Admin Law -DECLARATORY RELIEF QUO WARRANTO
DECLARATORY RELIEF
[No. L-1897. November 28, 1949]
JOSE DE BORJA, plaintiff and appellant, vs.DEOGRACIAS V.
VILLADOLID, Director of Fisheries, defendant and appellee.
1.DECLARATORY RELIEF; ACTION WHEN TO BE FILED; BEFORE
BREACH.The action for declaratory relief must be brought before
there has been a breach of a contract or statute the construction of
which is sought. The law does not require that there shall be an
actual pending case. It is sufficient that there is a breach of the law,
an actionable violation to bar a complaint for declaratory judgment.
2.ID.; GENERAL PURPOSE OF DECLARATORY JUDGMENT.The
general purpose of a declaratory judgment act is to provide for
adjudication of the legal rights, duties, or status of the respective
parties.
TORRES, J.:
This is a complaint for declaratory relief filed with the Court of First
Instance of Manila whereby plaintiff prayed the court to issue a
declaratory judgment "declaring that the plaintiff is not required by
law to secure a commercial fishing boat license," for the operation
of his motor boats engaged in the transportation of fish.
Plaintiff alleges in his complaint that he "is a license fee fish
peddler, . . . having paid the required license fee" to the office of
Manila City Treasurer; that " as such fish peddler" he "is the owner
of two motor boats, . . . with coastwise license issued by the Bureau
of Customs . . . renewable every year; " that "said motor boats are
used by him solely and exclusively in connection with his business
of buying fish somewhere in Busuanga and other islands adjacent
to the coast of Palawan and in Lubang, Batangas, for the purpose of
selling said fish in Manila and that plaintiff has no intervention in
the catching of fish, nor does he participate, as partner or in any
other capacity, in the catch of the fishermen actually engaged in
the catching of fish."
It appears that the defendant Deogracias V. Villadolid, as Director of
the Bureau of Fisheries required the plaintiff, as such fish peddler,
to procure a commercial fishing boat license as owner and operator
of said motor boats. Plaintiff refused to secure such license as
demanded by the defendant, on the ground that he is not so
required by section 18 of Act No. 4003, as amended by section 1 of
Commonwealth Act No. 471, for the reason that he "is not
operating his motor boats for the purpose of catching fish."
A motion to dismiss the complaint was granted by the lower court
and a motion for reconsideration having been denied, this case has
brought here on appeal.
There is no controversy as to the facts. The issue presented for our
determination is whether or not the plaintiff, by operating his motor
boats for the purpose of transporting fish caught by other persons
in the places mentioned in the complaint, and of bringing them to
Manila for sale in the local market, is obliged to procure a
commercial fishing boat license as owner and operator of his motor
boats engaged for said purpose.
Section 17 of Act No. 4003 and section 18 of the same Act, as
amended by section 1 of Commonwealth Act No. 471, read as
follows:
SEC. 17. License tax on operation of boat. Unless provided
with a license issued in accordance with the provisions of this Act,
no person, association or corporation shall operate any vessel of
more than three tons gross for the purpose of catching fish in the
territorial waters of the Philippine Islands.
SEC. 18. Annual fee on operation of boat. The Secretary of
Agriculture and Commerce is hereby empowered to issue to the
proper parties licenses for fishing operation of powered vessels of
more than three tons gross and sailing or rowed vessels of more
than three tons gross towed or operated in connection with power
-propelled vessels in the territorial waters of the Philippines upon
the payment of an annual fee of not less than two pesos nor more
than two hundred pesos for every vessel subject to taxation under
this Act: Provided That failure of a licensee to secure a renewal or
extension of his license and pay the annual fee on or before the last
day of February of each year shall subject him to a surcharge of
one hundred per centum based on the amount of the original fee,
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without prejudice to criminal proceedings against the delinquent
licensee under the penal provisions of this Act: Provided, further,
That all vessels less than three tons gross shall be licensed under
the provisions of section seventy of this Act: And provided, also,
That the catching of fish under the license issued shall be subject
to the limitations, restrictions, and penalties imposed by this Act.
(As amended by sec. 1 of Com. Act No. 471.)
The Solicitor General, as counsel for defendant, relies on an opinion
rendered by the Secretary of Justice on June 24, 1947, to the effect
that vessels engaged in the transportation of fish, although not
actually employed in the catching thereof, are, pursuant to Act No.
4003, required to pay the commercial fishing boat license.
We deem it unnecessary to delve now on the applicability of the
ruling made by the Secretary of Justice to the case at bar. We are
only concerned with the question whether or not the complaint for
declaratory relief filed by plaintiff, and which the Court of First
Instance of Manila dismissed for lack of merit, should be given due
course in this Court.
It appears that the Director of the Bureau of Fisheries demanded
that plaintiff pay the license provided in that Act and in view of the
insistent refusal of plaintiff to comply with such demand, he finally
turned over the case to the Office of the Fiscal of the City of Manila
for appropriate action. However, plaintiff, upon learning of the step
taken by the director of the Bureau of Fisheries, countered by filing
this complaint for declaratory relief, but this attitude of the plaintiff
will only result in multiplicity of actions which should always be
invoked and the Rules of Court obviously seeks to prevent when, in
section 2 of Rule 66, it provides that the action for declaratory relief
must be brought "before there has been a breach" of a contract or
statute the construction of which is sought.
The facts in this case are so clear and unambiguous, that in the
light of said section 2 or Rule 66, there is nothing left for the courts
to adjudicate or construe regarding the legal rights, suites and
status of appellant in the premises. The general purpose of
declaratory judgment act is to provide for adjudication of the legal
rights, duties, or status of the respective parties." (C.J.S., p. 1022;
see also 16 Am. Jur., p. 284.)
It is quite clear that if appellant is prosecuted and found criminally
liable, then the punishment prescribed by section 78 of the law, will
be imposed upon him; otherwise the charge will be dismissed. In
either case, the action is, as stated by the Solicitor General,
terminated with finality. It might be argued that no criminal action
has as yet been presented. But the law does not require that there
shall be an actual pending case. It is sufficient that there is a
breach of the law, an actionable violation to bar a complaint for
declaratory judgment.
Evidently, appellant would have the courts to prejudice the
impending criminal action against him, without necessarily
terminating the same.
The order of the Court of First Instance of Manila which dismissed
the complaint herein is hereby affirmed.
With costs.
[No. L-7913. 31 October 1955]
MARIA P. DE AZAJAR, plaintiff and appellant, vs .FRANCISCO
ARDALLES and the BUREAU OF LANDS, defendants and
appellees.
PUBLIC LANDS; SALES; AUTHORITY TO ALIENATE LANDS VESTED
EXCLUSIVELY IN DlRECTOR OF LANDS AND SECRETARY OF
AGRICULTURE.A sales application filed with the Bureau of Lands
must go through the different stages as prescribed by law until the
Director of Lands, the officer clothed with the authority to alienate
lands belonging to the public domain, renders his decision. From a
decision of the Director of Lands an appeal lies to the Secretary of
Agriculture and Natural Resources. For that reason, until after all
these administrative remedies shall have been exhausted, no court
may compel the Director of Lands or the Secretary of Agriculture
and Natural Resources on appeal to decide one way or another any
sales application as that is vested exclusively in them.
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ID.; ID.; ID,; CITIZENSHIP OF APPLICANT TO BE CONSIDERED IN THE
ACQUISITION OF PUBLIC LAND; WHEN REPORT TO COURTS MAY
BE MADE.Whether the applicant in the present case is entitled or
not to purchase the parcel of land of the public domain applied for
depends upon her citizenship aside from other requirements
prescribed by law. If she is a Filipino citizen as she claims, she
should go ahead with the administrative proceedings in the Bureau
of Lands and submit the evidence to prove her citizenship. She may
resort to Courts, if the exercise of her rights as citizen be prevented
or denied, to compel the officer, who prevented or denied her the
exercise of her rights as a Filipino citizen, to allow her to exercise
such rights.
DECLARATORY RELIEF; ACTION NOT PROPER PROCEEDINGS TO
DETERMINE FILIPINO CITIZENSHIP.An action for declaratory relief
is not the proper proceedings for the purpose of securing a judicial
declaration of Filipino citizenship. (Obiles vs. Republic, 49 Off. Gaz.,
923; Sen, et al. vs. Republic, G. R. No. L-6868, 30 April 1955.)
APPEAL from a judgment of the Court of First Instance of Albay.
Mojica, J.
PADILLA, J.:
In a complaint filed in the Court of First Instance of Albay plaintiff
seeks a declaratory judgment or relief pleading that sometime in
December, 1950 she applied for the purchase of a parcel of land
containing an area of 240 square meters belonging to the public
domain located in the Province of Albay, more particularly
described in the second paragraph of the complaint; that an
opposition to the application was filed by Francisco Ardales on the
ground that the applicant being a Chinese citizen is not entitled to
acquire lands of the public domain; that the opposition to her
application raises uncertainty or insecurity as to her citizenship
which is prejudicial to her interest and unless it be judicially
determined the Bureau of Lands would likely deny her sales
application; that she is the daughter of a Filipino citizen named Blas
Azajar; that she was born in Amoy, China, on 25 August 1922 and
came to the Philippines on 9 November 1926; that her father Blas
Azajar was born in Manila on 25 June 1896 of a Filipino mother
named Francisca Azajar; that in 1918 her father Blas Azajar elected
to become Filipino citizen; that at the time of such election Blas
Azajar was married to Tan Giok who became also a citizen of the
Philippines when in 1918 her husband elected to become Filipino
citizen; that when she was born on 25 August 1922 in lawful
wedlock, Blas Azajar and Tan Giok were Filipino citizens; and that
she and her parents being Filipino citizens and exercising
continuously and uninterruptedly their rights and privileges as
Filipino citizens have not lost their Filipino citizenship. Upon these
allegations she prays that after due hearing judgment be rendered
declaring her to be a Filipino citizen and as such entitled to acquire
lands of the public domain and that she is possessed of all the
rights and privileges accorded to Filipino citizens.
The defendants Francisco Ardales and the Director of Lands filed
their answers. On the date set for hearing the following stipulation
was submitted:
The parties Plaintiff and Defendants, stipulate on the following
facts:
1.That according to Landing Certificate of Residence No. 18363
issued by the Bureau of Customs, Manila, in favor of Blas Azajar on
January 10, 1918 states that said Blas Azajar is the son of Francisca
Azajar, Filipina, and it further states that he was born on June 25,
1896 in the City of Manila as evidenced by photostatic copy of said
landing certificate marked as Exhibit "A";
2,That the Landing Certificate of Residence No. 76921 issued by the
Collector of Customs of Manila in the name of Tan Giok dated
November 9, 1926 states that said Tan Giok is the wife of Blas
Azajar and states further that she was born in Amoy, China, in 1897
and it also states that she is the wife of Blas Azajar, wife of PI
citizen, her local residence being Naga, Camarines Sur, as
evidenced by photostatic copy of said landing certificate marked as
Exhibit "B";
3.That the Landing Certificate of Residence No. 76920 issued in the
name of Peck Ti Azajar issued by the Collector of Customs of Manila
on November 9, 1926 states that said Peck Ti Azajar is the daughter
of Blas Azajar and it also states that she is the daughter of PI citizen
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who was born in Amoy on August 25, 1922, as evidenced by
photostatic copy of said landing certificate marked as Exhibit "C";
4.That on October 11, 1949 she registered in precinct No. 312 as
voter in Manila and on October 12, 1951 she also registered as
voter in precinct No. 37 of Quezon City as evidenced by her voters
affidavit No. 6037171;
5.That Maria Peck Ti Azajar has her Residence Certificate No. A-
2977928 issued in Manila on September 29, 1949 in which it
certifies she is a Filipina citizen and residing at O'Donnell Street,
Manila;
6.That Maria Peck Ti Azajar had four children with Co Bun Tee with
whom she is supposedly living as common-law wife since sometime
in the year 1943;
Wherefore, without prejudice to the right of both parties of
presenting further evidence, respectfully submit to the Honorable
Court the above mentioned stipulation of facts. City of Legaspi,
Philippines, October 22, 1951.
(Sgd.) AVELINO R. RONAN
Atty. for the Defendant Francisco Ardales
(Sgd.) Z. GUTIERREZ LORA
Atty. for the plaintif
(Sgd.) LEONARDO P. FLORES
Provincial Fiscal
In representation of the Bureau of Lands
After hearing the court rendered judgment holding that plaintiff is a
Chinese citizen and as such is not entitled to acquire lands of the
public domain, with costs against her. A motion for reconsideration
was denied. Hence this appeal.
The appeal was forwarded to the Court of Appeals and while it was
pending there, the First Assistant Solicitor General filed a motion
praying that the appeal be dismissed on the ground that an action
for declaratory relief is notthe proper proceedings for the purpose
of securing a judicial declaration of Filipino citizenship, invoking the
rule laid down in Obiles vs. Republic, 49 Off. Gaz. 923; that
although the Director of Lands and a private individual, who
objected to the plaintiff's application for the purchase of a lot
belonging to the public domain, were made party defendants, the
nature of the action as intended by the plaintiff is not in anyway
altered, because it is not alleged in the complaint that the Director
of Lands has ruled adversely on her citizenship and that for that
reason disapproved her sales application; that the action brought
by the plaintiff not being the proper remedy in the light of the
allegations of the complaint, the trial court was without authority or
jurisdiction to decide it on the merits except to dismiss it. An
objection was filed by the appellant to this motion and the court
held in abeyance the resolution on the motion and objection until
the case be decided on the merits. In her pleading objecting to the
motion to dismiss, the appellant moved that the appeal be
forwarded to the Supreme Court involving as it does purely
questions of law. To this motion of the appellant the First Assistant
Solicitor General objected, on the ground that not only questions of
law but also of fact are involved in the case and insisted on his
motion that the appeal be dismissed for lack of jurisdiction of the
trial court to hear it and render judgment therein. After denying the
motion to forward the case to this Court for final determination
thereof, on 16 March 1954 the Fourth Division of the Court of
Appeals ruled that as the Solicitor General raises the question of
jurisdiction of the trial court to decide the case on the merits and
there being practically no controversy over the facts on which the
appellant's claim is based, it certified the appeal to this Court,
pursuant to section 31, in connection with section 17, paragraph 4,
clauses 3 and 6, of Republic Act No. 296, known as the Judiciary Act
of 1948.
Section 1, Rule 66, provides:
Any person interested under a deed, will, contract or other written
instrument, or whose rights are affected by a statute or ordinance,
may bring an action to determine any question of construction or
validity arising under the instrument or statute and for a
declaration of his rights or duties thereunder,
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The appellant is not interested under a deed, will, con-tract or other
written instrument; nor are her rights affected by a statute or
ordinance and so her grievance against Francisco Ardales who
objected to her sales application for a parcel of land of the public
domain has not brought her under and within the scope of section 1
of Rule 66 quoted above. A sales application filed with the Bureau
of Lands must go through the different stages as prescribed by law
until the Director of Lands, the officer clothed with the authority to
alienate lands belonging to the public domain, renders his decision.
Whether the appellant is entitled or not to purchase the parcel of
land of the public domain applied for by her depends upon her
citizenship aside from other requirements prescribed by law. From a
decision of the Director of Lands an appeal lies to the Secretary of
Agriculture and Natural Resources. For that reason, until after all
these administrative remedies shall have been exhausted, no court
may compel the Director of Lands or the Secretary of Agriculture
and Natural Resources on appeal to decide one way or another any
sales application as that is vested exclusively in them. Citizenship
cannot, therefore, be determined in a complaint for declaratory
judgment or relief. It is not the proper remedy or proceedings. 1 If
she is a Filipino citizen as she claims, she should go ahead with the
administrative proceedings in the Bureau of Lands and submit the
evidence to prove her citizenship. The appellant may resort to the
Courts, if the exercise of her rights as citizen be prevented or
denied, to compel the officer, who prevented or denied her the
exercise of her rights as a Filipino citizen, to allow her to exercise
such rights. Such is not the action brought herein. Consequently,
the Court below should have dismissed it. Properly and strictly
speaking, the question raised by the First Assistant Solicitor
General is not of jurisdiction and does not involve the jurisdiction of
the Court below, because the latter has jurisdiction to hear and
determine all actions and special proceedings because of its
general jurisdiction, except those the cognizance of which have
been vested by law in other courts. It is not the jurisdiction of the
Court below that is involved but the availability of the remedy
sought on the basis of the averments in the complaint.
Conformably thereto, the judgment appealed from is set aside and
the complaint and appeal are dismissed, with costs against the
appellant.
Pars, C. J., Bengzon, Montemayor, Reyes, A., Jugo,Bautista
Angelo, Labrador, Concepcion, and Reyes, J. B. L., JJ., concur.
Judgment set aside.
No. L-4183. October 26, 1951]
NATIONAL DENTAL SUPPLY Co., plaintiff and
appellant, vs. BIBIANO MEER, in his capacity as Collector of
Internal Revenue, defendant and appellee.
TAXATION; DECLARATORY RELIEF NOT APPLICABLE TO TAXPAYER'S
LIABILITY TO PAY TAX.An action for declaratory relief shall not
apply to cases where a taxpayer questions his liability for the
payment of any tax, duty, or charge collectible under any law
administered by the Bureau of Customs or the Bureau of Internal
Revenue. This rule, which was formerly a proviso contained in Act
No. 3736, though not incorporated in Rule 66 of the Rules of Court,
has not been repealed but is still in full force and effect. The reason
for its non-incorporation is to leave its application to the sound
discretion of the court, which is the sole arbiter to determine
whether the action of declaratory relief is applicable or not.
Reyes, Albert and Agcaoili and Antonio M. Molina for plaintif and
appellant.
First Assistant Solicitor General Roberto A. Gianzon and Solicitor
Felicisimo R. Rosete for defendant and appellee.
BAUTISTA ANGELO, J.:
This is an action for declaratory relief to obtain a ruling on whether
sales of dental gold or gold alloys and other metals used for dental
purposes come within the purview of Article 184 of the National
Internal Revenue Code as claimed by the Collector of Internal
Revenue.
Defendant filed a motion to dismiss on the ground (1) that plaintiff
has no cause of action for declaratory judgment and (2) that even
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assuming the existence of a cause of action, relief by declaratory
judgment is not proper because it will not terminate the
controversy. The court sustained the motion under the first ground
holding that actions for declaratory relief do not apply to cases
where a taxpayer questions his liability for the payment of any tax
collectible under any law administered by the Bureau of Internal
Revenue. From this ruling the plaintiff has appealed.
The only question to be determined is whether plaintiff can bring
the present action for declaratory relief.
Plaintiff contends that it can do so under section 1, Rule 66, of the
Rules of Court, which contains no prohibition to a taxpayer to file an
action for declaratory relief to test the legality of any tax, whereas
defendant contends that the failure to incorporate in Rule 66 the
proviso added by Commonwealth Act No. 55 to section 1, of Act No.
3736, does not imply its repeal and, therefore, it still stands and
applies to the plaintiff.
The original law on declaratory relief is Act No. 3736, which went
into effect on November 22, 1930. Section 1 of said Act provides:
SECTION 1. Construction.Any person interested under a deed,
contract or other written instrument, or whose rights are affected
by a statute, may bring an action in the Court of First Instance to
determine any question of construction or validity arising under the
instrument or statute and for a declaration of his rights or duties
thereunder.
On October 17, 1936, Congress approved Commonwealth Act No.
55 adding to section 1 of said Act No. 3736, the following proviso:
. . . Provided, however, That the provisions of this Act, shall not
apply to cases where a taxpayer questions his liability for the
payment of any tax, duty, or charge collectible under any law
administered by the Bureau of Customs or the Bureau of Internal
Revenue.
Subsequently, by virtue of the powers granted to it by our
Constitution, the supreme Court codified and promulgated the
present Rules of Court among which is reproduces the declaratory
relief provisions contained in Act No. 3736, but eliminates the
proviso introduced by Commonwealth Act No. 55. Speaking of the
reasons why said proviso has not been incorporated in Rule 66,
former Chief Justice Moran who intervened in the preparation of
said Rules of Court, has the following to say:
(a) Propriety of remedy.The proviso added by Commonwealth Act
No. 55 to section 1 of Act No. 3736, which prohibits an action for
declaratory relief in cases where a taxpayer questions his liability
for the payment of any tax, duty, or charge collectible under any
law administered by the Bureau of Customs or the Bureau of
Internal Revenue', is not incorporated in the above provision in
order to make it discretionary upon the courts to apply or not to
apply the remedy in such cases. Of course, where the tax is already
due and collectible, the tax payer cannot prevent collection by the
declaratory action, but he should pay the tax and sue for its
recovery within the period limited by law. But, where the tax is not
yet due, there can be no valid reason why the tax-payer cannot by
declaratory relief test its validity. Such a procedure cannot possibly
hamper the activities of the government and is, on the other hand,
simple, speedy and inexpensive. The United States Supreme Court
has approved the practice, long prevailing in other jurisdictions, of
testing the legality of a tax by an action of this nature. (2 Moran,
Comments on the Rules of Court, 3rd ed. p. 129).
From the opinion of the former Chief Justice Moran may be deduced
that the failure to incorporate the above proviso in section 1, rule
66, is not due to an intention to repeal it but rather to the desire to
leave its application to the sound discretion of the court, which is
the sole arbiter to determine whether a case is meritorious or not.
And even if it be desired to incorporate it in rule 66, it is doubted if
it could be done under the rule-making power of the Supreme Court
considering that the nature of said proviso is substantive and not
adjective, its purpose being to lay down a policy as to the right of a
taxpayer to contest the collection of taxes on the part of a revenue
officer or of the Government. with the adoption of said proviso, our
law-making body has asserted its policy on the matter, which is to
prohibit a taxpayer to question his liability for the payment of any
tax that may be collected by the Bureau of Internal Revenue. As
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this Court well said, quoting from several American cases, "The
Government may fix the conditions upon which it will consent to
litigate the validity of its original taxes . . ." "The power of taxation
being legislative, all the incidents are within the control of the
Legislature". (Sarasola vs. Trinidad, 40 Phil., 252, 263.) In other
words, it is our considered opinion that the contained in
Commonwealth Act No. 55 is still in force and effect and bars the
plaintiff from filing the present action.
The foregoing view finds support in section 306 of the National
Internal Revenue Code, which specifically lays down the procedure
to be followed in those cases wherein a taxpayer entertains some
doubt about the correctness of a tax sought to be collected. Said
section provides that the tax should first be paid and the taxpayer
should sue for its recovery afterwards. The purpose of the law
obviously is to prevent delay in the collection of taxes upon which
the Government depends for its very existence. To allow a taxpayer
to first secure a ruling as regards the validity of the tax before
paying it would be to defeat this purpose, and to prevent this result
the rule regarding declaratory relief was declared inapplicable to
cases involving collection of taxes.
Wherefore, the order appealed from is affirmed, with costs against
the appellant.
G.R. No. 91500. October 18, 1990.*
ALLIED BROADCASTING CENTER, INC.,
petitioner, vs.REPUBLIC OF THE PHILIPPINES, DEPARTMENT
OF TRANSPORTATION AND COMMUNICATIONS and NATIONAL
TELECOMMUNICATIONS COMMISSION, respondents.
Civil Procedure; Declaratory Relief; Pres. Decree No. 576-A; A
petition for declaratory relief is not within the original jurisdiction of
the Supreme Court even if only questions of law are involved.The
petition seeks a declaration of the unconstitutionality and/or nullity
of Presidential Decree No. 576-A. As such, it must be treated as one
seeking declaratory relief under Rule 64 of the Rules of Court. Such
an action should be brought before the Regional Trial Court and not
before the Supreme Court. A petition for declaratory relief is not
among the petitions within the original jurisdiction of the Supreme
Court even if only questions of law are involved.
Same; Same; Judicial Review; The power of judicial review can only
be exercised in connection with a bona fide case or controversy
which involves the statute sought to be reviewed.Moreover, there
is no actual case or controversy involving the law sought to be
annulled. Petitioner does not allege that it has filed an application
for a license to operate a radio or television station in excess of the
authorized
number and that the same is being denied or refused on the basis
of the restrictions under Presidential Decree No. 576-A. Petitioner
does not also allege that it had been penalized or is being
penalized for a violation under said Decree. There is, likewise, no
allegation that any of the petitioner's stations had been confiscated
or shut down pursuant to Presidential Decree No, 576-A. Obviously,
the constitutional challenge is not being raised in the context of a
specific case or controversy wherein the petitioner has asserted his
rights. All that petitioner seeks is the nullification of Presidential
Decree No. 576-A and the reinstatement of its rights under Republic
Act No. 3001. Judicial review cannot be exercised in vacuo. Judicial
power is "the right to determine actual controversies arising
between adverse litigants." The function of the courts is to
determine controversies between litigants and not to give advisory
opinions. The power of judicial review can only be exercised in
connection with a bona fide case or controversy which involves the
statute sought to be reviewed.
ulo, Aliling & Macamay for petitioner.
GANCAYCO, J.:
This is a petition for the declaration of the unconstitutionality of
Presidential Decree No. 576-A with a prayer for the issuance of a
temporary restraining order and/or a writ of preliminary injunction.
The allegations of the petition are that on January 19, 1960,
Republic Act No. 3001 was passed granting petitioner the permit or
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franchise to construct, maintain and operate radio broadcasting
stations in the Philippines. Petitioner was able to construct,
maintain and operate ten (10) radio broadcasting stations all over
the country. Through said broadcasting stations, petitioner was able
to provide adequate public service which enabled the government
to reach the population on important public issues, and assist the
government in programs relating to public information and
education. Its radio stations have never been used for the
broadcasting of obscene or indecent language or speech, or for the
dissemination of misleading information or willful
misrepresentation, or to the detriment of the public health, or to
incite, encourage or assist in subversion or treasonable acts.
Under Section 10 of Republic Act No. 3001, petitioner's franchise or
permit "shall be subject to amendment, alteration or repeal by the
Congress of the Philippines when the public interest so
requires . ..."
On November 11, 1974, Presidential Decree No. 576-A entitled
"Decree Regulating The Ownership And Operation Of Radio And
Television Stations And For Other Purposes" was issued and duly
published in the December 2, 1974 supplemental issue of
the Official Gazette. 1
Sections 3, 4, 5 and 6 of the said Decree provide as follows:
Sec. 3. No person or corporation may own, operate, or manage
more than one radio or television station in one municipality or city;
nor more than five AM and FM radio stations; nor more than five
television channels in the entire country, and no radio or television
station shall be utilized by any single-interest group to disseminate
information or otherwise influence the public or the government to
serve or support the ends of such group.
Sec. 4. Any person or corporation which owns more than the
number of radio or television stations authorized in the preceding
section shall divest itself of the excess stations or channels. Any
excess station shall be sold through the Board of Communications.
The divestiture provided herein shall be made not later than
December 31, 1981. Thereafter, a person or corporation shall make
such divestiture within one year from the discovery of the offense.
Sec. 5. Failure to divest as provided in the foregoing section shall, in
addition to the penalties provided in Section 6, subject the person
or corporation guilty of such failure to cancellation of the franchise
of every excess station and to confiscation of the station and its
facilities without compensation.
Sec. 6. All franchises, grants, licenses, permits, certificates or other
forms of authority to operate radio or television broadcasting
systems shall terminate on December 31, 1981. Thereafter,
irrespective of any franchise, grant, license, permit, certificate or
other forms of authority to operate granted by any office, agency or
person, no radio or television station shall be authorized to operate
without the authority of the Board of Communications and the
Secretary of Public Works and Communications or their successors
who have the right and authority to assign to qualified parties
frequencies, channels or other means of Identifying broadcast
systems; Provided, however, that any conflict over, or
disagreement with, a decision of the aforementioned authorities
may be appealed finally to the Office of the President within fifteen
days from the date the decision is received by the party in interest.
Pursuant to Section 6 of the said Decree, all franchises, grants,
licenses, permits, certificates, or other forms of authority to operate
radio or television broadcasting systems/stations, including the
franchise or permit of petitioner under Republic Act No. 3001, have
been deemed terminated or revoked effective December 31, 1981.
Thus, petitioner is left with only 3 radio stations located in Iloilo
City, Bacolod City and Roxas City.
Petitioner alleged that said Decree has caused it great and
irreparable damage, because (a) it divested petitioner of its
franchise without due process of law and forced it to divest itself of
some of its radio stations; (b) it deprived petitioner of its right to
further construct, maintain and operate radio broadcasting stations
in other cities or municipalities of the country; 2 (c) it deprived
petitioner of its right to avail of loan facilities or renew its existing
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loan availments from any bank or financial institution in order to
expand and continue the operation of its radio broadcasting
business; and (d) petitioner suffered loss of income.
Hence, this petition to declare Presidential Decree No. 576-A as
unconstitutional and null and void ab initio. The grounds of the
petition are as follows:
I THE ISSUANCE OF PRESIDENTIAL DECREE NO. 576-A SUMMARILY
TERMINATING THE PETITIONER'S FRANCHISE OR PERMIT ON
DECEMBER 31, 1981 CONSTITUTES AN UNLAWFUL TAKING OR
DEPRIVATION OF THE PROPERTY RIGHTS (FRANCHISE OR PERMIT)
OF PETITIONER WITHOUT DUE PROCESS OF LAW AND/OR PAYMENT
OF JUST COMPENSATION;
II. THE ISSUANCE OF THE AFORESAID DECREE FORCED THE
PETITIONER TO DlVEST ITSELF OF SOME OF ITS RADIO STATIONS
AND THE TERMINATION OF ITS CONGRESSIONAL FRANCHISE
CONSTITUTES A VIOLATION AND IMPAIRMENT OF PETITIONER'S OR
THE PEOPLE'S RIGHT OR FREEDOM OF SPEECH, EXPRESSION
AND/OR OF THE PRESS;
III. THE ISSUANCE OF THE AFORESAID DECREE FORCED THE
PETITIONER TO DIVEST ITSELF OF SOME OF ITS RADIO STATIONS
AND THE ARBITRARY TERMINATION OF ITS CONGRESSIONAL
FRANCHISE CONSTITUTES AN UNLAWFUL IMPAIRMENT OF THE
OBLIGATION OF CONTRACT BETWEEN THE STATE AND THE
PETITIONER; AND
IV. THE ISSUANCE OF THE AFORESAID DECREE RESTRICTING
PETITIONER OR ANY OTHER PERSON OR ENTITY TO OPERATE A
CERTAIN NUMBER OF RADIO OR TELEVISION STATIONS IN ONE CITY
OR MUNICIPALITY, OR IN THE ENTIRE COUNTRY FOR THAT MATTER,
AND FURTHER TERMINATING THE CONGRESSIONAL FRANCHISE OF
PETITIONER CONSTITUTES AN UNLAWFUL RESTRAINT OF TRADE; 3
Without giving due course to the petition, the respondents were
required to submit their comment thereto within ten (10) days from
notice. After the comment of the respondents was submitted, the
petitioner was required to file a reply thereto. As said reply was
filed the Court required respondents to submit their rejoinder. The
rejoinder of respondents had been duly submitted so the case is
now due for resolution.
After a careful deliberation on the petition, the Court finds the same
to be devoid of merit.
The petition seeks a declaration of the unconstitutionality and/or
nullity of Presidential Decree No. 576-A. As such, it must be treated
as one seeking declaratory relief under Rule 64 of the Rules of
Court. Such an action should be brought before the Regional Trial
Court and not before the Supreme Court. A petition for declaratory
relief is not among the petitions within the original jurisdiction of
the Supreme Court even if only questions of law are involved. 4
Thus, the present petition should be dismissed on this score.
Moreover, there is no actual case or controversy involving the law
sought to be annulled. Petitioner does not allege that it has filed an
application for a license to operate a radio or television station in
excess of the authorized number and that the same is being denied
or refused on the basis of the restrictions under Presidential Decree
No. 576-A. Petitioner does not also allege that it had been penalized
or is being penalized for a violation under said Decree. There is,
likewise, no allegation that any of the petitioner's stations had been
confiscated or shut down pursuant to Presidential Decree No. 576-
A. Obviously, the constitutional challenge is not being raised in the
context of a specific case or controversy wherein the petitioner has
asserted his rights. All that petitioner seeks is the nullification of
Presidential Decree No. 576-A and the reinstatement of its rights
under Republic Act No. 3001.
Judicial review cannot be exercised in vacuo. Judicial power is "the
right to determine actual controversies arising between adverse
litigants." 5
The function of the courts is to determine controversies between
litigants and not to give advisory opinions. 6 The power of judicial
review can only be exercised in connection with a bona fide case or
controversy which involves the statute sought to be reviewed. 7
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Petitioner alleges that it used to maintain and operate at least ten
(10) radio broadcasting stations but pursuant to Sections 3, 4, 5
and 6 of Presidential Decree No. 576-A it divested itself of the
"excess stations" thus leaving it with three (3) radio stations
located in Iloilo City, Bacolod City and Roxas City. Petitioner did not
allege that it challenged the constitutionality of the decree at any
time since it took effect on December 31, 1981. It does not appear
that petitioner's compliance was made under protest. In view of its
acquiescence with Presidential Decree No. 576-A, the petitioner is
now estopped from challenging the same under the principle of
estoppel that "one who sleeps on his rights shall not be heard to
complain."
The allegation of petitioner that its petition should be treated as a
petition for prohibition does not place petitioner in any better
position. The petition cannot be considered as one for prohibition as
it does not seek to prohibit further proceedings being conducted by
any tribunal, corporation, board or person exercising judicial or
ministerial functions. 8
In the instant petition, petitioner does not seek to prohibit any
proceeding being conducted by public respondent which adversely
affects its interest. Petitioner does not claim that it has a pending
application for a broadcast license which is about to be denied
under Presidential Decree No. 576-A. Apparently, what petitioner
seeks to prohibit is the possible denial of an application it may
make to operate radio or television stations on the basis of the
restrictions imposed by Presidential Decree No. 576-A. Obviously,
the petition is premature.
Petitioner prays for reinstatement of its rights under its original
franchise. Reinstatement is an affirmative remedy and cannot be
secured through a writ of prohibition which is essentially a
preventive and not a corrective remedy. It cannot correct an act
that is a fait accompli. 9
WHEREFORE, the petition is DISMISSED with costs against
petitioner.
SO ORDERED.
HABEAS CORPUS
No. L-4254. September 26, 1951]
BORIS MEJOFF, petitioner vs. THE DIRECTOR OF PRISONS,
respondent.
ALIENS; DEPORTATION; HABEAS CORPUS.A foreign national, not
enemy, against whom no criminal charges have been formally
made or judicial order issued, may not indefinitely be kept in
detention. He also has the right to life and liberty and all other
fundamental rights as applied to human beings, as proclaimed in
the "Universal Declaration of Human Rights" approved by the
General Assembly of the United Nations, of which the Philippines is
a member. The theory on which the court is given power to act is
that the warrant for his deportation, which was not executed,
is functus officio and the alien is being held without any authority of
law (U. S. vs. Nichols, 47 Fed. Sup., 201). The possibility that he
might join or aid disloyal elements if turned out at large does not
justify prolonged detention, the remedy in that case being to
impose conditions in the order of release and exact bail in a
reasonable amount with sufficient sureties.
TUASON, J.:
This is a second petition for habeas corpus by Boris Mejoff, the first
having been denied in a decision of this Court of July 30, 1949. The
history of the petitioner's detention was thus briefly set forth in that
decision, written by Mr. Justice Bengzon:
The petitioner Boris Mejoff is an alien of Russian descent who was
brought to this country from Shanghai as a secret operative by the
Japanese forces during the latter's regime in these Islands. Upon
liberation he was arrested as a Japanese spy, by U.S. Army Counter
Intelligence Corps. Later he was handed to theCommonwealth
Government for disposition in accordance with Commonwealth Act
No. 682. Thereafter, the People's Court ordered his release. But the
deportation Board taking his case up, found that having no travel
documents Mejoff was illegally in this country, and consequently
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referred the matter to the immigration authorities. After the
corresponding investigation, the Board of commissioners of
Immigration on April 5, 1948, declared that Mejoff had entered the
Philippines illegally in 1944, without inspection and admission by
the immigration officials at a designation port of entry and,
therefore, it ordered that he be deported on the first available
transportation to Russia. The petitioner was then under custody, he
having been arrested on March 18, 1948. In May 1948 he was
transferred to the Cebu Provincial Jail together with three other
Russians to await the arrival of some Russian vessels. In July and
August of that year two boats of Russian nationality called at the
Cebu Port. But their masters refused to take petitioner and his
companions alleging lack of authority to do so. In October 1948
after repeated failures to ship this deportee abroad, the authorities
removed him to Bilibid Prison at Muntinglupa where he has been
confined up to the present time, inasmuch as the Commissioner of
Immigration believes it is for the best interests of the country to
keep him under detention while arrangements for his departure are
being made.
The Court held the petitioner's detention temporary and said that
"temporary detention is a necessary step in the process of
exclusion or expulsion of undesirable aliens and that pending
arrangements for his deportation, the Government has the right to
hold the undesirable alien under confinement for a reasonable
lenght of time." It took note of the fact, manifested by the Solicitor
General's representative in the course of the of the oral
argumment, that "this Government desires to expel the alien, and
does not relish keeping him at the people's expense . . . making
efforts to carry out the decree of exclusion by the highest officer of
the land." No period was fixed within which the immigration
authorities should carry out the contemplated deportation beyond
the statement that "The meaning of 'reasonable time' depends
upon the circumstances, specially the difficulties of obtaining a
passport, the availability of transportation, the diplomatic
arrangements with the governments concerned and the efforts
displayed to send the deportee away;" but the Court warned that
"under established precedents, too long a detention may justify the
issuance of a writ of habeas corpus."
Mr. Justice Paras, now Chief Justice, Mr. Justice Feria, Mr. Justice
Perfecto, and the writer of this decision dissented. Mr. Justice Feria
and Mr. Justice Perfecto voted for outright discharge of the prisoner
from custody. Mr. Justice Paras qualified his dissent by stating that
he might agree "to further detention of the herein petitioner,
provided that he be released if after six months, the Government is
still unable to deport him." This writer joined in the latter dissent
but thought that two months constituted reasonable time.
Over two years having elapsed since the decision aforesaid was
promulgated, the Government has not found way and means of
removing the petitioner out of the country, and none are in sight,
although it should be said in justice to the deportation authorities,
it was through no fault of theirs that no ship or country would take
the petitioner.
Aliens illegally staying in the Philippines have no right of asylum
therein (Sowapadji vs. Wixon, Sept. 18, 1946, 157 F. ed., 289, 290),
even if they are "stateless," which the petitioner claims to be. It is
no less true however, as impliedly stated in this Court's decision,
supra, that foreign nationals, not enemy against whom no charge
has been made other than that their permission to stay has
expired, may not indefinitely be kept in detention. The protection
against deprivation of liberty without due process of law and except
for crimes committed against the laws of the land is not limited to
Philippine citizens but extends to all residents, except enemy
aliens, regardless of nationality. Whether an alien who entered the
country in violation of its immigration laws may be detained for as
long as the Government is unable to deport him, is a point we need
not decide. The petitioner's entry into the Philippines was not
unlawful; he was brought by the armed and belligerent forces of
a de facto government whose decrees were law furing the
occupation.
Moreover, by its Constitution (Art. II, Sec. 3) the Philippines "adopts
the generally accepted principles of international law as part of the
law of Nation." And in a resolution entitled "Universal Declaration of
Human Rights" and approved by the General Assembly of the
United Nations of which the Philippines is a member, at its plenary
meeting on December 10, 1948, the right to life and liberty and all
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other fundamental rights as applied to all human beings were
proclaimed. It was there resolved that "All human beings are born
free and equal in degree and rights" (Art. 1); that "Everyone is
entitled to all the rights and freedom set forth in this Declaration,
without distinction of any kind, such as race, colour, sex, language,
religion, political or other opinion, nationality or social origin,
property, birth, or other status" (Art. 2): that "Every one has the
right to an effective remedy by the competent national tribunals for
acts violating the fundamental rights granted him by the
Constitution or by law" (Art. 8); that "No one shall be subjected to
arbitrary arrest, detention or exile" (Art. 9); etc.
In U. S. vs. Nichols, 47 Fed. Supp., 201, it was said that the court
"has the power to release from custody an alien who has been
detained an unreasonably long period of time by the Department of
Justice after it has become apparent that although a warrant for his
deportation has been issued, the warrant can not be effectuated;"
that "the theory on which the court is given the power to act is that
the warrant of deportation, not having been able to be executed,
is functus officio and the alien is being held without any authority of
law." The decision cited several cases which, it said, settled the
matter definitely in that jurisdiction, adding that the same result
had reached in innumerable cases elsewhere. The cases referred to
were United States ex rel. Ross vs. Wallis, 2 Cir. 279 F. 401, 404;
Caranica vs. Nagle, 9 Cir., 28 F. 2d 955; Saksagansky vs. Weedin, 9
Cir., 53 F. 2d 13, 16 last paragraph; Ex parte Matthews, D.C.W.D.
Wash., 277 F. 857; Moraitis vs. Delany, D.C. Md. Aug. 28, 1942, 46 F.
Supp. 425.
The most recent case, as far as we have been able to find, was that
of Staniszewski vs. Watkins (1948), 90 Fed. Supp., 132, which is
nearly foursquare with the case at hand. In that case a stateless
person, formerly a Polish national, resident in the United States
since 1911 and many times serving as a seaman on American
vessels both in peace and in war, was ordered excluded from the
United States and detained at Ellis Island at the expense of the
steamship company, when he returned from a voyage on which he
had shipped from New York for one or more European ports and
return to the United States. The grounds for his exclusion were that
he had no passport or immigration visa, and that in 1937 had been
convicted of perjury because in certain documents he presented
himself to be an American citizen. Upon his application for release
on habeas corpus, the Court released him upon his own
recognizance. Judge Leibell, of the United States District Court for
the Southern District of New York, said in part:
When the return to the writ of habeas corpus came before this
court, I suggested that all interested parties . . . make an effort to
arrange to have the petitioner ship out of some country that he
would receive him as a resident. He is, a native-born Pole but the
Polish Consul has advised him in writing that he is no longer a
Polish subject. This Government does not claim that he is a Polish
citizen. His attorney says he is a stateless. The Government is
willing that he go back to the ship, but if he were sent back aboard
a ship and sailed to the Port (Cherbourg, France) from which he last
sailed to the United States, he would probably be denied
permission to land. There is no other country that would take him,
without proper documents.
It seems to me that this is a genuine hardship case and that the
petitioner should be released from custody on proper terms. . . .
What is to be done with the petitioner? The government has had
him in custody almost seven months and practically admits it has
no place to send him out of this country. The steamship company,
which employed him as one of a group sent to the ship by the
Union, with proper seaman's papers issued by the United States
Coast Guard, is paying $3 a day for petitioner's board at Ellis Island.
It is no fault of the steamship company that petitioner is an
inadmissible alien as the immigration officials describe him. . . .
I intend to sustain the writ of habeas corpus and order the release
of the petitioner on his own recognizance. He will be required to
inform the immigration officials at Ellis Island by mail on the 15th of
each month, stating where he is employed and where he can be
reached by mail. If the government does succeed in arranging for
petitioner's deportation to a country that will be ready to receive
him as a resident, it may then advise the petitioner to that effect
and arrange for his deportation in the manner provided by law.
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Although not binding upon this Court as a precedent, the case
aforecited affords a happy solution to the quandry in which the
parties here finds themselves, solution which we think is sensible,
sound and compatible with law and the Constitution. For this
reason, and since the Philippine law on immigration was patterned
after or copied from the American law and practice, we choose to
follow and adopt the reasoning and conclusions in the Staniszewski
decision with some modifications which, it is believed, are in
consonance with the prevailing conditions of peace and order in the
Philippines.
It was said or insinuated at the hearing ofthe petition at bar, but
not alleged in the return, that the petitioner was engaged in
subversive activities, and fear was expressed that he might join or
aid the disloyal elements if allowed to be at large. Bearing in mind
the Government's allegation in its answer that "the herein
petitioner was brought to the Philippines by the Japanese forces,"
and the fact that Japan is no longer at war with the United States or
the Philippines nor identified with the countries allied against these
nations, the possibility of the petitioner's entertaining or
committing hostile acts prejudicial to the interest and security of
this country seems remote.
If we grant, for the sake of argument, that such a possibility exists,
still the petitioner's unduly prolonged detention would be
unwarranted by law and the Constitution, if the only purpose of the
detention be to eliminate a danger that is by no means actual,
present, or uncontrolable. After all, the Government is not impotent
to deal with or prevent any threat by such measure as that just
outlined. The thought eloquently expressed by Mr. Justice Jackson
of the United States Supreme Court in connection with the
appliccation for bail of ten Communists convicted by a lower court
of advocacy of violent overthrow of the United States Government
is, in principle, pertinent and may be availed of at this juncture.
Said the learned Jurist:
The Governmet's alternative contention is that defendants, by
misbehavior after conviction, have forfeited their claim to bail.
Grave public danger is said to result from what they may be
expected to do, in addition to what they have done since their
conviction. If I assume that defendants are disposed to commit
every opportune disloyal to act helpful to Communist countries, it is
still difficult to reconcile with traditional American law the jailing of
persons by the courts because of anticipated but as yet
uncommitted crimes. lmprisonment to protect society from
predicted but unconsummated offenses is so unprecedented in this
country and so fraught with danger of excesses and injustice that I
am loath to resort it, even as a discretionary judicial technique to
supplement conviction of such offenses as those of which
defendants stand convicted.
But the right of every American to equal treatment before the law
is wrapped up in the same constitutional bundle with those of these
Communists. If an anger or disgust with these defendants we throw
out the bundle, we alsocast aside protection for the liberties of
more worthy critics who may be in opposition to the government of
some future day.
xxx xxx x x x1wphl.nt
If, however, I were to be wrong on all of these abstract or
theoretical matters of principle, there is a very practical aspect of
this application which must not be overlooked or underestimated
that is the disastrous effect on the reputation of American justice if
I should now send these men to jail and the full Court later decide
that their conviction is invalid. All experience with litigation teaches
that existence of a substantial question about a conviction implies
a more than negligible risk of reversal. Indeed this experience lies
back of our rule permitting and practice of allowing bail where such
questions exist, to avoid the hazard of unjustifiably imprisoning
persons with consequent reproach to our system of justice. If that is
prudent judicial practice in the ordinary case, how much more
important to avoid every chance of handing to the Communist
world such an ideological weapon as it would have if this country
should imprison this handful of Communist leaders on a conviction
that our highest Court would confess to be illegal. Risks, of course,
are involved in either granting or refusing bail. I am naive enough
to underestimate the troublemaking propensities of the defendants.
But, with the Department of Justice alert to the the dangers, the
worst they can accomplish in the short time it will take to end the
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litigation is preferable to the possibility of national embarrassment
from a celebrated case of unjustified imprisonment of Communist
leaders. Under no circumstances must we permit their
symbolization of an evil force in the world to be hallowed and
glorified by any semblance of martyrdom. The way to avoid that
risk is not to jail these men until it is finally decided that they
should stay jailed.
If that case is not comparable with ours on the issues presented, its
underlying principle is of universal application. In fact, its ratio
decidendi applies with greater force to the present petition, since
the right of accused to bail pending apppeal of his case, as in the
case of the ten Communists, depends upon the discretion of the
court, whereas the right to be enlarged before formal charges are
instituted is absolute. As already noted, not only are there no
charges pending against the petitioner, but the prospects of
bringing any against him are slim and remote.
Premises considered, the writ will issue commanding the
respondents to release the petitioner from custody upon these
terms: The petitioner shall be placed under the surveillance of the
immigration authorities or their agents in such form and manner as
may be deemed adequate to insure that he keep peace and be
available when the Government is ready to deport him. The
surveillance shall be reasonable and the question of
reasonableness shall be submitted to this Court or to the Court of
First Instance of Manila for decision in case of abuse. He shall also
put up a bond for the above purpose in the amount of P5,000 with
sufficient surety or sureties, which bond the Commissioner of
Immigration is authorized to exact by section 40 of Commonwealth
Act No. 613.
No costs will be charged.
Paras, C.J., Feria, Bengzon, Padilla, Reyes and Jugo, JJ., concur.
What constitutes a reasonable time for the detention of the
petitioner in custody for deportation depends upon the facts and
circumstances of particular cases. This court cannot shut its eyes to
the vitally important interests of this country at this time with
respect to the bottleneck of shipping, when every available ship,
domestic and foreign, must be utilized to the utmost without delay
consequent upon the lack of avilable seamen. Under these present
conditions the court should be liberal indeed in aiding the executive
branch of the govenment in the strict enforcement of laws so vitally
necessary in the common defns. There is sound authority for this
view in United States ex. rel. Schlimm vs. Howe, D C.N. U Y. 222 F.
96, 97, where Circuit Judge Lacombe refused to release an alien
who had come here from Germany and was ordered deported in
1915 when, by reason of the then existing war between Germany
and England, his deportation to Germany was not possible. It was
said:
At the present time there is no regular passenger ocean service to
German ports, so the authorities are unable to forward him, and are
holding him until some opportunity of returning him to Germany
may present itself. His continual detention is unfortunate, but
certainly is not illegal. His present condition can be alleviated only
by the action of the executive branch of the government. A federal
court would not be justified in discharging him. . . .
If he is not really fit for sea service, it is not probable that he would
be forced into it, although he may be able to serve his government
in some other capacity. But however that may be, while this
country has no power under existing legislation to impress him into
sea service against his will, he has no just cause to be relieved from
the strict enforcement of our deportation laws, and to remain at
liberty in this country as a sanctuary contrary to our laws.
G.R. No. L-22748 July 29, 1977
GREGORIO CO and HERCULANO CO, petitioners-appellees,
vs.
THE DEPORTATION BOARD, respondent-appellant.
FERNANDO, J.:
The basic question before us is whether the judiciary may entertain
an action for prohibition and habeas corpus filed against the
Deportation Board, now appellant, during the pendency of an
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inquiry against petitioners, now appellees, that may possibly lead
to their expulsion from the country. The then Judge Jesus de Veyra
of the Manila Court of First Instance, in a well-written decision,
sustained his jurisdiction, granted the relief sought on the ground
that they were Filipinos, and restrained appellant Board from taking
further cognizance of the proceeding. Hence this appeal by the
Deportation Board. On the basis of the finding of facts of the lower
court, tested by the standards prescribed in Chua Hiong v.
Deportation Board, 1 there was justification for the decision it
rendered. While Vivo v. Montesa 2 and Calacday v. Vivo3 stand for
the proposition that under the well-settled administrative law
doctrine of primary jurisdiction, an administrative agency, such as
appellant, must be given the opportunity to decide the matter
before it before the courts could intervene, the latter case pointed
out that there are appropriate where the right to immediate judicial
review should be recognized. As the lower court found, this is one
of them. We cannot see any valid ground for reversal.
The facts set forth in the brief for appellant, which to its credit did
manifest objectivity do not, upon careful scrutiny, warrant the
reversal sought. Right at the start, it made mention of the
petitioners Gregorio Co and Herculano Co being born in Aparri,
Cagayan, on April 24, 1920 and September 25, 1922. Their father,
a certain Co Pengco, was a Chinese merchant residing in Aparri,
Cagayan and their mother was Maria Tan Comin, whose nationality
was disputed. 4 The parties were, however, agreed that she had
lived maritally with Co Pengco, out of which seven children were
born, among them petitioners. Such relationship continued until the
death of Co Pengco sometime n 1926 in China. The mother died in
1946, also in China. 5 Then on July 12, 1957, a Special Prosecutor of
the Deportation Board filed charges against petitioners with such
Board alleging that as Chinese subjects residing in the Philippines,
who failed, neglected and refused to register as Chinese nationals
with the Bureau of Immigration, they violated the law, compounded
by the fact that they represented themselves as Filipinos. 6 They
were thus enabled to enjoy certain rights and privileges which are
accorded only to Filipino citizens, such as suffrage, ownership of
real property, Herculano's ownership of a coastwise vessel,
Gregorio Co's loan from the Rehabilitation Finance
Corporation. 7 First, they sought and were granted liberty upon the
filing of cash and surety bonds, subject to other terms and
conditions. 8 Then they filed with the Deportation Board a motion to
dismiss based on the plea that it lacked jurisdiction for the reason
that they are citizens of the Philippines. 9 Such motion was denied
as was a subsequent motion seeking reconsideration. 10 They did
exhaust their administrative remedy, an appeal to the President
being fruitless.11 Thereafter, they filed the special civil action of
prohibition and habeas corpus, with the decision as noted being in
their favor on the ground of their being Filipinos. 12 The exhaustive
brief of petitioners as appellees denied the claim that there was a
dispute concerning Maria Tan Comin's citizenship. 13 They pointed
out that both the appellee Deportation Board and the lower court
maintained the contrary view, her citizenship being
admitted.14 Moreover, they called attention to the "overwhelming
and uncontroverted evidence" as to their citizenship based on their
having been born in the Philippines of a Chinese father and a
Filipino mother, the recognition of such status by several
government agencies, and the exercise by them of the right to
suffrage, not to mention the fact that their birth certificates showed
that they are Filipinos.15
On the above facts, it is understandable why judicial intervention
even prior to the final decision of appellant Deportation Board was
justified. The plea for reversal cannot be granted.
1. Chua Hiong v. Deportation Board 16 stands for this principle:
"When the evidence submitted by a respondent is conclusive of his
citizenship, the right to immediate review should also be
recognized and the courts should promptly enjoin the deportation
proceedings." 17 Nor is it required that such standard be rigidly
adhered to, as pointed out in the opinion of Justice Labrador: "The
difficult,", arises when the evidence is not conclusive on either side,
as in the case at bar. Should the deportation proceedings be
allowed to continue till the end, or should the question of alienage
or citizenship of respondent be allowed to be decided first in a
judicial proceeding, suspending the administrative proceedings in
the meantime that the alienage or citizenship is being finally
determined in the courts? The highest judicial authority in the
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United States has answered the second question in the
affirmative." 18 It was likewise stressed that judicial determination is
allowable "in cases when the courts themselves believe that there
is substantial evidence supporting the claim of citizenship, so
substantial that there are reasonable grounds for the belief that the
claim is correct, In other words, the remedy should be allowed only
in sound discretion of a competent court in a proper
proceeding." 19 That sound discretion was properly exercised by the
then Judge de Veyra in the judgment now on appeal.
2. Calacday v. Vivo20 reiterated the principle announced in Vivo v.
Montesa as to the applicability of the doctrine of primary
jurisdiction in deportation proceedings, thus precluding judicial
intervention until completed. Nonetheless, the opinion made
express mention of the exception to the rule set forth in the Chua
Hiong decision. Thus: "A clarification announced in Chua Hiong v.
Deportation Board is not to be lost sight of however." 21 Petitioners
could thus very well rely on the pronouncements set forth with such
clarity by Justice Labrador in the aforesaid case. The only question
that remains is whether on the test prescribed as to the quantum of
evidence required to justify judicial intervention before the
termination of the deportation proceedings, the judgment reached
