G.R. No.

L-47821 September 15, 1988 On April 20, 1972, the Chief of the Legal Division of the Bureau of Private Schools sent a copy of the
complaint by first indorsement to the Rector of herein respondent school. Said comment was made
on April 21, 1972, stating, among others, that the complaint had lost its validity because the same
BENITO ROSALES, EMILIA R. ROSALES and ROMMEL ROSALES represented by Guardian-Ad-
was filed on the eve of the commencement exercises of the school, in violation of the provision of
Litem, ROMMEL ROSALES, petitioners,
paragraph 176, Section XI of the Manual of Regulation for Private Schools requiring complaints of
vs.
the kind to be filed not later than ten (10) days before commencement exercises. However,
COURT OF APPEALS and DON BOSCO TECHNICAL INSTITUTE, FR. AGUSTIN LOPEZ; MRS. S.A.
defendant Rector indicated that he would welcome an investigation in order to erase any doubt as
MENDOZA, assisted by her husband GODOFREDO MENDOZA and MISS FELICIDAD
to the selection of the honor students of the grade school concerned.
GORDON. respondents.

On May 5, 1972, the Director of Private Schools rendered a decision holding that Rommel Rosales
Antonio R. Rabago for petitioners.
was the rightful valedictorian.

Myrna Cruz-Feliciano for respondents.

On November 29, 1972, Rosales filed a complaint for damages itemized as follows: P25,000.00 for
moral damages; P15,000.00 for correctional damages and P5,000.00 for attorney's fees, in view of
the failure of the school to graduate Rommel Rosales as valedictorian of his class.

BIDIN, J.:
This is a petition for review on certiorari seeking to annul and set aside the decision of the Court of
Appeals * dated July 26, 1977 in CA-G.R. No. 54674-R entitled "BENITO ROSALES, et al, v. DON
BOSCO TECHNICAL INSTITUTE" which affirmed the decision of the court a quo ** dated September
14, 1973, dismissing petitioners' complaint for damages. The decision of the Court of Appeals reads:
... (It) is clearly evident that plaintiffs were not candid when they maintained
that they knew nothing about the school's petition for reconsideration, and
that after all there was nothing 'mysterious' about the School's actuations.
Further, it is likewise clear from the evidence that plaintiffs did seek the review
by the Secretary of Education of the Director's ruling, and that at the time the
School filed its motion to dismiss, the matter was still pending resolution with
the Secretary of Education. Hence, the court a quoincurred in no error when it
found that the decision of the Director of Private Schools dated May 5, 1972
was far from being final and that the administrative remedies availed of by
plaintiffs had not yet been exhausted.
As to the claim that plaintiffs have been denied due process, suffice it to say
that the dismissal of the complaint was based on the ground that it was
premature, administrative remedies not having been exhausted.
PREMISES CONSIDERED, decision appealed from is hereby affirmed in toto. No
costs. (pp. 26-27, Rollo)
The facts of the case as found by the Court of Appeals, are as follows:
On April 11, 1972, the Don Bosco Technical Institute (School, for short) posted the list of honor
students for the graduation of its elementary department which was to take place on April 22,1972.
Rommel Rosales a student of Grade VI, candidate for graduation and likewise candidate for
Valedictorian, reported to his parents that he was not listed as Valedictorian of the class but that it
was another boy by the name of Conrado Valerie. The parents of Rommel demanded for a re-
computation of the grades of their son who, they averred, should be class valedictorian and filed a
formal complaint with the Director of Bureau of Private Schools against the school claiming
anomalous ranking of honor pupils for the grade school with a request for a review of the
computations made by the school.
In its answer, respondent school prayed that the complaint be dismissed on the ground that the
Director of Private Schools acting on its motion dated May 11, 1972 reconsidered and set aside his
decision of May 5, 1972 and instead "approved and/or confirmed the selection and award of honors
to the students concerned for the school year 1971-1972 as effected by the school." (p. 14, Rollo
[R.A., p. 31])
Petitioners, in their reply, averred that said motion for reconsideration was mysteriously filed, there
being no original copies of the same in the Office of the Director of Private Schools which would
show the date of filing thereof and their corresponding receipt of a copy thereof by the petitioners.
Respondent school however, insisted that their motion for reconsideration was regularly filed and
the assailed decision was in fact reconsidered as above stated on December 18,1972. The records
show that petitioners filed a motion for reconsideration on January 11, 1973 of said decision of
December 18, 1972 but was denied on January 19, 1973. Thus, on February 7, 1973, petitioners
appealed both decisions of December 18, 1972 and January 19, 1973 to the Secretary of Education
which appeal was still pending at the time of the filing of their complaint in court.
At the pre-trial, plaintiffs (petitioners herein) confirmed their filing of said appeal with the Secretary
of Education. For this reason, respondent school moved to dismiss the complaint for lack of cause of
action on the ground of plaintiff's (petitioner's) failure to exhaust administrative remedies.
On September 14, 1973, the trial court issued an order which reads:
Acting on the motion to dismiss dated August 20, 1 973 and the opposition
thereto filed by the plaintiffs and after hearing the oral argument of the
plaintiffs during the hearing of the motion, the Court finds that plaintiffs have
not exhausted all administrative remedies against the defendants and that it
does not fall within any of the recognized exceptions to the requirement. Since
the complaint does not allege exhaustion of said remedies principally on
appeal to the Secretary of Education which was available to him, the Court
finds that the complaint does not allege facts sufficient to constitute cause of
action.
WHEREFORE, the Motion to Dismiss is granted and the complaint is
DISMISSED, without costs. (Rollo, pp. 23-24)
On appeal, the Court of Appeals found that the court a quo incurred no error when it found that the
decision of the Director of Private Schools dated May 5, 1972 was far from being final and that the
administrative remedies availed of by plaintiffs had not yet been exhausted and affirmed the
decision appealed from in toto.
Hence, this petition. Petitioners raised the following assignment of errors:
I
THE LOWER COURT ERRED IN NOT FINDING THAT THE DECISION OF THE
BUREAU OF PRIVATE SCHOOLS DATED MAY 5, 1972 HAS ALREADY BECOME
FINAL AND CONCLUSIVE.
II
THE LOWER COURT ERRED IN NOT FINDING THAT THE EXHAUSTION OF
ADMIMSTRATIVE REMEDIES IS NOT APPLICABLE IN THIS INSTANT CASE.
III
THE LOWER COURT ERRED IN ACTING AND DISREGARDING THE
APPLICATION OF DUE PROCESS OF LAW TO THE PLAINTIFFS-APPELLANTS.
IV
THE LOWER COURT ERRED IN DISMISSING THE COMPLAINT OF THE
PLAINTIFFS- APPELLANT. (pp. 10-11, Rollo).
The main issues in this case are:
1. Whether or not the decision of the Director of the Bureau of Private Schools
dated May 5, 1972 has already become final and conclusive; and
2. Whether or not the principle of exhaustion of administrative remedies is
applicable in this case.
The first issue involves findings of fact of the Court of Appeals and of the trial court which as a
general rule are final and may not be reviewed on appeal to this Court, subject to certain exceptions
which have been recognized and accepted by this court at one time or another (Manlapaz v. Court of
Appeals, 147 SCRA 238 [1987]).
Petitioners' position is to the effect that there was no motion for reconsideration of the May 5, 1972
decision of the Director of Private Schools, so that the same has become final and executory.
The Court of Appeals found that although the Record on Appeal does not contain a copy of the
alleged motion for reconsideration of the subject decision of May 5, 1972, it was however,
mentioned in the letter of the Director of Private Schools dated January 19, 1973 addressed to
counsel of plaintiffs (petitioners herein) which reads:
This has reference to your request in behalf of Mrs. Emilia R. Rosales, for
reconsideration of the action taken by this Office as per letter dated December
18, 1972, reconsidering its original stand on the matter of the ranking of honor
students at the Don Bosco Technical Institute, Mandaluyong, Rizal, for the
school year 1971-72, as contained in a letter dated May 5, 1972.
After a careful review of the records of the present case, in the light of existing
rules and regulations on the matter, this Office finds no valid cause or reason to
modify or disturb its action as embodied in a letter dated December 18, 1972.
Accordingly, please be informed that your request for reconsideration, as per
letter dated January 11, 1973, is denied. (p. 14, Rollo [R.A. pp. 28-29].
Thus, as correctly concluded by the Court of Appeals, the contents of aforesaid letter indubitably
establish that there was in fact the questioned motion for reconsideration which was acted upon by
the Director of Private Schools on December 18, 1972, reconsidering his stand on May 5,1972; that
petitioners knew about this reconsidered stand otherwise they would not have written said request
for reconsideration of the decision of said Director of December 18, 1972, and that the request for
reconsideration written by Atty. Rabago in behalf of his clients, the herein petitioners was dated
January 11, 1973 which was denied on January 19, 1973.
Subject complaint, Civil Case No. 16998, was filed with the trial court on November 29,1972,
showing beyond dispute that the request for reconsideration judicially admitted to have been filed
by the petitioners on February 7, 1973 with the Secretary of Education and Culture had not yet been
resolved at the time of the filing of Civil Case No. 16998.
Hence, the said civil case which is an action for damages is premature. The finality of the
administrative case which gives life to petitioners' cause of action has not yet been reached. This
was still pending as evidenced in the certificate issued by the agency trying the same (Record on
Appeal, pp. 53-54; Rollo, p. 14). The court a quo was thus correct in acting upon the motion to
dismiss filed by the respondents on the ground that plaintiffs failed to exhaust administrative
remedies.
Under the doctrine of exhaustion of administrative remedies, recourse through court action, as a
general rule, cannot prosper until all the remedies have been exhausted at the administrative level,
(Pacana vs. Consunji, 108 SCRA 631[1981]; Pestañas et al. v. Dyogi, et al., 81 SCRA 574 [1978];
Antonio v. Tanco, 65 SCRA 448 [1975]).
Thus, in Abe-Abe et al. v. Manta (90 SCRA 524, 531 [1979]) we emphatically declared:
When an adequate remedy may be had within the Executive Department of the
government, but nevertheless, a litigant fails or refuses to avail himself of the
same, the judiciary shall decline to interfere. This traditional attitude of the
courts is based not only on convenience but likewise on respect; convenience
of the party litigants and respect for a co-equal office in the government. If a
remedy is available within the administrative machinery, this should be
resorted to before resort can be made to (the) court. (citing Cruz vs. Del
Rosario, 119 Phil. 63, 66).
Petitioners however, claim that they were denied due process, obviously to show that their case falls
within one of the exceptions to the doctrine of exhaustion of administrative remedies.
Such contention is however untenable, because in the first place, they were made to avail in the
same administrative agency, the opportunity or right to oppose, which in fact they did, when they
filed a motion for reconsideration and later when the motion was denied, they appealed to the
Secretary of Education and Culture.

Precisely, a motion for reconsideration or appeal is curative in character on the issue of alleged
denial of due process (Sampang vs. Inciong, 137 SCRA 56 [19851; REMERCO Garments v. MOLE, 135
SCRA 167 [1985])

WHEREFORE, the instant petition is Dismissed for lack of merit and the decision of the Court of
Appeals is Affirmed. No costs.

SO ORDERED.
 [G.R. No. L-18496. July 30, 1962.]
JOSE L. GONZALES, Appellee, v. SECRETARY OF EDUCATION, ET AL., Appellants.
Ramon A. Gonzales for Appellee.
Solicitor General and Provincial Fiscal for appellants.
SYLLABUS
1. ADMINISTRATIVE LAW; EXHAUSTION OF ADMINISTRATIVE REMEDIES BEFORE RESORT TO
COURT. — The rule in this jurisdiction is that when, in accordance with law, a plain, speedy and
adequate remedy is accorded to the aggrieved party within the Executive Department of the
government to which he belongs, the Courts will not interfere until that remedy has been resorted
to and exhausted (Lamb v. Phipps, 22 Phil., 456, 492). This meaning that the aggrieved party must
not merely initiate the prescribed administrative procedure to obtain relief, but must pursue his
case to its appropriate conclusion before seeking judicial intervention (Aircraft etc. v. Hirsch Et. Al.,
331 U. S. 752).
DECISION
DIZON, J.:
Appeal taken by the Director of Public Schools and Alfredo Pineda from the following decision of the
Court of First Instance of Iloilo:jgc:chanrobles.com.ph
"WHEREFORE, judgment is hereby rendered declaring petitioner Jose Gonzales to be the incumbent
principal of the Iloilo Vocational School. Respondent Alfredo Pineda is restrained from occupying
and assuming the said position. The writ of preliminary injunction against him is hereby made
permanent. The Director of Public Schools is hereby restrained from implementing the appointment
or designation of said Alfredo Pineda to the position of principal of Iloilo Vocational School. As
regards the Secretary of Education, the petition is dismissed. No pronouncement as to costs."cralaw
virtua1aw library
On October 1, 1954, Jose L. Gonzales, a senior teacher civil service eligible, was appointed Principal
of the Lambunao High School established in the municipality of Lambunao, Iloilo, with an annual
compensation of P3,390.00. Pursuant to Republic Act No. 1595 approved on June 16, 1956, the
Lambunao High School was converted into a Regional Vocational High School under the name of
Iloilo Vocational High School and began functioning as such on July 1, 1957.
On February 18, 1959, Gonzales received a letter from the Secretary of Education appointing him as
Head of the Related Subjects Department of the Bureau of Public School with compensation at the
rate of P3,300.00 per annum effective July 1, 1957. He also received a copy of a letter of the Director
of Public Schools addressed to respondent Alfredo Pineda, at the time Principal of the Samar Trade
School, appointing him as Principal of the Iloilo Vocational School. When Pineda came to assume the
office of Principal of the latter school on February 18, 1959, Gonzales refused to yield the same to
him, and on February 19, 1959 he sent a written protest (Exhibit 10) against Pineda’s appointment
as well as against his own appointment as Head of the Related Subjects Department, addressed to
the Superintendent of the Iloilo School of Arts and Trades, who forwarded it without undue delay to
the Director of Public Schools by a second indorsement dated February 25, 1959. Without waiting
for any action on his protest — in fact even before said protest could be forwarded and submitted to
the Director of Public Schools — Gonzales, on the 23rd of the same month, filed the present petition
for prohibition with preliminary injunction in the Court of First Instance of Iloilo to restrain the
Secretary of Education and the Director of Public Schools from giving effect to the appointment of
Alfredo Pineda as Principal of the Iloilo Vocational School, and to recover damages. After due trial,
the lower court rendered the appealed judgment.
Upon the facts set forth above — which are not disputed — we are of the opinion and so hold that,
as appellants claim, the lower court erred in not holding that the present action was instituted
prematurely.
Appellant Pineda and appellee Gonzales are employees of the Executive Department of the
Government. The Lambunao High School was a general and provincial high school, while the Iloilo
Vocational High School, as its very name indicates, is a vocational and national institution. Upon
enactment of Republic Act 1595 on June 16, 1956, the Department of Education took steps to
implement its provisions construing them as, in effect, having abolished the Lambunao High School,
establishing in its stead the Iloilo Vocational High School.
On the other hand, there can be no question that the Department of Education was the one called
upon to implement the provisions of the statute mentioned heretofore. If the action taken by it was
wrong, the aggrieved party was undoubtedly entitled to seek relief. It is the rule in this jurisdiction,
however, that when, in accordance with law, a plain, speedy and adequate remedy is accorded to the
aggrieved party within the Executive Department of the Government to which he belongs, the courts
will not interfere until that remedy has been resorted to and exhausted (Lamb v. Phipps, 22 Phil.,
456, 492), this meaning that the aggrieved party must not merely initiate the prescribed
administrative procedures to obtain relief, but must pursue them to their appropriate conclusion
before seeking judicial intervention (Aircraft, etc. v. Kirsch, Et Al., 331 U.S. 752).
The facts of this case disclose that appellee initiated appropriate administrative procedures to
obtain relief from the orders that he considered prejudicial to his rights by means of his first
indorsement dated February 19, 1959, addressed to the Superintendent of the Iloilo School of Arts
and Trades. This protest was forwarded by the latter to the Director of Public Schools on February
25, of the same year, but even before this date appellee instituted the present action. It is, therefore,
clear that he did not give his superior officers any opportunity to reconsider the questioned orders
before seeking judicial intervention. The rule of exhaustion of appropriate remedies before
resorting to the courts to seek relief appears to be of stronger application to the present case where,
according to the record, appellant Pineda and the superior officers of appellee did not appear to
have exerted any undue pressure upon him to compel him to yield and give up the position in
question.
WHEREFORE, the decision appealed from is reserved, with the result that the present action is
dismissed, with costs.
G.R. No. L-15976 January 31, 1962 Without touching on the various issues raised, We would say that mandamus cannot prosper in this
case for the simple reason that, as the record shows, the land in question is already the subject
matter of expropriation proceeding instituted by Basilan City pursuant to a resolution approved by
APOLONIO DE LOS SANTOS, plaintiff-appellant,
the City Council, which proceeding is now pending in the Court of First Instance of Basilan.
vs.
Moreover, herein petitioner has failed to exhaust the administrative remedies available to him.
BENJAMIN V. LIMBAGA, defendant-appellee.
Petitioner should have first brought the matter to the Director of Public Works who, under the law,
exercises supervision and control over city engineers of chartered cities (see Commonwealth Act
T. de los Santos for plaintiff-appellant. No. 424), and if he was not satisfied with the Director's decision he should have appealed to the
Office of the Solicitor General and G. S. de la Peña for defendant-appellee. Secretary of Public Works and Communications. Miguel v. Reyes, G. R. No. L-4851, July 31, 1953).
The principle is fundamental that a party aggrieved by a decision of an administrative official
should, before coming to court, apply for review of such decision by higher administrative authority
DE LEON, J.:
(De la Torre v. Trinidad, G. R. No. L-14907, May 30, 1960; Perez v. City Mayor, et al., G. R. No. L-
16786, Oct. 31, 1961). This principle rests on the presumption that the administrative agency, if
This an appeal from an order of the Court of First Instance of Basilan City dismissing a petition afforded a complete chance to pass upon the matter, will decide the same correctly.
for mandamus to compel Benjamin V. Limbaga, the engineer of that city, to authorize Apolonio de los
Santos to construct a residential house on the land described in the petition..
IN VIEW HEREOF, the order of dismissal is hereby affirmed, with costs.

It is alleged in the petition that on November 19, 1952, Apolonio de los Santos applied with the
respondent city engineer for a permit to construct a residential house on his land situated in
Lamitan, Basilan City; that the respondent without any lawful cause refused to grant said permit;
and that in view of this refusal, petitioner suffered damages in the amount of P18,000.00.

In his answer, the respondent, represented by the City Fiscal of Basilan, denied the allegations of the
petition and interposed the following affirmative defenses: that after a fire which occurred in
Lamitan that razed down a major portion of the market site therein, the city government approved
the purchase of an additional area to enlarge the said site and that, incidentally, the lot claimed by
the petitioner was included in the area; that by virtue thereof, expropriation proceedings had been
instituted thereon, hence, the denial of the permit applied for by petitioner. 1äwphï1.ñët

On December 5, 1958, the city fiscal moved to dismiss the petition on the following grounds: that
mandamus will not lie since the issuance of the permit applied for was a discretionary and not a
ministerial duty on the part of the city engineer; that petitioner's application for a permit to
construct a residential building, of strong material, on the lot in question had to be denied by the
city engineer for the lot was within the area of the proposed market site which was already under
expropriation proceedings instituted by Basilan City pursuant to a resolution approved by the City
Council; and in view of the fact that on March 24, 1958, while this case was pending, petitioner filed
an application in the name of another person (Marcial Quilaton) to construct a temporary movable
store on the same site in question, which was approved and thereafter a mobile store was actually
constructed thereon and consequently, petitioner is deemed to have abandoned his application to
construct the building of strong material and necessarily the remedy of mandamus being sought by
petitioner had lost its merit.

On March 11, 1959, the trial court issued an order of dismissal based on the following grounds: that
mandamus could not be granted as it was not a ministerial duty on the part of the city engineer to
approve petitioner's application for construction of buildings but approval of the same needed
sound discretion in the said engineer's exercise of his official functions; and that the site in question,
which petitioner wanted for the construction of a building as per his application, has already been
utilized by him for the construction of another building which now exists thereon - an act which
purports of an abandonment of his petition for mandamus.

From the order of dismissal, petitioner has appealed direct to this Court raising only questions of
law.
G.R. No. 87437 May 29, 1991
JOAQUIN M. TEOTICO, petitioner,
vs.
DEMOCRITO O. AGDA, SR., and HON. JUDGE IGNACIO M. CAPULONG, Regional Trial Court,
Branch No. 134, Makati, Metro Manila, respondents.
Ramon M. Miranda for private respondent.
DAVIDE, JR., J.:
Petitioner, Administrator of the Fiber Industry Development Authority, assisted by the Office of the
Solicitor General, filed this original petition for certiorari and prohibition, with a prayer for a writ of
preliminary injunction and for temporary restraining order. He urges Us to annul the Orders of 16
and 29 December 1988 and 14 February 1989, and the writ of injunction dated 11 May 1988 issued
by respondent Judge of Branch 134 (Makati, Metro Manila) of the Regional Trial Court, National
Capital Judicial Region, in Civil Case No. 88-577;1 to prohibit respondent Judge from hearing said
case; and to order the dismissal thereof for lack of cause of action as private respondent (petitioner
therein, and who shall hereafter be referred to as Agda) has not exhausted all administrative
remedies available to him.
In Our resolution of 12 April 19892 We required respondents to comment on the petition and issued
a Temporary Restraining Order effective as of that date and continuing until otherwise ordered by
the Court.
The factual antecedents as culled from the Petition in this case and the Amended Petition of Agda in
Civil Case No. 88-577 are as follows:
On 2 January 1984, Honorable Cesar Lanuza, then Administrator of the Fiber Development
Authority (FIDA for short), an agency attached to the Department of Agriculture, appointed Agda as
CHIEF FIBER DEVELOPMENT OFFICER (Range 73) of the FIDA effective upon assumption of office. 3
This appointment does not indicate any specific station or place of assignment.
Under Special Order No. 29, series of 1984, dated 2 January 1984, which was to take effect
immediately and to "remain in force until revoked," Administrator Lanuza designated Agda as
"Acting Regional Administrator for FIDA Regions I and II."4
In Special Order No. 219 dated 13 November 1987, series of 1987, Administrator Lanuza
"temporarily re-assigned" Agda, "in the interest of the service," at the main office of the
Administrator to perform special functions which may be assigned to him, and one Mr. Epitacio
Lanuza, Jr., Assistant Fiber Regional Administrator, was designated Officer in Charge of FIDA Region
I.5
On 9 December 1987 Agda prepared for filing with the Civil Service Commission, the Secretary of
the Department of Agriculture, and the Commission on Audit an Urgent Petition To Stop
Implementation and Nullify Special Order No. 219, s. '87, alleging therein that the Special Order is
(a) devoid of legal basis as it does not preserve and maintain a status quo before the controversy, (b)
against the interest of public service considering that Epitacio Lanuza has been cited for two cases
both involving dishonesty, abuse of privileges and character unbecoming a government official, (c)
improper, inappropriate and devoid of moral justification, and (d) a violation of Civil Service rules
and regulation considering that it violates the rule on nepotism since Epitacio Lanuza and
Administrator Lanuza are cousins.6 The copy of the Civil Service Commission was personally
indorsed to it by Agda on 14 December 1987 for its "proper resolution, perusal and appropriate
action." The Merit Systems Protection Board indorsed it on 21 January 1988 to the Secretary of the
Department of Agriculture for comment and/or appropriate action.7
Earlier however, or on 11 December 1987, by Special Order No. 239, series of 1987, Administrator
Lanuza designated Mr. Wilfredo Seguritan, Supervising Fiber Development Officer, as Officer in
Charge of FIDA Region I vice Mr. Epitacio Lanuza, Jr., who was ordered relieved as such pending the
final determination of the case filed against him by the Board of Personnel Inquiry of the
Department of Agriculture.8
On 7 January 1988, herein petitioner (hereafter referred to as Teotico), as Acting Administrator of
FIDA issued a Memorandum to Agda directing him to immediately submit his development
programs for Region I for the years 1988 to 1993 and his proposals concerning the potentials for
sericulture and the maguey industry in the Region.9
In his 1st indorsement of 12 January 1988, Agda returned the aforesaid Memorandum to Teotico
with the comment that it is in the best interest of the service that submission of the required
proposals be deferred since Special Order No. 219 had re-assigned him to FIDA Central Office where
"he now reports up to the present," while Wilfredo Seguritan, per Special Order No. 239, is the OIC
of FIDA for the Region. He suggested, however, that if compliance is imperative, Special Order No.
219 should be reconsidered and set aside.10
On 2 March 1988 Teotico issued a Memorandum to Agda informing him that although Special Order
No. 219 instructed him to report to the Office of the Administrator, he has neither been seen nor
officially heard from during the past several weeks and directing him to submit not later than 4
March 1988 an official clarification on his whereabouts and accomplishments for the past three
weeks.11
In his Reply of 9 March 1988 Agda reminded Teotico that his urgent petition to stop the
Implementation of Special Order No. 219 is still unresolved; consequently, its implementation
should be held in abeyance; and, as regards his whereabouts, he referred Teotico to the logbook
kept by the FIDA guard and certificates of appearance "attached from the respective offices during
the past three (3) weeks."12
On 9 March 1988 FIDA Region I OIC, Mr. Seguritan, requested Teotico to require Agda to turn over
to him (Seguritan) the keys of the vault in FIDA Region I "for the safekeeping of our blank cheeks,
official receipts, approved checks but not yet issued to payee creditors, salaries and other vital
official documents of the Region";13 in a routing slip dated 11 March 1988, Teotico referred the
request to Agda with the note: "For immediate compliance pls. so as not to hamper the conduct of
our operations and service in Region I."14
On 16 March 1988 Agda indorsed the above routing slip request to the Secretary of the Department
of Agriculture wherein he admits that he has the key of the safety vault, but impliedly asserts that he
will not yield it to anybody alleging that his petition to stop the implementation of Special Order No.
219 and to nullify it is still unresolved and, besides, the intended re-assignment is merely
temporary; hence, it would be in keeping with substantial justice if a status quo of things be
maintained. He also asks that the urgent petition be resolved and that meanwhile the directive to
turn over the keys be held in abeyance.15
On 23 March 1988 Teotico formally charged Agda for insubordination and conduct prejudical to the
best interest of the service for, among others, his failure to comply with the memorandum of
January 7, 1988 and with the routing slip request of 11 March 1988.16
On 4 April 1988 Teotico placed Agda under preventive suspension pursuant to his Special Order No.
74, to wit:
Pursuant to Section (sic) 41 and 42 of P.D. 807, Mr. Democrito Agda, Sr. is placed under
preventive suspension for the following reasons:
a) grave misconduct and gross insubordination—for refusal to turn over the
keys to the safe in Region I. With the considerable amount of cash advances
being handled in the region, Mr. Agda's refusal to turn over said keys has
become prejudicial to the best interests of the service;
b) neglect in the performance of duty—for his refusal to report to the office of
the Administrator and his refusal to accept assignment claiming that it is a
form of harassment since he still has a pending unresolved petition; and
c) pending an investigation in some instances involving falsification of public
documents and instances of possible malversation of funds for services and
maintenance and operating expenses in Region I as per results of the recent
FIDA Management Audit.
In this regard, the cashier is instructed to withhold the salary of Mr. Agda.
This order takes effect upon receipt of this memorandum and shall remain in force unless
earlier revoked or until the cases involving Mr. Agda are resolved. 17
On 8 April 1988 Agda asked Teotico for an extension of twenty days from 11 April 1988 within
which to submit his answer to the formal charge;18 however, in his memorandum of 11 April 1988,
Teotico granted him an extension of only five days from receipt thereof.19 Also on 11 April, Teotico
issued Special Order No. 26 reconstituting the Committee on Adjudication of Cases FIDA-AC headed
by Senior State Prosecutor Hipolita Ordinario of the Department of Justice.20
On 13 April 1988 counsel for Agda, Atty. Ramon Miranda, submitted a letter requesting for an
extension of fifteen days to file the answer.21 In the letter of Senior State Prosecutor Ordinario of 14
April 1988, Agda, through his counsel, was given until 21 April 1988 within which to file the
answer.22
It likewise appears that on 13 April 1988 Agda sent a letter to the Commission on
Elections23 inquiring if Special Order No. 219, series of 1987, of Administrator Lanuza was referred
and submitted to it for approval three days before its implementation. In a letter dated 14 April
1988, Atty. Horacio SJ Apostol, Manager of the Law Department of the Commission, informed
private respondent that "as of this date, records of the Department do not show that aforesaid
Special Order was submitted or referred to this Commission for approval."24
On 18 April 1988 Agda filed with the court below in Civil Case No. 88-577 his Amended
Petition25 for Certiorari, Prohibition and Injunction with preliminary injunction and restraining
order against Teotico and the three (3) members of the FIDA-AC alleging, in substance, that Special
Order No. 219 of 13 November 1987 issued by then Fida Administrator Lanuza is null and void for
having been issued in violation of Section 48 of P.D. No. 807 (Civil Service Decree) which prohibits
the detail or re-assignment of civil service personnel within three months before an election and
Section 261(h) of Batas Pambansa Blg 881 (The Omnibus Election Code) which prohibits transfer or
detail of officers and employees in the civil service within the election period except upon prior
approval of the Commission on Elections, and that all succeeding orders or memoranda issued in
connection with or by reason of such Special Order or in implementation thereof are likewise null
and void. The election referred to was the January 18, 1988 local election. He further alleges therein
that he "is filing" with the COMELEC criminal charges for violation of Sections 3, 261(h) and 264 of
B. P. No. 881 against former Administrator Lanuza and Teotico. He prays inter alia, that the court
declare null and void and set aside Special Order No. 219, Teotico's Memoranda of 7 January, 2
March, and 11 March, 1988, the Formal Charges of 23 March, the preventive suspension of 4 April,
Special Order No. 86, the Memorandum of 11 April 1988, and Ordinario's letter of 14 April 1988,
and the formal investigation to be conducted on the charge against him.
On 18 April 1988 respondent Judge issued a restraining order directing respondents therein to
refrain from enforcing Annexes "E", "I", "M", "O", "R", "S", and "Z" of the amended petition until
further orders of the court and setting the hearing of the application for a writ of preliminary
injunction on 26 April 1988.26
On 2 May 1988 Teotico and his co-respondents in the court below filed, through the office of the
Solicitor General, a motion to dismiss the case and opposition to the issuance of a writ of
preliminary injunction27 alleging that the petition is premature for failure to exhaust administrative
remedies and patently lacks merit and is merely intended to derail the administrative investigation
against Agda. Movants set the hearing thereof on 5 May 1988.
On 4 May 1988 Agda filed an opposition to the motion to dismiss and memorandum in support of
his application for a writ of preliminary injunction.28
On 11 May 1988 respondent Judge issued an Order granting the application for a writ of preliminary
injunction upon the filing of a bond of P50,000. 0029 on the basis of the following findings:
xxx xxx xxx
After careful consideration of the pleadings and their annexes filed by the parties, this
Court finds, to wit: the petitioner was appointed on June 16, 1984, as Chief, Fiber Industry
Development Authority by Cesar C. Lanuza, former Administrator of FIDA and was
assigned in Regions 1 and 2 with office at San Fernando, La Union; that on November 13,
1987, three months before the local elections, which was held on January 18, 1987, the
petitioner was reassigned by former FIDA Administrator Lanuza to the FIDA main office
and designated Epitacio E. Lanuza, Jr. as officer-in-charge (OIC) of FIDA Region 1; that on
December 15, 1987, petitioner requested the Civil Service Commission (CSC) to stay the
implementation of Special Order No. 219; that on January 7, 1988, respondent Teotico
implemented said Special Order 219, despite the fact that petitioner requested the Civil
Service Commission to stay implementation of the said Special Order 219; that on January
12, 1988, petitioner requested the respondent Teotico to defer the implementation of
said Special Order No. 219; that on March 2, 1988, respondent Teotico again
implemented Special Order 219, requiring petitioner to submit his accomplishment
report; that on March 9, 1988, petitioner requested respondent Teotico to defer the
implementation of said special order, considering that the same has not yet been resolved
by the Secretary of Agriculture; that on December 11, 1987, former FIDA Administrator
designated Wilfredo G. Siguritan as officer-in-charge of FIDA Region 1; that on March 9,
1988, FIDA Region 1 administrator Siguritan requested the petitioner through
respondent Teotico to require petitioner to turn over to him the keys of the vault in FIDA
Region 1; that on March 14, 1988, respondent Teotico implemented Special Order No.
219, requiring petitioner to turn over said keys to OIC Seguritan; that on March 16, 1988,
 petitioner requested the Secretary of Agriculture to defer the implementation of said and Teotico was specifically ordered "to immediately reinstate the petitioner, Democrito O. Agda,
special order pending resolution of said office; that on March 23, 1988, respondent Sr., from (sic) his previous position as Fiber Regional Administrator, FIDA Region I, with full back
Teotico implemented Special Order 219 by instituting administrative charges against wages and allowances mandated by law."
petitioner for insubordination prejudicial to the best interest of the service; that on April
4, 1988, respondent Teotico placed the petitioner under preventive suspension, effective
On 22 December 1988 Teotico and his co-respondents filed a motion to reconsider the above 16
April 6, 1988; that on April 8, 1988, petitioner requested respondent Teotico to give him
December 1988 Order stating therein that it would be premature for the court to order them to
twenty (20) days from April 11, 1988, within which to submit his explanation to the
comply with the 11 May Order before their motion for reconsideration is finally resolved and they
formal administrative charges.
pray that the motion for reconsideration dated 2 June 1988 be resolved and that further action on
its 16 December Order be deferred until resolution of the motion.38
xxx xxx xxx
On 29 December 1988 respondent Judge issued an Order39 denying the motion for reconsideration
After careful consideration of the allegations of the facts in this case, this Court believes filed on 2 June and the motion of 22 December 1988 and directing Teotico to comply with the Order
that petitioner was denied due process of law. The fact that petitioner informed of 16 December 1988 immediately upon receipt of said Order of 29 December.
respondent Teotico to stay and/or defer the implementation of Special Order No. 219,
considering that the same is still pending before the Secretary of Agriculture, despite of
On 5 January 1989 Teotico and his co-respondents filed a motion for reconsideration/clarification,
which, respondents, more particularly, Teotico, in grave abuse of discretion whimsical
alleging, inter alia, that there is no basis for ordering Teotico to reinstate Agda with full back wages
and capricious, tantamounting (sic) to the denial of due process of law to the petitioner,
and allowances since not even the Order of 11 May granting the motion for preliminary injunction
implemented the same and aggravated by the fact that respondents Teotico filed
ordains the same.40 But respondent Judge also denied this motion in his Order of 14 February
insubordination charges against the petitioner. This court believes, that actuations of the
1989.41
respondents in railroading the request of the petitioner to stay the implementation of
Special Order No. 219 tantamounts to the denial of due process of law as mandated by the
new (C)onstitution, which falls under one of the principle of exhaustion of administrative Finding no other avenue of relief in the court below, petitioner filed this petition on 27 March 1989
remedies. (New Filipino Maritime Agencies, Inc. vs. Rivera, L-5359-60, June 15, 1978) (De submitting to Us the following grounds:
Lara, et al. vs. Cloribin, et al., G.R. No. L-21763, May 31, 1965).
I
It does not appear from the records that Agda presented evidence at a hearing on the application for
a writ of preliminary injunction. On the contrary, as reflected in the above-quoted order of
Respondent Judge acted with grave abuse of discretion when he ordered petitioner,
respondent Judge, the writ was issued on the basis of his "consideration of the pleadings and their
allegedly in compliance with the writ of injunction issued, to reinstate respondent Agda
annexes filed by the parties."
to his previous position as Fiber Regional Administrator FIDA Region I with full
backwages and allowances notwithstanding that such act was not mandated or even
On 17 May 1988, respondent Judge issued a Writ of Preliminary Preventive or Prohibitory mentioned in the prohibitory injunctive writ.
Injunction30 restraining Teotico and his co-respondents from enforcing Annexes "E", "I", "K", "M",
"O", "R", "S", and "Z" of the amended petition.
II

On 2 June 1988 Teotico and his co-respondents below filed a motion, dated 31 May 1988, to
Respondent Judge acted with grave abuse of discretion when he refused to dismiss
reconsider the 11 May Order alleging therein that the bases of the findings of denial of due process
respondent's petition in Civil Case No. 88-577 despite his finding that respondent has
are not supported by facts; they set the motion for hearing on 10 June 1988.31
already availed of an administrative remedy which is pending resolution by the Civil
Service Commission.
On 2 June 1988 Agda filed a motion to declare respondents below in contempt for refusing to
comply with the writ .32Then on 17 June 1988 he filed his opposition33 to the motion for
III
reconsideration.

Respondent Judge acted with grave abuse of discretion when he issued a writ of
Teotico and his co-respondents filed on 17 June 1988 their opposition to the motion to declare them
preliminary injunction dated May 11, 1988 without hearing on the merits.
in contempt of court.34

In compliance with Our resolution of 12 April 1989, herein respondents filed their Comment on 2
The motion for contempt was ultimately denied in the Order of respondent Judge of 8 September
May 1989.
1988.35

As We stated in the introductory portion of this Decision, in the resolution of 29 May 1989 We gave
On September 23, 1988 Agda filed a motion to reconsider the 8 September Order. 36
due course to the petition and required the parties to submit their Memoranda, which they
complied with.
In his Order of 16 December 1988,37 respondent Judge held that Teotico and his co-respondents
cannot be held for contempt; however they were directed to comply with the Order of 11 May 1988
The petition is impressed with merit.
Respondent Judge clearly acted with grave abuse of discretion in taking cognizance of Civil Case No.
88-577, in deliberately failing to act on the motion to dismiss, in issuing a writ of preliminary
injunction, and in ordering the "reinstatement" of Agda, "as Fiber Regional Administrator, FIDA
Region I, with full back wages and allowances mandated by law."
Agda was not appointed as Fiber Regional Administrator, FIDA Region I, but as CHIEF FIBER
DEVELOPMENT OFFICER; he was not appointed to any specific station.42 He was
merely designated as Acting Regional Administrator For FIDA Regions I and II.43
Not having been appointed to any specific station, he could be tranferred or assigned to any other
place by the head of office where in the opinion of the latter his services may be utilized more
effectively.44
In Ibañez vs. COMELEC,45 ., We held:
Assayed upon the foregoing legal crucible the petitioner's case suffers an initial set back.
The appointments upon which they respectively anchor their claim state that they were
merely appointed as "Election Registrars in the Commission on Elections. . . . ." Therefore,
there can be no gainsaying the fact that the petitioners were not appointed to, and
consequently, not entitled to any security of tenure or permanence in, any specific
station. On the general principle, they may be transferred as the exigencies of the service
require. They ordinarily have no right to complain against any change of assignment. 46
pendency as an excuse for his refusal to comply with the memorandum of Teotico of 7 January 1988
and the routing slip request of 11 March 1988 for the key to the safety vault.
We are not persuaded by Agda's claim that the questioned detail was done in violation of Section
261(h) of Batas Pambansa Blg. 881 (Omnibus Election Code) Considering that (a) he raised this
matter for the first time only in his Amended Petition, or five (5) months after the issuance of the
Special Order. No evidence has been presented, or at least strongly and convincingly suggested, to
prove or show that no prior approval was obtained by Administrator Lanuza from the COMELEC for
such detail, or that a case for violation of Section 261(h) was in fact filed against Lanuza or Teotico.
All that Agda can show are his alleged letter to the COMELEC to inquire if Special Order No. 219 had
been referred to it and an alleged answer dated 14 April 1988 of Atty. Horacio SJ Apostol, Manager
of the Law Department of the Commission, to the effect that the records of the Department do not
show, as of that date, that the Special Order was submitted or referred to the Commission. The latter
is not conclusive proof that no prior authority was in fact obtained by Administrator Lanuza for the
reassignment or detail of Agda. No law requires the submission. to the COMELEC of special orders
reassigning or detailing employees within the prohibited period. What is needed is "prior
authority," the request for which and its approval may be in separate documents or papers.
Moreover, although Agda alleges in his amended petition that:
11.20. Petitioner is filing criminal charges for violations of Secs. 3, 261(h) and 264 of B.P.
881 against former FIDA Administrator Lanuza and respondent Teotico in the COMELEC."
(Emphasis supplied)

In the latest case of Department of Education, Culture and Sports, et al. vs. The Honorable Court of
none of his subsequent pleadings both before the lower court and before Us disclose that he had in
Appeals, et al.,183 SCRA 555, 562, We held:
fact filed such charges. Obviously, said allegation was a clever attempt to show a semblance of a
valid grievance.
The appointment of Navarro as principal does not refer to any particular station or
school. As such, she could be assigned to any station and she is not entitled to stay
Furthermore, even in the cases of transfer or detail within the probihited period prior to an election,
permanently at any specific school. (Bongbong vs. Parado, 57 SCRA 623). When she was
an aggrieved party is provided an appropriate administrative remedy. Section 6 of Rule VI of the
assigned to the Carlos Albert High School, it would not have been with the intention to let
Civil Service Rules on Personnel Actions and Policies provides:
her stay in said school permanently. Otherwise, her appointment would have so stated.
Consequently, she may be assigned to any station or school in Quezon City as the
exigencies of public service require even without her consent. Sec. 6. Except when the exigencies of the service require, an official or employee of the
government may not be ordered detailed or reassigned during the three-month period
before any local or national election, and if he believes that the order for his detail or
Moreover, it should be borne in mind that Special Order No. 29 of 2 January 1984 merely designated
reassignment is due to harassment, coercion, intimidation, or other personal reasons, he
Agda as Acting Regional Administrator for Regions I and II. Such being the case, the rule enunciated
may appeal the order to the Commission. Until this is proven, however, the order is
in Cuadra vs. Cordova etc., 103 Phil. 391, on temporary appointments or appointments in an acting
presumed to be in the interest of the service and notwithstanding the appeal, the decision
capacity that they are terminable at the pleasure of the appointing authority, is applicable to Agda.
to detail or reassign him shall be executory, but the Commission may order deferment of
He can neither claim a vested right to the station to which he was assigned nor to security of tenure
suspension of the detail or reassignment ex parte."
thereat.

Agda made no attempt to avail of this remedy. In his Urgent Petition to Stay Implementation and
Accordingly, private respondent could be re-assigned to any place and Special Order No. 219 dated
Nullify Special Order No. 219, nothing is mentioned about a violation of the ban on transfer or detail.
13 November 1987 reassigning private respondent at the Office of the Administrator of the FIDA "in
The reason seems too obvious. Until he filed the Amended Petition before the court below he did not
the interest of the service" was in order. Although denominated as "reassignment", it was in fact a
consider his re-assignment per Special Order No. 219 as a violation of the ban on transfer or detail
mere detail in that office.
during the three-month period before the election.

