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DOCTRINE OF QUALIFIED POLITICAL AGENCY G.R. No. 98045 June 26, 1996 DESAMPARADO VDA.

DE NAZARENO and LETICIA NAZARENO TAPIA, petitioners, vs. THE COURT OF APPEALS, MR. & MRS. JOSE SALASALAN, MR. & MRS. LEO RABAYA, AVELINO LABIS, HON. ROBERTO G. HILARIO, ROLLEO I. IGNACIO, ALBERTO M. GILLERA and HON. ABELARDO G. PALAD, JR., in their official and/or private capacities, respondents. ROMERO, J.:p Petitioners Desamparado Vda.de Nazareno and Leticia Nazareno Tapia challenge the decision of the Court of Appeals which affirmed the dismissal of petitioners' complaint by the Regional Trial Court of Misamis Oriental, Branch 22. The complaint was for annulment of the verification, report and recommendation, decision and order of the Bureau of Lands regarding a parcel of public land. The only issue involved in this petition is whether or not petitioners exhausted administrative remedies before having recourse to the courts. The subject of this controversy is a parcel of land situated in Telegrapo, Puntod, Cagayan de Oro City. Said land was formed as a result of sawdust dumped into the dried-up Balacanas Creek and along the banks of the Cagayan river. Sometime in 1979, private respondents Jose Salasalan and Leo Rabaya leased the subject lots on which their houses stood from one Antonio Nazareno, petitioners' predecessor-in-interest. In the latter part of 1982, private respondents allegedly stopped paying rentals. As a result, Antonio Nazareno and petitioners filed a case for ejectment with the Municipal Trial Court of Cagayan de Oro City, Branch 4. A decision was rendered against private respondents, which decision was affirmed by the Regional Trial Court of Misamis Oriental, Branch 20. The case was remanded to the municipal trial court for execution of judgment after the same became final and executory. Private respondents filed a case for annulment of judgment before the Regional Trial Court of Misamis Oriental, Branch 24 which dismissed the same. Antonio Nazareno and petitioners again moved for execution of judgment but private respondents filed another case for certiorari with prayer for restraining order and/or writ of preliminary injunction with the Regional Trial Court of Misamis Oriental, Branch 25 which was likewise dismissed. The decision of the lower court was finally enforced with the private respondents being ejected from portions of the subject lots they occupied.. Before he died, Antonio Nazareno caused the approval by the Bureau of Lands of the survey plan designated as Plan Csd-106-00571 with a view to perfecting his title over the accretion area being claimed by him. Before the approved survey plan could be released to the applicant, however, it was protested by private respondents before the Bureau of Lands. In compliance with the order of respondent District Land Officer Alberto M. Gillera, respondent Land Investigator Avelino G. Labis conducted an investigation and rendered a report to the Regional Director recommending that Survey Plan No. MSI-10-06-000571-D (equivalent to Lot No. 36302, Cad. 237) in the name of Antonio Nazareno, be cancelled and that private respondents be directed to file appropriate public land applications. Based on said report, respondent Regional Director of the Bureau of Lands Roberto Hilario rendered a decision ordering the amendment of the survey plan in the name of Antonio Nazareno by segregating therefrom the areas occupied by the private respondents who, if qualified, may file public land applications covering their respective portions. Antonio Nazareno filed a motion for reconsideration with respondent Rolleo Ignacio, Undersecretary of the Department of Natural Resources and Officer-in-Charge of the Bureau of Lands who denied the motion. Respondent Director of Lands Abelardo Palad then ordered him to vacate the portions adjudicated to private respondents and remove whatever improvements they have introduced thereon. He also ordered that private respondents be placed in possession thereof. Upon the denial of the late Antonio Nazareno's motion for reconsideration, petitioners Desamparado Vda. de Nazareno and Leticia Tapia Nazareno, filed a case before the RTC, Branch 22 for annulment of the following: order of investigation by respondent Gillera, report and recommendation by respondent Labis, decision by respondent Hilario, order by respondent Ignacio

affirming the decision of respondent Hilario and order of execution by respondent Palad. The RTC dismissed the complaint for failure to exhaust administrative remedies which resulted in the finality of the administrative decision of the Bureau of Lands. On appeal, the Court of Appeals affirmed the decision of the RTC dismissing the complaint. Applying Section 4 of C.A. No. 141, as amended, it contended that the approval of the survey plan belongs exclusively to the Director of Lands. Hence, factual findings made by the Metropolitan Trial Court respecting the subject land cannot be held to be controlling as the preparation and approval of said survey plans belong to the Director of Lands and the same shall be conclusive when approved by the Secretary of Agriculture and Natural resources. 1 Furthermore, the appellate court contended that the motion for reconsideration filed by Antonio Nazareno cannot be considered as an appeal to the Office of the Secretary of Agriculture and Natural Resources, as mandated by C.A. No. 141 inasmuch as the same had been acted upon by respondent Undersecretary Ignacio in his capacity as Officer-in-charge of the Bureau of Lands and not as Undersecretary acting for the Secretary of Agriculture and Natural Resources. For the failure of Antonio Nazareno to appeal to the Secretary of Agriculture and Natural Resources, the present case does not fall within the exception to the doctrine of exhaustion of administrative remedies. It also held that there was no showing of oppressiveness in the manner in which the orders were issued and executed.. Hence, this petition. Petitioners assign the following errors: I. PUBLIC RESPONDENT COURT OF APPEALS IN A WHIMSICAL, ARBITRARY AND CAPRICIOUS MANNER AFFIRMED THE DECISION OF THE LOWER COURT WHICH IS CONTRARY TO THE PREVAILING FACTS AND THE LAW ON THE MATTER; II. PUBLIC RESPONDENT COURT OF APPEALS IN A WHIMSICAL, ARBITRARY AND CAPRICIOUS MANNER AFFIRMED THE DECISION OF THE LOWER COURT DISMISSING THE ORIGINAL CASE WHICH FAILED TO CONSIDER THAT THE EXECUTION ORDER OF PUBLIC RESPONDENT ABELARDO G. PALAD, JR., DIRECTOR OF LANDS, MANILA, PRACTICALLY CHANGED THE DECISION OF PUBLIC RESPONDENT ROBERTO HILARIO, REGIONAL DIRECTOR, BUREAU OF LANDS, REGION 10, THUS MAKING THE CASE PROPER SUBJECT FOR ANNULMENT WELL WITHIN THE JURISDICTION OF THE LOWER COURT. The resolution of the above issues, however, hinges on the question of whether or not the subject land is public land. Petitioners claim that the subject land is private land being an accretion to his titled property, applying Article 457 of the Civil Code which provides: To the owners of lands adjoining the banks of rivers belong the accretion which they gradually receive from the effects of the current of the waters. In the case of Meneses v. CA, 2 this Court held that accretion, as a mode of acquiring property under Art. 457 of the Civil Code, requires the concurrence of these requisites : (1) that the deposition of soil or sediment be gradual and imperceptible; (2) that it be the result of the action of the waters of the river (or sea); and (3) that the land where accretion takes place is adjacent to the banks of rivers (or the sea coast). These are called the rules on alluvion which if present in a case, give to the owners of lands adjoining the banks of rivers or streams any accretion gradually received from the effects of the current of waters. For petitioners to insist on the application of these rules on alluvion to their case, the abovementioned requisites must be present. However, they admit that the accretion was formed by the dumping of boulders, soil and other filling materials on portions of the Balacanas Creek and the Cagayan River bounding their land. 3 It cannot be claimed, therefore, that the accumulation of such boulders, soil and other filling materials was gradual and imperceptible, resulting from the action of the waters or the current of the Balacanas Creek and the Cagayan River. In Hilario v. City of Manila, 4 this Court held that the word "current" indicates the participation of the body of water in the ebb and flow of waters due to high and low tide. Petitioners' submission not having met the first and second requirements of the rules on alluvion, they cannot claim the rights of a riparian owner. In any case, this court agrees with private respondents that petitioners are estopped from denying the public character of the subject land, as well as the jurisdiction of the Bureau of Lands when the late Antonio Nazareno filed his Miscellaneous Sales Application MSA (G-6) 571. 5 The mere filing of said Application constituted an admission that the land being applied for was public land, having

been the subject of Survey Plan No. MSi-10-06-000571-D (Equivalent to Lot No. 36302, Cad-237) which was conducted as a consequence of Antonio Nazareno's Miscellaneous Sales Application wherein said land was described as an orchard. Said description by Antonio Nazareno was, however, controverted by respondent Labis in his investigation report to respondent Hilario based on the findings of his ocular inspection that said land actually covers a dry portion of Balacanas Creek and a swampy portion of Cagayan River. The investigation report also states that, except for the swampy portion which is fully planted to nipa palms, the whole area is fully occupied by a part of a big concrete bodega of petitioners and several residential houses made of light materials, including those of private respondents which were erected by themselves sometime in the early part of 1978. 6 Furthermore, the Bureau of Lands classified the subject land as an accretion area which was formed by deposits of sawdust in the Balacanas Creek and the Cagayan river, in accordance with the ocular inspection conducted by the Bureau of Lands. 7 This Court has often enough held that findings of administrative agencies which have acquired expertise because their jurisdiction is confined to specific matters are generally accorded not only respect but even finality. 8 Again, when said factual findings are affirmed by the Court of Appeals, the same are conclusive on the parties and not reviewable by this Court. 9 It is this Court's irresistible conclusion, therefore, that the accretion was man-made or artificial. In Republic v. CA, 10 this Court ruled that the requirement that the deposit should be due to the effect of the current of the river is indispensable. This excludes from Art. 457 of the Civil Code all deposits caused by human intervention. Putting it differently, alluvion must be the exclusive work of nature. Thus, in Tiongco v. Director of Lands, et al., 11 where the land was not formed solely by the natural effect of the water current of the river bordering said land but is also the consequence of the direct and deliberate intervention of man, it was deemed a man-made accretion and, as such, part of the public domain. In the case at bar, the subject land was the direct result of the dumping of sawdust by the Sun Valley Lumber Co. consequent to its sawmill operations. 12 Even if this Court were to take into consideration petitioners' submission that the accretion site was the result of the late Antonio Nazareno's labor consisting in the dumping of boulders, soil and other filling materials into the Balacanas Creek and Cagayan River bounding his land, 13 the same would still be part of the public domain. Having determined that the subject land is public land, a fortiori, the Bureau of Lands, as well as the Office of the Secretary of Agriculture and Natural Resources have jurisdiction over the same in accordance with the Public Land Law. Accordingly, the court a quo dismissed petitioners' complaint for non-exhaustion of administrative remedies which ruling the Court of Appeals affirmed. However, this Court agrees with petitioners that administrative remedies have been exhausted. Petitioners could not have intended to appeal to respondent Ignacio as an Officer-In-Charge of the Bureau of Lands. The decision being appealed from was the decision of respondent Hilario who was the Regional Director of the Bureau of Lands. Said decision was made "for and by authority of the Director of Lands". 14 It would be incongruous to appeal the decision of the Regional Director of the Bureau of Lands acting for the Director of the Bureau of Lands to an Officer-In-Charge of the Bureau of Lands. In any case, respondent Rolleo Ignacio's official designation was "Undersecretary of the Department of Agriculture and Natural Resources." He was only an "Officer-In-Charge" of the Bureau of Lands. When he acted on the late Antonio Nazareno's motion for reconsideration by affirming or adopting respondent Hilario's decision, he was acting on said motion as an Undersecretary on behalf of the Secretary of the Department. In the case of Hamoy v. Secretary of Agriculture and Natural Resources, 15 this Court held that the Undersecretary of Agriculture and Natural Resources may modify, adopt, or set aside the orders or decisions of the Director of Lands with respect to questions involving public lands under the administration and control of the Bureau of Lands and the Department of Agriculture and Natural Resources. He cannot, therefore, be said to have acted beyond the bounds of his jurisdiction under Sections 3, 4 and 5 of Commonwealth Act No. 141 16 As borne out by the administrative findings, the controverted land is public land, being an artificial accretion of sawdust. As such, the Director of Lands has jurisdiction, authority and control over the

same, as mandated under Sections 3 and 4 of the Public Land Law (C.A. No. 141) which states, thus: Sec. 3. The Secretary of Agriculture and Natural Resources shall be the exclusive officer charged with carrying out the provisions of this Act through the Director of Lands who shall act under his immediate control. Sec. 4. Subject to said control, the Director of Lands shall have direct executive control of the survey, classification, lease, sale or any other form of concession or disposition and management of the lands of the public domain, and his decisions as to questions of fact shall be conclusive when approved by the Secretary of Agriculture and Natural Resources. In connection with the second issue, petitioners ascribe whim, arbitrariness or capriciousness in the execution order of public respondent Abelardo G. Palad, the Director of Lands. This Court finds otherwise since said decision was based on the conclusive finding that the subject land was public land. Thus, this Court agrees with the Court of Appeals that the Director of Lands acted within his rights when he issued the assailed execution order, as mandated by the aforecited provisions. Petitioners' allegation that respondent Palad's execution order directing them to vacate the subject land practically changed respondent Hilario's decision is baseless. It is incorrect for petitioners to assume that respondent Palad awarded portions of the subject land to private respondents Salasalans and Rabayas as they had not yet been issued patents or titles over the subject land. The execution order merely directed the segregation of petitioners' titled lot from the subject land which was actually being occupied by private respondents before they were ejected from it. Based on the finding that private respondents were actually in possession or were actually occupying the subject land instead of petitioners, respondent Palad, being the Director of Lands and in the exercise of his administrative discretion, directed petitioners to vacate the subject land on the ground that private respondents have a preferential right, being the occupants thereof. While private respondents may not have filed their application over the land occupied by them, they nevertheless filed their protest or opposition to petitioners' Miscellaneous Sales Application, the same being preparatory to the filing of an application as they were in fact directed to do so. In any case, respondent Palad's execution order merely implements respondent Hilario's order. It should be noted that petitioners' own application still has to be given due course. 17 As Director of Lands, respondent Palad is authorized to exercise executive control over any form of concession, disposition and management of the lands of the public domain. 18 He may issue decisions and orders as he may see fit under the circumstances as long as they are based on the findings of fact. In the case of Calibo v. Ballesteros, 19 this Court held that where, in the disposition of public lands, the Director of Lands bases his decision on the evidence thus presented, he clearly acts within his jurisdiction, and if he errs in appraising the evidence, the error is one of judgment, but not an act of grave abuse of discretion annullable by certiorari. Thus, except for the issue of non-exhaustion of administrative remedies, this Court finds no reversible error nor grave abuse of discretion in the decision of the Court of Appeals. WHEREFORE, the petition is DISMISSED for lack of merit. G.R. No. L- 24548 October 27, 1983 WENCESLAO VlNZONS TAN, THE DIRECTOR OF FORESTRY, APOLONIO THE SECRETARY OF AGRICULTURE AND NATURAL RESOURCES JOSE Y. FELICIANO, respondentsappelllees, vs. THE DIRECTOR OF FORESTRY, APOLONIO RIVERA, THE SECRETARY OF AGRICULTURE AND N ATURAL RESOURCES JOSE Y. FELICIANO, respon dents-appellees,RAVAGO COMMERCIAL CO., JORGE LAO HAPPICK and ATANACIO MALLARI, intervenors, Camito V Pelianco Jr. for petitioner-appellant. Solicitor General for respondent Director. Estelito P. Mendoza for respondent Ravago Comm'l Co. Anacleto Badoy for respondent Atanacio Mallari. Mariano de Joya, Jr. for respondent Jorge Lao Happick, Jr.

MAKASIAR, J: This is an appeal from the order dated January 20, 1965 of the then Court of First Instance of Manila, Branch VII, in Civil Case No. 56813, a petition for certiorari, prohibition and mandamus with preliminary prohibitory injunction (p. 2. rec.), which dismissed the petition of petitioner-appellant Wenceslao Vinzons Tan on the ground that it does not state a sufficient cause of action, and upon the respondents-appellees' (Secretary of Agriculture and Natural resources and the Director of Forestry) motion to dismiss (p. 28, rec.). Sometime in April 1961, the Bureau of Forestry issued Notice No. 2087, advertising for public bidding a certain tract of public forest land situated in Olongapo, Zambales, provided tenders were received on or before May 22, 1961 (p. 15, CFI rec.). This public forest land, consisting of 6,420 hectares, is located within the former U.S. Naval Reservation comprising 7,252 hectares of timberland, which was turned over by the United States Government to the Philippine Government (P. 99, CFI rec.). On May 5, 1961, petitioner-appellant Wenceslao Vinzons Tan submitted his application in due form after paying the necessary fees and posting tile required bond therefor. Nine other applicants submitted their offers before the deadline (p. 29, rec.). Thereafter, questions arose as to the wisdom of having the area declared as a forest reserve or allow the same to be awarded to the most qualified bidder. On June 7, 1961, then President Carlos P. Garcia issued a directive to the Director of the Bureau of Forestry, which read as follows: It is desired that the area formerly covered by the Naval Reservation be made a forest reserve for watershed purposes. Prepare and submit immediately a draft of a proclamation establishing the said area as a watershed forest reserve for Olongapo, Zambales. It is also desired that the bids received by the Bureau of Forestry for the issuance of the timber license in the area during the public bidding conducted last May 22, 1961 be rejected in order that the area may be reserved as above stated. ... (SGD.) CARLOS P. GARCIA (pp. 98, CFI rec.). On August 3, 1961, Secretary Cesar M. Fortich of Agriculture and Natural Resources sustained the findings and re comendations of the Director of Forestry who concluded that "it would be beneficial to the public interest if the area is made available for exploitation under certain conditions," and We quote: Respectfully forwarded to the honorable, the Executive Secretary Malacanang. Manila inviting particular attention to the comment and recommendation of the Director of Forestry in the proceeding in indorsement in which this Of fice fully concurs. The observations of responsible forest officials are most revealing of their zeal to promote forest conservation and watershed protection especially in Olongapo, Zambales area. In convincing fashion, they have demonstrated that to declare the forest area involved as a forest reserve ratify than open it for timber exploitation under license and regulation would do more harm than of to the public interest. To convert the area into a forest reserve without an adequate forest protection force, would make of it a 'Free Zone and Logging Paradise,' to the ever 'Problem Loggers' of Dinalupihan, Bataan . . . an open target of timber smugglers, kaingineros and other forms of forest vandals and despoilers. On the other hand, to award the area, as planned, to a reputable and responsible licensee who shall conduct logging operations therein under the selective logging method and who shall be obliged to employ a sufficient number of forest guards to patrol and protect the forest consecration and watershed protection. Worthy of mention is the fact that the Bureau of Forestry had already conducted a public bidding to determine the most qualified bidder to whom the area advertised should be awarded. Needless to stress, the decision of the Director of Forestry to dispose of the area thusly was arrived at after much thought and deliberation and after having been convinced that to do so would not adversely affect the watershed in that sector. The result of the bidding only have to be announced. To be sure, some of the participating bidders like Mr. Edgardo Pascual, went to much expense in the hope of winning a virgin forest concession. To suddenly make a turn about of this decision without strong justifiable grounds, would cause the Bureau of Forestry and this Office no end of embarrassment.

In view of the foregoing, it is earnestly urged that the Director of Forestry be allowed to proceed with the announcement of the results of the bidding for the subject forest area (p. 13, CFI rec.). The Office of the President in its 4th Indorsement dated February 2, 1962, signed by Atty. Juan Cancio, Acting Legal Officer, "respectfully returned to the Honorable Secretary of the Department of Agriculture and Natural Resources for appropriate action," the papers subject of Forestry Notice No. 2087 which was referred to the Bureau of Forestry for decision (p. 14, CFI rec.). Finally, of the ten persons who submitted proposed the area was awarded to herein petitionerappellant Wenceslao Vinzons Tan, on April 15, 1963 by the Bureau of Forestry (p. 17, CFI rec.). Against this award, bidders Ravago Commercial Company and Jorge Lao Happick filed motions for reconsideration which were denied by the Director of Forestry on December 6, 1963. On May 30, 1963, the Secretary of Agriculture and Natural Resources Benjamin M. Gozon who succeeded Secretary Cesar M. Fortich in office issued General Memorandum Order No. 46, series of 1963, pertinent portions of which state: xxx xxx xxx SUBJECT: ... ... ... (D)elegation of authority to the Director of Forestry to grant ordinary timber licenses. 1. ... ... ... 2. The Director of Forestry is hereby authorized to grant (a) new ordinary timber licenses where the area covered thereby is not more than 3,000 hectares each; and (be the extension of ordinary timber licenses for areas not exceeding 5,000 hectares each; 3. This Order shall take effect immediately (p. 267, CFI rec.). Thereafter, Jose Y. Feliciano was appointed as Acting secretary of Agriculture and Natural Resources, replacing secretary Benjamin M. Gozon. Upon assumption of office he Immediately promulgate on December 19, 19b3 General memorandum Order No. 60, revoking the authority delegated to the Director of Forestry, under General Memorandum order No. 46, to grant ordinary timber licenses, which order took effect on the same day, December 19, 1963. Pertinent portions of the said Order read as follows: xxx xxx xxx SUBJECT: Revocation of General Memorandum Order No 46 dated May 30, 1963 1. In order to acquaint the undersigned with the volume and Nature of the work of the Department, the authority delegated to the Director of forestry under General Memorandum Order No. 46, dated May 30, 1963, to grant (a) new ordinary timber licenses where the area covered thereby is not more than 3,000 hectares each; and (b) the extension of ordinary timber licenses for areas not exceeding 3,000 hectares each is hereby revoked. Until further notice, the issuance of' new licenses , including amendments thereto, shall be signed by the secretary of Agriculture and Natural Resources. 2. This Order shall take effect immediately and all other previous orders, directives, circulars, memoranda, rules and regulations inconsistent with this Order are hereby revoked (p. 268, CFl rec.; Emphasis supplied). On the same date that the above-quoted memorandum took effect, December 19, 1963, Ordinary Timber License No. 20-'64 (NEW) dated April 22, 1963, in the name of Wenceslao Vinzons Tan, was signed by then Acting Director of Forestry Estanislao R. Bernal without the approval of the Secretary of Agriculture and Natural Resources. On January 6, 1964, the license was released by the Office of the Director of Forestry (p. 30, CFI rec.; p. 77, rec.). It was not signed by the Secretary of Agriculture and Natural Resources as required by Order No. 60 aforequoted. On February 12, 1964, Ravago Commercial Company wrote a letter to the Secretary of Agriculture and Natural Resources shall be considered by tile Natural Resources praying that, pending resolution of the appeal filed by Ravago Commercial Company and Jorge Lao Happick from the order of the Director of Forestry denying their motion for reconsideration, OTI No. 20-'64 in the name of Wenceslao V. Tan be cancelled or revoked on the ground that the grant thereof was irregular, anomalous and contrary to existing forestry laws, rules and regulations. On March 9, 1964, acting on the said representation made by Ravago Commercial Company, the Secretary of Agriculture and Natural Resources promulgated an order declaring Ordinary Timber License No. 20-'64 issued in the name of Wenceslao Vinzons Tan, as having been issued by the

Director of Forestry without authority, and is therefore void ab initio. The dispositive portion of said order reads as follows: WHEREFORE, premises considered, this Office is of the opinion and so holds that O.T. License No. 20-'64 in the name of Wenceslao Vinzons Tan should be, as hereby it is, REVOKED AND DECLARED without force and effect whatsoever from the issuance thereof. The Director of Forestry is hereby directed to stop the logging operations of Wenceslao Vinzons Tan, if there be any, in the area in question and shall see to it that the appellee shall not introduce any further improvements thereon pending the disposition of the appeals filed by Ravago Commercial Company and Jorge lao Happick in this case" (pp. 30-31, CFI rec.). Petitioner-appellant moved for a reconsideration of the order, but the Secretary of Agriculture and Natural Resources denied the motion in an Order dated March 25, 1964, wherein this paragraph appears: In this connection, it has been observed by the Acting Director of Forestry in his 2nd indorsement of February 12, 1964, that the area in question composes of water basin overlooking Olongapo, including the proposed Olongapo watershed Reservation; and that the United States as well as the Bureau of Forestry has earmarked this entire watershed for a watershed pilot forest for experiment treatment Concerning erosion and water conservation and flood control in relation to wise utilization of the forest, denudation, shifting cultivation, increase or decrease of crop harvest of agricultural areas influenced by the watershed, etc. .... (pp. 3839, CFI rec.; p. 78, rec.). On April 11, 1964, the Secretary of Agriculture and Natural Resources, acting on the separate appeals filed by Jorge Lao Happick and Ravago Commercial Company, from the order of the Director of Forestry dated April 15, 1963, awarding to Wenceslao Vinzons Tan the area under Notive No. 2087, and rejecting the proposals of the other applicants covering the same area, promulgated an order commenting that in view of the observations of the Director of Forestry just quoted, "to grant the area in question to any of the parties herein, would undoubtedly adversely affect public interest which is paramount to private interests," and concluding that, "for this reason, this Office is of the opinion and so holds, that without the necessity of discussing the appeals of the herein appellants, the said appeals should be, as hereby they are, dismissed and this case is considered a closed matter insofar as this Office is concerned" (p. 78, rec.). On April 18, 1964, on the basis of the denial of his motion for reconsideration by the Secretary of Agriculture and Natural Resources, petitioner-appellant filed the instant case before tile court a quo (Court of First Instance, Manila), Special Civil Action No. 56813, a petition for certiorari, prohibition and mandamus with preliminary prohibitory injunction (pp. 1-12, CFI rec.). Petitioner-appellant claims that the respondents-appellees "unlawfully, illegally whimsically, capriciously and arbitrarily acted without or in excess of their jurisdiction, and/or with grave abuse of discretion by revoking a valid and existing timber license without just cause, by denying petitioner-appellant of the equal protection of the laws, by depriving him of his constitutional right to property without due process of law, and in effect, by impairing the obligation of contracts" (P. 6, CFI rec.). Petitioner-appellant prayed for judgment making permanent the writ of preliminary injunction against the respondentsappellees; declaring the orders of the Secretary of Agriculture and Natural Resources dated March 9, March 25, and April 11, 1964, as well as all his acts and those of the Director of Forestry implementing said orders, and all the proceedings in connection therewith, null and void, unlawful and of no force and effect; ordering the Director of Forestry to renew OTI No. 20-'64 upon expiration, and sentencing the respondents, jointly and severally, to pay the petitioner-appellant the sum of Two Hundred Thousand Pesos (P200,000.000) by way of pecuniary damage, One Hundred Thousand Pesos (P100,000.00) by way of moral and exemplary damages, and Thirty Thousand Pesos (P30,000-00) as attorney's fees and costs. The respondents-appellees separately filed oppositions to the issuance of the writ of preliminary injunction, Ravago Commercial Company, Jorge Lao, Happick and Atanacio Mallari, presented petitions for intervention which were granted, and they too opposed the writ. The Director of Forestry in his motion to dismiss dated April 24, 1964, alleges the following grounds: (1) that the court has no jurisdiction; (2) that the respondents may not be sued without their consent; (3) that the petitioner has not exhausted all available administrative remedies; (4) that the petition does not state a cause of action; and (5) that purely administrative and discretionary functions of administrative officials may not be interfered with by the courts. The Secretary of