by the lower court may be termed as suffering from the corrosion of
substantial legal error.
3. No such infirmity has been shown. The facts were fairly
appraised and the law based on judicial precedents. It is to be
noted that even the brief for appellant could not assert
categorically that the mother of petitioners, Maria Tan Comin was
an alien. All that it did say was that her nationality "is
disputed." 22 Again, with candor, there was an admission that she
was born in Iguig, Cagayan in 1892, the father being a Chinese and
the mother being a Filipino. It was on the basis of such fact that the
lower court, relying on the Philippine Bill of 1902, also in the light of
applicable authorities, reached the conclusion that her illegitimate
children were entitled to Filipino citizenship. The restraint apparent
in the claim of appellant Deportation Board that its prosecutor at
most "is possessed with evidence to show that Maria Tan Comin
was a Chinese" 23 certainly militates against its persuasive force.
The finding of the lower court as to her being a Filipina had not
been shown to be without basis. Likewise, as was made mention at
the outset, the trial court, on the basis of the evidence before it,
reached the conclusion that deportation would not lie as the status
of petitioners as Filipino citizens, "being the illegitimate children of
an unwed Filipino mother,"24 was duly established. Nor was that the
only basis for reaching such a conclusion. It did take into
consideration the birth certificates showing that they are
Filipinos. 25 Then there was proof from at least two government
agencies recognizing such status as Filipino citizens. The
Commissioner of Immigration did so as well as the City Fiscal of
Quezon City when he sustained the legality of petitioner Co's
applying for a loan from the Rehabilitation Finance Corporation
mortgaging his real property therein located.26 Moreover, it was
likewise proven that they exercised as Filipinos the right of suffrage
as set forth in their brief.27 There is warrant for the conclusion
reached by the lower court as to their citizenship following the
doctrine announced in Talaroc v. Uy.28 Justice Tuason, speaking for
this Court, specifically made mention of respondent Uy having been
allowed to exercise the right of suffrage, to hold public office and to
take the oath of allegiance to the Republic of the Philippines. It is
thus clear that to impute error to the lower court for sustaining the
prohibition proceedings against the Deportation Board in view of
the status of petitioners having been duly established, finds no
support from the authoritative doctrines of this Court.
WHEREFORE, the decision of respondent Judge Jesus de Veyra,
holding that petitioners are Filipino citizens and that the
Deportation Board was without jurisdiction to take cognizance of
the deportation proceedings filed against them, is affirmed. No
costs.
G.R. No. 78596. July 13, 1989.*
IN THE MATTER OF THE PETITION FOR HABEAS CORPUS OF:
LUCIEN TRAN VAN NGHIA, petitioner, vs.HON. RAMON J.
LIWAG, Acting Commissioner of the Commission on
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Immigration and Deportation (CID) AND JOHN DOES, agents
of the CID, respondents.
Constitutional Law; Warrant of Arrest; Requirement of Probable
Cause; Deportation Proceedings; Due Process; It is essential that
there should be a specific charge against the alien to be deported
and arrested.The aforesaid argument raised by petitioner has
been resolved in the case of Harvey vs. Defensor-Santiago, G.R. No.
82544, June 28, 1988, where the Court, through Madame Justice
Melencio-Herrera, said: The requirement of probable cause to be
determined by a Judge, does not extend to deportation
proceedings. (Morano vs. Vivo, supra, citing Tiu Chun Hai vs.
Commissioner, infra). There need be no truncated recourse to
both judicial and administrative warrants in a single deportation
proceeding. The foregoing does not deviate from the ruling in Qua
Chee Gan vs. Deportation Board (G.R. No. 10280, September 30,
1963, 9 SCRA 27 [1963] reiterated in Vivo vs. Montesa, supra, that
under the express terms of our Constitution (the 1935
Constitution), it is therefore even doubtful whether the arrest of an
individual may be ordered by authority other than a judge if the
purpose is merely to determine the existence of a probable cause,
leading to an administrative investigation. What is essential is that
there should be a specific charge against the alien intended to be
arrested and deported, that a fair hearing be conducted (Section 37
[c]) with the assistance of counsel, if desired, and that the charge
be substantiated by competent evidence. x x x. The particular
circumstances obtaining in the case at bar have seriously placed on
doubt the legality and propriety of petitioners apprehension by
respondent Commissioner. For unlike in the Harvey case where the
warrantless capture of two suspected alien pedophiles was based
on probable cause ascertained only after close surveillance for a
three-month period during which their activities were monitored,
herein petitioner was invited by a combined team of CID agents
and police officers at his apartment unit on the strength of a
mission order issued by the Commissioner on Immigration based on
a sworn complaint of a single individual. The essential requisite of
probable cause was conspicuously absent.
Same; Same; Same; Same; Same; Moot and Academic; Habeas
Corpus; General Rule that the release of a detained person renders
the petition for habeas corpus moot and academic; Exceptions.
But even assuming that the arrest of petitioner was not legal at the
beginning, certain events have supervened to render his petition
moot and academic or to otherwise cure whatever defect there was
at the inception of his arrest. Firstly, petitioner is no longer under
confinement. On June 20, 1987, petitioner was released upon the
posting and approval of a personal bailbond on June 19, 1987 in the
amount of P20,000.00 during the pendency of the administrative
proceedings by the CID or until further orders of the Court. The
general rule in a number of cases is that the release, whether
permanent or temporary, of a detained person renders the petition
for habeas corpus moot and academic, unless there are restraints
attached to his release which precludes freedom of action, in which
case the Court can still inquire into the nature of his involuntary
restraint under the Villavicencio vs. Lukban rule. In Moncupa vs.
Enrile, supra, the Court granted the writ of habeas corpus inspite of
the fact that petitioner Moncupa had been temporarily released
from detention on orders of the defense minister. In the Moncupa
case, it was shown that attached to his discharge was the
prohibition to travel, to change his abode and to grant interviews to
members of the mass media without official permission. He was
also ordered to report regularly to the military authorities. The
Court subsequently nullified said conditions and ruled: Such
restrictions limit the freedom of movement of the petitioner. It is
not physical restraint alone which is inquired into by the writ of
habeas corpus. x x x. Where a person continues to be unlawfully
denied one or more of his constitutional freedoms, where there is
present a denial of due process, where the restraints are not merely
involuntary but appear to be unnecessary, and where a deprivation
of freedom originally valid has, in the light of subsequent
developments, become arbitrary, the person concerned or those
applying in his behalf may still avail themselves of the privilege of
the writ. Secondly, records show that formal deportation
proceedings have been initiated against petitioner before the Board
of Special Inquiry of the CID. The restraint (if any) against
petitioners person has therefore become legal. The writ of habeas
corpus has served its purpose.
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[No. 13283. January 23, 1918.]
CASIMIRO BAYANI, petitioner and appellant, vs. THE
INSULAR COLLECTOR OF CUSTOMS, respondent and
appellee.
1.ALIENS; ADMINISTRATIVE PROCEEDINGS; RIGHT TO A FULL, FREE
AND FAIR HEARING.While the hearings before the board of special
inquiry, of the department of customs, are summary, in that no
special pleadings, etc., are, required, they are nevertheless judicial
in character, and the persons whose rights are inquired into by it
are entitled to a full, free, and fair hearing just as in any other
cases where the rights of individuals are being determined. While
the decisions of the customs administrative officers are final upon
the question of the right of an alien to enter the territory of the
United States, unless there has been an abuse of the power and
discretion in them vested, the courts will not hesitate to review the
decision of such officers whenever it is alleged and proved that
they have abused the power and discretion conferred upon them,
or where they have acted in open violation of the law. The essential
thing in such investigations, as well as in all other judicial or quasi-
judicialproceedings, is that there shall have been an honest effort
to arrive at the truth by methods sufficiently fair and reasonable to
amount to due process of law.
2.ID.; ID.; RIGHT TO HAVE ATTORNEYS; RIGHT OF ATTORNEY TO
PRESENT QUESTIONS DIRECTLY TO THE WITNESS.Aliens seeking
admission into the territory of the United States have the right to
be represented by an attorney if they so desire. They have a right
to present witnesses in support of their request to enter. Their
attorney has the right to present whatsoever pertinent and material
questions which he may desire to such witnesses, as will
demonstrate or will tend to demonstrate the right to such alien to
enter the country. The burden of proving his right to enter the
territory of the United States is upon the immigrant who seeks that
privilege. To sustain that burden he has a right to call and present
witnesses. To that end either he or his attorney should be permitted
to ask such pertinent and material questions as will tend to support
his contention. A. denial of any of these rights is not authorized in
law, and amounts to an unfair and unjust hearing. It is the duty of
the board of special inquiry to make an effort to arrive at the truth
by hearing all of the witnesses and to permit them, without
intimidation, to state all of the facts, and to answer all of the
pertinent questions put to them, either by the attorney or by the
board.
Chas. E. Tenney for appellant.
Acting Attorney-General Paredes for appellee.
JOHNSON, J.:
It appears from the record that the appellant arrived at Manila, on
the 21st day of August, 1917, on the steamship Loongsang and
requested permission to enter the Philippine Islands upon the
ground that he was a citizen thereof, having been born in said
Islands, His right to enter was inquired into by a board of special
inquiry. At the conclusion of said inquiry his request to enter was
denied. An appeal was taken to the Collector of Customs and the
decision of the board of inquiry was taken by him confirmed.
Thereupon a writ of habeas corpus was petitioned for in the Court
of First Instance of Manila. At the conclusion of the hearing on said
petition the writ was denied and the present appeal was perfected.
The appellant now alleges that he has not been given a full, free,
and fair hearing before the board of special inquiry, and that the
order denying him the right to enter the Philippine Islands should
be set aside and that he should be granted a new trial on the
merits. The appellant now alleges that the record of the
proceedings before the board of special inquiry shows that the said
board had abused its authority in not giving him full, free, and fair
hearing; that it appears from the record that the said hearing was
in great part made up of leading and misleading questions and
untrue statements, calculated to confuse the witnesses and not
adapted to discover the real merits of the petitioner's rights; that
the board failed to present questions and refused to the attorney
for the appellant to present questions which would bring to light the
real, material, and important facts justifying his right to enter the
Philippine Islands; that the Court of first Instance failed to find from
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the record that the board of special inquiry had abused its
authority, power and discretion in refusing the appellant permission
to land in the Philippine Islands, and that the decision of said board
was arbitrary, frivolous and capricious and was not sustained by
the evidence.
In reply to said alleged errors the Attorney-General Quintin Paredes,
admits that appellant has not been accorded a free, full, and fair
hearing and recommended that he be given a new trial. The
Attorney-General in his brief said:
The issue raised by this appeal is whether the record shows abuse
of discretion and authority on the part of the board of special
inquiry which heard this case. Counsel for appellant directs
attention to some very illadvised action on the part of members of
the board in their examination of the witnesses in this case. The
misstatement of material facts to witnesses (rec., pp. 10 and 12)
and the barring of a witness before she had concluded her
testimony (rec., p. 12) unquestionably are serious irregularities.
And in the opinion of the undersigned, this petitioner was not
accorded such a hearing as the law contemplates and assured
immigrants. It is recommended that the record be remanded to the
immigration officials with instructions to grant this applicant a new
hearing.
Respectfully submitted.
While the hearings before the board of special inquiry are summary
in that no special pleadings, etc., are required, they are,
nevertheless, judicial in character, and the persons tried by such a
board are entitled to a full, free, and fair hearing just as in any
other cases where the rights of individuals are being inquired into.
Such individuals have the right to be represented by an attorney, if
they so desire. They have a right to present witnesses to support
their request to enter. Their attorney has a right to present
whatever pertinent questions he may desire to such witnesses, as
will demonstrate or will tend to show the right of the immigrant to
enter the country. (Edwards vs. McCoy, 22 Phil. Rep., 598; Ang Eng
Chong vs. Collector of Customs, 23 Phil. Rep., 614; Go Kiam vs.
Collector of Customs, R. G. No. 7099; 1 Loo Bun Hian vs. Collector
of Customs, R. G. No. 7074; 1 Lim Yiong vs. Collector of Customs,
36 Phil. Rep., 424; Ex parte Lam Pui, 217 Fed. Rep., 456; Jouras vs.
Allen, 222 Fed. Rep., 756; U. S. vs. Ruiz, 23 Fed. Rep., 431 [?]; Ex
parte Petkos, 212 Fed. Rep., 275; Ex parte Ung King Ieng, 213 Fed.
Rep., 119; Lim Ching vs. Collector of Customs, 33 Phil. Rep., 186; Ex
parte Gregory, 210 Fed. Rep., 680; Louie Dai vs. U. S., 238 Fed.
Rep., 68, 74; Ex parte Lee Dung Moo, 230 Fed. rep., 746; Ex parte
Tom Toy Tin, 230 Fed. Rep., 747; Ex parte Chin Loy You, 223 Fed.
Rep., 883; Ex parte Wong Foo, 230 Fed. Rep., 534.)
The decisions of the customs administrative officers are final in
cases like the present, unless there has been an abuse of the power
and discretion vested in them. The courts, however, do not hesitate
to review the decision of such administrative officers whenever it is
alleged and shown that they have grossly abused the power and
discretion conferred upon them, or where they acted in open
violation of the law. (Ko Poco vs. Mccoy, 10 Phil. Rep., 442; Chin Yow
vs. U. S., 208 U. S. 8, 11; U. S. vs. Ju Toy, 198 U. S., 253; Ex parte
Lung Foot, 174 Fed. Rep., 70; Lorenzo vs. McCoy, 15 Phil. Rep., 559;
Lim Yiong vs. Collector of Customs, 36 Phil. Rep., 424.)
An alien seeking to enter territory of the United States, even
though the hearing is summary, is entitled to a free, full, and fair
hearing before he is denied the right to enter. The right to a hearing
includes the right to have the evidence considered by the board. He
is not only entitled to have the evidence which he presents
considered, but he is entitled to present all of the evidence which
he has and which is germane to the question of his right to enter.
While the board of special inquiry is not technically a judicial body
and the procedure is not technically judicial, nor are the
proceedings defined by any particular rules or statutes,
nevertheless, the board is required, under the procedure which it
adopts, to give the immigrant or the alien an opportunity to show
by proof that his request should be granted. (Edwards vs. McCoy,
22 Phil. Rep., 598.)
It appears from the record that all of the witnesses presented by
the appellant were people of humble origin and very ignorant. They
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were not accustomed, perhaps, to scenes of judicial proceedings.
They were therefore, naturally, under the strain born of timidity and
known ignorance. For that reason they were easily excited and
intimidated. The board should have allayed their fears and put
them, as far as possible, at their ease, at least to the point of
indicating to them that they were under the protection, so long as
they obey the law, of judicial authority. This the board did not do.
Upon the contrary board, with the evident intent to confuse and to
unduly excite the witnesses, made statements to them which were
positively untrue and unsupported by any part of the record. And
not only that, but the board actually intimidated one important
witness, apparently without reason, by informing her that she could
give no further testimony in that case and that she was therefore
barred from testifying before it. The entire examination by the
record from the beginning to the end, of all of the witnesses, was
made in a spirit of hostility. For that reason the board was rendered
incapacitated to properly and judicially weigh and consider the
evidence impartially. Where the record itself discloses the fact that
the evidence is weighed in the spirit of hostility there cannot be
that impartial, free, full and fair hearing contemplated by the law.
(Ex parte Tom Toy Tin, 230 Fed. Rep., 747; Jouras vs. Allen, 222 Fed.
Rep., 756.)
It is the duty of the board to make an effort to arrive at the truth by
hearing all of the witnesses and to permit them, without
intimidation, to state all of the facts and to answer all of the
pertinent questions put to them either by their attorney or by the
board. (Ex parte Chin Loy You, 223 Fed. Rep., 833.)
The essential thing in investigations like the present as well as all
other judicial or quasi-judicial proceedings is that there shall have
been an honest effort to arrive at the truth by methods sufficiently
fair and reasonable to amount to due process of law.
The burden of proving his right to enter the territory of the United
States is upon the immigrant who seeks that privilege. To sustain
that burden he has a right to call and present witnesses. To that
end either he or his attorney should be permitted to ask such
pertinent and material questions as will tend to support his
contention. A denial of any of these rights is not authorized in law
and amounts to an unfair and unjust hearing. If witnesses are
presented by the board to dispute or to overcome the proof
adduced by the immigrant then, of course, the latter, either by
himself or by his attorney, has a perfect right to test the credibility
of such witnesses by a proper cross-examination. (Ex parte Ung
king Ieng, 213 Fed. Rep., 119.)
After a careful examination of the record we are persuaded that the
recommendation of the Attorney-General should be adopted. It is,
therefore, hereby ordered and decreed that the record be returned
to the court whence it came with directions that the judgment
appealed from be reversed and that an order be issued directing
and commanding the board of special inquiry to give to the
appellant a rehearing as speedily as the facts and circumstances
will permit, and without any findings as to costs. So ordered.
Arellano, C.J., Torres, Carson, Araullo, Street, and Avancea, JJ.,
concur.
G.R. No. 83882. January 24, 1989.*
IN RE PETITION FOR HABEAS CORPUS OF WILLIE YU, WILLIE
YU, petitioner, vs. MIRIAM DEFENSOR-SANTIAGO,
BIENVENIDO P. ALANO, JR., MAJOR PABALAN, DELEO
HERNANDEZ, BLODDY HERNANDEZ, BENNY REYES AND JUN
ESPIRITU SANTO, respondents.
Constitutional Law; Citizenship; Naturalization; Renunciation of
Citizenship; Petitioners act of applying for a Portuguese passport
despite his naturalization as a Philippine citizen, and his act of
declaring his nationality as Portuguese in commercial documents,
constitute an express renunciation of his Philippine citizenship
acquired through naturalization.Petitioners own compliance
reveals that he was originally issued a Portuguese passport in 1971,
valid for five (5) years and renewed for the same period upon
presentment before the proper Portuguese consular officer. Despite
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his naturalization as a Philippine citizen on 10 February 1978, on 21
July 1981, petitioner applied for and was issued Portuguese
Passport No. 35/81 serial N. 1517410 by the Consular Section of the
Portuguese Embassy in Tokyo. Said Consular Office certifies that his
Portuguese passport expired on 20 July 1986. While still a citizen of
the Philippine who had renounced, upon his naturalization,
absolutely and forever all allegiance and fidelity to any foreign
prince, potentate, state or sovereignty and pledged to maintain
true faith and allegiance to the Republic of the Philippines, he
declared his nationality as Portuguese in commercial documents he
signed, specifically, the Companies Registry of Tai Shun Estate Ltd.
filed in Hongkong sometime in April 1980. To the mind of the Court,
the foregoing acts considered together constitute an express
renunciation of petitioners Philippine citizenship acquired through
naturalization. In Board of Immigration Commissioners us. Go
Gallano, express renunciation was held to mean a renunciation that
is made known distinctly and explicitly and not left to inference or
implication. Petitioner, with full knowledge, and legal capacity, after
having renounced Portuguese citizenship upon naturalization as a
Philippine citizen resumed or reacquired his prior status as a
Portuguese citizen, applied for a renewal of his Portuguese passport
and represented himself as such in official documents even after he
had become a naturalized Philippine citizen. Such resumption or
reacquisition of Portuguese citizenship is grossly inconsistent with
his maintenance of Philippine citizenship.
Same; Same; Same; Same; Philippine citizenship is not a
commodity or ware to be displayed when required and suppressed
when convenient.Philippine citizenship, it must be stressed, is not
a commodity or ware to be displayed when required and
suppressed when convenient. This then resolves adversely to the
petitioner his motion for clarification and other motions mentioned
in the second paragraph, page 3 of this Decision.
FERNAN, C.J., dissenting:
Constitutional Law; Citizenship; Naturalization; Due Process; In a
deportation proceeding, when the alleged alien claims citizenship
and supports his claim by substantial evidence, his status must be
finally determined by a judicial as distinguished from an executive
tribunal.The observation of Mr. Justice Hugo E. Gutierrez, Jr. in his
dissenting opinion that "(c)onsidering the serious implications of
de-Filipinization, the correct procedures according to law must be
applied, is appropriate as it has been held that "(i)f, however, in a
deportation proceeding, the alleged alien claims citizenship and
supports the claim by substantial evidence, he is entitled to have
his status finally determined by a judicial, as distinguished from an
executive, tribunal (3 Am Jur 2d 949 citing United States ex rel.
Bilokumsky v. Tod, 263 US 149, 68 L ed 221, 44 S Ct 54; Ng Fung Ho
v. White, 259 US 276, 66 Led 938, 42 S Ct 492). By this, it means a
full blown trial under the more rigid rules of evidence prescribed in
court proceedings. And certainly, the review powers being
exercised by this Court in this case fall short of this requirement.
Said powers of review cannot be a substitute for the demands of
due process, particularly in the light of the well-recognized principle
that this Court is not a trier of facts.
Same; Same; Same; Same; Renunciation; Renunciation must be
shown by clear and express evidence and not left to inference or
implication.As adverted to earlier, I find the evidence on record
relied upon by the majority to be inadequate to support the
conclusion that petitioner has renounced his Filipino citizenship.
Renunciation must be shown by clear and express evidence and not
left in inference or implication.
Constitutional Law; Citizenship; Naturalization; Renunciation; The
determination that a person has ceased to be a Filipino should not
be left to summary proceedings.Considering the serious
implications of de-Filipinization, the correct procedures according to
law must be applied. If Mr. Yu is no longer a Filipino, by all means
this Court should not stand in the way of the respondent
commissioners efforts to deport him. But where a person pleads
with all his might that he has never formally renounced his
citizenship and that he might die if thrown out of the country, he
deserves at the very least a full trial where the reasons behind his
actions may be explored and all the facts fully ascertained. The
determination that a person (not necessarily Mr. Yu) has ceased to
be a Filipino is so momentous and far-reaching that it should not be
left to summary proceedings.
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Same; Same; Same; Same; Same; Mere use of a foreign passport
does not ipso facto show an express renunciation of Filipino
citizenship.I am not prepared to rule that the mere use of a
foreign passport is ipso facto express renunciation of Filipino
citizenship. A Filipino may get a foreign passport for convenience,
employment, or avoidance of discriminatory visa requirements but
he remains at heart a Filipino. Or he may so because he wants to
give up his Philippine citizenship. Whatever the reason, it must be
ascertained in a court of law where a full trial is conducted instead
of an administrative determination of a most summary nature.
CRUZ, J., concurring:
Constitutional Law; Citizenship; Naturalization; Petitioner failed to
overcome the presumption that he had forfeited his status as a
naturalized Filipino when he obtained a Portuguese passport.I
concur in the result because I believe the petitioner has failed to
overcome the presumption that he has forfeited his status as a
naturalized Filipino by his obtention of a Portuguese passport.
Passports are generally issued by a state only to its nationals. The
petitioner has not shown that he comes under the exception and
was granted the Portuguese passport despite his Philippine
citizenship.
Same; Same; Same; Same; Express renunciation of citizenship is
an unequivocal and deliberate act with full awareness of its
consequences.Regretfully, I cannot agree with the finding that
the petitioner has expressly renounced his Philippine citizenship.
The evidence on this point is in my view rather meager. Express
renunciation of citizenship as a mode of losing citizenship under
Com. Act No. 63 is an unequivocal and deliberate act with full
awareness of its significance and consequences. I do not think the
commercial documents he signed suggest caterogorical
disclaimer.
CORTS, J., dissenting:
Constitutional Law; Citizenship; Administrative Law; Deportation
Proceedings; Petitioners claim of Filipino citizenship did not ipso
facto deprive the CID of jurisdiction over his case.I agree with the
majority in the view that a claim of Filipino citizenship in
deportation proceedings does not ipso facto deprive the
Commission on Immigration and Deportation (CID) of jurisdiction
over a case, its findings being subject to judicial review.
Same; Same; Naturalization; Renunciation of Citizenship; The
evidence presented by the CID is inadequate to create even a
prima facie case of petitioners renunciation of citizenship.
However, I am unable to go along with the conclusion that in this
case the loss of petitioners Filipino citizenship has been
established. The evidence on record, consisting of the photocopy of
a memorandum from the Portuguese Consular Office that petitioner
applied for and was issued a Portuguese passport in 1981 and that
it expired in 1986 and photocopies of commercial papers
manifesting petitioners nationality as Portuguese, without
authentication by the appropriate Philippine Consul, to my mind, do
not constitute substantial evidence that under the law petitioner
has lost his Filipino citizenship by express renunciation. I find the
CIDs evidence inadequate to create even a prima facie case of
such renunciation.
Pelaez, Adriano and Gregorio and Bonifacio A. Alentajan for
petitioner.
Chavez, Hechanova & Lim Law Offices collaborating counsel for
petitioner.
Augusto Jose y. Arreza for respondents.
PADILLA, J.:
The present controversy originated with a petition for habeas
corpus filed with the Court on 4 July 1988 seeking the release from
detention of herein petitioner. 1 After manifestation and motion of
the Solicitor General of his decision to refrain from filing a return of
the writ on behalf of the CID, respondent Commissioner thru
counsel filed the return. 2 Counsel for the parties were heard in oral
argument on 20 July 1988. The parties were allowed to submit
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marked exhibits, and to file memoranda. 3 An internal resolution of
7 November 1988 referred the case to the Court en banc. In its 10
November 1988 resolution, denying the petition for habeas corpus,
the Court disposed of the pending issues of (1) jurisdiction of the
CID over a naturalized Filipino citizen and (2) validity of warrantless
arrest and detention of the same person.
Petitioner filed a motion for reconsideration with prayer for
restraining order dated 24 November 1988. 4 On 29 November
1988, the Court resolved to deny with finality the aforesaid motion
for reconsideration, and further resolved to deny the urgent motion
for issuance of a restraining order dated 28 November 1988. 5
Undaunted, petitioner filed a motion for clarification with prayer for
restraining order on 5 December 1988.
Acting on said motion, a temporary restraining order was issued by
the Court on 7 December 1988. 6 Respondent Commissioner filed a
motion to lift TRO on 13 December 1988, the basis of which is a
summary judgment of deportation against Yu issued by the CID
Board of Commissioners on 2 December 1988. 7 Petitioner also
filed a motion to set case for oral argument on 8 December 1988.
In the meantime, an urgent motion for release from arbitrary
detention 8 was filed by petitioner on 13 December 1988. A
memorandum in furtherance of said motion for release dated 14
December 1988 was filed on 15 December 1988 together with a
vigorous opposition to the lifting of the TRO.
The lifting of the Temporary Restraining Order issued by the Court
on 7 December 1988 is urgently sought by respondent
Commissioner who was ordered to cease and desist from
immediately deporting petitioner Yu pending the conclusion of
hearings before the Board of Special Inquiry, CID. To finally dispose
of the case, the Court will likewise rule on petitioner's motion for
clarification with prayer for restraining order dated 5 December
1988, 9 urgent motion for release from arbitrary detention dated 13
December 1988, 10 the memorandum in furtherance of said motion
for release dated 14 December 1988, 11 motion to set case for oral
argument dated 8 December 1988. 12
Acting on the motion to lift the temporary restraining order (issued
on 7 December 1988) dated 9 December 1988, 13 and the vigorous
opposition to lift restraining order dated 15 December 1988, 14 the
Court resolved to give petitioner Yu a non-extendible period of
three (3) days from notice within which to explain and prove why
he should still be considered a citizen of the Philippines despite his
acquisition and use of a Portuguese passport. 15
Petitioner filed his compliance with the resolution of 15 December
1988 on 20 December 1988 16 followed by an earnest request for
temporary release on 22 December 1988. Respondent filed on 2
January 1989 her comment reiterating her previous motion to lift
temporary restraining order. Petitioner filed a reply thereto on 6
January 1989.
Petitioner's own compliance reveals that he was originally issued a
Portuguese passport in 1971, 17 valid for five (5) years and
renewed for the same period upon presentment before the proper
Portuguese consular officer. Despite his naturalization as a
Philippine citizen on 10 February 1978, on 21 July 1981, petitioner
applied for and was issued Portuguese Passport No. 35/81 serial N.
1517410 by the Consular Section of the Portuguese Embassy in
Tokyo. Said Consular Office certifies that his Portuguese passport
expired on 20 July 1986. 18 While still a citizen of the Philippines
who had renounced, upon his naturalization, "absolutely and
forever all allegiance and fidelity to any foreign prince, potentate,
state or sovereignty" and pledged to "maintain true faith and
allegiance to the Republic of the Philippines," 19 he declared his
nationality as Portuguese in commercial documents he signed,
specifically, the Companies registry of Tai Shun Estate Ltd. 20 filed
in Hongkong sometime in April 1980.
To the mind of the Court, the foregoing acts considered together
constitute an express renunciation of petitioner's Philippine
citizenship acquired through naturalization. In Board of Immigration
Commissioners us, Go Gallano, 21 express renunciation was held to
mean a renunciation that is made known distinctly and explicitly
and not left to inference or implication. Petitioner, with full
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knowledge, and legal capacity, after having renounced Portuguese
citizenship upon naturalization as a Philippine citizen 22 resumed or
reacquired his prior status as a Portuguese citizen, applied for a
renewal of his Portuguese passport 23 and represented himself as
such in official documents even after he had become a naturalized
Philippine citizen. Such resumption or reacquisition of Portuguese
citizenship is grossly inconsistent with his maintenance of
Philippine citizenship.
This Court issued the aforementioned TRO pending hearings with
the Board of Special Inquiry, CID. However, pleadings submitted
before this Court after the issuance of said TRO have unequivocally
shown that petitioner has expressly renounced his Philippine
citizenship. The material facts are not only established by the
pleadings they are not disputed by petitioner. A rehearing on this
point with the CID would be unnecessary and superfluous. Denial, if
any, of due process was obviated when petitioner was given by the
Court the opportunity to show proof of continued Philippine
citizenship, but he has failed.
While normally the question of whether or not a person has
renounced his Philippine citizenship should be heard before a trial
court of law in adversary proceedings, this has become
unnecessary as this Court, no less, upon the insistence of
petitioner, had to look into the facts and satisfy itself on whether or
not petitioner's claim to continued Philippine citizenship is
meritorious.
Philippine citizenship, it must be stressed, is not a commodity or
were to be displayed when required and suppressed when
convenient. This then resolves adverse to the petitioner his motion
for clarification and other motions mentioned in the second
paragraph, page 3 of this Decision.
WHEREFORE, premises considered, petitioner's motion for release
from detention is DENIED. Respondent's motion to lift the
temporary restraining order is GRANTED. This Decision is
immediately executory.
SO ORDERED.
Melencio-Herrera, Paras, Feliciano, Gancayco, Bidin, Sarmiento,
Grio-Aquino, Medialdea and Regalado, JJ., concur.
Separate Opinions
FERNAN, C.J., dissenting
I dissent. The treatment given by the majority to the petition at bar
does not meet the traditional standards of fairness envisioned in
the due process clause. Petitioner herein is being effectively
deprived of his Filipino citizenship through a summary procedure
and upon pieces of documentary evidence that, to my mind, are
not sufficiently substantial and probative for the purpose and
conclusion they were offered.
The observation of Mr. Justice Hugo E. Gutierrez, Jr. in his dissenting
opinion that "(c)onsidering the serious implications of de-
Filipinization, the correct procedures according to law must be
applied," is appropriate as it has been held that "(i)f, however, in a
deportation proceeding, the alleged alien claims citizenship and
supports the claim by substantial evidence, he is entitled to have
his status finally determined by a judicial, as distinguished from an
executive, tribunal" (3 Am Jur 2d 949 citing United States ex rel.
Bilokumsky v. Tod, 263 US 149, 68 Led 221, 44 S Ct 54; Ng Fung Ho
v. White, 259 US 276, 66 Led 938, 42 S Ct 492). By this, it means a
full blown trial under the more rigid rules of evidence prescribed in
court proceedings. And certainly, the review powers being
exercised by this Court in this case fall short of this requirement.
Said powers of review cannot be a substitute for the demands of
due process, particularly in the light of the well-recognized principle
that this Court is not a trier of facts.
As adverted to earlier, I find the evidence on record relied upon by
the majority to be inadequate to support the conclusion that
petitioner has renounced his Filipino citizenship, Renunciation must
be shown by clear and express evidence and not left to inference or
implication.
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GUTIERREZ, JR., J., dissenting
I disagree with the summary procedure employed in this case to
divest a Filipino of his citizenship.
Judging from the records available to us, it appears that Mr. Willie
Yu is far from being the desirable kind of Filipino we would
encourage to stay with us. But precisely for this reason, I believe
that a petition for denaturalization should have been filed and
prosecuted in the proper trial court instead of the shortcut methods
we are sustaining in the majority opinion. I must emphasize that
the Bill of Rights, its due process clause, and other restrictions on
the untrammeled exercise of government power find their fullest
expression when invoked by non-conforming, rebellious, or
undesirable characters.
Considering the serious implications of de-Filipinization, the correct
procedures according to law must be applied. If Mr. Yu is no longer
a Filipino, by all means this Court should not stand in the way of the
respondent Commissioner's efforts to deport him. But where a
person pleads with all his might that he has never formally
renounced his citizenship and that he might die if thrown out of the
country, he deserves at the very least a full trial where the reason
behind his actions may be explored and all the facts fully
ascertained. The determination that a person (not necessarily Mr.
Yu) has ceased to be a Filipino is so momentous and far-reaching
that it should not be left to summary proceedings.
I find it a dangerous precedent if administrative official on such
informal evidence as that presented in this case are allowed to rule
that a Filipino has "renounced" his citizenship and has, therefore,
become stateless or a citizen of another country (assuming that
other country does not reject him because he formally renounced
citizenship therein when he became a Filipino) and to immediately
throw him out of the Philippines.
I am not prepared to rule that the mere use of a foreign passport is
ipso facto express renunciation of Filipino citizenship. A Filipino may
get a foreign passport for convenience, employment, or avoidance
of discriminatory visa requirements but he remains at heart a
Filipino. Or he may do so because he wants to give up his Philippine
citizenship. Whatever the reason, it must be ascertained in a court
of law where a full trial is conducted instead of an administrative
determination of a most summary nature.
There are allegedly high government officials who have applied for
and been given alien certificates of registration by our Commission
on Immigration and Deportation or who have in the past, performed
acts even more indicative of "express renunciation" than the mere
use of a passport or the signing of a commercial document where a
different citizenship has been typed or entered. Are we ready now
to authorize the respondent Commissioner to de-Filipinization
them? Can they be immediately deported for lack of lawful
documents to stay here as resident aliens? Can a summary
administrative determination override the voice of hundreds of
thousands or even millions of voters who put them in public office?
It is likewise not the function of this Court to be a trier of facts and
to arrive at conclusions in the first instance in citizenship cases.
The moral character of Mr. Yu is beside the point. Like any other
Filipino being denaturalized or otherwise deprived of citizenship, he
deserves his full day in court. I . therefore, regretfully dissent on
grounds of due process.
CRUZ, J., concurring
I concur in the result because I believe the petitioner has failed to
overcome the presumption that he has forfeited his status as a
naturalized Filipino by his obtention of a Portuguese passport.
Passports are generally issued by a state only to its nationals. The
petitioner has not shown that he comes under the exception and
was granted the Portuguese passport despite his Philippine
citizenship.
Regretfully, I cannot agree with the finding that the petitioner has
expressly renounced his Philippine citizenship. The evidence on this
point is in my view rather meager. Express renunciation of
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citizenship as a mode of losing citizenship under Com. Act No. 63 is
an unequivocal and deliberate act with full awareness of its
significance and consequences. I do not think the "commercial
documents he signed" suggest such categorical disclaimer.
CORTES, J., dissenting
I agree with the majority in the view that a claim of Filipino
citizenship in deportation proceedings does not ipso facto deprive
the Commission on Immigration and Deportation (CID) of
jurisdiction over a case, its findings being subject to judicial review.
However, I am unable to go along with the conclusion that in this
case the loss of petitioner's Filipino citizenship has been
established. The evidence on record, consisting of the photocopy of
a memorandum from the Portuguese Consular Office that petitioner
applied for and was issued a Portuguese passport in 1981 and that
it expired in 1986 and photocopies of commercial papers
manifesting petitioner's nationality as Portuguese, without
authentication by the appropriate Philippine Consul, to my mind, do
not constitute substantial evidence that under the law petitioner
has lost his Filipino citizenship by express renunciation.
I find the CIDs evidence inadequate to create even a prima facie
case of such renunciation.
Separate Opinions
FERNAN, C.J., dissenting
I dissent. The treatment given by the majority to the petition at bar
does not meet the traditional standards of fairness envisioned in
the due process clause. Petitioner herein is being effectively
deprived of his Filipino citizenship through a summary procedure
and upon pieces of documentary evidence that, to my mind, are
not sufficiently substantial and probative for the purpose and
conclusion they were offered.
The observation of Mr. Justice Hugo E. Gutierrez, Jr. in his dissenting
opinion that "(c)onsidering the serious implications of de-
Filipinization, the correct procedures according to law must be
applied," is appropriate as it has been held that "(i)f, however, in a
deportation proceeding, the alleged alien claims citizenship and
supports the claim by substantial evidence, he is entitled to have
his status finally determined by a judicial, as distinguished from an
executive, tribunal" (3 Am Jur 2d 949 citing United States ex rel.
Bilokumsky v. Tod, 263 US 149, 68 Led 221, 44 S Ct 54; Ng Fung Ho
v. White, 259 US 276, 66 Led 938, 42 S Ct 492). By this, it means a
full blown trial under the more rigid rules of evidence prescribed in
court proceedings. And certainly, the review powers being
exercised by this Court in this case fall short of this requirement.
Said powers of review cannot be a substitute for the demands of
due process, particularly in the light of the well-recognized principle
that this Court is not a trier of facts.
As adverted to earlier, I find the evidence on record relied upon by
the majority to be inadequate to support the conclusion that
petitioner has renounced his Filipino citizenship, Renunciation must
be shown by clear and express evidence and not left to inference or
implication. GUTIERREZ, JR., J., dissenting
I disagree with the summary procedure employed in this case to
divest a Filipino of his citizenship.
Judging from the records available to us, it appears that Mr. Willie
Yu is far from being the desirable kind of Filipino we would
encourage to stay with us. But precisely for this reason, I believe
that a petition for denaturalization should have been filed and
prosecuted in the proper trial court instead of the shortcut methods
we are sustaining in the majority opinion. I must emphasize that
the Bill of Rights, its due process clause, and other restrictions on
the untrammeled exercise of government power find their fullest
expression when invoked by non-conforming, rebellious, or
undesirable characters.
Considering the serious implications of de-Filipinization, the correct
procedures according to law must be applied. If Mr. Yu is no longer
a Filipino, by all means this Court should not stand in the way of the
respondent Commissioner's efforts to deport him. But where a
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Admin Law -DECLARATORY RELIEF QUO WARRANTO
person pleads with all his might that he has never formally
renounced his citizenship and that he might die if throw out of the
country, he deserves at the very least a full trial where the reason
behind his actions may be explored and all the facts fully
ascertained. The determination that a person (not necessarily Mr.
Yu) has ceased to be a Filipino is so momentous and far-reaching
that it should not be left to summary proceedings.
I find it a dangerous precedent if administrative official on such
informal evidence as that presented in this case are allowed to rule
that a Filipino has "renounced" his citizenship and has, therefore,
become stateless or a citizen of another country (assuming that
other country does not reject him because he formally renounced
citizenship therein when he became a Filipino) and to immediately
throw him out of the Philippines.
I am not prepared to rule that the mere use of a foreign passport is
ipso facto express renunciation of Filipino citizenship. A Filipino may
get a foreign passport for convenience, employment, or avoidance
of discriminatory visa requirements but he remains at heart a
Filipino. Or he may do so because he wants to give up his Philippine
citizenship. Whatever the reason, it must be ascertained in a court
of law where a full trial is conducted instead of an administrative
determination of a most summary nature.
There are allegedly high government officials who have applied for
and been given alien certificates of registration by our Commission
on Immigration and Deportation or who have in the past, performed
acts even more indicative of "express renunciation" than the mere
use of a passport or the signing of a commercial document where a
different citizenship has been typed or entered. Are we ready now
to authorize the respondent Commissioner to de-Filipinization
them? Can they be immediately deported for lack of lawful
documents to stay here as resident aliens? Can a summary
administrative determination override the voice of hundreds of
thousands or even millions of voters who put them in public office?
It is likewise not the function of this Court to be a trier of facts and
to arrive at conclusions in the first instance in citizenship cases.
The moral character of Mr. Yu is beside the point. Like any other
Filipino being denaturalized or otherwise deprived of citizenship, he
deserves his full day in court. I . therefore, regretfully dissent on
grounds of due process.
CRUZ, J., concurring
I concur in the result because I believe the petitioner has failed to
overcome the presumption that he has forfeited his status as a
naturalized Filipino by his obtention of a Portuguese passport.
Passports are generally issued by a state only to its nationals. The
petitioner has not shown that he comes under the exception and
was granted the Portuguese passport despite his Philippine
citizenship.
Regretfully, I cannot agree with the finding that the petitioner has
expressly renounced his Philippine citizenship. The evidence on this
point is in my view rather meager. Express renunciation of
citizenship as a mode of losing citizenship under Com. Act No. 63 is
an unequivocal and deliberate act with full awareness of its
significance and consequences. I do not think the "commercial
documents he signed" suggest such categorical disclaimer.
CORTES, J., dissenting
I agree with the majority in the view that a claim of Filipino
citizenship in deportation proceedings does not ipso facto deprive
the Commission on Immigration and Deportation (CID) of
jurisdiction over a case, its findings being subject to judicial review.
However, I am unable to go along with the conclusion that in this
case the loss of petitioner's Filipino citizenship has been
established. The evidence on record, consisting of the photocopy of
a memorandum from the Portuguese Consular Office that petitioner
applied for and was issued a Portuguese passport in 1981 and that
it expired in 1986 and photocopies of commercial papers
manifesting petitioner's nationality as Portuguese, without
authentication by the appropriate Philippine Consul, to my mind, do
not constitute substantial evidence that under the law petitioner
has lost his Filipino citizenship by express renunciation.
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I find the CIDs evidence inadequate to create even a prima facie
case of such renunciation.
WRIT OF AMPARO / WRIT OF HABEAS DATA
A.M. No. 07-9-12-SC
(25 September 2007)
THE RULE ON THE WRIT OF AMPARO
SECTION 1. Petition. The petition for a writ of amparo is a
remedy available to any person whose right to life, liberty and
security is violated or threatened with violation by an unlawful act
or omission of a public official or employee, or of a private
individual or entity.
The writ shall cover extralegal killings and enforced disappearances
or threats thereof.
SEC. 2. Who May File. The petition may be filed by the
aggrieved party or by any qualified person or entity in the following
order:
a. Any member of the immediate family, namely: the spouse,
children and parents of the aggrieved party;
b. Any ascendant, descendant or collateral relative of the
aggrieved party within the fourth civil degree of
consanguinity or affinity, in default of those mentioned in
the preceding paragraph; or
c. Any concerned citizen, organization, association or
institution, if there is no known member of the immediate
family or relative of the aggrieved party.
The filing of a petition by the aggrieved party suspends the right of
all other authorized parties to file similar petitions. Likewise, the
filing of the petition by an authorized party on behalf of the
aggrieved party suspends the right of all others, observing the
order established herein.
SEC. 3. Where to File. The petition may be filed on any day and
at any time with the Regional Trial Court of the place where the
threat, act or omission was committed or any of its elements
occurred, or with the Sandiganbayan, the Court of Appeals, the
Supreme Court, or any justice of such courts. The writ shall be
enforceable anywhere in the Philippines.
When issued by a Regional Trial Court or any judge thereof, the writ
shall be returnable before such court or judge.
When issued by the Sandiganbayan or the Court of Appeals or any
of their justices, it may be returnable before such court or any
justice thereof, or to any Regional Trial Court of the place where the
threat, act or omission was committed or any of its elements
occurred.
When issued by the Supreme Court or any of its justices, it may be
returnable before such Court or any justice thereof, or before the
Sandiganbayan or the Court of Appeals or any of their justices, or
to any Regional Trial Court of the place where the threat, act or
omission was committed or any of its elements occurred.
SEC. 4. No Docket Fees. The petitioner shall be exempted from
the payment of the docket and other lawful fees when filing the
petition. The court, justice or judge shall docket the petition and act
upon it immediately.
SEC. 5. Contents of Petition. The petition shall be signed and
verified and shall allege the following:
a. The personal circumstances of the petitioner;
b. The name and personal circumstances of the respondent
responsible for the threat, act or omission, or, if the name is
unknown or uncertain, the respondent may be described by
an assumed appellation;
c. The right to life, liberty and security of the aggrieved party
violated or threatened with violation by an unlawful act or
omission of the respondent, and how such threat or violation
is committed with the attendant circumstances detailed in
supporting affidavits;
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d. The investigation conducted, if any, specifying the names,
personal circumstances, and addresses of the investigating
authority or individuals, as well as the manner and conduct
of the investigation, together with any report;
e. The actions and recourses taken by the petitioner to
determine the fate or whereabouts of the aggrieved party
and the identity of the person responsible for the threat, act
or omission; and
f. The relief prayed for.
The petition may include a general prayer for other just and
equitable reliefs.
SEC. 6. Issuance of the Writ. Upon the filing of the petition, the
court, justice or judge shall immediately order the issuance of the
writ if on its face it ought to issue. The clerk of court shall issue the
writ under the seal of the court; or in case of urgent necessity, the
justice or the judge may issue the writ under his or her own hand,
and may deputize any officer or person to serve it.
The writ shall also set the date and time for summary hearing of
the petition which shall not be later than seven (7) days from the
date of its issuance.
SEC. 7. Penalty for Refusing to Issue or Serve the Writ. A
clerk of court who refuses to issue the writ after its allowance, or a
deputized person who refuses to serve the same, shall be punished
by the court, justice or judge for contempt without prejudice to
other disciplinary actions.
SEC. 8. How the Writ is Served. The writ shall be served upon
the respondent by a judicial officer or by a person deputized by the
court, justice or judge who shall retain a copy on which to make a
return of service. In case the writ cannot be served personally on
the respondent, the rules on substituted service shall apply.
SEC. 9. Return; Contents. Within seventy-two (72) hours after
service of the writ, the respondent shall file a verified written return
together with supporting affidavits which shall, among other things,
contain the following:
a. The lawful defenses to show that the respondent did not
violate or threaten with violation the right to life, liberty and
security of the aggrieved party, through any act or omission;
b. The steps or actions taken by the respondent to determine
the fate or whereabouts of the aggrieved party and the
person or persons responsible for the threat, act or
omission;
c. All relevant information in the possession of the respondent
pertaining to the threat, act or omission against the
aggrieved party; and
d. If the respondent is a public official or employee, the return
shall further state the actions that have been or will still be
taken:
i. to verify the identity of the aggrieved party;
ii. to recover and preserve evidence related to the death or
disappearance of the person identified in the petition which
may aid in the prosecution of the person or persons
responsible;
iii. to identify witnesses and obtain statements from them
concerning the death or disappearance;
iv. to determine the cause, manner, location and time of death
or disappearance as well as any pattern or practice that
may have brought about the death or disappearance;
v. to identify and apprehend the person or persons involved in
the death or disappearance; and
vi. to bring the suspected offenders before a competent court.
The return shall also state other matters relevant to the
investigation, its resolution and the prosecution of the case.
A general denial of the allegations in the petition shall not be
allowed.
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SEC. 10. Defenses not Pleaded Deemed Waived. All
defenses shall be raised in the return, otherwise, they shall be
deemed waived.
SEC. 11. Prohibited Pleadings and Motions. The following
pleadings and motions are prohibited:
a. Motion to dismiss;
b. Motion for extension of time to file return, opposition,
affidavit, position paper and other pleadings;
c. Dilatory motion for postponement;
d. Motion for a bill of particulars;
e. Counterclaim or cross-claim;
f. Third-party complaint;
g. Reply;
h. Motion to declare respondent in default;
i. Intervention;
j. Memorandum;
k. Motion for reconsideration of interlocutory orders or interim
relief orders; and
l. Petition for certiorari, mandamus or prohibition against any
interlocutory order.
SEC. 12. Effect of Failure to File Return. In case the
respondent fails to file a return, the court, justice or judge shall
proceed to hear the petition ex parte.
SEC. 13. Summary Hearing. The hearing on the petition shall
be summary. However, the court, justice or judge may call for a
preliminary conference to simplify the issues and determine the
possibility of obtaining stipulations and admissions from the
parties.
The hearing shall be from day to day until completed and given the
same priority as petitions for habeas corpus.
SEC. 14. Interim Reliefs. Upon filing of the petition or at
anytime before final judgment, the court, justice or judge may
grant any of the following reliefs:
(a) Temporary Protection Order. The court, justice or judge, upon
motion or motu proprio, may order that the petitioner or the
aggrieved party and any member of the immediate family be
protected in a government agency or by an accredited person or
private institution capable of keeping and securing their safety. If
the petitioner is an organization, association or institution referred
to in Section 3(c) of this Rule, the protection may be extended to
the officers involved.
The Supreme Court shall accredit the persons and private
institutions that shall extend temporary protection to the petitioner
or the aggrieved party and any member of the immediate family, in
accordance with guidelines which it shall issue.
The accredited persons and private institutions shall comply with
the rules and conditions that may be imposed by the court, justice
or judge.
(b) Inspection Order. The court, justice or judge, upon verified
motion and after due hearing, may order any person in possession
or control of a designated land or other property, to permit entry for
the purpose of inspecting, measuring, surveying, or photographing
the property or any relevant object or operation thereon.
The motion shall state in detail the place or places to be inspected.
It shall be supported by affidavits or testimonies of witnesses
having personal knowledge of the enforced disappearance or
whereabouts of the aggrieved party.
If the motion is opposed on the ground of national security or of the
privileged nature of the information, the court, justice or judge may
conduct a hearing in chambers to determine the merit of the
opposition.
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The movant must show that the inspection order is necessary to
establish the right of the aggrieved party alleged to be threatened
or violated.
The inspection order shall specify the person or persons authorized
to make the inspection and the date, time, place and manner of
making the inspection and may prescribe other conditions to
protect the constitutional rights of all parties. The order shall expire
five (5) days after the date of its issuance, unless extended for
justifiable reasons.
(c) Production Order. The court, justice or judge, upon verified
motion and after due hearing, may order any person in possession,
custody or control of any designated documents, papers, books,
accounts, letters, photographs, objects or tangible things, or
objects in digitized or electronic form, which constitute or contain
evidence relevant to the petition or the return, to produce and
permit their inspection, copying or photographing by or on behalf of
the movant.
The motion may be opposed on the ground of national security or
of the privileged nature of the information, in which case the court,
justice or judge may conduct a hearing in chambers to determine
the merit of the opposition.
The court, justice or judge shall prescribe other conditions to
protect the constitutional rights of all the parties.
(d) Witness Protection Order. The court, justice or judge, upon
motion or motu proprio, may refer the witnesses to the Department
of Justice for admission to the Witness Protection, Security and
Benefit Program, pursuant to Republic Act No. 6981.
The court, justice or judge may also refer the witnesses to other
government agencies, or to accredited persons or private
institutions capable of keeping and securing their safety.
SEC. 15. Availability of Interim Reliefs to Respondent. Upon
verified motion of the respondent and after due hearing, the court,
justice or judge may issue an inspection order or production order
under paragraphs (b) and (c) of the preceding section.
A motion for inspection order under this section shall be supported
by affidavits or testimonies of witnesses having personal
knowledge of the defenses of the respondent.
SEC. 16. Contempt. The court, justice or judge may order the
respondent who refuses to make a return, or who makes a false
return, or any person who otherwise disobeys or resists a lawful
process or order of the court to be punished for contempt. The
contemnor may be imprisoned or imposed a fine.
SEC. 17. Burden of Proof and Standard of Diligence
Required. The parties shall establish their claims by substantial
evidence.
The respondent who is a private individual or entity must prove
that ordinary diligence as required by applicable laws, rules and
regulations was observed in the performance of duty.
The respondent who is a public official or employee must prove that
extraordinary diligence as required by applicable laws, rules and
regulations was observed in the performance of duty.
The respondent public official or employee cannot invoke the
presumption that official duty has been regularly performed to
evade responsibility or liability.
SEC. 18. Judgment. The court shall render judgment within ten
(10) days from the time the petition is submitted for decision. If the
allegations in the petition are proven by substantial evidence, the
court shall grant the privilege of the writ and such reliefs as may be
proper and appropriate; otherwise, the privilege shall be denied.
SEC. 19. Appeal. Any party may appeal from the final judgment
or order to the Supreme Court under Rule 45. The appeal may raise
questions of fact or law or both.
The period of appeal shall be five (5) working days from the date of
notice of the adverse judgment.
The appeal shall be given the same priority as in habeas corpus
cases.
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SEC. 20. Archiving and Revival of Cases. The court shall not
dismiss the petition, but shall archive it, if upon its determination it
cannot proceed for a valid cause such as the failure of petitioner or
witnesses to appear due to threats on their lives.
A periodic review of the archived cases shall be made by the
amparo court that shall, motu proprio or upon motion by any party,
order their revival when ready for further proceedings. The petition
shall be dismissed with prejudice upon failure to prosecute the case
after the lapse of two (2) years from notice to the petitioner of the
order archiving the case.
The clerks of court shall submit to the Office of the Court
Administrator a consolidated list of archived cases under this Rule
not later than the first week of January of every year.
SEC. 21. Institution of Separate Actions. This Rule shall not
preclude the filing of separate criminal, civil or administrative
actions.
SEC. 22. Effect of Filing of a Criminal Action. When a
criminal action has been commenced, no separate petition for the
writ shall be filed. The reliefs under the writ shall be available by
motion in the criminal case.
The procedure under this Rule shall govern the disposition of the
reliefs available under the writ of amparo.
SEC. 25. Suppletory Application of the Rules of Court. The
Rules of Court shall apply suppletorily insofar as it is not
inconsistent with this Rule.
SEC. 26. Applicability to Pending Cases. This Rule shall
govern cases involving extralegal killings and enforced
disappearances or threats thereof pending in the trial and appellate
courts.
SEC. 27. Effectivity. This Rule shall take effect on October 24,
2007, following its publication in three (3) newspapers of general
circulation.
A. M. No. 08-1-16-SC January 22, 2008
THE RULE ON THE WRIT OF HABEAS DATA
RESOLUTION
Acting on the recommendation of the Chairperson of the
Committee on Revision of the Rules of Court submitting for this
Courts consideration and approval the proposed Rule on the Writ of
Habeas Data, the Court Resolved to APPROVE the same.
This Resolution shall take effect on February 2, 2008, following its
publication in three (3) newspapers of general circulation.
January 22, 2008.

