G.R. No.

83578 March 16, 1989

THE PRESIDENTIAL ANTI-DOLLAR SALTING TASK FORCE, petitioner,

vs.
HONORABLE COURT OF APPEALS, HONORABLE TEOFILO L, GUADIZ, JR.,Presiding Judge,
REGIONAL TRIAL COURT, Branch 147: NCR (MAKATI), and KARAMFIL IMPORT-EXPORT CO.,
INC., respondents.

K. V. Faylona & Associates for respondents.

SARMIENTO, J.:

The petitioner, the Presidential Anti-Dollar Salting Task Force, the President's arm assigned to
investigate and prosecute so-called "dollar salting" activities in the country (per Presidential Decree
No. 1936 as amended by Presidential Decree No. 2002), asks the Court to hold as null and void two
Resolutions of the Court of Appeals, dated September 24, 1987 1 and May 20, 1988, 2 reversing its Decision,
dated October 24, 1986. 3 The Decision set aside an Order, dated April 16, 1985, of the Regional Trial Court, 4 as well as its Order, dated
August 21, 1985. The Resolution, dated September 24, 1987 disposed of, and granted, the private respondent Karamfil Import-Export Co.,
Inc.'s motion for reconsideration of the October 24, 1986 Decision; the Resolution dated May 20, 1988, in turn, denied the petitioner's own
motion for reconsideration.

The facts are not in controversy. We quote:

On March 12, 1985, State Prosecutor Jose B. Rosales, who is assigned with the
Presidential Anti-Dollar Salting Task Force hereinafter referred to as PADS Task
Force for purposes of convenience, issued search warrants Nos. 156, 157, 158, 159,
160 and 161 against the petitioners Karamfil Import-Export Co., Inc., P & B
Enterprises Co., Inc., Philippine Veterans Corporation, Philippine Veterans
Development Corporation, Philippine Construction Development Corporation,
Philippine Lauan Industries Corporation, Inter-trade Development (Alvin Aquino),
Amelili U. Malaquiok Enterprises and Jaime P. Lucman Enterprises.

The application for the issuance of said search warrants was filed by Atty. Napoleon Gatmaytan of
the Bureau of Customs who is a deputized member of the PADS Task Force. Attached to the said
application is the affidavit of Josefin M. Castro who is an operative and investigator of the PADS
Task Force. Said Josefin M. Castro is likewise the sole deponent in the purported deposition to
support the application for the issuance of the six (6) search warrants involved in this case. The
application filed by Atty. Gatmaytan, the affidavit and deposition of Josefin M. Castro are all dated
March 12, 1985. 5

Shortly thereafter, the private respondent (the petitioner below) went to the Regional Trial Court on a
petition to enjoin the implementation of the search warrants in question. 6 On March 13, 1985, the trial court
issued a temporary restraining order [effective "for a period of five (5) days notice " 7 ] and set the case for hearing on March 18, 1985.

In disposing of the petition, the said court found the material issues to be:

1) Competency of this Court to act on petition filed by the petitioners;

 2) Validity of the search warrants issued by respondent State Prosecutor;

3) Whether or not the petition has become moot and academic because all the
search warrants sought to be quashed had already been implemented and
executed. 8

On April 16, 1985, the lower court issued the first of its challenged Orders, and held:

WHEREFORE, in view of all the foregoing, the Court hereby declares Search
Warrant Nos. 156, 157, 158, 159, 160, and 161 to be null and void. Accordingly, the
respondents are hereby ordered to return and surrender immediately all the personal
properties and documents seized by them from the petitioners by virtue of the
aforementioned search warrants.

SO ORDERED. 9

On August 21, 1985, the trial court denied reconsideration.

On April 4, 1986, the Presidential Anti-Dollar Salting Task Force went to the respondent Court of
Appeals to contest, on certiorari, the twin Order(s) of the lower court.

In ruling initially for the Task Force, the Appellate Court held:

Herein petitioner is a special quasi-judicial body with express powers enumerated

under PD 1936 to prosecute foreign exchange violations defined and punished under
P.D. No. 1883.

The petitioner, in exercising its quasi-judicial powers, ranks with the Regional Trial
Courts, and the latter in the case at bar had no jurisdiction to declare the search
warrants in question null and void.

Besides as correctly pointed out by the Assistant Solicitor General the decision of the
Presidential Anti-Dollar Salting Task Force is appealable to the Office of the
President.10

On November 12, 1986, Karamfil Import-Export Co., Inc. sought a reconsideration, on the question
primarily of whether or not the Presidential Anti-Dollar Salting Task Force is "such other responsible
officer' countenanced by the 1973 Constitution to issue warrants of search and seizure.

As we have indicated, the Court of Appeals, on Karamfil's motion, reversed itself and issued its
Resolution, dated September 1987, and subsequently, its Resolution, dated May 20, 1988, denying
the petitioner's motion for reconsideration.

In its petition to this Court, the petitioner alleges that in so issuing the Resolution(s) above-
mentioned, the respondent Court of Appeals "committed grave abuse of discretion and/or acted in
excess of its appellate jurisdiction," 11 specifically:
 a) In deviating from the settled policy and rulings of the Supreme Court that no
Regional Trial Courts may countermand or restrain the enforcement of lawful writs or
decrees issued by a quasi-judicial body of equal and coordinate rank, like the PADS
Task Force;

b) For resorting to judicial legislation to arrive at its erroneous basis for reconsidering
its previous Decision dated October 24, 1986 (see Annex "I") and thus promulgated
the questioned Resolutions (Annexes "A" and "B"), which violated the constitutional
doctrine on separation of powers;

c) In not resolving directly the other important issues raised by the petitioner in its
Petition in CA-G.R. No. 08622-SP despite the fact that petitioner has demonstrated
sufficiently and convincingly that respondent RTC, in issuing the questioned Orders
in Special Proceeding No. M-624 (see Annexes "C" and 'D"), committed grave abuse
of discretion and/or acted in excess of jurisdiction:

1. In ruling that (a) the description of the things to be seized as stated in the
contested search warrant were too general which allegedly render the search
warrants null and void; (b) the applications for the contested search warrants actually
charged two offenses in contravention of the 2nd paragraph, Section 3, Rule 126 of
the Rules of Court; and (c) this case has not become moot and academic, even if the
contested search warrants had already been fully implemented with positive results;
and

2. In ruling that the petitioner PADS Task Force has not been granted under PD 1936
'judicial or quasi-judicial jurisdiction. 12

We find, upon the foregoing facts, that the essential questions that confront us are- (i) is the
Presidential Anti-Dollar Salting Task Force a quasi-judicial body, and one co-equal in rank and
standing with the Regional Trial Court, and accordingly, beyond the latter's jurisdiction; and (ii) may
the said presidential body be said to be "such other responsible officer as may be authorized by law"
to issue search warrants under the 1973 Constitution questions we take up seriatim.**

In submitting that it is a quasi-judicial entity, the petitioner states that it is endowed with "express
powers and functions under PD No. 1936, to prosecute foreign exchange violations as defined and
punished under PD No. 1883." 13 "By the very nature of its express powers as conferred by the laws," so it is contended, "which
are decidedly quasi-judicial or discretionary function, such as to conduct preliminary investigation on the charges of foreign exchange
violations, issue search warrants or warrants of arrest, hold departure orders, among others, and depending upon the evidence presented, to
dismiss the charges or to file the corresponding information in court of Executive Order No. 934, PD No. 1936 and its Implementing Rules
and Regulations effective August 26, 1984), petitioner exercises quasi-judicial power or the power of adjudication ." 14

The Court of Appeals, in its Resolution now assailed, 15 was of the opinion that "[t]he grant of quasi-judicial powers to petitioner did not
diminish the regular courts' judicial power of interpretation. The right to interpret a law and, if necessary to declare one unconstitutional,
exclusively pertains to the judiciary. In assuming this function, courts do not proceed on the theory that the judiciary is superior to the two
other coordinate branches of the government, but solely on the theory that they are required to declare the law in every case which come
before them." 16

This Court finds the Appellate Court to be in error, since what the petitioner puts to question is the
Regional Trial Court's act of assuming jurisdiction over the private respondent's petition below and
its subsequent countermand of the Presidential Anti-Dollar Salting Task Force's orders of search and
seizure, for the reason that the presidential body, as an entity (allegedly) coordinate and co-equal
with the Regional Trial Court, was (is) not vested with such a jurisdiction. An examination of the
Presidential Anti-Dollar Salting Task Force's petition shows indeed its recognition of judicial review
(of the acts of Government) as a basic privilege of the courts. Its objection, precisely, is whether it is
the Regional Trial Court, or the superior courts, that may undertake such a review.

Under the Judiciary Reorganization Act of 1980, 17 the Court of Appeals exercises:

(3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions,
orders or awards of Regional Trial Court and quasi-judicial agencies,
instrumentalities, boards or commissions, except those falling within the appellate
jurisdiction of the Supreme Court in accordance with the Constitution, the provisions
of this Act, and of subparagraph (1) of the third paragraph and subparagraph (4) of
the fourth paragraph of Section 17 of the Judiciary Act of 1948. 18

xxx xxx xxx

Under the present Constitution, with respect to its provisions on Constitutional Commissions, it is
provided, in part that:

... Unless otherwise provided by this Constitution or by law, any decision, order, or
ruling of each Commission may be brought to the Supreme Court on certiorari by the
aggrieved party within thirty days from receipt of a copy thereof. 19

On the other hand, Regional Trial Courts have exclusive original jurisdiction:

(6) In all cases not within the exclusive jurisdiction of any court, tribunal, person or
body exercising judicial or quasi-judicial functions. 20

xxx xxx xxx

Likewise:

... The Supreme Court may designate certain branches of the Regional Trial Court to
handle exclusively criminal cases, juvenile and domestic relations cases, agrarian
case, urban land reform cases which do not fall under the jurisdiction of quasi-
judicial bodies and agencies and/or such other special cases as the Supreme Court
may determine in the interest of a speedy and efficient administration of justice. 21

xxx xxx xxx

Under our Resolution dated January 11, 1983: 22

... The appeals to the Intermediate Appellate Court [now, Court of Appeals] from
quasi-judicial bodies shall continue to be governed by the provisions of Republic Act
No. 5434 insofar as the same is not inconsistent with the provisions of B.P. Blg.
129. 23

The pertinent provisions of Republic Act No. 5434 are as follows:

 SECTION 1. Appeals from specified agencies. Any provision of existing law or
Rule of Court to the contrary notwithstanding, parties aggrieved by a final ruling,
award, order, decision, or judgment of the Court of Agrarian Relations; the Secretary
of Labor under Section 7 of Republic Act Numbered Six hundred and two, also
known as the "Minimum Wage Law"; the Department of Labor under Section 23 of
Republic Act Numbered Eight hundred seventy-five, also known as the "Industrial
Peace Act"; the Land Registration Commission; the Securities and Exchange
Commission; the Social Security Commission; the Civil Aeronautics Board; the
Patent Office and the Agricultural Inventions Board, may appeal therefrom to the
Court of Appeals, within the period and in the manner herein provided, whether the
appeal involves questions of fact, mixed questions of fact and law, or questions of
law, or all three kinds of questions. From final judgments or decisions of the Court of
Appeals, the aggrieved party may appeal by certiorari to the Supreme Court as
provided in Rule 45 of the Rules of Court. 24

Because of subsequent amendments, including the abolition of various special courts, 25 jurisdiction over
quasi-judicial bodies has to be, consequently, determined by the corresponding amendatory statutes. Under the Labor Code, decisions and
awards of the National Labor Relations Commission are final and executory, but, nevertheless, 'reviewable by this Court through a petition
for certiorari and not by way of appeal." 26

Under the Property Registration Decree, decisions of the Commission of Land Registration, en
consults, are appealable to the Court of Appeals. 27

The decisions of the Securities and Exchange Commission are likewise appealable to the Appellate
Court, 28 and so are decisions of the Social Security Commission.29

As a rule, where legislation provides for an appeal from decisions of certain administrative bodies to
the Court of Appeals, it means that such bodies are co-equal with the Regional Trial Courts, in terms
of rank and stature, and logically, beyond the control of the latter.

As we have observed, the question is whether or not the Presidential Anti-Dollar Salting Task Force
is, in the first place, a quasi-judicial body, and one whose decisions may not be challenged before
the regular courts, other than the higher tribunals the Court of Appeals and this Court.

A quasi-judicial body has been defined as "an organ of government other than a court and other than
a legislature, which affects the rights of private parties through either adjudication or rule
making." 30 The most common types of such bodies have been listed as follows:

(1) Agencies created to function in situations wherein the government is offering

some gratuity, grant, or special privilege, like the defunct Philippine Veterans Board,
Board on Pensions for Veterans, and NARRA, and Philippine Veterans
Administration.

(2) Agencies set up to function in situations wherein the government is seeking to

carry on certain government functions, like the Bureau of Immigration, the Bureau of
Internal Revenue, the Board of Special Inquiry and Board of Commissioners, the
Civil Service Commission, the Central Bank of the Philippines.
 (3) Agencies set up to function in situations wherein the government is performing
some business service for the public, like the Bureau of Posts, the Postal Savings
Bank, Metropolitan Waterworks & Sewerage Authority, Philippine National Railways,
the Civil Aeronautics Administration.

(4) Agencies set up to function in situations wherein the government is seeking to

regulate business affected with public interest, like the Fiber Inspections Board, the
Philippine Patent Office, Office of the Insurance Commissioner.

(5) Agencies set up to function in situations wherein the government is seeking under
the police power to regulate private business and individuals, like the Securities &
Exchange Commission, Board of Food Inspectors, the Board of Review for Moving
Pictures, and the Professional Regulation Commission.

(6) Agencies set up to function in situations wherein the government is seeking to

adjust individual controversies because of some strong social policy involved, such
as the National Labor Relations Commission, the Court of Agrarian Relations, the
Regional Offices of the Ministry of Labor, the Social Security Commission, Bureau of
Labor Standards, Women and Minors Bureau. 31

As may be seen, it is the basic function of these bodies to adjudicate claims and/or to determine
rights, and unless its decision are seasonably appealed to the proper reviewing authorities, the same
attain finality and become executory. A perusal of the Presidential Anti-Dollar Salting Task Force's
organic act, Presidential Decree No. 1936, as amended by Presidential Decree No. 2002, convinces
the Court that the Task Force was not meant to exercise quasi-judicial functions, that is, to try and
decide claims and execute its judgments. As the President's arm called upon to combat the vice of
"dollar salting" or the blackmarketing and salting of foreign exchange, 32 it is tasked alone by the Decree to
handle the prosecution of such activities, but nothing more. We quote:

SECTION 1. Powers of the Presidential Anti-Dollar Salting Task Force.-The

Presidential Anti-Dollar Salting Task Force, hereinafter referred to as Task Force,
shall have the following powers and authority:

a) Motu proprio or upon complaint, to investigate and prosecute all dollar salting
activities, including the overvaluation of imports and the undervaluation of exports;

b) To administer oaths, summon persons or issue subpoenas requiring the

attendance and testimony of witnesses or the production of such books, papers,
contracts, records, statements of accounts, agreements, and other as may be
necessary in the conduct of investigation;

c) To appoint or designate experts, consultants, state prosecutors or fiscals,

investigators and hearing officers to assist the Task Force in the discharge of its
duties and responsibilities; gather data, information or documents; conduct hearings,
receive evidence, both oral and documentary, in all cases involving violation of
foreign exchange laws or regulations; and submit reports containing findings and
recommendations for consideration of appropriate authorities;
 d) To punish direct and indirect contempts with the appropriate penalties therefor
under Rule 71 of the Rules of Court; and to adopt such measures and take such
actions as may be necessary to implement this Decree.

xxx xxx xxx

f. After due investigation but prior to the filing of the appropriate criminal charges with
the fiscal's office or the courts as the case may be, to impose a fine and/or
administrative sanctions as the circumstances warrant, upon any person found
committing or to have committed acts constituting blackmarketing or salting abroad
of foreign exchange, provided said person voluntarily admits the facts and
circumstances constituting the offense and presents proof that the foreign exchange
retained abroad has already been brought into the country.

Thereafter, no further civil or criminal action may be instituted against said person
before any other judicial regulatory or administrative body for violation of Presidential
Decree No. 1883.

The amount of the fine shall be determined by the Chairman of the Presidential Anti-
Dollar Salting Task Force and paid in Pesos taking into consideration the amount of
foreign exchange retained abroad, the exchange rate differentials, uncollected taxes
and duties thereon, undeclared profits, interest rates and such other relevant factors.

The fine shall be paid to the Task Force which shall retain Twenty percent (20 %)
thereof. The informer, if any, shall be entitled to Twenty percent (20 %) of the fine.
Should there be no informer, the Task Force shall be entitle to retain Forty percent
(40 %) of the fine and the balance shall accrue to the general funds of the National
government. The amount of the fine to be retained by the Task Force shall form part
of its Confidential Fund and be utilized for the operations of the Task Force . 33

The Court sees nothing in the aforequoted provisions (except with respect to the Task Force's
powers to issue search warrants) that will reveal a legislative intendment to confer it with quasi-
judicial responsibilities relative to offenses punished by Presidential Decree No. 1883. Its
undertaking, as we said, is simply, to determine whether or not probable cause exists to warrant the
filing of charges with the proper court, meaning to say, to conduct an inquiry preliminary to a judicial
recourse, and to recommend action "of appropriate authorities". It is not unlike a fiscal's office that
conducts a preliminary investigation to determine whether or not prima facie evidence exists to
justify haling the respondent to court, and yet, while it makes that determination, it cannot be said to
be acting as a quasi-court. For it is the courts, ultimately, that pass judgment on the accused, not the
fiscal.

It is not unlike the Presidential Commission on Good Government either, the executive body
appointed to investigate and prosecute cases involving "ill-gotten wealth". It had been vested with
enormous powers, like the issuance of writs of sequestration, freeze orders, and similar processes,
but that did not, on account thereof alone, make it a quasi-judicial entity as defined by recognized
authorities. It cannot pronounce judgement of the accused's culpability, the jurisdiction to do which is
exclusive upon the Sandiganbayan. 34
If the Presidential Anti-Dollar Salting Task Force is not, hence, a quasi-judicial body, it cannot be said
to be co-equal or coordinate with the Regional Trial Court. There is nothing in its enabling statutes
that would demonstrate its standing at par with the said court.

In that respect, we do not find error in the respondent Court of Appeal's resolution sustaining the
assumption of jurisdiction by the court a quo.

It will not do to say that the fact that the Presidential Task Force has been empowered to issue
warrants of arrest, search, and seizure, makes it, ergo, a "semi-court". Precisely, it is the objection
interposed by the private respondent, whether or not it can under the 1973 Charter, issue such kinds
of processes.

It must be observed that under the present Constitution, the powers of arrest and search are
exclusive upon judges. 35 To that extent, the case has become moot and academic. Nevertheless, since the question has been
specifically put to the Court, we find it unavoidable to resolve it as the final arbiter of legal controversies, pursuant to the provisions of the
1973 Constitution during whose regime the case was commenced.

Since the 1973 Constitution took force and effect and until it was so unceremoniously discarded in
1986, its provisions conferring the power to issue arrest and search warrants upon an officer, other
than a judge, by fiat of legislation have been at best controversial. In Lim v. Ponce de Leon, 36 a 1975
decision, this Court ruled that a fiscal has no authority to issue search warrants, but held in the same vein that, by virtue of the responsible
officer" clause of the 1973 Bill of Rights, "any lawful officer authorized by law can issue a search warrant or warrant of arrest.37 Authorities,
however, have continued to express reservations whether or not fiscals may, by statute, be given such a power. 38

Less than a year later, we promulgated Collector of Customs v. Villaluz, 39 in which we categorically averred:
Until now only the judge can issue the warrant of arrest." 40 "No law or presidential decree has been enacted or promulgated vesting the
same authority in a particular responsible officer ." 41

Apparently, Villaluz had settled the debate, but the same question persisted following this Courts
subsequent rulings upholding the President's alleged emergency arrest powers . 42 [Mr. Justice Hugo
Gutierrez would hold, however, that a Presidential Commitment Order (PCO) is (was) not a species of "arrest" in its technical sense, and that
the (deposed) Chief Executive, in issuing one, does not do so in his capacity as a "responsible officer" under the 1973 Charter, but rather, as
Commander-in-Chief of the Armed Forces in times of emergency, or in order to carry out the deportation of undesirable aliens.43 In the
distinguished Justice's opinion then, these are acts that can be done without need of judicial intervention because they are not, precisely,
judicial but Presidential actions.]