Agriculture and Natural Resources joined the motion to dismiss when in his answer of May 18, 1964, he avers the following special and affirmative defenses: (1) that the court has no jurisdiction to entertain the action for certiorari, prohibition and mandamus; (2) that the petitioner has no cause of action; (3) that venue is improperly laid; (4) that the State is immune from suit without its consent; (5) that the court has no power to interfere in purely administrative functions; and (6) that the cancellation of petitioner's license was dictated by public policy (pp. 172-177, rec.). Intervenors also filed their respective answers in intervention with special and affirmative defenses (pp. 78-79, rec.). A hearing was held on the petition for the issuance of writ of preliminary injunction, wherein evidence was submitted by all the parties including the intervenors, and extensive discussion was held both orally and in writing. After the said hearing, on January 20, 1965, the court a quo, from the evidence received, resolved not only the question on the issuance of a writ of preliminary injunction but also the motion to dismiss, declared that the petition did not state a sufficient cause of action, and dismissed the same accordingly. To justify such action, the trial court, in its order dismissing the petition, stated that "the court feels that the evidence presented and the extensive discussion on the issuance of the writ of preliminary mandatory and prohibitory injunction should also be taken into consideration in resolving not only this question but also the motion to dismiss, because there is no reason to believe that the parties will change their stand, arguments and evidence" (p. 478, CFI rec.). His motion for reconsideration having been denied (p. 488, CFI rec.), petitioner-appellant Wenceslao Vinzons Tan appealed directly to this Court. I Petitioner-appellant now comes before this Court, claiming that the trial court erred in: (1) holding that the petition does not state a sufficient cause of action: and (2) dismissing the petition [p.27,rec. ]. He argues that the sole issue in the present case is, whether or not the facts in the petition constitute a sufficient cause of action (p. 31, rec.). Petitioner-appellant, in his brief, presented a lengthy discussion on the definition of the term cause of action wherein he contended that the three essential elements thereon, namely, the legal right of the plaintiff, the correlative obligation of the defendants and the act or omission of the defendant in violation of that right are satisfied in the averments of this petition (pp. 31-32, rec.). He invoked the rule that when the ground for dismissal is that the complaint states no cause of action, such fact can be determined only from the facts alleged in the complaint and from no other, and the court cannot consider other matters aliunde He further invoked the rule that in a motion to dismiss based on insufficiency of cause of action, the facts alleged in the complaint are deemed hypothetically admitted for the purpose of the motion (pp. 32-33, rec.). A perusal of the records of the case shows that petitioner-appellant's contentions are untenable. As already observed, this case was presented to the trial court upon a motion to dismiss for failure of the petition to state a claim upon which relief could be granted (Rule 16 [g], Revised Rules of Court), on the ground that the timber license relied upon by the petitioner- appellant in his petition was issued by the Director of Forestry without authority and is therefore void ab initio. This motion supplanted the general demurrer in an action at law and, as a rule admits, for the purpose of the motion, ail facts which are well pleaded however while the court must accept as true all well pleaded facts, the motion does not admit allegations of which the court will take judicial notice are not true, nor does the rule apply to legally impossible facts, nor to facts inadmissible in evidence, nor to facts which appear by record or document included in the pleadings to be unfounded (Vol. 1, Moran's Comments on the Rules of Court, 1970 ed., p. 505, citing cases). It must be noted that there was a hearing held in the instant case wherein answers were interposed and evidence introduced. In the course of the hearing, petitioner-appellant had the opportunity to introduce evidence in support of tile allegations iii his petition, which he readily availed of. Consequently, he is estopped from invoking the rule that to determine the sufficiency of a cause of action on a motion to dismiss, only the facts alleged in the complaint must be considered. If there were no hearing held, as in the case of Cohen vs. U.S. CCA Minn 1942,129 F. 2d 733), "where the case was presented to District Court upon a motion to dismiss because of alleged failure of complaint to state a claim upon which relief could be granted, and no answer was interposed and no evidence introduced, the only facts which the court could properly consider in passing upon the

motion were those facts appearing in the complaint, supplemented be such facts as the court judicially knew. In Llanto vs. Ali Dimaporo, et al. (16 SCRA 601, March 31, 1966), this Court, thru Justice Conrado V. Sanchez, held that the trial court can properly dismiss a complaint on a motion to dismiss due to lack of cause of action even without a hearing, by taking into consideration the discussion in said motion and the opposition thereto. Pertinent portion of said decision is hereby quoted: Respondents moved to dismiss. Ground therefor is lack of cause of action. The Court below granted the motion, dismissed the petition. The motion to reconsider failed. Offshoot is this appeal. 1. The threshold questions are these: Was the dismissal order issued without any hearing on the motion to dismiss? Is it void? WE go to the record. The motion to dismiss was filed on February 1, 1961 and set for hearing on February 10 following. On February 8, 1961 petitioner's counsel telegraphed the court, (r)equest postponement motion dismissal till written opposition filed.' He did not appear at the scheduled hearing. But on March 4, 1961, he followed up his wire, with his written opposition to the motion to dismiss. Adverting to the 5-page motion to dismiss and the 6-page opposition thereto, We find that the arguments pro and con on the question of the board's power to abolish petitioner's position to discussed the problem said profusely cited authorities. The May 15, 1961 8-page court order recited at length the said arguments and concluded that petitioner made no case. One good reason for the statutory requirement of hearing on a motion as to enable the suitors to adduce evidence in support of their opposing claims. But here the motion to dismiss is grounded on lack of cause of action. Existence of a cause of action or lack of it is determined be a reference to the facts averred in the challenged pleading. The question raised in the motion is purely one of law. This legal issue was fully discussed in said motion and the opposition thereto. In this posture, oral arguments on the motion are reduced to an unnecessary ceremony and should be overlooked. And, correctly so, because the other intendment of the law in requiring hearing on a motion, i.e., 'to avoid surprises upon the opposite party and to give to the latter time to study and meet the arguments of the motion,' has been sufficiently met. And then, courts do not exalt form over substance (Emphasis supplied). Furthermore even if the complaint stated a valid cause of action, a motion to dismiss forinsufficiency of cause of action will be granted if documentary evidence admitted by stipulation disclosing facts sufficient to defeat the claim enabled the court to go beyond disclosure in the complaint (LOCALS No. 1470, No. 1469, and No. 1512 of the International Longshoremen's Association vs. Southern Pacific Co., 6 Fed. Rules Service, p. 107; U.S. Circuit Court of Appeals, Fifth Circuit, Dec. 7, 1952; 131 F. 2d 605). Thus, although the evidence of the parties were presented on the question of granting or denying petitioner-appellant's application for a writ of preliminary injunction, the trial court correctly applied said evidence in the resolution of the motion to dismiss. Moreover, in applying said evidence in the resolution of the motion to dismiss, the trial court, in its order dismissing the petition, pointed out that, "there is no reason to believe that the parties will change their stand, arguments and evidence" (p. 478, CFI rec.). Petitioner-appellant did not interpose any objection thereto, nor presented new arguments in his motion for reconsideration (pp. 482-484, CFI rec.). This omission means conformity to said observation, and a waiver of his right to object, estopping him from raising this question for the first time on appeal. " I question not raised in the trial court cannot be raised for the first time on appeal" (Matienzo vs. Servidad, Sept. 10, 1981, 107 SCRA 276). Moreover, petitioner-appellant cannot invoke the rule that, when the ground for asking dismissal is that the complaint states no cause of action, its sufficiency must be determined only from the allegations in the complaint. "The rules of procedure are not to be applied in a very rigid, technical sense; rules of procedure are used only to help secure substantial justice. If a technical and rigid enforcement of the rules is made, their aim would be defeated. Where the rules are merely secondary in importance are made to override the ends of justice; the technical rules had been misapplied to the prejudice of the substantial right of a party, said rigid application cannot be countenanced" (Vol. 1, Francisco, Civil Procedure, 2 ed., 1973, p. 157, citing cases). What more can be of greater importance than the interest of the public at large, more particularly the welfare of the inhabitants of Olongapo City and Zambales province, whose lives and properties are directly and immediately imperilled by forest denudation.

The area covered by petitioner-appellant's timber license practically comprises the entire Olongapo watershed (p. 265, CFI rec.). It is of public knowledge that watersheds serves as a defense against soil erosion and guarantees the steady supply of water. As a matter of general policy, the Philippine Constitution expressly mandated the conservation and proper utilization of natural resources, which includes the country's watershed. Watersheds in the Philippines had been subjected to rampant abusive treatment due to various unscientific and destructive land use practices. Once lush watersheds were wantonly deforested due to uncontrolled timber cutting by licensed concessionaries and illegal loggers. This is one reason why, in paragraph 27.of the rules and regulations included in the ordinary timber license it is stated: The terms and conditions of this license are subject to change at the discretion of the Director of Forestry, and that this license may be made to expire at an earlier date, when public interests so require (Exh. D, p. 22, CFI rec.). Considering the overriding public interest involved in the instant case, We therefore take judicial notice of the fact that, on April 30, 1964, the area covered by petitioner-appellant's timber license has been established as the Olongapo Watershed Forest Reserve by virtue of Executive Proclamation No. 238 by then President Diosdado Macapagal which in parts read as follows: Pursuant to the provisions of Section 1824 of the Revised Administrative Code, as amended, 1, Diosdado Macapagal, President of the Philippines do hereby withdraw from entry, sale, or settlement and establish as Olongapo Watershed Forest Reserve for watershed, soil protection, and timber production purposes, subject to private rights, if any there be, under the administration and control of the Director of Forestry, xx the following parcels of land of the public domain situated in the municipality of Olongapo, province of Zambales, described in the Bureau of Forestry map No. FR-132, to wit: ... ...(60 O.G. No. 23, 3198). Petitioner-appellant relies on Ordinary Timber License No. 20-'64 (NEW) for his alleged right over the timber concession in question. He argues thus: "The facts alleged in the petition show: (1) the legal right of the petitioner to log in the area covered by his timber license; (2) the legal or corresponding obligation on the part of the respondents to give effect, recognize and respect the very timber license they issued to the petitioner; and (3) the act of the respondents in arbitrarily revoking the timber license of the petitioner without giving him his day in court and in preventing him from using and enjoying the timber license issued to him in the regular course of official business" (p. 32, rec.). In the light of petitioner-appellant's arguments, it is readily seen that the whole controversy hinges on the validity or invalidity of his timber license. WE fully concur with the findings of the trial court that petitioner- appellant's timber license was signed and released without authority by then Acting Director Estanislao R. Bernal of Forestry, and is therefore void ab initio. WE hereby quote such findings: In the first place, in general memorandum order No. 46 dated May 30, 1963, the Director of Forestry was authorized to grant a new ordinary timber license only where the area covered thereby was not more than 3,000 hectares; the tract of public forest awarded to the petitioner contained 6,420 hectares (Exhs. 2-A and 2-B Ravago, embodied in Annex B; Exh. B). The petitioner contends that only 1,756 hectares of the said area contain commercial and operable forest; the authority given to the Director of Forestry to grant a new ordinary timber license of not more than 3,000 hectares does not state that the whole area should be commercial and operable forest. It should be taken into consideration that the 1,756 hectares containing commercial and operable forest must have been distributed in the whole area of 6,420 hectares. Besides the license states, 'Please see attached sketch and technical description,' gives an area of 6,420 hectares and does not state what is the area covered of commmercial and operable forest (Exh. Ravago Also Annex B of the petition, which was marked as Exhibit B, states: Under Notice No. 2087, a tract of public forest containing 6,420 hectares located in Olongapo, Zambales was declared available for timber utilization and development. Pursuant to this Notice, there were received bid proposals from the following persons: ... Wherefore, confirming the findings of said Committee, the area described in Notice No. 2087 shall be awarded, as it is hereby awarded to Wenceslao Vinzons Tan, subject to the following conditions: ... ...

In the second place, at the time it was released to the petitioner, the Acting Director of Forestry had no more authority to grant any license. The license was signed by the Acting Director of Forestry on December 19, 1963, and released to the petitioner on January 6, 1964 (Exh. RavaGo The authority delegated to the Director of Forestry to grant a new ordinary timber license was contained in general memorandum order No. 46 dated May 30, 1963. This was revoked by general memorandum order No. 60, which was promulgated on December 19, 1963. In view thereof, the Director of Forestry had no longer any authority to release the license on January 6, 1964, and said license is therefore void ab initio (pp. 479480, CFI rec.). The release of the license on January 6, 1964, gives rise to the impression that it was ante-dated to December 19, 1963 on which date the authority of the Director of Forestry was revoked. But, what is of greatest importance is the date of the release or issuance, and not the date of the signing of the license. While petitioner-appellant's timber license might have been signed on December 19, 1963 it was released only on January 6, 1964. Before its release, no right is acquired by the licensee. As pointed out by the trial court, the Director of Forestry had no longer any authority to release the license on January 6, 1964. Therefore, petitioner-appellant had not acquired any legal right under such void license. This is evident on the face of his petition as supplemented by its annexes which includes Ordinary Timber License No. 20-'64 (NEW). Thus, in the case of World Wide Insurance & Surety Co., Inc. vs. Macrohon, et al. (105 Phil. 250, Feb. 28, 1959), this Court held that if from the face of the complaint, as supplemented by its annexes, plaintiff is not the owner, or entitled to the properties it claims to have been levied upon and sold at public auction by the defendants and for which it now seeks indemnity, the said complaint does not give plaintiff any right of action against the defendants. In the same case, this Court further held that, in acting on a motion to dismiss, the court cannot separate the complaint from its annexes where it clearly appears that the claim of the plaintiff to be the A owner of the properties in question is predicated on said annexes. Accordingly, petitioner-appellant's petition must be dismissed due to lack of cause of action. II Petitioner-appellant, in his petition, alleged that he has exhausted all his administrative remedies to no avail as respondents-appellees have failed, neglected, refused and continue to refuse to allow petitioner-appellant to continue operation in the area covered by his timber license. He further alleged that he has neither recourse by way of appeal, nor any plain, speedy and adequate remedy in the ordinary course of law except thru this special civil action, as the last official act of the respondent-appellee Secretary of Agriculture and Natural Resources in declaring void the timber license referred to above after denying petitioner-appellant's motion for reconsideration, is the last administrative act. Petitioner-appellant relies on the case of Demaisip vs. The Court of Appeals, et al. (106 Phil. 237, Sept. 24, 1959), wherein it was held that the failure of the plaintiff to appeal from the adverse decision of the Secretary to the President cannot preclude the plaintiff from taking court action in view of the theory that the Secretary of a department is merely an alter-ego of the President. The presumption is that the action of the Secretary bears the implied sanction of the President unless the same is disapproved by the latter (Villena vs. the Secretary of Interior, 67 Phil. 451; p. 7, CFI rec.). To this We cannot agree. Petitioner-appellant did not appeal the order of the respondent Secretary of Agriculture and Natural Resources to the President of the Philippines, who issued Executive Proclamation No. 238 withdrawing the area from private exploitation, and establishing it as the Olongapo Watershed Forest Reserve. Considering that the President has the power to review on appeal the orders or acts of the respondents-appellees, the failure of the petitioner-appellant to take that appeal is failure on his part to exhaust his administrative remedies. Thus, this Court, in the case of Calo vs. Fuertes (5 SCRA 399, 400, June 29, 1962), held that: At any rate, the appellant's contention that, as the Secretary of Agriculture and Natural Resources is the alter ego of the President and his acts or decisions are also those of the latter, he need not appeal from the decision or opinion of the former to the latter, and that, such being the case, after he had appealed to the Secretary of Agriculture and Natural Resources from the decision or opinion of the Director of Lands he had exhausted the administrative remedies, is untenable.

The withdrawal of the appeal taken to the President of the Philippines is tantamount to not appealing all thereto. Such withdrawal is fatal, because the appeal to the President is the last step he should take in an administrative case. In 1912, in the case of Lamb vs. Phipps (22 Phil. 491-92, July 22, 1912), this Court stressed the doctrine of exhaustion of administrative remedies, thus: When a plain, adequate and speedy remedy is afforded by and within the executive department of the government the courts will not interfere until at least that remedy has been exhausted. Jao Igco vs. Shuster, 10 Phil. Rep. 448; Ekiu vs. U.S., 142 U.S. 651; U.S. vs. Sing Tuck, 194 U.S. 161; U.S. vs. Ju Toy 198 U.S. 253; Chill Yow vs. U.S., 28 Sup. Ct. Rep. 201). The administrative remedies afforded by law must first be exhausted before resort can be had to the courts, especially when the administrative remedies are by law exclusive and final. Some matters and some questions are by law delegated entirely and absolutely to the discretion of particular branches of the executive department of the government. When the law confers exclusive and final jurisdiction upon the executive department of the government to dispose of particular questions, their judgments or the judgments of that particular department are no more reviewable by the courts than the final judgment or decisions of the courts are subject to be reviewed and modified by them" (emphasis supplied). Moreover, this being a special civil action, petitioner-appellant must allege and prove that he has no other speedy and adequate remedy (Diego vs. The Court of Appeals, et al., 54 Off. Gaz., No. 4, 956). In the case at bar, petitioner- appellant's speedy and adequate remedy is an appeal to the President of the Philippines. Accordingly, "it is settled to the point of being elementary that the only question involved n certiorari is jurisdiction, either want of jurisdiction or excess thereof, and abuse of discretion shall warrant the issuance of the extraordinary remedy of certiorari when the same is so grave as when the power is exercised in an arbitrary or despotic manner by reason of passion, prejudice or personal hostility, and it must be so patent and gross as to amount to an evasion of positive duty, or to a virtual refusal to perform a duty enjoined, or to act at all in contemplation of law" FS Divinagracia AgroCommercial Inc. vs. Court of Appeals, 104 SCRA 191 [April .1, 1981]). The foregoing is on the assumption that there is any irregularity, albeit there is none in the acts or omissions of the respondents-appellees. certiorari is not a substitute for appeal as held time and again by this Court (People vs. Villanueva, 110 SCRA 465), "it being a time honored and well known principle that before seeking judicial redress, a party must first exhaust the administrative remedies available" (Garcia vs. Teehankee, 27 SCRA 944, April 18, 1969). Moreover, from the decision of the Secretary of Agriculture and Natural Resources complained of, petitioners had a plain, speedy and adequate remedy by appealing therefrom to the Chief Executive. In other words, before filing the present action for certiorari in the court below, they should have availed of this administrative remedy and their failure to do so must be deemed fatal to their case [Calo vs. Fuertes, et al., G.R. No. L-16537, June 29,1962]. To place petitioners' case beyond the pale of this rule, they must show that their case falls which it does not within the cases where, in accordance with our decisions, the aggrieved party need not exhaust administrative remedies within his reach in the ordinary course of the law [Tapales vs. The President and the Board of Regents of the U.P., G.R. No. L-17532, March 30, 1963; Mangubat vs. Osmena, G.R. No. L- 12837, April 30, 1959; Baguio vs. Hon. Jose Rodriguez, G. R. No. L-11078, May 27, 1959; Pascual vs. Provincial Board, G.R. No. L-11959, Oct. 31, 1959; Marinduque Iron Mines, etc. vs. Secretary of Public Works, G.R. No. L-15982, May 31, 1963; Alzate vs. Aldaba, G.R. No. L-14407, Feb. 29, 1960 and Demaisip vs. Court of Appeals, G.R. No. L- 13000, Sept. 25, 1959] (Ganob vs. Ramas, 27 SCRA 1178, April 28, 1969). III Petitioner-appellant not only failed to exhaust his administrative remedies, but also failed to note that his action is a suit against the State which, under the doctrine of State immunity from suit, cannot prosper unless the State gives its consent to be sued Kawananakoa vs. Polybank, 205 U.S. 349; Siren vs. U.S., 7 Wall. 152; Sec. 16, Art. XV, 1973 Constitution). The respondents-appellees, in revoking the petitioner-appellant's timber license, were acting within the scope of their authority. Petitioner-appellant contends that "this case is not a suit against the State but an application of a sound principle of law whereby administrative decisions or actuations

may be reviewed by the courts as a protection afforded the citizens against oppression" (p. 122, CFI rec.). But, piercing the shard of his contention, We find that petitioner-appellant's action is just an attempt to circumvent the rule establishing State exemption from suits. He cannot use that principle of law to profit at the expense and prejudice of the State and its citizens. The promotion of public welfare and the protection of the inhabitants near the public forest are property, rights and interest of the State. Accordingly, "the rule establishing State exeraiption from suits may not be circumvented by directing the action against the officers of the State instead of against the State itself. In such cases the State's immunity may be validly invoked against the action as long as it can be shown that the suit really affects the property, rights, or interests of the State and not merely those of the officer nominally made party defendant" (SINCO, Phil. Political Law, 10th ed., p. 35; Salgado vs. Ramos, 64 Phil. 724; see also Angat River Irrigation System vs. Angat River Workers' Union, G.R. No. L-10943-44, Dec. 28, 1957, 102 Phil. 789, 800-802; Mobil PhiL vs. Customs Arrastre Service, 18 SCRA 1120, 1121-1125; Bureau of Printing vs. Bureau of Printing Employees' Association, 1 SCRA 340, 341, 343). Both the Secretary of Agriculture and Natural Resources and the Director of Forestry acted in their capacity as officers of the State, representatives of the sovereign authority discharging governmental powers. A private individual cannot issue a timber license. Consequently, a favorable judgment for the petitioner-appellant would result in the government losing a substantial part of its timber resources. This being the case, petitioner-appellant's action cannot prosper unless the State gives its consent to be sued. IV Granting arguendo, that petitioner-appellant's timber license is valid, still respondents-appellees can validly revoke his timber license. As pointed out earlier, paragraph 27 of the rules and regulations included in the ordinary timber license states: "The terms and conditions of this license are subject to change at the discretion of the Director of Forestry, and that this license may be made to expire at an earlier date, when public interests so require " (Exh. D, p. 22, CFI rec.). A timber license is an instrument by which the State regulates the utilization and disposition of forest resources to the end that public welfare is promoted. A timber license is not a contract within the purview of the due process clause; it is only a license or privilege, which can be validly withdrawn whenever dictated by public interest or public welfare as in this ceise "A license is merely a permit or privilege to do what otherwise would be unlawful, and is not a contract between the authority, federal, state, or municipal, granting it and the person to whom it is granted; neither is it property or a property right, nor does it create a vested right; nor is it taxation" (37 C.J. 168). Thus, this Court held that the granting of license does not create irrevocable rights, neither is it property or property rights (People vs. Ong Tin 54 O.G. 7576). In the case of Pedro vs. Provincial Board of Rizal (56 Phil. 123), it was held that: A license authorizing the operation and exploitation of a cockpit is not property of which the holder may not be deprived without due process of law, but a mere privilege which may be revoked when public interests so require. The welfare of the people is the supreme law. Thus, no franchise or right can be availed of to defeat the proper exercise of police power (Surigao Electric Co., Inc. vs. Municipality of Surigao, 24 SCRA 898, Aug. 30, 1968). The State has inherent power enabling it to prohibit all things hurtful to comfort, safety, and welfare of society (Edu vs. Ericta, 35 SCRA 481, Oct. 24,1970). V As provided in the aforecited provision, timber licenses are subject to the authority of the Director of Forestry. The utilization and disposition of forest resources is directly under the control and supervision of the Director of Forestry. However, "while Section 1831 of the Revised Administrative Code provides that forest products shall be cut, gathered and removed from any forest only upon license from the Director of Forestry, it is no less true that as a subordinate officer, the Director of Forestry is subject to the control of the Department Head or the Secretary of Agriculture and Natural Resources (See. 79[c], Rev. Adm. Code), who, therefore, may impose reasonable regulations in the exercise of the powers of the subordinate officer" (Director of Forestry vs. Benedicto, 104 SCRA 309, May 5, 1981). The power of control of the Department Head over bureaus and offices includes the power to modify, reverse or set aside acts of subordinate officials (Province of Pangasinan vs. Secretary of Public Works and Communications, 30 SCRA 134, Oct.

31, 1969; Montano vs. Silvosa, 97 Phil. 143, 144, 147-148). Accordingly, respondent-appellee Secretary of Agriculture and Natural Resources has the authority to revoke, on valid grounds, timber licenses issued by the Director of Forestry. There being supporting evidence, the revocation of petitioner-appellant's timber license was a wise exercise of the power of the respondentappellee (Secretary of Agriculture and Natural Resources) and therefore, valid. Thus, "this Court had rigorously adhered to the principle of conserving forest resources, as corollary to which the alleged right to them of private individuals or entities was meticulously inquired into and more often than not rejected. We do so again" (Director of Forestry vs. Benedicto, supra). WE reiterate Our fidelity to the basic policy of conserving the national patrimony as ordained by the Constitution. WHEREFORE, IN VIEW OF ALL THE FOREGOING, THE ORDER APPEALED FROM IS HEREBY .AFFIRMED IN TOTO. COSTS AGAINST PETITIONER-APPELLANT. G.R. No. L-16537 June 29, 1962 FRANCISCO C. CALO, petitioner-appellant, vs. DELFIN C. FUERTES, DIRECTOR OF LANDS and SECRETARY OF AGRICULTURE AND NATURAL RESOURCES, respondents-appellees. Calo, Calo and Calo for petitioner-appellant. Ismael B. Sanchez and Jalandoni and Jamir for respondent-appellee Delfin C. Fuertes. Office of the Solicitor General for respondent-appellee Director of Lands and Secretary of Agriculture and Natural Resources. PADILLA, J.: In Bureau of Lands Claim No. 224 (N), Lot No. 143-A, Cadastral Case No. 84, Butuan City entitled Francis C. Calo, claimant-contestant, vs. H.A. No. 86871 (E-40476) Delfin C. Fuertes, applicantrespondent, the Director of Lands rendered on 12 April 1956 an opinion denying a dismissing former's claim and contest against the Homestead Application No. 86871 (E-40476) of Delfin C. Fuertes, was ordering him to vacate the premises within sixty days from receipt of a copy of the opinion, and stating that upon finality thereof homestead patent would be issued to Delfin C. Fuertes. His request for reconsideration having been denied by the Director of Lands on 25 January 1957, Francisco C. Calo brought to the Secretary of Agriculture and Natural Resources the case, docketed as DANR case No. 1549. On 28 February 1958 the Secretary of Agriculture and Natural Resources modified the opinion of the Director of Lands . . . in the sense that Delfin C. Fuertes should reimburse Francisco C. Calo of the difference between the value of the improvements the latter introduced on the land in controversy and the value of the consequential benefits derived by him therefrom within thirty (30) days from advice by the Director of Lands who is hereby directed to determine the aforementioned difference within sixty (60) days from receipt of a copy of this decision. Still dissatisfied with the above opinion, Francisco C. Calo asked the Secretary of Agriculture and Natural Resources to reconsider it but the latter denied a reconsideration thereof. Hence, on 1 August 1958 Francisco C. Calo appealed to the President of the Philippines (Annex A Answer, p. 54, rec. of case No. 55), but on 8 August 1958 he withdrew it before the President of the Philippines could act thereon (Annex A to memorandum of the petitioner, p. 64, rec. of case No. 55). On 22 August 1958 Francisco C. Calo filed in the Court of First Instance of Agusan a petition for writs of certiorari and prohibition with preliminary injunction praying that the enforcement of the opinions of the Director of Lands and the Secretary of Agriculture and Natural Resources be enjoined; that if a bond be needed for the purpose he was willing to file it; that after hearing the injunction be made final and permanent; that the respondent Delfin C. Fuertes pay him P18,000 as damages and attorney's fees and costs of the suit; that he be declared the owner entitled to possess the parcel of land subject of the litigation; and for any other just and equitable relief (special civil case No. 55). On 24 December 1958 the respondent Delfin C. Fuertes filed an answer and, on 27 December 1958, an amended answer to the petition; on 29 December 1958 and 3 January 1959 the respondent Secretary of Agriculture and Natural Resources and the Director of Lands, respectively,

filed their answers. After a preliminary hearing as provided for in section 5, Rule 8, of the Rules of Court, on 31 July 1959 the court rendered judgment, the dispositive part of which is WHEREFORE, for failure to state a cause of action, for lack of jurisdiction and for not exhausting all the administrative remedies available to the petitioner in the ordinary course of law, the Court resolves to dismiss as it hereby dismisses the herein petition with costs against petitioner. The petitioner appealed, but as only a question of law is raised, the Court of Appeals certified the appeal to this Court. This appeal has not been perfected within the reglementary period, as provided for in section 17, Rule 41, for although the notice of appeal was filed on 31 August 1959 (p. 77, record of case No. 55) or on the 13th day from the receipt of case No. 55) the appeal bond was filed on 18 September 1959 (p. 78, record of case No. 55) or on the 31st day after notice of judgment. This is enough to dispose of the case.1wph1.t At any rate, the appellant's contention that, as the Secretary of Agriculture and Natural Resources is the alter ego of the President and his acts or decisions are also those of the latter, he need not appeal from the decision or opinion of the former to the latter, and that, such being the case, after he had appealed to the Secretary of Agriculture and Natural Resources from the decision or opinion of the Director of Lands he had exhausted all the administrative remedies, is untenable. The withdrawal of the appeal taken to the President of the Philippines is tantamount to not appealing at all thereto. Such withdrawal is fatal, because the appeal to the President is the last step he should take in an administrative case. Furthermore, a special civil action for certiorari and prohibition under Rule 67 of the Rules of Court lies only when "there is no appeal, nor any plain, speedy, and adequate remedy in the ordinary course of law." In the case at bar, appeal from an opinion or order by the Secretary of Agriculture and Natural Resources to the President of the Philippines is the plain, speedy and adequate remedy available to the petitioner.1 The judgment appealed from already had become final and cannot be reviewed. The appeal is dismissed, with costs against the petitioner-appellant.

G.R. No. L-12944 March 30, 1959 MARIA NATIVIDAD VDA. DE TAN, petitioner-appellee, vs. VETERANS BACKPAY COMMISSION, respondent-appellant. Atilano R. Cinco and Aguilan and Rosero Law Offices for appellee. Acting Solicitor General Guillermo E. Torres and Solicitor Camilo D. Quiason for appellant. REYES, J.B.L., J.: On March 5, 1957, petitioner-appellee, Maria Natividad vda. de Tan filed with the Court of First Instance of Manila a verified petition for mandamus seeking an order to compel the respondentappellant Veterans Back Pay Commission: (1) to declare deceased Lt. Tan Chiat Bee alias Tan Lian Lay, a Chinese national, entitled to backpay rights, privileges, and prerogatives under Republic Act No. 304, as amended by Republic Act No. 897; and (2) to give due course to the claim of petitioner, as the widow of the said veterans, by issuing to her the corresponding backpay certificate of indebtedness. Respondent Commission filed its answer in due time asserting certain special and affirmative defenses, on the basis of which, the Commission unsuccessfully moved to dismiss the petition. The parties then submitted a stipulation of facts hereinbelow reproduced:

Come now the petitioner and respondent in the above-entitled case through their respective counsel, and to this Honorable Court respectfully agree and stipulate that the following facts are true: 1. That the petitioner is of legal age, widow, and a resident of 400 Lallana, Tondo, Manila; that the respondent is a government instrumentality or agency, with offices in the City of Manila, Philippines, duly vested with authority to implement the provisions of the Backpay Law, otherwise known as Republic Act No. 879, further amending Republic Act No. 304; 2. That the petitioner is the widow of the late Lt. Tan Chiat Bee alias Tan Lian Lay, a Chinese national, and a bona fide member of the 1st Regiment, United States-Chinese Volunteers in the Philippines; 3. That the United States-Chinese Volunteers in the Philippines is a guerrilla organization duly recognized by the Army of the United States and forming part and parcel of the Philippine Army; 4. That Tan Chiat Bee alias Tan Lian Lay died in the service on April 4, 1945 in the battle at Ipo Dam, Rizal Province, Philippines; he was duly recognized as a guerrilla veteran and certified to by the Armed Forces of the Philippines as having rendered meritorious military services during the Japanese occupation; 5. That petitioner as the widow of the said recognized deceased veteran, filed an application for back pay under the provisions of Republic Act No. 897, the resolution of the Veterans Back Pay Commissions dated November 19, 1953 and the letter of the Veterans Back Pay Commission dated December 9, 1953; 6. That on June 18, 1955, the Secretary and the Chief of Office Staff of Veterans Back Pay Commission sent a letter to General Vicente Lopez of the United States-Chinese Volunteers in the Philippines apprising the latter that the Commission has reaffirmed its resolution granting the back pay to alien members; 7. That the Adjutant, Armed Forces of the Philippines, has verified and certified that deceased veteran has rendered service as a recognized guerrilla for the period indicated in his (Adjutant's) indorsement to the Chief, Finance Service Armed Forces of the Philippines; 8. That, likewise, the Chief of Finance Service, Camp Murphy, has computed the backpay due the petitioner and the same was passed in audit by representatives of the Auditor General; 9. That after due liberation respondent revoked its previous stands and ruled that aliens are not entitled to back pay; 10. That on February 13, 1957, the respondent Veterans Back Pay Commission, through its Secretary & Chief of Office Staff, made a formal reply to the aforesaid claim of the herein petitioner denying her request on the ground that aliens are not entitled to back pay; 11. That upon refusal of the Veterans Back Pay Commission the petitioner brought the case direct to this Honorable Court by way of mandamus; 12. That petitioner and respondent admit the existence and authenticity of the following documents; Annex AResolution of the Veterans Back Pay dated November 19, 1953. Annex BLetter dated December 9, 1953. Annex CLetter dated June 18, 1955. Annex DExecutive Order No. 21 dated October 28, 1944. Annex EExecutive Order No. 68 dated September 26, 1945. Annex FMinutes of the Resolution of the Back Pay Commission regarding the opinion of the Secretary of Justice dated February 8, 1956. Annex GLetter of Back Pay Commission dated February 26, 1954 to Secretary of Justice. Annex HOpinion No. 213 series of 1956 of the Secretary of Justice. Annex IReply of Veterans Backpay Commission. Annex JExplanatory Note to House Bill No. 1953. Annex KExplanatory note to Senate Bill No. 10. Annex LExplanatory note to House Bill No. 1228, now Republic Act No. 897. Annex MJoint Resolution No. 5 of the First Congress of the Philippines. 13. That the parties waive the presentation of further evidence; 14. That the respondents will file its memorandum within ten (10) days from August 1, 1957 and the petitioner may file her memorandum within ten (10) days from receipt of respondent's memorandum, after which the case is deemed submitted for decision.

