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MANUEL M. LEYSON JR., petitioner, vs.

OFFICE OF THE OMBUDSMAN, The case is a simple case of breach of contract with damages
TIRSO ANTIPORDA, Chairman, UCPB and CIIF Oil Mills, and OSCAR A. which should have been filed in the regular court. This Office
TORRALBA, President, CIIF Oil Mills, respondents. ALEX has no jurisdiction to determine the legality or validity of the
termination of the contract entered into by CIIF and ITTC.
DECISION Besides the entities involved are private corporations (over)
which this Office has no jurisdiction.[2]
On 4 June 1998 reconsideration of the dismissal of the complaint was denied. The
Ombudsman was unswayed in his finding that the present controversy involved
On 7 February 1996 International Towage and Transport Corporation (ITTC), a breach of contract as he also took into account the circumstance that petitioner had
domestic corporation engaged in the lighterage or shipping business, entered into a already filed a collection case before the Regional Trial Court of Manila-Br. 15,
one (1)-year contract with Legaspi Oil Company, Inc. (LEGASPI OIL), Granexport docketed as Civil Case No. 97-83354. Moreover, the Ombudsman found that the
Manufacturing Corporation (GRANEXPORT) and United Coconut Chemicals, Inc. filing of the motion for reconsideration on 31 March 1998 was beyond the
(UNITED COCONUT), comprising the Coconut Industry Investment Fund (CIIF) inextendible period of five (5) days from notice of the assailed resolution on 19
companies, for the transport of coconut oil in bulk through MT Transasia. The March 1998.[3] miso
majority shareholdings of these CIIF companies are owned by the United Coconut
Planters Bank (UCPB) as administrator of the CIIF. Under the terms of the contract,
either party could terminate the agreement provided a three (3)-month advance Petitioner now imputes grave abuse of discretion on public respondent in dismissing
notice was given to the other party. However, in August 1996, or prior to the his complaint. He submits that inasmuch as Philippine Coconut Producers
expiration of the contract, the CIIF companies with their new President, respondent Federation, Inc. (COCOFED) v. PCGG[4] and Republic v. Sandiganbayan[5] have
Oscar A. Torralba, terminated the contract without the requisite advance notice. The declared that the coconut levy funds are public funds then, conformably
CIIF companies engaged the services of another vessel, MT Marilag, operated by with Quimpo v. Tanodbayan,[6] corporations formed and organized from those funds
Southwest Maritime Corporation. miso or whose controlling stocks are from those funds should be regarded as government
owned and/or controlled corporations. As in the present case, since the funding or
controlling interest of the companies being headed by private respondents was given
On 11 March 1997 petitioner Manuel M. Leyson Jr., Executive Vice President of or owned by the CIIF as shown in the certification of their Corporate Secretary,[7] it
ITTC, filed with public respondent Office of the Ombudsman a grievance case follows that they are government owned and/or controlled corporations. Corollarily,
against respondent Oscar A. Torralba. The following is a summary of the petitioner asserts that respondents Antiporda and Torralba are public officers subject
irregularities and corrupt practices allegedly committed by respondent Torralba: (a) to the jurisdiction of the Ombudsman. Sdaadsc
breach of contract - unilateral cancellation of valid and existing contract; (b) bad
faith - falsification of documents and reports to stop the operation of MT
Transasia; (c) manipulation - influenced their insurance to disqualify MT Petitioner alleges next that public respondent's conclusion that his complaint refers
Transasia; (d) unreasonable denial of requirement imposed; (e) double standards to a breach of contract is whimsical, capricious and irresponsible amounting to a
and inconsistent in favor of MT Marilag; (f) engaged and entered into a contract total disregard of its main point, i. e., whether private respondents violated The Anti-
with Southwest Maritime Corp. which is not the owner of MT Marilag, where Graft and Corrupt Practices Act when they entered into a contract with Southwest
liabilities were waived and whose paid-up capital is only P250,000.00; and, (g) Maritime Corporation which was grossly disadvantageous to the government in
overpricing in the freight rate causing losses of millions of pesos to Cocochem. [1] general and to the CIIF in particular. Petitioner admits that his motion for
reconsideration was filed out of time. Nonetheless, he advances that public
respondent should have relaxed its rules in the paramount interest of justice; after
On 2 January 1998 petitioner charged respondent Tirso Antiporda, Chairman of all, the delay was just a matter of days and he, a layman not aware of technicalities,
UCPB and CIIF Oil Mills, and respondent Oscar A. Torralba with violation of The personally filed the complaint. Rtcspped
Anti-Graft and Corrupt Practices Act also before the Ombudsman anchored on the
aforementioned alleged irregularities and corrupt practices. spped
Private respondents counter that the CIIF companies were duly organized and are
existing by virtue of the Corporation Code. Their stockholders are private
On 30 January 1998 public respondent dismissed the complaint based on its finding individuals and entities. In addition, private respondents contend that they are not
public officers as defined underThe Anti-Graft and Corrupt Practices Act but are acquired by PNOC, which is a government-owned or controlled
private executives appointed by the Boards of Directors of the CIIF companies. corporation, PETROPHIL became a subsidiary of PNOC and
They asseverate that petitioner's motion for reconsideration was filed through the thus shed-off its private status. It is now funded and owned by
expert assistance of a learned counsel. They then charge petitioner with forum the government as, in fact, it was acquired to perform functions
shopping since he had similarly filed a case for collection of a sum of money plus related to government programs and policies on oil, a vital
damages before the trial court. commodity in the economic life of the nation. It was acquired
not temporarily but as a permanent adjunct to perform essential
The Office of the Solicitor General maintains that the Ombudsman approved the government or government-related functions, as the marketing
recommendation of the investigating officer to dismiss the complaint because he arm of the PNOC to assist the latter in selling and distributing
sincerely believed there was no sufficient basis for the criminal indictment of private oil and petroleum products to assure and maintain an adequate
respondents. spped and stable domestic supply. Korte

We find no grave abuse of discretion committed by the Ombudsman. COCOFED v. But these jurisprudential rules invoked by petitioner in support of his claim that the
PCGG referred to in Republic v. Sandiganbayanreviewed the history of the coconut CIIF companies are government owned and/or controlled corporations are
levy funds. I These funds actually have four (4) general classes: (a) the Coconut incomplete without resorting to the definition of "government owned or controlled
Investment Fund created under R. A. No. 6260;[8] (b) the Coconut Consumers corporation" contained in par. (13), Sec. 2, Introductory Provisions of the
Stabilization Fund created under P. D. No. 276;[9] (c) the Coconut Industry Administrative Code of 1987, i. e., any agency organized as a stock or non-stock
Development Fund created under P. D. No. 582;[10] and, (d) the Coconut Industry corporation vested with functions relating to public needs whether governmental or
Stabilization Fund created under P. D. No. 1841.[11] proprietary in nature, and owned by the Government directly or through its
instrumentalities either wholly, or, where applicable as in the case of stock
corporations, to the extent of at least fifty-one (51) percent of its capital stock. The
The various laws relating to the coconut industry were codified in 1976. On 21 definition mentions three (3) requisites, namely, first, any agency organized as a
October of that year, P. D. No. 961[12] was promulgated. On 11 June 1978 it was stock or non-stock corporation; second, vested with functions relating to public
amended by P. D. No. 1468[13] by inserting a new provision authorizing the use of needs whether governmental or proprietary in nature; and, third, owned by the
the balance of the Coconut Industry Development Fund for the acquisition of Government directly or through its instrumentalities either wholly, or, where
"shares of stocks in corporations organized for the purpose of engaging in the applicable as in the case of stock corporations, to the extent of at least fifty-one (51)
establishment and operation of industries x x x commercial activities and other allied percent of its capital stock. Sclaw
business undertakings relating to coconut and other palm oil indust(ries)."[14] From
this fund thus created, or the CIIF, shares of stock in what have come to be known
as the "CIIF companies" were purchased. miso In the present case, all three (3) corporations comprising the CIIF companies were
organized as stock corporations. The UCPB-CIIF owns 44.10% of the shares of
LEGASPI OIL, 91.24% of the shares of GRANEXPORT, and 92.85% of the shares
We then stated in COCOFED that the coconut levy funds were raised by the State's of UNITED COCONUT.[15]Obviously, the below 51% shares of stock in LEGASPI
police and taxing powers such that the utilization and proper management thereof OIL removes this firm from the definition of a government owned or controlled
were certainly the concern of the Government. These funds have a public character corporation. Our concern has thus been limited to GRANEXPORT and UNITED
and are clearly affected with public interest. COCONUT as we go back to the second requisite. Unfortunately, it is in this regard
that petitioner failed to substantiate his contentions. There is no showing that
Quimpo v. Tanodbayan involved the issue as to whether PETROPHIL was a GRANEXPORT and/ or UNITED COCONUT was vested with functions relating to
government owned or controlled corporation the employees of which fell within the public needs whether governmental or proprietary in nature unlike PETROPHIL
jurisdictional purview of the Tanodbayan for purposes of The Anti-Graft and inQuimpo. The Court thus concludes that the CIIF companies are, as found by
Corrupt Practices Act. We upheld the jurisdiction of the Tanodbayan on the public respondent, private corporations not within the scope of its jurisdiction. Sclex
ratiocination that -
With the foregoing conclusion, we find it unnecessary to resolve the other issues
While it may be that PETROPHIL was not originally "created" raised by petitioner.
as a government-owned or controlled corporation, after it was
A brief note on private respondents' charge of forum shopping. Executive Secretary
v. Gordon[16] is instructive that forum shopping consists of filing multiple suits
involving the same parties for the same cause of action, either simultaneously or
successively, for the purpose of obtaining a favorable judgment. It is readily
apparent that the present charge will not prosper because the cause of action
herein, i. e., violation of The Anti-Graft and Corrupt Practices Act, is different from
the cause of action in the case pending before the trial court which is collection of a
sum of money plus damages. miso

WHEREFORE, the petition is DISMISSED. The Resolution of public respondent

Office of the Ombudsman of 30 January 1998 which dismissed the complaint of
petitioner Manuel M. Leyson Jr., as well as its Order of 4 June 1998 denying his
motion for reconsideration, is AFFIRMED. Costs against petitioner.

RODOLFO M. CUENCA, G.R. No. 146214 facilities of the North and South Luzon Expressway. In the course of its operations,
Petitioner, it incurred substantial credit obligations from both private and government sources.
- versus -
However, its unpaid obligations ballooned so much that by 1983, it
HON. ALBERTO P. ATAS, Present: became impossible for it to settle its maturing and overdue accounts with various
JULITO F. FABRERO, and HON. GFIs, namely, the Philippine National Bank (PNB), Development Bank of the
NATHANIEL A. LOBIGAS, in CARPIO MORALES, J., Philippines (DBP), National Development Company (NDC), Government Service
their capacity as Hearing Officers Acting Chairperson, Insurance System (GSIS), Land Bank of the Philippines (LBP), and Philippine
of the SECURITIES AND TINGA, Export and Foreign Loan Guarantee Corporation (PEFLGC), now known as the
EXCHANGE COMMISSION; VELASCO, JR., Trade and Investment Development Corporation of the Philippines.
PHILIPPINE NATIONAL NACHURA,* and On February 23, 1983, then President Ferdinand E. Marcos issued Letter
CONSTRUCTION CORPORATION, REYES,* JJ. of Instruction No. (LOI) 1295,[4] directing the creditor GFIs to convert into CDCPs
ASSET PRIVATIZATION TRUST, shares of stock the following: (1) all of the direct obligations of CDCP and those of
PHILIPPINE NATIONAL BANK, its wholly-owned subsidiaries, including, but not limited to loans, credits, accrued
DEVELOPMENT BANK OF interests, fees and advances in any currency outstanding as of December 31, 1982;
THE PHILIPPINES, NATIONAL (2) the direct obligations of CDCP maturing in 1983; and (3) obligations maturing in
DEVELOPMENT COMPANY, 1983 which were guaranteed by the GFIs.
FOREIGN LOAN GUARANTEE On April 25, 1983, a special stockholders meeting, presided by petitioner,
CORPORATION, anGOVERNMENT SERVICE Promulgated: was held whereby stockholders representing more than two-thirds (2/3) of the
INSURANCE SYSTEM, outstanding capital stock of CDCP approved the increase of its authorized capital
Respondents. October 5, 2007 stock from PhP 1.6 to 2.7 billion in accordance with LOI 1295. Thus, the CDCP,
x-----------------------------------------------------------------------------------------x pursuant to said letter, converted some of its obligations to GFIs into equity.