In Ponsica v. Ignalaga,44 however, we held that the mayor has been made a "responsible officer' by the Local Government
Code, 45 but had ceased to be one with the approval of the 1987 Constitution according judges sole authority to issue arrest and search
warrants. But in the same breath, we did not rule the grant under the Code unconstitutional based on the provisions of the former
Constitution. We were agreed, though, that the "responsible officer" referred to by the fundamental law should be one capable of
approximating "the cold neutrality of an impartial judge." 46

In striking down Presidential Decree No. 1936 the respondent Court relied on American
jurisprudence, notably, Katz v. United States, 47 Johnson v. United States, 48 and Coolidge v. New Hampshire 49 in which
the American Supreme Court ruled that prosecutors (like the petitioner) cannot be given such powers because of their incapacity for a
"detached scrutiny" 50 of the cases before them. We affirm the Appellate Court.

We agree that the Presidential Anti-Dollar Salting Task Force exercises, or was meant to exercise,
prosecutorial powers, and on that ground, it cannot be said to be a neutral and detached "judge" to
determine the existence of probable cause for purposes of arrest or search. Unlike a magistrate, a
prosecutor is naturally interested in the success of his case. Although his office "is to see that justice
is done and not necessarily to secure the conviction of the person accused," 51 he stands, invariably, as the
accused's adversary and his accuser. To permit him to issue search warrants and indeed, warrants of arrest, is to make him both judge and
jury in his own right, when he is neither. That makes, to our mind and to that extent, Presidential Decree No. 1936 as amended by
Presidential Decree No. 2002, unconstitutional.
It is our ruling, thus, that when the 1973 Constitution spoke of "responsible officer" to whom the
authority to issue arrest and search warrants may be delegated by legislation, it did not furnish the
legislator with the license to give that authority to whomsoever it pleased. It is to be noted that the
Charter itself makes the qualification that the officer himself must be "responsible". We are not
saying, of course, that the Presidential Anti-Dollar Salting Task Force (or any similar prosecutor) is or
has been irresponsible in discharging its duty. Rather, we take "responsibility", as used by the
Constitution, to mean not only skill and competence but more significantly, neutrality and
independence comparable to the impartiality presumed of a judicial officer. A prosecutor can in no
manner be said to be possessed of the latter qualities.

According to the Court of Appeals, the implied exclusion of prosecutors under the 1973 Constitution
was founded on the requirements of due process, notably, the assurance to the respondent of an
unbiased inquiry of the charges against him prior to the arrest of his person or seizure of his
property. We add that the exclusion is also demanded by the principle of separation of powers on
which our republican structure rests. Prosecutors exercise essentially an executive function (the
petitioner itself is chaired by the Minister, now Secretary, of Trade and Industry), since under the
Constitution, the President has pledged to execute the laws. 52 As such, they cannot be made to issue judicial
processes without unlawfully impinging the prerogative of the courts.

At any rate, Ponsica v. Ignalaga should foreclose all questions on the matter, although the Court
hopes that this disposition has clarified a controversy that had generated often bitter debates and
bickerings.

The Court joins the Government in its campaign against the scourge of "dollar- salting", a pernicious
practice that has substantially drained the nation's coffers and has seriously threatened its economy.
We recognize the menace it has posed (and continues to pose) unto the very stability of the country,
the urgency for tough measures designed to contain if not eradicate it, and foremost, the need for
cooperation from the citizenry in an all-out campaign. But while we support the State's efforts, we do
so not at the expense of fundamental rights and liberties and constitutional safeguards against
arbitrary and unreasonable acts of Government. If in the event that as a result of this ruling, we
prove to be an "obstacle" to the vital endeavour of stamping out the blackmarketing of valuable
foreign exchange, we do not relish it and certainly, do not mean it. The Constitution simply does not
leave us much choice.

WHEREFORE, the petition is DISMISSED. No costs. SO ORDERED.

G.R. Nos. 92319-20 October 2, 1990

EDUARDO M. COJUANGCO, JR., petitioner,

vs.
PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT (PCGG) AND HON. FRANCISCO I.
CHAVEZ in his capacity as Solicitor General, and the HON. OMBUDSMAN, respondents,
MARIA CLARA L. LOBREGAT and JOSE R. ELEAZAR, JR., intervenors.

Estelito P. Mendoza and Villareal Law Offices for petitioner.

Angara, Abello, Concepcion, Regala & Cruz for intervenors.

GANCAYCO, J.:

In these petitions the issues raised are: (1) whether or not the Presidential Commission on Good
Government (PCGG) has the power to conduct a preliminary investigation of the anti-graft and
corruption cases filed by the Solicitor General against Eduardo Cojuangco, Jr. and other
respondents for the alleged misuse of coconut levy funds; and (2) on the assumption that it has
jurisdiction to conduct such a preliminary investigation, whether or not its conduct constitutes a
violation of petitioner's rights to due process and equal protection of the law.

On November 28, 1989, President Corazon C. Aquino directed the Solicitor General to prosecute all
persons involved in the misuse of coconut levy funds. Pursuant to the above directive the Solicitor
General created a task force to conduct a thorough study of the possible involvement of all persons
in the anomalous use of coconut levy funds.

On January 12, 1990, the Solicitor General filed two criminal complaints with respondent PCGG
docketed under I.S. Nos. 74 and 75. 1

The PCGG assigned both complaints to prosecutor Cesario del Rosario for preliminary investigation.
The latter scheduled both cases for hearing.

Del Rosario prepared a subpoena dated January 16, 1990 setting the preliminary investigation on
January 29, 1990 at 2:00 o'clock in the afternoon as to respondents Maria Clara Lobregat, Jose
Eleazar, Felix Duenas Jr., and Salvador Escudero, III, and on January 31, 1990 at 2:00 o'clock in the
afternoon as to petitioner Eduardo M. Cojuangco, Jr., Rolando de la Cuesta, and Hermenegildo
Zayco.

At the scheduled preliminary investigation on January 31, 1990 petitioner appeared through counsel.
Instead of filing a counter-affidavit, as required in the subpoena, he filed two motions addressed to
the PCGG, namely; (1) a motion to disqualify/inhibit PCGG; alternatively, a motion to dismiss; and
(2) motion to have the PCGG itself hear or resolve Cojuangco's motion to disqualify/inhibit PCGG
alternatively, motion to dismiss.

Prosecutor del Rosario denied both motions and declared the proceedings closed and the cases
submitted for resolution. Thereafter, petitioner requested the PCGG to resolve directly his aforesaid
motions.

On February 27, 1990, the PCGG issued an order denying petitioner's motions and required him,
together with all the respondents in I.S. Nos. 74 and 75 to submit counter-affidavits within five (5)
days from receipt thereof. Petitioner did not submit the required counter-affidavit.

Instead, he filed in this Court on March 12, 1990 the herein petitions for prohibition with prayer for a
temporary restraining order/writ of preliminary injunction.

He alleges that the PCGG may not conduct a preliminary investigation of the complaints filed by the
Solicitor General without violating petitioner's rights to due process and equal protection of the law,
and that the PCGG has no right to conduct such preliminary investigation. It is prayed that a
temporary restraining order be issued enjoining the respondents and any or all persons acting under
their orders or in their behalf from continuing with the preliminary investigation of I.S. Nos. 74 and 75
and enjoining as well the PCGG from taking any further action on said cases; and after hearing on
the merits, to issue a writ of preliminary injunction prohibiting respondent PCGG from conducting a
preliminary investigation of said criminal complaints and to order that the records of I.S. Nos. 74 and
75 be forwarded to the Ombudsman for such action he may consider appropriate and to pay the
costs of the suits.

In a resolution dated March 13, 1990, this Court, without giving due course to the petition, resolved
to require respondents to comment thereon within ten (10) days from notice.

On the same date, the PCGG issued an order that reads as follows:

Considering that none of the respondents have filed their counter-affidavits and
supporting evidence, except respondent Hermenegildo Zayco, the complaints filed
against them may now be considered submitted for resolution by this Commission.

Since the respondents, except Hermenegildo Zayco, have not submitted counter-
affidavits and controverting evidence, the evidence submitted by the complainants
stands uncontradicted. And this Commission finds the findings and conclusions of
fact of the investigating prosecutor, that a prima facie case has been established
against all the respondents, including Hermenegildo Zayco, to warrant the filing of an
information for a violation of Section 3(1) in relation to Section 3(i) thus making them
liable under Section 3(a) of RA 3019, to be well-founded.

Wherefore, let the corresponding information be filed. 2

On March 14, 1990, two informations 3 were filed by the PCGG with the Sandiganbayan against
petitioner and all other respondents named in I.S. Nos. 74 and 75 which were docketed as Criminal
Cases No. 14398 and 14399.

Meanwhile, the Solicitor General filed with the PCGG several other complaints against petitioner and
several others bearing on the misuse of the coconut levy funds. Two of these complaints were
docketed as I.S. Nos. 79 and 82. A panel of prosecutors designated by the PCGG issued
a subpoena to petitioner in order to compel him to appear in the investigation of said cases.

On March 20, 1990, petitioner filed a supplemental petition informing the Court of the filing of said
informations and the additional complaints aforestated. He prays that a temporary restraining order
be issued enjoining respondents and other persons acting under their orders or in their behalf from
continuing with the preliminary investigation of as well as taking further action in I.S. Nos. 79 and 82
and similar cases filed with the PCGG. Petitioner also prays that, after hearing, the PCGG be
prohibited from continuing with the preliminary investigation of I.S. Nos. 79 and 82 and that it be
ordered to forward the records of the case to the Ombudsman for appropriate action, and to pay the
costs of the suit.

On the same date, petitioner filed a motion reiterating the petition for the issuance of a temporary
restraining order/writ of preliminary injunction and alternatively seeking that the case be set for
hearing.

On March 22, 1990, the Court admitted the supplemental pleading of the petitioner; required
respondents to comment thereon within a non-extendible period of ten (10) days from notice; and
issued a status quo order prevailing at the time this petition was filed on March 12, 1990.
On April 2, 1990, a consolidated comment was submitted by the respondents attaching as annex
thereto the letters of the Executive Secretary dated February 9, 1990 and February 21, 1990,
respectively, addressed to the Chairman, PCGG, conveying the instructions of the President of the
Philippines that the complaints involving coconut levy funds be filed with the PCGG, to conduct the
necessary investigation and if warranted to file and prosecute the cases before the Sandiganbayan;
and it confirmed the earlier instructions of the President dated November 28, 1989 to the same
effect. 4

On May 4, 1990 petitioner filed a reply to the consolidated comment as required by the Court. In a
resolution dated June 5, 1990, the Solicitor General was required to file a rejoinder. On May 31,
1990, a motion for hearing of said cases was filed by petitioner and this was granted by the Court on
June 21, 1990. It was directed that the Ombudsman be impleaded as party-respondent. The Court
required the Ombudsman to comment on the petition within ten (10) days from notice. The case was
set for hearing on Tuesday, July 17, 1990 at 10:00 in the morning.

The Ombudsman submitted his comment on July 3, 1990 and the Court required petitioner to file a
reply to the same.

On July 6, 1990, Maria Clara Lobregat and Jose R. Eleazar, Jr. filed a Motion for Leave to Intervene
and a Motion to Admit Petition to Intervene wherein they ask that the PCGG desist from further
proceeding with the preliminary investigation of I.S. Nos. 74, 75, 77, 79, 80, 81, 82, 83, and 84
charging the intervenors and other respondents, including petitioner, with violations of the Anti-Graft
and Corrupt Practices Act (Republic Act No. 3019) in connection with the, coconut levy funds. The
intervenors question the authority of the PCGG to conduct a preliminary investigation of the said
cases. They maintain that even assuming that the PCGG has such authority, the same cannot be
delegated to a prosecutor or his assistants.

On July 10, 1990, the court granted the motion for leave to intervene and admitted the petition for
intervention. The PCGG was required to comment on said petition within ten (10) days from notice.

On July 13, 1990, respondents filed their rejoinder to the reply of petitioner to their consolidated
comments. The Ombudsman filed his comment to the petition for intervention, while petitioner filed
his reply to the comment of the Ombudsman on July 16, 1990.

The hearing was held as scheduled on July 17, 1990 where all the parties including the Ombudsman
appeared and/or were duly represented by counsels. After the hearing, the parties were required to
submit their simultaneous memoranda within fifteen (15) days from the date of the hearing.

On July 21, 1990, the Solicitor General asked for an extension of time within which to file his
comment to the petition for intervention. He filed said comment within the period of extension asked
for on July 31, 1990.

The memoranda of all the parties having been submitted, the petitions were deemed submitted for
resolution.

On the first issue wherein petitioner and intervenors question the authority of the PCGG to conduct a
preliminary investigation of the criminal complaints filed against them by the Solicitor General, the
Court finds and so holds the same to be devoid of merit.
Under Section 2, Rule 112 of the 1985 Rules of Criminal Procedure the officers authorized to
conduct a preliminary investigation are the following:

Sec. 2. Officers authorized to conduct preliminary investigation.

The following may conduct a preliminary investigation:

(a) Provincial or city fiscals and their assistants;

(b) Judges of the Municipal Trial Courts and Municipal Circuit Trial Court;

(c) National and Regional state prosecutors; and

(d) Such other officers as may be authorized by law.

Their authority to conduct preliminary investigation shall include all crimes cognizable
by the proper court in their respective territorial jurisdictions.

Under Section 2 likewise of Rule 112 of the Rules of Court before its present amendment, the
officers authorized to conduct preliminary investigation are as follows:

Sec. 2. Officers authorized to conduct preliminary examination: Every justice of

the peace, municipal judge, city or provincial fiscal, shall have authority to conduct
preliminary examination or investigation in accordance with these rules of all
offenses alleged to have been committed within his municipality, city or province,
cognizable by the Court of First Instance.

The justice of the peace of the provincial capital or of the municipality in which the
provincial jail is located when directed by an order of the Court of First Instance, shall
have authority to conduct such preliminary examination or investigation of any
offense committed anywhere within his province at the expense of the municipality
wherein the same was committed.

Under Section 3 thereof in case of temporary absence of the justice of the peace or his auxiliary, the
municipal mayor may conduct the preliminary investigation. For complaints filed directly with the
Court of First Instance, the judge of the said court may refer the case to the justice of the peace or
he may himself conduct both the preliminary examination and investigation simultaneously, under
Section 13 of the same rule.

Upon the enactment of the Anti-Graft and Corrupt Practices Act on August 17, 1960, 5 and Republic
Act No. 1379 (covering unexplained wealth cases) on August 18, 1955, the preliminary investigation of
cases involving the Anti-Graft and Corrupt Practices Act and/or unexplained wealth cases was vested on
the aforestated officers.

However, on July 17, 1979, Presidential Decree No. 1630 was promulgated whereby the
Tanodbayan was vested with the "exclusive authority to conduct preliminary investigation of all cases
cognizable by the Sandiganbayan." 6Under Presidential Decree No. 1486 which was approved on June
11, 1978, the Sandiganbayan was created and vested with exclusive jurisdiction over all offenses
committed by public officers enumerated therein. This was amended by Presidential Decree No. 1606
dated December 10, 1978 and further amended by Presidential Decree No. 1861 issued on March 23,
1983 wherein the jurisdiction of the Sandiganbayan was defined as follows:

Sec. 1. Section 4 of Presidential Decree No. 1606 is hereby amended to read as

follows:

Sec. 4. Jurisdiction The Sandiganbayan shall exercise:

(a) Exclusive original jurisdiction in all cases involving:

(1) Violations of Republic Act No. 3019, as amended, otherwise known as the Anti-
Graft and Corrupt Practices Act, Republic Act No. 1379, and Chapter II, Section 2,
Title VII of the Revised Penal Code;

(2) Other offenses or felonies committed by public officers and employees in relation
to their office, including those employed in government-owned or controlled
corporations, whether simple or complexed with other crimes, where the penalty
prescribed by law is higher than prision correccional or imprisonment for six (6)
years, or a fine of P6,000.00: PROVIDED, HOWEVER, that offenses or felonies
mentioned in this paragraph where the penalty prescribed by law does not
exceed prision correccional or imprisonment for six (6) years or a fine of P6,000.00
shall be tried by the proper Regional Trial Court, Metropolitan Trial Court, Municipal
Trial Court and Municipal Circuit Trial Court.

(b) Exclusive appellate jurisdiction:

(1) On appeal, from the final judgments, resolutions or orders of the Regional Trial
Courts in cases originally decided by them in their respective territorial jurisdiction.

(2) By petition for review, from the final judgments, resolutions or orders of the
Regional Trial Courts in the exercise of their appellate jurisdiction over cases
originally decided by the Metropolitan Trial Courts, Municipal Trial Courts and
Municipal Circuit Trial Courts, in their respective jurisdiction.

The procedure prescribed in Batas Pambansa Blg. 129, as well as the implementing
rules the Supreme Court has promulgated and may hereinafter promulgate, relative
to appeals/petitions for review to the Intermediate Appellate Court shall apply to
appeals and petition for review filed with the Sandiganbayan. In all cases elevated to
the Sandiganbayan, the Office of the Tanodbayan shall represent the People of the
Philippines.

In case private individuals are charged as co-principals, accomplices or accessories

with the public officers or employees, including those employed in government-
owned or controlled corporations, they shall be tried jointly with said public officers
and employees.

Any provision of law or the Rules of Court to the contrary notwithstanding, the
criminal action and the corresponding civil action for the recovery of civil liability
arising from the offense charged shall at all times be simultaneously instituted with
 and jointly determined in the same proceeding by the Sandiganbayan or the
appropriate courts, the filing of the criminal action being deemed to necessarily carry
with it the filing of the civil action, and no right to reserve the filing of such civil action
separately from the criminal action shall be recognized: PROVIDED, HOWEVER,
that where the civil action had heretofore been filed separately but judgment therein
has not yet been rendered, and the criminal case is hereafter filed with the
Sandiganbayan or the appropriate court, said civil action shall be transferred to the
Sandiganbayan or the appropriate court, as the case maybe, for consolidation and
joint determination with the criminal action, otherwise the separate civil action shall
be considered abandoned.

Sec. 2. All cases pending in the Sandiganbayan or in the appropriate courts as of the
date of the effectivity of this Decree shall remain with and be disposed of by the
courts where they are pending.

Sec. 3. The provisions of this Decree notwithstanding, the office of the Tanodbayan
shall continue to have the exclusive authority to conduct preliminary investigation, file
the necessary information, and direct and control the prosecution of all cases
enumerated in Section 4 of Presidential Decree No. 1606, whether such cases be
within the exclusive original/appellate jurisdiction of the Sandiganbayan or the
appropriate courts in accordance with the provisions of Presidential Decree No.
1630. (Emphasis supplied.)

However, this exclusive jurisdiction of the Tanodbayan to conduct preliminary investigation of said
cases was modified by Executive Order No. 1 signed by President Corazon C. Aquino on February
28, 1986 creating the PCGG and constituting its membership to assist the President in the recovery
of ill gotten wealth accumulated by the former President, his relatives and cronies. Therein it is
provided, among others:

Sec. 2. The Commission shall be charged with the task of assisting the President
in regard to the following matters:

(a) The recovery of all ill-gotten wealth accumulated by former President Ferdinand
E. Marcos, his immediate family, relatives, subordinates and close associates,
whether located in the Philippines or abroad, including the takeover or sequestration
of all business enterprises and entities owned or controlled by them, during his
administration, directly or through nominees, by taking undue advantage of their
public office and/or using their powers, authority, influence, connections or
relationship.

(b) The investigation of such cases of graft and corruption as the President may
assign to the Commission from time to time.

(c) The adoption of safeguards to ensure that the above practices shall not be
repeated in any manner under the new government, and the institution of adequate
measures to prevent the occurrence of corruption.

Sec. 3. The Commission shall have the power and authority:

 (a) To conduct investigations as may be necessary in order to accomplish and carry
out the purposes of this order. (Emphasis supplied.)

Under Executive Order No. 14 signed by President Aquino on May 7, 1986, it is also provided:

Sec. 1. Any provision of the law to the contrary notwithstanding, the Presidential
Commission on Good Government with the assistance of the Office of the Solicitor
General and other government agencies, is hereby empowered to file and prosecute
all cases investigated by it under Executive Order No. 1, dated February 28, 1986
and Executive Order No. 2, dated March 12, 1986, as may be warranted by its
findings.

Sec. 2. The Presidential Commission on Good Government shall file all such cases,
whether civil or criminal, with the Sandiganbayan, which shall have exclusive and
original jurisdiction thereof .