Manila, July 31, 1957. Based on the foregoing, the lower court rendered judgment the dispositive portion of which, reads: Wherefore, the petition is granted, ordering respondent Commission to give due course to the claim of herein petitioner to the backpay to which her deceased husband was entitled as member of a duly recognized guerrilla organization. Against the decision, the respondent instituted this appeal averring once more, in its assignment of errors, the special and affirmative defenses that the petitioner failed to exhaust available administrative remedies; that the suit is, in effect, an action to enforce a money claim against the government without its consent; that mandamus will not lie to compel the exercise of a discretionary function; and that the Republic Act Nos. 304 and 897 already referred to were never intended to benefit aliens. We find no merit in the appeal. As to the claim that mandamus is not the proper remedy to correct the exercise of discretion of the Commission, it may well be remembered that its discretion is limited to the facts of the case, i.e., in merely evaluating the evidence whether or not the claimant is a member of a guerrilla force duly recognized by the United States Army. Nowhere in the law is the respondent Commission given the power to adjudicate or determine rights after such facts are established. Having been satisfied that deceased Tan Chiat Bee was an officer of a duly recognized guerrilla outfit, certified to by the Armed Forces of the Philippines, having served under the United States-Chinese Volunteers in the Philippines, a guerrilla unit recognized by the United States army and forming part of the Philippine Army, it becomes the ministerial duty of the respondent to give due course to his widow's application. (See sections 1 and 6, Republic Act 897). Note that the Chief of the Finance Service, Camp Murphy, has accepted the backpay due the petitioner's husband and the same was passed in audit by the representatives of the Auditor General. It is insisted by the respondent Commission that aliens are not included within the purview of the law. We disagree. The law is contained in Republic Act Nos. 304 and 897 is explicit enough, and it extends its benefits to members of "guerrilla forces duly recognized by the Army of the United States." From the plain and clear language thereof, we fail to see any indication that its operation should be limited to citizens of the Philippines only, for all that is required is that the guerrilla unit be duly recognized by the Army of the United States. We are in full accord with Opinion No. 213, series of 1956, of the Secretary of Justice, which reads: Section 1 of the cited Act (Republic act No. 304, as amended by Republic Act No. 897), otherwise known as the Back Pay Law, recognizes the rights to the backpay of members of "guerrilla forces duly recognized by the Army of the United States, among others. A perusal of its provisions reveals nothing which may be construed to mean that only Filipino citizens are entitled to back pay thereunder. On the contrary, the statute expressly includes within its coverage "persons under contract with the Government of the Commonwealth", which clause was construed by this office to refer to service" by the government (Opinion No. 137, s. 1953), a majority of whom were noncitizens. Thus, the Opinion No. 30, s. 1949, this office ruled that a civil service employee of the U.S. Coast and Geodetic Survey rendering the service to the Philippine Government when war broke out on December 8, 1941, was entitled to back pay. As regards guerrillas, it seems clear that all the law requires is that they be "duly recognized by the Army of the United States." Section 1 of the Back Pay Law, it is also noted, enumerates those who are not entitled to its benefits; recognized guerrillas who were not Filipino citizens are not among those expressly mentioned. The maxim expressio unius est exclusio alterius, I think, finds application here. Moreover, Executive Order No. 21, dated October 28, 1944, expressly declared that, Sections 22 (a) and 27 of Commonwealth Act No. 1 to the contrary notwithstanding, "all persons of any nationality or citizenship, who are actively serving in recognized military forces in the Philippines, are thereby considered to be on active service in the Philippine Army." It is the respondent's main argument that it could not have been the intention of Congress to extend its benefit to aliens, as the purpose of the law was "precisely to help rehabilitate members of the Armed Forces of the Philippines and recognized guerrillas by giving them the right to acquire public lands and public property by using the back pay certificate", and "it is fundamental under the Constitution that aliens except American citizens cannot acquire public lands or exploit our natural resources". Respondent Commission fails to realize that this is just one of the various uses of the

certificate; and that it may also be utilized for the payment of obligations to the Government or to any of its branches or instrumentalities, i.e., taxes, government hospital bills, etc. (See Sec. 2, Rep. act No. 897). As further observed by the lower court: It is one thing to be entitled to backpay and to receive acknowledgment therefor, and another thing to receive backpay certificates in accordance with the resolutions of the Commission and to make use of the same. It was, therefore, unreasonable if not arbitrary on the part of respondent Commission to deny petitioner's claim on the basis. It is further contended by the Commission that the petitioner should have first exhausted her administrative remedies by appealing to the President of the Philippines, and that her failure to do so is a bar to her action in court (Montes vs. The Civil Service Board of Appeals, 101 Phil., 490; 54 Off. Gaz. [7] 2174. The respondent Commission is in estoppel to invoke this rule, considering that in its resolution (Annex F of the Stipulation of Facts) reiterating its obstinate refusal to abide by the opinion of the Secretary of Justice, who is the legal adviser of the Executive Department, the Commission declared that The opinions promulgated by the Secretary of Justice are advisory in nature, which may either be accepted or ignored by the office seeking the opinion, and any aggrieved party has the court for recourse, (Annex F) thereby leading the petitioner to conclude that only a final judicial ruling in her favor would be accepted by the Commission. Neither is there substance in the contention that the petition is, in effect, a suit against the government without its consent. the relief prayed for is simply "the recognition of the petitionerappellee" under the provisions of sections 1 and 2 of Republic Act No. 897, and consists in "directing an agency of the government to perform an act . . . it is bound to perform." Republic Act Nos. 304 and 897 necessarily embody state consent to an action against the officers entrusted with the implementation of said Acts in case of unjustified refusal to recognize the rights of proper applicants. [G.R. No. 132174. August 20, 2001] GUALBERTO CASTRO, petitioner, vs. HONORABLE SECRETARY RICARDO GLORIA IN HIS CAPACITY AS SECRETARY OF THE DEPARTMENT OF EDUCATION, CULTURE AND SPORTS, respondent. DECISION SANDOVAL-GUTIERREZ, J.: The principle of non-exhaustion of administrative remedy is not an iron-clad rule. There are instances when it may be pierced and judicial action may be resorted to immediately. The present case is one illustration. Sought to be set aside in this petition for review on certiorari are the: (a) Decisioni[1] dated November 20, 1997 of the Regional Trial Court, Branch 60, Barili, Cebu dismissing Gualberto Castros petition for mandamus; and b) Orderii[2] dated January 5, 1998 denying his motion for reconsideration. The factual and legal antecedents are as follows: Porfirio Gutang, Jr. filed with the Department of Education, Culture and Sports (DECS) a complaint for disgraceful and immoral conduct against petitioner Gualberto Castro, a teacher in Guibuangan Central School, Barili, Cebu. It was alleged that he has an illicit affair with Gutangs wife, petitioners co-teacher at the same school. After hearing or on August 28, 1984, the DECS Regional Office VII, through Assistant Superintendent Francisco B. Concillo, rendered a decision declaring petitioner guilty of the offense charged. He was meted the penalty of dismissal from the service.iii[3] The DECS Central Office affirmed Concillos decision in an Indorsement dated March 25, 1986. iv[4] On July 21, 1986, petitioner filed a motion for reconsideration. Instead of resolving the motion, the DECS Central Office directed the School Division of Cebu to comment on the motion.v[5] The School Division Superintendent recommended that the motion be resolved favorably. However, the recommendation was opposed by the DECS Region VII.vi[6]

Thereafter, in his letters dated November 5, 1988 and July 19,1990, petitioner asked the incumbent DECS Secretary to resolve his motion for reconsideration. But his letters remained unheeded, thus, on October 4, 1995, petitioner filed with the DECS Central Office a Motion for Review Setting Aside/Modifying the Decision of Regional Director of DECS Region VII. vii[7] DECS Secretary Ricardo Gloria (respondent) referred the motion to the Regional Director of Region VII for comment. On January 3, 1996, Regional Director Eladio C. Dioko issued a 2nd Indorsement sustaining the decision of Assistant Superintendent Concillo, thus: This Office sustains former Director Concillos decision that responde nt Castro is guilty of Disgraceful and Immoral Conduct but posits the belief that the proper penalty as provided by law be meted out for him. In the Honorable Secretary is vested by law the power to review, reaffirm, modify or reverse decisions of a lower office.viii[8] In his 3rd Indorsement dated March 6, 1996, respondent Secretary denied petitioner s motion for review.ix[9] Thrice thwarted, petitioner filed a petition for mandamus with the Regional Trial Court, Branch 60, Barili, Cebu, imploring that judgment be rendered ordering respondent Secretary or anyone who may have assumed the duties and functions of his office (1) to reduce his penalty from dismissal to one (1) year suspension; 2) to consider the one (1) year suspension as already served considering that he has been out of the service for more than ten (10) years; 3) to reinstate him to his former position; and 4) to pay is back salaries.x[10] On November 20, 1997, the trial court rendered the herein assailed decision dismissing the petition on the ground of non-exhaustion of administrative remedies. It ruled that petitioner should have appealed to the Civil Service Commission before coming to court, thus: Considering that the Civil Service Commission has the power to review on appeal the orders o r acts of respondent, petitioner has failed to exhaust administrative remedies. Non-exhaustion of administrative remedies implies absence of cause of action. Where a remedy is available within the administrative machinery, this should be resorted to before recourse can be made to the courts. The doctrine of primary jurisdiction does not warrant a court to arrogate unto itself the authority to resolve a controversy the jurisdiction over which is initially lodged with an administrative body of special competence. (Vidad v. RTC of Negros Oriental, Branch 42, 227 SCRA 271). Mandamus If appeal or some other equally adequate remedy is still available in the ordinary course of law, the action for MANDAMUS would be improper. Sherman Vs. Horilleno, 57 Phil. 13; Fajardo Vs. Llorente, 6 Phil, 426; Paquio Vs. Del Rosario, 46 Phil. 59; Manalo v. Paredes, 47,938; Castro Revilla Vs. Garduno, 53 Phil. 934; Rural Transit Co. Vs. Teodoro, 57 Phil. 11. Special Civil Actions against administrative officers should not be entertained if superior administrative officers could grant relief. Cecilio vs. Belmonte, 48 Phil.243, 255. From the facts it is clear that the penalty of dismissal from the service was erroneously imposed upon petitioner. However, certiorari is the remedy to correct errors of judgment which are grave and arbitrary and not mandamus. Mandamus will not lie to order the reinstatement of the petitioner in his former position as Elementary Grades Teacher as it was not yet established that he is entitled to or has legal right to the office. In the case of Manalo vs. Gloria, 236 SCRA 130, the petitioners claim for backwages could be the appropriate subject of an ordinary civil action as mandamus applies when there is no other plain, speedy and adequate remedy in the ordinary course of law. In the case at bench, the Court after a judicious study and analysis on the case, has no other alternative than to DENY the present petition for lack of merit. SO ORDERED.xi[11] Petitioner filed a motion for reconsideration but was denied. Hence, the present petition for review on certiorari. Petitioner insists that, when the question to be settled is purely a question of law, he may go directly to the proper court so that he can have proper redress. For its part, the Office of the Solicitor General (OSG) contends that petitioners adequate remedy was to appeal the decision of respondent Secretary to the Civil Service Commission, pursuant to the provisions of Executive Order No. 292. Since petitioner failed to exhaust administrative remedies, his petition must be dismissed for lack of cause of action. Also, the OSG argues that the remedy of mandamus to

compel payment of back salary does not lie unless petitioners right thereto is well defined. This is based on the general proposition that a public official is not entitled to any compensation if he has not rendered any service. The petition is impressed with merit. The doctrine of exhaustion of administrative remedies calls for resort first to the appropriate administrative authorities in the resolution of a controversy falling under their jurisdiction before the same may be elevated to the courts of justice for review. It is settled that non-observance of the doctrine results in lack of a cause of action,xii[12] which is one of the grounds allowed by the Rules of Court for the dismissal of the complaint.xiii[13] The doctrine is not absolute. There are instances when it may be dispensed with and judicial action may be validly resorted to immediately. Among these exceptions are: 1) When the question raised is purely legal; 2) when the administrative body is in estoppel; 3) when the act complained of is patently illegal; 4) when there is urgent need for judicial intervention; 5) when the claim involved is small; 6) when irreparable damage will be suffered; 7) when there is no other plain, speedy and adequate remedy; 8) when strong public interest is involved; and 10) in quo warranto proceedings.xiv[14] Truly, a petition for mandamus is premature if there are administrative remedies available to petitioner.xv[15] But where the case involves only legal questions, the litigant need not exhaust all administrative remedies before such judicial relief can be sought.xvi[16] In Cortes v. Bartolome,xvii[17]a case involving a petition for mandamus, we ruled that while it may be that nonjudicial remedies could have been available to respondent in that he could have appealed to the then Secretary of Local Government and Community Development and thereafter to the Civil Service Commission, the principle of exhaustion of administrative remedies need not be adhered to when the question is purely legal. This is because issues of law cannot be resolved with finality by the administrative officer. Appeal to the administrative officer would only be an exercise in futility.xviii[18] Thus, in the ultimate, the resolution of this case hinges on whether or not the following is a question of law or a question of fact Is dismissal from the service the proper penalty for the 1 st offense ofdisgraceful and immoral conduct? It is settled that for a question to be one of law, the same must not involve an examination of the probative value of the evidence presented by the litigants or any of them. And the distinction is well known. There is a question of law when the doubt or differences arise as to what the law is on a certain state of facts. There is a question of fact when the doubt or differences arise as to the truth or the falsehood of alleged facts.xix[19] In the case at bench, petitioner no longer disputes the administrative finding of his guilt for the offense of disgraceful and immoral conduct. It is settled and final insofar as he is concerned. What petitioner only impugns is the correctness of the penalty of dismissal from the service. He is convinced that the proper penalty for the first offense of disgraceful and immoral conduct is only suspension from the service. Undoubtedly, the issue here is a pure question of law. We need only to look at the applicable law or rule and we will be able to determine whether the penalty of dismissal is in order. We find for petitioner. Petitioner has all the reasons to seek the aid of this Court since it has been clearly established by evidence that he is a first time offender. Section 23, Rule XIV of the Rules Implementing Book V of Executive Order No. 292 (Otherwise known as the Administrative Code of 1987 and other Pertinent Civil Service Laws)xx[20] provides: Sec. 23. Administrative offenses with its corresponding penalties are cla ssified into grave, less grave, and light depending on the gravity of its nature and effects of said acts on the government service. The following are grave offenses with its corresponding penalties: xxx xxx (o) Disgraceful and immoral conduct <1st Offense, Suspension for six (6) months and one day (1) day to one (1) year; 2nd Offense, Dismissal.> As correctly pointed out by petitioner, the proper penalty for the 1st offense of disgraceful and immoral conduct is only suspension for six (6) months and one (1) day to one (1) year. In fact, this

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has been the consistent ruling of this Court. In Aquino v. Navarro,xxi[21]a secondary guidance councelor in a public high school, was merely suspended for disgraceful and immoral conduct. In Burgos v. Aquino,xxii[22] the Court suspended a court stenographer for six months for maintaining illicit relations with the complainants husband and for perjury in not disclosing in her personal information sheet she has a daughter as a result of that relationship. Similarly, in Nalupta Jr. v. Tapec,xxiii[23] a deputy sheriff was suspended for six months and one day for having a relationship with a woman other than his wife by whom he has two children. Thus: The act of respondent of having illicit relations with Consolacion Inocencio is considered disgraceful and immoral conduct within the purview of Section 36 (b) (5) of Presidential Decree No. 807, otherwise known as the Civil Service Decree of the Philippines, for which respondent may be subjected to disciplinary action. Memorandum Circular No. 30, Series of 1989 of the Civil Service Commission has categorized disgraceful and immoral conduct as a grave offense for which a penalty of suspension for six (6) months and one (1) day shall be imposed for the first offense, while the penalty of dismissal is imposed for the second offense. (Emphasis supplied) Inasmuch as the present charge of immorality against respondent constitutes the first charge of this nature, the Court shall at this instance suspend respondent for six (6) months and one (1) day. Again, in the 1997 case of Ecube-Badel v. Badel,xxiv[24] we imposed the penalty of suspension for one (1) year without pay against respondent David Badel for his first offense of immorality. It is worthy to note that even DECS Regional Director Eladio C. Dioko stated in his 2nd Indorsement dated January 3, 1996, that while he sustains Director Concillos decision, the proper penalty as provided by law (should) be meted out for him. The Regional Trial Court also echoed the same sentiment, thus: From the facts, it is clear that the penalty of dismissal from the service was erroneously imposed upon petitioner. However, certiorari is the remedy to correct errors of judgment which are grave and arbitrary and not mandamus. Anent petitioners prayer for the payment of back salaries, we find it to be without legal basis. The issue regarding payment of back salaries during the period that a member of the civil service is out of work but subsequently ordered reinstated is settled in our jurisdiction. Such payment of salaries corresponding to the period when an employee is not allowed to work may be decreed if he is found innocent of the charges. However, if the employee is not completely exenorated of the charges xxv[25] such as when the penalty of dismissal is reduced to mere suspension, he would not be entitled to the payment of his back salaries. In Yacia v. City of Baguio,xxvi[26]the decision of the Commissioner of Civil Service ordering the dismissal of a government employee on the ground of dishonesty was immediately executed pending appeal. But, on appeal, the Civil Service Board of Appeals modified that penalty of dismissal to a fine equivalent to six months pay. This Court ruled that the employees claim for back wages, for the period during which he was not allowed to work because of the execution of the decision of the Commissioner, should be denied. The general proposition is that a public official is not entitled to any compensation if he has not rendered any service. As he works, he shall earn. Since petitioner did not work during the period for which he is now claiming salaries, there can be no legal or equitable basis to order the payment of such salaries.xxvii[27] Thus, we reduce the penalty of dismissal imposed upon petitioner to suspension for a period of one year without pay. Considering that he has been out of the service for quite a long time, we feel he has been sufficiently punished for his offense. We, therefore, order his reinstatement. WHEREFORE, the petition is hereby GRANTED. The Regional Trial Courts Decision dated November 20, 1997 and Order dated January 5, 1998 are SET ASIDE. The penalty of dismissal imposed upon petitioner is reduced to one (1) year suspension from office without pay. In view of the length of time petitioner has been out of the service, we consider the penalty of suspension to have been fully served. He must, therefore, be REINSTATED to office immediately. SO ORDERED. G.R. No. 119645 August 22, 1996 SPO3 NOEL CABADA and SPO3 RODOLFO G. DE GUZMAN, petitioners, vs. HON. RAFAEL M. ALUNAN III, Secretary of the Department of Interior and Local Government

& Chairman, National Police Commission (NAPOLCOM); HON. ALEXIS CANONIZADO, Commissioner, NAPOLCOM, Manila; Chairman LEODEGARIO ALFARO, Regional Appellate Board VIII; Regional Director EDMUNDO LAVILLA LARROZA, Philippine National Police (PNP) Regional Command VIII; and MARIO VALDEZ, respondents. DAVIDE, JR., J.:p This is a special civil action for certiorari under Rule 65 of the Rules of Court 1 to set aside the decision (in the form of a letter) of 24 March 1995 2 of public respondent National Police Commission (NAPOLCOM), which denied due course for lack of jurisdiction the appeal and the petition for review filed by petitioners SP03 Noel Cabada and SP03 Rodolfo G. de Guzman, respectively. Challenged in the said appeal and petition for review were the decision of 15 August 1994 3 and resolution of 25 October 1994 4 of the Regional Appellate Board of the Eighth Regional Command (RAB 8), which affirmed their dismissal from the service. The pleadings and annexes filed by the parties disclose the following factual and procedural backdrop of this case: On 29 October 1993, a complaint against the petitioners for Grave Misconduct, Arbitrary Detention, and Dishonesty was filed with the Office of the Commission on Human Rights in Tacloban City by private respondent Mario Valdez. 5 The complaint was referred to the Philippine National Police Eighth Regional Command (PNP-RECOM 8) which, after conducting its own investigation, filed an administrative charge of Grave Misconduct against the petitioners and instituted summary dismissal proceedings. On 7 April 1994, the Regional Director of PNP-RECOM 8 handed down a decision 6 finding the petitioners guilty of grave misconduct and ordering their dismissal from the police service. Pursuant to this decision, Special Order No. 174, dated 23 April 1994, 7was issued ordering, among other things, the dismissal of the petitioners from the service. The petitioners claimed that they were not formally furnished with a copy of the decision and that they were able to secure a copy thereof "thru their own effort and initiative" only on 13 June 1994. 8 However, they received a copy of Special Order No. 174 on 26 April 1994. Although they insist that the basis of the appeal before RAB 8 was Special Order No. 174, 9 petitioner Cabada stated under oath in his Appeal 10 filed with the Department of Interior and Local Government (DILG) that he in fact seasonably filed a motion for reconsideration of the decision of the Regional Director of PNPRECOM 8, who, however, failed or refused to act on the said motion, and that he asked that the said motion be treated as an appeal to the RAB. In its decision of 15 August 1994, 11 the RAB 8 affirmed the decision of the Regional Director. In its resolution of 25 October 1994, 12 it denied the petitioners' motion for reconsideration of its decision. The petitioners received a copy of this resolution on 26 January 1995. Petitioners Cabada and De Guzman then filed with the Honorable Secretary of the DILG and Chairman of the NAPOLCOM their "Appeal" 13 dated 5 February 1995 and "Petition for Review" 14 dated 4 February 1995, respectively. In its decision of 24 March 1995, the NAPOLCOM, through Commissioner Alexis Canonizado, denied due course to the petitioners' appeal and petition for review for lack of jurisdiction "it appearing . . . that both the Decision and the Resolution of the Regional Appellate Board had long become final and executory and there being no showing that the RAB failed to decide respondents' appeal within the reglementary period of sixty (60) days." 15 In support thereof, the NAPOLCOM cited Section 23, Rule IV of NAPOLCOM Memorandum Circular No. 91-002 and Section 5, Rule III of NAPOLCOM Memorandum Circular No. 91-006, which provide as follows: Sec. 23.Effect of Failure to Decide Appeal. Failure of the Regional Appellate Board to decide the appeal within the reglementary period shall render the decision final and executory without prejudice, however, to the filing of an appeal by either party with the Secretary of the Department of the Interior and Local Government. xxx xxx xxx Sec. 5.Finality of Decision/Resolution. The decision of the Regional Appellate Board on an appealed case shall become final and executory after ten (10) days from receipt of a copy thereof by the appellant, if no Motion for Reconsideration is filed within said period.

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A motion for Reconsideration may be filed by either party from a Decision rendered by the Regional Appellate Board on an appealed case, provided that the same is filed within ten (10) days from receipt of a copy of the decision in question. However, only one (1) Motion for Reconsideration may be allowed. Hence, the instant petition. The Office of the Solicitor General seeks to dismiss this petition on the ground of prematurity because the petitioners failed to exhaust administrative remedies; they should have instead appealed to the Civil Service Commission (CSC) pursuant to Section 47, Chapter 6, Subtitle A, Title I, Book V of the Administrative Code of 1987 (E.O. No. 292), which vests upon the CSC appellate jurisdiction over disciplinary cases of government personnel where the penalty imposed is, inter alia, dismissal from office. The said provision reads: Sec. 47.Disciplinary Jurisdiction. (1) The Commission shall decide upon appeal all administrative disciplinary cases involving the imposition of a penalty of suspension for more than thirty days, or fine in an amount exceeding thirty days salary, demotion in rank or salary or transfer, or removal or dismissal from office. . . . (2) The Secretaries . . . shall have jurisdiction to investigate and decide matters involving disciplinary action against officers and employees under their jurisdiction. . . . In case the decision rendered by a bureau or office head is appealable to the Commission, the same may be initially appealed to the Department and finally to the Commission and pending appeal, the same shall be executory except when the penalty is removal, in which case, the same shall be executory only after confirmation by the Secretary concerned. The Office of the Solicitor General opines that this provision covers PNP personnel, like the petitioners; consequently, they should have appealed to the CSC. It also advances the view that the instant petition should have been filed with the proper forum, the Regional Trial Court. The core issues that present themselves for our determination are whether. (1) the NAPOLCOM committed grave abuse of discretion in denying due course, for lack of jurisdiction, the petitioners' appeal from and petition for review of the decision and resolution of the RAB 8; and (2) this special civil action was prematurely filed for failure of the petitioners to exhaust administrative remedies. I Section 45 of the DILG Act of 1990 16provides for the finality of disciplinary actions against members of the PNP as follows: Sec. 45.Finality of Disciplinary Action. The disciplinary action imposed upon a member of the PNP shall be final and executory: Provided, That a disciplinary action imposed by the regional director or by the PLEB involving demotion or dismissal from the service may be appealed to the regional appellate board within ten (10) days from receipt of the copy of the notice of decision: Provided, further, That the disciplinary action imposed by the Chief of the PNP involving demotion or dismissal may be appealed to the National Appellate Board within ten (10) days from receipt thereof: Provided, furthermore, That, the regional or National Appellate Board, as the case may be, shall decide the appeal within sixty (60) days from receipt of the notice of appeal: Provided, finally, That failure of the regional appellate board to act on the appeal within said period shall render the decision final and executory without prejudice, however, to the filing of an appeal by either party with the Secretary. (emphasis supplied) The last proviso of this section is restated in Section 23, Rule IV of NAPOLCOM Memorandum Circular No. 91-002. And Section 3, Rule III of NAPOLCOM Memorandum Circular No. 92-006 provides: Sec. 3.Period Within Which to Decide Appealed Cases; Finality of RAB/NAB Decisions. The NAPOLCOM appellate board concerned shall decide the appealed cases within sixty (60) days from receipt of the entire records of the case from the PNP summary dismissal authority. However, failure of the NAPOLCOM Regional Appellate Board (RAB) to act on the appeal within said period renders the decision final and executory without prejudice to the filing of an appeal by the respondent-appellant with the Secretary of the Department of the Interior and Local Government. The decision rendered by the NAPOLCOM National Appellate Board (NAB) disposing an appealed case shall be final and executory unless a timely Motion for Reconsideration is filed within ten (10)

days from receipt thereof, in which case, it shall become final and executory upon receipt by the respondent-appellant of the resolution of the aforesaid board denying, modifying or affirming the decision. Section 45 of the DILG Act of 1990 specifically provides that if a RAB fails to decide an appeal within the reglementary period of sixty days, the appealed decision becomes final and executory without, however, prejudice to the right of the aggrieved party to appeal to the Secretary of the DILG. The said provision is, however, silent as regards the availability of an appeal from a decision rendered by a RAB within the reglementary period. This gap in Section 45 cannot be construed to prohibit appeals from decisions of the RAB rendered within the reglementary period, for while the epigraph of the section is worded Finality of Disciplinary Action, there is nothing therein that explicitly bars any further appeal. Complementary laws on discipline of government officials and employees must then be inquired into considering that in conformity with the mandate of the Constitution that the PNP must be national in scope and civilian in character, 17 it is now a part, as a bureau, of the reorganized DILG. 18 As such, it falls within the definition of the civil service in Section 2 (1), Article IX-B of the Constitution. 19 For this reason, Section 91 of the DILG Act of 1990 provides: Sec. 91.Application of Civil Service Laws. The Civil Service Law and its implementing rules and regulations shall apply to all personnel of the Department. The Civil Service Law referred to in Section 91 of the DILG Act of 1990 is Subtitle A, Title I, Book V of the Administrative Code of 1987 (E.O. No. 292). Section 47 of Chapter 6 thereof provides, inter alia, that in cases where the decision rendered by a bureau or office is appealable to the Commission, the same may initially be appealed to the department and finally to the Commission. The rules and regulations implementing the Civil Service Law referred to in Section 91 of the DILG Act of 1990 is the Omnibus Rules Implementing Book V of Executive Order No. 292 known as the Administrative Code of 1987 promulgated by the CSC. Sections 31 and 32, Rule XIV of the said Rules provide as follows: Sec. 31. Except as otherwise provided by the Constitution or by law, the Commission shall have the final authority to pass upon the removal, separation and suspension of all officers and employees in the civil service and upon all matters relating to the conduct, discipline and efficiency of such officers and employees. Sec. 32. The Secretaries and heads of agencies and instrumentalities, provinces, cities and municipalities shall have jurisdiction to investigate and decide matters involving disciplinary action against officers and employees under their jurisdiction. Their decisions shall be final in case the penalty imposed is suspension for not more than thirty (30) days or fine in an amount not exceeding thirty (30) days' salary. In case the decision rendered by a bureau or office head is appealable to the Commission, the same may be initially appealed to the department, then to the Merit Systems Protection Board, and finally to the Commission and pending appeal, the same shall be executory except when the penalty is removal, in which case the same shall be executory only after confirmation by the Secretary concerned. Under Section 7 of E.O. No. 262, 20 the Secretary of the DILG has the power of supervision and control of his Department. His powers and functions thereunder are recognized and affirmed in Section 10 of the DILG Act of 1990. 21 In view then of the aforementioned gap in Section 45 of the DILG Act of 1990, the provisions of the Civil Service Law and the rules and regulations implementing it must be taken into account in light of the maxim interpretare concordare legibus est optimus interpretandi or every statute must be so construed and harmonized with other statutes as to form a uniform system of jurisprudence. 22 As thus construed and harmonized, it follows that if a RAB fails to decide an appealed case within sixty days from receipt of the notice of appeal, the appealed decision is deemed final and executory, and the aggrieved party may forthwith appeal therefrom to the Secretary of the DILG. Likewise, if the RAB has decided the appeal within the sixty-day period, its decision may still be appealed to the Secretary of the DILG. In the instant case, Cabada's appeal was addressed to "the Honorable Secretary of the Department of the Interior and Local Government . . . as Chairman and Presiding Officer of the National Police Commission," 23 while De Guzman's petition for review was addressed to "the Honorable Secretary,

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Department of the Interior and Local Government and Chairman, National Police Commission, Makati City, Metro Manila." 24 We consider the appeal and the petition for review as appeals to the Secretary of the DILG under Section 45 of the DILG Act of 1990. Only the Secretary of the DILG can act thereon, one way or the other. The NAPOLCOM did not have authority over the appeal and the petition for review, and just because both mentioned the Secretary of the DILG as Chairman or Presiding Officer of the NAPOLCOM did not bring them within the jurisdiction of the NAPOLCOM. The latter does not have such jurisdiction because Section 14 of the DILG Act of 1990 pertinently provides as follows: Sec. 14.Powers and Functions of the Commission. . . . xxx xxx xxx (i) Affirm, reverse or modify, through the National Appellate Board, personnel disciplinary action involving demotion or dismissal from the service imposed upon members of the Philippine National Police by the Chief of the Philippine National Police; (k) Exercise appellate jurisdiction through the regional appellate boards over administrative cases against policemen and over decisions on claims for police benefits. . . . This section clearly shows that the NAPOLCOM exercise appellate jurisdiction only on the following cases and THROUGH (a) the NAB in personnel disciplinary actions involving demotion or dismissal from the service imposed by the Chief of the PNP, and (b) the RAB in administrative cases against policemen and over decisions on claims for police benefits. It has no appellatejurisdiction over decisions rendered by the NAB and the RAB. Consequently, the NAPOLCOM did not have the power or authority to issue, through Commissioner Alexis Canonizado, the 24 March 1995 decision denying due course to the appeal and petition for review filed by petitioners Cabada and De Guzman, respectively, for lack of jurisdiction because of Section 5, Rule III of NAPOLCOM Memorandum Circular No. 91-006 and Section 23, Rule IV of NAPOLCOM Memorandum Circular No. 91-002. The reference to these rules suggest that the NAPOLCOM believes it has jurisdiction over appeals from decisions of the RAB if the latter has not decided the appeal within the reglementary period of sixty days. Such a suggestion is flawed because it would allow a ridiculous situation where the NAPOLCOM vests upon itself an appellate jurisdiction from a decision rendered by it in the exercise of its appellate jurisdiction through the RAB, per Section 14(k) of the DILG Act of 1990. Moreover, Commissioner Canonizado cannot, singly, act for the NAPOLCOM because it is a collegial body composed of a Chairman and four Commissioners, pursuant to Section 13 of the DILG Act of 1990. In light of the foregoing, the petitioners could properly invoke our original jurisdiction to issue the extraordinary writ of certiorari under Rule 65 of the Rules of Court to annul and set aside the NAPOLCOM's decision of 24 March 1995. It being a patent nullity, the filing of a motion for its reconsideration before the institution of this special civil action may be dispensed with. 25 II The plea of the Office of the Solicitor General that the instant action is premature for nonexhaustion of administrative remedies is thus untenable. We would have sustained it if the Secretary of the DILG was the one who denied due course to or dismissed the appeal of petitioner Cabada and the petition for review of petitioner De Guzman. By then, pursuant to Section 91 of the DILG Act of 1990; Section 47, Chapter 6, Subtitle A, Title I, Book V of the Administrative Code of 1987; and Sections 31 and 32 of the Omnibus Rules Implementing Book V of Executive Order No. 292, the appeal would have to be filed with the CSC. And futile would be the petitioners claim in their Reply to the Comment of the OSG that their case falls within the exceptions to the rule on exhaustion of administrative remedies. In view of all the foregoing, a discussion on the other issues raised by the petitioners relating to the merits of the case and on the issue of due process is unnecessary. WHEREFORE, premises considered, the instant petition is GRANTED. The decision (in the form of a fetter) of the National Police Commission of 24 March 1995 is ANNULLED and SET ASIDE. The Secretary of the Department of Interior and Local Government is DIRECTED to RESOLVE with reasonable dispatch the appeal and petition for review of petitioners SP03 NOEL CABADA and SP03 RODOLFO G. DE Guzman, respectively, from the decision of 15 August 1994 and resolution

of 25 October 1994 of the Regional Appellate Boar, Eight Regional Command, if the same were filed on time. No pronouncement as to costs.