The Civil Service Decree, P.D. No. 807, allows transfer, detail and re-assignment.47 If the employee
Not having yet fully exhausted the existing adequate administrative remedy which he already took
concerned believes that there is no justification therefore, he "may appeal his case to" the Civil
advantage of, Agda cannot be permitted to abandon it at his chosen time and leisure and invoke the
Service Commission. Unless otherwise ordered by the Commission, the decision to detail an
jurisdiction of regular courts. As aptly summarized:
employee shall be executory. Agda invoked the appellate jurisdiction of the Commission when he
filed his Urgent Petition To Stay Implementation and Nullify the Special Order in question with the
Civil Service Commission.48 It does not, however, appear to Us that he exerted genuine and sincere Within the administrative forum the law may provide for review of decisions by higher
efforts to obtain an expeditious resolution thereof What appears to be clear is that he used its authorities. Before a party can be allowed to invoke the jurisdiction of the courts of
 justice, he is expected to have exhausted all means of administrative redress afforded
him. There are both legal and practical reasons for this. The administrative process is
intended to provide less expensive and more speedy solutions to disputes. Where the
enabling statute indicates a procedure for administrative review, and provides a system
of administrative appeal, or reconsideration, the courts for reasons of law, comity and
convenience, will not entertain a case unless the available administrative remedies have
been resorted to and the appropriate authorities have been given opporturity to act and
correct the errors committed in the administrative forum. 49
The doctrine of exhaustion of administrative remedies is well-entrenched in this jurisdiction and a
host of cases has buttressed its stability.50 There are, of course, recognized exceptions thereto, but,
unfortunately, private respondent cannot seek safe refuge under their protective mantle, for in
respect to the remedy provided for in Section 24(c) of P.D. No. 807, which is also the remedy
provided for in Section 24(f), availment thereof is indispensable for the viability of any judicial
action. As we held in Department of Education, Culture and Sports, et al. vs. The Honorable Court of
Appeals, et al., supra:
Finally, respondent Navarro has not exhausted administrative remedies as she did not
elevate the matter of her transfer to the Civil Service Commission in accordance with
Section 24(c), P.D. No. 807, otherwise known as the Civil Service Decree, which provides:
xxx xxx xxx
By not appealing her case to the Civil Service Commission before filing Special Civil Action
No Q-37025, respondent Navarro is indubitably without cause of action.
Respondent Judge, as clearly shown in his Order of 11 May 1988, was fully aware of Agda's urgent
petition before the Civil Service Commission to suspend its implementation of Special Order No. 219
and to nullify the same. He had, therefore, no other business to do except to grant the motion to
dismiss. He should have, forthwith, stayed his hands until the administrative processes had been
completed.51 Yet, for reasons only known to him, which We cannot divine at, he did not do so. On the
contrary, he granted the application for a writ of preliminary injunction and issued the writ on 17
May 1988.
The writ was improvidently and capriciously issued. The issuance of the writ, although addressed to
the sound discretion of the court, is conditioned on the existence of a clear and positive right which
should be protected.52Considering that the amended petition should have been dismissed outright
because Agda prematurely invoked the jurisdiction of the court in view of his appeal to the Civil
Service Commission, it follows that, even if he had a right, no protection was available from the
court below. But even if We disregard for the moment the above weakness of the amended petition
and consider, as the respondent Judge did, "the pleadings and their annexes," the inescapable action
that should follow would be denial of the application for the issuance of the writ. The pleadings and
the annexes do not at all demonstrate a clear and positive right for Agda, for as discussed above, by
the very nature of his appointment he had no security of tenure in the station to where he was
assigned on 2 January 1984; besides, his designation as acting Regional Administrator for FIDA
Regions I and II was terminable at any time at the pleasure of the head of office. Moreover, as could
be gleaned from the annexes of the Amended Petition, Agda impliedly accepted his re-assignment to
the Control Office of FIDA To Teotico's Memorandum of January 1988 addressed to Agda as
"Regional Administrator" which required him to submit his development programs for Region I
(1988-1993) and his proposals for sericulture and the maguey industry in said Region, Agda, in his
indorsement of 12 January 1-988 claims and admits that "this representation was reassigned to
FIDA Central Office where he now reports up to the present" and that "Mr. Wilfredo Seguritan . . .
remains up to the present as the OIC of FIDA for the said Region." In this indorsement Agda wrote
below his signature the following: (Detailed to Central Office). To Teotico's Memorandum of 2
March 1988 requiring him to submit an official clarification on his whereabouts and his
accomplishments for the past three weeks since he had not been seen or officially heard from, Agda
referred the former to the record (log book) kept by the FIDA Guard and certificates of appearance.
Clearly then, as of the filing of the Amended Petition, Special Order No. 219 was a fait accompli. Acts
already consummated cannot be enjoined by preliminary injunction. 53
The respondent Judge did not stop there. As complained by Teotico, on 16 December 1988 the
former issued an Order wherein although he denied the motion for the reconsideration of his 8
September 1988 Order denying the motion for contempt, he ordered Teotico to immediately
reinstate Agda "from (sic) his previous position as Fiber Regional Administrator, FIDA Region I, with
full back wages and allowances mandated by law." This, in effect, amounted to a mandatory
injunction, issued without a hearing and in violation of Section 5 of Rule 58 of the Rules of Court.
There was no basis for its issuance. A mandatory injunction may only be issued upon a showing that
the invasion of the right is material and substantial; the right of complainant is clear and
unmistakable; and there is an urgent and permanent necessity for the writ to prevent serious
damage.54 They have not been shown to exist in this case.
Even if the 16 December reinstatement order should be construed to be directed against the
preventive suspension order issued by Teotico on 4 April 1988, respondent Judge clearly
capriciously breached the limits of his discretion for nowhere in his amended petition has Agda
attacked its validity or legality on any other ground than its being issued to implement Special Order
No. 219,55 which he claims was issued in violation of the pertinent provisions of the Omnibus
Election Code and the Civil Service Decree prohibiting transfer or reassignment of civil service
officials and employees within three months before the local election of January 18, 1988. He
assailed the suspension order not on the ground that Teotico does not have the authority to file the
formal charge and to preventively suspend him, but solely on the basis of his self-serving claim that
both were issued without or in excess of jurisdiction or with grave abuse of discretion because they
were meant to implement Special Order No. 219.
Preventive suspension is allowed under Section 41 of P.D. No. 807 which reads:
Sec. 41. Preventive Suspension. — The proper disciplining authority may preventively
suspend any subordinate officer or employee under his authority pending an
investigation, if the charge against such officer or employee involves dishonesty,
oppression or grave misconduct, or neglect in the performance of duty, or if there are
reasons to believe that the respondent is guilty of charges which would warrant his
removal from the service.
However, per Section 42 of the same decree, if the administrative cases against the suspended
officer or employee, who is not a Presidential appointee, is not finally decided by the disciplining
authority within ninety days after date of suspension, he shall be automatically reinstated in the
service provided that when the delay in the disposition of the case is due to the fault, negligence or
petition of the respondent, the period of delay shall not be counted in computing the period of
suspension.1âwphi1
In the instant case, by Agda's own act and the cooperation of respondent Judge, the administrative
case against the former is not yet even ready for hearing. He has not filed his Answer, although he
was given until 21 April 1988 within which to do so.
Lastly, We hold that both the preliminary injunction and the reinstatement order issued by
respondent Judge practically granted the main relief prayed for by Agda even before the hearing on
the case on the merits. In Obias, et al., vs. Hon. Borja, et al., 136 SCRA 687, We ruled that respondent
judge acted with grave abuse of discretion in issuing a writ of preliminary injunction which in effect
practically granted the principal relief sought in the Mandamuscase. The reason for this is that such
issuance "would, in effect, be a prejudgment of the main case and a reversal of the rule on the
burden of proof since it would assume the proposition which the petitioner is inceptively bound to
prove.56

The foregoing conclusions render unnecessary a discussion on other matters raised in this case.

WHEREFORE, the Petition is GRANTED. The Orders of respondent Judge of 11 May 1988, 16
December 1988, 29 December 1988 and 14 February 1989 and the Writ of Injunction issued on 17
May 1987 in Civil Case No. 88-577 entitled Democrito D. Agda, Sr., vs. Joaquin M. Teotico, et al., are
SET ASIDE and said Civil Case is hereby ordered DISMISSED. With costs against private respondent.

SO ORDERED.
 We direct you not to cause any transfer, conveyance encumbrance, concealment, or liquidation of
the aforementioned shares of stocks without any written authority from the commission.

xxx xxx xxx

[G.R. No. 112708-09. March 29, 1996]
This sequestration order and formation of the Supervisory Committee shall take effect upon your
receipt of this Order.

REPUBLIC OF THE PHILIPPINES, represented by PRESIDENTIAL COMMISSION ON GOOD For your immediate and strict compliance.
GOVERNMENT, petitioner, vs. SANDIGANBAYAN, SIPALAY TRADING CORPORATION
and ALLIED BANKING CORPORATION, respondents. Very truly yours,

DECISION FOR THE COMMISSION:

FRANCISCO, J.:
(Sgd.) (Sgd.)
RAMON A. DIAZ QUINTIN S. DOROMAL
Save for slight modification of a specific disquisition made by the SANDIGANBAYAN in its
Commissioner Commissioner[2]
now-assailed judgment dated August 23, 1993, we affirm the same, as well as its Resolution
promulgated on October 7, 1993 denying the Motion For Reconsideration. SIPALAY was forced to litigate after the PCGG sought to implement the sequestration without acting
on its motions x x x To Lift Sequestration Order and x x x For Hearing For Specification Of Charges
The factual background of this case is as follows:
And For Copies Of Evidence. SIPALAY maintained that the sequestration was without evidentiary
Petitioner PCGG issued separate orders against private respondents Sipalay Trading substantiation, violative of due process, and deemed automatically lifted when no judicial
Corporation and Allied Banking Corporation (hereinafter referred to as SIPALAY and ALLIED) to proceeding was brought against it within the period mandated under Article XVIII, Section 26 of the
effect their sequestration. Two (2) separate petitions were filed by SIPALAY and ALLIED before this Constitution.
Court assailing the sequestration orders. After the consolidation of these petitions and the filing of
Anent ALLIED (S.B. 0100), its Valenzuela branch on August 13, 1986 was served a Search and
the comments, other pleadings and certain motions by the parties, this Court referred the cases to
Seizure Order by agents of the PCGG, the text of which reads:
public respondent SANDIGANBAYAN for proper disposition, [1] where SIPALAYs petition was
docketed as S.B. 0095, and that of ALLIED as S.B. 0100. The Manager
Allied Banking Corporation
Concerning SIPALAY (S.B. 0095), its 360, 875, 513 shares of stock in Maranaw Hotels and
Valenzuela Branch
Resort Corporation which owns the Century Park Sheraton Hotel are, according to the PCGG, part of
Valenzuela, Metro Manila
Lucio C. Tans ill-gotten wealth. The PCGG on July 24, 1986 thus sequestered these SIPALAY shares
under a Sequestration Order and Supervisory Committee which reads:
SEARCH AND SEIZURE ORDER
24 July 1986
Gentlemen:
Maranaw Hotels and Resort Corporation
C/O Mr. Lucio C. Tan By virtue of the powers vested in this Commission by the President of the Republic of
Allied Banking Corporation the Philippines, you are hereby directed to submit for search and seizure all bank documents in the
Allied Bank Center abovementioned premises which our representative may find necessary and relevant to the
Ayala Ave., Makati investigation being conducted by this Commission.
Metro Manila
Atty. Benjamin Alonte is deputized to head the team that will implement this Order.
Subject: Sequestration Order and Supervisory Committee
August 13, 1986, Pasig, Metro Manila.
Gentlemen:
FOR THE
By virtue of the powers vested in the Presidential Commission on Good Government by authority of COMMISSION:
the President of the Republic of the Philippines, we hereby sequester the shares of stocks in
Maranaw Hotels and Resort Corporation held by and/or in the name of Sipalay Trading Corporation.
(Sgd.)
RAMON A. DIAZ
 Commissioner
(Sgd.)
MARY
CONCEPCION
BAUTISTA
Commissioner[3]
ALLIED went to court for the same reason that the PCGG was bent on implementing the
order. ALLIED contended that this order is not one for sequestration but is particularly a general
search warrant which fails to meet the constitutional requisites for its valid issuance.
The petitions were jointly heard by the SANDIGANBAYAN. Briefly, the more salient events
which transpired therein are as follows:
At the presentation of their evidence, PCGG Secretary Ramon Hontiveros appeared as the lone
witness for SIPALAY and ALLIED. He produced and identified excerpts of the minutes of the PCGG
meetings held on March 13 and 12, 1986[4] in response to a subpoena duces tecum.
For the PCGGs part, its witnesses were Commissioner Dr. Quintin Doromal, former PCGG
Commissioner Mary Concepcion Bautista, now deceased, and Atty. Benjamin Alonte, Director IV,
Legal Department of the PCGG who headed the team that served the search and seizure order on
ALLIED. Commissioner Doromal identified voluminous documents. Former Commissioner Bautista
died midway her cross-examination. The PCGG almost failed to present Atty. Alonte, had the
SANDIGANBAYAN not reconsidered[5] its Order of March 8, 1993[6]declaring the cases submitted for
decision after the PCGG was deemed to have waived presentation of its evidence for its repeated
postponements of the hearing. After Atty. Alontes testimony and upon the PCGGs manifestation that
it was no longer presenting any witness, the SANDIGANBAYAN[7] gave the PCGG twenty (20) days
(from July 1, 1993) within which to submit its formal evidence in writing. SIPALAY and ALLIED
were given the same period (20 days) from receipt of such written formal offer of evidence within
which to file their formal comments and/or objections thereto, and after which, the incident will be
deemed submitted for resolution.
What the PCGG filed on July 7, 1993 was not a written formal offer of its evidence as directed
by the SANDIGANBAYAN, but a Motion To Dismiss the SIPALAY and ALLIED petitions. Admittedly,
this motion to dismiss came nearly seven (7) years after SIPALAY and ALLIED originally filed their
petitions before this Court on September 16, 1986 and August 26, 1986, respectively. The ground
was SIPALAYs and ALLIEDs alleged failure to exhaust administrative remedies. The PCGG argued
that SIPALAY and ALLIED should have first appealed the sequestration orders to the Office of the
President before challenging them in court, invoking Sections 5 and 6 of the PCGG Rules and
Regulations. An Oppositions and a Reply were filed in relation to the motion.
At some earlier time (May 21, 1992), the PCGG filed a Motion For The Consolidation Or Joint
Trial of SIPALAYs and ALLIEDs petitions (S.B. 0095 and S.B. 0100) with Civil Case 0005 - a
complaint for Reversion, Reconveyance, Restitution, Accounting and Damages dated July 17, 1987
likewise filed before the SANDIGANBAYAN by the PCGG against Lucio Tan, Ferdinand and Imelda
Marcos, and other defendants.[8] The SANDIGANBAYAN formally denied this motion in an extended
Resolution dated July 6, 1993. The PCGG filed a Motion for Reconsideration thereof. This motion was
deemed submitted for resolution when no opposition and reply were filed. SIPALAY and ALLIED
then filed a Motion To Consider Cases Submitted For Decision, to which an opposition and reply
were filed.
The PCGG lost in these cases below. The SANDIGANBAYAN in its now-assailed August 23,
1993 Decision[9] voided the orders issued against SIPALAY and ALLIED. The decretal portion reads:
In S.B. No. 0095
WHEREFORE, in the light of the foregoing, the Court has no judicious recourse but to declare, as it
hereby declares, the writ of sequestration issued against petitioner Sipalay Trading Corporations
shares of stock in Maranaw Hotel and Resorts Corporation as deemed automatically lifted for
respondent PCGGs failure to implead the petitioner within the period mandated under Section 26,
Article XVIII of the 1987 Constitution. The same writ is likewise declared null and void for having
issued without sufficient evidentiary foundation -respondent PCGG having failed to adduce and
proffer that quantum of evidence-necessary for its validity -without prejudice to the issue of
illgotten wealth being attributed to petitioner Sipalay Trading Corporation and/or defendants Lucio
C. Tan, et al. being threshed out and litigated in Civil Case No. 0005.
In S.B. No. 0100
WHEREFORE, premises duly considered, the Court hereby declares the subject search and seizure
order issued by respondent PCGG directed against petitioner Allied Banking Corporations
Valenzuela branch on August 13, 1986 as null and void ab initio for having been issued without due
process and in contravention of the organic law then in force, the Freedom Constitution, under
which mantle, the Bill of Rights found in the 1973 Constitution was amply protected and
enforced. Consequently, all documents, records and other tangible objections (sic) seized pursuant
thereto are hereby ordered returned to petitioner Allied Banking Corporation through its duly
authorized representative, after proper inventory and accounting shall have been made within
thirty (30) days from receipt hereof.
SO ORDERED.
The resolution of PCGGs motion to dismiss and for reconsideration of the denial of its motion for
consolidation or joint trial, as well as SIPALAYs and ALLIEDs motion to consider the cases submitted
for decision, was incorporated in the decision. And after its motion for reconsideration of the
decision was denied in a Resolution promulgated on October 7, 1993,[10] the PCGG brought the
instant petition. A comment, reply, and rejoinder were subsequently filed.
The key issues, in query form, are:
(1) Was the SANDIGANBAYANs denial of the PCGGs motion to dismiss proper?
(2) Should the SANDIGANBAYAN have disposed first such motion to dismiss rather than resolving it
as part of the judgment?
(3) Was the nullification of the sequestration order issued against SIPALAY and of the search and
seizure order issued against ALLIED correct?
(4) Were the sequestration and search and seizure orders deemed automatically lifted for failure to
bring an action in court against SIPALAY and ALLIED within the constitutionally prescribed period?
Hardly can it be disputed that a direct action in court without prior exhaustion of
administrative remedies, when required, is premature, warranting its dismissal on a motion to
dismiss grounded on lack of cause of action. The supporting cases cited by the PCGG in its petition
indeed spell this out, to wit: Pestanas v. Dyogi,[11] Aboitiz v. Coil, of Customs,[12] and Aquino-
Sarmiento v. Morato.[13] And in the case of Ocampo v. Buenaventura[14] likewise cited by PCGG, the
Court in essence approves of the filing of a motion to dismiss based upon failure to state a cause of
action at any stage of the proceedings.
As a general rule, a motion to dismiss is interposed before the defendant pleads (Section 1, Rule 16,
Rules of Court). However, there is no rule or law prohibiting the defendant from filing a motion to
dismiss after an answer had been filed. On the contrary, Section 2 of Rule 9, expressly authorizes the
filing of such motion at any stage of the proceedings when it is based upon failure to state a cause of
action x x x.
These principles, at first impression, appear to favor the PCGG. Sections 5 and 6 of the PCGG Rules
and Regulations indeed provide an administrative mechanism for persons or entities contesting the
sequestration orders issued against them.
Section 5. - Who may contest - The person against whom a writ of sequestration or freeze or hold
order is directed may request the lifting thereof in writing, either personally or through counsel
within five (5) days from the receipt of the writ of order x x x.
Section 6. - Procedure for Review of writ or order - After due hearing or motu propio for good cause
shown, the Commission may lift the writ or order unconditionally or subject to such condition as it
may deem necessary, taking into consideration the evidence and circumstances of the case. The
resolution of the Commission may be appealed by the party concerned to the Office of the President
of the Philippines within fifteen (15) days from receipt thereof.
Neither an initial request before the PCGG for the lifting of the sequestration orders nor an appeal to
the Office of the President was made by SIPALAY and ALLIED before they filed their respective
petitions in court. The PCGGs motion to dismiss was anchored on lack of cause of action, albeit filed
beyond the period to answer.
However, the peculiarities of this case preclude the rightful application of the principles
aforestated. The SIPALAY and ALLIED petitions were both filed on the third quarter of 1986
(September 16 and August 26, respectively), while the PCGG decided to file its motion to dismiss
only in the middle of 1993 (July 7). Nearly seven (7) years came to pass in between that so much has
already transpired in the proceedings during the interregnum. SIPALAY and ALLIED had rested
their cases, and the PCGG had finished presenting all its witnesses, not to mention other various
motions and incidents already disposed of by the SANDIGANBAYAN, with special attention to the
numerous postponements granted the PCGG for presentation of its evidence which prevented an
earlier termination of the proceedings. The motion to dismiss came only at the penultimate stage of
the proceedings where the remaining task left for the PCGG was to file its written formal offer of
evidence as required by the SANDIGANBAYAN. This Court, in Soto v. Janero[15] has made it quite
clear that:
Failure to observe the doctrine of exhaustion of administrative remedies does not affect the
jurisdiction of the Court. We have repeatedly stressed this in a long line of decisions. The only effect
of non-compliance with this rule is that it will deprive the complainant of a cause of action, which is
a ground for a motion to dismiss. If not invoked at the proper time, this ground is deemed waived
and the court can take cognizance of the case and try it. (Italics supplied)
The length of time the PCGG allowed to drift away and its decision to file its motion to dismiss only
at the homestretch of the trial hardly qualify as proper time. This factual scenario largely differs
from the Ocampo case relied upon by the PCGG. In that case and the case of Community Investment &
Finance Corp. v. Garcia[16] cited therein, the motions to dismiss involved were filed just after the
filing of the answer, and not at some belated time nearing the end of the trial. The parties in those
cases have not presented any testimonial or documentary evidence yet, as the trial proper has not
commenced, and neither does it appear that the movants concerned took close to seven (7) years
before filing their respective motions to dismiss.The PCGG therefore cannot seek refuge in
the Ocampo case to justify the marked delay in filing its motion to dismiss. Such tarried maneuver
made the PCGG guilty of estoppel by laches - the definition and effect of which this Court, speaking
through Mr. Justice Regalado, had the occasion to visit anew in the relatively recent case of Olizon v.
CA.[17]
Laches has been defined as the failure or neglect, for an unreasonable and unexplained length of
time, to do that which by exercising due diligence could nor should have been done earlier; it is
negligence or omission to assert a right within a reasonable time, warranting a presumption that the
party entitled to assert it either has abandoned it or declined to assert it.
With its undenied belated action, seven (7) years in the making at that, it is only proper to presume
with conclusiveness that the PCGG has abandoned or declined to assert what it bewailed as the
SIPALAY and ALLIED petitions lack of cause of action. More accurately, the PCGG should be deemed
to have waived such perceived defect in line with the Soto case,[18]for proper time cannot mean nor
sanction an unexplained and unreasonable length of time such as seven (7) years. The leniency
extended by the Rules (Rule 9, Section 2, Rules of Court) and by jurisprudence (Ocampo case) in
allowing a motion to dismiss based on lack of cause of action filed after the answer or at any stage of
the proceedings cannot be invoked to cover-up and validate the onset of laches - or the failure to do
something which should be done or to claim or enforce a right at a proper time[19] which, in this
case, was one of the PCGGs follies.Indeed, in matters of timeliness, indecent waste is just as
reprehensible as indecent haste.
Another equally forceful reason warranting the denial of the PCGGs motion to dismiss is that
this case falls under two recognized exceptions to the general rule of prior exhaustion of
administrative remedies, and the SANDIGANBAYANs brief but lucid disquisition on one exception
merits this Courts approval.
Two. The rule on non-exhaustion of administrative (sic) remedies does not apply to petitioners case.
This rule, which is based on sound public policy and practical considerations, is not inflexible. It is
subject to many exceptions, to wit: (i) where there is estoppel on the part of the party invoking the
doctrine; (ii) where the challenged administrative act is patently illegal amounting to lack of
jurisdiction; (iii) where there is unreasonable delay or official inaction that will irretrievably
prejudice the complainant; and (iv) where the question involved is purely legal and will ultimately
have to be decided by the courts of justice.[20]
x x x xxx xxx
x x x there was no absolute necessity of appealing respondent PCGGs resolution to the Office of the
President, as purportedly required by Section 6 of the PCGG Rules and Regulations, inasmuch as
respondent PCGG seemed to have exhibited indifference towards petitioners pleas for the lifting of
the sequestration and search and seizure orders. Official inaction or unreasonable delay, as
heretofore intimated, is one of the exceptions to the rule on non-exhaustion of administrative
remedies. Hence, under the circumstance, petitioners may not be faulted for seeking relief directly
from the courts.[21]
The other exception is the first in the enumeration, i.e., where there is estoppel on the part of the
party invoking the doctrine, consisting in the PCGGs being guilty of estoppel by laches which has just
been discussed in great length. In answer therefore to the first key issue, this Court rules in the
affirmative. The denial of the PCGGs motion to dismiss was in order.
In respect of the second key issue, the PCGG faults the SANDIGANBAYAN for incorporating in
the judgment the resolution of its motion to dismiss, arguing that said motion should have been
resolved first and separately. That would have been unnecessary and injudicious in the light of the
peculiarities of this case where the motion was filed only at the tail end of the trial and when the
PCGG has virtually presented all its evidence. At that stage, there was in fact nothing left for the
parties to do but to await the forthcoming judgment of the SANDIGANBAYAN, save for the
submission of the PCGGs written formal offer of documentary evidence as directed by the court,
which the PCGG failed to do within the 20-day period given it because it filed the motion to dismiss
instead. In this connection, the PCGGs contention that the 20-day period for the submission of its
written formal offer of evidence was suspended upon the filing of the motion to dismiss has no
merit. The SANDIGANBAYANs observation on this matter, as espoused by private respondents
SIPALAY and ALLIED, is correct.
The Court agrees with petitioners (SIPALAY and ALLIED) stance that the only period suspended by
a motion to dismiss is the period to file an answer (Section 4, Rule 16 of the Rules of Court) [22] and
that where a period is to be suspended by the filing of a pleading, the Rules of Court expressly
provides for such suspension (Section 1[b], Rule 12 of the Rules of Court, for instance, provides for
the suspension of the period to file a responsive pleading if a motion for bill of particulars is
filed).[23] Consequently, respondents (PCGG) filing of a motion to dismiss, without seeking leave of
court to stay or suspend the running of the period for filing its written formal offer of evidence - as
agreed upon and ordered in open court during the hearing on July 1, 1993 - could not have the effect
of suspending the period within which it should submit its formal offer of evidence in
writing. Without express leave of court, respondent (PCGG) could not improvidently assume that it
has liberty to suspend the running of the period agreed upon. Respondent (PCGG) should have been
prudent enough to seek the permission of this Court in respect of such matter to avert possible
controversy arising therefrom. More importantly, respondent (PCGG) should not have made a
unilateral presumption of procedural norm.[24]
xxx xxx xxx
In view of the foregoing, the Court has no judicious recourse but to sustain petitioners (SIPALAY and
ALLIED) stance and declare, as it hereby declares, that respondent (PCGG) is deemed to have
waived presentation of further evidence and to have its evidence rested on the basis of the evidence
on record.[25]
Besides, to insist on a prior and separate resolution of the PCGGs motion to dismiss and the
suspension of the 20-day period for the filing of the written formal offer of its evidence would have
needlessly prolonged further the proceedings below - something that certainly does not, and will
not, sit well with a just, speedy and inexpensive determination of every action and proceeding
envisioned by Section 2, Rule 1, of the Rules of Court. The same reasoning likewise justifies
dispensing with a prior determination of the PCGGs Motion For Reconsideration of the
SANDIGANBAYANs Resolution denying consolidation or joint trial of the SIPALAY and ALLIED
petitions with Civil Case 0005, and private respondents (SIPALAY and ALLIED) Motion To Consider
Cases Submitted For Decision. Thus, the second key issue should be resolved against the PCGG. The
SANDIGANBAYAN was well-justified in incorporating in its decision the resolution of the PCGGs
motion to dismiss, as well as its motion for reconsideration of the denial of the motion for
consolidation or joint trial and private respondents (SIPALAY and ALLIED) motion to consider the
cases submitted for decision.
Going now to the third key issue, the sequestration order and the search and seizure order
issued against SIPALAY and ALLIED, respectively, were nullified by the SANDIGANBAYAN on the
ground of non-compliance with constitutional requirements. Let us examine the SIPALAY and
ALLIED cases separately.
The pertinent constitutional provision in focus in SIPALAYs case is Section 26 of Article XVIII.
It reads in full:
Section 26. The authority to issue sequestration or freeze orders under Proclamation No. 3
dated March 25, 1986 in relation to the recovery of ill-gotten wealth shall remain operative for not
more than eighteen months after the ratification of this Constitution. However, in the national
interest, as certified by the President, the Congress may extend said period.
A sequestration or freeze order shall be issued only upon showing of a prima facie case. The order
and the list of the sequestered or frozen properties shall forthwith be registered with the proper
court. For orders issued before the ratification of this Constitution, the corresponding judicial action
or proceeding shall be filed within six months from its ratification. For those issued after such
ratification, the judicial action or proceeding shall be commenced within six months from the
issuance thereof.
The sequestration or freeze order is deemed automatically lifted if no judicial action or proceeding
is commenced as herein provided.
The SANDIGANBAYAN voided the sequestration order issued against SIPALAY for lack of
sufficient prima facie factual foundation, x x x.[26] In so concluding, it only took into account the
testimonies of PCGG witnesses Doromal, Bautista and Alonte. It appears further that the
SANDIGANBAYAN particularly zeroed in on Commissioner Doromals testimony, considering its
observations that: 1) The testimony of former PCGG Commissioner Mary Concepcion Bautista
has no probative value and cannot be admitted in evidence in view of said witness untimely
demise prior to the completion of her cross-examination by petitioners counsel. (citing the cases
of Bachrach Motor Co., Inc. v. CIR, et al. [86 SCRA 27] and Ortigas, Jr. v. Lufthansa German Airlines [64
SCRA 610]),[27] and 2) Neither is Atty. Benjamin Alontes testimony relevant. His oral
declarations, aside from being hearsay, do not go into the substance of the cases.[28]
By way of preface, no serious objection can be raised insofar as the SANDIGANBAYANs
exclusive reliance on the testimonies of the three (3) PCGG witnesses is concerned. The
SANDIGANBAYAN had no other choice, for these testimonies in fact constitute the entire evidence
for the PCGG, inasmuch as no documentary evidence which might have supported the testimonial
evidence were offered by the PCGG below. The Rules of Court[29] and jurisprudence[30] decree
that The court shall consider no evidence which has not been formally offered. There is no doubt
that the testimonies of the PCGG witnesses were formally offered as evidence meriting due
appreciation by the SANDIGANBAYAN, since Section 35, Rule 132 of the Rules requires that the offer
of testimonial evidence must be made at the time the witness is called to testify. With respect to
documents, however, the same Section 35 (second paragraph) provides a different time for their
offer, to wit:
Documentary and object evidence shall be offered after the presentation of a partys testimonial
evidence. Such offer shall be done orally unless allowed by the court to be done in writing.
The twenty (20)-day period from July 1, 1993, or until July 20, for the submission of a written
formal offer of evidence given by the SANDIGANBAYAN to the PCGG after the latters last witness
(Atty. Alonte) has testified, was intended precisely to accommodate any and all documentary
evidence - even object evidence for that matter, the PCGG would have wanted to offer. But, as
previously discussed under the second key issue, the PCGG waived such offer when it opted to file a
motion to dismiss sans/In lieu of the written formal offer of evidence within such given period that
expired without interruption. Quite accurately therefore can it be said that due to its lapse in
procedure, the PCGG brought it upon itself if the existence or non-existence of prima facie factual
foundation had to be determined by the SANDIGANBAYAN only from what can be drawn from the
PCGGs testimonial evidences - and from no other. And the Court, in reviewing that courts finding
that no prima facie evidence exists to support the sequestration order, likewise has no other choice
but to be similarly confined thereto.
But whose testimony or testimonies? The question becomes significant inasmuch as the
SANDIGANBAYAN found as inadmissible some of the PCGG witnesses testimonies.
Dr. Doromals testimony in reviewable as no attack on its admissibility was ever launched by
the SANDIGANBAYAN. With respect to Atty. Alontes testimony, the SANDIGANBAYAN declared it as
hearsay which finding the PCGG does not contest. The PCGG in fact now appears to do away with his
testimony considering that the PCGG neither quoted in, nor annexed to its petition, such testimony
or any portion thereof. Atty. Alontes testimony therefore can be dispensed with. However, the Court JUSTICE ESCAREAL:
disagrees with the SANDIGANBAYANs ruling that Commissioner Bautistas supervening death in the
course of her cross-examination rendered her entire testimony without probative value and Purpose please?
inadmissible. The SANDIGANBAYAN apparently clung to the principle enunciated in
ATTY. LEYNES:
the Bachrach and Ortigas cases,[31] to wit:
The testimony of this witness will cover the fact that at the time of sequestration
Oral testimony may be taken into account only when it is complete, that is, if the witness has been there were issued (sic), there were more prima facie evidence.
wholly cross-examined by the adverse party or the right to cross-examine is lost wholly or in part
thru the fault of such adverse party. But when cross-examination is not and cannot be done or xxx xxx xxx
completed due to causes attributable to the party offering the witness, the uncompleted testimony ATTY. LEYNES:
is thereby rendered incompetent.
q: Dr. Doromal do you know the petitioner, Sipalay Trading Corporation?
The right of a party to cross-examine the witness of his adversary is invaluable as it is inviolable in a: Yes, sir.
civil cases, no less than the right of the accused in criminal cases. The express recognition of such
right of the accused in the Constitution does not render the right thereto of parties in civil cases less q: Why do you know Sipalay Trading Corporation?
constitutionally based, for it is an indispensable part of the due process guaranteed by the
fundamental law x x x. Until such cross-examination has been finished, the testimony of the witness a: It is one of those companies which we had investigated and eventually issued a
cannot be considered as complete and may not, therefore, be allowed to form part of the evidence to Sequestration Order.
be considered by the court in deciding the case.
q: Do you you (sic) Maranaw Hotels and Resorts?

But the Bachrach and Ortigas cases involved different factual features. In those cases, the a: Yes, sir.
witnesses concerned whose testimonies were rightly stricken off the records either left for abroad
or simply failed to appear at the time they were supposed to be cross-examined by the adverse q: Why do you know this Maranao Hotels and Resorts?
party. In short, the lack of cross-examination by the opposing parties therein was occasioned by
a: Again it is one of those we had sequestered because of its relation with Sipalay
sudden or unexplained non-appearance, unlike in this case where no less than the witness
Trading Corporation?
Bautistas death prevented the completion of her cross-examination. The controlling case here
is Fulgado v. C.A., et. al.[32] where the Court, in allowing the testimony of therein plaintiff Ruperto q: Do you know the petitioner Allied Banking Corporation?
Fulgado who died before his cross-examination, to remain in the record, ruled that:
a: Yes, sir.
The wholesale exclusion of testimonies was too inflexible a solution to the procedural impasse q: Why do you know it?
because it prejudiced the party whose only fault during the entire proceedings was to die before he
could be cross-examined. The prudent alternative should have been to admit the direct examination a: In the same manner that the material of documents we had, we ended up having a
so far as the loss of cross-examination could have been shown to be not in that instance a material Sequestration Order on Allied Banking Corporation.
loss. And more compellingly so in the instant case where it has become evident that the adverse
party was afforded a reasonable chance for cross-examination but through his own fault failed to xxx xxx xxx
cross-examine the witness.
ATTY. LEYNES:

Where death prevents cross-examination under such circumstances that no responsibility of any sort q: Dr. Doromal at that time that the sequestration order which you have just recognized
can be ascribed to the plaintiff or his witness, it seems a harsh measure to strike out all that has been was issued and which sequestration order was signed by you and Commissioner
obtained in the direct examination. (Italics supplied) Ramon Diaz, what documents if any did you consider?

If testimony is inexpungible where the witness dies prior to any cross-examination, with more
reason should testimony partially cross-examined at the time of the witness death (as in
Commissioner Bautista s case) remain intact. Thus, with the exception of Atty. Alontes testimony,
Dr. Doromals and deceased Commissioner Bautista s testimonies, together with the evidence of
SIPALAY and ALLIED, deserve a second scrutiny in determining the correctness of the
SANDIGANBAYANs finding of lack of prima facie factual foundation.
Here then are the highlights of Dr. Doromals and deceased Commissioner Bautistas
testimonies.
DR. DOROMAL
(DIRECT)
a: We considered documents which were gotten from Malacaang after the previous
President had left. We had also document (sic) which were gotten from
the U.S. which were given by the States Department to the PCGG and whatever
had been gotten by our operation people.
q: If I show to you some of these documents will you be able to recognize them?
a: Yes, some of them I will be able to recognize.
q: I show to you a set of documents, what relation have these set of documents to those
documents which you have mentioned you and Commissioner Diaz or the
Commission considered when the Sequestration Order dated July 24, 1986 was
issued?
Will you please go over these documents?
COURT INTERPRETER: Witness may answer:

Witness is going over the voluminous documents. WITNESS:

WITNESS: a: These documents are more than just prima facie evidence which is the only thing
required of us before issuing the Sequestration Order.
a: The documents that I have just slipped into here that would have to do with Sipalay
Trading Corporation, this I remember. In fact over and above what is needed there are plenty of evidence of these
documents which movant amply justifies our issuing of the Sequestration Order
ATTY. LEYNES: in the sense that there is just no reason no(r) question that there is a
preponderance of evidence for the sequestration.
q: The question is, what relation has this document to the document you considered in
issuing the Sequestration Order subject matter of this case? ATTY. LEYNES:
a: This one which I had flipped into this had been considered by the Commission at the That would be all, Your Honor.
time of the sequestration.
JUSTICE ESCAREAL:
ATTY. LEYNES:
How about this 0095?
May I request that this document which the witness had identified, these
documents consisted of seventy-six documents and we -have earlier ATTY. LEYNES:
inadvertently marked them as Exhibit A to WWW but if we can have them
marked accordingly as Exhibits 1, 2 to 76 accordingly. In both cases, Your Honor.

xxx xxx xxx JUSTICE ESCAREAL:

ATTY. LEYNES: Does the document include any reference to the Allied Banking Corporation?

q: Doctor Doromal when you issued, when the Sequestration Order was issued in the ATTY. LEYNES:
judgment of the Commission, what quantum of evidence do these documents
Yes, Your Honor, but the Sequestration Order was issued by Commissioner Diaz
amount to?
and Mary Con Bautista.
ATTY. MENDOZA:
JUSTICE ESCAREAL:
Objection to the question, Your Honors (sic) please. First of all the witness did
With respect to?
not identify all of those documents as he was going over the folder of
documents. He was picking up particular documents in the folder and it is a ATTY. LEYNES:
question of law.
Allied Banking Corporation.
ATTY. LEYNES:
May I ask additional questions, Your Honor.
We are proving that there is more prima facie evidence in the judgment when he
issued the Sequestration Order. JUSTICE ESCAREAL:
What is the quantum of evidence do these documents represent? Please proceed.
JUSTICE ESCAREAL: ATTY. LEYNES:
For the purpose of issuance thereof? q: Dr. Doromal what if any is your participation in the issuance of the Sequestration
Order or the Search and Seizure Order against Allied Banking Corporation?
ATTY. LEYNES:
a: All these Sequestration Orders were brought by the Commission in (sic) banc and we
Yes, Your Honor. are present with the documents that had been available.
JUSTICE ESCAREAL: We listen to them and the action is made by the Commission and in the issuance
of the Sequestration Order.
With that qualification are you willing to accept that qualification?
Then whoever is the Commissioner most involved in that particular company
ATTY. LEYNES:
thus signs or do sign the Sequestration Order.
Yes, your Honor.