Sec. 3. Civil suits for restitution, reparation of damages, or indemnification for

consequential damages, forfeiture proceedings provided for under Republic Act No.
1379, or any other civil actions under the Civil Code or other existing laws, in
connection with Executive Order No.1 dated February 28, 1986 and Executive Order
No. 2 dated March 12, 1986, may be filed separately from and proceed
independently of any criminal proceedings and may be proved by preponderance of
evidence. (Emphasis supplied.)

From the foregoing provisions of law, particularly Sections 2(b) and 3(a) of Executive Order No. 1
and Sections 1 and 2 of Executive Order No. 14, it is clear that the PCGG has the power to
investigate and prosecute such ill-gotten wealth cases of the former President, his relatives and
associates, and graft and corrupt practices cases that may be assigned by the President to the
PCGG to be filed with the Sandiganbayan. No doubt, the authority to investigate extended to the
PCGG includes the authority to conduct a preliminary investigation. 7

Thus, the Tanodbayan lost the exclusive authority to conduct the preliminary investigation of these
types of cases by the promulgation of the said Executive Order Nos. 1 and 14 whereby the PCGG
was vested concurrent jurisdiction with the Tanodbayan to conduct such preliminary investigation
and to prosecute said cases before the Sandiganbayan. 8 The power of the PCGG to conduct a
preliminary investigation of the aforementioned types of cases has been recognized by this Court
in Bataan Shipyard and Engineering Co. Inc. (BASECO) vs. PCGG. 9

Upon the adoption of the 1987 Constitution, the Office of the Ombudsman was created under Article
XI, as follows:

Sec. 13. The Office of the Ombudsman shall have the following powers, functions,
and duties:

(1) Investigate on its own, or on complaint by any person, any act or omission of any
public official, employee, office or agency, when such act or omission appears to be
illegal, unjust, improper, or inefficient.
 (2) Direct, upon complaint or at its own instance, any public official or employee of
the Government, or any subdivision, agency or instrumentality thereof, as well as of
any government-owned or controlled corporation with original charter, to perform and
expedite any act or duty required by law, or to stop, prevent, and correct any abuse
or impropriety in the performance of duties.

(3) Direct the officer concerned to take appropriate action against a public official or
employee at fault, and recommend his removal, suspension, demotion, fine, censure,
or prosecution, and ensure compliance therewith.

(4) Direct the officer concerned, in any appropriate case and subject to such
limitations as may be provided by law, to furnish it with copies of documents relating
to contracts or transactions entered into by his office involving the disbursement or
use of public funds or properties, and report any irregularity to the Commission on
Audit for appropriate action.

(5) Request any government agency for assistance and information necessary in the
discharge of its responsibilities, and to examine, if necessary, pertinent records and
documents.

(6) Publicize matters covered by its investigation when circumstances so warrant and
with due prudence.

(7) Determine the causes of inefficiency, red tape, mismanagement, fraud, and
corruption in the Government and make recommendations for their elimination and
the observance of high standards of ethics and efficiency.

(8) Promulgate its rules of procedure and exercise such other powers or perform
such functions or duties as may be provided by law. (Emphasis supplied)

This Court, in Zaldivar, 10 interpreting the aforesaid provision of the Constitution, particularly Section
13(1) thereof vesting on the Ombudsman the right and the power to investigate on its own or on
complaint, any act or omission of any public official, employee, office or agency which appears "to be
illegal, unjust, improper, or inefficient", held that the general power of investigation covers the lesser
power to conduct a preliminary investigation. Thus, as the power of investigation vested on the
Ombudsman under the Constitution includes the power to conduct a preliminary investigation, then the
special prosecutor (former Tanodbayan) may no longer conduct such a preliminary investigation unless
duly authorized by the Ombudsman. 11

A reading of the foregoing provision of the Constitution does not show that the power of investigation
including preliminary investigation vested on the Ombudsman is exclusive. Hence, the said provision
of the Constitution did not repeal or remove the power to conduct an investigation, including the
authority to conduct a preliminary investigation, vested on the PCGG by Executive Orders Nos. 1
and 14.

Although under Section 26 of Article XVIII of the Constitution the authority of the PCGG to issue
sequestration or freeze orders was maintained for not more than eighteen months after the
ratification of the Constitution, it cannot be construed thereby that its power of investigation had
thereby been revoked by the failure to reiterate said power in the Constitution.
Indeed, upon the passage of Republic Act No. 6770, otherwise known as the "Ombudsman Act of
1989," it is therein specifically provided in Section 15 as follows:

Sec. 15. Powers, Functions and Duties. The Office of the Ombudsman shall have
the following powers, functions and duties:

(1) Investigate and prosecute on its own or on complaint by any person, any act or
omission of any public officer or employee, office or agency, when such act or
omission appears to be illegal, unjust, improper or inefficient. It has primary
jurisdiction over cases cognizable by the Sandiganbayan and, in the exercise of this
primary jurisdiction, it may take over, at any stage, from any investigatory agency of
Government, the investigation of such cases;

xxx xxx xxx

(11) Investigate and initiate the proper action for the recovery of ill-gotten and/or
unexplained wealth amassed after February 25, 1986 and the prosecution of the
parties involved therein.

The Ombudsman shall give priority to complaints filed against high ranking
government officials and/or those occupying supervisory positions, complaints
involving grave offenses as well as complaints involving large sums of money and/or
properties.

Under Section 15(l) of Republic Act No. 6770 aforecited, the Ombudsman has primary jurisdiction
over cases cognizable by the Sandiganbayan so that it may take over at any stage from any
investigatory agency of the government, the investigation of such cases. The authority of the
Ombudsman to investigate offenses involving public officers or employees is not exclusive but is
concurrent with other similarly authorized agencies of the government. Such investigatory agencies
referred to include the PCGG and the provincial and city prosecutors and their assistants, the state
prosecutors and the judges of the municipal trial courts and municipal circuit trial courts. 12

In other words, the aforestated provision of the law has opened up the authority to conduct
preliminary investigation of offenses cognizable by the Sandiganbayan to all investigatory agencies
of the government duly authorized to conduct a preliminary investigation under Section 2, Rule 112
of the 1985 Rules of Criminal Procedure with the only qualification that the Ombudsman may take
over at any stage of such investigation in the exercise of his primary jurisdiction.

It is also noted that under Section 15(11) of the aforestated Republic Act No. 6770, among the
powers vested on the Ombudsman is to investigate and to initiate the proper action for recovery of
ill-gotten wealth and/or unexplained wealth amassed after February 25, 1986 and the prosecution of
the parties involved therein. The Court agrees with the contention of the public respondent PCGG
that this provision is a tacit recognition that the authority of the PCGG to conduct preliminary
investigation of ill-gotten wealth and/or unexplained wealth amassed before February 25, 1986 is
maintained.

However, the Court finds and so holds that the aforesaid provision of the law cannot in any manner
dilute or diminish the primary jurisdiction of the Ombudsman over all such types of cases committed
by public officers or employees as provided in Section 13, Article XI of the Constitution. Thus,
notwithstanding the provision of Section 15(11) of Republic Act No. 6770, the primary jurisdiction of
the Ombudsman to investigate covers ill-gotten wealth and/or unexplained wealth cases that
occurred even before February 25, 1986.

The second issue raised that the preliminary investigation by the PCGG of the aforestated
complaints violates the right of petitioner to due process and to equal protection of law is impressed
with merit.

Under Section 1, Rule 112 of the 1985 Rules on Criminal Procedure, preliminary investigation is
defined as "an inquiry or proceeding for the purpose of determining whether there is sufficient
ground to engender a well-founded belief that a crime cognizable by the Regional Trial Court has
been committed and that the respondent is probably guilty thereof, and should be held for trial."

The purpose of a preliminary investigation is to secure the innocent against hasty, malicious and
oppressive prosecution, and to protect him from an open and public accusation of a crime, from the
trouble, expense, anxiety of a public trial, and also to protect the state from useless and expensive
trials. 13

The conduct of a preliminary investigation is the initial step towards the criminal prosecution of a
person. After such preliminary investigation, if the investigating officer finds that there is sufficient
ground to engender a well-founded belief that a crime has been committed and that the respondent
is probably guilty thereof and should be held for trial, then the corresponding complaint or
information shall be filed in the competent court. It is the filing of said complaint or information that
initiates the criminal prosecution of the accused when he is brought to court for trial.

Such a preliminary investigation is required for offenses cognizable by the Regional Trial Court and
the Sandiganbayan. 14 It must be undertaken in accordance with the procedure provided in Section 3,
Rule 112 of the 1985 Rules of Criminal Procedure. This procedure is to be observed in order to assure
that a person undergoing such preliminary investigation will be afforded due process.

As correctly pointed out by petitioner, an indispensable requisite of due process is that the person
who presides and decides over a proceeding, including a preliminary investigation, must possess the
cold neutrality of an impartial judge. 15

Although such a preliminary investigation is not a trial and is not intended to usurp the function of the
trial court, it is not a casual affair. The officer conducting the same investigates or inquires into the
facts concerning the commission of the crime with the end in view of determining whether or not an
information may be prepared against the accused. Indeed, a preliminary investigation is in effect a
realistic judicial appraisal of the merits of the case. Sufficient proof of the guilt of the accused must
be adduced so that when the case is tried, the trial court may not be bound as a matter of law to
order an acquittal. A preliminary investigation has then been called a judicial inquiry. It is a judicial
proceeding. An act becomes judicial when there is opportunity to be heard and for, the production
and weighing of evidence, and a decision is rendered thereon.

The authority of a prosecutor or investigating officer duly empowered to preside or to conduct a

preliminary investigation is no less than that of a municipal judge or even a regional trial court
judge. 16 While the investigating officer, strictly speaking is not a "judge," by the nature of his functions he
is and must be considered to be a quasi judicial officer.
Soon after the creation of the PCGG under Executive Order No. 1, the PCGG sequestered and froze
all the properties of petitioner Cojuangco in accordance with the powers vested in it by law.

On July 31, 1987, said petitioner was sued by the PCGG before the Sandiganbayan by way of a
complaint entitled "Republic of the Philippines vs. Eduardo M. Cojuangco, Jr.," et al. docketed as
Civil Case No. 0033. Among the allegations of the complaint are as follows:

This is a civil action against Defendants Eduardo Cojuangco, Jr., Ferdinand E.

Marcos, Imelda R. Marcos and the rest of the Defendants in the above-entitled case
to recover from them ill-gotten wealth consisting of funds and other property which
they, in unlawful concert with one another, had acquired and accumulated in flagrant
breach of trust and of their fiduciary obligations as public officers with, grave abuse of
right and power and in brazen violation of the Constitution and laws of the Republic
of the Philippines, thus resulting in their unjust enrichment during Defendant
Ferdinand E. Marcos' 20 years of rule from December 30, 1965 to February 25,
1986, first as President of the Philippines under the 1935 Constitution and, thereafter,
as one man ruler under martial law and Dictator under the 1973 Marcos-promulgated
Constitution.

2. The wrongs committed by Defendant acting singly or collectively and in unlawful

concert with one another, include the misappropriation and theft of public funds,
plunder of the nation's wealth, extortion, blackmail, bribery, embezzlement and other
acts of corruption, betrayal of public trust and brazen abuse or power as more fully
described below, all at the expense and to the grave and irreparable damage of
Plaintiff and the Filipino people. (Emphasis supplied.) 17

The complaint was filed by the PCGG through its Chairman, Ramon A. Diaz, who verified the
complaint, and Solicitor General Francisco I. Chavez and Assistant Solicitor General Ramon S.
Desuasido.

Petitioner in turn filed a counterclaim against the PCGG for the sequestration of his properties and
the institution of the suit. He also questioned the acts of the PCGG in several special civil actions
before the court. 18

On November 27, 1989, the first working day after petitioner Cojuangco returned to the Philippines,
the PCGG filed with the Sandiganbayan an information against said petitioner for violation of
Republic Act No. 3019 entitled "People of the Philippines vs. Eduardo M. Cojuangco, Jr." docketed
as Criminal Case No. 14161. However, the Sandiganbayan found no probable cause for the
issuance of a warrant of arrest so a petition for certiorari was filed by the Solicitor General in this
Court docketed as G.R. No. 91741. On March 29, 1990 this Court denied the petition.

On November 28, 1989, President Aquino directed the Solicitor General to prosecute all persons
involved in the misuse of the coconut levy funds. The Solicitor General created a task force for the
purpose.

On January 12, 1990, the Solicitor General filed with the PCGG the first two criminal complaints for
violation of the Anti-Graft and Corrupt Practices Act, bearing on the anomalous use and/or misuse of
the coconut levy funds docketed as I.S. Nos. 74 and 75. Among the respondents were the petitioner
and intervenors Lobregat and Eleazar. The PCGG assigned assistant prosecutor Cesario del
Rosario to conduct the preliminary investigation.

As hereinabove related, a subpoena was issued by the said prosecutor for the preliminary
investigation on January 29, 1989 insofar as intervenors are concerned while that of petitioner, de la
Cuesta and Herminigildo Zayco was scheduled on January 31, 1990. In the same subpoena,
respondents were required to submit their counter-affidavits and other supporting documents to
controvert the complaint within ten (10) days from notice.

On the scheduled investigation dated January 29, 1990, intervenors appeared through counsel and
moved to dismiss the complaints for lack of jurisdiction of the PCGG to conduct the preliminary
investigation but this was denied by said prosecutor. They were asked by the prosecutor if they will
submit their counter-affidavits but intervenors' counsel replied that they were not yet ready to file the
same because of their pending motion. Thus, the cases were considered closed insofar as they are
concerned.

The intervenors contested the prosecutor's action before the Sandiganbayan through a petition
for certiorari and prohibition docketed as Criminal Case No. 0093. On March 13, 1990, the
Sandiganbayan promulgated its decision wherein it declared the preliminary investigation conducted
by del Rosario null and void, enjoined the PCGG from filing an information on the basis thereof and
directed the PCGG to conduct another preliminary investigation of I.S. Nos. 74 and 75 as to the
intervenors and to assign another investigating prosecutor.

Earlier however, that is, on February 27, 1990, the PCGG, overruling prosecutor del Rosario's order,
gave the intervenors in I.S. Nos. 74 and 75 another period of five (5) days from notice within which to
submit their counter-affidavits and supporting evidence. Based on this action the PCGG filed a
motion for reconsideration of the aforesaid decision of the Sandiganbayan which had not been
resolved.

As to petitioner, on the day of the preliminary investigation dated January 31, 1990, his counsel filed
a motion to disqualify or inhibit the PCGG, an alternative motion to dismiss, and a motion to have the
PCGG itself hear and/or resolve the motion to disqualify or inhibit itself alternatively a motion to
dismiss. The preliminary investigation presided by prosecutor del Rosario started at 2:00 o'clock
P.M. with eight other respondents duly represented by their counsel. The said motion was denied
and the preliminary investigation was adjourned.

Immediately thereafter petitioner brought the matter to Chairman Mateo A.T. Caparas of the PCGG
and in several communications sought resolution of the motion by the PCGG. On February 27, 1990,
the PCGG issued an order denying petitioner's motion to dismiss for lack of jurisdiction but did not
resolve the motion to disqualify. Therein, the PCGG directed petitioner to submit his counter-
affidavits within five (5) days from receipt of notice.

On March 12, 1990, the same day this petition was filed in this Court, the petitioner, instead of filing
the counter-affidavit, filed with the PCGG an urgent motion to defer proceedings in I.S. Nos. 74 and
75 for at least until March 22, 1990 within which to seek judicial relief from the order of February 27,
1990. Upon the filing of this petition, petitioner filed a supplemental urgent motion to defer
proceedings with the PCGG informing it of the filing of this petition.
Nevertheless, on March 14, 1990, the PCGG filed two informations corresponding to the complaints
in I.S. Nos. 74 and 75 which are docketed as Criminal Cases Nos. 14398 and 14399, respectively, at
the Sandiganbayan. The PCGG recommended bail as P100,000.00 for each case.

Meanwhile, the Solicitor General filed two other complaints against the petitioner with the PCGG
accusing the petitioner of violation of Republic Act No. 3019 and other penal laws in connection with
the coconut levy funds, namely, I.S. No. 79 which concerns an alleged arbitration award in favor of
Agricultural Investors Inc., and I.S. No. 82 which concerns the acquisition of coconut oil mills.

Several other complaints were filed by the Solicitor General with the PCGG against petitioner for
preliminary investigation petition, to wit:

(a) I.S. No. 80 which concerns the acquisition of the First United Bank, now United Coconut Planters'
Bank; (b) I.S. No. 81 concerning shares of the United Coconut Oil Mills Inc.; (c) I.S. No. 83 regarding
the acquisition of coconut oil mills and certain indebtedness thereof; and (d) I.S. No. 84 regarding
settlement of an Anti-Graft suit in the United States. All of these complaints were for alleged violation
of Republic Act No. 3019.

The question that arises, therefore, is whether under the circumstances of this case, it would be fair
and just for the PCGG to conduct the preliminary investigation of the said complaint instead of the
Ombudsman or any other duly authorized investigating agency.

Upon the creation of the PCGG under Executive Order No. 1 issued by President Aquino, the PCGG
was charged with the task of assisting the President not only in the recovery of ill-gotten wealth or
unexplained wealth accumulated by the former President, his immediate family, relatives,
subordinates and close associates but also in the investigation of such cases of graft and corruption
as the President may assign to the Commission from time and to prevent a repetition of the same in
the future.

Section 3 of Executive Order No. 1 provides as follows:

Sec. 3. The Commission shall have the power and authority:

(a) To conduct investigation as may be necesssary 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.

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 its investigation;

6. Hold any person in direct or indirect contempt and impose the appropriate penalties as provided
by the rules.

Considering that the PCGG, like the courts, is vested with the authority to grant provisional remedies
of (1) sequestration, (2) freezing assets, and (3) provisional takeover, it is indispensable that, as in
the case of attachment and receivership, there exists a prima facie factual foundation, at least, for
the sequestration order, freeze order or takeover order, an adequate and fair opportunity to contest it
and endeavor to cause its negation or nullification. Both are assured under the foregoing executive
orders and the rules and regulations promulgated by the PCGG. 19

Thus, in Baseco, this Court held, as follows:

 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 . . . (and other parties affected) be
afforded fair opportunity to contest these claims before appropriate Philippine
authorities." Section 7 of the Commission's 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 "sequestration or freeze order shall be
issued only upon showing of a prima facie case." 20

Insofar as the general power of investigation vested in the PCGG is concerned, it may be divided
into two stages. The first stage of investigation which is called the criminal investigation stage is the
fact-finding inquiring which is usually conducted by the law enforcement agents whereby they gather
evidence and interview witnesses after which they assess the evidence and if they find sufficient
basis, file the complaint for the purpose of preliminary investigation. The second stage is the
preliminary investigation stage of the said complaint. It is at this stage, as above discussed, where it
is ascertained if there is sufficient evidence to bring a person to trial.

In the petition before this Court, it is not denied that the PCGG conducted the appropriate criminal
investigation of petitioner and intervenors as a law enforcer. In the process it sequestered all the
properties of the petitioner after a prima facie finding that the same amount to ill-gotten wealth and/or
were acquired in relation to allegedly anomalous disposition or misuse of the coconut levy funds.

The PCGG then filed on July 31, 1987 a complaint docketed as Civil Case No. 0033 against
petitioner and intervenors not only for alleged ill-gotten wealth as associates of former President
Marcos but for the unlawful concert with the former President and his wife to unjustly enrich
themselves at the expense of the Filipino people through the alleged misuse, misappropriation and
dissipation of the coconut levy funds, as enumerated in the complaint. This complaint was verified
and filed by the then Chairman of the PCGG and also signed by the Solicitor General and the
Assistant Solicitor General.