G.R. Nos. 112708-09 March 29, 1996 REPUBLIC OF THE PHILIPPINES, represented by PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT, petitioner, vs. SANDIGANBAYAN, SIPALAY TRADING CORPORATION and ALLIED BANKING CORPORATION, respondents. FRANCISCO, J.:p Save for slight modification of a specific disquisition made by the SANDIGANBAYAN in its nowassailed judgment dated August 23, 1993, we affirm the same, as well as its Resolution promulgated on October 7, 1993 denying the Motion For Reconsideration. The factual background of this case is as follows: Petitioner PCGG issued separate orders against private respondents Sipalay Trading Corporation and Allied Banking Corporation (hereinafter referred to as SIPALAY and ALLIED) to effect their sequestration. Two (2) separate petitions were filed by SIPALAY and ALLIED before this Court assailing the sequestration orders. After the consolidation of these petitions and the filing of the comments, other pleadings and certain motions by the parties, this Court referred the cases to public respondent SANDIGANBAYAN for proper disposition, 1 where SIPALAY's petition was docketed as S.B. 0095, and that of ALLIED as S.B. 0100. Concerning SIPALAY (S.B. 0095), its 360, 875, 513 shares of stock in Maranaw Hotels and Resort Corporation which owns the Century Park Sheraton Hotel are, according to the PCGG, part of Lucio C. Tan's ill-gotten wealth. The PCGG on July 24, 1988 thus sequestered these SIPALAY shares under a "Sequestration Order and Supervisory Committee" which reads: 24 July 1986 Maranaw Hotels and Resort Corporation C/O Mr. Lucio C. Tan Allied Banking Corporation Allied Bank Center Ayala Ave., Makati Metro Manila Subject: Sequestration Order and Supervisory Committee Gentlemen: By virtue of the powers vested in the Presidential Commission on Good Government by authority of the President of the Republic of the Philippines, we hereby sequester the shares of stocks in Maranaw Hotels and Resort Corporation held by and/or in the name of Sipalay Trading Corporation. We direct you not to cause any transfer, conveyance, encumbrance, concealment, or liquidation of the aforementioned shares of stocks without any written authority from the Commission. xxx xxx xxx This sequestration order and formation of the Supervisory Committee shall take effect upon your receipt of this Order. For your immediate and strict compliance. Very truly yours, FOR THE COMMISSION: (Sgd.)(Sgd.) RAMON A. DIAZ QUINTIN S. DOROMAL Commissioner Commissioner 2

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SIPALAY was forced to litigate after the PCGG sought to implement the sequestration without acting on its motions ". . . To Lift Sequestration Order" and ". . . For Hearing For Specification Of Charges And For Copies Of Evidence". SIPALAY maintained that the sequestration was without evidentiary substantiation, violative of due process, and deemed automatically lifted when no judicial proceeding was brought against it within the period mandated under Article XVIII, Section 26 of the Constitution. Anent ALLIED (S.B. 0100), its Valenzuela branch on August 13, 1986 was served a "Search and Seizure Order" by agents of the PCGG, the text of which reads: The Manager Allied Banking Corporation Valenzuela Branch Valenzuela, Metro Manila SEARCH AND SEIZURE ORDER Gentlemen: By virtue of the powers vested in this Commission by the President of the Republic of the Philippines, you are hereby directed to submit for search and seizure all bank documents in the abovementioned premises which our representative may find necessary and relevant to the investigation being conducted by this Commission. Atty. Benjamin Alonte is deputized to head the team that will implement this Order. August 13, 1986, Pasig, Metro Manila. FOR THE COMMISSION: (Sgd.) RAMON A. DIAZ Commissioner (Sgd.) MARY CONCEPCION BAUTISTA Commissioner 3 ALLIED went to court for the same reason that the PCGG was bent on implementing the order. ALLIED contended that this order is not one for sequestration but is particularly a general search warrant which fails to meet the constitutional requisites for its valid issuance. The petitions were jointly heard by the SANDIGANBAYAN. Briefly, the more salient events which transpired therein are as follows: At the presentation of their evidence, PCGG Secretary Ramon Hontiveros appeared as the lone witness for SIPALAY and ALLIED. He produced and identified excerpts of the minutes of the PCGG meetings held on March 13 and 12, 1986 4 in response to a subpoena duces tecum. For the PCGG's part, its witnesses were Commissioner Dr. Quintin Doromal, former PCGG Commissioner Mary Concepcion Bautista, now deceased, and Atty. Benjamin Alonte, Director IV, Legal Department of the PCGG who headed the team that served the search and seizure order on ALLIED. Commissioner Doromal identified voluminous documents. Former Commissioner Bautista died midway her cross-examination. The PCGG almost failed to present Atty. Alonte, had the SANDIGANBAYAN not reconsidered 5 its Order of March 8, 1993 6 declaring the cases submitted for decision after the PCGG was deemed to have waived presentation of its evidence for its repeated postponements of the hearing. After Atty. Alonte's testimony and upon the PCGG's manifestation that it was no longer presenting any witness, the SANDIGANBAYAN 7 gave the PCGG twenty (20) days (from July 1, 1993) within which to submit its formal evidence in writing. SIPALAY and ALLIED were given the same period (20 days) from receipt of such written formal offer of evidence within which to file their formal comments and/or objections thereto, and after which, the incident will be deemed submitted for resolution. What the PCGG filed on July 7, 1993 was not a written formal offer of its evidence as directed by the SANDIGANBAYAN, but a "Motion To Dismiss" the SIPALAY and ALLIED petitions. Admittedly, this motion to dismiss came nearly seven (7) years after SIPALAY and ALLIED originally filed their petitions before this Court on September 16, 1986 and August 26, 1986, respectively. The ground was SIPALAY's and ALLIED's alleged failure to exhaust administrative remedies. The PCGG argued that SIPALAY and ALLIED should have first appealed the sequestration orders to the Office

of the President before challenging them in court, invoking Sections 5 and 6 of the PCGG Rules and Regulations. An "Opposition" and a "Reply" were filed in relation to the motion. At some earlier time (May 21, 1992), the PCGG filed a "Motion For The Consolidation Or Joint Trial" of SIPALAY's and ALLIED's petitions (S.B. 0095 and S.B. 0100) with Civil Case 0005 a complaint for "Reversion, Reconveyance, Restitution, Accounting and Damages" dated July 17, 1987 likewise filed before the SANDIGANBAYAN by the PCGG against Lucio Tan, Ferdinand and Imelda Marcos, and other defendants. 8 The SANDIGANBAYAN formally denied this motion in an extended Resolution dated July 6, 1993. The PCGG filed a "Motion for Reconsideration" thereof. This motion was deemed submitted for resolution when no opposition and reply were filed. SIPALAY and ALLlED then filed a "Motion To Consider Cases Submitted For Decision", to which an opposition and reply were filed. The PCGG lost in these cases below. The SANDIGANBAYAN in its now-assailed August 23, 1993 Decision 9 voided the orders issued against SIPALAY and ALLIED. The decretal portion reads: In S.B. No. 0095 WHEREFORE, in the light of the foregoing, the Court has no judicious recourse but to declare, as it hereby declares, the writ of sequestration issued against petitioner Sipalay Trading Corporation's shares of stock in Maranaw Hotel and Resorts Corporation as deemed automatically lifted for respondent PCGG's failure to implead the petitioner within the period mandated under Section 26, Article XVIII of the 1987 Constitution. The same writ is likewise declared null and void for having issued without sufficient evidentiary foundation respondent PCGG having failed to adduce and proffer that quantum of evidence necessary for its validity without prejudice to the issue of illgotten wealth being attributed to petitioner Sipalay Trading Corporation and/or defendants Lucio C. Tan, et al. being threshed out and litigated in Civil Case No. 0005. In S.B. No. 0100 WHEREFORE, premises duly considered, the Court hereby declares the subject search and seizure order issued by respondent PCGG directed against petitioner Allied Banking Corporation's Valenzuela branch on August 13, 1986 as null and void ab initio for having been issued without due process and in contravetion of the organic law then in force, the Freedom Constitution, under which mantle, the Bill of Rights found in the 1973 Constitution was amply protected and enforced. Consequently, all documents, records and other tangible objections (sic) seized pursuant thereto are hereby ordered returned to petitioner Allied Banking Corporation through its duly authorized representative, after proper inventory and accounting shall have been made within thirty (30) days from receipt hereof. SO ORDERED. The resolution of PCGG's motions to dismiss and for reconsideration of the denial of its motion for consolidation or joint trial, as well as SIPALAY's and ALLIED's motion to consider the cases submitted for decision, was incorporated in the decision. And after its motion for reconsideration of the decision was denied in a Resolution promulgated on October 7, 1993, 10 the PCGG brought the instant petition. A comment, reply, and rejoinder were subsequently filed. The key issues, in query form, are: (1) Was the SANDIGANBAYAN's denial of the PCGG's motion to dismiss proper? (2) Should the SANDIGANBAYAN have disposed first such motion to dismiss rather than resolving it as part of the judgment? (3) Was the nullification of the sequestration order issued against SIPALAY and of the search and seizure order issued against ALLIED correct? (4) Were the sequestration and search and seizure orders deemed automatically lifted for failure to bring an action in court against SIPALAY and ALLIED within the constitutionally prescribed period? Hardly can it be disputed that a direct action in court without prior exhaustion of administrative remedies, when required, is premature, warranting its dismissal on a motion to dismiss grounded on lack of cause of action. The supporting cases cited by the PCGG in its petition indeed spell this out, to wit: "Pestanas v. Dyogi", 11 "Aboitiz v. Coll. of Customs", 12 and "Aquino-Sarmiento v. Morato", 13 And in the case of "Ocampo v. Buenaventura" 14 likewise cited by PCGG, the Court in essence approves of the filing of a motion to dismiss based upon failure to state a cause of action at any stage of the proceedings.

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As a general rule, a motion to dismiss is interposed before the defendant pleads (Section 1, Rule 16, Rules of Court). However, there is no rule or law prohibiting the defendant from filing a motion to dismiss after an answer had been filed. On the contrary, Section 2 of Rule 9, expressly authorizes the filing of such motion at any stage of the proceedings when it is based upon failure to state a cause of action . . . These principles, at first impression, appear to favor the PCGG. Sections 5 and 6 of the PCGG Rules and Regulations indeed provide an administrative mechanism for persons or entities contesting the sequestration orders issued against them. Sec. 5. Who may contest The person against whom a writ of sequestration or freeze or hold order is directed may request the lifting thereof in writing, either personally or through counsel within five (5) days from the receipt of the writ of order . . . Sec. 6. Procedure for Review of writ or order After due hearing or motu propio for good cause shown, the Commission may lift the writ or order unconditionally or subject to such condition as it may deem necessary, taking into consideration the evidence and circumstances of the case. The resolution of the Commission may be appealed by the party concerned to the Office of the President of the Philippines within fifteen (15) days from receipt thereof. Neither an initial request before the PCGG for the lifting of the sequestration orders nor an appeal to the Office of the President was made by SIPALAY and ALLIED before they filed their respective petitions in court. The PCGG's motion to dismiss was anchored on lack of cause of action, albeit filed beyond the period to answer. However, the peculiarities of this case preclude the rightful application of the principles aforestated. The SIPALAY and ALLIED petitions were both filed on the third quarter of 1986 (September 16 and August 26, respectively), while the PCGG decided to file its motion to dismiss only in the middle of 1993 (July 7). Nearly seven (7) years came to pass in between that so much has already transpired in the proceedings during the interregnum. SIPALAY and ALLIED had rested their cases, and the PCGG had finished presenting all its witnesses, not to mention other various motions and incidents already disposed of by the SANDIGANBAYAN, with special attention to the numerous postponements granted the PCGG for presentation of its evidence which prevented an earlier termination of the proceedings. The motion to dismiss came only at the penultimate stage of the proceedings where the remaining task left for the PCGG was to file its written formal offer of evidence as required by the SANDIGANBAYAN. This Court, in "Soto v. Jareno" 15 has made it quite clear that: Failure to observe the doctrine of exhaustion of administrative remedies does not affect the jurisdiction of the Court. We have repeatedly stressed this in a long line of decisions. The only effect of non-compliance with this rule is that it will deprive the complainant of a cause of action, which is a ground for a motion to dismiss. If not invoked at the proper time, this ground is deemed waived and the court can take cognizance of the case and try it. (Emphasis supplied). The length of time the PCGG allowed to drift away and its decision to file its motion to dismiss only at the homestretch of the trial hardly qualify as "proper time". This factual scenario largely differs from the "Ocampo" case relied upon by the PCGG. In that case and the case of "Community Investment & Finance Corp. v. Garcia" 16 cited therein, the motions to dismiss involved were filed just after the filing of the answer, and not at some belated time nearing the end of the trial. The parties in those cases have not presented any testimonial or documentary evidence yet, as the trial proper has not commenced, and neither does it appear that the movants concerned took close to seven (7) years before filing their respective motions to dismiss. The PCGG therefore cannot seek refuge in the "Ocampo" case to justify the marked delay in filing its motion to dismiss. Such tarried maneuver made the PCGG guilty of estoppel by laches the definition and effect of which this Court, speaking through Mr. Justice Regalado, had the occasion to visit anew in the relatively recent case of "Olizon v. CA." 17 Laches has been defined as the failure or neglect, for an unreasonable and unexplained length of time, to do that which by exercising due diligence could nor should have been done earlier; it is negligence or omission to assert a right within a reasonable time, warranting a presumption that the party entitled to assert it either has abandoned it or declined to assert it. With its undenied belated action, seven (7) years in the making at that, it is only proper to presume with conclusiveness that the PCGG has abandoned or declined to assert what it bewailed as the

SIPALAY and ALLIED petitions' lack of cause of action. More accurately, the PCGG should be deemed to have waived such perceived defect in line with the "Soto" case, 18 for "proper time" cannot mean nor sanction an unexplained and unreasonable length of time such as seven (7) years. The leniency extended by the Rules (Rule 9, Section 2, Rules of Court) and by jurisprudence ("Ocampo case") in allowing a motion to dismiss based on lack of cause of action filed after the answer or at any stage of the proceedings cannot be invoked to cover-up and validate the onset of laches or the failure to do something which should be done or to claim or enforce a right at a proper time 19 which, in this case, was one of the PCGG's follies. Indeed, in matters of timeliness, "indecent waste" is just as reprehensible as "indecent haste". Another equally forceful reason warranting the denial of the PCGG's motion to dismiss is that this case falls under two recognized exceptions to the general rule of prior exhaustion of administrative remedies, and the SANDIGANBAYAN's brief but lucid disquisition on one exception merits this Court's approval. Two. The rule on non-exhaustion of administrative (sic) remedies does not apply to petitioners' case. This rule, which is based on sound public policy and practical considerations, is not inflexible. It is subject to many exceptions, to wit: (i) where there is estoppel on the part of the party invoking the doctrine; (ii) where the challenged administrative act is patently illegal amounting to lack of jurisdiction; (iii) where there is unreasonable delay or official inaction that will irretrievably prejudice the complainant; and (iv) where the question involved is purely legal and will ultimately have to be decided by the courts of justice. 20 xxx xxx xxx . . . there was no absolute necessity of appealing respondent PCGG's resolution to the Office of the President, as purportedly required by Section 6 of the PCGG Rules and Regulations, inasmuch as respondent PCGG seemed to have exhibited indifference towards petitioners' pleas for the lifting of the sequestration and search and seizure orders. Official inaction or unreasonable delay, as heretofore intimated, is one of the exceptions to the rule on non-exhaustion of administrative remedies. Hence, under the circumstance, petitioners may not be faulted for seeking relief directly from the courts. 21 The other exception is the first in the enumeration, i.e., "where there is estoppel on the part of the party invoking the doctrine", consisting in the PCGG's being guilty of estoppel by laches which has just been discussed in great length. In answer therefore to the first key issue, this Court rules in the affirmative. The denial of the PCGG's motion to dismiss was in order. In respect of the second key issue, the PCGG faults the SANDIGANBAYAN for incorporating in the judgment the resolution of its motion to dismiss, arguing that said motion should have been resolved first and separately. That would have been unnecessary and injudicious in the light of the "peculiarities" of this case where the motion was filed only at the tail end of the trial and when the PCGG has virtually presented all its evidence. At that stage, there was in fact nothing left for the parties to do but to await the forthcoming judgment of the SANDIGANBAYAN, save for the submission of the PCGG's written formal offer of documentary evidence as directed by that court, which the PCGG failed to do within the 20-day period given it because it filed the motion to dismiss instead. In this connection, the PCGG's contention that the 20-day period for the submission of its written formal offer of evidence was suspended upon the filing of the motion to dismiss has no merit. The SANDIGANBAYAN's observation on this matter, as espoused by private respondents SIPALAY and ALLIED, is correct. The Court agrees with petitioners' (SIPALAY and ALLIED) stance that the only period suspended by a motion to dismiss is the period to file an answer (Section 4, Rule 16 of the Rules of Court ) 22 and that where a period is to be suspended by the filing of a pleading, the Rules of Court expressly provides for such suspension (Section 1[b], Rule 12 of the Rules of Court, for instance, provides for the suspension of the period to file a responsive pleading if a motion for bill of particulars is filed ). 23 Consequently, respondent's (PCGG) filing of a motion to dismiss, without seeking leave of court to stay or suspend the running of the period for filing its written formal offer of evidence as agreed upon and ordered in open court during the hearing on July 1, 1993 could not have the effect of suspending the period within which it should submit its formal offer of evidence in writing. Without express leave of court, respondent (PCGG) could not improvidently assume that it has liberty to suspend the running of the period agreed upon. Respondent (PCGG) should have been prudent

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enough to seek the permission of this Court in respect of such matter to avert possible controversy arising therefrom. More importantly, respondent (PCGG) should not have made a unilateral presumption of procedural norm. 24 xxx xxx xxx In view of the foregoing, the Court has no judicious recourse but to sustain petitioners' (SIPALAY and ALLIED) stance and declare, as it hereby declares, that respondent (PCGG) is deemed to have waived presentation of further evidence and to have its evidence rested on the basis of the evidence on record. 25 Besides, to insist on a prior and separate resolution of the PCGG's motion to dismiss and the suspension of the 20-day period for the filing of the written formal offer of its evidence would have needlessly prolonged further the proceedings below something that certainly does not, and will not, sit well with a "just, speedy and inexpensive determination of every action and proceeding" envisioned by Section 2, Rule 1, of the Rules of Court. The same reasoning likewise justifies dispensing with a prior determination of the PCGG's "Motion For Reconsideration" of the SANDIGANBAYAN's Resolution denying consolidation or joint trial of the SIPALAY and ALLIED petitions with Civil Case 0005, and private respondents' (SIPALAY and ALLIED) "Motion To Consider Cases Submitted For Decision." Thus, the second key issue should be resolved against the PCGG. The SANDIGANBAYAN was well-justified in incorporating in its decision the resolution of the PCGG's motion to dismiss, as well as its motion for reconsideration of the denial of the motion for consolidation or joint trial and private respondents' (SIPALAY and ALLIED) motion to consider the cases submitted for decision. Going now to the third key issue, the sequestration order and the search and seizure order issued against SIPALAY and ALLIED, respectively, were nullified by the SANDIGANBAYAN on the ground of non-compliance with constitutional requirements. Let us examine the SIPALAY and ALLIED cases separately. The pertinent constitutional provision in focus in SIPALAY's case is Section 26 of Article XVIII. It reads in full: Sec. 26. The authority to issue sequestration or freeze orders under Proclamation No. 3 dated March 25, 1986 in relation to the recovery of ill-gotten wealth shall remain operative for not more than eighteen months after the ratification of this Constitution. However, in the national interest, as certified by the President, the Congress may extend said period. A sequestration or freeze order shall be issued only upon showing of a prima facie case. The order and the list of the sequestered or frozen properties shall forthwith be registered with the proper court. For orders issued before the ratification of this Constitution, the corresponding judicial action or proceeding shall be filed within six months from its ratification. For those issued after such ratification, the judicial action or proceeding shall be commenced within six months from the issuance thereof. The sequestration or freeze order is deemed automatically lifted if no judicial action or proceeding is commenced as herein provided. The SANDIGANBAYAN voided the sequestration order issued against SIPALAY "for lack of sufficient prima facie factual foundation, . . ." 26 In so concluding, it only took into account the testimonies of PCGG witnesses Doromal, Bautista and Alonte. It appears further that the SANDIGANBAYAN particularly zeroed in on Commissioner Doromal's testimony, considering its observations that: 1) "The testimony of former PCGG Commissioner Mary Concepcion Bautista has no probative value and cannot be admitted in evidence in view of said witness' untimely demise prior to the completion of her cross-examination by petitioner's counsel" (citing the cases of "Bachrach Motor Co., Inc. v. CIR, et al." [86 SCRA 27] and "Ortigas, Jr. v. Lufthansa German Airlines" [64 SCRA 610]), 27 and 2) "Neither is Atty. Benjamin Alonte's testimony relevant. His oral declarations, aside from being hearsay, do not go into the substance of the cases." 28 By way of preface, no serious objection can be raised insofar as the SANDIGANBAYAN's exclusive reliance on the testimonies of the three (3) PCGG witnesses is concerned. The SANDIGANBAYAN had no other choice, for these testimonies in fact constitute the entire evidence for the PCGG, inasmuch as no documentary evidence which might have supported the testimonial evidence were offered by the PCGG below. The Rules of Court 29 and jurisprudence 30 decree that "The court shall

consider no evidence which has not been formally offered." There is no doubt that the testimonies of the PCGG witnesses were formally offered as evidence meriting due appreciation by the SANDIGANBAYAN, since Section 35, Rule 132 of the Rules requires that the offer of testimonial evidence "must be made at the time the witness is called to testify." With respect to documents, however, the same Section 35 (second paragraph) provides a different time for their offer, to wit: Documentary and object evidence shall be offered after the presentation of a party's testimonial evidence. Such offer shall be done orally unless allowed by the court to be done in writing. The twenty (20)-day period from July 1, 1993, or until July 20, for the submission of a written formal offer of evidence given by the SANDIGANBAYAN to the PCGG after the latter's last witness (Atty. Alonte) has testified, was intended precisely to accommodate any and all documentary evidence even object evidence for that matter, the PCGG would have wanted to offer. But, as previously discussed under the second key issue, the PCGG waived such offer when it opted to file a motion to dismiss sans/in lieu of the written formal offer of evidence within such given period that expired without interruption. Quite accurately therefore can it be said that due to its lapse in procedure, the PCGG brought it upon itself if the existence or non-existence of "prima facie factual foundation" had to be determined by the SANDIGANBAYAN only from what can be drawn from the PCGG's testimonial evidences and from no other. And the Court, in reviewing that court's finding that no prima facie evidence exists to support the sequestration order, likewise has no other choice but to be similarly confined thereto. But whose testimony or testimonies? The question becomes significant inasmuch as the SANDIGANBAYAN found as inadmissible some of the PCGG witnesses' testimonies. Dr. Doromal's testimony is reviewable as no attack on its admissibility was ever launched by the SANDIGANBAYAN. With respect to Atty. Alonte's testimony, the SANDIGANBAYAN declared it as hearsay which finding the PCGG does not contest. The PCGG in fact now appears to do away with his testimony considering that the PCGG neither quoted in, nor annexed to its petition, such testimony or any portion thereof. Atty. Alonte's testimony therefore can be dispensed with. However, the Court disagrees with the SANDIGANBAYAN's ruling that Commissioner Bautista's supervening death in the course of her cross-examination rendered her entire testimony without probative value and inadmissible. The SANDIGANBAYAN apparently clung to the principle enunciated in the "Bachrach" and "Ortigas" cases, 31 to wit: Oral testimony may be taken into account only when it is complete, that is, if the witness has been wholly cross-examined by the adverse party or the right to cross-examine is lost wholly or in part thru the fault of such adverse party. But when cross-examination is not and cannot be done or completed due to causes attributable to the party offering the witness, the uncompleted testimony is thereby rendered incompetent. The right of a party to cross-examine the witness of his adversary is invaluable as it is inviolable in civil cases, no less than the right of the accused in criminal cases. The express recognition of such right of the accused in the Constitution does not render the right thereto of parties in civil cases less constitutionally based, for it is an indispensable part of the due process guaranteed by the fundamental law. . . . Until such cross-examination has been finished, the testimony of the witness cannot be considered as complete and may not, therefore, be allowed to form part of the evidence to be considered by the court in deciding the case. But the "Bachrach" and "Ortigas" cases involved different factual features. In those cases, the witnesses concerned whose testimonies were rightly stricken off the records either left for abroad or simply failed to appear at the time they were supposed to be cross-examined by the adverse party. In short, the lack of cross-examination by the opposing parties therein was occasioned by sudden or unexplained non-appearance, unlike in this case where no less than the witness Bautista's death prevented the completion of her cross-examination. The controlling case here is "Fulgado v. C.A., et al." 32 where the Court, in allowing the testimony of therein plaintiff Ruperto Fulgado who died before his cross-examination, to remain in the record, ruled that: The wholesale exclusion of testimonies was too inflexible a solution to the procedural impasse because it prejudiced the party whose only fault during the entire proceedings was to die before he could be cross-examined. The prudent alternative should have been to admit the direct examination so far as the loss of cross-examination could have been shown to be not in that instance a material loss. And more compellingly so in the instant case where it has become evident that the adverse

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party was afforded a reasonable chance for cross-examination but through his own fault failed to cross-examine the witness. Where death prevents cross-examination under such circumstances that no responsibility of any sort can be ascribed to the plaintiff or his witness, it seems a harsh measure to strike out all that has been obtained in the direct examination. (Emphasis supplied) If testimony is inexpungible where the witness dies prior to any cross-examination, with more reason should testimony partially cross-examined at the time of the witness' death (as in Commissioner Bautista's case) remain intact. Thus, with the exception of Atty. Alonte's testimony, Dr. Doromal's and deceased Commissioner Bautista's testimonies, together with the evidence of SIPALAY and ALLIED, deserve a second scrutiny in determining the correctness of the SANDIGANBAYAN's finding of "lack of prima facie factual foundation." Here then are the highlights of Dr. Doromal's and deceased Commissioner Bautista's testimonies. DR. DOROMAL (DIRECT) JUSTICE ESCAREAL: Purpose please? ATTY. LEYNES: The testimony of this witness will cover the fact that at the time of sequestration there were issued (sic), there were more prima facie evidence. xxx xxx xxx ATTY. LEYNES: Q Dr. Doromal, do you know the petitioner, Sipalay Trading Corporation? A Yes, sir. Q Why do you know Sipalay Trading Corporation? A It is one of those companies which we had investigated and eventually issued a Sequestration Order. Q Do you you (sic) Maranao Hotels and Resorts? A Yes, sir. Q Why do you know this Maranao Hotels and Resorts? A Again it is one of those we had sequestered because of its relation with Sipalay Trading Corporation? Q Do you know the petitioner Allied Banking Corporation? A Yes, sir. Q Why do you know it? A In the same manner that the material of documents we had, we ended up having a Sequestration Order on Allied Banking Corporation. xxx xxx xxx ATTY. LEYNES: Q Dr. Doromal at that time that the sequestration order which you have just recognized was issued and which sequestration order was signed by you and Commissioner Ramon Diaz, what documents if any did you consider? A We considered documents which were gotten from Malacaang after the previous President had left. We had also document (sic) which were gotten from the U.S. which were given by the States Department to the PCGG and whatever had been gotten by our operation people. Q If I show to you some of these documents will you be able to recognize them? A Yes, some of them I will be able to recognize. Q I show to you a set of documents, what relation have these set of documents to those documents which you have mentioned you and Commissioner Diaz or the Commission considered when the Sequestration Order dated July 24, 1986 was issued? Will you please go over these documents? COURT INTERPRETER: Witness is going over the voluminous documents. WITNESS:

A The documents that I have just slipped into here that would have to do with Sipalay Trading Corporation, this I remember. ATTY. LEYNES: Q The question is, what relation has this document to the document you considered in issuing the Sequestration Order subject matter of this case? A This one which I had flipped into this had been considered by the Commission at the time of the sequestration. ATTY. LEYNES: May I request that this document which the witness had identified, these documents consisted of seventy-six documents and we have earlier inadvertently marked them as Exhibit A to WWW but if we can have them marked accordingly as Exhibits 1, 2 to 76 accordingly. xxx xxx xxx ATTY. LEYNES: Q Doctor Doromal when you issued, when the Sequestration Order was issued in the judgment of the Commission, what quantum of evidence do these documents amount to? ATTY. MENDOZA: Objection to the question, Your Honors (sic) please. First of all the witness did not identify all of those documents as he was going over the folder of documents. He was picking up particular documents in the folder and it is a question of law. ATTY. LEYNES: We are proving that there is more prima facie evidence in the judgment when he issued the Sequestration Order. What is the quantum of evidence do these documents represent? JUSTICE ESCAREAL: For the purpose of issuance thereof? ATTY. LEYNES: Yes, Your Honor. JUSTICE ESCAREAL: With that qualification are you willing to accept that qualification? ATTY. LEYNES: Yes, Your Honor. JUSTICE ESCAREAL: Witness may answer: WITNESS: A These documents are more than just prima facie evidence which is the only thing required of us before issuing the Sequestration Order. In fact over and above what is needed there are plenty of evidence of these documents which movant amply justifies our issuing of the Sequestration Order in the sense that there is just no reason no question that there is a preponderance of evidence for the sequestration. ATTY. LEYNES: That would be all, Your Honor. JUSTICE ESCAREAL: How about this 0095? ATTY. LEYNES: In both cases, Your Honor. JUSTICE ESCAREAL: Does the document include any reference to the Allied Banking Corporation? ATTY. LEYNES: Yes, Your Honor; but the Sequestration Order was issued by Commissioner Diaz and Mary Con Bautista. JUSTICE ESCAREAL: With respect to? ATTY. LEYNES: Allied Banking Corporation. May I ask additional questions, Your Honor.