DECISION Consequently, CDCP issued common shares to DBP, NDC, GSIS, LBP,
VELASCO, JR., J.: PEFLGC, and preferred D shares to PNB in consideration for the extinguishment of
some of CDCPs outstanding loan obligations to said GFIs, all of which were duly
The Case recorded in its corporate books. Subsequently, in December 1983, the SEC approved
the increase of CDCPs authorized capital stock, and the corresponding CDCP
In this Petition for Review on Certiorari[1] of the adverse November 29, Certificates of Stock were issued in the names of DBP, GSIS, LBP, PEFLGC, and
2000 Decision[2] of the Court of Appeals (CA) in CA-G.R. SP No. 60366, petitioner PNB, to wit:
Rodolfo M. Cuenca, in effect, questions the July 10, 2000 Decision[3] of the
Securities and Exchange Commission (SEC) Securities Investigation and Clearing Certificates of stock issued Name No. of shares issued to GFIs
Department (SICD) in SICD SEC Case No. 05-96-5357 entitledRodolfo M. Cuenca Cert. of Stock No. 40269[5] DBP 26,987,477 common shares
v. Philippine National Construction Corporation (PNCC), et al., which declared
defendants-government financial institutions (GFIs) as majority stockholders of the Cert. of Stock No. 40270[6] PEFLGC 37,584,577 common shares
PNCC. The SICD Decision was affirmed by the SEC in SEC Case No. AC 807, Cert. of Stock No. 40271[7] GSIS 47,490,000 common shares
which, in turn, was upheld by the CA in its assailed November 29, 2000 Decision.
Cert. of Stock No. 40272 LBP 657,836 common shares
The Facts Cert. of Stock No. N[8] PNB 25,500,000 Preferred Class D
Petitioner was an incorporator, President, and Chief Executive Officer of the then
Construction Development Corporation of thePhilippines (CDCP), now PNCC, from The total subscription of the above issuance of shares of stock pursuant to
its incorporation in 1966 until 1983. Sometime in 1977, CDCP was granted a LOI 1295 amounted to PhP 1,405,202,000 or 1.4 billion.
franchise under Presidential Decree No. 1113 to construct, operate, and maintain toll
Thus, with the implementation of LOI 1295, respondents-GFIs became the issued a TRO enjoining the GFIs from voting their shares of stock in
majority stockholders of CDCP to the extent of 70% of the authorized capital stocks. PNCC.[10] Thereafter, the parties presented their respective preliminary evidence
The change in the corporations ownership was made public through various during the hearings for the issuance of a preliminary injunction.
announcements.[9] CDCP was later renamed to PNCC to reflect the Philippine
Government stockholding, and became a government-acquired asset corporation. Meanwhile, despite the pendency of SICD SEC Case No. 05-96-5357,
Consequently, the various GFIs were given seats in the Board of Directors of PNCC petitioner filed a Third Amended Complaint[11]before the Makati City Regional Trial
and participated in the management of the company. Court (RTC), Branch 142, docketed as Civil Case No. 95-1356 and entitled Rodolfo
M. Cuenca, for and in behalf of PNCC v. APT, et al. for (1) enforcement and strict
On August 19, 1987, PNCC issued Certificate of Stock No. 43032 in the compliance with LOI 1295; (2) cancellation of all penalties, interest, and surcharges
name of NDC for 14,699,000 shares of common stock. accrued after December 31, 1982; (3) enjoinment of the GFIs from receiving any
real or personal properties from PNCC; and (4) cancellation of the transfer of Lot 3,
Meanwhile, sometime in 1988, pursuant to Administrative Order Nos. 14 Block 1, RL-04-000001 covered by Transfer Certificate of Title (TCT) No. 34996 to
and 64, DBP, PNB, PEFLGC, and NDC transferred their interests in PNCC to the APT.
Republic of the Philippines which in turn conveyed them to the Asset Privatization
Trust (APT), now the Privatization and Management Office, for disposition to the On September 8, 1998, the SEC SICD issued an Order[12] granting the
private sector pursuant to the governments privatization program. preliminary injunction. PNCCs Motion for Reconsideration was then denied in
the December 21, 1998 SEC SICD Omnibus Order.[13] Thus, on January 8, 1999,
On May 31, 1996, more than a decade after LOI 1295 was implemented, PNCC filed a Petition for Certiorari[14] before the SEC en banc to review and set
petitioner filed a complaint before the SEC SICD docketed as SEC Case No. 05-96- aside the September 8, 1998 and December 21, 1998 SEC SICD Orders, docketed as
5357 entitled Rodolfo M. Cuenca v. PNCC, et al., for the SEC to determine and SEC-EB Case No. 640. On March 14, 2000, the SEC en banc issued an order
declare whether the GFIs were registered stockholders of PNCC and the number of dismissing PNCCs petition.Consequently, PNCC brought before the CA the SEC en
shares held by each of them and to compel PNCC to call and hold regular banc March 14, 2000 Order through a Petition for Review,[15] docketed as CA-G.R.
stockholders meetings and election of directors every year. SP No. 58117.

Petitioner averred that while PNCC issued the above specified certificates In the meantime, on May 20, 1999, petitioner filed a Motion to Admit
of stock to the GFIs pursuant to LOI 1295, the GFIs however refused to cancel and Amended Complaint in SEC SICD Case No. 05-96-5357, which was granted despite
never did cancel the loans in their books as payment for the shares issued in their oppositions from PNCC and the GFIs. Respondents PNCC and GFIs then filed their
names by PNCC as they considered it to be a diminution of the value of their respective answers to the amended complaint.
investments. Thus, petitioner claimed that some of the GFIs refused to accept
delivery of the stock certificates from PNCC while others were not even aware of On March 23, 2000, PNCC filed a Motion to Designate Hearing
the issuance of the certificates of stock in their names. Consequently, respondents- Panel[16] on the ground that the instant case would be better heard and resolved by a
GFIs continued to charge and receive payments for their loan and interest charges hearing panel of three than by a sole hearing officer, considering the interests the
from PNCC though these loans were supposed to have been converted into common Philippine Government holds in PNCC through the GFIs. This was opposed by
stock in 1983 pursuant to LOI 1295. petitioner. Nonetheless, while not finding any valid reason for said motion,
respondent SEC SICD Hearing Officer Alberto P. Atas granted PNCCs motion
In March 1998, with the idea of spinning-off its toll-way operations, through the April 6, 2000 Order[17] to allay respondent PNCCs fear that it may not
PNCC scheduled a special stockholders meeting onApril 14, 1998. On March 31, be able to obtain a sense of fairness and justness in the determination of the merits of
1998, petitioner filed before the SEC SICD an Urgent Application for Temporary its claims. No Motion for Reconsideration of the April 6, 2000 Order was filed by
Restraining Order (TRO) and Writ of Preliminary Injunction seeking to enjoin petitioner.
PNCC from allowing the GFIs to vote their shares of stock in PNCC, either issued
or subscribed, pursuant to LOI 1295, and from exercising any right arising from the Consequently, SEC SICD Director Daisy Besa-De Asis designated
shares. respondents Hearing Officers Alberto P. Atas, Julito F. Fabrero, and Nathaniel A.
Lobigas as the three (3)-person Hearing Panel.
On April 14, 1998, the date of the special stockholders meeting of PNCC,
the SEC SICD, through its hearing officer, granted petitioners urgent application and
During the hearings of the instant case, through a May 4, 2000 Order, the
Hearing Panel admitted almost all of petitioners exhibits. On May 8, 2000, PNCC On July 10, 2000, the Hearing Panel rendered its Decision dismissing
filed an Amended Answer[18] raising a new matter of the April 14, 2000 Deed of petitioners complaint for lack of merit and revoking the writ of preliminary
Confirmation and June 7, 2000 Supplement to Deed of Confirmation. On June 1, injunction issued on September 8, 1998. The fallo reads:
2000, the Hearing Panel admitted PNCCs Amended Answer through an Order.[19]

On June 2, 2000, the Hearing Panel scheduled a new preliminary WHEREFORE, plaintiffs Complaint is hereby dismissed
conference on June 13, 2000. At the hearing on June 5, 2000, due to conflicts with for lack of merit and the Orders dated April 14,
the schedules of some of the parties counsels, the preliminary conference was 1998 and September 8, 1998 are hereby revoked and set
moved to June 29, 2000.However, on June 6, 2000, PNCC filed an Urgent aside.[25]
Motion[20] praying that the preliminary conference be reset back to the original
schedule of June 13, 2000 so as to follow the proviso in the SEC Rules of
Procedure. PNCCs Urgent Motion was granted through aJune 8, 2000 Order,[21] and The Hearing Panel found that the evidence presented by PNCC and GFIs
the preliminary conference was reset back to June 13, 2000. constituted substantial proof of the implementation of LOI 1295. It reasoned that not
only did PNCC issue the shares of stock as shown in its stock ledger cards but such
In the preliminary conference on June 13, 2000, petitioner adopted his fact was corroborated by Caval Securities Registry, Inc., PNCCs stock transfer
previous preliminary conference brief dated November 15, 1999. PNCC and APT agent, which prepared PNCCs September 15, 1987 Schedule of
filed their preliminary conference briefs dated June 8, 2000 and June 13, 2000, Subscription.[26] Moreover, prior to the filing of the instant case, the GFIs have been
respectively; while DBP, GSIS, PNB, and PEFLGC adopted their respective nominating their representatives to PNCCs Board of Directors which is an attribute
preliminary conference briefs previously filed. On the same date, petitioner was of ownership of shares of stock in PNCC.
barred from presenting additional evidence due to his failure to file a reply to
PNCCs Amended Answer and to file an amended preliminary conference brief The Hearing Panel also took cognizance of the April 14, 2000 Deed of
together with the affidavits of witnesses as required by the new SEC Rules. Confirmation[27] and the June 7, 2000 Supplement to Deed of
Confirmation[28] executed by the GFIs, which erased all doubts on the
On June 13 and 14, 2000, PNCC adopted the testimonial and documentary implementation of LOI 1295 by the conversion of the GFIs loan receivables from
evidence it presented during the hearing on the preliminary injunction as part of its PNCC into the latters equity. Thus, with the clear consideration of loan receivables
evidence-in-chief and adduced further additional witnesses and documentary for the shares of stock, the shares issued to the GFIs cannot in any way be
evidence to substantiate the new matter presented in its amended answer. The GFIs considered watered stocks. It cited Section 62 of the Corporation Code which
adopted PNCCs evidence which was orally offered by PNCC over petitioners expressly allows the issuance of shares of stock in consideration for previously
objection. incurred indebtedness.

The Hearing Panel scheduled the reception of petitioners rebuttal evidence Moreover, the Notes to the Financial Statements[29] on the Report on
on June 19 and 20, 2000. However, on June 19, 2000, instead of presenting rebuttal Examinations of Financial Statements[30] for comparative periods of December 31,
evidence, petitioner filed a Motion to Admit Second Amended Complaint, but an 1982 and December 31, 1983 prepared by independent auditors from Carlos J.
opposition was filed to it by respondents for being dilatory. Valdes & Co., Certified Public Accountants, clearly show the reduction of PNCC
loan obligations. Specifically, Note No. 11[31] stated that as ofDecember 31, 1983,
On June 21, 2000, PNCC filed a Motion to Terminate Plaintiffs Rebuttal total obligations already converted into equity amounted to PhP 1,382,202 or
Evidence and to Submit the Case for Decision on the Merits[22] which was roughly 1.4 billion representing the increase of authorized capital stock of PNCC.
opposed[23] by petitioner. On July 3, 2000, the Hearing Panel issued an Omnibus
Order[24] denying petitioners motion to admit second amended complaint, granted On the other hand, the Hearing Panel found the pieces of evidence
PNCCs motion to terminate petitioners rebuttal evidence, and submitted the case for presented by petitioner, most of which were the same ones presented by
resolution on the merits. Thus, the instant case was submitted for decision on the respondents, to be inconsequential and insufficient to overthrow the weight of the
merits based on the pleadings, evidence, and other submissions of the parties. evidence presented by respondents that a conversion of PNCCs debt into equity was
implemented. It ratiocinated that the badges of fraud pointed out by petitioner are
inconsequential as no clear and convincing evidence was presented by petitioner,
The Ruling of the SEC SICD
and that allegations cannot take the place of proof.Likewise, the lack of a assailed decision is identical to or very similar to some portions of PNCCs petitions
subscription agreement was not fatal to the shares of stock issued to the GFIs as LOI in another case.
1295 in no uncertain terms mandated such conversion of debt-to-equity which was
duly approved by the stockholders of PNCC in increasing its authorized capital Subsequently, the SEC en banc issued its August 8, 2000 Order denying
stock precisely pursuant to LOI 1295. petitioners appeal and affirming in toto the July 10, 2000 Decision of the SEC SICD.
The decretal portion states:
Anent the August 15, 1995 Memorandum of Agreement[32] executed by
the Department of Finance (DOF), APT, and PNCC, whereby PNCC assigned to FINDING NO REVERSIBLE ERROR, therefore, the
APT and the DOF Lot 3, Block 1, RL-04-000001 covered by TCT No. 34996, such herein Appeal should be, as it is hereby DISMISSED.
did not by far prove that PNCC paid its obligations to PNB and DBP, which
transferred their assets to the National Government, and the shares PNCC issued to The 10th July 2000 Decision in SICD Case No. 05-96-
these GFIs were without consideration. Evidence shows that PNCC owed PNB PhP 5357 is herewith AFFIRMED in toto.
1.79 billion and DBP PhP 629 million, but what were converted into equity were
only PhP 255 million for PNB and PhP 269.874 million for DBP, thus leaving Costs adjudged against the appellant.[37]
outstanding balances of PhP 1.535 billion for PNB and PhP 359 million for
DBP. These outstanding and unconverted loan credits were the subject of the
assignment of receivables to APT. The SEC en banc found that petitioner banked on sweeping speculations
and assumptions except the significant and substantial proof to corroborate the
In fine, the Hearing Panel cited the resolution of the 1992 case serious charges leveled against the Hearing Panel. It reasoned that petitioner had not
of Childrens Garden of the Philippines v. APT,[33] where this Court ruled that the shown malice, bad faith, or corrupt purpose on the part of the Hearing Panel to
implementation of LOI 1295 was already a fait accompli; thus, there was clear warrant the reversal of the assailed Decision.
recognition by the Court of the factual conversion of GFIs loan credits to PNCC Moreover, it pointed out that petitioner failed to procedurally appreciate
shares. the import of the mandatory requirements set forth in the SEC Rules of Procedure in
effect at that time, as the Hearing Panel merely adhered to Rule V, Sec. 4 of said
As regards NDC, the Hearing Panel dismissed the complaint against it for Rules of Procedure, which provides that hearings shall be commenced not later than
failure of petitioner to state a cause of action as the issuance of 14,699,000 shares of 15 days from the date of the termination of the preliminary conference and
common stock of PNCC in favor of NDC in 1987 was pursuant to LOI 1136 and not completed within 20 days from the date of the first hearing. Besides, according to
LOI 1295, and the shares were issued for valuable consideration. the SEC en banc, the proceedings in the SEC SICD were summary in nature; thus,
speed seemed to ensue when the case was heard and decided.
The Ruling of the SEC En Banc
On the issue of violation or infringement of petitioners right to due
With the adverse ruling against him, petitioner timely filed his Notice of process, the SEC en banc found no basis for it, as the summary nature of the
Appeal[34] and Petition for Review on Certiorari and/or Memorandum on proceedings below has to be followed by the Hearing Panel. Moreover, the SEC en
Appeal.[35] Aside from assailing the July 10, 2000 SEC SICD Decision, petitioner banc found a dearth of evidence to lend support to petitioners contention.
also assailed the July 3, 2000 Omnibus Order terminating the presentation of his
rebuttal evidence and submitting the case for decision on the merits, and the June 27, Finally, the SEC en banc likewise relied on the GFIs ratification of their
2000 Preliminary Conference Order[36] barring him from presenting additional subscription to the shares issued by PNCC pursuant to LOI 1295 to erase any doubt
witnesses as part of his evidence-in-chief. Petitioner raised before the SEC en about its implementation and the extinguishment of PNCCs unpaid loan credits to
banc the allegations that the Hearing Panel conspired with PNCC in railroading the the extent of such issuance of shares of stock.
trial and issuing the questioned Orders and Decision.
The Ruling of the Court of Appeals
Among other things, petitioner assails the speed, taking only seven (7)
days from the date the case was submitted for decision, with which the Hearing Aggrieved, on August 24, 2000, petitioner raised through a Petition for
Panel came out with a grammar-perfect decision. It concluded that it was PNCC Review[38] before the CA the August 8, 2000 SEC en banc Order dismissing his
which prepared the decision, pointing out numerous instances where the text of the appeal, docketed as CA-G.R. SP No. 60366. Petitioner likewise assailed in its CA
petition the SEC SICD June 27, 2000 Preliminary Conference Order, July 3, 2000 opined that [petitioner] could not now cry foul over his lapses as due process is not
Omnibus Order, and July 10, 2000 Decision. violated where a person is given the opportunity to be heard but chooses not to give
his side.
Thereafter, through its assailed November 29, 2000 Decision, [39] the CA
denied and dismissed the petition for review for lack of merit; thus, it upheld the Likewise, the CA reasoned that petitioner could not assail the findings of
SEC en banc order affirming the SEC SICD decision which dismissed petitioners facts and conclusions of law by the Hearing Panel as such are based on the
complaint. The CA found that neither the SEC en banc nor the SEC Hearing Panel aggregate evidence presented by the parties. It pointed out that the evidence
committed grave abuse of discretion amounting to lack or excess of jurisdiction in presented during the hearings for the issuance of a preliminary injunction was
rendering their respective orders and decision. preliminary or only a sample to support the issuance of the injunctive writ. Verily,
the CA ruled that the findings of the Hearing Officer in the issuance of the TRO and
The appellate court failed to see any rhyme or reason in finding fault in or injunctive writ could not pre-empt the conclusive findings of the tribunal after due
to disturb the findings of the SEC en banc on its ruling regarding the alleged trial and presentation of all the evidence adduced by the parties. Thus, the CA was
suspicious and compelling badges of fraud pointing to a conspiracy between the convinced that petitioner was indeed accorded due process and given ample
Hearing Panel and PNCC. It quoted with approbation the quasi-judicial agencys opportunity to ventilate his case.
disquisition on this matter. Moreover, it reasoned that there was nothing startling or
irregular in the fact that the text of the same decision was similar in language with In fine, the appellate court likewise held the applicability of Childrens
the text of the pleadings filed by PNCC as the Hearing Panel is allowed by the Rules Garden of the Philippines[40] and the fact that the assailed issuance of shares of stock
to adopt any part of the position papers or draft decisions the parties had filed in to the GFIs was for valuable consideration, that is, the existing loan credit
their resolution or decision. As regards the constitution of the three-person Hearing obligations. The CA then ruled that petitioner was guilty of forum shopping for
Panel, the CA held that by not filing a motion for reconsideration of the order having raised substantially the same issues before the SEC and RTC.
granting the constitution of the panel, petitioner could not now evoke suspicion on
it. Hence, the instant petition is now before the Court.