Among the allegations in the civil complaint, are the very transactions now subject of the criminal
complaints filed by the Solicitor General against petitioner to wit:

13. Defendant Eduardo Cojuangco, Jr., taking undue advantage of his association,
influence and connection, acting in unlawful concert with Defendants Ferdinand E.
Marcos and Imelda R. Marcos, embarked upon devices, schemes and stratagems to
unjustly enrich themselves at the expense of Plaintiff and the Filipino people, such
as, when he

13(a) manipulated, beginning the year 1975, with the active collaboration of
Defendants Juan Ponce Enrile, Maria Clara Lobregat Danilo Ursua, Jose R. Eleazar,
Jr. and Herminigildo C. Zayco, the purchase by Philippine Coconut Authority (PCA) of
72.2% of the outstanding capital stock of the First (sic) (FUB)which was
subsequently converted into a universal bank named United Coconut Planters Bank
(UCPB) through the use of the Coconut Consumers Stabilization-Fund (CCSF) levy
initially in the amount of P85,773,100.00 in a manner contrary to law and to the
specific purposes for which said coconut levy funds were imposed and collected
under P.D. 276, and under anomalous and sinister designs and circumstances, to
wit:

xxx xxx xxx

At pp. 22 to 22-A, Expanded Complaint, Civil Case No.0033)

[I.S. No. 080]

(c) misappropriated, misused and dissipated P840 million of the Coconut Industry
Development Fund (CIDF) levy funds deposited with the National Investment
Development Corporation (NIDC) as administrator-trustee of said funds and later
with UCPB, of which Defendant Eduardo Cojuangco, Jr. was the Chief Executive
Officer in connection with the (i) development, improvement, operation and
maintenance of the Bugsuk Island Seed Garden ("BUGSUK") by Agricultural
Investors, Inc. ("AII") as developer (both Bugsuk and AII are beneficially held and
controlled by Defendant Eduardo Cojuangco, Jr.) pursuant to a highly oppressive,
anomalous and one-sided memorandum agreement, dated November 20, 1974, (ii)
sale by AII to PCA of the seed nuts produced at Bugsuk Seed Garden at exorbitant
prices pursuant to a very onerous, oppressive and disadvantageous agreement,
dated August 2, 1985 and (iii) payment of liquidated damages in the amount of
P640,856,879.67 and arbitration fee of P150,000.00 pursuant to a decision rendered
by a Board of Arbitrators against UCPB for alleged breach of contract.;

xxx xxx xxx

(At pp. 26-27)

[I.S. No. 079]

(d) established and caused to be funded with coconut levy funds, with the active
collaboration of Defendant Ferdinand E. Marcos through the issuance of LOI 926,
and of defendants, Juan Ponce Enrile, Jose R. Eleazar, Jr., Maria Clara Lobregat,
Jose C. Concepcion, Inaki Mendezona, Douglas Lu Ym, Teodoro D. Regala,
Emmanuel Almeda, Eduardo Escueta, Leo Palma, and Rolando de la Cuesta, the
United Coconut Oil Mills, Inc. (UNICOM) a corporation beneficially held and
controlled by Defendant Eduardo Cojuangco, Jr. and bought sixteen (16) competing
and/or non-operating oil mills at exorbitant prices in the total amount of P184,935
million, then mothballed them in order to control the prices of copra and other
coconut products, and assumed and paid the outstanding loan obligations of seven
(7) of those purchased oil mills in the total amount of P805,984 million with the
express consent and approval of Defendant Ferdinand E. Marcos, thereby
establishing a coconut monopoly for their own benefit and unjust enrichment and to
the grave damage of Plaintiff and the Filipino people;

(e) manipulated with the active collaboration of Defendants Mohammad Ali Dimaporo
and Teodoro D. Regala, the sale of the Mindanao Coconut Oil Mills (MINCOCO) to
 UNICOM through the issuance of LOI 926 by Defendant Ferdinand E. Marcos, in
violation of the Guaranty Agreement dated July 23, 1976, which prohibited the sale,
among others, of the MINCOCO assets/properties without the prior written consent of
NIDC, under terms and conditions grossly disadvantageous to Plaintiff and the
Filipino people;

(f) drew up a scheme of payment to settle the accounts of MINCOCO and other
UNICOM-acquired mills with their respective creditors: namely the National
Investment Development Corporation (NIDC), Deveploment Bank of the Philippines
(DBP), Philippine Veterans Bank (PVB), under terms grossly disadvantageous to
Plaintiff;

xxx xxx xxx

(At pp. 27-28)

[I.S. Nos. 81, 82 and 83]

(g) misappropriated and dissipated the coconut levy funds by withdrawing

therefrom tens of millions of pesos in order to pay damages adjudged against
UNICOM, headed and controlled by Defendant Eduardo Cojuangco, Jr., in an anti-
trust suit in California, U.S.A.;

xxx xxx xxx

(At p. 29)

[I.S. No. 84]

(h) misused, dissipated and unlawfully disbursed coconut levy funds with the active
collaboration and participation of defendants Maria Clara Lobregat, Juan Ponce
Enrile, Jose Eleazar, Jr., Rolando de la Cuesta and Herminigildo Zayco as members
of the PCA governing board for projects and purposes completely alien to those for
which the fund was collected and donations made by PCA such as . . . P6 million to
COCOFED; and other similar unlawful disbursements, which all remain unaccounted
for to date;

xxx xxx xxx

(At pp 28 to 28-A Emphasis supplied)

[I.S. No. 74 and 75]

Thereafter, as aforestated, the Solicitor General filed the first two complaints against petitioner and
intervenors among others, under I.S. Nos. 74 and 75 for alleged violation of the Anti Graft and
Corrupt Practices Act for donations allegedly made out of coconut levy funds to the Philippine
Coconut Producers Federation (COCOFED).
Petitioner and intervenors questioned not only the authority of the PCGG to conduct the preliminary
investigation but asserted a denial of due process and equal protection of the law. There is cogent
basis for their plea.

The PCGG, as a law enforcer, gathered evidence as to the alleged ill-gotten wealth of petitioner and
intervenors and, after satisfying itself that there is a prima facie case, sequestered and issued a
freeze order for all the properties of petitioner. Based also on the said finding of a prima facie case,
the PCGG filed a civil complaint docketed as Civil Case No. 0033 against petitioner and intervenors
for alleged ill-gotten wealth including the alleged misuse, misappropriation, and diversion of coconut
levy funds.

As hereinabove discussed the criminal complaints under I.S. Nos. 74, 79, 80, 81, 82, 83 and 84 filed
by the Solicitor General all for alleged violation of Republic Act No. 3019, are covered and alleged in
the aforesaid civil complaint docketed as Civil Case No. 0033.

The PCGG conducted the preliminary investigation of I.S. Nos. 74 and 75 and is poised to conduct
the preliminary investigation of the other aforementioned complaints for the same alleged violations
of law subject of the civil complaint.

The Court cannot close its eyes to the glaring fact that in earlier instances, the PCGG had already
found a prima facie case against the petitioner and intervenors when, acting like a judge, it caused
the sequestration of the properties and the issuance of the freeze order of the properties of
petitioner. Thereafter, acting as a law enforcer, in collaboration with the Solicitor General, the PCGG
gathered the evidence and upon finding cogent basis therefor filed the aforestated civil complaint.
Consequently the Solicitor General filed a series of criminal complaints.

It is difficult to imagine how in the conduct of such preliminary investigation the PCGG could even
make a turn about and take a position contradictory to its earlier findings of a prima facie case
against petitioner and intervenors. This was demonstrated in the undue haste with which I.S. Nos.
74 and 75 was investigated and the informations were filed in court even as the petitioner and
intervenors questioned its authority, invoked the denial of due process and promptly informed the
PCGG of the filing of this petition.

In our criminal justice system, the law enforcer who conducted the criminal investigation, gathered
the evidence and thereafter filed the complaint for the purpose of preliminary investigation cannot be
allowed to conduct the preliminary investigation of his own complaint. It is to say the least arbitrary
and unjust.

It is in such instances that We say one cannot be "a prosecutor and judge at the same time." Having
gathered the evidence and filed the complaint as a law enforcer, he cannot be expected to handle
with impartiality the preliminary investigation of his own complaint, this time as a public prosecutor.

The circumstances of the instant petition are even worse. To repeat, the PCGG and the Solicitor
General finding a prima facie basis filed a civil complaint against petitioner and intervenors alleging
substantially the same illegal or criminal acts subject of the subsequent criminal complaints the
Solicitor General filed with the PCGG for preliminary investigation. While ostensibly, it is only the
Solicitor General who is the complainant in the criminal cases filed with the PCGG, in reality the
PCGG is an unidentified co-complainant.
Moreover, when the PCGG issued the sequestration and freeze orders against petitioner's
properties, it was on the basis of a prima facie finding that the same were ill-gotten and/or were
acquired in relation to the illegal disposition of coconut levy funds. Thus, the Court finds that the
PCGG cannot possibly conduct the preliminary investigation of said criminal complaints with the
"cold neutrality of an impartial judge," as it has prejudged the matter. Add to this the fact that there
are many suits filed by petitioner and the intervenors against the PCGG and vice versa.

For lesser grounds this Court had disqualified a fiscal or a judge from handling a case.

A fiscal was disqualified from conducting a preliminary investigation because he had appeared for
the prosecution when said case was pending in the municipal court. 21 In a case filed before the
Commission on Elections this Court held Commissioner Opinion should not have participated in the case
since he was the former lawyer of Arturo Pacificador. 22 A judge was required to inhibit himself in a case
where he was a witness for the complainant. 23 A judge before whom the extrajudicial statement of one of
the accused was subscribed was disqualified from hearing the case. 24 A judge who told the complainant
is case was weak and it would be to his advantage to settle the case was disqualified. 25 A judge against
whom an administrative complaint was filed by one of the parties was also disqualified. 26 In a case where
the motion for inhibition was found to be groundless, this Court held that the judge should inhibit himself
considering the seriousness of the charges. 27 A judge was asked to inhibit himself from trying a
malversation case against the accused since he previously convicted the latter of arson. 28 In another
case, the judge was ordered to inhibit himself because of strained relationship with the defendant. 29

There are numerous other cases wherein the judges and fiscals were disqualified on similar grounds
as those aforementioned. 30

Where the circumstances do not inspire confidence in the objectivity and impartiality of the judge,
such judge should inhibit voluntarily or if he refuses, he should be prohibited from handling the case.
Judge must not only be impartial but must also appear impartial as an assurance to the parties that
his decision will be just. 31 His actuation must inspire that belief. This is an instance when appearance is
as important as reality. 32

The same rule of thumb should apply to an investigating officer conducting a preliminary
investigation. This is the reason why under Section 1679 of the former Revised Administrative Code,
the Secretary of Justice, who has supervision over the prosecution arm of the government, is given
ample power to designate another prosecutor to handle the investigation and prosecution of a case
when the prosecutor handling the same is otherwise disqualified by personal interest, or is unable or
fails to perform his duty.

The Court finds that under the circumstances of the case, the PCGG cannot inspire belief that it
could be impartial in the conduct of the preliminary investigation of the aforesaid complaints against
petitioner and intervenors. It cannot possibly preside in the said preliminary investigation with an
even hand.

The Court holds that a just and fair administration of justice can be promoted if the PCGG would be
prohibited from conducting the preliminary investigation of the complaints subject of this petition and
the petition for intervention and that the records of the same should be forwarded to the
Ombudsman, who as an independent constitutional officer has primary jurisdiction over cases of this
nature, to conduct such preliminary investigation and take appropriate action.
All violators of the law must be brought before the bar of justice. However, they must be afforded due
process and equal protection of the law, whoever they may be.

WHEREFORE, the petitions of Eduardo M. Cojuangco, Jr. and intervenors Maria Clara Lobregat,
and Jose Eleazar, Jr. are hereby GRANTED. The PCGG is directed to transmit the complaints and
records thereof under I.S. Nos. 74, 75, 79, 80, 81, 82, 83 and 84 to the Ombudsman for appropriate
action. All proceedings of the preliminary investigation conducted by the PCGG of said complaints
are hereby declared null and void including the informations which it filed in the Sandiganbayan
against petitioner and intervenors docketed as Criminal Cases Nos. 14398 and 14399. The status
quo order which this Court issued on March 12, 1990 is hereby made permanent and the PCGG is
permanently prohibited from further conducting the preliminary investigation of the aforestated
complaints. The Court makes no pronouncement as to costs.

SO ORDERED.

Fernan, C.J., Narvasa, Melencio-Herrera, Cruz, Feliciano, Padilla, Bidin, Sarmiento, Cortes, Grio-
Aquino, Medialdea and Regalado, JJ., concur.

Paras, J., took no part.

Separate Opinions

GUTIERREZ, JR., J.: concurring:

I concur in the Court's decision penned by my distinguished colleague, Mr. Justice Emilio A.
Gancayco. The PCGG cannot preside over these cases with an even hand, much less inspire the
slightest belief in its impartiality and fairness.

Where the PCGG has sequestered properties, arrived at precise conclusions, and filed a CIVIL case
for the recovery or forfeiture of those properties, it is disqualified from conducting any preliminary
investigation of CRIMINAL charges pertaining to the same alleged ill gotten wealth. As an interested
party in the CIVIL case, it is incapable of acting fairly in the CRIMINAL case. This is the Court's
ruling.

I feel, however, that the Court should have gone further.

In the light of the unquestioned jurisdiction given to the Ombudsman by the Constitution and statute,
the PCGG should no longer continue conducting preliminary investigations. It should limit itself to the
preparation and filing of civil cases. Its conduct of preliminary investigations is so colored by the
basic reason for its creation, its institutional structure, and its obsession to recover everything that it
perceives and suspects to be ill gotten wealth that it cannot help but run roughshod over
fundamental requirements of fair play in criminal cases.

Nowhere is pre-judgment so evident as in this case.

In filing the civil case against Mr. Cojuangco, the PCGG has concluded with certainty that he is guilty
of "misappropriation and theft of public funds, plunder of the nation's wealth, extortion, blackmail,
bribery, embezzlement, and other acts of corruption, betrayal of public trust and brazen abuse of
power, as more fully described below, all at the expense and to the grave irreparable damage of
Plaintiff and the Filipino people." (See complaint in CC 0033, Sandiganbayan, pp. 2 and 3) Mr.
Cojuangco has been asked to pay more than P100 Billion in damages. He was placed on the "hold
order" lists of PCGG and prohibited from coming home to defend himself His wife, children, and
grandchildren hold cancelled passports and are indefinitely exiled.

On January 31, 1990 when the preliminary investigation was to be conducted, a voluminous motion
to inhibit the PCGG was filed by the petitioner. It took the PCGG Prosecutor exactly ten (10) minutes
to deny the motion and pass upon the complex constitutional and jurisdictional issues. The Supreme
Court needed several months to deliberate and resolve the same issues.

Apart from its having been created for the sole purpose of recovering the ill gotten wealth of ex-
President Marcos, his relatives and cronies, the make-up of the PCGG prevents it from being
independent. The Chairman and members serve at the absolute pleasure of the President. The law
prescribes no qualifications for their appointment. The law does not mention future appointments.

The record is replete with incidents of non-objectivity. The petitioner has repeatedly filed motions to
inspect the records of his former companies to enable him to defend himself. Motions which an
ordinary Fiscal, Prosecutor, or Judge would routinely grant are denied. The Supreme Court itself in,
G.R. No. 91741 has ruled that the petitioner had been singled out by the PCGG and given biased
treatment. In that same case, the Sandiganbayan found no probable cause for the arrest of Mr.
Cojuangco. We sustained the Sandiganbayan.

The other issue which the Court should have explored further is the constitutional right of all accused
persons to equal protection of the law.

As earlier stated, the appointment, tenure, functions, and objectives of the PCGG prevent it from
being fair and objective. Its actions in this case show that indeed it cannot be fair and objective. It is
a temporary office given a fixed mission. It has to accomplish that mission.

On the other hand, the Ombudsman is created by the Constitution. It is vested with "independent"
powers. It enjoys fiscal autonomy. It is insulated from interference by the political departments. The
qualifications for Ombudsman are found in the Constitution. They include "recognized probity and
independence." He must have been a practising lawyer or Judge for at least ten (10) years. The
incumbent Ombudsman has served in the Supreme Court, Court of Appeals, Court of First Instance,
Department of Justice and high level fact finding committees. He was at the top of his class at the
U.P. College of Law and has been a distinguished Professor of Law for decades. He was nominated
and appointed Ombudsman on the record of his unquestioned competence, intellectual skills,
integrity, and independence.
In the light of the above considerations, persons who appear before the PCGG and not the
Ombudsman are clearly denied the equal protection guaranteed by the Constitution. There is no
substantial basis for some respondents to appear before the biased and less competent PCGG
while others appear before the impartial and more competent Ombudsman. The line drawn between
public officials in office before February 25, 1986 and those in public office after February 25, 1986 is
arbitrary and discriminatory. There are no substantial distinctions permitting a valid classification.
And as stressed by the petitioner, is there a substantial distinction between those who committed
graft and corruption under former President Marcos and those who are now committing (according to
media and the Roman Catholic hierarchy) graft and corruption under President Aquino? The
petitioner argues:

The violation of equal protection thus becomes clear. It is now four years after EDSA.
Three years after the ratification of the new Constitution. Must there be one kind of
justice for the "victors", another for the "vanquished"? Is there not but one Filipino
under the Constitution? There is no cogent reason why the liberty of those who were
associated with former President Marcos should lie in the hands of PCGG and not in
the Ombudsman who is independent of the President, and, of course, the Solicitor
General, and is precisely mandated by the Constitution to deal with graft and
corruption cases.

It is thus a denial of equal protection of the law that the petitioner has been subjected
to preliminary investigation for violation of R.A. No. 3019 by PCGG rather than by the
Ombudsman. (Petitioner's Memorandum, p. 41)

Impartiality and fundamental fairness are inherent rights of all persons brought before our criminal
justice system. The social justice provisions of the Constitution mandate that the State must take
special measures to protect these rights when the accused are the outcasts and the poor or belong
to a group which is ignored, disliked, or hated by those currently in power.

During the Marcos administration, a top leader of the then opposition was ordered prosecuted in
what were clearly railroaded proceedings. The Court struck down the charade of a preliminary
investigation and among, other things, stated:

The purpose of preliminary investigation is to secure the innocent against hasty,

malicious and oppressive prosecution, and to protect him from an open and public
accusation of crime, from the trouble, expense and anxiety of a public trial, and also
to protect the state from useless and expensive trials. (Trocio v. Manta, 118 SCRA
241; citing Hashim v. Boncan, 71 Phil. 216). The right to a preliminary investigation is
a statutory grant, and to withhold it would be to transgress constitutional due
process. (See People v. Oandasan 25 SCRA 277) However, in order to satisfy the
due process clause it is not enough that the preliminary investigation is conducted in
the sense of making sure that a transgressor shall not escape with impunity. A
preliminary investigation serves not only the purposes of the State. More important, it
is a part of the guarantees of freedom and fair play which are birthrights of all who
live in our country. It is, therefore, imperative upon the fiscal or the judge as the case
may be, to relieve the accused from the pain of going through a trial once it is
ascertained that the evidence is insufficient to sustain a prima facie case or that no
probable cause exists to form a sufficient belief as to the guilt of the accused.
Although there is no general formula or fixed rule for the determination of probable
 cause since the same must be decided in the light of the conditions obtaining in
given situations and its existence depends to a large degree upon the finding or
opinion of the judge conducting the examination, such a finding should not disregard
the facts before the judge nor run counter to the clear dictates of reason (See La
Chemise Lacoste, S.A. v. Fernandez, 129 SCRA 391). The judge or fiscal, therefore,
should not go on with the prosecution in the hope that some credible evidence might
later turn up during trial for this would be a flagrant violation of a basic right which the
courts are created to uphold. It bears repeating that the judiciary lives up to its
mission by vitalizing and not denigrating constitutional rights. So it has been before. It
should continue to be so. (Salonga v. Cruz Panio, 134 SCRA 438, 461-462)

The Court today can do no less. It has to apply the same yardstick to the PCGG. The same
guarantees of fairness and justice in this decision of the Court rendered during the time of Mr.
Marcos belong in equal measure to petitioner Cojuangco and all who appear before the PCGG
during the term of President Aquino.

Separate Opinions

GUTIERREZ, JR., J.: concurring:

I concur in the Court's decision penned by my distinguished colleague, Mr. Justice Emilio A.
Gancayco. The PCGG cannot preside over these cases with an even hand, much less inspire the
slightest belief in its impartiality and fairness.

Where the PCGG has sequestered properties, arrived at precise conclusions, and filed a CIVIL case
for the recovery or forfeiture of those properties, it is disqualified from conducting any preliminary
investigation of CRIMINAL charges pertaining to the same alleged ill gotten wealth. As an interested
party in the CIVIL case, it is incapable of acting fairly in the CRIMINAL case. This is the Court's
ruling.

I feel, however, that the Court should have gone further.