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JUSTICE ESCAREAL: Please proceed. ATTY. LEYNES: Q Dr. Doromal what if any is your participation in the issuance of the Sequestration Order or the Search and Seizure Order against Allied Banking Corporation? A All these Sequestration Orders were brought by the Commission in (sic) banc and we are present with the documents that had been available. We listen to them and the action is made by the Commission and in the issuance of the Sequestration Order. Then whoever is the Commissioner most involved in that particular company thus signs or do sign the Sequestration Order. In this particular case that you mentioned about Allied Banking Corporation, the two other Commissioners who were there ahead of me were the ones who signed because they are most familiar with the Allied Banking Corporation. xxx xxx xxx ATTY. LEYNES: Q Specifically what is your participation in the issuance of the sequestration personally of Allied Banking Corporation? A I am one of the most who participated in the discussion when I became a member and that was April in 1986. xxx xxx xxx ATTY. LEYNES: Q When deliberated upon what documents were considered? xxx xxx xxx WITNESS: A First of all when this Search and Seizure Order was issued this was during the time that I was already a member of the PCGG as Commissioner and when this is brought before the group before the Commission there are the attached documents that backed up this Search and Seizure Order and for that matter other items that have to do with the sequestration or something similar to that so what I am saying the materials that go with this would indicate the reason for the Search and Seizure Order similar to the papers that are needed when we issued the Sequestration Order. ATTY. LEYNES: Q I will show you again this Exhibit 1, these Exhibits 1 to 76 will you please go over the same and state before this Honorable court what relation have these documents to the documents which you mentioned were considered in the deliberation for the issuance of Search and Seizure Order against Allied Banking Corporation? xxx xxx xxx WITNESS: A I am looking at some of these documents that have to do with the Allied Banking Corporation and I recognize some of these and the others I do not see because some of these are materials which were gathered by other groups and their attachments but the others such as this letter, this I remember. xxx xxx xxx ATTY. LEYNES: Q Dr. Doromal in your recollection what is the reason or the finding of the PCGG why the Sequestration Order was issued against Sipalay Trading Corporation or Maranao Hotels and Resorts? WITNESS: A The reason was that in the Maranao Corporation which was the company which was later on acquired by Sipalay Trading Corporation which was the holding company it was our judgment that there are enough indications there that these were acquired because of closeness to the president and that this was really in fact one of those that had been gotten from DBP, Development Bank of the Philippines with the idea being that it was, it could be gotten through the help of the Office of the President and the President himself. xxx xxx xxx

ATTY. LEYNES: Q What if any is the finding of PCGG regarding the ownership of Sipalay Trading Corporation? A Sipalay Trading Corporation was holding company and owner. The people in the ownership is not only Lucio Tan but looks like relatives of Mr. Tan. Q In your recollection Doctor Doromal, what is the finding or reason of companies why it issued the Search and Issue (sic) Order against Allied Banking Corporation? WITNESS: A The Commission wanted to find out documents that would indicate or prove the relationship between President Marcos and Lucio Tan and one way to do that is to have access to the papers to the documents that were in the Allied Banking Corporation. ATTY. LEYNES: That would be all, Your Honor. 33 MARY CONCEPCION BAUTISTA (DIRECT) JUSTICE ESCAREAL: Purpose, please. ATTY. LEYNES: The testimony of the witness is offered for the purpose of proving that when the Presidential Commission on Good Government issued the search and seizure order dated August 13, 1988, the Commission considered ample evidence in the issuance thereof and also to prove that defendant Lucio Tan in concert with defendants Ferdinand Marcos and Imelda Marcos acquired General Bank and Trust Company in violation of existing rules and for remedial consideration and that later on Genbank was converted by defendant Lucio Tan and company to Allied Bank of which defendant Lucio Tan and defendants Ferdinand Marcos owned beneficially. xxx xxx xxx ATTY. LEYNES: Q Madam Witness, what basis or document, if any did the commission consider when it issued the search and seizure order? A We had several documents in our possession at that time one of the documents was a list which have been taken from the office of Imee M. Araneta on EDSA which contained a listing of the holdings of the late President Marcos in several corporations and the extent of his participation on this corporation. And the other, in addition to what have been given by certain informants, another was an affidavit of Mr. Gapud which he had issued wherein he had mentioned also the participation of Mr. Marcos in Allied Banking, I think that affidavit is here and also the fact that deposits were made from Allied Banking in the accounts of Mr. Marcos in the Security Bank. xxx xxx xxx Q Madam Witness, you mentioned certain documents on the basis of which the PCGG issued the search and seizure order against Allied Banking Corporation, I am showing to you a folder containing Exhibit 1 to 18, will you please go over this document and state which of these documents were considered by the Commission when it issued the search and seizure order. A These documents marked Exhibits 1 which is a list, which is a letter, unfortunately I don't see page two of this but this is the document which we have addressed principally, as far as we know addressed to the late President Marcos and together with this we have Exhibit 2, another letter dated March 28, 1977 addressed to the Deputy Governor Mr. Brias about the intention to purchase General Bank and Trust Company and subsequently documents Exhibit 3 signed by Carlota Valenzuela, Special Assistant to the Governor, Exhibit 4 another document marked Confidential signed by Mr. Barin reporting on the action taken regarding Genbank. xxx xxx xxx WITNESS: And another document which has been marked as Exhibit 4, 5, 6, 7, these documents refers to the acquisition by Lucio Tan of the Genbank for the amount of P500,000.00, the commission then considered that plus the fact that the acquisition and transfer of Genbank to the Lucio Tan group was done in a short time without proper observance of public bidding which the Commission then considered to be irregular, so this is one of the documents we look at. Mr. Tan in the acquisition of Genbank had been given a favored treatment.

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xxx xxx xxx WITNESS: This document dated May 17, 1989 under letterhead Allied Banking Corporation addressed to His Excellency President Marcos, President and Prime Minister signed by Lucio Tan. In addition we have a document which has already been marked as Exhibit 12 which is the affidavit of Mr. Rolando Gapud dated January 14, this is series of 1987, in this document Mr. Gapus (sic) has also made an enumeration of deposits made by certain individuals from certain banks among them Allied Banking Corporation for the account of Mr. Marcos in the Security Bank. xxx xxx xxx WITNESS: Exhibits 13 and 13-a which is a listings (sic) of deposits made and placements in the bank, in the bank account of Mr. Marcos. In addition, we have the documents marked up to Exhibits 13-g, h, l, all showing checks or amounts received from Allied Bank deposited in the Security Bank and Trust Company. Exhibits up to Exhibit 13-k, l, m, p, t, v, 2, y and x. 34 xxx xxx xxx ATTY. LEYNES: Q Chairman Bautista, during the last hearing before it was adjourned we were going over this folder containing Exhibits 1 to 80 and we are indicating which of these exhibits were considered by the PCGG when it issued the Search and Seizure Order against Allied Banking Corporation; Will you please go over again this folder and indicate to this Exhibit to whether what was considered by the Presidential Commission on Good Government when it issued the Search and Seizure Order against Allied Banking Corporation. A I recall that we had already pointed to the document marked Exhibit 7 in red which is a letter of Lucio Tan to the Governor Licaros of the Central Bank and the one marked in red as Exhibit 8 which is the letter to Mr. Gregorio Licaros signed by T.O. Domingo, the Allied Banking Report which is marked as Exhibit 9. xxx xxx xxx Q Apart from these exhibits which you have just mentioned what other evidence if any did the Commission consider? A There were for instance the verbal information given to us by individuals as well as the information given to us by Mr. Rolando Gaffud verbally. xxx xxx xxx ATTY. LEYNES: Q What is the finding based on these Exhibits which you mentioned and the information given by Rolando Gaffud which he later on formalized in an affidavit. What finding if any with regards to the Allied Banking Corporation did the Commission arrive that led to the issuance of the Search and Seixure (sic) Order? A The Commission after reviewing al (sic) of these exhibits as with all the information that had come into its possession had come to the conclusion that indeed Mr. Lucio Tan was a close associate of the late President Marcos and they were involved in business associates and transactions and that the late President had substantial holdings in this corporation in which Lucio Tan was also involved and therefore the commission would have to act in accordance to its powers of the sequestration granted under Executive Order No. 1. xxx xxx xxx ATTY. LEYNES: Q To what corporation do you refer to when you mentioned Mr. Marcos has equity in the corporation owned by Lucio Tan? A Among them is precisely Allied Banking Corporation, Asia Brewery and Sipalay Trading Corporation. I mean these are some of the corporations. Q Chairman Bautista, what is the legal basis or authority by the commission of the Presidential Commission on Good Government when it issued the Search and Seizure Order against the Allied Banking Corporation? A The Commission under Executive Order No. 1, the President has been given specifically the power to sequester business and property owned by the late President Marcos, Mrs. Marcos, relatives and closed business associates and to take possession or take over this business and

assets in order to prevent dissipation of these assets or removal of these assets and concealment of these assets and also to take over such documents as the Commission may consider necessary in order that these documents may be preserved for the purpose of the filing of the case in order to prosecute or conduct civil action against President Marcos, Mrs. Marcos, relatives and other close business associates that is very clearly stated in Executive Order No. 1. xxx xxx xxx ATTY. LEYNES: 0100, Your Honor. Q Chairman Bautista, the Search and Seizure Order issued by PCGG dated August 13, 1986 against Allied Banking Corporation reads in pertinent part and I quote: "You are hereby directed to submit for Search and Seizure all bank documents in the above mentioned premises which our representatives may find necessary and relevant to the investigation conducted by the Commission." A Well I think we clearly specify there that we are to seize the bank documents. It is specifically stated that the Search and Seizure Order refers to bank documents precisely because of the information that had been given to us that these documents could be found in the particular place. xxx xxx xxx ATTY. LEYNES: Q Now, Chairman Bautista do you know what happened after the Search and Seizure Order against Allied Banking Corporation? WITNESS. A We were not able to seize any document precisely because of the objection raised and so what happened is that the parties agreed to just seal this place so that neither of the parties would be able to remove any documents. ATTY. LEYNES: That will be all, Your Honor. 35 Dr. Doromal was basically preoccupied with identifying and referring to documents purportedly coming from Malacaang, the US State Department and other sources. What his testimony essentially yields is the fact that the prima facie evidence/s supporting the sequestration order issued against SIPALAY is/are buried and ascertainable in these documents. But, to repeat, any reference thereto is unwarranted since there was no offer thereof in evidence. And it must be emphasized at this point that mere identification of documents and the marking thereof as exhibits do not confer any evidentiary weight on documents not formally offered. In "People v. Santito, Jr." 36 the Court, speaking through Mr. Justice Regalado once again, thus said that: Even assuming that the same had been identified in court, it would have no evidentiary value . Identification of documentary evidence must be distinguished from its formal offer as an exhibit. The first is done in the course of the trial and is accompanied by the marking of the evidence as an exhibit. The second is done only when the party rests its case and not before. The mere fact that a particular document is identified and marked as an exhibit does not mean it will be or has been offered as part of the evidence of the party. The party may decide to formally offer it if it believes this will advance its cause, and then again it may decide not to do so at all. (Emphasis supplied.) Verily then, without the PCGG documents having been formally offered, however decisive and compelling they may otherwise be, it is as if a prima facie case does not exist at all. That makes Dr. Doromal's testimony by and in itself worthless. The same can be said of deceased Commissioner Bautista as well who was similarly immersed in the mechanical process of identification. In fact, her testimony and the documents she referred to were totally unrelated to the sequestration order issued against SIPALAY, as they chiefly dwelt on the search and seizure order issued against ALLIED. Being immaterial, nothing therefrom can shore up a prima facie case against SIPALAY. And it may well be clarified at this juncture that it is the immateriality of deceased Commissioner Bautista's testimony that justified the SANDIGANBAYAN into paying particular attention to Dr. Doromal's testimony in its search for prima facie evidence not the inadmissibility of her testimony arising from her death during cross-examination which we have heretofore adjudged to be a faulty observation. The SANDIGANBAYAN was therefore correct in saying that:

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No direct connection or relationship has been established, at least, as far as the evidence extant on the records of these cases are concerned, between petitioner Sipalay Trading's acquisition and ownership of the sequestered shares of stock and Lucio C. Tan's alleged fraudulent business maneuverings and connivance with the late President Ferdinand E. Marcos. These oral testimonies are practically dependent on the existence of official records of respondent PCGG which, due to the latter's own doing, have not been formally offered. Hence, these oral testimonies have no leg to stand on. 37 xxx xxx xxx Without credible and competent documentary evidence to fortify the witnesses' bare allegations as aforestated, it is difficult to sustain a finding of prima facie case in the proceedings especially taking into account the fact that petitioner Sipalay Trading is presumed by law to possess a separate and distinct judicial personality from its principal stockholders, i.e., Lucio Tan, et al. . . . 38 The difficulty is easier to grasp when reckoned with the various but uniform definitions of prima facie case/evidence aside from that given by the SANDIGANBAYAN, to wit: Prima facie evidence has been defined as evidence which, standing alone unexplained or uncontroverted, is sufficient to maintain the proposition affirmed. It is such as, in judgment of law, is sufficient to establish the fact, and if not rebutted, remains sufficient for that purpose. 39 xxx xxx xxx It is evidence which suffices for the proof of a particular fact until contradicted and overcome by other evidence. 40 xxx xxx xxx It is evidence which, standing alone and unexplained, would maintain the proposition and warrant the conclusion to support which it is introduced. 41 xxx xxx xxx Prima facie case is such as will suffice until contradicted and overcome by other evidence. 42 xxx xxx xxx A prima facie case is one which is apparently established by evidence adduced by plaintiff in support of his case up to the time such evidence stands unexplained and uncontradicted. 43 xxx xxx xxx A prima facie case is one in which the evidence in favor of a proposition is sufficient to support a finding in its favor, if all the evidence to the contrary is disregarded. 44 xxx xxx xxx A litigating party is said to have a prima facie case when the evidence in his favor is sufficiently strong for his opponent to be called on to answer it. A prima facie case, is one which is established by sufficient evidence, and can be overthrown only be rebutting evidence adduced on the other side. 45 From whatever definition we look at it, Dr. Doromal's and deceased Commissioner Bautista's testimonies are by no means sufficiently strong evidence to make up a prima facie case for the PCGG. What gave them colorable weight were the unoffered documents. But as things stand in the absence of such documentary evidence, they are empty and crumble on their own even without counter-explanation or contradiction, as anything that may tend to prove the proposition that the SIPALAY shares in Maranaw Hotels and Resort Corporation were/are ill-gotten is just nowhere extractable from these testimonies by and in themselves. These declarations unfortunately fail to hurdle judicial inspection, proceeding from the principle that a party's evidence is "of necessity subject to a rigid scrutiny" when he possesses, but does not produce, documentary evidence which would be far more satisfactory. 46 We are thus vividly and fittingly reminded of the proverbial words of Mr. Justice Story that: Naked statements must be entitled to little weight when the parties hold better evidence behind the scenes 47 and A party's nonproduction of a document which courts almost invariably expect will be produced unavoidably throws a suspicion over the cause. 48 Corollary to this is that the presumption is always and inevitably against a litigant who fails to furnish evidence within his reach, and it is the stronger when the documents, writings, etc., would be conclusive in establishing his case. 49 This is indeed an occasion to emphasize once again that the superiority of written

evidence, compared with oral, is so pronounced, obvious and well known, that in most cases the deliberate and inexcusable withholding of the written evidence, and effort to secure favorable consideration of oral testimony in the place of it , is an affront to the intelligence of the court. 50 At best, the bare testimonies of Dr. Doromal and deceased Commissioner Bautista, in the eyes of the Court, yield nothing but mere uncorroborated speculations or suspicions insofar as the PCGG attempted to establish the "prima facie factual foundation" that would hold up the sequestration order against SIPALAY. But a fact cannot be found by mere surmise or conjecture. 51 Suspicion cannot give probative force to testimony which in itself is insufficient to establish or to justify an inference of a particular fact, 52 for "the sea of suspicion has no shore, and the court that embarks upon it is without rudder or compass". 53 And as it is not the habit of any courts of justice to yield themselves up in matters of right to mere conjectures and possibilities, 54 courts are not permitted to render verdicts or judgments upon guesses or surmises. 55 Turning now to the evidence for SIPALAY and ALLIED, it unveiled no "prima facie factual foundation" either. Former PCGG secretary and lone witness Atty. Hontiveros, in response to two (2) subpoenas duces tecum 56 requested by counsel for both corporations 57 which required him to bring to the court "all records, including minutes of meeting of the PCGG, its resolutions, together with all supporting evidence or documents of whatever nature" in connection with the issuance of the sequestration order against SIPALAY and the search and seizure order against ALLIED, could only produce the following excerpts of minutes of two (2) PCGG meetings held on March 13 and March 12, 1986: 6. Commissioner Daza also informed the Commissioner that upon the instructions of Minister Salonga, any Commissioner can file or issue a sequestral order provided the order has the conformity verbal or written of another Commissioner. These could include any other order or seizure. 58 xxx xxx xxx 6. Commissioner Pedro L. Yap before his departure on a mission, reported the work he had accomplished during the past days. These included numerous "freeze" and "sequestration" orders. He asked that the list of orders should not be particularized in the minutes. 59 after admittedly spending no less than two (2) months tracing documents to bring to court: ATTY. MENDOZA: xxx xxx xxx Q I am asking you how many months did it take looking for records? A I think more than two months, sir. Q And these were the records you found, marked Exhibits A and B? A Yes, sir, during the time I devoted to them. 60 xxx xxx xxx ATTY. MENDOZA: xxx xxx xxx Q But nonetheless, for two months you tried looking for records corresponding to the subpoena? A Yes, sir. 61 Other than being informative of PCGG internal procedure on how and by whom sequestration orders in general are issued and of the "accomplishments" of one of its then commissioners, the excerpts are absolutely unreflective of any deliberation by PCGG commissioners particularly concerning the sequestration order against SIPALAY, much less the factual basis for its issuance. They do not even make the slightest allusion to SIPALAY, or ALLIED. That Atty. Hontiveros devoted two (2) months for document-searching only to come up with minutes that are as barren as the testimonial evidences of the PCGG validates indeed the claim of respondent corporations which may well sum-up the PCGG's case specifically against SIPALAY, that: The only logical conclusion that may be reached by Atty. Hontiveros' inability to produce PCGG records in regard respondent Sipalay is that there was no evidence before the PCGG or any of its Commissioners which would tend to establish that the shares of stock in Maranaw registered in the name of private respondent Sipalay are ill-gotten. 62 There being no evidence, not even a prima facie one, there was therefore no valid sequestration of the SIPALAY shares in the Maranaw Hotels and Resort Corporation. We hereby re-emphasize the

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indispensability of prima facie evidence by adverting to the Court's pronouncement in "Republic v. Sandiganbayan," 63 to wit: IV. The issue on the existence of prima facie evidence in support of the issuance of a sequestration order has likewise been laid to rest in the BASECO case, in this wise: 8. Requisites for Validity What is indispensable is that, again as in the case of attachment and receivership, there exist a prima facie factual foundation, at least, for the sequestration, freeze or takeover order, and adequate and fair opportunity to contest it and endeavor to cause its negation or nullification. Both were assured under the executive orders in question and the rules and regulations promulgated by the PCGG. a. Prima Facie Evidence as Basis for Orders Executive Order No. 14 enjoins that there be "due regard to the requirements of fairness and due process." Executive Order No. 2 declares that with respect to claims on allegedly "ill-gotten" assets and properties, "it is the position of the new democratic government that President Marcos . . . (and other parties affected) be afforded fair opportunity to contest these claims before appropriate Philippine authorities." Section 7 of the Commission's Rules and Regulations provides that sequestration or freeze (and takeover) orders issue upon the authority of at least two commissioners, based on the affirmation or complaint of an interested party, or motu propio when the Commission has reasonable grounds to believe that the issuance thereof is warranted. A similar requirement is now found in Section 26, Art. XVIII of the 1987 Constitution, which requires that a "sequestion or freeze order shall be issued only upon showing of a prima facie case." (Emphasis in the original text) Notably the PCGG, in what apparently appears to be a desperate attempt to slither its way out of its failure to show a prima facie case, would now argue that: . . . it is worth-mentioning the fact that the FREEDOM CONSTITUTION under which Executive Order Nos. 1, 2, 14 and 14-A had been issued, categorically authorized the issuance of writs of sequestration without requiring any finding of prima facie evidence to support such issuance. Nevertheless, the PCGG saw to it that before any writ of sequestration was issued, the Commissioners carefully examined and weighed the evidence on hand that would justify such issuance of sequestration order. The FREEDOM CONSTITUTION provides under Article II, Section 1, the following: Sec. 1. Until a legislature is elected and convened under a New Constitution, the President shall continue to exercise legislative power. The President shall give priority to measures to achieve the mandate of the people to: a) . . . b) . . . c) . . . and d) Recover ill-gotten properties amassed by the leaders and supporters of the previous regime and protect the interest of the people through orders of sequestration or freezing of assets or accounts. It is only in the 1987 Constitution that the existence or finding of prima facie case was required before a sequestration order could be issued. The writ of sequestration in question was issued long before the ratification of the 1987 Constitution; hence, it was covered by the Freedom Constitution which did not require, the prior finding of prima facie evidence. 64 This argument is clearly without merit in the face of this Court's pronouncement in the "Baseco" case, 65 that: Parenthetically, even if the requirement for a prima facie showing of ill-gotten wealth were not expressly imposed by some rule or regulation as a condition to warrant the sequestration or freezing of property contemplated in the executive orders in question, it would nevertheless be exigible in this jurisdiction in which the Rule of Law prevails and official acts which are devoid of rational basis in fact or law, or are whimsical and capricious, are condemned and struck down. Going now to the case of ALLIED, the principal objection raised regarding the order issued against it is that the PCGG made use of an unauthorized and constitutionally defective search warrant to effect the sequestration. The SANDIGANBAYAN saw and declared it as such. We agree. There can be no doubt that the order which the PCGG issued against ALLIED typifies a search warrant (full text of which appears in the early part of this decision). Not only is the order captioned

as SEARCH AND SEIZURE ORDER, the body thereof clearly enjoined the branch manager to make available to the PCGG team all bank documents precisely for that purpose. It is unauthorized because nowhere in the same Executive Order No. 1 66 (particularly Section 3) invoked by the PCGG to justify the search and seizure order was the PCGG expressly empowered to issue such specie of a process in pursuit of its mandated purpose of recovering ill-gotten/unexplained wealth. Section 3 of E.O. No. 1 enumerates the following powers of the PCGG: Sec. 3. The Commission shall have the power and authority: (a) To conduct investigation as may be necessary in order to accomplish and carry out the purposes of this order. (b) To sequester or place or cause to be placed under its control or possession any building or office wherein any ill-gotten wealth or properties may be found, and any records pertaining thereto, in order to prevent their destruction, concealment or disappearance which would frustrate or hamper the investigation or otherwise prevent the Commission from accomplishing its task. (c) To provisionally take over in the public interest or to prevent its disposal or dissipation, business enterprises and properties taken over by the government of the Marcos administration or by entities or persons close to former President Marcos, until the transactions leading to such acquisition by the latter can be disposed of by the appropriate authorities. (d) To enjoin or restrain any actual or threatened commission of acts by any person or entity that may render moot and academic, or frustrate, or otherwise make ineffectual the efforts of the Commission to carry out its tasks under this order. (e) To administer oaths, and issue subpoenas requiring the attendance and testimony of witnesses and/or the production of such books, papers, contracts, records, statement of accounts and other documents as may be material to the investigation conducted by the Commission. (f) To hold any person in direct or indirect contempt and impose the appropriate penalties, following the same procedures and penalties provided in the Rules of Court. (g) To seek and secure the assistance of any office, agency or instrumentality of the government. (h) To promulgate such rules and regulations as may be necessary to carry out the purposes of this order. The Court in "Cojuangco, Jr. v. PCGG" 67 simplified these powers in this wise: From the foregoing provisions of law, it is clear that the PCGG has the following powers and authority: 1. To conduct an investigation including the preliminary investigation and prosecution of the illgotten wealth cases of former President Marcos, relatives and associates, and graft and corruption cases assigned by the President to it; 2. Issue sequestration orders in relation to property claimed to be ill-gotten; 3. Issue "freeze orders" prohibiting persons in possession of property alleged to be ill-gotten from transferring or otherwise disposing of the same; 4. Issue provisional takeover orders of the said property; 5. Administer oaths and issue subpoenas in the conduct of investigation; 6. Hold any person in direct or indirect contempt and impose the appropriate penalties as provided by the rules. Neither can it be validly argued by the PCGG that its authority to issue a search and seizure order possessing the essential features of a search warrant is derivable from subparagraphs (b) and (c) of Section 3 of E.O. No. 1 or from No. 4 of the simplified enumeration in the " Cojuangco" case, by implication. "Baseco" has clarified once and for all the essential nature of the provisional measures of sequestration, freeze orders and provisional takeover that the PCGG is explicitly equipped with: As thus described, sequestration, freezing and provisional takeover are akin to the provisional remedy of preliminary attachment, or receivership. By attachment, a sheriff seizes property of a defendant in a civil suit so that it may stand as security for the satisfaction of any judgment that may be obtained, and not disposed of, or dissipated, or lost intentionally or otherwise, pending the action. By receivership, property, real or personal, which is subject of litigation, is placed in the possession and control of a receiver appointed by the Court, who shall conserve it pending final determination of the title or right or possession over it. All these remedies sequestration, freezing, provisional takeover, attachment and receivership are provisional, temporary, designed