JUSTICE ESCAREAL:
 In this particular case that you mentioned about Allied Banking Corporation, the
two other Commissioners who were there ahead of me were the ones who
signed because they are most familiar with the Allied Banking Corporation.
xxx xxx xxx
ATTY. LEYNES:
q: Specifically what is your participation in the issuance of the sequestration personally
of Allied Banking Corporation?
a: I am one of the most who participated in the discussion when I became a member
and that was April in 1986.
xxx xxx xxx
ATTY. LEYNES:
q: When deliberated upon what documents were considered?
xxx xxx xxx
WITNESS:
a: First of all when this Search and Seizure Order was issued this was during the time
that I was already a member of the PCGG as Commissioner and when this is
brought before the group before the Commission there are the attached
documents that backed up this Search and Seizure Order and for that matter
other items that have to do with the sequestration or something similar to that
so what I am saying the materials that go with this would indicate the reason for
the Search and Seizure Order similar to the papers that are needed when we
issued the Sequestration Order.
ATTY. LEYNES:
q: I will show you again this Exhibit 1, these Exhibits 1 to 76 will you please go over the
same and state before this Honorable court what relation have these documents
to the documents which you mentioned were considered in the deliberation for
the issuance of Search and Seizure Order against Allied Banking Corporation?
xxx xxx xxx
WITNESS:
a: I am looking at some of these documents that have to do with the Allied Banking
Corporation and I recognize some of these and the others I do not see because
some of these are materials which were gathered by other groups and their
attachments but the- others such as this letter, this I remember.
xxx xxx xxx
ATTY. LEYNES:
q: Dr. Doromal in your recollection what is the reason or the finding of the PCGG why
the Sequestration Order was issued against Sipalay Trading Corporation or
Maranao Hotels and Resorts?
WITNESS:
a: The reason was that in the Maranao Corporation which was the company which was
later on acquired by Sipalay Trading Corporation which was the holding
company it was our judgment that there are enough indications there that these
were acquired because of closeness to the president and that this was really in
fact one of those that had been gotten from DBP, Development Bank of the
Philippines with the idea being that it was, it could be gotten through the help of
the Office of the President and the President himself.
xxx xxx xxx
ATTY. LEYNES:
q: What if any is the finding of PCGG regarding the ownership of Sipalay Trading
Corporation?
a: Sipalay Trading Corporation was holding company and owner. The people in the
ownership is not only Lucio Tan but looks like relatives of Mr. Tan.
q: In your recollection Doctor Doromal, what is the finding or reason of companies why
it issued the Search and Issue (sic) Order against Allied Banking Corporation?
WITNESS:
a: The Commission wanted to find out documents that would indicate or prove the
relationship between President Marcos and Lucio Tan and one way to do that is
to have access to the papers to the documents that were in the Allied Banking
Corporation.
ATTY. LEYNES:
That would be all, Your Honor.[33]
MARY CONCEPCION BAUTISTA
(DIRECT)
JUSTICE ESCAREAL:
Purpose, please.
ATTY. LEYNES:
The testimony of the witness is offered for the purpose of proving that when the
Presidential Commission on Good Government issued the search and seizure
order dated August 13, 1988, the Commission considered ample evidence in the
issuance thereof and also to prove that defendant Lucio Tan in concert with
defendants Ferdinand Marcos and Imelda Marcos acquired General Bank and
Trust Company in violation of existing rules and for remedial consideration and
that later on Genbank was converted by defendant Lucio Tan and company to
Allied Bank of which defendant Lucio Tan and defendants Ferdinand Marcos
owned beneficially.
xxx xxx xxx
ATTY. LEYNES:
q: Madam Witness, what basis or document, if any did the commission consider when it
issued the search and seizure order?
a: We had several documents in our possession at that time, one of the documents was
a list which have been taken from the office of Imee M. Araneta on EDSA which
contained a listing of the holdings of the late President Marcos in several
corporations and the extent of his participation on these corporations. And the
other, in addition to what have been given by certain informants, another was an
affidavit of Mr. Gapud which he had issued wherein he had mentioned also the
 participation of Mr. Marcos in Allied Banking, I think that affidavit is here and
also the fact that deposits were made from Allied Banking in the accounts of Mr.
Marcos in the Security Bank.
xxx xxx - xxx
q: Madam Witness, you mentioned certain documents on the basis of which the PCGG
issued the search and seizure order against Allied Banking Corporation, I am
showing to you a folder containing Exhibit 1 to 18, will you please go over this
document and state which of these documents were considered by the
Commission when it issued the search and seizure order?
a: These documents marked Exhibits I which is a list, which is a letter, unfortunately I
dont see page two of this but this is the document which we have addressed
principally, as far as we know addressed to the late President Marcos and
together with this we have Exhibit 2, another letter dated March 28, 1977
addressed to the Deputy Governor Mr. Brias about the intention to purchase
General Bank and Trust Company and subsequently documents Exhibit 3 signed
by Carlota Valenzuela, Special Assistant to the Governor, Exhibit 4 another
document marked Confidential signed by Mr. Barin reporting on the action taken
regarding Genbank.
xxx xxx xxx
WITNESS:
And another document which has been marked as Exhibit 4, 5, 6, 7, these
documents refer to the acquisition by Lucio Tan of the Genbank for the amount
of P500,000.00, the Commission then considered that plus the fact that the
acquisition and transfer of Genbank to the Lucio Tan group was done in a short
time without proper observance of public bidding which the Commission then
considered to be irregular, so this is one of the documents we look at. Mr. Tan in
the acquisition of Genbank had been given a favored treatment.
xxx xxx xxx
WITNESS:
This document dated May 17, 1989 under letterhead Allied Banking Corporation
addressed to His Excellency President Marcos, President and Prime Minister
signed by Lucio Tan. In addition we have a document which has already been
marked as Exhibit 12 which is the affidavit of Mr. Rolando Gapud dated January
14, this is series of 1987, in this document Mr. Gapus (sic) has also made an
enumeration of deposits made by certain individuals from certain banks among
them Allied Banking Corporation for the account of Mr. Marcos in the Security
Bank.
xxx xxx xxx
WITNESS:
Exhibits 13 and 13-a which is a listings (sic) of deposits made and placements in
the bank, in the bank account of Mr. Marcos. In addition, we have the documents
marked up to Exhibits 13-g, h, l, all showing checks or amounts received from
Allied Bank deposited in the Security Bank and Trust Company. Exhibits up to
Exhibit 13-k, 1, m, p. t, v, 2, y and x.[34]
xxx xxx xxx
ATTY. LEYNES:
q: Chairman Bautista, during the last hearing before it was adjourned we were going
over this folder containing Exhibits 1 to 80 and we are indicating which of these
exhibits. were considered by the PCGG when it issued the Search and Seizure
Order against Allied Banking Corporation;
Will you please go over again this folder and indicate to this Exhibit to whether
what was considered by the Presidential Commission on Good Government when
it issued the Search and Seizure Order against Allied Banking Corporation.
a: I recall that we had already pointed to the document marked Exhibit 7 in red which is
a letter of Lucio Tan to the Governor Licaros of the Central Bank and the one
marked in red as Exhibit 8 which is the letter to Mr. Gregorio Licaros signed by
T.O. Domingo, the Allied Banking Report which is marked as Exhibit 9.
xxx xxx xxx
q: Apart from these exhibits which you have just mentioned what other evidence if any
did the Commission consider?
a: There were for instance the verbal information given to us by individuals as well as
the information given to us by Mr. Rolando Gapud verbally.
xxx xxx xxx
ATTY. LEYNES:
q: What is the finding based on these Exhibits which you mentioned and the
information given by Rolando Gapud which he later on formalized in an affidavit.
What finding if any with regards to the Allied Banking Corporation did the
Commission arrive that led to the issuance of the Search and Seizure (sic) Order?
a: The Commission after reviewing al (sic) of these exhibits as with all the information
that had come into its possession had come to the conclusion that indeed Mr.
Lucio Tan was a close associate of the late President Marcos and they were
involved in business associates and transactions and that the late President had
substantial holdings in this corporation in which Lucio Tan was also involved
and therefore the commission would have to act in accordance to its powers of
the sequestration granted under Executive Order No. 1.
xxx xxx xxx
ATTY. LEYNES:
q: To what corporation do you refer to when you mentioned Mr. Marcos has equity in
the corporation owned by Lucio Tan?
a: Among them is precisely Allied Banking Corporation, Asia Brewery and Sipalay
Trading Corporation. I mean these are some of the corporations.
q: Chairman Bautista, what is the legal basis or authority by the commission of the
Presidential Commission on Good Government when it issued the Search and
Seizure Order against the Allied Banking Corporation?
a: The Commission under Executive Order No. 1, the President has been given
specifically the power to sequester business and property owned by the late
President Marcos, Mrs. Marcos, relatives and closed business associates and to
take possession or take over this business and assets in order to prevent
dissipation of these assets or removal of these assets and concealment of these
assets and also to take over such documents as the Commission may consider
necessary in order that these documents may be preserved for the purpose of the
 filing of the case in order to prosecute or conduct civil action against President
Marcos, Mrs. Marcos, relatives and other close business associates that is very
clearly stated in Executive Order No. 1.
xxx xxx xxx
ATTY. LEYNES:
0100, Your Honor.
q: Chairman Bautista, the Search and Seizure Order issued by PCGG dated August 13,
1986 against Allied Banking Corporation reads in pertinent part and I quote:
You are hereby directed to submit for Search and Seizure all bank documents in
the above mentioned premises which our representatives may find necessary
and relevant to the investigation conducted by the Commission.
a: Well I think we clearly specify there that we are to seize the bank documents.
It is specifically stated that the Search and Seizure Order refers to bank
documents precisely because of the information that had been given to us that
these documents could be found in the particular place.
xxx xxx xxx
ATTY. LEYNES:
q: Now, Chairman Bautista do you know what happened after the Search and Seizure
Order against Allied Banking Corporation?
WITNESS:
a: We were not able to seize any document precisely because of the objection raised
and so what happened is that the parties agreed to just seal this place so that
neither of the parties would be able to remove any documents.
ATTY. LEYNES:
That will be all, Your Honor.[35]
Dr. Doromal was basically preoccupied with identifying and referring to documents
purportedly coming from Malacaang, the US State Department and other sources. What his
testimony essentially yields is the fact that the prima facie evidence/s -supporting the sequestration
order issued against SIPALAY is/are buried and ascertainable in these documents. But, to repeat,
any reference thereto is unwarranted since there was no offer thereof in evidence. And it must be
emphasized at this point that mere identification of documents and the marking thereof as exhibits
do not confer any evidentiary weight on documents not formally offered. In People v. Santito,
Jr.,[36] the Court, speaking through Mr. Justice Regalado once again, thus said that:
Even assuming that the same had been identified in court, it would have no evidentiary
value. Identification of documentary evidence must be distinguished from its formal offer as an
exhibit. The first is done in the course of the trial and is accompanied by the marking of the evidence
as an exhibit. The second is done only when the party rests its case and not before. The mere fact
that a particular document is identified and marked as an exhibit does not mean it will be or has
been offered as part of the evidence of the party. The party may decide to formally offer it if it
believes this will advance its cause, and then again it may decide not to do so at all. (Italics
supplied.)
Verily then, without the PCGG documents having been formally offered, however decisive and
compelling they may otherwise be, it is as if a prima facie case does not exist at all. That makes Dr.
Doromals testimony by and in itself worthless. The same can be said of deceased Commissioner
Bautista as well who was similarly immersed in the mechanical process of identification. In fact, her
testimony and the documents she referred to were totally unrelated to the sequestration order
issued against SIPALAY, as they chiefly dwelt on the search and seizure order issued against
ALLIED. Being immaterial, nothing therefrom can shore up a prima fade case against SIPALAY. And
it may well be clarified at this juncture that it is the immateriality of deceased Commissioner
Bautistas testimony that justified the SANDIGANBAYAN into paying particular attention to Dr.
Doromals testimony in its search for prima facie evidence - not the inadmissibility of her testimony
arising from her death during cross-examination which we have heretofore adjudged to be a faulty
observation. The SANDIGANBAYAN was therefore correct in saying that:
No direct connection or relationship has been established, at least, as far as the evidence extant on
the records of these cases are concerned, between petitioner Sipalay Tradings acquisition and
ownership of the sequestered shares of stock and Lucio C. Tans alleged fraudulent business
maneuverings and connivance with the late President Ferdinand E. Marcos. These oral testimonies
are practically dependent on the existence of official records of respondent PCGG which, due to the
latters own doing, have not been formally offered. Hence, these oral testimonies have no leg to stand
on.[37]
xxx xxx xxx
Without credible and competent documentary evidence to fortify the witnesses bare allegations as
aforestated, it is difficult to sustain a finding of prima facie case in the proceedings - especially
taking into account the fact that petitioner Sipalay Trading is presumed by law to possess a separate
and distinct judicial personality from its principal stockholders, i.e., Lucio Tan, et. al. x x x.[38]
The difficulty is easier to grasp when reckoned with the various but uniform definitions
of prima facie case/evidence aside from that given by the SANDIGANBAYAN, to wit:
Prima facie evidence has been defined as evidence which, standing alone unexplained or
uncontroverted, is sufficient to maintain the proposition affirmed. It is such as, in judgment of law, is
sufficient to establish the fact, and if not rebutted, remains sufficient for that purpose.[39]
xxx xxx xxx
It is evidence which suffices for the proof of a particular fact until contradicted and overcome by
other evidence.[40]
xxx xxx xxx
It is evidence which, standing alone and unexplained, would maintain the proposition and warrant
the conclusion to support which it is introduced.[41]
xxx xxx xxx
Prima facie case is such as will suffice until contradicted and overcome by other evidence. [42]
xxx xxx xxx
A prima facie case is one which is apparently established by evidence adduced by plaintiff in support
of his case up to the time such evidence stands unexplained and uncontradicted.[43]
 xxx xxx xxx
A prima facie case is one in which the evidence in favor of a proposition is sufficient to support a
finding in its favor, if all the evidence to the contrary is disregarded. [44]
xxx xxx xxx
A litigating party is said to have a prima facie case when the evidence in his favor is sufficiently
strong for his opponent to be called on to answer it. A prima facie case, then, is one which is
established by sufficient evidence, and can be overthrown only be rebutting evidence adduced on
the other side.[45]
From whatever definition we look at it, Dr. Doromals and deceased Commissioner Bautistas
testimonies are by no means sufficiently strong evidence to make up a prima facie case for the
PCGG. What gave them colorable weight were the unoffered documents. But as things stand in the
absence of such documentary evidence, they are empty and crumble on their own even without
counter-explanation or contradiction, as anything that may tend to prove the proposition that the
SIPALAY shares in Maranaw Hotels and Resort Corporation were/are ill-gotten is just nowhere
extractable from these testimonies by and in themselves. These declarations unfortunately fail to
hurdle judicial inspection, proceeding from the principle that a partys evidence is of necessity
subject to a rigid scrutiny when he possesses, but does not produce, documentary evidence which,
would be far more satisfactory.[46] We are thus vividly and fittingly reminded of the proverbial
words of Mr. Justice Story that:
Naked statements must be entitled to little weight when the parties hold better evidence behind the
scenes[47] and
A partys nonproduction of a document which courts almost invariably expect will be produced
unavoidably throws a suspicion over the cause.[48]
Corollary to this is that the presumption is always and inevitably against a litigant who fails to
furnish evidence within his reach, and it is the stronger when the documents, writings, etc., would
be conclusive in establishing his case.[49] This is indeed an occasion to emphasize once again that the
superiority of written evidence, compared with oral, is so pronounced, obvious and well known, that
in most cases the deliberate and inexcusable withholding of the written evidence, and effort to
secure favorable consideration of oral testimony in the place of it, is an affront to the intelligence of
the court.[50]
At best, the bare testimonies of Dr. Doromal and deceased Commissioner Bautista, in the eyes
of the Court, yield nothing but mere uncorroborated speculations or suspicions insofar as the PCGG
attempted to establish the prima facie factual foundation that would hold up the sequestration order
against SIPALAY. But a fact cannot be found by mere surmise or conjecture.[51] Suspicion cannot give
probative force to testimony which in itself is insufficient to establish or to justify an inference of a
particular fact,[52] for the sea of suspicion has no shore, and the court that embarks upon it is
without rudder or compass.[53] And as it is not the habit of any courts of justice to yield themselves
up in matters of right to mere conjectures and possibilities,[54] courts are not permitted to render
verdicts or judgments upon guesses or surmises.[55]
Turning now to the evidence for SIPALAY and ALLIED, it unveiled no prima facie factual
foundation either. Former PCGG secretary and lone witness Atty. Hontiveros, in response to two (2)
subpoenas duces tecum[56] requested by counsel for both corporations[57] which required him to
bring to the court all records, including minutes of meeting of the PCGG, its resolutions, together
with all supporting evidence or documents of whatever nature in connection with the issuance of
the sequestration order against SIPALAY and the search and seizure order against ALLIED, could
only produce the following excerpts of minutes of two (2) PCGG meetings held on March 13 and
March 12, 1986:
6. Commissioner Daza also informed the Commissioner that upon the instructions of
Minister Salonga, any Commissioner can file or issue a sequestral order provided
the order has the conformity verbal or written of another Commissioner. These
could include any other order or seizure.[58]
xxx xxx xxx
6. Commissioner Pedro L. Yap before his departure on a mission, reported the work he
had accomplished during the past days. These included numerous freeze and
sequestration orders. He asked that the list of orders should not be particularized
in the minutes.[59]
after admittedly spending no less than two (2) months tracing documents to bring to court:
ATTY. MENDOZA:
xxx xxx xxx
Q: I am asking you how many months did it take looking for records?
A: I think more than two months, sir.
Q: And these were the records you found, marked Exhibits A and B?
A: Yes, sir, during the time I devoted to them.[60]
xxx xxx xxx
ATTY. MENDOZA:
xxx xxx xxx
Q: But nonetheless, for two months you tried looking for records corresponding to the
subpoena?
A: Yes, sir.[61]
Other than being informative of PCGG internal procedure on how and by whom sequestration
orders in general are issued and of the accomplishments of one of its then commissioners, the
excerpts are absolutely unreflective of any deliberation by PCGG commissioners particularly
concerning the sequestration order against SIPALAY, much less the factual basis for its
issuance. They do not even make the slightest allusion to SIPALAY, or ALLIED. That Atty. Hontiveros
devoted two (2) months for document-searching only to come up with minutes that are as barren as
the testimonial evidences of the PCGG validates indeed the claim of respondent corporations which
may well sum-up the PCGGs case specifically against SIPALAY, that:
The only logical conclusion that may be reached by Atty. Hontiveros inability to produce PCGG
records in regard respondent Sipalay is that there was no evidence before the PCGG or any of its
Commissioners which would tend to establish that the shares of stock in Maranaw registered in the
name of private respondent Sipalay are ill-gotten.[62]
There being no evidence, not even a prima facie one, there was therefore no valid
sequestration of the SIPALAY shares in the Maranaw Hotels and Resort Corporation. We hereby re-
emphasize the indispensability of prima facie evidence by adverting to the Courts pronouncement
in Republic v. Sandiganbayan,[63] to wit:
IV. The issue on the existence of prima facie evidence in support of the issuance of a sequestration
order has likewise been laid to rest in the BASECO case, in this wise:
8. Requisites for Validity
What is indispensable is that, again as in the case of attachment and receivership, there exist
a prima facie factual foundation, at least, for the sequestration, freeze or takeover order, and
adequate and fair opportunity to contest it and endeavor to cause its negation or nullification.
Both were assured under the executive orders in question and the rules and regulations
promulgated by the PCGG.
a. Prima Facie Evidence as Basis for Orders
Executive Order No. 14 enjoins that there be due regard to the requirements of fairness and due
process. Executive Order No. 2 declares that with respect to claims on allegedly ill-gotten assets and
properties, it is the position of the new democratic government that President Marcos x x x (and
other parties affected) be afforded fair opportunity to contest these claims before appropriate
Philippine authorities. Section 7 of the Commissions Rules and Regulations provides that
sequestration or freeze (and takeover) orders issue upon the authority of at least two
commissioners, based on the affirmation or complaint of an interested party, or motu propio when
the Commission has reasonable grounds to believe that the issuance thereof is warranted. A similar
requirement is now found in Section 26, Art. XVIII of the 1987 Constitution, which requires that a
sequestration or freeze order shall be issued only upon showing of a prima facie case. (Italics in the
original text.)
Notably the PCGG, in what apparently appears to be a desperate attempt to slither its way out of its
failure to show a prima facie case, would now argue that:
x x x it is worth-mentioning the fact that the FREEDOM CONSTITUTION under which Executive
Order Nos. 1, 2, 14 and 14-A had been issued, categorically authorized the issuance of writs of
sequestration without requiring any finding of prima facie evidence to support such issuance.
Nevertheless the PCGG saw to it that before any writ of sequestration was issued, the
Commissioners carefully examined and weighed the evidence on hand that would justify such
issuance of sequestration order. The FREEDOM CONSTITUTION provides under Article II, Section 1,
the following:
SECTION 1. Until a legislature is elected and convened under a New Constitution, the President shall
continue to exercise legislative power.
The President shall give priority to measures to achieve the mandate of the people to:
a)x x x
b)x x x
c)x x x and
d)Recover ill-gotten properties amassed by the leaders and supporters of the previous regime and
protect the interest of the people through orders of sequestration or freezing of assets or accounts.
It is only in the 1987 Constitution that the existence or finding of prima facie case was required
before a sequestration order could be issued. The writ of sequestration in question was issued long
before the ratification of the 1987 Constitution; hence, it was covered by the Freedom Constitution
which did not require the prior finding of prima facie evidence.[64]
This argument is clearly without merit in the face of this Courts pronouncement in
the Baseco case,[65] that:
Parenthetically, even if the requirement for a prima facie showing of ill-gotten wealth were not
expressly imposed by some rule or regulation as a condition to warrant the sequestration or
freezing of property contemplated in the executive orders in question, it would nevertheless be
exigible in this jurisdiction in which the Rule of Law prevails and official acts which are devoid of
rational basis in tact or law, or are whimsically and capricious, are condemned and struck down.
Going now to the case of ALLIED, the principal objection raised regarding the order issued
against it is that the PCGG made use of an unauthorized and constitutionally defective search
warrant to effect the sequestration. The SANDIGANBAYAN saw and declared it as such. We agree.
There can be no doubt that the order which the PCGG issued against ALLIED typifies a search
warrant (full text of which appears in the early part of this decision). Not only is the order captioned
as SEARCH AND SEIZURE ORDER, the body thereof clearly enjoined the branch manager to make
available to the PCGG team all bank documents precisely for the purpose.It is unauthorized because
nowhere in the same Executive Order No. 1[66] (particularly Section 3) invoked by the PCGG to
justify the search and seizure order was the PCGG expressly empowered to issue such specie of a
process in pursuit of its mandated purpose of recovering ill-gotten/unexplained wealth. Section 3 of
E.O. No. 1 enumerates the following powers of the PCGG:
SECTION 3. - The Commission shall have the power and authority:
(a) To conduct investigation as may be necessary in order to accomplish and carry out the purposes
of this order.
(b) To sequester or place or cause to be placed under its control or possession any building or office
wherein any ill-gotten wealth or properties may be found, and any records pertaining thereto, in
order to prevent their destruction, concealment or disappearance which would frustrate or hamper
the investigation or otherwise prevent the Commission from accomplishing its task.
(c) To provisionally take over in the public interest or to prevent its disposal or dissipation,
business enterprises and properties taken over by the government of the Marcos administration or
by entities or persons close to former President Marcos, until the transactions leading to such
acquisition by the latter can be disposed of by the appropriate authorities.
(d) To enjoin or restrain any actual or threatened commission of acts by any person or entity that
may render moot and academic, or frustrate, or otherwise make ineffectual the efforts of the
Commission to carry out its tasks under this order.
(e) To administer oaths, and issue subpoenas requiring the attendance and testimony of witnesses
and/or the production of such books, papers, contracts, records, statement of accounts and other
documents as may be material to the investigation conducted by the Commission.
(f) To hold any person in direct or indirect contempt and impose the appropriate penalties,
following the same procedures and penalties provided in the Rules of Court.
(g) To seek and secure the assistance of any office agency or instrumentality of the government.
(h) To promulgate such rules and regulations as may be necessary to carry out the purposes of this
order.
The Court in Cojuangco, Jr. v. PCGG[67] simplified these powers in this wise:
From the foregoing provisions of law, it is clear that the PCGG has the following powers and
authority:
1. To conduct an investigation including the preliminary investigation and prosecution of the ill-
gotten wealth cases of former President Marcos, relatives and associates, and graft and corruption
cases assigned by the President to it;
2. Issue sequestration orders in relation to property claimed to be ill-gotten;
3. Issue freeze orders prohibiting persons in possession of property alleged to be ill-gotten from
transferring or otherwise disposing of the same;
4. Issue provisional takeover orders of the said property;
5. Administer oaths and issue subpoenas in the conduct of investigation;
6. Hold any person in direct or indirect contempt and impose the appropriate penalties as provided
by the rules.
Neither can it be validly argued by the PCGG that its authority to issue a search and seizure order
possessing the essential features of a search warrant is derivable from subparagraphs (b) and (c) of
Section 3 of E.O. No. 1 or from No. 4 of the simplified enumeration in the Cojuangco case, by
implication. Baseco has clarified once and for all the essential nature of the provisional measures of
sequestration, freeze orders and provisional takeover that the PCGG is explicitly equipped with:
As thus described, sequestration, freezing and provisional takeover are akin to the provisional
remedy of preliminary attachment, or receivership. By attachment, a sheriff seizes property of a
defendant in a civil suit so that it may stand as security for the satisfaction of any judgment that may
be obtained, and not disposed of, or dissipated, or lost intentionally or otherwise, pending the
action. By receivership, property, real or personal, which is subject of litigation, is placed in the
possession and control of a receiver appointed by the Court, who shall conserve it pending final
determination of the title or right or possession over it. All these remedies- sequestration, freezing,
provisional takeover, attachment and receivership-are provisional, temporary, designed for
particular exigencies, attended by no character or permanency or finality, and always subject to the
control of the issuing court or agency.
Attachment and receivership are legal processes purely conservatory in character, not involving an
active and drastic intrusion into and confiscation of properties as what a search warrant (or search
and seizure order) necessarily entails. All processes that the PCGG is allowed to issue in discharging
the duty for which it was created, therefore, ought to be viewed strictly in this context. And this
finds further support in Philippine Coconut Producers Federation, Inc. [COCOFED] v.
PCGG[68] where the Court stressed anew that:
The question of the validity of PCGG sequestration and freeze orders as provisional measures to
collect and conserve the assets believed to be ill-gotten wealth has been laid to rest in
BASECO vs. PCGG (150 SCRA 181) where this Court held that such orders are not confiscatory but
only preservative in character, not designed to effect a confiscation of, but only to
conserve_properties believed to be ill-gotten wealth of the ex-president, his family and associates,
and to prevent their concealment dissipation, or transfer, pending the determination of their true-
ownership. (Italics supplied)
Being in fact a search warrant, the SEARCH AND SEIZURE ORDER cannot escape, and must
pass, the acid test for validity as provided by the prevailing constitution under which it was issued -
the FREEDOM CONSTITUTION which adopted verbatim the provision of the 1973 Constitution
(Section 3, Article IV) relating to search warrants, to wit:
The right of the people to be secure in their persons, houses, papers, and effects against
unreasonable searches and seizures of whatever nature and for any purpose shall not be violated,
and no search warrant or warrant of arrest shall issue except upon probable cause to be determined
by the judge, or such other responsible officer as may be authorized by law, after examination under
oath or affirmation of the complainant and the witnesses he may produce, and particularly
describing the place to be searched, and the person or things to be seized.
Supporting jurisprudence thus outlined the following requisites for a search warrants validity, the
absence of even one will cause its downright nullification:
(1) it must be issued upon probable cause;
(2) the probable cause must be determined by the judge himself and not by the applicant or any
other person;
(3) in the determination of probable cause, the judge must examine, under oath or affirmation, the
complainant and such witnesses as the latter may produce; and
(4) the warrant issued must particularly describe the place to be searched and persons or things to
be seized.[69]
In addition to its unauthorized issuance (as just discussed), the SEARCH AND SEIZURE
ORDER is so constitutionally defective.
Firstly, as it suffered from the same inherent weakness or emptiness as that which marred dr.
Doromals testimony (as earlier discussed extensively). deceased Commissioner Bautistas in-court
declarations did not in any way establish probable cause which has been consistently defined as:
x x x such facts and circumstances which would lead a reasonably discreet and prudent man to
believe that an offense has been committed, and that objects sought in connection with the offense
are in the place sought to be searched. This probable cause must be shown to be within the personal
knowledge of the complainant or the witnesses he may produce and not based on mere hearsay. [70]
This is so because, as what her testimony irresistibly suggested, the purported facts and
circumstances supporting the order are exclusively traceable from documents she identified but
which were never formally offered in evidence in the SANDIGANBAYAN. She never testified to any
fact of her own personal knowledge to bolster the PCGGs claim that ALLIED was in possession and
control of illegally-amassed wealth by Lucio Tan. Her testimony, therefore, is plain hearsay, self-
serving, or uncorroborated suspicion. And the rule is that search warrants are not issued on loose,
vague or doubtful basis of fact, nor on mere suspicion or belief.[71]
Secondly, the PCGG has no authority to issue the order in the first place. Only a judge and such
other responsible officer as may be authorized by law were empowered by the FREEDOM
CONSTITUTION to do so, and the PCGG is neither. It is not a judge, as clarified by the Court
in Baseco, to wit:
It should also by now be reasonably evident from what has thus far been said that the PCGG is not,
and was never intended to act as, judge. Its general function is to conduct investigations in order
to collect evidence establishing instances of ill-gotten wealth; issue sequestration, and such orders as
may be warranted by the evidence thus collected and as may be necessary to preserve and conserve
the assets of which it takes custody and control and prevent their disappearance, loss or dissipation;
and eventually file and prosecute in the proper court of competent jurisdiction all cases investigated
by it as may be warranted by its findings. It does not try and decide, or hear and determine, or
adjudicate with any character of finality or compulsion, cases involving the essential issue of
whether or not property should be forfeited and transferred to the State because ill-gotten within
the meaning of the Constitution and the executive orders. This function is reserved to the
designated court, in this case, the Sandiganbayan.There can therefore be no serious regard accorded
to the accusation, leveled by BASECO, that the PCGG plays the perfidious role of prosecutor and
judge at the same time. (Italics supplied.)
And the PCGG cannot be considered as such other responsible officer as may be
authorized by law because Executive Order No. 1, to reiterate, did not expressly nor impliedly
grant the PCGG the power to issue search warrants/orders.
Thirdly, the order does not provide a specification of the documents sought to be
searched/seized from ALLIED. The body thereof, to quote again, reads:
By virtue of the powers vested in the Commission by the President of the Republic of
the Philippines, you are hereby directed to submit for search and seizure all bank documents in the
aforementioned premises which our representative may find necessary and relevant to the
investigation being conducted by this Commission.
xxx xxx xxx
It expressly refers to all bank documents which is too all-embracing, the obvious intent of
which is to subject virtually all records pertaining to all business transactions of ALLIED of
whatever nature, to search and seizure. Such tenor of a seizure warrant is not a particular
description,[72] thus contravening the explicit command of the Constitution that there be a particular
description of things to be seized.[73] Being a general warrant, the SEARCH AND SEIZURE ORDER is
constitutionally objectionable[74] and to be more precise, void for lack of particularity [75] We end our
discussion on this matter with the Courts admonition in People v. Veloso.[76]
A search warrant must conform strictly to the requirements of the constitutional and statutory
provisions under which it was issued. Otherwise, it is void. The proceedings upon search warrants,
it has rightly been held, must be absolutely legal, for there is not a description of process known to
the law, the execution of which is more distressing to the citizen. Perhaps there is none which
excites such intense feeling in consequence of its humiliating and degrading effect. The warrant will
always be construed strictly without, however, going the full length of requiring technical
accuracy. No presumptions of regularity are to be invoked in aid of the process when an officer
undertakes to justify under it.
The third key issue should therefore be answered in the affirmative, i.e., the nullification of
the sequestration and search and seizure orders was in order.
The last key issue involves another constitutional imperative - i.e., that the corresponding suit
or suits against a sequestered entity of entities should be brought in the proper court, the
Sandiganbayan to be precise, [77] within the prescribed period - failure of which automatically lifts
the sequestration order or orders issued. Up for determination is whether under the factual features
of the case, there was compliance with this rule as professed by the PCGG, or non-observance
thereof, as argued and declared by respondent corporations and the SANDIGANBAYAN,
respectively. Stress should be given to the fact that the Courts resolution of this crucial issue would
particularly apply to SIPALAY inasmuch as it involves a sequestration order - not to ALLIED against
whom was issued a search and seizure order that we have just heretofore declared as
void. Nonetheless, for simplicitys sake, such resolution can be made to cover ALLIEDs case as
well. We thus forego with the distinction in this instance and assume that ALLIED was sequestered
via sequestration order similar to that issued against SIPALAY.
At the fore once again in Section 26, Article XVIII of the 1987 Constitution, specifically the
second and third paragraphs:
Section 26.
xxx xxx xxx
A sequestration or freeze order shall be issued only upon showing of a prima facie case. The order
and the list of the sequestered or frozen properties shall forthwith be registered with the proper
court. For orders issued before the ratification of this Constitution, the corresponding judicial action
or proceeding shall be filed within six months from its ratification. For those issued after such
ratification, the judicial action or proceeding shall be commenced within six months from the
issuance thereof.
The sequestration or freeze order is deemed automatically lifted if no judicial action or proceeding
is commenced as herein provided.
And here are the relevant and undisputable facts: The 1987 Constitution was ratified on February 2,
1987. Counting six (6) months therefrom, August 2, 1987 was the constitutional deadline for the
PCGG to file the corresponding judicial action/proceeding against entity or entities it sequestered
prior to February 2, 1987. Among such entity or entities were SIPALAY and ALLIED, the dates of
their sequestration as appearing from the corresponding orders issued against them are July 14,
1986 and August 13, 1986, respectively. The PCGG admittedly did not file any direct complaint
either against SIPALAY or ALLIED before the SANDIGANBAYAN between February 2 and August 2
of 1987. But within such period, specifically on July 17, 1987, the PCGG filed before the
SANDIGANBAYAN a civil case against Lucio Tan and others, for Revision, Reconveyance, Restitution,
Accounting and Damages, docketed as CC No. 0005.[78] The original complaint in CC No. 0005 did not
name SIPALAY and ALLIED as defendants, as it enumerated only natural persons, except for
one,[79] as such. SIPALAY and ALLIED were impleaded as defendants in CC No. 0005 for the first time
only after the lapse of more than four (4) years from the filing of the original complaint in July of
1987, under an amended complaint filed by the PCGG in September of 1991.
Given this factual backdrop, two propositions are being bruited by the PCGG:
1) that the July 17, 1987 original complaint against Lucio C. Tan, et. al. (CC No. 0005) is the judicial
action required by the 1987 Constitution to justify the continued sequestration of SIPALAY (and
ALLIED), and
2) even assuming arguendo that such original complaint was defective for not naming therein
SIPALAY and ALLIED as defendants, still there was faithful compliance with the constitutional
mandate, since the September, 1991 amended complaint impleading SIPALAY and ALLIED as
defendants - even when filed beyond the August 2, 1987 deadline - retroacted to July 17, 1987
which, thus, cured the defect.
Both propositions have to be rejected.
As to the first, the SANDIGANBAYAN correctly struck it down by following the doctrine laid
down in PCGG v. International Copra Export Corporation, Interco Manufacturing Corporation
and Sandiganbayan[80] (INTERCO case, for short). We thus quote with approval the pertinent
disquisitions, to wit:
x x x On not a few occasions, the Court has sustained the merit and logic of motions seeking the
lifting of writs of sequestration for respondent PCGGs failure to institute the corresponding judicial
action or proceeding against corporations which, either through sheer oversight or gross neglect,
have not been expressly impleaded in the various civil complaints filed before this Court. The case of
PCGG v. International Copra Export Corporation, et. al. (INTERCO case) is illuminating on this point.
Therein, the Supreme Court made a distinction between the judicial personalities of a corporation
and its stockholders, ruling that if a corporation is not impleaded, it cannot be deemed to have been
sued in an action against its stockholders.
A perusal of the original complaint in Civil Case No. 0005, which was concededly filed within the six-
month period provided for under the organic law, reveals that petitioner Sipalay Trading was not
specifically impleaded therein as party-defendant, either in a nominal or principal capacity. If at all,
the latter has been included therein as part of principal defendants ill-gotten assets. Under Rule 3,
Section 7 of the Rules of Court, (P)arties in interest without whom no final determination can be had
of an action shall be joined either as plaintiffs or defendants.
It bears emphasis along this vein that, as implied from INTERCO, petitioner Sipalay Trading has a
juridical personality separate and distinct from its stockholders. As such, any civil charge filed
against principal defendant Lucio C. Tan and/or his dummies or agents is not deemed a suit against
the former. Neither does mere inclusion in the list of ill-gotten assets as part of principal defendants
ill-gotten wealth suffice to comply with the constitutional injunction. Impleading a party means
bringing the suit against it. Listing or annexing it to the complaint, on the other hand, implies being
the object of the action.
xxx xxx x x x
It must be stated with equal respect that the phrase judicial action or proceeding, within the
meaning of the organic law, is subject to the ordinary rules of procedure and is subordinate to the
requirements of due process. Failure to implead petitioner corporation in the action within the
constitutional period is, therefore, patently transgressive of the constitutional mandate against
deprivation of life, liberty and property without due process of law. [81]
To fortify this ruling, we need only to point out the similarity in factual antecedents obtaining
in INTERCO and the instant case. In INTERCO, no judicial action or proceeding was instituted by the
PCGG directly against respondent corporations therein (International Copra Export and
International Manufacturing) which it sequestered on June 10, 1987 purportedly upon a prima
facie finding that certain shares of stocks in those corporations are beneficially owned but were
acquired with ill-gotten wealth by Eduardo Cojuangco, Jr., within six (6) months from the date of
their sequestration - i.e., between June 10, 1987 and December 10, 1987. And the PCGG
in INTERCO likewise filed a complaint before the SANDIGANBAYAN on July 31, 1987against
Eduardo Cojuangco, Jr., among others (Civil case No. 0033) without, however, impleading
respondent corporations as parties-defendants. The Court in INTERCO rejected the PCGGs
contention that the July 31, 1987 complaint against Cojuangco, Jr., et. al. was substantial compliance
with the requirement under Section 26, Article XVIII of the 1987 Constitution, by upholding very
fundamental principles in corporation law:
In this jurisdiction, a corporation has a legal personality .distinct and separate from its
stockholders. Thus a suit against any of the stockholders is not ipso facto a suit against the
corporation.
xxx xxx xxx
There is likewise no merit to petitioners argument that the doctrine which justifies the piercing of
the veil of corporate fiction is applicable to the case at bar. The Sandiganbayan correctly found the
record bereft of sufficient basis from which to conclude that private respondents respective
corporate identities have been used to defeat public convenience, protect fraudulent schemes, or
evade obligations and liabilities under statutes. Whether or not Enrique Luy, a major stockholder of
private respondents, acted as a dummy of Eduardo Cojuangco, Jr., and whether or not the
shareholders of Enrique Luy are beneficially owned by Eduardo Cojuangco, Jr., are matters still to be
established in Civil Case No. 0033. But as far as private respondents are concerned, inclusion of their
major stockholder in Civil Case No. 0033 does not detract from, nor excuse, petitioners failure to file
the proper judicial action against them in compliance with the constitutional requirement under
Section 26 of Article XVIII.
And following the rule, elsewise stated, that cases circumstanced identically should be resolved
consistently, adherence to the ruling of the Court in INTERCO is necessary and inescapable.
Regarding its second proposition, the PCGG erroneously relies on Pangasinan
Transportation Co. v. Philippine Farming Co., Ltd.[82] where it was ruled to the effect that:
Where the original complaint states a cause of action, but does it imperfectly, and afterward an
amended complaint is filed, correcting the defect, the plea of statute of limitations will relate to the
time of filing the original complaint.
The Pangasinan case dealt solely with a defect in the cause of action stated in the original
complaint filed by therein petitioner Pangasinan Transport against its competitor, respondent
Philippine Farming before the Public Service Commission for illegal reduction of rates - i.e., non-
specification of the acts constituting the offense. It did not in any way involve a failure to implead a
party-defendant which is an entirely different thing from a defective cause of action. The scope of
the retroactive and curative effect of an amended complaint as declared in Pangasinan therefore
ought not be broadened so as to cover infirmities in the original complaint other than amendable
imperfections in a cause of action. In fact, insofar as the failure to implead a party or parties in the
original complaint is specifically concerned, the Court on at least two occasions said that the rule
in Pangasinan would not apply to the party impleaded for the first time in the amended complaint.
These are the cases of Aetna Insurance Co. v. Luzon Stevedoring Corporation[83] and Seno, et. al.,
v. Mangubat, et. al.[84] cited by herein SIPALAY and ALLIED in their Comment. In Aetna, the
amended complaint filed by therein appellant Aetna Insurance Co. as plaintiff before the then CFI of
Manila impleading Barber Line Far East Service as defendant for the first time, was filed beyond the
one-year period fixed in the Carriage of Goods by Sea Act. In Seno, one Andres Evangelista and
Bienvenido Mangubat were likewise impleaded as defendants for the first time under an amended
complaint filed beyond the ten-year period required under Article 1144 of the New Civil Code
within which to bring an action upon a written contract. And in both cases, the Court affirmed the
dismissal of the complaints against these newly impleaded defendants by refusing the application of
the Pangasinan ruling and decreeing that the amended complaints did not stall the running of the
prescription periods provided under the applicable laws. Bearing once again similar factual features
as the Aetna and Seno cases, this particular sub-issue should, perforce, be resolved in accordance
therewith.
This Court is, of course, fully aware of that very recent case of Republic v. Sandiganbayan, et
al., 240 SCRA 376 [January 23, 1995], where its Final Dispositions relating to the judicial
action/proceeding in sequestration cases appear to clash with INTERCO. In resolving what
appeared to be the crucial question involved in that 1995 Republic v. Sandiganbayan case, to wit:
DOES INCLUSION IN THE COMPLAINTS FILED BY THE PCGG BEFORE THE SANDIGANBAYAN OF
SPECIFIC ALLEGATIONS OF CORPORATIONS BEING DUMMIES OR UNDER THE CONTROL OF ONE
OR ANOTHER OF THE DEFENDANTS NAMED THEREIN AND USED AS INSTRUMENTS FOR
ACQUISITION, OR AS BEING DEPOSITARIES OR PRODUCTS, OF ILL-GOTTEN WEALTH; OR THE
ANNEXING TO SAID COMPLAINTS OF A LIST OF SAID FIRMS, BUT WITHOUT ACTUALLY
IMPLEADING THEM AS DEFENDANTS, SATISFY THE CONSTITUTIONAL REQUIREMENT THAT IN
ORDER TO MAINTAIN A SEIZURE EFFECTED, IN ACCORDANCE WITH EXECUTIVE ORDER NO. 1, s.
1986, THE CORRESPONDING JUDICIAL ACTION OR PROCEEDING SHOULD BE FILED WITHIN THE
SIX-MONTH PERIOD PRESCRIBED IN SECTION 26, ARTICLE XVIII, OF THE (1987) CONSTITUTION?
the Court made these conclusions:
It is thus both needful and timely to pronounce that:
1) Section 26, Article XVIII of the Constitution does not, by its terms or any fair interpretation
thereof, require that corporations or business enterprises alleged to be repositories of ill-gotten
wealth, as the term is used in said provision, be actually and formally impleaded in the actions for
the recovery thereof, in order to maintain in effect existing sequestrations thereof;
2) complaints for the recovery of ill-gotten wealth which merely identify and/or allege said
corporations or enterprises to be the instruments, repositories or the fruits of ill-gotten wealth
without more, come within the meaning of the phrase corresponding judicial action or proceeding
contemplated by the constitutional provision referred to; the more so, that normally, said
corporations, as distinguished from their stockholders or members, are not generally suable for the
latters illegal or criminal actuations in the acquisition of the assets invested by them in the former.
3) even assuming the impleading of said corporations to be necessary and proper so that judgment
may comprehensively and effectively be rendered in the actions, amendment of the complaints to
implead them as defendants may, under existing rules of procedure, be done at any time during the
pendency of the actions thereby initiated, and even during the pendency of an appeal to the
Supreme Court - a procedure that, in any case, is not inconsistent with or proscribed by the
constitutional time limits to the filing of the corresponding complaints for - i.e., with regard or in
relation to, in respect of or in connection with, or concerning - orders or sequestration, freezing, or
provisional takeover.
These fresh pronouncements, however did not reverse, abandon or supplant INTERCO. What
the Court did was to explain the two apparently colliding dispositions by making this hairline, but
critical, distinction:
XVI. The Interco and PJI Rulings
This Court is not unmindful of the fact that its Resolution-of July 26, 1991 on the petitioners motion
for reconsideration in G.R. No. 92755 (PCGG vs. Interco) appears to sustain the proposition that
actual impleading in the recovery action of a corporation under sequestration for being a repository
of illegally-acquired wealth, is necessary and requisite for such proposed or pending seizure to
come under the protective umbrella of the Constitution. But Interco is to be differentiated from the
cases now under review in that in the former, as already elsewhere herein made clear, there was a
lack of proof, even of the prima facie kind, that Eduardo Cojuangco, Jr. owned any stock in Interco,
the evidence on record being in fact that said corporation had been organized as a family
corporation of the Luys.
So, too, this Courts judgment in the so-called PJI Case (Republic of the Philippines [PCGG] v.
Sandiganbayan and Rosario Olivares) may not be regarded as on all fours with the cases under
consideration.The PJI Case involved the shares of stock in the name of eight (8) natural persons
which had never been sequestered at all. What happened was that the PCGG simply arrogated unto
itself the right to vote those unsequestered shares on the bare claim that the eight (8) registered
owners thereof were dummies of Benjamin Romualdez, the real owner of the shares; and all that the
PCGG had done as predicate for that act of appropriation of the stock, was to include all the shares of
PJI in a list (Annex A) appended to its complaint in Sandiganbayan Case no. 0035, describing them
as among the properties illegally acquired by Romualdez. Unfortunately, as in Interco, the PCGG
failed to substantiate by competent evidence its theory of clandestine ownership of Romualdez; and
since moreover, there had been no sequestration of the alleged dummies shares of stock, it was
undoubtedly correct for the Sandiganbayan to grant the latters motion for them to be recognized
and declared as the true owners of the stock in question, which judgment this Court subsequently
pronounced to be free from grave abuse of discretion. [85]
We need only to recall at this juncture that, as in INTERCO, evidence of the PCGG is nil to even come
up with a prima facie case against SIPALAY (and ALLIED). This similitude is the one decisive factor
that draws the instant case away from the Final Dispositions made by the Court in the
1995 Republic v. Sandiganbayan case - thus making INTERCO, as supported by
the Aetna and Seno cases, the controlling precedent. The principle of Stare Decisis, indeed, is most
compelling, for when the court has once laid down a principle of law as applicable to a certain state
of facts, it will adhere to that principle and apply it to all future cases where the facts are
substantially the same.[86] And it is in this light that Mr. Justice Padillas lone Dissent in the
1995 Republic v. Sandiganbayan case becomes meaningfully relevant, to wit:
x x x failure to implead these corporations as defendants and merely annexing a list of such
corporations to the complaints is a violation of their right to due process for it would in effect be
disregarding their distinct and separate personality without a hearing.
In cases where stocks of a corporation were allegedly the fruits of ill-gotten wealth, it should be
remembered that in most of these cases the stocks involved constitute a substantial if not
controlling interest in the corporations. The basic tenets of fair play demand that these corporations
be impleaded as defendants since a judgment in favor of the government will undoubtedly
substantially and decisively affect the corporations as distinct entities. The judgment could strip
them of everything without being previously heard as they are not parties to the action in which the
judgment is rendered.
x x x Holding that the corresponding judicial action or proceeding contemplated by the Constitution
is any action concerning or involving the corporation under sequestration is oversimplifying the
solution, the result of which is antagonistic to the principles of justice and fair play.
x x x the actions contemplated by the Constitution should be those which include the corporation not as
a mere annex to the complaint but as defendant. This is the minimum requirement of the due process
guarantee. Short of being impleaded, the corporation has no standing in the judicial action. It cannot
adequately defend itself. It may not even be heard.
On the x x x opinion that alternatively the corporations can be impleaded as defendants by
amendment of the complaint, Section 26, Article XVIII of the Constitution would appear to preclude
this procedure, for allowing amendment of the complaint to implead therefore unimpleaded
corporations would in effect allow complaints against the corporations to be filed beyond the periods
fixed by said Section 26.