In the light of the unquestioned jurisdiction given to the Ombudsman by the Constitution and statute,
the PCGG should no longer continue conducting preliminary investigations. It should limit itself to the
preparation and filing of civil cases. Its conduct of preliminary investigations is so colored by the
basic reason for its creation, its institutional structure, and its obsession to recover everything that it
perceives and suspects to be ill gotten wealth that it cannot help but run roughshod over
fundamental requirements of fair play in criminal cases.

Nowhere is pre-judgment so evident as in this case.

In filing the civil case against Mr. Cojuangco, the PCGG has concluded with certainty that he is guilty
of "misappropriation and theft of public funds, plunder of the nation's wealth, extortion, blackmail,
bribery, embezzlement, and other acts of corruption, betrayal of public trust and brazen abuse of
power, as more fully described below, all at the expense and to the grave irreparable damage of
Plaintiff and the Filipino people." (See complaint in CC 0033, Sandiganbayan, pp. 2 and 3) Mr.
Cojuangco has been asked to pay more than P100 Billion in damages. He was placed on the "hold
order" lists of PCGG and prohibited from coming home to defend himself His wife, children, and
grandchildren hold cancelled passports and are indefinitely exiled.

On January 31, 1990 when the preliminary investigation was to be conducted, a voluminous motion
to inhibit the PCGG was filed by the petitioner. It took the PCGG Prosecutor exactly ten (10) minutes
to deny the motion and pass upon the complex constitutional and jurisdictional issues. The Supreme
Court needed several months to deliberate and resolve the same issues.

Apart from its having been created for the sole purpose of recovering the ill gotten wealth of ex-
President Marcos, his relatives and cronies, the make-up of the PCGG prevents it from being
independent. The Chairman and members serve at the absolute pleasure of the President. The law
prescribes no qualifications for their appointment. The law does not mention future appointments.

The record is replete with incidents of non-objectivity. The petitioner has repeatedly filed motions to
inspect the records of his former companies to enable him to defend himself. Motions which an
ordinary Fiscal, Prosecutor, or Judge would routinely grant are denied. The Supreme Court itself in,
G.R. No. 91741 has ruled that the petitioner had been singled out by the PCGG and given biased
treatment. In that same case, the Sandiganbayan found no probable cause for the arrest of Mr.
Cojuangco. We sustained the Sandiganbayan.

The other issue which the Court should have explored further is the constitutional right of all accused
persons to equal protection of the law.

As earlier stated, the appointment, tenure, functions, and objectives of the PCGG prevent it from
being fair and objective. Its actions in this case show that indeed it cannot be fair and objective. It is
a temporary office given a fixed mission. It has to accomplish that mission.

On the other hand, the Ombudsman is created by the Constitution. It is vested with "independent"
powers. It enjoys fiscal autonomy. It is insulated from interference by the political departments. The
qualifications for Ombudsman are found in the Constitution. They include "recognized probity and
independence." He must have been a practising lawyer or Judge for at least ten (10) years. The
incumbent Ombudsman has served in the Supreme Court, Court of Appeals, Court of First Instance,
Department of Justice and high level fact finding committees. He was at the top of his class at the
U.P. College of Law and has been a distinguished Professor of Law for decades. He was nominated
and appointed Ombudsman on the record of his unquestioned competence, intellectual skills,
integrity, and independence.

In the light of the above considerations, persons who appear before the PCGG and not the
Ombudsman are clearly denied the equal protection guaranteed by the Constitution. There is no
substantial basis for some respondents to appear before the biased and less competent PCGG
while others appear before the impartial and more competent Ombudsman. The line drawn between
public officials in office before February 25, 1986 and those in public office after February 25, 1986 is
arbitrary and discriminatory. There are no substantial distinctions permitting a valid classification.
And as stressed by the petitioner, is there a substantial distinction between those who committed
graft and corruption under former President Marcos and those who are now committing (according to
media and the Roman Catholic hierarchy) graft and corruption under President Aquino? The
petitioner argues:
 The violation of equal protection thus becomes clear. It is now four years after EDSA.
Three years after the ratification of the new Constitution. Must there be one kind of
justice for the 'victors', another for the 'vanquished'?'Is there not but one Filipino
under the Constitution? There is no cogent reason why the liberty of those who were
associated with former President Marcos should lie in the hands of PCGG and not in
the Ombudsman who is independent of the President, and, of course, the Solicitor
General, and is precisely mandated by the Constitution to deal with graft and
corruption cases.

It is thus a denial of equal protection of the law that the petitioner has been subjected
to preliminary investigation for violation of R.A. No. 3019 by PCGG rather than by the
Ombudsman. (Petitioner's Memorandum, p. 41)

Impartiality and fundamental fairness are inherent rights of all persons brought before our criminal
justice system. The social justice provisions of the Constitution mandate that the State must take
special measures to protect these rights when the accused are the outcasts and the poor or belong
to a group which is ignored, disliked, or hated by those currently in power.

During the Marcos administration, a top leader of the then opposition was ordered prosecuted in
what were clearly railroaded proceedings. The Court struck down the charade of a preliminary
investigation and among, other things, stated:

The purpose of preliminary investigation is to secure the innocent against hasty,

malicious and oppressive prosecution, and to protect him from an open and public
accusation of crime, from the trouble, expense and anxiety of a public trial, and also
to protect the state from useless and expensive trials. (Trocio v. Manta, 118 SCRA
241; citing Hashim v. Boncan, 71 Phil. 216). The right to a preliminary investigation is
a statutory grant, and to withhold it would be to transgress constitutional due
process. (See People v. Oandasan 25 SCRA 277) However, in order to satisfy the
due process clause it is not enough that the preliminary investigation is conducted in
the sense of making sure that a transgressor shall not escape with impunity. A
preliminary investigation serves not only the purposes of the State. More important, it
is a part of the guarantees of freedom and fair play which are birthrights of all who
live in our country. It is, therefore, imperative upon the fiscal or the judge as the case
may be, to relieve the accused from the pain of going through a trial once it is
ascertained that the evidence is insufficient to sustain a prima facie case or that no
probable cause exists to form a sufficient belief as to the guilt of the accused.
Although there is no general formula or fixed rule for the determination of probable
cause since the same must be decided in the light of the conditions obtaining in
given situations and its existence depends to a large degree upon the finding or
opinion of the judge conducting the examination, such a finding should not disregard
the facts before the judge nor run counter to the clear dictates of reason (See La
Chemise Lacoste, S.A. v. Fernandez, 129 SCRA 391). The judge or fiscal, therefore,
should not go on with the prosecution in the hope that some credible evidence might
later turn up during trial for this would be a flagrant violation of a basic right which the
courts are created to uphold. It bears repeating that the judiciary lives up to its
mission by vitalizing and not denigrating constitutional rights. So it has been before. It
should continue to be so. (Salonga v. Cruz Panio, 134 SCRA 438, 461-462)
The Court today can do no less. It has to apply the same yardstick to the PCGG. The same
guarantees of fairness and justice in this decision of the Court rendered during the time of Mr.
Marcos belong in equal measure to petitioner Cojuangco and all who appear before the PCGG
during the term of President Aquino.

G.R. No. L-25024 March 30, 1970

TEODORO C. SANTIAGO, JR. Minor, Represented by his Mother, Mrs. Angelita C.

Santiago, petitioner-appellant,
vs.
MISS JUANITA BAUTISTA, ROSALINDA ALPAS, REBECCA MATUGAS, MILKITA INAMAC,
ROMEO AGUSTIN, AIDA CAMINO, LUNA SARMAGO, AURORA LORENA, SOLEDAD
FRANCISCO and MR. FLOR MARCELO, respondents-appellees.

Teodoro M. Santiago for petitioner-appellant.

Ramon C. Carag for respondent-apellees.

BARREDO, J.:

Appeal from the order of the Court of First Instance of Cotabato dismissing, on a motion to dismiss,
its Civil Case No. 2012 for certiorari, injunction and damages on the ground that the complaint
therein states no cause of action, and from the subsequent order of the court a quo denying the
motion for the reconsideration of the said order of dismissal.

The record shows that at the time Civil Case No. 2012 was commenced in the court below, appellant
Teodoro Santiago, Jr. was a pupil in Grade Six at the public school named Sero Elementary School
in Cotabato City. As the school year 1964-1965 was then about to end, the "Committee On The
Rating Of Students For Honor" was constituted by the teachers concerned at said school for the
purpose of selecting the "honor students" of its graduating class. With the school Principal, Mrs.
Aurora Lorena, as chairman, and Juanita Bautista, Rosalinda Alpas, Rebecca Matugas, Milkita
Inamac, Romeo Agustin, Aida Camino and Luna Sarmago, as members, the above-named
committee deliberated and finally adjudged Socorro Medina, Patricia Ligat and Teodoro C.
Santiago, Jr. as first, second and third honors, respectively. The school's graduation exercises were
thereafter set for May 21, 1965; but three days before that date, the "third placer" Teodoro Santiago,
Jr., represented by his mother, and with his father as counsel, sought the invalidation of the "ranking
of honor students" thus made, by instituting the above-mentioned civil case in the Court of First
Instance of Cotabato, against the above-named committee members along with the District
Supervisor and the Academic Supervisor of the place.

The corresponding complaint filed alleged, inter alia: that plaintiff-petitioner Teodoro C. Santiago, Jr.
is a sixth grader at the Sero Elementary School in Cotabato City scheduled to be graduated on May
21st, 1965 with the honor rank of third place, which is disputed; that the teachers of the school had
been made respondents as they compose the "Committee on the Rating of Student for Honor",
whose grave abuse of official discretion is the subject of suit, while the other defendants were
included as Principal, District Supervisor and Academic Supervisor of the school; that Teodoro
Santiago, Jr. had been a consistent honor pupil from Grade I to Grade V of the Sero Elementary
School, while Patricia Ligat (second placer in the disputed ranking in Grade VI) had never been a
close rival of petitioner before, except in Grade V wherein she ranked third; that Santiago, Jr. had
been prejudiced, while his closest rival had been so much benefited, by the circumstance that the
latter, Socorro Medina, was coached and tutored during the summer vacation of 1964 by Mrs. Alpas
who became the teacher of both pupils in English in Grade VI, resulting in the far lead Medina
obtained over the other pupil; that the committee referred to in this case had been illegally
constituted as the same was composed of all the Grade VI teachers only, in violation of the Service
Manual for Teachers of the Bureau of Public Schools which provides that the committee to select the
honor students should be composed of all teachers in Grades V and VI; that there are direct and
circumstantial matters, which shall be proven during the trial, wherein respondents have exercised
grave abuse of discretion and irregularities, such as the changing of the final ratings on the grading
sheets of Socorro Medina and Patricia Ligat from 80% to 85%, and some teachers giving petitioner
a starting grade of 75% in Grade VI, which proves that there has already an intention to pull him to a
much lower rank at the end of the school year; that several district examinations outside of teachers'
daily units and other than periodical tests were given, ratings in which were heavily considered in the
determination of periodical ratings, whereas according to the Academic Supervisor and Acting
Division Superintendent of schools of the place such district examinations were not advisable; that
there was a unanimous agreement and understanding among the respondent teachers to insult and
prejudice the second and third honors by rating Socorro Medina with a perfect score, which is very
unnatural; that the words "first place" in petitioner's certificate in Grade I was erased and replaced
with the words "second place", which is an instance of the unjust and discriminating abuses
committed by the respondent teachers in the disputed selection of honor pupils they made; that
petitioner personally appealed the matter to the School Principal, to the District Supervisor, and to
the Academic Supervisor, but said officials "passed the buck to each other" to delay his grievances,
and as to appeal to higher authorities will be too late, there is no other speedy and adequate remedy
under the circumstances; and, that petitioner and his parents suffered mental and moral damages in
the amount of P10,000.00. They prayed the court, among others, to set aside the final list of honor
students in Grade VI of the Sero Elementary School for that school year 1964-1965, and, during the
pendency of the suit, to enjoin the respondent teachers from officially and formally publishing and
proclaiming the said honor pupils in Grade VI in the graduation exercises the school was scheduled
to hold on the 21st of May of that year 1965. The injunction prayed for was denied by the lower court
in its order of May 20, 1965, the said court reasoning out that the graduation exercises were then
already set on the following day, May 21, 1965, and the restraining of the same would be shocking to
the school authorities, parents, and the community who had eagerly looked forward to the coming of
that yearly happy event. As scheduled, the graduation exercises of the Sero Elementary School for
the school year 1964-1965 was held on May 21, with the same protested list of honor students.

Having been required by the above-mentioned order to answer the petition within ten (10) days,
respondents moved for the dismissal of the case instead. Under date of May 24, 1965, they filed a
motion to dismiss, on the grounds (1) that the action for certiorari was improper, and (2) that even
assuming the propriety of the action, the question brought before the court had already become
academic. This was opposed by petitioner.

In an order dated June 4, 1965, the motion to dismiss of respondents was granted, the court
reasoning thus:

The respondents now move to dismiss the petition for being improper and for being
academic. In order to resolve the motion to dismiss, the Court has carefully
 examined the petition to determine the sufficiency of the alleged cause of action
constituting the special civil action of certiorari.

The pertinent portions of the petition alleging 'grave abuse of discretion' are found in
paragraphs 3, 4, 5, 6, 7, 8, 9 and 10. These allegations may be substantially
summarized as follows: Paragraph 3 alleges that since grades one to six, the
students closely contending for class honors were Socorro Medina, Teodoro
Santiago, Jr., Dolores Dalican and Patricia Ligat.

Socorro Medina obtained first honor thrice (grades I, V and VI); once second honor
(grade IV), and twice third place (grades II and III).

Teodoro Santiago, Jr. obtained first place once (grade IV); four times second place
(grades I, II, III, and V) and once third place (grade VI).

Dolores Dalican obtained twice first place (grades II, III); once third place (grade I).

Patricia Ligat once third place (grade V); and once second place (grade VI).

That as now ranked in the graduation Ligat is given second place while Teodoro
Santiago, Jr., is given the third place only. This is the ranking now disputed by
petitioner, Teodoro Santiago, Jr.

Paragraph 4 alleges that Socorro Medina was tutored in the summer of 1964 by Mrs.
Rosalinda Alpas who became her English teacher in the sixth grade; that as such,
Mrs. Alpas unjustly favored Socorro against her rivals.

Paragraph 5 alleges that the teachers who composed the committee on honor
students are all grade six teachers while the Service Manual For Teachers provides
that the committee shall be composed of the teachers from the fifth and sixth grades.

Paragraph 6 alleges that there are direct and circumstantial evidence showing the
change of ratings of Socorro Medina and Patricia Ligat from 80% to 85% and the
intention to junk petitioner to a lower rank.

Paragraph 7 alleges that the giving of district examinations upon which ratings were
partly based were not advisable.

Paragraph 8 alleges that the teachers rated Socorro Medina a perfect pupil which is
unnatural.

Paragraph 9 alleges that on the first grade certificate of the petitioner the word "First
Place" was erased and changed to "Second Place".

Paragraph 10 alleges that petitioner personally appealed to the school authorities but
they only 'passed the buck to each other.'

SECOND PARAGRAPH VIOLATED

 Rule 65, Section 1 of the Rules of Court provides:

'Section 1. Petition for certiorari. When any tribunal, board, or

officer exercising judicial functions, has acted without or in excess of
its or his jurisdiction, or with grave abuse of discretion and there is no
appeal, nor any plain, speedy, and adequate remedy in the ordinary
course of law, a person aggrieved thereby may file a verified petition
in the proper court alleging the facts with certainty and praying that
judgment be rendered annulling or modifying the proceedings, as the
law requires, of such tribunal, board or officer.'

'The petition shall be accompanied by a certified true copy of the

judgment or order subject thereof, together with copies of all
pleadings and documents relevant and pertinent thereto.'

It is striking, indeed, that this petition has not been accompanied by a certified true
copy of the judgment or order complained of, together with all pleadings and
documents which are relevant thereto, as required by the second, paragraph of the
aforequoted rule. This violation renders the petition extremely indefinite and
uncertain. There is no written formal judgment or order of respondents that is
submitted for revision or correction of this Court. This violation is fatal to the petition.

ADMINISTRATIVE REMEDIES NEGLECTED

All that the petition alleges is that the petitioner personally appealed to the school
authorities who only 'passed the buck to each other.' This allegation does not show
that petitioner formally availed of and exhausted the administrative remedies of the
Department of Education. The petition implies that this is the first formal complaint of
petitioner against his teachers. The administrative agencies of the Department of
Education could have investigated the grievances of the petitioner with dispatch and
give effective remedies, but petitioner negligently abandoned them. Petitioner cannot
now claim that he lacked any plain, speedy and adequate remedy.

NO GRAVE ABUSE OF DISCRETION

Allegations relating to the alleged 'grave abuse of discretion' on the part of teachers
refer to errors, mistakes, or irregularities rather than to real grave abuse of discretion
that would amount to lack of jurisdiction. Mere commission of errors in the exercise of
jurisdiction may not be corrected by means of certiorari.

In view of the foregoing, the Court is of the opinion, and so holds, that the petition
states no cause of action and should be, as it is hereby dismissed.

Upon receipt of a copy of the above-quoted order, the petitioner moved for the reconsideration
thereof, but the same proved to be futile, hence, this appeal.

Appellant here assails the holding of the lower court that his petition states no cause of action on the
grounds discussed by the court a quo in the appealed order above-quoted (1) that the petition
does not comply with the second paragraph of Sec. 1 of Rule 65 because it has not been
accompanied by a certified true copy of the judgment or order subject thereof, together with copies
of all pleadings and documents relevant and pertinent thereto; (2) that administrative remedies were
not first exhausted; and (3) that there was no grave abuse of discretion on the part of the teachers
who constituted the committee referred to. On the other hand, appellees maintain that the court
below did not err in dismissing the case on said grounds. Further, they argue in favor of the
questioned order of dismissal upon the additional ground that the "committee on the ratings of
students for honor" whose actions are here condemned by appellant is not the "tribunal, board or
officer exercising judicial functions" against which an action for certiorari may lie under Section 1 of
Rule 65.

The last point raised by appellees deserves first consideration, for if really the said committee of
teachers does not fall within the category of the tribunal, board, or officer exercising judicial
functions contemplated by Rule 65, further discussion of the issues raised by appellant may no
longer be necessary. To resolve this problem the following tests may be employed:

In this jurisdiction certiorari is a special civil action instituted against 'any tribunal,
board, or officer exercising judicial functions.' (Section 1, Rule 67.) A judicial function
is an act performed by virtue of judicial powers; the exercise of a judicial function is
the doing of something in the nature of the action of the court (34 C.J. 1182). In order
that a special civil action of certiorari may be invoked in this jurisdiction the following
circumstances must exist: (1) that there must be a specific controversy involving
rights of persons or property and said controversy is brought before a tribunal, board
or officer for hearing and determination of their respective rights and obligations.

'Judicial action is an adjudication upon the rights of parties who in

general appear or are brought before the tribunal by notice or
process, and upon whose claims some decision or judgment is
rendered. It implies impartiality, disinterestedness, a weighing of
adverse claims, and is inconsistent with discretion on the one hand
for the tribunal must decide according to law and the rights of the
parties or with dictation on the other; for in the first instance it must
exercise its own judgment under the law, and not act under a
mandate from another power. ... The character of its action in a given
case must decide whether that action is judicial, ministerial, or
legislative, or whether it be simply that of a public agent of the
country or State, as in its varied jurisdictions it may by turns be each.'
(In Re Saline County Subscription, 100 Am. Dec. 337, 338, cited in
Southeastern Greyhound Lines v. Georgia Public Service
Commission, 181 S. E. 836-837.)

'It may be said generally that the exercise of judicial function is to

determine what the law is, and what the legal rights of parties are,
with respect to a matter in controversy; and whenever an officer is
clothed with that authority, and undertakes to determine those
questions, he acts judicially.' (State ex rel. Board of Commissioners of
St. Louis County, et al. v. Dunn, 90 N. W. 772-773.)
(2) the tribunal, board or officer before whom the controversy is brought must have
the power and authority to pronounce judgment and render a decision on the
controversy construing and applying the laws to that end.