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for particular exigencies, attended by no character or permanency or finality, and always subject to the control of the issuing court or agency. Attachment and receivership are legal processes purely conservatory in character, not involving an active and drastic intrusion into and confiscation of properties as what a search warrant (or search and seizure order) necessarily entails. All processes that the PCGG is allowed to issue in discharging the duty for which it was created, therefore, ought to be viewed strictly in this context. And this finds further support in "Philippine Coconut Producers Federation, Inc. [COCOFED] v. PCGG" 68 where the Court stressed anew that: The question of the validity of PCGG sequestration and freeze orders as provisional measures to collect and conserve the assets believed to be ill-gotten wealth has been laid to rest in BASECO vs. PCGG (150 SCRA 181) where this Court held that such orders are not confiscatory but only preservative in character, not designed to effect a confiscation of, but only to conserve properties believed to be ill-gotten wealth of the ex-president, his family and associates, and to prevent their concealment, dissipation, or transfer, pending the determination of their true ownership. (Emphasis supplied) Being in fact a search warrant, the SEARCH AND SEIZURE ORDER cannot escape, and must pass, the acid test for validity as provided by the prevailing constitution under which it was issued the FREEDOM CONSTITUTION which adopted verbatim the provision of the 1973 Constitution (Section 3, Article IV) relating to search warrants, to wit: The right of the people to be secure in their persons, houses, papers, and effects against unreasonable searches and seizures of whatever nature and for any purpose shall not be violated, and no search warrant or warrant of arrest shall issue except upon probable cause to be determined by the judge, or such other responsible officer as may be authorized by law, after examination under oath or affirmation of the complainant and the witnesses he may produce, and particularly describing the place to be searched, and the person or things to be seized. Supporting jurisprudence thus outlined the following requisites for a search warrant's validity, the absence of even one will cause its downright nullification: (1) it must be issued upon probable cause; (2) the probable cause must be determined by the judge himself and not by the applicant or any other person; (3) in the determination of probable cause, the judge must examine, under oath or affirmation, the complainant and such witnesses as the latter may produce; and (4) the warrant issued must particularly describe the place to be searched and persons or things to be seized. 69 In addition to its unauthorized issuance (as just discussed), the SEARCH AND SEIZURE ORDER is so constitutionally defective. Firstly, as it suffered from the same inherent weakness or emptiness as that which marred Dr. Doromal's testimony (as earlier discussed extensively), deceased Commissioner Bautista's in-court declarations did not in any way establish probable cause which has been consistently defined as: . . . such facts and circumstances which would lead a reasonably discreet and prudent man to believe that an offense has been committed, and that objects sought in connection with the offense are in the place sought to be searched. This probable cause must be shown to be within the personal knowledge of the complainant or the witnesses he may produce and not based on mere hearsay. 70 This is so because, as what her testimony irresistibly suggested, the purported facts and circumstances supporting the order are exclusively traceable from documents she identified but which were never formally offered in evidence in the SANDIGANBAYAN. She never testified to any fact of her own personal knowledge to bolster the PCGG's claim that ALLIED was in possession and control of illegally-amassed wealth by Lucio Tan. Her testimony, therefore, is plain hearsay, self-serving, or uncorroborated suspicion. And the rule is that search warrants are not issued on loose, vague or doubtful basis of fact, nor on mere suspicion or belief. 71 Secondly, the PCGG has no authority to issue the order in the first place. Only a "judge" and "such other responsible officer as may be authorized by law " were empowered by the FREEDOM CONSTITUTION to do so, and the PCGG is neither. It is not a judge, as clarified by the Court in "Baseco", to wit:

It should also by now be reasonably evident from what has thus far been said that the PCGG is not, and was never intended to act as, judge. Its general function is to conduct investigations in order to collect evidence establishing instances of "ill-gotten wealth"; issue sequestration, and such orders as may be warranted by the evidence thus collected and as may be necessary to preserve and conserve the assets of which it takes custody and contral and prevent their disappearance, loss or dissipation; and eventually file and prosecute in the proper court of competent jurisdiction all cases investigated by it as may be warranted by its findings. It does not try and decide, or hear and determine, or adjudicate with any character of finality or compulsion, cases involving the essential issue of whether or not property should be forfeited and transferred to the State because "ill-gotten" within the meaning of the Constitution and the executive orders. This function is reserved to the designated court, in this case, the Sandiganbayan. There can therefore be no serious regard accorded to the accusation, leveled by BASECO, that the PCGG plays the perfidious role of prosecutor and judge at the same time. (Emphasis supplied.) And the PCGG cannot be considered as "such other responsible officer as may be authorized by law" because Executive Order No. 1, to reiterate, did not expressly nor impliedly grant the PCGG the power to issue search warrants orders. Thirdly, the order does not provide a specification of the documents sought to be searched/seized from ALLIED. The body thereof, to quote again, reads: By virtue of the powers vested in the Commission by the President of the Republic of the Philippines, you are hereby directed to submit for search and seizure all bank documents in the aforementioned premises which our representative may find necessary and relevant to the investigation being conducted by this Commission. xxx xxx xxx It expressly refers to "all bank documents" which is too all-embracing, the obvious intent of which is to subject virtually all records pertaining to all business transactions of ALLIED of whatever nature, to search and seizure. Such tenor of a seizure warrant is not a particular description, 72 thus contravening the explicit command of the Constitution that there be a particular description of things to be seized. 73 Being a general warrant, the SEARCH AND SEIZURE ORDER is constitutionally objectionable 74 and to be more precise, void for lack of particularity. 75 We end our discussion on this matter with the Court's admonition in "People v. Veloso": 76 A search warrant must conform strictly to the requirements of the constitutional and statutory provisions under which it was issued. Otherwise, it is void. The proceedings upon search warrants, it has rightly been held, must be absolutely legal, "for there is not a description of process known to the law, the execution of which is more distressing to the citizen. Perhaps there is none which excites such intense feeling in consequence of its humiliating and degrading effect." The warrant will always be construed strictly without, however, going the full length of requiring technical accuracy. No presumptions of regularity are to be invoked in aid of the process when an officer undertakes to justify under it. The third key issue should therefore be answered in the affirmative, i.e., the nullification of the sequestration and search and seizure orders was in order. The last key issue involves another constitutional imperative i.e., that the corresponding suit or suits against a sequestered entity or entities should be brought in the proper court, the Sandiganbayan to be precise, 77 within the prescribed period failure of which automatically lifts the sequestration order or orders issued. Up for determination is whether under the factual features of the case, there was compliance with this rule as professed by the PCGG, or non-observance thereof, as argued and declared by respondent corporations and the SANDIGANBAYAN, respectively. Stress should be given to the fact that the Court's resolution of this crucial issue would particularly apply to SIPALAY inasmuch as it involves a sequestration order not to ALLIED against whom was issued a search and seizure order that we have just heretofore declared as void. Nonetheless, for simplicity's sake, such resolution can be made to cover ALLIED's case as well. We thus forego with the distinction in this instance and assume that ALLIED was sequestered via sequestration order similar to that issued against SIPALAY. At the fore once again is Section 26, Article XVIII of the 1987 Constitution, specifically the second and third paragraphs: Sec. 26.

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xxx xxx xxx A sequestration or freeze order shall be issued only upon showing of a prima facie case. The order and the list of the sequestered or frozen properties shall forthwith be registered with the proper court. For orders issued before the ratification of this Constitution, the corresponding judicial action or proceeding shall be filed within six months from its ratification. For those issued after such ratification, the judicial action or proceeding shall be commenced within six months from the issuance thereof. The sequestration or freeze order is deemed automatically lifted if no judicial action or proceeding is commenced as herein provided. And here are the relevant and undisputable facts: The 1987 Constitution was ratified on February 2, 1987. Counting six (6) months therefrom, August 2, 1987 was the constitutional deadline for the PCGG to file the corresponding judicial action/proceeding against entity or entities it sequestered prior to February 2, 1987. Among such entity or entities were SIPALAY and ALLIED, the dates of their sequestration as appearing from the corresponding orders issued against them are July 14, 1986 and August 13, 1986, respectively. The PCGG admittedly did not file any direct complaint either against SIPALAY or ALLIED before the SANDIGANBAYAN between February 2 and August 2 of 1987. But within such period, specifically on July 17, 1987, the PCGG filed before the SANDIGANBAYAN a civil case against Lucio Tan and others, for "Reversion, Reconveyance, Restitution, Accounting and Damages", docketed as CC No. 0005. 78 The original complaint in CC No. 0005 did not name SIPALAY and ALLIED as defendants, as it enumerated only natural persons, except for one, 79 as such. SIPALAY and ALLIED were impleaded as defendants in CC No. 0005 for the first time only after the lapse of more than four (4) years from the filing of the original complaint in July of 1987, under an amended complaint filed by the PCGG in September of 1991. Given this factual backdrop, two propositions are being bruited by the PCGG: 1) that the July 17, 1987 original complaint against Lucio C. Tan, et al. (CC No. 0005) is the judicial action required by the 1987 Constitution to justify the continued sequestration of SIPALAY (and ALLIED), and 2) even assuming arguendo that such original complaint was defective for not naming therein SIPALAY and ALLIED as defendants, still there was faithful compliance with the constitutional mandate, since the September, 1991 amended complaint impleading SIPALAY and ALLIED as defendants even when filed beyond the August 2, 1987 deadline retroacted to July 17, 1987 which, thus, cured the defect. Both propositions have to be rejected. As to the first, the SANDIGANBAYAN correctly struck it down by following the doctrine laid down in "PCGG v. International Copra Export Corporation, Interco Manufacturing Corporation and Sandiganbayan" 80 ("INTERCO" case, for short). We thus quote with approval the pertinent disquisitions, to wit: . . . On not a few occasions, the Court has sustained the merit and logic of motions seeking the lifting of writs of sequestration for respondent PCGG's failure to institute the corresponding judicial action or proceeding against corporations which, either through sheer oversight or gross neglect, have not been expressly impleaded in the various civil complaints filed before this Court. The case of "PCGG v. International Copra Export Corporation, et al." (INTERCO case) is illuminating on this point. Therein, the Supreme Court made a distinction between the juridical personalities of a corporation and its stockholders, ruling that if a corporation is not impleaded, it cannot be deemed to have been sued in an action against its stockholders. A perusal of the original complaint in Civil Case No. 0005, which was concededly filed within the six-month period provided for under the organic law, reveals that petitioner Sipalay Trading was not specifically impleaded therein as party-defendant, either in a nominal or principal capacity. If at all, the latter has been included therein as part of principal defendant's ill-gotten assets. Under Rule 3, Section 7 of the Rules of Court, "(P)arties in interest without whom no final determination can be had of an action shall be joined either as plaintiffs or defendants." It bears emphasis along this vein that, as implied from INTERCO, petitioner Sipalay Trading has a juridical personality separate and distinct from its stockholders. As such, any civil charge filed against principal defendant Lucio C. Tan and/or his dummies or agents is not deemed a suit against

the former. Neither does mere inclusion in the list of ill-gotten assets as part of principal defendant's ill-gotten wealth suffice to comply with the constitutional injunction. Impleading a party means bringing the suit against it. Listing or annexing it to the complaint, on the other hand, implies being the object of the action. xxx xxx xxx It must be stated with equal respect that the phrase "judicial action or proceeding," within the meaning of the organic law, is subject to the ordinary rules of procedure and is subordinate to the requirements of due process. Failure to implead petitioner corporation in the action within the constitutional period is, therefore, patently transgressive of the constitutional mandate against deprivation of life, liberty and property without due process of law. 81 To fortify this ruling, we need only to point out the similarity in factual antecedents obtaining in "INTERCO" and the instant case. In "INTERCO", no judicial action or proceeding was instituted by the PCGG directly against respondent corporations therein (International Copra Export and International Manufacturing) which it sequestered on June 10, 1987 purportedly upon a prima facie finding that certain shares of stocks in those corporations are beneficially owned but were acquired with ill-gotten wealth by Eduardo Cojuangco, Jr., within six (6) months from the date of their sequestration i.e., between June 10, 1987 and December 10, 1987. And the PCGG in "INTERCO" likewise filed a complaint before the SANDIGANBAYAN on July 31, 1987 against Eduardo Cojuangco, Jr., among others (Civil Case No. 0033) without, however, impleading respondent corporations as parties-defendants. The Court in "INTERCO" rejected the PCGG's contention that the July 31, 1987 complaint against Cojuangco, Jr., et al. was substantial compliance with the requirement under Section 26, Article XVIII of the 1987 Constitution, by upholding very fundamental principles in corporation law: In this jurisdiction, a corporation has a legal personality distinct and separate from its stockholders. Thus, a suit against any of the stockholders is not ipso facto a suit against the corporation. xxx xxx xxx There is likewise no merit to petitioner's argument that the doctrine which justifies the "piercing of the veil of corporate fiction" is applicable to the case at bar. The Sandiganbayan correctly found the record bereft of sufficient basis from which to conclude that private respondents' respective corporate identities have been used to defeat public convenience, protect fraudulent schemes, or evade obligations and liabilities under statutes. Whether or not Enrique Luy, a major stockholder of private respondents, acted as a dummy of Eduardo Cojuangco, Jr., and whether or not the shareholders of Enrique Luy are beneficially owned by Eduardo Cojuangco, Jr., are matters still to be established in Civil Case No. 0033. But as far as private respondents are concerned, inclusion of their major stockholder in Civil Case No. 0033 does not detract from, nor excuse, petitioner's failure to file the proper judicial action against them in compliance with the constitutional requirement under Section 26 of Article XVIII. And following the rule, elsewise stated, that cases circumstanced identically should be resolved consistently, adherence to the ruling of the Court in "INTERCO" is necessary and inescapable. Regarding its second proposition, the PCGG erroneously relies on "Pangasinan Transportation Co. v. Philippine Farming Co., Ltd." 82 where it was ruled to the effect that: Where the original complaint states a cause of action, but does it imperfectly, and afterward an amended complaint is filed, correcting the defect, the plea of statute of limitations will relate to the time of filing the original complaint. The "Pangasinan" case dealt solely with a defect in the cause of action stated in the original complaint filed by therein petitioner Pangasinan Transport against its competitor, respondent Philippine Farming before the Public Service Commission; for illegal reduction of rates i.e., nonspecification of the acts constituting the offense. It did not in any way involve a failure to implead a party-defendant which is an entirely different thing from a defective cause of action. The scope of the retroactive and curative effect of an amended complaint as declared in "Pangasinan" therefore ought not be broadened so as to cover infirmities in the original complaint other than amendable imperfections in a cause of action. In fact, insofar as the failure to implead a party or parties in the original complaint is specifically concerned, the Court on at least two occasions said that the rule in "Pangasinan" would not apply to the party impleaded for the first time in the amended complaint. These are the cases of "Aetna Insurance Co. v. Luzon Stevedoring Corporation" 83 and "Seno, et

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al., v. Mangubat, et al." 84 cited by herein SIPALAY and ALLIED in their "Comment." In "Aetna", the amended complaint filed by therein appellant Aetna Insurance Co. as plaintiff before the then CFI of Manila impleading Barber Line Far East Service as defendant for the first time, was filed beyond the one-year period fixed in the Carriage of Goods by Sea Act. In "Seno", one Andres Evangelista and Bienvenido Mangubat were likewise impleaded as defendants for the first time under an amended complaint filed beyond the ten-year period required under Article 1144 of the New Civil Code within which to bring an action upon a written contract. And in both cases, the Court affirmed the dismissal of the complaints against these newly impleaded defendants by refusing the application of the "Pangasinan" ruling and decreeing that the amended complaints did not stall the running of the prescription periods provided under the applicable laws. Bearing once again similar factual features as the "Aetna" and "Seno" cases, this particular sub-issue should, perforce, be resolved in accordance therewith. This Court is, of course, fully aware of that very recent case of "Republic v. Sandiganbayan, et al.", 240 SCRA 376 [January 23, 1995], where its "Final Dispositions" relating to the judicial action/proceeding in sequestration cases appear to clash with " INTERCO". In resolving what appeared to be the "crucial question" involved in that 1995 "Republic v. Sandiganbayan" case, to wit: DOES INCLUSION IN THE COMPLAINTS FILED BY THE PCGG BEFORE THE SANDIGANBAYAN OF SPECIFIC ALLEGATIONS OF CORPORATIONS BEING "DUMMIES" OR UNDER THE CONTROL OF ONE OR ANOTHER OF THE DEFENDANTS NAMED THEREIN AND USED AS INSTRUMENTS FOR ACQUISITION, OR AS BEING DEPOSITARIES OR PRODUCTS, OF ILL-GOTTEN WEALTH; OR THE ANNEXING TO SAID COMPLAINTS OF A LIST OF SAID FIRMS, BUT WITHOUT ACTUALLY IMPLEADING THEM AS DEFENDANTS, SATISFY THE CONSTITUTIONAL REQUIREMENT THAT IN ORDER TO MAINTAIN A SEIZURE EFFECTED IN ACCORDANCE WITH EXECUTIVE ORDER NO. 1, s. 1986, THE CORRESPONDING "JUDICIAL ACTION OR PROCEEDING" SHOULD BE FILED WITHIN THE SIX-MONTH PERIOD PRESCRIBED IN SECTION 26, ARTICLE XVIII, OF THE (1987) CONSTITUTION? the Court made these conclusions: It is thus both needful and timely to pronounce that: 1) Section 26, Article XVIII of the Constitution does not, by its terms or any fair interpretation thereof, require that corporations or business enterprises alleged to be repositories of "ill-gotten wealth", as the term is used in said provision, be actually and formally impleaded in the actions for the recovery thereof, in order to maintain in effect existing sequestrations thereof; 2) complaints for the recovery of ill-gotten wealth which merely identify and/or allege said corporations or enterprises to be the instruments, repositories or the fruits of ill-gotten wealth, without more, come within the meaning of the phrase "corresponding judicial action or proceeding" contemplated by the constitutional provision referred to; the more so, that normally, said corporations, as distinguished from their stockholders or members, are not generally suable for the latter's illegal or criminal actuations in the acquisition of the assets invested by them in the former; 3) even assuming the impleading of said corporations to be necessary and proper so that judgment may comprehensively and effectively be rendered in the actions, amendment of the complaints to implead them as defendants may, under existing rules of procedure, be done at any time during the pendency of the actions thereby initiated, and even during the pendency of an appeal to the Supreme Court a procedure that, in any case, is not inconsistent with or proscribed by the constitutional time limits to the filing of the corresponding complaints "for" i.e., with regard or in relation to, in respect of, or in connection with, or concerning orders of sequestration, freezing, or provisional takeover. These fresh pronouncements, however, did not reverse, abandon or supplant "INTERCO". What the Court did was to explain the two apparently colliding dispositions by making this "hairline", but critical, distinction: XVI. The "Interco" and "PJI" Rulings This Court is not unmindful of the fact that its Resolution of July 26, 1991 on the petitioner's motion for reconsideration in G.R. No. 92755 (PCGG vs. Interco) appears to sustain the proposition that actual impleading in the recovery action of a corporation under sequestration for being a repository of illegally-acquired wealth, is necessary and requisite for such proposed or pending seizure to

come under the protective umbrella of the Constitution. But Interco is to be differentiated from the cases now under review in that in the former, as already elsewhere herein made clear, there was a lack of proof, even of the prima facie kind, that Eduardo Cojuangco, Jr. owned any stock in Interco, the evidence on record being in fact that said corporation had been organized as a family corporation of the Luys. So, too, this Court's judgment in the so-called "PJI Case" (Republic of the Philippines [PCGG] v. Sandiganbayan and Rosario Olivares) may not be regarded as on all fours with the cases under consideration. The PJI Case involved the shares of stock in the name of eight (8) natural persons which had never been sequestered at all. What happened was that the PCGG simply arrogated unto itself the right to vote those unsequestered shares on the bare claim that the eight (8) registered owners thereof were "dummies" of Benjamin Romualdez, the real owner of the shares; and all that the PCGG had done as predicate for that act of appropriation of the stock, was to include all the shares of PJI in a list (Annex A) appended to its complaint in Sandiganbayan Case No. 0035, describing them as among the properties illegally acquired by Romualdez. Unfortunately, as in Interco, the PCGG failed to substantiate by competent evidence its theory of clandestine ownership of Romualdez; and since moreover, there had been no sequestration of the alleged dummies' shares of stock, it was undoubtedly correct for the Sandiganbayan to grant the latter's motion for them to be recognized and declared as the true owners of the stock in question, which judgment this Court subsequently pronounced to be free from grave abuse of discretion. 85 We need only to recall at this juncture that, as in "INTERCO", evidence of the PCGG is nil to even come up with a prima facie case against SIPALAY (and ALLIED). This similitude is the one decisive factor that draws the instant case away from the "Final Dispositions" made by the Court in the 1995 "Republic v. Sandiganbayan" case thus making "INTERCO", as supported by the "Aetna" and "Seno" cases, the controlling precedent. The principle of StareDecisis, indeed, is most compelling, for "when the court has once laid down a principle of law as applicable to a certain state of facts, it will adhere to that principle and apply it to all future cases where the facts are substantially the same." 86 And it is in this light that Mr. Justice Padilla's lone "Dissent" in the 1995 "Republic v. Sandiganbayan" case becomes meaningfully relevant, to wit: . . . failure to implead these corporations as defendants and merely annexing a list of such corporations to the complaints is a violation of their right to due process for it would in effect be disregarding their distinct and separate personality without a hearing. In cases where stocks of a corporation were allegedly the fruits of ill-gotten wealth, it should be remembered that in most of these cases the stocks involved constitute a substantial if not controlling interest in the corporations. The basic tenets of fair play demand that these corporations be impleaded as defendants since a judgment in favor of the government will undoubtedly substantially and decisively affect the corporations as distinct entities. The judgment could strip them of everything without being previously heard as they are not parties to the action in which the judgment is rendered. . . . Holding that the "corresponding judicial action or proceeding" contemplated by the Constitution is any action concerning or involving the corporation under sequestration is oversimplifying the solution, the result of which is antagonistic to the principles of justice and fair play. . . . the actions contemplated by the Constitution should be those which include the corporation not as a mere annex to the complaint but as defendant. This is the minimum requirement of the due process guarantee. Short of being impleaded, the corporation has no standing in the judicial action. It cannot adequately defend itself. It may not even be heard. On the . . . opinion that alternatively the corporations can be impleaded as defendants by amendment of the complaint, Section 26, Article XVIII of the Constitution would appear to preclude this procedure, for allowing amendment of the complaint to implead theretofore unimpleaded corporations would in effect allow complaints against the corporations to be filed beyond the periods fixed by said Section 26. Justice Amuerfina Melencio-Herrera in her separate opinion in Bataan Shipyard and Engineering Corporation, Inc. v. PCGG (150 SCRA 181, 253) correctly stated what should be the rule, thus: Sequestration is an extraordinary, harsh and severe remedy. It should be confined to its lawful parameters and exercised, with due regard, in the words of its enabling laws, to the requirements of fairness, due process, and Justice. (Emphasis supplied)

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While government efforts to recover illegally amassed wealth should have support from all its branches, eagerness and zeal should not be allowed to run berserk, overriding in the process the very principles that it is sworn to uphold. In our legal system, the ends do not always justify the means. Wrongs are never corrected by committing other wrongs, and as above-discussed the recovery of ill-gotten wealth does not and should never justify unreasonable intrusions into constitutionally forbidden grounds. . . . In answer therefore to the last key issue, we hold that the sequestration and the search and seizure orders issued were indeed automatically lifted. Finally, the PCGG in its "Reply" raises as "additional issue" the bias and partiality of the nowassailed decision's ponente and Chairman of the SANDIGANBAYAN's SECOND DIVISION, Justice Romeo Escareal. To bolster this charge, the PCGG harps on alleged prejudicial acts committed by Justice Escareal affecting CC No. 0005 the case filed against Lucio C. Tan, and the instant case (S.B. Nos. 0095 against SIPALAY and 0100 against ALLIED). This issue deserves no merit at all. Firstly, the PCGG's complaints against Justice Escareal's purported bias and partiality in CC No. 0005 have no bearing whatsoever to the instant case. That should be ventilated and passed upon there, not here. And secondly, SIPALAY and ALLIED in their "Rejoinder" meritoriously parried the PCGG's accusation by arguing that: 1.02. Petitioner apparently overlooks that the Sandiganbayan is a collegiate court which sits in divisions composed of three (3) members each. The unanimous vote of all the three (3) members of a division is required for the rendition of a judgment (See Section 1(b), Rule XVIII, Revised Rules of the Sandiganbayan). The Decision and Resolution subject of the present appeal, though penned by Justice Romeo Escareal, the Chairman of the Second Division of the Sandiganbayan, were concurred in by the two (2) other members of the Sandiganbayan's Second Division. Such being the case, petitioner's fears of bias or partiality on the part of Justice Romeo Escareal cannot affect the questioned Decision and Resolution rendered by the Sandiganbayan (Second Division). As held by this Honorable Court in Miriam Defensor-Santiago vs. Hon. Justice Francis Garchitorena, et al. (G.R. No. 109226, December 2, 1993): Notwithstanding petitioner's misgiving, it should be taken into consideration that the Sandiganbayan sits in three divisions with three justices in each division. Unanimity among the three members is mandatory for arriving at any decision of a division. (P.D. 1606, Sec. 5). The collegiate character of the Sandiganbayan thus renders baseless petitioner's fear of prejudice and bias on the part of Presiding Justice Garchitorena (Paredes vs. Gopenco, 29 SCRA 688 [1969]) G.R. Nos. 115121-25 February 9, 1996 NATIONAL FOOD AUTHORITY and ROMEO G. DAVID, petitioners, vs. THE HON. COURT OF APPEALS, HON. BERNARDO P. ABESAMIS, Presiding Judge, Regional Trial Court, Branch 85, Quezon City, HON. RODOLFO ORTIZ, Presiding Judge, Regional trial Court, Branch 89, Quezon City, HON. TIRSO D. C. VELASCO, Presiding Judge, Regional Trial Court, Branch 88, Quezon City, HON. BENEDICTO B. ULEP, Presiding Judge, Branch 105, Quezon City, HON. JUSTO M. SULTAN, Presiding Judge, Branch 98, Quezon City, COL. FELIX M. MANUBAY, MASADA SECURITY AGENCY, CONTINENTAL WATCHMAN AND SECURITY AGENCY, ALBERTO T. LASALA, and NORMAN D. MAPAGAY, respondents. DECISION PUNO, J.: The case at bar involves the legality of negotiated security contracts awarded by the National Food Authority (NFA), a government-owned and controlled corporation and its Administrator, Romeo G. David, to several private security agencies, in default of a public bidding. Petitioners NFA and David seek a modification of the decision of the Court of Appeals insofar as it nullifies and enjoins the implementation of the said negotiated security contracts. The facts are not disputed. In 1990, the NFA, through then Administrator Pelayo J. Gabaldon, conducted a public bidding to award security contracts for the protection of its properties and facilities all over the country . Twelve security agencies were awarded one-year contracts, among whom were private

respondents Col. Felix M. Manubay (doing business under the name Greenview Investigation and Security Agency), Continental Watchman and Security Agency, Alberto T. Lasala (doing business under the name PSF Watchman and Investigation Agency) and Norman D. Mapagay (doing business under the name People's Protective and Security Agency). In August 1992, petitioner Romeo G. David became NFA Administrator. He caused a review of all security service contracts, procedures on the accreditation of private security agencies and the bidding for security services. Pending this review, Administrator David extended the services of private respondents and the other incumbent security agencies on a periodic basis. The review was completed in March 1993 and new terms for accreditation, bidding and hiring of security agencies were made. The bidding areas were also reclassified and reduced from fourteen NFA regions to only five NFA areas nationwide. A special order was thereafter issued for the implementation of the new rules and procedure. On April 6, 1993, Special Order No. 04-07 was issued under which Administrator David created a Prequalification, Bids and Awards Committee (PBAC) to undertake the prequalification of prospective bidders, conduct the bidding, evaluate the bids tendered and recommend to the Administrator the bids accepted. Notices for prequalification and bidding for security services were published in a newspaper of national circulation. All incumbent security contractors were required to prequalify and only those prequalified were to be allowed to participate in the prebidding and bidding scheduled on June 4 and 18, 1993, respectively. The prebidding and bidding dates were later reset to June 18 and 30, 1993 to give more time for the participants to comply with documentary requirements. Forty-one security agencies, composed of the incumbents and new applicants, including private respondent Masada Security Agency, submitted the necessary documents for prequalification. Upon a review of the documents submitted, the PBAC disqualified respondent Mapagay for failure to submit proof of his financial capability to support his bid. It also disqualified respondent Lasala for alleged failure to meet the five-year service requirement. Only respondents Manubay, Continental and Masada participated in the prebidding and were declared on June 17, 1993 prequalified to bid. Meanwhile, however, two of the applicants who failed to prequalify, namely Lanting Security and Watchman Agency and respondent Lasala, filed separate complaints with the Regional Trial Court, Quezon City to restrain Administrator David and the PBAC from proceeding with the public bidding. As prayed for, restraining orders were issued by the two courts on June 29, 1993 which the NFA received on June 30, 1993, the day of the scheduled bidding. No bidding thus took place on said date. On respondent Lasala's application, the Regional Trial Court, Branch 93, Quezon City issued on July 20, 1993 a preliminary injunction ordering the PBAC to refrain from proceeding with the bidding until the merits of the case shall have been heard and resolved. During the effectivity of the writ of preliminary injunction, Administrator David sent to all incumbent security agencies, including four of herein private respondents, notices of termination dated July 30, 1993. Private respondents .were informed that their services were to end on August 16, 1993 inasmuch as their respective contracts had expired and they no longer enjoyed the trust and confidence of the NFA. They were thus instructed to withdraw their security guards from all NFA installations. On August 4, 1993, Administrator David contracted the services of seven new security agencies starting August 16, 1993 on a month-to-month basis pending resolution of the injunction against the bidding. Private respondents forthwith filed separate complaints with the Regional Trial Court, Branches 85, 89, 88, 105 and 98, Quezon City for prohibition, mandamus and damages with a prayer for the issuance of a preliminary injunction and restraining order. 1 The trial courts issued five separate restraining orders and injunctions ordering the NFA to desist from terminating the services of respondents, and from awarding and installing the new security agencies replacing them. These orders were challenged by NFA and David in separate petitions before the Court of Appeals alleging grave abuse of discretion by respondent judges. The Court of Appeals consolidated the petitions and on March 11, 1994 rendered a decision partially granting the same by annulling that part of the orders restraining NFA from terminating the contracts with the incumbent security

