1. No. L-16704. March 17, 1962.

VICTORIAS MILLING COMPANY, INC., petitioner-appellant, vs. SOCIAL SECURITY COMMISSION, respondent-appellee.

Statutory construction; Distinction between an administrative rule and an administrative interpretation of law;
Nature of administrative rules and regulations.—When an administrative agency promulgated rules and
regulations, it "makes" a new law with the force and effect of a valid law, while when it renders an opinion or
gives a statement of policy, it merely interprets a pre-existing law (Parker, Administrative Law, p. 197; Davis,
Administrative Law, p. 194). Rules and regulations when promulgated in pursuance of the procedure or authority
conferred upon the administrative agency by law, partake of the nature of a statute, and compliance therewith
may be enforced by a penal sanction provided in the law. This is so because statutes are usually couched in
general terms, after expressing the policy, purposes, objectives, remedies and sanctions intended by the
legislature. The details and the manner of carrying out the law are often times left to the administrative agency
entrusted with its enforcement.

Same; Same; Binding effect of administrative rules on courts; Requisites.—A rule is binding on the courts so long
as the procedure fixed for its promulgation is followed, and its scope is within the statutory authority granted by
the legislature, even if the courts are not in agreement with the policy stated therein or its innate wisdom (Davis,
op. cit., pp. 195-197). On the other hand, administrative interpretation of the law is at best merely advisory, for it
is the courts that finally determine what the law means.

Same; Same; Circular No. 22 of the Social Security Commission merely an advisory opinion and need not be
approved by the President.—Circular No. 22 of the Social Security Commission purports merely to advise
employers-members of the System of what, in the light of the amendment of the law, they should include in
determining the monthly compensation of their employees upon which the social security contributions should
be based. It did not add any duty or detail that was not already in the law as amended. It merely stated and
circularized the opinion of the Commission as to how the law should be construed. Such circular, therefore, did
not require presidential approval and publication in the Official Gazette for its effectivity.

Same; Interpretation of terms or words; Rule when a term or word is specifically defined in a statute.—While the
rule is that terms or words are to be interpreted in accordance with their well-accepted meaning in law,
nevertheless, when such term or word is specifically defined in a particular law, such interpretation must be
adopted in enforcing that particular law, for it can not be gainsaid that a particular phrase or term may have one
meaning for one purpose and another meaning for some other purpose.

BARRERA, J.:
On October 15, 1958, the Social Security Commission issued its Circular No. 22 of the following tenor: .
Effective November 1, 1958, all Employers in computing the premiums due the System, will take into
consideration and include in the Employee's remuneration all bonuses and overtime pay, as well as the cash
value of other media of remuneration. All these will comprise the Employee's remuneration or earnings, upon
which the 3-1/2% and 2-1/2% contributions will be based, up to a maximum of P500 for any one month.
Upon receipt of a copy thereof, petitioner Victorias Milling Company, Inc., through counsel, wrote the Social
Security Commission in effect protesting against the circular as contradictory to a previous Circular No. 7, dated
October 7, 1957 expressly excluding overtime pay and bonus in the computation of the employers' and
employees' respective monthly premium contributions, and submitting, "In order to assist your System in arriving
at a proper interpretation of the term 'compensation' for the purposes of" such computation, their observations
on Republic Act 1161 and its amendment and on the general interpretation of the words "compensation",
"remuneration" and "wages". Counsel further questioned the validity of the circular for lack of authority on the
part of the Social Security Commission to promulgate it without the approval of the President and for lack of
publication in the Official Gazette.
Overruling these objections, the Social Security Commission ruled that Circular No. 22 is not a rule or regulation
that needed the approval of the President and publication in the Official Gazette to be effective, but a mere
administrative interpretation of the statute, a mere statement of general policy or opinion as to how the law
should be construed.
Not satisfied with this ruling, petitioner comes to this Court on appeal.
The single issue involved in this appeal is whether or not Circular No. 22 is a rule or regulation, as contemplated
in Section 4(a) of Republic Act 1161 empowering the Social Security Commission "to adopt, amend and repeal
subject to the approval of the President such rules and regulations as may be necessary to carry out the
provisions and purposes of this Act."
There can be no doubt that there is a distinction between an administrative rule or regulation and an
administrative interpretation of a law whose enforcement is entrusted to an administrative body. When an
administrative agency promulgates rules and regulations, it "makes" a new law with the force and effect of a valid
law, while when it renders an opinion or gives a statement of policy, it merely interprets a pre-existing law (Parker,
Administrative Law, p. 197; Davis, Administrative Law, p. 194). Rules and regulations when promulgated in
pursuance of the procedure or authority conferred upon the administrative agency by law, partake of the nature
of a statute, and compliance therewith may be enforced by a penal sanction provided in the law. This is so
because statutes are usually couched in general terms, after expressing the policy, purposes, objectives,
remedies and sanctions intended by the legislature. The details and the manner of carrying out the law are often
times left to the administrative agency entrusted with its enforcement. In this sense, it has been said that rules
and regulations are the product of a delegated power to create new or additional legal provisions that have the
effect of law. (Davis,op. cit., p. 194.) .
A rule is binding on the courts so long as the procedure fixed for its promulgation is followed and its scope is
within the statutory authority granted by the legislature, even if the courts are not in agreement with the policy
stated therein or its innate wisdom (Davis, op. cit., 195-197). On the other hand, administrative interpretation of
the law is at best merely advisory, for it is the courts that finally determine what the law means.
Circular No. 22 in question was issued by the Social Security Commission, in view of the amendment of the
provisions of the Social Security Law defining the term "compensation" contained in Section 8 (f) of Republic Act
No. 1161 which, before its amendment, reads as follows: .
(f) Compensation — All remuneration for employment include the cash value of any remuneration paid in any
medium other than cash except (1) that part of the remuneration in excess of P500 received during the month;
(2) bonuses, allowances or overtime pay; and (3) dismissal and all other payments which the employer may make,
although not legally required to do so.
Republic Act No. 1792 changed the definition of "compensation" to:
(f) Compensation — All remuneration for employment include the cash value of any remuneration paid in any
medium other than cash except that part of the remuneration in excess of P500.00 received during the month.
It will thus be seen that whereas prior to the amendment, bonuses, allowances, and overtime pay given in
addition to the regular or base pay were expressly excluded, or exempted from the definition of the term
"compensation", such exemption or exclusion was deleted by the amendatory law. It thus became necessary for
the Social Security Commission to interpret the effect of such deletion or elimination. Circular No. 22 was,
therefore, issued to apprise those concerned of the interpretation or understanding of the Commission, of the
law as amended, which it was its duty to enforce. It did not add any duty or detail that was not already in the law
as amended. It merely stated and circularized the opinion of the Commission as to how the law should be
construed.1äwphï1.ñët
The case of People v. Jolliffe (G.R. No. L-9553, promulgated on May 30, 1959) cited by appellant, does not
support its contention that the circular in question is a rule or regulation. What was there said was merely that a
regulation may be incorporated in the form of a circular. Such statement simply meant that the substance and
not the form of a regulation is decisive in determining its nature. It does not lay down a general proposition of
law that any circular, regardless of its substance and even if it is only interpretative, constitutes a rule or
regulation which must be published in the Official Gazette before it could take effect.
The case of People v. Que Po Lay (50 O.G. 2850) also cited by appellant is not applicable to the present case,
because the penalty that may be incurred by employers and employees if they refuse to pay the corresponding
premiums on bonus, overtime pay, etc. which the employer pays to his employees, is not by reason of non-
compliance with Circular No. 22, but for violation of the specific legal provisions contained in Section 27(c) and (f)
of Republic Act No. 1161.
We find, therefore, that Circular No. 22 purports merely to advise employers-members of the System of what, in
the light of the amendment of the law, they should include in determining the monthly compensation of their
employees upon which the social security contributions should be based, and that such circular did not require
presidential approval and publication in the Official Gazette for its effectivity.
It hardly need be said that the Commission's interpretation of the amendment embodied in its Circular No. 22, is
correct. The express elimination among the exemptions excluded in the old law, of all bonuses, allowances and
overtime pay in the determination of the "compensation" paid to employees makes it imperative that such
bonuses and overtime pay must now be included in the employee's remuneration in pursuance of the
amendatory law. It is true that in previous cases, this Court has held that bonus is not demandable because it is
not part of the wage, salary, or compensation of the employee. But the question in the instant case is not
whether bonus is demandable or not as part of compensation, but whether, after the employer does, in fact, give
or pay bonus to his employees, such bonuses shall be considered compensation under the Social Security Act
after they have been received by the employees. While it is true that terms or words are to be interpreted in
accordance with their well-accepted meaning in law, nevertheless, when such term or word is specifically
defined in a particular law, such interpretation must be adopted in enforcing that particular law, for it can not be
gainsaid that a particular phrase or term may have one meaning for one purpose and another meaning for some
other purpose. Such is the case that is now before us. Republic Act 1161 specifically defined what
"compensation" should mean "For the purposes of this Act". Republic Act 1792 amended such definition by
deleting same exemptions authorized in the original Act. By virtue of this express substantial change in the
phraseology of the law, whatever prior executive or judicial construction may have been given to the phrase in
question should give way to the clear mandate of the new law.
IN VIEW OF THE FOREGOING, the Resolution appealed from is hereby affirmed, with costs against appellant. So
ordered.

2. G.R. No. 163448. March 8, 2005.*

NATIONAL FOOD AUTHORITY (NFA), and JUANITO M. DAVID, in his capacity as Regional Director, NFA Regional
Office No. 1, San Juan, La Union, petitioners, vs. MASADA SECURITY AGENCY, INC., represented by its Acting
President & General Manager, COL. EDWIN S. ESPEJO (RET.), respondents.

Labor Law; Republic Act 6727; Wages, Defined.—In construing the word “wage” in Section 6 of RA 6727,
reference must be had to Section 4 (a) of the same Act. It states: SEC. 4. (a) Upon the effectivity of this Act, the
statutory minimum wage rates for all workers and employees in the private sector, whether agricultural or
nonagricultural, shall be increased by twenty-five pesos (P25) per day . . . (Emphasis supplied) The term “wage”
as used in Section 6 of RA 6727 pertains to no other than the “statutory minimum wage” which is defined under
the Rules Implementing RA 6727 as the lowest wage rate fixed by law that an employer can pay his worker. The
basis thereof under Section 7 of the same Rules is the normal working hours, which shall not exceed eight hours
a day. Hence, the prescribed increases or the additional liability to be borne by the principal under Section 6 of
RA 6727 is the increment or amount added to the remuneration of an employee for an 8-hour work.
Statutory Construction; Expresio unius est exclusion alterius; Where a statute, by its terms, is expressly limited to
certain matters, it may not, by interpretation or construction, be extended to others.—Expresio unius est exclusio
alterius. Where a statute, by its terms, is expressly limited to certain matters, it may not, by interpretation or
construction, be extended to others. Since the increase in wage referred to in Section 6 pertains to the “statutory
minimum wage” as defined herein, principals in service contracts cannot be made to pay the corresponding
wage increase in the overtime pay, night shift differential, holiday and rest day pay, premium pay and other
benefits granted to workers. While basis of said remuneration and benefits is the statutory minimum wage, the
law cannot be unduly expanded as to include those not stated in the subject provision.

Same; Verba legis non est recedendum; From the words of a statute there should be no departure.—The settled
rule in statutory construction is that if the statute is clear, plain and free from ambiguity, it must be given its
literal meaning and applied without interpretation. This plain meaning rule or verba legis derived from the
maxim index animi sermo est (speech is the index of intention) rests on the valid presumption that the words
employed by the legislature in a statute correctly express its intention or will and preclude the court from
construing it differently. The legislature is presumed to know the meaning of the words, to have used words
advisedly, and to have expressed its intent by use of such words as are found in the statute. Verba legis non est
recedendum, or from the words of a statute there should be no departure. The presumption therefore is that
lawmakers are well aware that the word “wage” as used in Section 6 means the statutory minimum wage. If their
intention was to extend the obligation of principals in service contracts to the payment of the increment in the
other benefits and remuneration of workers, it would have so expressly specified. In not so doing, the only logical
conclusion is that the legislature intended to limit the additional obligation imposed on principals in service
contracts to the payment of the increment in the statutory minimum wage.

Same; Same; It is not within the province of this Court to inquire into the wisdom of the law for indeed, we are
bound by the words of the statute; the law is applied as it is.—The general rule is that construction of a statute
by an administrative agency charged with the task of interpreting or applying the same is entitled to great weight
and respect. The Court, however, is not bound to apply said rule where such executive interpretation, is clearly
erroneous, or when there is no ambiguity in the law interpreted, or when the language of the words used is clear
and plain, as in the case at bar. Besides, administrative interpretations are at best advisory for it is the Court that
finally determines what the law means. Hence, the interpretation given by the labor agencies in the instant case
which went as far as supplementing what is otherwise not stated in the law cannot bind this Court. It is not
within the province of this Court to inquire into the wisdom of the law for indeed, we are bound by the words of
the statute. The law is applied as it is. At any rate, the interest of the employees will not be adversely affected if
the obligation of principals under the subject provision will be limited to the increase in the statutory minimum
wage. This is so because all remuneration and benefits other than the increased statutory minimum wage would
be shouldered and paid by the employer or service contractor to the workers concerned. Thus, in the end, all
allowances and benefits as computed under the increased rate mandated by RA 6727 and the wage orders will
be received by the workers.

YNARES-SANTIAGO, J.:
Assailed in this petition for review under Rule 45 of the Rules of Court is the February 12, 2004 decision1 of the
Court of Appeals in CA-G.R. CV No. 76677, which dismissed the appeal filed by petitioner National Food
Authority (NFA) and its April 30, 2004 resolution denying petitioner’s motion for reconsideration.
The antecedent facts show that on September 17, 1996, respondent MASADA Security Agency, Inc., entered into
a one year2 contract3 to provide security services to the various offices, warehouses and installations of NFA
within the scope of the NFA Region I, comprised of the provinces of Pangasinan, La Union, Abra, Ilocos Sur and
Ilocos Norte. Upon the expiration of said contract, the parties extended the effectivity thereof on a monthly basis
under same terms and condition.4
Meanwhile, the Regional Tripartite Wages and Productivity Board issued several wage orders mandating
increases in the daily wage rate. Accordingly, respondent requested NFA for a corresponding upward adjustment
in the monthly contract rate consisting of the increases in the daily minimum wage of the security guards as well
as the corresponding raise in their overtime pay, holiday pay, 13th month pay, holiday and rest day pay. It also
claimed increases in Social Security System (SSS) and Pag-ibig premiums as well as in the administrative costs and
margin. NFA, however, granted the request only with respect to the increase in the daily wage by multiplying the
amount of the mandated increase by 30 days and denied the same with respect to the adjustments in the other
benefits and remunerations computed on the basis of the daily wage.
Respondent sought the intervention of the Office of the Regional Director, Regional Office No. I, La Union, as
Chairman of the Regional Tripartite Wages and Productivity Board and the DOLE Secretary through the Executive
Director of the National Wages and Productivity Commission. Despite the advisory5 of said offices sustaining the
claim of respondent that the increase mandated by Republic Act No. 6727 (RA 6727) and the wage orders issued
by the RTWPB is not limited to the daily pay, NFA maintained its stance that it is not liable to pay the
corresponding adjustments in the wage related benefits of respondent’s security guards.
On May 4, 2001, respondent filed with the Regional Trial Court of Quezon, City, Branch 83, a case for recovery of
sum of money against NFA. Docketed as Civil Case No. Q-01-43988, the complaint6 sought reimbursement of the
following amounts allegedly paid by respondent to the security guards, to wit: P2,949,302.84, for unpaid wage
related benefits brought about by the effectivity of Wage Order Nos. RB 1-05 and RB CAR-04;7 RB 1-06 and RB
CAR-05;8 RB 1-07 and RB CAR-06;9 and P975,493.04 for additional cost and margin, plus interest. It also prayed
for damages and litigation expenses.10
In its answer with counterclaim,11 NFA denied that respondent paid the security guards their wage related
benefits and that it shouldered the additional costs and margin arising from the implementation of the wage
orders. It admitted, however, that it heeded respondent’s request for adjustment only with respect to increase in
the minimum wage and not with respect to the other wage related benefits. NFA argued that respondent cannot
demand an adjustment on said salary related benefits because it is bound by their contract expressly limiting
NFA’s obligation to pay only the increment in the daily wage.
At the pre-trial, the only issue raised was whether or not respondent is entitled to recover from NFA the wage
related benefits of the security guards.12
On September 19, 2002, the trial court rendered a decision13 in favor of respondent holding that NFA is liable to
pay the security guards’ wage related benefits pursuant to RA 6727, because the basis of the computation of said
benefits, like overtime pay, holiday pay, SSS and Pag-ibig premium, is the increased minimum wage. It also found
NFA liable for the consequential adjustments in administrative costs and margin. The trial court absolved
defendant Juanito M. David having been impleaded in his official capacity as Regional Director of NFA Regional
Office No. 1, San Juan, La Union. The dispositive portion thereof, reads:
WHEREFORE, judgment is hereby rendered in favor of plaintiff MASADA Security Agency, Inc., and against
defendant National Food Authority ordering said defendant to make the corresponding adjustment in the
contract price in accordance with the increment mandated under the various wage orders, particularly Wage
Order Nos. RBI-05, RBCAR-04, RBI-06, RBCAR-05, RBI-07 and RBCAR-06 and to pay plaintiff the amounts
representing the adjustments in the wage-related benefits of the security guards and consequential increase in
its administrative cost and margin upon presentment by plaintiff of the corresponding voucher claims.
Plaintiff’s claims for damages and attorney’s fees and defendants counterclaim for damages are hereby denied.
Defendant Juanito M. David is hereby absolved from any liability.
SO ORDERED.14
NFA appealed to the Court of Appeals but the same was dismissed on February 12, 2004. The appellate court
held that the proper recourse of NFA is to file a petition for review under Rule 45 with this Court, considering
that the appeal raised a pure question of law. Nevertheless, it proceeded to discuss the merits of the case for
"purposes of academic discussion" and eventually sustained the ruling of the trial court that NFA is under
obligation to pay the administrative costs and margin and the wage related benefits of the respondent’s security
guards.15
On April 30, 2004, the Court of Appeals denied NFA’s motion for reconsideration.16 Hence, the instant petition.
The issue for resolution is whether or not the liability of principals in service contracts under Section 6 of RA
6727 and the wage orders issued by the Regional Tripartite Wages and Productivity Board is limited only to the
increment in the minimum wage.
At the outset, it should be noted that the proper remedy of NFA from the adverse decision of the trial court is a
petition for review under Rule 45 directly with this Court because the issue involved a question of law. However,
in the interest of justice we deem it wise to overlook the procedural technicalities if only to demonstrate that
despite the procedural infirmity, the instant petition is impressed with merit.17
RA 672718 (Wage Rationalization Act), which took effect on July 1, 1989,19 declared it a policy of the State to
rationalize the fixing of minimum wages and to promote productivity-improvement and gain-sharing measures to
ensure a decent standard of living for the workers and their families; to guarantee the rights of labor to its just
share in the fruits of production; to enhance employment generation in the countryside through industrial
dispersal; and to allow business and industry reasonable returns on investment, expansion and growth.20
In line with its declared policy, RA 6727, created the National Wages and Productivity Commission
(NWPC),21vested, inter alia, with the power to prescribe rules and guidelines for the determination of
appropriate minimum wage and productivity measures at the regional, provincial or industry levels;22 and the
Regional Tripartite Wages and Productivity Boards (RTWPB) which, among others, determine and fix the
minimum wage rates applicable in their respective region, provinces, or industries therein and issue the
corresponding wage orders, subject to the guidelines issued by the NWPC.23 Pursuant to its wage fixing
authority, the RTWPB issue wage orders which set the daily minimum wage rates.24
Payment of the increases in the wage rate of workers is ordinarily shouldered by the employer. Section 6 of RA
6727, however, expressly lodged said obligation to the principals or indirect employers in construction projects
and establishments providing security, janitorial and similar services. Substantially the same provision is
incorporated in the wage orders issued by the RTWPB.25 Section 6 of RA 6727, provides:
SEC. 6. In the case of contracts for construction projects and for security, janitorial and similar services, the
prescribed increases in the wage rates of the workers shall be borne by the principals or clients of the
construction/service contractors and the contract shall be deemed amended accordingly. In the event, however,
that the principal or client fails to pay the prescribed wage rates, the construction/service contractor shall be
jointly and severally liable with his principal or client. (Emphasis supplied)
NFA claims that its additional liability under the aforecited provision is limited only to the payment of the
increment in the statutory minimum wage rate, i.e., the rate for a regular eight (8) hour work day.
The contention is meritorious.
In construing the word "wage" in Section 6 of RA 6727, reference must be had to Section 4 (a) of the same Act. It
states:
SEC. 4. (a) Upon the effectivity of this Act, the statutory minimum wage rates for all workers and employees in the
private sector, whether agricultural or non-agricultural, shall be increased by twenty-five pesos (P25) per day …
(Emphasis supplied)
The term "wage" as used in Section 6 of RA 6727 pertains to no other than the "statutory minimum wage" which
is defined under the Rules Implementing RA 6727 as the lowest wage rate fixed by law that an employer can pay
his worker.26 The basis thereof under Section 7 of the same Rules is the normal working hours, which shall not
exceed eight hours a day. Hence, the prescribed increases or the additional liability to be borne by the principal
under Section 6 of RA 6727 is the increment or amount added to the remuneration of an employee for an 8-hour
work.
Expresio unius est exclusio alterius. Where a statute, by its terms, is expressly limited to certain matters, it may
not, by interpretation or construction, be extended to others.27 Since the increase in wage referred to in Section
6 pertains to the "statutory minimum wage" as defined herein, principals in service contracts cannot be made to
pay the corresponding wage increase in the overtime pay, night shift differential, holiday and rest day pay,
premium pay and other benefits granted to workers. While basis of said remuneration and benefits is the
statutory minimum wage, the law cannot be unduly expanded as to include those not stated in the subject
provision.
The settled rule in statutory construction is that if the statute is clear, plain and free from ambiguity, it must be
given its literal meaning and applied without interpretation. This plain meaning rule or verba legis derived from
the maxim index animi sermo est (speech is the index of intention) rests on the valid presumption that the words
employed by the legislature in a statute correctly express its intention or will and preclude the court from
construing it differently. The legislature is presumed to know the meaning of the words, to have used words
advisedly, and to have expressed its intent by use of such words as are found in the statute. Verba legis non est
recedendum, or from the words of a statute there should be no departure.28
The presumption therefore is that lawmakers are well aware that the word "wage" as used in Section 6 means
the statutory minimum wage. If their intention was to extend the obligation of principals in service contracts to
the payment of the increment in the other benefits and remuneration of workers, it would have so expressly
specified. In not so doing, the only logical conclusion is that the legislature intended to limit the additional
obligation imposed on principals in service contracts to the payment of the increment in the statutory minimum
wage.
The general rule is that construction of a statute by an administrative agency charged with the task of
interpreting or applying the same is entitled to great weight and respect. The Court, however, is not bound to
apply said rule where such executive interpretation, is clearly erroneous, or when there is no ambiguity in the
law interpreted, or when the language of the words used is clear and plain, as in the case at bar. Besides,
administrative interpretations are at best advisory for it is the Court that finally determines what the law
means.29 Hence, the interpretation given by the labor agencies in the instant case which went as far as
supplementing what is otherwise not stated in the law cannot bind this Court.
It is not within the province of this Court to inquire into the wisdom of the law for indeed, we are bound by the
words of the statute.30 The law is applied as it is. At any rate, the interest of the employees will not be adversely
affected if the obligation of principals under the subject provision will be limited to the increase in the statutory
minimum wage. This is so because all remuneration and benefits other than the increased statutory minimum
wage would be shouldered and paid by the employer or service contractor to the workers concerned. Thus, in
the end, all allowances and benefits as computed under the increased rate mandated by RA 6727 and the wage
orders will be received by the workers.
Moreover, the law secures the welfare of the workers by imposing a solidary liability on principals and the service
contractors. Under the second sentence of Section 6 of RA 6727, in the event that the principal or client fails to
pay the prescribed wage rates, the service contractor shall be held solidarily liable with the former. Likewise,
Articles 106, 107 and 109 of the Labor Code provides:
ART. 106. Contractor or Subcontractor. – Whenever an employer enters into contract with another person for the
performance of the former’s work, the employees of the contractor and of the latter’s subcontractor, if any, shall
be paid in accordance with the provisions of this Code.
In the event that the contractor or subcontractor fails to pay the wage of his employees in accordance with this
Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to
the extent of the work performed under the contract, in the same manner and extent that he is liable to
employees directly employed by him.
…
ART. 107. Indirect Employer. – The provisions of the immediately preceding Article shall likewise apply to any
person, partnership, association or corporation which, not being an employer, contracts with an independent
contractor for the performance of any work, task, job or project.
ART. 109. Solidary Liability. – The provisions of existing laws to the contrary notwithstanding, every employer or
indirect employer shall be held responsible with his contractor or subcontractor for any violation of any provision
of this Code. For purposes of determining the extent of their civil liability under this Chapter, they shall be
considered as direct employers.
Based on the foregoing interpretation of Section 6 of RA 6727, the parties may enter into stipulations increasing
the liability of the principal. So long as the minimum obligation of the principal, i.e., payment of the increased
statutory minimum wage is complied with, the Wage Rationalization Act is not violated.
In the instant case, Article IV.4 of the service contract provides:
IV.4. In the event of a legislated increase in the minimum wage of security guards and/or in the PADPAO rate, the
AGENCY may negotiate for an adjustment in the contract price. Any adjustment shall be applicable only to the
increment, based on published and circulated rates and not on mere certification.31
In the same vein, paragraph 3 of NFA Memorandum AO-98-03- states:
3. For purposes of wage adjustments, consider only the rate based on the wage Order issued by the Regional
Tripartite Wage Productivity Board (RTWPB). Unless otherwise provided in the Wage Order issued by the RTWPB,
the wage adjustment shall be limited to the increment in the legislated minimum wage;32
The parties therefore acknowledged the application to their contract of the wage orders issued by the RTWPB
pursuant to RA 6727. There being no assumption by NFA of a greater liability than that mandated by Section 6 of
the Act, its obligation is limited to the payment of the increased statutory minimum wage rates which, as
admitted by respondent, had already been satisfied by NFA.33 Under Article 1231 of the Civil Code, one of the
modes of extinguishing an obligation is by payment. Having discharged its obligation to respondent, NFA no
longer have a duty that will give rise to a correlative legal right of respondent. The latter’s complaint for
collection of remuneration and benefits other than the increased minimum wage rate, should therefore be
dismissed for lack of cause of action.
The same goes for respondent’s claim for administrative cost and margin. Considering that respondent failed to
establish a clear obligation on the part of NFA to pay the same as well as to substantiate the amount thereof with
documentary evidence, the claim should be denied.
WHEREFORE, the petition is GRANTED. The February 12, 2004 decision and the April 30, 2004 resolution of the
Court of Appeals which dismissed petitioner National Food Authority’s appeal and motion for reconsideration,
respectively, in CA-G.R. CV No. 76677, are REVERSED and SET ASIDE. The complaint filed by respondent MASADA
Security Agency, Inc., docketed as Civil Case No. Q-01-43988, before the Regional Trial Court of Quezon, City,
Branch 83, is ordered DISMISSED.
SO ORDERED.

3. G.R. No. 126999. August 30, 2000.*

SGMC REALTY CORPORATION, petitioner, vs. OFFICE OF THE PRESIDENT (OP), RIDGEVIEW REALTY CORPORATION,
SM INVESTMENTS CORPORATION, MULTI-REALTY DEVELOPMENT CORP., HENRY SY, SR., HENRY SY, JR., HANS T. SY,
MARY UY TY and VICTOR LIM, respondents.
Remedial Law; Administrative Law; Appeal; The thirty-day period is subject to the qualification that there are no
other statutory periods of appeal applicable.—As pointed out by public respondent, the aforecited administrative
order allows aggrieved party to file its appeal with the Office of the President within thirty (30) days from receipt
of the decision complained of. Nonetheless, such thirty-day period is subject to the qualification that there are
no other statutory periods of appeal applicable. If there are special laws governing particular cases which provide
for a shorter or longer reglementary period, the same shall prevail over the thirty-day period provided for in the
administrative order. This is in line with the rule in statutory construction that an administrative rule or regulation,
in order to be valid, must not contradict but conform to the provisions of the enabling law.

Same; Same; Same; There are special laws that mandate a shorter period of fifteen (15) days within which to
appeal a case to public respondent.—We note that indeed there are special laws that mandate a shorter period
of fifteen (15) days within which to appeal a case to public respondent. First, Section 15 of Presidential Decree
No. 957 provides that the decisions of the National Housing Authority (NHA) shall become final and executory
after the lapse of fifteen (15) days from the date of receipt of the decision. Second, Section 2 of Presidential
Decree No. 1344 states that decisions of the National Housing Authority shall become final and executory after
the lapse of fifteen (15) days from the date of its receipt.

Same; Same; Same; The decision of the HLURB became final and executory upon the lapse of fifteen days from
receipt of the decision.—As the appeal filed by petitioner was not taken within the reglementary period, the
prescriptive period for perfecting an appeal continues to run. Consequently, the decision of the HLURB became
final and executory upon the lapse of fifteen days from receipt of the decision. Hence, the decision became
immutable; it can no longer be amended nor altered by public respondent. Accordingly, inasmuch as the timely
perfection of an appeal is a jurisdictional requisite, public respondent has no more authority to entertain the
petitioner’s appeal. Otherwise, any amendment or alteration made which substantially affects the final and
executory judgment would be null and void for lack of jurisdiction.

QUISUMBING, J.:
In this special civil action for certiorari, petitioner seeks to set aside the decision1 of public respondent rendered
on June 18, 1996, in OP Case No. 95-L-6333, and its order2 dated October 1, 1996, denying the motion for
reconsideration.
The records disclose that on March 29, 1994, petitioner filed before the Housing and Land Use Regulatory Board
(HLURB) a complaint for breach of contract, violation of property rights and damages against private respondents.
After the parties filed their pleadings and supporting documents, the arbiter rendered a decision dismissing
petitioner's complaint as well as private respondents' counterclaim.1âwphi1.nêt
Petitioner then filed a petition for review with the Board of Commissioners of the HLURB which, however,
dismissed said petition. On October 23, 1995, petitioner received a copy of said decision of the Board of
Commissioners. On November 20, 1995, petitioner filed an appeal with public respondent. After the parties filed
their memorandum, they filed their respective draft decisions as ordered by public respondent.
On June 18, 1996, public respondent, without delving into the merits of the case, rendered the assailed decision
which reads:
"IN VIEW OF THE FOREGOING, the appeal is hereby DISMISSED for being filed out of time.
"SO ORDERED."3
Petitioner seasonably filed a motion for reconsideration which was denied. Undaunted, petitioner filed the
instant petition, alleging that public respondent committed grave abuse of discretion amounting to lack or excess
of jurisdiction:
 [I]
. . . IN HOLDING THAT THE PERIOD TO APPEAL FROM THE HOUSING AND LAND USE REGULATORY BOARD TO THE
OFFICE OF THE PRESIDENT IS FIFTEEN (15) DAYS AND NOT THIRTY (30) DAYS AS MANDATED IN THE 1994 RULES
OF PROCEDURE ADOPTED BY THE HOUSING AND LAND USE REGULATORY BOARD, AN ADMINISTRATIVE AGENCY
UNDER THE SUPERVISION AND CONTROL OF PUBLIC RESPONDENT OFFICE OF THE PRESIDENT.
[II]
. . . IN DISREGARDING THE 1994 RULES OF PROCEDURE OF THE HOUSING AND LAND USE REGULATORY BOARD
WITHOUT DECLARING THE SAME ILLEGAL AND/OR INVALID, AND IN DISREGARDING THE WELL-ESTABLISHED
DOCTRINE OF LIBERAL CONSTRUCTION OF THE ADMINISTRATIVE RULES OF PROCEDURE IN ORDER TO PROMOTE
THEIR OBJECT AND TO ASSIST THE PARTIES IN CLAIMING JUST, SPEEDY AND INEXPENSIVE DETERMINATION OF
THEIR RESPECTIVE CLAIMS AND DEFENSES.4
The fundamental issue for resolution is whether or not public respondent committed grave abuse of discretion in
ruling that the reglementary period within which to appeal the decision of HLURB to public respondent is fifteen
days.
Petitioner contends that the period of appeal from the HLURB to the Office of the President is thirty (30) days
from receipt by the aggrieved party of the decision appealed from in accordance with Section 27 of the 1994
Rules of Procedure of HLURB and Section 1 of Administrative Order No. 18, series of 1987, of the Office of the
President.
However, we find petitioner's contention bereft of merit, because of its reliance on a literal reading of cited rules
without correlating them to current laws as well as presidential decrees on the matter.
Section 27 of the 1994 HLURB Rules of Procedure provides as follows:
"Section 27. Appeal to the Office of the President. — Any party may, upon notice to the Board and the other party,
appeal the decision of the Board of Commissioners or its division to the Office of the President within thirty (30)
days from receipt thereof pursuant to and in accordance with Administrative Order No. 18, of the Office of the
President dated February 12, 1987. Decision of the President shall be final subject only to review by the Supreme
Court on certiorari or on questions of law."5
On the other hand, Administrative Order No. 18, series of 1987, issued by public respondent reads:
"Section 1. Unless otherwise governed by special laws, an appeal to the Office of the President shall be taken
within thirty (30) days from receipt by the aggrieved party of the decision/resolution/order complained of or
appealed from."6
As pointed out by public respondent, the aforecited administrative order allows aggrieved party to file its appeal
with the Office of the President within thirty (30) days from receipt of the decision complained of. Nonetheless,
such thirty-day period is subject to the qualification that there are no other statutory periods of appeal
applicable. If there are special laws governing particular cases which provide for a shorter or longer reglementary
period, the same shall prevail over the thirty-day period provided for in the administrative order. This is in line
with the rule in statutory construction that an administrative rule or regulation, in order to be valid, must not
contradict but conform to the provisions of the enabling law.7
We note that indeed there are special laws that mandate a shorter period of fifteen (15) days within which to
appeal a case to public respondent. First, Section 15 of Presidential Decree No. 957 provides that the decisions of
the National Housing Authority (NHA) shall become final and executory after the lapse of fifteen (15) days from
the date of receipt of the decision. Second, Section 2 of Presidential Decree No. 1344 states that decisions of the
National Housing Authority shall become final and executory after the lapse of fifteen (15) days from the date of
its receipt. The latter decree provides that the decisions of NHA is appealable only to the Office of the President.
Further, we note that the regulatory functions of NHA relating to housing and land development has been
transferred to Human Settlements Regulatory Commission, now known as HLURB.8 Thus, said presidential
issuances providing for a reglementary period of appeal of fifteen days apply in this case. Accordingly, the period
of appeal of thirty (30) days set forth in Section 27 of HLURB 1994 Rules of Procedure no longer holds true for
being in conflict with the provisions of aforesaid presidential decrees. For it is axiomatic that administrative rules
derive their validity from the statute that they are intended to implement. Any rule which is not consistent with
statute itself is null and void.9
In this case, petitioner received a copy of the decision of HLURB on October 23, 1995.1âwphi1 Considering that
the reglementary period to appeal is fifteen days, petitioner has only until November 7, 1995, to file its appeal.
Unfortunately, petitioner filed its appeal with public respondent only on November 20, 1995 or twenty-eight
days from receipt of the appealed decision, which is obviously filed out of time.
As the appeal filed by petitioner was not taken within the reglementary period, the prescriptive period for
perfecting an appeal continues to run. Consequently, the decision of the HLURB became final and executory
upon the lapse of fifteen days from receipt of the decision. Hence, the decision became immutable; it can no
longer be amended nor altered by public respondent. Accordingly, inasmuch as the timely perfection of an
appeal is a jurisdictional requisite, public respondent has no more authority to entertain the petitioner's appeal.
Otherwise, any amendment or alteration made which substantially affects the final and executory judgment
would be null and void for lack of jurisdiction.10
Thus, in this case public respondent cannot be faulted of grave abuse of discretion in ruling that the period of
appeal is fifteen days and in forthrightly dismissing petitioner's appeal as the same was clearly filed out of time.
Worth mentioning, just days prior to the promulgation of the assailed decision of public respondent, the HLURB
adopted on June 10, 1996, its 1996 Rules of Procedure. Significantly, Section 2, Rule XVIII of said rules provides
that any party may, upon notice to the HLURB and the other party, appeal a decision rendered by the Board of
Commissioners en banc or by one of its divisions to the Office of the President within fifteen 15 calendar days
from receipt thereof in accordance with P.D. 1344 and A.O. 18, series of 1987.11 Apparently, the amendment
was made pursuant to the pronouncements of public respondent in earlier cases12 it decided that appeals to the
Office of the President from the decision of HLURB should be filed within fifteen (15) days from receipt thereof.
At present therefore, decisions rendered by HLURB is appealable to the Office of the President within fifteen (15)
calendar days from receipt thereof.
Finally, we find that the instant petition ought not to have been directly filed with this Court. For while we have
concurrent jurisdiction with the Regional Trial Courts and the Court of Appeals to issue writs of certiorari, this
concurrence is not to be taken as an unrestrained freedom of choice concerning the court to which application
for the writ will be directed. There is after all a hierarchy of courts. That hierarchy is determinative of the venue
of appeals, and should also serve as a general determinant of the appropriate forum for petitions for the
extraordinary writs.13A direct invocation of the Supreme Court's original jurisdiction to issue these extraordinary
writs is allowed only when there are special and important reasons therefor, clearly and specifically set out in the
petition.14
WHEREFORE, the instant petition is DISMISSED for utter lack of merit. Costs against petitioner.
SO ORDERED.

1. G.R. No. 159694. January 27, 2006.*

COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. AZUCENA T. REYES, respondent.
G.R. No. 163581. January 27, 2006.*
AZUCENA T. REYES, petitioner, vs. COMMISSIONER OF INTERNAL REVENUE, respondent.

Taxation; Assessment; Taxpayers shall be informed in writing of the law and the facts on which the assessment is
made, otherwise, the assessment shall be void.—The second paragraph of Section 228 of the Tax Code is clear
and mandatory. It provides as follows: “Sec. 228. Protesting of Assessment.—x x x x x x x x x “The taxpayers shall
be informed in writing of the law and the facts on which the assessment is made: otherwise, the assessment
shall be void.”

Same; Same; The old requirement of merely notifying the taxpayer of the CIR’s findings was changed in 1998 to
informing the taxpayer of not only the law but also of the facts on which an assessment would be made.—RA
8424 has already amended the provision of Section 229 on protesting an assessment. The old requirement of
merely notifying the taxpayer of the CIR’s findings was changed in 1998 to informing the taxpayer of not only the
law, but also of the facts on which an assessment would be made; otherwise, the assessment itself would be
invalid.

Same; Same; Statutes; Statutory Construction; Statutes that are remedial, or that do not create new or take away
vested rights, do not fall under the general rule against the retroactive operation of statutes; RA 8424 does not
state, either expressly or by necessary implication, that pending actions are excepted from the operation of
Section 228, or that applying it to pending proceedings would impair vested rights.—The general rule is that
statutes are prospective. However, statutes that are remedial, or that do not create new or take away vested
rights, do not fall under the general rule against the retroactive operation of statutes. Clearly, Section 228
provides for the procedure in case an assessment is protested. The provision does not create new or take away
vested rights. In both instances, it can surely be applied retroactively. Moreover, RA 8424 does not state, either
expressly or by necessary implication, that pending actions are excepted from the operation of Section 228, or
that applying it to pending proceedings would impair vested rights.

Same; Same; Same; Same; A tax regulation is promulgated by the finance secretary to implement the provisions
of the Tax Code; The absence of the regulation does not automatically mean that the law itself would become
inoperative.—The non-retroactive application of Revenue Regulation (RR) No. 12-99 is of no moment,
considering that it merely implements the law. A tax regulation is promulgated by the finance secretary to
implement the provisions of the Tax Code. While it is desirable for the government authority or administrative
agency to have one immediately issued after a law is passed, the absence of the regulation does not
automatically mean that the law itself would become inoperative.

Same; Same; Same; Same; An administrative rule interpretive of a statute and not declarative of certain rights
and corresponding obligations, is given retroactive effect as of the date of the effectivity of the statute.—An
administrative rule interpretive of a statute, and not declarative of certain rights and corresponding obligations,
is given retroactive effect as of the date of the effectivity of the statute. RR 12-99 is one such rule. Being
interpretive of the provisions of the Tax Code, even if it was issued only on September 6, 1999, this regulation
was to retroact to January 1, 1998—a date prior to the issuance of the preliminary assessment notice and
demand letter.

Same; Same; Same; Same; In case of discrepancy between the law as amended and its implementing but old
regulation, the former necessarily prevails; Between Section 228 of the Tax Code and the pertinent provisions of
RR 12-85, the latter cannot stand because it cannot go beyond the provision of the law.—Section 228 has
replaced Section 229. The provision on protesting an assessment has been amended. Furthermore, in case of
discrepancy between the law as amended and its implementing but old regulation, the former necessarily
prevails. Thus, between Section 228 of the Tax Code and the pertinent provisions of RR 12-85, the latter cannot
stand because it cannot go beyond the provision of the law. The law must still be followed, even though the
existing tax regulation at that time provided for a different procedure. The regulation then simply provided that
notice be sent to the respondent in the form prescribed, and that no consequence would ensue for failure to
comply with that form.

Same; Same; To proceed heedlessly with tax collection without first establishing a valid assessment is evidently
violative of the cardinal principle in administrative investigations: that taxpayers should be able to present their
case and adduce supporting evidence.—The law imposes a substantive, not merely a formal, requirement. To
proceed heedlessly with tax collection without first establishing a valid assessment is evidently violative of the
cardinal principle in administrative investigations: that taxpayers should be able to present their case and adduce
supporting evidence. In the instant case, respondent has not been informed of the basis of the estate tax liability.
Without complying with the unequivocal mandate of first informing the taxpayer of the government’s claim,
there can be no deprivation of property, because no effective protest can be made. The haphazard shot at
slapping an assessment, supposedly based on estate taxation’s general provisions that are expected to be known
by the taxpayer, is utter chicanery.

Same; Same; Although taxes are the lifeblood of the government, their assessment and collection should be
made in accordance with law as any arbitrariness will negate the very reason for government itself.—Even a
cursory review of the preliminary assessment notice, as well as the demand letter sent, reveals the lack of basis
for—not to mention the insufficiency of—the gross figures and details of the itemized deductions indicated in
the notice and the letter. This Court cannot countenance an assessment based on estimates that appear to have
been arbitrarily or capriciously arrived at. Although taxes are the lifeblood of the government, their assessment
and collection “should be made in accordance with law as any arbitrariness will negate the very reason for
government itself.”

Same; Same; Failure to comply with Section 228 does not only render the assessment void, but also finds no
validation in any provision in the Tax Code.—Tax laws are civil in nature. Under our Civil Code, acts executed
against the mandatory provisions of law are void, except when the law itself authorizes the validity of those acts.
Failure to comply with Section 228 does not only render the assessment void, but also finds no validation in any
provision in the Tax Code. We cannot condone errant or enterprising tax officials, as they are expected to be
vigilant and law-abiding.