'The phrase "judicial power" is not capable of a precise definition

which would be applicable to all cases. The term has been variously
defined as the authority to determine the rights of persons or property
by arbitrating between adversaries in specific controversies at the
instance of a party thereto; the authority exercised by that department
of government which is charged with the declaration of what the law
is and its construction so far as it is written law; the authority or power
vested in the judges or in the courts; the authority vested in some
court, officer, or persons to hear and determine when the rights of
persons or property or the propriety of doing an act is the subject
matter of adjudication; the power belonging to or emanating from a
judge as such; the power conferred upon a public officer, involving
the exercise of judgment and discretion in the determination of
questions of right in specific cases affecting the interest of persons or
property, as distinguished from ministerial power or authority to carry
out the mandates of judicial power or the law; the power exercised by
courts in hearing and determining cases before them, or some matter
incidental thereto, and of which they have jurisdiction; the power of a
court to decide and pronounce a judgment; the power which
adjudicates upon and protects the rights and interests of individual
citizens, and to that end construes and applies the law. "Judicial
power" implies the construction of laws and the adjudication of legal
rights. It includes the power to hear and determine but not everyone
who may hear and determine has judicial power. The term "judicial
power" does not necessarily include the power to hear and determine
a matter that is not in the nature of a suit or action between the
parties.' (34 C.J. 1183-1184.) .

(3) the tribunal, board or officer must pertain to that branch of the sovereign power
which belongs to the judiciary, or at least, which does not belong to the legislative or
executive department.

... the distinction between legislative or ministerial functions and

judicial functions is difficult to point out. What is a judicial function
does not depend solely upon the mental operation by which it is
performed or the importance of the act. In solving this question, due
regard must be had to the organic law of the state and the division of
power of government. In the discharge of executive and legislative
duties, the exercise of discretion and judgment of the highest order is
necessary, and matters of the greatest weight and importance are
dealt with. It is not enough to make a function judicial that it requires
discretion, deliberation, thought, and judgment. It must be the
exercise of discretion and judgment within that subdivision of the
sovereign power which belongs to the judiciary, or, at least, which
does not belong to the legislative or executive department. If the
 matter, in respect to which it is exercised, belongs to either of the two
last-named departments of government, it is not judicial. As to what is
judicial and what is not seems to be better indicated by the nature of
a thing, than its definition.' (Whealing & Elm Grove Railroad Co. Appt.
v. Town of Triadelphia, et al., 4 L.R.A. (N. S.) pp. 321, 328-329.)
[Emphasis supplied]1

'WHAT ARE JUDICIAL OR QUASI JUDICIAL ACTS. It is difficult, if not

impossible, precisely to define what are judicial or quasi judicial acts, and
there is considerable conflict in the decisions in regard thereto, in
connection with the law as to the right to the writ of certiorari. It is clear,
however, that it is the nature of the act to be performed, rather than of
the office, board, or body which performs it, that determines whether or
not it is the discharge of a judicial or quasi-judicial function. It is not
essential that the proceedings should be strictly and technically judicial,
in the sense in which that word is used when applied to the courts of
justice, but it is sufficient if they are quasi judicial. It is enough if the
officers act judicially in making their decision, whatever may be their
public character. ...' "In State ex rel. Board of Commrs. vs. Dunn (86
Minn. 301, 304), the following statements were made:

'The precise line of demarkation between what are judicial and what
are administrative or ministerial functions is often difficult to
determine. The exercise of judicial functions may involve the
performance of legislative or administrative duties, and the
performance of administrative or ministerial duties, may, in a
measure, involve the exercise of judicial functions. It may be said
generally that the exercise of judicial functions is to determine what
the law is, and what the legal rights of parties are, with respect to a
matter in controversy; and whenever an officer is clothed with that
authority, and undertakes to determine those questions, he acts
judicially.'2

It is evident, upon the foregoing authorities, that the so called committee on the rating of students for
honor whose actions are questioned in this case exercised neither judicial nor quasi judicial
functions in the performance of its assigned task. From the above-quoted portions of the decision
cited, it will be gleaned that before tribunal board, or officer may exercise judicial or quasi judicial
acts, it is necessary that there be a law that give rise to some specific rights of persons or property
under which adverse claims to such rights are made, and the controversy ensuing therefrom is
brought, in turn, before the tribunal, board or officer clothed with power and authority to determine
what that law is and thereupon adjudicate the respective rights of the contending parties. As pointed
out by appellees,3 however, there is nothing on record about any rule of law that provides that when
teachers sit down to assess the individual merits of their pupils for purposes of rating them for honors,
such function involves the determination of what the law is and that they are therefore automatically
vested with judicial or quasi judicial functions. Worse still, this Court has not even been appraised by
appellant of the pertinent provisions of the Service Manual of Teachers for Public Schools appellees
allegedly violated in the composition of the committee they constituted thereunder, and, in the
performance of that committee's duties.
At any rate, the situation brought before Us in this case, the seemingly one of first impression, is not
without substantial parallel. In the case of Felipe vs. Leuterio, etc., et al.,4 the issue presented for
determination was whether or not the courts have the authority to reverse the award of the board of
judges of an oratorical contest, and this Court declared that the judiciary has no power to reverse the
award of the board of judges of that contest and, for that matter, it would not interfere in literary contests,
beauty contests and similar competitions. It was reasoned out thus:

For more than thirty years oratorical tilts have been held periodically by schools and
colleges in this islands. Inter-collegiate oratorical competitions are of more recent
origin. Members of this court have taken part in them either as contestants in their
school days (In the College of Law, U.P. annual oratorical contest, first prize was
awarded to Justice Montemayor in 1914 and to Justice Labrador in 1916), or as
members of the board of judges afterwards. They know some few verdicts did not
reflect the audience's preference and that errors have sometimes been ascribed to
the award of the judges. Yet no party ever presumed to invoke judicial intervention;
for it is unwritten law in such contests that the board's decision is final and
unappealable.

Like the ancient tournaments of the Sword, these tournaments of the Word apply the
highest tenets of sportsmanship: finality of referee's verdict. No alibis, no murmurs of
protest. The participants are supposed to join the competition to contribute to its
success by striving their utmost: the prizes are secondary.

No rights to the prizes may be asserted by the contestants, because theirs was
merely the privilege to compete for the prize, and that privilege did not ripen into a
demandable right unless and until they were proclaimed winners of the competition
by the appointed arbiters or referees or judges.

Incidentally, these school activities have been imported from the United States. We
found in American jurisprudence no litigation questioning the determination of the
board of judges.

Now, the fact that a particular action has had no precedent during a long period
affords some reason for doubting the existence of the right sought to be enforced,
especially where occasion for its assertion must have often arisen; and courts are
cautious before allowing it, being loath to establish a new legal principle not in
harmony with the generally accepted views thereon. (See C.J.S. Vol. 1, p. 1012.)

We observe that in assuming jurisdiction over the matter, the respondent judge
reasoned out that where there is a wrong there is a remedy and that courts of first
instance are courts of general jurisdiction.

The flaw in his reasoning lies in the assumption that Imperial suffered some wrong at
the hands of the board of judges. If at all, there was error on the part of one judge, at
most. Error and wrong do not mean the same thing. 'Wrong' as used in the aforesaid
principle is the deprivation or violation of a right. As stated before, a contestant has
no right to the prize unless and until he or she is declared winner by the board of
referees or judges.
 Granting that Imperial suffered some loss or injury, yet in law there are instances
of 'damnum absque injuria'. This is one of them. If fraud or malice had been proven,
it would be a different proposition. But then her action should be directed against the
individual judge or judges who fraudulently or maliciously injured her. Not against the
other judges.

But even were We to assume for the moment, as the court below apparently did, that judicial
intervention might be sought in cases of this nature, still, We are inclined to sustain the order of
dismissal appealed from for failure on the part of appellant to comply with the requirements of
Section 1 of Rule 65. To be sure, the lower court's holding that appellant's failure to accompany his
petition with a copy of the judgment or order subject thereof together with copies of all pleadings and
documents relevant and pertinent thereto "is fatal to his cause" is supported not only by the provision
of that Rule but by precedents as well. In the case of Alajar, et al. vs. Court of Industrial
Relations,5 where it was claimed by therein petitioners that the respondent court had acted with grave
abuse of discretion in estimating certain rice harvests involved in the case in terms of cavans instead of
cans, allegedly in complete disregard of the decision of the Court of First Instance of Batangas in
Expropriation Proceedings No. 84 and of this Court in G.R. No.
L-6191,6 and in ordering thereafter the division of the said rice harvests on the ratio of 70-30 in favor of
the tenants, this Court denied the petition for certiorari on the ground, among others, of failure on the part
of said petitioners to attach to their petition copies of the decisions allegedly violated. Speaking thru Mr.
Justice J.B.L. Reyes then, this Court held:

The petition is patently without merit. In the first place, it is not even sufficient in form
and substance to justify the issuance of the writ of certiorari prayed for. It charges
that the Court of Industrial Relations abused its discretion in disregarding the
decision of the Court of First Instance of Batangas in Expropriation Proceedings No.
84 and of this Court in G.R. No. L-6191; yet it does not attach to the petition the
decisions allegedly violated by the Court below and point out which particular portion
or portions thereof have been disregarded by the respondent Court.

The same principle was applied in the more recent case of NAWASA vs. Municipality of Libmanan,
et al.,7 wherein this Court dismissed (by Resolution) the petition for certiorari and mandamus filed by the
National Waterworks and Sewerage Authority against the Court of First Instance of Camarines Sur, and
the municipality of Libmanan. In the following language, this Court emphasized the importance of
complying with the said requirement of Rule 65:

While paragraph 3 of the petition speaks of the complaint filed by the respondent
municipality with the respondent court for recovery of property with damages (Civil
Case No. L-161) no copy thereof is attached to the petition.

Similarly, paragraph 4 of the petition mentions the decision rendered by the

respondent court on December 10, 1965, but no copy thereof is attached to the
petition.

Again, paragraph 5 of the petition speaks of the order of default entered by the
respondent court and of the motion for reconsideration filed by petitioner in the case
above-mentioned, but no copy of the order of default is attached to its petition.
 Bearing in mind that the petition under consideration was filed for the purpose of
enjoining the respondent court from executing the decision rendered in Civil Case
No. L-161, the importance of the missing pleadings is obvious.

Moreover, the petition is also for the purpose of securing an order commanding the
respondent court to approve either the original or the amended record on appeal filed
petition, but no copy of either is attached to its petition.

In view of the foregoing, the petition under consideration is dismissed.

It might be true, as pointed out by appellant, that he received a copy of the programme of the
graduation exercises held by the Sero Elementary School in the morning of the very day of that
graduation exercises, implying that he could not have attached then a copy thereof (to show the
decision of the committee of teachers in the ranking of students complained of) to his petition. The
stubborn fact remains, however, that appellant had known of such decision of the said committee of
teachers much earlier, as shown by the circumstance that according to him, even before the filing of
his petition with the lower court on the 19th of May, 1965, he had personally appealed the said
committee's decision with various higher authorities of the above-named school, who merely passed
the buck to each other. Moreover, appellant mentions in his petition various other documents or
papers as the Service Manual for Teachers allegedly violated by appellees in the constitution of
their committee; altered grading sheets; and erasures in his Grade I certificate which appellant
never bothered to attach to his petition. There could be no doubt then that he miserably failed to
comply with the requirement of Rule 65 above-mentioned. With this conclusion, it is no longer
necessary to pass upon the other two errors assigned by appellant.

FOR THE FOREGOING CONSIDERATIONS, the judgment appealed from is affirmed, with costs
against appellant.

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Castro, Fernando, Teehankee and
Villamor, JJ., concur.

[G.R. No. 151908. August 12, 2003]

SMART COMMUNICATIONS, INC. (SMART) and PILIPINO TELEPHONE

CORPORATION (PILTEL), petitioners, vs. NATIONAL
TELECOMMUNICATIONS COMMISSION (NTC), respondent.

[G.R. No. 152063. August 12, 2003]

GLOBE TELECOM, INC. (GLOBE) and ISLA COMMUNICATIONS CO.,

INC. (ISLACOM), petitioners, vs. COURT OF APPEALS (The
Former 6th Division) and the NATIONAL TELECOMMUNICATIONS
COMMISSION, respondents.
 DECISION
YNARES-SANTIAGO, J.:

Pursuant to its rule-making and regulatory powers, the National

Telecommunications Commission (NTC) issued on June 16, 2000
Memorandum Circular No. 13-6-2000, promulgating rules and regulations on
the billing of telecommunications services. Among its pertinent provisions are
the following:

(1) The billing statements shall be received by the subscriber of the telephone service
not later than 30 days from the end of each billing cycle. In case the statement is
received beyond this period, the subscriber shall have a specified grace period within
which to pay the bill and the public telecommunications entity (PTEs) shall not be
allowed to disconnect the service within the grace period.

(2) There shall be no charge for calls that are diverted to a voice mailbox, voice
prompt, recorded message or similar facility excluding the customers own equipment.

(3) PTEs shall verify the identification and address of each purchaser of prepaid SIM
cards. Prepaid call cards and SIM cards shall be valid for at least 2 years from the date
of first use. Holders of prepaid SIM cards shall be given 45 days from the date the
prepaid SIM card is fully consumed but not beyond 2 years and 45 days from date of
first use to replenish the SIM card, otherwise the SIM card shall be rendered
invalid. The validity of an invalid SIM card, however, shall be installed upon request
of the customer at no additional charge except the presentation of a valid prepaid call
card.

(4) Subscribers shall be updated of the remaining value of their cards before the start
of every call using the cards.

(5) The unit of billing for the cellular mobile telephone service whether postpaid or
prepaid shall be reduced from 1 minute per pulse to 6 seconds per pulse. The
authorized rates per minute shall thus be divided by 10. [1]

The Memorandum Circular provided that it shall take effect 15 days after
its publication in a newspaper of general circulation and three certified true
copies thereof furnished the UP Law Center. It was published in the
newspaper, The Philippine Star, on June 22, 2000. Meanwhile, the provisions
[2]

of the Memorandum Circular pertaining to the sale and use of prepaid cards
and the unit of billing for cellular mobile telephone service took effect 90 days
from the effectivity of the Memorandum Circular.

On August 30, 2000, the NTC issued a Memorandum to all cellular mobile
telephone service (CMTS) operators which contained measures to minimize if
not totally eliminate the incidence of stealing of cellular phone units. The
Memorandum directed CMTS operators to:

a. strictly comply with Section B(1) of MC 13-6-2000 requiring the presentation and
verification of the identity and addresses of prepaid SIM card customers;

b. require all your respective prepaid SIM cards dealers to comply with Section B(1) of
MC 13-6-2000;

c. deny acceptance to your respective networks prepaid and/or postpaid customers

using stolen cellphone units or cellphone units registered to somebody other than
the applicant when properly informed of all information relative to the stolen
cellphone units;

d. share all necessary information of stolen cellphone units to all other CMTS operators
in order to prevent the use of stolen cellphone units; and

e. require all your existing prepaid SIM card customers to register and present valid
identification cards.[3]

This was followed by another Memorandum dated October 6, 2000

addressed to all public telecommunications entities, which reads:

This is to remind you that the validity of all prepaid cards sold on 07 October
2000 and beyond shall be valid for at least two (2) years from date of first use
pursuant to MC 13-6-2000.

In addition, all CMTS operators are reminded that all SIM packs used by
subscribers of prepaid cards sold on 07 October 2000 and beyond shall be valid
for at least two (2) years from date of first use. Also, the billing unit shall be on a
six (6) seconds pulse effective 07 October 2000.

For strict compliance. [4]

On October 20, 2000, petitioners Isla Communications Co., Inc. and

Pilipino Telephone Corporation filed against the National Telecommunications
Commission, Commissioner Joseph A. Santiago, Deputy Commissioner
Aurelio M. Umali and Deputy Commissioner Nestor C. Dacanay, an action for
declaration of nullity of NTC Memorandum Circular No. 13-6-2000 (the Billing
Circular) and the NTC Memorandum dated October 6, 2000, with prayer for
the issuance of a writ of preliminary injunction and temporary restraining
order. The complaint was docketed as Civil Case No. Q-00-42221 at the
Regional Trial Court of Quezon City, Branch 77. [5]

Petitioners Islacom and Piltel alleged, inter alia, that the NTC has no
jurisdiction to regulate the sale of consumer goods such as the prepaid call
cards since such jurisdiction belongs to the Department of Trade and Industry
under the Consumer Act of the Philippines; that the Billing Circular is
oppressive, confiscatory and violative of the constitutional prohibition against
deprivation of property without due process of law; that the Circular will result
in the impairment of the viability of the prepaid cellular service by unduly
prolonging the validity and expiration of the prepaid SIM and call cards; and
that the requirements of identification of prepaid card buyers and call balance
announcement are unreasonable. Hence, they prayed that the Billing Circular
be declared null and void ab initio.

Soon thereafter, petitioners Globe Telecom, Inc and Smart

Communications, Inc. filed a joint Motion for Leave to Intervene and to Admit
Complaint-in-Intervention. This was granted by the trial court.
[6]

On October 27, 2000, the trial court issued a temporary restraining order
enjoining the NTC from implementing Memorandum Circular No. 13-6-2000
and the Memorandum dated October 6, 2000. [7]

In the meantime, respondent NTC and its co-defendants filed a motion to

dismiss the case on the ground of petitioners failure to exhaust administrative
remedies.

Subsequently, after hearing petitioners application for preliminary

injunction as well as respondents motion to dismiss, the trial court issued on
November 20, 2000 an Order, the dispositive portion of which reads:

WHEREFORE, premises considered, the defendants motion to dismiss is hereby

denied for lack of merit. The plaintiffs application for the issuance of a writ of
preliminary injunction is hereby granted. Accordingly, the defendants are hereby
enjoined from implementing NTC Memorandum Circular 13-6-2000 and the NTC
Memorandum, dated October 6, 2000, pending the issuance and finality of the
decision in this case. The plaintiffs and intervenors are, however, required to file a
bond in the sum of FIVE HUNDRED THOUSAND PESOS (P500,000.00),
Philippine currency.

SO ORDERED. [8]

Defendants filed a motion for reconsideration, which was denied in an

Order dated February 1, 2001. [9]

Respondent NTC thus filed a special civil action for certiorari and
prohibition with the Court of Appeals, which was docketed as CA-G.R. SP. No.
64274. On October 9, 2001, a decision was rendered, the decretal portion of
which reads:

WHEREFORE, premises considered, the instant petition for certiorari and prohibition
is GRANTED, in that, the order of the court a quo denying the petitioners motion to
dismiss as well as the order of the court a quo granting the private respondents prayer
for a writ of preliminary injunction, and the writ of preliminary injunction issued
thereby, are hereby ANNULLED and SET ASIDE. The private respondents complaint
and complaint-in-intervention below are hereby DISMISSED, without prejudice to the
referral of the private respondents grievances and disputes on the assailed issuances of
the NTC with the said agency.

SO ORDERED. [10]

Petitioners motions for reconsideration were denied in a Resolution dated

January 10, 2002 for lack of merit. [11]

Hence, the instant petition for review filed by Smart and Piltel, which was
docketed as G.R. No. 151908, anchored on the following grounds:

A.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT THE

NATIONAL TELECOMMUNICATIONS COMMISSION (NTC) AND NOT THE REGULAR
COURTS HAS JURISDICTION OVER THE CASE.

B.
 THE HONORABLE COURT OF APPEALS ALSO GRAVELY ERRED IN HOLDING
THAT THE PRIVATE RESPONDENTS FAILED TO EXHAUST AN AVAILABLE
ADMINISTRATIVE REMEDY.

C.

THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE

BILLING CIRCULAR ISSUED BY THE RESPONDENT NTC IS UNCONSTITUTIONAL
AND CONTRARY TO LAW AND PUBLIC POLICY.

D.

THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE PRIVATE

RESPONDENTS FAILED TO SHOW THEIR CLEAR POSITIVE RIGHT TO WARRANT
THE ISSUANCE OF A WRIT OF PRELIMINARY INJUNCTION.[12]

Likewise, Globe and Islacom filed a petition for review, docketed as G.R.
No. 152063, assigning the following errors:

1. THE HONORABLE COURT OF APPEALS SO GRAVELY ERRED BECAUSE THE

DOCTRINES OF PRIMARY JURISDICTION AND EXHAUSTION OF
ADMINISTRATIVE REMEDIES DO NOT APPLY SINCE THE INSTANT CASE IS
FOR LEGAL NULLIFICATION (BECAUSE OF LEGAL INFIRMITIES AND
VIOLATIONS OF LAW) OF A PURELY ADMINISTRATIVE REGULATION
PROMULGATED BY AN AGENCY IN THE EXERCISE OF ITS RULE MAKING
POWERS AND INVOLVES ONLY QUESTIONS OF LAW.

2. THE HONORABLE COURT OF APPEALS SO GRAVELY ERRED BECAUSE THE

DOCTRINE ON EXHAUSTION OF ADMINISTRATIVE REMEDIES DOES NOT
APPLY WHEN THE QUESTIONS RAISED ARE PURELY LEGAL QUESTIONS.