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agencies but affirming the orders insofar as they enjoined NFA from awarding the contracts to the seven new security agencies. The Court of Appeals ordered: WHEREFORE, premises considered, the petition is found meritorious in part and partially given DUE COURSE . The assailed orders and writs of preliminary injunction are ANNULLED and SET ASIDE insofar as they order petitioners to cease and desist from terminating or implementing the termination of private respondents' expired security contracts with NFA. The said assailed orders and writs of preliminary injunction issued are, however, declared LEGAL, VALID and NOT issued in excess of jurisdiction or with grave abuse of discretion insofar as they enjoin petitioners from awarding the security service contracts to the seven (7) security agencies named by petitioners and/or implementing said awards. To this extent the petitions are DISMISSED for lack of merit. 2 Reconsideration was denied on April 15, 1994. Petitioners now assail that part of the decision of the Court of Appeals nullifying and enjoining the implementation of the contracts with the new security agencies. They plead that we restrain the lower courts from enforcing the injunction as against the new security agencies. They argue that the new security agencies were hired as an "emergency measure" after the contracts with the incumbent security agencies expired. They claim that without the new security agencies, the properties of the NFA worth billions of pesos would be exposed to danger of loss and dissipation. 3 On May 18, 1994, we issued a temporary restraining order enjoining respondents from enforcing the decision of the Court of Appeals and the writs of preliminary injunction issued by the trial courts "insofar as the same nullify or otherwise stop the implementation of the subject interim negotiated NFA security contracts." We however ordered petitioners to "proceed with the public bidding of the security contracts without delay and submit to us a report on the result of such bidding within 30 days from the holding thereof.4 On July 21, 1994, petitioners submitted a report dated July 19, 1994 informing the Court that a public bidding was held on June 21, 1994 but no contract had been awarded because the PBAC had to study and evaluate each and every bid proposal.5 A second report dated March 3, 1995 was filed by petitioners informing us that deliberation on the bids was prolonged by the necessity of passing upon the technical merits of each bid and by the discovery of collusion between two bidders "which spawned threats against the life of the members of the PBAC." The PBAC decided to conduct a rebidding in Areas 1, 2 and 3 and apprise the court of the results thereof.6 A third report dated July 13, 1995 was submitted where petitioners manifested that still no contract had been awarded because the minimum number of bidders per area was not met. Two bidders 7 for Areas 3, 4 and 5 submitted identical bids which were held collusive by the PBAC per advice of the Office of the Government Corporate Counsel. The rejection of the two agencies reduced the number of bidders in each area below the required minimum compelling the PBAC to recommend a failure of bidding in all five NFA areas. Petitioners, however, could not act on the PBAC's recommendation because a temporary restraining order was issued on April 10, 1995 by the Regional Trial Court, Branch 17, Davao. One of the bidders found in collusion8 filed a complaint with the said Regional Trial Court questioning the legality of the PBAC's rejection of its bids and enjoining NFA and the PBAC from awarding security contracts to any lowest or next lowest qualified bidder.9 We shall now resolve the contentions of petitioners that the Court of Appeals gravely erred: I IN FAILING TO CONSIDER THAT PRIVATE RESPONDENTS HAVE NO RIGHT AND CAUSE OF ACTION AGAINST PETITIONERS, AND THEREFORE, ARE NOT ENTITLED TO THE QUESTIONED RELIEF GRANTED THEM BY RESPONDENTS RTC JUDGES AND COURT OF APPEALS; II IN FAILING TO CONSIDER THAT PRIVATE RESPONDENTS DID NOT AVAIL OF, MUCH LESS EXHAUST, AVAILABLE ADMINISTRATIVE REMEDIES, THEREBY RENDERING THEIR COMPLAINT PREMATURE AND LEGALLY DEFICIENT TO MERIT THE GRANT OF JUDICIAL RELIEF; III

IN ITS FAILURE TO RECOGNIZE THAT THE EXECUTION OF THE NEW INTERIM MONTHLY NEGOTIATED SECURITY CONTRACTS OF NFA, INTENDED TO PROVIDE NFA WITH AMPLE SECURITY DURING THE TEMPORARY EMERGENCY PERIOD THAT A PUBLIC BIDDING CANNOT BE CONDUCTED BY REASON OF THE INJUNCTIVE ORDERS OF THE COURTS A QUO, ARE SANCTIONED BY LAW, BEING LEGITIMATE EXCEPTION TO THE GENERAL REQUIREMENT OF A PUBLIC BIDDING; IV IN ITS GENERAL FAILURE TO RECOGNIZE THAT THE EXECUTION OF THE INTERIM MONTHLY NEGOTIATED NFA SECURITY CONTRACTS ARE A VALID EXERCISE OF BUSINESS JUDGMENT WITHIN THE PERIMETERS OF NFA MANAGEMENT'S AREA OF COMPETENCE. THE CA, MOREOVER, SERIOUSLY ERRED WHEN IT FAILED TO CONSIDER THAT THE LAW AND THE SITUATIONAL FACTS OF THE CASE SANCTION AND EVEN CALL FOR THE IMMEDIATE IMPLEMENTATION OF SAID INTERIM CONTRACTS.10 We reject these contentions. The principle of exhaustion of administrative remedies is not a hard and fast rule. It is subject to some limitations and exceptions. In this case, private respondents' contracts were terminated in the midst of bidding preparations and their replacements hired barely five days after their termination. In fact, respondent Masada, a prequalified bidder, submitted all requirements and was preparing for the public bidding only to find out that contracts had already been awarded by negotiation. Indeed, an appeal to the NFA Board or Council of Trustees and the Secretary of Agriculture pursuant to the provisions of the Administrative Code of 1987 11 was not a plain, speedy and adequate remedy in the ordinary course of the law. 12 The urgency of the situation compelled private respondents to go to court to stop the implementation of these negotiated security contracts. We are neither impressed by petitioners' claim that the subject contracts were negotiated as a necessity to stave off a crisis that gripped the NFA, i.e., the loss, destruction and dissipation of their properties, warehouses, rice and corn stocks and facilities with an estimated value of P19 billion. Petitioners allege they were merely exercising their sound business judgment in an emergency situation brought about by respondent security agencies themselves who, in the first place, obtained the injunctions from the Quezon City trial courts. First of all, the restraining orders and writ of preliminary injunction issued by the two Quezon City trial courts on complaint by Lanting and respondent Lasala suspending the public bidding scheduled on June 30, 1993 did not result in the emergency situation petitioners alleged. The security vacuum was created when petitioners terminated the services of the incumbent security agencies after the issuance of the said orders and before the injunctions issued by respondent trial courts on application by private respondents. When the bidding did not take place on June 30, 1993, the incumbent security agencies continued rendering services to petitioners, albeit on a temporary and provisional basis. However, one month later, they were all terminated on grounds of expiration of contract and loss of trust and confidence. We agree with the Court of Appeals that it was well within the power of petitioners to discontinue the services of the incumbent security agencies. Their contracts with the NFA expired in 1992, hence, their services were deemed terminated on said date. 13 The fact that these agencies continued rendering services to NFA did not amount to an implied. renewal of their respective contracts. Respondents do not have any vested right to continue their contracts with NFA. They remained and continued performing their tasks at the tolerance of NFA who, by sending the notices of termination, simply reminded them of the expiration of their contracts. 14 These contracts can be renewed, revived or extended only by mutual consent of the parties. No court can compel a party to agree to a contract thru the instrumentality of a writ of preliminary injunction. Nevertheless, what causes eyebrows to arch is the act of petitioners in discontinuing the incumbents' services. Respondents Manubay and Lasala allege that their agencies had been rendering security services to the NFA since 1985 15 and 1988, 16 respectively. Moreover, Manubay and Continental passed the prequalification stage and were declared by the PBAC eligible to join the public bidding. Scarcely a month later, however, their services were terminated at the same time and for the same reasons as the rest of the incumbent security agencies. It is certainly strange why petitioners chose to do away with the incumbents' services at a time when a "security void" would directly and most necessarily result from their withdrawal. The least petitioners could have

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done under the circumstances was to maintain the status quo until the writ of preliminary injunction obtained by respondent Lasala shall have been lifted. Assuming arguendo that an emergency actually existed and the negotiated contracts were justified, petitioners' continued failure to conduct a public bidding and select the bidder within a reasonable time casts doubts on the good faith behind the negotiated contracts. This Court, on May 18, 1994, specifically ordered petitioners to conduct a public bidding and report the results within thirty days from holding thereof. In compliance, a public bidding was conducted on June 21, 1994 but until now no bidder has been chosen and no contract has been awarded. Petitioners cited various reasons for the delay. They alleged that the minimum number of bidders in three of the five areas had not been met and that two bidders in the other two areas were in collusion. This suspicion of collusion generated so much controversy that the PBAC could not decide whether to include the bids of the two agencies. Finally, the PBAC excluded them and recommended that the Administrator declare a failure of bidding in all five areas of responsibility. The Administrator should have immediately acted upon the PBAC's recommendation and accordingly scheduled another public bidding but somehow petitioners chose to abide by a restraining order of the Davao trial court. It must be noted that what the Davao trial court issued was a temporary restraining order enjoining petitioners from awarding the contracts to the lowest or next lowest bidder at the June 21, 1994 public bidding. It was not a writ of preliminary injunction nor was an order restraining the holding of another bidding. Petitioners and the PBAC are obviously taking their sweet time to select and award security contracts to winning bidders. They took one year evaluating and deliberating on thirteen bid proposals only to declare a failure of bidding in all five areas of responsibility. Then they relied on a restraining order of a trial court after no less that this Highest Court specifically ordered them to conduct and conclude a public bidding. Litigants should be conscious of the position lower courts occupy in the operation of the integrated judicial system of the nation. 17 There is only one Supreme Court and all courts and litigants should take their bearings from this Court. 18 Petitioners' manifest reluctance to hold a public bidding and award a contract to the winning bidder smacks of favoritism and partiality toward the security agencies to whom it awarded the negotiated contracts and cannot be countenanced. A competitive public bidding aims to protect the public interest by giving the public the best possible advantages thru open competition. It is a mechanism that enables the government agency to avoid or preclude anomalies in the execution of public contracts. 19 The General Appropriations Act (GAA) of 1993 20 cannot be used by petitioners to justify their actuations. An appropriations act is primarily a special type of legislation whose content is limited to specified sums of money dedicated to a specific purpose or a separate fiscal unit. 21 Section 31 on the General Provisions of the GAA of 1993 merely authorizes the heads of departments, bureaus, offices or agencies of the national government to hire, through public bidding or negotiated contracts, contractual personnel to perform specific activities or services related or incidental to their functions. This law specifically authorizes expenditures for the hiring of these personnel. 22 It is not the governing law on the award of service contracts by government agencies nor does it do away with the general requirement of public bidding. 23 IN VIEW WHEREOF, the petition is dismissed and the decision dated March 11, 1994 and resolution dated April 15, 1994 of the Court of Appeals in CA-G.R. SP Nos. 32213, 32230 and 32274-76 are affirmed. The temporary restraining order issued by this Court on May 18, 1994 is hereby lifted. Treble costs against petitioners. SO ORDERED. G.R. No. 127876 December 17, 1999 ROXAS & CO., INC., petitioner, vs. THE HONORABLE COURT OF APPEALS, DEPARTMENT OF AGRARIAN REFORM, SECRETARY OF AGRARIAN REFORM, DAR REGIONAL DIRECTOR FOR REGION IV, MUNICIPAL AGRARIAN REFORM OFFICER OF NASUGBU, BATANGAS and DEPARTMENT OF AGRARIAN REFORM ADJUDICATION BOARD, respondents.

PUNO, J.: This case involves three (3) haciendas in Nasugbu, Batangas owned by petitioner and the validity of the acquisition of these haciendas by the government under Republic Act No. 6657, the Comprehensive Agrarian Reform Law of 1988. Petitioner Roxas & Co. is a domestic corporation and is the registered owner of three haciendas, namely, Haciendas Palico, Banilad and Caylaway, all located in the Municipality of Nasugbu, Batangas. Hacienda Palico is 1,024 hectares in area and is registered under Transfer Certificate of Title (TCT) No. 985. This land is covered by Tax Declaration Nos. 0465, 0466, 0468, 0470, 0234 and 0354. Hacienda Banilad is 1,050 hectares in area, registered under TCT No. 924 and covered by Tax Declaration Nos. 0236, 0237 and 0390. Hacienda Caylaway is 867.4571 hectares in area and is registered under TCT Nos. T-44662, T-44663, T-44664 and T-44665. The events of this case occurred during the incumbency of then President Corazon C. Aquino. In February 1986, President Aquino issued Proclamation No. 3 promulgating a Provisional Constitution. As head of the provisional government, the President exercised legislative power "until a legislature is elected and convened under a new Constitution." 1 In the exercise of this legislative power, the President signed on July 22, 1987, Proclamation No. 131 instituting a Comprehensive Agrarian Reform Program and Executive Order No. 229 providing the mechanisms necessary to initially implement the program. On July 27, 1987, the Congress of the Philippines formally convened and took over legislative power from the President. 2 This Congress passed Republic Act No. 6657, the Comprehensive Agrarian Reform Law (CARL) of 1988. The Act was signed by the President on June 10, 1988 and took effect on June 15, 1988. Before the law's effectivity, on May 6, 1988, petitioner filed with respondent DAR a voluntary offer to sell Hacienda Caylaway pursuant to the provisions of E.O. No. 229. Haciendas Palico and Banilad were later placed under compulsory acquisition by respondent DAR in accordance with the CARL. Hacienda Palico On September 29, 1989, respondent DAR, through respondent Municipal Agrarian Reform Officer (MARO) of Nasugbu, Batangas, sent a notice entitled "Invitation to Parties" to petitioner. The Invitation was addressed to "Jaime Pimentel, Hda. Administrator, Hda.Palico." 3 Therein, the MARO invited petitioner to a conference on October 6, 1989 at the DAR office in Nasugbu to discuss the results of the DAR investigation of Hacienda Palico, which was "scheduled for compulsory acquisition this year under the Comprehensive Agrarian Reform Program." 4 On October 25, 1989, the MARO completed three (3) Investigation Reports after investigation and ocular inspection of the Hacienda. In the first Report, the MARO found that 270 hectares under Tax Declaration Nos. 465, 466, 468 and 470 were "flat to undulating (0-8% slope)" and actually occupied and cultivated by 34 tillers of sugarcane. 5 In the second Report, the MARO identified as "flat to undulating" approximately 339 hectares under Tax Declaration No. 0234 which also had several actual occupants and tillers of sugarcane; 6 while in the third Report, the MARO found approximately 75 hectare under Tax Declaration No. 0354 as "flat to undulating" with 33 actual occupants and tillers also of sugarcane. 7 On October 27, 1989, a "Summary Investigation Report" was submitted and signed jointly by the MARO, representatives of the Barangay Agrarian Reform Committee (BARC) and Land Bank of the Philippines (LBP), and by the Provincial Agrarian Reform Officer (PARO). The Report recommended that 333.0800 hectares of Hacienda Palico be subject to compulsory acquisition at a value of P6,807,622.20. 8 The following day, October 28, 1989, two (2) more Summary Investigation Reports were submitted by the same officers and representatives. They recommended that 270.0876 hectares and 75.3800 hectares be placed under compulsory acquisition at a compensation of P8,109,739.00 and P2,188,195.47, respectively. 9 On December 12, 1989, respondent DAR through then Department Secretary Miriam D. Santiago sent a "Notice of Acquisition" to petitioner. The Notice was addressed as follows: Roxas y Cia, Limited Soriano Bldg., Plaza Cervantes Manila, Metro Manila. 10

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Petitioner was informed that 1,023.999 hectares of its land in Hacienda Palico were subject to immediate acquisition and distribution by the government under the CARL; that based on the DAR's valuation criteria, the government was offering compensation of P3.4 million for 333.0800 hectares; that whether this offer was to be accepted or rejected, petitioner was to inform the Bureau of Land Acquisition and Distribution (BLAD) of the DAR; that in case of petitioner's rejection or failure to reply within thirty days, respondent DAR shall conduct summary administrative proceedings with notice to petitioner to determine just compensation for the land; that if petitioner accepts respondent DAR's offer, or upon deposit of the compensation with an accessible bank if it rejects the same, the DAR shall take immediate possession of the land. 11 Almost two years later, on September 26, 1991, the DAR Regional Director sent to the LBP Land Valuation Manager three (3) separate Memoranda entitled "Request to Open Trust Account." Each Memoranda requested that a trust account representing the valuation of three portions of Hacienda Palico be opened in favor of the petitioner in view of the latter's rejection of its offered value. 12 Meanwhile in a letter dated May 4, 1993, petitioner applied with the DAR for conversion of Haciendas Palico and Banilad from agricultural to non-agricultural lands under the provisions of the CARL. 13 On July 14, 1993, petitioner sent a letter to the DAR Regional Director reiterating its request for conversion of the two haciendas. 14 Despite petitioner's application for conversion, respondent DAR proceeded with the acquisition of the two Haciendas. The LBP trust accounts as compensation for Hacienda Palico were replaced by respondent DAR with cash and LBP bonds. 15 On October 22, 1993, from the mother title of TCT No. 985 of the Hacienda, respondent DAR registered Certificate of Land Ownership Award (CLOA) No. 6654. On October 30, 1993, CLOA's were distributed to farmer beneficiaries. 16 Hacienda Banilad On August 23, 1989, respondent DAR, through respondent MARO of Nasugbu, Batangas, sent a notice to petitioner addressed as follows: Mr. Jaime Pimentel Hacienda Administrator Hacienda Banilad Nasugbu, Batangas 17 The MARO informed Pimentel that Hacienda Banilad was subject to compulsory acquisition under the CARL; that should petitioner wish to avail of the other schemes such as Voluntary Offer to Sell or Voluntary Land Transfer, respondent DAR was willing to provide assistance thereto. 18 On September 18, 1989, the MARO sent an "Invitation to Parties" again to Pimentel inviting the latter to attend a conference on September 21, 1989 at the MARO Office in Nasugbu to discuss the results of the MARO's investigation over Hacienda Banilad. 19 On September 21, 1989, the same day the conference was held, the MARO submitted two (2) Reports. In his first Report, he found that approximately 709 hectares of land under Tax Declaration Nos. 0237 and 0236 were "flat to undulating (0-8% slope)." On this area were discovered 162 actual occupants and tillers of sugarcane. 20 In the second Report, it was found that approximately 235 hectares under Tax Declaration No. 0390 were "flat to undulating," on which were 92 actual occupants and tillers of sugarcane. 21 The results of these Reports were discussed at the conference. Present in the conference were representatives of the prospective farmer beneficiaries, the BARC, the LBP, and Jaime Pimentel on behalf of the landowner. 22 After the meeting, on the same day, September 21, 1989, a Summary Investigation Report was submitted jointly by the MARO, representatives of the BARC, LBP, and the PARO. They recommended that after ocular inspection of the property, 234.6498 hectares under Tax Declaration No. 0390 be subject to compulsory acquisition and distribution by CLOA. 23 The following day, September 22, 1989, a second Summary Investigation was submitted by the same officers. They recommended that 737.2590 hectares under Tax Declaration Nos. 0236 and 0237 be likewise placed under compulsory acquisition for distribution. 24 On December 12, 1989, respondent DAR, through the Department Secretary, sent to petitioner two (2) separate "Notices of Acquisition" over Hacienda Banilad. These Notices were sent on the same day as the Notice of Acquisition over Hacienda Palico. Unlike the Notice over Hacienda Palico, however, the Notices over Hacienda Banilad were addressed to: Roxas y Cia. Limited

7th Floor, Cacho-Gonzales Bldg. 101 Aguirre St., Leg. Makati, Metro Manila. 25 Respondent DAR offered petitioner compensation of P15,108,995.52 for 729.4190 hectares and P4,428,496.00 for 234.6498 hectares. 26 On September 26, 1991, the DAR Regional Director sent to the LBP Land Valuation Manager a "Request to Open Trust Account" in petitioner's name as compensation for 234.6493 hectares of Hacienda Banilad. 27 A second "Request to Open Trust Account" was sent on November 18, 1991 over 723.4130 hectares of said Hacienda. 28 On December 18, 1991, the LBP certified that the amounts of P4,428,496.40 and P21,234,468.78 in cash and LBP bonds had been earmarked as compensation for petitioner's land in Hacienda Banilad. 29 On May 4, 1993, petitioner applied for conversion of both Haciendas Palico and Banilad. Hacienda Caylaway Hacienda Caylaway was voluntarily offered for sale to the government on May 6, 1988 before the effectivity of the CARL. The Hacienda has a total area of 867.4571 hectares and is covered by four (4) titles TCT Nos. T-44662, T-44663, T-44664 and T-44665. On January 12, 1989, respondent DAR, through the Regional Director for Region IV, sent to petitioner two (2) separate Resolutions accepting petitioner's voluntary offer to sell Hacienda Caylaway, particularly TCT Nos. T-44664 and T-44663.30 The Resolutions were addressed to: Roxas & Company, Inc. 7th Flr. Cacho-Gonzales Bldg. Aguirre, Legaspi Village Makati, M. M 31 On September 4, 1990, the DAR Regional Director issued two separate Memoranda to the LBP Regional Manager requesting for the valuation of the land under TCT Nos. T-44664 and T-44663.32 On the same day, respondent DAR, through the Regional Director, sent to petitioner a "Notice of Acquisition" over 241.6777 hectares under TCT No. T-44664 and 533.8180 hectares under TCT No.T-44663.33 Like the Resolutions of Acceptance, the Notice of Acquisition was addressed to petitioner at its office in Makati, Metro Manila. Nevertheless, on August 6, 1992, petitioner, through its President, Eduardo J. Roxas, sent a letter to the Secretary of respondent DAR withdrawing its VOS of Hacienda Caylaway. The Sangguniang Bayan of Nasugbu, Batangas allegedly authorized the reclassification of Hacienda Caylaway from agricultural to non-agricultural. As a result, petitioner informed respondent DAR that it was applying for conversion of Hacienda Caylaway from agricultural to other uses. 34 In a letter dated September 28, 1992, respondent DAR Secretary informed petitioner that a reclassification of the land would not exempt it from agrarian reform. Respondent Secretary also denied petitioner's withdrawal of the VOS on the ground that withdrawal could only be based on specific grounds such as unsuitability of the soil for agriculture, or if the slope of the land is over 18 degrees and that the land is undeveloped. 35 Despite the denial of the VOS withdrawal of Hacienda Caylaway, on May 11, 1993, petitioner filed its application for conversion of both Haciendas Palico and Banilad. 36 On July 14, 1993, petitioner, through its President, Eduardo Roxas, reiterated its request to withdraw the VOS over Hacienda Caylaway in light of the following: 1) Certification issued by Conrado I. Gonzales, Officer-in-Charge, Department of Agriculture, Region 4, 4th Floor, ATI (BA) Bldg., Diliman, Quezon City dated March 1, 1993 stating that the lands subject of referenced titles "are not feasible and economically sound for further agricultural development. 2) Resolution No. 19 of the Sangguniang Bayan of Nasugbu, Batangas approving the Zoning Ordinance reclassifying areas covered by the referenced titles to non-agricultural which was enacted after extensive consultation with government agencies, including [the Department of Agrarian Reform], and the requisite public hearings. 3) Resolution No. 106 of the Sangguniang Panlalawigan of Batangas dated March 8, 1993 approving the Zoning Ordinance enacted by the Municipality of Nasugbu.

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4) Letter dated December 15, 1992 issued by Reynaldo U. Garcia of the Municipal Planning & Development, Coordinator and Deputized Zoning Administrator addressed to Mrs. Alicia P. Logarta advising that the Municipality of Nasugbu, Batangas has no objection to the conversion of the lands subject of referenced titles to non-agricultural. 37 On August 24, 1993 petitioner instituted Case No. N-0017-96-46 (BA) with respondent DAR Adjudication Board (DARAB) praying for the cancellation of the CLOA's issued by respondent DAR in the name of several persons. Petitioner alleged that the Municipality of Nasugbu, where the haciendas are located, had been declared a tourist zone, that the land is not suitable for agricultural production, and that the Sangguniang Bayan of Nasugbu had reclassified the land to nonagricultural. In a Resolution dated October 14, 1993, respondent DARAB held that the case involved the prejudicial question of whether the property was subject to agrarian reform, hence, this question should be submitted to the Office of the Secretary of Agrarian Reform for determination. 38 On October 29, 1993, petitioner filed with the Court of Appeals CA-G.R. SP No. 32484. It questioned the expropriation of its properties under the CARL and the denial of due process in the acquisition of its landholdings. Meanwhile, the petition for conversion of the three haciendas was denied by the MARO on November 8, 1993. Petitioner's petition was dismissed by the Court of Appeals on April 28, 1994. 39 Petitioner moved for reconsideration but the motion was denied on January 17, 1997 by respondent court. 40 Hence, this recourse. Petitioner assigns the following errors: A. RESPONDENT COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT PETITIONER'S CAUSE OF ACTION IS PREMATURE FOR FAILURE TO EXHAUST ADMINISTRATIVE REMEDIES IN VIEW OF THE PATENT ILLEGALITY OF THE RESPONDENTS' ACTS, THE IRREPARABLE DAMAGE CAUSED BY SAID ILLEGAL ACTS, AND THE ABSENCE OF A PLAIN, SPEEDY AND ADEQUATE REMEDY IN THE ORDINARY COURSE OF LAW ALL OF WHICH ARE EXCEPTIONS TO THE SAID DOCTRINE. B. RESPONDENT COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT PETITIONER'S LANDHOLDINGS ARE SUBJECT TO COVERAGE UNDER THE COMPREHENSIVE AGRARIAN REFORM LAW, IN VIEW OF THE UNDISPUTED FACT THAT PETITIONER'S LANDHOLDINGS HAVE BEEN CONVERTED TO NON-AGRICULTURAL USES BY PRESIDENTIAL PROCLAMATION NO. 1520 WHICH DECLARED THE MUNICIPALITY NASUGBU, BATANGAS AS A TOURIST ZONE, AND THE ZONING ORDINANCE OF THE MUNICIPALITY OF NASUGBU RE-CLASSIFYING CERTAIN PORTIONS OF PETITIONER'S LANDHOLDINGS AS NONAGRICULTURAL, BOTH OF WHICH PLACE SAID LANDHOLDINGS OUTSIDE THE SCOPE OF AGRARIAN REFORM, OR AT THE VERY LEAST ENTITLE PETITIONER TO APPLY FOR CONVERSION AS CONCEDED BY RESPONDENT DAR. C. RESPONDENT COURT OF APPEALS GRAVELY ERRED WHEN IT FAILED TO DECLARE THE PROCEEDINGS BEFORE RESPONDENT DAR VOID FOR FAILURE TO OBSERVE DUE PROCESS, CONSIDERING THAT RESPONDENTS BLATANTLY DISREGARDED THE PROCEDURE FOR THE ACQUISITION OF PRIVATE LANDS UNDER R.A. 6657, MORE PARTICULARLY, IN FAILING TO GIVE DUE NOTICE TO THE PETITIONER AND TO PROPERLY IDENTIFY THE SPECIFIC AREAS SOUGHT TO BE ACQUIRED. D. RESPONDENT COURT OF APPEALS GRAVELY ERRED WHEN IT FAILED TO RECOGNIZE THAT PETITIONER WAS BRAZENLY AND ILLEGALLY DEPRIVED OF ITS PROPERTY WITHOUT JUST COMPENSATION, CONSIDERING THAT PETITIONER WAS NOT PAID JUST COMPENSATION BEFORE IT WAS UNCEREMONIOUSLY STRIPPED OF ITS LANDHOLDINGS THROUGH THE ISSUANCE OF CLOA'S TO ALLEGED FARMER BENEFICIARIES, IN VIOLATION OF R.A. 6657. 41 The assigned errors involve three (3) principal issues: (1) whether this Court can take cognizance of this petition despite petitioner's failure to exhaust administrative remedies; (2) whether the acquisition proceedings over the three haciendas were valid and in accordance with law; and (3) assuming the haciendas may be reclassified from agricultural to non-agricultural, whether this court has the power to rule on this issue. I. Exhaustion of Administrative Remedies.

In its first assigned error, petitioner claims that respondent Court of Appeals gravely erred in finding that petitioner failed to exhaust administrative remedies. As a general rule, before a party may be allowed to invoke the jurisdiction of the courts of justice, he is expected to have exhausted all means of administrative redress. This is not absolute, however. There are instances when judicial action may be resorted to immediately. Among these exceptions are: (1) when the question raised is purely legal; (2) when the administrative body is in estoppel; (3) when the act complained of is patently illegal; (4) when there is urgent need for judicial intervention; (5) when the respondent acted in disregard of due process; (6) when the respondent is a department secretary whose acts, as an alter ego of the President, bear the implied or assumed approval of the latter; (7) when irreparable damage will be suffered; (8) when there is no other plain, speedy and adequate remedy; (9) when strong public interest is involved; (10) when the subject of the controversy is private land; and (11) in quo warranto proceedings. 42 Petitioner rightly sought immediate redress in the courts. There was a violation of its rights and to require it to exhaust administrative remedies before the DAR itself was not a plain, speedy and adequate remedy. Respondent DAR issued Certificates of Land Ownership Award (CLOA's) to farmer beneficiaries over portions of petitioner's land without just compensation to petitioner. A Certificate of Land Ownership Award (CLOA) is evidence of ownership of land by a beneficiary under R.A. 6657, the Comprehensive Agrarian Reform Law of 1988. 43 Before this may be awarded to a farmer beneficiary, the land must first be acquired by the State from the landowner and ownership transferred to the former. The transfer of possession and ownership of the land to the government are conditioned upon the receipt by the landowner of the corresponding payment or deposit by the DAR of the compensation with an accessible bank. Until then, title remains with the landowner. 44 There was no receipt by petitioner of any compensation for any of the lands acquired by the government. The kind of compensation to be paid the landowner is also specific. The law provides that the deposit must be made only in "cash" or "LBP bonds." 45 Respondent DAR's opening of trust account deposits in petitioner' s name with the Land Bank of the Philippines does not constitute payment under the law. Trust account deposits are not cash or LBP bonds. The replacement of the trust account with cash or LBP bonds did not ipso facto cure the lack of compensation; for essentially, the determination of this compensation was marred by lack of due process. In fact, in the entire acquisition proceedings, respondent DAR disregarded the basic requirements of administrative due process. Under these circumstances, the issuance of the CLOA's to farmer beneficiaries necessitated immediate judicial action on the part of the petitioner. II. The Validity of the Acquisition Proceedings Over the Haciendas. Petitioner's allegation of lack of due process goes into the validity of the acquisition proceedings themselves. Before we rule on this matter, however, there is need to lay down the procedure in the acquisition of private lands under the provisions of the law. A. Modes of Acquisition of Land under R. A. 6657 Republic Act No. 6657, the Comprehensive Agrarian Reform Law of 1988 (CARL), provides for two (2) modes of acquisition of private land: compulsory and voluntary. The procedure for the compulsory acquisition of private lands is set forth in Section 16 of R.A. 6657, viz: Sec. 16.Procedure for Acquisition of Private Lands . For purposes of acquisition of private lands, the following procedures shall be followed: a). After having identified the land, the landowners and the beneficiaries, the DAR shall send its notice to acquire the land to the owners thereof, by personal delivery or registered mail, and post the same in a conspicuous place in the municipal building and barangay hall of the place where the property is located. Said notice shall contain the offer of the DAR to pay a corresponding value in accordance with the valuation set forth in Sections 17, 18, and other pertinent provisions hereof. b) Within thirty (30) days from the date of receipt of written notice by personal delivery or registered mail, the landowner, his administrator or representative shall inform the DAR of his acceptance or rejection of the offer. c) If the landowner accepts the offer of the DAR, the LBP shall pay the landowner the purchase price of the land within thirty (30) days after he executes and delivers a deed of transfer in favor of the Government and surrenders the Certificate of Title and other muniments of title.