SEC. 23. Consolidation. When a criminal action is filed (Sgd.)

subsequent to the filing of a petition for the writ, the latter shall be
consolidated with the criminal action. REYNATO S. PUNO
Chief Justice
When a criminal action and a separate civil action are filed
subsequent to a petition for a writ of amparo, the latter shall be
consolidated with the criminal action. (Sgd.) (Sgd.)

LEONARDO A. QUISUMBING
After consolidation, the procedure under this Rule shall continue to CONSUELO YNARES-SANTIAGO
apply to the disposition of the reliefs in the petition. Associate Justice Associate Justice

SEC. 24. Substantive Rights. This Rule shall not diminish,

(Sgd.) (Sgd.)
increase or modify substantive rights recognized and protected by
the Constitution.
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a public official or employee, or of a private individual or entity

NGELINA SANDOVAL-GUTIERREZ ANTONIO T. CARPIO
engaged in the gathering, collecting or storing of data or
Associate Justice Associate Justice
information regarding the person, family, home and
correspondence of the aggrieved party.
gd.) (Sgd.)
SEC. 2. Who May File. - Any aggrieved party may file a petition
A. ALICIA AUSTRIA-MARTINEZ RENATO C. CORONA for the writ of habeas data. However, in cases of extralegal killings
Associate Justice Associate Justice and enforced disappearances, the petition may be filed by:

(a) Any member of the immediate family of the aggrieved party,

gd.) (Sgd.) namely: the spouse, children and parents; or
ONCHITA CARPIO MORALES ADOLFO S. AZCUNA (b) Any ascendant, descendant or collateral relative of the
Associate Justice Associate Justice aggrieved party within the fourth civil degree of consanguinity or
affinity, in default of those mentioned in the preceding paragraph;
gd.) (ON OFFICIAL LEAVE) or

ANTE O. TINGA MINITA V. CHICO-NAZARIO SEC. 3. Where to File. - The petition may be filed with the
Associate Justice Associate Justice Regional Trial Court where the petitioner or respondent resides, or
that which has jurisdiction over the place where the data or
information is gathered, collected or stored, at the option of the
gd.) (Sgd.)
petitioner.
RESBITERO J. VELASCO JR. ANTONIO EDUARDO B. NACHURA
The petition may also be filed with the Supreme Court or the Court
Associate Justice Associate Justice
of Appeals or the Sandiganbayan when the action concerns public
data files of government offices.
gd.) (Sgd.)
SEC. 4. Where Returnable; Enforceable. - When the writ is
UBEN T. REYES TERESITA J. LEONARDO-DE CASTRO issued by a Regional Trial Court or any judge thereof, it shall be
Associate Justice Associate Justice returnable before such court or judge.

When issued by the Court of Appeals or the Sandiganbayan or any

-----------------------------------------------------------------------------
THE RULE ON THE WRIT OF HABEAS DATA
SECTION 1. Habeas Data. - The writ of habeas data is a remedy
available to any person whose right to privacy in life, liberty or
security is violated or threatened by an unlawful act or omission of
of its justices, it may be returnable before such court or any justice
thereof, or to any Regional Trial Court of the place where the
petitioner or respondent resides, or that which has jurisdiction over
the place where the data or information is gathered, collected or
stored.
When issued by the Supreme Court or any of its justices, it may be
returnable before such Court or any justice thereof, or before the
Court of Appeals or the Sandiganbayan or any of its justices, or to
any Regional Trial Court of the place where the petitioner or
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respondent resides, or that which has jurisdiction over the place
where the data or information is gathered, collected or stored.
The writ of habeas data shall be enforceable anywhere in the
Philippines.
Sec. 5. Docket Fees. - No docket and other lawful fees shall be
required from an indigent petitioner. The petition of the indigent
shall be docked and acted upon immediately, without prejudice to
subsequent submission of proof of indigency not later than fifteen
(15) days from the filing of the petition.
SEC. 6. Petition. - A verified written petition for a writ of habeas
data should contain:
(a) The personal circumstances of the petitioner and the
respondent;
(b) The manner the right to privacy is violated or threatened and
how it affects the right to life, liberty or security of the aggrieved
party;
(c) The actions and recourses taken by the petitioner to secure the
data or information;
(d) The location of the files, registers or databases, the government
office, and the person in charge, in possession or in control of the
data or information, if known;
(e) The reliefs prayed for, which may include the updating,
rectification, suppression or destruction of the database or
information or files kept by the respondent.
In case of threats, the relief may include a prayer for an order
enjoining the act complained of; and
(f) Such other relevant reliefs as are just and equitable.
SEC. 7. Issuance of the Writ. - Upon the filing of the petition, the
court, justice or judge shall immediately order the issuance of the
writ if on its face it ought to issue. The clerk of court shall issue the
writ under the seal of the court and cause it to be served within
three (3) days from the issuance; or, in case of urgent necessity,
the justice or judge may issue the writ under his or her own hand,
and may deputize any officer or person serve it.
The writ shall also set the date and time for summary hearing of
the petition which shall not be later than ten (10) work days from
the date of its issuance.
SEC. 8. Penalty for Refusing to Issue or Serve the Writ. - A
clerk of court who refuses to issue the writ after its allowance, or a
deputized person who refuses to serve the same, shall be punished
by the court, justice or judge for contempt without prejudice to
other disciplinary actions.
SEC. 9. How the Writ is Served. - The writ shall be served upon
the respondent by a judicial officer or by a person deputized by the
court, justice or judge who shall retain a copy on which to make a
return of service. In case the writ cannot be served personally on
the respondent, the rules on substituted service shall apply.
SEC. 10. Return; Contents. - The respondent shall file a verified
written return together with supporting affidavits within five (5)
working days from service of the writ, which period may be
reasonably extended by the Court for justifiable reasons. The return
shall, among other things, contain the following:
(a) The lawful defenses such as national security, state secrets,
privileged communications, confidentiality of the source of
information of media and others;
(b) In case of respondent in charge, in possession or in control of
the data or information subject of the petition;
(i) a disclosure of the data or information about the petitioner, the
nature of such data or information, and the purpose for its
collection;
(ii) the steps or actions taken by the respondent to ensure the
security and confidentiality of the data or information; and,
(iii) the currency and accuracy of the data or information held; and,
(c) Other allegations relevant to the resolution of the proceeding.
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A general denial of the allegations in the petition shall not be
allowed.
SEC. 11. Contempt. - The court, justice or judge may punish with
imprisonment or fine a respondent who commits contempt by
making a false return, or refusing to make a return; or any person
who otherwise disobeys or resist a lawful process or order of the
court.
SEC. 12. When Defenses May be Heard in Chambers. - A
hearing in chambers may be conducted where the respondent
invokes the defense that the release of the data or information in
question shall compromise national security or state secrets, or
when the data or information cannot be divulged to the public due
to its nature or privileged character.
Sec. 13. Prohibited Pleadings and Motions. - The following pleadings
and motions are prohibited:
(a) Motion to dismiss;
(b) Motion for extension of time to file return, opposition, affidavit,
position paper and other pleadings;
(c) Dilatory motion for postponement;
(d) Motion for a bill of particulars;
(e) Counterclaim or cross-claim;
(f) Third-party complaint;
(g) Reply;
(h) Motion to declare respondent in default;
(i) Intervention;
(j) Memorandum;
(k) Motion for reconsideration of interlocutory orders or interim
relief orders; and
(l) Petition for certiorari, mandamus or prohibition against any
interlocutory order.
SEC. 14. Return; Filing. - In case the respondent fails to file a
return, the court, justice or judge shall proceed to hear the
petition ex parte, granting the petitioner such relief as the petition
may warrant unless the court in its discretion requires the
petitioner to submit evidence.
SEC. 15. Summary Hearing. - The hearing on the petition shall
be summary. However, the court, justice or judge may call for a
preliminary conference to simplify the issues and determine the
possibility of obtaining stipulations and admissions from the
parties.
SEC. 16. Judgment. - The court shall render judgment within ten
(10) days from the time the petition is submitted for decision. If the
allegations in the petition are proven by substantial evidence, the
court shall enjoin the act complained of, or order the deletion,
destruction, or rectification of the erroneous data or information
and grant other relevant reliefs as may be just and equitable;
otherwise, the privilege of the writ shall be denied.
Upon its finality, the judgment shall be enforced by the sheriff or
any lawful officers as may be designated by the court, justice or
judge within five (5) working days.
SEC. 17. Return of Service. - The officer who executed the final
judgment shall, within three (3) days from its enforcement, make a
verified return to the court. The return shall contain a full statement
of the proceedings under the writ and a complete inventory of the
database or information, or documents and articles inspected,
updated, rectified, or deleted, with copies served on the petitioner
and the respondent.
The officer shall state in the return how the judgment was enforced
and complied with by the respondent, as well as all objections of
the parties regarding the manner and regularity of the service of
the writ.
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SEC. 18. Hearing on Officers Return. - The court shall set the
return for hearing with due notice to the parties and act
accordingly.
SEC. 19. Appeal. - Any party may appeal from the final judgment
or order to the Supreme Court under Rule 45. The appeal may raise
questions of fact or law or both.
The period of appeal shall be five (5) working days from the date of
notice of the judgment or final order.
The appeal shall be given the same priority as in habeas
corpus and amparo cases.
SEC. 20. Institution of Separate Actions. - The filing of a
petition for the writ of habeas data shall not preclude the filing of
separate criminal, civil or administrative actions.
SEC. 21. Consolidation. - When a criminal action is filed
subsequent to the filing of a petition for the writ, the latter shall be
consolidated with the criminal action.
When a criminal action and a separate civil action are filed
subsequent to a petition for a writ of habeas data, the petition shall
be consolidated with the criminal action.
After consolidation, the procedure under this Rule shall continue to
govern the disposition of the reliefs in the petition.
SEC. 22. Effect of Filing of a Criminal Action. - When a criminal
action has been commenced, no separate petition for the writ shall
be filed. The relief under the writ shall be available to an aggrieved
party by motion in the criminal case.
The procedure under this Rule shall govern the disposition of the
reliefs available under the writ of habeas data.
SEC. 23. Substantive Rights. - This Rule shall not diminish,
increase or modify substantive rights.
SEC. 24. Suppletory Application of the Rules of Court. - The
Rules of Court shall apply suppletorily insofar as it is not
inconsistent with this Rule.
SEC. 25. Effectivity. - This Rule shall take effect on February 2,
2008, following its publication in three (3) newspapers of general
circulation.
[PUBLISHED IN THE MANILA BULLETIN, THE PHILIPPINE
STAR AND THE PHILIPPINE DAILY INQUIRER ON 25 JANUARY
2008]
INJUNCTION
No. L-8685. January 31, 1957]
THE COLLECTOR OF INTERNAL REVENUE,
petitioner, vs. AURELIO P. REYES and COURT OF TAX
APPEALS, respondents.
1.TAXATION; INCOME TAX; COLLECTION BY SUMMARY METHODS OF
DlSTRAINT AND LEVY, WHEN TO BE MADE; WARRANTS ISSUED
AFTER THE PRESCRIPTIVE PERIOD; EFFECT OF.In the collection of
income tax, it is mandatory that the right of the Collector of
Internal Revenue to collect it by the summary methods of distraint
and levy be exercised within the period of three years from the
time the income tax return is filed, otherwise the right can only be
enforced by judicial action, Where, as in the present case, the
deficiency income taxes were assessed and the warrants for their
collection by distraint and levy were issued after the three-year
prescriptive priod, said warrants, as well as the steps taken in
connection with the sale of the properties of the taxpayer were
issued without authority of the law and, hence, the Court of Tax
Appeals could properly enjoin their enforcement.
2.ID.; INJUNCTION; POWER OF TAX COURT TO RESTRAIN
COLLECTION OF TAX; PREREQUISITE FOR ISSUANCE OF WRIT.
While Section 305 of the National Internal Revenue Code prohibits
courts from granting injunction to restrain the collection of any
internal revenue tax, fee or charge imposed by the Code, however,
Section 11 of Republic Act No. 1125 authorizes the Court of Tax
Appeals to suspend at any stage of the proceedings the said
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collection when, in its opinion, the same may jeopardize the
interest of the Government and/or the taxpayer, provided the
taxpayer either deposits the amount claimed or files a surety bond
for not more than double the amount with the Court. Said Section
11 must be deemed to have modified Section 305 of the Internal
Revenue Code in view of the repealing clause contained in said Act
to the effect that any law or part of law, or any executive order,
rule or regulation or part thereof, inconsistent with the provisons of
this Act is hereby repealed. (Section 21)
3.ID.; ID.; ID.; BOND REQUIRED ONLY WHERE THE
COLLECTION IS MADE IN ACCORDANCE WITH LAW.The
requirement of the bond as a condition precedent to the
inssuance of the writ of injunction applies only in cases
where the processes by which the collection sought to be
made by means thereof are carried out in consonance with
the law for such cases provided and not when said
processes are obviously in violation of the law to the
extreme that they have to be suspended for jeopardizing
the interests of the taxpayer.
Office of the Solicitor General Ambrosio Padilla, Assistant Solicitor
General Ramon L. Avancea, Solicitor Jose P. Alejandro, Melquiades
Gutierrez and Librada del Rosario-Natividad for petitioner.
Meer, Meer and Meer for respondents.
FELIX, J.:
This is a petition for certiorari filed by the Collector if the Internal
Revenue wherein he seeks to nullify the resolution of the Court of
Tax Appeals restraining him from collecting, through summary
administrative methods, taxes allegedly due from Dr. Aurelio P.
Reyes. The facts of the case may be summarized as follows:
In a letter dated October 13, 1954, petitioner, the Collector of
Internal Revenue demanded from Aurelio P. Reyes payment of his
alleged deficiency income taxes, surcharges, interests and
penalties for the tax years 1946 to 1950 amounting to P641,470.04
as of October 31, 1954, with the suggestion that the aforesaid tax
liabilities be paid either to the Bureau of Internal Revenue or the
City Treasurer of Manila. Together with said letter of assessment,
respondent Aurelio P. Reyes received a warrant of distraint and levy
on his properties in the event that he should fail to pay the alleged
deficiency income taxes on or before October 31, 1954, Being
informed by the City Treasurer of Manila by a letter dated
November 4, 1954, that said Treasurer was instructed by petitioner
to execute the warrant of distraint and levy on the amount
demanded is not settled on or before November 10, 1954, Aurelio P.
Reyes filed with the Court of Tax Appeals on November 15, 1954, a
petition for review of the Collector's assessment of his alleged
deficiency income tax liabilities. This was followed by an urgent
petition, filed on November 16, 1954, to restrain the Collector of
Internal Revenue from executing the warrant of distraint and levy
on his properties, alleging among others, that the right of
respondent to collect by summary proceedings the tax demanded
had already prescribed in accordance with section 51 (d) of the
National Internal Revenue Code, as his income tax returns for the
tax years 1946 to 1950 had been filed more than three years ago,
the last one being on April 27, 1951; that a distraint and levy on his
properties would work injustice or irreparable injury to him and
would tend to render any judgment of the Court in the main case
meaningless and ineffectual; that the requisite if Section 11 of
Republic Act No. 1125 for the filing of a bond or deposit before a
writ of distraint and levy may be suspended is not applicable in this
case; and that a greater portion of his assets consists of real
properties located in Manila and shares a stock in the Philippine
Racing Club which are all encumbered in various financial
institutions and therefore there is no possibility that he would
abscond with his property or remove or conceal the same.
The Collector of Internal Revenue opposed said petition in
November 19, 1954, on the ground that Court of Tax Appeals has
no authority to restrain him from executing the warrant of distraint
and levy on his properties of Aurelio P. Reyes in connection with the
collection of the latter's deficiency income taxes; that said taxpayer
has an adequate remedy in law by paying first and then seek for
the recovery thereof; and that section 51 (d) does not preclude
distraint and levy. By resolution of January 8, 1955, the Court of Tax
Appeals upheld the stand of Aurelio P. Reyes and ordered the
Collector of Internal Revenue to desist from collecting by
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administrative method the taxes allegedly due from Reyes pending
the outcome of his appeal, without prejudice to other judicial
remedy or remedies which the Collector may desire to pursue for
the protection of the interest of the Government, pending the final
decision of the case on the merits. On January 21, 1955, the
Solicitor General filed a notice of appeal from said resolution and
instituted in this Court the instant certiorari case on January 22,
1955.
It is not disputed that respondent Reyes filed his income tax returns
for the years 1946 to 1950, and that the warrant of distraint and
levy against the properties of said respondent was issued only on
October 13, 1954, or 3 years, 5 months and 16 days after the
respondent taxpayer has filed his returns for the tax year 1950,
which he made on April 27, 1951. Therefore, the issues in this
instances are: (1) whether the Court of Tax Appeals could restrain
the Collector of Internal Revenue from enforcing collection of
income tax deficiency by summary proceedings after the expiration
of the three-year period provided for in section 51 (d) of the
National Internal Revenue Code; and (2) granting that the Collector
could be restrained, whether the Court of Tax Appeals had any
power to grant an injunction without requiring the filing of a bond
or making a deposit as prescribed by section 11 of Republic Act No.
1125.
Section 51 (d) of the National Internal Revenue Code reads as
follows:
SEC. 51. Assessment and Payment of income Tax.
xxx xxx xxx
(d) Refusal or neglect to make return; fraudulent returns, etc. In
cases of refusal or neglect to make return or in cases of erroneous,
false or fraudulent returns, the Collector of Internal Revenue shall,
upon discovery thereof, at any time within three years after said
return is due, or has been made, make a return upon information
obtained as provided for in this Code or by existing law, or require
the necessary corrections to be made, and the assessment made
by the Collector on Internal Revenue thereon shall be paid by such
person or corporation immediately upon notification of the amount
of said assessment.
and in a long line of cases this Court has already construed this just
quoted provision to mean that the three year prescriptive period
provided therein constituted a limitation to the right of the
Government to enforce the collection of income taxes by the
summary proceedings of distraint and levy though it could proceed
to recover the taxes due by the institution of the corresponding civil
action (Collector of Internal Revenue vs. Villegas, 56 Phil., 554,
citing Holmes, Federal Income Tax, 2d., p. 581; Collector of Internal
Revenue vs. Haygood, 65 Phil., 520; and Juan de la Via vs. El
Gobierno de las Filipinas, G.R. No. 42669, January 29, 1938). This
doctrine was reiterated in the case of Philippine Sugar Estate
Development Co., Inc., vs. Juan Posadas, 68 Phil., 216, wherein it
was held that:
. . . after the three years have elapsed from the date to which
income tax returns which have been found to be false, fraudulent
or erroneous, may have been made, the Collector of Internal
Revenue cannot make any summary collection through
administrative methods, but must do so through judicial
proceedings.
In the recent case of the Collector of Internal Revenue vs. Jose
Avelino et al., supra, p. 327, promulgated November 19, 1956, this
Court held:
It therefore appears that when it refers to the Collection of income
tax it is mandatory that the right of the Collector of Internal
Revenue to collect it by the summary methods of distraint and levy
be exercised within the period of three years from the time the
income tax return is filed, otherwise the right can only be enforced
by judicial action. Since, admittedly, the deficiency taxes in
question were assessed and the warrants for their collection by
distraint and levy were issued after the period of three years from
the filing of the returns, it is evident that said warrants, as well as
the steps taken in connection with the sale of the properties of the
taxpayer, were issued without authority of the law and, hence, the
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Court of Tax Appeals acted properly in enjoining their enforcement
as prayed for by petitioner.
It is, however, contended by petitioner that the respondent Court of
Tax Appeals acted in complete disregard of the prohibition of said
section 305 of the National Internal Revenue Code when it
restrained the former from executing the warrant of distraint and
levy against the properties of respondent Aurelio P. Reyes. Said
provision reads as follows:
SEC. 305. INJUNCTION NOT AVAILABLE TO RESTRAIN THE
COLLECTION OF TAX. No court shall have authority to grant an
injunction to restrain the collection of any internal revenue tax, fee,
or charge imposed by this Code (National Internal Revenue Code).
However, Section 11 of Republic Act No. 1125 prescribes the
following:
SEC. 11. Who may appeal; efect of appeal. Any person,
association or corporation adversely affected by a decision or ruling
of the Collector of internal Revenue,. may file an appeal in the
Court of Tax Appeals within thirty days after receipt of such decision
or ruling.
No appeal taken to the Court of Tax Appeals from the decision of
the Collector of Internal Revenue . . . shall suspend the payment,
levy, distraint, and/or sale of any property of the taxpayer for the
satisfaction of his tax liability as provided by existing law: Provided,
however, That when in the opinion of the Court the collection by
the Bureau of Internal Revenue . . . may jeopardize the interest
of the Government and/or the taxpayer the Court at any stage of
the proceeding may suspend said collection and require the
taxpayer either to deposit the amount claimed or to file a surety
bond for not more than double the amount with the Court.
It can be inferred from the aforequoted provision that there may be
instances like the one at bar, when the Collector of Internal
Revenue could be restrained from proceeding with the collection,
levy, distraint and/or sale of any property of the taxpayer. In this
respect, this Court said in the case of Collector of Internal Revenue
vs. Avelino et al., supra:
This section (Sec. 11 of Rep. Act No. 1125) must be deemed to
have modified section 305 of the National Internal Revenue Code in
view of the repeating clause contained in said Act to the effect that
"any law or part of law, or any executive order, rule or regulation or
part thereof, inconsistent with the provisions of this Act is hereby
repealed" (Section 21).
But petitioner asserts that even assuming that under Section 11 of
Republic Act No. 1125 respondent court is empowered to order him
to desist from the collection of said taxes by extra-judicial methods,
yet the Court erred in issuing the injunction without requiring the
taxpayer either to deposit the amount claimed or file a surety bond
for an amount not more than double the tax sought to be collected.
We disagree with this contention. At first blush it might be as
contended by the Solicitor General, but a careful analysis of the
second paragraph of said Section 11 will lead us to the conclusion
that the requirement of the bond as a condition precedent to the
issuance of the writ of injunction applies only in cases where the
processes by which the collection sought to be made by means
thereof are carried out in consonance with the law for such cases
provided and not when said processes are obviously in violation of
the law to the extreme that they have to be SUSPENDED for
jeopardizing the interests of the taxpayer.
Section 11 of Republic Act No. 1125 is therefore premised on the
assumption that the collection by summary proceedings is by itself
in accordance with existing law; and then what is suspended is the
act of collecting, whereas, in the case at bar what the respondent
Court suspended was the use of the method employed to verify the
collection which was evidently illegal after the lapse of the three-
year limitation period. The respondent Court issued the injunction
in question on the basis of its finding that the means intended to be
used by petitioner in the collection of the alleged deficiency taxes
were in violation of law. It certainly would be an absurdity on the
part of the Court of Tax Appeals to declare that the collection by the
summary methods of distraint and levy was violative of law, and
then, on the same breath require the petitioner to deposit or file a
bond as a prerequisite for the issuance of a writ of injunction. Let us
suppose, for the sake of argument, that the Court a quo would have
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required the petitioner to post the bond in question and that the
taxpayer would refuse or fail to furnish said bond, would the
Court a quo be obliged to authorize or allow the Collector of
Internal Revenue to proceed with the collection from the petitioner
of the taxes due by a means it previously declared to be contrary to
law?
The pronouncement made by the respondent Court, after due
hearing, to the effect that summary methods of collection by
distraint and levy would be improper in the instant case, was done
in the exercise of its power to pass judgment on all matters brought
before it. It was a lawful exercise of the jurisdiction vested in said
Court which is well--provided for in section 7 of Republic Act No.
1125:
SEC. 7. Jurisdiction. The Court of Tax Appeals shall exercise
exclusive appellate jurisdiction to review by appeal, as herein
provided
(1) Decisions of the Collector of Internal Revenue in cases involving
disputed assessments, refunds of internal revenue taxes, fees or
other charges, penalties imposed in relation thereto, or other
matters arising under the National Internal Revenue Code or other
law or part of law administered by the Bureau of Internal Revenue.
There is another issue raised by respondent Aurelio P. Reyes that
merits consideration. It does not appear from the records that a
motion for reconsideration was ever filed by counsel for petitioner,
although a notice of appeal, dated January 21, 1955, was filed in
the court below. It is an established doctrine in this jurisdiction that
the attention of the Court should first be called to its supposed
error, and its correction asked for on a motion for reconsideration
(Herrera vs. Barretto, 25 Phil., 245; Uy Chua vs. Imperial, 44 Phil.,
27; Manila Post Publishing Co. vs. Sanchez, 81 Phil., 614 46 Off.,
Suppl. (1) 412; Alvarez vs. Ibaez, 83 Phil., 104, 46 Off. Gaz., 4233).
That failure of the petitioner to file with the court below a motion
for reconsideration of the order subject of the certiorari
proceedings is a fatal and insurmountable barrier, is further
stressed in the case of Valeriano Nicolas et al. vs. The Hon.
Modesto Castillo et al., (97 Phil., 336) wherein this Court held:
No motion for reconsideration was ever filed by petitioners in the
court below, calling its attention to the alleged errors and
irregularities now raised in this petition, to give it an opportunity to
correct such errors and irregularities, if indeed any were
committed. For his reason alone if not for any other, the writ was
applied for should be denied.
Wherefore, the petition for certiorari is denied and the resolution of
the respondent Court of Tax Appeals is hereby affirmed, without
pronouncement as to costs. It is so ordered.
Paras, C.J., Bengzon, Padilla, Montemayor, Reyes, A., Bautista
Angelo, Labrador and Endencia, JJ., concur.
Separate Opinions
REYES, J.B.L., J., concurring:
I concur in the result, subject to my dissenting opinion in the case
of Collector of Internal Revenue vs. Avelino and the Court of Tax
Appeals, (supra, p. 327) regarding the necessity of the taxpayer's
posting a bond or depositing the amount of the taxes claimed,
before the tax collection may be suspended.
No. L-15350. November 30, 1962,
MARIANO G. PINEDA,ARCADIO E. YABYABIN,and MAXIMINO
PIZARRO,petitioners, vs. HON.GREGORIO T. LANTIN, District
Judge of the Court of First Instance of Manila, BACOLOD-
MURCIA MILLING CO., INC.and J. AMADO ARANETA,
respondents.
Jurisdiction; Injunction against Securities and Exchange
Commission; Where power to issue is lodged.A court of first
instance has no jurisdiction to grant an injunctive relief against the
Securities and Exchange Commission. That power is lodged
exclusively with the Supreme Court.
Same; Same; Review of orders or rulings of Securities and
Exchange Commission.A party who is aggrieved by or disagrees
with an order or ruling of the Securities and Exchange Commission,
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may file a petition for review with the Supreme Court; he cannot
seek relief from courts of general jurisdiction.
Same; Same; Scope of supreme courts power of review.The
power of the Supreme Court to review orders and decisions of the
Securities and Exchange Commission extends to incidental orders
issued by the Securities and Exchange Commission to investigate
certain charges against a corporation and its officers.
Appeals; Interlocutory Orders; When Appealable.While the
general rule is that interlocutory orders are not appealable, they
may be appealed when the appeal is grounded on lack of
jurisdiction.
ffice of the Solicitor General for petitioners.
Vicente Hilado for respondents.
REGALA, J.:
This case raises a question of law heretofore undecided by this
Court, to wit:
MAY A COURT OF FIRST INSTANCE ENJOIN THE SECURITIES AND
EXCHANGE COMMISSION?
The facts from which this issue resulted are the following:
In a letter dated July 9, 1958, addressed to the Securities and
Exchange Commission, Teresa Cuaycong La and Apeles H. Lopez,
thru counsel, complained of maintain actions of the respondent
corporation, the Bacolod-Murcia Milling Co., Inc. and its President
and General Manager, J. Amado Araneta. They claimed that the
named respondents had committed various acts in violation of the
Articles of Incorporation of the respondent corporation petition, the
pertinent provisions of the corporation law, the rules and
regulations promulgated by the Security and Exchange
Commission. They represented that conduct of the said J. Amado
Araneta was one series acts prejudicial to the interests of the
minority stockholders. The complainants were two such
stockholders.
Acting on the letter-complaint, petitioner Mariano Pineda, in his
official capacity as Securities and Exchange Commissioner, ordered
the investigation of the character and, for that purpose, designated
the other petition Arcadio E. Yabyabin and Maximino Pizarro, as
investigators. These last two petitioners were the Chief Counsel and
Chief Examiner, respectively, of the Commission.
Pursuant to the above order, petitioners Yabyabin and Pizarro, on
July 29, 1958, addressed a subpoena duces tecum to respondent J.
Amado Araneta as well as to treasurer and secretary of the
Bacolod-Murcia. On receiving the subpoena duces tecum, however,
herein respondent corporation and J. Amado Araneta, thru court
filed a "Petition to Reconsider Order and to Set Aside
Subpoena Duces Tecum." They contended that with approval of
Republic Act No. 1143 on June 17, 1954, "the power given by law to
the Securities and Exchange Commission to conduct investigations
has been qualified and made subject to the condition that such
investigations must be conducted in accordance with the rules
adopted by the Commission." (Sec. 1 [d], Republic Act No. 1143.)
And, since the Securities and Exchange Commission had not till
then adopted such rules, it could not proceed with the
investigation.
After due consideration, on August 18, 1958, petitioner Mariano G.
Pineda denied the above petition filed by the respondent.
Subsequently, on August 21, 1958, respondents Bacolod-Murcia
and J. Amado Araneta filed a Motion to Quash and Discontinue
Entire Proceedings. This was docketed as SEC Case No. 951. The
basis of this motion was principally the same as that recited in the
petition to reconsider and set aside the subpoena duces tecum. In
other words, the herein respondents reiterated their contention that
the Securities and Exchange Commission could not proceed with
the investigation until after it shall have promulgated the rules
required by Republic Act No. 1143. Furthermore, the respondent-
movants alleged that the complaint by the aforesaid minority
stockholders "was part of a plot and conspiracy to harass and
oppress the herein respondents at the inspiration or instigation of
the Secretary of Commerce and Industry, the Honorable Pedro C.
Hernaez, who has direct supervision and control over the Securities
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and Exchange Commission." This motion was found to be without
merit, and was, for that reason, forthwith denied by the
Commissioner on October 10, 1958.
After having received a copy of the order denying their motion of
August 21, 1958, the respondent corporation and J. Amado Araneta
filed a special civil action for prohibition against the herein
petitioners Yabyabin and Pizarro, and, for the first time, joined
Lacson and Lopez as respondents. It was docketed in the sala of
Judge Gregorio T. Lantin of the Manila Court of First Instance as Civil
Case No. 38456.
Having been served with summons in the above civil case,
petitioners Yabyabin and Pizarro, on November 29, 1959, moved to
dismiss the same. They argued that writ prayed for would amount
to a review, modify or setting aside of an order of the Securities
and change Commission and therefore, beyond the jurisdiction of
the Court of First Instance. According to them, only the Supreme
Court could modify or review an order or decision of the
Commission in accordance with Security 1 of Rule 43, Rules of
Court and Section 35 of Commonwealth Act No. 83, as amended by
Republic Act 635.
On December 6, 1958, Judge Gregorio T. Lantin is the following
order: "Upon consideration of the motion to dismiss dated
November 28, 1958, filed by respondent Arcadio E. Yabyabin and
Maximino B. Pizarro, and objection thereto, let resolution of the said
motion deferred until the trial of the case on the merits." Soon after
the issuance of this order, or, on December 26, 1958, herein
petitioners Yabyabin and Pizarro filed an answer to the petition for
prohibition. Thereafter, order deferring the resolution of the motion
to dismiss was reconsidered. Instead, the motion to dismiss was
denied on January 31, 1959.
Disagreeing with the above order of denial, herein petitioners filed
a motion for reconsideration on February 19, 1959. They reaffirmed
in that pleading their position that only the Supreme Court may
review orders of Securities and Exchange Commission; that when
Manila Court of First Instance did so review, it went beyond its
authority and jurisdiction. This was denied again by the respondent
judge, when on February 28, 1959, he issued an order dismissing
the motion for consideration.
This case was elevated to this Honorable Court review on a petition
for certiorari with prohibition a preliminary injunction. To that end, it
devolved on to resolve the question of law first mentioned above.
Stated in another way, the issue here is:
WAS THE CIVIL CASE FOR PROHIBITION FILED BY THEREIN
RESPONDENTS PROPER AND WITHIN IN THE JURISDICTION OF THE
COURT OF FIRST INSTANCE?
This Tribunal holds the view that under the Rules of Court and the
law applicable to the case at bar, a Court of First Instance has no
jurisdiction to grant injunctive reliefs against the Securities and
Exchange Commission. That power is lodged exclusively with this
Court.
Section 1 of Rule 43 of the Rules of Court provides;
SECTION 1. Petition for review. Within thirty days from notice of
an order or decision issued by the Public Service Commission or the
Securities and Exchange Commission, any party aggrieved thereby
may file, in the Supreme Court, a written petition for the review of
such order of decision.
Furthermore, Section 35 of Commonwealth Act No. 83, as amended
by Republic Act No. 635, creating and setting forth the powers and
functions of the Securities and Exchange Commission, provides the
following:
SEC. 35. Court review or orders. (a) Any person aggrieved by an
order issued by the commission in any proceeding under this Act to
which such person is a party or who may be affected thereby may
obtain a review of such order in the Supreme Court of the
Philippines by filing in such court within thirty days after the entry
of such order a written petition praying that the order of the
Commission be modified or set aside in whole or in part. . . .
Beyond doubt, therefore, whenever a party is aggrieved by or
disagrees with an order or ruling of the Securities and Exchange
Commission, his remedy is to come to this Court on a petition for
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review. He is not permitted to seek relief from courts of general
jurisdiction. The two provisions quoted above clearly pronounce
that only this Court possesses the jurisdiction to review or pass
upon the legality or correctness of any order or decision of the
Securities and Exchange Commission, and, as circumstances might
warrant, to modify, reverse, or, set aside the same.
It was urged by the herein respondents that the principal purpose
of their action in the lower court was not to have an order of the
Securities and Exchange Commission reviewed but to have the
investigation stopped because of an alleged lack of jurisdiction to
proceed with the same. Therefore, the argument continued, Section
7 of Rule 43 of the Rules of Court and Section 35 of Court
Commonwealth Act No. 83, as amended by Republic No. 635, could
not have properly applied.
The contention carries no weight. This Court has thoroughly read
through the petition for prohibition with the lower court. But, even a
cursory reading would have revealed so fully that its main aim was
have an order of the Securities and Exchange Commission reviewed
the order denying their motion to quash and discontinue the
entire proceeding in the Commission More than anything else, Civil
Case No. 38456 was meant to have that order of the Commission
ultimately set aside.
But even assuming for the sake of argument that principal concern
of Bacolod-Murcia in filing the action below was indeed to stop the
investigation so that jurisdiction of the investigating body to
conduct the same might first be determined, still this Court holds
that action should have been commenced in this Tribunal. When
the Rules of Court and the law provided that orders and decisions of
the Securities and Exchange Commission are reviewable only by
this Court, they could possibly have excluded within their efficacy
the review of incidental orders as the one at bar. Otherwise, entire
philosophy for providing that only this Court review on appeal
orders of the Commission would rendered mute, weak and
purposeless. For then, shall be sanctioning what can not be done
directly to be done indirectly.
Finally, herein respondents contended that since questioned order
of the Commission was merely in interlocutory, they could not have
come to this Court under Section 1 of Rule 43 because the said
provision refers only to final orders and decisions. This Court,
however, finds neither force nor merit in this argument. We have
held already in the case of San Beda v. Court of Industrial Relations,
G.R. No. L-7649, promulgated October 29, 1955, that while the
general rule is that interlocutory orders are not appealable, the
same may be so appealed when it is grounded upon lack of
jurisdiction.
The role of the Securities and Exchange Commission in our national
economy cannot be minimized. The legislature has entrusted to it
the serious responsibility of enforcing all laws affecting corporations
and other forms of associations not otherwise vested in some other
government offices. Being charged, therefore, with overseeing the
operations of those various corporate enterprises from which our
government derives great revenues and income, it cannot afford to
be impeded or restrained in the performance of its functions by
writs of injunction emanating from tribunals subordinate to this
Court. If every Court of First Instance can enjoin the Commission
from pursuing its objectives, and, in the premises, substitute its
judgment for that of the Commission on what should or should not
be done, then, no one will suffer thereby but the economy of our
body politic and, eventually, this country's citizenry. Certainly, the
legislature could never have intended that.
IN VIEW OF ALL THE FOREGOING, the order of the lower court
denying the motion to dismiss filed by the herein petitioners in Civil
Case No. 38456 is hereby set aside and the herein respondents are
prohibited and enjoined from proceeding with the trial and
determination on the merits of the same civil case, with costs.
No. L-20768.February 28, 1963.
ELISEO B. LEMI, petitioner, vs. BRIGIDO VALENCIA,
Secretary of Public Works & Communications; ROBERTO M.
SAN ANDRES, Chief, Radio Control Office; ALFREDO M.
CARGO (Supposedly agent of the Hon. Secretary of Public
Works & Communications); HERACLIO SAN JUAN, Radio
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Regulation Inspector, Radio Control Office; CONRADO
CAJATOR, Chairman, Presidential Anti-Graft Committee
(PAGCOM) and agents, respondents.
Radio control laws; Due process; Renewal of radio station license
may not be disapproved without hearing.Section 3 of the Radio
Control Act provides that no application for the renewal of station or
operator license shall be disapproved without giving the licensee a
hearing. This legal provision was implemented by Department
Order No. 11, series of 1950, Section 17 of which provides, inter
alia, that a radio station license may also be revoked for violations
of the radio laws and regulations, local or international, provided,
however, that no such license shall be revoked without giving the
licensee a hearing.
Same; Same; Same; Requirement of hearing applies to any action
of the radio control office that would amount to such revocation.
While petitioners last application for renewal of license has not
been disapproved, it is held that the requirement of a hearing
applies not only to the revocation of a radio license but also to any
action by the Radio Control Office that, for all practical purposes,
would amount to such revocation because it makes it impossible for
the radio station concerned to continue broadcasting.
Same; Same; Same; Seizure of radio transmitter under search
warrant, no exception.That the seizure of the radio transmitter, in
the case at bar, was made under authority of a search warrant
cannot obliterate the fact that such seizure was made in violation
of the law requiring a previous hearing.
Ernesto C. Hidalgo for petitioner.
Office of the Solicitor General Arturo A. Alafriz and Solicitor Camilo
D. Quiason for respondents.
CASTRO, J.:
Republic Act 1553, approved on June 16, 1956, authorized the
petitioner Eliseo B. Lemi to construct, maintain and operate radio
broadcasting and television stations. On June 8, 1960 the Radio
Control Office of the Department of Public Works and
Communications issued to him license 5931 to construct, maintain
and operate radio station DZQR. This license was effective for one
year, that is, from May 24, 1960 to May 23,
1961.chanroblesvirtualawlibrarychanrobles virtual law library
On April 12, 1961 Lemi applied for renewal of the license to cover
the period from May 24, 1961 to May 23, 1962, and paid the
corresponding renewal license fee of P50. The Radio Control Office
took no action on this renewal application. On May 31, 1962 he
again applied for renewal of the license, to cover the period from
May 24, 1962 to May 23, 1963, and again paid the corresponding
renewal license fee. Again the Radio Control Office took no action
thereon. He continued operating the radio station without any
interference whatsoever from the office of the Public Works
Secretary and the Radio Control Office. As a matter of fact, a letter
dated December 7, 1962 of the chief of the latter office requested
the licensee "to feature the many newly recorded Philippine
Christmas songs."chanrobles virtual law library
In the morning of January 11, 1963, while the radio station DZQR
was broadcasting, Alfredo M. Cargo, an agent of the Public Works
Secretary, and Heraclio San Juan, a radio regulation inspector of the
Radio Control Office, accompanied by agents of the Presidential
Anti-Graft Committee (PAGCOM), armed with a search warrant
issued by the Court of First Instance of Manila, searched the radio
station and thereafter seized and carried away a radio transmitter
which was being used at the time, on the pretext that it "was
without any name plate or serial number and is entirely different
from the authorized transmitter," in gross violation of the Radio
Control Law.chanroblesvirtualawlibrarychanrobles virtual law library
On January 19, 1963 Lemi instituted the present original petition for
mandamus with preliminary injunction, against Public Works
Secretary Brigido Valencia, Chief Roberto San Andres of the Radio
Control Office, Alfredo M. Cargo, Heraclio San Juan, Chairman
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Conrado Cajator of the PAGCOM and the latter's agents, praying
that this Court (1) issue a preliminary mandatory injunction
directing the respondents to return immediately the radio
transmitter to him, and, after due hearing on the merits, to make
the writ permanent; and (2) order the respondents to issue without
delay the renewal license applied for by
him.chanroblesvirtualawlibrarychanrobles virtual law library
The petitioner averred that the summary and unwarranted seizure
of the transmitter "was a wanton and deliberate disregard" of the
pertinent provisions of the Radio Control Law and the regulations
promulgated thereunder providing for "due formal hearing before a
seizure or closure; "that the search warrant was procured "by
means of misrepresentation and deceit" on the part of the
respondents' agents, who made it appear "that a criminal charge or
some sort of charge had been previously filed against the petitioner
when ... no such charge is known to petitioner up to this to me;"
that the transmitter "was never illegally used as it was (used) with
full knowledge and approval and consent of the respondents
themselves;" that the said transmitter was not capable of
transmitting messages abroad; that being "attached to the radio
station permanently as an indispensable structure thereof without
which broadcast could not have been possible," the transmitter is
"real property" and "not subject of seizure warrant;" that the
seizure thereof was "actually inspired by vindictiveness and ill-will
arising from the criticisms aired by a paying commentator ... R.T.
Jocson, in his daily radio program, "So the People May Know", of the
abuses of the Chief of the Radio Control Office and the present
administration ... further aggravated by the refusal of petitioner to
accede to the repeated requests of respondent Roberto San Andres
to refrain from testifying in the administrative charges ... which ...
R.T. Jocson ... previously filed against respondent Roberto San
Andres, and to bar the said commentator from the air and that the
continued deprivation of the use of the transmitter during the
pendency of the petition would work great injustice and irreparable
damage and injury to him because he would then be prevented
from fulfilling his contractual commitments with his numerous
clientele.chanroblesvirtualawlibrarychanrobles virtual law library
The petitioner further averred that sometime after November 3,
1961, after he had filed the first application for renewal of the radio
station license, Eliodoro B. Jose, chief radio inspector of the Radio
Control Office, inspected the station and found the equipment and
installations therein "in order and in compliance with the pertinent
requirements of radio regulations, [and] recommended the
issuance of a radio station license;" and that inspite such
recommendation, the respondents Public Works Secretary and Chief
of the Radio Control Office, "with the evident purpose of prejudicing
the operations of the herein petitioner, unlawfully neglected the
performance of their duties by maliciously withholding the license
for station DZQR already paid by the petitioner, although the law
specifically enjoins issuance thereof as a ministerial duty after
petitioner had complied with the requirements of the law and
regulations."chanrobles virtual law library
We gave due course to the petition and ordered the respondents to
submit their answer and show cause why a writ of preliminary
mandatory injunction should not be
issued.chanroblesvirtualawlibrarychanrobles virtual law library
In their answer to the petition, the respondents claimed that the
radio transmitter was seized "by virtue of a valid search warrant
after it was clearly established ... that the transmitter ... was
illegally constructed and installed without any previous permit;"
that the seized transmitter "is powerful enough to transmit
messages abroad;" that no misrepresentation was committed in
securing the search warrant as "a criminal charge has already been
filed against the petitioner with the Office of the City Fiscal for
violation of Radio Station and Communications Law, docketed as
I.S. No. 1689 and scheduled for hearing ... on January 31, 1963; and
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Admin Law -DECLARATORY RELIEF QUO WARRANTO
that the transmitter is subject to seizure as it is movable
property."chanrobles virtual law library
The respondents further averred that although license 5931 expired
on May 23, 1961, the renewal application was filed only on May 15,
1962, in violation of action 2 of Act 3846, as amended, which
provides that applications for renewal of radio licenses should be
filed at least two months before the expiry dates of the licenses
sought to be renewed; that mere payment of the corresponding
renewal license fee does not in itself constitute a renewal of the
radio station license; that the renewal license was withheld
because the petitioner was using a transmitter "without any name
plate or serial number," different from the one authorized by the
Radio Control Office which initially was an "UNELMANCO-BCT 500
S/N RCD-0503" and later authorized to be substituted by a
"COLLINS T.M. 400 S/N RCD-0637;" that the use of the unauthorized
transmitter is in gross violation of section 1-A of Act 3846, as
amended; that the issuance of a license to operate a radio station
involves the exercise of judgment and discretion; and that the only
specific legal duty of the respondent Public Works Secretary is to
hold a hearing in case he disapproves a license, pursuant to section
3(1) of Act 3846, as amended.chanroblesvirtualawlibrarychanrobles
virtual law library
The respondents further maintained that the petitioner not having
exhausted other available remedies in the ordinary course of law,
namely, (1) a court action to quash the search warrant, and (2) an
appeal to the respondent Secretary, the petition is prematurely
filed.chanroblesvirtualawlibrarychanrobles virtual law library
The petitioner's rejoinder recited that when he filed the first
application for renewal on April 12, 1961, the period fixed in license
5931 (May 23, 1961) had not yet expired; that it has been a long
established and existing practice that once the renewal license fee
is accepted, the acceptance is equivalent to a permit to continue
operating during the pendency of the issuance of the renewal
license until the disapproval of the application for renewal, which
may take effect only after due notice and hearing; that if the
transmitter "has no visible name plate, it was because the same
was repainted to conform with good engineering practice, it being a
secondhand surplus equipment that the search warrant is null and
void ab initio, the respondents having admitted "the absence of any
formal information against the petitioner before the filing of an
application for a search warrant with the Court of First Instance of
Manila;"1 at the respondents' "refusal to renew ... license for an
unreasonable length of time is equivalent to a disapproval of the
application itself and/or revocation of the old license without due
notice and hearing," in violation of section 3(1), supra, and section
17 of Department Order 11, series of 1950; that a petition for
mandamus can be availed of even without exhausting available
administrative remedies; and that in matters of this nature, this
Court has concurrent jurisdiction with courts of first instance,
pursuant to section 5 of Rule 67 of the new Rules of
Court.chanroblesvirtualawlibrarychanrobles virtual law library
Acting on the manifestation filed by the petitioner on February 20,
1963, we issued a resolution on the following February 28,
commanding the respondents to return the radio transmitter, upon
the filing of a bond of P1,000.chanroblesvirtualawlibrarychanrobles
virtual law library
Is the petitioner entitled to the reliefs prayed for?chanrobles virtual
law library
Section 3 of Rule 65 of the new Rules of Court authorizes the
issuance of a writ of mandamus when "any ... person unlawfully
neglects the performance of an act which the law specifically
enjoins as a duty resulting from an office, trust, or station, or
unlawfully excludes another from the use and enjoyment of a right
or office to which such other is entitled, and there is no plain,
speedy and adequate remedy in the ordinary course of law." It is
essential, therefore, for a writ of mandamus to issue, that the
plaintiff has a legal right to the thing demanded and that it is the
imperative duty of the defendant to perform the act required.2 The
legal right of the plaintiff to the thing demanded must be well-
defined, clear and certain.3 The corresponding duty of the
defendant to perform the required act must also be clear and
specific.4 Mandamus will not issue in doubtful cases, as it simply
commands the exercise of a power already possessed or to perform
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Admin Law -DECLARATORY RELIEF QUO WARRANTO
a duty already imposed.5Mandamus will lie to compel action, or to
remedy official inaction.6chanrobles virtual law library
Under section 3 of the Radio Control Law,7 the Public Works
Secretary8 is empowered to regulate the establishment, use and
operation of all radio stations and of all forms of radio
communication and transmission within the Philippines, and to
issue such rules and regulations as may be necessary for the
proper implementation of the law.9In addition,
(k) He is hereby empowered to approve or to disapprove any
application for the construction, installation, establishment or
operation of a radio station;chanrobles virtual law library
(l) He may approve or disapprove any application for renewal of
station or operator license: Provided, however, that no application
for renewal shall be disapproved without giving the licensee a
hearing;chanrobles virtual law library
(m) He may, at his discretion, bring criminal actions against
violators of the radio laws or the regulations and confiscate the
radio apparatus in case of illegal operation; or simply suspend or
revoke the offender's station or operator licenses or refuse to renew
such licenses; or just reprimand and warn the offenders.
The exercise of the above-enumerated specific powers and duties
involves judgment and discretion on the part of the Secretary.
Discretion,
when applied to public functionaries, means a power or right
conferred upon them by law of acting officially, under certain
circumstances, according to the dictates of their own judgments
and consciences, uncontrolled by the judgments or consciences of
others. A purely ministerial act or duty, in contradistinction to a
discretional act, is one which an officer or tribunal perform in a
given state of facts, in a prescribed manner, in obedience to the
mandate of a legal authority, without regard to or the exercise of
his own judgment upon the propriety or impropriety of the act
done. If the law imposes a duty upon a public officer, and gives him
the right to decide how or when the duty shall be performed, such
duty is discretionary and not ministerial. The duty is ministerial only
when the discharge of the same requires neither the exercise of
official discretion nor judgment.10
Under section 9 of the Radio Control Law, the Public Works
Secretary is authorized "to create a Radio Regulation Section,
Division or Office which shall take charge of carrying out the
provisions of this Act and of the regulations prescribed by him, or to
delegate temporarily the duties herein conferred upon him and the
enforcement of the regulations prescribed by him, to any bureau or
office under his department, subject to his general supervision and
control."chanrobles virtual law library
1. In the case at bar, the respondents Secretary and Chief of the
Radio Control Office patently neglected the discharge of the duty,
under section 3(1), supra, to "approve or disapprove" the
petitioner's applications for renewal of the radio license. On April
12, 1961 the latter filed the first application for renewal of license
5931, and paid the corresponding license fee of P50. The Radio
Control Office which is directly under the "supervision and control"
of the Public Works Secretary took no action on this application. On
May 31, 1962 the petitioner filed another application for renewal of
his radio license and paid the corresponding renewal license fee. No
action was likewise taken on this one. And despite the continued
operation of the radio station since May 23, 1961, the date license
5931 expired, there was no interference whatsoever from the office
of the respondent Secretary and the Radio Control Office. In point
of fact, such continued operation was officially tolerated, as can be
gleaned from the letter dated December 7, 1962 sent by the Chief
of the Radio Control Office to the petitioner, at the behest of the
respondent Secretary, requesting the licensee "to feature the many
newly recorded Philippine Christmas songs," as a special public
feature in the radio programs of station
DZQR.chanroblesvirtualawlibrarychanrobles virtual law library
The respondents maintain, however, that the petitioner is not
entitled to the renewal of his license, because the first renewal
application was filed only on April 12, 1961, 41 days more or less
before license 5931 expired (on May 23, 1961), and the second
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Admin Law -DECLARATORY RELIEF QUO WARRANTO
renewal application was filed only on May 31, 1962, 8 days more or
less after the period supposedly covered by the first application for
renewal was to expire (on May 23, 1962), in violation of section 2 of
Act 3846, as amended, which requires that "if a renewal is desired,
the licensee shall submit application ... at least two months before
the expiration date of the license to be renewed."chanrobles virtual
law library
We see no obstacle to the application to the case at bar of our
ruling in Bolinao Electronics Corporation, et al. vs. Valencia, et al.11
There this Court made the following pronouncements:
But the only reason relied upon by the respondents to be the
ground for the disapproval of the applications, is the alleged late
filing of the petitions for renewal. The notices sent to petitioners ...
alleged only one supposed violation which would justify
disapproval. But petitioners claim that this violation has ceased to
exist when the act of late filing was condoned or pardoned by
respondents by the issuance of the circular dated July 24, 1962,
which in its pertinent part, reads:chanrobles virtual law library
CIRCULAR TO:
ALL RADIO STATIONS, RADIO DEALERS,
MANUFACTURERS AND RADIO TRAINING
SCHOOLS
It has come to the attention of this Office that a great number of
radio station operators have been conducting their operations
resorting to practices which are in violation of existing radio laws
and regulations, such as:
xxx xxx xxxchanrobles virtual law library
6. Late submission of applications for new and renewal
licenses.chanroblesvirtualawlibrarychanrobles virtual law library
It is now the intention of this Office to correct whatever laxity which
in the past has encouraged this illegal practice, to strictly enforce
the radio regulations and to take drastic action against violators of
these regulations.chanroblesvirtualawlibrarychanrobles virtual law
library
You are, therefore, requested to examine closely your operating
practices, permits and licenses and take remedial measures as
soon as possible but not later than August 10, 1962.
(SGD.) ROBERTO M. SAN ANDRES
Radio Regulation Chief
It seems clear that the foregoing circular sustains petitioners'
contention that the previous non-observance by station operators
of radio laws and regulations of the Radio Control Office regarding
filing of petitions for renewal, among others, was condoned if the
necessary steps were taken to correct their records and practices
before August 10, 1962. It is not denied that herein subject
applications for renewal were all made before said date, or even
before the issuance of the circular itself or, July 24, 1962. The lone
reason given for the investigation of petitioners' applications, i.e.,
late filing thereof, is therefore no longer tenable. The violation, in
legal effect, ceased to exist and, hence, there is no reason nor need
for the present investigation. The raison d'etre for it has
disappeared. Its continuation will serve no useful purpose in
contemplation of the law authorizing investigation in connection
with applications for renewal of permit.
2. The respondents further maintain that in the operation of radio
station DZQR, the petitioner was using a transmitter different from
the authorized one; that the authorized transmitter was an
"UNELMANCO-BCT 500 S/N RCD-0503" which, upon prior approval
of the Radio Control Office, was later changed to a "COLLINS T.M.
400 S/N RCD-0637;" that the transmitter which was seized on
January 11, 1963 was "without any name plate or serial number." in
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Admin Law -DECLARATORY RELIEF QUO WARRANTO
gross violation of section 1-A of Act 3846, as amended, providing
that "no person ... shall possess or own a radio transmitter
...without registering the same with the Secretary of Commerce and
Industry, ... and no person ... shall construct ... radio transmitter ...
without a permit issued by the Secretary of Commerce and
Industry;" and that in the exercise of his discretionary power under
section 3(m), supra, the respondent Secretary filed a criminal
action against the petitioner for such violation with the City Fiscal of
Manila, docketed as I.S. No. 1689; and that the radio transmitter
was seized on the strength of a search warrant issued by the Court
of First Instance of Manila.chanroblesvirtualawlibrarychanrobles
virtual law library
We resolved this issue in our resolution of February 28, 1963, by
virtue of which we granted the writ of preliminary mandatory
injunction commanding the respondents to return to the petitioner
the radio transmitter. We said in that resolution that
The fact that petitioner had been allowed to operate his radio
station for so long practically without any interference on the part
of the Radio Control Office would seem to support his
contention.chanroblesvirtualawlibrarychanrobles virtual law library
True, a memorandum submitted on March 29, 1962, by Eliodoro B.
Jose, Head, Project No. 2, to the Chief, Radio Control Division, is to
the effect that, in a previous report made by him, he had stated
that when he inspected petitioner's station then located at the
Capitol Technical Institute Building, he was shown a permit for the
transfer of the station from Globe Theater Building to the Capitol
Technical Institute Building; that the transmitter then being used
was not the same for which the permit to transfer was issued; that
he advised petitioner to apply for the corresponding permit to
purchase, possess, or construct the transmitter so that a license
may be issued for the new station; but the same report shows that
Jose had recommended that a license be issued to petitioner upon
the filing of the corresponding application; that the non-closure of
radio station DZQR, in spite of an order given to Mr. Jose to have it
closed was explained by him in another memorandum of March 26,
1962, this being the reason - presumably - why the station
continued to operate without any interference on the part of the
Radio Control Office. This report or memorandum itself shows that,
aside from the claim that the radio transmitter used at the time by
petitioner was not the one he was authorized to use, the same was
not objectionable in any other respect; that its use was known and
was - to a certain extent - tolerated by the Radio Control Office.
The use of the radio transmitter by the petitioner having been
"known and - to a certain extent - tolerated" by the Radio Control
Office, "the violation in legal effect, ceased to exist."chanrobles
virtual law library
No validity can be accorded to the respondents' assertion that, in
seizing the transmitter, the respondent Secretary was merely
exercising his confiscatory power under section 3 (m), supra. This
Court in no uncertain terms declared in its resolution of February
28, 1963 that the seizure, though made under authority of a search
warrant, cannot obliterate the fact that such seizure violated
section 3(1), supra, which provides that "no application for renewal
shall be disapproved without giving the licensee a hearing," and
section 17 of Department Order 11 which provides that no "radio
station license may be revoked for willful violations of the radio
laws and regulations, local or international ... without giving the
licensee a hearing;" that the application for issuance of the search
warrant and the ultimate seizure of the radio transmitter in effect
amounted to an attempt to evade the requirement of such hearing;
and that the seizure effected made it impossible for the radio
station to continue operating.chanroblesvirtualawlibrarychanrobles
virtual law library
The requirement of a hearing as provided by the Radio Control Law
and the rules and regulations promulgated thereunder, is founded
on the fundamental principle that no person shall be deprived of his
property without due process of law. A franchise, like the one
granted by R.A. 1553 to the petitioner, is property entitled to
constitutional protection.12 A "radio license is an operating
authority of importance involving primarily the interest of the
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public,"13 and "valuable rights and investments made in reliance academic. No pronouncement as to
on a license ... should not be destroyed ... except for the most costs.chanroblesvirtualawlibrarychanrobles virtual law library
compelling reasons."14chanrobles virtual law library
Concepcion, C.J., Dizon, Makalintal, Zaldivar, Sanchez, Fernando
3. The respondents finally maintain that the present petition is and Capistrano, JJ., concur.
premature because the petitioner failed to exhaust available
remedies on the administrative level. This contention is without Reyes, J., separate opinion.
merit. There is no statute providing for an appeal from an action Separate Opinionschanrobles virtual law library
taken by the Radio Control Office to the Secretary of Public Works
and Communications. And if an appeal there be to the respondent REYES, J.B.L., J., concurring:chanrobles virtual law library
Secretary, by virtue of the latter's power of "general supervision
I fully concur with the opinion of Mr. Justice Castro, but would like to
and control" over the Radio Control Office,15 this remedy is not
express emphatic condemnation of the practice followed by the
such "adequate remedy in the ordinary course of law" as would bar
Radio Control Office of indefinitely and unreasonably delaying
the present action for mandamus, for the acts committed by the
action upon radio license applications. I view official conduct of the
respondents are "patently illegal,"16 having been performed in
type described in the main opinion not as a mere instance of official
violation of the Radio Control Law and the rules and regulations
indolence, but as a subtle attempt to impose absolute radio
promulgated thereunder, and the immediate return of the
censorship, and to silence at will radio stations which allow airing of
transmitter demanded "urgency of judicial intervention"17 as its
views critical of the powers that be. We should be ever alert to such
seizure completely immobilized the radio station DZQR and
indirect subversion of the constitutional liberties of speech and of
prevented the petitioner from complying with his contractual
the press.
commitments.chanroblesvirtualawlibrarychanrobles virtual law
library