The CA further upheld the summary proceedings before the Hearing Panel Parenthetically, on June 19, 2000, petitioner filed a Notice of Dismissal
for being in accord with the SECs New Rules of Procedure, and, thus, such could and Motion to Dismiss Third Amended Complaint[41] in Civil Case No. 95-1356
not be prejudicial to petitioner. As regards the admission of PNCCs amended before the Makati City RTC, Branch 142. Petitioner reasoned that based on the
answer, the CA held that such could not be considered as a conspiratorial act as position taken and the admissions made by PNCC and the GFIs in other cases, with
petitioner did not oppose such admission. respect to the validity of LOI 1295, he was no longer certain if it was proper for him
to maintain suit for the enforcement and implementation of said law. The trial court
On the issue of the preliminary conference brief being merely permissive, promptly dismissed Civil Case No. 95-1356 through its June 23, 2000 Order.[42]
the CA noted that during the June 5, 2000 hearing, it was specifically ordered by the
Hearing Panel for the parties to file their respective briefs with attached affidavits of Similarly, sometime in September 2000, PNCC filed a motion to
their witnesses before the actual preliminary conference. Thus, petitioner could have dismiss CA-G.R. SP No. 58117 before the CA Ninth Division, as said case had been
prepared and filed his brief before the June 13, 2000 preliminary rendered moot and academic by the July 10, 2000 Decision of the SEC SICD
conference. However, petitioner chose to remain silent and simply adopted his Hearing Panel, which lifted and revoked the preliminary injunction granted through
previous preliminary conference brief.Petitioner never made known to the Hearing the assailed SEC SICD September 8, 1998 Order. Consequently, CA-G.R. SP No.
Panel his assertion that the filing of his brief was merely permissive. Besides, it was 58117 was dismissed through the September 19, 2000 CA Resolution.[43]
the Hearing Panel who had the say on whether preliminary conference briefs should
be filed or not.

On the issue of the limitation on the presentation of petitioners rebuttal

evidence, the CA likewise found it untenable as he could have filed a reply to The Issues
traverse the new one-paragraph allegation in the amended answer or, in the
alternative, referred to supporting documents and affidavits negating such new Petitioner raises the following grounds for our consideration:
matter in his preliminary conference brief. Petitioner did neither. The CA then

RAILROADED THE TRIAL IN FAVOR OF RESPONDENT A. Badges of fraud abound in the pages of the Decision dated 10
PNCC. July 2000, indubitably showing the Hearing Panels utter
disregard of due process.
A. The Court of Appeals has committed reversible error in not B. The SEC en bancs and the Hearing Panels findings of fact are
finding that the SEC en banc grossly erred in not holding inexplicably the opposite of the findings of fact previously
that the Hearing Panel, in issuing the Omnibus Order made by Hearing Officer Gallegos and the SEC en banc,
dated 3 July 2000 terminating the presentation of even though both sets of findings of fact are based on the
petitioners rebuttal evidence and submitting the case for very same evidence.
decision on the merits, committed reversible error and C. The Court of Appeals has committed reversible error in
grave abuse of discretion. finding that petitioner is guilty of forum shopping.
D. The Court of Appeals has committed reversible error in not
i. Respondent PNCCs Motion to Terminate Plaintiffs ruling that the SEC en banc grossly erred in not holding
Rebuttal Evidence was a mere scrap of paper and that the Hearing Panel committed reversible error and grave
should not have been given due course by the Hearing abuse of discretion in considering evidence not formally
Panel. offered and admitted.
ii. The premature termination of petitioners rebuttal E. The Court of Appeals has committed reversible error in
evidence was a denial of his right to due process. not ruling that the SEC en banc grossly erred in not holding
iii. The cancellation of the 19 and 20 June 2000 trial that the Hearing Panel committed reversible error and grave
sessions where petitioner was scheduled to present abuse of discretion in making findings of fact not supported
rebuttal evidence, [sic] was due to the lack of quorum by the evidence on record and in disregarding
in the Hearing Panel, which was not the fault of overwhelming evidence.[44]
petitioner and for which he should not have been
iv. The Hearing Panel grossly erred in finding that Petitioner challenges the CA decision on the ground that he was denied
petitioner could not have presented new or significant due process. He also claims that the CA erred in ruling that the factual findings of
evidence on rebuttal, and that petitioner had already the SEC SICD Hearing Panel, as affirmed by the SEC en banc, were conclusive on
presented sufficient rebuttal evidence, considering that it. Finally, he faults the CA for its failure to appreciate circumstances that would not
said findings contradict each other and are only show denial of due process but of fraud and conspiracy in railroading the
presumptuous and bereft of any factual basis. instant case against him.

B. The Court of Appeals has committed reversible error in not The Courts Ruling
finding that the SEC en banc grossly erred in not holding
that the Hearing Panel, in issuing the Preliminary The petition is bereft of merit.
Conference Order dated 27 June 2000 (released on 3 July
2000) barring petitioner from presenting additional Procedural Due Process
witnesses as part of his evidence-in-chief, committed
reversible error and grave abuse of discretion. Procedural due process, in gist, is the necessity for notice and an
opportunity to be heard before judgment is rendered. Its essence is encapsulated in
the immortal cry of Themistocles to Alcibiades: Strikebut hear me first.[45] Thus, as performance of this duty is inseparable from the authority
long as a party is given the opportunity to defend his/her interests in due course, the conferred upon it.[47] (Emphasis supplied.)
party would have no reason to complain, for it is this opportunity to be heard that
makes up the essence of due process.[46]
Prescinding from the above requirements, it is thus clear that the
In administrative and quasi-judicial proceedings where the magistrates or proceedings before the SEC SICD Hearing Panel are bound by these
tribunals hearing the case are not bound by the niceties and finer points of judicial requirements. To determine whether petitioner was denied due process as alleged,
due process, the cardinal primary requirements of procedural due process, as we will scrutinize the proceedings below.
gleaned by Justice Laurel from an array of American decisions, were enumerated
in Tibay v. Court of Industrial Relations, as follows: Proceedings before the Hearing Panel

(1) The first of these rights is the right to a hearing, For clarity, we reiterate the significant and relevant events that transpired
which includes the right of the party interested or affected to which are mainly being assailed by petitioner.
present his own case and submit evidence in support thereof.
xxx It is undisputed that the instant case was pending for over four (4) years
before the SEC SICD, that is, from May 31, 1996 until the rendition of the SEC
(2) Not only must the party be given an opportunity to SICD Decision on July 10, 2000. In the intervening time, petitioner was granted a
present his case and to adduce evidence tending to establish the 20-day TRO onApril 13, 1998 and a writ of preliminary injunction was likewise
rights which he asserts but the tribunal must consider the issued in his favor on September 8, 1998.
evidence presented. x x x
Meanwhile, on May 20, 1999, petitioner filed a motion to admit amended
(3) While the duty to deliberate does not impose the complaint which was granted by the Hearing Officer. Consequently, PNCC and the
obligation to decide right, it does imply a necessity which GFIs filed their respective answers to the amended complaint. On May 8, 2000,
cannot be disregarded, namely, that of having something to PNCC in turn filed a motion for leave to admit amended answer, which was not
support its decision. x x x opposed by petitioner, and duly granted by the Hearing Panel on June 1, 2000.

(4) Not only must there be some evidence to support a Likewise, PNCCs March 21, 2000 motion to designate hearing panel,
finding or conclusion (City of Manila vs. Agustin, G. R. No. while opposed by petitioner, was granted on April 6, 2000 and the Hearing Panel
45844, promulgated November 29, 1937, XXXVI O.G. 1335), was constituted; however, petitioner did not assail this grant as he failed to file a
but the evidence must be substantial. x x x Motion for Reconsideration of the April 6, 2000 Order.

(5) The decision must be rendered on the evidence Consequently, a new preliminary conference was scheduled for June 13,
presented at the hearing, or at least contained in the record 2000 but was moved to June 29, 2000 due to conflict of schedules of the counsels,
and disclosed to the parties affected. x x x but was reset to the original date of June 13, 2000 upon PNCCs urgent motion to
conform with the then SEC New Rules of Procedure.
(6) The [c]ourt x x x or any of its judges,
therefore, must act on its or his own independent During the preliminary conference of June 13, 2000, petitioner was barred
consideration of the law and facts of the controversy, and from presenting additional evidence. The preliminary conference order was
not simply accept the views of a subordinate in arriving at a subsequently issued on June 27, 2000. Petitioners presentation of rebuttal witnesses
decision. x x x was terminated through the July 3, 2000 Omnibus Order which also denied
admission of petitioners second amended complaint and submitted the case for
(7) [The court] should, in all controversial decision on the merits.
questions, render its decision in such a manner that the
parties to the proceeding can know the various issues On July 10, 2000, the Hearing Panel rendered its Decision dismissing
involved, and the reasons for the decisions rendered. The petitioners case for lack of merit.
d. Such other matters as may aid in the just and speedy
Were the foregoing proceedings procedurally flawed as alleged by disposition of the case.
petitioner? Were the proceedings of the instant case before the SEC SICD Hearing
Panel railroaded? Was there a conspiracy between the Hearing Panel and respondent The Hearing Officer shall terminate the preliminary
PNCC and the GFIs?Was petitioners right to due process violated? A review of the conference ten (10) days after its commencement, whether or
then SEC New Rules of Procedure will shed light on the issue of due process. not the parties have agreed to settle their differences.

SEC Rules prescribe a summary procedure xxxx

A cursory reading of the then prevailing SEC New Rules of Procedure SEC. 4. Preliminary Conference Order.After the
shows that the proceedings before the Hearing Officers or Hearing Panel are preliminary conference, the Hearing Officer shall issue an Order
summary in nature and to be conducted expeditiously in the interest of just, speedy reciting the action taken at the conference; the stipulations made
and inexpensive determination of disputes and claims.[48] by the parties as to any of the matters considered; a recital of
such other evidence as the parties may have agreed upon; the
Notably, said rules provided: witnesses, if any, to be presented by all the parties; and the
scheduled dates of hearing for presentation of all such
witnesses. Provided, however, that the hearings shall be
RULE I commenced not later than fifteen (15) days from the date of
the termination of the preliminary conference and
SEC. 4. Nature of Proceedings.Subject to the requirements completed within twenty (20) days from the date of the first
of due process, proceedings before the Commission shall be hearing. Provided, further, that the failure of a party to present a
summary in nature not necessarily adhering to or following the witness or witnesses on a scheduled hearing date shall be
technical rules of evidence obtaining in the regular deemed a waiver of such hearing date. Provided, finally, that a
courts. Provided, however, that the Rules of Court may apply in party may present such witness or witnesses within the
a suppletory manner whenever practicable. remaining hearing dates.