Justice Amuerfina Melencio-Herrera in her separate opinion in Bataan Shipyard and Engineering
Corporation, Inc. v. PCGG (150 SCRA 181, 253) correctly stated what should be the rule, thus:

Sequestration is an extraordinary, harsh and severe remedy. It should be confined to its lawful
parameters and exercised, with due regard, in the words of its enabling laws, to the requirements
of fairness, due process and Justice. (Italics supplied)

While government efforts to recover illegally amassed wealth should have support from all its
branches, eagerness and zeal should not be allowed to run berserk, overriding in the process the
very principles that it is sworn to uphold. In our legal system, the ends do not always justify the
means. Wrongs are never corrected by committing other wrongs, and as above-discussed the
recovery of ill-gotten wealth does not and should never justify unreasonable intrusions into
constitutionally forbidden grounds x x x.

In answer therefore to the last key issue, we hold that the sequestration and the search and seizure
orders issued were indeed automatically lifted.

Finally, the PCGG in its Reply raises as additional issue the bias and partiality of the now-assailed
decisions ponente and Chairman of the SANDIGANBAYANs SECOND DIVISION, Justice Romeo
Escareal. To bolster this charge, the PCGG harps on alleged prejudicial acts committed by Justice
Escareal affecting CC No. 0005 - the case filed against Lucio C. Tan, and the instant case (S.B. Nos.
0095 against SIPALAY and 0100 against ALLIED).

This issue deserves no merit at all. Firstly, the PCGGs complaints against Justice Escareals
purported bias and partiality in CC No. 0005 have no bearing whatsoever to the instant case. That
should be ventilated and passed upon there, not her. And secondly, SIPALAY and ALLIED in their
Rejoinder meritoriously parried the PCGGs accusation by arguing that:

1.02. Petitioner apparently overlooks that the Sandiganbayan is a collegiate court which sits in
divisions composed of three (3) members each. The unanimous vote of all the three (3) members of
a division is required for the rendition of a judgment (See Section 1(b), Rule XVIII, Revised Rules of
the Sandiganbayan). The Decision and Resolution subject of the present - appeal, though penned by
Justice Romeo Escareal, the Chairman of the Second Division of the Sandiganbayan, were concurred
in by the two (2) other members of the Sandiganbayans Second Division. Such being the case,
petitioners fears of bias or partiality on the part of Justice Romeo Escareal cannot affect the
questioned Decision and Resolution rendered by the Sandiganbayan (Second Division). As held by
this Honorable Court in Mirriam Defensor-Santiago vs. Hon. Justice Francis Garchitorena, Et Al. (G.R.
No. 109226, December 2, 1993):

Notwithstanding petitioners misgiving, it should be taken into consideration that the

Sandiganbayan sits in three divisions with three justices in each division. Unanimity among the
three members is mandatory for arriving at any decision of a division. (P.D. 1606, Sec. 5). The
collegiate character of the Sandiganbayan thus renders baseless petitioners fear of prejudice and
bias on the part of Presiding Justice Garchitorena (Paredes vs. Gopenco, 29 SCRA 688 [1969]).

WHEREFORE, the petition is hereby DISMISSED.

SO ORDERED.
 [G.R. No. 120704. March 3, 1997]
HON. BARTOLOME C. CARALE,
Chairman, National Labor Relations Commission (NLRC), HON. IRENEA A. CENIZA,
Presiding Commissioner, Fourth Division, NLRC, and HON. REYNOSO
A. BELARMINO, Executive Labor Arbiter, Regional Arbitration Branch, Region
VII, petitioners, vs. HON.PAMPIO A. ABARINTOS, Presiding Judge, Regional Trial
Court, Branch 22, Cebu City, and FERDINAND V. PONTEJOS, respondents.
DECISION
DAVIDE, JR., J.:
Did respondent Judge Pampio A. Abarintos commit grave abuse of discretion amounting to
lack or excess of jurisdiction when he: (1) denied the petitioners motions to dismiss the complaint
filed by respondent Ferdinand V. Pontejos (hereinafter PONTEJOS) to declare null and void an
Administrative Order of petitioner Carale, as Chairman of the National Labor Relations Commission
(NLRC) (hereinafter CARALE), detailing Pontejos to the Fourth Division of the NLRC in Cebu City;
and the motion to reconsider the order of denial; and then (2) granted the application for a writ of
preliminary injunction?
This is the key issue raised in this petition.
The relevant factual antecedents summarized in the petition are as follows:
9. Private respondent Pontejos was issued an original and permanent appointment
dated January 10, 1989 as Labor and Employment Development Officer (RAB VII)
in the National Labor Relations Commission with a salary of P36,864.00 per annum
under Title No. 211-10 of the Appropriations Act R.A. 6642. In 1992, the aforesaid
position was reclassified as Labor Arbitration Associate with compensation
of P99,000.00 per annum or rank at salary grade 22, retroactive to June 30,
1989. Private respondent holds this position up to the present.
10.On 03 October 1994, petitioner Chairman of the NLRC, issued Administrative Order
No. 10-03 series of 1994, detailing/reassigning private respondent to the NLRC,
Fourth Division, Cebu City, effective October 17, 1994. Said Order reads:
ADMINISTRATIVE ORDER NO. 10-03
(Series of 1994)
In the interest of the service, Mr. Ferdinand Pontejos, Labor Arbitration
Branch No. VII, is hereby detailed to the Fourth Division, Cebu City, effective
October 17, 1994, until further orders from the undersigned.
Mr. Pontejos is directed to wind up his pending work and thereafter report
to the Presiding Commissioner Irene E. Ceniza for instruction regarding his
new assignment.
Manila, October 3, 1994.
(SGD) BARTOLOME S.
CARALE
Chairma
n
11.Similar personnel actions, prior to and after Pontejos reassignment to NLRC, Cebu
City, were also effected by petitioner Carale pursuant to his exercise of
administrative authority and supervision over all NLRC officials and employees....
12.On 24 October 1994, private respondent filed a complaint before the Regional Trial
Court of Cebu City against herein petitioners for Illegal Transfer Tantamount To
Removal Without Cause In Gross Violation Of The Security Of Tenure Afforded
Under The Constitution And In Utter Disregard Of The Civil Service Rules and
Regulations, Republic Act 6715, with Prayer For The Issuance Of A Writ Of
Preliminary Injunction and/or Preliminary Mandatory Injunction With
Damages. The case was docketed as Civil Case No. CEB-16671....
13.Motions to dismiss dated November 8, 1994 and November 15, 1994, were
respectively filed by petitioner Ceniza and Carale, arguing that it is the Civil Service
Commission which has exclusive jurisdiction over any question concerning
personnel movement....
14.A Supplemental Motion to Dismiss dated November 21, 1994 was filed by petitioner
Belarmino arguing that the questioned administrative order is in the nature of a
detail and the civil service employee who is not satisfied with or aggrieved by such
detail may appeal the matter before the Civil Service Commission....
15.On December 20, 1994, respondent judge issued the first questioned order denying
petitioners Motions to Dismiss holding that alleged non-exhaustion of
administrative remedies before where the surrounding circumstances of the
matter before this Court indicate an urgency of judicial intervention....
16.In the same Order, respondent judge also granted the prayer for preliminary
injunction restraining petitioners from implementing the transfer order....
17.A motion for reconsideration dated January 9, 1995 was filed by petitioner
Belarmino which was denied in the second questioned order dated February 7,
1995....
18.On 06 March 1995, Jeoffrey S. Joaquino, Clerk of Court VII, pursuant to respondent
judges order dated December 20, 1994, issued a writ of injunction enjoining herein
petitioners from unduly interfering with and/or obstructing private respondent
Pontejos lawful discharge of his duties and functions as such Labor Arbitration
Associate, until further orders from respondent judge. The writ of injunction was
received by petitioner Carale on March 21, 1995.... [1]
Pontejos complaint in Civil Case No. CEB-16671 suggested that the uncordial relationship
between himself, as president of the Unified Employees Union of the NLRC, RAB VII, and Chairman
of the NLRC-RAB-VII Multi-Purpose Cooperative, and petitioners Presiding Commissioner Ceniza
and Executive Labor Arbiter Belarmino, against whom the petitioner had earlier filed a petition
for certiorari with this Court and a complaint for harassment and intimidation, respectively, had
something to do with his detail to the Fourth Division of the NLRC. Pontejos alleged as there was no
position of Labor Arbitration Associate in that Division, the detail order was maliciously resorted to
as a scheme to lure [him] away from his permanent position, thereby violating his security of
tenure; and described it as an act of vindictiveness against him and was patently illegal, malicious,
arbitrary and an exercise of grave abuse of discretion in excess of jurisdiction. [2] To justify his direct
resort to the court, Pontejos alleged that [t]here is no other available and speedy remedy in order to
protect [his] interest than to resort to this Honorable Court; that the urgency of judicial intervention
is an exception to the rule of exhaustion of administrative remedies, [3] not to mention the fact that
the administrative act in question is patently illegal.[4] To support his application for a writ of
preliminary injunction and/or restraining [order], Pontejos alleged that:
11.[He] is entitled to the relief demanded and the whole or part of such relief consists
in RESTRAINING OR PREVENTING the defendants, their agents and all persons
acting for or in their behalf, from enforcing and implementing the questioned
Administrative Order No. 10-03, Series of 1994;
12.The commission of the continuance of the acts complained of during the litigation or
the non-performance thereof, could probably work grave injustice to the plaintiff
... so that the defendants ...must be enjoined by a restraining order from
implementing and/or enforcing the ... questioned Administrative Order;
13.[He] is willing to post a bond executed to he defendants enjoined, in an amount to be
fixed by the court, to the effect that [he] will pay to such party all damages which
they [sic] may sustain by reason of the injunction if the court should finally decide
that the plaintiff is not entitled thereto.[5]
Pontejos further asserted that the petitioners had acted with gross and evident bad faith, and
by their conduct, have violated all forms of good human conduct and dealings and did not exhibit
any degree of good faith, honesty and propriety, as a consequence of which he has suffered mental
anxiety, sleepless nights, wounded feelings and moral shock; and had displayed anti-social acts and
conduct, contrary to the tenents [sic] enunciated in the Preliminary Title in Human relations found
in Articles 19 and 20 of the Civil Code of the Philippines. On account thereof, he prayed for the
award of P100,000.00 as moral damages; P50,000.00 as exemplary damages; P30,000.00 as
attorneys fees; and P5,000.00 as litigation expenses.[6]
In the challenged order of 20 December 1994, the trial court, in dismissing the petitioners
motions to dismiss, ruled that the only effect of non-compliance with the rule on exhaustion of
administrative remedies is that it will deprive the complainant of a cause of action; it does not affect
the jurisdiction of the court. Since the factual allegations of the complaint satisfactorily meet the test
of sufficiency of the complaint insofar as cause of action is concerned, the complaint was not
dismissible.
In the challenged resolution of 7 February 1995 denying the petitioners motion to reconsider
the order of 20 December 1994, the trial court further held that the case before it fell within one of
the exceptions to the rule on exhaustion of administrative remedies, namely, where the question to
be settled is whether the controverted act of respondent Commissioner Carale was performed with
grave abuse of discretion.[7]
In this special civil action for certiorari, the petitioners assert that:
I implementing or enforcing Carales Administrative Order 10-03, Series of 1994.
RESPONDENT JUDGE HAS NO JURISDICTION TO REVIEW THE VALIDITY OF THE TRANSFER
ORDER ISSUED BY PETITIONER CHAIRMAN OF THE NATIONAL LABOR RELATIONS COMMISSION
SINCE THE CONTROVERSY IS WITHIN THE ORIGINAL AND EXCLUSIVE JURISDICTION OF THE
CIVIL SERVICE COMMISSION.
II
THE RESPONDENT JUDGE HAS NO JURISDICTION TO TAKE COGNIZANCE OF THE COMPLAINT
FILED AGAINST PETITIONERS AS IT CONSTITUTES A SUIT AGAINST THE STATE WITHOUT ITS
CONSENT.
III
THE PETITIONERS WERE NOT REPRESENTED IN THE TRIAL COURT BY THEIR STATUTORY
COUNSEL, THE OFFICE OF THE SOLICITOR GENERAL, HENCE THE PROCEEDINGS HAD THEREIN IS
A NULLITY.
As to the first ground, the petitioners maintain that being a permanent civil service employee,
Pontejos is subject to civil service laws and regulations pursuant to Subsection 1(1), Section 8-B,
Article IX-A of the Constitution. His grievance concerning Carales administrative order detailing him
to the Fourth Division of the NLRC should have been raised in an appropriate complaint before the
Merit Systems and Protection Board (MSPB) created under P.D. No. 1409, whose functions,
pursuant to Civil Service Commission (CSC) Resolution No. 93-2387, have been transferred directly
to the CSC itself. The petitioners further claim that there is no factual or legal basis indicative of the
urgency of judicial intervention to justify the trial courts assumption of jurisdiction over this case
and to order the issuance of the questioned writ of preliminary injunction.
Anent the second ground, the petitioners, citing Veterans Manpower and Protective Service,
Inc. v. Court of Appeals,[8] submit that Pontejos complaint, which asked for a writ of injunction and
damages, is in effect a suit against the State without its consent, hence, the petitioners, who are all
public officials, are immune from such suit.
In support of the third ground, the petitioners alleged that all throughout the proceedings
before the trial court, the petitioners were not represented by their statutory counsel, the Solicitor
General, whose authority is mandated under P.D. No. 478, the magna carta of the Office of the
Solicitor General (OSG).[9] Consequently, the questioned orders and the writ of preliminary
injunction were invalid.
In the 26 July 1995 resolution, we required the respondents to comment on the petition and
issued a temporary restraining order, effective as of the said date, which enjoined the respondents
from enforcing the orders of 20 December 1994 and 7 February 1995 issued in Civil Case No. CEB-
16671.
We resolved to give due course to the petition and required the parties to submit their
respective memoranda. However, only Pontejos complied, the Office of the Solicitor General failing
to despite two extensions of time. We denied on 20 November 1996 its third motion for extension of
time to file its Memorandum.
We find merit in the petition, but not necessarily on strength of the grounds raised.
The primary issue in this special civil action, as stated in the opening paragraph of
this ponencia, is whether the respondent Judge acted with grave abuse of discretion amounting to
lack of jurisdiction when he denied the motions to dismiss and the motion for reconsideration, and
granted the application for a writ of preliminary injunction to enjoin the petitioners from
I
The motions to dismiss separately filed in the trial court by petitioners Carale and Presiding
Commissioner Ceniza were principally anchored on lack of jurisdiction due to the failure of Pontejos
to exhaust administrative remedies. Obviously, the petitioners failed to appreciate that non-
exhaustion of administrative remedies is not jurisdictional. It only renders the action premature, i.e.,
the claimed cause of action is not ripe for judicial determination and for that reason a party has no
cause of action to ventilate in court.[10] Their motions to dismiss must then be understood to be
based on: (a) lack of jurisdiction; and (b) lack of cause of action for failure to exhaust administrative
remedies.
Observance of the mandate regarding exhaustion of administrative remedies is a sound
practice and policy. It ensures an orderly procedure which favors a preliminary sifting process,
particularly with respect to matters peculiarly within the competence of the administrative agency,
avoidance of interference with functions of the administrative agency by withholding judicial action
until the administrative process had run its course, and prevention of attempts to swamp the courts
by a resort to them in the first instance.[11] The underlying principle of the rule rests on the City, entitled Ferdinand V. Pontejos v. Hon. Bartolome C. Carale, et al., are hereby ANNULLED and
presumption that the administrative agency, if afforded a complete chance to pass upon the matter, SET ASIDE and respondent Judge Pampio A. Abarintos is hereby directed to forthwith issue an order
will decide the same correctly.[12] There are both legal and practical reasons for this principle. The DISMISSING the said case.
administrative process is intended to provide less expensive and more speedy solutions to
disputes. Where the enabling statute indicates a procedure for administrative review, and provides SO ORDERED.
a system of administrative appeal, or reconsideration, the courts, for reasons of law, comity and
convenience, will not entertain a case unless the available administrative remedies have been
resorted to and the appropriate authorities have been given an opportunity to act and correct the
errors committed in the administrative forum.[13]

Accordingly, the party with an administrative remedy must not merely initiate the prescribed
administrative procedure to obtain relief, but also pursue it to its appropriate conclusion before
seeking judicial intervention in order to give the administrative agency an opportunity to decide the
matter by itself correctly and prevent unnecessary and premature resort to the court.[14]

In the instant case, Pontejos did not attempt to seek administrative relief, which was both
available and sufficient. Initially, he could have asked for reconsideration of the detail order, failing
which, he could have gone directly to the CSC, through the MSPB, which is empowered to:

(2) Hear and decide cases brought before it by offices and employees who feel aggrieved by
the determination of appointing authorities involving ... transfer, detail,
reassignment and other personnel actions, as well as complaints against any officers
in the government arising from personnel actions of these officers or from violations
of the merit system....[15]

Nothing in the complaint in Civil Case No. CEB-16671 convinces us that Pontejos ever thought
of pursuing the available administrative remedies. Neither do we find sufficient basis for his
invocation of the exception to the rule on exhaustion of administrative remedies. What he offered
were nothing but vague and general averments that could best qualify as motherhood
statements. Further, they were unsupported by allegations of fact or law which would prima
facie bring his case within any of the accepted exceptions to the rule, namely: (1) where the
question is purely legal, (2) where judicial intervention is urgent, (3) when its application may cause
great and irreparable damage, (4) where the controverted acts violate due process, (5) failure of a
high government official from whom relief is sought to act on the matter, and (6) when the issue of
non-exhaustion of administrative remedies has been rendered moot.[16]

II

We do not likewise hesitate to rule that the respondent Judge committed grave abuse of
discretion when he granted the application for a writ of preliminary injunction without any notice of
hearing. The rule on preliminary injunction plainly provides that it cannot be granted without notice
to the defendant. Section 5, Rule 58 of the Rules of Court states, in part, as follows:

SEC. 5. Preliminary injunction not granted without notice. -- No preliminary injunction shall be
granted without notice to the defendant. If it shall appear from the facts shown by affidavits or by
verified complaint that great or irreparable injury would result to the applicant before the matter
could be heard on notice, the judge to whom the application for preliminary injunction was made,
may issue a restraining order to be effective only for a period of twenty days from date of
issuance. Within the said twenty-day period, the judge must cause an order to be served on the
defendant, requiring him to show cause, at a specified time and place, why the injunction should not
be granted, and determine within the same period whether or not the preliminary injunction shall
be granted and shall accordingly issue the corresponding order.... (underscoring supplied for
emphasis)

WHEREFORE, the instant petition is GRANTED. The assailed orders of 20 December 1994
and 7 February 1995 in Civil Case No. CEB-16671 of Branch 22 of the Regional Trial Court of Cebu
 [G.R. No. 111107. January 10, 1997]
LEONARDO A. PAAT, in his capacity as Officer-in-Charge (OIC), Regional Executive Director
(RED), Region 2 and JOVITO LAYUGAN, JR., in his capacity as Community
Environment and Natural Resources Officer (CENRO), both of the Department of
Environment and Natural Resources (DENR), petitioners, vs. COURT OF APPEALS,
HON. RICARDO A. BACULI in his capacity as Presiding Judge of Branch 2, Regional
Trial Court at Tuguegarao, Cagayan, and SPOUSES BIENVENIDO and VICTORIA DE
GUZMAN, respondents.
DECISION
TORRES, JR., J.:
Without violating the principle of exhaustion of administrative remedies, may an action
for replevin prosper to recover a movable property which is the subject matter of an administrative
forfeiture proceeding in the Department of Environment and Natural Resources pursuant to Section
68-A of P. D. 705, as amended, entitled The Revised Forestry Code of the Philippines?
Are the Secretary of DENR and his representatives empowered to confiscate and forfeit
conveyances used in transporting illegal forest products in favor of the government?
These are two fundamental questions presented before us for our resolution.
The controversy on hand had its incipiency on May 19, 1989 when the truck of private
respondent Victoria de Guzman while on its way to Bulacan from San Jose, Baggao, Cagayan, was
seized by the Department of Environment and Natural Resources (DENR, for brevity) personnel in
Aritao, Nueva Vizcaya because the driver could not produce the required documents for the forest
products found concealed in the truck. Petitioner Jovito Layugan, the Community Environment and
Natural Resources Officer (CENRO) in Aritao, Cagayan, issued on May 23, 1989 an order of
confiscation of the truck and gave the owner thereof fifteen (15) days within which to submit an
explanation why the truck should not be forfeited. Private respondents, however, failed to submit
the required explanation. On June 22, 1989,[1] Regional Executive Director Rogelio Baggayan of
DENR sustained petitioner Layugans action of confiscation and ordered the forfeiture of the truck
invoking Section 68-A of Presidential Decree No. 705 as amended by Executive Order No.
277. Private respondents filed a letter of reconsideration dated June 28, 1989 of the June 22, 1989
order of Executive Director Baggayan, which was, however, denied in a subsequent order of July 12,
1989.[2] Subsequently, the case was brought by the petitioners to the Secretary of DENR pursuant to
private respondents statement in their letter dated June 28, 1989 that in case their letter for
reconsideration would be denied then this letter should be considered as an appeal to the
Secretary.[3] Pending resolution however of the appeal, a suit for replevin, docketed as Civil Case
4031, was filed by the private respondents against petitioner Layugan and Executive Director
Baggayan[4] with the Regional Trial Court, Branch 2 of Cagayan, [5] which issued a writ ordering the
return of the truck to private respondents. [6] Petitioner Layugan and Executive Director Baggayan
filed a motion to dismiss with the trial court contending, inter alia, that private respondents had no
cause of action for their failure to exhaust administrative remedies. The trial court denied the
motion to dismiss in an order dated December 28, 1989.[7] Their motion for reconsideration having
been likewise denied, a petition for certiorari was filed by the petitioners with the respondent Court
of Appeals which sustained the trial courts order ruling that the question involved is purely a legal
question.[8] Hence, this present petition,[9] with prayer for temporary restraining order and/or
preliminary injunction, seeking to reverse the decision of the respondent Court of Appeals was filed
by the petitioners on September 9, 1993. By virtue of the Resolution dated September 27,
1993,[10] the prayer for the issuance of temporary restraining order of petitioners was granted by
this Court.
Invoking the doctrine of exhaustion of administrative remedies, petitioners aver that the trial
court could not legally entertain the suit for replevin because the truck was under administrative
seizure proceedings pursuant to Section 68-A of P.D. 705, as amended by E.O. 277. Private
respondents, on the other hand, would seek to avoid the operation of this principle asserting that
the instant case falls within the exception of the doctrine upon the justification that (1) due process
was violated because they were not given the chance to be heard, and (2) the seizure and forfeiture
was unlawful on the grounds: (a) that the Secretary of DENR and his representatives have no
authority to confiscate and forfeit conveyances utilized in transporting illegal forest products, and
(b) that the truck as admitted by petitioners was not used in the commission of the crime.
Upon a thorough and delicate scrutiny of the records and relevant jurisprudence on the
matter, we are of the opinion that the plea of petitioners for reversal is in order.
This Court in a long line of cases has consistently held that before a party is allowed to seek
the intervention of the court, it is a pre-condition that he should have availed of all the means of
administrative processes afforded him. Hence, if a remedy within the administrative machinery can
still be resorted to by giving the administrative officer concerned every opportunity to decide on a
matter that comes within his jurisdiction then such remedy should be exhausted first before courts
judicial power can be sought. The premature invocation of courts intervention is fatal to ones cause
of action.[11] Accordingly, absent any finding of waiver or estoppel the case is susceptible of dismissal
for lack of cause of action.[12] This doctrine of exhaustion of administrative remedies was not
without its practical and legal reasons, for one thing, availment of administrative remedy entails
lesser expenses and provides for a speedier disposition of controversies. It is no less true to state
that the courts of justice for reasons of comity and convenience will shy away from a dispute until
the system of administrative redress has been completed and complied with so as to give the
administrative agency concerned every opportunity to correct its error and to dispose of the
case. However, we are not amiss to reiterate that the principle of exhaustion of administrative
remedies as tested by a battery of cases is not an ironclad rule. This doctrine is a relative one and its
flexibility is called upon by the peculiarity and uniqueness of the factual and circumstantial settings
of a case. Hence, it is disregarded (1) when there is a violation of due process, [13] (2) when the issue
involved is purely a legal question,[14] (3) when the administrative action is patently illegal
amounting to lack or excess of jurisdiction,[15] (4) when there is estoppel on the part of the
administrative agency concerned,[16] (5) when there is irreparable injury,[17] (6) when the
respondent is a department secretary whose acts as an alter ego of the President bears the implied
and assumed approval of the latter,[18] (7) when to require exhaustion of administrative remedies
would be unreasonable,[19] (8) when it would amount to a nullification of a claim, [20] (9) when the
subject matter is a private land in land case proceedings,[21] (10) when the rule does not provide a
plain, speedy and adequate remedy, and (11) when there are circumstances indicating the urgency
of judicial intervention.[22]
In the case at bar, there is no question that the controversy was pending before the Secretary
of DENR when it was forwarded to him following the denial by the petitioners of the motion for
reconsideration of private respondents through the order of July 12, 1989. In their letter of
reconsideration dated June 28, 1989,[23] private respondents clearly recognize the presence of an
administrative forum to which they seek to avail, as they did avail, in the resolution of their
case. The letter, reads, thus:
xxx
If this motion for reconsideration does not merit your favorable action, then this letter should be
considered as an appeal to the Secretary.[24]
It was easy to perceive then that the private respondents looked up to the Secretary for the
review and disposition of their case. By appealing to him, they acknowledged the existence of an
adequate and plain remedy still available and open to them in the ordinary course of the law. Thus,
they cannot now, without violating the principle of exhaustion of administrative remedies, seek
courts intervention by filing an action for replevin for the grant of their relief during the pendency
of an administrative proceedings.
Moreover, it is important to point out that the enforcement of forestry laws, rules and
regulations and the protection, development and management of forest lands fall within the
primary and special responsibilities of the Department of Environment and Natural Resources. By
the very nature of its function, the DENR should be given a free hand unperturbed by judicial
intrusion to determine a controversy which is well within its jurisdiction. The assumption by the
trial court, therefore, of the replevin suit filed by private respondents constitutes an unjustified
encroachment into the domain of the administrative agencys prerogative. The doctrine of primary
jurisdiction does not warrant a court to arrogate unto itself the authority to resolve a controversy
the jurisdiction over which is initially lodged with an administrative body of special
competence.[25] In Felipe Ismael, Jr. and Co. vs. Deputy Executive Secretary, [26] which was reiterated
in the recent case of Concerned Officials of MWSS vs. Vasquez,[27] this Court held:
Thus, while the administration grapples with the complex and multifarious problems caused by
unbriddled exploitation of these resources, the judiciary will stand clear. A long line of cases
establish the basic rule that the courts will not interfere in matters which are addressed to the
sound discretion of government agencies entrusted with the regulation of activities coming under
the special technical knowledge and training of such agencies.
To sustain the claim of private respondents would in effect bring the instant controversy
beyond the pale of the principle of exhaustion of administrative remedies and fall within the ambit
of excepted cases heretofore stated. However, considering the circumstances prevailing in this
case, we can not but rule out these assertions of private respondents to be without merit. First, they
argued that there was violation of due process because they did not receive the May 23, 1989 order
of confiscation of petitioner Layugan. This contention has no leg to stand on. Due process does not
necessarily mean or require a hearing, but simply an opportunity or right to be heard. [28] One may
be heard , not solely by verbal presentation but also, and perhaps many times more creditably and
practicable than oral argument, through pleadings.[29] In administrative proceedings moreover,
technical rules of procedure and evidence are not strictly applied; administrative process cannot be
fully equated with due process in its strict judicial sense.[30] Indeed, deprivation of due process
cannot be successfully invoked where a party was given the chance to be heard on his motion for
reconsideration,[31] as in the instant case, when private respondents were undisputedly given the
opportunity to present their side when they filed a letter of reconsideration dated June 28, 1989
which was, however, denied in an order of July 12, 1989 of Executive Director Baggayan. In Navarro
III vs. Damasco,[32] we ruled that :
The essence of due process is simply an opportunity to be heard, or as applied to administrative
proceedings, an opportunity to explain ones side or an opportunity to seek a reconsideration of the
action or ruling complained of. A formal or trial type hearing is not at all times and in all instances
essential. The requirements are satisfied when the parties are afforded fair and reasonable
opportunity to explain their side of the controversy at hand. What is frowned upon is the absolute
lack of notice or hearing.
Second, private respondents imputed the patent illegality of seizure and forfeiture of the
truck because the administrative officers of the DENR allegedly have no power to perform these acts
under the law. They insisted that only the court is authorized to confiscate and forfeit conveyances
used in transporting illegal forest products as can be gleaned from the second paragraph of Section
68 of P.D. 705, as amended by E.O. 277. The pertinent provision reads as follows:
SECTION 68. xxx
xxx
The court shall further order the confiscation in favor of the government of the timber or any forest
products cut, gathered, collected, removed, or possessed, as well as the machinery, equipments,
implements and tools illegaly [sic] used in the area where the timber or forest products are found.
(Underline ours)
A reading, however, of the law persuades us not to go along with private respondents
thinking not only because the aforequoted provision apparently does not mention nor include
conveyances that can be the subject of confiscation by the courts, but to a large extent, due to the
fact that private respondents interpretation of the subject provision unduly restricts the clear
intention of the law and inevitably reduces the other provision of Section 68-A , which is quoted
herein below:
SECTION 68-A. Administrative Authority of the Department or His Duly Authorized Representative To
Order Confiscation. In all cases of violation of this Code or other forest laws, rules and regulations,
theDepartment Head or his duly authorized representative, may order the confiscation of any forest
products illegally cut, gathered, removed, or possessed or abandoned, and all conveyances used
either by land, water or air in the commission of the offense and to dispose of the same in
accordance with pertinent laws, regulations and policies on the matter. (Underline ours)
It is, thus, clear from the foregoing provision that the Secretary and his duly authorized
representatives are given the authority to confiscate and forfeit any conveyances utilized in
violating the Code or other forest laws, rules and regulations. The phrase to dispose of the same is
broad enough to cover the act of forfeiting conveyances in favor of the government. The only
limitation is that it should be made in accordance with pertinent laws, regulations or policies on the
matter. In the construction of statutes, it must be read in such a way as to give effect to the purpose
projected in the statute.[33] Statutes should be construed in the light of the object to be achieved and
the evil or mischief to be suppressed, and they should be given such construction as will advance the
object, suppress the mischief, and secure the benefits intended.[34] In this wise, the observation of
the Solicitor General is significant, thus:
But precisely because of the need to make forestry laws more responsive to present situations and
realities and in view of the urgency to conserve the remaining resources of the country, that the
government opted to add Section 68-A. This amendatory provision is an administrative
remedy totally separate and distinct from criminal proceedings. More than anything else, it is
intended to supplant the inadequacies that characterize enforcement of forestry laws through
criminal actions. The preamble of EO 277-the law that added Section 68-A to PD 705-is most
revealing:
WHEREAS, there is an urgency to conserve the remaining forest resources of the country for the
benefit and welfare of the present and future generations of Filipinos;
WHEREAS, our forest resources may be effectively conserved and protected through the vigilant
enforcement and implementation of our forestry laws, rules and regulations;
WHEREAS, the implementation of our forestry laws suffers from technical difficulties, due to certain
inadequacies in the penal provisions of the Revised Forestry Code of the Philippines; and
WHEREAS, to overcome this difficulties, there is a need to penalize certain acts more responsive to
present situations and realities;
It is interesting to note that Section 68-A is a new provision authorizing the DENR to confiscate, not
only conveyances, but forest products as well. On the other hand, confiscation of forest products by
the court in a criminal action has long been provided for in Section 68. If as private respondents
insist, the power on confiscation cannot be exercised except only through the court under Section
68, then Section 68-A would have no purpose at all. Simply put, Section 68-A would not have
provided any solution to the problem perceived in EO 277, supra.[35]
Private respondents, likewise, contend that the seizure was illegal because the petitioners
themselves admitted in the Order dated July 12, 1989 of Executive Director Baggayan that the truck
of private respondents was not used in the commission of the crime. This order, a copy of which was
given to and received by the counsel of private respondents, reads in part , viz. :
xxx while it is true that the truck of your client was not used by her in the commission of the crime,
we uphold your claim that the truck owner is not liable for the crime and in no case could a criminal
case be filed against her as provided under Article 309 and 310 of the Revised Penal Code. xxx[36]
We observed that private respondents misread the content of the aforestated order and
obviously misinterpreted the intention of petitioners. What is contemplated by the petitioners when
they stated that the truck "was not used in the commission of the crime" is that it was not used in
the commission of the crime of theft, hence, in no case can a criminal action be filed against the
owner thereof for violation of Article 309 and 310 of the Revised Penal Code. Petitioners did not
eliminate the possibility that the truck was being used in the commission of another crime, that is,
the breach of Section 68 of P.D.705 as amended by E.O. 277. In the same order of July 12, 1989,
petitioners pointed out:
xxx However, under Section 68 of P.D.705 as amended and further amended by Executive Order
No.277 specifically provides for the confiscation of the conveyance used in the transport of forest
products not covered by the required legal documents. She may not have been involved in the
cutting and gathering of the product in question but the fact that she accepted the goods for a fee or
fare the same is therefor liable. xxx[37]
Private respondents, however, contended that there is no crime defined and punishable
under Section 68 other than qualified theft, so that, when petitioners admitted in the July 12, 1989
order that private respondents could not be charged for theft as provided for under Articles 309 and
310 of the Revised Penal Code, then necessarily private respondents could not have committed an
act constituting a crime under Section 68. We disagree. For clarity, the provision of Section 68 of
P.D. 705 before its amendment by E.O. 277 and the provision of Section 1 of E.O. No.277 amending
the aforementioned Section 68 are reproduced herein, thus:
SECTION 68. Cutting, gathering and/or collecting timber or other products without license. - Any
person who shall cut , gather , collect , or remove timber or other forest products from any forest
land, or timber from alienable and disposable public lands, or from private lands, without any
authority under a license agreement, lease, license or permit, shall be guilty of qualified theft as
defined and punished under Articles 309 and 310 of the Revised Penal Code xxx. (Underscoring
ours; Section 68, P.D.705 before its amendment by E.O.277 )
SECTION 1. Section 68 of Presidential Decree No.705, as amended, is hereby amended to read as
follows:
Section 68. Cutting, gathering and/or collecting timber or other forest products without license. -Any
person who shall cut, gather, collect, remove timber or other forest products from any forest land,
or timber from alienable or disposable public land, or from private land, without any authority, or
possess timber or other forest products without the legal documents as required under existing
forest laws and regulations, shall be punished with the penalties imposed under Articles 309 and
310 of the Revised Penal Code xxx." (Underscoring ours; Section 1, E.O No. 277 amending Section
68, P.D. 705 as amended)
With the introduction of Executive Order No. 277 amending Section 68 of P.D. 705, the act of
cutting, gathering, collecting, removing, or possessing forest products without authority constitutes
a distinct offense independent now from the crime of theft under Articles 309 and 310 of the
Revised Penal Code, but the penalty to be imposed is that provided for under Article 309 and 310 of
the Revised Penal Code. This is clear from the language of Executive Order No. 277 when it
eliminated the phrase shall be guilty of qualified theft as defined and punished under Articles 309
and 310 of the Revised Penal Code and inserted the words shall be punished with the penalties
imposed under Article 309 and 310 of the Revised Penal Code . When the statute is clear and
explicit, there is hardly room for any extended court ratiocination or rationalization of the law.[38]
From the foregoing disquisition, it is clear that a suit for replevin can not be sustained against
the petitioners for the subject truck taken and retained by them for administrative forfeiture
proceedings in pursuant to Section 68-A of the P. D. 705, as amended. Dismissal of the replevin suit
for lack of cause of action in view of the private respondents failure to exhaust administrative
remedies should have been the proper course of action by the lower court instead of assuming
jurisdiction over the case and consequently issuing the writ ordering the return of the truck.
Exhaustion of the remedies in the administrative forum, being a condition precedent prior to ones
recourse to the courts and more importantly, being an element of private respondents right of
action, is too significant to be waylaid by the lower court.
It is worth stressing at this point, that a suit for replevin is founded solely on the claim that
the defendant wrongfully withholds the property sought to be recovered. It lies to recover
possession of personal chattels that are unlawfully detained. [39] To detain is defined as to mean to
hold or keep in custody,[40] and it has been held that there is tortuous taking whenever there is an
unlawful meddling with the property, or an exercise or claim of dominion over it, without any
pretense of authority or right; this, without manual seizing of the property is sufficient. [41] Under the
Rules of Court, it is indispensable in replevin proceedings, that the plaintiff must show by his own
affidavit that he is entitled to the possession of property, that the property is wrongfully detained by
the defendant, alleging the cause of detention, that the same has not been taken for tax assessment,
or seized under execution, or attachment, or if so seized, that it is exempt from such seizure, and the
actual value of the property.[42] Private respondents miserably failed to convince this Court that a
wrongful detention of the subject truck obtains in the instant case. It should be noted that the truck
was seized by the petitioners because it was transporting forest products with out the required
permit of the DENR in manifest contravention of Section 68 of P.D. 705 as amended by E.O
277. Section 68-A of P.D. 705, as amended, unquestionably warrants the confiscation as well as the
disposition by the Secretary of DENR or his duly authorized representatives of the conveyances
used in violating the provision of forestry laws. Evidently, the continued possession or detention of
the truck by the petitioners for administrative forfeiture proceeding is legally permissible, hence ,
no wrongful detention exists in the case at bar.
Moreover, the suit for replevin is never intended as a procedural tool to question the orders
of confiscation and forfeiture issued by the DENR in pursuance to the authority given under P.D.705,
as amended. Section 8 of the said law is explicit that actions taken by the Director of the Bureau of
Forest Development concerning the enforcement of the provisions of the said law are subject
to review by the Secretary of DENR and that courts may not review the decisions of the Secretary
except through a special civil action for certiorari or prohibition. It reads :
SECTION 8 . REVIEW - All actions and decisions of the Director are subject to review, motu propio or
upon appeal of any person aggrieved thereby, by the Department Head whose decision shall be final
and executory after the lapse of thirty (30) days from the receipt of the aggrieved party of said
decision, unless appealed to the President in accordance with Executive Order No. 19, Series of
1966. The Decision of the Department Head may not be reviewed by the courts except through a
special civil action for certiorari or prohibition.
WHEREFORE, the Petition is GRANTED; the Decision of the respondent Court of Appeals
dated October 16, 1991 and its Resolution dated July 14, 1992 are hereby SET ASIDE AND
REVERSED; the Restraining Order promulgated on September 27, 1993 is hereby made permanent;
and the Secretary of DENR is directed to resolve the controversy with utmost dispatch.

SO ORDERED.
G.R. No. 110526 February 10, 1998 WHEREAS, the deregulation of certain sectors of the coconut industry, such as marketing
of coconut oils pursuant to Presidential Decree No. 1960, the lifting of export and
commodity clearances under Executive Order No. 1016, and relaxation of regulated
ASSOCIATION OF PHILIPPINE COCONUT DESICCATORS, petitioner,
capacity for the desiccated coconut sector pursuant to Presidential Memorandum of
vs.
February 11, 1988, has become a centerpiece of the present dispensation;
PHILIPPINE COCONUT AUTHORITY, respondent.

WHEREAS, the issuance of permits or licenses prior to business operation is a form of

MENDOZA, J.:
At issue in this case is the validity of a resolution, dated March 24, 1993, of the Philippine Coconut
Authority in which it declares that it will no longer require those wishing to engage in coconut
processing to apply to it for a license or permit as a condition for engaging in such business.
Petitioner Association of Philippine Coconut Desiccators (hereafter referred to as APCD) brought
this suit for certiorari and mandamus against respondent Philippine Coconut Authority (PCA) to
invalidate the latter's Board Resolution No. 018-93 and the certificates of registration issued under
it on the ground that the resolution in question is beyond the power of the PCA to adopt, and to
compel said administrative agency to comply instead with the mandatory provisions of statutes
regulating the desiccated coconut industry, in particular, and the coconut industry, in general.
As disclosed by the parties' pleadings, the facts are as follows:
regulation which is not provided in the charter of nor included among the powers of the
PCA;
WHEREAS, the Governing Board of PCA has determined to follow and further support the
deregulation policy and effort of the government to promote free enterprise;
NOW THEREFORE, BE IT RESOLVED AS IT IS HEREBY RESOLVED, that, henceforth, PCA
shall no longer require any coconut oil mill, coconut oil refinery, coconut desiccator,
coconut product processor/factory, coconut fiber plant or any similar coconut processing
plant to apply with PCA and the latter shall no longer issue any form of license or permit
as condition prior to establishment or operation of such mills or plants;
RESOLVED, FURTHER, that the PCA shall limit itself only to simply registering the
aforementioned coconut product processors for the purpose of monitoring their volumes
of production, administration of quality standards with the corresponding service
fees/charges.