3. THE HONORABLE COURT OF APPEALS SO GRAVELY ERRED BECAUSE THE

DOCTRINE OF EXHAUSTION OF ADMINISTRATIVE REMEDIES DOES NOT
APPLY WHERE THE ADMINISTRATIVE ACTION IS COMPLETE AND EFFECTIVE,
WHEN THERE IS NO OTHER REMEDY, AND THE PETITIONER STANDS TO
SUFFER GRAVE AND IRREPARABLE INJURY.

4. THE HONORABLE COURT OF APPEALS SO GRAVELY ERRED BECAUSE

PETITIONERS IN FACT EXHAUSTED ALL ADMINISTRATIVE REMEDIES
AVAILABLE TO THEM.

5. THE HONORABLE COURT OF APPEALS SO GRAVELY ERRED IN ISSUING ITS

QUESTIONED RULINGS IN THIS CASE BECAUSE GLOBE AND ISLA HAVE A
CLEAR RIGHT TO AN INJUNCTION.[13]
 The two petitions were consolidated in a Resolution dated February 17,
2003.[14]

On March 24, 2003, the petitions were given due course and the parties
were required to submit their respective memoranda. [15]

We find merit in the petitions.

Administrative agencies possess quasi-legislative or rule-making powers

and quasi-judicial or administrative adjudicatory powers. Quasi-legislative or
rule-making power is the power to make rules and regulations which results in
delegated legislation that is within the confines of the granting statute and the
doctrine of non-delegability and separability of powers. [16]

The rules and regulations that administrative agencies promulgate, which

are the product of a delegated legislative power to create new and additional
legal provisions that have the effect of law, should be within the scope of the
statutory authority granted by the legislature to the administrative agency. It is
required that the regulation be germane to the objects and purposes of the
law, and be not in contradiction to, but in conformity with, the standards
prescribed by law. They must conform to and be consistent with the
[17]

provisions of the enabling statute in order for such rule or regulation to be

valid.Constitutional and statutory provisions control with respect to what rules
and regulations may be promulgated by an administrative body, as well as
with respect to what fields are subject to regulation by it. It may not make rules
and regulations which are inconsistent with the provisions of the Constitution
or a statute, particularly the statute it is administering or which created it, or
which are in derogation of, or defeat, the purpose of a statute. In case of
conflict between a statute and an administrative order, the former must
prevail. [18]

Not to be confused with the quasi-legislative or rule-making power of an

administrative agency is its quasi-judicial or administrative adjudicatory
power. This is the power to hear and determine questions of fact to which the
legislative policy is to apply and to decide in accordance with the standards
laid down by the law itself in enforcing and administering the same law. The
administrative body exercises its quasi-judicial power when it performs in a
judicial manner an act which is essentially of an executive or administrative
nature, where the power to act in such manner is incidental to or reasonably
necessary for the performance of the executive or administrative duty
entrusted to it. In carrying out their quasi-judicial functions, the administrative
officers or bodies are required to investigate facts or ascertain the existence of
facts, hold hearings, weigh evidence, and draw conclusions from them as
basis for their official action and exercise of discretion in a judicial nature. [19]

In questioning the validity or constitutionality of a rule or regulation issued

by an administrative agency, a party need not exhaust administrative
remedies before going to court. This principle applies only where the act of the
administrative agency concerned was performed pursuant to its quasi-judicial
function, and not when the assailed act pertained to its rule-making or quasi-
legislative power. In Association of Philippine Coconut Dessicators v.
Philippine Coconut Authority, it was held:
[20]

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.

Even assuming arguendo that the principle of exhaustion of administrative

remedies apply in this case, the records reveal that petitioners sufficiently
complied with this requirement. Even during the drafting and deliberation
stages leading to the issuance of Memorandum Circular No. 13-6-2000,
petitioners were able to register their protests to the proposed billing
guidelines. They submitted their respective position papers setting forth their
objections and submitting proposed schemes for the billing circular. After the
[21]

same was issued, petitioners wrote successive letters dated July 3,

2000 and July 5, 2000, asking for the suspension and reconsideration of the
[22] [23]

so-called Billing Circular. These letters were not acted upon until October 6,
2000, when respondent NTC issued the second assailed Memorandum
implementing certain provisions of the Billing Circular. This was taken by
petitioners as a clear denial of the requests contained in their previous letters,
thus prompting them to seek judicial relief.

In like manner, the doctrine of primary jurisdiction applies only where the
administrative agency exercises its quasi-judicial or adjudicatory
function. Thus, in cases involving specialized disputes, the practice has been
to refer the same to an administrative agency of special competence pursuant
to the doctrine of primary jurisdiction. The courts will not determine a
controversy involving a question which is within the jurisdiction of the
administrative tribunal prior to the resolution of that question by the
administrative tribunal, where the question demands the exercise of sound
administrative discretion requiring the special knowledge, experience and
services of the administrative tribunal to determine technical and intricate
matters of fact, and a uniformity of ruling is essential to comply with the
premises of the regulatory statute administered.The objective of the doctrine
of primary jurisdiction is to guide a court in determining whether it should
refrain from exercising its jurisdiction until after an administrative agency has
determined some question or some aspect of some question arising in the
proceeding before the court. It applies where the claim is originally cognizable
in the courts and comes into play whenever enforcement of the claim requires
the resolution of issues which, under a regulatory scheme, has been placed
within the special competence of an administrative body; in such case, the
judicial process is suspended pending referral of such issues to the
administrative body for its view.[24]

However, where what is assailed is the validity or constitutionality of a rule

or regulation issued by the administrative agency in the performance of its
quasi-legislative function, the regular courts have jurisdiction to pass upon the
same. The determination of whether a specific rule or set of rules issued by an
administrative agency contravenes the law or the constitution is within the
jurisdiction of the regular courts. Indeed, the Constitution vests the power of
judicial review or the power to declare a law, treaty, international or executive
agreement, presidential decree, order, instruction, ordinance, or regulation in
the courts, including the regional trial courts. This is within the scope of
[25]

judicial power, which includes the authority of the courts to determine in an

appropriate action the validity of the acts of the political departments. Judicial
[26]

power includes the duty of the courts of justice to settle actual controversies
involving rights which are legally demandable and enforceable, and to
determine whether or not there has been a grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of any branch or
instrumentality of the Government. [27]

In the case at bar, the issuance by the NTC of Memorandum Circular No.
13-6-2000 and its Memorandum dated October 6, 2000 was pursuant to its
quasi-legislative or rule-making power. As such, petitioners were justified in
invoking the judicial power of the Regional Trial Court to assail the
constitutionality and validity of the said issuances. In Drilon v. Lim, it was [28]

held:

We stress at the outset that the lower court had jurisdiction to consider the
constitutionality of Section 187, this authority being embraced in the general
definition of the judicial power to determine what are the valid and binding laws by
the criterion of their conformity to the fundamental law. Specifically, B.P. 129 vests in
the regional trial courts jurisdiction over all civil cases in which the subject of the
litigation is incapable of pecuniary estimation, even as the accused in a criminal action
has the right to question in his defense the constitutionality of a law he is charged with
violating and of the proceedings taken against him, particularly as they contravene the
Bill of Rights. Moreover, Article X, Section 5(2), of the Constitution vests in the
Supreme Court appellate jurisdiction over final judgments and orders of lower courts
in all cases in which the constitutionality or validity of any treaty, international or
executive agreement, law, presidential decree, proclamation, order, instruction,
ordinance, or regulation is in question.[29]

In their complaint before the Regional Trial Court, petitioners averred that
the Circular contravened Civil Code provisions on sales and violated the
constitutional prohibition against the deprivation of property without due
process of law. These are within the competence of the trial judge. Contrary to
the finding of the Court of Appeals, the issues raised in the complaint do not
entail highly technical matters. Rather, what is required of the judge who will
resolve this issue is a basic familiarity with the workings of the cellular
telephone service, including prepaid SIM and call cards and this is judicially
known to be within the knowledge of a good percentage of our population and
expertise in fundamental principles of civil law and the Constitution.

Hence, the Regional Trial Court has jurisdiction to hear and decide Civil
Case No. Q-00-42221. The Court of Appeals erred in setting aside the orders
of the trial court and in dismissing the case.

WHEREFORE, in view of the foregoing, the consolidated petitions

are GRANTED.The decision of the Court of Appeals in CA-G.R. SP No. 64274
dated October 9, 2001 and its Resolution dated January 10, 2002 are
REVERSED and SET ASIDE. The Order dated November 20, 2000 of the
Regional Trial Court of Quezon City, Branch 77, in Civil Case No. Q-00-42221
is REINSTATED. This case is REMANDED to the court a quo for continuation
of the proceedings.

SO ORDERED.

G.R. No. 77707 August 8, 1988

PEDRO W. GUERZON, petitioner,

vs.
COURT OF APPEALS, BUREAU OF ENERGY UTILIZATION, F. C. CAASI JR., and PILIPINAS
SHELL PETROLEUM CORPORATION, respondents.

Llego, Llego & Collera for petitioner.

Florentino G. Dumlao, Jr. for respondent Pilipinas Shell Petroleum Corporation.

CORTES, J.:

Raised by petitioner to this Court is the issue of whether or not the Bureau of Energy Utilization, the
agency charged with regulating the operations and trade practices of the petroleum industry, has the
power to order a service station operator-lessee to vacate the service station and to turn over its
possession to the oil company-lessor upon the expiration of the dealership and lease agreements.

The facts, as found by the Court of Appeals, are as follows:

Basic antecedent facts show that on January 9, 1981 petitioner Pedro Guerzon
executed with Basic Landoil Energy Corporation, which was later acquired by
respondent Pilipinas Shell Petroleum Corporation, a contract denominated as
"Service Station Lease" for the use and operation of respondent SHELL's properties,
facilities and equipment, which included four (4) pieces of fuel dispensing Pumps and
one (1) piece air compressor, for a period of five (5) years from January 15, 1981 and
ending on January 14, 1986. On January 7, 1981 petitioner likewise executed with
the same Corporation a "Dealer's Sales Contract" for the sale by petitioner of
respondent SHELL's petroleum and other products in the leased service station
which contract expired April 12,1986. On April 13,1981, respondent Bureau of Energy
Utilization (BEU) approved the Dealer's Sales Contract pursuant to which petitioner
was appointed dealer of SHELL's gasoline and other petroleum products which he
was to sell at the gasoline station located at Cagayan de Oro City. On the same day,
respondent BEU issued a certificate of authority in petitioner's favor, which had a 5-
year period of validity, in line with the terms of the contract.

Paragraph 9 of the Service Station Lease Contract provides:

 The cancellation or termination of the Dealer's Sales Contract
executed between the COMPANY and the LESSEE on January
7,1981 shall automatically cancel this Lease.

As early as January 2, 1986 respondent SHELL through its District Manager

Reseller Mindanao wrote to petitioner informing him that the Company was not
renewing the Dealer's Sales Contract which was to expire on April 12, 1986 together
with the service station lease and reminding him to take appropriate steps to wind up
his business activities at the station and, on the appropriate date to hand over the
station with all its facilities and equipment to the representative of respondent. A copy
of this letter was furnished respondent BEU, through the latter's Mindanao Division
Office. On April 12, 1986, respondent SHELL wrote petitioner reiterating the decision
not to extend the Dealer's Sales Contract, demanding the surrender of the station
premises and all company owned equipment to the respondent's representative.

On April 15, 1986 respondent BEU, through respondent Caasi, Jr., officer- in-charge
of its Mindanao Division Office, issued the assailed order directing the petitioner as
follows:

(1) immediately vacate the service station abovementioned and turn it

over to Pilipinas Shell Petroleum Corporation; and

(2) show cause in writing, under oath within ten (10) days from receipt
hereof why no administrative and/or criminal proceedings shall be
instituted against you for the aforesaid violation.

The order directed that a copy of the same be furnished the PCINP Commander of
Cagayan de Oro City, requesting prompt and effective enforcement of the directive
and submitting to the BEU of the result of the action taken thereon.

On April 22, 1986, pursuant to the order of April 15, 1986, respondent SHELL,
accompanied by law enforcement officers, was able to secure possession of the
gasoline station in question together with the requisite equipments and accessories,
and turned them over to the control of the personnel of respondent SHELL who
accompanied them.

On May 9, 1986, petitioner filed with the Regional Trial Court of Misamis Oriental a
complaint for certiorari, injunction and damages with preliminary mandatory
injunction (Civil Case No. 10619) to annul the disputed order dated April 15, 1986 of
respondent F.C. Caasi, Jr., but on September 18,1986 this complaint was dismissed
for lack of jurisdiction to annul the order of a quasi-judicial body of equivalent
category as the Regional Trial Court. [Rollo, pp. 37-39.]

Thus, petitioner filed in the Court of Appeals a petition for certiorari with a prayer for preliminary
mandatory injunction against Pilipinas Shell Petroleum Corporation, F.C. Caasi, Jr. and the Bureau
of Energy Utilization seeking the annulment of respondent Caasi, Jr.'s order dated April 15, 1986 and
the restoration to petitioner of possession of the service station and the equipment removed
therefrom.
In a decision promulgated on February 10, 1987, the Court of Appeals denied due course and
dismissed the petition after holding the disputed order valid and the proceedings undertaken to
implement the same sanctioned by Presidential Decree No. 1206, as amended.

Hence, petitioner's recourse to this Court.

In his petition for review, petitioner ascribed the following errors to the Court of Appeals:

THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT RESPONDENT BUREAU

OF ENERGY UTILIZATION HAS JURISDICTION TO EJECT THE PETITIONER FROM THE
GASOLINE SERVICE STATION LEASED.

II

THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THERE IS NO NECESSITY

OF ANY NOTICE AND HEARING PRIOR TO THE ISSUANCE OF THE DISPUTED ORDER
ISSUED BY RESPONDENT BUREAU OF ENERGY UTILIZATION ORDERING THE PETITIONER
TO VACATE THE LEASED PREMISES. [Rollo, p. 13]

The controversy revolves around the assailed order issued by respondent F.C. Caasi, Jr., Officer-in-
Charge of the Mindanao Division Office of the Bureau of Energy Utilization, which reads:

15 April 1986

Mr. Pedro W. Guerzon

Corner Velez-Recto Streets

Cagayan de Oro City

Sir:

We were officially informed by Pilipinas Shell Petroleum Corporation that you refused
to vacate its company-owned service station at the above address despite the fact
that you were advised by Shell in its letter of January 02, 1986 that it will not renew
the Dealer's Sales Contract between yourself and the company upon its expiration
on April 12,1986.

Your continued occupancy of the service station is not only considered a violation of
BEU laws, rules and regulations but is also detrimental to the interests of the parties
concerned and the public.

In view thereof, you are hereby directed to:

(1) immediately vacate the service station abovementioned and turn it over to
Pilipinas Shell Petroleum Corporation; and
 (2) show cause in writing, under oath within ten (1O) days from receipt hereof why no
administrative and/or criminal proceedings shall be instituted against you for the
aforesaid violation.

Let a copy of this directive be furnished the PC-INP Commander of Cagayan de Oro
City, who is hereby requested to cause the prompt and effective enforcement hereof
and to submit to this Bureau the result/s of the action/s taken thereon.

Very truly yours,

(Sgd.) F.C. CAASI JR.

Officer-in-Charge

cc: PC/INP Commander

Cagayan de Oro City Pilipinas Shell Petroleum Corporation

Sasa, Davao City/Cagayan de Oro City

BEU-Manila

[Rollo, p. 122; Emphasis supplied.]

As stated at the outset, whether or not it is within the jurisdiction of the Bureau of Energy Utilization
to issue the above order is the primary issue to be resolved.

The Solicitor General contends that since petitioner's license to sell petroleum products expired on
April 12,1986, when his dealership and lease contracts expired, as of the following day, April 13,
1986 he was engaged in illegal trading in petroleum products in violation of Batas Pambansa Blg. 33
[Rollo, pp. 100-101.] The pertinent provisions of B.P. No. 33 state:

Sec. 2. Prohibited Acts.The following acts are prohibited and penalized:

(a) Illegal trading in petroleum and/or petroleum products;

xxx xxx xxx

Sec. 3. Definition of terms.For the purposes of this Act, the si following terms shall
be understood to mean:

Illegal trading in petroleum and/or petroleum products-the sale or distribution of

petroleum products for profit without license or authority from the Government; non-
issuance of receipts by licensed traders; misrepresentation as to quality and/or
quantity; an sa oil companies, distributors and/or dealers violative of government
rules and regulations.

xxx xxx xxx

Thus, concludes the Solicitor General, the Bureau of Energy nation had the power to issue, and was
justified in issuing, the order to vacate pursuant to Presidential Decree No. 1206, as amended, the
pertinent portion of which provides:

Sec. 7. Bureau of Energy Utilization.There is created in the Department a Bureau

of Energy Utilization, hereafter referred to in this Section as the Bureau, which shall
have the following powers and functions, among others:

xxx xxx xxx

e. After due notice and hearing, impose and collect a fine not exceeding One
Thousand Pesos, for every violation or non-compliance with any term or condition of
any certificate, license, or permit issued by the Bureau or of any of its orders,
decisions, rules and regulations.

The fine so imposed shall be paid to the Bureau, and failure to pay the fine within the
time specified in the order or decision of the Bureau or failure to cease and
discontinue the violation or noncompliance shall be deemed good and sufficient
reason for the suspension, closure or stoppage of operations of the establishment of
the person guilty of the violation or non-compliance. In case the violation or default is
committed by a corporation or association, the manager or person who has charge of
the management of the corporation or association and the officers or directors
thereof who have ordered or authorized the violation or default shall be solidarily
liable for the payment of the fine.

The Bureau shall have the power and authority to issue corresponding writs of
execution directing the City Sheriff or provincial Sheriff or other peace officers whom
it may appoint to enforce the fine or the order of closure, suspension or stoppage of
operations. Payment may also be enforced by appropriate action brought in a court
of competent jurisdiction. The remedy provided herein shall not be a bar to or affect
any other remedy under existing laws, but shall be cumulative and additional to such
remedies;

xxx xxx xxx

However, the Solicitor General's line of reasoning is fatally flawed by the failure of the facts to
support it. From a cursory reading of the assailed order, it is readily apparent that the order is
premised on petitioner's refusal to vacate the service station in spite of the expiration and non-
renewal of his dealership and lease agreements with respondent Shell. Nowhere in the order is it
stated that petitioner had engaged in illegal trading in petroleum products or had committed any
other violation of B.P. Blg. 33. The order merely makes a vague reference to a "violation of BEU
laws, rules and regulations," without stating the specific provision violated. That petitioner had
engaged in illegal trading in petroleum products cannot even be implied from the wording of the
assailed order.

But then, even if petitioner was indeed engaged in illegal trading in petroleum products, there was no
basis under B.P. Blg. 33 to order him to vacate the service station and to turn it over to respondent
Shell. Illegal trading in petroleum products is a criminal act wherein the injured party is the State.
Respondent Shell is not even alleged by the Solicitor General as a private party prejudiced and,
therefore, it can claim no relief if a criminal case is instituted. *

Even on the assumption that petitioner's continued occupancy and operation of the service station
constituted a violation of a law or regulation, still the Court has no recourse but to rule against the
legality of the order, the Bureau of Energy Utilization not being empowered to issue it. Section 7 of
P.D. No. 1206, as amended, is very clear as to the courses of action that the Bureau of Energy
Utilization may take in case of a violation or non- compliance with any term or condition of any
certificate, license or permit issued by the Bureau or any of its orders, decisions, rules or regulations.
The Bureau may: (1) impose a fine not exceeding P1,000.00; and (2) in case of failure to pay the
fine imposed or to cease and discontinue the violation or non-compliance, order the suspension,
closure or stoppage of operations of the establishment of the guilty party. Its authority is limited to
these two (2) options. It can do no more, as there is nothing in P.D. No. 1206, as amended, which
empowers the Bureau to issue an order to vacate in case of a violation.

As it is, jurisdiction to order a lessee to vacate the leased premises is vested in the civil courts in an
appropriate case for unlawful detainer or accion publiciana [Secs. 19(2) and 33(2), B.P. Blg. 129, as
amended.] There is nothing in P.D. No. 1206, as amended, that would suggest that the same or
similar jurisdiction has been granted to the Bureau of Energy Utilization. It is a fundamental rule that
an administrative agency has only such powers as are expressly granted to it by law and those that
are necessarily implied in the exercise thereof [Makati Stock Exchange, Inc. v. Securities and
Exchange Commission, G.R. No. L-23004, June 30,1965,14 SCRA 620; Sy v. Central Bank, G.R.
No. L-41480, April 30, 1976, 70 SCRA 570.] That issuing the order to vacate was the most effective
way of stopping any illegal trading in petroleum products is no excuse for a deviation from this rule.
Otherwise, adherence to the rule of law would be rendered meaningless.