xxxx SEC. 5. Submission of Position Papers and Draft

Decisions. Within fifteen (15) days after the submission of case
RULE V for resolution, the parties shall submit their position papers
PROCEEDINGS BEFORE THE setting forth the law and the facts relied upon by them. They
DESIGNATED HEARING OFFICER shall also be required to submit a draft of the decision or
resolution they seek, stating clearly and distinctly the facts and
SECTION 1. Preliminary Conference.In any action, the the law upon which it is based. The Hearing Officer may
Hearing Officer shall set the case for preliminary conference adopt, in whole or in part, either of the parties draft decision
within ten (10) days after the last pleading is filed, and the or resolution, or reject both.
parties and their attorneys shall be directed to appear before the
Hearing Officer on the dates set on the notice, to consider based RULE VI
on the affidavits, documents and other evidence submitted by DECISION
the parties:
SECTION 1. Decision.The Hearing Officer shall render
a. The possibility of an amicable settlement; a decision within twenty (20) days from submission of the
b. The simplification of the issues; case for resolution. (Emphasis supplied.)
c. Schedule hearing which must be undertaken
continuously as scheduled until completed and terminated; and
No denial of due process
effective case management tool to obliterate case delay and expedite case processing
From the foregoing provisions, it becomes clear that petitioner was indeed and adjudication.
accorded due process. The requirements spelled out in Ang Tibay have been
complied with. Verily, a close examination of the proceedings in the SEC SICD in In any event, no prejudice could have been suffered by petitioner arising
the backdrop of the above rules shows that petitioners right to due process was not from his inability to file brief for the June 13, 2000 preliminary conference as he had
violated. He was indeed accorded ample opportunity to ventilate his position. already finished presentation of his evidence. The conference was conducted only
with respect to additional matters raised in PNCCs Amended Answer which did not
First, there is no cause shown for arbitrariness or ill-motive in the however alter its theory. Moreover, petitioner cannot now say that he failed to file
constitution of the Hearing Panel. While petitioner opposed PNCCs motion for its his preliminary conference brief due to short notice as he only received the order
constitution, the April 6, 2000 Order granting it was not questioned nor assailed by granting the resetting on June 9, 2000, a Friday. It is undisputed that the parties were
petitioner in a motion for reconsideration. Verily, the rules allow the constitution of granted enough time through the June 2, 2000 Order setting the original schedule on
a hearing panel, as Sec. 2 of Rule I, SEC New Rules of Procedure on Definitions June 13, 2000 and for the parties to file their respective briefs. Indeed, petitioner had
provides that a Hearing Officer is any Commissioner, officer, body or panel duly sufficient time to prepare and file his brief.
designated or created by the Commission to hear and decide a particular case
(emphasis supplied). Fourth, on the issue of not being accorded the opportunity to file an
opposition to PNCCs urgent motion to reset the preliminary conference back to June
Thus, by failing to question the Hearing Panels constitution, and by 13, 2000, suffice it to say that the urgent motion was non-litigious, then it may be
participating in the proceedings before the panel, petitioner had indeed acquiesced to granted ex-parte as the matter raised pertains only to the schedule of the preliminary
and waived any question on its constitution. conference in accordance with the rules. Otherwise, the opposition will further delay
the preliminary conference proceeding which the rules precisely obviate.
Second, the resetting of the preliminary conference back to the original
schedule of June 13, 2000 is well within the authority of the Hearing Panel and Fifth, the ruling of the Hearing Panel during the June 13, 2000 preliminary
pursuant to Rule V, Sec. 1 of the SEC Rules which provides that the preliminary conference barring petitioner from presenting additional witnesses is within its
conference be set within 10 days after the last pleading was filed. authority and competence. Indeed, the reasons given for such curtailment were that
petitioner failed to file his reply to address the sole new matter raised in the
Indeed, the last pleading filed was the amended answer to which petitioner amended answer, to file an amended preliminary conference brief required by the
opted not to file a reply despite the opportunity to do so. More so, when the panel, and to submit the affidavits of his witnesses required to be appended to his
amended answer only raised a new one-paragraph matter on the deed of brief.
confirmation and its supplement executed by the GFIs. In this setting, we find
nothing out of line. While the SEC New Rules of Procedure allows the testimony of adverse
witnesses sans their affidavits, the records do not show that petitioner informed the
Third, petitioner contends that the SEC Hearing Panel required the Hearing Panel of the names of his additional witnesses, the description of their
submission of preliminary conference briefs for the June 13, 2000 preliminary testimony, and the documentary evidence they would identify except the general
conference when, under the SECs Rules of Procedure, the filing of such briefs was description that they are adverse witnesses. Indeed, petitioner did not dispute these
not mandatory. In this regard, we do not fault but rather commend the SEC Hearing except to cry foul that the curtailment of presenting additional witnesses and
Panel for taking the necessary steps to ensure that the proceedings are conducted in evidence violated his right to due process.Given the fact that petitioner was hedging
an orderly fashion. The SEC Hearing Panel, in directing the submission of briefs, and was, so to say, fishing for evidence, it is but proper that he was barred from
was simply mindful of the importance of pre-trial as means of facilitating the further presenting additional witnesses in order not to needlessly prolong the
disposal of cases by simplifying or limiting the issues and avoiding unnecessary proceedings.
proof of facts at the trial, or exploring the possibility of an amicable settlement or of
submission to arbitration, and generally to do whatever may reasonably be necessary Sixth, in the same vein, the ruling of the Hearing Panel to terminate
to facilitate and shorten the formal trial.[49] Recently, we issued Resolution No. 03-1- petitioners presentation of rebuttal evidence in the July 3, 2000 Omnibus Order is
09-SC on the Guidelines on Pre-trial and on the Use of the Different Modes of likewise well-taken. Indeed, the Hearing Panel granted petitioners oral motion for
Discovery and Deposition, stressing that pre-trial, if used properly, is a very presentation of rebuttal evidence but limited it to the testimony of petitioner himself
and Mr. Froilan V. Bacugan. However, on the scheduled date for their testimony,
petitioner presented other witnesses and again went on a fishing expedition. Given vigorously pursue his objections to them can only be construed to be an
that no persuasive additional evidence was forthcoming, the termination of rebuttal acquiescence to such actions or waiver of his rights. Petitioner cannot now be heard
evidence is proper. Besides, as correctly ruled by the Hearing Panel, additional to complain.
evidence of the same class may be dispensed with if such would not add anything
substantial or material to what has already been presented. No evidence of fraud and conspiracy

Petitioner however argues that by the termination of his rebuttal evidence, We now move on to the issues of fraud and conspiracy which petitioner
he was deprived of the right to prove that (1) the signatories to the Deed of foisted to show that the instant case was railroaded and fast-tracked against him.
Confirmation and Supplement were not authorized by their respective Boards of
Directors; (2) the GFIs have not actually cancelled PNCCs loan in their books; and Petitioner would like us to believe that the CA and the SEC en banc erred
(3) the GFIs have likewise not cancelled the interest, penalties, adjustments for peso in not considering the badges of fraud he presented to show that the case was
devaluation, and other surcharges that accrued PNCCs loan from 1982 to 2000. [50] railroaded. First, petitioner points out that the SEC SICD only took seven (7) days to
come out with a grammar-perfect decision. Second, petitioner strongly asserts that
The records reveal that petitioner could very well have introduced the proceedings were fast-tracked due to the governments action to privatize some of
evidence on the alleged non-cancellation of the loans and other charges in the books the assets of the GFIs which include the subject shares of stock. Third, petitioner
of the GFIs during the presentation of his evidence-in-chief. Having failed to do so, presents numerous instances in the July 10, 2000 SEC SICD Decision which, he
petitioner can no longer belatedly interject such evidence into the record through the proffers, indubitably showed that it was not the Hearing Panel which penned the
right to introduce rebuttal evidence. Such evidence, if any, can be considered as decision but respondent PNCC.
forgotten evidence which is evidence already existing at the time of the trial but was
not presented at that stage of the proceedings. We are not persuaded.

Anent the authority of the signatories to the Deed of Confirmation and Petitioner has not shown any proof or substantial evidence of fraud and
Supplement, petitioner could also have confronted PNCCs witnesses, especially conspiracy. Indeed, he who alleges fraud must prove it for basic is the rule
Atty. Raul Villanueva who was presented to prove this fact, when they testified that actori incumbit onus probandi.[51] Differently stated, upon the plaintiff in a civil
before the SEC Hearing Panel. Petitioner again failed to do this. Lastly, the SEC case, the burden of proof never parts.[52] In the case at bar, the petitioner must
Hearing Panel had determined that there was sufficient evidence on record to render therefore establish his allegation of fraud by a preponderance of evidence. [53] Once
an informed judgment on the issues of fact before it. Thus, there is nothing irregular again, petitioner utterly failed to do this. In addition, it is an aged-old rule in civil
in the discontinuation of the presentation of rebuttal evidence. cases that he who alleges a fact has the burden of proving it and a mere allegation is
not evidence.[54] Fraud is never presumed, but must be established by clear and
Seventh, the disallowance of petitioners second amended complaint is also convincing evidence.[55]
proper as the proceedings were already at the late stage, and it was not expeditious
to go back again to the stage for respondents to file their answers and set anew a Indeed, a cursory reading of the comparative statements presented by
fourth preliminary conference. Besides, the amendment which petitioner wanted to petitioner proves nothing beyond the fact that they are similarly worded. Even
be incorporated refers to the sole new issue in PNCCs amended answer, which he granting arguendo that these statements in the decision were taken from the
could have addressed with a reply to the amended answer or through an amended pleadings of PNCC, no ill-motive or adverse conclusion may be derived from said
preliminary conference brief.Petitioner did neither. He had thus waived his right to decision as the SEC New Rules of Procedure, specifically Sec. 5 of Rule V, allows
address the sole new matter raised in the amended answer; and if otherwise, the the Hearing Officer to adopt in whole or in part a draft decision, position paper, or
summary and expeditious nature of the proceedings below would be duly other pleadings for that matter filed by the parties. While it is true that the parties did
compromised. Indeed, when a party is given ample opportunity to present his case, not file any draft decision or position paper, yet the Hearing Panel is not barred to
his failure to do so is not a denial of due process. adopt a part or portion of any pleadings filed by the parties. If the Hearing Panel is
allowed to adopt a draft decision or position paper, more so is it allowed to adopt
In no uncertain terms, the CA explicated that the assailed acts of the SEC any portion from the pleadings filed by the parties.
Hearing Panel considered as badges of fraud by petitioner find legal mooring either
in the SECs Rules of Procedure or are within its quasi-judicial powers. Petitioners Moreover, Sec. 1 of Rule VI particularly provides that the decision must
participation in the proceedings and actions taken by the panel or his failure to be rendered within 20 days from the submission of the case for resolution. Thus, by
complying with the directive provided by said Rules, the Hearing Panel cannot be It is well-settled that factual findings of administrative agencies are
faulted in rendering the July 10, 2000 Decision after only seven (7) days from the generally held to be binding and final so long as they are supported by substantial
submission of the instant case for resolution on the merits.In fact, the Hearing Panel evidence in the record of the case. It is not the function of this Court to analyze or
must be commended for doing its job expeditiously. weigh all over again the evidence and credibility of witnesses presented before the
lower court, tribunal, or office, as we are not a trier of facts. Our jurisdiction is
Anent the issue of the governments privatization as the cause of the limited to reviewing and revising errors of law imputed to the lower court, the latters
alleged rapid processing of the case, such is utterly specious and bereft of any findings of fact being conclusive and not reviewable by this Court. [59]
factual basis. Petitioner wants us to believe that the government, through the GFIs,
exerted pressure on the Hearing Panel and the SEC en banc for a favorable The CA found neither reversible error nor grave abuse of discretion on the
judgment. This is utterly an unfounded innuendo as petitioner has not presented part of the SEC en banc in affirming the decision of the SEC SICD Hearing Panel,
even an iota of proof to substantiate his accusation. Allegations are easily leveled which was supported by substantial evidence. Thus, we find no reason to rule
but proving them is another matter. In the absence of proof, petitioner only has bare otherwise.
allegations and nothing more.
LOI 1295 has been implemented
Findings of facts of administrative bodies accorded finality when
supported by substantial evidence Even without considering our factual determination in Childrens Garden
of the Philippines v. APT,[60] still we arrive at the same conclusion that LOI 1295
was indeed implemented.
On the merits of the case, suffice it to say that the findings of facts and First, it is undisputed that shares of stock were issued to the GFIs
conclusions of law of the SEC are controlling on the reviewing authority. Indeed, converting part of their outstanding loan credit to equity with PNCC. The
the rule is that the findings of fact of administrative bodies, if based on substantial certificates of stock issued attest to this fact. Moreover, the administrative body
evidence, are controlling on the reviewing authority.[56] below had duly debunked any irregularity in the face of these certificates of
stock. Second, the records and accounts of PNCC duly reflected such debt-to-equity
We disagree with petitioner that there was a change in the findings by the conversion as attested to by the independent auditors from Carlos J. Valdes & Co.,
Hearing Panel vis--vis the findings of the Hearing Officer in the grant of the Certified Public Accountants, in the comparative Financial Statements covering the
preliminary injunction upon the same set of evidence. It must be borne in mind that years 1982 and 1983. Third, the due issuance of the shares of stock in the names of
the pieces of evidence presented during the hearings for the issuance of the the GFIs was corroborated by PNCCs stock transfer agent, Caval Securities
injunctive writ were only preliminary ones, that is, a sampling of the evidence Registry, Inc. Fourth, the Deed of Confirmation and its Supplement erased any
intended to give the tribunal an idea of the justification for the issuance of the doubt as to the implementation of LOI 1295. Thus, based on these reasons, there can
injunctive writ pending the decision of the case on the merits. As often repeated, the be no doubt as to the implementation of LOI 1295. Corollarily, the shares of stock
issuance of an injunctive writ cannot preempt the resolution of the case on the subject of the instant case issued to the GFIs were for value and thus cannot be
merits. Indeed, the records show that PNCC and respondent GFIs presented considered as void or watered stocks.
additional evidence aside from what were presented during the hearings for the
issuance of the injunctive writ. Thus, petitioner has no basis to say that the decision Petitioner guilty of forum shopping
was based on the same evidence presented during the hearings for the issuance of
the preliminary injunction, which were held in 1998. On the issue of forum shopping, we agree with both the SEC en banc and
It has been held that it is not for the appellate court to substitute its own the CA that petitioner is guilty of forum shopping.A close perusal of both the
judgment for that of the administrative agency on the sufficiency of the evidence Amended Complaint in SICD SEC Case No. 05-96-5357 and the Third Amended
and the credibility of the witnesses.[57] The Hearing Panel had the optimum Complaint in Civil Case No. 95-1356 shows that both cases are derived from the
opportunity to review the pieces of evidence presented before it and to observe the same factual issues involving substantially the same parties. Although the actions
demeanor of the witnesses. Administrative decisions on matters within their seem to be different, yet it can be seen that there is a splitting of a cause of action.
jurisdiction are entitled to respect and can only be set aside on proof of grave abuse
of discretion, fraud, or error of law,[58]which have not been shown by petitioner in While, on the one hand, the instant case was for the determination whether
this case. the GFIs are indeed stockholders of PNCC and their respective number of shares,
and on the other, Civil Case No. 95-1356 was for the enforcement and compliance
of LOI 1295, yet both actions involved substantially the same parties, stemming
from the same factual antecedent of the debt-to-equity conversion mandated by LOI
1295 and involved the same cause of action that petitioner anchors both complaints,
that is, that LOI 1295 was not fully implemented.

In this connection, we reject petitioners pretense that no identity exists

between Civil Case No. 95-1356 and the instant case, both of which substantially
involve the same parties, having the same cause of action and which stem from the
same factual antecedents. The fact remains that in Civil Case No. 95-1356,
petitioner prayed for the enforcement and compliance of LOI 1295, the same relief
he could have asked for in the instant case before the SEC proceedings below. The
fact that he made PNCC as complainant in the civil case does not alter the essence of
said case in which the GFIs are made to answer substantially the same issues raised
in the instant case. It is indeed revealing that petitioner withdrew his third amended
complaint before the trial court on June 19, 2000 when the instant case was at its last
stages before the Hearing Panel. Moreover, while petitioner informed the trial court
of the pendency of the instant case, yet petitioner fatally failed to state in his
verification and certification[61] the status of the instant case as required by Sec. 5,
1(b)[62] of Rule 7, 1997 Rules of Civil Procedure. Clearly, petitioner is guilty of
forum shopping.

SEC has jurisdiction to compel PNCC to hold annual stockholders

meetings and election of board of directors

Finally, it has been settled in Philippine National Construction

Corporation v. Pabion[63] that PNCC is an acquired asset corporation and not a
government-owned and/or controlled corporation (GOCC). In said case, we held that
PNCC did not lose its status as a private corporation upon acquisition by the
government through GFIs of the majority of its shares of stock. Our determination
that PNCC is an acquired asset corporation removed it from the category of a
GOCC. Thus, while the SEC has no jurisdiction over GOCCs with original charter
or created by special law primarily because they are governed by their charters, it
retains jurisdiction over government-acquired asset corporations. Therefore, the SEC
may compel PNCC to hold a stockholders meeting for the purpose of electing
members of the latters board of directors.

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

the November 29, 2000 Decision of the CA in CA-G.R. SP No. 60366 is
hereby AFFIRMED IN TOTO. Costs against petitioner.