On November 5, 1992, seven desiccated coconut processing companies belonging to the APCD ADOPTED this 24th day of March 1993, at Quezon City.3
brought suit in the Regional Trial Court, National Capital Judicial Region in Makati, Metro Manila, to
enjoin the PCA from issuing permits to certain applicants for the establishment of new desiccated
The PCA then proceeded to issue "certificates of registration" to those wishing to operate desiccated
coconut processing plants. Petitioner alleged that the issuance of licenses to the applicants would
coconut processing plants, prompting petitioner to appeal to the Office of the President of the
violate PCA's Administrative Order No. 02, series of 1991, as the applicants were seeking permits to
Philippines on April 26, 1993 not to approve the resolution in question. Despite follow-up letters
operate in areas considered "congested" under the administrative order. 1
sent on May 25 and June 2, 1993, petitioner received no reply from the Office of the President. The
"certificates of registration" issued in the meantime by the PCA has enabled a number of new
On November 6, 1992, the trial court issued a temporary restraining order and, on November 25, coconut mills to operate. Hence this petition.
1992, a writ of preliminary injunction, enjoining the PCA from processing and issuing licenses to
Primex Products, Inc., Coco Manila, Superstar (Candelaria) and Superstar (Davao) upon the posting
Petitioner alleges:
of a bond in the amount of P100,000.00.2

I
Subsequently and while the case was pending in the Regional Trial Court, the Governing Board of
the PCA issued on March 24, 1993 Resolution No. 018-93, providing for the withdrawal of the
Philippine Coconut Authority from all regulation of the coconut product processing industry. While RESPONDENT PCA'S BOARD RESOLUTION NO. 018-93 IS NULL AND VOID FOR BEING AN
it continues the registration of coconut product processors, the registration would be limited to the UNDUE EXERCISE OF LEGISLATIVE POWER BY AN ADMINISTRATIVE BODY.
"monitoring" of their volumes of production and administration of quality standards. The full text of
the resolution reads:
II

RESOLUTION NO. 018-93

ASIDE FROM BEING ULTRA-VIRES, BOARD RESOLUTION NO. 018-93 IS WITHOUT ANY
POLICY DECLARATION DEREGULATING
BASIS, ARBITRARY, UNREASONABLE AND THEREFORE IN VIOLATION OF SUBSTANTIVE
THE ESTABLISHMENT OF NEW COCONUT
DUE PROCESS OF LAW.
PROCESSING PLANTS

III
WHEREAS, it is the policy of the State to promote free enterprise unhampered by
protective regulations and unnecessary bureaucratic red tapes;
IN PASSING BOARD RESOLUTION NO. 018-93, RESPONDENT PCA VIOLATED THE
PROCEDURAL DUE PROCESS REQUIREMENT OF CONSULTATION PROVIDED IN
 PRESIDENTIAL DECREE NO. 1644, EXECUTIVE ORDER NO. 826 AND PCA
ADMINISTRATIVE ORDER NO. 002, SERIES OF 1991.
On the other hand, in addition to answering petitioner's arguments, respondent PCA alleges that
this petition should be denied on the ground that petitioner has a pending appeal before the Office
of the President. Respondent accuses petitioner of forum-shopping in filing this petition and of
failing to exhaust available administrative remedies before coming to this Court. Respondent
anchors its argument on the general rule that one who brings an action under Rule 65 must show
that one has no appeal nor any plain, speedy, and adequate remedy in the ordinary course of law.
I.
The rule of requiring exhaustion of administrative remedies before a party may seek judicial review,
so strenuously urged by the Solicitor General on behalf of respondent, has obviously no application
here. The resolution in question was issued by the PCA in the exercise of its rule-making or
legislative power. However, only judicial review of decisions of administrative agencies made in the
exercise of their quasi-judicial function is subject to the exhaustion doctrine. The exhaustion
doctrine stands as a bar to an action which is not yet complete 4 and it is clear, in the case at bar, that
after its promulgation the resolution of the PCA abandoning regulation of the desiccated coconut
industry became effective. To be sure, the PCA is under the direct supervision of the President of the
Philippines but there is nothing in P.D. No. 232, P.D. No. 961, P.D. No. 1468 and P.D. No. 1644
defining the powers and functions of the PCA which requires rules and regulations issued by it to be
approved by the President before they become effective.
In any event, although the APCD has appealed the resolution in question to the Office of the
President, considering the fact that two months after they had sent their first letter on April 26,
1993 they still had to hear from the President's office, meanwhile respondent PCA was issuing
certificates of registration indiscriminately to new coconut millers, we hold that petitioner was
justified in filing this case on June 25, 1993.5 Indeed, after writing the Office of the President on April
26, 19936 petitioner sent inquiries to that office not once, but twice, on May 26, 1993 7 and on June 2,
1993,8 but petitioner did not receive any reply.
II.
We now turn to the merit of the present petition. The Philippine Coconut Authority was originally
created by P.D. 232 on June 30, 1973, to take over the powers and functions of the Coconut
Coordinating Council, the Philippine Coconut Administration and the Philippine Coconut Research
Institute. On June 11, 1978, by P.D. No. 1468, it was made "an independent public corporation . . .
directly reporting to, and supervised by, the President of the Philippines," 9 and charged with
carrying out the State's policy "to promote the rapid integrated development and growth of the
coconut and other palm oil industry in all its aspects and to ensure that the coconut farmers become
direct participants in, and beneficiaries of, such development and growth."10 through a regulatory
scheme set up by law.11
Through this scheme, the government, on August 28, 1982, temporarily prohibited the opening of
new coconut processing plants and, four months later, phased out some of the existing ones in view
of overproduction in the coconut industry which resulted in cut-throat competition, underselling
and smuggling of poor quality products and ultimately in the decline of the export performance of
coconut-based commodities. The establishment of new plants could be authorized only upon
determination by the PCA of the existence of certain economic conditions and the approval of the
President of the Philippines. Thus, Executive Order No. 826, dated August 28, 1982, provided:
Sec. 1. Prohibition. — Except as herein provided, no government agency or
instrumentality shall hereafter authorize, approve or grant any permit or license for the
establishment or operation of new desiccated coconut processing plants, including the
importation of machinery or equipment for the purpose. In the event of a need to
establish a new plant, or expand the capacity, relocate or upgrade the efficiencies of any
existing desiccated plant, the Philippine Coconut Authority may, upon proper
determination of such need and evaluation of the condition relating to:
a. the existing market demand;
b. the production capacity prevailing in the country or locality;
c. the level and flow of raw materials; and
d. other circumstances which may affect the growth or viability of the industry
concerned,
authorize or grant the application for, the establishment or expansion of capacity,
relocation or upgrading of efficiencies of such desiccated coconut processing plant,
subject to the approval of the President.
On December 6, 1982, a phase-out of some of the existing plants was ordered by the government
after finding that "a mere freeze in the present capacity of existing plants will not afford a viable
solution to the problem considering that the total available limited market is not adequate to
support all the existing processing plants, making it imperative to reduce the number of existing
processing plants."12 Accordingly, it was ordered:13
Sec. 1. The Philippine Coconut Authority is hereby ordered to take such action as may be
necessary to reduce the number of existing desiccated coconut processing plants to a
level which will insure the survival of the remaining plants. The Authority is hereby
directed to determine which of the existing processing plants should be phased out and to
enter into appropriate contracts with such plants for the above purpose.
It was only on October 23, 1987 when the PCA adopted Resolution No. 058-87, authorizing the
establishment and operation of additional DCN plants, in view of the increased demand for
desiccated coconut products in the world's markets, particularly in Germany, the Netherlands and
Australia. Even then, the opening of new plants was made subject to "such implementing guidelines
to be set forth by the Authority" and "subject to the final approval of the President."
The guidelines promulgated by the PCA, as embodied in Administrative Order No. 002, series of
1991, inter alia authorized the opening of new plants in "non-congested areas only as declared by
the PCA" and subject to compliance by applicants with "all procedures and requirements for
registration under Administrative Order No. 003, series of 1981 and this Order." In addition, as the
opening of new plants was premised on the increased global demand for desiccated coconut
products, the new entrants were required to submit sworn statements of the names and addresses
of prospective foreign buyers.
This form of "deregulation" was approved by President Aquino in her memorandum, dated
February 11, 1988, to the PCA. Affirming the regulatory scheme, the President stated in her
memorandum:
 It appears that pursuant to Executive Order No. 826 providing measures for the Art. II, § 3 of P.D. No. 1468 further requires the PCA:
protection of the Desiccated Coconut Industry, the Philippine Coconut Authority
evaluated the conditions relating to: (a) the existing market demands; (b) the production
(h) To regulate the marketing and the exportation of copra and its by-products by
capacity prevailing in the country or locality; (c) the level and flow of raw materials; and
establishing standards for domestic trade and export and, thereafter, to conduct an
(d) other circumstances which may affect the growth or viability of the industry
inspection of all copra and its by-products proposed for export to determine if they
concerned and that the result of such evaluation favored the expansion of production and
conform to the standards established;
market of desiccated coconut products.

Instead of determining the qualifications of market players and preventing the entry into the field of
In view hereof and the favorable recommendation of the Secretary of Agriculture, the
those who are unfit, the PCA now relies entirely on competition — with all its wastefulness and
deregulation of the Desiccated Coconut Industry as recommended in Resolution No. 058-
inefficiency — to do the weeding out, in its naive belief in survival of the fittest. The result can very
87 adopted by the PCA Governing Board on October 28, 1987 (sic) is hereby approved.14
well be a repeat of 1982 when free enterprise degenerated into a "free-for-all," resulting in cut-
throat competition, underselling, the production of inferior products and the like, which badly
These measures — the restriction in 1982 on entry into the field, the reduction the same year of the affected the foreign trade performance of the coconut industry.
number of the existing coconut mills and then the lifting of the restrictions in 1987 — were adopted
within the framework of regulation as established by law "to promote the rapid integrated
Indeed, by repudiating its role in the regulatory scheme, the PCA has put at risk other statutory
development and growth of the coconut and other palm oil industry in all its aspects and to ensure
provisions, particularly those of P.D. No. 1644, to wit:
that the coconut farmers become direct participants in, and beneficiaries of, such development and
growth." 15 Contrary to the assertion in the dissent, the power given to the Philippine Coconut
Authority — and before it to the Philippine Coconut Administration — "to formulate and adopt a Sec. 1. The Philippine Coconut Authority shall have full power and authority to regulate
general program of development for the coconut and other palm oils industry" 16 is not a roving the marketing and export of copra, coconut oil and their by-products, in furtherance of
commission to adopt any program deemed necessary to promote the development of the coconut the steps being taken to rationalize the coconut oil milling industry.
and other palm oils industry, but one to be exercised in the context of this regulatory structure.
Sec. 2. In the exercise of its powers under Section 1 hereof, the Philippine Coconut
In plain disregard of this legislative purpose, the PCA adopted on March 24, 1993 the questioned Authority may initiate and implement such measures as may be necessary to attain the
resolution which allows not only the indiscriminate opening of new coconut processing plants but rationalization of the coconut oil milling industry, including, but not limited to, the
the virtual dismantling of the regulatory infrastructure whereby, forsaking controls theretofore following measures:
placed in its keeping, the PCA limits its function to the innocuous one of "monitoring" compliance by
coconut millers with quality standards and volumes of production. In effect, the PCA would simply
(a) Imposition of floor and/or ceiling prices for all exports of copra, coconut oil and their
be compiling statistical data on these matters, but in case of violations of standards there would be
by-products;
nothing much it would do. The field would be left without an umpire who would retire to the
bleachers to become a mere spectator. As the PCA provided in its Resolution No. 018-93:
(b) Prescription of quality standards;
NOW, THEREFORE, BE IT RESOLVED AS IT IS HEREBY RESOLVED, that, henceforth, PCA
shall no longer require any coconut oil mill, coconut oil refinery, coconut desiccator, (c) Establishment of maximum quantities for particular periods and particular markets;
coconut product processor/factory, coconut fiber plant or any similar coconut processing
plant to apply with PCA and the latter shall no longer issue any form of license or permit
(d) Inspection and survey of export shipments through an independent international
as condition prior to establishment or operation of such mills or plants;
superintendent or surveyor.

RESOLVED, FURTHER, that the PCA shall limit itself only to simply registering the
In the exercise of its powers hereunder, the Philippine Coconut Authority shall consult
aforementioned coconut product processors for the purpose of monitoring their volumes
with, and be guided by, the recommendation of the coconut farmers, through
of production, administration of quality standards with the corresponding service
corporations owned or controlled by them through the Coconut Industry Investment
fees/charges.
Fund and the private corporation authorized to be organized under Letter of Instructions
No. 926.
The issue is not whether the PCA has the power to adopt this resolution to carry out its mandate
under the law "to promote the accelerated growth and development of the coconut and other palm
and the Revised Coconut Code (P.D. No. 1468), Art. II, § 3, to wit:
oil industry."17 The issue rather is whether it can renounce the power to regulate implicit in the law
creating it for that is what the resolution in question actually is.
(m) Except in respect of entities owned or controlled by the Government or by the
coconut farmers under Sections 9 and 10, Article III hereof, the Authority shall have full
Under Art. II, § 3(a) of the Revised Coconut Code (P.D. No. 1468), the role of the PCA is "To
power and authority to regulate the production, distribution and utilization of all
formulate and adopt a general program of development for the coconut and other palm oil industry
subsidized coconut-based products, and to require the submission of such reports or
in all its aspects." By limiting the purpose of registration to merely "monitoring volumes of
documents as may be deemed necessary by the Authority to ascertain whether the levy
production [and] administration of quality standards" of coconut processing plants, the PCA in
payments and/or subsidy claims are due and correct and whether the subsidized
effect abdicates its role and leaves it almost completely to market forces how the coconut industry
will develop.
 products are distributed among, and utilized by, the consumers authorized by the The PCA cannot rely on the memorandum of then President Aquino for authority to adopt the
Authority. resolution in question. As already stated, what President Aquino approved in 1988 was the
establishment and operation of new DCN plants subject to the guidelines to be drawn by the
PCA.20 In the first place, she could not have intended to amend the several laws already
The dissent seems to be saying that in the same way that restrictions on entry into the field were
mentioned, which set up the regulatory system, by a mere memoranda to the PCA. In the
imposed in 1982 and then relaxed in 1987, they can be totally lifted now without prejudice to
second place, even if that had been her intention, her act would be without effect considering
reimposing them in the future should it become necessary to do so. There is really no renunciation
that, when she issued the memorandum in question on February 11, 1988, she was no longer
of the power to regulate, it is claimed. Trimming down of PCA's function to registration is not an
vested with legislative authority.21
abdication of the power to regulate but is regulation itself. But how can this be done when, under
Resolution No. 018-93, the PCA no longer requires a license as condition for the establishment or
operation of a plant? If a number of processing firms go to areas which are already congested, the WHEREFORE, the petition is GRANTED. PCA Resolution No. 018-93 and all certificates of
PCA cannot stop them from doing so. If there is overproduction, the PCA cannot order a cut back in registration issued under it are hereby declared NULL and VOID for having been issued in
their production. This is because the licensing system is the mechanism for regulation. Without it excess of the power of the Philippine Coconut Authority to adopt or issue.
the PCA will not be able to regulate coconut plants or mills.
SO ORDERED.
In the first "whereas" clause of the questioned resolution as set out above, the PCA invokes a policy
of free enterprise that is "unhampered by protective regulations and unnecessary bureaucratic red
tape" as justification for abolishing the licensing system. There can be no quarrel with the
elimination of "unnecessary red tape." That is within the power of the PCA to do and indeed it
should eliminate red tape. Its success in doing so will be applauded. But free enterprise does not call
for removal of "protective regulations."

Our Constitutions, beginning with the 1935 document, have repudiated laissez-faire as an economic
principle.18 Although the present Constitution enshrines free enterprise as a policy, 19 it nonetheless
reserves to the government the power to intervene whenever necessary to promote the general
welfare. This is clear from the following provisions of Art. XII of the Constitution which, so far as
pertinent, state:

Sec. 6. . . . Individuals and private groups, including corporations, cooperatives, and

similar collective organizations, shall have the right to own, establish, and operate
economic enterprises, subject to the duty of the State to promote distributive justice and to
intervene when the common good so demands.

Sec. 19. The State shall regulate or prohibit monopolies when the public interest so
requires. No combinations in restraint of trade or unfair competition shall be allowed.
(Emphasis added).

At all events, any change in policy must be made by the legislative department of the government.
The regulatory system has been set up by law. It is beyond the power of an administrative agency to
dismantle it. Indeed, petitioner charges the PCA of seeking to render moot a case filed by some of its
members questioning the grant of licenses to certain parties by adopting the resolution in question.
It is alleged that members of petitioner complained to the court that the PCA had authorized the
establishment and operation of new plants in areas which were already crowded, in violation
of its Administrative Order No. 002, series of 1991. In response, the Regional Trial Court
issued a writ of preliminary injunction, enjoining the PCA from issuing licenses to the private
respondent in that case.

These allegations of petitioner have not been denied here. It would thus seem that instead of
defending its decision to allow new entrants into the field against petitioner's claim that the
PCA decision violated the guidelines in Administrative Order No. 002, series of 1991, the PCA
adopted the resolution in question to render the case moot. In so doing, the PCA abdicated its
function of regulation and left the field to untrammeled competition that is likely to
resurrect the evils of cut-throat competition, underselling and overproduction which in 1982
required the temporary closing of the field to new players in order to save the industry.
G.R. No. L-39655 March 21, 1975
ARROW TRANSPORTATION CORPORATION, petitioner,
vs.
BOARD OF TRANSPORTATION and SULTAN RENT-A-CAR, INC., respondents.
Manuel Imbong for petitioner.
Office of the Solicitor General Estelito P. Mendoza and Assistant Solicitor General Reynato S. Puno for
respondent Board.
Pastor C. Bacani and Ernesto Ganiban for private respondent.
FERNANDO, J.:ñé+.£ªwph!1
It must have been the realization that a challenge to a provisional permit issued by respondent
Board of Transportation1 based on the absence of a hearing is not likely to be attended with success
that prompted petitioner to rely on another aspect of procedural due process, the infirmity alleged
being traceable to what it considered lack of jurisdiction.2 There is the invocation of Philippine Long
Distance Telephone Company v. Medina3 with its mention of both competitors and the public being
notified. It does not suffice. Something more, which more, is necessary. The reliance is misplaced. Its
applicability is by no means obvious. As was pointed out in the answer of respondent Board of
Transportation, such a claim is hardly persuasive with the procedure set forth in Presidential
Decree No. 101 being followed and the provisional authority to operate being based on an urgent
public need. Such a contention merits the approval of the Court. The petition cannot prosper.
Both petitioner and private respondent Sultan Rent-a-Car are domestic corporations.4 The former
has in his favor a certificate of public convenience to operate a public utility bus air-conditioned-
auto-truck service from Cebu City to Mactan International Airport and vice-versa with the use of
twenty (20) units.5 Private respondent on September 12, 1974 filed a petition with the respondent
Board for the issuance of a certificate of public convenience to operate a similar service on the same
line.6 Eight days later, without the required publication, the Board issued an order granting it
provisional permit to operate such auto-truck service on the line applied for.7 There was a motion
for reconsideration and for the cancellation of such provisional permit filed on October 21,
1974,8 but without awaiting final action thereon, this petition was filed. 9 This is the explanation:
"That petitioner has not waited for the resolution of his Motion for Reconsideration before going to
this Court considering that the question involved herein is purely a legal one, aside from the fact
that the issuance of the Order without the Board having acquired jurisdiction of the case yet, is
patently illegal or was performed without jurisdiction." 10
So it was set forth in the petition filed on November 16, 1974. As a preliminary injunction was
likewise sought, a hearing was scheduled for November 29, 1974. It was cancelled, this Court
issuing a resolution instead, requiring respondents to file an answer not later than December 6,
1974 and setting the hearing on the merits of the case on Wednesday, December 11, 1974. In the
answer submitted the facts alleged were substantially admitted. 11 It denied the allegation that there
must be a publication before a provisional permit can be issued, reference being made, as noted, to
Presidential Decree No. 101, which authorized respondent Board to grant provisional permits when
warranted by compelling circumstances and to proceed promptly along the method of legislative
inquiry. 12 The case was then argued on December 11, 1974, Attorney Manuel Imbong appearing for
petitioner and Assistant Solicitor General Reynato S. Puno appearing for respondent Board of
Transportation. 13 Thereafter, the parties were given twenty days to file their respective
memoranda and an additional ten-day period to submit replies thereto if so minded. In time all the
pleadings were submitted, and the case was ready for decision.
The petition, to repeat, cannot prosper.
1. It is to be, admitted that the claim for relief on the asserted constitutional deficiency based on
procedural due process, not from the standpoint of the absence of a hearing but from the lack of
jurisdiction without the required publication having been made, was argued vigorously and
developed exhaustively in the memoranda of petitioner. The arguments set forth, while impressed
with plausibility, do not suffice to justify the grant of certiorari. Moreover, the doctrine announced
in the Philippine Long Distance Telephone Company decision, heavily leaned on by petitioner is, at
the most, a frail and insubstantial support and gives way to decisions of this Court that have an even
more specific bearing on this litigation.
2. A barrier to petitioner's pretension, not only formidable but also insurmountable, is the well-
settled doctrine that for a provisional permit, an ex parte hearing suffices. 14 The decisive
consideration is the existence of the public need. 15 That was shown in this case, respondent Board,
on the basis of demonstrable data, being satisfied of the pressing necessity for the grant of the
provisional permit sought. There is no warrant for the nullification of what was ordered by it. It
must have been, as already noted, this state of the law that did lead petitioner to harp on its
interpretation of what for it is the teaching of the Philippine Long Distance Telephone Company
decision. 16 There was therein stated that one of the compelling reasons that led this Court to hold
that the defunct Public Service Commission did not acquire jurisdiction was that no provision was
made for bringing in as parties thereto the competitors of the Philippine Long Distance Telephone
Company. 17 That is the basis for the objection on procedural due process ground. While no doubt
such a holding was necessary for the decision of that case which dealt with a petition for the
reexamination of a decision that was held to be final and executory, it finds no application to this
controversy dealing with a provisional permit. This is made clear by this portion of the opinion of
Justice Sanchez: "Araneta seeks reexamination of the rates approved by the Commission. Araneta
avers that PLDT can carry out its improvement and expansion program at less onerous terms to the
subscribers. But Araneta [University] was not a party to the rate-fixing case or to any of the other
proceedings below. These rate-fixing and allied cases terminated with the final judgment of January
9, 1964. Not being a party, it could not have moved to reconsider said decision. Nor could it have
appealed from that decision — it had no standing in that case. Even if we treat Araneta's
reexamination petition as one for reconsideration, the time therefor has long passed. 18 It was then
stated: The reexamination herein sought by Araneta, perforce seeks the fixing of new and different
rates. 19 Further: Araneta in effect, institutes a fresh
petition — for new rates different from those already established. Such petition is a proceeding
separate and distinct from those concluded by the final judgment of PSC of January 9, 1964. 20 The
conclusion, therefore, necessarily follows:" We hold that the Public Service Commission may not
reduce or increase rates established in a judgment that has become final, without proper notice; and
that a Commission order reducing or increasing said rates without such notice is void." 21 Under the
facts of that case, the procedural due process infirmity amounting to lack of jurisdiction is quite
apparent. The opposite is true with this present petition which deals with a grant of provisional
permit. It would be to lift out of context the reference made in the aforesaid opinion with reference
to notification to the competitors to give a color of applicability to the situation before us. Clearly
then, the allegation of a failure to follow the command of the due process guarantee is bereft of any
legal foundation.
3. The question of whether the controversy is ripe for judicial determination was likewise argued by
the parties. For it is undeniable that at the time the petition was filed. there was pending with the
respondent Board a motion for reconsideration. Ordinarily, its resolution should be awaited. Prior
thereto, an objection grounded on prematurity can be raised. Nonetheless, counsel for petitioner
would stress that certiorari lies as the failure to observe procedural due process ousted respondent
Board of whatever jurisdiction it could have had in the premises. This Court was impelled to go into
the merits of the controversy at this stage, not only because of the importance of the issue raised but
also because of the strong public interest in having the matter settled. As was set forth in Executive
Order No. 101 which prescribes the procedure to be followed by respondent Board, it is the policy
of the State, as swiftly as possible, to improve the deplorable condition of vehicular traffic, obtain
maximum utilization of existing public motor vehicles and eradicate the harmful and unlawful trade
of clandestine operators, as well as update the standard of those carrying such business, making it
"imperative to provide, among other urgently needed measures, more expeditious methods in
prescribing, redefining, or modifying the lines and mode of operation of public utility motor vehicles
that now or thereafter, may operate in this country. 22 It is essential then both from the standpoint
of the firms engaged as well as of the riding public to ascertain whether or not the procedure
followed in this case and very likely in others of a similar nature satisfies the procedural due
process requirement. Thus its ripeness for adjudication becomes apparent.

To paraphrase what was said in Edu v. Ericta 23 where the validity of a legislation was passed upon
in a certiorari proceeding to annul and set aside a writ of preliminary injunction, to so act would be
to conserve both time and effort. Those desiring to engage in public utility business as well as the
public are both vitally concerned with the final determination of the standards to be followed in the
procedure that must be observed. There is, to repeat, a great public interest in a definitive outcome
of the crucial issue involved. One of the most noted authorities on Administrative Law, professor
Kenneth Culp Davis, discussing the ripeness concept, is of the view that the resolution of what could
be a debilitating uncertainty with the conceded ability of the judiciary to work out a solution of the
problem posed is a potent argument for minimizing the emphasis laid on its technical aspect. 24

WHEREFORE, the petition for certiorari is dismissed. No costs.


GAUDENCIO A. BEGOSA, Plaintiff-Appellee, v. CHAIRMAN, PHILIPPINE VETERANS
ADMINISTRATION; and MEMBERS OF THE BOARD OF ADMINISTRATORS, PHILIPPINE
VETERANS ADMINISTRATION, Defendants-Appellants.
Jose V . Rosales for Plaintiff-Appellee.
Solicitor General, for Defendants-Appellants.
SYLLABUS
1. REMEDIAL LAW; PARTIES; DOCTRINE OF NON-SUABILITY OF STATE, EXCEPTION.— It is well
settled that where a litigation may have adverse consequences on the public treasury, whether in
the disbursements of funds or loss of property, the public official proceeded against not being liable
in his personal capacity, then the doctrine of non-suability may appropriately be invoked. It has no
application, however, where the suit against such a functionary had to be instituted because of his
failure to comply with the duty imposed by statute appropriating public funds for the benefit of
plaintiff or petitioner
2. ID.; ADMINISTRATIVE LAW; EXHAUSTION OF ADMINISTRATIVE REMEDY UNNECESSARY
WHERE QUESTION IS LEGAL; CASE AT BAR.— It is well established that the principle requiring the
previous exhaustion of administrative remedies is not applicable ‘where the question in dispute is
purely a legal one,’ or where the controverted act is ‘patently illegal’ or was performed without
jurisdiction or in excess of jurisdiction, or where the respondent is a department Secretary, whose
acts as an alter-ego of the President bear the implied or assumed approval of the latter, unless
actually disapproved by him, or where there are circumstances indicating the urgency of judicial
intervention. Where there is a stipulation of facts, as in this case, the question before the lower court
being solely one of law and on the face of the decision, the actuation of appellants being patently
illegal, the doctrine of exhaustion of administrative remedies certainly does not come into play.
3. ID.; ID.; FINDINGS OF REGULATORY AGENCIES ENTITLED TO RESPECT.— It has often been
announced, and rightly so, that as much as possible the findings of regulatory agencies which are
expected to acquire expertise by their jurisdiction being confined to specific matters, deserve to be
accorded respect and finality. There is a limit, however, to such a deference paid to the actuations of
such bodies. Clearly, where there has been a failure to interpret and apply the statutory provisions
in question, judicial power should assert itself. Under the theory of separation of powers, it is to the
judiciary, and to the judiciary alone, that the final say on questions of law in appropriate cases
coming before it is vested.
DECISION
FERNANDO, J.:
Plaintiff Gaudencio A. Begosa, now appellee, sought the aid of the judiciary to obtain the benefits to
which he believed he was entitled under the Veterans’ Bill of Rights. 1 To such a move, there was an
insistent objection, both vigorous and persistent, on the part of defendants, the chairman and the
members of the Philippine Veterans Administration, now appellants. The lower court, then presided
by the then Judge, now Justice of the Court of Appeals, the Honorable Edilberto Soriano, found for
plaintiffs, after a careful and meticulous study of the applicable statutory provisions. Not being
satisfied with such a judgment, defendants appealed, relying once more on the principal grounds
raised below that plaintiff should have exhausted his administrative remedies before coming to
court and that he was in fact suing the State without its consent having been obtained. As neither
defense is sufficiently meritorious, we affirm the lower court decision.
As noted in such decision, appellee’s complaint was predicated on his having been "an enlisted man
in good standing of the Philippine Commonwealth Army, inducted in the service of the USAFFE" and
having taken "active participation in the battle of Bataan" as well as the "liberation drive against the
enemy" thereafter having become "permanently incapacitated from work due to injuries he
sustained in line of duty . . ." 2 It was likewise asserted in his complaint that after having submitted
all the supporting papers relative to his complaint, there was a disapproval on the part of
defendants on the ground of his having been dishonorably discharged, although such an event did
not take place until almost five years after the end of the war on November 7, 1950 and while he
was in the service of a different organization that such a penalty was imposed on him. 3
Then came the allegation that there was an approval on his claim on September 2, 1964 but effective
only as of October 5 of that year, and for amount much less than that to which he was entitled under
the law. 4 The relief sought was the payment, as of the date to which he believed his right to pension
should have been respected, of the sums, which he felt were legally due and owing to
him.chanrobles virtual lawlibrary
The then Judge Soriano noted that there was an admission of certain allegations to the complaint
with others being denied, and that the following affirmative and special defenses were interposed:
"Defendants’ answer admits certain allegations of said complaint, while denying others; set up the
following affirmative and special defenses: (1) payment of disability pension under Republic Act No.
65, as amended, by the Philippine Veterans Administration commences from the date the proper
application therefor is approved; (2) plaintiff has not exhausted all administrative remedies before
resorting to court action, hence the present action is premature; (3) inasmuch as the instant action
pertains to money claim against the Government, it must first be presented before the Auditor
General as provided by existing law on the matter (C.A. 327); and (4) plaintiff’s claim is in reality a
suit against the Government which cannot be entertained by this Court for lack of jurisdiction
because the Government has not given its consent, . . ." 5 The case was then submitted on an agreed
statement of facts and the respective memoranda of the parties.
In the decision now on appeal, the question of when appellee is entitled to his pension as well as
how much it would amount to were fully discussed by the lower court. Thus, as to the former: "From
the facts just set out, it will be noted that plaintiff filed his said claim for disability pension as far
back as March 4, 1955; that it was erroneously disapproved on June 21, 1955, because his
dishonorable discharge from the Army was not a good or proper ground for the said disapproval,
and that on reconsideration asked for by him on November 1, 1957, which he continued to follow
up, the Board of Administrators, Philippine Veterans Administration, composed of herein
defendants, which took over the duties of the Philippine Veterans Board, finally approved his claim
on September 2, 1964, at the rate of P30.00 a month." 6 After stating that in fairness and good
conscience the said claims could be made effective as of June 21, 1955, when it was erroneously
disapproved by appellants, and not on September 2, 1964 when it was approved on reconsideration,
as appellee should not for obvious reason be made to suffer for the error of another, the then Judge
Soriano observed further: "Had it not been for the said error, it appears that there was no good
ground to deny the said claim, so the latter was valid and meritorious even as of the date of its filing
on March 4, 1955, hence to make the same effective only as of the date of its approval on September
2, 1964 — according to defendant’s stand —would be greatly unfair and prejudicial to plaintiff. This
is especially true in the light of the well-known intent of the legislature in passing these pension
laws of war veterans, and the no less well-known spirit in which they should be construed or
interpreted by the courts in favor of their beneficiaries." 7
On the question of how much plaintiff should receive according to law, the appealed decision
contains the following: "The next question for resolution refers to the monthly rate or amount to
which plaintiff is entitled by way of pension. According to plaintiff, he should be given a disability
pension of P50.00 a month from June 21, 1955 (the effective date of his claim as above found by this
Court) until June 21, 1957, and P100.00 a month for life from June 22, 1957 when Section 9 of
Republic Act No. 65, as amended by Republic Act No. 1362, was further amended by Republic Act
No. 1920). This contention is well taken because the very letter of the Philippine Veterans
Administration to plaintiff (Annex F of the [Agreed Statements of Facts]) contains the following:
‘Note: Re-rating is not required, permanent disability.’ By ‘permanent disability’, as this Court
understands it, is meant that plaintiff is permanently incapacitated from work. Under Section 9 of
Republic Act No. 65, as amended by Republic Act No. 1362, which was the law in force when
plaintiff’s claim for pension should have been approved on June 21, 1955, he was entitled to a
pension of P50.00 a month as such permanently incapacitated person, which monthly rate or
amount was increased to P100.00 a month when the said Section 9 was further amended by
Republic Act No. 1920 on June 22, 1957." 8 Why the action of appellants in the form of resolution
could not prevail as against the law was made clear by the decision in this wise: "For one thing, the
said resolution may not change or amend the meaning of the term ‘permanent disability’ as used by
Congress itself in enacting the said Section 9 of Republic Act No. 65, as amended. For another, as of
June 21, 1955 and as of June 21, 1957, plaintiff was already entitled to the said pension of P50.00
and P100.00 a month respectively, and his said right cannot be adversely affected by a resolution
which was allegedly adopted only in 1963." 9 Necessarily, there was in the decision likewise a
recognition of the monthly allowance for each of appellee’s unmarried minor children below 18
years of age at the time he was entitled to the pension to which under the statute he could validly
lay claim.chanroblesvirtuallawlibrary
After rejecting as untenable the defenses that there was no exhaustion of administrative remedies,
that the action is in the nature of money claim which should first be presented before the Auditor
General, and that said action is in reality a suit against the Government without the latter’s consent,
the decision concludes with the following:" [Wherefore], judgment is hereby rendered in
accordance with the prayer of plaintiff’s amended complaint, to wit, that defendants make plaintiff’s
pension effective June 21, 1955 at the rate of P50.00 a month up to June 21, 1957 at the rate of
P100.00 a month, plus P10.00 a month each for his four unmarried minor children below 18 years
old from June 22, 1957 up to September 1, 1964; and the difference of P70.00 a month, plus P10.00
for his one unmarried minor child below 18 years old from September 2, 1954, and thereafter, with
costs against said dependents." 10
Appellants elevated the matter to us. The careful and painstaking way in which the controlling
statutory provisions were considered and applied by the then Judge Soriano must have impelled
them to place their faith in the alleged failure to respect the doctrines of non-suability and
exhaustion of administrative remedies to obtain a reversal. The appealed decision, however, as will
now be shown is not subject to such a reproach. The appeal then, as noted at the outset, is not to be
attended with success.
1. The fourth assignment of error assails what it considers to be the failing of the lower court in not
holding that the complaint in this case is in effect a suit against the State which has not given its
consent thereto. We have recently had occasion to reaffirm the force and primacy of the doctrine of
non-suability. 11 It does not admit of doubt, then, that if the suit were in fact against the State, the
lower court should have dismissed the complaint. Nor is it to be doubted that while ostensibly an
action may be against a public official, the defendant may in reality be the government. As a result, it
is equally well-settled that where a litigation may have adverse consequences on the public
treasury, whether in the disbursements of funds or loss of property, the public official proceeded
against not being liable in his personal capacity, then the doctrine of non-suability may
appropriately be invoked. It has no application, however, where the suit against such a functionary
had to be instituted because of his failure to comply with the duty imposed by statute appropriating
public funds for the benefit of plaintiff or petitioner. Such is the present
case.chanroblesvirtual|awlibrary
The doctrine announced by us in Ruiz v. Cabahug 12 finds relevance: "We hold that under the facts
and circumstances alleged in the amended complaint, which should be taken on its face value, the
suit is not one against the Government, or a claim against it, but one against the officials to compel
them to act in accordance with the rights to be established by the contending architects, or to
prevent them from making payment and recognition until the contending architects have
established their respective rights and interests in the funds retained and in the credit for the work
done." 13 As a matter of fact, in an earlier case where we sustained the power of a private citizen
claiming title to and right of possession of a certain property to sue an officer or agent of the
government alleged to be illegally withholding the same, we likewise expressed this caveat:
"However, and this is important, where the judgment in such a case would result not only in the
recovery of possession of the property in favor of said citizen but also in a charge against or
financial liability to the Government, then the suit should be regarded as one against the
government itself, and, consequently, it cannot prosper or be validly entertained by the courts
except with the consent of said Government." 14
2. Nor is the third assignment of error to the effect that the lower court did not require appellee to
exhaust his administrative remedies before coming to court any more persuasive. An excerpt from
the leading case of Gonzales v. Hechanova, 15 the opinion being penned by the present Chief Justice,
clearly demonstrates why appellants’ argument in this respect is unavailing: "Respondents assail
petitioner’s right to the reliefs prayed for because he ‘has not exhausted all administrative remedies
available to him before coming to court.’ We have already held, however, that the principle
requiring the previous exhaustion of administrative remedies is not applicable ‘where the question
in dispute is purely a legal one’, or where the controverted act is ‘patently illegal’ or was performed
without jurisdiction or in excess of jurisdiction, or where the respondent is a department secretary,
whose acts as an alter-ego of the President bear the implied or assumed approval of the latter,
unless actually disapproved by him, or where there are circumstances indicating the urgency of
judicial intervention." 16 The Gonzales doctrine, it is to be noted, summarized the views announced
in earlier cases. 17 The list of subsequent cases reiterating such a doctrine is quite impressive. 18 To
be more specific, where there is a stipulation of facts, as in this case, the question before the lower
court being solely one of law and on the face of the decision, the actuation of appellants being
patently illegal, the doctrine of exhaustion of administrative remedies certainly does not come into
play.
3. The other errors assigned, namely the alleged failure of the lower court to comply with the law in
fixing the amounts to which appellee is entitled instead of following the rules and regulations on
veterans’ benefits promulgated by appellants and the alleged interference with the purely
discretionary matter of a coordinate administrative agent, the Philippine Veterans Administration,
can easily be disposed of. It is to be admitted that appellants as chairman and members of the
Philippine Veterans Administration, formerly the Philippine Veterans Board, are officials of an
administrative body. 19 Nor may exception be taken to the general principle that as much as
possible the courts should view with the utmost sympathy the exercise of power of administrative
tribunals whether in its rule-making or adjudicatory capacity. It has often been announced, and
rightly so, that as much as possible the findings of these regulatory agencies which are expected to
acquire expertise by their jurisdiction being confined to specific matters, deserve to be accorded
respect and finality. There is a limit, however, to such a deference paid to the actuations of such
bodies. Clearly, where there has been a failure to interpret and apply the statutory provisions in
question, judicial power should assert itself. Under the theory of separation of powers, it is to the
judiciary and to the judiciary alone, that the final say on questions of law appropriate cases coming
before it is vested.chanrobles.com : virtual law library
When the then Judge Soriano, therefore, as he was called upon to do, saw to it that there was strict
compliance with the amounts of pension required by the law to be granted plaintiff and disregarded
the regulation promulgated under the rule-making power of appellants, the effect of which would
make appellee suffer the consequences of an error committed by them, it cannot be truly said that
his decision may be assailed as being offensive to authoritative doctrines. On the contrary, it can
stand the test of the utmost scrutiny. Precisely because the commands of the law were duly carried
out, it cannot be set aside.
WHEREFORE, the decision of the then Judge Edilberto Soriano of the Court of First Instance of
Manila promulgated on January 22, 1966, is affirmed. Without pronouncement as to costs.