4. On the matter of the ex parte motion of the petitioner that the

respondents be cited for contempt, we fully concur in the finding of
our then 1st Deputy Clerk of Court & Reporter, contained in his
report of January 18, 1964, that although the conduct of the
respondents in "not faithfully" complying with the terms of the writ
of preliminary mandatory injunction issued by this Court on March No. L-22756. March 18, 1966.
4, 1963, constitutes "reckless imprudence," such conduct "may not
be as grave as contempt as it would had they actually refused to HONDA GIKEN KOGYO KABUSHIKI KAISHA, ET AL.,
return the transmitter."chanrobles virtual law library petitioners, vs. HON. LOURDES P. SAN DIEGO, ET AL.,
respondents.
ACCORDINGLY, the writ of preliminary mandatory injunction issued
on March 4, 1963 is made permanent. Although there was clear
official neglect and unwarranted inaction on the part of the Courts; Jurisdiction; Injunctions; Courts of First Instance cannot
respondents in the matter of the issuance of the renewal licenses issue an injunction against the Patent Office.The law in this
applied for in the first and second renewal applications, the periods jurisdiction vests upon the Supreme Court the authority to review
covered by the said applications have long expired. The pertinent final orders and decisions of the Public Service Commissions. And in
relief prayed for is now a matter that is obviously moot and Iloilo Commercial, etc. vs. Public Service Commission (56 Phil. 28),
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Admin Law -DECLARATORY RELIEF QUO WARRANTO
it was held that in the absence of a specific delegation of
jurisdiction to the Courts of First Instance co grant injunctive relief
against orders of the Public Service Commission, no court, other
than the Supreme Court, possesses such jurisdiction. On the other
hand, under Rule 44 of the Revised Rules of Court and Section 33 of
Republic Act No. 166, as amended, appeals from orders and
decisions of the Director of the Patent Office must likewise be taken
to the Supreme Court. It is, therefore, undeniable that the
Philippine Patent Office and the Public Service Commission are
similarly situated and that both are of the same rank or category as
Courts of First Instance. Consequently, the latter have no
jurisdiction to issue a writ of injunction against them, for the rule is
well settled that a writ of injunction or of prohibition or of certiorari
may be issued against a court only by another court superior in
rank.
Ozaeta, Gibbs and Ozaeta for the petitioners.
A. Armovit and R. L. Bautista for the respondents.
DIZON, J.:
Petition for certiorari and prohibition seeking judgment declaring
that the respondent judges (or either of them) have no jurisdiction
to take cognizance of Civil Case No. L-7864, and restraining them
permanently from enforcing the orders issued therein on March 23
and April 7, both of the year 1964.
It appears that the petitioner, hereinafter referred to as Honda, is
the manufacturer of the Honda motorcycles and the owner, among
others, of the trademarks "HONDA", "HM" and "HM with wings"
used in the manufacture and sale of said Honda motorcycles, and
that said trademarks have for many years been duly registered in
Japan and other countries.
Since the year 1959, respondent Alfred Hahn had been importing
into the Philippines the said Honda motorcycles bearing the
trademarks just mentioned. In this connection, Hahn's answer to
the petition under consideration, while denying that he was a mere
importer of the Honda motorcycles, and alleging that since 1956 he
had been classified and licensed as producer and not a mere
importer of motorcycles, admits that Hahn had received authority
from Honda "to introduce and create a market for Honda
motorcycles" in the Philippines. It appears, however, that on
December 13, 1962, Hahn filed with the Philippine Patent Office a
verified petition seeking the registration in his name of the
trademark "HM HONDA", alleging under oath therein that "he
believes himself to be the lawful owner" of said trademark and that
"no other person, partnership, corporation or association, to the
best of his knowledge and belief, has the right to use said
trademark in the Philippines, either in the identical form or in such
mere resemblance thereto as might be calculated to deceive".
Honda opposed said application alleging, inter alia, that it was
manufacturing and selling and since long prior to January 1955 had
manufactured and sold in the Philippines and elsewhere
motorcycles under the trademarks already mentioned before; that
it had never abandoned and, in fact, was still using said trademarks
as trademarks in commerce with the Philippines and elsewhere.
Respondent Hahn's reply to the opposition contains no clear denial
of the facts alleged therein nor in it raise any question whatsoever
regarding the personality of the oppositor to appear before the
Patent Office.
The application for registration was set for hearing by the Patent
Office before petitioner Teofilo P. Velasco, one of its Hearing
Officers, on January 20, 1964, but the hearing was postponed to
February 6 of the same year on which date Honda presented its
evidence. The hearing was continued to February 12, 1964 to give
Hahn's counsel a chance to examine the various documents
presented by Honda. On that date said counsel registered his
opposition to the admission of some of the exhibits on purely
technical grounds, but all of them were admitted by the Hearing
Officer. Thereupon, counsel for Hahn for the first time questioned
the personality of Honda to appear before the Patent Office and
asked orally that its opposition be dismissed. After extensive
argument the oral motion to dismiss was denied.
On February 14, 1964, however, Hahn filed a motion for
reconsideration alleging therein that Honda's capacity to appear
before the Patent Office was a prejudicial question and that since it
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is not licensed to do business in the Philippines, the Patent Office
could not be said to have acquired jurisdiction over the person of
said oppositor. This motion notwithstanding, the Hearing Officer set
February 26, 1964 for the reception of Hahn's evidence, but on that
date, his counsel refused to present any evidence until his motion
for reconsideration had been resolved by the Director of Patents. In
view of this incident, on March 2, 1964 petitioner Director of
Patents issued the following order:
As prayed for in his "Motion for Reconsideration and Motion for
Issuance of Formal Order or Resolution" filed on February 13, 1964,
the Respondent-Applicant, through his counsel, is hereby granted a
period of TEN (10) days from receipt of a copy of this order within
which to submit the necessary authorities and arguments in further
support of his motion to dismiss the opposition. Copy of the said
authorities and arguments should be served by Respondent-
Applicant on counsel for the Opposer who, within a period of TEN
(10) days from receipt thereof, should file its written opposition and
supporting authorities. Thereafter, the motion to dismiss shall be
deemed submitted for resolution.
It is so ordered.
However, instead of complying with the above order, Hahn
commenced Civil Case No. Q-7864 in the Court of First Instance of
Rizal, Branch IX, Q.C., which was a petition for certiorari against all
the herein petitioners for the annulment of the order of the Patent
Office denying his motion to dismiss Honda's opposition, mainly on
the ground that, in accordance with Sections 68 and 69 of Act
1459, as amended, and the pertinent provisions of Act 3883, as
amended, registration with the Bureau of Commerce and a license
from the Securities and Exchange Commission is sine qua non to
have capacity to become a party "applicant or oppositor" to
an inter partes proceeding, in the Philippine Patent Office. On March
7, 1964, the respondent Judge Lourdes P. San Diego issued an order
requiring the parties to maintain the status quo pending resolution
of the petition for a writ of preliminary injunction, which was set for
hearing on March 21 of the same year.
On March 11, 1964, Honda appeared in Civil Case No. Q-7864 and
opposed the petition for the issuance of a writ of preliminary
injunction and filed a motion to dismiss the petition for certiorari on
the ground firstly, that the Court of First Instance of Rizal had no
jurisdiction to issue injunctive relief against the Philippines Patent
Office and secondly, on the ground that the petition did not allege
facts sufficient to constitute a cause of action against the therein
respondents.
On March 20 of the same year, the Director of Patents and the
other respondents in said case also filed a motion to dismiss the
petition for certiorari together with an opposition to the issuance of
a writ of preliminary injunction upon similar grounds.
On March 23, 1964, respondent Judge Lourdes P. San Diego,
notwithstanding the oppositions and motions to dismiss referred to
above, issued an order granting the petition for the issuance of a
writ of preliminary injunction and pursuant thereto, on April 2,
1964, the other respondent Judge Damaso S. Tengco, then acting
as vacation judge presiding over Branch IX, issued the
corresponding writ of preliminary injunction restraining the Director
of Patents and Hearing Officers Teofilo P. Velasco and Amando
Marquez "from extending further recognition to the capacity of
respondents Honda and Daihatsu and/or compelling petitioner to
enter into a trial on the merits with said respondents foreign
corporation and/or accepting and giving due course to any
opposition filed by unlicensed and unregistered foreign corporation,
pending the final determination of this petition".
Thereupon, the present petition for certiorari and prohibition was
filed for the annulment of the orders of March 23 and April 2, both
of the year 1964, issued by the respondent judges upon the ground
that in issuing them they acted without or in excess of their
jurisdiction or with grave abuse of discretion.
Upon the facts set forth above, the petition under consideration
must be granted because the respondent judges the one as
permanent presiding judge of Branch IX of the Court of First
Instance of Rizal, and the other as vacation judge presiding over
said court had no jurisdiction to issue the orders complained of.
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The rule is well settled so well settled indeed that it requires no
citation of authorities to support it that a writ of injunction or of
prohibition or of certiorari may be issued against a court only by
another court superior in rank to the former.
The law in this jurisdiction vests upon Us the authority to review
final orders and decisions of the Public Service Commission. In Iloilo
Commercial, etc. vs. Public Service Commission (56 Phil. 28), in
denying jurisdiction to the trial court to issue injunctive relief
against the Public Service Commission, We held:
Any order made by the Commission may be reviewed on the
application of any person or public service affected thereby,
by certiorari in appropriate cases or by petition, to the Supreme
Court, and the Supreme Court is given jurisdiction to review any
order of the Commission and to modify or set it aside (Sec.
35). . . . In the absence of a specific delegation of jurisdiction to the
Court of First Instance to grant injunctive relief against orders of
the Public Service Commission, it would appear that no court, other
than the Supreme Court, possesses such jurisdiction.
On the other hand, under Rule 44 of the Revised Rules of Court and
Section 33 of Republic Act No. 166, as amended, appeals from
orders and decisions of the Director of the Patent Office must
likewise be taken to Us. It is, therefore, undeniable that the
Philippine Patent Office and the Public Service Commission are
similarly situated and that both are, to say the least, of the same
rank or category as Courts of First Instance. Consequently, no one
of the latter has jurisdiction to issue a writ of injunction against
them.1wph1.t
Wherefore, the writs prayed for are granted and the orders
complained of are hereby set aside, with costs against the
respondents, except the respondent judges.
No. L-37737. February 27, 1979.*
MAXIMO NOCNOC, petitioner, vs. HON. ISIDORO A. VERA
District Judge of the Court of First Instance of Camarines
Norte and ERNESTO MANARANG, respondents.
Workmens Compensation; Jurisdiction; Injunction; A CFI has no
jurisdiction to issue a writ of injunction against the execution ofan
award for workmens compensation issued by a referee.In
reviewing the alleged nullity of the award and enjoining its
execution, respondent Judge assumed jurisdiction over a matter
which could have been elevated from the Workmens
Compensation Unit to the Workmens Compensation Commission,
and, thereafter, on appeal, to this Court. This, he cannot do, for x x
x the decisions, orders and awards entered by the Workmens
Compensation Commission are appealable to the Supreme Court. x
x x (T)he Court of First Instance is not empowered or clothed with
jurisdiction to review or modify, much, less, annul an award
or order of execution issued by the Workmens Compensation
Commission.
Same; Due Process; Employer in the case at bar was not denied his
day in court as he failed to controvert the claim for workmens
compensation and therefore is no more necessity of a formal
hearing.Now, as to private respondents claim that he was denied
his day in court. The WCU correctly found the claim was not
controverted by private respondent within the period prescribed by
the Workmens Compensation Act. as amended, and the
Commission Rules, which require controversion of the claim within
fourteen (14) days from the date of the disability or within ten (10)
days alter the employer or his representative first acquired
knowledge of the disability resulting from the accident or illness.
This finding was not disputed by private respondent. And, as a
matter of fact, private respondent paid petitioner-claimant
P2,330.00 in an attempt to settle the case amicably. The failure to
controvert is fatal to the defense of the claim. The Commission
Rules specifically provides that failure to controvert within the
period may result in the issuance of an award, if warranted by
substantial evidence, without necessity of any formal hearings. We
have recognized this right of the Labor Regional Administrator (now
Chief of Workmens Compensation Unit) to immediately issue an
award without notice and hearing where the employer failed to
seasonably submit the employers report or notice of contra version
in accordance with and in the manner provided for under Sections
37 and 45 of the Workmens Compensation Act.
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Same; A CFI cannot entertain an incident in a workmens
compensation case on the basis of its alleged general jurisdiction
which is merely a descriptive phrase.The descriptive phrase,
however, does not and cannot confer CFIs with power to entertain
an incident involving a Workmens Compensation case, which is
within the exclusive jurisdiction of the Workmens Compensation
Commission (WCC), and of this Court, in case of an appeal. For
jurisdiction to be properly vested in a court or body, it must be
expressly provided by law, and, in the case of Courts of First
Instance, by the Judiciary Act, as amended, not by a phrase
descriptive of the extent and scope of the Courts competence.
Barredo, J., concurring:
Workmens Compensation; Due process; Due process not a proper
issue in the case at bar.I concur, Indeed, We did not have to rule
on the allegation of petitioner about denial of due process because
that is a matter deemed resolved already in the certiorari case the
Court had dismissed.
ose Lozada Lapak for petitioner.
Edwin Z. Ferrer for private respondent.
SANTOS, J.:
In this petition for certiorari and prohibition filed on October 30,
1973, petitioner, a claimant for death compensation benefit, assails
the order of respondent Judge of the Court of First Instance dated
September 18, 1973 1 which enjoined the execution of the order of
the Workmen's Compensation Unit (WCU) Regional District No. 6,
dated March 14, 1973, directing inter alia private respondent to pay
petitioner-claimant the sum of P3,910.00 for the death of his son, 2
as well as the order of the same Court dated October 10, 1973
which denied the motion for reconsideration of above order of
September 18, 1973. 3 The issue raised in this petition is whether
respondent court of First Instance had jurisdiction to entertain a
case impugning the validity of an award/decision of the WCU and,
in the process, enjoin its execution.
In our resolution of November 5, 1973, petitioner-claimant's motion
to litigate as pauper was granted, respondent was required to file
an answer to the petition not to move to dismiss the same and
a temporary restraining order was issued enjoining respondent
Judge from further proceedings effective immediately and until
further orders from this court. 4 On December 11, 1973,
respondent CFI Judge filed his answer, 5 and on January 2, 1974,
petitioner-claimant filed his reply thereto. 6 In a manifestation and
motion filed on January 9. 1974, petitioner-claimant prayed that the
case be set fir oral argument before final resolution of the same by
the Court. 7 On January 11, 1974, private respondent Ernesto
Manarang adopted respondent Judge Vera's answer. 8
The records show that on September 19, 1972, petitioner-claimant
filed a claim for compensation under Act 3842, i.e., the Workmen's
Compensation Act as amended, with the Workmen's Compensation
Unit (WCU), Regional District No. 6, at Naga City, for the death of
his son, Norberto Nocnoc, single, who died in an accident on June 9,
1970, while employed as a bus conductor in the transportation
business of private respondent, Ernest Manarang. 9 Private
respondent received a copy of the claim on February 2, 1973. 10
On March 7, 1973, after the period to controv ert the claim expired,
private respodent moved to dismiss the claim on the ground that
petitioner had previously entered into an amicable setlement of the
claim and that petitioner-claimant had in fact received the sum of
P2,330.00. 11 In its order of March 14, 1973, 12 the WCU through
its Chief Referee, Estanislao D. Sarto, denied the motion to dismiss,
and instead awarded to petitioner-claimant the sum of P6,240.00,
but deducted thereform the aforesaid amount of P2,330.00 which
was deemed as advance and/or partial payment on the claim. The
dispositive portion of the award, therefore, directed private
respondent Manarang
1.To pay to claimant father Maxino Nocnoc ... the sum of P3,910 as
full compensation for the death of the late Roberto Nocnoc; and,
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2. To pay to the Workmen's Compensation Fund ... the sum of
P61.00 as administrative fee under Section 55 of the aforesaid law.
13
Respondent Manarang moved to have the award reconsidered, 14
but his Motion for Reconsideration was denied for lack of merit in
the WCU Order of April 24, 1973. 15 Upon the finality of the award,
claimant-petitioner filed a petition for the issuance of a writ of
execution 16 which was opposed by respondent on the ground that
he already filed on May 25, 1973, a petition for certiorari with this
Court, 17 the resolution of which " is a prejudicial question," 18
The "Petition for Review on Certiorari" adverted to was, per
resolution of this court dated June 8, 1973, considered "NOT FILED"
for failure of peitioner Manarang to pay docket and legal fees. 19 It
does not appear that he filed motion for reconsideration of the said
resolution, but thereafter or on July 20, 1973, the writ of execution
was issued by the WCU. 20
On August 4, 1973, respodent filed a complaint, entitled "Ernesto
Manarang v. Estanislao Sarto, et al." Civil Case No. 2438, for
injunction with the Court of First Instance, branch II at camarines
Norte, presided by respondent Judge to enjoin the enforcement of
the writ of execution so issued, upon his filing of a bond, to be fixed
by the Court. On August 7, 1973 respondent Judge ordered
defendants, WCU Chief Referee and the Provincial Sheriff to "cease
and desist from further orders." In a motion for intervention dated
August 9, 1973, 21 petitioner-claimant moved to be allowed to
intervene as "the real Party-in-interest", with prayer that his
"Motion to Dismiss", which he attached, predicated on lack of
jurisdiction on the part of respondent Judge, be admitted. 22 In its
order of August 13, 1973, respondent Judge granted the motion for
in. intervention but denied the motion to dismissed. 23
In their answer, with counterclaim, dated August 23, 1973 24
defendants (Chief Referee and Provincial Sheriff and intervenor
(petitioner-claimant) prayed for the dismissal of the complaint.
Upon the other hand, plaintiff now private respondent in his
reply 25 prayed for the dismissal of the counter-claim and that the
injunction already issued be made permanent. The questioned
orders of September 18, 1973 and October 19, 1973 were
thereafter issued. 26 Hence, this petition for certiorari and
prohibition. 27
As adverted to earlier, the question now before Us is whether the
Court of First Instance, as a court of general jurisdiction, can
entertain a case impugning the validity of award of the Workmen's
Compensation Unit and, in the process restrain the enforcement of
a writ of execution is issued by its Chief Referee.
Petitioner-claimant contends that the Court of First Instance had
been jurisdiction to entertain a Workmen's Compensation case
since it has no jurisdiction whatsoever over the same. 28 Neither
can it enjoin the execution of an award by the Workmen's
Compensation Unit, an independent administrative body fully
clothed by law with authority to adjudicate matters relative to
Workmens Compensation cases. 29
On the other hand, respondent Judge insists that "in issuing the
injunctive order in Civil Case No. 2438 (he) did so, not in the
exercise of any appellate jurisdiction over the Workmen's
Compensation Commission because he has none, but in the
exercise of his power as a court of general jurisdiction in a case file
before him. 30 For according to respondent judge, "he cannot
evade his solemn duty of giving redress to a litigant who claims,
that his constitutional right to a day in court has been denied." 31
Respondent Judge's position, therefore, is that while he has no
appellate jurisdiction over the Workmen's Compensation case, he
may "... in the exercise of his power as a court of general
jurisdiction ... (gives) redress to a litigant who that his constitutional
right to a day in court has been denied".
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Respondent Judge's position is not well-taken. This petition is
invested with merit.
1. Respondent Judge's disclaimer of appellate jurisdiction over
Workmen's Compensation cases is well-taken pursuant to Sec. 46,
Act 3428 or the Workmen's Compensation Act as amended by RA
772, to wit:
SEC. 46. Jurisdiction The Workmen's Compensation Commission
shall have exclusive jurisdiction to hear and decide claims for
compensation under the Workmen's Compensation Act subject to
appeal to the Supreme Court, in the same manner and in the same
period provided by law and by Rules of Court for appeal from the
Court of Industrial Relations to the Supreme Court. (Emphasis
supplied.)
But his assertion of jurisdiction over private respondent Manarang's
complaint for injunction arising from proceedings before the
Workmen's Compensation Unit, on the ground that his court "is one
of general jurisdiction" is contrary to his court's admitted lack of
jurisdiction whether original or appellate over Workmen's
Compensation cases. For, in reviewin the alleged nullity of the
award and enjoining its execution, respondent Judge assumed
jurisdiction over a matter which could have been elevated from the
Workmen's Compensation Unit to the Workmen's Compensation
Commission, and thereafter, on appeal, to this Court. This, he
cannot do, for "... the decisions, orders and awards entered by the
Workmen's Compensation Commission are appealable to the
Supreme Court. ... (T)he Court of First Instance is not empowered or
clothed with jurisdiction to review or modify, much less, annul an
award or order of execution issued by the Workmen's
Compensation Commision." 32
The law and jurisprudence are thus clear, unequivocal. No further
interpretation is necessary. The proper forum to thresh out the
validity of the WCU's award which is allegedly null and void
because it was rendered without giving the private respondent his
consitutional right to due process, as well as the validity of the
ensuing writ of execution to enforce the same is the Workmen's
Compensation Commission, and, on appeal, this court and not any
other, much less respondent's court. In point of fact, respondent
Manarang filed a Petition for Review on certiorari earlier with this
court on May 25, 1973. This, however, was considered "NOT FILED"
per this Court's resolution of June 8, 1973 for his failure to pay
docket and legal fees. Since he did not pursue the said remedy by
seeking the reconsideration of this Court's resolution and/or paying
the required fees, and, instead, went to respondent Judge's court
and filed the complaint for injunction, he may be deemed to have
abandoned the appropriate recourse of appeal to the Workmen's
Compensation Commission and to this Court.
2. Now, as to private respondent's claim that he was denied his
day in court. The WCU correctly found that the claim was not
controverted by private respondent within the period prescribed by
the Workmen's Compensation Act, as amended, and the
Commission Rules, which require controversion of the claim within
fourteen (14) days from the date of the disability or within ten (10)
days after the employer or his representative first acquired
knowledge of the disability resulting from the accident or illness.
This finding was not disputed by private respondent. And, as a
matter of fact, private respondent paid petitioner-claimant
P2,330.00 in an attempt to settle the case amicably. The failure to
controvert is fatal to the defense of the claim. 33 The Commission
Rules specifically provides that failure to controvert within the
period "may result in the issuance of an award, if warranted by
substantial evidence, without necessity of any formal hearings." 34
We have recognized this right of the Labor Regional Administrator
(now Chief of Workmen's Compensation Unit) to immediately issue
an award without notice and hearing where the employer failed to
seasonably submit the employer's report or notice of controversion
in accordance with and in the manner provided for under Sections
37 and 45 of the Workmen's Compensation Act. 35 Specifically, it
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has been held that after the failure to controvert, an emoployer
cannot raise the question of being denied its day in court. 36
Respondent Judge assumed jurisdiction over the private
respondent's complaint in Civil Case No. 2438 on the basis of
private respondents claim that he was denied his day in court and
on his (respondent Judge's) impression that as a "court of general
jurisdiction", the Court of First Instance has jurisdiction over the
case and give the relief prayed for as he did. Respondent Judge
lost sight of the fact that the phrase "court of general jurisdiction"
is merely descriptive of court of First Instance (CFI) which have
original jurisdiction over civil, criminal and other cases in contra-
distinction to courts of special, limited jurisdiction, e.g., the Court of
Agrarian Relations (CAR), the Court of Tac Appeals (CTA), the Circuit
Criminal Courts (CCC), the Juvenile and Domestic Relations Courts
(JDRC) and so forth. The descriptive phrase, however, does not and
cannot confer CFI's with power to entertain an incident involving a
Workmen's Compensation case, which within the exclusive
jurisdiction of the Workmen's Compensation Commission (WCC),
and of this Court, in case of an appeal. For jurisdiction to be
properly vested in a court or body, it must be expressly provided by
law, and, in the case of Courts of First Instance, by the Judiciary Act,
as amended, not by a phrase descriptive of the extent and scope of
the Court's competence.
IN VIEW OF THE FOREGOING, the orders of respondent Judge dated
September 18 and October 10, 1973, are hereby ANNULLED and
SET ASIDE. by this court on November 5, 1973, is hereby MADE
PERMANENT. This decision and the award of the Workmen's
Compensation Unit are immediately executory.
G.R. No. 101344. October 1, 1992. * any provision of the Constitution.We have expressly ruled therein,
ASSET PRIVATIZATION TRUST, as Trustee of the Government
of the Republic of the Philippines, petitioner, vs. COURT OF
APPEALS, JOB C. MADAYAG, Presiding Judge of the Regional
Trial Court of Makati, Br. 145, and JOHANNESBURG
PACKAGING CORP., respondents.
Remedial Law; Injunction; The basic purpose of a restraining order
is to preserve the status quo until the hearing of the application for
preliminary injunction and that insofar as lower courts are
concerned, its 20-day efectivity period is non-extendible.
Apparently, the basic purpose of a restraining order is to preserve
the status quo until the hearing of the application for preliminary
injunction, and that insofar as lower courts are concerned, its 20-
day effectivity period is non-extendible. It automatically terminates
at the end of such period without the need of any judicial
declaration to that effect and the lower courts, including the Court
of Appeals, have no discretion to extend the same. Only this Court
can. It is settled that, generally, the exercise of sound discretion in
issuing a restraining order by the lower court will not be interfered
with.
Same; Same; Same; Court agrees with petitioner that no
restraining order lies against it in view of Sec. 31 of Proclamation
No. 50-A.In the case before Us, however, We agree with petitioner
that no restraining order lies against it in view of Sec. 31 of
Proclamation No. 50-A dated 15 December 1986 which provides
No court or administrative agency shall issue any restraining
order or injunction against the Trust in connection with the
acquisition, sale or disposition of assets transferred to it x x x x Nor
shall such order or injunction be issued against any purchaser of
assets sold by the Trust to prevent such purchaser from taking
possession of any assets purchased by him.
Same; Same; Same; Same; Proclamation No. 50-A does not infringe
in addition, that Proclamation No. 50-A does not infringe any
provision of the Constitution. ThusThe President, in the exercise
of her legislative power under the Freedom Constitution, issued
Proclamation No. 50-A prohibiting the courts from issuing
restraining orders and writs of injunction against the APT and the
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purchasers of any assets sold by it, to prevent courts from
interfering in the discharge, by this instrumentality of the executive
branch of the Government, of its task of carrying out the
expeditious disposition and privatization of certain government
corporations and/or the assets thereof (Proc. No. 50), absent any
grave abuse of discretion amounting to excess or lack of
jurisdiction on its part. This proclamation, not being inconsistent
with the Constitution and not having been repealed or revoked by
Congress, has remained operative.
Same; Appeal; Court is invested with authority to review such
matters as may be necessary to serve best the interest of justice
even if they are not assigned as errors in the appeal.We have
opted to consider the no-injunction rule even if the issue is raised
only for the first time in this appeal because the acts of APT are
vested with public interest and that under Proclamation No. 50 it is
mandated to carry out the expeditious disposition and/or
privatization of certain government corporations and/or assets
thereof. Besides, this Court is invested with authority to review
such matters as may be necessary to serve best the interest of
justice, even if they are not assigned as errors in the appeal.
KAPUNAN, J.:
The petition for review on certiorari before us seeks to reverse and
set aside the decision of the Court of Appeals which denied due
course to the petition for certiorari filed by the Asset Privatization
Trust (APT) assailing the order of the Regional Trial Court (RTC)
Branch 62, Makati City. The Makati RTC's order upheld and
confirmed the award made by the Arbitration Committee in favor of
Marinduque Mining and Industrial Corporation (MMIC) and against
the Government, represented by herein petitioner APT for damages
in the amount of P2.5 BILLION (or approximately P4.5 BILLION,
including interest).
Ironically, the staggering amount of damages was imposed on the
Government for exercising its legitimate right of foreclosure as
creditor against the debtor MMIC as a consequence of the latter's
failure to pay its overdue and unpaid obligation of P22 billion to the
Philippine National Bank (PNB) and the Development Bank of the
Philippines (DBP).
The antecedent facts
of the case.
The development, exploration and utilization of the mineral
deposits in the Surigao Mineral Reservation have been authorized
by Republic Act No. 1528, as amended by Republic Acts Nos. 2077
and 4167, by virtue of which laws, a Memorandum of Agreement
was drawn on July 3, 1968, whereby the Republic of the Philippines
thru the Surigao Mineral Reservation Board, granted MMIC the
exclusive right to explore, develop and exploit nickel, cobalt and
other minerals in the Surigao mineral reservation. 1 MMIC is a
domestic corporation engaged in mining with respondent Jesus S.
Cabarrus, Sr. as President and among its original stockholders.
The Philippine Government undertook to support the financing of
MMIC by purchase of MMIC debenture bonds and extension of
guarantees. Further, the Philippine Government obtained a firm
commitment form the DBP and/or other government financing
institutions to subscribe in MMIC and issue guarantee/s for foreign
loans or deferred payment arrangements secured from the US
Eximbank, Asian Development Bank, Kobe Steel, of amount not
exceeding US$100 Million. 2
DBP approved guarantees in favor of MMIC and subsequent
requests for guarantees were based on the unutilized portion of the
Government commitment. Thereafter, the Government extended
accommodations to MMIC in various amounts.
On July 13, 1981, MMIC, PNB and DBP executed a Mortgage Trust
Agreement 3 whereby MMIC, as mortgagor, agreed to constitute a
mortgage in favor or PNB and DBP as mortgagees, over all MMIC's
assets; subject of real estate and chattel mortgage executed by the
mortgagor, and additional assets described and identified,
including assets of whatever kind, nature or description, which the
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mortgagor may acquire whether in substitution of, in
replenishment, or in addition thereto.
Article IV of the Mortgage Trust Agreement provides for Events of
Default, which expressly includes the event that the MORTGAGOR
shall fail to pay any amount secured by this Mortgage Trust
Agreement when due. 4
Article V of the Mortgage Trust Agreement prescribes in detail, and
in addition to the enumerated events of defaults, circumstances by
which the mortgagor may be declared in default, the procedure
therefor, waiver of period to foreclose, authority of Trustee before,
during and after foreclosure, including taking possession of the
mortgaged properties. 5
In various requests for advances/remittances of loans if huge
amounts, Deeds of Undertaking, Promissory Notes, Loan
Documents, Deeds of Real Estate Mortgages, MMIC invariably
committed to pay either on demand or under certain terms the
loans and accommodations secured from or guaranteed by both
DBP and PNB.
By 1984, DBP and PNB's financial both in loans and in equity in
MMIC had reached tremendous proportions, and MMIC was having a
difficult time meeting its financial obligations. MMIC had an
outstanding loan with DBP in the amount of P13,792,607,565.92 as
of August 31, 1984 and with PNB in the amount of
P8,789,028,249.38 as July 15, 1984 or a total Government expose
of Twenty Two Billion Six Hundred Sixty-Eight Million Five Hundred
Thirty-Seven Hundred Seventy and 05/100 (P22, 668,537,770.05),
Philippine Currency. 6 Thus, a financial restructuring plan (FRP)
designed to reduce MMIC's interest expense through debt
conversion to equity was drafted by the Sycip Gorres Velayo
accounting firm. 7 On April 30, 1984, the FRP was approved by the
Board of Directors of the MMIC. 8 However, the proposed FRP had
never been formally adopted, approved or ratified by either PNB or
DBP. 9
In August and September 1984, as the various loans and advances
made by DBP and PNB to MMIC had become overdue and since any
restructuring program relative to the loans was no longer feasible,
and in compliance with the directive of Presidential Decree No. 385,
DBP and PNB as mortgagees of MMIC assets, decided to exercise
their right to extrajudicially foreclose the mortgages in accordance
with the Mortgage Trust Agreement. 10
The foreclosed assets were sold to PNB as the lone bidder and were
assigned to three newly formed corporations, namely, Nonoc
Mining Corporation, Maricalum Mining and Industrial Corporation,
and Island Cement Corporation. In 1986, these assets were
transferred to the Asset Privatization Trust (APT). 11
On February 28, 1985, Jesus S. Cabarrus, Sr., together with the
other stockholders of MMIC, filed a derivative suit against DBP and
PNB before the RTC of Makati, Branch 62, for Annulment of
Foreclosures, Specific Performance and Damages. 12 The suit,
docketed as Civil Case No. 9900, prayed that the court: (1) annul
the foreclosures, restore the foreclosed assets to MMIC, and require
the banks to account for their use and operation in the interim; (2)
direct the banks to honor and perform their commitments under
the alleged FRP; and (3) pay moral and exemplary damages,
attorney's fees, litigation expenses and costs.
In the course of the trial, private respondents and petitioner APT, as
successor of the DBP and the PNB's interest in MMIC, mutually
agreed to submit the case to arbitration by entering into a
"Compromise and Arbitration Agreement," stipulating, inter alia:
NOW THEREFORE, for and in consideration of the foregoing
premises and the mutual covenants contained herein the parties
agree as follows:
1. Withdrawal and Compromise. The parties have agreed to
withdraw their respective claims from the Trial Court and to resolve
their dispute through arbitration by praying to the Trial Court to
issue a Compromise Judgment based on this Compromise and
Arbitration Agreement.
In withdrawing their dispute from the court and in choosing to
resolve it through arbitration, the parties have agreed that:
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(a) their respective money claims shall be reduced to purely money
claims; and
(b) as successor and assignee of the PNB and DBP interests in MMIC
and the MMIC accounts, APT shall likewise succeed to the rights
and obligations of PNB and DBP in respect of the controversy
subject of Civil Case No. 9900 to be transferred to arbitration and
any arbitral award/order against either PNB and/or DBP shall be the
responsibility be discharged by and be enforceable against APT, the
parties having agreed to drop PNB and DBP from the arbitration.
2. Submission. The parties hereby agree that (a) the controversy in
Civil Case No. 9900 shall be submitted instead to arbitration under
RA 876 and (b) the reliefs prayed for in Civil Case No. 9900 shall,
with the approval of the Trial Court of this Compromise and
Arbitration Agreement, be transferred and reduced to pure
pecuniary/money claims with the parties waiving and foregoing all
other forms of reliefs which they prayed for or should have prayed
for in Civil Case No. 9900. 13
The Compromise and Arbitration Agreement limited the issues to
the following:
5. Issues The issues to be submitted for the Committee's resolution
shall be (a) Whether PLAINTIFFS have the capacity or the
personality to institute this derivative suit in behalf of the MMIC or
its directors, (b) Whether or not the actions leading to, and
including,. the PNB-DBP foreclosure of the MMIC assets were
proper, valid and in good
faith. 14
This agreement was presented for approval to the trial court. On
October 14, 1992, the Makati RTC, Branch 61, issued an order, to
wit:
WHEREFORE, this Court orders:
1. Substituting PNB and DBP with the Asset Privatization Trust as
party defendant.
2. Approving the Compromise and Arbitration Agreement dated
October 6, 1997, attached as Annex "C" of the Omnibus Motion.
3. Approving the Transformation of the reliefs prayed for [by] the
plaintiffs in this case into pure money claims; and
4. The Complaint is hereby DISMISSED. 15
The Arbitration Committee was composed of retired Supreme Court
Justice Abraham Sarmiento as Chairman, Atty. Jose C. Sison and
former Court of Appeals Justice Magdangal Elma as Members. On
November 24, 1993, after conducting several hearings, the
Arbitration Committee rendered a majority decision in favor of
MMIC, the pertinent portions of which read as follows:
Since, as this Committee finds, there is no foreclosure at all as it
was not legally and validly done, the Committee holds and so
declares that the loans of PNB and DBP to MMIC. for the payment
and recovery of which the void foreclosure sales were undertaken,
continue to remain outstanding and unpaid. Defendant APT as the
successor-in-interest of PNB and DBP to the said loans is therefore
entitled and retains the right, to collect the same from MMIC
pursuant to, and based on the loan documents signed by MMIC,
subject to the legal and valid defenses that the latter may duly and
seasonably interpose. Such loans shall, however, be reduced by the
amount which APT may have realized from the sale of the seized
assets of MMIC which by agreement should no longer be returned
even if the foreclosures were found to be null and void.
The documentary evidence submitted and adopted by the parties
(Exhibits "3", "3-B"; Exhibit "100"; and also Exhibit "ZZZ") as their
exhibits would show that the total outstanding obligation due to
DBP and PNB as of the date of foreclosure is P22,668,537,770.05,
more or less.
Therefore defendant APT can, and is still entitled to, collect the
outstanding obligations of MMIC to PNB and DBP amounting to
P22,668,537,770.05, more or less, with interest thereon as
stipulated in the loan documents from the date of foreclosure up to
the time they are fully paid less the proportionate liability of DBP as
owner of 87% of the total capitalization of MMIC under the FRP.
Simply put, DBP shall share in the award of damages to, and in the
obligations of, MMIC in proportion to its 87% equity in tile total
capital stock of MMIC.
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xxx xxx xxx
As this Committee holds that the FRP is valid, DBP's equity in MMIC
is raised to 87%. So pursuant to the above provision of the
Compromise and Arbitration Agreement, the 87% equity of DBP is
hereby deducted from the actual damages of P19,486,118,654.00
resulting in the net actual damages of P2,531,635,425.02 plus
interest.
DISPOSITION
WHEREFORE, premises considered, judgment is hereby rendered:
1. Ordering the defendant to pay to the Marinduque Mining and
Industrial Corporation, except the DBP, the sum of
P2,531,635,425.02 with interest thereon at the legal rate of six per
cent (6%) per annum reckoned from August 3, 9, and 24,
1984, pari passu, as and for actual damages. Payment of these
actual damages shall be offset by APT from the outstanding and
unpaid loans of MMIC with DBP and PNB, which have not been
converted into equity. Should there be any balance due to MMIC
after the offsetting, the same shall be satisfied from the funds
representing the purchase price of the sale of the shares of Island
Cement Corporation in the amount of P503,000,000.00 held under
escrow pursuant to the Escrow Agreement dated April 22, 1988 or
to such subsequent escrow agreement that would supercede [sic] it
pursuant to paragraph (9) of the Compromise and Arbitration
Agreement;
2. Ordering the defendant to pay to the Marinduque Mining and
Industrial Corporation, except the DBP, the sum of P13,000.000.00,
as and for moral and exemplary damages. Payment of these moral
and exemplary damages shall be offset by APT from the
outstanding and unpaid loans of MMIC with DBP and PNB, which
have not been converted into equity. Should there be any balance
due to MMIC after the offsetting, the same shall be satisfied from
the funds representing the purchase price of the sale of the shares
of Island Cement Corporation in the amount of P503,000,000.00
held under escrow pursuant to the Escrow Agreement dated April
22, 1988 or to such subsequent escrow agreement that would
supercede [sic] it pursuant to paragraph (9) of the Compromise and
Arbitration Agreement;
3. Ordering the defendant to pay to the plaintiff, Jesus S. Cabarrus,
Sr., the sum of P10,000,000.00, to be satisfied likewise from the
funds held under escrow pursuant to the Escrow Agreement dated
April 22, 1988 or to such subsequent escrow agreement that would
supersede it, pursuant to paragraph (9) of the Compromise and
Arbitration Agreement, as and for moral damages; and
4. Ordering the defendant to pay arbitration costs.
This Decision is FINAL and EXECUTORY.
IT IS SO ORDERED. 16
Motions for reconsideration were filed by both parties, but the same
were denied.
On October 17, 1993, private respondents filed in the same Civil
Case No. 9900 an "Application/Motion for Confirmation of
Arbitration Award." Petitioner countered with an "Opposition and
Motion to Vacate Judgment" raising the following grounds.
1. The plaintiffs Application/Motion is improperly filed with this
branch of the Court, considering that the said motion is neither a
part nor the continuation of the proceedings in Civil Case No. 9900
which was dismissed upon motion of the parties. In fact, the
defendants in the said Civil Case No. 9900 were the Development
Bank of the Philippines and the Philippine National Bank (PNB);
2. Under Section 71 of Rep. Act 876, an arbitration under a contract
or submission shall be deemed a special proceedings and a party to
the controversy which was arbitrated may apply to the court having
jurisdiction, (not necessarily with this Honorable Court) for an order
confirming the award;