G.R. No. 79956 January 29, 1990 SEC. 16. The President shall exercise general supervision over
autonomous regions to ensure that laws are faithfully executed.
vs. Sec. 17. All powers, functions, and responsibilities not granted
COMMISSION ON AUDIT, respondent. Constitution or by law to the autonomous regions shall be vested
in the National Government.
G.R. No. 82217 January 29, 1990
Sec. 18. The Congress shall enact an organic act for each
LILIA YARANON and BONA BAUTISTA, assisted by their spouses, BRAULIO autonomous region with the assistance and participation of the
D. YARANON and DEMETRIO D. BAUTISTA, JR., respectively; JAMES BRETT regional consultative commission composed of representatives
and SINAI C. HAMADA, petitioners, appointed by the President from a list of nominees from multi-
vs. sectoral bodies. The organic act shall define the basic structure
THE COMMISSION ON AUDIT, HON. CATALINO MACARAIG, Executive of government for the region consisting of the executive
Secretary, HON. VICENTE JAYME, Secretary of Finance, HON. GUILLERMO N. department and legislative assembly, both of which shall be
CARAGUE, Secretary of Budget and Management, and HON. ROSALINA S. elective and representative of the constituent political units. The
CAJUCOM, OIC National Treasurer, respondents. organic acts shall likewise provide for special courts with
personal, family and property law jurisdiction consistent with
the provisions of this Constitution and national laws.

The creation of the autonomous region shall be effective when

CORTES, J.: approved by majority of the votes cast by the constituent units in
a plebiscite called for the purpose, provided that only provinces,
In these consolidated petitions, the constitutionality of Executive Order No. 220, cities, and geographic areas voting favorably in such plebiscite
dated July 15, 1987, which created the (Cordillera Administrative Region, is assailed shall be included in the autonomous region.
on the primary ground that it pre-empts the enactment of an organic act by the
Congress and the creation of' the autonomous region in the Cordilleras conditional Sec. 19. The first Congress elected under this Constitution shall,
on the approval of the act through a plebiscite. within eighteen months from the time of organization of both
Houses, pass the organic acts for the autonomous regions in
Relative to the creation of autonomous regions, the constitution, in Article X, Muslim Mindanao and the Cordilleras.
Sec. 20. Within its territorial jurisdiction and subject to the
AUTONOMOUS REGIONS provisions of this Constitution and national laws, the organic act
of autonomous regions shall provide for legislative powers over:
Sec. 15. There shall be created autonomous regions in Muslim
Mindanao and in the Cordilleras consisting of provinces, cities, (1) Administrative organization;
municipalities, and geographical areas sharing common and
distinctive historical and cultural heritage, economic and social (2) Creation of sources of revenues;
structures, and other relevant characteristics within the
framework of this Constitution and the national sovereignty as
well as territorial integrity of the Republic of the Philippines. (3) Ancestral domain and natural resources;

(4) Personal, family and property relations;

(5) Regional urban and rural planning development; the demands of the Cordillera people shall have been
substantially granted.
(6) Economic, social and tourism development ;
On March 27, 1987, Ambassador Pelaez [Acting as Chief
(7) Educational policies; Negotiator of the government], in pursuance of the September
13, 1986 agreement, flew to the Mansion House, Baguio City,
and signed with Fr. Balweg (as Chairman of the Cordillera
(8) Preservation and development of the cultural heritage; and panel) a joint agreement, paragraphs 2 and 3 of which state:

(9) Such other matters as may be authorized by law for the Par. 2- Work together in drafting an Executive Order to create a
promotion of the general welfare of the people of the region. preparatory body that could perform policy-making and
administrative functions and undertake consultations and studies
Sec. 21. The preservation of peace and order within the regions leading to a draft organic act for the Cordilleras.
shall be the responsibility of the local police agencies which
shall be organized, maintained, supervised, and utilized in Par. 3- Have representatives from the Cordillera panel join the
accordance with applicable laws. The defense and security of the study group of the R.P. Panel in drafting the Executive Order.
regions shall be the responsibility of the National Government.
Pursuant to the above joint agreement, E.O. 220 was drafted by
A study of E.O. No. 220 would be incomplete Without reference to its historical a panel of the Philippine government and of the representatives
background. of the Cordillera people.

In April 1986, just after the EDSA Revolution, Fr. Conrado M. On July 15, 1987, President Corazon C. Aquino signed the joint
Balweg, S.V.D., broke off on ideological grounds from the draft into law, known now as E.O. 220. [Rejoinder G.R. No.
Communist Party of the Philippines (CPP) and its military arm 82217, pp. 2-3].
the New People's Army. (NPA).
Executive Order No. 220, issued by the President in the exercise of her legislative
After President Aquino was installed into office by People powers under Art. XVIII, sec. 6 of the 1987 Constitution, created the Cordillera
Power, she advocated a policy of national reconciliation. She Administrative Region (CAR) , which covers the provinces of Abra, Benguet,
called on all revolutionary forces to a peace dialogue. The Ifugao, Kalinga-Apayao and Mountain Province and the City of Baguio [secs. 1 and
CPLA heeded this call of the President. After the preliminary 2]. It was created to accelerate economic and social growth in the region and to
negotiations, President Aquino and some members of her prepare for the establishment of the autonomous region in the Cordilleras [sec. 3].
Cabinet flew to Mt. Data in the Mountain Province on Its main function is to coordinate the planning and implementation of programs and
September 13, 1986 and signed with Fr. Conrado M. Balweg services in the region, particularly, to coordinate with the local government units as
(As Commander of the CPLA and Ama Mario Yag-ao (as well as with the executive departments of the National Government in the
President of Cordillera Bodong Administration, the civil supervision of field offices and in identifying, planning, monitoring, and accepting
government of the CPLA a ceasefire agreement that signified projects and activities in the region [sec. 5]. It shall also monitor the implementation
the cessation of hostilities (WHEREAS No. 7, E.O. 220). of all ongoing national and local government projects in the region [sec. 20]. The
CAR shall have a Cordillera Regional Assembly as a policy-formulating body and a
The parties arrived at an agreement in principle: the Cordillera Cordillera Executive Board as an implementing arm [secs. 7, 8 and 10]. The CAR
people shall not undertake their demands through armed and and the Assembly and Executive Board shall exist until such time as the autonomous
violent struggle but by peaceful means, such as political regional government is established and organized [sec. 17].
negotiations. The negotiations shall be a continuing process until
Explaining the rationale for the issuance of E.O. No. 220, its last "Whereas" clause Congress under the 1987 Constitution, has virtually pre-empted Congress from its
provides: mandated task of enacting an organic act and created an autonomous region in the
Cordilleras. We have carefully studied the Constitution and E.O. No. 220 and we
WHEREAS, pending the convening of the first Congress and the have come to the conclusion that petitioners' assertions are unfounded. Events
enactment of the organic act for a Cordillera autonomous region, subsequent to the issuance of E.O. No. 220 also bear out this conclusion.
there is an urgent need, in the interest of national security and
public order, for the President to reorganize immediately the 1. A reading of E.O. No. 220 will easily reveal that what it actually envisions is the
existing administrative structure in the Cordilleras to suit it to consolidation and coordination of the delivery of services of line departments and
the existing political realities therein and the Government's agencies of the National Government in the areas covered by the administrative
legitimate concerns in the areas, without attempting to pre-empt region as a step preparatory to the grant of autonomy to the Cordilleras. It does not
the constitutional duty of the first Congress to undertake the create the autonomous region contemplated in the Constitution. It merely provides
creation of an autonomous region on a permanent basis. for transitory measures in anticipation of the enactment of an organic act and the
creation of an autonomous region. In short, it prepares the ground for autonomy.
During the pendency of this case, Republic Act No. 6766 entitled "An Act Providing This does not necessarily conflict with the provisions of the Constitution on
for an Organic Act for the Cordillera Autonomous Region," was enacted and signed autonomous regions, as we shall show later.
into law. The Act recognizes the CAR and the offices and agencies created under
E.O. No. 220 and its transitory nature is reinforced in Art. XXI of R.A. No. 6766, to The Constitution outlines a complex procedure for the creation of an autonomous
wit: region in the Cordilleras. A regional consultative commission shall first be created.
The President shall then appoint the members of a regional consultative commission
SEC. 3. The Cordillera Executive Board, the Cordillera Region from a list of nominees from multi-sectoral bodies. The commission shall assist the
Assembly as well as all offices and agencies created under Congress in preparing the organic act for the autonomous region. The organic act
Execute Order No. 220 shall cease to exist immediately upon the shall be passed by the first Congress under the 1987 Constitution within eighteen
ratification of this Organic Act. months from the time of its organization and enacted into law. Thereafter there shall
be held a plebiscite for the approval of the organic act [Art. X, sec. 18]. Only then,
after its approval in the plebiscite, shall the autonomous region be created.
All funds, properties and assets of the Cordillera Executive
Board and the Cordillera Regional Assembly shall automatically
be transferred to the Cordillera Autonomous Government. Undoubtedly, all of these will take time. The President, in 1987 still exercising
legislative powers, as the first Congress had not yet convened, saw it fit to provide
for some measures to address the urgent needs of the Cordilleras in the meantime
I that the organic act had not yet been passed and the autonomous region created.
These measures we find in E.O. No. 220. The steps taken by the President are
It is well-settled in our jurisprudence that respect for the inherent and stated powers obviously perceived by petitioners, particularly petitioner Yaranon who views E.O.
and prerogatives of the law-making body, as well as faithful adherence to the No. 220 as capitulation to the Cordillera People's Liberation Army (CPLA) of
principle of separation of powers, require that its enactment be accorded the Balweg, as unsound, but the Court cannot inquire into the wisdom of the measures
presumption of constitutionality. Thus, in any challenge to the constitutionality of a taken by the President, We can only inquire into whether or not the measures violate
statute, the burden of clearly and unequivocally proving its unconstitutionality the Constitution. But as we have seen earlier, they do not.
always rests upon the challenger. Conversely, failure to so prove will necessarily
defeat the challenge. 2. Moreover, the transitory nature of the CAR does not necessarily mean that it is, as
petitioner Cordillera Broad Coalition asserts, "the interim autonomous region in the
We shall be guided by these principles in considering these consolidated petitions. Cordilleras" [Petition, G.R. No. 79956, p. 25].

In these cases, petitioners principally argue that by issuing E.O. No. 220 the The Constitution provides for a basic structure of government in the autonomous
President, in the exercise of her legislative powers prior to the convening of the first region composed of an elective executive and legislature and special courts with
personal, family and property law jurisdiction [Art. X, sec. 18]. Using this as a II
guide, we find that E.O. No. 220 did not establish an autonomous regional
government. It created a region, covering a specified area, for administrative A collateral issue raised by petitioners is the nature of the CAR: whether or not it is
purposes with the main objective of coordinating the planning and implementation a territorial and political subdivision. The Constitution provides in Article X:
of programs and services [secs. 2 and 5]. To determine policy, it created a
representative assembly, to convene yearly only for a five-day regular session,
tasked with, among others, identifying priority projects and development programs Section 1. The territorial and political subdivisions of the
[sec. 9]. To serve as an implementing body, it created the Cordillera Executive Republic of the Philippines are the provinces, cities,
Board composed of the Mayor of Baguio City, provincial governors and municipalities, and barangays. There shall be autonomous
representatives of the Cordillera Bodong Administration, ethno-linguistic groups regions in Muslim Mindanao and the Cordilleras as hereinafter
and non-governmental organizations as regular members and all regional directors provided.
of the line departments of the National Government as ex-officiomembers and
headed by an Executive Director [secs. 10 and 11]. The bodies created by E.O. No. xxx xxx xxx
220 do not supplant the existing local governmental structure, nor are they
autonomous government agencies. They merely constitute the mechanism for an Sec. 10. No province, city, municipality, or barangay may be
"umbrella" that brings together the existing local governments, the agencies of the created, divided, merged, abolished, or its boundary
National Government, the ethno-linguistic groups or tribes, and non-governmental substantially altered, except in accordance with the criteria
organizations in a concerted effort to spur development in the Cordilleras. established in the local government code and subject to approval
by a majority of the votes cast in a plebiscite in the political
The creation of the CAR for purposes of administrative coordination is underscored units directly affected.
by the mandate of E.O. No. 220 for the President and appropriate national
departments and agencies to make available sources of funds for priority We have seen earlier that the CAR is not the autonomous region in the Cordilleras
development programs and projects recommended by the CAR [sec. 21] and the contemplated by the Constitution, Thus, we now address petitioners' assertion that
power given to the President to call upon the appropriate executive departments and E. 0. No. 220 contravenes the Constitution by creating a new territorial and political
agencies of the National Government to assist the CAR [sec. 24]. subdivision.