[G.R. No. L-15982. May 31, 1963.]
MARINDUQUE IRON MINES AGENTS, INC., Petitioner-Appellant, v. THE SECRETARY OF PUBLIC
WORKS AND COMMUNICATIONS, Respondent-Appellee.
Catral & Reyes for Petitioner-Appellant.
Solicitor General for Respondents-Appellees.
SYLLABUS
1. ADMINISTRATIVE LAW; REMOVAL OF ILLEGAL FLUVIAL OBSTRUCTION; ABSENCE OF SPECIFIC
PROVISION FOR APPEAL TO THE PRESIDENT. — The absence of an express provision in Republic
Act No. 2056 for an appeal to the President from the decision of the Secretary of Public Works and
Communications, considered together with the peremptory character of the periods therein
prescribed for the removal of illegal fluvial obstruction, shows that such an appeal — assuming that
it may be taken in view of the President’s constitutional power of executive control — would not
affect the inexorable requirement that those periods be observed, the only exception in favor of the
Secretary, if there is justifiable or valid reason for his failure or delay to terminate and decide a case
or effect the removal of the illegal construction, such as, an injunction issued by a court.
2. ID.; ID.; FAILURE TO APPEAL; EFFECT OF. — The failure to appeal from the decision of the
Secretary of Agriculture and Natural Resources to the President cannot preclude the party
concerned from taking court action in view of the theory that the Secretary of a Department is
merely an alter-ego of the President; the assumption is that the action of the Secretary bears the
implied sanction of the President, unless the same is disapproved by the latter.
DECISION
MAKALINTAL, J.:
Appellant’s petition for certiorari in the Court of First Instance of Manila was dismissed for lack of
cause of action, on the ground that petitioner had not exhausted the administrative remedy
available to him, namely, appeal to the President from the decision of respondent Secretary of Public
Works and Communications. The events which gave rise to that petition are stated in the order of
dismissal dated July 30, 1959, as follows:jgc:chanrobles.com.ph
"It appears from the allegations of the petition that the petitioner was denounced before the Port
and Harbor Board, Manila for making certain constructions near the mouth of Calat-an Creek in
Sipalay, Negros Occidental; that on September 11, 1958, petitioner was served with copy of the
charges filed against it by two investigators of respondent Secretary of Public Works and
Communications who conducted an investigation of said charges; that on the basis of this
investigation, respondent Secretary rendered a decision dated January 16, 1959 ordering the
petitioner herein to remove the causeway illegally constructed at the mouth of the Calat-an River
and restore the bed of said river to its original condition within thirty days from receipt of copy of
the decision, otherwise, the removal shall be effected by the government at the expense of herein
petitioner. Without appealing the decision of the respondent Secretary to the President, herein
petitioner has filed with this Court the present petition for certiorariseeking that the decision of
respondent be annulled."cralaw virtua1aw library
The order of dismissal was issued after a preliminary hearing on the question of whether or not an
appeal to the President should first have been taken. It is the same question now raised before us.
Respondent’s action ordering petitioner-appellant to remove the causeway constructed by it at the
mouth of the Calat-an River was based on Republic Act No. 2056, sections 2 and 3 of which
provide:jgc:chanrobles.com.ph
"SECTION 2. When it is found by the Secretary of Public Works and Communications, after due
notice and hearing, that any dam, dike or another works . . . encroaches into any public navigable
river, stream, coastal waters and any other public navigable waters or waterways, . . . he shall have
the authority to order the removal of any such works and shall give the party concerned a period
not to exceed thirty days for the removal of the same: . . . Provided, further, That should the party
concerned fail to comply with the order of the Secretary of Public Works and Communications
within the period so stated in the order, such removal shall be effected by the Secretary of Public
Works and Communications at the expense of said party within ten days following the expiration of
the period given the party concerned: Provided, furthermore, That the investigation and hearing to
be conducted by the Secretary of Public Works and Communications under this section shall be
terminated and decided by him within a period which shall not exceed ninety days from the time he
shall have been notified in writing or a written complaint shall have been filed with him by any
interested party apprising him of the existence of a dam, dike or any other works that encroaches
into any public navigable river, stream, coastal waters or any other public waters or waterways . . . :
Provided, still furthermore, That the failure on the part of the Secretary of Public Works and
Communications without justifiable or valid reason to terminate and decide a case or effect the
removal of any such works, as provided for in this Section, shall constitute an offense punishable
under section three of this Act . . ."cralaw virtua1aw library
"SECTION 3. Any person who shall violate the provisions of this Act or who shall fail to comply with
a lawful order of the Secretary of Public Works and Communications within the period given him in
the said order for the removal of any works, shall be punished by imprisonment of not less than six
months or more than six years and fine of not less than five hundred pesos or more than six
thousand pesos. In the case of any Secretary of Public Works and Communications, in addition to the
fine and imprisonment herein provided, he shall suffer the penalty of perpetual absolute
disqualification to hold any office."cralaw virtua1aw library
Nowhere in the foregoing provisions, or in any other part of Republic Act No. 2056, is it required
that appeal to the President should precede recourse to the courts. The silence of the statute, to be
sure, does not mean that the President may not review the action of the Secretary. His power to do
so is implicit in his constitutional power of control of all the executive departments (Section 10, par.
1, Art. VII of the Constitution). This, however, does not resolve the issue, which is not whether
petitioner could have appealed to the President but whether he should have done so before seeking
judicial relief. The answer depends, in turn, upon whether an appeal to the President would have
been sufficiently effective, adequate and expeditious, a negative finding in this respect being the
basis on which the extraordinary writ of certiorari, as prayed for by petitioner, may be issued.
Section 2 of Republic Act No. 2056, it may be noted, prescribes three peremptory periods: (1) not
more than thirty days for the party concerned to remove the illegal construction, counted from the
date the Secretary of Public Works and Communications gives the order to that effect; (2) ten days
following the expiration of the thirty-day period for the Secretary to carry out the removal in case
the party concerned has not complied with the directive, and (3) ninety days within which the
investigation and hearing to be conducted by the Secretary under the said Section should be
terminated, counted from notice to him, by complaint or otherwise, of the existence of an illegal
construction that should be removed. What is more, failure of the offending party to comply with
the order of removal within the time given to him is punishable as a criminal offense. So is failure on
the part of the Secretary of Public Works and Communications "without justifiable or valid reason to
terminate and decide a case or effect the removal of any such works, as provided in this Section
(2)."cralaw virtua1aw library
The absence of an express provision in Republic Act No. 2056 for an appeal to the President from
the decision of the Secretary, considered together with the peremptory character of the periods
therein prescribed, shows that such an appeal — assuming that it may be taken in view of the
President’s constitutional power of executive control — would not affect the inexorable
requirement that those periods be observed, the only exception being in favor of the Secretary, if
there is justifiable or valid reason for his failure or delay to terminate and decide a case or effect the
removal of the illegal construction such as, for Instance, an injunction issued by a court.

The view of the executive department on this point, as expressed by the Secretary of Justice in his
opinion No. 249, s. 1958, coincides with ours. He said:jgc:chanrobles.com.ph

"The above law was evidently enacted to provide for an effective and expeditious manner of
removing illegal obstruction on public waterways. Not only is the Secretary of Public Works and
Communications required to investigate fluvial obstructions but is in terms required to finish the
investigation within a prescribed period. And upon failure of an errant builder of a dam or dike to
comply with an order of removal, the Secretary is specifically directed to cause the execution of his
decision. Failure on the part of the latter, without justifiable or valid reason, to decide a case or
effect the removal of illegal constructions within the time prescribed by the statute is made a
criminal offense.

"It is to be noted that the law does not provide for an administrative appeal. But even assuming that
such appeal is legally authorized, in the face of the unmistakable legislative policy disclosed by the
quoted statute, I am inclined to the view that an appeal to the President from a decision of the
Secretary of Public Works and Communications, does not in the meantime stay the execution of the
appealed decision.

"Nevertheless, in order to afford the aggrieved party ample opportunity to secure judicial
intervention before a demolition order is carried out, it is thought advisable that said party in every
case be given reasonable notice of the date when the demolition shall affected."cralaw virtua1aw
library

We are of the opinion that an appeal to the President from the order of respondent Secretary would
not have been expeditious enough for petitioner’s purposes and hence the latter did not have to
resort to it before seeking judicial relief. In any event, we believe the facts of this case place it within
the rule enunciated in Dimaisip v. Court of Appeals, 106 Phil., 237, as follows:jgc:chanrobles.com.ph

"Such failure (to appeal from the decision of the Secretary of Agriculture and Natural Resources to
the President) cannot preclude the plaintiffs from taking court action in view of the theory that the
Secretary of a Department is merely an altar-ego of the President; the assumption is that the action
of the Secretary bears the implied sanction of the President, unless the same is disapproved by the
latter."cralaw virtua1aw library

The order appealed from is reversed, and the case is remanded to the court a quo for trial and
judgment on the merits. No costs.
G.R. No. L-13882 December 27, 1963
VALERIANO C. BUENO, Petitioner, vs. PEDRO S. PATANAO, JUDGE JESUS S. RUIZ, Municipal
Judge of Butuan City, JUDGE MONTANO A. ORTIZ, Court of First Instance of Agusan,
PROVINCIAL SHERIFF, AGUSAN, Respondents.
Canuto V. Pefiando, Jr. and Eduardo M. Peralta for petitioner.
Tranquilino O. Calo, Jr. for respondents.
REGALA, J.:chanrobles virtual law library
Valeriano C. Bueno and Pedro B. Patanao are concessionaires of adjacent forest lands in the
province of Agusan under licenses issued by the Bureau of
Forestry.chanroblesvirtualawlibrarychanrobles virtual law library
On April 29, 1958, Pedro B. Patanao commenced Special Civil Case No. 48 with the Court of First
Instance of Agusan, against Valeriano C. Bueno and one Juanito Merin, for injunction and damages.
In his amended petition, Patanao alleged that on March 10, 1958 the respondents therein disturbed
him in his possession of his timber concession by illegally entering the same and cutting and hauling
logs therein; that when he went to the area to stop said respondents and their laborers, truckers and
loggers from cutting and hauling logs "he was met with riot guns, pistols and other firearms; and
that defendants were able to cut no less than one million board feet of exportable logs worth not
less than $64,000.00 and would be able to cut and haul even a bigger amount in the space of one
month as they had allegedly concentrated all their logging machineries and equipment with the
apparent intention of illegally denuding the forest are covered by his license. Patanao thus urged the
court below to issue a writ of preliminary injunction so as to enjoin the respondents, their agents,
laborers and lawyers, from entering the area and cutting and hauling logs therein pending trial and,
after trial, to make the injunction final and permanent, and to condemn said respondents liable in an
amount of not less than P175,000.00 as actual and moral damages, attorney's fees and
costs.chanroblesvirtualawlibrarychanrobles virtual law library
Finding the petition to be sufficient in form and substance, Judge Ortiz ordered the therein
respondents to file answer within 10 days from notice and to appear before the court on April 30,
1958 at 9 o'clock a.m. to show cause why the preliminary injunction prayed for should not issue. On
April 30, however, an order was issued by the same judge reading as follows:chanrobles virtual law
library
In view of the absence of the presiding Judge of this Court, the Municipal Judge of Butuan City is
authorized to receive the evidence of the movant for the purpose of deciding whether the injunction
should issue or not. Let the hearing of this case in the Municipal Court be set on May 5,
1958.chanroblesvirtualawlibrarychanrobles virtual law library
The petition for preliminary injunction was heard before Municipal Judge Ruiz on May 5 and 6,
1958, at which dates Bueno filed written oppositions thereto and answer to the
complaint.chanroblesvirtualawlibrarychanrobles virtual law library
In defense, Bueno interposed the following: (1) Patanao has no cause of action, his license over the
area adjacent to Bueno's area having expired; (2) Patanao has not exhausted the administrative
remedies in the settlement of their conflict regarding their common boundary, the same having
been brought already to the attention of the Bureau of Forestry for decision;(3) The area claimed by
Patanao and where Bueno is now operating is within said Bueno's duly licensed concession; (4)
Granting, without conceding, that Bueno had operated in the area of Patanao, said operation was
pursuant to a contractual relation between them; and (5), it is Patanao who has actually encroached
upon the forest area of Bueno.chanroblesvirtualawlibrarychanrobles virtual law library
On May 9, 1958, after hearing, Judge Ruiz granted issuance of a writ of preliminary injunction, and
on the next day said writ was issued by the Clerk of Court. Armed with the writ and a sketch map of
the Bureau of Forestry delimiting Patanao's area, a deputy of the respondent Provincial Sheriff
repaired to the concessions of the parties and then and there restrained, prohibited and enjoined
Bueno and his men from entering and cutting or hauling logs or any other forest products from the
area of Patanao.chanroblesvirtualawlibrarychanrobles virtual law library
Later, in view of Patanao's representations that some logs were cut by his laborers within his area
before April 8, 1958, but same were left on the site and later on carted away by Bueno's men on or
about May 10, 1958, an alias writ of preliminary injunction was issued on May 12, 1959 by the same
Municipal Judge Ruiz, ordering Bueno to give and deliver to Patanao not less than 500 pieces of
exportable lauan logs on deposit at the logpond at Batohon, Esperanza, Agusan. In compliance
thereto, the respondent Sheriff caused the confiscation and delivery to the possession of Patanao of
252 round logs pointed him by Patanao's men.chanroblesvirtualawlibrarychanrobles virtual law
library
Bueno filed a motion for reconsideration of the Court orders dated may 9 and 12, 1958, and the
corresponding writs. After oral argumentation by both parties, the judge of the Court of First
Instance himself denied the motion holding that in his absence, under Section 88 of the Judiciary
Act, Municipal Judge Ruiz had Jurisdiction to issue the preliminary injunction in
question.chanroblesvirtualawlibrarychanrobles virtual law library
On June 2, 1958, Bueno instituted before Us this petition for certiorariand prohibition with
preliminary injunction, claiming that the said orders of May 9 and 12, 1958 were issued far in excess
of the jurisdiction of Judge Ruiz and with grave abuse of discretion; that it is Patanao who had
encroached upon his forest concession; that all the respondents have been enforcing the orders
without affording him ample opportunity to contest them; and that there is no appeal or any other
plain, speedy and adequate remedy in the ordinary course of
law.chanroblesvirtualawlibrarychanrobles virtual law library
On June 5, 1958, counsel for herein respondents filed a "Motion to Dismiss Petition and Opposition
to Issuance of Preliminary Injunction". In a resolution dated June 10, 1958 this Court dismissed the
petition.chanroblesvirtualawlibrarychanrobles virtual law library
Bueno, however, filed a motion for reconsideration and this Court reconsidered the said resolution,
thereby giving due course to the petition.chanroblesvirtualawlibrarychanrobles virtual law library
On motion of petitioner Bueno, a writ of preliminary injunction was issued on June 20, 1958, upon a
bond for the fixed sum of P10,000.00. Respondents filed their answer in due
time.chanroblesvirtualawlibrarychanrobles virtual law library
It is contended in the first place that the orders of May 9 and 12, 1958 were both improvidently
issued by Municipal Judge Ruiz of Butuan City, the authority granted to the said Judge being merely
"to receive the evidence of the movant for the purpose of deciding whether the injunction should
issue or not".chanroblesvirtualawlibrarychanrobles virtual law library
Under Section 88 of the Judiciary Act of 1948, as amended, the Justice of the Peace of a capital or the
Municipal Judge of a chartered city has like interlocutory jurisdiction as a Judge of a Court of First
Instance to hear motions for the appointment of a receiver, for temporary injunctions, and for all
other orders of the Court which are not final in their character. Even conceding, without admitting,
that the Municipal Judge in this case was given only a limited authority to receive evidence on the
granting of the injunction, yet when the writ of injunction was issued by him, the Judge of the Court
of First Instance was no longer in the province; therefore, his act may be regarded as in pursuance
of the authority vested in him under the aforementioned Section 88 of the Judiciary Act of 1948, as
amended.chanroblesvirtualawlibrarychanrobles virtual law library
Furthermore, the Judge of the Court of First Instance who issued the authority to the Municipal
Judge under date of April 30, 1958 to receive evidence only, in denying the motion for
reconsideration filed by petitioner Bueno, sustained the power of the Municipal Judge to issue the
writ in question.chanroblesvirtualawlibrarychanrobles virtual law library
The next point raised by Bueno is that Patanao has no cause of action as yet against him in view of
the fact that the boundary controversy between them is still pending investigation by the Bureau of
Forestry, and before one can resort to the court such administrative remedies as may be available
should first be exhausted, citing the case of Villanueva et al. v. Ortiz, et al., G. R. No. L- 11412, decided
on May 28, 1958.chanroblesvirtualawlibrarychanrobles virtual law library
At first glance, petitioner's argument appears to be tenable. True, the common boundary of the
parties was verified by the Bureau of Forestry way back in March 1955. It seems, however, that
while petitioner Bueno had endeavored to respect the verification report, respondent Patanao had
refused to conform thereto, so much so that the conflict was brought anew to the attention of the
Director of Forestry who has formally taken a hand therein. On or about April 8, 1958, before
Patanao instituted Civil Case No. 48 with the respondent court, he was officially requested to
designate a representative to accompany Forestry officials in the verification of common boundary
line between him and petitioner. (Exhibit 8, letter addressed to Patanao by Anastacio Sison, officer-
in-charge, Esperanza Forest Station, Agusan, p. 3; Opposition to Urgent Motion to Dissolve Writ of
Preliminary Injunction, dated July 23, 1958.) That said boundary dispute is still pending in the
Bureau Forestry at the filing of this petition is shown by the letter of the District Forester of Agusan,
now in the record as Annex A-Opposition. The record also discloses that Patanao's application for
renewal and consolidation of his timber licenses for 1957-58 had not yet been approved by the
Secretary of Agriculture and Natural Resources. Its renewal depends upon the consideration of the
Director of Forestry. The granting of timber licenses, their renewal or cancellation, and the
determination of conflicting claims or boundary lines involving forest zones, such as those presently
occupied by the parties hereto, are all vested by law primarily upon the Director of Forestry and
ultimately upon his Department head.chanroblesvirtualawlibrarychanrobles virtual law library
Incidentally intertwined, however, with the issue of boundary in this case are the question of public
order and the determination of the contractual relations of the parties which only court of justice
have jurisdiction.chanroblesvirtualawlibrarychanrobles virtual law library
Paragraph 3 of the amended petition of Patanao recites that when he attempted to stop petitioner
Bueno and his laborers from cutting and hauling logs, "he was met with riot guns, pistols and other
firearms." This averment finds substantiation in the resolution of respondent Judge Ruiz granting
the issuance of a writ of preliminary injunction, as prayed for by Patanao, the pertinent part of
which reads as follows:
That the respondents committed illegal acts against the person and rights of the petitioner and by
the use of arms, riot guns, pistols and other firearms, forced the petitioner to desist and stop his
lawful logging operation in the area in question, thus disturbing his peaceful and continuous
possession of the above-described forest area, so that on May 2, 1958, the Provincial Fiscal of
Agusan filed with this Court of Criminal Case No. 1641, against Custodio Martinez, one of the trusted
bodyguards of the respondents, for GRAVE COERCION, against the very person of the petitioner
(Exhibit E) and this offense is only one of the illegal acts committed by the respondent's men on
April 8, 1958, which acts are highly arbitrary and oppressive to the rights of the petitioner. ....
In the case of Bohayang vs. Maceren, et al. 53 Off. Gaz., July 15, 1957, p. 4105, which involved public
land claimed by the parties thereto as within the area covered by their respective homestead
applications, this Court directed the trial court therein to go ahead with the hearing of the
possessory action instituted by one of the applicants in spite of the pendency of a boundary dispute
between the same parties in the Bureau of Lands, thus -
If it were merely a matter of the respondent court's control of its calendar, this Court would not
interfere with it. But the order complained of suspends the hearing of the case makes the
resumption thereof dependent upon the action to be taken by the Director of Lands on the conflict
of claims on the land between the petitioner and the respondents. Such postponement may be for a
long stretch of time as it is made depend upon the action to be taken by the Director of Lands. Such
action would settle or determine who under the Public Land Act is entitled to the land as and for
homestead. On the other hand, an action for recovery of possession is an urgent matter which must
be decided promptly to forestall breaches of peace, bodily injury to person mayhem, or perhaps loss
of life. It is duty of the Court to act swiftly and expeditiously in cases of that nature.
Considerations of public order must transcend the mere administrative issue of conflict of
boundaries, if courts has continue to be looked upon as the supreme arbiter of social peace. Indeed,
while the question of boundary is peculiary within the province of the executive branch in those
cases involving the public domain, courts are empowered and have the weapons to compel the
parties, temporarily or perpetually, to maintain peace. One of these judicial weapons is the
provisional remedy of injunction which, considering that its sole object is to preserve the status
quo until the merits case can be heard, and that the status quo is the last actual peaceable
uncontested status which preceded the pending controversy (Rodulfa v. Alfonso, 75 Phil. 225), must
be executed promptly and expeditiously to avert trouble or its
recurrence.chanroblesvirtualawlibrarychanrobles virtual law library
In an earlier case (Pitargue vs. Sorilla, 48 Off. Gaz. p. 3849), this Court lengthily discussed the
propriety of a possessory action, like forcible entry, even as the claimants' respective rights to the
lands applied for by them are still pending investigation in the Bureau of Lands, and it was there
concluded that the determination of rights to public lands is different from the determination of
who has the actual physical possession or occupation with a view to protecting the same and
preventing disorder and breaches of the peace:
... A judgment of the court ordering restitution of the possession of a parcel of land to the actual
occupant, who has been deprived thereof by another through the use of force or in any other illegal
manner, can never be "prejudicial interference" with the disposition or alienation of public lands. On
the other hand, if courts were deprived of jurisdiction of cases involving conflicts of possession, the
threat of judicial action against breaches of the peace committed on public lands would be
eliminated, and a state of lawlessness would probably be produced between applicants, occupants
or squatters, where force or might, not right or justice, would rule.
Also in the same case this Court held that the right of a bona fideoccupant of public land may be
protected by the possessory action of forcible entry or by any other suitable remedy that our rules
provide. Injunction, whether temporary or perpetual, is a suitable remedy provided by our Rules of
Court. Indeed, the petition for injunction filed by Patanao in the lower court is practically a
possessory action, for it has no other purpose than to restore Patanao in the area which he claims to
be in his actual physical possession.chanroblesvirtualawlibrarychanrobles virtual law library
Another phase of the whole controversy which favors the continuation, trial and disposition of the
petition for injunction in the court of origin concerns the contractual relations of the parties.
Paragraph 4 of the amended petition of Patanao seeks the payment of $64,000 representing the
value of one million board feet of exportable logs allegedly cut and hauled by Bueno and his men
from the area in dispute. In his supplemental opposition to Patanao's motion for preliminary
injunction, Bueno asserted:
In the remote possibility that plaintiff can maintain that defendants really operated in the area of
plaintiff (which, certainly has not during the date or dates cited in plaintiff's petition)the same was
done by defendants pursuants to a contractual relation in writing between plaintiff and defendant
Valeriano C. Bueno executed at Butuan City on May 1, 1955, true copies of documents being
attached hereto, ....chanroblesvirtualawlibrarychanrobles virtual law library
It will be noted from the attached documents that plaintiff had entered into a royalty arrangements
with defendants Valeriano C. Bueno for the latter to operate in plaintiff's area at the agreed royalty
of P3.50 per cubic meter, "as long as the area of the Lessee (Plaintiff shall contain commercial
timber" and that plaintiff had created "a continuing first mortgage on all the total timber production
of the Lessee (plaintiff)" in favor of defendant Valeriano C.
Bueno.chanroblesvirtualawlibrarychanrobles virtual law library
The agreed consideration of P3.50 per cubic meter of timber taken from plaintiff's area cannot be
interpreted other than as a royalty because the same amount of P3.50 was to be irrespective of "any
grade, class of timber cut".chanroblesvirtualawlibrarychanrobles virtual law library
Pursuant to the above-mentioned contractual arrangement, plaintiff obtained from defendant
Bueno a total of P192,205.89 from May 1, 1955 to date, against which charged the value of timber
cut by defendants from plain area at P3.50 per cubic meter, irrespective of "any grade, of timber
cut," to date, but leaving still a balance of P8,921.02 to be offset by plaintiff with his timber stand in
his alleged area.
and in his (Bueno's) answer to the injunction suit, he alleged the following defenses:
15. That granting, without conceding, that defendants have cut logs and hauled them from the
alleged concession of plaintiff, the same was in pursuance of a certain agreement and working
arrangement, both executed on May 1, 1955, between plaintiff and defendant Valeriano C. Bueno for
the exploitation and operation of the alleged concession area of plaintiff; that plaintiff's agreement
with defendant Valerian Bueno was exclusive and in full force and effect "as long as the area of the
plaintiff shall contain commercial timber" that plaintiff had created "a continuing first mortgage on
all the total timber production" out of his area in favor of timber Valeriano C. Bueno;chanrobles
virtual law library
16. That pursuant to the Agreement and working arrangement plaintiff entered into with defendant
Valerian Bueno mentioned in the preceding paragraph 15, plaintiff still has an outstanding account
with defendant Bueno in the amount of P18,921.02, to date, the said amount to be paid off in the
form of logs cut and hauled out of plaintiff's alleged area by defendants pursuant to said agreement
and working arrangement but which plaintiff maliciously and unreasonably refused to pay, either in
kind or in cash, despite repeated demands;chanrobles virtual law library
17. That true copies of the documents mentioned in preceding paragraphs 15 and 16 are made parts
and parcels of the herein answer and attached hereto to Annexes I and 2;
It appears that during the hearing of the motion preliminary injunction before respondent Judge
Ruiz, respondent Patanao stated that the agreements executed on May 1, 1955 were no longer in
force because of the failure of Bueno to comply with his obligations in favor of Patanao. In his
answer to the instant petition for certiorari, Patanao averred in paragraph 3 thereof that the
contracts in question pertained to a lease of equipment by Bueno in favor of Patanao and did not
give said Bueno the right to operate in the area of Patanao.chanroblesvirtualawlibrarychanrobles
virtual law library
In the case of Espinosa, et al., v. Makalintal, 79 Phil. 134, We denied the petition to declare the lower
court therein to be without jurisdiction over the subject matter of the main suit - a fishpond leased
by the government to the plaintiff - on ground that the case was the offshoot of disagreement
between the parties in connection with their civil or contractual relations and not with the
determination of conflicting claims regarding the disposition of public lands for fishpond purposes.
This Court said in that case:
The powers granted to the Secretary of Agriculture and Commerce by the pertinent provisions of
law invoked by petitioners are all of executive and administrative nature, such as granting of
licenses, permits, leases and contracts, or approving, rejecting, reinstating, or cancelling applications
or deciding conflicting applications. The controversies between the parties, as raised in the
pleadings in case No. 200 of the Court of First Instance of Iloilo appear to have arisen upon
disagreements in civil or contractual relations between the litigants to which the legal provisions
invoked by petitioners are not and cannot be applicable. It should be far-fetched to recognize in the
Secretary of Agriculture and Commerce the power of determining whether or not, as alleged by
Paranpan, he has been deprived by defendants of the possession of the fishpond in question and of
the legal effects of such alleged deprivation, or upon the nature of the two contracts of mortgage in
the form of sale with right to repurchase between Sason and Paranpan, alleged by defendants, or
whether Paranpan has charged Sason with usurious interests. These are questions judicial in nature
and only courts of justice can decide them.
Similarly, whether or not the agreements, dated May 1,1955, are still in force between the parties,
and whether they involve the cutting of timber in the forest area of Patanao by Bueno on a royalty
basis, as alleged by Bueno, or a mere lease by Patanao of Bueno's logging machinery, as maintained
by Patanao, are essentially judicial questions which the respondent Court of First Instance alone can
and must decide if complete and effective relief is to be
obtained.chanroblesvirtualawlibrarychanrobles virtual law library
This case should be distinguished from the case of Villanueva v. Ortiz, supra, cited by petitioners.
While that case involved boundary disputes between two concessionaires of adjacent forest lands
(one of whom, incidentally, is herein respondent Patanao), there was no showing of violence or
riotous acts that would necessitate the immediate interference of the court therein. Nor was there
alleged any contractual relations between parties.chanroblesvirtualawlibrarychanrobles virtual law
library
IN VIEW OF THE FOREGOING CONSIDERATION the instant petition is hereby dismissed and the
writ of preliminary injunction heretofore issued dissolved, costs against
petitioner.chanroblesvirtualawlibrarychanrobles virtual law lib rary

[G.R. No. L-43825. May 9, 1988.]
CONTINENTAL MARBLE CORP. and FELIPE DAVID, Petitioners, v. NATIONAL LABOR
RELATIONS COMMISSION (NLRC); ARBITRATOR JOSE T. COLLADO and RODITO
NASAYAO, Respondents.
Benito P. Fabie, for Petitioners.
Narciso C. Parayno, Jr. for Respondents.
SYLLABUS
1. REMEDIAL LAW; SUPREME COURT; EMPOWERED TO REVIEW FINAL DECISIONS OF
VOLUNTARY ARBITRATORS WHERE QUESTIONS OF LAW ARE INVOLVED. — In Oceanic Bic
Division (FFW) v. Romero, and reiterated in Mantrade/FMMC Division Employees and Workers
Union v. Bacungan the Court ruled that it can review the decisions of voluntary arbitrators inspite of
statutory provisions making ‘final’ the decisions of certain administrative agencies, we have taken
cognizance of petitions questioning these decisions where want of jurisdiction, grave abuse of
discretion, violation of due process, denial of substantial justice, or erroneous interpretation of the
law were brought to our attention. A voluntary arbitrator by the nature of her functions acts in a
quasi-judicial capacity. There is no reason why her decisions involving interpretation of law should
be beyond this Court’s review. Administrative officials are presumed to act in accordance with law
and yet we do not hesitate to pass upon their work where a question of law is involved or where a
showing of abuse of authority or discretion in their official acts is properly raised in petitions
for certiorari.
2. ADMINISTRATIVE LAW; EXHAUSTION OF ADMINISTRATIVE REMEDIES DOCTRINE CANNOT BE
INVOKED WHERE NO LAW PROVIDE FOR AN APPEAL FROM DECISIONS OF THE NATIONAL LABOR
RELATIONS COMMISSION. — The contention is without merit. The doctrine of exhaustion of
administrative remedies cannot be invoked in this case, as contended. In the recent case of John
Clement Consultants, Inc. versus National Labor Relations Commission, the Court said: "As is well
known, no law provides for an appeal from decisions of the National Labor Relations Commission;
hence, there can be no review and reversal on appeal by higher authority of its factual or legal
conclusions.
3. REMEDIAL LAW; EVIDENCE; FINDINGS OF FACTS OF ADMINISTRATIVE BODIES SUPPORTED BY
SUBSTANTIAL EVIDENCE ACCORDED GREAT RESPECT. — While the Court has accorded great
respect for, and finality to, findings of fact of a voluntary arbitrator and administrative agencies
which have acquired expertise in their respective fields, like the Labor Department and the National
Labor Relations Commission, their findings of fact and the conclusions drawn therefrom have to be
supported by substantial evidence.
4. LABOR AND SOCIAL LEGISLATIONS; LABOR CODE; EMPLOYMENT; FACTORS IN DETERMINING
EXISTENCE EMPLOYER-EMPLOYEE RELATIONSHIP. — Most of all, the element of control is lacking.
In Brotherhood Labor Unity Movement in the Philippines v. Zamora, the Court enumerated the
factors in determining whether or not an employer-employee relationship exists, to wit: (a) the
selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal;
and (d) the employer’s power to control the employee with respect to the means and methods by
which the work is to be accomplished. It is the so-called ‘control test’ that is the most important
element.
5. ID.; ID.; ID.; ID.; ID.; CASE AT BAR. — In the instant case, it appears that the petitioners had no
control over the conduct of Rodito Nasayao in the performance of his work. He decided for himself
on what was to be done and worked at his own pleasure. He was not subject to definite hours or
conditions of work and, in turn, was compensated according to the results of his own effort. He had
a free hand in running the company and its business, so much so, that the petitioner Felipe David
did not know, until very much later, that Rodito Nasayao had collected old accounts receivables, not
covered by their agreement, which he converted to his own personal use. Absent the power to
control the employee with respect to the means and methods by which his work was to be
accomplished, there was no employer-employee relationship between the parties. Hence, there is no
basis for an award of unpaid salaries or wages to Rodito Nasayao.
DECISION
PADILLA, J.:
In this petition for mandamus, prohibition and certiorari with preliminary injunction, petitioners
seek to annul and set aside the decision rendered by the respondent Arbitrator Jose T. Collado,
dated 29 December 1975, in NLRC Case No. LR-6151, entitled: "Rodito Nasayao, complainant, versus
Continental Marble Corp. and Felipe David, Respondents," and the resolution issued by the
respondent Commission, dated 7 May 1976, which dismissed herein petitioners’ appeal from said
decision.
In his complaint before the NLRC, herein private respondent Rodito Nasayao claimed that sometime
in May 1974, he vas appointed plant manager of the petitioner corporation, with an alleged
compensation of P3,000.00, s month, or 25% of the monthly net income of the company, whichever
is greater, and when the company failed to pay his salary for the months of May, June, and July 1974,
Rodito Nasayao filed a complaint with the National Labor Relations Commission, Branch IV, for the
recovery of said unpaid salaries. The case was docketed therein as NLRC Case No. LR-6151.
Answering, the herein petitioners denied that Rodito Nasayao was employed in the company as
plant manager with a fixed monthly salary of P3,000.00. They claimed that the undertaking agreed
upon by the parties was a joint venture, a sort of partnership, wherein Rodito Nasayao was to keep
the machinery in good working condition and, in return, he would get the contracts from end-users
for the installation of marble products, in which the company would not interfere. In addition,
private respondent Nasayao was to receive an amount equivalent to 25% of the net profits that the
petitioner corporation would realize, should there be any. Petitioners alleged that since there had
been no profits during said period, private respondent was not entitled to any
amount.chanroblesvirtualawlibrary
The case was submitted for voluntary arbitration and the parties selected the herein respondent
Jose T. Collado as voluntary arbitrator. In the course of the proceedings, however, the herein
petitioners challenged the arbitrator’s capacity to try and decide the case fairly and judiciously and
asked him to desist from further hearing the case. But, the respondent arbitrator refused. In due
time, or on 29 December 1975, he rendered judgment in favor of the complainant, ordering the
herein petitioners to pay Rodito Nasayao the amount of P9,000.00, within 10 days from notice. 1
Upon receipt of the decision, the herein petitioners appealed to the National Labor Relations
Commission on grounds that the labor arbiter gravely abused his discretion in persisting to hear
and decide the case notwithstanding petitioners’ request for him to desist therefrom: and that the
appealed decision is not supported by evidence. 2
On 18 March 1976, Rodito Nasayao filed a motion to dismiss the appeal on the ground that the
decision of the voluntary arbitrator is final, unappealable, and immediately executory; 3 and, on 23
March 1976, he filed a motion for the issuance of a writ of execution. 4
Acting on the motions, the respondent Commission, in a resolution dated 7 May 1976, dismissed the
appeal on the ground that the decision appealed from is final, unappealable and immediately
executory, and ordered the herein petitioners to comply with the decision of the voluntary
arbitrator within 10 days from receipt of the resolution. 5 The foregoing pronouncements find support in Section 29 of Republic Act No. 876, otherwise known
as the Arbitration Law, which provides:jgc:chanrobles.com.ph
The petitioners are before the Court in the present recourse. As prayed for, the Court issued a
temporary restraining order, restraining herein respondents from enforcing and/or carrying out "Sec. 29. Appeals. — An appeal may be taken from an order made in a proceeding under this Act, or
the questioned decision and resolution. 6 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
The issue for resolution is whether or not the private respondent Rodito Nasayao was employed as shall be governed by the Rules of Court in so far as they are applicable."cralaw virtua1aw library
plant manager of petitioner Continental Marble Corporation with a monthly salary of P3,000.00 or
25% of its monthly income, whichever is greater, as claimed by said respondent, or entitled to The private respondent, Rodito Nasayao, in his Answer to the petition, 9 also claims that the case is
receive only an amount equivalent to 25% of net profits, if any, that the company would realize, as premature for non-exhaustion of administrative remedies. He contends that the decision of the
contended by the petitioners. respondent Commission should have been first appealed by petitioners to the Secretary of Labor,
and, if they are not satisfied with his decision, to appeal to the President of the Philippines, before
The respondent arbitrator found that the agreement between the parties was for the petitioner resort is made to the Court.
company to pay the private respondent, Rodito Nasayao, a monthly salary of P3,000.00, and,
consequently, ordered the company to pay Rodito Nasayao the amount of P9,000.00 covering a The contention is without merit. The doctrine of exhaustion of administrative remedies cannot be
period of three (3) months, that is, May, June and July 1974. invoked in this case, as contended. In the recent case of John Clement Consultants, Inc. versus
National Labor Relations Commission, 10 the Court said:chanrobles.com.ph : virtual law library
The respondent Rodito Nasayao now contends that the judgment or award of the voluntary
arbitrator is final, unappealable and immediately executory, and may not be reviewed by the Court. "As is well known, no law provides for an appeal from decisions of the National Labor Relations
His contention is based upon the provisions of Art. 262 of the Labor Code, as amended. Commission; hence, there can be no review and reversal on appeal by higher authority of its factual
or legal conclusions. When, however, it decides a case without or in excess of its jurisdiction, or with
The petitioners, upon the other hand, maintain that "where there is patent and manifest abuse of grave abuse of discretion, the party thereby adversely affected may obtain a review and nullification
discretion, the rule on unappealability of awards of a voluntary arbitrator becomes flexible and it is of that decision by this Court through the extraordinary writ of certiorari. Since, in this case, it
the inherent power of the Courts to maintain the people’s faith in the administration of appears that the Commission has indeed acted without jurisdiction and with grave abuse of
justice."cralaw virtua1aw library discretion in taking cognizance of a belated appeal sought to be taken from a decision of Labor
Arbiter and thereafter reversing it, the writ of certiorari will issue to undo those acts, and do justice
The question of the finality and unappealability of a decision and/or award of a voluntary arbitrator to the aggrieved party."cralaw virtua1aw library
had been laid to rest in Oceanic Bic Division (FFW) v. Romero, 7 and reiterated in Mantrade/FMMC
Division Employees and Workers Union v. Bacungan. 8 The Court therein ruled that it can review We also find no merit in the contention of Rodito Nasayao that only questions of law, and not
the decisions of voluntary arbitrators, thus — findings of fact of a voluntary arbitrator may be reviewed by the Court, since the findings of fact of
the voluntary arbitrator are conclusive upon the Court.
"We agree with the petitioner that the decisions of voluntary arbitrators must be given the highest
respect and as a general rule must be accorded a certain measure of finality. This is especially true While the Court has accorded great respect for, and finality to, findings of fact of a voluntary
where the arbitrator chosen by the parties enjoys the first rate credentials of Professor Flerida Ruth arbitrator 11 and administrative agencies which have acquired expertise in their respective fields,
Pineda Romero, Director of the U.P. Law Center and an academician of unquestioned expertise in like the Labor Department and the National Labor Relations Commission, 12 their findings of fact
the field of Labor Law. It is not correct, however, that this respect precludes the exercise of judicial and the conclusions drawn therefrom have to be supported by substantial evidence. In that instant
review over their decisions. Article 262 of the Labor Code making voluntary arbitration awards case, the finding of the voluntary arbitrator that Rodito Nasayao was an employee of the petitioner
final, inappealable, and executory except where the money claims exceed P100,000.00 or 40% of corporation is not supported by the evidence or by the law.
paid-up capital of the employer or where there is abuse of discretion or gross incompetence refers
to appeals to the National Labor Relations Commission and not to judicial review. On the other hand, we find the version of the petitioners to be more plausible and in accord with
human nature and the ordinary course of things. As pointed out by the petitioners, it was illogical
"Inspite of statutory provisions making ‘final’ the decisions of certain administrative agencies, we for them to hire the private respondent Rodito Nasayao as plant manager with a monthly salary of
have taken cognizance of petitions questioning these decisions where want of jurisdiction, grave P3,000.00, an amount which they could ill-afford to pay, considering that the business was losing, at
abuse of discretion, violation of due process, denial of substantial justice, or erroneous the time he was hired, and that they were about to close shop in a few months’ time.
interpretation of the law were brought to our attention. There is no provision for appeal in the
statute creating the Sandiganbayan but this has not precluded us from examining decisions of this Besides, there is nothing in the record which would support the claim of Rodito Nasayao that he was
special court brought to us in proper petitions. . . ."cralaw virtua1aw library an employee of the petitioner corporation. He was not included in the company payroll, nor in the
list of company employees furnished the Social Security System.
The Court further said:jgc:chanrobles.com.ph
Most of all, the element of control is lacking. In Brotherhood Labor Unity Movement in the
"A voluntary arbitrator by the nature of her functions acts in a quasi-judicial capacity. There is no Philippines v. Zamora, 13 the Court enumerated the factors in determining whether or not an
reason why her decisions involving interpretation of law should be beyond this Court’s review. employer-employee relationship exists, to wit:jgc:chanrobles.com.ph
Administrative officials are presumed to act in accordance with law and yet we do not hesitate to
pass upon their work where a question of law is involved or where a showing of abuse of authority "In determining the existence of an employer-employee relationship, the elements that are
or discretion in their official acts is properly raised in petitions for certiorari."cralaw virtua1aw generally considered are the following: (a) the selection and engagement of the employee; (b) the
library payment of wages; (c) the power of dismissal; and (d) the employer’s power to control the
employee with respect to the means and methods by which the work is to be accomplished. It is the
so-called ‘control test’ that is the most important element (Investment Planning Corp. of the Phils. v.
The Social Security System, 21 SCRA 924; Mafinco Trading Corp. v. Ople, supra, and Rosario
Brothers, Inc. v. Ople, 131 SCRA 72)."cralaw virtua1aw library

In the instant case, it appears that the petitioners had no control over the conduct of Rodito Nasayao
in the performance of his work. He decided for himself on what was to be done and worked at his
own pleasure. He was not subject to definite hours or conditions of work and, in turn, was
compensated according to the results of his own effort. He had a free hand in running the company
and its business, so much so, that the petitioner Felipe David did not know, until very much later,
that Rodito Nasayao had collected old accounts receivables, not covered by their agreement, which
he converted to his own personal use. It was only after Rodito Nasayao had abandoned the plant
following discovery of his wrong-doings, that Felipe David assumed management of the
plant.chanrobles.com : virtual law library

Absent the power to control the employee with respect to the means and methods by which his
work was to be accomplished, there was no employer-employee relationship between the parties.
Hence, there is no basis for an award of unpaid salaries or wages to Rodito Nasayao.

WHEREFORE, the decision rendered by the respondent Jose T. Collado in NLRC Case No. LR-6151,
entitled: "Rodito Nasayao, complainant, versus Continental Marble Corp. and Felipe
David, Respondents," on 29 December 1975, and the resolution issued by the respondent National
Labor Relations Commission in said case on 7 May 1976, are REVERSED and SET ASIDE and another
one entered DISMISSING private respondent’s complaint. The temporary restraining order
heretofore issued by the Court is made permanent. Without costs.