3. The issues submitted for arbitration have been limited to two: (1)
propriety of the plaintiffs filing the derivative suit and (2) the
regularity of the foreclosure proceedings. The arbitration award
sought to be confirmed herein, far exceeded the issues submitted
and even granted moral damages to one of the herein plaintiffs;
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4. Under Section 24 of Rep. Act 876, the Court must make an order
vacating the award where the arbitrators exceeded their powers, or
so imperfectly executed them, that a mutual, final and definite
award upon the subject matter submitted to them was not made. 17
Private respondents filed a "REPLY AND OPPOSITION" dated
November 10, 1984, arguing that a dismissal of Civil Case No. 9900
was merely a "qualified dismissal" to pave the way for the
submission of the controversy to arbitration and operated simply as
"a mere suspension of the proceedings" They denied that the
Arbitration Committee had exceeded its powers.
In an Order dated November 28, 1993, the trial court confirmed the
award of the Arbitration Committee. The dispositive portion of said
order reads:
WHEREFORE, premises considered, and in the light of the parties
[sic] Compromise and Arbitration Agreement dated October 6,
1992, the Decision of the Arbitration Committee promulgated on
November 24, 1993, as affirmed in a Resolution dated July 26,
1994, and finally settled and clarified in the Separate Opinion dated
September 2, 1994 of Committee Member Elma, and the pertinent
provisions of RA 876, also known as the Arbitration Law, this Court
GRANTS PLAINTIFFS' APPLICATION AND THUS CONFIRMS THE
ARBITRATION AWARD, AND JUDGMENT IS HEREBY RENDERED:
(a) Ordering the defendant APT to the Marinduque Mining and
Industrial Corporation (MMIC), except the DBP, the sum of
P3,811,757,425.00, as and for actual damages, which shall be
partially satisfied from the funds held under escrow in the amount
of P503,000,000.00 pursuant to the Escrow Agreement dated April
22, 1988. The balance of the award, after the escrow funds are fully
applied, shall be executed against the APT;
(b) Ordering the defendant to pay to the MMIC, except the DBP, the
sum of P13,000,000.00 as and for moral and exemplary damages;
(c) Ordering the defendant to pay to Jesus S. Cabarrus, Sr., the sum
of P10,000,000.00 as and for moral damages; and
(d) Ordering the defendant to pay the herein
plaintiffs/applicants/movants the sum of P1,705,410.23 as
arbitration costs.
In reiteration of the mandates of Stipulation No. 10 and Stipulation
No. 8 paragraph 2 of the Compromise and Arbitration Agreement,
and the final edict of the Arbitration Committee's decision, and with
this Court's Confirmation, the issuance of the Arbitration
Committee's Award shall henceforth be final and executory.
SO ORDERED. 18
On December 27, 1994, petitioner filed its motion for
reconsideration of the Order dated November 28, 1994. Private
respondents, in turn, submitted their reply and opposition thereto.
On January 18, 1995, the trial court handed down its order denying
APT's motion for reconsideration for lack of merit and for having
been filed out of time. The trial court declared that "considering
that the defendant APT, through counsel, officially and actually
received a copy of the Order of this Court dated November 28,
1994 on December 6, 1994, the Motion for Reconsideration thereof
filed by the defendant APT on December 27, 1994, or after the
lapse of 21 days, was clearly filed beyond the 15-day reglementary
period prescribed or provided for by law for the filing of an appeal
from final orders, resolutions, awards, judgments or decisions of
any court in all cases, and by necessary implication for the filing of
a motion for reconsideration thereof."
On February 7, 1995, petitioner received private respondents'
Motion for Execution and Appointment of Custodian of Proceeds of
Execution dated February 6, 1995.
Petitioner thereafter filed with the Court of Appeals a special civil
action for certiorari with temporary restraining order and/or
preliminary injunction dated February 13, 1996 to annul and
declare as void the Orders of the RTC-Makati dated November 28,
1994 and January 18, 1995 for having been issued without or in
excess of jurisdiction and/or with grave abuse of discretion. 19 As
ground therefor, petitioner alleged that:
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I II
THE RESPONDENT JUDGE HAS NOT VALIDLY ACQUIRED
JURISDICTION MUCH LESS, HAS THE COURT AUTHORITY, TO
CONFIRM THE ARBITRAL AWARD CONSIDERING THAT THE ORIGINAL
CASE, CIVIL CASE NO. 9900, HAD PREVIOUSLY BEEN DISMISSED.
II
THE RESPONDENT JUDGE COMMITTED GRAVE ABUSE OF
DISCRETION AND ACTED WITHOUT OR IN EXCESS OF JURISDICTION,
IN ISSUING THE QUESTIONED ORDERS CONFIRMING THE ARBITRAL
AWARD AND DENYING THE MOTION FOR RECONSIDERATION OF
ORDER OF AWARD.
III
THE RESPONDENT JUDGE GROSSLY ABUSED HIS DISCRETION AND
ACTED WITHOUT OR IN EXCESS OF AND WITHOUT JURISDICTION IN
RECKONING THE COUNTING OF THE PERIOD TO FILE MOTION FOR
RECONSIDERATION, NOT FROM THE DATE OF SERVICE OF THE
COURT'S COPY CONFIRMING THE AWARD, BUT FROM RECEIPT OF A
XEROX COPY OF WHAT PRESUMABLY IS THE OPPOSING COUNSEL'S
COPY THEREOF. 20
On July 12, 1995, he Court of Appeals, through its Fifth-Division,
denied due course and dismissed the petition for certiorari.
Hence, the instant petition for review on certiorari imputing to the
Court of Appeals the following errors:
ASSIGNMENT OF ERRORS
I The RTC of Makati, Branch 62,
THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE MAKATI
REGIONAL TRIAL COURT, BRANCH 62 WHICH HAS PREVIOUSLY
DISMISSED CIVIL CASE NO. 9900 HAD LOST JURISDICTION TO
CONFIRM THE ARBITRAL AWARD UNDER THE SAME CIVIL CASE AND
NOT RULING THAT THE APPLICATION FOR CONFIRMATION SHOULD
HAVE BEEN FILED AS A NEW CASE TO BE RAFFLED OFF AMONG THE
DIFFERENT BRANCHES OF THE RTC.
THE COURT OF APPEALS LIKEWISE ERRED IN HOLDING THAT
PETITIONER WAS ESTOPPED FROM QUESTIONING THE ARBITRATION
AWARD, WHEN PETITIONER QUESTIONED THE JURISDICTION OF THE
RTC-MAKATI, BRANCH 62 AND AT THE SAME TIME MOVED TO
VACATE THE ARBITRAL AWARD.
III
THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE
RESPONDENT TRIAL COURT SHOULD HAVE EITHER
DISMISSED/DENIED PRIVATE RESPONDENTS' MOTION/PETITION FOR
CONFIRMATION OF ARBITRATION AWARD AND/OR SHOULD HAVE
CONSIDERED THE MERITS OF THE MOTION TO VACATE ARBITRAL
AWARD.
IV
THE COURT OF APPEALS ERRED IN NOT TREATING PETITIONER
APT'S PETITION FOR CERTIORARI AS AN APPEAL TAKEN FROM THE
ORDER CONFIRMING THE AWARD.
V
THE COURT OF APPEALS ERRED IN NOT RULING ON THE LEGAL
ISSUE OF WHEN TO RECKON THE COUNTING OF THE PERIOD TO
FILE A MOTION FOR RECONSIDERATION. 21
The petition is impressed with merit.
I
did not have jurisdiction to confirm
the arbitral award.
The use of the term "dismissed" is not "a mere semantic
imperfection". The dispositive portion of the Order of the trial court
dated October 14, 1992 stated in no uncertain terms:
4. The Complaint is hereby DISMISSED. 22
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The term "dismiss" has a precise definition in law. "To dispose of an
action, suit, or motion without trial on the issues involved.
Conclude, discontinue, terminate, quash." 23
Admittedly, the correct procedure was for the parties to go back to
the court where the case was pending to have the award confirmed
by said court. However, Branch 62 made the fatal mistake of
issuing a final order dismissing the case. While Branch 62 should
have merely suspended the case and not dismissed it, 24 neither of
the parties questioned said dismissal. Thus, both parties as well as
said court are bound by such error.
It is erroneous then to argue, as private respondents do, that
petitioner APT was charged with the knowledge that the "case was
merely stayed until arbitration finished," as again, the order of
Branch 62 in very clear terms stated that the "complaint was
dismissed." By its own action, Branch 62 had lost jurisdiction over
the case. It could not have validly reacquired jurisdiction over the
said case on mere motion of one of the parties. The Rules of Court
is specific on how a new case may be initiated and such is not done
by mere motion in a particular branch of the RTC. Consequently, as
there was no "pending action" to speak of, the petition to confirm
the arbitral award should have been filed as a new case and raffled
accordingly to one of the branches of the Regional Trial Court.
II
Petitioner was not estopped from
questioning the jurisdiction of
Branch 62 of the RTC of Makati.
The Court of Appeals ruled that APT was already estopped to
question the jurisdiction of the RTC to confirm the arbitral award
because it sought affirmative relief in said court by asking that the
arbitral award be vacated.
The rule is that "Where the court itself clearly has no jurisdiction
over the subject matter or the nature of the action, the invocation
of this defense may be done at any time. It is neither for the courts
nor for the parties to violate or disregard that rule, let alone to
confer that jurisdiction this matter being legislative in
character." 25 As a rule then, neither waiver nor estoppel shall apply
to confer jurisdiction upon a court barring highly meritorious and
exceptional circumstances. 26 One such exception was enunciated
in Tijam vs. Sibonghanoy, 27 where it was held that "after
voluntarily submitting a cause and encountering an adverse
decision on the merits, it is too late for the loser to question the
jurisdiction or power of the court."
Petitioner's situation is different because from the outset, it has
consistently held the position that the RTC, Branch 62 had no
jurisdiction to confirm the arbitral award; consequently, it cannot
be said that it was estopped from questioning the RTC's jurisdiction.
Petitioner's prayer for the setting aside of the arbitral award was
not inconsistent with its disavowal of the court's jurisdiction.
III
Appeal of petitioner to the
Court of Appeals thru certiorari
under Rule 65 was proper.
The Court of Appeals in dismissing APT's petition
for certiorari upheld the trial court's denial of APT's motion for
reconsideration of the trial court's order confirming the arbitral
award, on the ground that said motion was filed beyond the 15-day
reglementary period; consequently, the petition for certiorari could
not be resorted to as substitute to the lost right of appeal.
We do not agree.
Section 99 of Republic Act No. 876, 28
provides that:
. . . An appeal may be taken from an order made in a proceeding
under this Act, or from a judgment entered upon an award
through certiorari proceedings, but such appeals shall be limited to
questions of law. . . ..
The aforequoted provision, however, does not preclude a party
aggrieved by the arbitral award from resorting to the extraordinary
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remedy of certiorari under Rule 65 of the Rules of Court where, as
in this case, the Regional Trial Court to which the award was
submitted for confirmation has acted without jurisdiction or with
grave abuse of discretion and there is no appeal, nor any plain,
speedy remedy in the course of law.
Thus, Section 1 of Rule 65 provides:
Sec 1. Petition for Certiorari: When any tribunal, board or officer
exercising judicial functions, has acted without or in excess of its or
his jurisdiction, or with grave abuse of discretion and there is no
appeal, nor any plain, speed, and adequate remedy in the ordinary
course of law, a person aggrieved thereby may file a verified
petition in the proper court alleging the facts with certainty and
praying that judgment be rendered annulling or modifying the
proceedings, as the law requires, of such tribunal, board or officer.
In the instant case, the respondent court erred in dismissing the
special civil action for certiorari, it being clear from the pleadings
and the evidence that the trial court lacked jurisdiction and/or
committed grave abuse of discretion in taking cognizance of
private respondents' motion to confirm the arbitral award and,
worse, in confirming said award which is grossly and patently not in
accord with the arbitration agreement, as will be hereinafter
demonstrated.
IV
The nature and limits of the
Arbitrators' power.
As a rule, the award of an arbitrator cannot be set aside for mere
errors of judgment either as to the law or as to the facts. 29 Courts
are without power to amend or overrule merely because of
disagreement with matters of law or facts determined by the
arbitrators. 30 They will not review the findings of law and fact
contained in an award, and will not undertake to substitute their
judgment for that of the arbitrators, since any other rule would
make an award the commencement, not the end, of
litigation. 31 Errors of law and fact, or an erroneous decision of
matters submitted to the judgment of the arbitrators, are
insufficient to invalidate an award fairly and honestly
made. 32 Judicial review of an arbitration is thus, more limited than
judicial review of a trial. 33
Nonetheless, the arbitrators' award is not absolute and without
exceptions. The arbitrators cannot resolve issues beyond the scope
of the submission agreement. 34 The parties to such an agreement
are bound by the arbitrators' award only to the extent and in the
manner prescribed by the contract and only if the award is
rendered in conformity thereto. 35Thus, Sections 24 and 25 of the
Arbitration Law provide grounds for vacating, rescinding or
modifying an arbitration award. Where the conditions described in
Articles 2038, 36
2039, 37 and 1040 38 of the Civil Code applicable to compromises
and arbitration are attendant, the arbitration award may also be
annulled.
In Chung Fu Industries (Phils.) vs. Court of Appeals, 39
we held:
. . . . It is stated explicitly under Art. 2044 of the Civil Code that the
finality of the arbitrators' award is not absolute and without
exceptions. Where the conditions described in Articles 2038, 2039
and 2040 applicable to both compromises and arbitrations are
obtaining, the arbitrator's award may be annulled or rescended.
Additionally, under Sections 24 and 25 of the Arbitration Law, there
are grounds for vacating, modifying or rescinding an arbitrator's
award. Thus, if and when the factual circumstances referred to the
above-cited provisions are present, judicial review of the award is
properly warranted.
According, Section 20 of R.A. 876 provides:
Sec. 20. Form and contents of award. The award must be made
in writing and signed and acknowledge by a majority of the
arbitrators, if more than one; and by the sole arbitrator, if there is
only only. Each party shall be furnished with a copy of the award.
The arbitrators in their award may grant any remedy or relief which
they deem just and equitable and within the scope of the
agreement of the parties, which shall include, but not be limited to,
the specific performance of a contract.
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xxx xxx xxx
The arbitrators shall have the power to decide only those matters
which have been submitted to them. The terms of the award shall
be confined to such disputes. (Emphasis ours).
xxx xxx xxx
Sec. 24 of the same law enumerating the grounds for vacating an
award states:
Sec. 24. Grounds for vacating award. In any one of the following
cases, the court must make an order vacating the award upon the
petition of any party to the controversy when such party proves
affirmatively that in the arbitration proceeding:
(a) The award was procured by corruption, fraud, or other undue
means; or
(b) That there was evident partiality or corruption in the arbitrators
or any of them; or
(c) That the arbitrators were guilty of misconduct in refusing to
postpone the hearing upon sufficient cause shown, or in refusing to
hear evidence pertinent and material to the controversy; that one
or more of the arbitrators was disqualified to act as such under
section nine hereof, and willfully refrained from disclosing such
disqualifications or any other misbehavior by which the rights of
any party have been materially prejudiced; or
(d) That the arbitrators exceeded their powers, or so imperfectly
executed them, that a mutual, final and definite award upon the
subject matter submitted to them was not made. (Emphasis ours)
xxx xxx xxx.
Section 25 which enumerates the grounds for modifying the award
provides:
Sec. 25. Grounds for modifying or correcting award In anyone of
the following cases, the court must make an order modifying or
correcting the award, upon the application of any party to the
controversy which was arbitrated:
(a) Where there was an evident miscalculation of figures, or an
evident mistake in the description of any person, thing or property
referred to in the award; or
(b) Where the arbitrators have awarded upon a matter not
submitted to them, not affecting the merits of the decision upon
the matter submitted; or
(c) Where the award is imperfect in a matter of form not affecting
the merits of the controversy, and if it had been a commissioner's
report, the defect could have been amended or disregarded by the
court.
xxx xxx xxx
Finally, it should be stressed that while a court is precluded from
overturning an award for errors in the determination of factual
issues, nevertheless, if an examination of the record reveals no
support whatever for the arbitrators determinations, their award
must be vacated. 40 in the same manner, an award must be
vacated if it was made in "manifest disregard of the law." 41
Against the backdrop of the foregoing provisions and principles, we
find that the arbitrators came out with an award in excess of their
powers and palpably devoid of factual and legal basis.
V
There was no financial
structuring program:
foreclosure of mortgage
was fully justified.
The point need not be belabored that PNB and DBP had the
legitimate right to foreclose of the mortgages of MMIC whose
obligations were past due. The foreclosure was not a wrongful act
of the banks and, therefore, could not be the basis of any award of
damages. There was no financial restructuring agreement to speak
of that could have constituted an impediment to the exercise of the
banks' right to foreclose.
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As correctly stated by Mr. Jose C. Sison, a member of the Arbitration
Committee who wrote a separate opinion:
1. The various loans and advances made by DBP and PNB to MMIC
have become overdue and remain unpaid. The fact that a FRP was
drawn up is enough to establish that MMIC has not been complying
with the terms of the loan agreement. Restructuring simply
connotes that the obligations are past due that is why it is
"restructurable";
2. When MMIC thru its board and the stockholders agreed and
adopted the FRP, it only means that MMIC had been informed or
notified that its obligations were past due and that foreclosure is
forthcoming;
3. At that stage, MMIC also knew that PNB-DBP had the option of
either approving the FRP or proceeding with the foreclosure.
Cabarrus, who filed this case supposedly in behalf of MMIC should
have insisted on the FRP. Yet Cabarrus himself opposed the FRP;
4. So when PNB-DBP proceeded with the foreclosure, it was done
without bad faith but with the honest and sincere belief that
foreclosure was the only alternative; a decision further explained by
Dr. Placido Mapa who testified that foreclosure was, in the
judgment of PNB, the best move to save MMIC itself.
Q : Now in this portion of Exh. "L" which was marked as Exh. "L-1",
and we adopted as Exh. 37-A for the respondent, may I know from
you, Dr. Mapa what you meant by "that the decision to foreclose
was neither precipitate nor arbitrary"?
A : Well, it is not a whimsical decision but rather decision arrived at
after weighty consideration of the information that we have
received, and listening to the prospects which reported to us that
what we had assumed would be the premises of the financial
rehabilitation plan was not materialized nor expected to
materialize.
Q : And this statement that "it was premised upon the known fact"
that means, it was referring to the decision to foreclose, was
premised upon the known fact that the rehabilitation plan earlier
approved by the stockholders was no longer feasible, just what is
meant "by no longer feasible"?
A : Because the revenue that they were counting on to make the
rehabilitation plan possible, was not anymore expected to be
forthcoming because it will result in a short fall compared to the
prices that were actually taking place in the market.
Q : And I suppose that was what you were referring to when you
stated that the production targets and assumed prices of MMIC's
products, among other projections, used in the financial
reorganization program that will make it viable were not met nor
expected to be met?
A : Yes.
xxx xxx xxx
Which brings me to my last point in this separate opinion. Was PNB
and DBP absolutely unjustified in foreclosing the mortgages?
In this connection, it can readily be seen and it cannot quite be
denied that MMIC accounts in PNB-DBP were past due. The drawing
up of the FRP is the best proof of this. When MMIC adopted a
restructuring program for its loan, it only meant that these loans
were already due and unpaid. If these loans were restructurable
because they were already due and unpaid, they are likewise
"forecloseable". The option is with the PNB-DBP on what steps to
take.
The mere fact that MMIC adopted the FRP does not mean that DBP-
PNB lost the option to foreclose. Neither does it mean that the FRP
is legally binding and implementable. It must be pointed that said
FRP will, in effect, supersede the existing and past due loans of
MMIC with PNB-DBP. It will become the new loan agreement
between the lenders and the borrowers. As in all other contracts,
there must therefore be a meeting of minds of the parties; the PNB
and DBP must have to validly adopt and ratify such FRP before they
can be bound by it; before it can be implemented. In this case, not
an iota of proof has been presented by the PLAINTIFFS showing that
PNB and DBP ratified and adopted the FRP. PLAINTIFFS simply relied
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on a legal doctrine of promissory estoppel to support its allegations
in this regard. 42
Moreover, PNB and DBP had to initiate foreclosure proceedings as
mandated by P.D. No. 385, which took effect on January 31, 1974.
The decree requires government financial institutions to foreclose
collaterals for loans where the arrearages amount to 20% of the
total outstanding obligations. The pertinent provisions of said
decree read as follow:
Sec. 1. It shall be mandatory for government financial institutions,
after the lapse of sixty (60) days from the issuance of this Decree,
to foreclose the collaterals and/or securities for any loan, credit,
accommodation, and/or guarantees granted by them whenever the
arrearages on such account, including accrued interest and other
charges, amount to at least twenty percent (20%) of the total
outstanding obligations, including interest and other charges, as
appearing in the books of account and/or related records of the
financial institutions concerned. This shall be without prejudice to
the exercise by the government financial institutions of such rights
and/or remedies available to them under their respective contracts
with their debtors, including the right to foreclosure on loans,
credits, accommodations and/or guarantees on which the
arrearages are less than twenty percent (20%).
Sec. 2. No restraining order temporary or permanent injunction
shall be issued by the court against any government financial
institution in any action taken by such institution in compliance
with the mandatory foreclosure provided in Section 1 hereof,
whether such restraining order, temporary or permanent injunction
is sought by the borrower(s) or any third party or parties, except
after due hearing in which it is established by the borrower and
admitted by the government financial institution concerned that
twenty percent (20%) of the outstanding arrearages has been paid
after the filing of foreclosure proceedings. (Emphasis supplied.)
Private respondents' thesis that the foreclosure proceedings were
null and void because of lack of publication in the newspaper is
nothing more than a mere unsubstantiated aliegation not borne out
by the evidence. In any case, a disputable presumption exists in
favor of petitioner that official duty has been regularly performed
and ordinary course of business has been followed. 43
VI
Not only was the foreclosure rightfully exercised by the PNB and
DBP, but also, from the facts of the case, the arbitrators in making
the award went beyond the arbitration agreement.
In their complaint filed before the trial court, private respondent
Cabarrus, et al. prayed for judgment in their favor:
1. Declaring the foreclosures effected by the defendants DBP and
PNB on the assets of MMIC null and void and directing said
defendants to restore the foreclosed assets to the possession of
MMIC, to render an accounting of their use and/or operation of said
assets and to indemnify MMIC for the loss occasioned by its
dispossession or the deterioration thereof;
2. Directing the defendants DBP and PNB to honor and perform
their commitments under the financial reorganization plan which
was approved at the annual stockholders' meeting of MMIC on 30
April 1984;
3. Condemning the defendants DBP and PNB, jointly and severally
to pay the plaintiffs actual damages consisting of the loss of value
of their investments amounting to not less than P80,000,000, the
damnum emergens and lucrum cessans in such amount as may be
established during the trial, moral damages in such amount as this
Honorable Court may deem just and equitable in the premises,
exemplary damages in such amount as this Honorable Court may
consider appropriate for the purpose of setting an example for the
public good, attorney's fees and litigation expenses in such
amounts as may be proven during the trial, and the costs legally
taxable in this litigation.
Further, plaintiffs pray for such other reliefs as may be just and
equitable in the premises. 44
Upon submission for arbitration, the Compromise and Arbitration
Agreement of the parties clearly and explicitly defined and limited
the issues to the following:
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(a) whether PLAINTIFFS have the capacity or the personality to
institute this derivative suit in behalf of the MMIC or its directors;
(b) whether or not the actions leading to, and including, the PNB-
DBP foreclosure of the MMIC assets were proper, valid and in good
faith. 45
Item No. 8 of the Agreement provides for the period by which the
Committee was to render its decision, as well as the nature thereof:
8. Decision. The committee shall issue a decision on the
controversy not later than six (6) months from the date of its
constitution.
In the event the committee finds that PLAINTIFFS have the
personality to file this suit and the extra-judicial foreclosure of the
MMIC assets wrongful, it shall make an award in favor of the
PLAINTIFFS (excluding DBP), in an amount as may be established or
warranted by the evidence which shall be payable in Philippine
Pesos at the time of the award. Such award shall be paid by the
APT or its successor-in-interest within sixty (60) days from the date
of the award in accordance with the provisions of par. 9 hereunder. .
. . . The PLAINTIFFS' remedies under this Section shall be in addition
to other remedies that may be available to the PLAINTIFFS, all such
remedies being cumulative and not exclusive of each other.
On the other hand, in case the arbitration committee finds that
PLAINTIFFS have no capacity to sue and/or that the extra-judicial
foreclosure is valid and legal, it shall also make an award in favor of
APT based on the counterclaims of DBP and PNB in an amount as
may be established or warranted by the evidence. This decision of
the arbitration committee in favor of APT shall likewise finally settle
all issues regarding the foreclosure of the MMIC assets so that the
funds held in escrow mentioned in par. 9 hereunder will thus be
released in full in favor of
APT. 46
The clear and explicit terms of the submission notwithstanding, the
Arbitration Committee clearly exceeded its powers or so
imperfectly executed them: (a) in ruling on and declaring valid the
FRP; (b) in awarding damages to MMIC which was not a party to the
derivative suit; and (c) in awarding moral damages to Jesus S.
Cabarrus, Sr.
The arbiters overstepped
their powers by declaring as
valid the proposed Financial
Restructuring Program.
The Arbitration Committee went beyond its mandate and thus
acted in excess of its powers when it ruled on the validity of, and
gave effect to, the proposed FRP.
In submitting the case to arbitration, the parties had mutually
agreed to limit the issue to the "validity of the foreclosure" and to
transform the relief prayed for therein into pure money claims.
There is absolutely no evidence that the DBP and PNB agreed,
expressly or impliedly, to the proposed FRP. It cannot be
overemphasized that a FRP, as a contract, requires the consent of
the parties thereto. 47 The contract must bind both contracting
parties. 48 Private respondents even by their own admission
recognized that the FRP had yet not been carried out and that the
loans of MMIC had not yet been converted into equity. 49
However, the Arbitration Committee not only declared the FRP valid
and effective, but also converted the loans of MMIC into equity
raising the equity of DBP to 87%. 50
The Arbitration Committee ruled that there was "a commitment to
carry out the FRP" 51 on the ground of promissory estoppel.
Similarly, the principle of promissory estoppel applies in the present
case considering as we observed, the fact that the government
(that is, Alfredo Velayo) was the FRP's proponent. Although the
plaintiffs are agreed that the government executed no formal
agreement, the fact remains that the DBP itself which made
representations that the FRP constituted a "way out" for MMIC. The
Committee believes that although the DBP did not formally agree
(assuming that the board and stockholders' approvals were not
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formal enough), it is bound nonetheless if only for its conspicuous
representations.
Although the DBP sat in the board in a dual capacity as holder of
36% of MMIC's equity (at that time) and as MMIC's creditor the
DBP can not validly renege on its commitments simply because at
the same time, it held interests against the MMIC.
The fact, of course, is that as APT itself asserted, the FRP was being
"carried out" although apparently, it would supposedly fall short of
its targets. Assuming that the FRP would fail to meet its targets, the
DBP and so this Committee holds can not, in any event, brook
any denial that it was bound to begin with, and the fact is that
adequate or not (the FRP), the government is still bound by virtue
of its acts.
The FRP, of course, did not itself promise a resounding success,
although it raised DBP's equity in MMIC to 87%. It is not an excuse,
however, for the government to deny its commitments. 52
Atty. Sison, however, did not agree and correctly observed that:
But the doctrine of promissory estoppel can hardly find application
here. The nearest that there can be said of any estoppel being
present in this case is the fact that the board of MMIC was, at the
time the FRP was adopted, mostly composed of PNB and DBP
representatives. But those representatives, singly or collectively,
are not themselves PNB or DBP. They are individuals with
personalities separate and distinct from the banks they represent.
PNB and DBP have different boards with different members who
may have different decisions. It is unfair to impose upon them the
decision of the board of another company and thus pin them down
on the equitable principle of estoppel. Estoppel is a principle based
on equity and it is certainly not equitable to apply it in this
particular situation. Otherwise the rights of entirely separate
distinct and autonomous legal entities like PNB and DBP with
thousands of stockholders will be suppressed and rendered
nugatory. 53
As a rule, a corporation exercises its powers, including the power to
enter into contracts, through its board of directors. While a
corporation may appoint agents to enter into a contract in its
behalf, the agent should not exceed his authority. 54 In the case at
bar, there was no showing that the representatives of PNB and DBP
in MMIC even had the requisite authority to enter into a debt-for-
equity swap. And if they had such authority, there was no showing
that the banks, through their board of directors, had ratified the
FRP.
Further, how could the MMIC be entitled to a big amount of moral
damages when its credit reputation was not exactly something to
be considered sound and wholesome. Under Article 2217 of the
Civil Code, moral damages include besmirched reputation which a
corporation may possibly suffer. A corporation whose overdue and
unpaid debts to the Government alone reached a tremendous
amount of P22 Billion Pesos cannot certainly have a solid business
reputation to brag about. As Atty. Sison in his separate opinion
persuasively put it:
Besides, it is not yet a well settled jurisprudence that corporations
are entitled to moral damages. While the Supreme Court may have
awarded moral damages to a corporation for besmirched reputation
in Mambulao vs. PNB, 22 SCRA 359, such ruling cannot find
application in this case. It must be pointed out that when the
supposed wrongful act of foreclosure was done, MMIC's credit
reputation was no longer a desirable one. The company then was
already suffering from serious financial crisis which definitely
projects an image not compatible with good and wholesome
reputation. So it could not be said that there was a "reputation"
besmirched by the act of foreclosure. 55
The arbiters exceeded their
authority in awarding damages
to MMIC, which is not impleaded
as a party to the derivative suit.
Civil Case No. 9900 filed before the RTC being a derivative suit,
MMIC should have been impleaded as a party. It was not joined as a
party plaintiff or party defendant at any stage of the proceedings.
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As it is, the award of damages to MMIC, which was not a party
before the Arbitration Committee, is a complete nullity.
Settled is the doctrine that in a derivative suit, the corporation is
the real party in interest while the stockholder filing suit for the
corporation's behalf is only a nominal party. The corporation should
be included as a party in the suit.
An individual stockholder is permitted to institute a derivative suit
on behalf of the corporation wherein he holds stock in order to
protect or vindicate corporate rights, whenever the officials of the
corporation refuse to sue, or are the ones to be sued or hold the
control of the corporation. In such actions, the suing stockholder is
regarded as a nominal party, with the corporation as the real party
in interest. . . . . 56
It is a condition sine qua non that the corporation be impleaded as
a party because
. . . Not only is the corporation an indispensable party, but it is also
the present rule that it must be served with process. The reason
given is that the judgment must be made binding upon the
corporation in order that the corporation may get the benefit of the
suit and may not bring a subsequent suit against the same
defendants for the same cause of action. In other words the
corporation must be joined as party because it is its cause of action
that is being litigated and because judgment must be a res
ajudicata against it. 57
The reasons given for not allowing direct individual suit are:
(1) . . . "the universally recognized doctrine that a stockholder in a
corporation has no title legal or equitable to the corporate property;
that both of these are in the corporation itself for the benefit of the
stockholders." In other words, to allow shareholders to sue
separately would conflict with the separate corporate entity
principle;
(2) . . . that the prior rights of the creditors may be prejudiced.
Thus, our Supreme Court held in the case of Evangelista v. Santos,
that "the stockholders may not directly claim those damages for
themselves for that would result in the appropriation by, and the
distribution among them of part of the corporate assets before the
dissolution of the corporation and the liquidation of its debts and
liabilities, something which cannot be legally done in view of
section 16 of the Corporation Law . . .;
(3) the filing of such suits would conflict with the duty of the
management to sue for the protection of all concerned;
(4) it would produce wasteful multiplicity of suits; and
(5) it would involve confusion in a ascertaining the effect of partial
recovery by an individual on the damages recoverable by the
corporation for the same act. 58
If at all an award was due MMIC, which it was not, the same should
have been given sans deduction, regardless of whether or not the
party liable had equity in the corporation, in view of the doctrine
that a corporation has a personality separate and distinct from its
individual stockholders or members. DBP's alleged equity, even if it
were indeed 87%, did not give it ownership over any corporate
property, including the monetary award, its right over said
corporate property being a mere expectancy or inchoate
right. 59 Notably, the stipulation even had the effect of prejudicing
the other creditors of MMIC.
The arbiters, likewise,
exceeded their authority
in awarding moral damages
to Jesus Cabarrus, Sr.
It is perplexing how the Arbitration Committee can in one breath
rule that the case before it is a derivative suit, in which the
aggrieved party or the real party in interest is supposedly the
MMIC, and at the same time award moral damages to an individual
stockholder, to wit:
WHEREFORE, premises considered, judgment is hereby rendered:
xxx xxx xxx
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3. Ordering the defendant to pay to the plaintiff, Jesus S. Cabarrus,
Sr., the sum of P10,000,000.00, to be satisfied likewise from the
funds held under escrow pursuant to the Escrow Agreement dated
April 22, 1988 or to such subsequent escrow agreement that would
supersede it, pursuant to paragraph (9), Compromise and
Arbitration Agreement, as and for moral damages; . . . 60
The majority decision of the Arbitration Committee sought to justify
its award of moral damages to Jesus S. Cabarrus, Sr. by pointing to
the fact that among the assets seized by the government were
assets belonging to Industrial Enterprise Inc. (IEI), of which
Cabarrus is the majority stockholder. It then acknowledged that
Cabarrus had already recovered said assets in the RTC, but that "he
won no more than actual damages. While the Committee cannot
possibly speak for the RTC, there is no doubt that Jesus S. Cabarrus,
Sr., suffered moral damages on account of that specific foreclosure,
damages the Committee believes and so holds, he, Jesus S.
Cabarrus, Sr., may be awarded in this proceeding." 61
Cabarrus cause of action for the seizure of the assets belonging to
IEI, of which he is the majority stockholder, having been ventilated
in a complaint he previously filed with the RTC, from which he
obtained actual damages, he was barred by res judicata from filing
a similar case in another court, this time asking for moral damages
which he failed to get from the earlier case. 62 Worse, private
respondents violated the rule against non-forum shopping.
It is a basic postulate that a corporation has a personality separate
and distinct from its stockholders. 63 The properties foreclosed
belonged to MMIC, not to its stockholders. Hence, if wrong was
committed in the foreclosure, it was done against the corporation.
Another reason is that Jesus S. Cabarrus, Sr. cannot directly claim
those damages for himself that would result in the appropriation
by, and the distribution to, him part of the corporation's assets
before the dissolution of the corporation and the liquidation of its
debts and liabilities. The Arbitration Committee, therefore, passed
upon matters nor submitted to it. Moreover, said cause of action
had already been decided in a separate case. It is thus quite patent
that the arbitration committee exceeded the authority granted to it
by the parties' Compromise and Arbitration Agreement by awarding
moral damages to Jesus S. Cabarrus, Sr.
Atty. Sison, in his separate opinion, likewise expressed
befuddlement to the award of moral damages to Jesus S. Cabarrus,
Sr.:
It is clear and it cannot be disputed therefore that based on these
stipulated issues, the parties themselves have agreed that the
basic ingredient of the causes of action in this case is the wrong
committed on the corporation (MMIC) for the alleged illegal
foreclosure of its assets. By agreeing to this
stipulation, PLAINTIFFS themselves (Cabarrus, et al.) admit that the
cause of action pertains only to the corporation (MMIC) and that
they are filing this for and in behalf of MMIC.
Perforce this has to be so because it is the basic rule in Corporation
Law that "the shareholders have no title, legal or equitable to the
property which is owned by the corporation (13 Am. Jur. 165;
Pascual vs. Oresco, 14 Phil. 83). In Ganzon & Sons vs. Register of
Deeds, 6 SCRA 373, the rule has been reiterated that "a
stockholder is not the co-owner of corporate property." Since the
property or assets foreclosed belongs [sic] to MMIC, the wrong
committed, if any, is done against the corporation. There is
therefore no direct injury or direct violation of the rights of
Cabarrus et al. There is no way, legal or equitable, by which
Cabarrus et al. could recover damages in their personal capacities
even assuming or just because the foreclosure is improper or
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invalid. The Compromise and Arbitration Agreement itself and the
elementary principles of Corporation Law say so. Therefore, I am
constrained to dissent from the award of moral damages to
Cabarrus. 64
From the foregoing discussions, it is evident that, not only did the
arbitration committee exceed its powers or so imperfectly execute
them, but also, its findings and conclusions are palpably devoid of
any factual basis, and in manifest disregard of the law.
We do not find it necessary to remand this case to the RTC for
appropriate action. The pleadings and memoranda filed with this
Court, as well as in the Court of Appeals, raised and extensively
discussed the issues on the merits. Such being the case, there is
sufficient basis for us to resolve the controversy between the
parties anchored on the records and the pleadings before us. 65
WHEREFORE, the Decision of the Court of Appeals dated July 17,
1995, as well as the Orders of the Regional Trial Court of Makati,
Branch 62, dated November 28, 1994 and January 19, 1995, is
hereby REVERSED and SET ASIDE, and the decision of the
Arbitration Committee is hereby VACATED.
SO ORDERED.
Romero, J., Please see dissenting opinion.
Purisima, J., Concur and also with the separate concurring opinion
of Justice Pardo.
Pardo, J., With separate concurring opinion.
Separate Opinions
ROMERO, J., dissenting opinion;
In the instant petition for review on certiorari, petitioner. Asset
Privatization Trust (APT) is impugning the decision of respondent
Court of Appeals in CA-GR SP No. 36484 dated July 17, 1995,
grounded upon the following assigned errors which it had allegedly
committed:
1) The Court of Appeals erred in not holding that the Makati
Regional Trial Court, Branch 62, which had previously dismissed
Civil Case No. 9900, had lost jurisdiction to confirm the arbitral
award under the same civil case and in not ruling that the
application for confirmation should have been filed as a new case
to be raffled among the different branches of the RTC;
2) The Court of Appeals likewise erred in holding that petitioner was
estopped from questioning the arbitration award, when petitioner
questioned the jurisdiction of the RTC-Makati, Branch 62, and at the
same time moved to vacate the arbitral award;
3) The Court of Appeals erred in not holding that the respondent
Trial Court should have either dismissed/denied private
respondents' motion/petition for confirmation of arbitration award
and/or should have considered the merits of the motion to vacate
(the) arbitral award;
4) The Court of Appeals erred in not treating petitioner APT's
petition for certiorari as an appeal taken from the order confirming
the award; and
5) The Court of Appeals erred in not ruling on the legal issue of
when to reckon the counting of the period to file a motion for
reconsideration. 1
The resolution of these issues will ultimately test the process of
arbitration, how effective or ineffective it is as an alternative mode
of settling disputes, and how it is affected by judicial review. My
esteemed colleagues have taken the view that the petition is
impressed with merit and that the assailed decision of the Court of
Appeals should be reversed. In doing so, I believe they have dealt
arbitration a terrible blow and wasted years, even decades, of
development in this field. I beg to differ and, therefore, dissent.
The controversy is actually simpler than it appears. The
Marinduque Mining and Industrial Corporation (MMIC) obtained
several loans from the Philippine National Bank (PNB) and the
Development Bank of the Philippines (DBP) secured by mortgages
over practically all of its assets. As of July 15, 1984, MMIC's
obligation had ballooned to P22,668,537,770.05, 2 and it had no
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way of making the required payments. MMIC and its two creditor
banks thus ironed out a complex financial restructuring plan (FRP)
designed to drastically reduce MMIC's liability through a "debt-to-
equity" scheme. 3 This notwithstanding, the creditors opted to sell
MMIC's mortgaged properties through extrajudicial foreclosure
proceedings, where PNB turned out to be the lone bidder. 4
Aggrieved by this apparent bad faith on the part of the creditor
banks, private respondents Jesus S. Cabarrus, Sr., and other
minority stockholders of MMIC filed a derivative suit 5 against PNB
and DBP before the Makati Regional Trial Court. They prayed for the
annulment of the foreclosure and for the restoration of the
company's assets, the recognition by the creditor banks of their
commitments under the FRP, and the payment of damages, as well
as attorney's fees and costs of litigation. The case was raffled to
Branch 62 and docketed as Civil Case No. 9900.