3. Subsequent to the issuance of E.O. No. 220, the Congress, after it was convened, After carefully considering the provisions of E.O. No. 220, we find that it did not
enacted Republic Act No. 6658 which created the Cordillera Regional Consultative create a new territorial and political subdivision or merge existing ones into a larger
Commission. The President then appointed its members. The commission prepared a subdivision.
draft organic act which became the basis for the deliberations of the Senate and the
House of Representatives. The result was Republic Act No. 6766, the organic act for
the Cordillera autonomous region, which was signed into law on October 23, 1989. 1. Firstly, the CAR is not a public corporation or a territorial and political
A plebiscite for the approval of the organic act, to be conducted shortly, shall subdivision. It does not have a separate juridical personality, unlike provinces, cities
complete the process outlined in the Constitution. and municipalities. Neither is it vested with the powers that are normally granted to
public corporations, e.g. the power to sue and be sued, the power to own and dispose
of property, the power to create its own sources of revenue, etc. As stated earlier, the
In the meantime, E.O. No. 220 had been in force and effect for more than two years CAR was created primarily to coordinate the planning and implementation of
and we find that, despite E.O. No. 220, the autonomous region in the Cordilleras is programs and services in the covered areas.
still to be created, showing the lack of basis of petitioners' assertion. Events have
shown that petitioners' fear that E.O. No. 220 was a "shortcut" for the creation of the
autonomous region in the Cordilleras was totally unfounded. The creation of administrative regions for the purpose of expediting the delivery of
services is nothing new. The Integrated Reorganization Plan of 1972, which was
made as part of the law of the land by virtue of Presidential Decree No. 1,
Clearly, petitioners' principal challenge has failed. established eleven (11) regions, later increased to twelve (12), with definite regional
centers and required departments and agencies of the Executive Branch of the
National Government to set up field offices therein. The functions of the regional SCRA 1]. Local autonomy is not unique to the 1987 Constitution, it being
offices to be established pursuant to the Reorganization Plan are: (1) to implement guaranteed also under the 1973 Constitution [Art. II, sec. 10]. And while there was
laws, policies, plans, programs, rules and regulations of the department or agency in no express guarantee under the 1935 Constitution, the Congress enacted the Local
the regional areas; (2) to provide economical, efficient and effective service to the Autonomy Act (R.A. No. 2264) and the Decentralization Act (R.A. No. 5185),
people in the area; (3) to coordinate with regional offices of other departments, which ushered the irreversible march towards further enlargement of local autonomy
bureaus and agencies in the area; (4) to coordinate with local government units in in the country [Villegas v. Subido, supra.]
the area; and (5) to perform such other functions as may be provided by law. [See
Part II, chap. III, art. 1, of the Reorganization Plan]. On the other hand, the creation of autonomous regions in Muslim Mindanao and the
Cordilleras, which is peculiar to the 1987 Constitution contemplates the grant
We can readily see that the CAR is in the same genre as the administrative regions of political autonomy and not just administrative autonomy these regions. Thus, the
created under the Reorganization Plan, albeit under E.O. No. 220 the operation of provision in the Constitution for an autonomous regional government with a basic
the CAR requires the participation not only of the line departments and agencies of structure consisting of an executive department and a legislative assembly and
the National Government but also the local governments, ethno-linguistic groups special courts with personal, family and property law jurisdiction in each of the
and non-governmental organizations in bringing about the desired objectives and the autonomous regions [Art. X, sec. 18].
appropriation of funds solely for that purpose.
As we have said earlier, the CAR is a mere transitory coordinating agency that
2. Then, considering the control and supervision exercised by the President over the would prepare the stage for political autonomy for the Cordilleras. It fills in the
CAR and the offices created under E.O. No. 220, and considering further the resulting gap in the process of transforming a group of adjacent territorial and
indispensable participation of the line departments of the National Government, the political subdivisions already enjoying local or administrative autonomy into an
CAR may be considered more than anything else as a regional coordinating agency autonomous region vested with political autonomy.
of the National Government, similar to the regional development councils which the
President may create under the Constitution [Art. X, sec. 14]. These councils are Anent petitioners' objection, we note the obvious failure to show how the creation of
"composed of local government officials, regional heads of departments and other the CAR has actually diminished the local autonomy of the covered provinces and
government offices, and representatives from non-governmental organizations city. It cannot be over-emphasized that pure speculation and a resort to probabilities
within the region for purposes of administrative decentralization to strengthen the are insufficient to cause the invalidation of E.O. No. 220.
autonomy of the units therein and to accelerate the economic and social growth and
development of the units in the region." [Ibid.] In this wise, the CAR may be
considered as a more sophisticated version of the regional development council. WHEREFORE, the petitions are DISMISSED for lack of merit.


Finally, petitioners incidentally argue that the creation of the CAR contravened the
constitutional guarantee of the local autonomy for the provinces (Abra, Benguet,
Ifugao, Kalinga-Apayao and Mountain Province) and city (Baguio City) which
compose the CAR.

We find first a need to clear up petitioners' apparent misconception of the concept of

local autonomy.

It must be clarified that the constitutional guarantee of local autonomy in the

Constitution [Art. X, sec. 2] refers to the administrative autonomy of local
government units or, cast in more technical language, the decentralization of
government authority [Villegas v. Subido, G.R. No. L-31004, January 8, 1971, 37
ISABELO T. CRISOSTOMO, petitioner, vs. THE COURT OF APPEALS and On April 1, 1978, P.D. No. 1341 was issued by then President Ferdinand E.
Mateo continued as the head of the new University. On April 3, 1979, he was
This is a petition to review the decision of the Court of Appeals dated July 15, appointed Acting President and on March 28, 1980, as President for a term of six (6)
1992, the dispositive portion of which reads: years.

WHEREFORE, the present petition is partially granted. The questioned Orders and On July 11, 1980, the Circuit Criminal Court of Manila rendered judgment
writs directing (1) reinstatement of respondent Isabelo T. Crisostomo to the position acquitting petitioner of the charges against him. The dispositive portion of the
of President of the Polytechnic University of the Philippines, and (2) payment of decision reads:
salaries and benefits which said respondent failed to receive during his suspension
insofar as such payment includes those accruing after the abolition of the PCC and WHEREFORE, the Court finds the accused, Isabelo T. Crisostomo, not guilty of the
its transfer to the PUP, are hereby set aside. Accordingly, further proceedings violations charged in all these three cases and hereby acquits him therefrom, with
consistent with this decision may be taken by the court a quo to determine the costs de oficio. The bail bonds filed by said accused for his provisional liberty are
correct amounts due and payable to said respondent by the said university. hereby cancelled and released.

The background of this case is as follows: Pursuant to the provisions of Section 13, R.A. No. 3019, as amended, otherwise
known as The Anti-Graft and Corrupt Practices Act, and under which the accused
Petitioner Isabelo Crisostomo was President of the Philippine College of has been suspended by this Court in an Order dated October 22, 1976, said accused
Commerce (PCC), having been appointed to that position by the President of the is hereby ordered reinstated to the position of President of the Philippine College of
Philippines on July 17, 1974. Commerce, now known as the Polytechnic University of the Philippines, from
which he has been suspended. By virtue of said reinstatement, he is entitled to
During his incumbency as president of the PCC, two administrative cases receive the salaries and other benefits which he failed to receive during suspension,
were filed against petitioner for illegal use of government vehicles, misappropriation unless in the meantime administrative proceedings have been filed against him.
of construction materials belonging to the college, oppression and harassment, grave
misconduct, nepotism and dishonesty. The administrative cases, which were filed
with the Office of the President, were subsequently referred to the Office of the The bail bonds filed by the accused for his provisional liberty in these cases are
hereby cancelled and released.
Solicitor General for investigation.
Charges of violations of R.A. No. 3019, 3 (e) and R.A. No. 992, 20-21 and SO ORDERED.
R.A. No. 733, 14 were likewise filed against him with the Office of Tanodbayan.
On June 14, 1976, three (3) informations for violation of Sec. 3 (e) of the The cases filed before the Tanodbayan (now the Ombudsman) were likewise
Anti-Graft and Corrupt Practices Act (R.A. No. 3019, as amended) were filed dismissed on August 8, 1991 on the ground that they had become moot and
against him. The informations alleged that he appropriated for himself a bahay kubo, academic. On the other hand, the administrative cases were dismissed for failure of
which was intended for the College, and construction materials worth P250,000.00, the complainants to prosecute them.
more or less. Petitioner was also accused of using a driver of the College as his
personal and family driver.[1] On February 12, 1992, petitioner filed with the Regional Trial Court a motion
for execution of the judgment, particularly the part ordering his reinstatement to the
On October 22, 1976, petitioner was preventively suspended from office position of president of the PUP and the payment of his salaries and other benefits
pursuant to R.A. No. 3019, 13, as amended. In his place Dr. Pablo T. Mateo, Jr. was during the period of suspension.
designated as officer-in-charge on November 10, 1976, and then as Acting President
on May 13, 1977. The motion was granted and a partial writ of execution was issued by the trial
court on March 6, 1992. On March 26, 1992, however, President Corazon C. Aquino
appointed Dr. Jaime Gellor as acting president of the PUP, following the expiration In part the contention is well taken, but, as will presently be explained,
of the term of office of Dr. Nemesio Prudente, who had succeeded Dr. reinstatement is no longer possible because of the promulgation of P.D. No. 1437 by
Mateo. Petitioner was one of the five nominees considered by the President of the the President of the Philippines on June 10, 1978.
Philippines for the position.
P.D. No. 1341 did not abolish, but only changed, the former Philippine
On April 24, 1992, the Regional Trial Court, through respondent Judge College of Commerce into what is now the Polytechnic University of the
Teresita Dy-Liaco Flores, issued another order, reiterating her earlier order for the Philippines, in the same way that earlier in 1952, R.A. No. 778 had converted what
reinstatement of petitioner to the position of PUP president. A writ of execution, was then the Philippine School of Commerce into the Philippine College of
ordering the sheriff to implement the order of reinstatement, was issued. Commerce. What took place was a change in academic status of the educational
institution, not in its corporate life. Hence the change in its name, the expansion of
In his return dated April 28, 1992, the sheriff stated that he had executed the its curricular offerings, and the changes in its structure and organization.
writ by installing petitioner as President of the PUP, although Dr. Gellor did not
vacate the office as he wanted to consult with the President of the Philippines As petitioner correctly points out, when the purpose is to abolish a department
first. This led to a contempt citation against Dr. Gellor. A hearing was set on May 7, or an office or an organization and to replace it with another one, the lawmaking
1992. On May 5, 1992, petitioner also moved to cite Department of Education, authority says so. He cites the following examples:
Culture and Sports Secretary Isidro Cario in contempt of court. Petitioner assumed
the office of president of the PUP. E.O. No. 709:

On May 18, 1992, therefore, the People of the Philippines filed a petition 1. There is hereby created a Ministry of Trade and Industry, hereinafter referred to
for certiorari and prohibition (CA G.R. No. 27931), assailing the two orders and the as the Ministry. The existing Ministry of Trade established pursuant to Presidential
writs of execution issued by the trial court. It also asked for a temporary restraining Decree No. 721 as amended, and the existing Ministry established pursuant to
order. Presidential Decree No. 488 as amended, are abolished together with their services,
On June 25, 1992, the Court of Appeals issued a temporary restraining order, bureaus and similar agencies, regional offices, and all other entities under their
enjoining petitioner to cease and desist from acting as president of the PUP pursuant supervision and control. . . .
to the reinstatement orders of the trial court, and enjoining further proceedings in
Criminal Cases Nos. VI-2329-2331. E.O. No. 710:
On July 15, 1992, the Seventh Division of the Court of Appeals rendered a
decision,[2] the dispositive portion of which is set forth at the beginning of this 1. There is hereby created a Ministry of Public Works and Highways, hereinafter
opinion. Said decision set aside the orders and writ of reinstatement issued by the referred to as the Ministry. The existing Ministry of Public Works established
trial court. The payment of salaries and benefits to petitioner accruing after the pursuant to Executive Order No. 546 as amended, and the existing Ministry of
conversion of the PCC to the PUP was disallowed. Recovery of salaries and benefits Public Highways established pursuant to Presidential Decree No. 458 as amended,
was limited to those accruing from the time of petitioners suspension until the are abolished together with their services, bureaus and similar agencies, regional
conversion of the PCC to the PUP. The case was remanded to the trial court for a offices, and all other entities within their supervision and control. . . .
determination of the amounts due and payable to petitioner.
R.A. No. 6975:
Hence this petition. Petitioner argues that P.D. No. 1341, which converted the
PCC into the PUP, did not abolish the PCC. He contends that if the law had intended
the PCC to lose its existence, it would have specified that the PCC was being 13. Creation and Composition. - A National Police Commission, hereinafter referred
abolished rather than converted and that if the PUP was intended to be a new to as the Commission, is hereby created for the purpose of effectively discharging
institution, the law would have said it was being created. Petitioner claims that the the functions prescribed in the Constitution and provided in this Act. The
PUP is merely a continuation of the existence of the PCC, and, hence, he could be Commission shall be a collegial body within the Department. It shall be composed
reinstated to his former position as president. of a Chairman and four (4) regular commissioners, one (1) of whom shall be
designated as Vice-Chairman by the President. The Secretary of the Department
shall be the ex-officio Chairman of the Commission, while the Vice-Chairman shall
act as the executive officer of the Commission.
xxx xxx xxx institution absorbing, merging and integrating the entire PCC and other national
schools as may be transferred to this new state university.
90. Status of Present NAPOLCOM, PC-INP. - Upon the effectivity of this Act, the
present National Police Commission, and the Philippine Constabulary-Integrated
National Police shall cease to exist. The Philippine Constabulary, which is the b) The manner of selection and appointment of the university head is substantially
nucleus of the integrated Philippine Constabulary-Integrated National Police, shall different from that provided by the PCC Charter. The PUP President shall be
cease to be a major service of the Armed Forces of the Philippines. The Integrated appointed by the President of the Philippines upon recommendation of the Secretary
National Police, which is the civilian component of the Philippine Constabulary- of Education and Culture after consultation with the University Board of
Integrated National Police, shall cease to be the national police force and in lieu Regents (section 4, P.D. 1341). The President of PCC, on the other hand, was
thereof, a new police force shall be established and constituted pursuant to this Act. appointed by the President of the Philippines upon recommendation of the Board of
Trustees (Section 4, R.A. 778).
In contrast, P.D. No. 1341, provides:
c) The composition of the new universitys Board of Regents is likewise different
from that of the PCC Board of Trustees (which included the chairman of the Senate
1. The present Philippine College of Commerce is hereby converted into a university Committee on Education and the chairman of the House Committee on Education,
to be known as the Polytechnic University of the Philippines, hereinafter referred to the President of the PCC Alumni Association as well as the President of the
in this Decree as the University. Chamber of Commerce of the Philippines). Whereas, among others, the NEDA
Director-General, the Secretary of Industry and the Secretary of Labor are members
As already noted, R.A. No. 778 earlier provided: of the PUP Board of Regents. (Section 6, P.D. 1341).

1. The present Philippine School of Commerce, located in the City of Manila,

Philippines, is hereby granted full college status and converted into the Philippine d) The decree moreover transferred to the new university all the properties including
College of Commerce, which will offer not only its present one-year and two-year equipment and facilities:
vocational commercial curricula, the latter leading to the titles of Associate in
Business Education and/or Associate in Commerce, but also four-year courses . . . owned by the Philippine College of Commerce and such other National
leading to the degrees of Bachelor of Science in Business in Education and Bachelor Schools as may be integrated . . . including their obligations andappropriations . . .
of Science in Commerce, and five-year courses leading to the degrees of Master of (Sec. 12; Italics supplied).[3]
Arts in Business Education and Master of Arts in Commerce, respectively.
But these are hardly indicia of an intent to abolish an existing institution and
The appellate court ruled, however, that the PUP and the PCC are not one and to create a new one. New course offerings can be added to the curriculum of a
the same institution but two different entities and that since petitioner Crisostomos school without affecting its legal existence. Nor will changes in its existing structure
term was coterminous with the legal existence of the PCC, petitioners term expired and organization bring about its abolition and the creation of a new one. Only an
upon the abolition of the PCC. In reaching this conclusion, the Court of Appeals express declaration to that effect by the lawmaking authority will.
took into account the following:
The Court of Appeals also cites the provision of P.D. No. 1341 as allegedly
a) After respondent Crisostomos suspension, P.D. No. 1341 (entitled implying the abolition of the PCC and the creation of a new one the PUP in its stead:
POLYTECHNIC UNIVERSITY, DEFINING ITS OBJECTIVES, 12. All parcels of land, buildings, equipment and facilities owned by the Philippine
ORGANIZATIONAL STRUCTURE AND FUNCTIONS, AND EXPANDING ITS College of Commerce and such other national schools as may be integrated by virtue
CURRICULAR OFFERINGS) was issued on April 1, 1978. This decree explicitly of this decree, including their obligations and appropriations thereof, shall stand
provides that PUPs objectives and purposes cover not only PCCs offering of transferred to the Polytechnic University of the Philippines, provided, however, that
programs in the field of commerce and business administration but also programs in said national schools shall continue to receive their corresponding shares from the
other polytechnic areas and in other fields such as agriculture, arts and trades and special education fund of the municipal/provincial/city government concerned as are
fisheries . . . (section 2). Being a university, PUP was conceived as a bigger now enjoyed by them in accordance with existing laws and/or decrees.
The law does not state that the lands, buildings and equipment owned by the benefits which he failed to receive during his suspension in so far as such payment
PCC were being transferred to the PUP but only that they stand transferred to would include salaries accruing after March 28, 1980 when petitioner Crisostomos
it. Stand transferred simply means, for example, that lands transferred to the PCC term was terminated. Further proceedings in accordance with this decision may be
were to be understood as transferred to the PUP as the new name of the institution. taken by the trial court to determine the amount due and payable to petitioner by the
university up to March 28, 1980.
But the reinstatement of petitioner to the position of president of the PUP
could not be ordered by the trial court because on June 10, 1978, P.D. No. 1437 had SO ORDERED.
been promulgated fixing the term of office of presidents of state universities and
colleges at six (6) years, renewable for another term of six (6) years, and authorizing
the President of the Philippines to terminate the terms of incumbents who were not
reappointed. P.D. No. 1437 provides:
6. The head of the university or college shall be known as the President of the
university or college. He shall be qualified for the position and appointed for a term
of six (6) years by the President of the Philippines upon recommendation of the
Secretary of Education and Culture after consulting with the Board which may be
renewed for another term upon recommendation of the Secretary of Education and
Culture after consulting the Board. In case of vacancy by reason of death, absence or
resignation, the Secretary of Education and Culture shall have the authority to
designate an officer in charge of the college or university pending the appointment
of the President.