PANGANIBAN, CJ.:
Under the present provisions of the Tax Code and pursuant to elementary due process, taxpayers must be
informed in writing of the law and the facts upon which a tax assessment is based; otherwise, the assessment is
void. Being invalid, the assessment cannot in turn be used as a basis for the perfection of a tax compromise.
The Case
Before us are two consolidated1 Petitions for Review2 filed under Rule 45 of the Rules of Court, assailing the
August 8, 2003 Decision3 of the Court of Appeals (CA) in CA-GR SP No. 71392. The dispositive portion of the
assailed Decision reads as follows:
"WHEREFORE, the petition is GRANTED. The assailed decision of the Court of Tax Appeals is ANNULLED and SET
ASIDE without prejudice to the action of the National Evaluation Board on the proposed compromise settlement
of the Maria C. Tancinco estate’s tax liability."4
The Facts
The CA narrated the facts as follows:
"On July 8, 1993, Maria C. Tancinco (or ‘decedent’) died, leaving a 1,292 square-meter residential lot and an old
house thereon (or ‘subject property’) located at 4931 Pasay Road, Dasmariñas Village, Makati City.
"On the basis of a sworn information-for-reward filed on February 17, 1997 by a certain Raymond Abad (or
‘Abad’), Revenue District Office No. 50 (South Makati) conducted an investigation on the decedent’s estate (or
‘estate’). Subsequently, it issued a Return Verification Order. But without the required preliminary findings being
submitted, it issued Letter of Authority No. 132963 for the regular investigation of the estate tax case. Azucena T.
Reyes (or ‘*Reyes+’), one of the decedent’s heirs, received the Letter of Authority on March 14, 1997.
"On February 12, 1998, the Chief, Assessment Division, Bureau of Internal Revenue (or ‘BIR’), issued a preliminary
assessment notice against the estate in the amount of P14,580,618.67. On May 10, 1998, the heirs of the
decedent (or ‘heirs’) received a final estate tax assessment notice and a demand letter, both dated April 22, 1998,
for the amount of P14,912,205.47, inclusive of surcharge and interest.
"On June 1, 1998, a certain Felix M. Sumbillo (or ‘Sumbillo’) protested the assessment *o+n behalf of the heirs on
the ground that the subject property had already been sold by the decedent sometime in 1990.
"On November 12, 1998, the Commissioner of Internal Revenue (or ‘*CIR+’) issued a preliminary collection letter
to [Reyes], followed by a Final Notice Before Seizure dated December 4, 1998.
"On January 5, 1999, a Warrant of Distraint and/or Levy was served upon the estate, followed on February 11,
1999 by Notices of Levy on Real Property and Tax Lien against it.
"On March 2, 1999, [Reyes] protested the notice of levy. However, on March 11, 1999, the heirs proposed a
compromise settlement of P1,000,000.00.
"In a letter to [the CIR] dated January 27, 2000, [Reyes] proposed to pay 50% of the basic tax due, citing the
heirs’ inability to pay the tax assessment. On March 20, 2000, *the CIR+ rejected *Reyes’s+ offer, pointing out that
since the estate tax is a charge on the estate and not on the heirs, the latter’s financial incapacity is immaterial as,
in fact, the gross value of the estate amounting to P32,420,360.00 is more than sufficient to settle the tax liability.
Thus, [the CIR] demanded payment of the amount of P18,034,382.13 on or before April 15, 2000[;] otherwise,
the notice of sale of the subject property would be published.
"On April 11, 2000, [Reyes] again wrote to [the CIR], this time proposing to pay 100% of the basic tax due in the
amount of P5,313,891.00. She reiterated the proposal in a letter dated May 18, 2000.
"As the estate failed to pay its tax liability within the April 15, 2000 deadline, the Chief, Collection Enforcement
Division, BIR, notified [Reyes] on June 6, 2000 that the subject property would be sold at public auction on
August 8, 2000.
"On June 13, 2000, [Reyes] filed a protest with the BIR Appellate Division. Assailing the scheduled auction sale,
she asserted that x x x the assessment, letter of demand[,] and the whole tax proceedings against the estate are
void ab initio. She offered to file the corresponding estate tax return and pay the correct amount of tax without
surcharge [or] interest.
"Without acting on *Reyes’s+ protest and offer, *the CIR+ instructed the Collection Enforcement Division to
proceed with the August 8, 2000 auction sale. Consequently, on June 28, 2000, [Reyes] filed a [P]etition for
*R+eview with the Court of Tax Appeals (or ‘CTA’), docketed as CTA Case No. 6124.
"On July 17, 2000, [Reyes] filed a Motion for the Issuance of a Writ of Preliminary Injunction or Status Quo Order,
which was granted by the CTA on July 26, 2000. Upon *Reyes’s+ filing of a surety bond in the amount
ofP27,000,000.00, the CTA issued a [R]esolution dated August 16, 2000 ordering [the CIR] to desist and refrain
from proceeding with the auction sale of the subject property or from issuing a [W]arrant of [D]istraint or
[G]arnishment of [B]ank [A]ccount[,] pending determination of the case and/or unless a contrary order is issued.
"[The CIR] filed a [M]otion to [D]ismiss the petition on the grounds (i) that the CTA no longer has jurisdiction over
the case[,] because the assessment against the estate is already final and executory; and (ii) that the petition was
filed out of time. In a *R+esolution dated November 23, 2000, the CTA denied *the CIR’s+ motion.
"During the pendency of the [P]etition for [R]eview with the CTA, however, the BIR issued Revenue Regulation (or
‘RR’) No. 6-2000 and Revenue Memorandum Order (or ‘RMO’) No. 42-2000 offering certain taxpayers with
delinquent accounts and disputed assessments an opportunity to compromise their tax liability.
"On November 25, 2000, [Reyes] filed an application with the BIR for the compromise settlement (or
‘compromise’) of the assessment against the estate pursuant to Sec. 204(A) of the Tax Code, as implemented by
RR No. 6-2000 and RMO No. 42-2000.
"On December 26, 2000, [Reyes] filed an Ex-Parte Motion for Postponement of the hearing before the CTA
scheduled on January 9, 2001, citing her pending application for compromise with the BIR. The motion was
granted and the hearing was reset to February 6, 2001.
"On January 29, 2001, [Reyes] moved for postponement of the hearing set on February 6, 2001, this time on the
ground that she had already paid the compromise amount of P1,062,778.20 but was still awaiting approval of the
National Evaluation Board (or ‘NEB’). The CTA granted the motion and reset the hearing to February 27, 2001.
"On February 19, 2001, [Reyes] filed a Motion to Declare Application for the Settlement of Disputed Assessment
as a Perfected Compromise. In said motion, she alleged that [the CIR] had not yet signed the compromise[,]
because of procedural red tape requiring the initials of four Deputy Commissioners on relevant documents
before the compromise is signed by the [CIR]. [Reyes] posited that the absence of the requisite initials and
signature[s] on said documents does not vitiate the perfected compromise.
"Commenting on the motion, [the CIR] countered that[,] without the approval of the NEB, *Reyes’s+ application
for compromise with the BIR cannot be considered a perfected or consummated compromise.
"On March 9, 2001, the CTA denied *Reyes’s+ motion, prompting her to file a Motion for Reconsideration Ad
Cautelam. In a [R]esolution dated April 10, 2001, the CTA denied the [M]otion for [R]econsideration with the
suggestion that[,] for an orderly presentation of her case and to prevent piecemeal resolutions of different issues,
[Reyes] should file a [S]upplemental [P]etition for [R]eview[,] setting forth the new issue of whether there was
already a perfected compromise.
"On May 2, 2001, [Reyes] filed a Supplemental Petition for Review with the CTA, followed on June 4, 2001 by its
Amplificatory Arguments (for the Supplemental Petition for Review), raising the following issues:
‘1. Whether or not an offer to compromise by the *CIR+, with the acquiescence by the Secretary of Finance, of a
tax liability pending in court, that was accepted and paid by the taxpayer, is a perfected and consummated
compromise.
‘2. Whether this compromise is covered by the provisions of Section 204 of the Tax Code (CTRP) that requires
approval by the BIR *NEB+.’
"Answering the Supplemental Petition, [the CIR] averred that an application for compromise of a tax liability
under RR No. 6-2000 and RMO No. 42-2000 requires the evaluation and approval of either the NEB or the
Regional Evaluation Board (or ‘REB’), as the case may be.
"On June 14, 2001, [Reyes] filed a Motion for Judgment on the Pleadings; the motion was granted on July 11,
2001. After submission of memoranda, the case was submitted for [D]ecision.
"On June 19, 2002, the CTA rendered a [D]ecision, the decretal portion of which pertinently reads:
‘WHEREFORE, in view of all the foregoing, the instant [P]etition for [R]eview is hereby DENIED. Accordingly,
[Reyes] is hereby ORDERED to PAY deficiency estate tax in the amount of Nineteen Million Five Hundred Twenty
Four Thousand Nine Hundred Nine and 78/100 (P19,524,909.78), computed as follows:
xxxxxxxxx
‘*Reyes+ is likewise ORDERED to PAY 20% delinquency interest on deficiency estate tax due of P17,934,382.13
from January 11, 2001 until full payment thereof pursuant to Section 249(c) of the Tax Code, as amended.’
"In arriving at its decision, the CTA ratiocinated that there can only be a perfected and consummated
compromise of the estate’s tax liability*,+ if the NEB has approved *Reyes’s+ application for compromise in
accordance with RR No. 6-2000, as implemented by RMO No. 42-2000.
"Anent the validity of the assessment notice and letter of demand against the estate, the CTA stated that ‘at the
time the questioned assessment notice and letter of demand were issued, the heirs knew very well the law and
the facts on which the same were based.’ It also observed that the petition was not filed within the 30-day
reglementary period provided under Sec. 11 of Rep. Act No. 1125 and Sec. 228 of the Tax Code."5
Ruling of the Court of Appeals
In partly granting the Petition, the CA said that Section 228 of the Tax Code and RR 12-99 were mandatory and
unequivocal in their requirement. The assessment notice and the demand letter should have stated the facts and
the law on which they were based; otherwise, they were deemed void.6 The appellate court held that while
administrative agencies, like the BIR, were not bound by procedural requirements, they were still required by law
and equity to observe substantive due process. The reason behind this requirement, said the CA, was to ensure
that taxpayers would be duly apprised of -- and could effectively protest -- the basis of tax assessments against
them.7 Since the assessment and the demand were void, the proceedings emanating from them were likewise
void, and any order emanating from them could never attain finality.
The appellate court added, however, that it was premature to declare as perfected and consummated the
compromise of the estate’s tax liability. It explained that, where the basic tax assessed exceeded P1 million, or
where the settlement offer was less than the prescribed minimum rates, the National Evaluation Board’s (NEB)
prior evaluation and approval were the conditio sine qua non to the perfection and consummation of any
compromise.8 Besides, the CA pointed out, Section 204(A) of the Tax Code applied to all compromises, whether
government-initiated or not.9 Where the law did not distinguish, courts too should not distinguish.
Hence, this Petition.10
The Issues
In GR No. 159694, petitioner raises the following issues for the Court’s consideration:
"I.
Whether petitioner’s assessment against the estate is valid.
"II.
Whether respondent can validly argue that she, as well as the other heirs, was not aware of the facts and the law
on which the assessment in question is based, after she had opted to propose several compromises on the estate
tax due, and even prematurely acting on such proposal by paying 20% of the basic estate tax due."11
The foregoing issues can be simplified as follows: first, whether the assessment against the estate is valid; and,
second, whether the compromise entered into is also valid.
The Court’s Ruling
The Petition is unmeritorious.
First Issue:
Validity of the Assessment Against the Estate
The second paragraph of Section 228 of the Tax Code12 is clear and mandatory. It provides as follows:
"Sec. 228. Protesting of Assessment. --
xxxxxxxxx
"The taxpayers shall be informed in writing of the law and the facts on which the assessment is made: otherwise,
the assessment shall be void."
In the present case, Reyes was not informed in writing of the law and the facts on which the assessment of estate
taxes had been made. She was merely notified of the findings by the CIR, who had simply relied upon the
provisions of former Section 22913 prior to its amendment by Republic Act (RA) No. 8424, otherwise known as
the Tax Reform Act of 1997.
First, RA 8424 has already amended the provision of Section 229 on protesting an assessment. The old
requirement of merely notifying the taxpayer of the CIR’s findings was changed in 1998 to informing the taxpayer
of not only the law, but also of the facts on which an assessment would be made; otherwise, the assessment
itself would be invalid.
It was on February 12, 1998, that a preliminary assessment notice was issued against the estate. On April 22,
1998, the final estate tax assessment notice, as well as demand letter, was also issued. During those dates, RA
8424 was already in effect. The notice required under the old law was no longer sufficient under the new law.
To be simply informed in writing of the investigation being conducted and of the recommendation for the
assessment of the estate taxes due is nothing but a perfunctory discharge of the tax function of correctly
assessing a taxpayer. The act cannot be taken to mean that Reyes already knew the law and the facts on which
the assessment was based. It does not at all conform to the compulsory requirement under Section 228.
Moreover, the Letter of Authority received by respondent on March 14, 1997 was for the sheer purpose of
investigation and was not even the requisite notice under the law.
The procedure for protesting an assessment under the Tax Code is found in Chapter III of Title VIII, which deals
with remedies. Being procedural in nature, can its provision then be applied retroactively? The answer is yes.
The general rule is that statutes are prospective. However, statutes that are remedial, or that do not create new
or take away vested rights, do not fall under the general rule against the retroactive operation of
statutes.14Clearly, Section 228 provides for the procedure in case an assessment is protested. The provision does
not create new or take away vested rights. In both instances, it can surely be applied retroactively. Moreover, RA
8424 does not state, either expressly or by necessary implication, that pending actions are excepted from the
operation of Section 228, or that applying it to pending proceedings would impair vested rights.
Second, the non-retroactive application of Revenue Regulation (RR) No. 12-99 is of no moment, considering that
it merely implements the law.
A tax regulation is promulgated by the finance secretary to implement the provisions of the Tax Code.15 While it
is desirable for the government authority or administrative agency to have one immediately issued after a law is
passed, the absence of the regulation does not automatically mean that the law itself would become inoperative.
At the time the pre-assessment notice was issued to Reyes, RA 8424 already stated that the taxpayer must be
informed of both the law and facts on which the assessment was based. Thus, the CIR should have required the
assessment officers of the Bureau of Internal Revenue (BIR) to follow the clear mandate of the new law. The old
regulation governing the issuance of estate tax assessment notices ran afoul of the rule that tax regulations -- old
as they were -- should be in harmony with, and not supplant or modify, the law.16
It may be argued that the Tax Code provisions are not self-executory. It would be too wide a stretch of the
imagination, though, to still issue a regulation that would simply require tax officials to inform the taxpayer, in
any manner, of the law and the facts on which an assessment was based. That requirement is neither difficult to
make nor its desired results hard to achieve.
Moreover, an administrative rule interpretive of a statute, and not declarative of certain rights and corresponding
obligations, is given retroactive effect as of the date of the effectivity of the statute.17 RR 12-99 is one such rule.
Being interpretive of the provisions of the Tax Code, even if it was issued only on September 6, 1999, this
regulation was to retroact to January 1, 1998 -- a date prior to the issuance of the preliminary assessment notice
and demand letter.
Third, neither Section 229 nor RR 12-85 can prevail over Section 228 of the Tax Code.
No doubt, Section 228 has replaced Section 229. The provision on protesting an assessment has been amended.
Furthermore, in case of discrepancy between the law as amended and its implementing but old regulation, the
former necessarily prevails.18 Thus, between Section 228 of the Tax Code and the pertinent provisions of RR 12-
85, the latter cannot stand because it cannot go beyond the provision of the law. The law must still be followed,
even though the existing tax regulation at that time provided for a different procedure. The regulation then
simply provided that notice be sent to the respondent in the form prescribed, and that no consequence would
ensue for failure to comply with that form.
Fourth, petitioner violated the cardinal rule in administrative law that the taxpayer be accorded due process. Not
only was the law here disregarded, but no valid notice was sent, either. A void assessment bears no valid fruit.
The law imposes a substantive, not merely a formal, requirement. To proceed heedlessly with tax collection
without first establishing a valid assessment is evidently violative of the cardinal principle in administrative
investigations: that taxpayers should be able to present their case and adduce supporting evidence.19 In the
instant case, respondent has not been informed of the basis of the estate tax liability. Without complying with
the unequivocal mandate of first informing the taxpayer of the government’s claim, there can be no deprivation
of property, because no effective protest can be made.20 The haphazard shot at slapping an assessment,
supposedly based on estate taxation’s general provisions that are expected to be known by the taxpayer, is utter
chicanery.
Even a cursory review of the preliminary assessment notice, as well as the demand letter sent, reveals the lack of
basis for -- not to mention the insufficiency of -- the gross figures and details of the itemized deductions
indicated in the notice and the letter. This Court cannot countenance an assessment based on estimates that
appear to have been arbitrarily or capriciously arrived at. Although taxes are the lifeblood of the government,
their assessment and collection "should be made in accordance with law as any arbitrariness will negate the very
reason for government itself."21
Fifth, the rule against estoppel does not apply. Although the government cannot be estopped by the negligence
or omission of its agents, the obligatory provision on protesting a tax assessment cannot be rendered nugatory
by a mere act of the CIR .
Tax laws are civil in nature.22 Under our Civil Code, acts executed against the mandatory provisions of law are
void, except when the law itself authorizes the validity of those acts.23 Failure to comply with Section 228 does
not only render the assessment void, but also finds no validation in any provision in the Tax Code. We cannot
condone errant or enterprising tax officials, as they are expected to be vigilant and law-abiding.
Second Issue:
Validity of Compromise
It would be premature for this Court to declare that the compromise on the estate tax liability has been
perfected and consummated, considering the earlier determination that the assessment against the estate was
void. Nothing has been settled or finalized. Under Section 204(A) of the Tax Code, where the basic tax involved
exceeds one million pesos or the settlement offered is less than the prescribed minimum rates, the compromise
shall be subject to the approval of the NEB composed of the petitioner and four deputy commissioners.
Finally, as correctly held by the appellate court, this provision applies to all compromises, whether government-
initiated or not. Ubi lex non distinguit, nec nos distinguere debemos. Where the law does not distinguish, we
should not distinguish.
WHEREFORE, the Petition is hereby DENIED and the assailed Decision AFFIRMED. No pronouncement as to costs.
SO ORDERED.

2. G.R. No. 175451. September 28, 2007.*

ROSARIO L. DADULO, petitioner, vs. THE HON. COURT OF APPEALS, OFFICE OF THE OMBUDSMAN, HON. FELICIANO
BELMONTE, JR., in his capacity as City Mayor of Quezon City and GLORIA PATANGUI, respondents.

Administrative Law; Appeals; Rules of Procedure of the Office of the Ombudsman; Finality and Execution of
Decision; An appeal shall not stop the decision from being executory—in case the penalty is suspension or
removal and the respondent wins such appeal, he shall be considered as having been under preventive
suspension and shall be paid the salary and such other emoluments that he did not receive by reason of the
suspension or removal; A decision of the Office of the Ombudsman in administrative cases shall be executed as a
matter of course.—An appeal shall not stop the decision from being executory. In case the penalty is suspension
or removal and the respondent wins such appeal, he shall be considered as having been under preventive
suspension and shall be paid the salary and such other emoluments that he did not receive by reason of the
suspension or removal. A decision of the Office of the Ombudsman in administrative cases shall be executed as a
matter of course. The Office of the Ombudsman shall ensure that the decision shall be strictly enforced and
properly implemented. The refusal or failure by any officer without just cause to comply with an order of the
Office of the Ombudsman to remove, suspend, demote, fine, or censure shall be a ground for disciplinary action
against said officer.

Same; Same; Retroactive Application of Procedural Laws; Well-settled is the rule that procedural laws are
construed to be applicable to actions pending and undetermined at the time of their passage, and are deemed
retroactive in that sense and to that extent.—Well-settled is the rule that procedural laws are construed to be
applicable to actions pending and undetermined at the time of their passage, and are deemed retroactive in that
sense and to that extent. As a general rule, the retroactive application of procedural laws cannot be considered
violative of any personal rights because no vested right may attach to nor arise therefrom.

Same; Same; Appeals; Considering that an appeal under Administrative Order No. 17, the amendatory rule, shall
not stop the decision of the Office of the Ombudsman from being executory, the Court of Appeals did not
commit grave abuse of discretion in denying the petitioner’s application for injunctive relief.—This Court, in
Buencamino v. Court of Appeals, 527 SCRA 747 (2007), upheld the resolution of the Court of Appeals denying
Buencamino’s application for preliminary injunction against the immediate implementation of the suspension
order against him. The Court stated therein that considering that an appeal under Administrative Order No. 17,
the amendatory rule, shall not stop the Decision of the Office of the Ombudsman from being executory, the
Court of Appeals did not commit grave abuse of discretion in denying petitioner’s application for injunctive relief.

YNARES-SANTIAGO, J.:
For resolution is the motion for reconsideration filed by petitioner Rosario Dadulo of the Decision dated April 13,
2007 which disposed of the case as follows:
WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals in CA-G.R. SP No. 89909 affirming the
March 4, 2003 Decision of the Office of the Ombudsman in OMB-C-A-0470-J which found petitioner Rosario
Dadulo guilty of conduct prejudicial to the best interest of the service and imposed upon her the penalty of
suspension for six months is AFFIRMED.
SO ORDERED.1
Petitioner insists that the decision of the Office of the Ombudsman which found her guilty of conduct prejudicial
to the best interest of the service and imposed upon her the penalty of suspension for six months, which was
affirmed by the Court of Appeals in the assailed April 13, 2007 Decision, was not supported by substantial
evidence and that the implementation of the suspension Order is premature.
We deny the motion for reconsideration.
The factual findings of the Office of the Ombudsman upon which its decision on petitioner’s administrative
liability was based are supported by the evidence on record. These include the affidavits of the parties to the
instant case including those of respondent Gloria Patangui and Jessica Patangui, and the counter-affidavits of
petitioner and of the other Barangay Security Development Officers (BSDO).
Respondent Gloria Patangui testified that on September 22, 2002, the construction materials were taken from
her house and were brought to the barangay outpost. Patangui was informed by a BSDO that petitioner ordered
the seizure.
Jessica, respondent’s 9 year-old daughter, testified that she witnessed the actual taking of the construction
materials; that she saw two men enter their premises and take the construction materials while a woman was
supervising the activity. She later identified these men as the co-accused of petitioner.
Efren Pagabao, one of the BSDO administratively charged with petitioner, admitted that they went to the
residence of respondent upon orders of petitioner on September 22, 2002 to verify whether respondent has a
barangay permit for the house construction they were undertaking. This established the presence of the
barangay officials at the respondent’s residence and that they were there upon orders of petitioner.
On the other hand, other than a sweeping general denial of the charges against her, petitioner merely alleged
that respondent was a professional squatter. She did not specifically deny any of the acts imputed against her nor
did she explain why the construction materials were later found at the barangay outpost.
Thus, contrary to petitioner’s claim, there is substantial evidence on record sufficient to hold her administratively
liable.
As to the alleged premature implementation of the suspension order, the same is likewise bereft of merit.
Petitioner argues that her appeal has the effect of staying the execution of the decision of the Ombudsman
hence, the immediate implementation of the suspension order before it has become final and executory, was
premature. She cited the cases of Lapid v. Court of Appeals2 and Laxina v. Court of Appeals3 where this Court
ruled against the immediate implementation of the Ombudsman’s dismissal orders in view of Section 274 of
Republic Act No. 6770.5
As correctly observed by the Solicitor General, at the time the Lapid and Laxina cases were decided, Section 7,
Rule III of the Rules of Procedure of the Office of the Ombudsman was silent as to the execution of its decisions
pending appeal. This was later amended by Administrative Order No. 17 and Administrative Order No. 14-A as
implemented by Memorandum Circular No. 1 s. 2006. Hence, as amended, Section 7 of Rule III now reads:
Section 7. Finality and execution of decision. – Where the respondent is absolved of the charge, and in case of
conviction where the penalty imposed is public censure or reprimand, suspension of not more than one month,
or a fine equivalent to one month salary, the decision shall be final, executory and unappealable. In all other
cases, the decision may be appealed to the Court of Appeals on a verified petition for review under the
requirements and conditions set forth in Rule 43 of the Rules of Court, within fifteen (15) days from receipt of
the written Notice of the Decision or Order denying the Motion for Reconsideration.1âwphi1
An appeal shall not stop the decision from being executory. In case the penalty is suspension or removal and the
respondent wins such appeal, he shall be considered as having been under preventive suspension and shall be paid
the salary and such other emoluments that he did not receive by reason of the suspension or removal.
A decision of the Office of the Ombudsman in administrative cases shall be executed as a matter of
course.1âwphi1 The Office of the Ombudsman shall ensure that the decision shall be strictly enforced and
properly implemented. The refusal or failure by any officer without just cause to comply with an order of the
Office of the Ombudsman to remove, suspend, demote, fine, or censure shall be a ground for disciplinary action
against said officer.
In the case of In the Matter to Declare in Contempt of Court Hon. Simeon A. Datumanong, Secretary of
DPWH,6we held that:
The Rules of Procedure of the Office of the Ombudsman are clearly procedural and no vested right of the
petitioner is violated as he is considered preventively suspended while his case is on appeal. Moreover, in the
event he wins on appeal, he shall be paid the salary and such other emoluments that he did not receive by
reason of the suspension or removal. Besides, there is no such thing as a vested interest in an office, or even an
absolute right to hold office. Excepting constitutional offices which provide for special immunity as regards salary
and tenure, no one can be said to have any vested right in an office.7
Well-settled is the rule that procedural laws are construed to be applicable to actions pending and undetermined
at the time of their passage, and are deemed retroactive in that sense and to that extent. As a general rule, the
retroactive application of procedural laws cannot be considered violative of any personal rights because no
vested right may attach to nor arise therefrom.8
Following the ruling in the above cited case, this Court, in Buencamino v. Court of Appeals,9 upheld the
resolution of the Court of Appeals denying Buencamino’s application for preliminary injunction against the
immediate implementation of the suspension order against him. The Court stated therein that considering that
an appeal under Administrative Order No. 17, the amendatory rule, shall not stop the Decision of the Office of
the Ombudsman from being executory, the Court of Appeals did not commit grave abuse of discretion in denying
petitioner’s application for injunctive relief.
Finally, the appeal of the decision of the Ombudsman to the Court of Appeals is through a Petition for Review
under Rule 43 of the Rules of Court, Section 12 of which categorically provides that the appeal shall not stay the
award, judgment, final order or resolution sought to be reviewed unless the Court of Appeals shall direct
otherwise upon such terms as it may deem just.
WHEREFORE, the instant motion for reconsideration is DENIED with FINALITY.
SO ORDERED.

1. G.R. No. 147096. January 15, 2002.*

REPUBLIC OF THE PHILIPPINES, represented by NATIONAL TELECOMMUNICATIONS COMMISSION, petitioner, vs.
EXPRESS TELECOMMUNICATION CO., INC. and BAYAN TELECOMMUNICATIONS CO., INC., respondents.
G.R. No. 147210. January 15, 2002.
BAYAN TELECOMMUNICATIONS (Bayantel), INC., petitioner, vs. EXPRESS TELECOMMUNICATION CO., INC.
(Extelcom), respondent.

Administrative Law; Public Utilities; Telecommunications; In the regulatory telecommunications industry, the
National Telecommunications Commission (NTC) has the sole authority to issue Certificates of Public
Convenience and Necessity (CPCN) for the installation, operation, and maintenance of communications facilities
and services, radio communications systems, telephone and telegraph systems.—The NTC was created pursuant
to Executive Order No. 546, promulgated on July 23, 1979. It assumed the functions formerly assigned to the
Board of Communications and the Telecommunications Control Bureau, which were both abolished under the
said Executive Order. Previously, the NTC’s functions were merely those of the defunct Public Service Commission
(PSC), created under Commonwealth Act No. 146, as amended, otherwise known as the Public Service Act,
considering that the Board of Communications was the successor-in-interest of the PSC. Under Executive Order
No. 125-A, issued in April 1987, the NTC became an attached agency of the Department of Transportation and
Communications. In the regulatory telecommunications industry, the NTC has the sole authority to issue
Certificates of Public Convenience and Necessity (CPCN) for the installation, operation, and maintenance of
communications facilities and services, radio communications systems, telephone and telegraph systems. Such
power includes the authority to determine the areas of operations of applicants for telecommunications services.
Specifically, Section 16 of the Public Service Act authorizes the then PSC, upon notice and hearing, to issue
Certificates of Public Convenience for the operation of public services within the Philippines “whenever the
Commission finds that the operation of the public service proposed and the authorization to do business will
promote the public interests in a proper and suitable manner.”

Same; Same; Same; Publication of Laws; National Administrative Register; There is nothing in the Administrative
Code of 1987 which implies that the filing of the rules with the UP Law Center is the operative act that gives the
rules force and effect; The National Administrative Register is merely a bulletin of codified rules and it is
furnished only to the Office of the President, Congress, all appellate courts, the National Library, other public
offices or agencies as the Congress may select, and to other persons at a price sufficient to cover publication and
mailing or distribution costs.—Respondent Extelcom, however, contends that the NTC should have applied the
Revised Rules which were filed with the Office of the National Administrative Register on February 3, 1993. These
Revised Rules deleted the phrase “on its own initiative”; accordingly, a provisional authority may be issued only
upon filing of the proper motion before the Commission. In answer to this argument, the NTC, through the
Secretary of the Commission, issued a certification to the effect that inasmuch as the 1993 Revised Rules have
not been published in a newspaper of general circulation, the NTC has been applying the 1978 Rules. The
absence of publication, coupled with the certification by the Commissioner of the NTC stating that the NTC was
still governed by the 1978 Rules, clearly indicate that the 1993 Revised Rules have not taken effect at the time of
the grant of the provisional authority to Bayantel. The fact that the 1993 Revised Rules were filed with the UP
Law Center on February 3, 1993 is of no moment. There is nothing in the Administrative Code of 1987 which
implies that the filing of the rules with the UP Law Center is the operative act that gives the rules force and effect.
x x x The National Administrative Register is merely a bulletin of codified rules and it is furnished only to the
Office of the President, Congress, all appellate courts, the National Library, other public offices or agencies as the
Congress may select, and to other persons at a price sufficient to cover publication and mailing or distribution
costs.

Same; Same; Same; Same; Publication in the Official Gazette or a newspaper of general circulation is a condition
sine qua non before statutes, rules or regulations can take effect; The Rules of Practice and Procedure of the NTC,
which implements Section 29 of the Public Service Act (C.A. 146, as amended), fall squarely within the scope of
these laws, as explicitly mentioned in the case of Tañada v. Tuvera, 146 SCRA 446 (1986).—Publication in the
Official Gazette or a newspaper of general circulation is a condition sine qua non before statutes, rules or
regulations can take effect. This is explicit from Executive Order No. 200, which repealed Article 2 of the Civil
Code, and which states that: Laws shall take effect after fifteen days following the completion of their publication
either in the Official Gazette or in a newspaper of general circulation in the Philippines, unless it is otherwise
provided. The Rules of Practice and Procedure of the NTC, which implements Section 29 of the Public Service Act
(C.A. 146, as amended), fall squarely within the scope of these laws, as explicitly mentioned in the case Tañada v.
Tuvera.

Same; Same; Same; Where the records show that the amended application filed by a telecommunications firm in
fact included a motion for the issuance of a provisional authority, it cannot be said that the NTC granted the
provisional authority motu proprio.—In any event, regardless of whether the 1978 Rules or the 1993 Revised
Rules should apply, the records show that the amended application filed by Bayantel in fact included a motion for
the issuance of a provisional authority. Hence, it cannot be said that the NTC granted the provisional authority
motu proprio. The Court of Appeals, therefore, erred when it found that the NTC issued its Order of May 3, 2000
on its own initiative. This much is acknowledged in the Decision of the Court of Appeals: As prayer, ICC asked for
the immediate grant of provisional authority to construct, install, maintain and operate the subject service and to
charge the proposed rates and after due notice and hearing, approve the instant application and grant the
corresponding certificate of public convenience and necessity.
Same; Same; Same; Archiving of Cases; Revival of Cases; The archiving of cases is a widely accepted measure
designed to shelve cases in which no immediate action is expected but where no grounds exist for their outright
dismissal, albeit without prejudice, and there is nothing irregular in the revival of the application after the
condition therefor is fulfilled.—The Court of Appeals also erred when it declared that the NTC’s Order archiving
Bayantel’s application was null and void. The archiving of cases is a widely accepted measure designed to shelve
cases in which no immediate action is expected but where no grounds exist for their outright dismissal, albeit
without prejudice. It saves the petitioner or applicant from the added trouble and expense of re-filing a
dismissed case. Under this scheme, an inactive case is kept alive but held in abeyance until the situation obtains
wherein action thereon can be taken. In the case at bar, the said application was ordered archived because of
lack of available frequencies at the time, and made subject to reinstatement upon availability of the requisite
frequency. To be sure, there was nothing irregular in the revival of the application after the condition therefor
was fulfilled.

Same; Same; Same; Same; Same; Due Process; Where the order refers to a simple revival of an archived
application, it cannot be said that an oppositor’s right to procedural due process was prejudiced if it was not
given an opportunity to question the motion for revival; There is no denial of due process where full-blown
adversarial proceedings are conducted before an administrative body.—The Court of Appeals ruled that there
was a violation of the fundamental right of Extelcom to due process when it was not afforded the opportunity to
question the motion for the revival of the application. However, it must be noted that said Order referred to a
simple revival of the archived application of Bayantel in NTC Case No. 92-426. At this stage, it cannot be said that
Extelcom’s right to procedural due process was prejudiced. It will still have the opportunity to be heard during
the full-blown adversarial hearings that will follow. In fact, the records show that the NTC has scheduled several
hearing dates for this purpose, at which all interested parties shall be allowed to register their opposition. We
have ruled that there is no denial of due process where fullblown adversarial proceedings are conducted before
an administrative body. With Extelcom having fully participated in the proceedings, and indeed, given the
opportunity to file its opposition to the application, there was clearly no denial of its right to due process.

Same; Same; Same; Same; Same; The requirements of notice and publication of the application are no longer
necessary where the application is a mere revival of an application which has already been published earlier.—
The requirements of notice and publication of the application is no longer necessary inasmuch as the application
is a mere revival of an application which has already been published earlier. At any rate, the records show that all
of the five (5) CMTS operators in the country were duly notified and were allowed to raise their respective
oppositions to Bayan-tel’s application through the NTC’s Order dated February 1, 2000.

Same; Same; Same; Public Telecommunications Policy Act of the Philippines (R.A. No. 7925); Among the declared
national polices under R.A. No. 7925 is the healthy competition among telecommunications carriers, and clearly
the need for a healthy competitive environment in telecommunications is sufficient impetus for the NTC to
consider all those applicants who are willing to offer competition, develop the market and provide the
environment necessary for greater public service.—It should be borne in mind that among the declared national
policies under Republic Act No. 7925, otherwise known as the Public Telecommunications Policy Act of the
Philippines, is the healthy competition among telecommunications carriers, to wit: A healthy competitive
environment shall be fostered, one in which telecommunications carriers are free to make business decisions and
to interact with one another in providing telecommunications services, with the end in view of encouraging their
financial viability while maintaining affordable rates. The NTC is clothed with sufficient discretion to act on
matters solely within its competence. Clearly, the need for a healthy competitive environment in
telecommunications is sufficient impetus for the NTC to consider all those applicants who are willing to offer
competition, develop the market and provide the environment necessary for greater public service. This was the
intention that came to light with the issuance of Memorandum Circular 9-3-2000, allocating new frequency
bands for use of CMTS.

Same: Same; Same; Exhaustion of Administrative Remedies; The rule is well-entrenched that a party must
exhaust all administrative remedies before resorting to the courts—the premature invocation of the intervention
of the court is fatal to one’s cause of action.—We now come to the issue of exhaustion of administrative
remedies. The rule is well-entrenched that a party must exhaust all administrative remedies before resorting to
the courts. The premature invocation of the intervention of the court is fatal to one’s cause of action. This rule
would not only give the administrative agency an opportunity to decide the matter by itself correctly, but would
also prevent the unnecessary and premature resort to courts. In the case of Lopez v. City of Manila, we held: As a
general rule, where the law provides for the remedies against the action of an administrative board, body or
officer, relief to courts can be sought only after exhausting all remedies provided. The reason rests upon the
presumption that the administrative body, if given the chance to correct its mistake or error, may amend its
decision on a given matter and decide it properly. Therefore, where a remedy is available within the
administrative machinery, this should be resorted to before resort can be made to the courts, not only to give
the administrative agency the opportunity to decide the matter by itself correctly, but also to prevent
unnecessary and premature resort to courts.

Same; Same; Same; Certiorari; Motions for Reconsideration; It is well-settled that the filing of a motion for
reconsideration is a prerequisite to the filing of a special civil action for certiorari; Exceptions.—Clearly, Extelcom
violated the rule on exhaustion of administrative remedies when it went directly to the Court of Appeals on a
petition for certiorari and prohibition from the Order of the NTC dated May 3, 2000, without first filing a motion
for reconsideration. It is well-settled that the filing of a motion for reconsideration is a prerequisite to the filing of
a special civil action for certiorari. The general rule is that, in order to give the lower court the opportunity to
correct itself, a motion for reconsideration is a prerequisite to certiorari. It also basic that petitioner must exhaust
all other available remedies before resorting to certiorari. This rule, however, is subject to certain exceptions
such as any of the following: (1) the issues raised are purely legal in nature, (2) public interest is involved, (3)
extreme urgency is obvious, or (4) special circumstances warrant immediate or more direct action.

Same; Same; Same; Same; Same; That the Order of the NTC became immediately executory does not mean that
the remedy of filing a motion for reconsideration is foreclosed to the petitioner.—This case does not fall under
any of the recognized exceptions to this rule. Although the Order of the NTC dated May 3, 2000 granting
provisional authority to Bayantel was immediately executory, it did not preclude the filing of a motion for
reconsideration. Under the NTC Rules, a party adversely affected by a decision, order, ruling or resolution may
within fifteen (15) days file a motion for reconsideration. That the Order of the NTC became immediately
executory does not mean that the remedy of filing a motion for reconsideration is foreclosed to the petitioner.

Same; Same; Same; Same; The general rule is that purely administrative and discretionary functions may not be
interfered with by the courts—courts have no supervising power over the proceedings and actions of the
administrative departments of the government; The established exception to the rule is where the issuing
authority has gone beyond its statutory authority, exercised unconstitutional powers or clearly acted arbitrarily
and without regard to his duty or with grave abuse of discretion.—The Court of Appeals erred in annulling the
Order of the NTC dated May 3, 2000, granting Bayantel a provisional authority to install, operate and maintain
CMTS. The general rule is that purely administrative and discretionary functions may not be interfered with by
the courts. Thus, in Lacuesta v. Herrera, it was held: x x x (T)he powers granted to the Secretary of Agriculture
and Commerce (natural resources) by law regarding the disposition of public lands such as granting of licenses,
permits, leases and contracts, or approving, rejecting, reinstating, or canceling applications, are all executive and
administrative in nature. It is a well recognized principle that purely administrative and discretionary functions
may not be interfered with by the courts. (Coloso vs. Board of Accountancy, G.R. No. L-5750, April 20, 1953) In
general, courts have no supervising power over the proceedings and actions of the administrative departments
of the government. This is generally true with respect to acts involving the exercise of judgement or discretion
and findings of fact. (54 Am. Jur. 558-559) x x x. The established exception to the rule is where the issuing
authority has gone beyond its statutory authority, exercised unconstitutional powers or clearly acted arbitrarily
and without regard to his duty or with grave abuse of discretion. None of these obtains in the case at bar.

Same; Same; Same; Same; In petitions for certiorari, evidentiary matters or matters of fact raised in the court
below are not proper grounds nor may such be ruled upon the proceedings.—In petitions for certiorari,
evidentiary matters or matters of fact raised in the court below are not proper grounds nor may such be ruled
upon in the proceedings. As held in National Federation of Labor v. NLRC: At the outset, it should be noted that a
petition for certiorari under Rule 65 of the Rules of Court will prosper only if there is a showing of grave abuse of
discretion or an act without or in excess of jurisdiction on the part of the national Labor Relations Commission. It
does not include an inquiry as to the correctness of the evaluation of evidence which was the basis of the labor
official or officer in determining his conclusion. It is not for this Court to re-examine conflicting evidence, re-
evaluate the credibility of witnesses nor substitute the findings of fact of an administrative tribunal which has
gained expertise in its special field. Considering that the findings of fact of the labor arbiter and the NLRC are
supported by evidence on record, the same must be accorded due respect and finality.

Same; Same; Same; Same; Courts will not interfere in matters which are addressed to the sound discretion of the
government agency entrusted with the regulation of activities coming under the special and technical training
and knowledge of such agency; Administrative agencies are given a wide latitude in the evaluation of evidence
and in the exercise of their adjudicative functions, latitude which includes the authority to take judicial notice of
facts within its special competence.—This Court has consistently held that the courts will not interfere in matters
which are addressed to the sound discretion of the government agency entrusted with the regulation of
activities coming under the special and technical training and knowledge of such agency. It has also been held
that the exercise of administrative discretion is a policy decision and a matter that can best be discharged by the
government agency concerned, and not by the courts. In Villanueva v. Court of Appeals it was held that findings
of fact which are supported by evidence and the conclusion of experts should not be disturbed. This was
reiterated in Metro Transit Organization, Inc. v. National Labor Relations Commission, wherein it was ruled that
factual findings of quasi-judicial bodies which have acquired expertise because their jurisdiction is confined to
specific matters are generally accorded not only respect but even finality and are binding even upon the
Supreme Court if they are supported by substantial evidence. Administrative agencies are given a wide latitude in
the evaluation of evidence and in the exercise of its adjudicative functions. This latitude includes the authority to
take judicial notice of facts within its special competence.

Courts; Supreme Court; The divisions of the Supreme Court are not to be considered as separate and distinct
courts—the Supreme Court remains a unit notwithstanding that it works in divisions.—This Court finds that the
Manifestations of Extelcom alleging forum shopping on the part of the NTC and Bayantel are not impressed with
merit. The divisions of the Supreme Court are not to be considered as separate and distinct courts. The Supreme
Court remains a unit notwithstanding that it works in divisions. Although it may have three divisions, it is but a
single court. Actions considered in any of these divisions and decisions rendered therein are, in effect, by the
same Tribunal. The divisions of this Court are not to be considered as separate and distinct courts but as divisions
of one and the same court.

Same; Forum Shopping; Circular No. 28-91 was designed to serve as an instrument to promote and facilitate the
orderly administration of justice and should not be interpreted with such absolute literalness as to subvert its
own ultimate and legitimate objective or the goal of all rules of procedure—which is to achieve substantial
justice as expeditiously as possible.—The rules on forum shopping should not be literally interpreted. We have
stated thus: It is scarcely necessary to add that Circular No. 28-91 must be so interpreted and applied as to
achieve the purposes projected by the Supreme Court when it promulgated that circular. Circular No. 28-91 was
designed to serve as an instrument to promote and facilitate the orderly administration of justice and should not
be interpreted with such absolute literalness as to subvert its own ultimate and legitimate objective or the goal
of all rules of procedure—which is to achieve substantial justice as expeditiously as possible.

Same; Same; Even assuming that separate actions have been filed by two different parties involving essentially
the same subject matter, no forum shopping was committed where the parties did not resort to multiple judicial
remedies.—Even assuming that separate actions have been filed by two different parties involving essentially the
same subject matter, no forum shopping was committed as the parties did not resort to multiple judicial
remedies. The Court, therefore, directed the consolidation of the two cases because they involve essentially the
same issues. It would also prevent the absurd situation wherein two different divisions of the same court would
render altogether different rulings in the cases at bar.
Same; Parties; Administrative Law; National Telecommunications Commission; The NTC has legal standing to file
and initiate legal action in cases where it is clear that its inaction would result in an impairment of its ability to
execute and perform its functions.—We rule, likewise, that the NTC has legal standing to file and initiate legal
action in cases where it is clear that its inaction would result in an impairment of its ability to execute and
perform its functions. Similarly, we have previously held in Civil Service Commission v. Dacoycoy that the Civil
Service Commission, as an aggrieved party, may appeal the decision of the Court of Appeals to this Court.