In the meantime, the rights and interests of PNB and DBP, including
MMIC's indebtedness, were transferred to petitioner, created by
virtue of Proclamation No. 50, in relation to Administrative Order
No. 14. Hence, petitioner was substituted as party defendant in
Civil Case No. 9900.
On October 6, 1992, the parties entered into a Compromise and
Arbitration Agreement 6 providing, inter alia, that they were
withdrawing their respective claims, which would be reduced to
pure money claims, and that they were submitting the controversy
to arbitration under Republic Act No. 876. 7 The issues for
arbitration were thus limited to a determination of the plaintiffs'
capacity or right to institute the derivative suit in behalf of the
MMIC or its directors, and of the propriety of the foreclosure. Of
notable import was the provision on the nature of the judgment
that the arbitration committee might render, viz.:
10. Binding Efect and Enforcement. The award of the arbitration
committee shall be final and executory upon its issuance upon the
parties to the arbitration and their assigns and successors-in-
interest. In the event the award is not voluntarily satisfied by the
losing party, the party in whose favor the award has been made
may, pursuant to Republic Act No. 876, apply to the proper
Regional Trial Court for its enforcement. (Emphasis supplied)
Upon motion of the parties, this agreement was presented to the
court a quo for its approval. 8 On October 14, 1992, said court
issued an order (a) dismissing the complaint; (b) substituting the
creditor banks with the APT as party defendant; (c) "approving the
Compromise and Arbitration Agreement dated October 6, 1992";
and (d) "approving the transformation of the reliefs prayed for by
the plaintiffs in this case into pure money claims." 9
On November 24, 1993, after more than six months of hearing, the
arbitration committee 10 concluded that the assailed foreclosure
was not valid and accordingly decided the case in favor of MMIC.
Hence, petitioner was ordered to pay MMIC actual damages in the
amount of P2,531,635,425.02, with legal interest, and moral and
exemplary damages amounting to P13,000,000.00, and to pay
Jesus S. Cabarrus, Sr., the sum of P10,000,000.00 by way of moral
damages, such awards to be offset from the outstanding and
unpaid obligations of MMIC with the creditor banks, which have not
been converted into equity. The committee likewise decreed its
decision to be "final and executory." 11
Nearly a year later, MMIC filed in Civil Case No. 9900, a verified
"Application/Motion for Confirmation of Arbitration Award." 12 This
was opposed by petitioner on two grounds, namely, that Branch 62
no longer had jurisdiction to act on said motion after it "dismissed"
the complaint in its order of October 14, 1992, and that the award
"far exceeded the issues submitted" for arbitration by the
parties. 13 Not wanting to be outdone, MMIC filed a "Reply and
Opposition," arguing that the "qualified dismissal" of Civil Case No.
9900 was merely intended to expedite the submission of the
controversy to arbitration and was, therefore, "a mere suspension
of the proceedings," and that the arbitration committee did not
exceed its authority in making the award.
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On November 28, 1994, the trial court issued an order 14 confirming
the award of the committee in all respects except as to the award
of actual damages to MMIC, which was increased to
P3,811,757,425.00. The order closed with the following declaration:
In reiteration of the mandates of Stipulation No. 10 and Stipulation
No. 8 paragraph 2 of the Compromise and Arbitration Agreement,
and the final edict of the Arbitration Committee's decision, and with
this Court's Confirmation, the issuance of the Arbitration
Committee's Award shall henceforth be final and executory.
Petitioner filed a "Motion for Reconsideration" of said order on
December 27, 1994; but this was denied by the court a quo in its
order dated January 18, 1995 for lack of merit and for having been
filed beyond the reglementary period. Thus, it said:
. . . (C)onsidering that the defendant APT, through counsel, officially
and actually received a copy of the Order of this Court dated
November 28, 1994 on December 6, 1994, the Motion for
Reconsideration thereof filed by the defendant APT on December
27, 1994, or after the lapse of 21 days, was clearly filed beyond the
15-day reglementary period prescribed or provided for . . . (by law)
for the filing of an appeal from final orders, resolutions, awards,
judgments or decisions of any court in all cases, and by necessary
implication, for the filing of a motion for reconsideration thereof.
Instead of appealing such denial, petitioner filed on February 15,
1995, an "Appeal by Certiorari . . . . under Sections 1 and 2 of Rule
65 of the Revised Rules of Court" before the Court of Appeals,
praying for the nullification of the trial court's orders dated
November 28, 1994 and January 18, 1995. It argued that the trial
court had no jurisdiction or authority to confirm the arbitral award,
"considering that the original case, Civil Case No. 9900, had
previously been dismissed," and that the trial judge "acted with
grave abuse of discretion in issuing the questioned orders
confirming the award and denying the motion for reconsideration
thereof." 15
On July 17, 1995, the Court of Appeals dismissed the petition for
lack of merit. 16 From this dismissal, petitioner elevated its cause to
this Tribunal for a review, raising the issues stated at the outset.
I find it distressing that, in reaching the outcome of this
controversy, the majority has emasculated the process of
arbitration itself. This should not be the case for after all, the
decision of the arbitration committee is no longer the one being
attacked in these proceedings, but the judgment of the Court of
Appeals which herein petitioner found to be erroneous. The Court
has had occasion to trace the history of arbitration and to discuss
its significance in the case of Chung Fu Industries (Phils.), Inc. v.
Court of Appeals, 17 viz.:
Allow us to take a leaf from history and briefly trace the evolution
of arbitration as a mode of dispute settlement.
Because conflict is inherent in human society, much effort has been
expended by men and institutions in devising ways of resolving the
same. With the progress of civilization, physical combat has been
ruled out and instead, more specific means have been evolved,
such as recourse to the good offices of a disinterested third party,
whether this be a court or a private individual or individuals.
Legal history discloses that "early judges called upon to solve
private conflicts were primarily the arbiters, persons not specially
trained but in whose morality, probity and good sense the parties in
conflict reposed full trust. Thus, in Republican
Rome, arbiter and judge (judex) were synonymous. The magistrate
of praetor, after noting down the conflicting claims of litigants, and
clarifying the issues, referred them for decision to a private person
designated by the parties, by common agreement, or selected by
them from an apposite listing (the album judicium) or else by
having the arbiter chosen by lot. The judges proper, as specially
trained state officials endowed with (their) own power and
jurisdiction, and taking cognizance of litigations from beginning to
end, only appeared under the Empire, by the so-called cognitio
extra ordinem."
Such means of referring a dispute to a third party has also long
been an accepted alternative to litigation at common law.
Sparse though the law and jurisprudence may be on the subject of
arbitration in the Philippines, it was nonetheless recognized in the
Spanish Civil Code; specifically, the provisions on compromises
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made applicable to arbitrations under Articles 1820 and 1821.
Although said provisions were repealed by implication with the
repeal of the Spanish Law of Civil Procedure, these and additional
ones were reinstated in the present Civil Code.
Arbitration found a fertile field in the resolution of labor-
management disputes in the Philippines. Although early on,
Commonwealth Act 103 (1936) provided for compulsory arbitration
as the state policy to be administered by the Court of Industrial
Relations, in time such a modality gave way to voluntary
arbitration. While not completely supplanting compulsory
arbitration which until today is practiced by government officials,
the Industrial Peace Act which was passed in 1953 as Republic Act
No. 875, favored the policy of free collective bargaining, in general,
and resort to grievance procedure, in particular, as the preferred
mode of settling disputes in industry. It was accepted and
enunciated more explicitly in the Labor Code, which was passed on
November 1, 1974 as Presidential Decree No. 442, with the
amendments later introduced by Republic Act No. 6715 (1989).
Whether utilized in business transactions or in employer-employee
relations, arbitration was gaining wide acceptance. A consensual
process, it was preferred to orders imposed by government upon
the disputants. Moreover, court litigations tended to be time-
consuming, costly, and inflexible due to their scrupulous
observance of the due process of law doctrine and their strict
adherence to rules of evidence.
As early as the 1920's, this Court declared:
In the Philippines fortunately, the attitude of the court towards
arbitration agreements is slowly crystallizing into definite and
workable form . . . The rule now is that unless the agreement is
such as absolutely to close the doors of the courts against the
parties, which agreement would be void, the courts will look with
favor upon such amicable arrangements and will only with great
reluctance interfere to anticipate or nullify the action of the
arbitrator.
That there was a growing need for a law regulating arbitration in
general was acknowledged when Republic Act No. 876 (1953),
otherwise known as the Arbitration Law, was passed. "Said Act was
obviously adopted to supplement not to supplant the New
Civil Code on arbitration. It expressly declares that "the provisions
of chapters one and two, Title XIV, Book IV of the Civil Code shall
remain in force."
xxx xxx xxx
In practice nowadays, absent an agreement of the parties to
resolve their disputes via a particular mode, it is the regular courts
that remain the fora to resolve such matters. However, the parties
may opt for recourse to third parties, exercising their basic freedom
to "establish such stipulations, clauses, terms and conditions as
they may deem convenient, provided they are not contrary to law,
morals, good customs, public order or public policy." In such a case,
resort to the arbitration process may be spelled out by them in a
contract in anticipation of disputes that may arise between them.
Or this may be stipulated in a submission agreement when they are
actually confronted by a dispute. Whatever be the case, such
recourse to an extrajudicial means of settlement is not intended to
completely deprive the courts of jurisdiction. In fact, the early cases
on arbitration carefully spelled out the prevailing doctrine at the
time, thus: ". . . a clause in a contract providing that all matters in
dispute between the parties shall be referred to arbitrators and to
them alone is contrary to public policy and cannot oust the courts
of jurisdiction."
But certainly, the stipulation to refer all future disputes to an
arbitrator or to submit an ongoing dispute to one is valid. Being
part of a contract between the parties, it is binding and enforceable
in court in case one of them neglects, fails or refuses to arbitrate.
Going a step further, in the event that they declare their intention
to refer their differences to arbitration first before taking court
action, this constitutes a condition precedent, such that where a
suit has been instituted prematurely, the court shall suspend the
same and the parties shall be directed forthwith to proceed to
arbitration.
A court action may likewise be proper where the arbitrator has not
been selected by the parties.
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xxx xxx xxx
. . . It is stated explicitly under Art. 2044 of the Civil Code that the
finality of the arbitrator's award is not absolute and without
exceptions. Where the conditions described in Articles 2038, 2039
and 2040 18applicable to both compromises and arbitrations are
obtaining, the arbitrators' award may be annulled or rescinded.
Additionally, under Sections 24 and 25 of the Arbitration Law, there
are grounds for vacating, modifying or rescinding an arbitrator's
award. Thus, if and when the factual circumstances referred to in
the above-cited provisions are present, judicial review of the award
is properly warranted.
What if courts refuse or neglect to inquire into the factual milieu of
an arbitrator's award to determine whether it is in accordance with
law or within the scope of his authority? How may the power of
judicial review be invoked?
This is where the proper remedy is certiorari under Rule 65 of the
Revised Rules of Court. It is to be borne in mind, however, that this
action will lie only where a grave abuse of discretion or an act
without or in excess of jurisdiction on the part of the voluntary
arbitrator is clearly shown. For "the writ of certiorari is an
extraordinary remedy and that certiorari jurisdiction is not to be
equated with appellate jurisdiction. In a special civil action
of certiorari, the Court will not engage in a review of the facts found
nor even of the law as interpreted or applied by the arbitrator
unless the supposed errors of fact or of law are so patent and gross
and prejudicial as to amount to a grave abuse of discretion or
an exces de pouvoir on the part of the arbitrator." 19
So, what are the issues that need to be addressed in this action?
Certainly not the capacity of the plaintiffs below to file the
derivative suit in behalf of MMIC nor the validity of the extrajudicial
foreclosure conducted by PNB and DBP. These were the issues
submitted for arbitration by the parties and resolved with finality by
the arbitration committee upon agreement of the parties
themselves. The issues, therefore, all stemming from the judgment
of the Court of Appeals, may be narrowed down to three: (1) Was it
right in upholding the trial court's authority to confirm the
arbitration award considering that said court had earlier dismissed
the complaint? (2) Was it correct in finding that herein petitioner
was estopped from questioning such award? (3) Was it justified in
not treating petitioner's petition for certiorari as an appeal from the
trial court's order confirming said award?
(1) Petitioner overly stresses the fact that in the trial court's order
of October 14, 1992; the complaint was "dismissed" upon approval
of the Compromise and Arbitration Agreement between the parties.
Such dismissal, however, far from finally disposing of the
controversy as the term denotes, simply "suspended" it during the
period of arbitration. It is, as a colleague pointed out during the
deliberation of this action, a mere "semantic imperfection." Here is
a situation where the intent of the tribunal was obviously not to end
the case with finality, but to place the proceedings in abeyance
while the parties breathed life into an alternative mode of settling
their differences in the most expeditious manner. Arbitration is not
a self-enforcing process. It focuses the direction of the hearing and
the reception and appreciation of evidence by assigning these
tasks to a group of persons chosen by the parties, themselves. By
this, a circuitous and time-consuming court trial is avoided, leaving
the court with the singular duty of confirming the arbitrators'
decision, and allowing it to devote more of its time to resolving
other cases. As the appellate court correctly pointed out:
. . . (T)he dismissal of the Complaint in Civil Case No. 9900 was not
intended by the parties and by the court a quo, despite the
phraseology in Item No. 4 or the dispositive portion of the Order of
October 14, 1992, as a dismissal that would put an end to the case.
Rather it was simply a pronouncement for the cessation of the
proceedings in the court and the commencement of the arbitration
proceedings. It was for all intents and purposes a stay of the civil
action until an arbitration has been had or pending the return of the
arbitral award. This is evident since the parties submitted to the
court below not only an agreement to arbitrate but also a
compromise which is always submitted to the court for approval
and as a basis for a judgment. . . . 20
Regarding the trial court's authority to confirm the decision of the
arbitration committee, suffice it to say that such was not merely its
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right but its duty as well. Under Section 22 of R.A. No. 876, upon
application or motion of any party to arbitration, the court has the
obligation of confirming the arbitrators' award absent any specific
ground to vacate, modify or correct the same. Herein private
respondents did apply for such confirmation on February 7, 1995.
This was even opposed by petitioner on the ground that the
judgment had not yet become final and executory, in complete
disregard of paragraph 10 of the Compromise and Arbitration
Agreement and the very decision of the arbitration committee.
The award itself was properly made since it was not vacated,
modified or corrected upon any of the grounds enumerated under
Sections 24 and 25 of R.A. No. 876, to wit:
Sec. 24. Grounds for vacating award. In any one of the following
cases, the court must make an order vacating the award upon the
petition of any party to the controversy when such party proves
affirmatively that in the arbitration proceedings:
(a) The award was procured by corruption, fraud, or other undue
means; or
(b) That there was evident partiality or corruption in the arbitrators
or any of them; or
(c) That the arbitrators were guilty of misconduct in refusing to
postpone the hearing upon sufficient cause shown, or in refusing to
hear evidence pertinent and material to the controversy; that one
or more of the arbitrators was disqualified to act as such under
section nine hereof, and willfully refrained from disclosing such
disqualifications or of any other misbehavior by which the rights of
any party have been materially prejudiced; or
(d) That the arbitrators exceeded their powers, or so imperfectly
executed them, that a mutual, final and definite award upon the
subject matter submitted to them was not made.
Where an award is vacated, the court, in its discretion, may direct a
new hearing either before the same arbitrators or before a new
arbitrator or arbitrators chosen in the manner provided in the
submission or contract for the selection of the original arbitrator or
arbitrators, and any provision limiting the time in which the
arbitrators may make a decision shall be deemed applicable to the
new arbitration and to commence from the date of the court's
order.
Where the court vacates, an award, costs, not exceeding fifty
pesos, and disbursements may be awarded to the prevailing party
and the payment thereof may be enforced in like manner as the
payment of costs upon the motion in an action
Sec. 25. Grounds for modifying or correcting award. In any one
of the following cases, the court must make an order modifying or
correcting the award, upon the application of any party to the
controversy which was arbitrated:
(a) Where there was an evident miscalculation of figures, or an
evident mistake in the description of any person, thing or property
referred to in the award; or
(b) Where the arbitrators have awarded upon a matter not
submitted to them, not afecting the merits of the decision upon
the matter submitted; or
(c) Where the award is imperfect in a matter of form not afecting
the merits of the controversy, and if it had been a commissioner's
report, the defect could have been amended or disregarded by the
court.
The order may modify and correct the award so as to effect the
intent thereof and promote justice between the parties. (Emphasis
supplied)
Petitioner utterly failed to prove the existence of any of these
grounds. Its strongest argument, that the arbitration award "far
exceeded the issue submitted for arbitration," apart from being
unsubstantiated, does not go into the merits of the award, which is
the only way its modification or correction could be justified under
the terms of Section 25, aforequoted.
Furthermore, petitioner violated several covenants by asking the
court a quo to vacate the arbitration award. First, in paragraph 10
of the Compromise and Arbitration Agreement, it agreed to abide
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by the arbitration committee's decision which "shall be final and
executory upon its issuance upon the parties to the arbitration and
their assigns and successors-in-interest." Next, the decision that
the arbitrators did render on November 24, 1993 specifically
declared the same to be "final and executory." Finally, in the court's
confirmation order of November 28, 1994, the finality of the award
was reiterated by the court. Arbitration, as an alternative mode of
settlement, is gaining adherents in legal and judicial circles here
and abroad. If its tested mechanism can simply be ignored by an
aggrieved party, one who, it must be stressed, voluntarily and
actively participated in the arbitration proceedings from the very
beginning, it will destroy the very essence of mutuality inherent in
consensual contracts.
2) Petitioner claims that it is not estopped from questioning the
arbitration award probably because, notwithstanding its tenacious
quest for affirmative relief, it did not translate this pursuit into
positive action. The Court of Appeals succinctly puts it in this wise:
. . . The record shows that on its motion, petitioner APT was able to
postpone the hearing on therein plaintiffs' application/motion for
confirmation of arbitral award to a date and time that it chose.
However, when said matter was called for hearing, only counsel for
therein plaintiffs showed up. Nonetheless, respondent Judge gave
APT a period of seven (7) days from notice within which to
comment on the application/motion for confirmation. At no time did
petitioner APT ask for a hearing to present its evidence. While
petitioner APT repeatedly sought to vacate the arbitral award, it
made no concrete move to pursue its cause. In fact, at the hearing
on its motion for reconsideration, both parties through their
respective counsels gave oral arguments and thereafter agreed to
submit the motion for reconsideration for resolution. If petitioner
APT honestly believed that the respondent Judge erroneously took
cognizance of plaintiffs Application/Motion for Confirmation of
Arbitration Award, then it should have limited itself to challenging
the jurisdiction of said court. The fact remains that petitioner APT
repeatedly sought affirmative relief from the respondent Judge in
the same Civil Case No. 9900. Under the circumstances, petitioner
APT may not be heard now to complain that it was deprived of its
right to question the award made by the Arbitration
Committtee. 21 (Emphasis supplied)
3) The final issue which, to my mind, has particular relevance to the
case at bar, pertains to the alleged error of the Court of Appeals in
not treating APT's petition for certiorari as an appeal from the trial
court's confirmation order.
Petitioner's counsel received a copy of the confirmation order dated
November 28, 1994, on December 12, 1994. 22Said order was, for
review purposes, a "final order" because it finally disposed of the
case. Other than executing the confirmation order, there was
nothing else that the court was duty-bound to perform. Petitioner's
remedy, therefore, was to question the order, by appeal
on certiorari, not before the Court of Appeals, but before the
Supreme Court 23 within the reglementary period of fifteen days
which expired on December 27, 1994. Instead of appealing,
however, petitioner filed a motion for reconsideration of the order
on said deadline. Unfortunately, this was denied by the court a
quo in its order dated January 18, 1995, a copy of which was
received by petitioner's counsel on February 1, 1995. Under
prevailing procedural laws, it had just one day to perfect its appeal.
On February 15, 1995, petitioner opted to file with the Court of
Appeals an "Appeal by Certiorari . . . under Sections 1 and 2 of Rule
65 of the Revised Rules of Court." The reason is obvious: It could no
longer file a regular appeal from the assailed order because the
period for doing so has lapsed. The Court of Appeals thus made the
following pertinent observation.
. . . Assuming arguendo that petitioner APT's counsel received a
copy (of the November 28, 1994, order), as claimed by them, on
December 12, 1994, then the petitioner had fifteen (15) days
therefrom or until December 27, 1994, within which to appeal. The
petitioner's motion for reconsideration was admittedly filed on
December 27, 1994, the last day of the reglementary 15-day
period, and the order dated January 18, 1995, denying the same
was received by petitioner's counsel on February 1, 1995. Petitioner
APT had only the following day to perfect his appeal. Instead, it
chose to file the instant special civil action of certiorari on February
15, 1995.
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From the start, petitioner seemed unsure of its position on appeal.
While initially questioning the "order confirming the award" of the
arbitration committee, it later stated that it was raising the issue of
"filing by (herein private respondents) of a Motion for Execution and
Appointment of Custodian of proceeds of Execution dated February
6, 1995." The latter recourse is obviously erroneous, for no appeal
under either Rule 45 or Rule 65 may be taken from a "motion" or
the "filing" of one. Under Rule 45, only judgments or final orders of
a court or tribunal may be appealed to a higher court, while Rule 65
allows a special civil action where the acts of a tribunal, board or
officer are under attack for being performed with grave abuse of
discretion.
The applicable law, of course, is R.A. No. 876, which provides for
appeals from arbitration awards under Section 29 thereof, viz.:
. . . (A)n appeal may be taken from . . . a judgment entered upon an
award through certiorari proceedings, but such appeals shall be
limited to questions of law. The proceedings upon such an appeal,
including the judgment thereon, shall be governed by the Rules of
Court in so far as they are applicable.
The term "certiorari" in the aforequoted provision refers to an
ordinary appeal under Rule 45, not the special action
of certiorari under Rule 65. It is an "appeal," as Section 29
proclaims. The proper forum for this action is, under the old and the
new rules of procedure, the Supreme Court. Thus, Section 2(c) of
Rule 41 of the 1997 Rules of Civil Procedure states that, "In all
cases where only questions of law are raised or involved, the
appeal shall be to the Supreme Court by petition for review
on certiorari in accordance with Rule 45." Moreover, Section 29
limits the appeal to "questions of law," another indication that it is
referring to an appeal by certiorari under Rule 45 which, indeed, is
the customary manner of reviewing such issues. On the other hand,
the extraordinary remedy of certiorari under Rule 65 may be
availed of by a party where there is "no appeal, nor any plain,
speedy, and adequate remedy in the course of law," and under
circumstances where "a tribunal, board or officer exercising judicial
functions, has acted without or in excess of its or his jurisdiction, or
with grave abuse of discretion." 24
Based on the foregoing, it is clear that petitioner had run out of
options after its motion for reconsideration was denied by the trial
court in its order dated January 18, 1995. To compound its
negligence, it filed the wrong action with the wrong forum. These,
to my mind, are serious procedural flaws. To rule otherwise, as the
majority did, would constitute a grave injustice to private
respondents.
I vote to DISMISS the petition.
PARDO, J., separate concurring opinion;
I concur. However, I wish to add a few points not particularly
emphasized in the majority opinion.
The petition before the Court is one for review via certiorari under
Rule 45 of the Revised Rules of Court seeking to set aside the
resolution of the Court of Appeals that denied due course and
dismissed APT's petition for certiorari to annul the proceedings had
before the Regional Trial Court, Makati, Branch 62, in Civil Case No.
9900, particularly the order confirming the arbitration award,
reading as follows:
WHEREFORE, premises considered, and in the light of the parties
Compromise and Arbitration Agreement dated October 6, 1992, the
Decision of the Arbitration Committee promulgated on November
24, 1993, as affirmed in a Resolution dated July 26, 1994, and
finally settled and clarified in the Separate Opinion dated
September 2, 1994 of Committee Member Elma, and the pertinent
provisions of R.A. 876, also known as the Arbitration Law, this Court
GRANTS PLAINTIFFS' APPLICATION AND THUS CONFIRMS THE
ARBITRATION AWARD AND JUDGMENT IS HEREBY RENDERED:
(a) Ordering the defendant APT to the Marinduque Mining and
Industrial Corporation (MMIC), except the DBP, the sum of
P3,811,757,425.00, as and for actual damages under escrow in the
amount of P503,000,000.00 pursuant to the Escrow Agreement
dated April 22, 1988. The balance of the award, after the escrow
funds are fully applied, shall be executed against the APT;
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(b) Ordering the defendants to pay to the MMIC, except the DBP,
the sum of P13,000.00 as and for moral and exemplary damages;
(c) Ordering the defendant to pay to Jesus S. Caburrus, Sr., the sum
of P10,000,000.00 as and for moral damages; and
(d) Ordering the defendant to pay the herein
plaintiff/applicants/movants the sum of P1,705,410.00 as
arbitration costs.
In reiteration of the mandates of Stipulation No. 10 and Stipulation
No. 8 paragraph 2 of the Compromise and Arbitration Agreement,
and the final edict of the Arbitration Committee's decision, and with
this Court's Confirmation, the issuance of the Arbitration
Committee's Award shall henceforth be final and executory.
SO ORDERED.
Originally instituted on February 8, 1985, in the Regional Trial Court,
Makati, Metro Manila, private respondents, Jesus S. Cabarrus, Sr., et
al., a few of the numerous minority stockholders of Marinduque
Mining and Industrial Corp. (hereafter MMIC), filed a complaint,
later amended on March 13, 1995, for annulment of foreclosure,
specific performance and damages against the Philippine National
Bank (PNB) and the Development Bank of the Philippines (DBP)
alleging that in 1984, the PNB and DBP effected illegally the extra-
judicial foreclosure of real estate and chattel mortgages constituted
in their favor by the MMIC by the latter's assets of real estate and
chattels, to satisfy an obligation amounting to P22,668,537,770.05,
and that prior to the extra-judicial foreclosure, PNB and DBP had
agreed to a financial reorganization plan of MMIC to reduce the
latter's indebtedness to P3 billion and to convert the balance of its
obligation into equity.
In their joint answer to the amended complaint, defendants PNB
and DBP denied the material allegations of the amended complaint
but admitted that in August and September, 1984, they foreclosed
extra-judicially the mortgages on MMIC's assets, with the
qualification that the correct amount of obligation owed by MMIC as
of July 15, 1984, was P22,083,313,168.29; that the foreclosure of
the mortgages was legal and valid as mandated by Presidential
Decree No. 385 and by the provisions of the mortgage trust
agreements between PNB, DBP and MMIC; and, that the plaintiff's
therein, herein respondents Cabarrus, et al., were not entitled to
actual and moral damages.
In the course of the trial of Civil Case No. 9900, plaintiffs Jesus S.
Cabarrus, et al. and the Asset Privatization Trust (APT), as
successor-in-interest of the DBP and PNB's interest in MMIC
accounts, entered into a compromise and arbitration agreement
dated October 6, 1992, whereby they "agreed to move for the
dismissal of the case, to transform the reliefs prayed for therein
into pure money claims and to submit the controversy to arbitration
under Republic Act (RA) 876 before a committee composed of three
members" limiting the issues to two, namely:
(a) whether plaintiffs have the capacity or the personality to
institute this derivative suit in behalf of the MMIC or its directors,
and
(b) whether or not the actions leading to, and including, the PNB-
DBP foreclosure of the MMIC assets were proper, valid and in good
faith.
Thus, the parties created an Arbitration Committee composed of
three (3) members, one (1) representative of the plaintiff; one (1)
representative of APT; and the Chairman to be agreed upon by both
parties. Consequently, APT nominated Atty. Jose C. Sison, a trustee
of APT and its counsel; MMIC nominated former Justice of the Court
of Appeals Magtanggol Elma; and they selected retired Supreme
Court Justice Abraham F. Sarmiento as Chairman.
After conducting hearings and receiving voluminous evidence, on
November 24, 1993, the Arbitration Committee released what
purports to be its decision penned by the Chairman, the dispositive
portion of which reads as follows:
DISPOSITION
WHEREFORE, premises considered judgment is hereby rendered:
1. Ordering the defendant to pay the Marinduque Mining and
Industrial Corporation, except the DBP, the sum of
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P2,531,635,425,02 with interest thereon at the legal rate of six
(6%) per cent per annum reckoned from August 3, 9 and 24,
1984, pari passu, as and for actual damages. Payment of these
actual damages shall be offset by APT from the outstanding and
unpaid loans of MMIC with DBP and PNB, which have not been
converted into equity. Should there be any balance due to MMIC
after the offsetting, the same shall be satisfied from the funds
representing the purchase price of the sale of the shares of Island
Cement Corporation in the amount of P503,000,000.00 held under
escrow pursuant to the Escrow Agreement dated April 22, 1988 or
to such subsequent escrow agreement that would supersede it
pursuant to paragraph (9) of the Compromise and Arbitration
Agreement;
2. Ordering the defendant to pay to the Marinduque Mining and
Industrial Corporation, except the DBP, the sum of P13,000,000.00,
as and for moral and exemplary damages. Payment of these moral
and exemplary damages shall be offset by APT from the
outstanding and unpaid loans of MMIC with DBP and PNB, which
have not been converted into equity. Should there be any balance
due to MMIC after the offsetting, the same shall be satisfied from
the funds representing the purchase price of the sale of the shares
of island Cement Corporation in the amount of P503,000,000.00
held under escrow pursuant to the Escrow Agreement dated April
22, 1988 or to such subsequent escrow agreement that would
supersede it pursuant to paragraph (9) of the Compromise and
Arbitration Agreement;
3. Ordering the defendant to pay to the plaintiff, Jesus S. Cabarrus,
Sr., the sum of P10,000,000.00, to be satisfied likewise from the
funds held under escrow pursuant to the Escrow Agreement dated
April 22, 1988 or to such subsequent escrow agreement that would
supersede it, pursuant to paragraph (9), Compromise and
Arbitration Agreement, as and for moral damages; and
4. Ordering the defendant to pay arbitration costs.
This Decision is FINAL and EXECUTORY.
IT IS SO ORDERED.
Member Elma submitted a separate concurring and dissenting
opinion reading as follows:
ELMA, concurring and dissenting:
I am in complete agreement with the findings of the Decision on
the principal issues submitted for the Committee's resolution, viz:
that plaintiffs Cabarrus, et al., have the capacity or the personality
to institute this derivative suit in behalf of Marinduque Milling and
Industrial Corporation (MMIC) and that the actions leading to, and
including, the PNB-DBP foreclosure of the MMIC assets were
improper, invalid and/or not done in good faith. Consequently,
there is concurrence on my part to the award of actual, moral and
exemplary damages to MMIC, and moral damages to plaintiff Jesus
S. Cabarrus, Sr.
However, I am unable to agree with and, therefore, regretfully
dissent as to the manner or method of computation and amount of
actual damages awarded to MMIC, particularly set forth in
paragraph 1 of the dispositive potion of the Decision.
xxx xxx xxx
Considering that under the "Compromise and Arbitration
Agreement", the parties agreed that their respective claims be
reduced to purely pecuniary/money claims, then MMIC and/or
plaintiffs on behalf of all the other stockholders of MMIC are entitled
to actual or compensatory damages equivalent to the present value
of their equity over the MMIC assets, i.e. the total stockholders'
equity of P20,826,700,952.00 as of December 31, 1992. Further,
since as held in the Decision that the DBP would have an 87%
equity in MMIC as a consequence of the finding that the Financial
Rehabilitation Plan (FRP), is valid (p. 64 of the Decision), then the
amount of P18,119,229,828.24 (equivalent to DBP's 87% equity)
should be deducted from the total stockholders' equity of
P20,826,700,952.00 leaving a net amount of P2,707,471,123.76 to
be awarded to MMIC (excluding DBP's share) as actual or
compensatory damages.
It is to be noted that defendant APT did not present any evidence
rebutting the figures and computations made by witness Pastor.
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Since the Decision finds the FRP valid, then the stockholders of
MMIC (excluding DBP) should be placed in the same position that
they would have been where not for the fact that the FRP was
improperly and illegally aborted by PNB/DBP. Accordingly, it is my
submission that defendant APT should be ordered to pay MMIC
(excluding DBP) the sum of P2,707,471,123.76 with legal interest
thereon per annum from August 3, 1984 as and for actual
damages.
xxx xxx xxx
Member Sison submitted a separate opinion reading as follows:
SEPARATE OPINION
xxx xxx xxx
It is clear and it cannot be disputed therefore that based on these
stipulated issues, the parties themselves have agreed that the
basic ingredient of the causes of action in this case is the wrong
committed on the corporation (MMIC) for the alleged illegal
foreclosure of its assets. By agreeing to this stipulation, PLAINTIFFS
themselves (Cabarrus, et al.) admit that the cause of action
pertains only to the corporation (MMIC) and that they are filing this
for and in behalf of MMIC.
Perforce this has to be so because it is the basic rule in Corporation
Law that "the shareholders have no title, legal or equitable to the
property which is owned by the corporation (13 Am. Jur. 165;
Pascual vs. Oresco, 14 Phil. 83). In Ganzon & Sons vs. Register of
Deeds, 6 SCRA 373, the rule has been reiterated that "a
stockholder is not the co-owner of the corporate property." Since
the property or assets foreclosed belongs to MMIC, the wrong
committed, if any, is done against the corporation. There is
therefore no direct injury or direct violation of the rights of
Cabarrus et al. There is no way, legal or equitable by which
Cabarrus et al, could recover damages in their personal capacities
even assuming or just because the foreclosure is improper or
invalid. The Compromise and Arbitration Agreement itself and the
elementary principles of Corporation Law say so. Therefore, I am
constrained to dissent from the award of moral damages to
Cabarrus.
Neither could I agree to the award of moral damages to MMIC. The
acts complained of here in which the Committee based its award of
moral damages to MMIC is the foreclosure of the various real estate
and chattel mortgages. The majority of the Committee believes
that these foreclosure constitute a violation on an agreement
forged between PNB-DBP, on one hand, and MMIC, on the other,
regarding the restructuring of the various past due loans of MMIC to
what had been termed as the Financial Restructuring Program
(FRP).
xxx xxx xxx
In this connection, it can readily be seen and it cannot quite be
denied that MMIC accounts in PNB-DBP were past due. The drawing
up of the FRP is the best proof of this. When MMIC adopted a
restructuring program for its loan, it only meant that these loans
were already due and unpaid. If these loans were restructurable
because they were already due and unpaid, they are likewise
"forecloseable". The option is with the PNB-DBP on what steps to
take.
The mere fact that MMIC adopted the FRP does not mean that DBP-
PNB lost the option to foreclose. Neither does it mean that the FRP
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is legally binding and implementable. It must be pointed that said
FRP will, in effect, supersede the existing and past due loans of
MMIC with PNB-DBP. It will become the new loan agreement
between the lenders and the borrowers. As in all other contracts,
there must therefore be a meeting of the minds of the parties; the
PNB and DBP must have to validly adopt and ratify such FRP before
they can be bound by it; before it can be implemented. In this case,
not an iota of proof has been presented by the PLAINTIFFS showing
that PNB and DBP ratified and adopted the FRP. PLAINTIFFS simply
relied on a legal doctrine of promissory estoppel to support its
allegations in this regard.
xxx xxx xxx
All told, PNB and DBP had the right to foreclose and were justified
in doing so. But were the foreclosure legally done or carried out?
Were the requirements of notice, posting and publication required
by Acts 3135 and 1508 substantially complied with?
xxx xxx xxx
I cannot, however, concur with the for holding that such minor taint
of illegality in the foreclosure is enough to justify the award of
damages, amounting to P19,486,118,654.00. "Rules of law
respecting the recovery of damages are framed with reference to
just rights or both parties, not merely what may be right for an
injured person to receive, but also what is just to compel the other
party to pay, to accord just compensation for the injury" (Kennings
vs. Kline Ind. 602). Following this universally accepted rule on
damage, I do not believe it is just to compel APT to pay such huge
amount for such minor technical infraction.
But while I do not agree with this pronouncement of the
Committee, I nevertheless concur with the result as far as the
disposition of the award for actual damages is concerned. I agree
that DEFENDANT APT can, and is still entitled to, collect the
outstanding obligations of MMIC to PNB and DBP amounting to
P22,668,537,770.05 with interest thereon as stipulated in the loan
documents from the date of foreclosure until the time they are fully
paid. The resultant effect of such a disposition is that APT can offset
the said obligation due from MMIC such that ultimately no damages
will be due and payable to MMIC. As there may be damage without
injury, there can be injury without damage (15 Am. Jur., p.
388). This case is a case of "injury without damage".
Both parties moved for reconsideration of the "decision" of the
Arbitration Committee. In addition, respondents Cabarrus et al. filed
a motion for clarification and to re-open the case to receive
evidence. In a resolution dated July 26, 1984, with one member
dissenting, the Arbitration Committee denied the motions for
reconsideration of both parties as well as all other pending motions.
On October 17, 1984, respondents Cabarrus et al. filed directly with
the Regional Trial Court, Makati, Branch 62, in the same Civil Case
No. 9900, a pleading entitled application/motion for confirmation of
arbitral award.
On November 4, 1994, petitioner APT filed an opposition and
motion to vacate judgment, contending that respondents' motion
was improperly filed with the same branch of the court in Civil Case
No. 9900, which was previously dismissed, and that the motion
should have been filed as a separate special proceedings in the
Regional Trial Court to be docketed by the Clerk of Court.
Nonetheless, acting on the application/motion, Judge Roberto C.
Diokno, presiding judge, Regional Trial Court, Makati, Branch 62, on
November 28, 1994, issued an order granting plaintiffs' application
confirming the arbitration award, and rendering judgment as set
out in the opening paragraph of this opinion.
On December 12, 1994, petitioner APT received notice of the lower
court's order. On December 27, 1994, petitioner APT filed a motion
for reconsideration. By order dated January 18, 1995, the trial court
denied the motion. On February 7, 1995, respondents Cabarrus, et
al. filed a motion for execution and appointment of custodian of
proceeds of execution. Petitioner opposed the motion. It is
apparently still unresolved.
On February 15, 1995, petitioner APT filed with the Court of Appeals
an original special civil action for certiorari with prayer for
temporary restraining order or preliminary injunction 1 to annul the
two (2) orders of the respondent Regional Trial Court above-
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mentioned confirming the arbitral award and denying its
reconsideration.
The issue presented in said petition was whether respondent Judge
Roberto C. Diokno, Regional Trial Court, Makati, Branch 62, had
jurisdiction to act on private respondents' application/motion for
confirmation of arbitral award in the same Civil Case No. 9900,
which had been dismissed earlier on motion of the parties, and thus
the court gravely abused its discretion in confirming the arbitral
award.
In its decision promulgated on July 17, 1995, the Court of Appeals
denied due course and dismissed the petition for certiorari for lack
of merit.
Hence, this petition for review filed on September 07, 1995. 2 has become final through the lapse of the fifteen-day reglementary
The petition is impressed with merit.
First, the Regional Trial Court, Makati, Branch 62, did not validly
acquire jurisdiction over the case by respondents' filing of a mere
motion in the same Civil Case No. 9900 because the case had been
dismissed earlier and such dismissal had become final and
unappealable. As heretofore stated, on October 6, 1992, the parties
entered into a compromise and arbitration agreement expressly
providing that they "have agreed to withdraw their respective
claims from the Trial Court and to resolve their dispute through