SO ORDERED.
G.R. No. L-42380 June 22, 1990
DATILES AND COMPANY, represented by LORETA DATILES and LARRY DATILES, petitioner,
vs.
Honorable MELQUIADES S. SUCALDITO, Presiding Judge of Branch I, Court of First Instance of
Zamboanga del Sur, Honorable MATIAS A. GUIEB, or his Successor-in-Office, Regional
Director, Region No. IX, Bureau of Fisheries and Aquatic Resources and JESUS DEYPALUBOS
and DANIEL CABELIEZA, respondents.
Larry B. Datiles for petitioners.
Cerilles & Cerilles, Vera Cruz, Largo, Bautista Law Offices for respondent J. Deypalubos.
PADILLA, J.:
The issue before the Court is whether or not an investigation of a formal protest over a lease grant,
by a Regional Director of the Bureau of Fisheries and Aquatic Resources may be the subject of a
petition for prohibition and/or injunction before the Regional Trial Court, in the light of the
following antecedent facts:
Petitioner Datiles and Company has in its favor a fishpond lease agreement 1 whereby the Republic
of the Philippines, thru the Secretary of Agriculture and Natural Resources, agreed to lease to the
company one hundred seventy five hectares, ninety nine ares and fifty-nine centares (175.9959
has.) of public land located in Batu, Siay, Zamboanga del Sur, for fishpond purposes. Fishpond Lease
Agreement (FLA) No. 1902 was executed on 16 June 1971, with an original period of ten (10) years,
later extended to twenty five (25) years, or up to year 2002. 2
About the middle of 1973, petitioner-lessee filed a complaint for "Injunction with Writ of Possession
with Preliminary and Prohibitory Injunction, with Damages" before the Court of First Instance (now
Regional Trial Court) of Zamboanga del Sur, and docketed as Civil Case No. 1389, against herein
private respondents Jesus Deypalubos and Daniel Cabdieza. 3 Said court action was alleged to have
been resorted to after the vehement refusal of the respondents to obey the orders of the then
Philippine Fisheries Commission and Bureau of Fisheries 4 (now Bureau of Fisheries and Aquatic
Resources) to vacate that portion of the area covered by FLA No. 1902 which they (private
respondents) were occupying without a fishpond permit and the knowledge and consent of
petitioner.
To the accusation of their unlawful entry, private respondents set up the defense of good faith at the
time of their entry and occupation of the land which they described as forested and uncultivated.
They added that prior to the filing of their own respective fishpond lease applications over the
disputed area (i.e., Deypalubos on the southern portion of about forty-nine (49) hectares and
Cabelieza on the eastern part of about two (2) hectares) on 3 January 1973, they were assured by an
officer from the Bureau that the areas were unoccupied and not subject of any pending leasehold
agreement or application. 5
Meanwhile, respondent Deypalubos submitted to the Bureau of Fisheries his formal protest against
petitioner's existing fishpond permit over the 49 hectares, subject on Civil Case 1389. 6
Later, or on 18 February 1974, the trial court, in Civil Case No. 1389 ordered the issuance of a writ
of preliminary mandatory injunction against both respondents 7 resulting in the restoration of
possession and occupancy of the disputed areas by the petitioner on 28 May 1974. 8
Thereafter, or on 2 June 1974, the Barrio Council of Batu, Slay, Zamboanga del Sur prepared and
submitted to the Bureau of Fisheries a resolution 9 which attests that the 49 hectare controverted
fishpond area was never occupied by the Datiles family (herein petitioner company's predecessor)
and that it was Mr. Deypalubos (herein private co-respondent) who cleared the same and
constructed all the improvements therein. The resolution further requests that the original grant of
175.9959 hectares to Datiles and Company (herein petitioner) be reduced to fifty (50) hectares only
in accordance with a certain presidential decree limiting the cultivation of a fishpond to about fifty
(50) hectares, with the remaining area to be distributed to poor families.
No investigation of both the above-mentioned barrio council resolution and Deypalubos' formal
protest over the forty-nine (49) hectares was held in view of a 29 October 1974 order of the Bureau
Director to hold in abeyance any hearing on the matter until such time that Civil Case No. 1389 shall
have been finally resolved. 10
On 3 January 1975, another memorandum was issued by the Bureau Director addressed to herein
public respondent Regional Director Guieb, directing "an immediate formal investigation of those
issues involved in the foregoing resolution and the protest of Mr. Jesus Deypalubos ...and not
touched upon in Civil Case No. 1389." 11
Accordingly, public respondent Guieb notified the parties of the scheduled hearing of the said
protest and resolution. 12
Praying to restrain the proposed investigation on the fishpond conflict, petitioner filed its 10
February 1975 petition for "Prohibition and/or Injunction with Preliminary Injunction" (Special
Civil Case No. 1426) before the CFI of Zamboanga del Sur against public respondent Guieb and
impleading pro forma therein respondents Deypalubos and Cabelieza. 13 Following the limitation on
the scope of issues to be investigated as directed in the 3 January 1975 Memorandum of the Bureau
Director, petitioner alleged that Regional Director Guieb has no longer any authority to conduct the
investigation, as the issues proposed to be investigated are the same issues raised in the then
pending Civil Case No. 1389.
The presiding judge of the court a quo, Hon. Melquiades S. Sucaldito (now respondent), seeing that a
possible irreparable injury could be caused the petitioner if the investigation in question were to
proceed, issued the 31 March 1975 restraining order. 14
During the trial of said Sp. Civil Case No. 1426, private respondents moved to dismiss the case and to
dissolve the restraining order, 15 anchored on the grounds of (a) lack of the court's jurisdiction to
try the case for failure on the part of petitioner to exhaust available administrative remedies, and
(b) violation of Section 1 of Pres. Decree No. 605 which provides, in part, as follows:
SECTION 1. No court of the Philippines shall have jurisdiction to issue any
restraining order, preliminary injunction or preliminary mandatory injunction
in any case involving or growing out of the issuance, approval or disapproval,
revocation or suspension of, or any action whatsoever by the proper
administrative official or body on concessions, licenses, permits, patents, or
public grants of connection with the disposition, exploitation, utilization,
exploration and/or development of the natural resources of the Philippines.
Upholding respondents' contentions, the respondent judge dismissed Sp. Civil Case No. 1426 and
lifted the 31 March 1975 restraining order on 4 August 1975. Pertinent portions of his decision read
as follows: 16
... the element of said section which read:
or any action whatsoever by the proper administrative
officials or body on concessions, licenses, permits, patents
or public grants of any kind.
is so embrasive as to include the projected investigation sought to be
prohibited. Clearly, therefore, Section 1 of Presidential Decree No. 605, as cited
above, is squarely applicable to the restraining order sought to be dissolved. ...
... in that Civil Case No. 1389, in granting the said Writ of Preliminary
Mandatory and Prohibitory Injunction, the Court acted solely to eject the
respondents Deypalubos and Cabelleza from, and to prevent their return to the
premises in question; to prevent them in widening their possession .... This
Civil Case No. 1389 has not yet been tried on the merit. On the other hand, the
investigation sought to be enjoined, and/or prohibited, involved not only mere
possession, but the right of the parties to lease the premises in question, based
on law, rules and regulations issued by the Bureau of Fisheries and Aquatic
Resources. This investigation, therefore, pertains to, and within the exclusive
jurisdiction of the Bureau of Fisheries. In this investigation of the protest, it
might be shown that while defendants may have no right in the beginning, they
might have acquired later on, equitable right which may lead to the approval of
their fishpond applications on the land in question. It may likewise show, upon
the other hand, that petitioner has not complied with the conditions of its lease
agreement;
xxx
Besides, the petitioner in this case has an available, adequate and speedy
remedy that is to appeal this matter of investigation to the proper superior
official-which in this case is the Secretary of agriculture and Natural Resources.
The plaintiff having failed to do this, the Court has no jurisdiction to entertain
the present petition for prohibition. ...
Hence, this petition for review, which was previously denied for lack of merit by this Court in a 28
May 1976 Resolution. 17 Petitioner moved for the reconsideration of the said order of denial 18 and
on 22 April 1977, the Court decided to give due course to the instant petition. 19
Petitioner's recourse to this Court is actually based on Section 2, Rule 65 of the Rules of Court,
seeking to prevent public respondent Guieb from investigating the subject fishpond conflict, on the
ground that this threatened act constitutes excess in the exercise of his jurisdiction. On the other
hand, while respondents do not contest that the nature of the contemplated action (investigation)
can be a proper subject of a petition for prohibition, it is nonetheless submitted that there being no
prior exhaustion of administrative remedies on petitioner's part and in view of PD. No. 606, the
respondent court cannot Properly take jurisdiction of the petition for prohibition.
We rule for the petitioner.
It is a well-settled rule that, for prohibition to lie against an executive officer, the petitioner must
first exhaust administrative remedies. This doctrine rests upon the assumption that the
administrative body, board or officer, if given the chance to correct its/his mistake or error, may
amend its/his decision on a given matter. 20 It follows therefore that there has to be some sort of a
decision, order or act, more or less final in character, that is ripe for review and properly the subject
of an appeal to a higher administrative body or officer, for the principle of exhaustion of
administrative remedies to operate. In the present case, however, there is no administrative order
or act as above described, that can be appealed from. The respondent Regional Director has not
rendered any decision, or made any final finding of any sort, and is in fact just about to conduct an
investigation which happens to be the very act sought to be prevented. Consequently,
administrative remedies that must be exhausted, although available, cannot be resorted to. There
being urgency in stopping public respondent Guieb's investigation but no plain, speedy and
adequate remedy in the ordinary course of law, petitioner's recourse to the respondent court for
relief by way of a petition for prohibition was proper.
We now look into PD No. 605. Its evident purpose is to prevent the substitution of judicial
judgments for those of public administrative officials in disputes involving the disposition or
utilization of natural resources of the country. The decree seeks to leave to administrative agencies
the authority to decide controversies involving licenses, permits, patents or public grants in
connection with natural resources, obviously because of the expertise of such administrative
officials in dealing with such problems.
The issuance of said decree (No. 605) does not, however, mean that courts cannot exercise
jurisdiction where questions of law are involved, as in the case at bar. Here, what was assailed
before respondent judge is Regional Director Guieb's move to conduct an investigation on
Deypalubos' formal protest, the petitioner's theory being that to investigate the matter is to go
beyond what the Director of the Bureau of Fisheries had authorized in his 3 January 1975
Memorandum, which is "to cause an immediate formal investigation of those issues involved in the
foregoing resolution and the protest ... and not touched upon in Civil Case No. 1389. 21 (Emphasis
supplied)
The situation, therefore, called for a determination of whether or not the proposed investigation
was indeed an over-exercise of authority by respondent Regional Director as claimed by the
petitioner; and if this was resolved in the negative, the investigation would have been allowed to
proceed. The respondent court was called upon to look only into the propriety of the investigation
regardless of the fact that the investigation could result in the issuance and/or revocation of
fishpond lease permits of the contending parties.
As to the prohibition dictated by PD No. 605, the same pertains to the issuance by courts of
injunctions or restraining orders against administrative acts on controversies which involve facts or
exercise of discretion in technical cases, because to allow courts to judge these matters could
disturb the smooth functioning of the administrative machinery. But on issues definitely outside of
this dimension and involving questions of law, courts are not prevented by PD No. 605 from
exercising their power to restrain or prohibit administrative acts.
Instead of remanding this case to respondent court for further proceedings, we win put a finish to it.
At bottom line, the real legal issue here is whether public respondent Guieb should desist from
investigating petitioner's fishpond lease No. 1902. It will be recalled that when respondent Guieb
issued the notice of hearing of 24 February 1975 to the parties, the subjects of investigation, as
indicated therein, were the 18 September 1973 Protest against FLA No. 1902 and the 2 June 1974
Barrio Council Resolution. The said Protest consists of Deypalubos' assertions that prior to his
application for a fishpond permit for the area in question, he was assured of the absence of any
improvements in the area he occupied, and that it was he who introduced all the substantial
improvements therein until petitioner company began harassing him. These issues were however
raised and, in fact, already passed upon in the decision rendered in Civil Case No. 1389, which
became final and executory on 26 October 1980. 22 Elaborating on these points, the court in said
Civil Case No. 1389, in a 21-page decision, found the above allegations not credible and ordered,
among others, the forfeiture in favor of petitioner of the improvements built and constructed by
Deypalubos in the controverted area covered by FLA No. 1902. Said court findings are consistent
with the results of the inspection by the former Philippine Fisheries Commission and Bureau of
Fisheries conducted in 1973. 23

The insistence still of respondent Regional Director Guieb to proceed with the investigation,
knowing fully well that there remain no other issues in Deypalubos' protest that were not
previously raised in Civil Case No. 1389 and before the same Bureau, leads one to conclude that he is
acting in excess of his delegated authority to investigate. After these issues had been tried and
investigated, administratively and judicially, the same issues can no longer be reopened by public
respondent Guieb.

The Barrio Council Resolution intended to be included in the investigation by public respondent
Guieb likewise contains the very same averments made in the protest, the only new matter
presented being that petitioner should have been awarded fifty (50) hectares only in view of a
presidential decree limiting administrative grants of fishpond permits or leases to just this much.
The provisions of the invoked decree have not however been set forth nor the decree number
indicated. All that was said is that there is an existing decree to that effect, and nothing more. Such a
broad statement does not justify a reinvestigation of this fishpond conflict.

Justice and fairness dictate that long-resolved matters be finally closed and laid to rest.

WHEREFORE, the 4 August 1975 decision in Sp. Civil Case No. 1426 is REVERSED and public
respondent Guieb is hereby ordered to REFRAIN and DESIST from investigating the respondent
Deypalubos' protest of 18 September 1973 and the Barrio Council Resolution of 2 June 1974 of
Batu-Siay, Zamboanga del Sur questioning Fishpond Lease Agreement No. 1902 in favor of
petitioner.

SO ORDERED.
G.R. No. L-12944 March 30, 1959 6. That on June 18, 1955, the Secretary and the Chief of Office Staff of Veterans Back Pay
Commission sent a letter to General Vicente Lopez of the United States-Chinese
Volunteers in the Philippines apprising the latter that the Commission has reaffirmed its
MARIA NATIVIDAD VDA. DE TAN, petitioner-appellee,
resolution granting the back pay to alien members;
vs.
VETERANS BACKPAY COMMISSION, respondent-appellant.
7. That the Adjutant, Armed Forces of the Philippines, has verified and certified that
deceased veteran has rendered service as a recognized guerrilla for the period indicated
Atilano R. Cinco and Aguilan and Rosero Law Offices for appellee.
Acting Solicitor General Guillermo E. Torres and Solicitor Camilo D. Quiason for appellant. in his •(Adjutant's) indorsement to the Chief, Finance Service Armed Forces of the
Philippines;

REYES, J.B.L., J.:

8. That, likewise, the Chief of Finance Service, Camp Murphy, has computed the backpay
due the petitioner and the same was passed in audit by representatives of the Auditor
On March 5, 1957, petitioner-appellee, Maria Natividad vda. de Tan filed with the Court of First General;
Instance of Manila a verified petition for mandamus seeking an order to compel the respondent-
appellant Veterans Back Pay Commission: (1) to declare deceased Lt. Tan Chiat Bee alias Tan Lian
9. That after due liberation respondent revoked its previous stands and ruled that aliens
Lay, a Chinese national, entitled to backpay rights, privileges, and prerogatives under Republic Act
are not entitled to back pay;
No. 304, as amended by Republic Act No. 897; and (2) to give due course to the claim of petitioner,
as the widow of the said veterans, by issuing to her the corresponding backpay certificate of
indebtedness. 10. That on February 13, 1957, the respondent Veterans Back Pay Commission, through
its Secretary & Chief of Office Staff, made a formal reply to the aforesaid claim of the
herein petitioner denying her request on the ground that aliens are not entitled to back
Respondent Commission filed its answer in due time asserting certain special and affirmative
pay;
defenses, on the basis of which, the Commission unsuccessfully moved to dismiss the petition.

11. That upon refusal of the Veterans Back Pay Commission the petitioner brought the
The parties then submitted a stipulation of facts hereinbelow reproduced:
case direct to this Honorable Court by way of mandamus;

Come now the petitioner and respondent in the above-entitled case through their
12. That petitioner and respondent admit the existence and authenticity of the following
respective counsel, and to this Honorable Court respectfully agree and stipulate that the
documents;
following facts are true:

Annex A—Resolution of the Veterans Back Pay dated November 19, 1953.
1. That the petitioner is of legal age, widow, and a resident of •400 Lallana, Tondo,
Manila; that the respondent is a government instrumentality or agency, with offices in the
City of Manila, Philippines, duly vested with authority to implement the provisions of the Annex B—Letter dated December 9, 1953.
Backpay Law, otherwise known as Republic Act No. 879, further amending Republic Act
No. 304;
Annex C—Letter dated June 18, 1955.

2. That the petitioner is the widow of the late Lt. Tan Chiat Bee alias Tan Lian Lay, a
Annex D—Executive Order No. 21 dated October 28, 1944.
Chinese national, and a bona fide member of the 1st Regiment, United States-Chinese
Volunteers in the Philippines;
Annex E—Executive Order No. 68 dated September 26, 1945.
3. That the United States-Chinese Volunteers in the Philippines is a guerrilla organization
duly recognized by the Army of the United States and forming part and parcel of the Annex F—Minutes of the Resolution of the Back Pay Commission regarding the opinion of
Philippine Army; the Secretary of Justice dated February 8, 1956.

4. That Tan Chiat Bee alias Tan Lian Lay died in the service on April 4, 1945 in the battle Annex G—Letter of Back Pay Commission dated February 26, 1954 to Secretary of Justice.
at Ipo Dam, Rizal Province, Philippines; he was duly recognized as a guerrilla veteran and
certified to by the Armed Forces of the Philippines as having rendered meritorious
Annex H—Opinion No. 213 series of 1956 of the Secretary of Justice.
military services during the Japanese occupation;

Annex I—Reply of Veterans Backpay Commission.

5. That petitioner as the widow of the said recognized deceased veteran, filed an
application for back pay under the provisions of Republic Act No. 897, the resolution of
the Veterans Back Pay Commissions dated November 19, 1953 and the letter of the Annex J—Explanatory Note to House Bill No. 1953.
Veterans Back Pay Commission dated December 9, 1953;
 Annex K—Explanatory note to Senate Bill No. 10.
Annex L—Explanatory note to House Bill No. 1228, now Republic Act No. 897.
Annex M—Joint Resolution No. 5 of the First Congress of the Philippines.
13. That the parties waive the presentation of further evidence;
14. That the respondents will file its memorandum within ten (10) days from August 1,
1957 and the petitioner may file her memorandum within ten (10) days from receipt of
respondent's memorandum, after which the case is deemed submitted for decision.
Manila, July 31, 1957.
Based on the foregoing, the lower court rendered judgment the dispositive portion of which, reads:
Wherefore, the petition is granted, ordering respondent Commission to give due course to
the claim of herein petitioner to the backpay to which her deceased husband was entitled
as member of a duly recognized guerrilla organization.
Against the decision, the respondent instituted this appeal averring once more, in its assignment of
errors, the special and affirmative defenses that the petitioner failed to exhaust available
administrative remedies; that the suit is, in effect, an action to enforce a money claim against the
government without its consent; that mandamus will not lie to compel the exercise of •a
discretionary function; and that the Republic Act Nos. 304 and •897 already referred to were never
intended to benefit aliens.
We find no merit in the appeal. As to the claim that mandamus is not the proper remedy to correct
the exercise of discretion of the Commission, it may well be remembered that its discretion is
limited to the facts of the case, i.e., in merely evaluating the evidence whether or not the claimant is
a member of a guerrilla force duly recognized by the United States Army. Nowhere in the law is the
respondent Commission given the power to adjudicate or determine rights after such facts are
established. Having been satisfied that deceased Tan Chiat Bee was an officer of a duly recognized
guerrilla outfit, certified to by the Armed Forces of the Philippines, having served under the United
States-Chinese Volunteers in the Philippines, a guerrilla unit recognized by the United States army
and forming part of the Philippine Army, it becomes the ministerial duty of the respondent to give
due course to his widow's application. (See sections 1 and 6, Republic Act •897). Note that the Chief
of the Finance Service, Camp Murphy, has accepted the backpay due the petitioner's husband and
the same was passed in audit by the representatives of the Auditor General.
It is insisted by the respondent Commission that aliens are not included within the purview of the
law. We disagree. The law is contained in Republic Act Nos. 304 and 897 is explicit enough, and it
extends its benefits to members of "guerrilla forces duly recognized by the Army of the United
States." From the plain and clear language thereof, we fail to see any indication that its operation
should be limited to citizens of the Philippines only, for all that is required is that the guerrilla unit
be duly recognized by the Army of the United States. We are in full accord with Opinion No. 213,
series of 1956, of the Secretary of Justice, which reads:
Section 1 of the cited Act (Republic act No. 304, as amended by Republic Act No. 897),
otherwise known as the Back Pay Law, recognizes the rights to the backpay of members
of "guerrilla forces duly recognized by the Army of the United States, among others. A
perusal of its provisions reveals nothing which may be construed to mean that only
Filipino citizens are entitled to back pay thereunder. On the contrary, the statute
expressly includes within its coverage "persons under contract with the Government of
the Commonwealth", which clause was construed by this office to refer to service" by the
government (Opinion No. •137, s. 1953), a majority of whom were non-citizens. Thus,
the Opinion No. 30, s. 1949, this office ruled that a civil service employee of the U.S. Coast
and Geodetic Survey rendering the service to the Philippine Government when war broke
out on December 8, 1941, was entitled to back pay.
As regards guerrillas, it seems clear that all the law requires is that they be "duly
recognized by the Army of the United States." Section 1 of the Back Pay Law, it is also
noted, enumerates those who are not entitled to its benefits; recognized guerrillas who
were not Filipino citizens are not among those expressly mentioned. The maxim expressio
unius est exclusio alterius, I think, finds application here.
Moreover, Executive Order No. 21, dated October 28, 1944, expressly declared that,
Sections 22 (a) and 27 of Commonwealth Act No. 1 to the contrary notwithstanding, "all
persons of any nationality or citizenship, who are actively serving in recognized military
forces in the Philippines, are thereby considered to be on active service in the Philippine
Army."
It is the respondent's main argument that it could not have been the intention of Congress to extend
its benefit to aliens, as the purpose of the law was "precisely to help rehabilitate members of the
Armed Forces of the Philippines and recognized guerrillas by giving them the right to acquire public
lands and public property by using the back pay certificate", and "it is fundamental under the
Constitution that aliens except American citizens cannot acquire public lands or exploit our natural
resources". Respondent Commission fails to realize that this is just one of the various uses of the
certificate; and that it may also be utilized for the payment of obligations to the Government or to
any of its branches or instrumentalities, i.e., taxes, government hospital bills, etc. (See Sec. 2, Rep. act
No. 897).
As further observed by the lower court:
It is one thing to be entitled to backpay and to receive acknowledgment therefor, and
another thing to receive backpay certificates in accordance with the resolutions of the
Commission and to make use of the same.
It was, therefore, unreasonable if not arbitrary on the part of respondent Commission to deny
petitioner's claim on the basis.
It is further contended by the Commission that the petitioner should have first exhausted her
administrative remedies by appealing to the President of the Philippines, and that her failure to do
so is a bar to her action in court (Montes vs. The Civil Service Board of Appeals, 101 Phil., 490; 54
Off. Gaz. [7] 2174. The respondent Commission is in estoppel to invoke this rule, considering that in
its resolution (Annex F of the Stipulation of Facts) reiterating its obstinate refusal to abide by the
opinion of the Secretary of Justice, who is the legal adviser of the Executive Department, the
Commission declared that —
The opinions promulgated by the Secretary of Justice are advisory in nature, which may
either be accepted or ignored by the office seeking the opinion, and any aggrieved party
has the court for recourse, (Annex F)
thereby leading the petitioner to conclude that only a final judicial ruling in her favor would be
accepted by the Commission.
Neither is there substance in the contention that the petition is, in effect, a suit against the
government without its consent. the relief prayed for is simply "the recognition of the petitioner-
appellee" under the provisions of sections 1 and 2 of Republic Act No. 897, and consists in "directing
an agency of the government to perform an act . . . it is bound to perform." Republic Act Nos. 304 and
897 necessarily embody state consent to an action against the officers entrusted with the
implementation of said Acts in case of unjustified refusal to recognize the rights of proper
applicants.

The decision appealed from should be, and hereby is, affirmed. No costs. So ordered.

G.R. No. 85439 January 13, 1992

KILUSANG BAYAN SA PAGLILINGKOD NG MGA MAGTITINDA NG BAGONG PAMILIHANG BAYAN
NG MUNTINLUPA, INC. (KBMBPM), TERESITA A. FAJARDO, NADYESDA B. PONSONES, MA. FE V.
BOMBASE, LOIDA D. LUCES, MARIO S. FRANCISCO, AMADO V. MANUEL and ROLANDO G.
GARCIA, incumbent members of the Board, AMADO G. PEREZ and MA. FE V. BOMBASE,
incumbent General Manager and Secretary-Treasurer, respectively, petitioners,
vs.
HON. CARLOS G. DOMINGUEZ, Secretary of Agriculture, Regional Director of Region IV of the
Department of Agriculture ROGELIO P. MADRIAGA, RECTO CORONADO and Municipal Mayor
IGNACIO R. BUNYE, both in his capacity as Municipal Mayor of Muntinlupa, Metro Manila and
as Presiding Officer of Sangguniang Bayan ng Muntinglupa, and JOHN DOES, respondents.
G.R. No. 91927 January 13, 1992
IGNACIO R. BUNYE, JAIME R. FRESNEDI, CARLOS G. TENSUAN, VICTOR E. AGUINALDO,
ALEJANDRO I. MARTINEZ, EPIFANIO A. ESPELETA, REY E. BULAY, LUCIO B. CONSTANTINO,
ROMAN E. NIEFES, NEMESIO O. MOZO, ROGER SMITH, RUFINO B. JOAQUIN, NOLASCO I. DIAZ,
RUFINO IBE and NESTOR SANTOS, petitioners,
vs.
THE SANDIGANBAYAN, THE OMBUDSMAN and ROGER C. BERBANO, Special Prosecutor
III, respondents.
Jose O. Villanueva and Roberto B. Romanillos for petitioners in G.R. No. 85439.
Alampay & Manhit Law Offices for petitioners in G.R. No. 91927.
DAVIDE, JR., J.:
These cases have been consolidated because they are closely linked with each other as to factual
antecedents and issues.
The first case, G.R. No. 85439 (hereinafter referred to as the Kilusang Bayan case), questions the
validity of the order of 28 October 1988 of then Secretary of Agriculture Hon. Carlos G. Dominguez
which ordered: (1) the take-over by the Department of Agriculture of the management of the
petitioner Kilusang Bayan sa Paglilingkod Ng Mga Magtitinda ng Bagong Pamilihang Bayan ng
Muntilupa, Inc. (KBMBPM) pursuant to the Department's regulatory and supervisory powers under
Section 8 of P.D. No. 175, as amended, and Section 4 of Executive Order No. 13, (2) the creation of a
Management Committee which shall assume the management of KBMBPM upon receipt of the
order, (3) the disbandment of the Board of Directors, and (4) the turn over of all assets, properties
and records of the KBMBPM the Management Committee.
The second case. G.R. No. 91927 (hereinafter referred to as the Bunye case), seeks the nullification of
the Resolution of 4 January 1990 of the Sandiganbayan admitting the Amended Information against
petitioners in Criminal Case No. 13966 and denying their motion to order or direct preliminary
investigation, and its Resolution of 1 February 1990 denying the motion to reconsider the former.
The procedural and factual antecedents are not disputed.
On 2 September 1985, the Municipal Government of Muntinlupa (hereinafter, Municipality), Metro
Manila, thru its then Mayor Santiago Carlos, Jr., entered into a contract with the KILUSANG BAYAN
SA PAGLILINGKOD NG MGA MAGTITINDA SA BAGONG PAMILIHANG BAYAN NG MUNTINLUPA, INC.
(KBMBPM) represented by its General Manager, Amado Perez, for the latter's management and
operation of the new Muntinlupa public market. The contract provides for a twenty-five (25) year
term commencing on 2 September 1985, renewable for a like period, unless sooner terminated
and/or rescinded by mutual agreement of the parties, at a monthly consideration of Thirty-Five
Thousand Pesos (P35,000) to be paid by the KBMBPM within the first five (5) days of each month
which shall, however, be increased by ten percent (10%) each year during the first five (5) years
only. 1
The KBMBPM is a service cooperative organized by and composed of vendors occupying the New
Muntinlupa Public Market in Alabang, Muntinlupa, Metro Manila pursuant to Presidential Decree
No. 175 and Letter of Implementation No. 23; its articles of incorporation and by-laws were
registered with the then Office of the Bureau of Cooperatives Development (thereafter the Bureau of
Agricultural Cooperatives Development or BACOD and now the Cooperative Development
Authority). 2
Following his assumption into office as the new mayor succeeding Santiago Carlos, Jr., petitioner
Ignacio Bunye, claiming to be particularly scandalized by the "virtual 50-year term of the
agreement, contrary to the provision of Section 143, paragraph 3 of Batas Pambansa Blg. 337," and
the "patently inequitable rental," directed a review of the aforesaid contract. 3 He sought opinions
from both the Commission on Audit and the Metro Manila Commission (MMC) on the validity of the
instrument. In separate letters, these agencies urged that appropriate legal steps be taken towards
its rescission. The letter of Hon. Elfren Cruz of the MMC even granted the Municipality authority "to
take the necessary legal steps for the cancellation/recission of the above cited contract and make
representations with KBMBPM for the immediate transfer/takeover of the possession, management
and operation of the New Muntinlupa Market to the Municipal Government of Muntinlupa." 4
Consequently, upon representations made by Bunye with the Municipal Council, the latter approved
on 1 August 1988 Resolution No. 45 abrogating the contract. To implement this resolution, Bunye,
together with his co-petitioners and elements of the Capital Command of the Philippine
Constabulary, proceeded, on 19 August 1986, to the public market and announced to the general
public and the stallholders thereat that the Municipality was taking over the management and
operation of the facility, and that the stallholders should henceforth pay their market fees to the
Municipality, thru the Market Commission, and no longer to the KBMBPM. 5
On 22 August 1988, the KBMBPM filed with Branch 13 of the Regional Trial Court of Makati a
complaint for breach of contract, specific performance and damages with prayer for a writ of
preliminary injunction against the Municipality and its officers, which was docketed as Civil Case
No. 88-1702. 6 The complaint was premised on the alleged illegal take-over of the public market
effected "in excess of his (Bunye's) alleged authority" and thus "constitutes breach of contract and
duty as a public official."
The writ applied for having been denied, 7 the KBMBPM officers resisted the attempts of Bunye and
company to complete the take-over; they continued holding office in the KBS building, under their
respective official capacities. The matter having been elevated to this Court by way
of certiorari, 8 We remanded the same to the Court of Appeals which docketed it as C.A.-G.R. No. L-
16930. 9
On 26 August 1988, Amado Perez filed with the Office of the Ombudsman a letter-complaint
charging Bunye and his co-petitioners with oppression, harassment, abuse of authority and
violation of the Anti-Graft and Corrupt Practices Act 10 for taking over the management and
operation of the public market from KBMBPM. 11
In a subpoena dated 7 October 1988, prosecutor Mothalib C. Onos of the Office of the Special
Prosecutor directed Bunye and his co-petitioners to submit within ten (10) days from receipt
thereof counter-affidavits, affidavits of their witnesses and other supporting documents. 12 The and Section 4 of Executive Order No. 113, take over the management of
subpoena and letter-complaint were received on 12 October 1988. KBMBPM under the following directives:

On 20 October 1988, two (2) days before the expiration of the period granted to file said documents, 1. THAT a Management Committee is hereby created
Bunye, et al. filed by mail an urgent motion for extension of "at least fifteen (15) days from October composed of the following:
22, 1988" within which to comply 13 with the subpoena.
a) Reg. Dir. or OIC RD — DA Region IV
Thereafter, the following transpired which subsequently gave rise to these petitions:
b) Atty. Rogelio P. Madriaga — BACOD
G.R. No. 85439
c) Mr. Recto Coronado — KBMBPM
In the early morning of 29 October 1988, a Saturday, respondent Madriaga and Coronado, allegedly
accompanied by Mayor Bunye and the latters' heavily armed men, both in uniform and in civilian
d) Mrs. Nadjasda Ponsones — KBMBPM
clothes, together with other civilians, namely: Romulo Bunye II, Alfredo Bunye, Tomas Osias,
Reynaldo Camilon, Benjamin Taguibao, Benjamin Bulos and other unidentified persons, allegedly
through force, violence and intimidation, forcibly broke open the doors of the offices of petitioners e) One (1) from the Municipal Government of Muntinlupa
located at the second floor of the KBS Building, new Muntinlupa Public Market, purportedly to serve to be designated by the Sangguniang Pambayan ng
upon petitioners the Order of respondent Secretary of Agriculture dated 28 October 1988, and to Muntinlupa;
implement the same, by taking over and assuming the management of KBMBPM, disbanding the
then incumbent Board of Directors for that purpose and excluding and prohibiting the General
2. THAT the Management Committee shall, upon receipt
Manager and the other officers from exercising their lawful functions as such. 14 The Order of the
of this Order, assume the management of KBMBPM;
Secretary reads as follows: 15

3. THAT the present Board of Directors is hereby

ORDER
disbanded and the officers and Manager of the KBMBPM
are hereby directed to turnover all assets, properties and
WHEREAS, the KILUSANG BAYAN SA PAGLILINGKOD NG MGA MAGTITINDA records of the KBMBPM to the Management Committee
NG BAGONG PAMILIHANG BAYAN NG MUNTINLUPA, INC., (KBMBPM), herein created;
Alabang, Muntinlupa, Metro Manila is a Cooperative registered under the
provisions of Presidential Decree No. 175, as amended;
4. THAT the Management Committee is hereby
empowered to promulgate rules of procedure to govern
WHEREAS, the Department of Agriculture is empowered to regulate and its workings as a body;
supervise cooperatives registered under the provisions of Presidential Decree
No. 175, as amended;
5. THAT the Management Committee shall submit to the
undersigned thru the Director of BACOD monthly reports
WHEREAS, the general membership of the KBMBPM has petitioned the on the operations of KBMBPM;
Department of Agriculture for assistance in the removal of the members of the
Board of Directors who were not elected by the general membership of said
6. THAT the Management Committee shall call a General
cooperative;
Assembly of all registered members of the KBMBPM
within Ninety (90) days from date of this Order to decide
WHEREAS, the on-going financial and management audit of the Department of such matters affecting the KBMBPM, including the
Agriculture auditors show (sic) that the management of the KBMBPM is not election of a new set of Board of Director (sic).
operating that cooperative in accordance with PD. 175, LOI No. 23, the
Circulars issued by DA/BACOD and the provisions of the by-laws of KBMBPM;
This Order takes effect immediately and shall continue to be in force until the
members of the Board of Directors shall have been duly elected and qualified.
WHEREAS, the interest of the public so demanding it is evident and urgently
necessary that the KBMBPM MUST BE PLACED UNDER MANAGEMENT TAKE-
Done this 28th day of October, 1988 at Quezon City.
OVER of the Department of Agriculture in order to preserve the financial
interest of the members of the cooperative and to enhance the cooperative
development program of the government; As claimed by petitioners, the Order served on them was not written on the stationary of the
Department, does not bear its seal and is a mere xerox copy.
WHEREAS, it is ordered that the Department of Agriculture in the exercise of
its regulatory and supervisory powers under Section 8 of PD 175, as amended,
The so-called petition upon which the Order is based appears to be an unverified petition dated 10
October 1988 signed, according to Mayor Bunye, 16 by 371 members of the KBMBPM.
On 2 November 1988, petitioners filed the petition in this case alleging, inter alia, that:
(a) Respondent Secretary acted without or in excess of jurisdiction in issuing
the Order for he arrogated unto himself a judicial function by determining the
alleged guilt of petitioners on the strength of a mere unverified petition; the
disbandment of the Board of Directors was done without authority of law since
under Letter of Implementation No. 23, removal of officers, directors or
committee members could be done only by the majority of the members
entitled to vote at an annual or special general assembly and only after an
opportunity to be heard at said assembly.
(b) Respondent Secretary acted in a capricious, whimsical, arbitrary and
despotic manner, so patent and gross that it amounted to a grave abuse of
discretion.
(c) The Order is a clear violation of the By-Laws of KBMBPM and is likewise
illegal and unlawful for it allows or tolerates the violation of the penal
provisions under paragraph (c), Section 9 of P.D. No. 175.
(d) The Order is a clear violation of the constitutional right of the individual
petitioners to be heard. 17
They pray that upon the filing of the petition, respondents, their agents, representatives or persons
acting on their behalf be ordered to refrain, cease and desist from enforcing and implementing the
questioned Order or from excluding the individual petitioners from the exercise of their rights as
such officers and, in the event that said acts sought to be restrained were already partially or wholly
done, to immediately restore the management and operation of the public market to petitioners,
order respondents to vacate the premises and, thereafter, preserve the status quo; and that, finally,
the challenged Order be declared null and void.
In the Resolution of 9 October 1988, 18 We required the respondents to Comment on the petition.
Before any Comment could be filed, petitioners filed on 2 January 1989 an Urgent Ex-Parte Motion
praying that respondent Atty. Rogelio Madriaga, who had assumed the position of Chairman of the
Management Committee, be ordered to stop and/or cancel the scheduled elections of the officers of
the KBMBPM on 6 January 1989 and, henceforth, desist from scheduling any election of officers or
Members of the Board of Directors thereof until further orders on the Court. 19 The elections were,
nevertheless, held and a new board of directors was elected. So, on 19 January 1989, petitioners
filed a supplemental motion 20 praying that respondent Madriaga and the "newly elected Board of
Directors be ordered to cease and desist from assuming, performing or exercising powers as such,
and/or from removing or replacing the counsels of petitioners as counsels for KBMBPM and for
Atty. Fernando Aquino, Jr., to cease and desist from unduly interfering with the affairs and business
of the cooperative."
Respondent Bunye, by himself, filed his Comment on 23 January 1989. 21 He denies the factual
allegations in the petition and claims that petitioners failed to exhaust administrative remedies. A
reply thereto was filed by petitioners on 7 February 1989. 22
Respondent Recto Coronado filed two (2) Comments. The first was filed on 6 February 1989 23 by
his counsel, Atty. Fernando Aquino, Jr., and the second, which is for both him and Atty. Madriaga,
was filed by the latter on 10 February 1989. 24
On 20 February 1989, petitioners filed a Reply to the first Comment of Coronado 25 and an Ex-
Parte Motion for the immediate issuance of a cease and desist order 26 praying that the so-called
new directors and officers of KBMBPM, namely: Tomas M. Osias, Ildefonso B. Reyes, Paulino Moldez,
Fortunato M. Medina, Aurora P. del Rosario, Moises Abrenica, and Lamberto Casalla, be ordered to
immediately cease and desist from filing notices of withdrawals or motions to dismiss cases filed by
the Cooperative now pending before the courts, administrative offices and the Ombudsman and
Tanodbayan, and that if such motions or notices were already filed, to immediately withdraw and
desist from further pursuing the same until further orders of this Court. The latter was precipitated
by the Resolution No. 19 of the "new" board of directors withdrawing all cases filed by its
predecessors against Bunye, et al., and more particularly the following cases: (a) G.R. No. 85439 (the
instant petition), (b) Civil Case No. 88-1702, (c) OSP Case No. 88-2110 before the Ombudsman, (d)
IBP Case No. 88-0119 before the Tanodbayan, and Civil Case No. 88-118 for Mandamus. 27
On 1 March 1989, We required the Solicitor General to file his Comment to the petition and the
urgent motion for the immediate issuance of a cease and desist order. 28
A motion to dismiss the instant petition was filed on 30 March 1989. 29 On 19 April 1989, We
resolved to dismiss the case and consider it closed and terminated. 30 Thereupon, after some
petitioners filed a motion for clarification and reconsideration, We set aside the dismissal order and
required the new directors to comment on the Opposition to Motion to Dismiss filed by the
former. 31
The new board, on 14 June 1989, prayed that its Manifestation of 6 June 1989 and Opposition dated
9 June 1989, earlier submitted it response to petitioners' motion for reconsideration of the order
dismissing the instant petition, be treated as its Comment. 32 Both parties then continued their legal
fencing, serving several pleadings on each other.
In Our Resolution of 9 August 1989, 33 We gave the petition due course and required the parties to
submit their respective Memoranda.
On 14 August 1989, petitioners filed an urgent ex-parte motion for the immediate issuance of a
cease and desist order 34 in view of the new board's plan to enter into a new management contract;
the motion was noted by this Court on 23 August 1989. A second ex-parte motion, noted on 18
October 1989, was filed on 19 September 1989 asking this court to consider the "Invitation to pre-
qualify and bid" for a new contract published by respondent Bunye. 35
In a belated Comment 36 for the respondent Secretary of Agriculture filed on 22 September 1989, the
Office of the Solicitor General asserts that individual petitioners, who were not allegedly elected by
the members or duly designated by the BACOD Director, have no right or authority to file this case;
the assailed Order of the Secretary was issued pursuant to P.D. No. 175, more particularly Section 8
thereof which authorizes him "(d) to suspend the operation or cancel the registration of any
cooperative after hearing and when in its judgment and based on findings, such cooperative is
operating in violation of this Decree, rules and regulations, existing laws as well as the by-laws of
the cooperative itself;" the Order is reasonably necessary to correct serious flaws in the cooperative
and provide interim measures until election of regular members to the board and officers thereof;
the elections conducted on 6 January 1989 are valid; and that the motion to dismiss filed by the new
board of directors binds the cooperative. It prays for the dismissal of the petition.
Respondent Secretary of Agriculture manifested on 22 September 1989 that he is adopting the
Comment submitted by the Office of the Solicitor General as his memorandum; 37 petitioners and
respondents Coronado and Madriaga filed their separate Memoranda on 6 November 1989; 38 while
the new board of directors submitted its Memorandum on 11 December 1989. 39
The new KBMBPM board submitted additional pleadings on 16 February 1990 which it deemed Arraignment was set for 18 October 1989. 52
relevant to the issues involved herein. Reacting, petitioners filed a motion to strike out improper
and inadmissible pleadings and annexes and sought to have the pleaders cited for contempt.
However, on 14 October 1989, petitioners filed with the Sandiganbayan an "Omnibus Motion to
Although We required respondents to comment, the latter did not comply.
Remand to the Office of the Ombudsman; to Defer Arraignment and to Suspend Proceedings." 53

Nevertheless, a manifestation was filed by the same board on 25 February 1991 40 informing this
Subsequently, through new counsel, petitioners filed on 17 October 1989 a Consolidated
Court of the holding, on 9 January 1991, of its annual general assembly and election of its board of
Manifestation and Supplemental Motion 54 praying, inter alia, for the quashal of the information on
directors for 1991. It then reiterates the prayer that the instant petition be considered withdrawn
the ground that they were deprived of their right to a preliminary investigation and that the
and dismissed. Petitioners filed a counter manifestation alleging that the instant petition was
information did not charge an offense.
already given due course on 9 August 1989. 41 In its traverse to the counter manifestation, the new
board insists that it "did not derive authority from the October 28, 1988 Order, the acts of the
Management Committee, nor (sic) from the elections held in (sic) January 6, 1989," but rather from The Sandiganbayan issued an order on 18 October 1989 deferring arraignment and directing the
the members of the cooperative who elected them into office during the elections. parties to submit their respective memoranda, 55 which petitioners complied with on 2 November
1989. 56 On 16 November 1989, special Prosecutor Berbano filed a motion to admit amended
information. 57
Petitioners filed a rejoinder asserting that the election of new directors is not a supervening event
independent of the main issue in the present petition and that to subscribe to the argument that the
issues in the instant petition became moot with their assumption into office is to reward a wrong On 17 November 1989, the Sandiganbayan handed down a Resolution 58 denying for lack of merit
done. the Omnibus Motion to Remand the Case To The Office of the Ombudsman, to Defer Arraignment
and to Suspend Proceedings. Petitioners then filed a motion to order a preliminary
investigation 59 on the basis of the introduction by the amended information of new, material and
G. R. NO. 91927
substantive allegations, which the special prosecutor opposed, 60 thereby precipitating a rejoinder
filed by petitioners. 61
Petitioners claim that without ruling on their 20 October 1988 motion for an extension of at last 15
days from 22 October 1988 within which to file their counter-affidavits, which was received by the
On 4 January 1990, the Sandiganbayan handed down a Resolution 62 admitting the Amended
Office of the Special Prosecutor on 3 November 1988, Special Prosecutor Onos promulgated on 11
Information and denying the motion to direct preliminary investigation. Their motion to reconsider
November 1988 a Resolution finding the evidence on hand sufficient to establish a prima facie case
this Resolution having been denied in the Resolution of 1 February 1990, 63 petitioners filed the
against respondents (herein petitioners) and recommending the filing of the corresponding
instant petition on 12 February 1990.
information against them before the Sandiganbayan. 42 Petitioners also claim that they submitted
their counter-affidavits on 9 November 1988. 43
Petitioners claim that respondent Sandiganbayan acted without or in excess of jurisdiction or with
manifest grave abuse of discretion amounting to lack of jurisdiction in denying petitioners their
In their motion dated 2 December 1988, petitioners move for a reconsideration of the above
right to preliminary investigation and in admitting the Amended Information.
Resolution, 44 which was denied by Onos 45 in his 18 January 1989 Order. The information against
the petitioners was attached to this order.
They then pray that: (a) the 4 January and 1 February 1990 Resolutions of the Sandiganbayan,
admitting the amended information and denying the motion for reconsideration, respectively, be
Upon submission of the records for his approval, the Ombudsman issued a first indorsement on 4
annulled; (b) a writ be issued enjoining the Sandiganbayan from proceeding further in Criminal
April 1989 referring to "Judge Gualberto J. de la Llana, Acting Director , IEO/RSSO, this Office, the
Case No. 13966; and (c) respondents be enjoined from pursuing further actions in the graft case.
within records of OSP Case No. 88-02110 . . . for further preliminary investigation . . ." 46

We required the respondents to Comment on the petition.