Same; Actions; Appeals; Certiorari; While Rule 65 of the Rules of Civil Procedure provides that public respondents
shall not appear in or file an answer or comment to the petition or any pleading therein, no similar proscription
exists under Rule 45.—As correctly stated by the NTC, the rule invoked by Extelcom is Rule 65 of the Rules of Civil
Procedure, which provides that public respondents shall not appear in or file an answer or comment to the
petition or any pleading therein. The instant petition, on the other hand, was filed under Rule 45 where no
similar proscription exists.

YNARES-SANTIAGO, J.:
On December 29, 1992, International Communications Corporation (now Bayan Telecommunications, Inc. or
Bayantel) filed an application with the National Telecommunications Commission (NTC) for a Certificate of Public
Convenience or Necessity (CPCN) to install, operate and maintain a digital Cellular Mobile Telephone
System/Service (CMTS) with prayer for a Provisional Authority (PA). The application was docketed as NTC Case No.
92-486.1
Shortly thereafter, or on January 22, 1993, the NTC issued Memorandum Circular No. 4-1-93 directing all
interested applicants for nationwide or regional CMTS to file their respective applications before the Commission
on or before February 15, 1993, and deferring the acceptance of any application filed after said date until further
orders.2
On May 6, 1993, and prior to the issuance of any notice of hearing by the NTC with respect to Bayantel's original
application, Bayantel filed an urgent ex-parte motion to admit an amended application.3 On May 17, 1993, the
notice of hearing issued by the NTC with respect to this amended application was published in the Manila
Chronicle. Copies of the application as well as the notice of hearing were mailed to all affected parties.
Subsequently, hearings were conducted on the amended application. But before Bayantel could complete the
presentation of its evidence, the NTC issued an Order dated December 19, 1993 stating:
In view of the recent grant of two (2) separate Provisional Authorities in favor of ISLACOM and GMCR, Inc., which
resulted in the closing out of all available frequencies for the service being applied for by herein applicant, and in
order that this case may not remain pending for an indefinite period of time, AS PRAYED FOR, let this case be, as
it is, hereby ordered ARCHIVED without prejudice to its reinstatement if and when the requisite frequency
becomes available.
SO ORDERED.4
On June 18, 1998, the NTC issued Memorandum Circular No. 5-6-98 re-allocating five (5) megahertz (MHz) of the
radio frequency spectrum for the expansion of CMTS networks. The re-allocated 5 MHz were taken from the
following bands: 1730-1732.5 / 1825-1827.5 MHz and 1732.5-1735 / 1827.5-1830 MHz.5
Likewise, on March 23, 1999, Memorandum Circular No. 3-3-99 was issued by the NTC re-allocating an additional
five (5) MHz frequencies for CMTS service, namely: 1735-1737.5 / 1830-1832.5 MHz; 1737.5-1740 / 1832.5-1835
MHz; 1740-1742.5 / 1835-1837.5 MHz; and 1742.5-1745 / 1837.5-1840 MHz.6
On May 17, 1999, Bayantel filed an Ex-Parte Motion to Revive Case,7 citing the availability of new frequency
bands for CMTS operators, as provided for under Memorandum Circular No. 3-3-99.
On February 1, 2000, the NTC granted BayanTel's motion to revive the latter's application and set the case for
hearings on February 9, 10, 15, 17 and 22, 2000.8 The NTC noted that the application was ordered archived
without prejudice to its reinstatement if and when the requisite frequency shall become available.
Respondent Express Telecommunication Co., Inc. (Extelcom) filed in NTC Case No. 92-486 an Opposition (With
Motion to Dismiss) praying for the dismissal of Bayantel's application.9 Extelcom argued that Bayantel's motion
sought the revival of an archived application filed almost eight (8) years ago. Thus, the documentary evidence
and the allegations of respondent Bayantel in this application are all outdated and should no longer be used as
basis of the necessity for the proposed CMTS service. Moreover, Extelcom alleged that there was no public need
for the service applied for by Bayantel as the present five CMTS operators --- Extelcom, Globe Telecom, Inc.,
Smart Communication, Inc., Pilipino Telephone Corporation, and Isla Communication Corporation, Inc. --- more
than adequately addressed the market demand, and all are in the process of enhancing and expanding their
respective networks based on recent technological developments. 1âwphi1.nêt
Extelcom likewise contended that there were no available radio frequencies that could accommodate a new
CMTS operator as the frequency bands allocated in NTC Memorandum Circular No. 3-3-99 were intended for and
had in fact been applied for by the existing CMTS operators. The NTC, in its Memorandum Circular No. 4-1-93,
declared it its policy to defer the acceptance of any application for CMTS. All the frequency bands allocated for
CMTS use under the NTC's Memorandum Circular No. 5-11-88 and Memorandum Circular No. 2-12-92 had
already been allocated to the existing CMTS operators. Finally, Extelcom pointed out that Bayantel is its
substantial stockholder to the extent of about 46% of its outstanding capital stock, and Bayantel's application
undermines the very operations of Extelcom.
On March 13, 2000, Bayantel filed a Consolidated Reply/Comment,10 stating that the opposition was actually a
motion seeking a reconsideration of the NTC Order reviving the instant application, and thus cannot dwell on the
material allegations or the merits of the case. Furthermore, Extelcom cannot claim that frequencies were not
available inasmuch as the allocation and assignment thereof rest solely on the discretion of the NTC.
In the meantime, the NTC issued on March 9, 2000 Memorandum Circular No. 9-3-2000, re-allocating the
following radio frequency bands for assignment to existing CMTS operators and to public telecommunication
entities which shall be authorized to install, operate and maintain CMTS networks, namely: 1745-1750MHz /
1840-1845MHz; 1750-1775MHz / 1845-1850MHz; 1765-1770MHz / 1860-1865MHz; and 1770-1775MHz / 1865-
1870MHz.11
On May 3, 2000, the NTC issued an Order granting in favor of Bayantel a provisional authority to operate CMTS
service.12 The Order stated in pertinent part:
On the issue of legal capacity on the part of Bayantel, this Commission has already taken notice of the change in
name of International Communications Corporation to Bayan Telecommunications, Inc. Thus, in the Decision
entered in NTC Case No. 93-284/94-200 dated 19 July 1999, it was recognized that Bayan Telecommunications,
Inc., was formerly named International Communications Corp. Bayantel and ICC Telecoms, Inc. are one and the
same entity, and it necessarily follows that what legal capacity ICC Telecoms has or has acquired is also the legal
capacity that Bayantel possesses.
On the allegation that the Commission has committed an error in allowing the revival of the instant application, it
appears that the Order dated 14 December 1993 archiving the same was anchored on the non-availability of
frequencies for CMTS. In the same Order, it was expressly stated that the archival hereof, shall be without
prejudice to its reinstatement "if and when the requisite frequency becomes available." Inherent in the said
Order is the prerogative of the Commission in reviving the same, subject to prevailing conditions. The Order of 1
February 2001, cited the availability of frequencies for CMTS, and based thereon, the Commission, exercising its
prerogative, revived and reinstated the instant application. The fact that the motion for revival hereof was made
ex-parte by the applicant is of no moment, so long as the oppositors are given the opportunity to be later heard
and present the merits of their respective oppositions in the proceedings.
On the allegation that the instant application is already obsolete and overtaken by developments, the issue is
whether applicant has the legal, financial and technical capacity to undertake the proposed project. The
determination of such capacity lies solely within the discretion of the Commission, through its applicable rules
and regulations. At any rate, the oppositors are not precluded from showing evidence disputing such capacity in
the proceedings at hand. On the alleged non-availability of frequencies for the proposed service in view of the
pending applications for the same, the Commission takes note that it has issued Memorandum Circular 9-3-2000,
allocating additional frequencies for CMTS. The eligibility of existing operators who applied for additional
frequencies shall be treated and resolved in their respective applications, and are not in issue in the case at hand.
Accordingly, the Motions for Reconsideration filed by SMARTCOM and GLOBE TELECOMS/ISLACOM and the
Motion to Dismiss filed by EXTELCOM are hereby DENIED for lack of merit.13
The grant of the provisional authority was anchored on the following findings:
COMMENTS:
1. Due to the operational mergers between Smart Communications, Inc. and Pilipino Telephone Corporation
(Piltel) and between Globe Telecom, Inc. (Globe) and Isla Communications, Inc. (Islacom), free and effective
competition in the CMTS market is threatened. The fifth operator, Extelcom, cannot provide good competition in
as much as it provides service using the analog AMPS. The GSM system dominates the market.
2. There are at present two applicants for the assignment of the frequencies in the 1.7 Ghz and 1.8 Ghz allocated
to CMTS, namely Globe and Extelcom. Based on the number of subscribers Extelcom has, there appears to be no
congestion in its network - a condition that is necessary for an applicant to be assigned additional frequencies.
Globe has yet to prove that there is congestion in its network considering its operational merger with Islacom.
3. Based on the reports submitted to the Commission, 48% of the total number of cities and municipalities are
still without telephone service despite the more than 3 million installed lines waiting to be subscribed.
CONCLUSIONS:
1. To ensure effective competition in the CMTS market considering the operational merger of some of the CMTS
operators, new CMTS operators must be allowed to provide the service.
2. The re-allocated frequencies for CMTS of 3 blocks of 5 Mhz x 2 is sufficient for the number of applicants should
the applicants be qualified.
3. There is a need to provide service to some or all of the remaining cities and municipalities without telephone
service.
4. The submitted documents are sufficient to determine compliance to the technical requirements. The applicant
can be directed to submit details such as channeling plans, exact locations of cell sites, etc. as the project
implementation progresses, actual area coverage ascertained and traffic data are made available. Applicant
appears to be technically qualified to undertake the proposed project and offer the proposed service.
IN VIEW OF THE FOREGOING and considering that there is prima facie evidence to show that Applicant is legally,
technically and financially qualified and that the proposed service is technically feasible and economically viable,
in the interest of public service, and in order to facilitate the development of telecommunications services in all
areas of the country, as well as to ensure healthy competition among authorized CMTS providers, let
a PROVISIONAL AUTHORITY (P.A.) be issued to Applicant BAYAN TELECOMMUNICATIONS, INC. authorizing it to
construct, install, operate and maintain a Nationwide Cellular Mobile Telephone Systems (CMTS), subject to the
following terms and conditions without prejudice to a final decision after completion of the hearing which shall
be called within thirty (30) days from grant of authority, in accordance with Section 3, Rule 15, Part IV of the
Commission's Rules of Practice and Procedure. xxx.14
Extelcom filed with the Court of Appeals a petition for certiorari and prohibition,15 docketed as CA-G.R. SP No.
58893, seeking the annulment of the Order reviving the application of Bayantel, the Order granting Bayantel a
provisional authority to construct, install, operate and maintain a nationwide CMTS, and Memorandum Circular
No. 9-3-2000 allocating frequency bands to new public telecommunication entities which are authorized to
install, operate and maintain CMTS.
On September 13, 2000, the Court of Appeals rendered the assailed Decision,16 the dispositive portion of which
reads:
WHEREFORE, the writs of certiorari and prohibition prayed for are GRANTED. The Orders of public respondent
dated February 1, 2000 and May 3, 2000 in NTC Case No. 92-486 are hereby ANNULLED and SET ASIDE and the
Amended Application of respondent Bayantel is DISMISSED without prejudice to the filing of a new CMTS
application. The writ of preliminary injunction issued under our Resolution dated August 15, 2000, restraining
and enjoining the respondents from enforcing the Orders dated February 1, 2000 and May 3, 2000 in the said
NTC case is hereby made permanent. The Motion for Reconsideration of respondent Bayantel dated August 28,
2000 is denied for lack of merit.
SO ORDERED.17
Bayantel filed a motion for reconsideration of the above decision.18 The NTC, represented by the Office of the
Solicitor General (OSG), also filed its own motion for reconsideration.19 On the other hand, Extelcom filed a
Motion for Partial Reconsideration, praying that NTC Memorandum Circular No. 9-3-2000 be also declared null
and void.20
On February 9, 2001, the Court of Appeals issued the assailed Resolution denying all of the motions for
reconsideration of the parties for lack of merit.21
Hence, the NTC filed the instant petition for review on certiorari, docketed as G.R. No. 147096, raising the
following issues for resolution of this Court:
A. Whether or not the Order dated February 1, 2000 of the petitioner which revived the application of
respondent Bayantel in NTC Case No. 92-486 violated respondent Extelcom's right to procedural due process of
law;
B. Whether or not the Order dated May 3, 2000 of the petitioner granting respondent Bayantel a provisional
authority to operate a CMTS is in substantial compliance with NTC Rules of Practice and Procedure and
Memorandum Circular No. 9-14-90 dated September 4, 1990.22
Subsequently, Bayantel also filed its petition for review, docketed as G.R. No. 147210, assigning the following
errors:
I. THE COURT OF APPEALS SERIOUSLY ERRED IN ITS INTERPRETATION OF THE PRINCIPLE OF "EXHAUSTION OF
ADMINISTRATIVE REMEDIES" WHEN IT FAILED TO DISMISS HEREIN RESPONDENT'S PETITION FOR CERTIORARI
DESPITE ITS FAILURE TO FILE A MOTION FOR RECONSIDERATION.
II. THE COURT OF APPEALS SERIOUSLY ERRED IN ITS FINDING THAT THE REVIVAL OF NTC CASE NO. 92-486
ANCHORED ON A EX-PARTE MOTION TO REVIVE CASE WAS TANTAMOUNT TO GRAVE ABUSE OF DISCRETION ON
THE PART OF THE NTC.
III. THE COURT OF APPEALS SERIOUSLY ERRED WHEN IT DENIED THE MANDATE OF THE NTC AS THE AGENCY OF
GOVERNMENT WITH THE SOLE DISCRETION REGARDING ALLOCATION OF FREQUENCY BAND TO
TELECOMMUNICATIONS ENTITIES.
IV. THE COURT OF APPEALS SERIOUSLY ERRED IN ITS INTERPRETATION OF THE LEGAL PRINCIPLE THAT
JURISDICTION ONCE ACQUIRED CANNOT BE LOST WHEN IT DECLARED THAT THE ARCHIVED APPLICATION
SHOULD BE DEEMED AS A NEW APPLICATION IN VIEW OF THE SUBSTANTIAL CHANGE IN THE CIRCUMSTANCES
ALLEGED IN ITS AMENDMENT APPLICATION.
V. CONTRARY TO THE FINDING OF THE COURT OF APPEALS, THE ARCHIVING OF THE BAYANTEL APPLICATION WAS
A VALID ACT ON THE PART OF THE NTC EVEN IN THE ABSENCE OF A SPECIFIC RULE ON ARCHIVING OF CASES
SINCE RULES OF PROCEDURE ARE, AS A MATTER OF COURSE, LIBERALLY CONSTRUED IN PROCEEDINGS BEFORE
ADMINISTRATIVE BODIES AND SHOULD GIVE WAY TO THE GREATER HIERARCHY OF PUBLIC WELFARE AND PUBLIC
INTEREST.
VI. CONTRARY TO THE FINDING OF THE COURT OF APPEALS, THE ARCHIVING OF BAYANTEL'S APPLICATION WAS
NOT VIOLATIVE OF THE SUMMARY NATURE OF THE PROCEEDINGS IN THE NTC UNDER SEC. 3, RULE 1 OF THE
NTC REVISED RULES OF PROCEDURE.
VII. THE COURT OF APPEALS SERIOUSLY ERRED IN ITS FINDING THAT THE ARCHIVING OF BAYANTEL'S
APPLICATION WAS VIOLATIVE OF THE ALLEGED DECLARED POLICY OF THE GOVERNMENT ON THE
TRANSPARENCY AND FAIRNESS OF ADMINISTRATIVE PROCESS IN THE NTC AS LAID DOWN IN SEC 4(1) OF R.A. NO.
7925.
VIII. THE COURT OF APPEALS SERIOUSLY ERRED IN ITS FINDING THAT THE NTC VIOLATED THE PROVISIONS OF THE
CONSTITUTION PERTAINING TO DUE PROCESS OF LAW.
IX. THE COURT OF APPEALS SERIOUSLY ERRED IN DECLARING THAT THE MAY 3, 2000 ORDER GRANTING
BAYANTEL A PROVISIONAL AUTHORITY SHOULD BE SET ASIDE AND REVERSED.
i. Contrary to the finding of the Court of Appeals, there was no violation of the NTC Rule that the legal, technical,
financial and economic documentations in support of the prayer for provisional authority should first be
submitted.
ii. Contrary to the finding of the Court of Appeals, there was no violation of Sec. 3, Rule 15 of the NTC Rules of
Practice and Procedure that a motion must first be filed before a provisional authority could be issued.
iii. Contrary to the finding of the Court of Appeals that a plea for provisional authority necessitates a notice and
hearing, the very rule cited by the petitioner (Section 5, Rule 4 of the NTC Rules of Practice and Procedure)
provides otherwise.
iv. Contrary to the finding of the Court of Appeals, urgent public need is not the only basis for the grant of a
provisional authority to an applicant;
v. Contrary to the finding of the Court of Appeals, there was no violation of the constitutional provision on the
right of the public to information when the Common Carrier Authorization Department (CCAD) prepared its
evaluation report.23
Considering the identity of the matters involved, this Court resolved to consolidate the two petitions.24
At the outset, it is well to discuss the nature and functions of the NTC, and analyze its powers and authority as
well as the laws, rules and regulations that govern its existence and operations.
The NTC was created pursuant to Executive Order No. 546, promulgated on July 23, 1979. It assumed the
functions formerly assigned to the Board of Communications and the Telecommunications Control Bureau, which
were both abolished under the said Executive Order. Previously, the NTC's functions were merely those of the
defunct Public Service Commission (PSC), created under Commonwealth Act No. 146, as amended, otherwise
known as the Public Service Act, considering that the Board of Communications was the successor-in-interest of
the PSC. Under Executive Order No. 125-A, issued in April 1987, the NTC became an attached agency of the
Department of Transportation and Communications.
In the regulatory telecommunications industry, the NTC has the sole authority to issue Certificates of Public
Convenience and Necessity (CPCN) for the installation, operation, and maintenance of communications facilities
and services, radio communications systems, telephone and telegraph systems. Such power includes the
authority to determine the areas of operations of applicants for telecommunications services. Specifically,
Section 16 of the Public Service Act authorizes the then PSC, upon notice and hearing, to issue Certificates of
Public Convenience for the operation of public services within the Philippines "whenever the Commission finds
that the operation of the public service proposed and the authorization to do business will promote the public
interests in a proper and suitable manner."25 The procedure governing the issuance of such authorizations is set
forth in Section 29 of the said Act, the pertinent portion of which states:
All hearings and investigations before the Commission shall be governed by rules adopted by the Commission,
and in the conduct thereof, the Commission shall not be bound by the technical rules of legal evidence. xxx.
In granting Bayantel the provisional authority to operate a CMTS, the NTC applied Rule 15, Section 3 of its 1978
Rules of Practice and Procedure, which provides:
Sec. 3. Provisional Relief. --- Upon the filing of an application, complaint or petition or at any stage thereafter, the
Board may grant on motion of the pleader or on its own initiative, the relief prayed for, based on the pleading,
together with the affidavits and supporting documents attached thereto, without prejudice to a final decision
after completion of the hearing which shall be called within thirty (30) days from grant of authority asked for.
(underscoring ours)
Respondent Extelcom, however, contends that the NTC should have applied the Revised Rules which were filed
with the Office of the National Administrative Register on February 3, 1993. These Revised Rules deleted the
phrase "on its own initiative;" accordingly, a provisional authority may be issued only upon filing of the proper
motion before the Commission.
In answer to this argument, the NTC, through the Secretary of the Commission, issued a certification to the effect
that inasmuch as the 1993 Revised Rules have not been published in a newspaper of general circulation, the NTC
has been applying the 1978 Rules.
The absence of publication, coupled with the certification by the Commissioner of the NTC stating that the NTC
was still governed by the 1978 Rules, clearly indicate that the 1993 Revised Rules have not taken effect at the
time of the grant of the provisional authority to Bayantel. The fact that the 1993 Revised Rules were filed with
the UP Law Center on February 3, 1993 is of no moment. There is nothing in the Administrative Code of 1987
which implies that the filing of the rules with the UP Law Center is the operative act that gives the rules force and
effect. Book VII, Chapter 2, Section 3 thereof merely states:
Filing. --- (1) Every agency shall file with the University of the Philippines Law Center three (3) certified copes of
every rule adopted by it. Rules in force on the date of effectivity of this Code which are not filed within three (3)
months from the date shall not thereafter be the basis of any sanction against any party or persons.
(2) The records officer of the agency, or his equivalent functionary, shall carry out the requirements of this
section under pain or disciplinary action.
(3) A permanent register of all rules shall be kept by the issuing agency and shall be open to public inspection.
The National Administrative Register is merely a bulletin of codified rules and it is furnished only to the Office of
the President, Congress, all appellate courts, the National Library, other public offices or agencies as the
Congress may select, and to other persons at a price sufficient to cover publication and mailing or distribution
costs.26 In a similar case, we held:
This does not imply however, that the subject Administrative Order is a valid exercise of such quasi-legislative
power. The original Administrative Order issued on August 30, 1989, under which the respondents filed their
applications for importations, was not published in the Official Gazette or in a newspaper of general circulation.
The questioned Administrative Order, legally, until it is published, is invalid within the context of Article 2 of Civil
Code, which reads:
"Article 2. Laws shall take effect after fifteen days following the completion of their publication in the Official
Gazette (or in a newspaper of general circulation in the Philippines), unless it is otherwise provided. x x x"
The fact that the amendments to Administrative Order No. SOCPEC 89-08-01 were filed with, and published by
the UP Law Center in the National Administrative Register, does not cure the defect related to the effectivity of
the Administrative Order.
This Court, in Tañada vs. Tuvera (G.R. No. L-63915, December 29, 1986, 146 SCRA 446) stated, thus:
"We hold therefore that all statutes, including those of local application and private laws, shall be published as a
condition for their effectivity, which shall begin fifteen days after publication unless a different effectivity is fixed
by the legislature.
Covered by this rule are presidential decrees and executive orders promulgated by the President in the exercise
of legislative power or, at present, directly conferred by the Constitution. Administrative Rules and Regulations
must also be published if their purpose is to enforce or implement existing law pursuant also to a valid delegation.
Interpretative regulations and those merely internal in nature, that is, regulating only the personnel of the
administrative agency and not the public, need not be published. Neither is publication required of the so-called
letters of instructions issued by administrative superiors concerning the rules or guidelines to be followed by
their subordinates in the performance of their duties.
xxx
We agree that the publication must be in full or it is no publication at all since its purpose is to inform the public
of the contents of the laws."
The Administrative Order under consideration is one of those issuances which should be published for its
effectivity, since its purpose is to enforce and implement an existing law pursuant to a valid delegation, i.e., P.D.
1071, in relation to LOI 444 and EO 133.27
Thus, publication in the Official Gazette or a newspaper of general circulation is a condition sine qua non before
statutes, rules or regulations can take effect. This is explicit from Executive Order No. 200, which repealed Article
2 of the Civil Code, and which states that:
Laws shall take effect after fifteen days following the completion of their publication either in the Official Gazette
or in a newspaper of general circulation in the Philippines, unless it is otherwise provided.28
The Rules of Practice and Procedure of the NTC, which implements Section 29 of the Public Service Act (C.A. 146,
as amended), fall squarely within the scope of these laws, as explicitly mentioned in the case Tañada v. Tuvera.29
Our pronouncement in Tañada vs. Tuvera is clear and categorical. Administrative rules and regulations must be
published if their purpose is to enforce or implement existing law pursuant to a valid delegation. The only
exceptions are interpretative regulations, those merely internal in nature, or those so-called letters of
instructions issued by administrative superiors concerning the rules and guidelines to be followed by their
subordinates in the performance of their duties.30
Hence, the 1993 Revised Rules should be published in the Official Gazette or in a newspaper of general
circulation before it can take effect. Even the 1993 Revised Rules itself mandates that said Rules shall take effect
only after their publication in a newspaper of general circulation.31 In the absence of such publication, therefore,
it is the 1978 Rules that governs.
In any event, regardless of whether the 1978 Rules or the 1993 Revised Rules should apply, the records show
that the amended application filed by Bayantel in fact included a motion for the issuance of a provisional
authority. Hence, it cannot be said that the NTC granted the provisional authority motu proprio. The Court of
Appeals, therefore, erred when it found that the NTC issued its Order of May 3, 2000 on its own initiative. This
much is acknowledged in the Decision of the Court of Appeals:
As prayer, ICC asked for the immediate grant of provisional authority to construct, install, maintain and operate
the subject service and to charge the proposed rates and after due notice and hearing, approve the instant
application and grant the corresponding certificate of public convenience and necessity.32
The Court of Appeals also erred when it declared that the NTC's Order archiving Bayantel's application was null
and void. The archiving of cases is a widely accepted measure designed to shelve cases in which no immediate
action is expected but where no grounds exist for their outright dismissal, albeit without prejudice. It saves the
petitioner or applicant from the added trouble and expense of re-filing a dismissed case. Under this scheme, an
inactive case is kept alive but held in abeyance until the situation obtains wherein action thereon can be taken.
In the case at bar, the said application was ordered archived because of lack of available frequencies at the time,
and made subject to reinstatement upon availability of the requisite frequency. To be sure, there was nothing
irregular in the revival of the application after the condition therefor was fulfilled.
While, as held by the Court of Appeals, there are no clear provisions in the Rules of the NTC which expressly
allow the archiving of any application, this recourse may be justified under Rule 1, Section 2 of the 1978 Rules,
which states:
Sec. 2. Scope.--- These rules govern pleadings, practice and procedure before the Board of Communications (now
NTC) in all matters of hearing, investigation and proceedings within the jurisdiction of the Board. However, in the
broader interest of justice and in order to best serve the public interest, the Board may, in any particular matter,
except it from these rules and apply such suitable procedure to improve the service in the transaction of the
public business. (underscoring ours)
The Court of Appeals ruled that the NTC committed grave abuse of discretion when it revived Bayantel's
application based on an ex-parte motion. In this regard, the pertinent provisions of the NTC Rules:
Sec. 5. Ex-parte Motions. --- Except for motions for provisional authorization of proposed services and increase of
rates, ex-parte motions shall be acted upon by the Board only upon showing of urgent necessity therefor and the
right of the opposing party is not substantially impaired.33
Thus, in cases which do not involve either an application for rate increase or an application for a provisional
authority, the NTC may entertain ex-parte motions only where there is an urgent necessity to do so and no rights
of the opposing parties are impaired.1âwphi1.nêt
The Court of Appeals ruled that there was a violation of the fundamental right of Extelcom to due process when
it was not afforded the opportunity to question the motion for the revival of the application. However, it must be
noted that said Order referred to a simple revival of the archived application of Bayantel in NTC Case No. 92-426.
At this stage, it cannot be said that Extelcom's right to procedural due process was prejudiced. It will still have the
opportunity to be heard during the full-blown adversarial hearings that will follow. In fact, the records show that
the NTC has scheduled several hearing dates for this purpose, at which all interested parties shall be allowed to
register their opposition. We have ruled that there is no denial of due process where full-blown adversarial
proceedings are conducted before an administrative body.34 With Extelcom having fully participated in the
proceedings, and indeed, given the opportunity to file its opposition to the application, there was clearly no
denial of its right to due process.
In Zaldivar vs. Sandiganbayan (166 SCRA 316 [1988]), we held that the right to be heard does not only refer to
the right to present verbal arguments in court. A party may also be heard through his pleadings. where
opportunity to be heard is accorded either through oral arguments or pleadings, there is no denial of procedural
due process. As reiterated in National Semiconductor (HK) Distribution, Ltd. vs. NLRC (G.R. No. 123520, June 26,
1998), the essence of due process is simply an opportunity to be heard, or as applied to administrative
proceedings, an opportunity to explain one's side. Hence, in Navarro III vs. Damaso (246 SCRA 260 [1995]), we
held that a formal or trial-type hearing is not at all times and not in all instances essential. Plainly, petitioner was
not denied due process.35
Extelcom had already entered its appearance as a party and filed its opposition to the application. It was neither
precluded nor barred from participating in the hearings thereon. Indeed, nothing, not even the Order reviving
the application, bars or prevents Extelcom and the other oppositors from participating in the hearings and
adducing evidence in support of their respective oppositions. The motion to revive could not have possibly
caused prejudice to Extelcom since the motion only sought the revival of the application. It was merely a
preliminary step towards the resumption of the hearings on the application of Bayantel. The latter will still have
to prove its capability to undertake the proposed CMTS. Indeed, in its Order dated February 1, 2000, the NTC set
several hearing dates precisely intended for the presentation of evidence on Bayantel's capability and
qualification. Notice of these hearings were sent to all parties concerned, including Extelcom.
As regards the changes in the personal circumstances of Bayantel, the same may be ventilated at the hearings
during Bayantel's presentation of evidence. In fact, Extelcom was able to raise its arguments on this matter in the
Opposition (With Motion to Dismiss) anent the re-opening and re-instatement of the application of Bayantel.
Extelcom was thus heard on this particular point.
Likewise, the requirements of notice and publication of the application is no longer necessary inasmuch as the
application is a mere revival of an application which has already been published earlier. At any rate, the records
show that all of the five (5) CMTS operators in the country were duly notified and were allowed to raise their
respective oppositions to Bayantel's application through the NTC's Order dated February 1, 2000.
It should be borne in mind that among the declared national policies under Republic Act No. 7925, otherwise
known as the Public Telecommunications Policy Act of the Philippines, is the healthy competition among
telecommunications carriers, to wit:
A healthy competitive environment shall be fostered, one in which telecommunications carriers are free to make
business decisions and to interact with one another in providing telecommunications services, with the end in
view of encouraging their financial viability while maintaining affordable rates.36
The NTC is clothed with sufficient discretion to act on matters solely within its competence. Clearly, the need for
a healthy competitive environment in telecommunications is sufficient impetus for the NTC to consider all those
applicants who are willing to offer competition, develop the market and provide the environment necessary for
greater public service. This was the intention that came to light with the issuance of Memorandum Circular 9-3-
2000, allocating new frequency bands for use of CMTS. This memorandum circular enumerated the conditions
prevailing and the reasons which necessitated its issuance as follows:
- the international accounting rates are rapidly declining, threatening the subsidy to the local exchange service
as mandated in EO 109 and RA 7925;
- the public telecommunications entities which were obligated to install, operate and maintain local exchange
network have performed their obligations in varying degrees;
- after more than three (3) years from the performance of the obligations only 52% of the total number of cities
and municipalities are provided with local telephone service.
- there are mergers and consolidations among the existing cellular mobile telephone service (CMTS) providers
threatening the efficiency of competition;
- there is a need to hasten the installation of local exchange lines in unserved areas;
- there are existing CMTS operators which are experiencing congestion in the network resulting to low grade of
service;
- the consumers/customers shall be given the freedom to choose CMTS operators from which they could get
the service.37
Clearly spelled out is the need to provide enhanced competition and the requirement for more landlines and
telecommunications facilities in unserved areas in the country. On both scores, therefore, there was sufficient
showing that the NTC acted well within its jurisdiction and in pursuance of its avowed duties when it allowed the
revival of Bayantel's application.
We now come to the issue of exhaustion of administrative remedies. The rule is well-entrenched that a party
must exhaust all administrative remedies before resorting to the courts. The premature invocation of the
intervention of the court is fatal to one's cause of action. This rule would not only give the administrative agency
an opportunity to decide the matter by itself correctly, but would also prevent the unnecessary and premature
resort to courts.38 In the case of Lopez v. City of Manila,39 we held:
As a general rule, where the law provides for the remedies against the action of an administrative board, body or
officer, relief to courts can be sought only after exhausting all remedies provided. The reason rests upon the
presumption that the administrative body, if given the chance to correct its mistake or error, may amend its
decision on a given matter and decide it properly. Therefore, where a remedy is available within the
administrative machinery, this should be resorted to before resort can be made to the courts, not only to give
the administrative agency the opportunity to decide the matter by itself correctly, but also to prevent
unnecessary and premature resort to courts.
Clearly, Extelcom violated the rule on exhaustion of administrative remedies when it went directly to the Court of
Appeals on a petition for certiorari and prohibition from the Order of the NTC dated May 3, 2000, without first
filing a motion for reconsideration. It is well-settled that the filing of a motion for reconsideration is a
prerequisite to the filing of a special civil action for certiorari.
The general rule is that, in order to give the lower court the opportunity to correct itself, a motion for
reconsideration is a prerequisite to certiorari. It also basic that petitioner must exhaust all other available
remedies before resorting to certiorari. This rule, however, is subject to certain exceptions such as any of the
following: (1) the issues raised are purely legal in nature, (2) public interest is involved, (3) extreme urgency is
obvious or (4) special circumstances warrant immediate or more direct action.40
This case does not fall under any of the recognized exceptions to this rule. Although the Order of the NTC dated
May 3, 2000 granting provisional authority to Bayantel was immediately executory, it did not preclude the filing
of a motion for reconsideration. Under the NTC Rules, a party adversely affected by a decision, order, ruling or
resolution may within fifteen (15) days file a motion for reconsideration. That the Order of the NTC became
immediately executory does not mean that the remedy of filing a motion for reconsideration is foreclosed to the
petitioner.41
Furthermore, Extelcom does not enjoy the grant of any vested interest on the right to render a public service.
The Constitution is quite emphatic that the operation of a public utility shall not be exclusive. Thus:
No franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted
to citizens of the Philippines or to corporations organized under the laws of the Philippines at least sixty per
centum of whose capital is owned by such citizens, nor shall such franchise, certificate or authorization be
exclusive in character or for a longer period than fifty years. Neither shall any such franchise or right be granted
except under the condition that it shall be subject to amendment, alteraion, or repeal by the Congress when the
common good so requires. xxx xxx xxx.42
In Radio Communications of the Phils., Inc. v. National Telecommunications Commission,43 we held:
It is well within the powers of the public respondent to authorize the installation by the private respondent
network of radio communications systems in Catarman, Samar and San Jose, Mindoro. Under the circumstances,
the mere fact that the petitioner possesses a franchise to put up and operate a radio communications system in
certain areas is not an insuperable obstacle to the public respondent's issuing the proper certificate to an
applicant desiring to extend the same services to those areas. The Constitution mandates that a franchise cannot
be exclusive in nature nor can a franchise be granted except that it must be subject to amendment, alteration, or
even repeal by the legislature when the common good so requires. (Art. XII, sec. 11 of the 1986 Constitution).
There is an express provision in the petitioner's franchise which provides compliance with the above mandate
(RA 2036, sec. 15).
Even in the provisional authority granted to Extelcom, it is expressly stated that such authority is not exclusive.
Thus, the Court of Appeals erred when it gave due course to Extelcom's petition and ruled that it constitutes an
exception to the rule on exhaustion of administrative remedies.
Also, the Court of Appeals erred in annulling the Order of the NTC dated May 3, 2000, granting Bayantel a
provisional authority to install, operate and maintain CMTS. The general rule is that purely administrative and
discretionary functions may not be interfered with by the courts. Thus, in Lacuesta v. Herrera,44 it was held:
xxx (T)he powers granted to the Secretary of Agriculture and Commerce (natural resources) by law regarding the
disposition of public lands such as granting of licenses, permits, leases and contracts, or approving, rejecting,
reinstating, or canceling applications, are all executive and administrative in nature. It is a well recognized
principle that purely administrative and discretionary functions may not be interfered with by the courts. (Coloso
vs. Board of Accountancy, G.R. No. L-5750, April 20, 1953) In general, courts have no supervising power over the
proceedings and actions of the administrative departments of the government. This is generally true with respect
to acts involving the exercise of judgement or discretion and findings of fact. (54 Am. Jur. 558-559) xxx.
The established exception to the rule is where the issuing authority has gone beyond its statutory authority,
exercised unconstitutional powers or clearly acted arbitrarily and without regard to his duty or with grave abuse
of discretion.45 None of these obtains in the case at bar.
Moreover, in petitions for certiorari, evidentiary matters or matters of fact raised in the court below are not
proper grounds nor may such be ruled upon in the proceedings. As held in National Federation of Labor v.
NLRC:46
At the outset, it should be noted that a petition for certiorari under Rule 65 of the Rules of Court will prosper
only if there is a showing of grave abuse of discretion or an act without or in excess of jurisdiction on the part of
the National Labor Relations Commission. It does not include an inquiry as to the correctness of the evaluation of
evidence which was the basis of the labor official or officer in determining his conclusion. It is not for this Court
to re-examine conflicting evidence, re-evaluate the credibility of witnesses nor substitute the findings of fact of
an administrative tribunal which has gained expertise in its special field. Considering that the findings of fact of
the labor arbiter and the NLRC are supported by evidence on record, the same must be accorded due respect
and finality.
This Court has consistently held that the courts will not interfere in matters which are addressed to the sound
discretion of the government agency entrusted with the regulation of activities coming under the special and
technical training and knowledge of such agency.47 It has also been held that the exercise of administrative
discretion is a policy decision and a matter that can best be discharged by the government agency concerned,
and not by the courts.48 In Villanueva v. Court of Appeals,49 it was held that findings of fact which are supported
by evidence and the conclusion of experts should not be disturbed. This was reiterated in Metro Transit
Organization, Inc. v. National Labor Relations Commission,50 wherein it was ruled that factual findings of quasi-
judicial bodies which have acquired expertise because their jurisdiction is confined to specific matters are
generally accorded not only respect but even finality and are binding even upon the Supreme Court if they are
supported by substantial evidence.1âwphi1.nêt
Administrative agencies are given a wide latitude in the evaluation of evidence and in the exercise of its
adjudicative functions. This latitude includes the authority to take judicial notice of facts within its special
competence.
In the case at bar, we find no reason to disturb the factual findings of the NTC which formed the basis for
awarding the provisional authority to Bayantel. As found by the NTC, Bayantel has been granted several
provisional and permanent authorities before to operate various telecommunications services.51 Indeed, it was
established that Bayantel was the first company to comply with its obligation to install local exchange lines
pursuant to E.O. 109 and R.A. 7925. In recognition of the same, the provisional authority awarded in favor of
Bayantel to operate Local Exchange Services in Quezon City, Malabon, Valenzuela and the entire Bicol region was
made permanent and a CPCN for the said service was granted in its favor. Prima facie evidence was likewise
found showing Bayantel's legal, financial and technical capacity to undertake the proposed cellular mobile
telephone service.
Likewise, the May 3, 2000 Order did not violate NTC Memorandum Circular No. 9-14-90 dated September 4,
1990, contrary to the ruling of the Court of Appeals. The memorandum circular sets forth the procedure for the
issuance of provisional authority thus:
EFFECTIVE THIS DATE, and as part of the Commission's drive to streamline and fast track action on
applications/petitions for CPCN other forms of authorizations, the Commission shall be evaluating
applications/petitions for immediate issuance of provisional authorizations, pending hearing and final
authorization of an application on its merit.
For this purpose, it is hereby directed that all applicants/petitioners seeking for provisional authorizations, shall
submit immediately to the Commission, either together with their application or in a Motion all their legal,
technical, financial, economic documentations in support of their prayer for provisional authorizations for
evaluation. On the basis of their completeness and their having complied with requirements, the Commission
shall be issuing provisional authorizations.
Clearly, a provisional authority may be issued even pending hearing and final determination of an application on
its merits.
Finally, this Court finds that the Manifestations of Extelcom alleging forum shopping on the part of the NTC and
Bayantel are not impressed with merit. The divisions of the Supreme Court are not to be considered as separate
and distinct courts. The Supreme Court remains a unit notwithstanding that it works in divisions. Although it may
have three divisions, it is but a single court. Actions considered in any of these divisions and decisions rendered
therein are, in effect, by the same Tribunal. The divisions of this Court are not to be considered as separate and
distinct courts but as divisions of one and the same court.52
Moreover, the rules on forum shopping should not be literally interpreted. We have stated thus:
It is scarcely necessary to add that Circular No. 28-91 must be so interpreted and applied as to achieve the
purposes projected by the Supreme Court when it promulgated that circular. Circular No. 28-91 was designed to
serve as an instrument to promote and facilitate the orderly administration of justice and should not be
interpreted with such absolute literalness as to subvert its own ultimate and legitimate objection or the goal of
all rules of procedure – which is to achieve substantial justice as expeditiously as possible.53
Even assuming that separate actions have been filed by two different parties involving essentially the same
subject matter, no forum shopping was committed as the parties did not resort to multiple judicial remedies. The
Court, therefore, directed the consolidation of the two cases because they involve essentially the same issues. It
would also prevent the absurd situation wherein two different divisions of the same court would render
altogether different rulings in the cases at bar.
We rule, likewise, that the NTC has legal standing to file and initiate legal action in cases where it is clear that its
inaction would result in an impairment of its ability to execute and perform its functions. Similarly, we have
previously held in Civil Service Commission v. Dacoycoy54 that the Civil Service Commission, as an aggrieved party,
may appeal the decision of the Court of Appeals to this Court.
As correctly stated by the NTC, the rule invoked by Extelcom is Rule 65 of the Rules of Civil Procedure, which
provides that public respondents shall not appear in or file an answer or comment to the petition or any pleading
therein.55 The instant petition, on the other hand, was filed under Rule 45 where no similar proscription exists.
WHEREFORE, in view of the foregoing, the consolidated petitions are GRANTED. The Court of Appeals' Decision
dated September 13, 2000 and Resolution dated February 9, 2001 are REVERSED and SET ASIDE. The permanent
injunction issued by the Court of Appeals is LIFTED. The Orders of the NTC dated February 1, 2000 and May 3,
2000 are REINSTATED. No pronouncement as to costs.
SO ORDERED.

1. No. L-19337. September 30, 1969.

ASTURIAS SUGAR CENTRAL, INC., petitioner, vs. COMMISSIONER OF CUSTOMS and COURT OF TAX APPEALS,
respondents.
Statutory construction; Administrative or executive interpretations of statutes; Weight of consideration where
statute has not been interpreted by court of last resort.—Where the court of last resort has not previously
interpreted the statute, the rule is that courts will give consideration to construction by administrative or
executive departments of the State.

Same; Same; Same; Interpretation of office charged with enforcement of statute.—The construction of the office
charged with implementing and enforcing the provisions of a statute should be given controlling weight.

Same; Construction of tax statutes; Rule on exemptions.—Exemption from taxation are not favored, and tax
statutes are to be construed in strictissimi juris against the taxpayer and liberally in favor of the taxing authority.

Taxation; Customs and Tariff Code; One-year period in Section, 23 of Philippine Tariff Act of 1909 is non-
extendible.—The one-year period prescribed in section 23 of Philippine Tariff Act of 1909 is non-extendible and
compliance therewith is mandatory.

Same; Same; Customs Administrative Order 389; "Jute bags" included in phrase "cylinders and other
containers."—The Philippine Tariff Act of 1909 and the Tariff and Customs Code, which Administrative Order 389
seeks to implement, speak of "containers" in general, The enumeration following the word "containers" in the
said statutes serves merely to give examples of containers and not to specify the particular kinds thereof. There is,
therefore, no reason to suppose that the customs authorities had intended, in Customs Administrative Order 389,
to circumscribe the scope of the word "container" any more than the statutes sought to be implemented actually
intended to do.