arbitration by praying to the Trial Court to issue a compromise
judgment based on this Compromise and Arbitration agreement.
Clearly, the parties had withdrawn the action then pending with the
Regional Trial Court, Makati, Branch 62, in Civil Case No. 9900, and
agreed that they would submit their dispute to arbitration and
reduce their respective claims to "purely money claims", "waiving
and foregoing all other forms of reliefs which they prayed for or
could have prayed for in Civil Case No. 9900." The parties "agreed
to move for the dismissal of the case, to transform the reliefs
prayed for therein to pure money claims and submit the
controversy to arbitration under Republic Act (RA) 876 before a
committee composed of three members."
In its order dated October 12, 1992, in Civil Case No. 9900, the trial
court presided over by respondent Judge categorically decreed that
"The complaint is hereby dismissed". Such disposition terminated
the case finally and irretrievably disposed of the same. 3 The term
"dismissed" has a definite meaning in law. "A judgment of
'dismissed', without qualifying words indicating a right to take
further proceedings, is presumed to be dismissed on the
merits". 4 The dismissal could not have been a suspension of action
provided for in the arbitration law, Republic Act No. 876.
Upon the finality of such order of dismissal, the case could no
longer be revived by mere motion. The trial court had lost its
authority over the case. 5 We cite as squarely applicable the
decision where this Court emphatically said "But after the dismissal
period, the only way by which the action may be resuscitated or
'revived,' is by the institution of a subsequent action through the
filing of another complaint and the payment of the fees prescribed
by law. This is so because upon attainment of finality of a dismissal
through the lapse of said reglementary period, the Court loses
jurisdiction and control over it and can no longer make any
disposition in respect thereof inconsistent with such dismissal" 6 It is
true that the confirmation of an arbitral award is within the
jurisdiction over the subject matter of a regional trial court. Such
jurisdiction must be invoked by proper motion as a special
proceedings with notice to the parties filed in the proper court with
the clerk of court (and upon payment of the prescribed fees). 7
Second, the Arbitration Committee did not actually reach a valid
decision on the subject controversy.
In the purported decision dated November 24, 1994, penned by
Chairman Sarmiento, the Committee ordered petitioner APT to pay
to MMIC the sum of P2,531,635,425.02, with interest thereon at the
legal rate at 6% per annum from August 3, 9 and 24, 1984, pari
passu as actual damages; to pay MMIC P13 million, as moral and
exemplary damages, and to pay Jesus S. Cabarrus, Sr. P10 million,
as moral damages.
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In the concurring and dissenting opinion of Member Elma, he
agreed with the finding on the principal issue submitted for
resolution. However, he dissented as to the manner or method of
computation and amount of actual damages awarded to MMIC. He
submitted that APT should be ordered to pay MMIC the sum of
P2,707,471,123.76, with legal interest thereon per annum from
August 3, 1984, as actual damages.
In his separate opinion, Member Sison stated that he concurred
with the result as far as the disposition of the award of actual
damage is concerned. He agreed that APT is entitled to collect the
outstanding obligations of MMIC to PNB and DBP amounting to
P22,668,537,770.05, with interest as stipulated in the loan
documents from the date of foreclosure until fully paid. The
resultant effect is that APT can offset said obligation due from MMIC
such that ultimately no damages shall be due and payable to MMIC.
He was against the award of moral and exemplary damages to
MMIC and Jesus S. Cabarrus, Sr.
It is obvious that the disposition in Chairman Sarmiento's award
and the concurring and dissenting opinion of Member Elma do not
tally and, hence, because of the dissent of Member Sison, the
Arbitration Committee did not reach a majority decision
constituting a valid judgment or fallo of the Committee.
The powers and duties of boards and commissions may not be
exercised by the individual members separately. Their acts are
official only when done by the members convened in session upon
a concurrence of at least a majority and with at least a quorum
present. 8
Respondents Cabarrus, et al. considered the disposition as
confusing and incomplete as to the award of damages and thereby
requiring the reception of further evidence as to necessitate the re-
opening of hearings on the case. On May 20, 1994, they filed a
motion for clarification seeking answer from the arbitration
committee as to the final amount of actual damages the MMIC is
entitled to, and, on June 9, 1994, they filed a motion to reopen the
case and to receive evidence.
Even the Arbitration Committee's resolution of the various motions
for reconsideration and other reliefs was conflicting. For Chairman
Sarmiento, respondents' motion for reconsideration, dated
December 15, 1993, and petitioner's motion for reconsideration,
dated January 3, 1994, respondents' motion for clarification dated
June 8, 1994, and respondents' urgent motion to re-open the case
and to receive evidence were all DENIED for lack of merit.
Member Elma dissented from the denial of the parties' motion for
reconsideration, reiterating that MMIC is entitled to actual damages
in the sum of P2,707,471,123.76, with legal interest thereon from
August 3, 1984.
Member Azura (substituting Sison) concurred with the Chairman in
denying respondents' motion for reconsideration, motion for
clarification and motion to re-open the case but favored granting
petitioner's (APT) motion for reconsideration.
WHEREFORE, I vote to GRANT the petition at bench, reverse the
decision of the Court of Appeals 9 as well as the orders of the
Regional Trial Court, Makati, Branch 62, in Civil Case No. 9900,
vacate the "decision" of the Arbitration Committee dated November
24, 1993, and, finally, ENJOIN the trial court from further acting on
the case.
Separate Opinions
ROMERO, J., dissenting opinion;
In the instant petition for review on certiorari, petitioner. Asset
Privatization Trust (APT) is impugning the decision of respondent
Court of Appeals in CA-GR SP No. 36484 dated July 17, 1995,
grounded upon the following assigned errors which it had allegedly
committed:
1) The Court of Appeals erred in not holding that the Makati
Regional Trial Court, Branch 62, which had previously dismissed
Civil Case No. 9900, had lost jurisdiction to confirm the arbitral
award under the same civil case and in not ruling that the
application for confirmation should have been filed as a new case
to be raffled among the different branches of the RTC;
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2) The Court of Appeals likewise erred in holding that petitioner was
estopped from questioning the arbitration award, when petitioner
questioned the jurisdiction of the RTC-Makati, Branch 62, and at the
same time moved to vacate the arbitral award;
3) The Court of Appeals erred in not holding that the respondent
Trial Court should have either dismissed/denied private
respondents' motion/petition for confirmation of arbitration award
and/or should have considered the merits of the motion to vacate
(the) arbitral award;
4) The Court of Appeals erred in not treating petitioner APT's
petition for certiorari as an appeal taken from the order confirming
the award; and
5) The Court of Appeals erred in not ruling on the legal issue of
when to reckon the counting of the period to file a motion for
reconsideration. 1
The resolution of these issues will ultimately test the process of
arbitration, how effective or ineffective it is as an alternative mode
of settling disputes, and how it is affected by judicial review. My
esteemed colleagues have taken the view that the petition is
impressed with merit and that the assailed decision of the Court of
Appeals should be reversed. In doing so, I believe they have dealt
arbitration a terrible blow and wasted years, even decades, of
development in this field. I beg to differ and, therefore, dissent.
The controversy is actually simpler than it appears. The
Marinduque Mining and Industrial Corporation (MMIC) obtained
several loans from the Philippine National Bank (PNB) and the
Development Bank of the Philippines (DBP) secured by mortgages
over practically all of its assets. As of July 15, 1984, MMIC's
obligation had ballooned to P22,668,537,770.05, 2 and it had no
way of making the required payments. MMIC and its two creditor
banks thus ironed out a complex financial restructuring plan (FRP)
designed to drastically reduce MMIC's liability through a "debt-to-
equity" scheme. 3 This notwithstanding, the creditors opted to sell
MMIC's mortgaged properties through extrajudicial foreclosure
proceedings, where PNB turned out to be the lone bidder. 4
Aggrieved by this apparent bad faith on the part of the creditor
banks, private respondents Jesus S. Cabarrus, Sr., and other
minority stockholders of MMIC filed a derivative suit 5 against PNB
and DBP before the Makati Regional Trial Court. They prayed for the
annulment of the foreclosure and for the restoration of the
company's assets, the recognition by the creditor banks of their
commitments under the FRP, and the payment of damages, as well
as attorney's fees and costs of litigation. The case was raffled to
Branch 62 and docketed as Civil Case No. 9900.
In the meantime, the rights and interests of PNB and DBP, including
MMIC's indebtedness, were transferred to petitioner, created by
virtue of Proclamation No. 50, in relation to Administrative Order
No. 14. Hence, petitioner was substituted as party defendant in
Civil Case No. 9900.
On October 6, 1992, the parties entered into a Compromise and
Arbitration Agreement 6 providing, inter alia, that they were
withdrawing their respective claims, which would be reduced to
pure money claims, and that they were submitting the controversy
to arbitration under Republic Act No. 876. 7 The issues for
arbitration were thus limited to a determination of the plaintiffs'
capacity or right to institute the derivative suit in behalf of the
MMIC or its directors, and of the propriety of the foreclosure. Of
notable import was the provision on the nature of the judgment
that the arbitration committee might render, viz.:
10. Binding Efect and Enforcement. The award of the arbitration
committee shall be final and executory upon its issuance upon the
parties to the arbitration and their assigns and successors-in-
interest. In the event the award is not voluntarily satisfied by the
losing party, the party in whose favor the award has been made
may, pursuant to Republic Act No. 876, apply to the proper
Regional Trial Court for its enforcement. (Emphasis supplied)
Upon motion of the parties, this agreement was presented to the
court a quo for its approval. 8 On October 14, 1992, said court
issued an order (a) dismissing the complaint; (b) substituting the
creditor banks with the APT as party defendant; (c) "approving the
Compromise and Arbitration Agreement dated October 6, 1992";
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and (d) "approving the transformation of the reliefs prayed for by
the plaintiffs in this case into pure money claims." 9
On November 24, 1993, after more than six months of hearing, the
arbitration committee 10 concluded that the assailed foreclosure
was not valid and accordingly decided the case in favor of MMIC.
Hence, petitioner was ordered to pay MMIC actual damages in the
amount of P2,531,635,425.02, with legal interest, and moral and
exemplary damages amounting to P13,000,000.00, and to pay
Jesus S. Cabarrus, Sr., the sum of P10,000,000.00 by way of moral
damages, such awards to be offset from the outstanding and
unpaid obligations of MMIC with the creditor banks, which have not
been converted into equity. The committee likewise decreed its
decision to be "final and executory." 11
Nearly a year later, MMIC filed in Civil Case No. 9900, a verified
"Application/Motion for Confirmation of Arbitration Award." 12 This
was opposed by petitioner on two grounds, namely, that Branch 62
no longer had jurisdiction to act on said motion after it "dismissed"
the complaint in its order of October 14, 1992, and that the award
"far exceeded the issues submitted" for arbitration by the
parties. 13 Not wanting to be outdone, MMIC filed a "Reply and
Opposition," arguing that the "qualified dismissal" of Civil Case No.
9900 was merely intended to expedite the submission of the
controversy to arbitration and was, therefore, "a mere suspension
of the proceedings," and that the arbitration committee did not
exceed its authority in making the award.
On November 28, 1994, the trial court issued an order 14 confirming
the award of the committee in all respects except as to the award
of actual damages to MMIC, which was increased to
P3,811,757,425.00. The order closed with the following declaration:
In reiteration of the mandates of Stipulation No. 10 and Stipulation
No. 8 paragraph 2 of the Compromise and Arbitration Agreement,
and the final edict of the Arbitration Committee's decision, and with
this Court's Confirmation, the issuance of the Arbitration
Committee's Award shall henceforth be final and executory.
Petitioner filed a "Motion for Reconsideration" of said order on
December 27, 1994; but this was denied by the court a quo in its
order dated January 18, 1995 for lack of merit and for having been
filed beyond the reglementary period. Thus, it said:
. . . (C)onsidering that the defendant APT, through counsel, officially
and actually received a copy of the Order of this Court dated
November 28, 1994 on December 6, 1994, the Motion for
Reconsideration thereof filed by the defendant APT on December
27, 1994, or after the lapse of 21 days, was clearly filed beyond the
15-day reglementary period prescribed or provided for . . . (by law)
for the filing of an appeal from final orders, resolutions, awards,
judgments or decisions of any court in all cases, and by necessary
implication, for the filing of a motion for reconsideration thereof.
Instead of appealing such denial, petitioner filed on February 15,
1995, an "Appeal by Certiorari . . . . under Sections 1 and 2 of Rule
65 of the Revised Rules of Court" before the Court of Appeals,
praying for the nullification of the trial court's orders dated
November 28, 1994 and January 18, 1995. It argued that the trial
court had no jurisdiction or authority to confirm the arbitral award,
"considering that the original case, Civil Case No. 9900, had
previously been dismissed," and that the trial judge "acted with
grave abuse of discretion in issuing the questioned orders
confirming the award and denying the motion for reconsideration
thereof." 15
On July 17, 1995, the Court of Appeals dismissed the petition for
lack of merit. 16 From this dismissal, petitioner elevated its cause to
this Tribunal for a review, raising the issues stated at the outset.
I find it distressing that, in reaching the outcome of this
controversy, the majority has emasculated the process of
arbitration itself. This should not be the case for after all, the
decision of the arbitration committee is no longer the one being
attacked in these proceedings, but the judgment of the Court of
Appeals which herein petitioner found to be erroneous. The Court
has had occasion to trace the history of arbitration and to discuss
its significance in the case of Chung Fu Industries (Phils.), Inc. v.
Court of Appeals, 17 viz.:
Allow us to take a leaf from history and briefly trace the evolution
of arbitration as a mode of dispute settlement.
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Because conflict is inherent in human society, much effort has been
expended by men and institutions in devising ways of resolving the
same. With the progress of civilization, physical combat has been
ruled out and instead, more specific means have been evolved,
such as recourse to the good offices of a disinterested third party,
whether this be a court or a private individual or individuals.
Legal history discloses that "early judges called upon to solve
private conflicts were primarily the arbiters, persons not specially
trained but in whose morality, probity and good sense the parties in
conflict reposed full trust. Thus, in Republican
Rome, arbiter and judge (judex) were synonymous. The magistrate
of praetor, after noting down the conflicting claims of litigants, and
clarifying the issues, referred them for decision to a private person
designated by the parties, by common agreement, or selected by
them from an apposite listing (the album judicium) or else by
having the arbiter chosen by lot. The judges proper, as specially
trained state officials endowed with (their) own power and
jurisdiction, and taking cognizance of litigations from beginning to
end, only appeared under the Empire, by the so-called cognitio
extra ordinem."
Such means of referring a dispute to a third party has also long
been an accepted alternative to litigation at common law.
Sparse though the law and jurisprudence may be on the subject of
arbitration in the Philippines, it was nonetheless recognized in the
Spanish Civil Code; specifically, the provisions on compromises
made applicable to arbitrations under Articles 1820 and 1821.
Although said provisions were repealed by implication with the
repeal of the Spanish Law of Civil Procedure, these and additional
ones were reinstated in the present Civil Code.
Arbitration found a fertile field in the resolution of labor-
management disputes in the Philippines. Although early on,
Commonwealth Act 103 (1936) provided for compulsory arbitration
as the state policy to be administered by the Court of Industrial
Relations, in time such a modality gave way to voluntary
arbitration. While not completely supplanting compulsory
arbitration which until today is practiced by government officials,
the Industrial Peace Act which was passed in 1953 as Republic Act
No. 875, favored the policy of free collective bargaining, in general,
and resort to grievance procedure, in particular, as the preferred
mode of settling disputes in industry. It was accepted and
enunciated more explicitly in the Labor Code, which was passed on
November 1, 1974 as Presidential Decree No. 442, with the
amendments later introduced by Republic Act No. 6715 (1989).
Whether utilized in business transactions or in employer-employee
relations, arbitration was gaining wide acceptance. A consensual
process, it was preferred to orders imposed by government upon
the disputants. Moreover, court litigations tended to be time-
consuming, costly, and inflexible due to their scrupulous
observance of the due process of law doctrine and their strict
adherence to rules of evidence.
As early as the 1920's, this Court declared:
In the Philippines fortunately, the attitude of the court towards
arbitration agreements is slowly crystallizing into definite and
workable form . . . The rule now is that unless the agreement is
such as absolutely to close the doors of the courts against the
parties, which agreement would be void, the courts will look with
favor upon such amicable arrangements and will only with great
reluctance interfere to anticipate or nullify the action of the
arbitrator.
That there was a growing need for a law regulating arbitration in
general was acknowledged when Republic Act No. 876 (1953),
otherwise known as the Arbitration Law, was passed. "Said Act was
obviously adopted to supplement not to supplant the New
Civil Code on arbitration. It expressly declares that "the provisions
of chapters one and two, Title XIV, Book IV of the Civil Code shall
remain in force."
xxx xxx xxx
In practice nowadays, absent an agreement of the parties to
resolve their disputes via a particular mode, it is the regular courts
that remain the fora to resolve such matters. However, the parties
may opt for recourse to third parties, exercising their basic freedom
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to "establish such stipulations, clauses, terms and conditions as
they may deem convenient, provided they are not contrary to law,
morals, good customs, public order or public policy." In such a case,
resort to the arbitration process may be spelled out by them in a
contract in anticipation of disputes that may arise between them.
Or this may be stipulated in a submission agreement when they are
actually confronted by a dispute. Whatever be the case, such
recourse to an extrajudicial means of settlement is not intended to
completely deprive the courts of jurisdiction. In fact, the early cases
on arbitration carefully spelled out the prevailing doctrine at the
time, thus: ". . . a clause in a contract providing that all matters in
dispute between the parties shall be referred to arbitrators and to
them alone is contrary to public policy and cannot oust the courts
of jurisdiction."
But certainly, the stipulation to refer all future disputes to an
arbitrator or to submit an ongoing dispute to one is valid. Being
part of a contract between the parties, it is binding and enforceable
in court in case one of them neglects, fails or refuses to arbitrate.
Going a step further, in the event that they declare their intention
to refer their differences to arbitration first before taking court
action, this constitutes a condition precedent, such that where a
suit has been instituted prematurely, the court shall suspend the
same and the parties shall be directed forthwith to proceed to
arbitration.
A court action may likewise be proper where the arbitrator has not
been selected by the parties.
xxx xxx xxx
. . . It is stated explicitly under Art. 2044 of the Civil Code that the
finality of the arbitrator's award is not absolute and without
exceptions. Where the conditions described in Articles 2038, 2039
and 2040 18applicable to both compromises and arbitrations are
obtaining, the arbitrators' award may be annulled or rescinded.
Additionally, under Sections 24 and 25 of the Arbitration Law, there
are grounds for vacating, modifying or rescinding an arbitrator's
award. Thus, if and when the factual circumstances referred to in
the above-cited provisions are present, judicial review of the award
is properly warranted.
What if courts refuse or neglect to inquire into the factual milieu of
an arbitrator's award to determine whether it is in accordance with
law or within the scope of his authority? How may the power of
judicial review be invoked?
This is where the proper remedy is certiorari under Rule 65 of the
Revised Rules of Court. It is to be borne in mind, however, that this
action will lie only where a grave abuse of discretion or an act
without or in excess of jurisdiction on the part of the voluntary
arbitrator is clearly shown. For "the writ of certiorari is an
extraordinary remedy and that certiorari jurisdiction is not to be
equated with appellate jurisdiction. In a special civil action
of certiorari, the Court will not engage in a review of the facts found
nor even of the law as interpreted or applied by the arbitrator
unless the supposed errors of fact or of law are so patent and gross
and prejudicial as to amount to a grave abuse of discretion or
an exces de pouvoir on the part of the arbitrator." 19
So, what are the issues that need to be addressed in this action?
Certainly not the capacity of the plaintiffs below to file the
derivative suit in behalf of MMIC nor the validity of the extrajudicial
foreclosure conducted by PNB and DBP. These were the issues
submitted for arbitration by the parties and resolved with finality by
the arbitration committee upon agreement of the parties
themselves. The issues, therefore, all stemming from the judgment
of the Court of Appeals, may be narrowed down to three: (1) Was it
right in upholding the trial court's authority to confirm the
arbitration award considering that said court had earlier dismissed
the complaint? (2) Was it correct in finding that herein petitioner
was estopped from questioning such award? (3) Was it justified in
not treating petitioner's petition for certiorari as an appeal from the
trial court's order confirming said award?
(1) Petitioner overly stresses the fact that in the trial court's order
of October 14, 1992; the complaint was "dismissed" upon approval
of the Compromise and Arbitration Agreement between the parties.
Such dismissal, however, far from finally disposing of the
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controversy as the term denotes, simply "suspended" it during the
period of arbitration. It is, as a colleague pointed out during the
deliberation of this action, a mere "semantic imperfection." Here is
a situation where the intent of the tribunal was obviously not to end
the case with finality, but to place the proceedings in abeyance
while the parties breathed life into an alternative mode of settling
their differences in the most expeditious manner. Arbitration is not
a self-enforcing process. It focuses the direction of the hearing and
the reception and appreciation of evidence by assigning these
tasks to a group of persons chosen by the parties, themselves. By
this, a circuitous and time-consuming court trial is avoided, leaving
the court with the singular duty of confirming the arbitrators'
decision, and allowing it to devote more of its time to resolving
other cases. As the appellate court correctly pointed out:
. . . (T)he dismissal of the Complaint in Civil Case No. 9900 was not
intended by the parties and by the court a quo, despite the
phraseology in Item No. 4 or the dispositive portion of the Order of
October 14, 1992, as a dismissal that would put an end to the case.
Rather it was simply a pronouncement for the cessation of the
proceedings in the court and the commencement of the arbitration
proceedings. It was for all intents and purposes a stay of the civil
action until an arbitration has been had or pending the return of the
arbitral award. This is evident since the parties submitted to the
court below not only an agreement to arbitrate but also a
compromise which is always submitted to the court for approval
and as a basis for a judgment. . . . 20
Regarding the trial court's authority to confirm the decision of the
arbitration committee, suffice it to say that such was not merely its
right but its duty as well. Under Section 22 of R.A. No. 876, upon
application or motion of any party to arbitration, the court has the
obligation of confirming the arbitrators' award absent any specific
ground to vacate, modify or correct the same. Herein private
respondents did apply for such confirmation on February 7, 1995.
This was even opposed by petitioner on the ground that the
judgment had not yet become final and executory, in complete
disregard of paragraph 10 of the Compromise and Arbitration
Agreement and the very decision of the arbitration committee.
The award itself was properly made since it was not vacated,
modified or corrected upon any of the grounds enumerated under
Sections 24 and 25 of R.A. No. 876, to wit:
Sec. 24. Grounds for vacating award. In any one of the following
cases, the court must make an order vacating the award upon the
petition of any party to the controversy when such party proves
affirmatively that in the arbitration proceedings:
(a) The award was procured by corruption, fraud, or other undue
means; or
(b) That there was evident partiality or corruption in the arbitrators
or any of them; or
(c) That the arbitrators were guilty of misconduct in refusing to
postpone the hearing upon sufficient cause shown, or in refusing to
hear evidence pertinent and material to the controversy; that one
or more of the arbitrators was disqualified to act as such under
section nine hereof, and willfully refrained from disclosing such
disqualifications or of any other misbehavior by which the rights of
any party have been materially prejudiced; or
(d) That the arbitrators exceeded their powers, or so imperfectly
executed them, that a mutual, final and definite award upon the
subject matter submitted to them was not made.
Where an award is vacated, the court, in its discretion, may direct a
new hearing either before the same arbitrators or before a new
arbitrator or arbitrators chosen in the manner provided in the
submission or contract for the selection of the original arbitrator or
arbitrators, and any provision limiting the time in which the
arbitrators may make a decision shall be deemed applicable to the
new arbitration and to commence from the date of the court's
order.
Where the court vacates, an award, costs, not exceeding fifty
pesos, and disbursements may be awarded to the prevailing party
and the payment thereof may be enforced in like manner as the
payment of costs upon the motion in an action
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Sec. 25. Grounds for modifying or correcting award. In any one
of the following cases, the court must make an order modifying or
correcting the award, upon the application of any party to the
controversy which was arbitrated:
(a) Where there was an evident miscalculation of figures, or an
evident mistake in the description of any person, thing or property
referred to in the award; or
(b) Where the arbitrators have awarded upon a matter not
submitted to them, not afecting the merits of the decision upon
the matter submitted; or
(c) Where the award is imperfect in a matter of form not afecting
the merits of the controversy, and if it had been a commissioner's
report, the defect could have been amended or disregarded by the
court.
The order may modify and correct the award so as to effect the
intent thereof and promote justice between the parties. (Emphasis
supplied)
Petitioner utterly failed to prove the existence of any of these
grounds. Its strongest argument, that the arbitration award "far
exceeded the issue submitted for arbitration," apart from being
unsubstantiated, does not go into the merits of the award, which is
the only way its modification or correction could be justified under
the terms of Section 25, aforequoted.
Furthermore, petitioner violated several covenants by asking the
court a quo to vacate the arbitration award. First, in paragraph 10
of the Compromise and Arbitration Agreement, it agreed to abide
by the arbitration committee's decision which "shall be final and
executory upon its issuance upon the parties to the arbitration and
their assigns and successors-in-interest." Next, the decision that
the arbitrators did render on November 24, 1993 specifically
declared the same to be "final and executory." Finally, in the court's
confirmation order of November 28, 1994, the finality of the award
was reiterated by the court. Arbitration, as an alternative mode of
settlement, is gaining adherents in legal and judicial circles here
and abroad. If its tested mechanism can simply be ignored by an
aggrieved party, one who, it must be stressed, voluntarily and
actively participated in the arbitration proceedings from the very
beginning, it will destroy the very essence of mutuality inherent in
consensual contracts.
2) Petitioner claims that it is not estopped from questioning the
arbitration award probably because, notwithstanding its tenacious
quest for affirmative relief, it did not translate this pursuit into
positive action. The Court of Appeals succinctly puts it in this wise:
. . . The record shows that on its motion, petitioner APT was able to
postpone the hearing on therein plaintiffs' application/motion for
confirmation of arbitral award to a date and time that it chose.
However, when said matter was called for hearing, only counsel for
therein plaintiffs showed up. Nonetheless, respondent Judge gave
APT a period of seven (7) days from notice within which to
comment on the application/motion for confirmation. At no time did
petitioner APT ask for a hearing to present its evidence. While
petitioner APT repeatedly sought to vacate the arbitral award, it
made no concrete move to pursue its cause. In fact, at the hearing
on its motion for reconsideration, both parties through their
respective counsels gave oral arguments and thereafter agreed to
submit the motion for reconsideration for resolution. If petitioner
APT honestly believed that the respondent Judge erroneously took
cognizance of plaintiffs Application/Motion for Confirmation of
Arbitration Award, then it should have limited itself to challenging
the jurisdiction of said court. The fact remains that petitioner APT
repeatedly sought affirmative relief from the respondent Judge in
the same Civil Case No. 9900. Under the circumstances, petitioner
APT may not be heard now to complain that it was deprived of its
right to question the award made by the Arbitration
Committtee. 21 (Emphasis supplied)
3) The final issue which, to my mind, has particular relevance to the
case at bar, pertains to the alleged error of the Court of Appeals in
not treating APT's petition for certiorari as an appeal from the trial
court's confirmation order.
Petitioner's counsel received a copy of the confirmation order dated
November 28, 1994, on December 12, 1994. 22Said order was, for
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review purposes, a "final order" because it finally disposed of the
case. Other than executing the confirmation order, there was
nothing else that the court was duty-bound to perform. Petitioner's
remedy, therefore, was to question the order, by appeal
on certiorari, not before the Court of Appeals, but before the
Supreme Court 23 within the reglementary period of fifteen days
which expired on December 27, 1994. Instead of appealing,
however, petitioner filed a motion for reconsideration of the order
on said deadline. Unfortunately, this was denied by the court a
quo in its order dated January 18, 1995, a copy of which was
received by petitioner's counsel on February 1, 1995. Under
prevailing procedural laws, it had just one day to perfect its appeal.
On February 15, 1995, petitioner opted to file with the Court of
Appeals an "Appeal by Certiorari . . . under Sections 1 and 2 of Rule
65 of the Revised Rules of Court." The reason is obvious: It could no
longer file a regular appeal from the assailed order because the
period for doing so has lapsed. The Court of Appeals thus made the
following pertinent observation.
. . . Assuming arguendo that petitioner APT's counsel received a
copy (of the November 28, 1994, order), as claimed by them, on
December 12, 1994, then the petitioner had fifteen (15) days
therefrom or until December 27, 1994, within which to appeal. The
petitioner's motion for reconsideration was admittedly filed on
December 27, 1994, the last day of the reglementary 15-day
period, and the order dated January 18, 1995, denying the same
was received by petitioner's counsel on February 1, 1995. Petitioner
APT had only the following day to perfect his appeal. Instead, it
chose to file the instant special civil action of certiorari on February
15, 1995.
From the start, petitioner seemed unsure of its position on appeal.
While initially questioning the "order confirming the award" of the
arbitration committee, it later stated that it was raising the issue of
"filing by (herein private respondents) of a Motion for Execution and
Appointment of Custodian of proceeds of Execution dated February
6, 1995." The latter recourse is obviously erroneous, for no appeal
under either Rule 45 or Rule 65 may be taken from a "motion" or
the "filing" of one. Under Rule 45, only judgments or final orders of
a court or tribunal may be appealed to a higher court, while Rule 65
allows a special civil action where the acts of a tribunal, board or
officer are under attack for being performed with grave abuse of
discretion.
The applicable law, of course, is R.A. No. 876, which provides for
appeals from arbitration awards under Section 29 thereof, viz.:
. . . (A)n appeal may be taken from . . . a judgment entered upon an
award through certiorari proceedings, but such appeals shall be
limited to questions of law. The proceedings upon such an appeal,
including the judgment thereon, shall be governed by the Rules of
Court in so far as they are applicable.
The term "certiorari" in the aforequoted provision refers to an
ordinary appeal under Rule 45, not the special action
of certiorari under Rule 65. It is an "appeal," as Section 29
proclaims. The proper forum for this action is, under the old and the
new rules of procedure, the Supreme Court. Thus, Section 2(c) of
Rule 41 of the 1997 Rules of Civil Procedure states that, "In all
cases where only questions of law are raised or involved, the
appeal shall be to the Supreme Court by petition for review
on certiorari in accordance with Rule 45." Moreover, Section 29
limits the appeal to "questions of law," another indication that it is
referring to an appeal by certiorari under Rule 45 which, indeed, is
the customary manner of reviewing such issues. On the other hand,
the extraordinary remedy of certiorari under Rule 65 may be
availed of by a party where there is "no appeal, nor any plain,
speedy, and adequate remedy in the course of law," and under
circumstances where "a tribunal, board or officer exercising judicial
functions, has acted without or in excess of its or his jurisdiction, or
with grave abuse of discretion." 24
Based on the foregoing, it is clear that petitioner had run out of
options after its motion for reconsideration was denied by the trial
court in its order dated January 18, 1995. To compound its
negligence, it filed the wrong action with the wrong forum. These,
to my mind, are serious procedural flaws. To rule otherwise, as the
majority did, would constitute a grave injustice to private
respondents.
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I vote to DISMISS the petition.
PARDO, J., separate concurring opinion;
I concur. However, I wish to add a few points not particularly
emphasized in the majority opinion.
The petition before the Court is one for review via certiorari under
Rule 45 of the Revised Rules of Court seeking to set aside the
resolution of the Court of Appeals that denied due course and
dismissed APT's petition for certiorari to annul the proceedings had
before the Regional Trial Court, Makati, Branch 62, in Civil Case No.
9900, particularly the order confirming the arbitration award,
reading as follows:
WHEREFORE, premises considered, and in the light of the parties
Compromise and Arbitration Agreement dated October 6, 1992, the
Decision of the Arbitration Committee promulgated on November
24, 1993, as affirmed in a Resolution dated July 26, 1994, and
finally settled and clarified in the Separate Opinion dated
September 2, 1994 of Committee Member Elma, and the pertinent
provisions of R.A. 876, also known as the Arbitration Law, this Court
GRANTS PLAINTIFFS' APPLICATION AND THUS CONFIRMS THE
ARBITRATION AWARD AND JUDGMENT IS HEREBY RENDERED:
(a) Ordering the defendant APT to the Marinduque Mining and
Industrial Corporation (MMIC), except the DBP, the sum of
P3,811,757,425.00, as and for actual damages under escrow in the
amount of P503,000,000.00 pursuant to the Escrow Agreement
dated April 22, 1988. The balance of the award, after the escrow
funds are fully applied, shall be executed against the APT;
(b) Ordering the defendants to pay to the MMIC, except the DBP,
the sum of P13,000.00 as and for moral and exemplary damages;
(c) Ordering the defendant to pay to Jesus S. Caburrus, Sr., the sum
of P10,000,000.00 as and for moral damages; and
(d) Ordering the defendant to pay the herein
plaintiff/applicants/movants the sum of P1,705,410.00 as
arbitration costs.
In reiteration of the mandates of Stipulation No. 10 and Stipulation
No. 8 paragraph 2 of the Compromise and Arbitration Agreement,
and the final edict of the Arbitration Committee's decision, and with
this Court's Confirmation, the issuance of the Arbitration
Committee's Award shall henceforth be final and executory.
SO ORDERED.
Originally instituted on February 8, 1985, in the Regional Trial Court,
Makati, Metro Manila, private respondents, Jesus S. Cabarrus, Sr., et
al., a few of the numerous minority stockholders of Marinduque
Mining and Industrial Corp. (hereafter MMIC), filed a complaint,
later amended on March 13, 1995, for annulment of foreclosure,
specific performance and damages against the Philippine National
Bank (PNB) and the Development Bank of the Philippines (DBP)
alleging that in 1984, the PNB and DBP effected illegally the extra-
judicial foreclosure of real estate and chattel mortgages constituted
in their favor by the MMIC by the latter's assets of real estate and
chattels, to satisfy an obligation amounting to P22,668,537,770.05,
and that prior to the extra-judicial foreclosure, PNB and DBP had
agreed to a financial reorganization plan of MMIC to reduce the
latter's indebtedness to P3 billion and to convert the balance of its
obligation into equity.
In their joint answer to the amended complaint, defendants PNB
and DBP denied the material allegations of the amended complaint
but admitted that in August and September, 1984, they foreclosed
extra-judicially the mortgages on MMIC's assets, with the
qualification that the correct amount of obligation owed by MMIC as
of July 15, 1984, was P22,083,313,168.29; that the foreclosure of
the mortgages was legal and valid as mandated by Presidential
Decree No. 385 and by the provisions of the mortgage trust
agreements between PNB, DBP and MMIC; and, that the plaintiff's
therein, herein respondents Cabarrus, et al., were not entitled to
actual and moral damages.
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In the course of the trial of Civil Case No. 9900, plaintiffs Jesus S.
Cabarrus, et al. and the Asset Privatization Trust (APT), as
successor-in-interest of the DBP and PNB's interest in MMIC
accounts, entered into a compromise and arbitration agreement
dated October 6, 1992, whereby they "agreed to move for the
dismissal of the case, to transform the reliefs prayed for therein
into pure money claims and to submit the controversy to arbitration
under Republic Act (RA) 876 before a committee composed of three
members" limiting the issues to two, namely:
(a) whether plaintiffs have the capacity or the personality to
institute this derivative suit in behalf of the MMIC or its directors,
and
(b) whether or not the actions leading to, and including, the PNB-
DBP foreclosure of the MMIC assets were proper, valid and in good
faith.
Thus, the parties created an Arbitration Committee composed of
three (3) members, one (1) representative of the plaintiff; one (1)
representative of APT; and the Chairman to be agreed upon by both
parties. Consequently, APT nominated Atty. Jose C. Sison, a trustee
of APT and its counsel; MMIC nominated former Justice of the Court
of Appeals Magtanggol Elma; and they selected retired Supreme
Court Justice Abraham F. Sarmiento as Chairman.
After conducting hearings and receiving voluminous evidence, on
November 24, 1993, the Arbitration Committee released what
purports to be its decision penned by the Chairman, the dispositive
portion of which reads as follows:
DISPOSITION
WHEREFORE, premises considered judgment is hereby rendered:
1. Ordering the defendant to pay the Marinduque Mining and
Industrial Corporation, except the DBP, the sum of
P2,531,635,425,02 with interest thereon at the legal rate of six
(6%) per cent per annum reckoned from August 3, 9 and 24,
1984, pari passu, as and for actual damages. Payment of these
actual damages shall be offset by APT from the outstanding and
unpaid loans of MMIC with DBP and PNB, which have not been
converted into equity. Should there be any balance due to MMIC
after the offsetting, the same shall be satisfied from the funds
representing the purchase price of the sale of the shares of Island
Cement Corporation in the amount of P503,000,000.00 held under
escrow pursuant to the Escrow Agreement dated April 22, 1988 or
to such subsequent escrow agreement that would supersede it
pursuant to paragraph (9) of the Compromise and Arbitration
Agreement;
2. Ordering the defendant to pay to the Marinduque Mining and
Industrial Corporation, except the DBP, the sum of P13,000,000.00,
as and for moral and exemplary damages. Payment of these moral
and exemplary damages shall be offset by APT from the
outstanding and unpaid loans of MMIC with DBP and PNB, which
have not been converted into equity. Should there be any balance
due to MMIC after the offsetting, the same shall be satisfied from
the funds representing the purchase price of the sale of the shares
of island Cement Corporation in the amount of P503,000,000.00
held under escrow pursuant to the Escrow Agreement dated April
22, 1988 or to such subsequent escrow agreement that would
supersede it pursuant to paragraph (9) of the Compromise and
Arbitration Agreement;
3. Ordering the defendant to pay to the plaintiff, Jesus S. Cabarrus,
Sr., the sum of P10,000,000.00, to be satisfied likewise from the
funds held under escrow pursuant to the Escrow Agreement dated
April 22, 1988 or to such subsequent escrow agreement that would
supersede it, pursuant to paragraph (9), Compromise and
Arbitration Agreement, as and for moral damages; and
4. Ordering the defendant to pay arbitration costs.
This Decision is FINAL and EXECUTORY.
IT IS SO ORDERED.
Member Elma submitted a separate concurring and dissenting
opinion reading as follows:
ELMA, concurring and dissenting:
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I am in complete agreement with the findings of the Decision on
the principal issues submitted for the Committee's resolution, viz:
that plaintiffs Cabarrus, et al., have the capacity or the personality
to institute this derivative suit in behalf of Marinduque Milling and
Industrial Corporation (MMIC) and that the actions leading to, and
including, the PNB-DBP foreclosure of the MMIC assets were
improper, invalid and/or not done in good faith. Consequently,
there is concurrence on my part to the award of actual, moral and
exemplary damages to MMIC, and moral damages to plaintiff Jesus
S. Cabarrus, Sr.
However, I am unable to agree with and, therefore, regretfully
dissent as to the manner or method of computation and amount of
actual damages awarded to MMIC, particularly set forth in
paragraph 1 of the dispositive potion of the Decision.
xxx xxx xxx
Considering that under the "Compromise and Arbitration
Agreement", the parties agreed that their respective claims be
reduced to purely pecuniary/money claims, then MMIC and/or
plaintiffs on behalf of