Moreover, contrary to the Solicitor General's theory, the text of the assailed order leaves no room for
doubt that it was issued in connection with an adjudication of the contractual dispute between
respondent Shell and petitioner. But then the Bureau of Energy Utilization, like its predecessor, the
defunct Oil Industry Commission, has no power to decide contractual disputes between gasoline
dealers and oil companies, in the absence of an express provision of law granting to it such power
[see Pilipinas Shell Petroleum Corp. v. Oil Industry Commission, G.R. No. L-41315, November 13,
1986,145 SCRA 433.] As explicitly stated in the law, in connection with the exercise of quasi-judicial
powers, the Bureau's jurisdiction is limited to cases involving violation or non-compliance with any
term or condition of any certificate, license or permit issued by it or of any of its orders, decisions,
rules or regulations.

Viewed from any angle, respondent F.C. Caasi, Jr., in issuing the assailed order, acted beyond his
authority and overstepped the powers granted by P.D. No. 1206, as amended. The assailed order
was, therefore, null and void.

Even if the issuance of the order to vacate was within the authority of respondent Caasi, Jr., still its
nullity is apparent because of the failure to comply with the requirement of notice and hearing. That
P.D. No. 1206, as amended, requires notice and hearing before any administrative penalty provided
in Sec. (7)e may be imposed is patent. Sec. (7)e provides for a gradation of penalties of which the
imposition of a fine in an amount not exceeding P1,000.00 is the least severe, and requires that
even before a fine is imposed notice and an opportunity to be heard be given to the offender.
While the order dated April 15, 1986 is null and void, the Court, however, finds itself unable to issue
the writ of mandatory injunction prayed for ordering respondent Shell to restore possession of the
service station and the equipment and facilities therein to petitioner. Petitioner himself had admitted
in his petition that his dealership and lease agreements with respondent Shell had already expired.
Recognized the validity of the termination of the agreements, he requested for their renewal.
However, this request was denied. [Rollo, p. 9] Undeniably, after April 12, 1986, any right petitioner
had to possess the service station and the equipment and facilities therein had been extinguished.
No basis for an affirmative relief therefore exist.

WHEREFORE, in view of the foregoing, the Decision of the Court of Appeals dated February 10,
1987 is REVERSED and the Order dated April 15,1986 issued by respondent Caasi, Jr. of the
Bureau of Energy Utilization is ANNULLED and SET ASIDE.

However, the right of petitioner to the possession of the service station and the equipment and
facilities having been extinguished, the prayer for the issuance of a writ of mandatory injunction is
DENIED.

SO ORDERED.

G.R. No. L-50444 August 31, 1987

ANTIPOLO REALTY CORPORATION, petitioner,

vs.
THE NATIONAL HOUSING AUTHORITY, HON. G.V. TOBIAS, in his capacity as General
Manager of the National Housing Authority, THE HON. JACOBO C. CLAVE, in his capacity as
Presidential Executive Assistant and VIRGILIO A. YUSON, respondents.

FELICIANO, J.:

By virtue of a Contract to Sell dated 18 August 1970, Jose Hernando acquired prospective and
beneficial ownership over Lot. No. 15, Block IV of the Ponderosa Heights Subdivision in Antipolo,
Rizal, from the petitioner Antipolo Realty Corporation.

On 28 August 1974, Mr. Hernando transferred his rights over Lot No. 15 to private respondent
Virgilio Yuson. The transfer was embodied in a Deed of Assignment and Substitution of Obligor
(Delegacion), executed with the consent of Antipolo Realty, in which Mr. Yuson assumed the
performance of the vendee's obligations under the original contract, including payment of his
predecessor's installments in arrears. However, for failure of Antipolo Realty to develop the
subdivision project in accordance with its undertaking under Clause 17 of the Contract to Sell, Mr.
Yuson paid only the arrearages pertaining to the period up to, and including, the month of August
1972 and stopped all monthly installment payments falling due thereafter Clause 17 reads:

Clause 17. SUBDIVISION BEAUTIFICATION. To insure the beauty of the

subdivision in line with the modern trend of urban development, the SELLER hereby
obligates itself to provide the subdivision with:
 a) Concrete curbs and gutters

b) Underground drainage system

c) Asphalt paved roads

d) Independent water system

e) Electrical installation with concrete posts.

f) Landscaping and concrete sidewall

g) Developed park or amphi-theatre

h) 24-hour security guard service.

These improvements shall be complete within a period of two (2) years from date of
this contract. Failure by the SELLER shall permit the BUYER to suspend his monthly
installments without any penalties or interest charges until such time that such
improvements shall have been completed. 1

On 14 October 1976, the president of Antipolo Realty sent a notice to private respondent Yuson
advising that the required improvements in the subdivision had already been completed, and
requesting resumption of payment of the monthly installments on Lot No. 15. For his part, Mr. Yuson
replied that he would conform with the request as soon as he was able to verify the truth of the
representation in the notice.

In a second letter dated 27 November 1976, Antipolo Realty reiterated its request that Mr. Yuson
resume payment of his monthly installments, citing the decision rendered by the National Housing
Authority (NHA) on 25 October 1976 in Case No. 252 (entitled "Jose B. Viado Jr., complainant vs.
Conrado S. Reyes, respondent") declaring Antipolo Realty to have "substantially complied with its
commitment to the lot buyers pursuant to the Contract to Sell executed by and between the lot
buyers and the respondent." In addition, a formal demand was made for full and immediate payment
of the amount of P16,994.73, representing installments which, Antipolo Realty alleged, had accrued
during the period while the improvements were being completed i.e., between September 1972
and October 1976.

Mr. Yuson refused to pay the September 1972-October 1976 monthly installments but agreed to pay
the post October 1976 installments. Antipolo Realty responded by rescinding the Contract to Sell,
and claiming the forfeiture of all installment payments previously made by Mr. Yuson.

Aggrieved by the rescission of the Contract to Sell, Mr. Yuson brought his dispute with Antipolo
Realty before public respondent NHA through a letter-complaint dated 10 May 1977 which complaint
was docketed in NHA as Case No. 2123.

Antipolo Realty filed a Motion to Dismiss which was heard on 2 September 1977. Antipolo Realty,
without presenting any evidence, moved for the consolidation of Case No. 2123 with several other
cases filed against it by other subdivision lot buyers, then pending before the NHA. In an Order
issued on 7 February 1978, the NHA denied the motion to dismiss and scheduled Case No. 2123 for
hearing.

After hearing, the NHA rendered a decision on 9 March 1978 ordering the reinstatement of the
Contract to Sell under the following conditions:

l) Antipolo Realty Corporation shall sent [sic] to Virgilio Yuzon a statement of account
for the monthly amortizations from November 1976 to the present;

m) No penalty interest shall be charged for the period from November 1976 to the
date of the statement of account; and

n) Virgilio Yuzon shall be given sixty (60) days to pay the arrears shown in the
statement of account. 2

Antipolo Realty filed a Motion for Reconsideration asserting: (a) that it had been denied due process
of law since it had not been served with notice of the scheduled hearing; and (b) that the jurisdiction
to hear and decide Mr. Yuson's complaint was lodged in the regular courts, not in the NHA, since
that complaint involved the interpretation and application of the Contract to Sell.

The motion for reconsideration was denied on 28 June 1978 by respondent NHA General Manager
G.V. Tobias, who sustained the jurisdiction of the NHA to hear and decide the Yuson complaint. He
also found that Antipolo Realty had in fact been served with notice of the date of the hearing, but that
its counsel had failed to attend the hearing. 3 The case was submitted for decision, and eventually
decided, solely on the evidence presented by the complainant.

On 2 October 1978, Antipolo Realty came to this Court with a Petition for certiorari and Prohibition
with Writ of Preliminary Injunction, which was docketed as G.R. No. L-49051. Once more, the
jurisdiction of the NHA was assailed. Petitioner further asserted that, under Clause 7 of the Contract
to Sell, it could validly terminate its agreement with Mr. Yuson and, as a consequence thereof, retain
all the prior installment payments made by the latter. 4

This Court denied certiorari in a minute resolution issued on 11 December 1978, "without prejudice
to petitioner's pursuing the administrative remedy." 5 A motion for reconsideration was denied on 29
January 1979.

Thereafter, petitioner interposed an appeal from the NHA decision with the Office of the President
which, on 9 March 1979, dismissed the same through public respondent Presidential Executive
Assistant Jacobo C. Clave. 6

In the present petition, Antipolo Realty again asserts that, in hearing the complaint of private
respondent Yuson and in ordering the reinstatement of the Contract to Sell between the parties, the
NHA had not only acted on a matter beyond its competence, but had also, in effect, assumed the
performance of judicial or quasi-judicial functions which the NHA was not authorized to perform.

We find the petitioner's arguments lacking in merit.

It is by now commonplace learning that many administrative agencies exercise and perform
adjudicatory powers and functions, though to a limited extent only. Limited delegation of judicial or
quasi-judicial authority to administrative agencies (e.g., the Securities and Exchange Commission
and the National Labor Relations Commission) is well recognized in our jurisdiction, 7 basically
because the need for special competence and experience has been recognized as essential in the
resolution of questions of complex or specialized character and because of a companion recognition that
the dockets of our regular courts have remained crowded and clogged. In Spouses Jose Abejo and
Aurora Abejo, et al. vs. Hon. Rafael dela Cruz, etc., et al., 8 the Court, through Mr. Chief Justice
Teehankee, said:

In the fifties, the Court taking cognizance of the move to vest jurisdiction in
administrative commissions and boards the power to resolve specialized disputes in
the field of labor (as in corporations, public transportation and public utilities) ruled
that Congress in requiring the Industrial Court's intervention in the resolution of labor
management controversies likely to cause strikes or lockouts meant such jurisdiction
to be exclusive, although it did not so expressly state in the law. The Court held that
under the "sense-making and expeditious doctrine of primary jurisdiction . . . the
courts cannot or will not determine a controversy involving a question which is within
the jurisdiction of an administrative tribunal where the question demands the
exercise of sound administrative discretion requiring the special knowledge,
experience, and services of the administrative tribunal to determine technical and
intricate matters of fact, and a uniformity of ruling is essential to comply with the
purposes of the regulatory statute administered" (Pambujan Sur United Mine
Workers v. Samar Mining Co., Inc., 94 Phil, 932, 941 [1954]).

In this era of clogged court dockets, the need for specialized administrative boards or
commissions with the special knowledge, experience and capability to hear and
determine promptly disputes on technical matters or essentially factual matters,
subject to judicial review in case of grave abuse of discretion has become well nigh
indispensable. Thus, in 1984, the Court noted that 'between the power lodged in an
administrative body and a court, the unmistakeable trend has been to refer it to the
former, "Increasingly, this Court has been committed to the view that unless the law
speaks clearly and unequivocably, the choice should fall on fan administrative
agency]" ' (NFL v. Eisma, 127 SCRA 419, 428, citing precedents). The Court in the
earlier case of Ebon vs. De Guzman (113 SCRA 52, 56 [1982]), noted that the
lawmaking authority, in restoring to the labor arbiters and the NLRC their jurisdiction
to award all kinds of damages in labor cases, as against the previous P.D.
amendment splitting their jurisdiction with the regular courts, "evidently, . . . had
second thoughts about depriving the Labor Arbiters and the NLRC of the jurisdiction
to award damages in labor cases because that setup would mean duplicity of suits,
splitting the cause of action and possible conflicting findings and conclusions by two
tribunals on one and the same claim."

In an even more recent case, Tropical Homes, Inc. vs. National Housing Authority, et al., 9 Mr. Justice
Gutierrez, speaking for the Court, observed that:

There is no question that a statute may vest exclusive original jurisdiction in an

administrative agency over certain disputes and controversies falling within the
agency's special expertise. The very definition of an administrative agency includes
 its being vested with quasi-judicial powers. The ever increasing variety of powers and
functions given to administrative agencies recognizes the need for the active
intervention of administrative agencies in matters calling for technical knowledge and
speed in countless controversies which cannot possibly be handled by regular
courts.

In general the quantum of judicial or quasi-judicial powers which an administrative agency may
exercise is defined in the enabling act of such agency. In other words, the extent to which an
administrative entity may exercise such powers depends largely, if not wholly, on the provisions of
the statute creating or empowering such agency. 10 In the exercise of such powers, the agency concerned must
commonly interpret and apply contracts and determine the rights of private parties under such contracts. One thrust of the multiplication of
administrative agencies is that the interpretation of contracts and the determination of private rights thereunder is no longer a uniquely
judicial function, exercisable only by our regular courts.

Thus, the extent to which the NHA has been vested with quasi-judicial authority must be determined
by referring to the terms of Presidential Decree No. 957, known as "The Subdivision and
Condominium Buyers' Decree." 11 Section 3 of this statute provides as follows:

National Housing Authority. The National Housing Authority shall have exclusive
jurisdiction to regulate the real estate trade and business in accordance with the
provisions of this decree (emphasis supplied)

The need for and therefore the scope of the regulatory authority thus lodged in the NHA are
indicated in the second and third preambular paragraphs of the statute which provide:

WHEREAS, numerous reports reveal that many real estate subdivision owners,
developers, operators, and/or sellers have reneged on their representations and
obligations to provide and maintain properly subdivision roads, drainage, sewerage,
water systems lighting systems and other similar basic requirements, thus
endangering the health and safety of home and lot buyers;

WHEREAS, reports of alarming magnitude also show cases of swindling and

fraudulent manipulations perpetrated by unscrupulous subdivision and condominium
sellers and operators, such as failure to deliver titles to the buyers or titles free from
liens and encumbrances, and to pay real estate taxes, and fraudulent sales of the
same subdivision lots to different innocent purchasers for value . (emphasis
supplied)

Presidential Decree No. 1344 12 clarified and spelled out the quasi-judicial dimensions of the grant of regulatory authority to the
NHA in the following quite specific terms:

SECTION 1. In the exercise of its functions to regulate the real estate trade and
business and in addition to its powers provided for in Presidential Decree No. 957,
the National Housing Authority shall have exclusive jurisdiction to hear and decide
cases of the following nature:

A. Unsound real estate business practices:

 B. Claims involving refund and any other claims filed by sub- division lot or
condominium unit buyer against the project owner, developer, dealer, broker or
salesman; and

C. Cases involving specific performance of contractual and statutory obligations filed

by buyers of subdivision lots or condominium units against the owner, developer,
dealer, broker or salesman. (emphasis supplied.)

The substantive provisions being applied and enforced by the NHA in the instant case are found in
Section 23 of Presidential Decree No. 957 which reads:

Sec. 23. Non-Forfeiture of Payments. No installment payment made by a buyer in

a subdivision or condominium project for the lot or unit he contracted to buy shall be
forfeited in favor of the owner or developer when the buyer, after due notice to the
owner or developer, desists from further payment due to the failure of the owner or
developer to develop the subdivision or condominium project according to the
approved plans and within the time limit for complying with the same. Such buyer
may, at his option, be reimbursed the total amount paid including amortization and
interests but excluding delinquency interests, with interest thereon at the legal rate.
(emphasis supplied.)

Having failed to comply with its contractual obligation to complete certain specified improvements in
the subdivision within the specified period of two years from the date of the execution of the Contract
to Sell, petitioner was not entitled to exercise its options under Clause 7 of the Contract. Hence,
petitioner could neither rescind the Contract to Sell nor treat the installment payments made by the
private respondent as forfeited in its favor. Indeed, under the general Civil Law, 13 in view of petitioner's
breach of its contract with private respondent, it is the latter who is vested with the option either to rescind the contract and receive
reimbursement of an installment payments (with legal interest) made for the purchase of the subdivision lot in question, or to suspend
payment of further purchase installments until such time as the petitioner had fulfilled its obligations to the buyer. The NHA was therefore
correct in holding that private respondent's prior installment payments could not be forfeited in favor of petitioner.

Neither did the NHA commit any abuse, let alone a grave abuse of discretion or act in excess of its
jurisdiction when it ordered the reinstatement of the Contract to Sell between the parties. Such
reinstatement is no more than a logical consequence of the NHA's correct ruling, just noted, that the
petitioner was not entitled to rescind the Contract to Sell. There is, in any case, no question that
under Presidential Decree No. 957, the NHA was legally empowered to determine and protect the
rights of contracting parties under the law administered by it and under the respective agreements,
as well as to ensure that their obligations thereunder are faithfully performed.

We turn to petitioner's assertion that it had been denied the right to due process. This assertion lacks
substance. The record shows that a copy of the order denying the Motion to Dismiss and scheduling
the hearing of the complaint for the morning of 6 March 1978, was duly served on counsel for
petitioner, as evidenced by the annotation appearing at the bottom of said copy indicating that such
service had been effected. 14 But even if it be assumed, arguendo, that such notice had not been served on the petitioner,
nevertheless the latter was not deprived of due process, for what the fundamental law abhors is not the absence of previous notice but rather
the absolute lack of opportunity to be heard. 15 In the instant case, petitioner was given ample opportunity to present its side and to be heard
on a motion for reconsideration as well, and not just on a motion to dismiss; the claim of denial of due process must hence sound even more
hollow. 16

We turn finally to the question of the amount of P16,994.73 which petitioner insists had accrued
during the period from September 1972 to October 1976, when private respondent had suspended
payment of his monthly installments on his chosen subdivision lot. The NHA in its 9 March 1978
resolution ruled that the regular monthly installments under the Contract to Sell did not accrue during
the September 1972 October 1976 period:

[R]espondent allowed the complainant to suspend payment of his monthly

installments until the improvements in the subdivision shall have been completed.
Respondent informed complainant on November 1976 that the improvements have
been completed. Monthly installments during the period of suspension of payment
did not become due and demandable Neither did they accrue Such must be the
case, otherwise, there is no sense in suspending payments. If the suspension is
lifted the debtor shall resume payments but never did he incur any arrears.

Such being the case, the demand of respondent for complainant to pay the arrears
due during the period of suspension of payment is null and void. Consequently, the
notice of cancellation based on the refusal to pay the s that were not due and
demandable is also null and void. 17

The NHA resolution is probably too terse and in need of certification and amplification. The NHA
correctly held that no installment payments should be considered as having accrued during the
period of suspension of payments. Clearly, the critical issue is what happens to the installment
payments which would have accrued and fallen due during the period of suspension had no default
on the part of the petitioner intervened. To our mind, the NHA resolution is most appropriately read
as directing that the original period of payment in the Contract to Sell must be deemed extended by
a period of time equal to the period of suspension (i.e., by four (4) years and two (2) months) during
which extended time (tacked on to the original contract period) private respondent buyer must
continue to pay the monthly installment payments until the entire original contract price shall have
been paid. We think that such is the intent of the NHA resolution which directed that "[i]f the
suspension is lifted, the debtor shall resume payments" and that such is the most equitable and just
reading that may be given to the NHA resolution. To permit Antipolo Realty to collect the disputed
amount in a lump sum after it had defaulted on its obligations to its lot buyers, would tend to defeat
the purpose of the authorization (under Sec. 23 of Presidential Decree No. 957, supra) to lot buyers
to suspend installment payments. As the NHA resolution pointed out, [s]uch must be the case,
otherwise, there is no sense in suspending payments." Upon the other hand, to condone the entire
amount that would have become due would be an expressively harsh penalty upon the petitioner
and would result in the unjust enrichment of the private respondent at the expense of the petitioner.
It should be recalled that the latter had already fulfilled, albeit tardily, its obligations to its lot buyers
under their Contracts to Sell. At the same time, the lot buyer should not be regarded as delinquent
and as such charged penalty interest. The suspension of installment payments was attributable to
the petitioner, not the private respondent. The tacking on of the period of suspension to the end of
the original period precisely prevents default on the part of the lot buyer. In the words of the NHA
resolution, "never would [the buyer] incur any arrears."

WHEREFORE, the Petition for certiorari is DISMISSED. The NHA decision appealed from is hereby
AFFIRMED and clarified as providing for the lengthening of the original contract period for payment
of installments under the Contract to Sell by four (4) years and two (2) months, during which
extended time private respondent shall continue to pay the regular monthly installment payments
until the entire original contract price shall have been paid. No pronouncement as to costs.

SO ORDERED.