Same; Same; Drawbacks; Effect of availment of Section 105 (x).—Where an importer has opted to take advantage
of the provisions of section 105(x), he may not, after having failed to comply with the conditions imposed
thereby, avoid the consequences of such failure by being allowed a drawback under section 106(b) of the same
Act without having complied with the conditions of the latter section.
Statutory construction; Parts of statute should be harmonized.—A construction should be avoided which affords
an opportunity to defeat compliance with the terms of a statute. Rather, courts should proceed on the theory
that parts of a statute may be harmonized and reconciled with each other.

CASTRO, J.:
This is a petition for review of the decision of the Court of Tax Appeals of November 20, 1961, which denied
recovery of the sum of P28,629.42, paid by the petitioner, under protest, in the concept of customs duties and
special import tax, as well as the petitioner's alternative remedy to recover the said amount minus one per cent
thereof by way of a drawback under sec. 106 (b) of the Tariff and Customs Code.
The petitioner Asturias Sugar Central, Inc. is engaged in the production and milling of centrifugal sugar for exert,
the sugar so produced being placed in containers known as jute bags. In 1957 it made two importations of jute
bags. The first shipment consisting of 44,800 jute bags and declared under entry 48 on January 8, 1967, entered
free of customs duties and special import tax upon the petitioner's filing of Re-exportation and Special Import
Tax Bond no. 1 in the amounts of P25,088 and P2,464.50, conditioned upon the exportation of the jute bags
within one year from the date of importation. The second shipment consisting of 75,200 jute bags and declared
under entry 243 on February 8, 1957, likewise entered free of customs duties and special import tax upon the
petitioner's filing of Re-exportation and Special Import Tax Bond no. 6 in the amounts of P42,112 and P7,984.44,
with the same conditions as stated in bond no. 1.
Of the 44,800 jute bags declared under entry 48, only 8,647 were exported within one year from the date of
importation as containers of centrifugal sugar. Of the 75,200 jute bags declared under entry 243, only 25,000
were exported within the said period of one year. In other words, of the total number of imported jute bags only
33,647 bags were exported within one year after their importation. The remaining 86,353 bags were exported
after the expiration of the one-year period but within three years from their importation.
On February 6, 1958 the petitioner, thru its agent Theo. H. Davies & Co., Far East, Ltd., requested the
Commissioner of Customs for a week's extension of Re-exportation and Special Import Tax Bond no. 6 which was
to expire the following day, giving the following as the reasons for its failure to export the remaining jute bags
within the period of one year: (a) typhoons and severe floods; (b) picketing of the Central railroad line from
November 6 to December 21, 1957 by certain union elements in the employ of the Philippine Railway Company,
which hampered normal operations; and (c) delay in the arrival of the vessel aboard which the petitioner was to
ship its sugar which was then ready for loading. This request was denied by the Commissioner per his letter of
April 15, 1958.
Due to the petitioner's failure to show proof of the exportation of the balance of 86,353 jute bags within one
year from their importation, the Collector of Customs of Iloilo, on March 17, 1958, required it to pay the amount
of P28,629.42 representing the customs duties and special import tax due thereon, which amount the petitioner
paid under protest.
In its letter of April 10, 1958, supplemented by its letter of May 12, 1958, the petitioner demanded the refund of
the amount it had paid, on the ground that its request for extension of the period of one year was filed on time,
and that its failure to export the jute bags within the required one-year period was due to delay in the arrival of
the vessel on which they were to be loaded and to the picketing of the Central railroad line. Alternatively, the
petitioner asked for refund of the same amount in the form of a drawback under section 106(b) in relation to
section 105(x) of the Tariff and Customs Code.
After hearing, the Collector of Customs of Iloilo rendered judgment on January 21, 1960 denying the claim for
refund. From his action, appeal was taken to the Commissioner of Customs who upheld the decision of the
Collector. Upon a petition for review the Court of Tax Appeals affirmed the decision of the Commissioner of
Customs.
The petitioner imputes three errors to the Court of Tax Appeals, namely:
1. In not declaring that force majeure and/or fortuitous event is a sufficient justification for the failure of the
petitioner to export the jute bags in question within the time required by the bonds.
2. In not declaring that it is within the power of the Collector of Customs and/or the Commissioner of Customs to
extend the period of one (1) year within which the jute bags should be exported.
3. In not declaring that the petitioner is entitled to a refund by way of a drawback under the provisions of section
106, par. (b), of the Tariff and Customs Code.
1. The basic issue tendered for resolution is whether the Commissioner of Customs is vested, under the
Philippine Tariff Act of 1909, the then applicable law, with discretion to extend the period of one year provided
for in section 23 of the Act. Section 23 reads:
SEC. 23. That containers, such as casks, large metal, glass, or other receptacles which are, in the opinion of the
collector of customs, of such a character as to be readily identifiable may be delivered to the importer thereof
upon identification and the giving of a bond with sureties satisfactory to the collector of customs in an amount
equal to double the estimated duties thereon, conditioned for the exportation thereof or payment of the
corresponding duties thereon within one year from the date of importation, under such rules and regulations as
the Insular Collector of Customs shall provide.1
To implement the said section 23, Customs Administrative Order 389 dated December 6, 1940 was promulgated,
paragraph XXVIII of which provides that "bonds for the re-exportation of cylinders and other containers are good
for 12 months without extension," and paragraph XXXI, that "bonds for customs brokers, commercial samples,
repairs and those filed to guarantee the re-exportation of cylinders and other containers are not extendible."
And insofar as jute bags as containers are concerned, Customs Administrative Order 66 dated August 25, 1948
was issued, prescribing rules and regulations governing the importation, exportation and identification thereof
under section 23 of the Philippine Tariff Act of 1909. Said administrative order provides:
That importation of jute bags intended for use as containers of Philippine products for exportation to foreign
countries shall be declared in a regular import entry supported by a surety bond in an amount equal to double
the estimated duties, conditioned for the exportation or payment of the corresponding duties thereon within
one year from the date of importation.
It will be noted that section 23 of the Philippine Tariff Act of 1909 and the superseding sec. 105(x) of the Tariff
and Customs Code, while fixing at one year the period within which the containers therein mentioned must be
exported, are silent as to whether the said period may be extended. It was surely by reason of this silence that
the Bureau of Customs issued Administrative Orders 389 and 66, already adverted to, to eliminate confusion and
provide a guide as to how it shall apply the law, 2 and, more specifically, to make officially known its policy to
consider the one-year period mentioned in the law as non-extendible.
Considering that the statutory provisions in question have not been the subject of previous judicial interpretation,
then the application of the doctrine of "judicial respect for administrative construction," 3 would, initially, be in
order.
Only where the court of last resort has not previously interpreted the statute is the rule applicable that courts
will give consideration to construction by administrative or executive departments of the state.41awphîl.nèt
The formal or informal interpretation or practical construction of an ambiguous or uncertain statute or law by
the executive department or other agency charged with its administration or enforcement is entitled to
consideration and the highest respect from the courts, and must be accorded appropriate weight in determining
the meaning of the law, especially when the construction or interpretation is long continued and uniform or is
contemporaneous with the first workings of the statute, or when the enactment of the statute was suggested by
such agency.5
The administrative orders in question appear to be in consonance with the intention of the legislature to limit the
period within which to export imported containers to one year, without extension, from the date of importation.
Otherwise, in enacting the Tariff and Customs Code to supersede the Philippine Tariff Act of 1909, Congress
would have amended section 23 of the latter law so as to overrule the long-standing view of the Commissioner
of Customs that the one-year period therein mentioned is not extendible.
Implied legislative approval by failure to change a long-standing administrative construction is not essential to
judicial respect for the construction but is an element which greatly increases the weight given such
construction.6
The correctness of the interpretation given a statute by the agency charged with administering its provision is
indicated where it appears that Congress, with full knowledge of the agency's interpretation, has made
significant additions to the statute without amending it to depart from the agency's view.7
Considering that the Bureau of Customs is the office charged with implementing and enforcing the provisions of
our Tariff and Customs Code, the construction placed by it thereon should be given controlling
weight.1awphîl.nèt
In applying the doctrine or principle of respect for administrative or practical construction, the courts often refer
to several factors which may be regarded as bases of the principle, as factors leading the courts to give the
principle controlling weight in particular instances, or as independent rules in themselves. These factors are the
respect due the governmental agencies charged with administration, their competence, expertness, experience,
and informed judgment and the fact that they frequently are the drafters of the law they interpret; that the
agency is the one on which the legislature must rely to advise it as to the practical working out of the statute,
and practical application of the statute presents the agency with unique opportunity and experiences for
discovering deficiencies, inaccuracies, or improvements in the statute; ... 8
If it is further considered that exemptions from taxation are not favored, 9 and that tax statutes are to be
construed in strictissimi juris against the taxpayer and liberally in favor of the taxing authority, 10 then we are
hard put to sustain the petitioner's stand that it was entitled to an extension of time within which to export the
jute bags and, consequently, to a refund of the amount it had paid as customs duties.
In the light of the foregoing, it is our considered view that the one-year period prescribed in section 23 of the
Philippine Tariff Act of 1909 is non-extendible and compliance therewith is mandatory.
The petitioner's argument that force majeure and/or fortuitous events prevented it from exporting the jute bags
within the one-year period cannot be accorded credit, for several reasons. In the first place, in its decision of
November 20, 1961, the Court of Tax Appeals made absolutely no mention of or reference to this argument of
the petitioner, which can only be interpreted to mean that the court did not believe that the "typhoons, floods
and picketing" adverted to by the petitioner in its brief were of such magnitude or nature as to effectively
prevent the exportation of the jute bags within the required one-year period. In point of fact nowhere in the
record does the petitioner convincingly show that the so-called fortuitous events or force majeure referred to by
it precluded the timely exportation of the jute bags. In the second place, assuming, arguendo, that the one-year
period is extendible, the jute bags were not actually exported within the one-week extension the petitioner
sought. The record shows that although of the remaining 86,353 jute bags 21,944 were exported within the
period of one week after the request for extension was filed, the rest of the bags, amounting to a total of 64,409,
were actually exported only during the period from February 16 to May 24, 1958, long after the expiration of the
one-week extension sought by the petitioner. Finally, it is clear from the record that the typhoons and floods
which, according to the petitioner, helped render impossible the fulfillment of its obligation to export within the
one-year period, assuming that they may be placed in the category of fortuitous events or force majeure, all
occurred prior to the execution of the bonds in question, or prior to the commencement of the one-year period
within which the petitioner was in law required to export the jute bags.
2. The next argument of the petitioner is that granting that Customs Administrative Order 389 is valid and
binding, yet "jute bags" cannot be included in the phrase "cylinders and other containers" mentioned therein. It
will be noted, however, that the Philippine Tariff Act of 1909 and the Tariff and Customs Code, which
Administrative Order 389 seeks to implement, speak of "containers" in general. The enumeration following the
word "containers" in the said statutes serves merely to give examples of containers and not to specify the
particular kinds thereof. Thus, sec. 23 of the Philippine Tariff Act states, "containers such as casks large metals,
glass or other receptacles," and sec. 105 (x) of the Tariff and Customs Code mentions "large containers," giving as
examples "demijohn cylinders, drums, casks and other similar receptacles of metal, glass or other materials."
(emphasis supplied) There is, therefore, no reason to suppose that the customs authorities had intended, in
Customs Administrative Order 389 to circumscribe the scope of the word "container," any more than the statures
sought to be implemented actually intended to do.
3. Finally, the petitioner claims entitlement to a drawback of the duties it had paid, by virtue of section 106 (b) of
the Tariff and Customs Code, 11 which reads:
SEC. 106. Drawbacks: ...
b. On Articles Made from Imported Materials or Similar Domestic Materials and Wastes Thereof. — Upon the
exportation of articles manufactured or produced in the Philippines, including the packing, covering, putting up,
marking or labeling thereof, either in whole or in part of imported materials, or from similar domestic materials
of equal quantity and productive manufacturing quality and value, such question to be determined by the
Collector of Customs, there shall be allowed a drawback equal in amount to the duties paid on the imported
materials so used, or where similar domestic materials are used, to the duties paid on the equivalent imported
similar materials, less one per cent thereof: Provided, That the exportation shall be made within three years after
the importation of the foreign material used or constituting the basis for drawback ... .
The petitioner argues that not having availed itself of the full exemption granted by sec. 105(x) of the Tariff and
Customs Code due to its failure to export the jute bags within one year, it is nevertheless, by authority of the
above-quoted provision, entitled to a 99% drawback of the duties it had paid, averring further that sec. 106(b)
does not presuppose immediate payment of duties and taxes at the time of importation.
The contention is palpably devoid of merit.
The provisions invoked by the petitioner (to sustain his claim for refund) offer two options to an importer. The
first, under sec. 105 (x), gives him the privilege of importing, free from import duties, the containers mentioned
therein as long as he exports them within one year from the date of acceptance of the import entry, which
period as shown above, is not extendible. The second, presented by sec. 106 (b), contemplates a case
where import duties are first paid, subject to refund to the extent of 99% of the amount paid, provided the
articles mentioned therein are exported within three years from importation.
It would seem then that the Government would forego collecting duties on the articles mentioned in section
105(x) of Tariff and Customs Code as long as it is assured, by the filing of a bond, that the same shall be exported
within the relatively short period of one year from the date of acceptance of the import entry. Where an
importer cannot provide such assurance, then the Government, under sec. 106(b) of said Code, would require
payment of the corresponding duties first. The basic purpose of the two provisions is the same, which is, to
enable a local manufacturer to compete in foreign markets, by relieving him of the disadvantages resulting from
having to pay duties on imported merchandise, thereby building up export trade and encouraging manufacture
in the country. 12But there is a difference, and it is this: under section 105(x) full exemption is granted to an
importer who justifies the grant of exemption by exporting within one-year. The petitioner, having opted to take
advantage of the provisions of section 105(x), may not, after having failed to comply with the conditions imposed
thereby, avoid the consequences of such failure by being allowed a drawback under section 106(b) of the same
Act without having complied with the conditions of the latter section.
For it is not to be supposed that the legislature had intended to defeat compliance with the terms of section
105(x) thru a refuge under the provisions of section 106(b). A construction should be avoided which affords an
opportunity to defeat compliance with the terms of a statute. 13 Rather courts should proceed on the theory
that parts of a statute may be harmonized and reconciled with each other.
A construction of a statute which creates an inconsistency should be avoided when a reasonable interpretation
can be adopted which will not do violence to the plain words of the act and will carry out the intention of
Congress.
In the construction of statutes, the courts start with the assumption that the legislature intended to enact an
effective law, and the legislature is not to be presumed to have done a vain thing in the enactment of a statute.
Hence, it is a general principle, embodied in the maxim, "ut res magis valeat quam pereat," that the courts
should, if reasonably possible to do so without violence to the spirit and language of an act, so interpret the
statute to give it efficient operation and effect as a whole. An interpretation should, if possible, be avoided under
which a statute or provision being construed is defeated, or as otherwise expressed, nullified, destroyed,
emasculated, repealed, explained away, or rendered insignificant, meaningless, inoperative, or nugatory. 14
ACCORDINGLY, the judgment of the Court of Tax Appeals of November 20, 1961 is affirmed, at petitioner's cost.

1. G.R. No. 96681. December 2,1991.*

HON. ISIDRO CARIÑO, in his capacity as Secretary of the Department of Education, Culture 6, Sports, DR. ERLINDA
LOLARGA, in her capacity as Superintendent of City Schools of Manila, petitioners, vs. THE COMMISSION ON
HUMAN RIGHTS, GRACIANO BUDOY, JULIETA BABARAN, ELSA IBABAO, HELEN LUPO, AMPARO GONZALES, LUZ DEL
CASTILLO, ELSA REYES and APOLINARIO ESBER, respondents.

Constitutional Law; Jurisdiction; Commission on Human Rights; Court declares the Commission on Human Rights
to have no jurisdiction on adjudicatory powers over certain specific type of cases like alleged human rights
violations involving civil or political rights.—The threshold question is whether or not the Commission on Human
Rights has the power under the Constitution to do so; whether or not, like a court of justice, or even a quasi-
judicial agency, it has jurisdiction or adjudicatory powers over, or the power to try and decide, or hear and
determine, certain specific type of cases, like alleged human rights violations in volving civil or political rights. The
Court declares the Commission on Human Rights to have no such power; and that it was not meant by the
fundamental law to be another court or quasijudicial agency in this country, or duplicate much less take over the
functions of the latter.

Same; Same; Same; Same; The most that may be conceded to the Commission in the way of adjudicative power
is that it may investigate, i.e., receive evidence and make findings of fact as regards claimed human rights
violations involving civil and political rights.—The most that may be conceded to the Commission. in the way of
adjudicative power is that it may investigate, i.e., receive evidence and make findings of fact as regards claimed
human rights violations involving civil and political rights. But fact-finding is not adjudication, and cannot be
likened to the judicial function of a court of justice, or even a quasi-judicial agency or official. The function of
receiving evidence and ascertaining therefrom the facts of a controversy is not a judicial function, properly
speaking. To be considered such, the faculty of receiving evidence and making factual conclusion in a controversy
must be accompanied by the authority of applying the law to those factual conclusions to the end that the
controversy may be decided or determined authoritatively, finally and definitively, subject to such appeals or
modes of review as may be provided by law. This function, to repeat, the Commission does not have.

Same; Same; Same; Same; Same; The Constitution clearly and categorically grants to the Commission the power
to investigate all forms of human rights violations invoking civil and political rights.—As should at once be
observed, only the first of the enumerated powers and functions bears any resemblance to adjudication or
adjudgment. The Constitution clearly and categorically grants to the Commission the power to investigate all
forms of human rights violations involving civil and political rights. It can exercise that power on its own initiative
or on complaint of any person. It may exercise that power pursuant to such rules of procedure as it may adopt
and, in cases of violations of said rules, cite for contempt in accordance with the Rules of Court. In the course of
any investigation conducted by it or under its authority, it may grant immunity from prosecution to any person
whose testimony or whose possession of documents or other evidence is necessary or convenient to determine
the truth. It may also request the assistance of any department, bureau, office, or agency in the performance of
its functions, in the conduct of its investigation or in extending such remedy as may be required by its findings.

Same; Same; Same; Same; Same; It cannot try and decide cases (or hear and determine causes) as courts of
justice or even quasi-judicial bodies do.—But it cannot try and decide cases (or hear and determine causes) as
courts of justice, or even quasi-judicial bodies do. To investigate is not to adjudicate or adjudge. Whether in the
popular or the technical sense, these terms have well understood and quite distinct meanings.
Same; Same; Same; Same; Same; Same; The Commission on Human Rights having merely the power to
investigate cannot and should not try and resolve on the merits the matters involved in Striking Teachers HRC
Case No. 90–775.—Hence it is that the Commission on Human Rights, having merely the power “to investigate,”
cannot and should not “try and resolve on the merits” (adjudicate) the matters involved in Striking Teachers HRC
Case No. 90–775, as it has announced it means to do; and it cannot do so even if there be a claim that in the
administrative disciplinary proceedings against the teachers in question, initiated and conducted by the DECS,
their human rights, or civil or political rights had been transgressed.

Same; Same; Same; Same; Same; Same; Same; The matters are undoubtedly and clearly within the original
jurisdiction of the Secretary of Education and also within the appellate jurisdiction of the Civil Service
Commission.—These are matters undoubtedly and clearly within the original jurisdiction of the Secretary of
Education, being within the scope of the disciplinary powers granted to him under the Civil Service Law, and also,
within the appellate jurisdiction of the Civil Service Commission.
NARVASA, J.:p
The issue raised in the special civil action of certiorari and prohibition at bar, instituted by the Solicitor General,
may be formulated as follows: where the relief sought from the Commission on Human Rights by a party in a
case consists of the review and reversal or modification of a decision or order issued by a court of justice or
government agency or official exercising quasi-judicial functions, may the Commission take cognizance of the
case and grant that relief? Stated otherwise, where a particular subject-matter is placed by law within the
jurisdiction of a court or other government agency or official for purposes of trial and adjudgment, may the
Commission on Human Rights take cognizance of the same subject-matter for the same purposes of hearing and
adjudication?
The facts narrated in the petition are not denied by the respondents and are hence taken as substantially correct
for purposes of ruling on the legal questions posed in the present action. These facts, 1 together with others
involved in related cases recently resolved by this Court 2 or otherwise undisputed on the record, are hereunder
set forth.
1. On September 17, 1990, a Monday and a class day, some 800 public school teachers, among them members of
the Manila Public School Teachers Association (MPSTA) and Alliance of Concerned Teachers (ACT) undertook
what they described as "mass concerted actions" to "dramatize and highlight" their plight resulting from the
alleged failure of the public authorities to act upon grievances that had time and again been brought to the
latter's attention. According to them they had decided to undertake said "mass concerted actions" after the
protest rally staged at the DECS premises on September 14, 1990 without disrupting classes as a last call for the
government to negotiate the granting of demands had elicited no response from the Secretary of Education. The
"mass actions" consisted in staying away from their classes, converging at the Liwasang Bonifacio, gathering in
peaceable assemblies, etc. Through their representatives, the teachers participating in the mass actions were
served with an order of the Secretary of Education to return to work in 24 hours or face dismissal, and a
memorandum directing the DECS officials concerned to initiate dismissal proceedings against those who did not
comply and to hire their replacements. Those directives notwithstanding, the mass actions continued into the
week, with more teachers joining in the days that followed. 3
Among those who took part in the "concerted mass actions" were the eight (8) private respondents herein,
teachers at the Ramon Magsaysay High School, Manila, who had agreed to support the non-political demands of
the MPSTA. 4
2. For failure to heed the return-to-work order, the CHR complainants (private respondents) were
administratively charged on the basis of the principal's report and given five (5) days to answer the charges. They
were also preventively suspended for ninety (90) days "pursuant to Section 41 of P.D. 807" and temporarily
replaced (unmarked CHR Exhibits, Annexes F, G, H). An investigation committee was consequently formed to hear
the charges in accordance with P.D. 807. 5
3. In the administrative case docketed as Case No. DECS 90-082 in which CHR complainants Graciano Budoy, Jr.,
Julieta Babaran, Luz del Castillo, Apolinario Esber were, among others, named respondents, 6 the latter filed
separate answers, opted for a formal investigation, and also moved "for suspension of the administrative
proceedings pending resolution by . . (the Supreme) Court of their application for issuance of an injunctive
writ/temporary restraining order." But when their motion for suspension was denied by Order dated November 8,
1990 of the Investigating Committee, which later also denied their motion for reconsideration orally made at the
hearing of November 14, 1990, "the respondents led by their counsel staged a walkout signifying their intent to
boycott the entire proceedings." 7 The case eventually resulted in a Decision of Secretary Cariño dated
December 17, 1990, rendered after evaluation of the evidence as well as the answers, affidavits and documents
submitted by the respondents, decreeing dismissal from the service of Apolinario Esber and the suspension for
nine (9) months of Babaran, Budoy and del Castillo. 8
4. In the meantime, the "MPSTA filed a petition for certiorari before the Regional Trial Court of Manila against
petitioner (Cariño), which was dismissed (unmarked CHR Exhibit, Annex I). Later, the MPSTA went to the Supreme
Court (on certiorari, in an attempt to nullify said dismissal, grounded on the) alleged violation of the striking
teachers" right to due process and peaceable assembly docketed as G.R. No. 95445, supra. The ACT also filed a
similar petition before the Supreme Court . . . docketed as G.R. No. 95590." 9 Both petitions in this Court were
filed in behalf of the teacher associations, a few named individuals, and "other teacher-members so numerous
similarly situated" or "other similarly situated public school teachers too numerous to be impleaded."
5. In the meantime, too, the respondent teachers submitted sworn statements dated September 27, 1990 to the
Commission on Human Rights to complain that while they were participating in peaceful mass actions, they
suddenly learned of their replacements as teachers, allegedly without notice and consequently for reasons
completely unknown to them. 10
6. Their complaints — and those of other teachers also "ordered suspended by the . . . (DECS)," all numbering
forty-two (42) — were docketed as "Striking Teachers CHR Case No. 90775." In connection therewith the
Commission scheduled a "dialogue" on October 11, 1990, and sent a subpoena to Secretary Cariño requiring his
attendance therein. 11
On the day of the "dialogue," although it said that it was "not certain whether he (Sec. Cariño) received the
subpoena which was served at his office, . . . (the) Commission, with the Chairman presiding, and Commissioners
Hesiquio R. Mallilin and Narciso C. Monteiro, proceeded to hear the case;" it heard the complainants' counsel (a)
explain that his clients had been "denied due process and suspended without formal notice, and unjustly, since
they did not join the mass leave," and (b) expatiate on the grievances which were "the cause of the mass leave of
MPSTA teachers, (and) with which causes they (CHR complainants) sympathize." 12 The Commission thereafter
issued an Order 13 reciting these facts and making the following disposition:
To be properly apprised of the real facts of the case and be accordingly guided in its investigation and resolution
of the matter, considering that these forty two teachers are now suspended and deprived of their wages, which
they need very badly, Secretary Isidro Cariño, of the Department of Education, Culture and Sports, Dr. Erlinda
Lolarga, school superintendent of Manila and the Principal of Ramon Magsaysay High School, Manila, are hereby
enjoined to appear and enlighten the Commission en banc on October 19, 1990 at 11:00 A.M. and to bring with
them any and all documents relevant to the allegations aforestated herein to assist the Commission in this matter.
Otherwise, the Commission will resolve the complaint on the basis of complainants' evidence.
xxx xxx xxx
7. Through the Office of the Solicitor General, Secretary Cariño sought and was granted leave to file a motion to
dismiss the case. His motion to dismiss was submitted on November 14, 1990 alleging as grounds therefor, "that
the complaint states no cause of action and that the CHR has no jurisdiction over the case." 14
8. Pending determination by the Commission of the motion to dismiss, judgments affecting the "striking
teachers" were promulgated in two (2) cases, as aforestated, viz.:
a) The Decision dated December l7, 1990 of Education Secretary Cariño in Case No. DECS 90-082, decreeing
dismissal from the service of Apolinario Esber and the suspension for nine (9) months of Babaran, Budoy and del
Castillo; 15 and
b) The joint Resolution of this Court dated August 6, 1991 in G.R. Nos. 95445 and 95590 dismissing the petitions
"without prejudice to any appeals, if still timely, that the individual petitioners may take to the Civil Service
Commission on the matters complained of," 16 and inter alia "ruling that it was prima facie lawful for petitioner
Cariño to issue return-to-work orders, file administrative charges against recalcitrants, preventively suspend
them, and issue decision on those charges." 17
9. In an Order dated December 28, 1990, respondent Commission denied Sec. Cariño's motion to dismiss and
required him and Superintendent Lolarga "to submit their counter-affidavits within ten (10) days . . . (after which)
the Commission shall proceed to hear and resolve the case on the merits with or without respondents counter
affidavit." 18 It held that the "striking teachers" "were denied due process of law; . . . they should not have been
replaced without a chance to reply to the administrative charges;" there had been a violation of their civil and
political rights which the Commission was empowered to investigate; and while expressing its "utmost respect to
the Supreme Court . . . the facts before . . . (it) are different from those in the case decided by the Supreme
Court" (the reference being unmistakably to this Court's joint Resolution of August 6, 1991 in G.R. Nos. 95445
and 95590, supra).
It is to invalidate and set aside this Order of December 28, 1990 that the Solicitor General, in behalf of petitioner
Cariño, has commenced the present action of certiorari and prohibition.
The Commission on Human Rights has made clear its position that it does not feel bound by this Court's joint
Resolution in G.R. Nos. 95445 and 95590, supra. It has also made plain its intention "to hear and resolve the case
(i.e., Striking Teachers HRC Case No. 90-775) on the merits." It intends, in other words, to try and decide or hear
and determine, i.e., exercise jurisdiction over the following general issues:
1) whether or not the striking teachers were denied due process, and just cause exists for the imposition of
administrative disciplinary sanctions on them by their superiors; and
2) whether or not the grievances which were "the cause of the mass leave of MPSTA teachers, (and) with which
causes they (CHR complainants) sympathize," justify their mass action or strike.
The Commission evidently intends to itself adjudicate, that is to say, determine with character of finality and
definiteness, the same issues which have been passed upon and decided by the Secretary of Education, Culture
& Sports, subject to appeal to the Civil Service Commission, this Court having in fact, as aforementioned,
declared that the teachers affected may take appeals to the Civil Service Commission on said matters, if still
timely.
The threshold question is whether or not the Commission on Human Rights has the power under the
Constitution to do so; whether or not, like a court of justice, 19 or even a quasi-judicial agency, 20 it has
jurisdiction or adjudicatory powers over, or the power to try and decide, or hear and determine, certain specific
type of cases, like alleged human rights violations involving civil or political rights.
The Court declares the Commission on Human Rights to have no such power; and that it was not meant by the
fundamental law to be another court or quasi-judicial agency in this country, or duplicate much less take over the
functions of the latter.
The most that may be conceded to the Commission in the way of adjudicative power is that it
may investigate, i.e., receive evidence and make findings of fact as regards claimed human rights violations
involving civil and political rights. But fact finding is not adjudication, and cannot be likened to the judicial
function of a court of justice, or even a quasi-judicial agency or official. The function of receiving evidence and
ascertaining therefrom the facts of a controversy is not a judicial function, properly speaking. To be considered
such, the faculty of receiving evidence and making factual conclusions in a controversy must be accompanied by
the authority of applying the law to those factual conclusions to the end that the controversy may be decided or
determined authoritatively, finally and definitively, subject to such appeals or modes of review as may be provided
by law. 21 This function, to repeat, the Commission does not have. 22
The proposition is made clear by the constitutional provisions specifying the powers of the Commission on
Human Rights.
The Commission was created by the 1987 Constitution as an independent office. 23 Upon its constitution, it
succeeded and superseded the Presidential Committee on Human Rights existing at the time of the effectivity of
the Constitution. 24 Its powers and functions are the following 25
(1) Investigate, on its own or on complaint by any party, all forms of human rights violations involving civil and
political rights;
(2) Adopt its operational guidelines and rules of procedure, and cite for contempt for violations thereof in
accordance with the Rules of Court;
(3) Provide appropriate legal measures for the protection of human rights of all persons within the Philippines, as
well as Filipinos residing abroad, and provide for preventive measures and legal aid services to the
underprivileged whose human rights have been violated or need protection;
(4) Exercise visitorial powers over jails, prisons, or detention facilities;
(5) Establish a continuing program of research, education, and information to enhance respect for the primacy of
human rights;
(6) Recommend to the Congress effective measures to promote human rights and to provide for compensation
to victims of violations of human rights, or their families;
(7) Monitor the Philippine Government's compliance with international treaty obligations on human rights;
(8) Grant immunity from prosecution to any person whose testimony or whose possession of documents or
other evidence is necessary or convenient to determine the truth in any investigation conducted by it or under
its authority;
(9) Request the assistance of any department, bureau, office, or agency in the performance of its functions;
(10) Appoint its officers and employees in accordance with law; and
(11) Perform such other duties and functions as may be provided by law.
As should at once be observed, only the first of the enumerated powers and functions bears any resemblance to
adjudication or adjudgment. The Constitution clearly and categorically grants to the Commission the power to
investigate all forms of human rights violations involving civil and political rights. It can exercise that power on its
own initiative or on complaint of any person. It may exercise that power pursuant to such rules of procedure as it
may adopt and, in cases of violations of said rules, cite for contempt in accordance with the Rules of Court. In the
course of any investigation conducted by it or under its authority, it may grant immunity from prosecution to any
person whose testimony or whose possession of documents or other evidence is necessary or convenient to
determine the truth. It may also request the assistance of any department, bureau, office, or agency in the
performance of its functions, in the conduct of its investigation or in extending such remedy as may be required
by its findings. 26
But it cannot try and decide cases (or hear and determine causes) as courts of justice, or even quasi-judicial
bodies do. To investigate is not to adjudicate or adjudge. Whether in the popular or the technical sense, these
terms have well understood and quite distinct meanings.
"Investigate," commonly understood, means to examine, explore, inquire or delve or probe into, research on,
study. The dictionary definition of "investigate" is "to observe or study closely: inquire into systematically. "to
search or inquire into: . . . to subject to an official probe . . .: to conduct an official inquiry." 27 The purpose of
investigation, of course, is to discover, to find out, to learn, obtain information. Nowhere included or intimated is
the notion of settling, deciding or resolving a controversy involved in the facts inquired into by application of the
law to the facts established by the inquiry.
The legal meaning of "investigate" is essentially the same: "(t)o follow up step by step by patient inquiry or
observation. To trace or track; to search into; to examine and inquire into with care and accuracy; to find out by
careful inquisition; examination; the taking of evidence; a legal inquiry;" 28 "to inquire; to make an investigation,"
"investigation" being in turn describe as "(a)n administrative function, the exercise of which ordinarily does not
require a hearing. 2 Am J2d Adm L Sec. 257; . . . an inquiry, judicial or otherwise, for the discovery and collection
of facts concerning a certain matter or matters." 29
"Adjudicate," commonly or popularly understood, means to adjudge, arbitrate, judge, decide, determine, resolve,
rule on, settle. The dictionary defines the term as "to settle finally (the rights and duties of the parties to a court
case) on the merits of issues raised: . . . to pass judgment on: settle judicially: . . . act as judge." 30 And "adjudge"
means "to decide or rule upon as a judge or with judicial or quasi-judicial powers: . . . to award or grant judicially
in a case of controversy . . . ." 31
In the legal sense, "adjudicate" means: "To settle in the exercise of judicial authority. To determine finally.
Synonymous with adjudge in its strictest sense;" and "adjudge" means: "To pass on judicially, to decide, settle or
decree, or to sentence or condemn. . . . Implies a judicial determination of a fact, and the entry of a
judgment." 32
Hence it is that the Commission on Human Rights, having merely the power "to investigate," cannot and should
not "try and resolve on the merits" (adjudicate) the matters involved in Striking Teachers HRC Case No. 90-775,
as it has announced it means to do; and it cannot do so even if there be a claim that in the administrative
disciplinary proceedings against the teachers in question, initiated and conducted by the DECS, their human
rights, or civil or political rights had been transgressed. More particularly, the Commission has no power to
"resolve on the merits" the question of (a) whether or not the mass concerted actions engaged in by the
teachers constitute and are prohibited or otherwise restricted by law; (b) whether or not the act of carrying on
and taking part in those actions, and the failure of the teachers to discontinue those actions, and return to their
classes despite the order to this effect by the Secretary of Education, constitute infractions of relevant rules and
regulations warranting administrative disciplinary sanctions, or are justified by the grievances complained of by
them; and (c) what where the particular acts done by each individual teacher and what sanctions, if any, may
properly be imposed for said acts or omissions.
These are matters undoubtedly and clearly within the original jurisdiction of the Secretary of Education, being
within the scope of the disciplinary powers granted to him under the Civil Service Law, and also, within the
appellate jurisdiction of the Civil Service Commission.
Indeed, the Secretary of Education has, as above narrated, already taken cognizance of the issues and resolved
them, 33 and it appears that appeals have been seasonably taken by the aggrieved parties to the Civil Service
Commission; and even this Court itself has had occasion to pass upon said issues. 34
Now, it is quite obvious that whether or not the conclusions reached by the Secretary of Education in disciplinary
cases are correct and are adequately based on substantial evidence; whether or not the proceedings themselves
are void or defective in not having accorded the respondents due process; and whether or not the Secretary of
Education had in truth committed "human rights violations involving civil and political rights," are matters which
may be passed upon and determined through a motion for reconsideration addressed to the Secretary Education
himself, and in the event of an adverse verdict, may be reviewed by the Civil Service Commission and eventually
the Supreme Court.
The Commission on Human Rights simply has no place in this scheme of things. It has no business intruding into
the jurisdiction and functions of the Education Secretary or the Civil Service Commission. It has no business going
over the same ground traversed by the latter and making its own judgment on the questions involved. This would
accord success to what may well have been the complaining teachers' strategy to abort, frustrate or negate the
judgment of the Education Secretary in the administrative cases against them which they anticipated would be
adverse to them.
This cannot be done. It will not be permitted to be done.
In any event, the investigation by the Commission on Human Rights would serve no useful purpose. If its
investigation should result in conclusions contrary to those reached by Secretary Cariño, it would have no power
anyway to reverse the Secretary's conclusions. Reversal thereof can only by done by the Civil Service Commission
and lastly by this Court. The only thing the Commission can do, if it concludes that Secretary Cariño was in error,
is to refer the matter to the appropriate Government agency or tribunal for assistance; that would be the Civil
Service Commission. 35 It cannot arrogate unto itself the appellate jurisdiction of the Civil Service Commission.
WHEREFORE, the petition is granted; the Order of December 29, 1990 is ANNULLED and SET ASIDE, and the
respondent Commission on Human Rights and the Chairman and Members thereof are prohibited "to hear and
resolve the case (i.e., Striking Teachers HRC Case No. 90-775) on the merits."
SO ORDERED.

2. G.R. No. 153310. March 2, 2004.*

MEGAWORLD GLOBUS ASIA, INC., petitioner, vs. DSM CONSTRUCTION AND DEVELOPMENT CORPORATION and
PRUDENTIAL GUARANTEE AND ASSURANCE, INC., respondents.

Remedial Law; Appeals; Construction Industry Arbitration Commission (CIAC); Decisions of the CIAC may be
appealed to the Court of Appeals not only on questions of law but also on questions of fact and mixed questions
of law and fact.—Under Section 19 of Executive Order No. 1008, the CIAC’s arbitral award “shall be final and
inappealable except on questions of law which shall be appealable to the Supreme Court.” In Metro Construction,
however, this Court held that, with the modification of E.O. No. 1008 by subsequent laws and issuances,
decisions of the CIAC may be appealed to the Court of Appeals not only on questions of law but also on
questions of fact and mixed questions of law and fact.

Same; Same; Findings of fact of administrative agencies and quasi-judicial bodies, which have acquired expertise
because their jurisdiction is confined to specific matters, are generally accorded not only respect, but finality
when affirmed by the Court of Appeals.—Considering that the computations, as well as the propriety of the
awards of the Arbitral Tribunal, are unquestionably factual issues that have been discussed and ruled upon by
Arbitral Tribunal and affirmed by the Court of Appeals, we cannot depart from such findings. Findings of fact of
administrative agencies and quasi-judicial bodies, which have acquired expertise because their jurisdiction is
confined to specific matters, are generally accorded not only respect, but finality when affirmed by the Court of
Appeals.

TINGA, J.:
Before this Court is a Petition for Review on Certiorari assailing the Decision dated February 14, 2002, of the
Court of Appeals in CA G.R. SP No. 67432,1 which affirmed the Decision2 of the Construction Industry Arbitration
Commission (CIAC)3 dated September 8, 2001, in CIAC Case No. 22-2000 finding petitioner Megaworld Globus
Asia, Inc., liable to DSM Construction in the amount of P62,760,558.49.
The antecedents are as follows:
Relative to the construction of a condominium project called "The Salcedo Park," located at H.V. dela Costa St.,
Salcedo Village, Makati City, the project owner, Megaworld, entered into three separate contracts with DSM
Construction, namely: (1) Contract for Architectural Finishing Works; (2) Contract for Interior Finishing Works;
and (3) Contract for Supply and Installation of Kitchen Cabinets and Closets. The total contract price, which was
initially placed at P300 Million, was later reduced to P240 Million when the items for kitchen cabinets and walk-in
closets were deleted.4 The contracts also contain a stipulation for Retention Money, which is a portion of the
total contract price (usually, as in this case, 10%) set aside by the project owner from all approved billings and
retained for a certain period to guarantee the performance by the contractor of all corrective works during the
defect-liability period which, in this case, is twelve months from the issuance of the Taking Over Certificate of
Works.5
The Letter of Award for Architectural Finishing Works provides that the period for commencement and
completion shall be twelve months, from August 1, 1997 to July 31, 1998. However, on February 21, 2000,
representatives of both Megaworld and DSM Construction entered into an Interim Agreement whereby they
agreed on a new schedule of the turnover of units from the 26th floor to the 40th floor, which was the last of the
contracted works.6The consideration agreed upon in the Interim Agreement was P53,000,000.00. Of this
amount, P3,000,000.00 was to be released immediately while five (5) equal installments of P7,000,000.00 were
to be released depending on the turn-over of units from the 26th floor to the 40th floor. The remaining amount
of P15,000,000.00 of theP53,000,000.00 consisted of half of the retention money.7
Because of the differences that arose from the billings, DSM Construction filed on August 21, 2002, a Complaint
before the CIAC for compulsory arbitration, claiming payment of P97,743,808.33 for the outstanding balance of
the three construction contracts, variation works, labor escalation, preliminaries loss and expense, earned
retention money, interests, and attorney’s fees.8 DSM Construction alleged that it already commenced the
finishing works on the existing 12 floors on August 1, 1997, instead of waiting for the entire 40-floor structure to
be completed. At one time, DSM Construction worked with other contractors whose work often depended on,
interfered or conflicted with said contractors. Delay by a trade contractor would start a chain reaction by delaying
or putting off other works.9
Interposing mainly the defense of delay in the turn-over of units and the poor quality of work of DSM
Construction, Megaworld filed its Answer and made a counter-claim for loss of profits, liquidated damages, costs
of take-over and rectification works, administration expenses, interests, attorney’s fees and cost of arbitration in
the total amount of P85,869,870.28.10
Prudential Guarantee and Assurance, Inc. (PGAI), which issued a Performance Bond to guarantee Megaworld’s
contractual obligation on the project, was impleaded by Megaworld as a third-party respondent.11
On March 28, 2001, the parties signed before the members of the Arbitral Tribunal the Terms of
Reference12(TOR) where they set forth their admitted facts,13 respective documentary evidence,14 summary of
claims15 and issues to be resolved by the tribunal.16 After presenting their evidence in the form of affidavits of
witnesses,17 the parties submitted their respective memoranda/draft decisions.18
On October 19, 2001, the Arbitral Tribunal promulgated its Decision dated September 28, 2001,
awardingP62,760,558.49 to DSM Construction and P9,473,799.46 to Megaworld.19
Megaworld filed a Petition for Review under Rule 43 of the Rules of Civil Procedure before the Court of Appeals.
It faulted the Arbitral Tribunal for finding that DSM Construction achieved a 95.56% level of accomplishment as
of February 14, 2000; for absolving DSM Corporation of the consequences of the alleged delay in the
performance of its work; and for ruling that DSM Construction had complied with the contractual requirements
for filing requests for extension. Megaworld likewise questioned the sufficiency of evidence to justify the awards
for liquidated damages; the balance of the contract price; the balance of amounts payable on account of
the Interim Agreement of February 21, 2000; the amount of P6,596,675.55 for variation orders; the amount
of P29,380,902.35 as reimbursement for preliminaries/loss and expense; the amount of P413,041.52 for labor
escalation costs; and the balance of the retention money in the amount of P14,700,000.00 despite its award
of P11,820,000.00 under the February 21, 2000, Interim Agreement. Finally, Megaworld claimed that the Arbitral
Tribunal erred in denying its claim for liquidated damages, expenses incurred for the cost of take-over work,
administrative expenses, and its recourse against PGAI and for limiting its recovery for rectification work to
only P9,197,863.55.20
On February 14, 2002, the Court of Appeals promulgated its Decision21 affirming that of the Arbitral Tribunal.
The court pointed out that only questions of law may be raised before it on appeal from an award of the
CIAC.22 That pronouncement notwithstanding, the Court of Appeals proceeded to review the decision of the
Arbitral Tribunal and found the same to be amply supported by evidence.23
Megaworld sought reconsideration of the Court of Appeals’ Decision arguing, among other things, that the
appellate court ignored the ruling in Metro Construction, Inc. v. Chatham Properties24 that the review of the CIAC
award may involve either questions of fact, law, or both fact and law.
The Court of Appeals denied the motion for reconsideration in its Resolution25 dated April 25, 2002. While
acknowledging that the findings of fact of the CIAC may be questioned in line with Metro Construction,26 the
appellate court stressed that the tribunal’s decision is not devoid of factual or evidentiary support.
Megaworld elevated the case to this Court through the present Petition, advancing the following grounds, viz:
I

THE COURT OF APPEALS IN EFFECT REFUSED TO HEED THE RULE LAID DOWN BY THIS Honorable
Court in the Metro Construction, INC. vs. Chatham properties, inc. case when it dismissed mgai’s
petition despite the grave questions of both fact and law brought before it by the petitioner.