Thereafter, on 28 April 1989, Bunye and company received a subpoena from de la Llana requiring
them to appear before the latter on 25 April 1989, 47 submit a report and file comment. After being
granted an extension, Bunye and company submitted their comment on 18 May 1989. 48
On 22 August 1989, de la Llana recommended the filing of an information for violation of section 3
(e) of the Anti-Graft and Corrupt Practices Act. 49 The case was referred to special prosecuting
officer Jose Parentela, Jr. who, in his Memorandum 50 to the Ombudsman through the Acting Special
Prosecutor, likewise urged that an information be filed against herein petitioners. On 3 October
1989, the Ombudsman signed his conformity to the Memorandum and approved the 18 January
information prepared by Onos, which was then filed with the Sandiganbayan.
Consequently, Bunye, et al. were served arrest warrants issued by the Sandiganbayan. Detained at
the NBI on 9 October 1989, they claim to have discovered only then the existence of documents
recommending and approving the filing of the complaint and a memorandum by special prosecutor
Bernardita G. Erum proposing the dismissal of the same. 51
On 21 February 1990, petitioners' counsel filed a motion to drop Epifanio Espeleta and Rey E. Dulay
as petitioners, 64 and in the Comment they filed on 30 March 1990, in compliance with Our
Resolution of 1 March 1990, they state that they do not interpose any objection to the motion.
On 20 March 1990, the Office of the Solicitor General moved that it be excused from filing comment
for the respondents as it cannot subscribe to the position taken by the latter with respect to the
questions of law involved. 65We granted this motion in the resolution of 8 May 1990.
Respondent Berbano filed his comment on 10 September 1991 and petitioners replied on 20
December 1990; Berbano subsequently filed a Rejoinder thereto on 11 January 1991. 66 The
Sandiganbayan then filed a manifestation proposing that it be excused from filing comment as its
position
on the matters in issue is adequately stated in the resolutions sought to be annulled. 67 On 7 March
1991, We resolved to note the manifestation and order the instant petition consolidated with G.R.
No. 85439.
The present dispute revolves around the validity of the antecedent proceedings which led to the
filing of the original information on 18 January 1989 and the amended information afterwards.
THE ISSUES AND THEIR RESOLUTION
1. G. R. No. 85439.
As adverted to in the introductory portion of this Decision, the principal issue in G.R. No. 85439 is
the validity of the 28 October 1988 Order of respondent Secretary of Agriculture. The exordium of
said Order unerringly indicates that its basis is the alleged petition of the general membership of the
KBMBPM requesting the Department for assistance "in the removal of the members of the Board of
Directors who were not elected by the general membership" of the cooperative and that the
"ongoing financial and management audit of the Department of Agriculture auditors show (sic) that
the management of the KBMBPM is not operating that cooperative in accordance with P.D. 175, LOI
23, the Circulars issued by DA/BACOD and the provisions and by-laws of KBMBPM." It is also
professed therein that the Order was issued by the Department "in the exercise of its regulatory and
supervisory powers under Section 8 of P.D. 175, as amended, and Section 4 of Executive Order No.
113."
Respondents challenge the personality of the petitioners to bring this action, set up the defense of
non-exhaustion of administrative remedies, and assert that the Order was lawfully and validly
issued under the above decree and Executive Order.
We find merit in the petition and the defenses interposed do not persuade Us.
Petitioners have the personality to file the instant petition and ask, in effect, for their reinstatement
as Section 3, Rule 65 of the Rules of Court, defining an action for mandamus, permits a person who
has been excluded from the use and enjoyment of a right or office to which he is entitled, to file
suit. 68 Petitioners, as ousted directors of the KBMBPM, are questioning precisely the act of
respondent Secretary in disbanding the board of directors; they then pray that this Court restore
them to their prior stations.
As to failure to exhaust administrative remedies, the rule is well-settled that this requirement does
not apply where the respondent is a department secretary whose acts, as an alter ego of the
President, bear the implied approval of the latter, unless actually disapproved by him. 69 This
doctrine of qualified political agency ensures speedy access to the courts when most needed. There
was no need then to appeal the decision to the office of the President; recourse to the courts could
be had immediately. Moreover, the doctrine of exhaustion of administrative remedies also yields to
other exceptions, such as when the question involved is purely legal, as in the instant case, 70 or
where the questioned act is patently illegal, arbitrary or oppressive. 71 Such is the claim of
petitioners which, as hereinafter shown, is correct.
And now on the validity of the assailed Order.
Regulation 34 of Letter of Implementation No. 23 (implementing P.D. No. 175) provides the
procedure for the removal of directors or officers of cooperatives, thus:
An elected officer, director or committee member may be removed by a vote of
majority of the members entitled to vote at an annual or special general
assembly. The person involved shall have an opportunity to be heard.
A substantially identical provision, found in Section 17, Article III of the KBMBPM's by-laws, reads:
Sec. 17. Removal of Directors and Committee Members. — Any elected director
or committee member may be removed from office for cause by a majority
vote of the members in good standing present at the annual or special general
assembly called for the purpose after having been given the opportunity to be
heard at the assembly.
Under the same article are found the requirements for the holding of both the annual general
assembly and a special general assembly.
Indubitably then, there is an established procedure for the removal of directors and officers of
cooperatives. It is likewise manifest that the right to due process is respected by the express
provision on the opportunity to be heard. But even without said provision, petitioners cannot be
deprived of that right.
The procedure was not followed in this case. Respondent Secretary of Agriculture arrogated unto
himself the power of the members of the KBMBPM who are authorized to vote to remove the
petitioning directors and officers. He cannot take refuge under Section 8 of P.D. No. 175 which
grants him authority to supervise and regulate all cooperatives. This section does not give him that
right.
An administrative officer has only such powers as are expressly granted to him and those
necessarily implied in the exercise thereof. 72 These powers should not be extended by implication
beyond what may to necessary for their just and reasonable execution. 73
Supervision and control include only the authority to: (a) act directly whenever a specific function is
entrusted by law or regulation to a subordinate; (b) direct the performance of duty; restrain the
commission of acts; (c) review, approve, reverse or modify acts and decisions of subordinate
officials or
units; (d) determine priorities in the execution of plans and programs; and (e) prescribe standards,
guidelines, plans and programs. Specifically, administrative supervision is limited to the authority of
the department or its equivalent to: (1) generally oversee the operations of such agencies and
insure that they are managed effectively, efficiently and economically but without interference with
day-to-day activities; (2) require the submission of reports and cause the conduct of management
audit, performance evaluation and inspection to determine compliance with policies, standards and
guidelines of the department; (3) take such action as may be necessary for the proper performance
of official functions, including rectification of violations, abuses and other forms of mal-
administration; (4) review and pass upon budget proposals of such agencies but may not increase
or add to them. 74
The power to summarily disband the board of directors may not be inferred from any of the
foregoing as both P.D. No. 175 and the by-laws of the KBMBPM explicitly mandate the manner by
which directors and officers are to be removed. The Secretary should have known better than to
disregard these procedures and rely on a mere petition by the general membership of the KBMBPM
and an on-going audit by Department of Agriculture auditors in exercising a power which he does
not have, expressly or impliedly. We cannot concede to the proposition of the Office of the Solicitor
General that the Secretary's power under paragraph (d), Section 8 of P.D. No. 175 above quoted to
suspend the operation or cancel the registration of any cooperative includes the "milder authority of
suspending officers and calling for the election of new officers." Firstly, neither suspension nor
cancellation includes the take-over and ouster of incumbent directors and officers, otherwise the
law itself would have expressly so stated. Secondly, even granting that the law intended such as
postulated, there is the requirement of a hearing. None was conducted.
Likewise, even if We grant, for the sake of argument, that said power includes the power to disband
the board of directors and remove the officers of the KBMBPM, and that a hearing was not expressly
required in the law, still the Order can be validly issued only after giving due process to the affected
parties, herein petitioners.
Due process is guaranteed by the Constitution 75 and extends to administrative proceedings. In the
landmark case of Ang Tibay vs. Court of Industrial Relations, 76 this Court, through Justice Laurel, laid
down the cardinal primary requirements of due process in administrative proceedings, foremost of
which is the right to a hearing, which includes the right to present one's case and submit evidence in
support thereof. The need for notice and the opportunity to be heard is the heart of procedural due
process, be it in either judicial or administrative proceedings. 77 Nevertheless, a plea of a denial of
procedural due process does not lie where a defect consisting in an absence of notice of hearing was
thereafter cured by the aggrieved party himself as when he had the opportunity to be heard on a
subsequent motion for reconsideration. This is consistent with the principle that what the law
prohibits is not the absence of previous notice but the absolute absence thereof and lack of an
opportunity to be heard. 78
dismiss a complaint or information. Much less does it affect the court's jurisdiction. In People
vs. Casiano, 83 this Court ruled:
Independently of the foregoing, the absence of such investigation [preliminary]
did not impair the validity of the information or otherwise render it defective.
Much less did it affect the jurisdiction of the court of first instance over the
present case. Hence, had the defendant-appellee been entitled to another
preliminary investigation, and had his plea of not guilty upon arraignment not
implied a waiver of said right, the court of first instance should have, either
conducted such preliminary investigation, or ordered the Provincial Fiscal to
make it, in pursuance of section 1687 of the Revised Administrative Code (as
amended by Republic Act No. 732), or remanded the record for said
investigation to the justice of the peace court, instead of dismissing the case as
it did in the order appealed from.
This doctrine was thereafter reiterated or affirmed in several case. 84
In the instant case, even if it is to be conceded for argument's sake that there was in fact no
preliminary investigation, the Sandiganbayan, per Doromal vs.Sandiganbayan, 85 "should merely
suspend or hold in abeyance proceedings upon the questioned Amended Information and remand
the case to the Office of the Ombudsman for him to conduct a preliminary investigation."

In the instant case, there was no notice of a hearing on the alleged petition of the general
It is Our view, however, that petitioners were not denied the right to preliminary investigation.
membership of the KBMBPM; there was, as well, not even a semblance of a hearing. The Order was
They, nevertheless, insist that the preliminary investigation conducted by the Office of the Special
based solely on an alleged petition by the general membership of the KBMBPM. There was then a
Prosecutor existed more in form than in substance. This is anchored on the failure by prosecutor
clear denial of due process. It is most unfortunate that it was done after democracy was restored
Onos to consider the counter-affidavits filed by petitioners. The same sin of omission is ascribed to
through the peaceful people revolt at EDSA and the overwhelming ratification of a new Constitution
Acting Director de la Llana who purportedly failed to consider the comments submitted by the
thereafter, which preserves for the generations to come the gains of that historic struggle which
petitioners pursuant to a subpoena dated 13 April 1989. The failure of special prosecutor Berbano
earned for this Republic universal admiration.
to conduct a preliminary investigation before amending the information is also challenged.

If there were genuine grievances against petitioners, the affected members should have timely raise
It is finally urged that the Sandiganbayan completely disregarded the "glaring anomaly that on its
these issues in the annual general assembly or in a special general assembly. Or, if such a remedy
face the Information filed by the Office of the Special Prosecutor" was prepared and subscribed on
would be futile for some reason or another, judicial recourse was available.
18 January 1989, while the records indicate that the preliminary investigation was concluded on 3
October 1989.
Be that as it may, petitioners cannot, however, be restored to their positions. Their terms expired in
1989, thereby rendering their prayer for reinstatement moot and academic. Pursuant to Section 13
In his Comment, respondent Berbano dispassionately traces the genesis of the criminal information
of the by-laws, during the election at the first annual general assembly after registration, one-half
filed before the Sandiganbayan. His assessment that a preliminary investigation sufficient in
plus one (4) of the directors obtaining the highest number of votes shall serve for two years, and the
substance and manner was conducted prior to the filing of the information reflects the view of the
remaining directors (3) for one year; thereafter, all shall be elected for a term of two years. Hence, in
Sandiganbayan, maintained in both the 17 November 1989 and 4 January 1990 resolutions, that
1988, when the board was disbanded, there was a number of directors whose terms would have
there was compliance with the requirements of due process.
expired the next year (1989) and a number whose terms would have expired two years after
(1990). Reversion to the status quo preceding 29 October 1988 would not be feasible in view of this
turn of events. Besides, elections were held in 1990 and 1991. 79 The affairs of the cooperative are Petitioners were provided a reasonable period within which to submit their counter-affidavits; they
presently being managed by a new board of directors duly elected in accordance with the did not avail of the original period; they moved for an extension of at least fifteen (15) days from 22
cooperative's by-laws. October 1988. Despite the urgency of its nature, the motion was sent by mail. The extension prayed
for was good up to 6 November 1988. But, as admitted by them, they filed the Counter-Affidavits
only on 9 November 1988. Yet, they blamed prosecutor Onos for promulgating the 11 November
2. G. R. No. 91927.
1989 Resolution and for, allegedly, not acting on the motion. Petitioners then should not lay the
blame on Onos; they should blame themselves for presuming that the motion would be granted.
The right of an accused to a preliminary investigation is not among
the rights guaranteed him in the Bill of Rights. As stated in Marcos, et al. vs. Cruz, 80 "the
This notwithstanding, petitioners were able to file a Motion for Reconsideration on 13 December
preliminary investigation in criminal cases is not a creation of the Constitution; its origin is
1988 requesting that the reviewing prosecutor consider the belatedly filed documents; 86 thus,
statutory and it exists and the right thereto can be invoked when so established and granted by law.
there is the recommendation of prosecutor Bernardita Erum calling for the dismissal of the charges
It is so specifically granted by procedural law. 81 If not waived, absence thereof may amount to a
on 2 March 1989, which, however, was not sustained upon subsequent review. The Sandiganbayan,
denial of due process. 82 However, lack of preliminary investigation is not a ground to quash or
in its 17 November 1989 Resolution, succinctly summed up the matter when it asserted that "even 2. DISMISSING, for lack of merit, the petition in G.R. No. 91927.
granting, for the sake of argument, that prosecutor Onos . . . failed to consider accused-movants'
counter-affidavits, such defect was cured when a "Motion for Reconsideration" was filed, and
No pronouncement as to costs.
which . . . de la Llana took into account upon review."

IT IS SO ORDERED.
It may not then be successfully asserted that the counter-affidavits were not considered by the
Ombudsman in approving the information. Perusal of the factual antecedents reveals that a second
investigation was conducted upon the "1st Indorsement" of the Ombudsman of 4 April 1989. As a
result, subpoenas were issued and comments were asked to be submitted, which petitioners did, but
only after a further extension of fifteen (15) days from the expiration of the original deadline. From
this submission the matter underwent further review.

Moreover, in the 18 January 1989 Order of prosecutor Onos, there was an ample discussion of the
defenses raised by the petitioners in their counter-affidavits, thus negating the charge that the
issues raised by them were not considered at all. 87

It is indisputable that the respondents were not remiss in their duty to afford the petitioners the
opportunity to contest the charges thrown their way. Due process does not require that the accused
actually file his counter-affidavits before the preliminary investigation is deemed completed. All that
is required is that he be given the opportunity to submit such if he is so minded. 88

In any event, petitioners did in fact, although belatedly, submit their counter-affidavits and as a
result thereof, the prosecutors concerned considered them in subsequent reviews of the
information, particularly in the re-investigation ordered by the Ombudsman.

And now, as to the protestation of lack of preliminary investigation prior to the filing of the
Amended Information. The prosecution may amend the information without leave of court before
arraignment, 89 and such does not prejudice the accused. 90 Reliance on the pronouncements
in Doromal vs. Sandiganbayan 91 is misplaced as what obtained therein was the preparation of an
entirely new information as contrasted with mere amendments introduced in the amended
information, which also charges petitioners with violating Section 3 (e) of the Anti-Graft Law.

In Gaspar vs. Sandiganbayan, 92 We held that there is no rule or law requiring the Tanodbayan to
conduct another preliminary investigation of a case under review by it. On the contrary, under P.D.
No. 911, in relation to Rule 12, Administrative Order No. VII, the Tanodbayan may, upon review,
reverse the findings of the investigator and thereafter "where he finds a prima facie case, to cause
the filing of an information in court against the respondent, based on the same sworn statements or
evidence submitted, without the necessity of conducting another preliminary investigation."

Respondent Sandiganbayan did not then commit any grave abuse of discretion in respect to its
Resolutions of 4 January 1990 and 1 February 1990.

The petition then must fail.

CONCLUSION

WHEREFORE, judgment is hereby rendered:

1. GRANTING the petition in G.R. No. 85439; declaring null and void the challenged Order of 28
October 1988 of the respondent Secretary of Agriculture; but denying, for having become moot and
academic, the prayer of petitioners that they be restored to their positions in the KBMBPM.
 FIRST DIVISION
[G.R. No. 46218. October 23, 1990.]
JOVENTINO MADRIGAL, Petitioner-Appellant, v. PROV. GOV. ARISTEO M. LECAROZ, VICE-
GOVERNOR CELSO ZOLETA, JR., PROVINCIAL BOARD MEMBERS DOMINGO RIEGO AND
MARCIAL PRINCIPE; PROV. ENGR. ENRIQUE M. ISIDRO, ABRAHAM T. TADURAN AND THE
PROVINCE OF MARINDUQUE, Respondents-Appellees.
F .S . Rivera, Jr. for petitioner.
DECISION
MEDIALDEA, J.:
This case was certified to Us by the Court of Appeals since it raises pure questions of law (pp. 66-68,
Rollo).
The issues raised in this case are certainly far from novel. We shall, therefore, simply reiterate well
established jurisprudential rules on the prescriptive period within which to file a petition for
mandamus to compel reinstatement to a government office and a claim for back salaries and
damages related thereto.cralawnad
The antecedent facts are as follows:chanrob1es virtual 1aw library
On November 25, 1971, public respondents Governor Aristeo M. Lecaroz, Vice-Governor Celso
Zoleta, Jr., Provincial Board of Marinduque members Domingo Riego and Marcial Principe abolished
petitioner-appellant Joventino Madrigal’s position as a permanent construction capataz in the office
of the Provincial Engineer from the annual Roads and Bridges Fund Budget for fiscal year 1971-
1972 (p. 2, Records) by virtue of Resolution No. 204. The abolition was allegedly due to the poor
financial condition of the province and it appearing that his position was not essential (p. 6,
Records).
On April 22, 1972, Madrigal appealed to the Civil Service Commission. On August 7, 1973, he
transmitted a follow-up letter to the Commission regarding his appeal. On January 7, 1974, the
Commission in its 1st Indorsement declared the removal of Madrigal from the service illegal (pp. 7-
8, Records).
On April 26, 1974, public respondent Governor Aristeo M. Lecaroz moved for a reconsideration of
said resolution. On February 10, 1975, the Commission denied the motion for reconsideration (pp.
9-10, Records).
On August 4, 1975, Madrigal sent a letter to the Provincial Board requesting implementation of the
resolution of the Commission and consequently, reinstatement to his former position.
On August 18, 1975, the Provincial Board, through Resolution No. 93, denied Madrigal’s request for
reinstatement because his former position no longer exists. In the same resolution, it ordered the
appropriation of the amount of P4,200.00 as his back salaries covering the period December 1, 1971
up to June 30, 1973 (p. 47, Records).
On December 15, 1975, Madrigal filed a petition before the Court of First Instance (now Regional
Trial Court) of Marinduque against public respondents Governor Aristeo M. Lecaroz, Vice-Governor
Celso Zoleta, Jr., Provincial Board Members Domingo Riego and Marcial Principe, Provincial
Engineer Enrique M. Isidro, Abraham I. Taduran and the Province of Marinduque for mandamus and
damages seeking, inter alia, (1) restoration of his abolished position in the Roads and Bridges Fund
Budget of the Province; (2) reinstatement to such position; and (3) payment of his back salaries plus
damages (pp. 1-5, Records).
On March 16, 1976, the trial court issued an order dismissing the petition on the ground that
Madrigal’s cause of action was barred by laches. The trial court rationalized its judgment as follows
(pp. 31-33, Rollo):jgc:chanrobles.com.ph
"It is beyond question that herein petitioner was separated from the service on November 25, 1971,
and it was only on December 15, 1975, or FOUR (4) YEARS and TWENTY (20) DAYS after, that he
filed this case for ‘Mandamus and Damages’ with the principal aim of causing his reinstatement to
the public position from where his service was terminated.
"Much as the petitioner might have had a good cause of action, it is unfortunate that that (sic) the
same is now barred by laches.
‘A person claiming right to a position in the civil service should file his action for reinstatement
within one year from his illegal removal from office, otherwise he is considered as having
abandoned the same (Gonzales v. Rodriguez, L-12976, March 24, 1961, 1 SCRA 755; Cebu Portland
Cement Co. v. CIR, L-17897, Aug. 31, 1962, 5 SCRA 1113; Alipio v. Rodriguez, L-17336, Dec. 26, 1963,
9 SCRA 752).’
"The rationale for the aforecited doctrine on time limitation of a cause of action in a judicial tribunal
by one seeking reinstatement in the civil service is that the suitor thereby is guilty of LACHES
(National Shipyards and Steel Corporation v. CIR, L-21675, May 23, 1967, 20 SCRA 134).
"The ruling is no doubt inspired by the provision of Section 16, Rule 66 of the Revised Rules of Court
on ‘Quo Warranto’, pertinent portion of which reads:chanrob1es virtual 1aw library
‘Sec. 16. Limitations. — Nothing contained in this rule shall be construed to authorize an action . . .
against a public officer or employee for his ouster from office unless the same be commenced within
one (1) year after the cause of such ouster, or the right of the plaintiff to hold such office or position,
arose . . .
and to the established jurisprudence interpreting the aforequoted rule to the effect that the period
of one year fixed therein is a condition precedent to the existence of the cause of action for quo
warranto (Bumanglag v. Fernandez, L-11482, Nov. 29, 1960; Tañada v. Yulo, 61 Phil. 515; Ortiz
Oiroso v. de Guzman, 49 Phil. 371; Tumulak v. Egay, 82 Phil. 828).
"That the instant case is one for MANDAMUS, and not QUO WARRANTO, is not of any significance,
for the same principle applies, as held in these cases:chanrob1es virtual 1aw library
‘An action for reinstatement, by a public official, whether it be quo warranto or mandamus, should
be filed in court within one year from removal or separation, otherwise the action will be barred,
(Morales, Jr. v. Patriarca, L-21280, April 30, 1965, 13 SCRA 766; Emphasis supplied).
‘. . . We hold that as petitioner was dismissed on June 16, 1953 and did not file his petition for
mandamus for his reinstatement until July 1, 1954 or after a period of one year, he is deemed to
have abandoned his right to his former position and is not entitled to reinstatement therein by
mandamus (Unabia v. City Mayor, L-8759, May 25, 1956, 53 O.G. 132; Emphasis supplied).’"
On April 27, 1976, the motion for reconsideration was denied (pp. 37-39, Rollo).
Madrigal assigns as errors the following:chanrob1es virtual 1aw library
1) the trial court erred in dismissing the petition for mandamus and damages on the ground of
laches; and

2) assuming arguendo that his claim for reinstatement was not filed seasonably, the trial court erred
in not proceeding with the trial of the case on the merits to determine the claim for back salaries
and damages.
As regards the first assignment of error, Madrigal alleges that the one (1) year period prescribed in
an action for quo warranto is not applicable in an action for mandamus because Rule 65 of the Rules
of Court does not provide for such prescriptive period. The declaration by the trial court that the
pendency of administrative remedies does not operate to suspend the period of one (1) year within
which to file the petition for mandamus, should be confined to actions for quo warranto only. On the
contrary, he contends that exhaustion of administrative remedies is a condition sine qua non before
one can petition for mandamus.chanrobles law library : red
On the part of public respondents, they aver that it has become an established part of our
jurisprudence, being a public policy repeatedly cited by the courts in myriad of mandamus cases,
that actions for reinstatement should be brought within one year from the date of dismissal,
otherwise, they will be barred by laches. The pendency of an administrative remedy before the
Commission does not stop the running of the one (1) year period within which a mandamus case for
reinstatement should be filed.
The unbending jurisprudence in this jurisdiction is to the effect that a petition for quo warranto and
mandamus affecting titles to public office must be filed within one (1) year from the date the
petitioner is ousted from his position (Galano, Et. Al. v. Roxas, G.R. No. L-31241, September 12, 1975,
67 SCRA 8; Cornejo v. Secretary of Justice, G.R. No. L-32818, June 28, 1974, 57 SCRA 663; Sison v.
Pangramuyen, etc., Et Al., G.R. No. L-40295, July 31, 1978, 84 SCRA 364; Cui v. Cui, G.R. No. L-18727,
August 31, 1964, 11 SCRA 755; Villaluz v. Zaldivar, G.R. No. L-22754, December 31, 1965, 15 SCRA
710; Villegas v. Dela Cruz, G.R. No. L-23752, December 31; 1965, 15 SCRA 720; Dela Maza v. Ochave,
G.R. No. L-22336, May 23, 1967, 20 SCRA 142; Alejo v. Marquez, G.R. No. L-29053, February 27,
1971, 37 SCRA 762). The reason behind this thing was expounded in the case of Unabia v. City
Mayor, etc., 99 Phil. 253 where We said:jgc:chanrobles.com.ph
". . . [W]e note that in actions of quo warranto involving right to an office, the action must be
instituted within the period of one year. This has been the law in the island since 1901, the period
having been originally fixed in Section 216 of the Code of Civil Procedure (Act No. 190). We find this
provision to be an expression of policy on the part of the State that persons claiming a right to an
office of which they are illegally dispossessed should immediately take steps to recover said office
and that if they do not do so within a period of one year, they shall be considered as having lost their
right thereto by abandonment. There are weighty reasons of public policy and convenience that
demand the adoption of a similar period for persons claiming rights to positions in the civil service.
There must be stability in the service so that public business may (sic) be unduly retarded; delays in
the statement of the right to positions in the service must be discouraged. The following
considerations as to public officers, by Mr. Justice Bengzon, may well be applicable to employees in
the civil service:chanrob1es virtual 1aw library
‘Furthermore, constitutional rights may certainly be waived, and the inaction of the officer for one
year could be validly considered as waiver, i.e., a renunciation which no principle of justice may
prevent, he being at liberty to resign his position anytime he pleases.
‘And there is good justification for the limitation period; it is not proper that the title to public office
should be subjected to continued uncertainly (sic), and the peoples’ interest requires that such right
should be determined as speedily as practicable.’ (Tumulak v. Egay, 46 Off Gaz., [8], 3693, 3695.)
"Further, the Government must be immediately informed or advised if any person claims to be
entitled to an office or a position in the civil service as against another actually holding it, so that the
Government may not be faced with the predicament of having to pay two salaries, one, for the
person actually holding the office, although illegally, and another, for one not actually rendering
service although entitled to do so. We hold that in view of the policy of the State contained in the law
fixing the period of one year within which actions for quo warranto may be instituted, any person
claiming right to a position in the civil service should also be required to file his petition for
reinstatement within the period of one year, otherwise he is thereby considered as having
abandoned his office."cralaw virtua1aw library
The fatal drawback of Madrigal’s cause is that he came to court out of time. As aforestated, it was
only after four (4) years and twenty (20) days from the abolition of his position that he filed the
petition for mandamus and damages. This single circumstance has closed the door for any judicial
remedy in his favor.
And this one (1) year period is not interrupted by the prosecution of any administrative remedy
(Torres v. Quintos, 88 Phil. 436). Actually, the recourse by Madrigal to the Commission was
unwarranted. It is fundamental that in a case where pure questions of law are raised, the doctrine of
exhaustion of administrative remedies cannot apply because issues of law cannot be resolved with
finality by the administrative officer. Appeal to the administrative officer of orders involving
questions of law would be an exercise in futility since administrative officers cannot decide such
issues with finality (Cebu Oxygen and Acetylene Co., Inc. v. Drilon, Et Al., G.R. No. 82849, August 2,
1989, citing Pascual v. Provincial Board of Nueva Ecija, 106 Phil. 466; Mondano v. Silvosa, 97 Phil.
143). In the present case, only a legal question is to be resolved, that is, whether or not the abolition
of Madrigal’s position was in accordance with law.
With respect to the second assignment of error, Madrigal asserts that despite (1) the ruling of the
Commission declaring his removal from office illegal; (2) Resolution No. 93 of the Provincial Board;
and (3) Provincial Voucher No. 714 covering the appropriation for the sum of P3,667.29,
representing his back salaries for said period, the trial court still refused to grant his money claim.
In answer thereto, public respondents contend that the court cannot pass upon Madrigal’s right to
back salaries without passing upon the validity of the abolition of his position which is a matter that
cannot now be a subject of judicial inquiry. This is so because the question of back salaries and
damages is only incidental to the issues involving the validity of said abolition and his request for
reinstatement.cralawnad
Again, We uphold the view advanced by public respondents. Madrigal loses sight of the fact that the
claim for back salaries and damages cannot stand by itself. The principal action having failed,
perforce, the incidental action must likewise fail. Needless to state, the claim for back salaries and
damages is also subject to the prescriptive period of one (1) year (see Gutierrez v. Bachrach Motor
Co., Inc., 105 Phil. 9).
ACCORDINGLY, the appeal is hereby DENIED. The orders of the Court of First Instance of
Marinduque dated March 16, 1976 and April 27, 1976 are AFFIRMED.
SO ORDERED.
G.R. No. L-17860 March 30, 1962
R. MARINO CORPUS, petitioner-appellant,
vs.
MIGUEL CUADERNO, SR., THE CENTRAL BANK OF THE PHILIPPINES AND
THE MONETARY BOARD AND MARIO MARCOS, respondents-appellees;
FILEMON MENDOZA, intervenor-appellee.
Juan T. David and R. L. Alvarez for petitioner-appellant.
Nat M. Balboa for respondents-appellees.
Jose W. Diokno for intervenor-appellee.
DE LEON, J.:
While petitioner-appellant was holding the position of Special Assistant to the Governor of the
Central Bank of the Philippines — a position declared by the President of the Philippines as "highly
technical in nature and placed in the exempt class" (Appendix "D", Exhibit "VV"), he was, on or about
March 7, 1958, charged in an administrative case, for alleged dishonesty, incompetence, neglect of
duty and/or abuse of authority, oppression, misconduct, etc. preferred against him by employees of
the Bank, resulting in his suspension by the Monetary Board of the Bank and the creation of a 3-man
committee to investigate him. The committee was composed of representatives of the Bank, Bureau
of Civil Service and the Office of the City Fiscal of Manila. After receiving the answer of the
respondent therein, the committee heard the case, receiving testimonies of witnesses on both sides.
On May 5, 1959, the committee submitted its Final Report, the pertinent conclusion and
recommendation therein reading as follows: .
(1) In view of the foregoing, the Committee finds that there is no basis upon which to
recommend disciplinary action against respondent, and therefore respectfully
recommends that he be immediately reinstated.
Unable to agree with the committee report, the Monetary Board adopted Resolution No. 957 on July
20, 1959 which considered "the respondent, R. Marino Corpus, resigned as of the date of his
suspension." The pertinent portion of the resolution reads thus: .
After an exhaustive and mature deliberation of the report of the aforesaid fact finding
committee, in conjunction with the entire records of the case and representations of both
complainants and respondent, through their respective counsel, and, further, after a
thorough review of the service record of the respondent, particularly the various cases
presented against him, object of Monetary Board Resolution No. 1527 dated August 30,
1955, which all involve fitness, discipline, etc. of respondent; and moreover, upon formal
statement of the Governor that he has lost confidence in the respondent as Special
Assistant to the Governor and In-Charge of the Export Department (such position being
primarily confidential and highly technical in nature), the Monetary Board finds that the
continuance of the respondent in the service of the Central Bank would be prejudicial to
the best interest of the Central Bank and, therefore, in accordance with the provisions of
Section 14 of the Bank Charter, considers the respondent, Mr. R. Marino Corpus, resigned
as of the date of his suspension.
Three days after, the Monetary Board adopted Resolution No. 995, dated July 23, 1959, approving
the appointment of herein respondent Mario Marcos to the position involved in place of petitioner
R. Marino Corpus.
On August 18, 1959, petitioner filed a petition for certiorari, mandamus and quo warranto, with
preliminary mandatory injunction and damages, against the herein respondents. The complaint, as
amended, embodied four causes of action, and the reliefs sought therein read as follows: .
1. Upon the FIRST CAUSE OF ACTION, to reinstate petitioner immediately to the position
of Special Assistant in charge of the control of exports in conformity with the Final Report
of the Investigating Committee of May 5, 1959 and to declare that the action of the
respondents per Monetary Resolution No. 957 is null and void, respondents having acted
in connection with the same in excess of their jurisdiction and with grave and gross abuse
of discretion and authority; and for the purposes thereof to order respondent Miguel
Cuaderno, Sr., as Governor of the Central Bank, to prepare an agenda including therein as
part of the business to be taken up by respondent Monetary Board petitioner's said
reinstatement;
2. Upon the SECOND CAUSE OF ACTION, to remove respondent Mario Marcos from the
Office of Special Assistant in charge of the Export Department of the Central Bank, the
same office to which petitioner in possession of the same and to declare that the
attempted appointment of the said respondent Mario Marcos to the same is unwarranted
and illegal, there being no vacancy in the same as it has at all times been legally and
physically filled by petitioner were it not for the unlawful acts of respondents in ousting
him therefrom: .1äwphï1.ñët
3. Upon the THIRD CAUSE OF ACTION, to pay petitioner the sums of P500,000.00 as
moral damages, P34,000.00 as salaries accrued and uncollected since March 18, 1958,
plus those that may subsequently accrue, P20,000.00 as bonuses, overtime pay, equity
pay and other allowances, which petitioner had failed to collect by reason of his
unwarranted and unjustified suspension by respondents, P20,000.00 as attorney's fees
plus the costs of this suit;
4. Upon the FOURTH CAUSE OF ACTION, to immediately reinstate petitioner to the
position of Special Assistant in charge of the control of exports and not to remove or
molest him therefrom pending the determination of this case and, to this end, upon
petitioner's filing of a bond with sufficient sureties in an amount to be fixed by this
Honorable Court, to issue a preliminary mandatory injunction commanding respondents
to do and/or refrain from doing the acts hereinabove referred to.
Petitioner further prays for such other and further relief as may be just and equitable in
the premises.
The respondents filed their answer on September 4, 1959. Filemon Mendoza, a Central Bank
employee, filed a petition for intervention. The respondents and the intervenor filed separate
motions to dismiss, against which an opposition was filed by petitioner. On October 8, 1959, an
order was issued by the court below holding in abeyance the resolution of the motions to dismiss
until the trial, stating that the grounds alleged therein do not appear to be indubitable.
Subsequently, petitioner manifested in open court that he was abandoning his prayer for the
issuance of a preliminary mandatory injunction so that the case can be speedily terminated. On June
8, 1960, upon representations of the respondents and intervenor, an order was issued vacating the
order of October 8, 1959 and ordering that "the Motions to Dismiss are deemed submitted anew for
resolution." On June 14, 1960, after several hearings, another order was issued granting the motions
to dismiss the amended petition, on the ground that petitioner did not exhaust all administrative
remedies available to him in law. Petitioner filed a motion for reconsideration, which was denied in
an order dated November 16, 1960. From said order of June 14, 1960, dismissing the petition, and
the order of November 16, 1960, denying the motion for reconsideration, petitioner has brought
this appeal, claiming that the lower court erred: .
 1. In dismissing his petition for certiorari, mandamus and quo warranto, with preliminary
mandatory injunction and damages;
2. In not finding that the Monetary Board removed him for a cause not provided by law,
therefore, in violation of the Constitution; and .
3. In not finding that the appointment of Mario P. Marcos, the officer appointed by the
respondent Monetary Board to the position to which he was appointed, to have been
made to a position that is not yet vacant.
The lower court was of the opinion that petitioner-appellant should have exhausted all
administrative remedies available to him, such as an appeal to the Commissioner of Civil Service,
under Republic Act No. 2260, or the President of the Philippines who under the Constitution and the
law is the head of all the executive departments of the government including its agencies and
instrumentalities. This is the main issue disputed in this appeal.
True, the appellant did not elevate his case for review either by the President or the Civil Service
Commission. However, it is our opinion that a report to these administrative appeals is voluntary or
permissive, taking into account the facts obtaining in this case.
(1) There is no law requiring an appeal to the President in a case like the one at bar. The fact that
the President had, in two instances cited in the orders appealed from, acted on appeals from
decisions of the Monetary Board of the Central Bank, should not be regarded as precedents, but at
most may be viewed as acts of condescension on the part of the Chief Executive. (2) While there are
provisions in the Civil Service Law regarding appeals to the Commissioner of Civil Service and the
Civil Service Board of Appeals, We believe the petitioner is not bound to observe them, considering
his status and the Charter of the Central Bank. In Castillo vs. Bayona, et al., G.R. No. L-14375, January
13, 1960, We said that Section 14, Republic Act 265, creating the Central Bank of the Philippines,
particularly paragraph (c) thereof, "is sufficiently broad to vest the Monetary Board with the power
of investigation and removal of its officials, except the Governor thereof. In other words, the Civil
Service Law is the general legal provision for the investigation, suspension or removal of civil
service employees, whereas Section 14 is a special provision of law which must govern the
investigation, suspension or removal of employees of the Central Bank, though they may be subject to
the Civil Service Law and Regulations in other respects." In this case, the respondent Monetary Board
considered petitioner resigned from the office to which he has been legally appointed as of the date
of his suspension, after he has been duly indicted and tried before a committee created by the Board
for the purpose. An appeal to the Civil Service Commission would thereby be an act of
supererogation, requiring the presentation of practically the same witnesses and documents
produced in the investigation conducted at the instance of the Monetary Board. Moreover, Section
16 (i) of the Civil Service Law provides that "except as otherwise provided by law," the Commissioner
of Civil Service shall have "final authority to pass upon the removal, separation and suspension of all
permanent officials and employees in the competitive or classified service and upon all matters
relating to the conduct, discipline, and efficiency of such officials and employees; ...." Considering
again the fact that the Charter of the Central Bank provides for its own power, through the Monetary
Board, relative to the investigation, suspension or removal of its own employees except the
Governor, coupled with the fact that petitioner has admitted that he belongs to the non-competitive
or unclassified service, it is evident that an appeal by petitioner to the Commissioner of Civil Service
is not required or at most is permissive and voluntary.
On the other hand, the doctrine does not apply where, by the terms or implications of the
statute authorizing an administrative remedy, such remedy is permissive only,
warranting the conclusion that the legislature intended to allow the judicial remedy even
though the administrative remedy has not been exhausted (42 Am. Jur. 583).
There is another reason. It must be remembered that the amended petition is for certiorari,
mandamus and quo warranto. The allegations of the second cause of action of the amended petition
as above quoted sufficiently comply with Section 7, Rule 63 of the Rules of Court on quo
warranto proceedings, which requires that "When the action is against a person for usurping an
office or franchise, the complaint shall set forth the name of the person who claims to be entitled
thereto. If any, with an averment of his right to the same and that the defendant is unlawfully in
possession thereof." And the complaint was filed within the period of one year from the date of
separation, pursuant to Section 16 of the same Rule (Madrid vs. Auditor General, 58 Off. Gaz.,
January, 1962, pp. 41, 42-43).
Section 9 of said Rule 68 provides that the time for pleadings and proceedings may be shortened
and the action may be given precedence over any and other civil business. Section 16 of the same
Rule requires the filing of the action against an officer for his ouster within one year after the cause
of such ouster. These judicial rules underscore the need for speed in the determination of
controversies to public offices (Remata vs. Javier, 37 Phil. 699; Tumulak vs. Egay, 82 Phil. 828). As
was stated in Pinullar vs. President of the Senate, G.R. No. L-11667, June 30, 1958, the rationale is
that the Government must be immediately informed or advised if any person claims to be entitled to
an office or position in the civil service as against another actually holding it, so that the
Government may not be faced with the predicament of having to pay two salaries, one, for the
person actually holding the office, although illegally, and another, for one not actually rendering
service although entitled to do so (see also Madrid vs. Auditor General, supra).
Giving life and effect to these provisions, we have held in Casin vs. Caluag, 45 Off. Gaz., Supp. No. 9, p.
379, that a special civil action for quo warranto may be tried and decided independently of a
pending criminal case. In another case (Abeto vs. Rodas, 46 Off. Gaz. 930), we denied by resolution a
supplemental motion for reconsideration where the petitioner had contended that the reglementary
period of one year was suspended by the order of the President exonerating him from certain
administrative charges because the petitioner "was justified in waiting for the President of the
Philippines to reappoint him as the logical and legal consequence of his exoneration," and "only
after considerable delay, when his hopes failed, did petitioner institute the present proceedings."
Finally, in Torres vs. Quintos, G.R. No. L-3304, April 5, 1951, we recalled the Abeto case, supra, by
commenting therein that the denial of the motion for reconsideration in that case had of course the
effect of rejecting the theory that the pendency of an administrative remedy suspends the period
within which a petition for quo warranto should be filed, and we gave the reason thus:
The reason is obvious. While it may be desirable that administrative remedies be first
resorted to, no one is compelled or bound to do so; and as said remedies neither are
prerequisite to nor bar the institution of quo warranto proceedings, it follows that he who
claims the right to hold a public office allegedly usurped by another and who desires to
seek redress in the courts, should file the proper judicial action within the reglementary
period. As emphasized in Bautista vs. Fajardo, 38 Phil. 624, and Tumulak vs. Egay, 46 O.G.
3683, public interest requires that the right to a public office should be determined as
speedily as practicable.
Upon the foregoing, we have to disagree with the legal opinion of the trial judge and hold that the
doctrine of exhaustion of administrative remedies is inapplicable and does not bar the present
proceedings.
Considering the two views we have taken in the case, we deem it unnecessary to pass upon the
second and third assignments of error which partially involve the evaluation of facts. The court
below has started to receive the evidence, and it is better equipped and should be given the chance
to pass upon the credibility of the witnesses who testified before it (Veraguth vs. Isabela Sugar Co.,
57 Phil. 266).
WHEREFORE, the orders under considerations are hereby set aside and the record of the case is
hereby ordered remanded to the trial court for further proceedings and judgment on the merits. No
pronouncement as to costs.