The powers and duties of the President of the university or college, in addition to
those specifically provided for in this Decree shall be those usually pertaining to the
office of the president of a university or college.

7. The incumbent president of a chartered state college or university whose term

may be terminated according to this Decree, shall be entitled to full retirement
benefits: provided that he has served the government for at least twenty (20) years;
and provided, further that in case the number of years served is less than 20 years, he
shall be entitled to one month pay for every year of service.

In this case, Dr. Pablo T. Mateo Jr., who had been acting president of the
university since April 3, 1979, was appointed president of PUP for a term of six (6)
years on March 28, 1980, with the result that petitioners term was cut short. In
accordance with 7 of the law, therefore, petitioner became entitled only to retirement
benefits or the payment of separation pay. Petitioner must have recognized this fact,
that is why in 1992 he asked then President Aquino to consider him for appointment
to the same position after it had become vacant in consequence of the retirement of
Dr. Prudente.
WHEREFORE, the decision of the Court of Appeals is MODIFIED by
SETTING ASIDE the questioned orders of the Regional Trial Court directing the
reinstatement of the petitioner Isabelo T. Crisostomo to the position of president of
the Polytechnic University of the Philippines and the payment to him of salaries and
VICTOR TING SENG DEE and EMILY CHAN- Consequently, seven informations for violation of Batas Pambansa Blg. 22
AZAJAR, petitioners, vs. COURT OF APPEALS and PEOPLE OF were filed against petitioners. Said informations are similarly worded except with
THE PHILIPPINES, respondents. respect to the check number, the amount involved, and the date the check was
issued. The information in Criminal Case No. 94-131945 (the other cases are
DECISION Criminal Case No. 94-131946, Criminal Case No. 94-131947, Criminal Case No.
MELO, J.: 94-131948, Criminal Case No. 94-131949, Criminal Case No. 94-131950, and
Criminal Case No. 94-131951) charged:

Before us is a petition for certiorari under Rule 45 seeking the reversal of the That sometime prior to May 27, 1993, in the City of Manila, Philippines, the said
February 12, 1999 decision of the Court of Appeals which affirmed that of the accused, conspiring and confederating together and mutually helping each other, did
Regional Trial Court of the National Capital Judicial Region (Manila, Branch 45) then and there wilfully, unlawfully and feloniously make or draw and issue to
finding petitioners guilty of seven (7) counts of violation of Batas Pambansa JOSEPHINE K. TAGLE, to apply on account or for value Producers Bank of the
Blg. 22. Philippines, Check No. 946072 dated May 27, 1993 payable to CASH in the amount
of P250,000.00 said accused well knowing that at the time of issue they did not have
Petitioners version of the background events is as follows: sufficient funds in or credit with the drawee bank for payment of such check in full
upon its presentment, which check when presented for payment within ninety (90)
From 1991 to 1992, Juliet Ting Chan Sioc Hiu obtained loans, in the aggregate
days from the date thereof, was subsequently dishonored by the drawee bank for
amount of P2,750,000.00, from private complainant Josefina K. Tagle for use in
Drawn Against Insufficient Funds and despite receipt of notice of such dishonor,
Juliets furniture business. As payment thereof, Juliet issued eleven (11) post-dated
said accused failed to pay said JOSEFINA K. TAGLE the amount of the check or to
checks which, upon maturity, were dishonored for reasons of Closed Account or
make arrangements for full payment of the same within five (5) banking days after
Drawn Against Insufficient Funds. Juliet was subsequently prosecuted for violation
receiving said notice.
of Batas Pambansa Blg. 22.
Due to her financial difficulties, Juliet requested her husband Victor Ting (p. 2, Original Records.)
Seng Dee and her sister Emily Chan-Azajar (petitioners herein) to take over her
furniture business, including the obligations appurtenant thereto. Agreeing to Juliets
Criminal Cases No. 94-131945 to 94-131951 were consolidated and jointly
request, petitioners issued nineteen (19) checks in replacement of the eleven (11)
tried. When arraigned, petitioners, assisted by counsel, pleaded not guilty. During
checks earlier issued by Juliet. The planned take-over, however, never materialized
trial, the prosecution presented only one witness, the private complainant, the
since the Naga Hope Christian School, petitioner Emily Chan-Azajars employer in
testimony of Producers Bank representative Ferdinand Lazo being dispensed with
Naga, refused to let her resign to attend to her sisters business.Since the planned
after counsel for petitioners admitted the dishonor of the checks subject matter of the
take-over did not take place, petitioners requested Juliet to reassume her obligation
to private complainant Tagle by replacing the checks they had previously issued to
the latter. Thus, Juliet replaced the nineteen (19) checks issued by petitioners with On March 16, 1995, the trial court found petitioners guilty of violating Batas
twenty-three (23) Far East Bank checks in favor of Tagle. Petitioners then requested Pambansa Blg. 22 in each of the seven cases, disposing as follows:
private complainant Tagle to return the nineteen (19) checks they had issued to
her. Instead of returning the checks, Tagle deposited seven of the checks with WHEREFORE, in view of the foregoing, accused VICTOR TING and EMILY
MetroBank where they were dishonored for being Drawn Against Insufficient CHAN AZAJAR are hereby found GUILTY beyond reasonable doubt of all the
Funds. charges contained in Criminal Case Nos. 94-131945; 94-131946; 94-131947; 94-
131948; 94-131949; 94-131950 and 94-131951 and for each count, they are hereby
On the other hand, private complainant Tagle alleged that sometime in April sentenced to suffer the penalty of one (1) year imprisonment; to pay Josefina K.
1993, petitioners obtained a loan of P950,000.00 from her, issuing several post- Tagle the total amount of P950,000.00; and to pay the cost.
dated checks in payment thereof. When the checks were deposited by Tagle with
MetroBank, they were dishonored for having been drawn against insufficient funds.
(p. 294, Rollo.)
Tagle alleged that despite verbal and written demands, petitioners failed to pay her
the value of the dishonored checks.
Aggrieved, petitioners filed an appeal with the Court of Appeals which was (3) the subsequent dishonor of the check by the drawee bank for
docketed therein as C.A.-G.R. No. 18054. However, the appellate court, on February insufficiency of funds or credit or dishonor for the same reason had
12, 1999, affirmed. Petitioners motion for reconsideration was, likewise, denied for not the drawer, without any valid cause, ordered the bank to stop
lack of merit. Hence, the instant petition. payment (Sycip, Jr. vs. CA, G.R. No. 125059, March 17, 2000).
Petitioners claim that the Court of Appeals erred in affirming the decision of An analysis of the evidence presented, however, shows that not all the
the trial court, given the absence of proof beyond reasonable doubt or in the aforementioned elements have been established by the prosecution beyond
presence of facts creating reasonable doubt. reasonable doubt.
The petition has merit. That the seven checks in question were issued by petitioners is beyond
dispute. Not only were the dishonored checks presented in court, but petitioners
Section 1 of Batas Pambansa Blg. 22, otherwise known as the Bouncing even admitted signing the checks and issuing them to private complainant. From the
Checks Law, provides: evidence on record, it is clear that petitioners signed and issued the seven checks in
Section 1. Checks without sufficient funds. Any person who makes or draws and question.
issues any check to apply on account or for value, knowing at the time of issue that That the checks were dishonored is also clearly established. Section 3 of Batas
he does not have sufficient funds in or credit with the drawee bank for the payment Pambansa Blg. 22 provides that the introduction in evidence of any unpaid and
of such check in full upon its presentment, which check is subsequently dishonored dishonored check, having the drawees refusal to pay stamped or written thereon, or
by the drawee bank for insufficiency of funds or credit or would have been attached thereto, with the reason therefor as aforesaid, shall be prima facie evidence
dishonored for the same reason had not the drawer, without any valid of the making or issuance of said check, and the due presentment to the drawee for
reason, ordered the bank to stop payment, shall be punished by imprisonment of not payment and the dishonor thereof, and that the same was properly dishonored for the
less than thirty days but not more than one (1) year or by a fine of not less than but reason written, stamped, or attached by the drawee on such dishonored check. In the
not more double the amount of the check which fine shall in no case exceed Two instant case, the fact of the checks dishonor is sufficiently shown by the return slips
hundred thousand pesos, or both such fine and imprisonment at the discretion of the issued by MetroBank, the depository bank, stating that the checks had been returned
court. for the reason DAIF Drawn Against Insufficient Funds. Not only are these check
return slips prima facie evidence that the drawee bank dishonored the checks, but
The same penalty shall be imposed upon any person who having sufficient funds in the defense did not present any evidence to rebut these documents. In fact, counsel
or credit with the drawee bank when he makes or draws and issues a check, shall fail for petitioners even admitted the fact of the checks dishonor, agreeing to dispense
to keep sufficient funds or to maintain a credit to cover the full amount of the check with the presentation of the bank representative who was supposed to prove the fact
if presented within a period of ninety (90) days from the date appearing thereon, for of dishonor of said checks (p. 162, Rollo.).
which reason it is dishonored by the drawee bank.
However, for liability to attach under Batas Pambansa Blg. 22, it is not enough
that the prosecution establishes that a check was issued and that the same was
Where the check is drawn by a corporation, company or entity, the person or persons subsequently dishonored. The prosecution must also prove the second element, that
who actually signed the check in behalf of such drawer shall be liable under this Act. is, it must further show that the issuer, at the time of the checks issuance, had
knowledge that he did not have enough funds or credit in the bank for payment
For a violation of Batas Pambansa Blg. 22 to be committed, the following thereof upon its presentment. Since the second element involves a state of mind
elements must be present: which is difficult to verify, Section 2 of Batas Pambansa Blg. 22 creates a
presumption juris tantum that the second element prima facie exists when the first
(1) the making, drawing, and issuance of any check to apply for account and third elements of the offense are present (Magno v. People, 210 SCRA 471
or for value; [1992]). Section 2 provides:
(2) the knowledge of the maker, drawer, or issuer that at the time of Section 2. Evidence of knowledge of insufficient funds. The making, drawing, and
issue there are no sufficient funds in or credit with the drawee bank issuance of a check payment of which is refused by the drawee because of
for the payment of such check in full upon is presentment; and insufficient funds or credit with such bank, when presented within ninety days from
the date of the check, shall be prima facie evidence of knowledge of such
insufficiency of funds or credit unless such maker or drawer pays the holder thereof A: I demanded the return of my money from them.
the amount due thereon, or makes arrangements for payment in full by the drawee of
such check within five (5) banking days after receiving notice that such check has Q: Now, what was the reply of the two accused?
not been paid by the drawee. A: They kept on promising that they will pay but up to now they have not paid
any single centavo.
In truth, this Court declared in King v. People (G.R. No. 131540, December 2,
1999) that the prima facie presumption arises when the check is issued. But the law Q: What other step did you take?
also provides that the presumption does not arise when the issuer pays the amount of A: I requested my lawyer to write a demand letter.
the check or makes arrangement for its payment within five banking days after
receiving notice that such check has not been paid by the drawee. Verily, BP 22 Q: And that demand letter was sent to the accused?
gives the accused an opportunity to satisfy the amount indicated in the check and
thus avert prosecution This opportunity, however, can be used only upon receipt by A: Yes, Sir.
the accused of a notice of dishonor. Thus, the presumption that the issuer had
Q: In what manner?
knowledge of the insufficiency of funds is brought into existence only after it is
proved that the issuer had received a notice of dishonor and that, within five days A: By registered mail.
from receipt thereof, he failed to pay the amount of the check or to make
arrangement for its payment. Q: Now, was that demand letter received by the two accused?

King v. People, decided by this Division, involves a set of facts similar to the A: Yes, Sir.
case at bar. In said case, the accused therein was proven to have issued eleven
checks, all of which were duly filled up and signed by her. It was also clearly Q: What is your evidence?
established that these eleven checks were dishonored, as shown by the checks A: The return card.
themselves which were stamped ACCOUNT CLOSED and further supported by the
return tickets issued by PCI Bank stating that the checks had been dishonored. Yet, Q: If you are shown anew the copy of the demand letter which is already marked
even if the prosecution had already established the issuance of the checks and their as Exhibit B, would you be able to recognize the same?
subsequent dishonor, this Court still required the prosecution to show that the issuer
knew of the insufficiency of funds by proving that he or she received a notice of A: Yes, Sir.
dishonor and, within five banking days thereafter, failed to satisfy the amount of the Q: Is that the one that you are referring to?
check or make arrangement for its payment.
A: Yes, Sir.
Moreover, in Lina Lim Lao v. CA (274 SCRA 572 [1997]), we emphasized
that the full payment of the amount appearing in the check within five banking days Q: How about the return card, is that correct?
from notice of dishonor is a complete defense. The absence of a notice of dishonor
necessarily deprives an accused an opportunity to preclude a criminal A: Yes, Sir, this is the one.
prosecution. Accordingly, procedural due process clearly enjoins that a notice of
Q: Now, upon receipt of this letter by the two accused, did the two accused pay
dishonor be actually served on petitioner. Petitioner has a right to demand and the
the amount of the said check?
basic postulate of fairness require that the notice of dishonor be actually sent to and
received by her to afford her the opportunity to avert prosecution under BP 22. A: No, Sir.
To prove that petitioners received a notice of dishonor, the prosecution Q: So what did you do next?
presented a copy of the demand letter allegedly sent to petitioners through registered
mail and its corresponding registry receipt. Private complainant Josefina Tagle, the A: I told my lawyer to file charges against them.
sole witness for the prosecution, testified thus:
Q: You mean the present charge?
Q: Now, when these seven (7) checks bounced for insufficiency of funds, what
step did you take? A: Yes, Sir.
Atty. Acuesta: and registry return receipt as if mere presentation of the same was equivalent to
proof that some sort of mail matter was received by petitioners.Receipts for
That is all, Your Honor. registered letters and return receipts do not prove themselves; they must be properly
(TSN, Aug. 24, 1994, p. 8-9.) authenticated in order to serve as proof of receipt of the letters (Central Trust Co. v.
City of Des Moines, 218 NW 580).