II

the finding of the appellate court that the decision was based on substantial evidence adduced by
both parties sans any review of the record or of attachments of dsm is fatally wrong, such finding
being merely an adoption of the tribunal’s decision which, as earlier pointed out, was not supported
by competent, credible and admissible evidence.

III

the court of appeals seriously erred in giving blanket approval of all the unfounded claims and
conclusions of the ciac arbitral tribunal’s SEPTEMBER 28, 2001 decision to the detriment of
petitioner’s cardinal right to due process, particularly to its right to administrative due process.

IV

the findings and conclusions made by a highly partisan ciac arbitral tribunal have no basis on the
evidence on record. hence, the exception to the rule that only questions of law may be brought to
the honorable court is applicable in the case AT bar.27

Although Megaworld, at the outset,28 intimates that the case involves grave questions of both fact and law, a
cursory reading of the Petition reveals that, except for the amorphous advertence to administrative due process,
the alleged errors fundamentally involve only questions of fact. Megaworld’s plea for the Court to pass upon the
findings of facts of the Arbitral Tribunal, which were upheld by the appellate court, must perforce fail.
To jumpstart its bid, Megaworld exploits the Court of Appeals’ pronouncement in the assailed decision that only
questions of law may be raised before it from an award of the CIAC. The appellate court did so, Megaworld
continues, in evident disregard of Metro Construction.29
Under Section 19 of Executive Order No. 1008,30 the CIAC’s arbitral award "shall be final and inappealable
except on questions of law which shall be appealable to the Supreme Court." In Metro Construction, however,
this Court held that, with the modification of E.O. No. 1008 by subsequent laws and issuances,31 decisions of the
CIAC may be appealed to the Court of Appeals not only on questions of law but also on questions of fact and
mixed questions of law and fact.
Of such subsequent laws and issuances, only Section 1,32 Rule 43 of the 1997 Rules of Civil Procedure expressly
mentions the CIAC. While an argument may be made that procedural rules cannot modify substantive law,
adding in support thereof that Section 1, Rule 43 has increased the jurisdiction of the Court of Appeals by
expanding the scope of review of CIAC awards, or that it contravenes the rationale for arbitration, extant from
the record is the fact that no party raised such argument. Consequently, the matter need not be delved into.
In any case, the attack against the merits of the Court of Appeals’ Decision must fail. Although Metro
Construction may have been unbeknownst to the appellate court when it promulgated its Decision, the fact
remains that, as noted therein,33 it reviewed the findings of facts of the CIAC and ruled that the findings are
amply supported by the evidence.
The Court of Appeals is presumed to have reviewed the case based on the Petition and its annexes, and weighed
them against the Comment of DSM Construction and the Decision of the Arbitral Tribunal to arrive at the
conclusion that the said Decision is based on substantial evidence. In administrative or quasi-judicial bodies like
the CIAC, a fact may be established if supported by substantial evidence or that amount of relevant evidence
which a reasonable mind might accept as adequate to justify a conclusion.34
The tenability of the assailed Decision is clear from the following discussion of the arguments raised by
Megaworld before the Court of Appeals which significantly are the same arguments it has raised before this
Court.
Issue of Accomplishment Level
Megaworld contested the finding of 95.56% level of accomplishment by the Arbitral Tribunal, alleging that the
receipts DSM Construction issued for payments under the Interim Agreement show that the latter only achieved
90% accomplishment up to the 31st floor while the 32nd to the 34th floors were only 60%
completed.35 Megaworld insisted, therefore, that the level of accomplishment was nowhere near 90%.
DSM Construction countered that Megaworld, in claiming a level of accomplishment of only 90%, contradicted its
own Project Manager, TCGI,36 which came up with a different percentage of accomplishment that are notably
higher than Megaworld’s computation.37
In resolving this issue, the Arbitral Tribunal relied on the computation of Davis Langdon & Seah (DLS), the
project’s independent surveyor,38 which found the level of accomplishment as of February 14, 2000, to be
95.56%. DLS’s computation is recited in Exhibit "NN",39 thus:

Architectural Finishing :40

The 24th
Progress
Billing
evaluated by
DLS covering
the period
November
15, 1999 to =
Php213,658,888.7741Php223,456,756.6842
December 95.62%
15, 1999
over the
Contract
Price for
Architectural
Finishing
Works.
Kitchen Cabinets & Bedroom Closets:43
The 9th
Progress =
Php26,228,091.7344Php28,556,915.1745
Billing 91.84%
evaluated by
 DLS covering
the period
December 1,
1999 to
December 9,
1999 over
the contract
price for
Kitchen
Cabinet and
Bedroom
Closet.
Interior Finishing Works:46
The 13th
Progress
Billing
evaluated by
DLS covering
the period
January 8,
2000 to
February 7, =
Php49,383,114.6747Php50,685,416.5548
2000 for the 95.55%
Interior
Finishing
Works over
the contract
price for
Interior
Finishing
Work.
Php213,658,888.77 + Php26,228,091.72 + Php49,383,114.67 = 289,270,295.17=95.56%
Php223,456,756.68 Php 28,556,915.17 Php50,685,416.55 302,699,097.40
Clearly, thus, CIAC’s finding that the level of accomplishment of DSM Construction as of February 12, 2002, stood
at 95.56% was affirmed by the Court of Appeals because it is supported by substantial evidence.
The Court of Appeals also noted that the Arbitral Tribunal did not give due course to all of DSM Construction’s
claims. Indeed, the Arbitral Tribunal rejected the construction company’s demand for payment for subsequent
works done after February 12, 2000, because Exhibit "OO," on which DSM Construction’s demand was based,
does not bear any mark that it had been received by Megaworld. Thus, the Arbitral Tribunal concluded that
subsequent works up to September 22, 2000, when DSM Construction supposedly stopped working on the
project, had not been established.49
This Court observes that between the two contrasting claims of Megaworld and DSM Construction on the
percentage of work accomplishment, the Arbitral Tribunal instead accorded weight to the assessment of DLS
which is the project surveyor. Apart from being reasonable, DLS’s evaluation is impartial. Thus, as correctly
pointed out by the Arbitral Tribunal, DLS rejected DSM Construction’s 99% accomplishment claim when it limited
its evaluation to only 95.56%.
Issues of Delay and Liquidated Damages
Next, Megaworld attributed the delay in the completion of the construction project solely to DSM Construction.
The latter countered that among the causes of delay was the lack of coordination among trade contractors and
the absence of a general contractor.50 Although the contract purportedly contains a provision for the
coordination of trade contractors, the lack of privity among them prevented coordination such that DSM
Construction could not require compliance on the part of the other trade contractors.
The Arbitral Tribunal decided this question by turning to Section 2.01 of the General Conditions of the Contract,
which states:
2.01 SITE, ACCESS & WORKS
The Contractor shall accept the Site as found on the date for possession and at their own expense clear the site
of any debris which may have been left by the preceding occupants/contractors.
The Arbitral Tribunal held that Section 2.01 presupposes that on the date of possession by DSM Construction of
the work premises, the preceding contractor had already left the same.51 The tribunal explained that the delay
incurred by other trade contractors also resulted in the delay of the work of DSM Construction.
It also pointed out that under Section 5.3 (1)52 of the Interim Agreement,53 Megaworld is required to complete
and turn over to DSM Construction preceding works for the latter to complete their works in accordance with the
Revised Work Schedule. Section 5.3 (1), the Arbitral Tribunal noted, even allows DSM Construction to recover
losses incurred on account of the standby time of DSM’s personnel/manpower or workers mobilized while
Megaworld is not ready to turn over the preceding works. The Arbitral Tribunal further held that, in accordance
with Section 5.3 (2)54 of the Interim Agreement, DSM Construction was entitled to an extension of time
corresponding to the number of days of delay reckoned from the time the preceding work item or area should
have been turned over to DSM Construction. Consequently, such delay, which is not exclusively imputable to
DSM Construction, negates the claim for liquidated damages by Megaworld.55
In affirming the Arbitral Tribunal’s disposition of the issues of delay and payment of liquidated damages, the
appellate court noted that the Arbitral Tribunal narrated the claims and defenses of both DSM Construction and
Megaworld before making an evaluation thereof and arriving at its conclusion.56 Clearly, the evidence and
arguments were carefully weighed to justify the said disposition.
The Tribunal’s finding that the project had already been delayed even before DSM Construction commenced its
work is borne out by the evidence. In his letter, Exhibit X-2,57 Project Management Consultant Eduardo C.
Arrojado, conceded that the previous contractors had delayed the project, at the same time faulting DSM
Construction for incurring its own delay. Furthermore, the work of DSM Construction pertaining as it did to the
architectural and interior finishing stages as well as the supply and installation of kitchen cabinets and closets,
obviously related to the final details and completion stage of the project. Thus, commencement of its task had to
depend on the turn over of the complete work of the prior contractors. Hence, the delay of the previous
contractors resulted in the delay of DSM Construction’s work.
Issues of the Contract Price Balance and Retention Money
Megaworld also questioned the Arbitral Tribunal’s awards of P7,129,825.19 corresponding to the balance of the
contract price, and P11,820,000.00 pursuant to the Interim Agreement.58 Megaworld alleged that DSM
Construction was no longer entitled to the balance of the contract price and the retention money after the latter
received payments pursuant to the Interim Agreement in the amounts of P5,444,553.18 for the 26th to the
28thfloors, another P5,444,553.18 for the 29th to the 31st floors at a 90% completion rate, and P4,161,818.18
for the 32nd to the 34th floors which were 60% completed. Megaworld also contended that since it spent more
money to complete the scope of work of DSM Construction, the latter was no longer entitled to any of the
balance.
On the other hand, DSM Construction argued that the award was justified in view of the failure of Megaworld to
controvert the amount of P7,129,825.19 included in the Account Overview of DLS. DSM Construction also
emphasized that it was not claiming the entire P53 Million under the Interim Agreement but only the amount
corresponding to the actual work done. Even based on DLS’s computation, a total of P11,820,000.00 of retention
money is still unpaid out of the 50% agreed to be released under the Interim Agreement (P15,000,000.00
lessP3,180,000.00 retention money or P11,820,000.00 for the paid billings).59
The Arbitral Tribunal ruled that the balance claimed under the three contracts was based on what DSM
Construction had actually accomplished less the payments it had previously received. Considering that the
remaining works which were performed by another trade contractor, Deticio and Isabedra Builders, were paid
directly by Megaworld, no other cost for work accomplished in the Interim Agreement is due DSM Construction
except the retention money of P11,820,000.00.60
The Court of Appeals affirmed the award of the Arbitral Tribunal regarding the balance of the contract price
ofP7,129,825.19 and the retention money of P11,820,000.00 to DSM Construction. The Court of Appeals noted
that the Arbitral Tribunal again narrated the claims and defenses of both DSM Construction and Megaworld
before arriving at its conclusion. The appellate court further stated that the mere fact that the tribunal did not
award the whole amount claimed by DSM Construction (P12,820,000.00) and instead awarded
only P11,820,000.00 belies Megaworld’s allegation that the tribunal adopted "hook, line and sinker" DSM
Construction’s claims.61
This Court finds the award of the balance of the contract price of P7,129,825.20 justified in view of DLS’
explanation in Exhibit MM-362 that the amount of P7,129,825.20 represented the unpaid billing for architectural,
interior and kitchen billings before Megaworld and DSM Construction drafted the Interim Agreement.
Issue of Variation Works
Megaworld also disputed before the Court of Appeals the P6,686,675.5563 award by the Arbitral Tribunal for
variation works. Variation works consist of the addition, omission or alteration to the kind, quality or quantity of
the works.64 DSM Construction originally claimed a total of P26,208,639.00 for variation works done but, of this
claim, the Arbitral Tribunal only awarded P6,686,675.55 in line with the evaluation of DLS.
Megaworld conceded that DSM Construction performed additional works to the extent of P5,036,252.81.
However, Megaworld claimed that since it incurred expenses when it hired another trade contractor to take over
the works left uncompleted by DSM Construction, the latter lost its right to claim such amount especially since
DSM Construction did not comply with the documentation when claiming variation works.65
DSM Construction asserted that the Arbitral Tribunal, in fact, should have awarded P26,208,639.00 instead of
limiting the award to only P6,686,675.55 because it was not even disputed that variation works were performed.
It also contended that it cannot be faulted for the lack of documentation because the fault lay on Megaworld’s
project manager who failed to forward the variation orders to DLS.66
The Arbitral Tribunal ruled in favor of DSM Construction, holding that there was enough evidence to prove that
the contractor made a request for change or variation orders. The Arbitral Tribunal also found the testimony of
Engineer Eduardo C. Arrojado convincing, factual and balanced despite Megaworld’s attempt to discredit him.
However, while the amount claimed for variation works was P26,208,639.00, the Arbitral Tribunal limited the
awarded to only P6,686,675.5567 since a closer scrutiny of the other items indicated that some works were not
performed.68
The appellate court upheld the award of the Arbitral Tribunal because the award was based not only on the
documentary exhibits prepared by DLS but on the testimony of Engineer Eduardo C. Arrojado, as well.69
This Court is convinced that payments for variation works is due. Undoubtedly, variation works were performed
by DSM Construction. This was confirmed by Engineer Eduardo C. Arrojado who testified that he recommended
the payment for substantial additional works to DSM Construction. He further stated that since time was of the
essence in the completion of the project, there were variation orders which were performed without the prior
approval of the owner. However, he explained that this was a common construction practice. Finally, he stated
that he agreed with the evaluation of DLS.70
The testimony justified the Arbitral Tribunal’s reliance on the evaluation made by DLS which limited the claim for
variation works to P6,596,675.55.
Issue of Preliminaries/Loss and Expense
Megaworld also disputed the award of P29,380,902.35 for preliminaries/losses and expense.
The provision for preliminaries/loss and expense in the contract assumes a direct loss and/or expense incurred in
the regular progress of work for which the contractor would not be reimbursed under any other provision of the
contract.71 DSM Construction’s claim for preliminaries/loss and expense in the amount of P36,603,192.82
covered the loss and expense incurred on payroll, equipment rental, materials and site clearing on account of
such factors as delay in the execution of the works for causes not attributable to DSM Construction.72
Megaworld refused to recognize DSM Construction’s claim because the latter allegedly failed to comply with
Clause 6.16 of the Conditions of Contract, which imposes a two-month deadline for submission of claims for
preliminaries reckoned from "the happening of the event giving rise to the loss and expense."73 DSM
Construction, however, argued that the documentary evidence shows that out of the four claims for
preliminaries, only one (Exhibit MM-5 with an evaluation of P17,552,722.47), covering the period August 1, 1998
to April 1999, was submitted beyond the two-months requirement.74 DSM Construction also pointed out that
the two-month requirement for this claim was waived by Megaworld through DLS when the latter recognized the
validity of claims by coming up with an evaluation of P17,552,722.47 for the period covered in Exhibit MM-5.75
The Arbitral Tribunal ruled that DSM Construction was entitled to extended preliminaries considering that delay
was not attributable to DSM Construction. The Arbitral Tribunal observed that Megaworld did not present
evidence to refute the claim for extended preliminaries which were previously evaluated by DLS. However, after
assessing the two previous evaluations by DLS, the tribunal ruled that the claims for hauling and disposal and
cleaning and clearing of debris should not be included in the extended preliminaries. Hence, the Arbitral Tribunal
reduced the amount of P44,051.62 from the claim of P2,655,879.89 per Exhibit "MM-7," and P3,883,309.54
from the claim of P5,651,235.24 per Exhibit "MM-8," such amounts being unnecessary.76
The appellate court affirmed the award, stressing the fact that the Arbitral Tribunal denied some of the claims
which it did not find valid.77
DSM Construction’s entitlement to the payment for preliminaries was explained by Engineer Eduardo C. Arrojado
to be the necessary result of the extension of the contract between DSM Construction and
Megaworld.78 Notably, majority of the claims of DSM Construction was reduced by the Arbitral Tribunal on the
basis of Exhibit MM-479 or the Summary of Variation Order Status Report prepared by DLS.
Although the Arbitral Tribunal ruled that DSM Construction was entitled to claim for preliminaries, the award was
not based on the claim of DSM Construction but on the evaluation made by DLS.
The foregoing disquisition adequately shows that the evidence on record supports the findings of facts of the
Arbitral Tribunal on which the Court of Appeals based its decision. In fact, although not all the exhibits in the
Arbitral Tribunal were presented before the Court of Appeals, the record of the appellate court contains the
operative facts and the substance of said exhibits, thus enabling the intelligent disposition of the issues
presented before it. This Court went over all the records, including the exhibits, to ascertain whether the
appellate court missed any crucial point. It did not.
The alleged undue favor accorded by the Arbitral Tribunal to DSM Construction is belied by the fact that the
Arbitral Tribunal did not grant all of DSM Construction’s claims. In majority of DSM Construction’s claims, the
Arbitral Tribunal awarded amounts lower than what DSM Construction demanded. The Arbitral Tribunal also
granted some of Megaworld’s claims.80
Neither did the Court of Appeals merely "swallow hook, line and sinker" the award of the Arbitral Tribunal. While
the appellate court affirmed the decision of the Arbitral Tribunal, it also ruled in favor of Megaworld when it
limited DSM Construction’s lien to only six units instead of all the condominium units to which DSM was entitled
under the Contract, rationalizing that the P62 Million award can be covered by the value of the six units of the
condominium project.81
Considering that the computations, as well as the propriety of the awards of the Arbitral Tribunal, are
unquestionably factual issues that have been discussed and ruled upon by Arbitral Tribunal and affirmed by the
Court of Appeals, we cannot depart from such findings. Findings of fact of administrative agencies and quasi-
judicial bodies, which have acquired expertise because their jurisdiction is confined to specific matters, are
generally accorded not only respect, but finality when affirmed by the Court of Appeals.82
Megaworld, however, adamantly contends that the present case constitutes an exception to the above rule
because: (1) there is grave abuse of discretion in the appreciation of facts; (2) the judgment is premised on
misapprehension of facts; and, (3) the findings of fact of the Court of Appeals is premised on the supposed
absence of evidence and is contradicted by the evidence on record.83
We disagree. None of these flaws appear in this case. Grave abuse of discretion means the capricious or
whimsical exercise of judgment that is so patent and gross as to amount to an evasion of positive duty or a virtual
refusal to perform a duty enjoined by law, or to act at all in contemplation of law, as where the power is exercised
in an arbitrary and despotic manner by reason of passion or hostility.84 No abuse of discretion was established
by Megaworld. On the contrary, what is apparent is Megaworld’s effort to attribute grave abuse of discretion to
the Arbitral Tribunal simply because of the unfavorable judgment against it. Megaworld’s assertion that there
was misapprehension of facts and that the evidence is insufficient to support the decision is also untenable. The
Decisions of the Arbitral Tribunal and the Court of Appeals adequately explain the reasons therefor and are
supported by substantial evidence.
Likewise unmeritorious is Megaworld’s assertion that it was deprived of administrative due process. The Arbitral
Tribunal considered the arguments and the evidence submitted by both parties. That it accorded greater weight
to DSM Construction’s evidence, by itself, does not constitute a denial of due process.
WHEREFORE, the Petition is DENIED. The Decision dated February 14, 2001, of the Court of Appeals is AFFIRMED.
The Temporary Restraining Order issued by this Court on July 12, 2002, is hereby LIFTED. Costs against Petitioner.
SO ORDERED.

3. G.R. No. 148318. November 22, 2004.*

NATIONAL POWER CORPORATION, petitioner, vs. HON. ROSE MARIE ALONZO-LEGASTO, as Presiding Judge, RTC of
Quezon City, Branch 99, JOSE MARTINEZ, Deputy Sheriff, RTC of Quezon City, CARMELO V. SISON, Chairman,
Arbitration Board, and FIRST UNITED CONSTRUCTORS CORPORATION, respondents.

Actions; Alternative Dispute Resolution; Arbitration; Judicial Review; Errors of law and fact, or an erroneous
decision on matters submitted to the judgment of the arbitrators, are insufficient to invalidate an award fairly
and honestly made—judicial review of an arbitration award is more limited than judicial review of a trial.—A
stipulation submitting an ongoing dispute to arbitration is valid. As a rule, the arbitrator’s award cannot be set
aside for mere errors of judgment either as to the law or as to the facts. Courts are generally without power to
amend or overrule merely because of disagreement with matters of law or facts determined by the arbitrators.
They will not review the findings of law and fact contained in an award, and will not undertake to substitute their
judgment for that of the arbitrators. A contrary rule would make an arbitration award the commencement, not
the end, of litigation. Errors of law and fact, or an erroneous decision on matters submitted to the judgment of
the arbitrators, are insufficient to invalidate an award fairly and honestly made. Judicial review of an arbitration
award is, thus, more limited than judicial review of a trial.
Same; Same; Same; Same; An arbitration award is not absolute and without exceptions—where the conditions
described in Arts. 2038, 2039 and 2040 of the Civil Code applicable to both compromises and arbitrations are
obtaining, the arbitrators’ award may be annulled or rescinded.—An arbitration award is not absolute and
without exceptions. Where the conditions described in Articles 2038, 2039 and 2040 of the Civil Code applicable
to both compromises and arbitrations are obtaining, the arbitrators’ award may be annulled or rescinded.
Additionally, judicial review of an arbitration award is warranted when the complaining party has presented proof
of the existence of any of the grounds for vacating, modifying or correcting an award outlined under Sections 24
and 25 of R.A. 876.

Same; Same; Same; Same; The fact that a party was disadvantaged by the decision of the arbitration committee
does not prove evident partiality.—In this case, petitioner does not specify which of the foregoing grounds it
relies upon for judicial review. Petitioner avers that “if and when the factual circumstances referred to in the
provisions aforementioned are present, judicial review of the award is warranted.” From its presentation of issues,
however, it appears that the alleged evident partiality of Mr. Sison is singled out as a ground to vacate the board’s
decision. We note, however, that the Court of Appeals found that petitioner did not present any proof to back up
its claim of evident partiality on the part of Mr. Sison. Its averments to the effect that Mr. Sison was biased and
had prejudged the case do not suffice to establish evident partiality. Neither does the fact that a party was
disadvantaged by the decision of the arbitration committee prove evident partiality.

Estoppel; Promissory Estoppel; Words and Phrases; Promissory estoppel presupposes the existence of a promise
on the part of one against whom estoppel is claimed, and the promise must be plain and unambiguous and
sufficiently specific so that the court can understand the obligation assumed and enforce the promise according
to its terms.—Promissory estoppel “may arise from the making of a promise, even though without consideration,
if it was intended that the promise should be relied upon and in fact it was relied upon, and if a refusal to enforce
it would be virtually to sanction the perpetration of fraud or would result in other injustice.” Promissory estoppel
presupposes the existence of a promise on the part of one against whom estoppel is claimed. The promise must
be plain and unambiguous and sufficiently specific so that the court can understand the obligation assumed and
enforce the promise according to its terms.

Same; Same; A cause of action for promissory estoppel does not lie where an alleged promise was conditional.—
In the present case, the foregoing events clearly evince that the promise that the blasting works would be paid
was predicated on the approval of the extra work order by petitioner’s Board. Even FUCC acknowledged that the
blasting works should be an extra work order and requested that the extra work order be confirmed as such and
approved by the appropriate officials. Notably, even as the extra work order allegedly promised to it was not yet
forthcoming, FUCC commenced blasting. The alleged promise to pay was therefore conditional and up to this
point, promissory estoppel cannot be established as the basis of petitioner’s liability especially in light of P.D.
1594 and its implementing rules of which both parties are presumed to have knowledge. In Mendoza v. Court of
Appeals, supra, we ruled that “*a+ cause of action for promissory estoppel does not lie where an alleged oral
promise was conditional, so that reliance upon it was not reasonable. It does not operate to create liability where
it does not otherwise exist.”

Corporation Law; Acts done in excess of corporate officers’ scope of authority cannot bind the corporation; A
compromise agreement entered into by the parties, the corporation represented by its President acting pursuant
to a Board of Directors’ resolution is a confirmatory act signifying ratification of all prior acts of its officers.—
Petitioner’s argument that it is not bound by the acts of its officials who acted beyond the scope of their
authority in allowing the blasting works is correct. Petitioner is a government agency with a juridical personality
separate and distinct from the government. It is not a mere agency of the government but a corporate entity
performing proprietary functions. It has its own assets and liabilities and exercises corporate powers, including
the power to enter into all contracts, through its Board of Directors. In this case, petitioner’s officials exceeded
the scope of their authority when they authorized FUCC to commence blasting works without an extra work
order properly approved in accordance with P.D. 1594. Their acts cannot bind petitioner unless it has ratified
such acts or is estopped from disclaiming them. However, the Compromise Agreement entered into by the
parties, petitioner being represented by its President, Mr. Guido Alfredo A. Delgado, acting pursuant to its Board
Resolution No. 95-54 dated April 3, 1995, is a confirmatory act signifying petitioner’s ratification of all the prior
acts of its officers. Significantly, the parties agreed that “*t+his Compromise Agreement shall serve as the
Supplemental Agreement for the payment of plaintiff’s blasting works at the Botong site” in accordance with CI
1(6) afore-quoted. In other words, it is primarily by the force of this Compromise Agreement that the Court is
constrained to declare FUCC entitled to payment for the blasting works it undertook.

Alternative Dispute Resolution; Arbitration; Findings of the Arbitration Board, affirmed by the trial court and the
Court of Appeals and supported by substantial evidence, should be accorded not only respect but finality.—At
this point, we hearken to the rule that the findings of the Arbitration Board, affirmed by the trial court and the
Court of Appeals and supported as they are by substantial evidence, should be accorded not only respect but
finality. Accordingly, the amount of P763.00 per cubic meter fixed by the Arbitration Board and affirmed by the
appellate court as just compensation should stand.

Actions; Judgments; Dispositive Portions; In a case decided by a court, the true judgment of legal effect is that
entered by the clerk of said court pursuant to the dispositive part of its decision.—As regards the issue of interest,
while the appellate court declared in the body of its Decision “that interest which would represent the cost of
the money spent be imposed on the money actually spent by claimant for the blasting works,” there is no
pronouncement as to the payment of interest in the dispositive portion of the Decision even as it specifically
deleted the award of attorney’s fees. Despite its knowledge of the appellate court’s omission, FUCC did not file a
motion for reconsideration or appeal from its Decision. In failing to do so, FUCC allowed the Decision to become
final as to it. In Edwards v. Arce, we ruled that in a case decided by a court, the true judgment of legal effect is
that entered by the clerk of said court pursuant to the dispositive part of its decision. The only portion of the
decision that may be the subject of execution is that which is ordained or decreed in the dispositive portion.
Whatever may be found in the body of the decision can only be considered as part of the reasons or conclusions
of the court and serve only as guides to determine the ratio decidendi.

Same; Same; Same; Interest; A judgment which had become final and executory may be clarified when there is
an ambiguity caused by an omission or mistake in the dispositive portion of the decision; Where the omission of
the award of interest in the dispositive portion was obviously inadvertent, correction is in order.—Even so, the
Court allows a judgment which had become final and executory to be clarified when there is an ambiguity
caused by an omission or mistake in the dispositive portion of the decision. In Reinsurance Company of the
Orient, Inc. v. Court of Appeals, we held: x x x In this case, the omission of the award of interest was obviously
inadvertent. Correction is therefore in order. However, we do not agree with the Arbitration Board that the
interest should be computed at 12%. Since the case does not involve a loan or forbearance of money, goods or
credit and court judgments thereon, the interest due shall be computed at 6% per annum computed from the
time the claim was made in 1992 as determined by the Arbitration Board and in accordance with Articles 2209
and 1169 of the Civil Code. The actual base for the computation of legal interest shall be on the amount finally
adjudged. Further, when the judgment awarding a sum of money becomes final and executory, the rate of legal
interest shall be 12% per annum from such finality until its satisfaction, this interim period being deemed to be
by then an equivalent to a forbearance of credit.

TINGA, J.:
National Power Corporation (NPC) filed the instant Petition for Review1 dated July 19, 2001, assailing the
Decision2 of the Court of Appeals dated May 28, 2001 which affirmed with modification the Order3 and Writ of
Execution4 respectively dated May 22, 2000 and June 9, 2000 issued by the Regional Trial Court. In its assailed
Decision, the appellate court declared respondent First United Constructors Corporation (FUCC) entitled to just
compensation for blasting works it undertook in relation to a contract for the construction of power facilities it
entered into with petitioner. The Court of Appeals, however, deleted the award for attorney's fees having found
no basis therefor.
The facts culled from the Decision of the Court of Appeals are undisputed:
On April 14, 1992, NPC and FUCC entered into a contract for the construction of power facilities (civil works) –
Schedule 1 – 1x20 MW Bacon-Manito II Modular Geothermal Power Plant (Cawayan area) and Schedule 1A –
1x20 MW Bacon-Manito II Modular Geothermal Power Plant (Botong area) in Bacon, Sorsogon (BACMAN II). The
total contract price for the two schedules is P108,493,966.30, broken down as follows:

SCHEDULE

1 – Cawayan area P 52,081,421.00

1A – Botong area P 56,412,545.30

P 108,493,966.30

Appended with the Contract is the contract price schedule which was submitted by the respondent FUCC during
the bidding. The price for grading excavation was P76.00 per cubic meter.
Construction activities commenced in August 1992. In the latter part of September 1992 and after excavating 5.0
meters above the plant elevation, FUCC requested NPC that it be allowed to blast to the design grade of 495
meters above sea level as its dozers and rippers could no longer excavate. It further requested that it be paid
P1,346.00 per cubic meter similar to the rate of NPC's project in Palinpinon.
While blasting commenced on October 6, 1992, NPC and FUCC were discussing the propriety of an extra work
order and if such is in order, at what price should FUCC be paid.
Sometime in March 1993, NPC Vice President for Engineering Construction, Hector Campos, created a task force
to review FUCC's blasting works. The technical task force recommended that FUCC be paid P458.07 per cubic
meter as such being the price agreed upon by FUCC.
The matter was further referred to the Department of Public [W]orks and Highways (DPWH), which in a letter
dated May 19, 1993, recommended the price range of P500.00 to P600.00 per cubic meter as reasonable. It
further opined that the price of P983.75 per cubic meter proposed by Lauro R. Umali, Project Manager of
BACMAN II was high. A copy of the DPWH letter is attached as Annex "C", FUCC's Exhibit EEE-Arbitration.
In a letter dated June 28, 1993, FUCC formally informed NPC that it is accepting the proposed price of P458.07
per cubic meter. A copy of the said letter is attached as Annex "D", FUCC's Exhibit L Arbitration.
In the meantime, by March 1993, the works in Botong area were in considerable delay. By May 1993, civil works
in Botong were kept at a minimum until on November 1, 1993, the entire operation in the area completely
ceased and FUCC abandoned the project.
Several written and verbal warnings were given by NPC to FUCC. On March 14, 1994, NPC's Board of Directors
passed Resolution No. 94-63 approving the recommendation of President Francisco L. Viray to take over the
contract. President Viray's recommendation to take over the project was compelled by the need to stave-off
huge pecuniary and non-monetary losses, namely:
(a) Generation loss estimated to be at P26,546,400/month;
(b) Payment of steam penalties to PNOC-EDC the amount estimated to be at P10,206,048.00/month;
(c) Payment of liquidated damages due to the standby of electromechanical contractor;
(d) Loss of guaranteed protection (warranties) of all delivered plant equipment and accessories as Mitsubishi
Corporation, electromechanical contractor, will not be liable after six months of delivery.
To prevent NPC from taking over the project, on March 28, 1994, FUCC filed an action for Specific Performance
and Damages with Preliminary Injunction and Temporary Restraining Order before Branch 99, Regional Trial
Court, Quezon City.
Under paragraph 19 of its Complaint, FUCC admitted that it agreed to pay the price of P458.07 per cubic meter.
On April 5, 1994, Judge de Guzman issued a temporary restraining order and on April 21, 1994, the trial court
resolved to grant the application for issuance of a writ of preliminary injunction.
On July 7, 1994, NPC filed a Petition for Certiorari with Prayer for Temporary Restraining Order and Preliminary
Injunction before the First Division of the Court of Appeals asserting that no injunction may issue against any
government projects pursuant to Presidential Decree 1818.
On July 8, 1994, the Court of Appeals through then Associate Justice Bernardo Pardo issued a temporary
restraining order and on October 20, 1994, the said court rendered a Decision granting NPC's Petition for
Certiorari and setting aside the lower court's Order dated April 21, 1994 and the Writ of Preliminary Injunction
dated May 5, 1994.
However, notwithstanding the dissolution by the Court of Appeals of the said injunction, on July 15, 1995, FUCC
filed a Complaint before the Office of the Ombudsman against several NPC employees for alleged violation of
Republic Act No. 3019, otherwise known as the Anti-Graft and Corrupt Practices Act. Together with the complaint
was an Urgent Ex-Parte Motion for the issuance of a cease and [d]esist [o]rder to restrain NPC and other NPC
officials involved in the BACMAN II project from canceling and/or from taking over FUCC's contract for civil works
of said project.
Then on November 16, 1994, FUCC filed before the Supreme Court a Petition for Review assailing the Decision of
the Court of [A]ppeals dated October 20, 1994. In its Comment, NPC raised the issue that FUCC resorted to
forum shopping as it applied for a cease and desist order before the National Ombudsman despite the
dissolution of the injunction by the Court of Appeals.
Pending the petition filed by FUCC before the Supreme Court, on April 20, 1995 the NPC and FUCC entered into a
Compromise Agreement.
Under the Compromise Agreement, the parties agreed on the following:
1. Defendant shall process and pay the undisputed unpaid billings of Plaintiff in connection with the entire
project fifteen (15) days after a reconciliation of accounts by both Plaintiff and Defendant or thirty (30) days from
the date of approval of this Compromise Agreement by the Court whichever comes first. Both parties agree to
submit and include those accounts which could not be reconciled among the issues to be arbitrated as
hereunder provided;
2. Plaintiff accepts and acknowledges that Defendant shall have the right to proceed with the works by re-
bidding or negotiating the project immediately upon the signing of herein Compromise Agreement;
3. This Compromise Agreement shall serve as the Supplemental Agreement for payment of plaintiff's blasting
works at the Botong site;
4. Upon approval of this Compromise Agreement by the Court or Plaintiff's receipt of payment of this undisputed
unpaid billings from Defendant whichever comes first, the parties shall immediately file a Joint Manifestation and
Motion for the withdrawal of the following Plaintiff's petition from the Supreme Court, Plaintiff's Complaint from
the National Ombudsman, the Complaint and Amended Complaint from the RTC, Br. 99 of Quezon City;
5. Upon final resolution of the Arbitration, as hereunder prescribed, the parties shall immediately execute the
proper documents mutually terminating Plaintiff's contract for the civil works of the BACMAN II Project (Contract
No. Sp90DLM-918 (I & A);
6. Such mutual termination of Plaintiff's contract shall have the following effects and/or consequences: (a) the
construction works of Plaintiff at the Kawayan and Bolong sites, at its present stage of completion, shall be
accepted and/or deemed to have been accepted by defendant; (b) Plaintiff shall have no more obligation to
Defendant in respect of the BACMAN II Project except as provided in clause (e) below; (c) Defendant shall release
all retention moneys of plaintiff within a maximum period of thirty (30) days from the date of final Resolution of
the Arbitration; (d) no retention money shall thenceforth be withheld by Defendant in its payment to Plaintiff
under this Compromise Agreement, and (e) Plaintiff shall put up a one-year guaranty bond for its completed civil
works at the Kawayan site, retroactive to the date of actual use of the plant by defendant;
7. Plaintiff's blasting works claims and other unresolved claims, as well as the claims of damages of both parties
shall be settled through a two stage process to wit:
STAGE 1
7.1 Plaintiff and Defendant shall execute and sign this Compromise Agreement which they will submit for
approval by this Court. Under this Compromise Agreement both parties agree that:
xxx xxx
STAGE 2
7.1 The parties shall submit for arbitration to settle: (a) the price of blasting, (b) both parties' claims for damages,
delays, interests, and (c) all other unresolved claims of both parties, including the exact volume of blasted rocks;
7.2 The arbitration shall be through a three-member commission to be appointed by the Honorable Court. Each
party shall nominate one member. The Chairman of the Arbitration Board shall be [a] person mutually acceptable
to both parties, preferably from the academe;
7.3 The parties shall likewise agree upon the terms under which the arbitrable issues shall be referred to the
Arbitration Board. The terms of reference shall form part of the Compromise Agreement and shall be submitted
by the parties to the Honorable Court within a period of seven (7) days from the signing of the Compromise
Agreement;
7.4 The Arbitration Board shall have a non-extendible period of three (3) months within which to complete the
arbitration process and submit its Decision to the Honorable Court;
7.5 The parties agree that the Decision of the Arbitration Board shall be final and executory;
7.6 By virtue of this Compromise Agreement, except as herein provided, the parties shall mutually waive, forgo
and dismiss all of their other claims and/or counterclaim in this case. Plaintiff and defendant warrant that after
approval by the Court of this Compromise Agreement neither party shall file Criminal or Administrative cases or
suits against each other or its Board or member of its officials on grounds arising from the case.
The Compromise Agreement was subsequently approved by the Court on May 24, 1995.
The case was subsequently referred by the parties to the arbitration board pursuant to their Compromise
Agreement. On December 9, 1999 the Arbitration Board rendered its ruling the dispositive portion of which
states:
WHEREFORE, claimant is hereby declared entitled to an award of P118,681,328.28 as just compensation for
blasting works, plus ten percent (10%) thereof for attorney's fees and expenses of litigation.
Considering that payment in the total amount of P36,550,000.00 had previously been made, respondent is
hereby ordered to pay claimant the remaining sum of P82,131,328.28 for attorney's fees and expenses of
litigation.
Pursuant to the Compromise Agreement approved by this Honorable Court, the parties have agreed that the
decision of the Arbitration Board shall be final and executory.
SO ORDERED.
On December 10, 1999 plaintiff FUCC filed a Motion for Execution while defendant NPC filed a Motion to Vacate
Award by the Arbitration Board on December 20, 1999.
On May 22, 2000 Presiding Judge Rose Marie Alonzo Legasto issued an order the dispositive portion of which
states:
"WHEREFORE, the Arbitration Award issued by the Arbitration Board is hereby APPROVED and the Motion for
Execution filed by plaintiff hereby GRANTED. The Motion to Vacate Award filed by defendant is hereby DENIED
for lack of merit.
Accordingly, let a writ of execution be issued to enforce the Arbitration Award.
SO ORDERED."5 (Bracketed words supplied)
NPC went to the Court of Appeals on the lone issue of whether respondent judge acted with grave abuse of
discretion in issuing the Order dated May 22, 2000 and directing the issuance of a Writ of Execution.
In its assailed Decision, the appellate court declared that the court a quo did not commit grave abuse of
discretion considering that the Arbitration Board acted pursuant to its powers under the Compromise Agreement
and that its award has factual and legal bases.
The Court of Appeals gave primacy to the court-approved Compromise Agreement entered into by the parties
and concluded that they intended the decision of the arbitration panel to be final and executory. Said the court:
For one, what the price agreed to be submitted for arbitration are pure issues of fact (i.e., the price of blasting;
both parties' claims for damages, delay, interests and all other unresolved claims of both parties, including the
exact volume of blasted rocks). Also, the manner by which the Arbitration Board was formed and the terms
under which the arbitrable issues were referred to said Board are specified in the agreement. Clearly, the parties
had left to the Arbitration Board the final adjudication of their remaining claims and waived their right to
question said Decision of the Board. Hence, they agreed in clear and unequivocal terms in the Compromise
Agreement that said Decision would be immediately final and executory. Plaintiff relied upon this stipulation in
complying with its various obligations under the agreement. To allow defendant to now go back on its word and
start questioning the Decision would be grossly unfair considering that the latter was also a party to the
Compromise Agreement entered into part of which dealt with the creation of the Arbitration Board.6
The appellate court likewise held that petitioner failed to present evidence to prove its claim of bias and partiality
on the part of the Chairman of the Arbitration Board, Mr. Carmelo V. Sison (Mr. Sison).
Further, the Court of Appeals found that blasting is not part of the unit price for grading and structural excavation
provided for in the contract for the BACMAN II Project, and that there was no perfected contract between the
parties for an extra work order for blasting. Nonetheless, since FUCC relied on the representation of petitioner's
officials that the extra work order would be submitted to its Board of Directors for approval and that the blasting
works would be paid, the Court of Appeals ruled that FUCC is entitled to just compensation on grounds of equity
and promissory estoppel.
Anent the issue of just compensation, the appellate court took into account the estimate prepared by a certain
Mr. Lauro R. Umali (Mr. Umali), Project Manager of the BACMAN II Project, which itemized the various costs
involved in blasting works and came up with P1,310.82 per cubic meter, consisting of the direct cost for drilling,
blasting excavation, stockpiling and hauling, and a 30% mark up for overhead, contractor's tax and contingencies.
This estimate was later changed to P983.75 per cubic meter to which FUCC agreed. The Court of Appeals,
however, held that just compensation should cover only the direct costs plus 10% for overhead expenses. Thus, it
declared that the amount of P763.007 per cubic meter is sufficient. Since the total volume of blasted rocks as
computed by Dr. Benjamin Buensuceso, Jr.8 of the U.P. College of Engineering is 97,032.16 cubic meters, FUCC is
entitled to the amount of P74,035,503.50 as just compensation.
Although the Court of Appeals adjudged FUCC entitled to interest,9 the dispositive portion of the assailed
Decision10 did not provide for the payment of interest. Moreover, the award of attorney's fees was deleted as
there was no legal and factual ground for its imposition.
Petitioner, represented by the Office of the Solicitor General in the instant Petition, rehashes its submissions
before the Court of Appeals. It claims that the appellate court failed to pass upon the following issues:
1. The Chairman of the Arbitration Board showed extreme bias in prejudging the case.
2. The Chairman of the Arbitration Board greatly exceeded his powers when he mediated for settlement in the
court of arbitration proceedings.
3. The Chairman of the Arbitration Board committed serious irregularity in hastily convening the Board in two
days, which thereafter released its report.
4. The Arbitration Board Committed manifest injustice prejudicial to petitioner based on the following:
a. It rendered an award based on equity despite the mandatory provision of the law.
b. The Board's decision to justify that equity applies herein despite the fact that FUCC never submitted its own
actual costs for blasting and PHESCO, INC., the succeeding contractor, did not employ blasting but used ordinary
excavation method at P75.59 per cubic meter which is approximately the same unit price of plaintiff (FUCC).
c. It gravely erred when the Board claimed that an award of just compensation must be given to respondent
FUCC for what it has actually spent and yet instead of using as basis P458.07 which is the price agreed upon by
FUCC, it chose an estimate made by an NPC employee.
d. It gravely erred when it relied heavily on the purported letter of NPC Project Manager Lauro R. Umali, when
the same has not been identified nor were the handwritten entries in Annex ii established to be made by him.
5. The Arbitration Board gravely erred in computing interest at 12% and from the time of plaintiff's extrajudicial
claim despite the fact that herein case is an action for specific performance and not for payment of loan or
forbearance of money, and despite the fact that it has resolved that there was no perfected contract and there
was no bad faith on the part of defendant.
6. On June 25, 2000, NPC discovered the Sub-Contract Agreement of FUCC with a unit price of only P430/per cubic
meter.11 [Emphasis in the original]
Specifically, petitioner asserts that Mr. Sison exhibited bias and prejudgment when he exhorted it to pay FUCC for
the blasting works after concluding that the latter was allowed to blast. Moreover, Mr. Sison allegedly attempted
to mediate the conflict between the parties in violation of Section 20,12 paragraph 2 of Republic Act No. 876 (R.A.
876) otherwise known as the Arbitration Law. Petitioner also questions the abrupt manner by which the decision
of the Arbitration Board was released.
Petitioner avers that FUCC's claim for blasting works was not approved by authorized officials in accordance with
Presidential Decree No. 1594 (P.D. 1594) and its implementing rules which specifically require the approval of the
extra work by authorized officials before an extra work order may be issued in favor of the contractor. Thus, it
should not be held liable for the claim. If at all, only the erring officials should be held liable. Further, FUCC did
not present evidence to prove the actual expenses it incurred for the blasting works. What the Arbitration Board
relied upon was the memorandum of Mr. Umali which was neither identified or authenticated during the
arbitration proceedings nor marked as evidence for FUCC. Moreover, the figures indicated in Mr. Umali's
memorandum were allegedly mere estimates and were recommendatory at most.
Petitioner likewise claims that its succeeding contractor, Phesco, Inc. (Phesco), was able to excavate the same
rock formation without blasting.
Finally, it asserts that the award of P763.00 per cubic meter has no factual and legal basis as the sub-contract
between FUCC and its blasting sub-contractor, Dynamic Blasting Specialists of the Philippines (Dynamic), was only
P430.00 per cubic meter.
In its Comment13 dated October 15, 2001, FUCC points out that petitioner's arguments are exactly the same as
the ones it raised before the Arbitration Board, the trial court and the Court of Appeals. Moreover, in the
Compromise Agreement between the parties, petitioner committed to abide by the decision of the Arbitration
Board. It should not now be allowed to question the decision.
FUCC likewise notes that Atty. Jose G. Samonte (Atty. Samonte), one of the members of the Arbitration Board,
was nominated by petitioner itself. If there was any irregularity in its proceedings such as the bias and
prejudgment petitioner imputes upon Mr. Sison, Atty. Samonte would have complained. As it is, Atty. Samonte
concurred in the decision of the Arbitration Board and dissented only as to the award of attorney's fees.
As regards the issue of interest, FUCC claims that the case involves forbearance of money and not a claim for
damages for breach of an obligation in which case interest on the amount of damages awarded may be imposed
at the rate of six percent (6%) per annum.
Finally, FUCC asserts that its sub-contract agreement with Dynamic is not newly-discovered evidence. Petitioner's
lawyers allegedly had a copy of the sub-contract in their possession. In any event, the unit price of P430.00 per
cubic meter appearing in the sub-contract represents only a fraction of the costs incurred by FUCC for the
blasting works.
Petitioner filed a Reply14 dated March 18, 2002 reiterating its earlier submissions.
The parties in the present case mutually agreed to submit to arbitration the settlement of the price of blasting,
the parties' claims for damages, delay and interests and all other unresolved claims including the exact volume of
blasted rocks.15 They further mutually agreed that the decision of the Arbitration Board shall be final and
immediately executory.16
A stipulation submitting an ongoing dispute to arbitration is valid. As a rule, the arbitrator's award cannot be set
aside for mere errors of judgment either as to the law or as to the facts. Courts are generally without power to
amend or overrule merely because of disagreement with matters of law or facts determined by the arbitrators.
They will not review the findings of law and fact contained in an award, and will not undertake to substitute their
judgment for that of the arbitrators. A contrary rule would make an arbitration award the commencement, not
the end, of litigation. Errors of law and fact, or an erroneous decision on matters submitted to the judgment of
the arbitrators, are insufficient to invalidate an award fairly and honestly made. Judicial review of an arbitration
award is, thus, more limited than judicial review of a trial.17
However, an arbitration award is not absolute and without exceptions. Where the conditions described in
Articles 2038, 2039 and 2040 of the Civil Code18 applicable to both compromises and arbitrations are obtaining,
the arbitrators' award may be annulled or rescinded.19 Additionally, judicial review of an arbitration award is
warranted when the complaining party has presented proof of the existence of any of the grounds for vacating,
modifying or correcting an award outlined under Sections 24 and 25 of R.A. 876, viz:
Section 24. Grounds for vacating an award. — In any of the following cases, the court must make an order
vacating the award upon the petition of any party to the controversy when such party proves affirmatively that in
the arbitration proceedings:
(a) The award was procured by corruption, fraud, or other undue means; or
(b) That there was evident partiality or corruption in the arbitrators or any of them; or
(c) That the arbitrators were guilty of misconduct in refusing to postpone the hearing upon sufficient cause
shown, or in refusing to hear evidence pertinent and material to the controversy; that one or more of the
arbitrators was disqualified to act as such under section nine hereof, and willfully refrained from disclosing such
disqualifications or of any other misbehavior by which the rights of any party have been materially prejudiced; or
(d) That the arbitrators exceeded their powers, or so imperfectly executed them, that a mutual, final and definite
award upon the subject matter submitted to them was not made.
When an award is vacated, the court, in its discretion, may direct a new hearing either before the same
arbitrators or before a new arbitrator or arbitrators to be chosen in the manner provided in the submission or
contract for the selection of the original arbitrator or arbitrators, and any provision limiting the time in which the
arbitrators may make a decision shall be deemed applicable to the new arbitration to commence from the date
of the court's order.
Where the court vacates an award, costs not exceeding fifty pesos and disbursements may be awarded to the
prevailing party and the payment thereof may be enforced in like manner as the payment of costs upon the
motion in an action.
Section 25. Grounds for modifying or correcting an award. — In any one of the following cases, the court must
make an order modifying or correcting the award, upon the application of any party to the controversy which
was arbitrated:
(a) Where there was an evident miscalculation of figures, or an evident mistake in the description of any person,
thing or property referred to in the award; or
(b) Where the arbitrators have awarded upon a matter not submitted to them, not affecting the merits of the
decision upon the matter submitted; or
(c) Where the award is imperfect in a matter of form not affecting the merits of the controversy, and if it had
been a commissioner's report, the defect could have been amended or disregarded by the court.
The order may modify and correct the award so as to effect the intent thereof and promote justice between the
parties.
In this case, petitioner does not specify which of the foregoing grounds it relies upon for judicial review.
Petitioner avers that "if and when the factual circumstances referred to in the provisions aforementioned are
present, judicial review of the award is warranted."20 From its presentation of issues, however, it appears that
the alleged evident partiality of Mr. Sison is singled out as a ground to vacate the board's decision.
We note, however, that the Court of Appeals found that petitioner did not present any proof to back up its claim
of evident partiality on the part of Mr. Sison. Its averments to the effect that Mr. Sison was biased and had
prejudged the case do not suffice to establish evident partiality. Neither does the fact that a party was
disadvantaged by the decision of the arbitration committee prove evident partiality.21
According to the appellate court, "[p]etitioner was never deprived of the right to present evidence nor was there
any showing that the Board showed signs of any bias in favor of FUCC. As correctly found by the trial court, this
Court cannot find its way to support petitioner's contention that there was evident partiality in the assailed
Award of the Arbitrator in favor of the respondent because the conclusion of the Board, which the Court found
to be well-founded, is fully supported by substantial evidence."22
There is no reason to depart from this conclusion.
However, we take exception to the arbitrators' determination that based on promissory estoppel per se or alone,
FUCC is entitled to just compensation for blasting works for the reasons discussed hereunder.
Section 9 of P.D. No. 1594, entitled Prescribing Policies, Guidelines, Rules and Regulations for Government
Infrastructure Contracts, provides:
SECTION 9. Change Order and Extra Work Order.—A change order or extra work order may be issued only for
works necessary for the completion of the project and, therefore, shall be within the general scope of the
contract as bid[ded] and awarded. All change orders and extra work orders shall be subject to the approval of the
Minister of Public Works, Transportation and Communications, the Minister of Public Highways, or the Minister
of Energy, as the case may be.
The pertinent portions of the Implementing Rules and Regulations of P.D. 1594 provide:
CI - Contract Implementation:
These Provisions Refer to Activities During Project Construction, i.e., After Contract Award Until Completion,
Except as May Otherwise be Specifically Referred to Provisions Under Section II. IB - Instructions to Bidders.
CI 1 - Variation Orders - Change Order/Extra Work Order/Supplemental Agreement
4. An Extra Work Order may be issued by the implementing official to cover the introduction of new work items
after the same has been found to strictly comply with Section CI-1-1 and approved by the appropriate official if
the amount of the Extra Work Order is within the limits of the former's authority to approve original contracts
and under the following conditions:
a. Where there are additional works needed and necessary for the completion, improvement or protection of the
project which were not included as items of work in the original contract.
b. Where there are subsurface or latent physical conditions at the site differing materially from those indicated in
the contract.
c. Where there are duly unknown physical conditions at the site of an unusual nature differing materially from
those ordinarily encountered and generally recognized as inherent in the work or character provided for in the
contract.
d. Where there are duly approved construction drawings or any instruction issued by the implementing
office/agency during the term of contract which involve extra cost.
…
6. A separate Supplemental Agreement may be entered into for all Change Orders and Extra Work Orders if the
aggregate amount exceeds 25% of the escalated original contract price. All change orders/extra work orders
beyond 100% of the escalated original contract cost shall be subject to public bidding except where the works
involved are inseparable from the original scope of the project in which case negotiation with the incumbent
contractor may be allowed, subject to approval by the appropriate authorities.
7. Any Variation Order (Change Order, Extra Work Order or Supplemental Agreement) shall be subject to the
escalation formula used to adjust the original contract price less the cost of mobilization. In claiming for any
Variation Order, the contractor shall, within seven (7) calendar days after such work has been commenced or
after the circumstances leading to such condition(s) leading to the extra cost, and within 28 calendar days deliver
a written communication giving full and detailed particulars of any extra cost in order that it may be investigated
at that time. Failure to provide either of such notices in the time stipulated shall constitute a waiver by the
contractor for any claim. The preparation and submission of Change Orders, Extra Work Orders or Supplemental
Agreements are as follows:
a. If the Project Engineer believes that a Change Order, Extra Work Order or Supplemental Agreement should be
issued, he shall prepare the proposed Order or Supplemental Agreement accompanied with the notices
submitted by the contractor, the plans therefore, his computations as to the quantities of the additional works
involved per item indicating the specific stations where such works are needed, the date of his inspections and
investigations thereon, and the log book thereof, and a detailed estimate of the unit cost of such items of work,
together with his justifications for the need of such Change Order, Extra Work Order or Supplemental Agreement,
and shall submit the same to the Regional Director of office/agency/corporation concerned.
b. The Regional Director concerned, upon receipt of the proposed Change Order, Extra Work Order or
Supplemental Agreement shall immediately instruct the technical staff of the Region to conduct an on-the-spot
investigation to verify the need for the work to be prosecuted. A report of such verification shall be submitted
directly to the Regional Director concerned.
c. The Regional Director concerned after being satisfied that such Change Order, Extra Work Order or
Supplemental Agreement is justified and necessary, shall review the estimated quantities and prices and forward
the proposal with the supporting documentation to the head of office/agency/corporation for consideration.
d. If, after review of the plans, quantities and estimated unit cost of the items of work involved, the proper
office/agency/corporation committee empowered to review and evaluate Change Orders, Extra Work Orders or
Supplemental Agreements recommends approval thereof, the head of office/agency/corporation, believing the
Change Order, Extra Work Order or Supplemental Agreement to be in order, shall approve the same. The limits of
approving authority for any individual, and the aggregate of, Change Orders, Extra Work Orders or Supplemental
Agreements for any project of the head of office/agency/corporation shall not be greater than those granted for
an original project.
CI 3 - Conditions under which Contractor is to Start Work under Variation Orders and Receive Payments
1. Under no circumstances shall a contractor proceed to commence work under any Change Order, Extra Work
Order or Supplemental Agreement unless it has been approved by the Secretary or his duly authorized
representative. Exceptions to the preceding rule are the following:
a. The Regional Director, or its equivalent position in agencies/offices/corporations without plantilla position for
the same, may, subject to the availability of funds, authorize the immediate start of work under any Change or
Extra Work Order under any or all of the following conditions:
(1) In the event of an emergency where the prosecution of the work is urgent to avoid detriment to public
service, or damage to life and/or property; and/or
(2) When time is of the essence; provided, however, that such approval is valid on work done up to the point
where the cumulative increase in value of work on the project which has not yet been duly fully approved does
not exceed five percent (5%) of the adjusted original contract price, or P500,000 whichever is less; provided,
further, that immediately after the start of work, the corresponding Change/Extra Work Order shall be prepared
and submitted for approval in accordance with the above rules herein set. Payments for works satisfactorily
accomplished on any Change/Extra Work Order may be made only after approval of the same by the Secretary or
his duly authorized representative.
b. For a Change/Extra Work Order involving a cumulative amount exceeding five percent (5%) of the original
contract price or original adjusted contract price no work thereon may be commenced unless said Change/Extra
Work Order has been approved by the Secretary or his duly authorized representative. [Emphasis supplied]
It is petitioner's submission, and FUCC does not deny, that the claim for payment of blasting works in Botong
alone was approximately P170,000,000.00, a figure which far exceeds the original contract price of
P80,000,000.00 for two (2) project sites. Under the foregoing implementing rules, for an extra work order which
exceeds 5% of the original contract price, no blasting work may be commenced without the approval of the
Secretary or his duly authorized representative. Moreover, the procedure for the preparation and approval of the
extra work order outlined under Contract Implementation (CI) 1(7) above should have been complied with.
Accordingly, petitioner's officials should not have authorized the commencement of blasting works nor should
FUCC have proceeded with the same.
The following events, culled from the decision of the Arbitration Board and the assailed Decision, are made the
bases for the finding of promissory estoppel on the part of petitioner:
1. After claimant [respondent herein] encountered what it claimed to be massive hard rock formation (Testimony
of witness Dumaliang, TSN, 28 October 1996, pp. 41-42; Testimony of witness Lataquin, 28 November 1996, pp.
2-3; 20-23; Exh. "JJJ" and sub-markings) and informed respondent [petitioner herein] about it, respondent's own
geologists went to the Botong site to investigate and confirmed the rock formation and recommended blasting
(Cf. Memorandum of Mr. Petronilo E. Pana, Acting Manager of the Geoscience Services Department and the
report of the geologists who conducted the site investigation; Exhs. "F" and "F-1").
2. Claimant asked for clearance to blast the rock formation to the design grade (Letter dated 28 September 1992;
Exh. "UU"). The engineers of respondent at the project site advised claimant to proceed with its suggested
method of extraction (Order/Instruction given by Mr. Reuel R. Declaro and Mr. Francis A. Paderna dated 29
September 1992; Exh. "C").
3. Claimant requested that the intended blasting works be confirmed as extra work order by responsible officials
of respondent directly involved in the BACMAN II Project (i.e., then BACMAN II Project Manager, Mr. Lauro R.
Umali and Mr. Angelito G. Senga, Section Chief, Civil Engineering Design of respondent's Design Department
which bidded the project). These officials issued verbal instructions to the effect: (a) that claimant could blast the
rock formation down to the design grade of 495 masl; (b) that said blasting works would be an extra work order;
and (c) that claimant would be paid for said blasting works using the price per cubic meter for similar blasting
works at Palinpinon, or at P1,346.00 per cubic meter.
4. Claimant sent two (2) confirmatory letters to respondent, both addressed to its President, one dated 30
September 1992, and sent through Mr. Angelito Senga, Chief Civil Design – Thermal, the other dated 02 October
1992, and sent through Mr. Lauro R. Umali, Project Manager–BacMan II (Exhs. "D" and "E"; Testimony of witness
Dumaliang, TSN, 28 October 1996, pp. 43-49). The identical letters read:
We wish to confirm your instruction for us to proceed with the blasting of the Botong Plant site to the design
grade pending issuance of the relevant variation order. This is to avoid delay in the implementation of this critical
project due to the urgent need to blast rocks on the plant site.
We are confirming further your statement that the said blasting works is an extra work order and that we will be
paid using the price established in your Palinpinon contract with Phesco.
Thank you for your timely action and we look forward to the immediate issuance of the extra work order.
We are now mobilizing equipment and manpower for the said work and hope to start blasting next week.
5. Respondent received the letters but did not reply thereto nor countermand the earlier instructions given to
claimant to proceed with the blasting works. The due execution and authenticity of these letters (Exhs. "D-1" and
"E-1") and the fact of receipt (Exhs. "D-2" and "E-2") were duly proved by claimant (Testimony of witness
Dumaliang, TSN, 28 October 1996, 43-49).
6. In mid-October 1992, three (3) Vice-Presidents of respondent visited the project site and were informed of
claimant's blasting activities. While respondent claims that one of the Vice-Presidents, Mr. Rodrigo Falcon, raised
objections to claimant's blasting works as an extra work order, they instructed claimant to speed up the works
because of the power crisis then hounding the country. Stipulation no. 24 of the Joint Stipulation of Facts of the
parties which reads: "24. In mid-October 1992, three (3) Vice-Presidents of respondent, namely: Mr. Hector N.
Campos, Sr., of Engineering Construction, Mr. C.A. Pastoral of Engineering Design, and Mr. Rodrigo P. Falcon,
visited the project site and were likewise apprised of claimant's blasting activities. They never complained about
the blasting works, much less ordered its cessation. In fact, no official of respondent ever ordered that the
blasting works be stopped."
7. After visiting Botong, Mr. Hector N. Campos, Sr., then Vice President of Engineering Construction, instructed
Mr. Fernando A. Magallanes then Manager of the Luzon Engineering Projects Department, to evaluate claimant's
blasting works and to submit his recommendations on the proper price therefor. In a memorandum dated 17
November 1992 (Exh. "G" and sub-markings), Mr. Magallanes confirmed that claimant's blasting works was an
extra work order and recommended that it be paid at the price for similar blasting works at Palinpinon, or at
P1,346.00 per cubic meter. Mr. Campos concurred with the findings and recommendations of Mr. Magallanes
and instructed Mr. Lauro R. Umali, then Project Manager of BacMan II, to implement the same as shown by his
instructions scribbled on the memorandum.
8. Mr. Umali and the project team prepared proposed Extra Work Order No. 2 – Blasting (Exh. "DDD" –
Memorandum of Mr. Umali to Mr. Campos dated 20 January 1993 forwarding proposed Extra Work Order No. 2),
recommending a price of P983.75 per cubic meter for claimant's blasting works. Claimant agreed to this price
(Testimony of witness Dumaliang, 7 November 1996, p. 48).
9. On 19 February 1993, claimant brought the matter of its unpaid blasting works to the attention of the then
NPC Chairman [also Secretary of the Department of Energy then] Delfin L. Lazaro during a meeting with the
multi-sectoral task force monitoring the implementation of power plant projects, who asked then NPC President
Pablo B. Malixi what he was doing about the problem. President Malixi thereafter convened respondent's vice-
presidents and ordered them to quickly document the variation order and pay claimant. The vice-president, and
specifically Mr. Campos, pledged that the variation order for claimant's blasting works would be submitted for
the approval of the NPC Board during the first week of March 1993. Claimant thereafter sent respondent a letter
dated 22 February 1993 (Ex. "K") to confirm this pledge (Testimony of witness Dumaliang, 7 November 1996, pp.
28-30).
10. Mr. Campos created a task force (i.e., the Technical Task Force on the Study and Review of Extra Work Order
No. 2; Exh. "FFF") to review claimant's blasting works. After several meetings with the task force, claimant agreed
to the lower price of P458.07 per cubic meter, in exchange for quick payment (Testimony of witness Dumaliang, 7
November 1996, p. 30).
11. However, no variation order was issued and no payment came, although it appears from two (2) radiograms
sent by Mr. Campos to Mr. Paderna at the project site that the variation order was being processed and that
payment to claimant was forthcoming (Exhs. "AAA" and "BBB").
12. Respondent asked the Department of Public Works and Highways (DPWH) about the standard prices for
blasting in the projects of the DPWH. The DPWH officially replied to respondent's query in a letter dated 19 May
1993 but the task force still failed to seek Board approval for claimant's variation order. The task force eventually
recommended that the issue of grading excavation and structural excavation and the unit prices therefor be
brought into voluntary arbitration (Testimony of witness Dumaliang, 7 November 1996, pp. 30-57).
13. Claimant thereafter saw Mr. Francisco L. Viray, the new NPC President, who proposed that claimant accept
the price of P458.07 per cubic meter for its blasting works with the balance of its claim to be the subject of
arbitration. Claimant accepted the offer and sent the letter dated 28 September 1993 (Exh. "O") to formalize said
acceptance. However, no variation order was issued and the promised payment never came. (Testimony of
witness Dumaliang, 7 November 1996, p. 58).
14. After some time, claimant met Mr. Viray on 19 October 1993 at the project site, and with some NPC officers
in attendance, particularly Mr. Gilberto A. Pastoral, Vice-President for Engineering Design, who was instructed by
Mr. Viray to prepare the necessary memorandum (i.e., that claimant would be paid P458.07 per cubic meter with
the balance of its claim to be the subject of arbitration) for the approval of the NPC Board. Claimant formalized
what transpired during this meeting in its letter to Mr. Pastoral dated 22 October 1993 (Exhibit "R"). But no
action was taken by Mr. Pastoral and no variation order was issued by respondent (Testimony of witness
Dumaliang, 7 November 1996, pp. 57-58).23 [Emphasis supplied and bracketed words]
Promissory estoppel "may arise from the making of a promise, even though without consideration, if it was
intended that the promise should be relied upon and in fact it was relied upon, and if a refusal to enforce it
would be virtually to sanction the perpetration of fraud or would result in other injustice."24 Promissory
estoppel presupposes the existence of a promise on the part of one against whom estoppel is claimed. The
promise must be plain and unambiguous and sufficiently specific so that the court can understand the obligation
assumed and enforce the promise according to its terms.25
In the present case, the foregoing events clearly evince that the promise that the blasting works would be paid
was predicated on the approval of the extra work order by petitioner's Board. Even FUCC acknowledged that the
blasting works should be an extra work order and requested that the extra work order be confirmed as such and
approved by the appropriate officials. Notably, even as the extra work order allegedly promised to it was not yet
forthcoming, FUCC commenced blasting.
The alleged promise to pay was therefore conditional and up to this point, promissory estoppel cannot be
established as the basis of petitioner's liability especially in light of P.D. 1594 and its implementing rules of which
both parties are presumed to have knowledge. In Mendoza v. Court of Appeals, supra, we ruled that "[a] cause of
action for promissory estoppel does not lie where an alleged oral promise was conditional, so that reliance upon
it was not reasonable. It does not operate to create liability where it does not otherwise exist."
Petitioner's argument that it is not bound by the acts of its officials who acted beyond the scope of their
authority in allowing the blasting works is correct. Petitioner is a government agency with a juridical personality
separate and distinct from the government. It is not a mere agency of the government but a corporate entity
performing proprietary functions. It has its own assets and liabilities and exercises corporate powers, including
the power to enter into all contracts, through its Board of Directors.
In this case, petitioner's officials exceeded the scope of their authority when they authorized FUCC to commence
blasting works without an extra work order properly approved in accordance with P.D. 1594. Their acts cannot
bind petitioner unless it has ratified such acts or is estopped from disclaiming them.26
However, the Compromise Agreement entered into by the parties, petitioner being represented by its President,
Mr. Guido Alfredo A. Delgado, acting pursuant to its Board Resolution No. 95-54 dated April 3, 1995, is a
confirmatory act signifying petitioner's ratification of all the prior acts of its officers. Significantly, the parties
agreed that "[t]his Compromise Agreement shall serve as the Supplemental Agreement for the payment of
plaintiff's blasting works at the Botong site"27 in accordance with CI 1(6) afore-quoted. In other words, it is
primarily by the force of this Compromise Agreement that the Court is constrained to declare FUCC entitled to
payment for the blasting works it undertook.
Moreover, since the blasting works were already rendered by FUCC and accepted by petitioner and in the
absence of proof that the blasting was done gratuitously, it is but equitable that petitioner should make
compensation therefor, pursuant to the principle that no one should be permitted to enrich himself at the
expense of another.28
This brings us to the issue of just compensation.
The parties proposed in the terms of reference jointly submitted to the Arbitration Board that should FUCC be
adjudged entitled to just compensation for its blasting works, the price therefor should be determined based on
the payment for blasting works in similar projects of FUCC and the amount it paid to its blasting
subcontractor.29They agreed further that "the price of the blasting at the Botong site . . . shall range from
Defendant's position of P76.00 per cubic meter as per contract to a maximum of P1,144.00"30
Petitioner contends that the Arbitration Board, trial court and the appellate court unduly relied on the
memorandum of Mr. Umali which was allegedly not marked as an exhibit. We note, however, that this
memorandum actually forms part of the record of the case as Exhibit "DDD."31 Moreover, both the Arbitration
Board and the Court of Appeals found that Mr. Umali's proposal is the best evidence on record as it is supported
by detailed cost estimates that will serve as basis to determine just compensation.
While the Arbitration Board found that FUCC did not present evidence showing the amount it paid to its blasting
sub-contractor, it did present testimony to the effect that it incurred other costs and expenses on top of the
actual blasting cost. Hence, the amount of P430.00 per cubic meter indicated in FUCC's Contract of Agreement
with Dynamic is not controlling.
Moreover, FUCC presented evidence showing that in two (2) other projects where blasting works were
undertaken, petitioner paid the contractors P1,346 per cubic meter for blasting and disposal of solid rocks in the
Palinpinon project and P1,144.51 per cubic meter for rock excavation in the Hermosa Balintawak project. Besides,
while petitioner claims that in a contract with Wilper Construction for the construction of the Tayabas sub-
station, the price agreed for blasting was only P96.13, petitioner itself did not present evidence in support of this
claim.32
Parenthetically, the point raised by petitioner that its subsequent contractor, Phesco, did not undertake blasting
works in excavating the same rock formation is extraneous and irrelevant. The fact is that petitioner allowed
FUCC to blast and undertook to pay for the blasting works.
At this point, we hearken to the rule that the findings of the Arbitration Board, affirmed by the trial court and the
Court of Appeals and supported as they are by substantial evidence, should be accorded not only respect but
finality.33 Accordingly, the amount of P763.00 per cubic meter fixed by the Arbitration Board and affirmed by the
appellate court as just compensation should stand.
As regards the issue of interest, while the appellate court declared in the body of its Decision "that interest which
would represent the cost of the money spent be imposed on the money actually spent by claimant for the
blasting works,"34 there is no pronouncement as to the payment of interest in the dispositive portion of the
Decision even as it specifically deleted the award of attorney's fees.
Despite its knowledge of the appellate court's omission, FUCC did not file a motion for reconsideration or appeal
from its Decision. In failing to do so, FUCC allowed the Decision to become final as to it.
In Edwards v. Arce,35 we ruled that in a case decided by a court, the true judgment of legal effect is that entered
by the clerk of said court pursuant to the dispositive part of its decision. The only portion of the decision that
may be the subject of execution is that which is ordained or decreed in the dispositive portion. Whatever may be
found in the body of the decision can only be considered as part of the reasons or conclusions of the court and
serve only as guides to determine the ratio decidendi.36
Even so, the Court allows a judgment which had become final and executory to be clarified when there is an
ambiguity caused by an omission or mistake in the dispositive portion of the decision.37 In Reinsurance Company
of the Orient, Inc. v. Court of Appeals,38 we held:
In Republic Surety and Insurance Company, Inc. v. Intermediate Appellate Court, the Court applying the above
doctrine said:
"xxx We clarify, in other words, what we did affirm. What is involved here is not what is ordinarily regarded as a
clerical error in the dispositive part of the decision of the Court of First Instance, which type of error is perhaps
best typified by an error in arithmetical computation. At the same time, what is involved here is not a correction
of an erroneous judgment or dispositive portion of a judgment. What we believe is involved here is in the nature
of an inadvertent omission on the part of the Court of First Instance (which should have been noticed by private
respondent's counsel who had prepared the complaint), of what might be described as a logical follow-through
of something set forth both in the body of the decision and in the dispositive portion thereof: the inevitable
follow-through, or translation into, operational or behavioral terms, of the annulment of the Deed of Sale with
Assumption of Mortgage, from which petitioners' title or claim of title embodied in TCT 133153 flows." (Italics
supplied)39
In this case, the omission of the award of interest was obviously inadvertent. Correction is therefore in order.
However, we do not agree with the Arbitration Board that the interest should be computed at 12%. Since the
case does not involve a loan or forbearance of money, goods or credit and court judgments thereon, the interest
due shall be computed at 6% per annum computed from the time the claim was made in 1992 as determined by
the Arbitration Board and in accordance with Articles 2209 and 1169 of the Civil Code. The actual base for the
computation of legal interest shall be on the amount finally adjudged.40 Further, when the judgment awarding a
sum of money becomes final and executory, the rate of legal interest shall be 12% per annum from such finality
until its satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of credit.41
WHEREFORE, the petition is GRANTED in part. The appealed decision is MODIFIED in that the amount of
P74,035,503.50 shall earn legal interest of six percent (6%) from 1992. A twelve percent (12%) interest, in lieu of
six percent (6%), shall be imposed on such amount upon finality of this decision until the payment thereof.
SO ORDERED.
1. No. L-77372. April 29, 1988.*
LUPO L. LUPANGCO, RAYMOND S. MUNGKAL, NORMAN A. MESINA, ALEXANDER R. REGUYAL, JOCELYN P. CATAPANG,
ENRICO V. REGALADO, JEROME O. ARCEGA, ERNESTO C. BLAS, JR., ELPIDIO M. ALMAZAN, KARL CAESAR R.
RIMANDO, petitioners, vs. COURT OF APPEALS and PROFESSIONAL REGULATION COMMISSION, respondents.

Administrative Law; Courts; Jurisdiction; Orders or resolutions of the Professional Regulations Commission fall
within the general jurisdiction of the Regional Trial Court; Absence of provision in the law creating the
Commission that its orders and resolutions are appealable either to the Court of Appeals or to the Supreme
Court.—Upon the other hand, there is no law providing for the next course of action for a party who wants to
question a ruling or order of the Professional Regulation Commission. Unlike Commonwealth Act No. 83 and
Presidential Decree No. 902-A, there is no provision in Presidential Decree No. 223, the law creating the
Professional Regulation Commission, that orders or resolutions of the Commission are appealable either to the
Court of Appeals or to the Supreme Court. Consequently, Civil Case No. 86–37950, which was filed in order to
enjoin the enforcement of a resolution of the respondent Professional Regulation Commission alleged to be
unconstitutional, should fall within the general jurisdiction of the Court of First Instance, now the Regional Trial
Court.

Same; Same; Same; Same; The Professional Regulations Commission is attached to the Office of the President,
and even acts of the Office of the President may be reviewed by the Court of First Instance, now Regional Trial
Court.—What is clear from Presidential Decree No. 223 is that the Professional Regulation Commission is
attached to the Office of the President for general direction and coordination. Well settled in our jurisprudence is
the view that even acts of the Office of the President may be reviewed by the Court of First Instance (now the
Regional Trial Court).

Same; Same; Same; To invoke the exclusive appellate jurisdiction of the Court of Appeals under BP 129, there
must be a final order or ruling by an administrative body exercising quasi-judicial functions; Meaning of “quasi-
judicial adjudication"—In order to invoke the exclusive appellate jurisdiction of the Court of Appeals as provided
for in Section 9, paragraph 3 of B.P. Blg. 129, there has to be a final order or ruling which resulted from
proceedings wherein the administrative body involved exercised its quasi-judicial functions. In Black’s Law
Dictionary, quasi-judicial is defined as a term applied to the action, discretion, etc., of public administrative
officers or bodies required to investigate facts, or ascertain the existence of facts, hold hearings, and draw
conclusions from them, as a basis for their official action, and to exercise discretion of a judicial nature. To
expound thereon, quasi-judicial adjudication would mean a determination of rights, privileges and duties
resulting in a decision or order which applies to a specific situation. This does not cover rules and regulations of
general applicability issued by the administrative body to implement its purely administrative policies and
functions like Resolution No. 105 which was adopted by the respondent PRC as a measure to preserve the
integrity of licensure examinations.

Same; Same; Same; Axiom In administrative law that administrative authority should not act arbitrarily and
capriciously in the issuance of rules and regulations.—It is an axiom in administrative law that administrative
authorities should not act arbitrarily and capriciously in the issuance of rules and regulations. To be valid, such
rules and regulations must be reasonable and fairly adapted to secure the end in view. If shown to bear no
reasonable relation to the purposes for which they are authorized to be issued, then they must be held to be
invalid.

Same; Same; Same; Resolution No. 105 prohibiting examinees from attending any review class, briefing
conference conducted by or shall receive any hand-out, review materials or any tip from any school, college or
any university or any review center infringes on the examinees’ right to liberty guaranteed by the Constitution;
Reason.—Resolution No. 105 is not only unreasonable and arbitrary, it also infringes on the examinees’ right to
liberty guaranteed by the Constitution. Respondent PRC has no authority to dictate on the reviewees as to how
they should prepare themselves for the licensure examinations. They cannot be restrained from taking all the
lawful steps needed to assure the fulfillment of their ambition to become public accountants. They have every
right to make use of their faculties in attaining success in their endeavors. They should be allowed to enjoy their
freedom to acquire useful knowledge that will promote their personal growth.

Same; Same; Same; Resolution No. 105 violates the academic freedom of the schools concerned.—Another
evident objection to Resolution No. 105 is that it violates the academic freedom of the schools concerned.
Respondent PRC cannot interfere with the conduct of review that review schools and centers believe would best
enable their enrollees to meet the standards required before becoming a full-fledged public accountant. Unless
the means or methods of instruction are clearly found to be inefficient, impractical, or riddled with corruption,
review schools and centers may not be stopped from
helping out their students.

GANCAYCO, J.:
Is the Regional Trial Court of the same category as the Professional Regulation Commission so that it cannot pass
upon the validity of the administrative acts of the latter? Can this Commission lawfully prohibit the examinees
from attending review classes, receiving handout materials, tips, or the like three (3) days before the date of the
examination? These are the issues presented to the court by this petition for certiorari to review the decision of
the Court of Appeals promulgated on January 13, 1987, in CA-G.R. SP No. 10598, * declaring null and void the
other dated October 21, 1986 issued by the Regional Trial Court of Manila, Branch 32 in Civil Case No. 86-37950
entitled " Lupo L. Lupangco, et al. vs. Professional Regulation Commission."
The records shows the following undisputed facts:
On or about October 6, 1986, herein respondent Professional Regulation Commission (PRC) issued Resolution No.
105 as parts of its "Additional Instructions to Examiness," to all those applying for admission to take the licensure
examinations in accountancy. The resolution embodied the following pertinent provisions:
No examinee shall attend any review class, briefing, conference or the like conducted by, or shall receive any
hand-out, review material, or any tip from any school, college or university, or any review center or the like or
any reviewer, lecturer, instructor official or employee of any of the aforementioned or similars institutions during
the three days immediately proceeding every examination day including examination day.
Any examinee violating this instruction shall be subject to the sanctions prescribed by Sec. 8, Art. III of the Rules
and Regulations of the Commission. 1
On October 16, 1986, herein petitioners, all reviewees preparing to take the licensure examinations in
accountancy schedule on October 25 and November 2 of the same year, filed on their own behalf of all others
similarly situated like them, with the Regional Trial Court of Manila, Branch XXXII, a complaint for injunction with
a prayer with the issuance of a writ of a preliminary injunction against respondent PRC to restrain the latter from
enforcing the above-mentioned resolution and to declare the same unconstitutional.
Respondent PRC filed a motion to dismiss on October 21, 1987 on the ground that the lower court had no
jurisdiction to review and to enjoin the enforcement of its resolution. In an Order of October 21, 1987, the lower
court declared that it had jurisdiction to try the case and enjoined the respondent commission from enforcing
and giving effect to Resolution No. 105 which it found to be unconstitutional.
Not satisfied therewith, respondent PRC, on November 10, 1986, filed with the Court of Appeals a petition for
the nullification of the above Order of the lower court. Said petition was granted in the Decision of the Court of
Appeals promulgated on January 13, 1987, to wit:
WHEREFORE, finding the petition meritorious the same is hereby GRANTED and the other dated October 21,
1986 issued by respondent court is declared null and void. The respondent court is further directed to dismiss
with prejudice Civil Case No. 86-37950 for want of jurisdiction over the subject matter thereof. No cost in this
instance.
SO ORDERED. 2
Hence, this petition.
The Court of Appeals, in deciding that the Regional Trial Court of Manila had no jurisdiction to entertain the case
and to enjoin the enforcement of the Resolution No. 105, stated as its basis its conclusion that the Professional
Regulation Commission and the Regional Trial Court are co-equal bodies. Thus it held —
That the petitioner Professional Regulatory Commission is at least a co-equal body with the Regional Trial Court is
beyond question, and co-equal bodies have no power to control each other or interfere with each other's acts. 3
To strenghten its position, the Court of Appeals relied heavily on National Electrification Administration vs.
Mendoza, 4 which cites Pineda vs. Lantin 5 and Philippine Pacific Fishing, Inc. vs. Luna, 6 where this Court held
that a Court of First Instance cannot interfere with the orders of the Securities and Exchange Commission, the
two being co-equal bodies.
After a close scrutiny of the facts and the record of this case,
We rule in favor of the petitioner.
The cases cited by respondent court are not in point. It is glaringly apparent that the reason why this Court ruled
that the Court of First Instance could not interfere with the orders of the Securities and Exchange Commission
was that this was so provided for by the law. In Pineda vs. Lantin, We explained that whenever a party is
aggrieved by or disagree with an order or ruling of the Securities and Exchange Commission, he cannot seek
relief from courts of general jurisdiction since under the Rules of Court and Commonwealth Act No. 83, as
amended by Republic Act No. 635, creating and setting forth the powers and functions of the old Securities and
Exchange Commission, his remedy is to go the Supreme Court on a petition for review. Likewise, in Philippine
Pacific Fishing Co., Inc. vs. Luna, it was stressed that if an order of the Securities and Exchange Commission is
erroneous, the appropriate remedy take is first, within the Commission itself, then, to the Supreme Court as
mandated in Presidential Decree No. 902-A, the law creating the new Securities and Exchange Commission.
Nowhere in the said cases was it held that a Court of First Instance has no jurisdiction over all other government
agencies. On the contrary, the ruling was specifically limited to the Securities and Exchange Commission.
The respondent court erred when it place the Securities and Exchange Commission and the Professional
Regulation Commission in the same category. As already mentioned, with respect to the Securities and Exchange
Commission, the laws cited explicitly provide with the procedure that need be taken when one is aggrieved by its
order or ruling. Upon the other hand, there is no law providing for the next course of action for a party who
wants to question a ruling or order of the Professional Regulation Commission. Unlike Commonwealth Act No. 83
and Presidential Decree No. 902-A, there is no provision in Presidential Decree No. 223, creating the Professional
Regulation Commission, that orders or resolutions of the Commission are appealable either to the Court of
Appeals or to the Supreme Court. Consequently, Civil Case No. 86-37950, which was filed in order to enjoin the
enforcement of a resolution of the respondent Professional Regulation Commission alleged to be
unconstitutional, should fall within the general jurisdiction of the Court of First Instance, now the Regional Trial
Court. 7
What is clear from Presidential Decree No. 223 is that the Professional Regulation Commission is attached to the
Office of the President for general direction and coordination. 8 Well settled in our jurisprudence is the view that
even acts of the Office of the President may be reviewed by the Court of First Instance (now the Regional Trial
Court). In Medalla vs. Sayo, 9 this rule was thoroughly propounded on, to wit:
In so far as jurisdiction of the Court below to review by certiorari decisions and/or resolutions of the Civil Service
Commission and of the residential Executive Asssistant is concerned, there should be no question but that the
power of judicial review should be upheld. The following rulings buttress this conclusion:
The objection to a judicial review of a Presidential act arises from a failure to recognize the most important
principle in our system of government, i.e., the separation of powers into three co-equal departments, the
executives, the legislative and the judicial, each supreme within its own assigned powers and duties. When a
presidential act is challenged before the courts of justice, it is not to be implied therefrom that the Executive is
being made subject and subordinate to the courts. The legality of his acts are under judicial review, not because
the Executive is inferior to the courts, but because the law is above the Chief Executive himself, and the courts
seek only to interpret, apply or implement it (the law). A judicial review of the President's decision on a case of
an employee decided by the Civil Service Board of Appeals should be viewed in this light and the bringing of the
case to the Courts should be governed by the same principles as govern the judicial review of all administrative
acts of all administrative officers. 10
Republic vs. Presiding Judge, CFI of Lanao del Norte, Br. II, 11 is another case in point. Here, "the Executive
Office"' of the Department of Education and Culture issued Memorandum Order No. 93 under the authority of
then Secretary of Education Juan Manuel. As in this case, a complaint for injunction was filed with the Court of
First Instance of Lanao del Norte because, allegedly, the enforcement of the circular would impair some contracts
already entered into by public school teachers. It was the contention of petitioner therein that "the Court of First
Instance is not empowered to amend, reverse and modify what is otherwise the clear and explicit provision of
the memorandum circular issued by the Executive Office which has the force and effect of law." In resolving the
issue, We held:
... We definitely state that respondent Court lawfully acquired jurisdiction in Civil Case No. II-240 (8) because the
plaintiff therein asked the lower court for relief, in the form of injunction, in defense of a legal right (freedom to
enter into contracts) . . . . .
Hence there is a clear infringement of private respondent's constitutional right to enter into agreements not
contrary to law, which might run the risk of being violated by the threatened implementation of Executive Office
Memorandum Circular No. 93, dated February 5, 1968, which prohibits, with certain exceptions, cashiers and
disbursing officers from honoring special powers of attorney executed by the payee employees. The respondent
Court is not only right but duty bound to take cognizance of cases of this nature wherein a constitutional and
statutory right is allegedly infringed by the administrative action of a government office. Courts of first Instance
have original jurisdiction over all civil actions in which the subject of the litigation is not capable of pecuniary
estimation (Sec. 44, Republic Act 296, as amended). 12 (Emphasis supplied.)
In San Miguel Corporation vs. Avelino, 13 We ruled that a judge of the Court of First Instance has the authority to
decide on the validity of a city tax ordinance even after its validity had been contested before the Secretary of
Justice and an opinion thereon had been rendered.
In view of the foregoing, We find no cogent reason why Resolution No. 105, issued by the respondent
Professional Regulation Commission, should be exempted from the general jurisdiction of the Regional Trial Court.
Respondent PRC, on the other hand, contends that under Section 9, paragraph 3 of B.P. Blg. 129, it is the Court of
Appeals which has jurisdiction over the case. The said law provides:
SEC. 9. Jurisdiction. — The Intermediate Appellate Court shall exercise:
xxx xxx xxx
(3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders, or awards of Regional
Trial Courts and quasi-judicial agencies, instrumentalities, boards or commissions, except those falling within the
appellate jurisdiction of the Supreme Court in accordance with the Constitution, the provisions of this Act, and of
subparagraph (1) of the third paragraph and subparagraph (4) of the fourth paragraph of Section 17 of the
Judiciary Act of 1948.
The contention is devoid of merit.
In order to invoke the exclusive appellate jurisdiction of the Court of Appeals as provided for in Section 9,
paragraph 3 of B.P. Blg. 129, there has to be a final order or ruling which resulted from proceedings wherein the
administrative body involved exercised its quasi-judicial functions. In Black's Law Dictionary, quasi-judicial is
defined as a term applied to the action, discretion, etc., of public administrative officers or bodies required to
investigate facts, or ascertain the existence of facts, hold hearings, and draw conclusions from them, as a basis
for their official action, and to exercise discretion of a judicial nature. To expound thereon, quasi-judicial
adjudication would mean a determination of rights, privileges and duties resulting in a decision or order which
applies to a specific situation. 14 This does not cover rules and regulations of general applicability issued by the
administrative body to implement its purely administrative policies and functions like Resolution No. 105 which
was adopted by the respondent PRC as a measure to preserve the integrity of licensure examinations.
The above rule was adhered to in Filipinas Engineering and Machine Shop vs. Ferrer. 15 In this case, the issue
presented was whether or not the Court of First Instance had jurisdiction over a case involving an order of the
Commission on Elections awarding a contract to a private party which originated from an invitation to bid. The
said issue came about because under the laws then in force, final awards, judgments, decisions or orders of the
Commission on Elections fall within the exclusive jurisdiction of the Supreme Court by way of certiorari. Hence, it
has been consistently held that "it is the Supreme Court, not the Court of First Instance, which has exclusive
jurisdiction to review on certiorari final decisions, orders, or rulings of the Commission on Elections relative to
the conduct of elections and the enforcement of election laws."16
As to whether or not the Court of First Instance had jurisdiction in said case, We said:
We are however, far from convinced that an order of the COMELEC awarding a contract to a private party, as a
result of its choice among various proposals submitted in response to its invitation to bid comes within the
purview of a "final order" which is exclusively and directly appealable to this court on certiorari. What is
contemplated by the term "final orders, rulings and decisions, of the COMELEC reviewable by certiorari by the
Supreme Court as provided by law are those rendered in actions or proceedings before the COMELEC and taken
cognizance of by the said body in the exercise of its adjudicatory or quasi-judicial powers. (Emphasis supplied.)
xxx xxx xxx
We agree with petitioner's contention that the order of the Commission granting the award to a bidder is not an
order rendered in a legal controversy before it wherein the parties filed their respective pleadings and presented
evidence after which the questioned order was issued; and that this order of the commission was issued
pursuant to its authority to enter into contracts in relation to election purposes. In short, the COMELEC resolution
awarding the contract in favor of Acme was not issued pursuant to its quasi-judicial functions but merely as an
incident of its inherent administrative functions over the conduct of elections, and hence, the said resolution may
not be deemed as a "final order reviewable by certiorari by the Supreme Court. Being non-judicial in character, no
contempt order may be imposed by the COMELEC from said order, and no direct and exclusive appeal by
certiorari to this Tribunal lie from such order. Any question arising from said order may be well taken in an
ordinary civil action before the trial courts. (Emphasis supplied.) 17
One other case that should be mentioned in this regard is Salud vs. Central Bank of the Philippines. 18 Here,
petitioner Central Bank, like respondent in this case, argued that under Section 9, paragraph 3 of B.P. Blg. 129,
orders of the Monetary Board are appealable only to the Intermediate Appellate Court. Thus:
The Central Bank and its Liquidator also postulate, for the very first time, that the Monetary Board is among the
"quasi-judicial ... boards" whose judgments are within the exclusive appellate jurisdiction of the IAC; hence, it is
only said Court, "to the exclusion of the Regional Trial Courts," that may review the Monetary Board's
resolutions. 19
Anent the posture of the Central Bank, We made the following pronouncement:
The contention is utterly devoid of merit. The IAC has no appellate jurisdiction over resolution or orders of the
Monetary Board. No law prescribes any mode of appeal from the Monetary Board to the IAC. 20
In view of the foregoing, We hold that the Regional Trial Court has jurisdiction to entertain Civil Case No. 86-
37950 and enjoin the respondent PRC from enforcing its resolution.
Although We have finally settled the issue of jurisdiction, We find it imperative to decide once and for all the
validity of Resolution No. 105 so as to provide the much awaited relief to those who are and will be affected by it.
Of course, We realize that the questioned resolution was adopted for a commendable purpose which is "to
preserve the integrity and purity of the licensure examinations." However, its good aim cannot be a cloak to
conceal its constitutional infirmities. On its face, it can be readily seen that it is unreasonable in that an examinee
cannot even attend any review class, briefing, conference or the like, or receive any hand-out, review material, or
any tip from any school, collge or university, or any review center or the like or any reviewer, lecturer, instructor,
official or employee of any of the aforementioned or similar institutions . ... 21
The unreasonableness is more obvious in that one who is caught committing the prohibited acts even without
any ill motives will be barred from taking future examinations conducted by the respondent PRC. Furthermore, it
is inconceivable how the Commission can manage to have a watchful eye on each and every examinee during the
three days before the examination period.
It is an aixiom in administrative law that administrative authorities should not act arbitrarily and capriciously in
the issuance of rules and regulations. To be valid, such rules and regulations must be reasonable and fairly
adapted to the end in view. If shown to bear no reasonable relation to the purposes for which they are
authorized to be issued, then they must be held to be invalid. 22
Resolution No. 105 is not only unreasonable and arbitrary, it also infringes on the examinees' right to liberty
guaranteed by the Constitution. Respondent PRC has no authority to dictate on the reviewees as to how they
should prepare themselves for the licensure examinations. They cannot be restrained from taking all the lawful
steps needed to assure the fulfillment of their ambition to become public accountants. They have every right to
make use of their faculties in attaining success in their endeavors. They should be allowed to enjoy their freedom
to acquire useful knowledge that will promote their personal growth. As defined in a decision of the United
States Supreme Court:
The term "liberty" means more than mere freedom from physical restraint or the bounds of a prison. It means
freedom to go where one may choose and to act in such a manner not inconsistent with the equal rights of
others, as his judgment may dictate for the promotion of his happiness, to pursue such callings and vocations as
may be most suitable to develop his capacities, and give to them their highest enjoyment. 23
Another evident objection to Resolution No. 105 is that it violates the academic freedom of the schools
concerned. Respondent PRC cannot interfere with the conduct of review that review schools and centers believe
would best enable their enrollees to meet the standards required before becoming a full-fledged public
accountant. Unless the means or methods of instruction are clearly found to be inefficient, impractical, or riddled
with corruption, review schools and centers may not be stopped from helping out their students. At this juncture,
We call attention to Our pronouncement in Garcia vs. The Faculty Admission Committee, Loyola School of
Theology, 24 regarding academic freedom to wit:
... It would follow then that the school or college itself is possessed of such a right. It decides for itself its aims
and objectives and how best to attain them. It is free from outside coercion or interference save possibly when
the overriding public welfare calls for some restraint. It has a wide sphere of autonomy certainly extending to the
choice of students. This constitutional provision is not to be construed in a niggardly manner or in a grudging
fashion.
Needless to say, the enforcement of Resolution No. 105 is not a guarantee that the alleged leakages in the
licensure examinations will be eradicated or at least minimized. Making the examinees suffer by depriving them
of legitimate means of review or preparation on those last three precious days-when they should be refreshing
themselves with all that they have learned in the review classes and preparing their mental and psychological
make-up for the examination day itself-would be like uprooting the tree to get rid of a rotten branch. What is
needed to be done by the respondent is to find out the source of such leakages and stop it right there. If corrupt
officials or personnel should be terminated from their loss, then so be it. Fixers or swindlers should be flushed
out. Strict guidelines to be observed by examiners should be set up and if violations are committed, then licenses
should be suspended or revoked. These are all within the powers of the respondent commission as provided for
in Presidential Decree No. 223. But by all means the right and freedom of the examinees to avail of all legitimate
means to prepare for the examinations should not be curtailed.
In the light of the above, We hereby REVERSE and SET ASIDE, the decision of the Court of Appeals in CA-G.R. SP
No. 10591 and another judgment is hereby rendered declaring Resolution No. 105 null and void and of no force
and effect for being unconstitutional. This decision is immediately executory. No costs.
SO ORDERED.