all the other stockholders of MMIC are entitled to actual or

compensatory damages equivalent to the

present value of their equity over the MMIC assets, i.e. the total
stockholders' equity of P20,826,700,952.00 as of December 31,
1992. Further, since as held in the Decision that the DBP would
have an 87% equity in MMIC as a consequence of the finding that
the Financial Rehabilitation Plan (FRP), is valid (p. 64 of the
Decision), then the amount of P18,119,229,828.24 (equivalent to
DBP's 87% equity) should be deducted from the total stockholders'
equity of P20,826,700,952.00 leaving a net amount of
P2,707,471,123.76 to be awarded to MMIC (excluding DBP's share)
as actual or compensatory damages.
xxx xxx xxx
It is clear and it cannot be disputed therefore that based on these
stipulated issues, the parties themselves have agreed that the
basic ingredient of the causes of action in this case is the wrong
committed on the corporation (MMIC) for the alleged illegal
foreclosure of its assets. By agreeing to this stipulation, PLAINTIFFS
themselves (Cabarrus, et al.) admit that the cause of action
pertains only to the corporation (MMIC) and that they are filing this
for and in behalf of MMIC.

It is to be noted that defendant APT did not present any evidence

rebutting the figures and computations made by witness Pastor.
Since the Decision finds the FRP valid, then the stockholders of
MMIC (excluding DBP) should be placed in the same position that
they would have been where not for the fact that the FRP was
improperly and illegally aborted by PNB/DBP. Accordingly, it is my
submission that defendant APT should be ordered to pay MMIC
(excluding DBP) the sum of P2,707,471,123.76 with legal interest
thereon per annum from August 3, 1984 as and for actual
damages.

xxx xxx xxx

Member Sison submitted a separate opinion reading as follows:

SEPARATE OPINION
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Perforce this has to be so because it is the basic rule in Corporation
Law that "the shareholders have no title, legal or equitable to the
property which is owned by the corporation (13 Am. Jur. 165;
Pascual vs. Oresco, 14 Phil. 83). In Ganzon & Sons vs. Register of
Deeds, 6 SCRA 373, the rule has been reiterated that "a
stockholder is not the co-owner of the corporate property." Since
the property or assets foreclosed belongs to MMIC, the wrong
committed, if any, is done against the corporation. There is
therefore no direct injury or direct violation of the rights of
Cabarrus et al. There is no way, legal or equitable by which
Cabarrus et al, could recover damages in their personal capacities
even assuming or just because the foreclosure is improper or
invalid. The Compromise and Arbitration Agreement itself and the
elementary principles of Corporation Law say so. Therefore, I am
constrained to dissent from the award of moral damages to
Cabarrus.
Neither could I agree to the award of moral damages to MMIC. The
acts complained of here in which the Committee based its award of
moral damages to MMIC is the foreclosure of the various real estate
and chattel mortgages. The majority of the Committee believes
that these foreclosure constitute a violation on an agreement
forged between PNB-DBP, on one hand, and MMIC, on the other,
regarding the restructuring of the various past due loans of MMIC to
what had been termed as the Financial Restructuring Program
(FRP).
xxx xxx xxx
In this connection, it can readily be seen and it cannot quite be
denied that MMIC accounts in PNB-DBP were past due. The drawing
up of the FRP is the best proof of this. When MMIC adopted a
restructuring program for its loan, it only meant that these loans
were already due and unpaid. If these loans were restructurable
because they were already due and unpaid, they are likewise
"forecloseable". The option is with the PNB-DBP on what steps to
take.
The mere fact that MMIC adopted the FRP does not mean that DBP-
PNB lost the option to foreclose. Neither does it mean that the FRP
is legally binding and implementable. It must be pointed that said
FRP will, in effect, supersede the existing and past due loans of
MMIC with PNB-DBP. It will become the new loan agreement
between the lenders and the borrowers. As in all other contracts,
there must therefore be a meeting of the minds of the parties; the
PNB and DBP must have to validly adopt and ratify such FRP before
they can be bound by it; before it can be implemented. In this case,
not an iota of proof has been presented by the PLAINTIFFS showing
that PNB and DBP ratified and adopted the FRP. PLAINTIFFS simply
relied on a legal doctrine of promissory estoppel to support its
allegations in this regard.
xxx xxx xxx
All told, PNB and DBP had the right to foreclose and were justified
in doing so. But were the foreclosure legally done or carried out?
Were the requirements of notice, posting and publication required
by Acts 3135 and 1508 substantially complied with?
xxx xxx xxx
I cannot, however, concur with the for holding that such minor taint
of illegality in the foreclosure is enough to justify the award of
damages, amounting to P19,486,118,654.00. "Rules of law
respecting the recovery of damages are framed with reference to
just rights or both parties, not merely what may be right for an
injured person to receive, but also what is just to compel the other
party to pay, to accord just compensation for the injury" (Kennings
vs. Kline Ind. 602). Following this universally accepted rule on
damage, I do not believe it is just to compel APT to pay such huge
amount for such minor technical infraction.
But while I do not agree with this pronouncement of the
Committee, I nevertheless concur with the result as far as the
disposition of the award for actual damages is concerned. I agree
that DEFENDANT APT can, and is still entitled to, collect the
outstanding obligations of MMIC to PNB and DBP amounting to
P22,668,537,770.05 with interest thereon as stipulated in the loan
documents from the date of foreclosure until the time they are fully
paid. The resultant effect of such a disposition is that APT can offset
the said obligation due from MMIC such that ultimately no damages
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will be due and payable to MMIC. As there may be damage without
injury, there can be injury without damage (15 Am. Jur., p.
388). This case is a case of "injury without damage".
Both parties moved for reconsideration of the "decision" of the
Arbitration Committee. In addition, respondents Cabarrus et al. filed
a motion for clarification and to re-open the case to receive
evidence. In a resolution dated July 26, 1984, with one member
dissenting, the Arbitration Committee denied the motions for
reconsideration of both parties as well as all other pending motions.
On October 17, 1984, respondents Cabarrus et al. filed directly with
the Regional Trial Court, Makati, Branch 62, in the same Civil Case
No. 9900, a pleading entitled application/motion for confirmation of
arbitral award.
On November 4, 1994, petitioner APT filed an opposition and
motion to vacate judgment, contending that respondents' motion
was improperly filed with the same branch of the court in Civil Case
No. 9900, which was previously dismissed, and that the motion
should have been filed as a separate special proceedings in the
Regional Trial Court to be docketed by the Clerk of Court.
Nonetheless, acting on the application/motion, Judge Roberto C.
Diokno, presiding judge, Regional Trial Court, Makati, Branch 62, on
November 28, 1994, issued an order granting plaintiffs' application
confirming the arbitration award, and rendering judgment as set
out in the opening paragraph of this opinion.
On December 12, 1994, petitioner APT received notice of the lower
court's order. On December 27, 1994, petitioner APT filed a motion
for reconsideration. By order dated January 18, 1995, the trial court
denied the motion. On February 7, 1995, respondents Cabarrus, et
al. filed a motion for execution and appointment of custodian of
proceeds of execution. Petitioner opposed the motion. It is
apparently still unresolved.
On February 15, 1995, petitioner APT filed with the Court of Appeals
an original special civil action for certiorari with prayer for
temporary restraining order or preliminary injunction 1 to annul the
two (2) orders of the respondent Regional Trial Court above-
mentioned confirming the arbitral award and denying its
reconsideration.
The issue presented in said petition was whether respondent Judge
Roberto C. Diokno, Regional Trial Court, Makati, Branch 62, had
jurisdiction to act on private respondents' application/motion for
confirmation of arbitral award in the same Civil Case No. 9900,
which had been dismissed earlier on motion of the parties, and thus
the court gravely abused its discretion in confirming the arbitral
award.
In its decision promulgated on July 17, 1995, the Court of Appeals
denied due course and dismissed the petition for certiorari for lack
of merit.
Hence, this petition for review filed on September 07, 1995. 2
The petition is impressed with merit.
First, the Regional Trial Court, Makati, Branch 62, did not validly
acquire jurisdiction over the case by respondents' filing of a mere
motion in the same Civil Case No. 9900 because the case had been
dismissed earlier and such dismissal had become final and
unappealable. As heretofore stated, on October 6, 1992, the parties
entered into a compromise and arbitration agreement expressly
providing that they "have agreed to withdraw their respective
claims from the Trial Court and to resolve their dispute through
arbitration by praying to the Trial Court to issue a compromise
judgment based on this Compromise and Arbitration agreement.
Clearly, the parties had withdrawn the action then pending with the
Regional Trial Court, Makati, Branch 62, in Civil Case No. 9900, and
agreed that they would submit their dispute to arbitration and
reduce their respective claims to "purely money claims", "waiving
and foregoing all other forms of reliefs which they prayed for or
could have prayed for in Civil Case No. 9900." The parties "agreed
to move for the dismissal of the case, to transform the reliefs
prayed for therein to pure money claims and submit the
controversy to arbitration under Republic Act (RA) 876 before a
committee composed of three members."
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In its order dated October 12, 1992, in Civil Case No. 9900, the trial
court presided over by respondent Judge categorically decreed that
"The complaint is hereby dismissed". Such disposition terminated
the case finally and irretrievably disposed of the same. 3 The term
"dismissed" has a definite meaning in law. "A judgment of
'dismissed', without qualifying words indicating a right to take
further proceedings, is presumed to be dismissed on the
merits". 4 The dismissal could not have been a suspension of action
provided for in the arbitration law, Republic Act No. 876.
Upon the finality of such order of dismissal, the case could no
longer be revived by mere motion. The trial court had lost its
authority over the case. 5 We cite as squarely applicable the
decision where this Court emphatically said "But after the dismissal
has become final through the lapse of the fifteen-day reglementary
period, the only way by which the action may be resuscitated or
'revived,' is by the institution of a subsequent action through the
filing of another complaint and the payment of the fees prescribed
by law. This is so because upon attainment of finality of a dismissal
through the lapse of said reglementary period, the Court loses
jurisdiction and control over it and can no longer make any
disposition in respect thereof inconsistent with such dismissal" 6 It is
true that the confirmation of an arbitral award is within the
jurisdiction over the subject matter of a regional trial court. Such
jurisdiction must be invoked by proper motion as a special
proceedings with notice to the parties filed in the proper court with
the clerk of court (and upon payment of the prescribed fees). 7
Second, the Arbitration Committee did not actually reach a valid
decision on the subject controversy.
In the purported decision dated November 24, 1994, penned by
Chairman Sarmiento, the Committee ordered petitioner APT to pay
to MMIC the sum of P2,531,635,425.02, with interest thereon at the
legal rate at 6% per annum from August 3, 9 and 24, 1984, pari
passu as actual damages; to pay MMIC P13 million, as moral and
exemplary damages, and to pay Jesus S. Cabarrus, Sr. P10 million,
as moral damages.
In the concurring and dissenting opinion of Member Elma, he
agreed with the finding on the principal issue submitted for
resolution. However, he dissented as to the manner or method of
computation and amount of actual damages awarded to MMIC. He
submitted that APT should be ordered to pay MMIC the sum of
P2,707,471,123.76, with legal interest thereon per annum from
August 3, 1984, as actual damages.
In his separate opinion, Member Sison stated that he concurred
with the result as far as the disposition of the award of actual
damage is concerned. He agreed that APT is entitled to collect the
outstanding obligations of MMIC to PNB and DBP amounting to
P22,668,537,770.05, with interest as stipulated in the loan
documents from the date of foreclosure until fully paid. The
resultant effect is that APT can offset said obligation due from MMIC
such that ultimately no damages shall be due and payable to MMIC.
He was against the award of moral and exemplary damages to
MMIC and Jesus S. Cabarrus, Sr.
It is obvious that the disposition in Chairman Sarmiento's award
and the concurring and dissenting opinion of Member Elma do not
tally and, hence, because of the dissent of Member Sison, the
Arbitration Committee did not reach a majority decision
constituting a valid judgment or fallo of the Committee.
The powers and duties of boards and commissions may not be
exercised by the individual members separately. Their acts are
official only when done by the members convened in session upon
a concurrence of at least a majority and with at least a quorum
present. 8
Respondents Cabarrus, et al. considered the disposition as
confusing and incomplete as to the award of damages and thereby
requiring the reception of further evidence as to necessitate the re-
opening of hearings on the case. On May 20, 1994, they filed a
motion for clarification seeking answer from the arbitration
committee as to the final amount of actual damages the MMIC is
entitled to, and, on June 9, 1994, they filed a motion to reopen the
case and to receive evidence.
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Even the Arbitration Committee's resolution of the various motions
for reconsideration and other reliefs was conflicting. For Chairman
Sarmiento, respondents' motion for reconsideration, dated
December 15, 1993, and petitioner's motion for reconsideration,
dated January 3, 1994, respondents' motion for clarification dated
June 8, 1994, and respondents' urgent motion to re-open the case
and to receive evidence were all DENIED for lack of merit.
Member Elma dissented from the denial of the parties' motion for
reconsideration, reiterating that MMIC is entitled to actual damages
in the sum of P2,707,471,123.76, with legal interest thereon from
August 3, 1984.
Member Azura (substituting Sison) concurred with the Chairman in
denying respondents' motion for reconsideration, motion for
clarification and motion to re-open the case but favored granting
petitioner's (APT) motion for reconsideration.
WHEREFORE, I vote to GRANT the petition at bench, reverse the
decision of the Court of Appeals 9 as well as the orders of the
Regional Trial Court, Makati, Branch 62, in Civil Case No. 9900,
vacate the "decision" of the Arbitration Committee dated November
24, 1993, and, finally, ENJOIN the trial court from further acting on
the case.
QUO WARRANTO
G.R. No. 92008. July 30, 1990.*
RAMON P. BINAMIRA, petitioner, vs. PETER D. GARRUCHO,
JR., respondent.
Political Law; Administrative Law; Appointment and Designation
defined.Appointment may be defined as the selection, by the
authority vested with the power, of an individual who is to exercise
the functions of a given office. When completed, usually with its
confirmation, the appointment results in security of tenure for the
person chosen unless he is replaceable at pleasure because of the
nature of his office. Designation, on the other hand, connotes
merely the imposition by law of additional duties on an incumbent
official, as where, in the case before us, the Secretary of Tourism is
designated Chairman of the Board of Directors of the Philippine
Tourism Authority, or where, under the Constitution, three Justices
of the Supreme Court are designated by the Chief Justice to sit in
the Electoral Tribunal of the Senate or the House of
Representatives. It is said that appointment is essentially executive
while designation is legislative in nature.
Same; Same; Same; Where the person is merely designated and
not appointed, the implication is that he shall hold the office only in
a temporary capacity and may be replaced at will by the
appointing authority.Designation may also be loosely defined as
an appointment because it likewise involves the naming of a
particular person to a specified public office, That is the common
understanding of the term However, where the person is merely
designated and not appointed, the implication is that he shall hold
the office only in a temporary capacity and may be replaced at will
by the appointing authority. In this sense, the designation is
considered only an acting or temporary appointment, which does
not confer security of tenure on the person named.
Same; Same; Same; Same; Even if so understood as an
appointment the designation of the petitioner cannot sustain his
claim that he has been illegally removed; Case at bar; Reason.
Even if so understood, that is, as an appointment, the
designation of the petitioner cannot sustain his claim that he has
been illegally removed. The reason is that the decree clearly
provides that the appointment of the General Manager of the
Philippine Tourism Authority shall be made by the President of the
Philippines, not by any other officer. Appointment involves the
exercise of discretion, which because of its nature cannot be
delegated. Legally speaking, it was not possible for Minister
Gonzales to assume the exercise of that discretion as an alter
ego of the President. The appointment (or designation) of the
petitioner was not a merely mechanical or ministerial act that could
be validly performed by a subordinate even if he happened as in
this case to be a member of the Cabinet.
Same; Same; Same; Same; Court cannot accept the fact that the
act of the Secretary as an extension or projection of the personality
of the President made irreversible the petitioner's title to the
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position in question.Indeed, even on the assumption that the
power conferred on the President could be validly exercised by the
Secretary, we still cannot accept that the act of the latter, as an
extension or "projection" of the personality of the President, made
irreversible the petitioner's title to the position in question. The
petitioner's conclusion that Minister Gonzales's act was in effect the
act of President Aquino is based only on half the doctrine he
vigorously invokes,
Same; Same; Same; Same; Acts of Department Heads performed
and promulgated in the regular course of business to be considered
valid as acts of the President of the Philippines must not be
disapproved or reprobated by the Chief Executive.The doctrine
presumes the acts of the Department Head to be the acts of the
President of the Philippines when "performed and promulgated in
the regular course of business." which was true of the designation
made by Minister Gonzales in favor of the petitioner. But it also
adds that such acts shall be considered valid only if not
"disapproved or reprobated by the Chief Executive," as also
happened in the case at bar.
Same; Same; Same; Same; Same; Petitioner's claim of security of
tenure must perforce fall to the ground.With these rulings, the
petitioner's claim of security of tenure must perforce fall to the
ground. His designation being an unlawful encroachment on a
presidential prerogative, he did not acquire valid title thereunder to
the position in question. Even if it be assumed that it could be and
was authorized, the designation signified merely a temporary or
acting appointment that could be legally withdrawn at pleasure, as
in fact it was (albeit for a different reason). In either case, the
petitioner's claim of security of tenure must be rejected.
Same; Same; Same; Same; Court rules that the petitioner never
acquired valid title to the disputed position and so has no right to
be reinstated as General Manager of the Philippine Tourism
Authority.The Court sympathizes with the petitioner, who
apparently believed in good faith that he was being extended a
permanent appointment by the Minister of Tourism. After all,
Minister Gonzales had the ostensible authority to do so at the time
the designation was made. This belief seemed strengthened when
President Aquino later approved the composition of the PTA Board
of Directors where the petitioner was designated Vice-Chairman
because of his position as General Manager of the PTA However,
such circumstances fall short of the categorical appointment
required to be made by the President herself, and not the Minister
of Tourism, under Sec. 23 of P.D. No. 564. We must rule therefore
that the petitioner never acquired valid title to the disputed
position and so has no right to be reinstated as General Manager of
the Philippine Tourism Authority.
CRUZ, J.:
In this petition for quo warranto, Ramon P. Binamira seeks
reinstatement to the office of General Manager of the Philippine
Tourism Authority from which he claims to have been removed
without just cause in violation of his security of tenure.
The petitioner bases his claim on the following communication
addressed to him by the Minister of Tourism on April 7, 1986:
MEMORANDUM TO: MR. RAMON P. BINAMIRA
You are hereby designated General Manager of the Philippine
Tourism Authority, effective immediately.
By virtue hereof, you may qualify and enter upon the performance
of the duties of the office.
(Sgd.) JOSE ANTONIO GONZALES Minister of Tourism and Chairman,
P.T.A. Board
Pursuant thereto, the petitioner assumed office on the same date.
On April 10, 1986, Minister Gonzales sought approval from
President Aquino of the composition of the Board of Directors of the
PTA, which included Binamira as Vice-Chairman in his capacity as
General Manager. This approval was given by the President on the
same date. 1
Binamira claims that since assuming office, he had discharged the
duties of PTA General Manager and Vice-Chairman of its Board of
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Directors and had been acknowledged as such by various
government offices, including the Office of the President.
He complains, though, that on January 2, 1990, his resignation was
demanded by respondent Garrucho as the new Secretary of
Tourism. Binamira's demurrer led to an unpleasant exchange that
led to his filing of a complaint against the Secretary with the
Commission on Human Rights. But that is another matter that does
not concern us here.
What does is that on January 4, 1990, President Aquino sent
respondent Garrucho the following memorandum, 2 copy furnished
Binamira:
4 January 1990
MEMORANDUM TO: Hon. Peter D. Garrucho, Jr.. Secretary
of Tourism
It appearing from the records you have submitted to this Office that
the present General Manager of the Philippine Tourism Authority
was designated not by the President, as required by P.D. No. 564,
as amended, but only by the Secretary of Tourism, such designation
is invalid. Accordingly, you are hereby designated concurrently as
General Manager, effective immediately, until I can appoint a
person to serve in the said office in a permanent capacity.
Please be guided accordingly.
(Sgd.) CORAZON C. AQUINO
cc: Mr. Ramon P. Binamira Philippine Tourism Authority Manila
Garrucho having taken over as General Manager of the PTA in
accordance with this memorandum, the petitioner filed this action
against him to question his title. Subsequently, while his original
petition was pending, Binamira filed a supplemental petition
alleging that on April 6, 1990, the President of the Philippines
appointed Jose A. Capistrano as General Manager of the Philippine
Tourism Authority. Capistrano was impleaded as additional
respondent.
The issue presented in this case is starkly simple.
Section 23-A of P.D. 564, which created the Philippine Tourism
Authority, provides as follows:
SECTION 23-A. General Manager-Appointment and Tenure. The
General Manager shall be appointed by the President of the
Philippines and shall serve for a term of six (6) years unless sooner
removed for cause; Provided, That upon the expiration of his term,
he shall serve as such until his successor shall have been appointed
and qualified. (As amended by P.D. 1400)
It is not disputed that the petitioner was not appointed by the
President of the Philippines but only designated by the Minister of
Tourism. There is a clear distinction between appointment and
designation that the petitioner has failed to consider.
Appointment may be defined as the selection, by the authority
vested with the power, of an individual who is to exercise the
functions of a given office. 3 When completed, usually with its
confirmation, the appointment results in security of tenure for the
person chosen unless he is replaceable at pleasure because of the
nature of his office. Designation, on the other hand, connotes
merely the imposition by law of additional duties on an incumbent
official, 4 as where, in the case before us, the Secretary of Tourism
is designated Chairman of the Board of Directors of the Philippine
Tourism Authority, or where, under the Constitution, three Justices
of the Supreme Court are designated by the Chief Justice to sit in
the Electoral Tribunal of the Senate or the House of
Representatives. 5 It is said that appointment is essentially
executive while designation is legislative in nature.
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Designation may also be loosely defined as an appointment
because it likewise involves the naming of a particular person to a
specified public office. That is the common understanding of the
term. However, where the person is merely designated and not
appointed, the implication is that he shall hold the office only in a
temporary capacity and may be replaced at will by the appointing
authority. In this sense, the designation is considered only an acting
or temporary appointment, which does not confer security of
tenure on the person named.
Even if so understood, that is, as an appointment, the designation
of the petitioner cannot sustain his claim that he has been illegally
removed. The reason is that the decree clearly provides that the
appointment of the General Manager of the Philippine Tourism
Authority shall be made by the President of the Philippines, not by
any other officer. Appointment involves the exercise of discretion,
which because of its nature cannot be delegated. Legally speaking,
it was not possible for Minister Gonzales to assume the exercise of
that discretion as an alter ego of the President. The appointment
(or designation) of the petitioner was not a merely mechanical or
ministerial act that could be validly performed by a subordinate
even if he happened as in this case to be a member of the Cabinet.
An officer to whom a discretion is entrusted cannot delegate it to
another, the presumption being that he was chosen because he
was deemed fit and competent to exercise that judgment and
discretion, and unless the power to substitute another in his place
has been given to him, he cannot delegate his duties to another. 6
In those cases in which the proper execution of the office requires,
on the part of the officer, the exercise of judgment or discretion,
the presumption is that he was chosen because he was deemed fit
and competent to exercise that judgment and discretion, and,
unless power to substitute another in his place has been given to
him, he cannot delegate his duties to another. 7
Indeed, even on the assumption that the power conferred on the
President could be validly exercised by the Secretary, we still
cannot accept that the act of the latter, as an extension or
"projection" of the personality of the President, made irreversible
the petitioner's title to the position in question. The petitioner's
conclusion that Minister Gonzales's act was in effect the act of
President Aquino is based only on half the doctrine he vigorously
invokes. Justice Laurel stated that doctrine clearly in the landmark
case of Villena v. Secretary of the Interior, 8 where he described the
relationship of the President of the Philippines and the members of
the Cabinet as follows:
... all executive and administrative organizations are adjuncts of the
Executive Department, the heads of the various executive
departments are assistants and agents of the Chief Executive, and,
except in cases where the Chief Executive is required by the
Constitution or the law to act in person or the exigencies of the
situation demand that he act personally, the multifarious executive
and administrative functions of the Chief Executive are performed
by and through the executive departments, and the acts of the
secretaries of such departments, performed and promulgated in
the regular course of business, are, unless disapproved or
reprobated by the Chief Executive, presumptively the acts of the
Chief Executive.
The doctrine presumes the acts of the Department Head to be the
acts of the President of the Philippines when "performed and
promulgated in the regular course of business," which was true of
the designation made by Minister Gonzales in favor of the
petitioner. But it also adds that such acts shall be considered valid
only if not 'disapproved or reprobated by the Chief Executive," as
also happened in the case at bar.
The argument that the designation made by Minister Gonzales was
approved by President Aquino through her approval of the
composition of the Board of Directors of the PTA is not persuasive.
It must be remembered that Binamira was included therein as Vice-
Chairman only because of his designation as PTA General Manager
by Minister Gonzales. Such designation being merely provisional, it
could be recalled at will, as in fact it was recalled by the President
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herself, through the memorandum she addressed to Secretary
Garrucho on January 4, 1990.
With these rulings, the petitioner's claim of security of tenure must
perforce fall to the ground. His designation being an unlawful
encroachment on a presidential prerogative, he did not acquire
valid title thereunder to the position in question. Even if it be
assumed that it could be and was authorized, the designation
signified merely a temporary or acting appointment that could be
legally withdrawn at pleasure, as in fact it was (albeit for a different
reason).itc-asl In either case, the petitioner's claim of security of
tenure must be rejected.
The Court sympathizes with the petitioner, who apparently believed
in good faith that he was being extended a permanent appointment
by the Minister of Tourism. After all, Minister Gonzales had the
ostensible authority to do so at the time the designation was made.
This belief seemed strengthened when President Aquino later
approved the composition of the PTA Board of Directors where the
petitioner was designated Vice-Chairman because of his position as
General Manager of the PTA. However, such circumstances fall
short of the categorical appointment required to be made by the
President herself, and not the Minister of Tourism, under Sec. 23 of
P.D. No. 564. We must rule therefore that the petitioner never
acquired valid title to the disputed position and so has no right to
be reinstated as General Manager of the Philippine Tourism
Authority.
WHEREFORE, the petition is DISMISSED, with costs against the
petitioner. It is so ordered.
JESUS ARMANDO A.R. TARROSA, petitioner, vs.GABRIEL C.
SINGSON and HON. SALVADOR M. ENRIQUEZ, III,
respondents.
Remedial Law; Special Civil Action; Quo Warranto; Quo warranto as
a special civil action can only be commenced by the Solicitor
General or by a person claiming to be entitled to a public office or
position unlawfully held or exercised by another.The instant
petition is in the nature of a quo warranto proceeding as it seeks
the ouster of respondent Singson and alleges that the latter is
unlawfully holding or exercising the powers of Governor of the
Bangko Sentral (Cf. Castro v. Del Rosario, 19 SCRA 196 [1967]).
Such a special civil action can only be commenced by the Solicitor
General or by a person claiming to be entitled to a public office or
position unlawfully held or exercised by another (Revised Rules of
Court, Rule 66, Sec. 6; Acosta v. Flor, 5 Phil. 18 [1905]).
Same; Same; Same; Petitioner who did not aver entitlement to the
office cannot bring the action for quo warranto.In Sevilla v. Court
of Appeals, 209 SCRA 637 (1992), we held that the petitioner
therein, who did not aver that he was entitled to the office of the
City Engineer of Cabanatuan City, could not bring the action
for quo warranto to oust the respondent from said office as a mere
usurper.
Same; Same; Same; Question of title to an office may not be
determined in a suit to restrain the payment of salary to the person
holding office, brought by one not claiming to be entitled to said
office.Likewise in Greene v. Knox, 175 N.Y. 432 (1903), 67 N.E.
910, it was held that the question of title to an office, which must
be resolved in a quo warranto proceeding, may not be determined
in a suit to restrain the payment of salary to the person holding
such office, brought by someone who does not claim to be the one
entitled to occupy the said office.
Same; Same; Same; The action was improvidently brought by the
petitioner.It is obvious that the instant action was improvidently
brought by petitioner. To uphold the action would encourage every
disgruntled citizen to resort to the courts, thereby causing
incalculable mischief and hindrance to the efficient operation of the
governmental machinery (See Roosevelt v. Draper, 7 Abb. Pr. 108,
23 N.Y. 218).
Constitutional Law; Judicial Inquiry; Principle that bars judicial
inquiry into a constitutional question unless the resolution thereof
is indispensable for the determination of the case.Its capstone
having been removed, the whole case of petitioner collapses.
Hence, there is no need to resolve the question of whether the
disbursement of public funds to pay the salaries and emoluments
of respondent Singson can be enjoined. Likewise, the Court refrains
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from passing upon the constitutionality of Section 6, R.A. No. 7653
in deference to the principle that bars a judicial inquiry into a
constitutional question unless the resolution thereof is
indispensable for the determination of the case (Fernandez v.
Torres, 215 SCRA 489 [1992]).
Same; Commission on Appointments; Confirmation
Powers; Congress cannot by law expand the confirmation powers of
the Commission on Appointments and require appointment of other
government officials not expressly mentioned in the first sentence
of Sec. 16 of Article 7 of the Constitution.However, for the
information of all concerned, we call attention to our decision
in Calderon v. Carale, 208 SCRA 254 (1992), with Justice Isagani A.
Cruz dissenting, where we ruled that Congress cannot by law
expand the confirmation powers of the Commission on
Appointments and require confirmation of appointment of other
government officials not expressly mentioned in the first sentence
of Section 16 of Article VII of the Constitution.
QUIASON, J.:
This is a petition for prohibition filed by petitioner as a "taxpayer,"
questioning the appointment of respondent Gabriel Singson as
Governor of the Bangko Sentral Ng Pilipinas for not having been
confirmed by the Commission on Appointments. The petition seeks
to enjoin respondent Singson from the performance of his functions
as such official until his appointment is confirmed by the
Commission on Appointments and respondent Salvador M.
Enriquez, Secretary of Budget and Management, from disbursing
public funds in payment of the salaries and emoluments of
respondent Singson.
I officers of the armed forces from the rank of colonel or naval
Respondent Singson was appointed Governor of the Bangko Sentral
by President Fidel V. Ramos on July 2, 1993, effective on July 6,
1993 (Rollo, p. 10).
Petitioner argues that respondent Singson's appointment is null and
void since it was not submitted for confirmation to the Commission
on Appointments. The petition is anchored on the provisions of
Section 6 of R.A. No. 7653, which established the Bangko Sentral as
the Central Monetary Authority of the Philippines. Section 6, Article
II of R.A. No. 7653 provides:
Sec. 6. Composition of the Monetary Board. The powers and
functions of the Bangko Sentral shall be exercised by the Bangko
Sentral Monetary Board, hereafter referred to as the Monetary
Board, composed of seven (7) members appointed by the President
of the Philippines for a term of six (6) years.
The seven (7) members are:
(a) The Governor of the Bangko Sentral, who shall be the Chairman
of the Monetary Board. The Governor of the Bangko Sentral shall
be head of a department and his appointment shall be subject to
confirmation by the Commission on Appointments. Whenever the
Governor is unable to attend a meeting of the Board, he shall
designate a Deputy Governor to act as his alternate: Provided, That
in such event, the Monetary Board shall designate one of its
members as acting Chairman . . . (Emphasis supplied).
In their comment, respondents claim that Congress exceeded its
legislative powers in requiring the confirmation by the Commission
on Appointments of the appointment of the Governor of the Bangko
Sentral. They contend that an appointment to the said position is
not among the appointments which have to be confirmed by the
Commission on Appointments, citing Section 16 of Article VII of the
Constitution which provides that:
Sec. 16. The President shall nominate and, with the consent of the
Commission on Appointments, appoint the heads of the executive
departments, ambassadors, other public ministers and consuls, or
captain, and other officers whose appointments are vested in him
in this Constitution. He shall also appoint all other officers of the
Government whose appointments are not otherwise provided for by
law, and those whom he may be authorized by law to appoint. The
Congress may, by law, vest the appointment of other officers lower
in rank in the President alone, in the courts, or in the heads of
department, agencies, commissions, or boards . . . (Emphasis
supplied).
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Respondents also aver that the Bangko Sentral has its own budget
and accordingly, its budgetary requirements are not subject to the
provisions of the General Appropriations Act.
We dismiss the petition.
II
The instant petition is in the nature of a quo warranto proceeding
as it seeks the ouster of respondent Singson and alleges that the
latter is unlawfully holding or exercising the powers of Governor of
the Bangko Sentral (Cf. Castro v. Del Rosario, 19 SCRA 196 [1967]).
Such a special civil action can only be commenced by the Solicitor
General or by a "person claiming to be entitled to a public office or
position unlawfully held or exercised by another" (Revised Rules of
Court, Rule 66, Sec. 6; Acosta v. Flor, 5 Phil. 18 [1905]).
In Sevilla v. Court of Appeals, 209 SCRA 637 (1992), we held that
the petitioner therein, who did not aver that he was entitled to the
office of the City Engineer of Cabanatuan City, could not bring the
action for quo warranto to oust the respondent from said office as a
mere usurper.
Likewise in Greene v. Knox, 175 N.Y. 432 (1903), 67 N.E. 910, it was
held that the question of title to an office, which must be resolved
in a quo warranto proceeding, may not be determined in a suit to
restrain the payment of salary to the person holding such office,
brought by someone who does not claim to be the one entitled to
occupy the said office.
It is obvious that the instant action was improvidently brought by
petitioner. To uphold the action would encourage every disgruntled
citizen to resort to the courts, thereby causing incalculable mischief
and hindrance to the efficient operation of the governmental
machinery (See Roosevelt v. Draper, 7 Abb. Pr. 108, 23 N.Y. 218).
Its capstone having been removed, the whole case of petitioner
collapses. Hence, there is no need to resolve the question of
whether the disbursement of public funds to pay the salaries and
emoluments of respondent Singson can be enjoined. Likewise, the
Court refrains from passing upon the constitutionality of Section 6,
R.A. No. 7653 in deference to the principle that bars a judicial
inquiry into a constitutional question unless the resolution thereof
is indispensable for the determination of the case (Fernandez v.
Torres, 215 SCRA 489 [1992]).
However for the information of all concerned, we call attention to
our decision in Calderon v. Carale, 208 SCRA 254 (1992), with
Justice Isagani A. Cruz dissenting, where we ruled that Congress
cannot by law expand the confirmation powers of the Commission
on Appointments and require confirmation of appointment of other
government officials not expressly mentioned in the first sentence
of Section 16 of Article VII of the Constitution.
WHEREFORE, the petition is DENIED. No pronouncement as to
costs.
SO ORDERED.
Feliciano, Bidin, Regalado, Davide, Jr., Romero, Bellosillo, Melo,
Puno, Vitug and Kapunan, JJ., concur.
Narvasa, C.J. and Cruz, JJ., are on leave.
Separate Opinions
PADILLA, J., concurring:
I concur in the result. Instead, however, of basing the petition's
dismissal mainly on technicality, I would anchor said dismissal
squarely on the ruling laid down by the Court in Calderon vs.
Carale, 208 SCRA 254 (1992), to the effect that appointments by
the President of the Philippines, which under the Constitution (Sec.
16, Article VII) are not among those required to be confirmed by the
Commission on Appointments, may not, by legislation, be made
subject to such confirmation. This ruling was a reiteration of the
doctrine earlier laid down in Sarmiento vs. Mison, (G.R. No. 79974,
156 SCRA 549, December 17, 1987) and Bautista vs. Salonga, (G.R.
No. 86439, 172 SCRA 160, April 13, 1989).
# Separate Opinions
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PADILLA, J., concurring:
I concur in the result. Instead, however, of basing the petition's
dismissal mainly on technicality, I would anchor said dismissal
squarely on the ruling laid down by the Court in Calderon vs.
Carale, 208 SCRA 254 (1992), to the effect that appointments by
the President of the Philippines, which under the Constitution (Sec.
16, Article VII) are not among those required to be confirmed by the
Commission on Appointments, may not, by legislation, be made
subject to such confirmation. This ruling was a reiteration of the
doctrine earlier laid down in Sarmiento vs. Mison, (G.R. No. 79974,
156 SCRA 549, December 17, 1987) and Bautista vs. Salonga, (G.R.
No. 86439, 172 SCRA 160, April 13, 1989).
SUIT FOR DAMAGES
[No. L-11944. August 31, 1960]
PHILIPPINE RACING CLUB, INC., ET AL.,
petitioners, vs. ARSENIO BONIFACIO, ET AL., respondents.
1.APPEAL AND ERROR; EVALUATION OF EVIDENCE BY COURT OF
APPEALS; FINALITY.The painstaking evaluation of the evidence
made by the Court of Appeals, under the law and precedents on the
matter involves a question of fact which may not be disturbed by
the Supreme Court on appeal.
2.HORSE RACES; COMMISSION ON RACES; AUTHORITY AND
FUNCTIONS.The horse race law Republic Act No. 309 creates a
Commission on Races which is charged with the supervision and
regulation of horse races in the Philippines. Under said Act, the
Commission is charged with the duty to enforce the laws, rules and
regulations relating to horse races to require that race tracks be
properly constructed and maintained, and in general, "it shall have
supervision over all race track or racing club officials or employees
authorized or required to be appointed under this Act and over all
horse races" (Section 2). The Commission may also exercise such
other powers as may be prescribed by law or regulation (Section 2).
3.ID.; RULES AND REGULATIONS; BOARD OF JUDGES AND
STEWARDS; AUTHORITY AND FUNCTIONS.Under the rules and
regulations adopted by the Commission on Races, particularly
article 1, Chapter I, in relation to Articles 28 and 29, Chapter V
thereof, in every horse race the rule requires that there be a board
of judges who should determine the result of the race and whose
decisions are final and unappealable. In addition, the rule requires
that there be a board of stewards which, among others, is given the
power to "annul any race before the horses reach their destination
if in their opinion there is a bad start or any other incident takes
place that makes such action necessary." (As translated). Hence,
there are two groups of officials who act in every race whose
functions are different one from the other; the board of judges and
the board of stewards.
4.ID.; ID.; ID.; ID.; COMMISSION ON RACES SUPERVISION.
The judges determine who the winners are, their decision
final and irrevocable; the stewards, on the other hand, are
given the power to annul any race if in their opinion there is
a bad start or some good reasons exist justifying it. And over
these officials we have the Commission on Races which is
charged with the duty to supervise their action and the
performance of their duties in connection with the races.
5.ID.; POWER OF COMMISSION ON RACES ON BOARD OF
JUDGES' DECISION; POWER OF BOARD OF STEWARDS TO
CANCEL OR ANNUL HORSE RACE.The functions of the
Commission on Races, the boards of Judges and Stewards are
clearly delimited in the rules and regulations adopted for the
purpose. The board of judges was created to decide the race
and its decision is final and unappealable. This means that
the public has no other recourse than to abide by it even if it
believes it to be eroneous. No other authority can change or
reverse its decision. But the functions of the boards of
stewards are somewhat different. They have nothing to do
with the decision of the race. That function exclusively
devolves upon the judges. Its functions are merely to see that
the race be regular, or that the horses start properly,
otherwise it may declare the race annulled or ineffective. But
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this is addressed to its discretion. Once such discretion is
exercised, no other authority can interfere. Its decision is also
final. And the commission on races cannot cancel or annul
such decision for although the latter has supervision over all
horse races and over all race officials and employees having
connection with their operation, such power of supervision
cannot be extended to functions which belong to other
officials as delimited by law. The power of control has been
withheld from the Commissioner.
6.WORDS AND PHRASES; SUPERVISION.Supervision only
means overseeing or the power or authority to see that
subordinate officers perform their duties. It is different from
control which includes the power to alter, nullify or set aside
what a subordinate officer may do in the performance of his
duties as well as to substitute the judgment of the superior
for that of his subordinate. (Montano vs. Silvosa, 51 Off. Gaz.,
2884).
BAUTISTA ANGELO, J.:
This is a petition for review of a decision of the Court of
Appeals relieving respondents from the civil liability ascribed
to them by the trial court.
In a race held at the Santa Ana Hippodrome belonging to the
Philippine Racing Club, Inc. on July 23, 1950, the competing
horses went off to a faulty start. When the barrier was lifted
one of the horses turned around and blocked the three horses
at its left thus enabling the three horses from the right side to
run ahead and gain a good lead. The official starter signalled
the stewards of the races who were then on the judges stand
indicating that the race should be cancelled. The two
stewards on duty who were also acting as judges were Carlos
Coscolluela and Melquiades Parungao. As his signal went
unheeded, the official starter proceeded to the stand where
the stewards were seated to inform them that the start was
bad and in his opinion the race should be cancelled.
Coscolluela, however, told him to "shut up" and allowed the
race to go on until its termination.
When the winning horses as well as the corresponding
dividends were announced, the betting public showed its
disapproval of the result. A commotion resulted which
reached the knowledge of the members of the Commission on
Races who were then seated in the dining room of the club.
The commission was composed of Arsenio Bonifacio, Jesus
Cacho, Tomas Sunico and Victor Buencamino, all of whom,
except the last, were present at the time. When they noticed
the uproar and were informed of its cause, they sent for the
stewards and made an on the spot investigation. Convinced
that the start of the race was faulty, they decided to cancel it
and had their decision announced to the public. In the
meantime, while the investigation was going on, the holders
of the winning tickets were able to cash the same at the ticket
windows. The result was that while the club paid the
dividends on the winning tickets it had to refund to the
holders of the losing ones the sum of P5,032.00.
Because of this incident, plaintiffs commenced the present
action before the Court of First Instance of Manila seeking to
recover from defendants said sum of P5,032.00; plus
P10,000.00 as moral damages, alleging that defendants acted
without or in excess of their authority when they ordered the
cancellation of the race and the return of the bets to the
holders of the losing tickets, said acts having caused plaintiffs
moral damages for having placed their character and
reputation under public suspicion.
Defendants disclaimed responsibility alleging that if on the
date alleged in the complaint they annulled the race they did
so merely pursuant to their official duties as members of the
Commission on Races and after conducting an on the spot
investigation at which plaintiffs and its employees were
heard, and hence they cannot be held liable for damages.
They put up a counterclaim in the amount of P40,000.00.
The trial court, after rejecting defendants plea that the
cancellation of the race was justified, found for plaintiffs,
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ordering defendants to pay jointly and severally the sum of
P5,032.00 as actual damages, with legal interest from the
filing of the complaint. The court disallowed the counterclaim
set up by defendants.
After the Court of Appeals, to which the case was taken, had
reversed this decision, appellants interposed the present
petition for review.
One of the errors they assign is the finding of the Court of
Appeals that the race started in a very faulty manner and for
that reason the Board of Stewards which had the authority to
suspend or cancel the race under the rules and regulations on
the matter should have decreed its cancellation as was so
insistently recommended by the official starter and, therefore,
the trial court erred in ruling otherwise. Petitioners contend
that such finding is not borne out by the evidence and so its
conclusion that the race should have been cancelled because
of such poor start is erroneous. We notice, however, that the
Court of Appeals made a painstaking evaluation of the
evidence submitted by both parties quoting extensively from
the testimony of official starter Villa who undoubtedly is the
best man who can explain how the race started having
reached the above conclusion after taking into account said
testimony. Hence, under the law and precedents on the
matter, this is a question of fact which we cannot now look
into in the present appeal.
The remaining question, therefore, that needs to be
determined is whether the action of the Board of Stewards in
not cancelling the race notwithstanding the bad start which
raised a howl of protest from the public was final and
irrevocable in the sense that it could no longer be revised by
the Commission on Races in the exercise of the power of
supervision it has over all horse races in the Philippines.
The law governing the operation of horse races in the
Philippines is Republic Act No. 309. This Act creates a
Commission on Races which is charged with the supervision
and regulation of horse races in the Philippines. Under said
Act, the Commission is charged with the duty to enforce the
laws, rules and regulations relating to horse races, to require
that race tracks be properly constructed and maintained, and
in general, "it shall have supervision over all race track or
racing club officials or employees authorized or required to be
appointed under this Act and over all horse races" (Section 2).
The Commission may also exercise such other powers as may
be prescribed by law or regulation (Section 2).
On the other hand, the pertinent provisions of the rules and
regulations governing horse races adopted by the same
Commission is Article 1, Chapter, I, in relation to Articles 28
and 29, Chapter V, which for ready reference are quoted
hereunder:jgc:chanrobles.com.ph
"ART. 1. La Junta de Carreras tendra poder de supervisin
sobre todo cuando se refiera a las carreras que se celebran en
Filipinas, y en virtud de este poder de supervisin, ejercera
facultades administrativas y quasi-judiciales."cralaw
virtua1aw library
It would, therefore, appear that in every horse race the rule
requires that there be a board of judges who should
determine the result of the race and whose decisions are final
and unappealable. In addition, the rule requires that there be
a board of stewards which among others, is given the power
to "annul any race before the horses reach their destination if
in their opinion there is a bad start or any other incident takes
place that makes such action necessary" (as translated).
Hence, there are two groups of officials who act in every race
whose functions are different one from the other: the board of
judges and the board of stewards. The judges determine who
the winners are, their decision being final and irrevocable; the
stewards, on the other hand, are given the power to annul
any race if in their opinion there is a bad start or some good
reasons exist justifying it. And over these officials we have the
Commission on Races which is charged with the duty to
supervise their action and the performance of their duties in
connection with the races.
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The question that now arises is: If a horse race takes place
and the winners are determined by the judges but there is a
faulty start and the official starter recommends that the race
be cancelled but the board of stewards turns a deaf ear to the
recommendation, what action can the Commission on Races
take on the matter? Can it annul or declare ineffective the
race as decided by the board of judges? Is the power to
cancel or annul a horse race the sole function of the board of
stewards?
The functions of these groups of officials should not be
confused. They are clearly delimited in the rules and
regulations adopted for the purpose. As we have seen, the
board of judges was created to decide the race and its
decision is final and unappealable. This means that the public
has no other recourse than to abide by it even if it believes it
to be erroneous. No other authority can change or reverse its
decision. But the functions of the board of stewards are
somewhat different. They have nothing to do with the
decision of the race. That function exclusively devolves upon
the judges. Its functions are merely to see that the race be
regular, or that the horses start properly, otherwise it may
declare the race annulled or ineffective. But this is addressed
to its discretion. Once such discretion is exercised, no other
authority can interfere. Its decision is also final.
We are, therefore, of the opinion that the action taken by the
Commission on Races cancelling or annulling the race held on
July 23, 1950 for the reason that there was a faulty start on
the part of some horses was in excess of the authority
granted to it by law. It is true, as already stated, that the
Commission on Races has the supervision over all horse races
and over all race officials and employees having connection
with their operations, but such power of supervision cannot
be extended to functions which belong to other officials as
delimited by law. As defined by this Court, supervision only
means overseeing or the power or authority to see that
subordinate officers perform their duties. It is different from
control which includes the power to alter, nullify or set aside
what a subordinate officer may do in the performance of his
duties, as well as to substitute the judgment of the superior
for that of his subordinate (Mondano v. Silvosa, 97 Phil., 143;
51 Off. Gaz., [6] 2884). This power of control has been
withheld from the Commission.
However, considering that respondents have acted in their
official capacity in the honest belief that they had such power
as in fact they acted on the matter only after an on the spot
investigation, we hold that they cannot be held liable for
damages. In this sense, the decision of the Court of Appeals
should be affirmed.
"Acts in Line of Duty or under Color of Authority. As a rule,
a public officer, whether judicial, quasi-judicial, or executive,
is not personally liable to one injured in consequence of an
act performed within the scope of his official authority, and in
the line of his official duty. In order that acts may be done
within the scope of official authority, it is not necessary that
they be prescribed by statute, or even that they be
specifically directed or requested by a superior officer, but it
is sufficient if they are done by an officer in relation to
matters committed by law to his control or supervision, or
that they have more or less connection with such matters, or
that they are governed by a lawful requirement of the
department under whose authority the officer is acting. Under
this principle, state building commissioners who, in obedience
to a statute, discharge one who has been employed to
construct a state building, take possession of the work, and
place it in the hands of another contractor, are not liable to
the former contractor in damages, since in so doing they are
merely acting in the line of their duty. An officer is not
personally responsible for the necessary and unavoidable
destruction of goods stored in buildings, when such buildings
were destroyed by him in the lawful performance of a public
duty imposed on him by a valid and constitutional statute.
"Error or Mistake in Exercise of Authority. Where an officer
is invested with discretion and is empowered to exercise his
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judgment in matters brought before him, he is sometimes

called a quasi-judicial officer, and when so acting he is usually
given immunity from liability to persons who may be injured
as the result of an erroneous or mistaken decision, however
erroneous judgment may be, provided the acts complained of
are done within the scope of the officers authority, and
without willfulness, malice, or corruption." (43 Am. Jur., pp.
85-86.)

Wherefore, the decision appealed from is affirmed, without

costs.

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