Aside from the above testimony, no other reference was made to the demand Likewise, for notice by mail, it must appear that the same was served on the
letter by the prosecution. As can be noticed from the above exchange, the addressee or a duly authorized agent of the addressee. In fact, the registry return
prosecution alleged that the demand letter had been sent by mail. To prove mailing, receipt itself provides that [a] registered article must not be delivered to anyone but
it presented a copy of the demand letter as well as the registry return the addressee, or upon the addressees written order, in which case the authorized
receipt. However, no attempt was made to show that the demand letter was indeed agent must write the addressees name on the proper space and then affix legibly his
sent through registered mail nor was the signature on the registry return receipt own signature below it. In the case at bar, no effort was made to show that the
authenticated or identified. It cannot even be gleaned from the testimony of private demand letter was received by petitioners or their agent. All that we have on record
complainant as to who sent the demand letter and when the same was sent. In fact, is an illegible signature on the registry receipt as evidence that someone received the
the prosecution seems to have presumed that the registry return receipt was proof letter. As to whether this signature is that of one of the petitioners or of their
enough that the demand letter was sent through registered mail and that the same authorized agent remains a mystery. From the registry receipt alone, it is possible
was actually received by petitioners or their agents. that petitioners or their authorized agent did receive the demand letter. Possibilities,
however, cannot replace proof beyond reasonable doubt.There being insufficient
As adverted to earlier, it is necessary in cases for violation of Batas Pambansa proof that petitioners received notice that their checks had been dishonored, the
Blg. 22, that the prosecution prove that the issuer had received a notice of presumption that they knew of the insufficiency of the funds therefor cannot arise.
dishonor. It is a general rule that when service of notice is an issue, the person
alleging that the notice was served must prove the fact of service (58 Am Jur 2d, As we stated in Savage v. Taypin (G.R. No. 134217, May 11, 2000), penal
Notice, 45). The burden of proving notice rests upon the party asserting its statutes must be strictly construed against the State and liberally in favor of the
existence. Now, ordinarily, preponderance of evidence is sufficient to prove accused. Likewise, the prosecution may not rely on the weakness of the evidence for
notice. In criminal cases, however, the quantum of proof required is proof beyond the defense to make up for its own blunders in prosecuting an offense. Having failed
reasonable doubt. Hence, for Batas Pambansa Blg. 22 cases, there should be clear to prove all the elements of the offense, petitioners may not thus be convicted for
proof of notice. Moreover, it is a general rule that, when service of a notice is sought violation of Batas Pambansa Blg. 22.
to be made by mail, it should appear that the conditions on which the validity of
such service depends had existence, otherwise the evidence is insufficient to That petitioners are civilly liable to private complainant is also
establish the fact of service (C.J.S., Notice, 18). In the instant case, the prosecution doubtful. Private complainant claims that petitioners borrowed Nine Hundred Fifty
did not present proof that the demand letter was sent through registered mail, relying Thousand (P950,000.00) Pesos from her on or about the end of April 1993, in
as it did only on the registry return receipt.In civil cases, service made through payment of which petitioners issued several post-dated checks in her favor. The
registered mail is proved by the registry receipt issued by the mailing office and an seven checks issued by petitioners as payment for the amount borrowed add up to
affidavit of the person mailing of facts showing compliance with Section 7 of Rule P950,000.00. If private complainant is the businesswoman that she claims to be, she
13 (See Section 13, Rule 13, 1997 Rules of Civil Procedure). If, in addition to the should be collecting interest on the loan she granted to petitioners. In other words,
registry receipt, it is required in civil cases that an affidavit of mailing as proof of the amount to be repaid by petitioners should be more than P950,000.00, to account
service be presented, then with more reason should we hold in criminal cases that a for interest on the loan. The checks issued by petitioners, however, do not provide
registry receipt alone is insufficient as proof of mailing. In the instant case, the for interest. It is thus more credible that the seven checks involved in this case form
prosecution failed to present the testimony, or at least the affidavit, of the person part of nineteen checks issued to replace the checks issued by Juliet Ting to private
mailing that, indeed, the demand letter was sent. complainant. This conclusion is bolstered by private complainants admission in her
reply-affidavit that more than seven checks were issued by petitioners (p.
Moreover, petitioners, during the pre-trial, denied having received the demand 11, Original Records). In said reply-affidavit, private complainant states that
letter (p. 135, Rollo.). Given petitioners denial of receipt of the demand letter, it respondents issued and delivered to me in Manila several checks, which partially
behooved the prosecution to present proof that the demand letter was indeed sent include their seven (7) bouncing checks herein. I say partially because I will have to
through registered mail and that the same was received by petitioners. This, the file additional bouncing check cases against them, as these other checks likewise
prosecution miserably failed to do. Instead, it merely presented the demand letter bounced. Furthermore, in the same reply-affidavit, private complainant claims that
the checks in question were not replaced, allegedly because the replacement checks
must first be cleared, which did not happen in this case. By implication, had the 23
Far East Bank checks issued by Juliet Ting to replace the nineteen checks issued by
petitioners been cleared, then private complainant would have considered the checks
in question as having been replaced. This only supports our conclusion that it was
Juliet Ting who owed money to private complainant, not petitioners.
Moreover, the original debtor Juliet Ting was convicted by the Regional Trial
Court of Manila in Criminal Cases 93-126581-91 for eleven counts of violation of
Batas Pambansa Blg. 22. These eleven bouncing check cases involved the same
obligation being sued upon by private complainant Tagle herein. The trial court
expressly acknowledged in said cases that nineteen (19) checks were issued by
petitioners as payment for Juliet Tings obligation. In its August 7, 1997 decision
convicting Juliet Ting for violation of Batas Pambansa Blg. 22, the trial court
declared that to cover the additional loans, accused (Juliet Ting) delivered 19 post-
dated checks issued by Victor Ting and Emily Azajar (p. 55, Rollo.). The trial courts
decision further provides:
Since she could not fund the other checks (Exhs. B to K), she replaced the same with
19 post-dated checks of her husband Victor Ting and her sister Emily Azajar
totaling P2,450,000.00. They issued the checks as they would take over her furniture
business. The intended partnership of Victor and Emily was aborted as the latter was
not allowed to resign from her teaching post in Naga City. She then replaced the
checks issued by Victor and Emily with her own checks 23 FEB post-dated checks
per list (Exh. 9) prepared by Suzanne Azajar.

Despite receipt of the replacement checks, complainant refused to return the checks
of Victor and Emily and even filed cases against them.

(p. 56, Rollo.)

Not having borrowed the amount of Nine Hundred Fifty Thousand

(P950,000.00) from private complainant, petitioners may not thus be held liable
WHEREFORE, premises considered, the instant petition is GRANTED and
the assailed decision of the Court of Appeals dated February 12, 1999 REVERSED
and SET ASIDE. Petitioners Victor Ting Seng Dee and Emily Chan-Azajar are
hereby ACQUITTED of the charges against them for violation of Batas Pambansa
Blg. 22, for lack of sufficient evidence to prove the offenses charged beyond
reasonable doubt. No special pronouncement is made as to costs.
vs. Please be informed that the escrow deposit and performance bond were required to
INTERNATIONAL COMMUNICATION CORPORATION, Respondent. public telecommunications entities to ensure that the mandated installation of local
exchange lines are installed within three (3) years pursuant to EO 109 and RA 7925.
AMENDED DECISION Since your company has already complied with its obligation by the installation of
more than 300,000 lines in Quezon City, Malabon City and Valenzuela City in the
AUSTRIA-MARTINEZ, J.: National Capital Region and Region V in early 1997, the escrow deposit and
performance bond were not required in your subsequent authorizations. 2
On July 23, 2004, the Court promulgated its Decision in the above-captioned case
with the following dispositive portion: In a Resolution dated October 4, 2004, the Court required petitioners and the NTC to
file their respective comments on the motion.3
WHEREFORE, the petition for review on certiorari is PARTIALLY GRANTED.
The Order of the National Telecommunications Commissions dated November 10, Subsequently, in its Manifestation/Comment filed on January 11, 2005, the Office of
1997 in NTC Case No. 96-195 is AFFIRMED with the following modifications: the Solicitor General (OSG), in behalf of the NTC, likewise referred to the same
letter of OIC Heceta and declared that it fully agrees with respondent that the escrow
deposit and performance bond are not required in subsequent authorizations for
Respondent International Communication Corporation, in accordance with Section additional/new areas outside its original roll-out obligation under the Service Area
27 of NTC MC No. 11-9-93, is required to: Scheme of E.O. No. 109.

(1) Deposit in escrow in a reputable bank 20% of the investment required Petitioners did not file any comment and it was only after the Court issued a show
for the first two years of the implementation of the proposed project; and cause and compliance Resolution on October 19, 2005 that petitioners manifested in
their Entry of Special Appearance, Manifestation and Compliance dated November
(2) Post a performance bond equivalent to 10% of the investment required 25, 2005 that they have no further comments on respondent’s motion for partial
for the first two years of the approved project but not to exceed P500 reconsideration.4
The Court has observed in its Decision that Section 27 of NTC MC No. 11-9-93 is
within such period to be determined by the National Telecommunications silent as to whether the posting of an escrow deposit and performance bond is a
Commission. condition sine qua non for the grant of a provisional authority. The NTC, through
the OSG, explicitly clarified, which was not disputed by petitioners, that the escrow
No pronouncement as to costs. deposit and performance bond are not required in subsequent authorizations for
additional/new areas outside its original roll-out obligation under E.O. No. 109. The
OSG agreed with respondent’s stance that since the provisional authority in this case
SO ORDERED.1 involves a voluntary application not covered by the original service areas created by
the NTC under E.O. No. 109, then it is not subject to the posting of an escrow
Respondent now seeks a partial reconsideration of the portion of the Court’s deposit and performance bond as required by E.O. No. 109, but only to the
decision requiring it to make a 20% escrow deposit and to post a 10% performance conditions provided in the provisional authority. Further, the OSG adapted the
bond. Respondent claims that Section 27 of NTC MC No. 11-9-93, which required ratiocination of the Court of Appeals on this matter, i.e., respondent was not
the foregoing amounts, pertains only to applications filed under Executive Order No. subjected to the foregoing escrow deposit and performance bond requirement
109 (E.O. No. 109) and not to applications voluntarily filed. In its Manifestation in because the landline obligation is already outside its original roll-out commitment
support of the motion for partial reconsideration, respondent attached a letter from under E.O. No. 109.5
Deputy Commissioner and Officer-in-Charge (OIC), Kathleen G. Heceta, of the
National Telecommunications Commission (NTC), stating thus:
The NTC, being the government agency entrusted with the regulation of activities The same precept was enunciated in Bagatsing v. Committee on Privatization where
coming under its special and technical forte, and possessing the necessary rule- we upheld the action of the Commission on Audit (COA) in validating the sale of
making power to implement its objectives,6 is in the best position to interpret its own Petron Corporation to Aramco Overseas Corporation on the basis of COA's
rules, regulations and guidelines. The Court has consistently yielded and accorded interpretation of its own circular that set bidding and audit guidelines on the disposal
great respect to the interpretation by administrative agencies of their own rules of government assets –
unless there is an error of law, abuse of power, lack of jurisdiction or grave abuse of
discretion clearly conflicting with the letter and spirit of the law. 7 The COA itself, the agency that adopted the rules on bidding procedure to be
followed by government offices and corporations, had upheld the validity and
In City Government of Makati vs. Civil Service Commission, 8 the Court cited cases legality of the questioned bidding. The interpretation of an agency of its own
where the interpretation of a particular administrative agency of a certain rule was rules should be given more weight than the interpretation by that agency of the
adhered to, viz.: law it is merely tasked to administer (underscoring supplied).

As properly noted, CSC was only interpreting its own rules on leave of absence and Given the greater weight accorded to an agency's interpretation of its own rules than
not a statutory provision in coming up with this uniform rule. Undoubtedly, the to its understanding of the statute it seeks to implement, we simply cannot set aside
CSC like any other agency has the power to interpret its own rules and any the former on the same grounds as we would overturn the latter. More specifically,
phrase contained in them with its interpretation significantly becoming part of in cases where the dispute concerns the interpretation by an agency of its own rules,
the rules themselves. As observed in West Texas Compress & Warehouse Co. v. we should apply only these standards: "Whether the delegation of power was valid;
Panhandle & S.F. Railing Co. – whether the regulation was within that delegation; and if so, whether it was a
reasonable regulation under a due process test." An affirmative answer in each of
xxx these questions should caution us from discarding the agency's interpretation of its
own rules. (Emphasis supplied)
This principle is not new to us. In Geukeko v. Araneta this Court upheld the
interpretation of the Department of Agriculture and Commerce of its own rules of Thus, the Court holds that the interpretation of the NTC that Section 27 of NTC MC
procedure in suspending the period of appeal even if such action was nowhere stated No. 11-9-93 regarding the escrow deposit and performance bond shall pertain only
therein. We said - to a local exchange operator’s original roll-out obligation under E.O. No. 109, and
not to roll-out obligations made under subsequent or voluntary applications outside
E.O. No. 109, should be sustained.
IN VIEW THEREOF, respondent’s Motion for Partial Reconsideration
x x x It must be remembered that Lands Administrative Order No. 6 is in the nature is GRANTED. The Court’s Decision dated July 23, 2004 is AMENDED, the
of procedural rules promulgated by the Secretary of Agriculture and Natural dispositive portion of which should read as follows:
Resources pursuant to the power bestowed on said administrative agency to
promulgate rules and regulations necessary for the proper discharge and
management of the functions imposed by law upon said office. x x x x Recognizing WHEREFORE, the petition for review on certiorari is DENIED. The Order of the
the existence of such rule-making authority, what is the weight of an interpretation National Telecommunications Commission dated November 10, 1997 in NTC Case
given by an administrative agency to its own rules or regulations?Authorities No. 96-195 is AFFIRMED.
sustain the doctrine that the interpretation given to a rule or regulation by
those charged with its execution is entitled to the greatest weight by the Court thereby deleting the order requiring respondent to make a 20% escrow deposit and
construing such rule or regulation, and such interpretation will be followed to post a 10% performance bond.
unless it appears to be clearly unreasonable or arbitrary (42 Am. Jur. 431). It
has also been said that: SO ORDERED.