1. G.R. No. 73123. September 2, 1991.*

IN RE: PETITION FOR DECLARATION OF INSOLVENCY OF [A] FILAND MANUFACTURING AND ESTATE DEVELOPMENT
COMPANY; [B] TOP CONSTRUCTION ENTERPRISES, INC.; AND [C] SPOUSES EMILIO CHING AND INAI TEH; EMILIO
CHING, petitioner, LAND BANK OF THE PHILIPPINES, oppositor. LAND BANK OF THE PHILIPPINES, petitioner, vs:
HON. DIONISIO N. CAPISTRANO, JUDGE OF THE REGIONAL TRIAL COURT OF PASAY CITY, EMILIO CHING AND FILAND
MANUFACTURING AND ESTATE DEVELOPMENT CO., INC., respondents.

Insolvency Law; Jurisdiction over petition for declaration of insolvency.—Under Act 1956, otherwise known as
the Insolvency Law. Jurisdiction over proceedings for suspension of payments, voluntary and involuntary
insolvency is exclusively vested in the regular courts. However, P.D. No. 1758 issued in 1981 added to the
exclusive and original jurisdiction of the SEC, defined and delineated in Section 5 of P.D. 902-A, the following: “d)
Petitions of corporations, partnerships or associations to be declared in the state of suspension of payments in
cases where the corporation, partnership or association possesses sufficient property to cover all its debts but
foresees the impossibility of meeting them when they respectively fall due or in cases where the corporation,
partnership or association has no sufficient assets to cover its liabilities, but is under the management of a
Rehabilitation Receiver or Management Committee created pursuant to this Decree.” xxx Section 5, par. (d)
should be construed as vesting upon the SEC original and exclusive jurisdiction only over petitions to be declared
in a state of suspension of payments, which may either be: (a) a simple petition for suspension of payments
based on the provisions of the Insolvency Law, or (b) a similar petition accompanied by a prayer for the
creation/appointment of a management committee and or rehabilitation receiver based on the provisions of P.D.
No. 902-A. Said provision cannot be stretched to include petitions for insolvency,

Same; Same; Statutory Construction; Interpretation of P.D. 902-A in relation to Act 1956.—A well-recognized .rule
in statutory construction is that repeals by implication are not favored and will not be so declared unless it be
manifest that the legislature so intended. When statutes are in pari materia they should be construed together.
In construing them the old statutes relating to the same subject matter should be ‘compared with the new
provisions and if possible by reasonable construction, both should be so construed that effect may be given’ to
every provision of each. Construing P.D, 902-A, as amended, in relation to Act 1956, we rule that insofar as
petitions for declaration of insolvency of private corporations are concerned, it is the regular court that has
exclusive and original jurisdiction thereon. The SEC may entertain such petitions only as an incident of and in
continuation of its already acquired jurisdiction over petitions to be declared in the state of suspension of
payments in the two (2) cases provided in Section 5 (d) of P.D. 902-A, as amended.

FERNAN, C.J.:p
Assailed in this petition for review on certiorari is the jurisdiction of the Regional Trial Court (RTC) of Pasay City
over a petition for declaration of insolvency of two (2) private corporations.
The antecedent facts are undisputed:
On September 19, 1980, private respondents Filand Manufacturing and Estate Development Co., Inc. (hereafter,
Filand Manufacturing) and Emilio Ching obtained from petitioner Land Bank of the Philippines a loan in the
amount of Ten Million Pesos (P10,000,000.00). Private respondents having failed to pay the loan on its due date,
petitioner instituted before the RTC of Manila a complaint for recovery thereof, docketed as Civil Case No. 0184-P.
During the pendency of the collection suit on December 29, 1984, private respondents Filand Manufacturing,
Emilio Ching and his spouse Inai Teh and Top Construction Enterprises, Inc., thru Emilio Ching, filed before the
respondent RTC of Pasay City a petition docketed as Special Proceedings No. 3232P for declaration of insolvency.
Cited as ground therefor was their inability to pay the various debts and liabilities incurred by them, either jointly
or solidarily or guaranteed by one for the other, in the course of their businesses, such inability being due to
business reserves brought about by the fire on January 2, 1984 which gutted the old Holiday Plaza Building then
owned and operated by Filand Manufacturing, as well as the economic crisis which gripped the country following
the assassination of former Senator Benigno S. Aquino in 1983. 1
Acting on said petition, respondent court on January 29, 1985 issued an Order of Adjudication declaring private
respondents insolvent pursuant to Section 18 of the Insolvency Law (Act No. 1956). The Sheriff of Pasay City was
"directed to take possession of, and safely keep, until the appointment of a receiver or assignee, all the deeds,
vouchers, books of account, papers, notes, bonds, bills and securities of (therein) petitioners, and all the real and
personal properties, estates and effects of the same petitioners, except such as may, by law, be exempt from
execution." Respondent court set "March 25, 1985 at 9:00 A.M. in its premises ... as the date of the meeting of
the creditors of the petitioners for them to choose an assignee/assignees of the estates of the petitioners." 2
Petitioner bank moved for a reconsideration of the Order of Adjudication on two (2) grounds, namely: (1) that
the court has no jurisdiction over the subject matter of the petition insofar as petitioning corporations are
concerned; and (2) the petition is defective in form and substance. 3 After an exchange of pleadings between
petitioner and private respondents, respondent court issued on July 19, 1985 an Order upholding its jurisdiction
over the petition and appointing petitioner bank as the assignee for and in behalf of all the creditors without
bond, thus:
WHEREFORE, all motions seeking to have this Court make a declaration that it has no jurisdiction over the above-
entitled proceeding are hereby DENIED, and the Land Bank of the Philippines is appointed as the assignee for and
in behalf of all the creditors of the petitioners, without bond, to which assignee the Clerk of Court, thru the
Branch Sheriff, shall deliver any and all real and personal properties, estates and effects, as well as the pertinent
papers and all deeds, vouchers, books of accounts, papers, notes, bonds, bills and securities taken by him
pursuant to the order of this Court of January 29, 1985.
The assignee is hereby ordered to comply with the time limit provided for in Sec. 43 of Act 1956, and for this
purpose, hereby sets his report for hearing on October 29, 1985, at 9:00 A.M.
SO ORDERED. 4
Petitioner bank declined the appointment and the City Treasurer of Pasay City, being the second biggest creditor
of private respondents, was appointed in its stead Petitioner bank then filed a Notice of Appeal and a Record on
Appeal on August 19, 1985, on the basis of which the respondent court forwarded the records of the case
directly to this Court.
By resolution dated September 23, 1985, the Court resolved to "REQUIRE the Branch Clerk of Court of the
(respondent court) to EXPLAIN why he forwarded to this Court the aforesaid records when the mode of seeking
review by this Court of a lower court's judgment under R.A. 5440 is by petition for review on certiorari; and the
Presiding Judge of said trial court is also directed to EXPLAIN why he accepted and approved the forwarding to
this Court of the aforesaid records, both within ten (10) days from notice hereof." Petitioner bank and/or counsel
were also "REQUIRED to EXPLAIN within ten (10) days from notice ..., since they failed to pay timely the docket
and legal research fund fees and to file timely a petition for review on certiorari under R.A. 5440 why the
judgment sought to be reviewed should not be now deemed final and executory and the records returned for
execution of judgment". 5 Upon submission of the required explanations, the Court on December 4, 1985
resolved to require the petitioner bank to file a petition for review on certiorari and to pay the docket and legal
research fund fees, both within a non-extendible period of ten (10) days from notice. 6 This Order was
seasonably complied with.
After the private respondents had submitted their comment on the petition, petitioner bank filed on March 24,
1986 a "Manifestation with motion for issuance of writ of preliminary injunction" informing the Court that on
March 3, 1986, the respondent court rendered a decision in Special Proceedings No. 3232-P, providing in its
dispositive portion as follows:
WHEREFORE, judgment is hereby rendered, as follows:
1. Petitioners Filand Manufacturing & Estate Development Co., Inc., and Top Construction Enterprises, Inc., are
declared by this Court as insolvent and, pursuant to Sec. 52 of Act 1956, as amended, their properties and assets
shall be distributed to the creditors in the proceeding with respect to the appointment of the City Treasurer of
Pasay City as receiver of their estates and effects. However, they are not discharged from their liabilities in
accordance with Sec. 52 of Act 1956, as amended.
2. Petitioners spouses Emilio Ching and Inai Teh are likewise declared insolvent and their application for
discharge is hereby approved, and they are hereby ordered discharged and released from all claims, debts,
liabilities and demands, whether actual or contingent, and whether personally or as guarantors or in a joint and
solidary capacity, with respect to the obligations set forth in the schedule and inventory of accounts due and
payable, Annex 'A' of the petition, as well as with respect to the obligations and creditors listed in the
manifestation of April 29, 1985, and the supplemental manifestation dated May 22, 1985, in the above-entitled
proceedings.
The other aspect of the above-entitled proceedings as regards the receiver and all incidents and matters in
connection with his functions and duties are hereby considered as mere interlocutory matters in the process of
winding up this proceeding.
SO ORDERED. 7
Acting on said manifestation and motion, the Court on April 14, 1986 issued a temporary restraining order
enjoining the respondent court from enforcing its decision of March 3, 1986. 8 The temporary restraining order
was however lifted insofar as private respondents spouses Emilio Ching and Inai Teh were concerned, the latter
being natural persons over whom the jurisdiction of the respondent court is not being questioned. 9
In its petition, given due course by the Court per resolution dated January 28, 1987, petitioner bank advances
the argument that it is the Securities and Exchange Commission (SEC), rather than the Regional Trial Court (RTC)
which has jurisdiction over the petition for declaration of insolvency filed by private respondent corporations.
This theory is allegedly anchored on specific provisions of Presidential Decree No. 902-A, as amended, namely:
Sections 3, 5(d) and 6(c) and (d), which petitioner bank construes as having repealed the Insolvency Law (Act
1956), which confers jurisdiction over insolvency proceedings on the regular courts. Private respondents
maintain the opposite view, contending simply that a petition for declaration of insolvency is not one of those
cases enumerated under Section 5, P.D. No. 902-A, as amended, over which the SEC has original and exclusive
jurisdiction.
In view of the far reaching importance of the issue presented before the Court, both from a legal and economic
standpoint, we resolved to implead the SEC as a party to this case and to require it to inform the Court of its
practice regarding insolvency proceedings. 10 The SEC thru the Solicitor General, filed its memorandum on
December 13, 1989.
After deliberating on the SEC's memorandum, the Court resolved to set the case for hearing on May 14, 1990 at
10:00 o'clock in the morning. A senior and knowledgeable officer of the SEC was requested to "appear and
inform the Court of the law and practice actually applied and followed by the SEC in respect of suspension of
payments by, and voluntary and involuntary insolvencies of Philippine corporations. ..." Former SEC Chairman
Julito Sulit, Jr. was appointed amicus curiae and was requested to appear at the hearing in that capacity. 11
Before addressing the principal issue in the instant petition, the Court notes with dismay that the petitioner and
the lower court appear to be still in the dark as to the proper mode of appeal to this Court. Hence, for their
elucidation as well as the others similarly misinformed, we deem it proper to quote the following resolution
dated March 1, 1990 of the Court en banc in UDK 9748, "Murillo v. Consul":
R.A. No. 5440 changed the mode of appeal from courts of first instance (now Regional Trial Courts) to the
Supreme Court in cases involving only questions of law, or the constitutionality or validity of any treaty, law,
ordinance, etc. or the legality of any tax, impost, assessment or toll, etc., or the jurisdiction of any inferior court,
from ordinary appeal — i.e., by notice of appeal, record on appeal and appeal bond, under Rule 41— to appeal
by certiorari, under Rule 45.
xxx xxx xxx
At present then, except in criminal cases where the penalty imposed is life imprisonment or reclusion perpetua,
there is no way by which judgments of regional trial courts may be appealed to this Court except by petition for
review on certiorari in accordance with Rule 45 of the Rules of Court, in relation to Section 17 of the Judiciary Act
of 1948, as amended. The proposition is clearly stated in the Interim Rules: 'Appeals to the Supreme Court shall
be taken by petition for certiorari which shall be governed by Rule 45 of the Rules of Court.
xxx xxx xxx
... To repeat, appeals to this Court cannot now be made by petition for review or by notice of appeal (and, in
certain instances, by record on appeal), but only by petition for review on certiorari under Rule 45. As was
stressed by this Court as early as 1980 in Buenbrazo v. Marave, 101 SCRA 848, all the members of the bench and
bar are charged with knowledge, not only that since the enactment of Republic Act No. 6031 in 1969,' 'the
review of the decision of the Court of First Instance in a case exclusively cognizable by the inferior court ... cannot
be made in an ordinary appeal or by record on appeal but also that 'appeal by record on appeal to the Supreme
Court under Rule 42 of the Rules of Court was abolished by Republic Act No. 5440 which, as already stated, took
effect on September 9, 1968.' Similarly, in Santos, Jr. v. C.A., 152 SCRA 378, this Court declared that 'Republic Act
No. 5440 had long superseded Rule 41 and Section 1, Rule 122 of the Rules of Court on direct appeals from the
court of first instance to the Supreme Court in civil and criminal cases,' ... and that 'direct appeals to this Court
from the trial court on questions of law had to be through the filing of a petition for review on certiorari, wherein
this Court could either give due course to the proposed appeal or deny it outright to prevent the clogging of its
docket with unmeritorious and dilatory appeals.
Going now to the issue of jurisdiction raised in this petition and considering the arguments proffered by the
parties' respective counsel, the view espoused by the amicus curiae as well as the submissions of the SEC thru
the Office of the Solicitor General and its Assistant Executive Director, we find for private respondents.
Under Act 1956, otherwise known as the Insolvency Law, jurisdiction over proceedings for suspension of
payments, voluntary and involuntary insolvency is exclusively vested in the regular courts. However, P.D. No. 1758
issued in 1981 added to the exclusive and original jurisdiction of the SEC defined and delineated in Section 5 of
P.D. 902-A, 12 the following:
d) Petitions of corporations, partnerships or associations to be declared in the state of suspension of payments in
cases where the corporation, partnership or association possesses sufficient property to cover all its debts but
foresees the impossibility of meeting them when they respectively fall due or in cases where the corporation,
partnership or association has no sufficient assets to cover its liabilities, but is under the management of a
Rehabilitation Receiver or Management Committee created pursuant to this Decree.
It is petitioner's contention that said additional par. (d) effectively repealed the Insolvency Law so as to transfer
and confer upon the SEC jurisdiction theretofore enjoyed by the regular courts over proceedings for suspension
of payments and voluntary and involuntary insolvency. We do not share such interpretation.
The SEC like any other administrative body, is a tribunal of limited jurisdiction and as such, could wield only such
powers as are specifically granted to it by its enabling statute. 13 Its jurisdiction should be interpreted
in strictissimi juris. 14
Section 5, par. (d) should be construed as vesting upon the SEC original and exclusive jurisdiction only over
petitions to be declared in a state of suspension of payments, which may either be: (a) a simple petition for
suspension of payments based on the provisions of the Insolvency Law, or (b) a similar petition accompanied by a
prayer for the creation/appointment of a management committee and/or rehabilitation receiver based on the
provisions of P.D. No. 902-A. Said provision cannot be stretched to include petitions for insolvency. The reason is
that under said Section 5, par. (d) above-quoted, the jurisdiction of the SEC over cases where the corporation,
partnership or association has no sufficient assets to cover its liabilities, (and therefore insolvent) is qualified by
the conjunctive phrase "but is under the management of a Rehabilitation Receiver or Management Committee
created pursuant to this Decree." This qualification effectively circumscribes the jurisdiction of the SEC over
insolvent corporations, partnerships and associations, and consequently, over proceedings for the declaration of
insolvency. It demonstrates beyond doubt that jurisdiction over insolvency proceedings pertains neither in the
first instance nor exclusively to the SEC but only in continuation of or as an incident to the exercise of its
jurisdiction over petitions to be declared in a state of suspension of payments wherein the petitioning
corporation, partnership or association had previously been placed under a rehabilitation receiver or
management committee by the SEC itself.
Viewed differently, where the petition filed is one for declaration of a state of suspension of payments due to a
recognition of the inability to pay one's debts and liabilities, and where the petitioning corporation either: (a) has
sufficient property to cover all its debts but foresees the impossibility of meeting them when they fall due
(solvent but illiquid or (b) has no sufficient property (insolvent) but is under the management of a rehabilitation
receiver or a management committee, the applicable law is P.D. No. 902-A pursuant to Sec. 5 par. (d) thereof.
However, if the petitioning corporation has no sufficient assets to cover its liabilities and is not under a
rehabilitation receiver or a management committee created under P.D. No. 902-A and does not seek merely to
have the payments of its debts suspended, but seeks a declaration of insolvency, as in this case, the applicable
law is Act 1956 on voluntary insolvency, specifically section 14 thereof, which provides:
Sec. 14. — An insolvent debtor, owing debts exceeding in amount the sum of one thousand pesos, may apply to
be discharged from his debts and liabilities by petition to the Court of First Instance of the province or city in
which he has resided for six month next preceding the filing of such petition. In his petition, he shall set forth his
place of residence, the period of his residence therein immediately prior to filing said petition, his inability to pay
all his debts in full, his willingness to surrender all his property, estate, and effects not exempt from execution for
the benefit of his creditors, and an application to be adjudged an insolvent. He shall annex to his petition a
schedule and inventory in the form hereinafter provided. The filing of such petition shall be an act of insolvency.
Neither could the grant of additional powers to SEC under Section 6(c) and (d) of P.D. No. 902- A, as amended, be
construed as vesting upon it exclusive and original jurisdiction over insolvency proceedings. The pertinent
provisions read:
SEC. 6. In order to effectively exercise such jurisdiction, the Commission shall possess the following powers:
xxx xxx xxx
c) To appoint one or more receivers of the property, real and personal, which is the subject of the action pending
before the Commission in accordance with the pertinent provisions of the Rules of Court in such other cases
whenever necessary to preserve the rights of the parties-litigants to and/or protect the interest of the investing
public and creditors; Provided, however, that the Commission may, in appropriate cases, appoint a rehabilitation
receiver of corporations, partnerships or other associations not supervised or regulated by other government
agencies who shall have, in addition to the powers of a regular receiver under the provisions of the Rules of
Court, such functions and powers as are provided for in the succeeding paragraph (d) hereof; Provided, further
that the Commission may appoint a rehabilitation receiver of corporations, partnerships or other nations
supervised or regulated by other government agencies, such as banks and insurance companies, upon request of
the government agency concerned; Provided, finally that upon appointment of a management committee,
rehabilitation receiver, board or body pursuant to this Decree, all actions for claims against corporations,
partnerships or nations under management or receivership pending before any court, tribunal, board or body
shall be suspended accordingly.
d) To create and appoint a management committee, board, or body upon petition or motu proprio to undertake
the management of corporations, partnerships or other associations not supervised or regulated by other
government agencies in appropriate cases when there is imminent danger of dissipation, loss, wastage or
destruction of assets or other properties or paralization of business operations of such corporations or entities
which may be prejudicial to the interest of minority stockholders, parties-litigants or the general public; Provided,
further, that the Commission may create or appoint a management committee, board or body to undertake the
management of corporations, partnerships or other associations supervised or regulated by other government
agencies, such as banks and insurance companies, upon request of the government agency concerned.
The management committee or rehabilitation receiver, board or body shall have the power to take custody of,
and control over, all the existing assets and property of such entities under management; to evaluate the existing
assets and liabilities, earnings and operations of such corporations, partnerships or other associations, to
determine the best way to wage and protect the interest of the investors and creditors; to study, review and
evaluate the feasibility of continuing operations and restructure and rehabilitate such entities if determined to be
feasible by the Commission. It shall report and be responsible to the Commission until dissolved by order of the
Commission: Provided, however, that the Commission may, on the basis of the findings and recommendation of
the management committee, or rehabilitation receiver, board or body, or on its own findings, determine that the
continuance in business of such corporation or entity would not be feasible or profitable nor work to the best
interest of the stockholders, parties-litigants, creditors, or the general public, order the dissolution of such
corporation entity and its remaining assets liquidated accordingly.
The management committee or rehabilitation receiver, board or body may overrule or revoke the actions of the
previous management and board of directors of the entity or entities under management notwithstanding any
provision of law, articles of incorporation or by-laws to the contrary.
The management committee, or rehabilitation receiver, board or body shall not be subject to any action, claim or
demand for, or in connection with any act done or omitted to be done by it in good faith in the exercise of its
functions, or in connection with the exercise of its powers herein conferred.
As declared by the law itself, these are merely ancillary powers to enable the SEC to effectively exercise its
jurisdiction. These additional ancillary powers can be exercised only in connection with an action pending before
the SEC and therefore had to be viewed in relation to Section 5 which defines the SEC's original and exclusive
jurisdiction. Section 6 does not enlarge or add to the exclusive and original jurisdiction of the SEC as particularly
enumerated under Section 5 of said Presidential Decree, as amended.
A well-recognized rule in statutory construction is that repeals by implication are not favored and will not be so
declared unless it be manifest that the legislature so intended. 15 When statutes are in pari material they should
be construed together. In construing them the old statutes relating to the same subject matter should be
compared with the new provisions and if possible by reasonable construction, both should be so construed that
effect may be given to every provision of each. 16
Construing P.D. 902-A, as amended, in relation to Act 1956, we rule that insofar as petitions for declaration of
insolvency of private corporations are concerned, it is the regular court that has exclusive and original jurisdiction
thereon. The SEC may entertain such petitions only as an incident of and in continuation of its already acquired
jurisdiction over petitions to be declared in the state of suspension of payments in the two (2) cases provided in
Section 5 (d) of P.D. 902-A, as amended.
WHEREFORE, the instant petition for review on certiorari is DENIED. The temporary restraining order issued on
April 14, 1986 is LIFTED. No pronouncement as to costs.
SO ORDERED.

2. G.R. No. 116033. February 26, 1997.*

ALFREDO L. AZARCON, petitioner, vs. SANDIGANBAYAN, PEOPLE OF THE PHILIPPINES and JOSE C. BATAUSA,
respondents.

Courts; Jurisdiction; Jurisdiction of a court is determined by the law at the time of the commencement of the
action.—It is hornbook doctrine that in order “(to) ascertain whether a court has jurisdiction or not, the
provisions of the law should be inquired into.” Furthermore, “the jurisdiction of the court must appear clearly
from the statute law or it will not be held to exist. It cannot be presumed or implied.” And for this purpose in
criminal cases, “the jurisdiction of a court is determined by the law at the time of commencement of the action.”

Same; Same; Sandiganbayan; Sandiganbayan has jurisdiction over a private individual when the complaint
charges the private individual either as a co-principal, accomplice or accessory of a public officer or employee
who has been charged with a crime within its jurisdiction.—In case private individuals are charged as co-
principals, accomplices or accessories with the public officers or employees, including those employed in
government-owned or controlled corporations, they shall be tried jointly with said public officers and employees.
The foregoing provisions unequivocally specify the only instances when the Sandiganbayan will have jurisdiction
over a private individual, i.e. when the complaint charges the private individual either as a co-principal,
accomplice or accessory of a public officer or employee who has been charged with a crime within its jurisdiction.

Same; Same; Same; Unless petitioner be proven a public officer, the Sandiganbayan will have no jurisdiction over
the crime charged.—The Information does not charge petitioner Azarcon of being a co-principal, accomplice or
accessory to a public officer committing an offense under the Sandiganbayan’s jurisdiction. Thus, unless
petitioner be proven a public officer, the Sandiganbayan will have no jurisdiction over the crime charged. Article
203 of the RPC determines who are public officers: “Who are public officers.—For the purpose of applying the
provisions of this and the preceding titles of the book, any person who, by direct provision of the law, popular
election, popular election or appointment by competent authority, shall take part in the performance of public
functions in the Government of the Philippine Islands, or shall perform in said Government or in any of its
branches public duties as an employee, agent, or subordinate official, of any rank or classes, shall be deemed to
be a public officer.”

Constitutional Law; Administrative Law; “Implied Powers” are those which are necessarily included in, and are
therefore of lesser degree than the power granted. It cannot extend to other matters not embraced therein, nor
are not incidental thereto.—It is axiomatic in our constitutional framework, which mandates a limited
government, that its branches and administrative agencies exercise only that power delegated to them as
“defined either in the Constitution or in legislation or in both.” Thus, although the “appointing power is the
exclusive prerogative of the President, x x x” the quantum of powers possessed by an administrative agency
forming part of the executive branch will still be limited to that “conferred expressly or by necessary or fair
implication” in its enabling act. Hence, “(a)n administrative officer, it has been held, has only such powers as are
expressly granted to him and those necessarily implied in the exercise thereof.” Corollary, implied powers “are
those which are necessarily included in, and are therefore of lesser degree than the power granted. It cannot
extend to other matters not embraced therein, nor are not incidental thereto.” For to so extend the statutory
grant of power “would be an encroachment on powers expressly lodged in Congress by our Constitution.” It is
true that Sec. 206 of the NIRC, as pointed out by the prosecution, authorizes the BIR to effect a constructive
distrain by requiring “any person” to preserve a distrained property, thus: The constructive distrain of personal
property shall be effected by requiring the taxpayer or any person having possession or control of such property
to sign a receipt covering the property distrained and obligate himself to preserve the same intact and unaltered
and not to dispose of the same in any manner whatever without the express authority of the Commissioner.

Statutory Construction; Legislative intent is determined principally from the language of the statute.—
“Legislative intent is determined principally from the language of a statute. Where the language of a statute is
clear and unambiguous, the law is applied according to its express terms, and interpretation would be resorted
to only where a literal interpretation would be either impossible or absurd or would lead to an injustice.” This is
particularly observed in the interpretation of penal statutes which “must be construed with such strictness as to
carefully safeguard the rights of the defendant x x x.” The language of the foregoing provision is clear. A private
individual who has in his charge any of the public funds or property enumerated therein and commits any of the
acts defined in any of the provisions of Chapter Four, Title Seven of the RPC, should likewise be penalized with
the same penalty meted to erring public officers. Nowhere in this provision is it expressed or implied that a
private individual falling under said Article 222 is to be deemed a public officer.

Courts; Jurisdiction; Jurisdiction cannot be conferred by erroneous belief of the court that it had jurisdiction.—
After a thorough review of the case at bench, the Court thus finds Petitioner Alfredo Azarcon and his co-accused
Jaime Ancla to be both private individuals erroneously charged before and convicted by Respondent
Sandiganbayan which had no jurisdiction over them. The Sandiganbayan’s taking cognizance of this case is of no
moment since “(j)urisdiction cannot be conferred by x x x erroneous belief of the court that it had jurisdiction.”

PANGANIBAN, J.:
Does the Sandiganbayan have jurisdiction over a private individual who is charged with malversation of public
funds as a principal after the said individual had been designated by the Bureau of Internal Revenue as a
custodian of distrained property? Did such accused become a public officer and therefore subject to the graft
court's jurisdiction as a consequence of such designation by the BIR?
These are the main questions in the instant petition for review of Respondent Sandiganbayan's Decision 1 in
Criminal Case No. 14260 promulgated on March 8, 1994, convicting petitioner of malversation of public funds
and property, and Resolution 2 dated June 20, 1994, denying his motion for new trial or reconsideration thereof.
The Facts
Petitioner Alfredo Azarcon owned and operated an earth-moving business, hauling "dirt and ore." 3 His services
were contracted by the Paper Industries Corporation of the Philippines (PICOP) at its concession in Mangagoy,
Surigao del Sur. Occasionally, he engaged the services of sub-contractors like Jaime Ancla whose trucks were left
at the former's premises. 4 From this set of circumstances arose the present controversy.
. . . It appears that on May 25, 1983, a Warrant of Distraint of Personal Property was issued by the Main Office of
the Bureau of Internal Revenue (BIR) addressed to the Regional Director (Jose Batausa) or his authorized
representative of Revenue Region 10, Butuan City commanding the latter to distraint the goods, chattels or
effects and other personal property of Jaime Ancla, a sub-contractor of accused Azarcon and, a delinquent
taxpayer. The Warrant of Garnishment was issued to accused Alfredo Azarcon ordering him to transfer, surrender,
transmit and/or remit to BIR the property in his possession owned by taxpayer Ancla. The Warrant of
Garnishment was received by accused Azarcon on June 17, 1985. 5
Petitioner Azarcon, in signing the "Receipt for Goods, Articles, and Things Seized Under Authority of the National
Internal Revenue," assumed the undertakings specified in the receipt the contents of which are reproduced as
follows:
(I), the undersigned, hereby acknowledge to have received from Amadeo V. San Diego, an Internal Revenue
Officer, Bureau of Internal Revenue of the Philippines, the following described goods, articles, and things:
Kind of property — Isuzu dump truck
Motor number — E120-229598
Chassis No. — SPZU50-1772440
Number of CXL — 6
Color — Blue
Owned By — Mr. Jaime Ancla
the same having been this day seized and left in (my) possession pending investigation by the Commissioner of
Internal Revenue or his duly authorized representative. (I) further promise that (I) will faithfully keep, preserve,
and, to the best of (my) ability, protect said goods, articles, and things seized from defacement, demarcation,
leakage, loss, or destruction in any manner; that (I) will neither alter nor remove, nor permit others to alter or
remove or dispose of the same in any manner without the express authority of the Commissioner of Internal
Revenue; and that (I) will produce and deliver all of said goods, articles, and things upon the order of any court of
the Philippines, or upon demand of the Commissioner of Internal Revenue or any authorized officer or agent of
the Bureau of Internal Revenue. 6
Subsequently, Alfredo Azarcon wrote a letter dated November 21, 1985 to the BIR's Regional Director for
Revenue Region 10 B, Butuan City stating that
. . . while I have made representations to retain possession of the property and signed a receipt of the same, it
appears now that Mr. Jaime Ancla intends to cease his operations with us. This is evidenced by the fact that
sometime in August, 1985 he surreptitiously withdrew his equipment from my custody. . . . In this connection,
may I therefore formally inform you that it is my desire to immediately relinquish whatever responsibilities I have
over the above-mentioned property by virtue of the receipt I have signed. This cancellation shall take effect
immediately. . . . 7
Incidentally, the petitioner reported the taking of the truck to the security manager of PICOP, Mr. Delfin Panelo,
and requested him to prevent this truck from being taken out of the PICOP concession. By the time the order to
bar the truck's exit was given, however, it was too late. 8
Regional Director Batausa responded in a letter dated May 27, 1986, to wit:
An analysis of the documents executed by you reveals that while you are (sic) in possession of the dump truck
owned by JAIME ANCLA, you voluntarily assumed the liabilities of safekeeping and preserving the unit in behalf
of the Bureau of Internal Revenue. This is clearly indicated in the provisions of the Warrant of Garnishment which
you have signed, obliged and committed to surrender and transfer to this office. Your failure therefore, to
observe said provisions does not relieve you of your responsibility. 9
Thereafter, the Sandiganbayan found that
On 11 June 1986, Mrs. Marilyn T. Calo, Revenue Document Processor of Revenue Region 10 B, Butuan City, sent a
progress report to the Chief of the Collection Branch of the surreptitious taking of the dump truck and that Ancla
was renting out the truck to a certain contractor by the name of Oscar Cueva at PICOP (Paper Industries
Corporation of the Philippines, the same company which engaged petitioner's earth moving services), Mangagoy,
Surigao del Sur. She also suggested that if the report were true, a warrant of garnishment be reissued against Mr.
Cueva for whatever amount of rental is due from Ancla until such time as the latter's tax liabilities shall be
deemed satisfied. . . However, instead of doing so, Director Batausa filed a letter-complaint against the (herein
Petitioner) and Ancla on 22 January 1988, or after more than one year had elapsed from the time of Mrs. Calo's
report. 10
Provincial Fiscal Pretextato Montenegro "forwarded the records of the complaint . . . to the Office of the
Tanodbayan" on May 18, 1988. He was deputized Tanodbayan prosecutor and granted authority to conduct
preliminary investigation on August 22, 1988, in a letter by Special Prosecutor Raul Gonzales approved by
Ombudsman (Tanodbayan) Conrado Vasquez. 11
Along with his co-accused Jaime Ancla, Petitioner Azarcon was charged before the Sandiganbayan with the crime
of malversation of public funds or property under Article 217 in relation to Article 222 of the Revised Penal Code
(RPC) in the following Information 12 filed on January 12, 1990, by Special Prosecution Officer Victor Pascual:
That on or about June 17, 1985, in the Municipality of Bislig, Province of Surigao del Sur, Philippines, and within
the jurisdiction of this Honorable Court, accused Alfredo L. Azarcon, a private individual but who, in his capacity
as depository/administrator of property seized or deposited by the Bureau of Internal Revenue, having
voluntarily offered himself to act as custodian of one Isuzu Dumptruck (sic) with Motor No. E120-22958, Chasis
No. SPZU 50-1772440, and number CXL-6 and was authorized to be such under the authority of the Bureau of
Internal Revenue, has become a responsible and accountable officer and said motor vehicle having been seized
from Jaime C. Ancla in satisfaction of his tax liability in the total sum of EIGHTY THOUSAND EIGHT HUNDRED
THIRTY ONE PESOS and 59/100 (P80,831.59) became a public property and the value thereof as public fund, with
grave abuse of confidence and conspiring and confederating with said Jaime C. Ancla, likewise, a private
individual, did then and there wilfully, (sic) unlawfully and feloniously misappropriate, misapply and convert to
his personal use and benefit the aforementioned motor vehicle or the value thereof in the aforestated amount,
by then and there allowing accused Jaime C. Ancla to remove, retrieve, withdraw and tow away the said Isuzu
Dumptruck (sic) with the authority, consent and knowledge of the Bureau of Internal Revenue, Butuan City, to
the damage and prejudice of the government in the amount of P80,831.59 in a form of unsatisfied tax liability.
CONTRARY TO LAW.
The petitioner filed a motion for reinvestigation before the Sandiganbayan on May 14, 1991, alleging that: (1) the
petitioner never appeared in the preliminary investigation; and (2) the petitioner was not a public officer, hence
a doubt exists as to why he was being charged with malversation under Article 217 of the Revised Penal
Code. 13The Sandiganbayan granted the motion for reinvestigation on May 22, 1991. 14 After the reinvestigation,
Special Prosecution Officer Roger Berbano, Sr., recommended the "withdrawal of the information" 15 but was
"overruled by the Ombudsman." 16
A motion to dismiss was filed by petitioner on March 25, 1992 on the ground that the Sandiganbayan did not
have jurisdiction over the person of the petitioner since he was not a public officer. 17 On May 18, 1992; the
Sandiganbayan denied the motion. 18
When the prosecution finished presenting its evidence, the petitioner then filed a motion for leave to file
demurrer to evidence which was denied on November 16, 1992, "for being without merit." 19 The petitioner
then commenced and finished presenting his evidence on February 15, 1993.
The Respondent Court's Decision
On March 8, 1994, Respondent Sandiganbayan 20 rendered a Decision, 21 the dispositive portion of which reads:
WHEREFORE, the Court finds accused Alfredo Azarcon y Leva GUILTY beyond reasonable doubt as principal of
Malversation of Public Funds defined and penalized under Article 217 in relation to Article 222 of the Revised
Penal Code and, applying the Indeterminate Sentence Law, and in view of the mitigating circumstance of
voluntary surrender, the Court hereby sentences the accused to suffer the penalty of imprisonment ranging from
TEN (10) YEARS and ONE (1) DAY of prision mayor in its maximum period to SEVENTEEN (17) YEARS, FOUR (4)
MONTHS and ONE (1) DAY of Reclusion Temporal. To indemnify the Bureau of Internal Revenue the amount of
P80,831.59; to pay a fine in the same amount without subsidiary imprisonment in case of insolvency; to suffer
special perpetual disqualification; and, to pay the costs.
Considering that accused Jaime Ancla has not yet been brought within the jurisdiction of this Court up to this
date, let this case be archived as against him without prejudice to its revival in the event of his arrest or voluntary
submission to the jurisdiction of this Court.
SO ORDERED.
Petitioner, through new counsel, 22 filed a motion for new trial or reconsideration on March 23, 1994, which was
denied by the Sandiganbayan in its Resolution 23 dated December 2, 1994.
Hence, this petition.
The Issues
The petitioner submits the following reasons for the reversal of the Sandiganbayan's assailed Decision and
Resolution:
I. The Sandiganbayan does not have jurisdiction over crimes committed solely by private individuals.
II. In any event, even assuming arguendo that the appointment of a private individual as a custodian or a
depositary of distrained property is sufficient to convert such individual into a public officer, the petitioner
cannot still be considered a public officer because:
[A]
There is no provision in the National Internal Revenue Code which authorizes the Bureau of Internal Revenue to
constitute private individuals as depositaries of distrained properties.
[B]
His appointment as a depositary was not by virtue of a direct provision of law, or by election or by appointment
by a competent authority.
III. No proof was presented during trial to prove that the distrained vehicle was actually owned by the accused
Jaime Ancla; consequently, the government's right to the subject property has not been established.
IV. The procedure provided for in the National Internal Revenue Code concerning the disposition of distrained
property was not followed by the B.I.R., hence the distraint of personal property belonging to Jaime C. Ancla and
found allegedly to be in the possession of the petitioner is therefore invalid.
V. The B.I.R. has only itself to blame for not promptly selling the distrained property of accused Jaime C. Ancla in
order to realize the amount of back taxes owed by Jaime C. Ancla to the Bureau. 24
In fine, the fundamental issue is whether the Sandiganbayan had jurisdiction over the subject matter of the
controversy. Corollary to this is the question of whether petitioner can be considered a public officer by reason of
his being designated by the Bureau of Internal Revenue as a depositary of distrained property.
The Court's Ruling
The petition is meritorious.
Jurisdiction of the Sandiganbayan
It is hornbook doctrine that in order "(to) ascertain whether a court has jurisdiction or not, the provisions of the
law should be inquired into." 25 Furthermore, "the jurisdiction of the court must appear clearly from the statute
law or it will not be held to exist. It cannot be presumed or implied." 26 And for this purpose in criminal cases,
"the jurisdiction of a court is determined by the law at the time of commencement of the action." 27
In this case, the action was instituted with the filing of this information on January 12, 1990; hence, the
applicable statutory provisions are those of P.D. No. 1606, as amended by P.D. No. 1861 on March 23, 1983, but
prior to their amendment by R.A. No. 7975 on May 16, 1995. At that time, Section 4 of P.D. No. 1606 provided
that:
Sec. 4. Jurisdiction. — The Sandiganbayan shall exercise:
(a) Exclusive original jurisdiction in all cases involving:
(1) Violations of Republic Act No. 3019, as amended, otherwise known as the Anti-Graft and Corrupt Practices
Act, Republic Act No. 1379, and Chapter II, Section 2, Title VII of the Revised Penal Code;
(2) Other offenses or felonies committed by public officers and employees in relation to their office, including
those employed in government-owned or controlled corporations, whether simple or complexed with other
crimes, where the penalty prescribed by law is higher than prision correccional or imprisonment for six (6) years,
or a fine of P6,000.00: PROVIDED, HOWEVER, that offenses or felonies mentioned in this paragraph where the
penalty prescribed by law does not exceed prision correccional or imprisonment for six (6) years or a fine of
P6,000.00 shall be tried by the proper Regional Trial Court, Metropolitan Trial Court, Municipal Trial Court and
Municipal Circuit Trial Court.
xxx xxx xxx
In case private individuals are charged as co-principals, accomplices or accessories with the public officers or
employees, including those employed in government-owned or controlled corporations, they shall be tried jointly
with said public officers and employees.
xxx xxx xxx
The foregoing provisions unequivocally specify the only instances when the Sandiganbayan will have jurisdiction
over a private individual, i.e. when the complaint charges the private individual either as a co-principal,
accomplice or accessory of a public officer or employee who has been charged with a crime within its jurisdiction.
Azarcon: A Public Officer or A Private Individual?
The Information does not charge petitioner Azarcon of being a co-principal, accomplice or accessory to a public
officer committing an offense under the Sandiganbayan's jurisdiction. Thus, unless petitioner be proven a public
officer, the Sandiganbayan will have no jurisdiction over the crime charged. Article 203 of the RPC determines
who are public officers:
Who are public officers. — For the purpose of applying the provisions of this and the preceding titles of the book,
any person who, by direct provision of the law, popular election, popular election or appointment by competent
authority, shall take part in the performance of public functions in the Government of the Philippine Islands, or
shall perform in said Government or in any of its branches public duties as an employee, agent, or subordinate
official, of any rank or classes, shall be deemed to be a public officer.
Thus,
(to) be a public officer, one must be —
(1) Taking part in the performance of public functions in the government, or
Performing in said Government or any of its branches public duties as an employee, agent, or subordinate official,
of any rank or class; and
(2) That his authority to take part in the performance of public functions or to perform public duties must be —
a. by direct provision of the law, or
b. by popular election, or
c. by appointment by competent authority. 28
Granting arguendo that the petitioner, in signing the receipt for the truck constructively distrained by the BIR,
commenced to take part in an activity constituting public functions, he obviously may not be deemed authorized
by popular election. The next logical query is whether petitioner's designation by the BIR as a custodian of
distrained property qualifies as appointment by direct provision of law, or by competent authority. 29 We answer
in the negative.
The Solicitor General contends that the BIR, in effecting constructive distraint over the truck allegedly owned by
Jaime Ancla, and in requiring Petitioner Alfredo Azarcon who was in possession thereof to sign a pro forma
receipt for it, effectively "designated" petitioner a depositary and, hence, citing U.S. vs. Rastrollo, 30 a public
officer.31 This is based on the theory that
(t)he power to designate a private person who has actual possession of a distrained property as a depository of
distrained property is necessarily implied in the BIR's power to place the property of a delinquent tax payer (sic)
in distraint as provided for under Sections 206, 207 and 208 (formerly Sections 303, 304 and 305) of the National
Internal Revenue Code, (NIRC) . . . . 32
We disagree. The case of U.S. vs. Rastrollo is not applicable to the case before us simply because the facts therein
are not identical, similar or analogous to those obtaining here. While the cited case involved a judicial deposit of
the proceeds of the sale of attached property in the hands of the debtor, the case at bench dealt with the BIR's
administrative act of effecting constructive distraint over alleged property of taxpayer Ancla in relation to his
back taxes, property which was received by Petitioner Azarcon. In the cited case, it was clearly within the scope
of that court's jurisdiction and judicial power to constitute the judicial deposit and give "the depositary a
character equivalent to that of a public official." 33 However, in the instant case, while the BIR had authority to
require Petitioner Azarcon to sign a receipt for the distrained truck, the NIRC did not grant it power to appoint
Azarcon a public officer.
It is axiomatic in our constitutional framework, which mandates a limited government, that its branches and
administrative agencies exercise only that power delegated to them as "defined either in the Constitution or in
legislation or in both." 34 Thus, although the "appointing power is the exclusive prerogative of the
President, . . ." 35 the quantum of powers possessed by an administrative agency forming part of the executive
branch will still be limited to that "conferred expressly or by necessary or fair implication" in its enabling act.
Hence, "(a)n administrative officer, it has been held, has only such powers as are expressly granted to him and
those necessarily implied in the exercise thereof." 36Corollarily, implied powers "are those which are necessarily
included in, and are therefore of lesser degree than the power granted. It cannot extend to other matters not
embraced therein, nor are not incidental thereto." 37 For to so extend the statutory grant of power "would be an
encroachment on powers expressly lodged in Congress by our Constitution." 38 It is true that Sec. 206 of the
NIRC, as pointed out by the prosecution, authorizes the BIR to effect a constructive distraint by requiring "any
person" to preserve a distrained property, thus:
xxx xxx xxx
The constructive distraint of personal property shall be effected by requiring the taxpayer or any person having
possession or control of such property to sign a receipt covering the property distrained and obligate himself to
preserve the same intact and unaltered and not to dispose of the same in any manner whatever without the
express authority of the Commissioner.
xxx xxx xxx
However, we find no provision in the NIRC constituting such person a public officer by reason of such
requirement. The BIR's power authorizing a private individual to act as a depositary cannot be stretched to
include the power to appoint him as a public officer. The prosecution argues that "Article 222 of the Revised
Penal Code . . . defines the individuals covered by the term 'officers' under Article 217 39 . . ." of the same
Code. 40 And accordingly, since Azarcon became "a depository of the truck seized by the BIR" he also became a
public officer who can be prosecuted under Article 217 . . . ." 41
The Court is not persuaded. Article 222 of the RPC reads:
Officers included in the preceding provisions. — The provisions of this chapter shall apply to private individuals
who, in any capacity whatever, have charge of any insular, provincial or municipal funds, revenues, or property
and to any administrator or depository of funds or property attached, seized or deposited by public authority,
even if such property belongs to a private individual.
"Legislative intent is determined principally from the language of a statute. Where the language of a statute is
clear and unambiguous, the law is applied according to its express terms, and interpretation would be resorted
to only where a literal interpretation would be either impossible or absurd or would lead to an injustice." 42 This
is particularly observed in the interpretation of penal statutes which "must be construed with such strictness as
to carefully safeguard the rights of the defendant . . . ." 43 The language of the foregoing provision is clear. A
private individual who has in his charge any of the public funds or property enumerated therein and commits any
of the acts defined in any of the provisions of Chapter Four, Title Seven of the RPC, should likewise be penalized
with the same penalty meted to erring public officers. Nowhere in this provision is it expressed or implied that a
private individual falling under said Article 222 is to be deemed a public officer.
After a thorough review of the case at bench, the Court thus finds Petitioner Alfredo Azarcon and his co-accused
Jaime Ancla to be both private individuals erroneously charged before and convicted by Respondent
Sandiganbayan which had no jurisdiction over them. The Sandiganbayan's taking cognizance of this case is of no
moment since "(j)urisdiction cannot be conferred by . . . erroneous belief of the court that it had
jurisdiction." 44 As aptly and correctly stated by the petitioner in his memorandum:
From the foregoing discussion, it is evident that the petitioner did not cease to be a private individual when he
agreed to act as depositary of the garnished dump truck. Therefore, when the information charged him and
Jaime Ancla before the Sandiganbayan for malversation of public funds or property, the prosecution was in fact
charging two private individuals without any public officer being similarly charged as a co-conspirator.
Consequently, the Sandiganbayan had no jurisdiction over the controversy and therefore all the proceedings
taken below as well as the Decision rendered by Respondent Sandiganbayan, are null and void for lack of
jurisdiction. 45
WHEREFORE, the questioned Resolution and Decision of the Sandiganbayan are hereby SET ASIDE and declared
NULL and VOID for lack of jurisdiction. No costs.
SO ORDERED.

1. No. L-25133. September 28, 1968.

S/SGT. JOSE SANTIAGO, petitioner-appellant, vs. LT. COL. CELSO ALIKPALA, ET AL., respondents-appellees.

Constitutional law; Due process; Remedy against deprivation of rights to be heard and present evidence; Habeas
corpus; Nature and function; When available.—It is to be admitted that there is no controlling and precise
definition of due process which, at the most furnishes a standard to which governmental action should conform
in order to impress with the stamp of validity any deprivation of life, liberty or property. A recent decision of this
Court, in Ermita-Malate Hotel v. Mayor of Manila (L-24693, July 31, 1967), treated the matter thus: "It is
responsiveness to the supremacy of reason, obedience to the dictates of justice. Negatively put, arbitrariness is
ruled out and unfairness as avoided. To satisfy the due process requirement, official action, to paraphrase
Cardozo, must not outrun the bounds of reason and result in sheer oppression. Due process is thus hostile to any
official action marred by lack of reasonableness. Correctly has it been identified as freedom from arbitrariness. It
is the embodiment of the sporting idea of fair play. It exacts fealty 'to those strivings for justice' and judges the
act of officialdom of whatever branch 'in the light of reason drawn from considerations of fairness that reflect
(democratic) traditions of legal and political thought.' "
The due process concept rightfully referred to as "a vital and living force in our jurisprudence" calls for respect
and deference, otherwise the governmental action taken suffers from a fatal infirmity. As was so aptly expressed
by the then Justice, now Chief Justice Concepcion: "x x x acts of Congress, as well as those of the Executive, can
deny due process only under pain of nullity, and judicial proceedings suffering from the same flaw are subject to
the same sanction, any statutory provision to the contrary notwithstanding (Cuaycong v. Sengbengco, L-11837,
Nov. 29, 1960).
Habeas corpus in a high prerogative writ. It is traditionally considered as an exceptional remedy to release a
person whose liberty is illegally restrained such as when the accused's constitutional rights are disregarded. Such
defect results in the absence or loss of jurisdiction and therefore invalidates the trial and the consequent
conviction of the accused whose f undamental right was violated. That void judgment of conviction may be
challenged by collateral attack, which precisely is the function of habeas corpus. This writ may issue even if
another remedy which is less effective may be availed of by the defendant"
In Harden v. The Director of Prisons (81 Phil. 741, [1948]), Justice Tuason, speaking for the Court, explicitly
announced that "deprivation of any fundamental or constitutional rights" justify a proceeding for habeas corpus
on the ground of lack of jurisdiction, Abriol v. Homeres (84 Phil. 525, [1949]) is even more categorical. In that
case, the action of a lower court, denying the accused the opportunity to present proof for his defense, his
motion for dismissal failing, was held by this Court as a deprivation of his right to due process. As was made clear
by the opinion of Justice Ozaeta: "No court of justice under our system of government has the power to deprive
him of that right. If the accused does not waive his right to be heard but on the contrary invokes the right, and
the court denies it to him, that court no longer has jurisdiction to proceed; it has no power to sentence the
accused without hearing him in his def ense; and the sentence thus pronounced is void and may be collaterally
attacked in a habeas corpus proceeding (Ibid, p. 534)."

Same; Military law; Court-martial; Nature and character; Effect of absence of special order designating
composition of a general court-martial; Case at bar.—In the case at bar, there is the express admission in the
statement of facts that respondents, as a court-martial, were not convened to try petitioner but someone else,
the action taken against petitioner being induced solely by a desire to avoid the effects of prescription; it would
follow then that the absence of a competent court or tribunal is most marked and undeniable. Such a denial of
due process is therefore fatal to its assumed authority to try petitioner.
Courts-martial are agencies of executive character, and one of the authorities "for the ordering of courts-
martial has been held to be attached to the constitutional functions of the President as Commander in Chief,
independently of legislation." (Winthrop's Military Law and Precedents, 2d Edition, p. 49). Unlike courts of law,
they are not a portion of the judiciary. Not belonging to the judicial branch of the government, it follows that
courts-martial must pertain to the executive department; and they are in fact simply instrumentalities of the
executive power, provided by Congress for the President as Commander in Chief, to aid him in properly
commanding the army and navy and enforcing discipline therein, and utilized under his orders or those of his
authorized military representatives (Ruffy v. Chief of Staff, Philippine Army, 76 Phil. 876).

FERNANDO, J.:
The validity of a court-martial proceeding was challenged in the lower court on due process grounds to show lack
of jurisdiction. Petitioner, a sergeant in the Philippine Army and the accused in a court-martial proceeding,
through a writ of certiorari and prohibition, filed on April 17, 1963, with the lower court, sought to restrain
respondents, the officers, constituting the court-martial, that was then in the process of trying petitioner for
alleged violation of two provisions of the Articles of War, from continuing with the proceedings on the ground of
its being without jurisdiction. There was likewise a plea for a restraining order, during the pendency of his
petition, but it was unsuccessful.
No response, either way, was deemed necessary by the then Presiding Judge of the lower court, now Justice
Nicasio Yatco of the Court of Appeals, as petitioner had, in the meanwhile, been convicted by the court-martial.
The lower court verdict, rendered on September 16, 1963, was one of dismissal, as in its opinion, "this case had
already become moot and academic ... ."
An appeal was taken to us, the same due process objections being raised. We think that the question before us is
of such import and significance that an easy avoidance through the technicality of the "moot and academic"
approach hardly recommends itself. For reasons to be more fully set forth, we find that such court-martial was
not lawfully convened, and, consequently, devoid of jurisdiction. Accordingly, we reverse the lower court.
There was a stipulation of facts submitted to the lower court on July 10, 1963, to the following effect: "That the
arraignment of the petitioner on December 17, 1962 was for the purpose of avoiding prescription pursuant to
Article of War 38 of one of the offenses with which the accused is charged since, as charged, same was allegedly
committed on or about December 18, 1960; That prior to the said arraignment, no written summons or
subpoena was issued addressed to the petitioner or his counsel, informing them of said arraignment; That
instead of said written summons or subpoena Col. Eladio Samson, Constabulary Staff Judge Advocate called up
First Sergeant Manuel Soriano at the Headquarters II Philippine Constabulary Zone, Camp Vicente Lim,
Canlubang, Laguna on December 16, 1962 by telephone with instructions to send the petitioner to HPC, Camp
Crame, Quezon City, under escort, for arraignment and only for arraignment; That upon arrival in HPC, the
petitioner was directed to proceed to the PC Officer's Clubhouse, where a General Court-Martial composed of
the respondents, created to try the case of 'People vs. Capt. Egmidio Jose, for violation of Articles of War 96 and
97', pursuant to paragraph 10, Special Order No. 14, Headquarters Philippine Constabulary, dated 18 July
1962, ..., was to resume, as scheduled, the trial of 'People vs. Pfc. Numeriano Ohagan, for violation of Articles of
War 64, 85, and 97'; That it was only at the time (December 17, 1962) that petitioner learned that he will be
arraigned for alleged violation of Articles of War 85 and 97, after being informed by one of the respondents, Capt.
Cuadrato Palma as Trial Judge Advocate why he was there; That prior to that arraignment on December 17, 1962
there was no special order published by the Headquarters Philippine Constabulary creating or directing the
General Court-Martial composed of the respondents to arraign and try the case against the petitioner, there
however was already an existing court trying another case; That the respondents relied on the first indorsement
of the Acting Adjutant General, HPC, Camp Crame, Quezon City, dated December 14, 1962 and addressed to the
Trial Judge Advocate of the General Court-martial ... directing the said Trial Judge Advocate to refer the case
against petitioner to the above-mentioned court, ...; That the above paragraph 10, Special Order No. 14 dated 18
July 1962, does not contain the phrase 'and such other cases which may be referred to it,' but however said
orders were amended only on 8 January 1963, to include such phrase, ... ." 1
It was further stipulated that petitioner's counsel did object to his arraignment asserting that a general court-
martial then convened was without jurisdiction, as there was no special order designating respondents to
compose a general court-martial for the purpose of trying petitioner, as petitioner was not furnished a copy of
the charge sheet prior to his arraignment as required in the Manual for Court-Martial, except on the very day
thereof, and as there was no written summons or subpoena served on either the petitioner, as accused, or the
counsel. Respondents, acting as the general court-martial, overruled the above objections, and the Trial Judge
Advocate was then ordered to proceed to read the charges and specifications against petitioner over the
vigorous objections of counsel. It was shown, likewise, in the stipulation of facts, that the case, having been
postponed to February 21, 1963, petitioner's counsel had in the meanwhile complained to the Chief of
Constabulary against the proceedings on the ground of its nullity, and sought to have respondents restrained
from continuing with the trial of petitioner due to such lack of jurisdiction but the Chief of Constabulary ruled
that he could not act on such complaint until the records of the trial were forwarded to him for review. With such
a ruling, and with the denial of two other motions by petitioner upon the court-martial being convened anew on
February 21, 1963, one to invalidate his arraignment on December 17, 1962, and the other to quash the
complaint based on the denial of due process and lack of jurisdiction, the present petition for certiorari and
prohibition was filed with the lower court. 2
As above noted, the lower court dismissed the petition due to its belief that, petitioner having been convicted in
the meanwhile, there being no restraining order, the matter had become moot and academic. As was set forth
earlier, we differ, the alleged lack of jurisdiction being too serious a matter to be thus summarily ignored.
The firm insistence on the part of petitioner that the general court-martial lacks jurisdiction on due process
grounds, cannot escape notice. The basic objection was the absence of a special order "designating respondents
to compose a general court-martial to convene and try the case of petitioner; ... ." It was expressly stipulated that
the respondents were convened to try the case of a certain Capt. Egmidio Jose and not that filed against
petitioner. As a matter of fact, the opening paragraph of the stipulation of facts made clear that he was arraigned
on December 17, 1962 by respondents as a general court-martial appointed precisely to try the above Capt. Jose
solely "for the purpose of avoiding prescription pursuant to Article of War 38 of one of the offenses with which
the accused is charged ... ."
Is such a departure from what the law and regulations 3 prescribe offensive to the due process clause? If it were,
then petitioner should be sustained in his plea for a writ of certiorari and prohibition, as clearly the denial of the
constitutional right would oust respondents of jurisdiction, even on the assumption that they were vested with it
originally. Our decisions to that effect are impressive for their unanimity.
In Harden v. The Director of Prisons, 4 Justice Tuason, speaking for the Court, explicitly announced that
"deprivation of any fundamental or constitutional rights" justify a proceeding for habeas corpus on the ground of
lack of jurisdiction. Abriol v. Homeres 5 is even more categorical. In that case, the action of a lower court, denying
the accused the opportunity to present proof for his defense, his motion for dismissal failing, was held by this
Court as a deprivation of his right to due process. As was made clear by the opinion of Justice Ozaeta: "No court
of justice under our system of government has the power to deprive him of that right. If the accused does not
waive his right to be heard but on the contrary — as in the instant case — invokes the right, and the court denies
it to him, that court no longer has jurisdiction to proceed; it has no power to sentence the accused without
hearing him in his defense; and the sentence thus pronounced is void and may be collaterally attacked in
a habeas corpus proceeding." 6
A recent decision rendered barely a month ago, in Chavez v. Court of Appeals, 7 is even more in point. Here,
again, habeas corpus was relied upon by petitioner whose constitutional rights were not respected, but, in
addition, the special civil actions of certiorari and mandamus were likewise availed of, in view of such consequent
lack of jurisdiction. The stress though in the opinion of Justice Sanchez was on habeas corpus. Thus: "The course
which petitioner takes is correct. Habeas corpus is a high prerogative writ. It is traditionally considered as an
exceptional remedy to release a person whose liberty is illegally restrained such as when the accused's
constitutional rights are disregarded. Such defect results in the absence or loss of jurisdiction and therefore
invalidates the trial and the consequent conviction of the accused whose fundamental right was violated. That
void judgment of conviction may be challenged by collateral attack, which precisely is the function of habeas
corpus. This writ may issue even if another remedy which is less effective may be availed of by the defendant."
The due process concept rightfully referred to as "a vital and living force in our jurisprudence" calls for respect
and deference, otherwise the governmental action taken suffers from a fatal infirmity. As was so aptly expressed
by the then Justice, now Chief Justice, Concepcion: "... acts of Congress, as well as those of the Executive, can
deny due process only under pain of nullity, and judicial proceedings suffering from the same flaw are subject to
the same sanction, any statutory provision to the contrary notwithstanding." 8
The crucial question, then, is whether such failure to comply with the dictates of the applicable law insofar as
convening a valid court martial is concerned, amounts to a denial of due process. We hold that it does. There is
such a denial not only under the broad standard which delimits the scope and reach of the due process
requirement, but also under one of the specific elements of procedural due process.
It is to be admitted that there is no controlling and precise definition of due process which, at the most furnishes
a standard to which governmental action should conform in order to impress with the stamp of validity any
deprivation of life, liberty or property. A recent decision of this Court, in Ermita-Malate Hotel v. Mayor of
Manila 9treated the matter thus: "It is responsiveness to the supremacy of reason, obedience to the dictates of
justice. Negatively put, arbitrariness is ruled out and unfairness avoided. To satisfy the due process requirement,
official action, to paraphrase Cardozo, must not outrun the bounds of reason and result in sheer oppression. Due
process is thus hostile to any official action marred by lack of reasonableness. Correctly has it been identified as
freedom from arbitrariness. It is the embodiment of the sporting idea of fair play. It exacts fealty 'to those
strivings for justice' and judges the act of officialdom of whatever branch 'in the light of reason drawn from
considerations of fairness that reflect [democratic] traditions of legal and political thought.'"
Nor is such a reliance on the broad reach of due process the sole ground on which the lack of jurisdiction of the
court-martial convened in this case could be predicated. Recently, stress was laid anew by us on the first
requirement of procedural due process, namely, the existence of the court or tribunal clothed with judicial, or
quasi-judicial, power to hear and determine the matter before it. 10 This is a requirement that goes back
to Banco Español-Filipino v. Palanca, a decision rendered half a century ago. 11
There is the express admission in the statement of facts that respondents, as a court-martial, were not convened
to try petitioner but someone else, the action taken against petitioner being induced solely by a desire to avoid
the effects of prescription; it would follow then that the absence of a competent court or tribunal is most marked
and undeniable. Such a denial of due process is therefore fatal to its assumed authority to try petitioner. The writ
of certiorari and prohibition should have been granted and the lower court, to repeat, ought not to have
dismissed his petition summarily.
The significance of such insistence on a faithful compliance with the regular procedure of convening court-
martials in accordance with law cannot be over-emphasized. As was pointed out by Justice Tuason in Ruffy v. The
Chief of Staff, Philippine Army: 12 "Courts-martial are agencies of executive character, and one of the authorities
for the ordering of courts-martial has been held to be attached to the constitutional functions of the President as
Commander-in-Chief, independently of legislation. (Winthrop's Military Law and Precedents, 2d Edition, p. 49.)
Unlike courts of law, they are not a portion of the judiciary." Further on, his opinion continues: "Not belonging to
the judicial branch of the government, it follows that courts-martial must pertain to the executive department;
and they are in fact simply instrumentalities of the executive power, provided by Congress for the President as
Commander-in-Chief, to aid him in properly commanding the army and navy and enforcing discipline therein, and
utilized under his orders or those of his authorized military representatives." 13
It is even more indispensable, therefore, that such quasi-judicial agencies, clothed with the solemn responsibility
of depriving members of the Armed Forces of their liberties, even of their lives, as a matter of fact, should be
held all the more strictly bound to manifest fidelity to the fundamental concept of fairness and the avoidance of
arbitrariness for which due process stands as a living vital principle. If it were otherwise, then, abuses, even if not
intended, might creep in, and the safeguards so carefully thrown about the freedom of an individual, ignored or
disregarded. Against such an eventuality, the vigilance of the judiciary furnishes a shield. That is one of its grave
responsibilities. Such a trust must be lived up to; such a task cannot be left undone.
WHEREFORE, the order of respondent Court of September 6, 1963, dismissing the petition for certiorari and
prohibition is reversed, and the writ of certiorari and prohibition granted, annulling the proceedings as well as
the decision rendered by respondents as a court-martial and perpetually restraining them from taking any
further action on the matter. Without pronouncement as to costs.
Concepcion, C.J., Reyes, J.B.L., Makalintal, Sanchez, Angeles and Capistrano, JJ., concur.
Dizon and Zaldivar, JJ., are on leave.
Separate Opinions
CASTRO, J., concurring:
My concurrence in the decision of this Court in the able pen of Mr. Justice Fernando is unqualified.
Nonetheless, I feel compelled to express my views on certain disturbing facets of this case which to my mind not
merely indicate a censurabe denial of due process, but as well pointedly exposes, from the perspective of military
law, tradition and usage, the intrinsic nullity of the proceedings had by the general court-martial in question.
The history and development of courts-martial as tribunals for the enforcement of discipline in bodies of military
character 1 underscore several time-honored tenets: a court-martial is an instrumentality of the executive power,
to aid the President as commander-in-chief in properly commanding and controlling the armed forces and
enforcing discipline therein; it has only such powers as are expressly vested in it by statute or as may be derived
from military usage; it is a creature of orders; as a purely executive agency designed for military uses, it is
brought into being by a military order; it is transient in its duration; it has no fixed place of session, nor
permanent office or clerk, no inherent power to issue a judicial mandate; its judgment is in quintessence simply
a recommendation until approved by the proper revisory commander; its competency cannot be expanded by
implication; and no intendment in favor of its acts can be made where their legality does not indubitably
appear. 2
The original concept of a court-martial in British Law, even with American and Philippine statutory accretions,
remains fundamentally the same today, with few modifications of consequence.
Why a court-martial is essentially transient in nature, and is as a rule appointed to try a single case, is not difficult
to comprehend.
Firstly, in a military organization, every officer thereof belongs to a particular branch of services and is for that
reason assigned to a position which calls for the discharge, in a continuing manner and for a period which is
denominated tour of duty, of duties pertaining to his specialization or branch of service. Thus an ordnance officer
is assigned to ordnance work, a field artillery officer to field artillery duties, a finance officer to duties involving
money and finances, a quartermaster officer to duties involving supplies and other aspects of logistics, and so
forth. Although generic military duty perforce embraces occasional membership in courts-martial, it does not
envision such membership as a continuing assignment of long duration.
Secondly, the court-martial, as its history and development demonstrate, is a blend of the jury system and the
one-judge (non-jury) judicial system. In common law jurisdictions, an accused is tried by his peers. In one-judge
(non-jury) jurisdictions, the accused is tried by a lone judicial arbiter. In a court-martial trial, the entire panel of
officers who constitute the court-martial is judge and jury.1awphîl.nèt
Thirdly, by virtue of military law, tradition and usage, a court-martial is constituted to try a particular case (or
several cases involving the same accused). After completion of the trial and resolution of necessary post-trial
incidents, the court is dissolved, and the members thereof return to and resume their respective normal
assignments. Even the law member of a court-martial (who rules on questions of law and admissibility of
evidence and advises the other members on court procedure and the legal intricacies of trial), rejoins his regular
office or unit (although he may thereafter again be appointed law member of a subsequent general court-martial,
or an ordinary member of another general court-martial, or even president of still another general court-martial).
In sum, a court-martial is not a continuing permanent tribunal.
Thus it is that, in the Armed Forces of the Philippines, the general rule has commanded undiminished respect
that a court-martial is appointed to try only a single case, or several cases pertaining to a single individual. There
is of course no legal impediment to empowering a court-martial, in the same order creating it, to try more than
one case, but such creations are the exception and quite infrequent. And even if "roving" or "semi-permanent"
courts-martial were the rule in our Armed Forces, which I do not concede, the general court-martial in the case
at bar was not one such.
It is undisputed — as in fact it is stipulated by the parties — that the general court-martial in question was
constituted to try Captain Egmidio Jose. Nothing in the phraseology of the order that created it authorized it to
try the petitioner staff-sergeant Santiago. It could not therefore proceed in any manner, which we can view as
properly coming within the periphery of its limited powers, with respect to the charge against Santiago.When it
arraigned Santiago on December 17, 1962, it was absolutely without legal power to do so, and the arraignment
was a futile ceremony, as meaningless as it was inefficacious.
Undeniably the record shows that the order creating the court-martial to try Captain Egmidio Jose was belatedly
amended on January 8, 1963 by the addition of the phrase, "and such other cases that may be referred to it." But
this afterthought could not, in law, serve to invest with validity an act that was ab initio a nullity. And it is of no
moment that petitioner was thereafter arraigned anew, assuming arguendo that he was. The proceedings would
have been palpably objectionable on the patent ground that the offense imputed to the petitioner which was
committed on December 18, 1960 was already time-barred on December 18, 1962, pursuant to the provisions of
Article of War 38 of Commonwealth Act 408, as amended.
As I see it, the arraignment of the petitioner by the general court-martial constituted to try Captain Egmidio Jose
was a desperate measure resorted to remedy a desperate situation — solely to interrupt the running of the
prescriptive period provided by Article of War 38. This action was not only completely devoid of any semblance
of legality; it likewise conclusively evinces gross negligence on the part of the military. Why nothing was done
toward the creation of a court-martial to try Santiago within the two years following the commission of the crime
is not explained by the record, and I venture the opinion that there can be no satisfactory explanation therefor.
The military authorities allowed that long period to lapse without any assiduous effort at bringing the petitioner
to the forum of a duly constituted general court-martial. This should never come to pass in the Armed Forces
where disciplinary measures of whatever specie or character, by law and tradition and usage, should be swiftly
administered. For, the officer of average military learning knows or should be cognizant of the proliferation in the
Articles of War of provisions designed to insure speedy trial of accused persons.1awphîl.nèt
Because an accused charged with a serious offense such as that in the case at bar — unlawful disposition of ten
carbines belonging to the Government — is ordinarily placed in arrest and is not entitled to bail, time is of the
essence as undue delay would obviously be prejudicial to the accused. The Articles of War (Commonwealth Act
408 as amended by Rep. Act 242) and implementing military manuals and regulations explicitly enjoin that the
report of investigation, if practicable, be completed within 48 hours, that the investigator forthwith make the
proper recommendation as to the disposition of the case, and that the officer exercising general court-martial
jurisdiction over the accused act on the report of the investigator with deliberate speed. As a matter of fact,
Article of War 71 explicitly commands that when a person subject to military law is placed in arrest or
confinement immediate steps be taken to try him or to dismiss the charge; that when a person is held for trial by
general court-martial his commanding officer, within eight days after the accused is arrested or confined,
forward the charges to the officer exercising general court-martial jurisdiction and furnish the accused a copy of
such charges; and that if the same be not practicable, he report to superior authority the reasons for the delay.
The same Article of War poises the threat of punishment (as a court-martial may direct) over any officer
responsible for unnecessary delay "in investigating or carrying the case to final conclusion."
The record propels me to the conclusion that everything that the military authorities did or neglected to do with
respect to the case of the petitioner was contrary to all the imperatives of military law, tradition and usage.
In fine, it is my considered view that at the time the petitioner was arraigned, there was no court-martial validly
in existence that could legally take cognizance of the charge against him. At best, the general court-martial in
question, vis-a-vis the petitioner, was disembodied if not innominate, with neither shape nor substance.

2. No. L-19180. October 31, 1963.

NATIONAL DEVELOPMENT COMPANY, ET AL., petitioners-appellees, vs. THE COLLECTOR OF CUSTOMS OF MANILA,
respondent-appellant.

Constitutional Law; Right to due process; Applies to administrative proceedings.—Even in administrative

proceedings, due process should be observed because that is a right enshrined in our Constitution.
Courts; Jurisdiction; Court of First Instance, not Court of Tax Appeals, has jurisdiction over question of due
process in imposition of fine under Tariff and Customs Code.—Where the question involved is not whether the
imposition of the fine by the Collector of Customs on the operator of the ship is correct or not, but whether he
acted properly in imposing said fine without first giving the operator an opportunity to be heard, it is held that
the Court of First Instance acted correctly in assuming jurisdiction over the case.

Tariff and Customs Code; Unmanifested cargo under Section 2521, Tariff and Customs Code; Necessity of
opportunity for hearing before imposition of fine.—Where the customs authorities found that the vessel carried
on board an unmanifested cargo consisting of one television set, and respondent Collector of Customs sent, a
written notice to the operator of the vessel. and the latter answered stating that the television set was not cargo
and so was not required by law to be manifested and requesting investigation and hearing but respondent
finding this explanation not satisfactory imposed on the vessel a fine of P5,000.00, ordering said fine to be paid
within 48 hours from receipt, with a threat that the vessel would be denied clearance and a warrant of seizure
would be issued if the fine will not be paid, it is held that the respondent Collector committed a grave abuse of
discretion because the petitioner was not given an opportunity to prove that the television set involved is not a
cargo that needs to be manifested.

Administrative Law; Exhaustion of administrative remedies; Exception, disregard of due process.—Exhaustion of

administrative remedies is not required where the appeal to the administrative superior is not a plain, speedy or
adequate remedy in the ordinary course of law, as where it is undisputed that respondent officer has acted in
utter disregard of the principle of due process.

BAUTISTA ANGELO, J.:

The National Development Company which is engaged in the shipping business under the name of "Philippine
National Lines" is the owner of steamship "S.S. Doña Nati" whose local agent in Manila is A. V. Rocha. On August
4, 1960, the Collector of Customs sent a notice to C.F. Sharp & Company as alleged operator of the vessel
informing it that said vessel was apprehended and found to have committed a violation of the customs laws and
regulations in that it carried an unmanifested cargo consisting of one RCA Victor TV set 21" in violation of Section
2521 of the Tariff and Customs Code. Inserted in said notice is a note of the following tenor: "The above article
was being carried away by Dr. Basilio de Leon y Mendez, official doctor of M/S "Doña Nati" who readily admitted
ownership of the same." C.F. Sharp & Company was given 48 hours to show cause why no administrative fine
should be imposed upon it for said violation.
C.F. Sharp & Company, not being the agent or operator of the vessel, referred the notice to A. V. Rocha, the agent
and operator thereof, who on August 8, 1960, answered the notice stating, among other things, that the
television set referred to therein was not a cargo of the vessel and, therefore, was not required by law to be
manifested. Rocha stated further: "If this explanation is not sufficient, we request that this case be set for
investigation and hearing in order to enable the vessel to be informed of the evidence against it to sustain the
charge and to present evidence in its defense."
The Collector of Customs replied to Rocha on August 9, 1960 stating that the television set in question was a
cargo on board the vessel and that he does not find his explanation satisfactory enough to exempt the vessel
from liability for violating Section 2521 of the Tariff and Customs Code. In said letter, the collector imposed a fine
of P5,000.00 on the vessel and ordered payment thereof within 48 hours with a threat that he will deny
clearance to said vessel and will issue a warrant of seizure and detention against it if the fine is not paid.
And considering that the Collector of Customs has exceeded his jurisdiction or committed a grave abuse of
discretion in imposing the fine of P5,000.00 on the vessel without the benefit of an investigation or hearing as
requested by A. V. Rocha, the National Development Company, as owner of the vessel, as well as A. V. Rocha as
agent and operator thereof, filed the instant special civil action of certiorari with preliminary injunction before
the Court of First Instance of Manila against the official abovementioned. The court, finding the petition for
injunction sufficient in form and substance, issued ex parte the writ prayed for upon the filing of a bond in the
amount of P5,00.00.
Respondent set up the following special defenses: (1) the court a quo has no jurisdiction to act on matters arising
from violations of the Customs Law, but the Court of Tax Appeals; (2) assuming that it has, petitioners have not
exhausted all available administrative remedies, one of which is to appeal to the Commissioner of Customs; (3)
the requirements of administrative due process have already been complied with in that the written notice given
by respondent to petitioner Rocha clearly specified the nature of the violation complained of and that the
defense set up by Rocha constitute merely a legal issue which does not require further investigation; and (4) the
investigation conducted by the customs authorities showed that the television set in question was unloaded by
the ship's doctor without going thru the custom house as required by law and was not declared either in the
ship's manifest or in the crew declaration list.
On the basis of the stipulation of facts submitted by the parties, the court a quo rendered decision setting aside
the ruling of respondent which imposes a fine of P5,000.00 on the vessel Doña Nati payable within 48 hours
from receipt thereof. The court stated that said ruling appears to be unjust and arbitrary because the party
affected has not been accorded the investigation it requested from the Collector of Customs.
Respondent interposed the present appeal.
When the customs authorities found that the vessel Doña Nati carried on board an unmanifested cargo
consisting of one RCA Victor TV set 21" in violation of Section 2521 of the Tariff and Customs Code, respondent
sent a written notice to C. F. Sharp & Company, believing it to be the operator or agent of the vessel, and when
the latter referred the notice to A. V. Rocha, the real operator of the vessel, for such step as he may deem
necessary to be taken the latter answered the letter stating that the television set was not cargo and so was not
required by law to be manifested, and he added to his answer the following: "If this explanation is not sufficient,
we request that this case be set for investigation and hearing in order to enable the vessel to be informed of the
evidence against it to sustain the charge and to present evidence in its defense. "Respondent, however, replied
to this letter saying that said television was a cargo within the meaning of the law and so he does not find his
explanation satisfactory and then and there imposed on the vessel a fine of P5,00.00. Respondent even went
further. He ordered that said fine be paid within 48 hours from receipt with a threat that the vessel would be
denied clearance and a warrant of seizure would be issued if the fine will not be paid. Considering this to be a
grave abuse of discretion, petitioners commenced the present action for certiorari before the court a quo.
We find this action proper for it really appears that petitioner Rocha was not given an opportunity to prove that
the television set complained of is not a cargo that needs to be manifested as required by Section 2521 of the
Tariff and Customs Code. Under said section, in order that an imported article or merchandise may be
considered a cargo that should be manifested it is first necessary that it be so established for the reason that
there are other effects that a vessel may carry that are excluded from the requirement of the law, among which
are the personal effects of the members of the crew. The fact that the set in question was claimed by the
customs authorities not to be within the exception does not automatically make the vessel liable. It is still
necessary that the vessel, its owner or operator, be given a chance to show otherwise. This is precisely what
petitioner Rocha has requested in his letter. Not only was he denied this chance, but respondent collector
immediately imposed upon the vessel the huge fine of P5,000.00. This is a denial of the elementary rule of due
process.
True it is that the proceedings before the Collector of Customs insofar as the determination of any act or
irregularity that may involve a violation of any customs law or regulation is concerned, or of any act arising under
the Tariff and Customs Code, are not judicial in character, but merely administrative, where the rules of
procedure are generally disregarded, but even in the administrative proceedings due process should be observed
because that is a right enshrined in our Constitution. The right to due process is not merely statutory. It is a
constitutional right. Indeed, our Constitution provides that "No person shall be deprived of life, liberty, or
property without due process of law", which clause epitomize the principle of justice which hears before it
condemns, which proceeds upon inquiry and renders judgment only after trial. That this principle applies with
equal force to administrative proceedings was well elaborated upon by this Court in the Ang Tibay case as follows:
... The fact, however, that the Court of Industrial Relations may be said to be free from the rigidity of certain
procedural requirements does not mean that it can, in justiciable case coming before it, entirely ignore or
disregard the fundamental and essential requirements of due process in trials and investigations of an
administrative character.
... There are cardinal primary rights which must be respected even in proceedings of this character. The first of
these rights is the right to a hearing, which includes the right of the party interested or affected to present his
own case and submit evidence in support thereof. Not only must the party be given an opportunity to present his
case and to adduce evidence tending to establish the rights which he asserts but the tribunal must consider the
evidence presented. While the duty to deliberate does not impose the obligation to decide right, it does imply a
necessity which cannot be disregarded, namely, that of having something to support its decision. No only must
there be some evidence to support a finding or conclusion, but the evidence must be substantial. The decision
must be rendered on the evidence presented at the hearing, or at least contained in the record and disclosed to
the parties affected. The Court of Industrial Relations or any of its judges, therefore, must act on its or his own
independent consideration of the law and facts of the controversy, and not simply accept the views of a
subordinate in arriving at a decision. The Court of Industrial Relations should, in all controversial questions,
render its decision in such a manner that the parties to the proceeding can know the various issues involved, and
the reason for the decision rendered. The performance of this duty is inseparable from the authority conferred
upon it. (Ang Tibay, et al. v. The Court of Industrial Relations, et al., 40 O.G., No. 11, Supp. p. 29).
There is, therefore, no point in the contention that the court a quo has no jurisdiction over the present case
because what is here involved is not whether the imposition of the fine by the Collector of Customs on the
operator of the ship is correct or not but whether he acted properly in imposing said fine without first giving the
operator an opportunity to be heard. Here we said that he acted improvidently and so the action taken against
him is in accordance with Rule 67 of our Rules of Court.
Another point raised is that petitioners have brought this action prematurely for they have not yet exhausted all
the administrative remedies available to them, one of which is to appeal the ruling to the Commissioner of
Customs. This may be true, but such step we do not consider a plain, speedy or adequate remedy in the ordinary
course of law as would prevent petitioners from taking the present action, for it is undisputed that respondent
collector has acted in utter disregard of the principle of due process.
WHEREFORE, the decision appealed from is affirmed. No costs.