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d) In case of rejection or failure to reply, the DAR shall conduct summary administrative proceedings to determine the compensation for the land requiring the landowner, the LBP and other interested parties to submit evidence as to the just compensation for the land, within fifteen (15) days from receipt of the notice. After the expiration of the above period, the matter is deemed submitted for decision. The DAR shall decide the case within thirty (30) days after it is submitted for decision. e) Upon receipt by the landowner of the corresponding payment, or, in case of rejection or no response from the landowner, upon the deposit with an accessible bank designated by the DAR of the compensation in cash or in LBP bonds in accordance with this Act, the DAR shall take immediate possession of the land and shall request the proper Register of Deeds to issue a Transfer Certificate of Title (TCT) in the name of the Republic of the Philippines. The DAR shall thereafter proceed with the redistribution of the land to the qualified beneficiaries. f) Any party who disagrees with the decision may bring the matter to the court of proper jurisdiction for final determination of just compensation. In the compulsory acquisition of private lands, the landholding, the landowners and the farmer beneficiaries must first be identified. After identification, the DAR shall send a Notice of Acquisition to the landowner, by personal delivery or registered mail, and post it in a conspicuous place in the municipal building and barangay hall of the place where the property is located. Within thirty days from receipt of the Notice of Acquisition, the landowner, his administrator or representative shall inform the DAR of his acceptance or rejection of the offer. If the landowner accepts, he executes and delivers a deed of transfer in favor of the government and surrenders the certificate of title. Within thirty days from the execution of the deed of transfer, the Land Bank of the Philippines (LBP) pays the owner the purchase price. If the landowner rejects the DAR's offer or fails to make a reply, the DAR conducts summary administrative proceedings to determine just compensation for the land. The landowner, the LBP representative and other interested parties may submit evidence on just compensation within fifteen days from notice. Within thirty days from submission, the DAR shall decide the case and inform the owner of its decision and the amount of just compensation. Upon receipt by the owner of the corresponding payment, or, in case of rejection or lack of response from the latter, the DAR shall deposit the compensation in cash or in LBP bonds with an accessible bank. The DAR shall immediately take possession of the land and cause the issuance of a transfer certificate of title in the name of the Republic of the Philippines. The land shall then be redistributed to the farmer beneficiaries. Any party may question the decision of the DAR in the regular courts for final determination of just compensation. The DAR has made compulsory acquisition the priority mode of the land acquisition to hasten the implementation of the Comprehensive Agrarian Reform Program (CARP). 46 Under Section 16 of the CARL, the first step in compulsory acquisition is the identification of the land, the landowners and the beneficiaries. However, the law is silent on how the identification process must be made. To fill in this gap, the DAR issued on July 26, 1989 Administrative Order No. 12, Series or 1989, which set the operating procedure in the identification of such lands. The procedure is as follows: II. OPERATING PROCEDURE A.The Municipal Agrarian Reform Officer, with the assistance of the pertinent Barangay Agrarian Reform Committee (BARC), shall: 1. Update the masterlist of all agricultural lands covered under the CARP in his area of responsibility. The masterlist shall include such information as required under the attached CARP Masterlist Form which shall include the name of the landowner, landholding area, TCT/OCT number, and tax declaration number. 2. Prepare a Compulsory Acquisition Case Folder (CACF) for each title (OCT/TCT) or landholding covered under Phase I and II of the CARP except those for which the landowners have already filed applications to avail of other modes of land acquisition. A case folder shall contain the following duly accomplished forms: a) CARP CA Form 1 MARO Investigation Report b) CARP CA Form 2 Summary Investigation Report of Findings and Evaluation c) CARP CA Form 3 Applicant's Information Sheet d) CARP CA Form 4 Beneficiaries Undertaking e) CARP CA Form 5 Transmittal Report to the PARO

The MARO/BARC shall certify that all information contained in the above-mentioned forms have been examined and verified by him and that the same are true and correct. 3. Send a Notice of Coverage and a letter of invitation to a conference/meeting to the landowner covered by the Compulsory Case Acquisition Folder. Invitations to the said conference/meeting shall also be sent to the prospective farmer-beneficiaries, the BARC representative(s), the Land Bank of the Philippines (LBP) representative,and other interested parties to discuss the inputs to the valuation of the property. He shall discuss the MARO/BARC investigation report and solicit the views, objection, agreements or suggestions of the participants thereon. The landowner shall also be asked to indicate his retention area. The minutes of the meeting shall be signed by all participants in the conference and shall form an integral part of the CACF . 4. Submit all completed case folders to the Provincial Agrarian Reform Officer (PARO). B. The PARO shall: 1. Ensure that the individual case folders are forwarded to him by his MAROs. 2. Immediately upon receipt of a case folder, compute the valuation of the land in accordance with A.O. No. 6, Series of 1988. 47 The valuation worksheet and the related CACF valuation forms shall be duly certified correct by the PARO and all the personnel who participated in the accomplishment of these forms. 3. In all cases, the PARO may validate the report of the MARO through ocular inspection and verification of the property. This ocular inspection and verification shall be mandatory when the computed value exceeds = 500,000 per estate. 4. Upon determination of the valuation, forward the case folder, together with the duly accomplished valuation forms and his recommendations, to the Central Office. The LBP representative and the MARO concerned shall be furnished a copy each of his report. C. DAR Central Office, specifically through the Bureau of Land Acquisition and Distribution (BLAD), shall: 1. Within three days from receipt of the case folder from the PARO, review, evaluate and determine the final land valuation of the property covered by the case folder. A summary review and evaluation report shall be prepared and duly certified by the BLAD Director and the personnel directly participating in the review and final valuation. 2. Prepare, for the signature of the Secretary or her duly authorized representative, a Notice of Acquisition (CARP CA Form 8) for the subject property. Serve the Notice to the landowner personally or through registered mail within three days from its approval. The Notice shall include, among others, the area subject of compulsory acquisition, and the amount of just compensation offered by DAR. 3. Should the landowner accept the DAR's offered value, the BLAD shall prepare and submit to the Secretary for approval the Order of Acquisition. However, in case of rejection or non-reply, the DAR Adjudication Board (DARAB) shall conduct a summary administrative hearing to determine just compensation, in accordance with the procedures provided under Administrative Order No. 13, Series of 1989. Immediately upon receipt of the DARAB's decision on just compensation, the BLAD shall prepare and submit to the Secretary for approval the required Order of Acquisition. 4. Upon the landowner's receipt of payment, in case of acceptance, or upon deposit of payment in the designated bank, in case of rejection or non-response, the Secretary shall immediately direct the pertinent Register of Deeds to issue the corresponding Transfer Certificate of Title (TCT) in the name of the Republic of the Philippines. Once the property is transferred, the DAR, through the PARO, shall take possession of the land for redistribution to qualified beneficiaries. Administrative Order No. 12, Series of 1989 requires that the Municipal Agrarian Reform Officer (MARO) keep an updated master list of all agricultural lands under the CARP in his area of responsibility containing all the required information. The MARO prepares a Compulsory Acquisition Case Folder (CACF) for each title covered by CARP. The MARO then sends the landowner a "Notice of Coverage" and a "letter of invitation" to a "conference/meeting" over the land covered by the CACF. He also sends invitations to the prospective farmer-beneficiaries the representatives of the Barangay Agrarian Reform Committee (BARC), the Land Bank of the Philippines (LBP) and other interested parties to discuss the inputs to the valuation of the property and solicit views, suggestions, objections or agreements of the parties. At the meeting, the landowner is asked to indicate his retention area.

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The MARO shall make a report of the case to the Provincial Agrarian Reform Officer (PARO) who shall complete the valuation of the land. Ocular inspection and verification of the property by the PARO shall be mandatory when the computed value of the estate exceeds P500,000.00. Upon determination of the valuation, the PARO shall forward all papers together with his recommendation to the Central Office of the DAR. The DAR Central Office, specifically, the Bureau of Land Acquisition and Distribution (BLAD), shall review, evaluate and determine the final land valuation of the property. The BLAD shall prepare, on the signature of the Secretary or his duly authorized representative, a Notice of Acquisition for the subject property. 48 From this point, the provisions of Section 16 of R.A. 6657 then apply. 49 For a valid implementation of the CAR program, two notices are required: (1) the Notice of Coverage and letter of invitation to a preliminary conference sent to the landowner, the representatives of the BARC, LBP, farmer beneficiaries and other interested parties pursuant to DAR A.O. No. 12, Series of 1989; and (2) the Notice of Acquisition sent to the landowner under Section 16 of the CARL. The importance of the first notice, i.e., the Notice of Coverage and the letter of invitation to the conference, and its actual conduct cannot be understated. They are steps designed to comply with the requirements of administrative due process. The implementation of the CARL is an exercise of the State's police power and the power of eminent domain. To the extent that the CARL prescribes retention limits to the landowners, there is an exercise of police power for the regulation of private property in accordance with the Constitution. 50 But where, to carry out such regulation, the owners are deprived of lands they own in excess of the maximum area allowed, there is also a taking under the power of eminent domain. The taking contemplated is not a mere limitation of the use of the land. What is required is the surrender of the title to and physical possession of the said excess and all beneficial rights accruing to the owner in favor of the farmer beneficiary. 51 The Bill of Rights provides that "[n]o person shall be deprived of life, liberty or property without due process of law." 52 The CARL was not intended to take away property without due process of law. 53 The exercise of the power of eminent domain requires that due process be observed in the taking of private property. DAR A.O. No. 12, Series of 1989, from whence the Notice of Coverage first sprung, was amended in 1990 by DAR A.O. No. 9, Series of 1990 and in 1993 by DAR A.O. No. 1, Series of 1993. The Notice of Coverage and letter of invitation to the conference meeting were expanded and amplified in said amendments. DAR A.O. No. 9, Series of 1990 entitled "Revised Rules Governing the Acquisition of Agricultural Lands Subject of Voluntary Offer to Sell and Compulsory Acquisition Pursuant to R.A. 6657," requires that: B. MARO 1. Receives the duly accomplished CARP Form Nos. 1 & 1.1 including supporting documents. 2. Gathers basic ownership documents listed under 1.a or 1.b above and prepares corresponding VOCF/CACF by landowner/landholding. 3. Notifies/invites the landowner and representatives of the LBP, DENR, BARC and prospective beneficiaries of the schedule of ocular inspection of the property at least one week in advance. 4. MARO/LAND BANK FIELD OFFICE/BARC a) Identify the land and landowner, and determine the suitability for agriculture and productivity of the land and jointly prepare Field Investigation Report (CARP Form No. 2), including the Land Use Map of the property. b) Interview applicants and assist them in the preparation of the Application For Potential CARP Beneficiary (CARP Form No. 3). c) Screen prospective farmer-beneficiaries and for those found qualified, cause the signing of the respective Application to Purchase and Farmer's Undertaking (CARP Form No. 4). d) Complete the Field Investigation Report based on the result of the ocular inspection/investigation of the property and documents submitted. See to it that Field Investigation Report is duly accomplished and signed by all concerned. 5. MARO

a) Assists the DENR Survey Party in the conduct of a boundary/ subdivision survey delineating areas covered by OLT, retention, subject of VOS, CA (by phases, if possible), infrastructures, etc., whichever is applicable. b) Sends Notice of Coverage (CARP Form No. 5) to landowner concerned or his duly authorized representative inviting him for a conference. c) Sends Invitation Letter (CARP Form No. 6) for a conference/public hearing to prospective farmerbeneficiaries, landowner, representatives of BARC, LBP, DENR, DA, NGO's, farmers' organizations and other interested parties to discuss the following matters: Result of Field Investigation Inputs to valuation Issues raised Comments/recommendations by all parties concerned. d) Prepares Summary of Minutes of the conference/public hearing to be guided by CARP Form No. 7. e) Forwards the completed VOCF/CACF to the Provincial Agrarian Reform Office (PARO) using CARP Form No. 8 (Transmittal Memo to PARO). xxx xxx xxx DAR A.O. No. 9, Series of 1990 lays down the rules on both Voluntary Offer to Sell (VOS) and Compulsory Acquisition (CA) transactions involving lands enumerated under Section 7 of the CARL. 54 In both VOS and CA. transactions, the MARO prepares the Voluntary Offer to Sell Case Folder (VOCF) and the Compulsory Acquisition Case Folder (CACF), as the case may be, over a particular landholding. The MARO notifies the landowner as well as representatives of the LBP, BARC and prospective beneficiaries of the date of the ocular inspection of the property at least one week before the scheduled date and invites them to attend the same. The MARO, LBP or BARC conducts the ocular inspection and investigation by identifying the land and landowner, determining the suitability of the land for agriculture and productivity, interviewing and screening prospective farmer beneficiaries. Based on its investigation, the MARO, LBP or BARC prepares the Field Investigation Report which shall be signed by all parties concerned. In addition to the field investigation, a boundary or subdivision survey of the land may also be conducted by a Survey Party of the Department of Environment and Natural Resources (DENR) to be assisted by the MARO. 55 This survey shall delineate the areas covered by Operation Land Transfer (OLT), areas retained by the landowner, areas with infrastructure, and the areas subject to VOS and CA. After the survey and field investigation, the MARO sends a "Notice of Coverage" to the landowner or his duly authorized representative inviting him to a conference or public hearing with the farmer beneficiaries, representatives of the BARC, LBP, DENR, Department of Agriculture (DA), nongovernment organizations, farmer's organizations and other interested parties. At the public hearing, the parties shall discuss the results of the field investigation, issues that may be raised in relation thereto, inputs to the valuation of the subject landholding, and other comments and recommendations by all parties concerned. The Minutes of the conference/public hearing shall form part of the VOCF or CACF which files shall be forwarded by the MARO to the PARO. The PARO reviews, evaluates and validates the Field Investigation Report and other documents in the VOCF/CACF. He then forwards the records to the RARO for another review. DAR A.O. No. 9, Series of 1990 was amended by DAR A.O. No. 1, Series of 1993. DAR A.O. No. 1, Series of 1993 provided, among others, that: IV. OPERATING PROCEDURES: Steps Responsible Activity Forms/ Agency/Unit Document (requirements) A. Identification and Documentation xxx xxx xxx 5 DARMO Issue Notice of Coverage CARP to LO by personal delivery Form No. 2 with proof of service, or registered mail with return

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card, informing him that his property is now under CARP coverage and for LO to select his retention area, if he desires to avail of his right of retention; and at the same time invites him to join the field investigation to be conducted on his property which should be scheduled at least two weeks in advance of said notice. A copy of said Notice shall CARP be posted for at least one Form No. 17 week on the bulletin board of the municipal and barangay halls where the property is located. LGU office concerned notifies DAR about compliance with posting requirements thru return indorsement on CARP Form No. 17. 6 DARMO Send notice to the LBP, CARP BARC, DENR representatives Form No. 3 and prospective ARBs of the schedule of the field investigation to be conducted on the subject property. 7 DARMO With the participation of CARP BARC the LO, representatives of Form No. 4 LBP the LBP, BARC, DENR Land Use DENR and prospective ARBs, Map Local Office conducts the investigation on subject property to identify the landholding, determines its suitability and productivity; and jointly prepares the Field Investigation Report (FIR) and Land Use Map. However, the field investigation shall proceed even if the LO, the representatives of the DENR and prospective ARBs are not available provided, they were given due notice of the time and date of investigation to be conducted. Similarly, if the LBP representative is not available or could not come on the scheduled date, the field investigation shall also be conducted, after which the duly accomplished Part I of CARP Form No. 4 shall be forwarded to the LBP representative for validation. If he agrees to the ocular inspection report of DAR, he signs the FIR (Part I) and accomplishes Part II thereof.

In the event that there is a difference or variance between the findings of the DAR and the LBP as to the propriety of covering the land under CARP, whether in whole or in part, on the issue of suitability to agriculture, degree of development or slope, and on issues affecting idle lands, the conflict shall be resolved by a composite team of DAR, LBP, DENR and DA which shall jointly conduct further investigation thereon. The team shall submit its report of findings which shall be binding to both DAR and LBP, pursuant to Joint Memorandum Circular of the DAR, LBP, DENR and DA dated 27 January 1992. 8 DARMO Screen prospective ARBs BARC and causes the signing of CARP the Application of Purchase Form No. 5 and Farmer's Undertaking (APFU). 9 DARMO Furnishes a copy of the CARP duly accomplished FIR to Form No. 4 the landowner by personal delivery with proof of service or registered mail will return card and posts a copy thereof for at least one week on the bulletin board of the municipal and barangay halls where the property is located. LGU office concerned CARP notifies DAR about Form No. 17 compliance with posting requirement thru return endorsement on CARP Form No. 17. B. Land Survey 10 DARMO Conducts perimeter or Perimeter And/or segregation survey or DENR delineating areas covered Segregation Local Office by OLT, "uncarpable Survey Plan areas such as 18% slope and above, unproductive/ unsuitable to agriculture, retention, infrastructure. In case of segregation or subdivision survey, the plan shall be approved by DENR-LMS. C. Review and Completion

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of Documents 11. DARMO Forward VOCF/CACF CARP to DARPO. Form No. 6 xxx xxx xxx. DAR A.O. No. 1, Series of 1993, modified the identification process and increased the number of government agencies involved in the identification and delineation of the land subject to acquisition. 56 This time, the Notice of Coverage is sent to the landowner before the conduct of the field investigation and the sending must comply with specific requirements. Representatives of the DAR Municipal Office (DARMO) must send the Notice of Coverage to the landowner by "personal delivery with proof of service, or by registered mail with return card," informing him that his property is under CARP coverage and that if he desires to avail of his right of retention, he may choose which area he shall retain. The Notice of Coverage shall also invite the landowner to attend the field investigation to be scheduled at least two weeks from notice. The field investigation is for the purpose of identifying the landholding and determining its suitability for agriculture and its productivity. A copy of the Notice of Coverage shall be posted for at least one week on the bulletin board of the municipal and barangay halls where the property is located. The date of the field investigation shall also be sent by the DAR Municipal Office to representatives of the LBP, BARC, DENR and prospective farmer beneficiaries. The field investigation shall be conducted on the date set with the participation of the landowner and the various representatives. If the landowner and other representatives are absent, the field investigation shall proceed, provided they were duly notified thereof. Should there be a variance between the findings of the DAR and the LBP as to whether the land be placed under agrarian reform, the land's suitability to agriculture, the degree or development of the slope, etc., the conflict shall be resolved by a composite team of the DAR, LBP, DENR and DA which shall jointly conduct further investigation. The team's findings shall be binding on both DAR and LBP. After the field investigation, the DAR Municipal Office shall prepare the Field Investigation Report and Land Use Map, a copy of which shall be furnished the landowner "by personal delivery with proof of service or registered mail with return card." Another copy of the Report and Map shall likewise be posted for at least one week in the municipal or barangay halls where the property is located. Clearly then, the notice requirements under the CARL are not confined to the Notice of Acquisition set forth in Section 16 of the law. They also include the Notice of Coverage first laid down in DAR A.O. No. 12, Series of 1989 and subsequently amended in DAR A.O. No. 9, Series of 1990 and DAR A.O. No. 1, Series of 1993. This Notice of Coverage does not merely notify the landowner that his property shall be placed under CARP and that he is entitled to exercise his retention right; it also notifies him, pursuant to DAR A.O. No. 9, Series of 1990, that a public hearing, shall be conducted where he and representatives of the concerned sectors of society may attend to discuss the results of the field investigation, the land valuation and other pertinent matters. Under DAR A.O. No. 1, Series of 1993, the Notice of Coverage also informs the landowner that a field investigation of his landholding shall be conducted where he and the other representatives may be present. B. The Compulsory Acquisition of Haciendas Palico and Banilad In the case at bar, respondent DAR claims that it, through MARO Leopoldo C. Lejano, sent a letter of invitation entitled "Invitation to Parties" dated September 29, 1989 to petitioner corporation, through Jaime Pimentel, the administrator of Hacienda Palico. 57 The invitation was received on the same day it was sent as indicated by a signature and the date received at the bottom left corner of said invitation. With regard to Hacienda Banilad, respondent DAR claims that Jaime Pimentel, administrator also of Hacienda Banilad, was notified and sent an invitation to the conference. Pimentel actually attended the conference on September 21, 1989 and signed the Minutes of the meeting on behalf of petitioner corporation. 58 The Minutes was also signed by the representatives of the BARC, the LBP and farmer beneficiaries. 59 No letter of invitation was sent or conference meeting held with respect to Hacienda Caylaway because it was subject to a Voluntary Offer to Sell to respondent DAR. 60 When respondent DAR, through the Municipal Agrarian Reform Officer (MARO), sent to the various parties the Notice of Coverage and invitation to the conference, DAR A.O. No. 12, Series of 1989 was already in effect more than a month earlier. The Operating Procedure in DAR Administrative Order No. 12 does not specify how notices or letters of invitation shall be sent to the landowner, the

representatives of the BARC, the LBP, the farmer beneficiaries and other interested parties. The procedure in the sending of these notices is important to comply with the requisites of due process especially when the owner, as in this case, is a juridical entity. Petitioner is a domestic corporation, 61 and therefore, has a personality separate and distinct from its shareholders, officers and employees. The Notice of Acquisition in Section 16 of the CARL is required to be sent to the landowner by "personal delivery or registered mail." Whether the landowner be a natural or juridical person to whose address the Notice may be sent by personal delivery or registered mail , the law does not distinguish. The DAR Administrative Orders also do not distinguish. In the proceedings before the DAR, the distinction between natural and juridical persons in the sending of notices may be found in the Revised Rules of Procedure of the DAR Adjudication Board (DARAB). Service of pleadings before the DARAB is governed by Section 6, Rule V of the DARAB Revised Rules of Procedure. Notices and pleadings are served on private domestic corporations or partnerships in the following manner: Sec. 6.Service upon Private Domestic Corporation or Partnership . If the defendant is a corporation organized under the laws of the Philippines or a partnership duly registered, service may be made on the president, manager, secretary, cashier, agent, or any of its directors or partners. Similarly, the Revised Rules of Court of the Philippines, in Section 13, Rule 14 provides: Sec. 13.Service upon private domestic corporation or partnership. If the defendant is a corporation organized under the laws of the Philippines or a partnership duly registered, service may be made on the president, manager, secretary, cashier, agent, or any of its directors. Summonses, pleadings and notices in cases against a private domestic corporation before the DARAB and the regular courts are served on the president, manager, secretary, cashier, agent or any of its directors. These persons are those through whom the private domestic corporation or partnership is capable of action. 62 Jaime Pimentel is not the president, manager, secretary, cashier or director of petitioner corporation. Is he, as administrator of the two Haciendas, considered an agent of the corporation? The purpose of all rules for service of process on a corporation is to make it reasonably certain that the corporation will receive prompt and proper notice in an action against it. 63 Service must be made on a representative so integrated with the corporation as to make it a priori supposable that he will realize his responsibilities and know what he should do with any legal papers served on him, 64 and bring home to the corporation notice of the filing of the action. 65 Petitioner's evidence does not show the official duties of Jaime Pimentel as administrator of petitioner's haciendas. The evidence does not indicate whether Pimentel's duties is so integrated with the corporation that he would immediately realize his responsibilities and know what he should do with any legal papers served on him. At the time the notices were sent and the preliminary conference conducted, petitioner's principal place of business was listed in respondent DAR's records as "Soriano Bldg., Plaza Cervantes, Manila," 66 and "7th Flr. Cacho-Gonzales Bldg., 101 Aguirre St., Makati, Metro Manila." 67 Pimentel did not hold office at the principal place of business of petitioner. Neither did he exercise his functions in Plaza Cervantes, Manila nor in Cacho-Gonzales Bldg., Makati, Metro Manila. He performed his official functions and actually resided in the haciendas in Nasugbu, Batangas, a place over two hundred kilometers away from Metro Manila. Curiously, respondent DAR had information of the address of petitioner's principal place of business. The Notices of Acquisition over Haciendas Palico and Banilad were addressed to petitioner at its offices in Manila and Makati. These Notices were sent barely three to four months after Pimentel was notified of the preliminary conference. 68 Why respondent DAR chose to notify Pimentel instead of the officers of the corporation was not explained by the said respondent. Nevertheless, assuming that Pimentel was an agent of petitioner corporation, and the notices and letters of invitation were validly served on petitioner through him, there is no showing that Pimentel himself was duly authorized to attend the conference meeting with the MARO, BARC and LBP representatives and farmer beneficiaries for purposes of compulsory acquisition of petitioner's landholdings. Even respondent DAR's evidence does not indicate this authority. On the contrary, petitioner claims that it had no knowledge of the letter-invitation, hence, could not have given Pimentel the authority to bind it to whatever matters were discussed or agreed upon by the parties

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at the preliminary conference or public hearing. Notably, one year after Pimentel was informed of the preliminary conference, DAR A.O. No. 9, Series of 1990 was issued and this required that the Notice of Coverage must be sent "to the landowner concerned or his duly authorized representative." 69 Assuming further that petitioner was duly notified of the CARP coverage of its haciendas, the areas found actually subject to CARP were not properly identified before they were taken over by respondent DAR. Respondents insist that the lands were identified because they are all registered property and the technical description in their respective titles specifies their metes and bounds. Respondents admit at the same time, however, that not all areas in the haciendas were placed under the comprehensive agrarian reform program invariably by reason of elevation or character or use of the land. 70 The acquisition of the landholdings did not cover the entire expanse of the two haciendas, but only portions thereof. Hacienda Palico has an area of 1,024 hectares and only 688.7576 hectares were targetted for acquisition. Hacienda Banilad has an area of 1,050 hectares but only 964.0688 hectares were subject to CARP. The haciendas are not entirely agricultural lands. In fact, the various tax declarations over the haciendas describe the landholdings as "sugarland," and "forest, sugarland, pasture land, horticulture and woodland." 71 Under Section 16 of the CARL, the sending of the Notice of Acquisition specifically requires that the land subject to land reform be first identified. The two haciendas in the instant case cover vast tracts of land. Before Notices of Acquisition were sent to petitioner, however, the exact areas of the landholdings were not properly segregated and delineated. Upon receipt of this notice, therefore,petitioner corporation had no idea which portions of its estate were subject to compulsory acquisition, which portions it could rightfully retain, whether these retained portions were compact or contiguous, and which portions were excluded from CARP coverage. Even respondent DAR's evidence does not show that petitioner, through its duly authorized representative, was notified of any ocular inspection and investigation that was to be conducted by respondent DAR. Neither is there proof that petitioner was given the opportunity to at least choose and identify its retention area in those portions to be acquired compulsorily. The right of retention and how this right is exercised, is guaranteed in Section 6 of the CARL, viz: Sec. 6.Retention Limits. . . . . The right to choose the area to be retained, which shall be compact or contiguous, shall pertain to the landowner; Provided, however, That in case the area selected for retention by the landowner is tenanted, the tenant shall have the option to choose whether to remain therein or be a beneficiary in the same or another agricultural land with similar or comparable features. In case the tenant chooses to remain in the retained area, he shall be considered a leaseholder and shall lose his right to be a beneficiary under this Act. In case the tenant chooses to be a beneficiary in another agricultural land, he loses his right as a leaseholder to the land retained by the landowner. The tenant must exercise this option within a period of one (1) year from the time the landowner manifests his choice of the area for retention. Under the law, a landowner may retain not more than five hectares out of the total area of his agricultural land subject to CARP. The right to choose the area to be retained, which shall be compact or contiguous, pertains to the landowner. If the area chosen for retention is tenanted, the tenant shall have the option to choose whether to remain on the portion or be a beneficiary in the same or another agricultural land with similar or comparable features. C. The Voluntary Acquisition of Hacienda Caylaway Petitioner was also left in the dark with respect to Hacienda Caylaway, which was the subject of a Voluntary Offer to Sell (VOS). The VOS in the instant case was made on May 6, 1988, 72 before the effectivity of R.A. 6657 on June 15, 1988. VOS transactions were first governed by DAR Administrative Order No. 19, series of 1989, 73 and under this order, all VOS filed before June 15, 1988 shall be heard and processed in accordance with the procedure provided for in Executive Order No. 229, thus: III. All VOS transactions which are now pending before the DAR and for which no payment has been made shall be subject to the notice and hearing requirements provided in Administrative Order No. 12, Series of 1989, dated 26 July 1989, Section II, Subsection A, paragraph 3.

All VOS filed before 15 June 1988, the date of effectivity of the CARL, shall be heard and processed in accordance with the procedure provided for in Executive Order No. 229. xxx xxx xxx. Sec. 9 of E.O. 229 provides: Sec. 9.Voluntary Offer to Sell. The government shall purchase all agricultural lands it deems productive and suitable to farmer cultivation voluntarily offered for sale to it at a valuation determined in accordance with Section 6. Such transaction shall be exempt from the payment of capital gains tax and other taxes and fees. Executive Order 229 does not contain the procedure for the identification of private land as set forth in DAR A.O. No. 12, Series of 1989. Section 5 of E.O. 229 merely reiterates the procedure of acquisition in Section 16, R.A. 6657. In other words, the E.O. is silent as to the procedure for the identification of the land, the notice of coverage and the preliminary conference with the landowner, representatives of the BARC, the LBP and farmer beneficiaries. Does this mean that these requirements may be dispensed with regard to VOS filed before June 15, 1988? The answer is no. First of all, the same E.O. 229, like Section 16 of the CARL, requires that the land, landowner and beneficiaries of the land subject to agrarian reform be identified before the notice of acquisition should be issued. 74 Hacienda Caylaway was voluntarily offered for sale in 1989. The Hacienda has a total area of 867.4571 hectares and is covered by four (4) titles. In two separate Resolutions both dated January 12, 1989, respondent DAR, through the Regional Director, formally accepted the VOS over the two of these four titles. 75 The land covered by two titles has an area of 855.5257 hectares, but only 648.8544 hectares thereof fell within the coverage of R.A. 6657. 76 Petitioner claims it does not know where these portions are located. Respondent DAR, on the other hand, avers that surveys on the land covered by the four titles were conducted in 1989, and that petitioner, as landowner, was not denied participation therein, The results of the survey and the land valuation summary report, however, do not indicate whether notices to attend the same were actually sent to and received by petitioner or its duly authorized representative. 77 To reiterate, Executive Order No. 229 does not lay down the operating procedure, much less the notice requirements, before the VOS is accepted by respondent DAR. Notice to the landowner, however, cannot be dispensed with. It is part of administrative due process and is an essential requisite to enable the landowner himself to exercise, at the very least, his right of retention guaranteed under the CARL. III. The Conversion of the three Haciendas. It is petitioner's claim that the three haciendas are not subject to agrarian reform because they have been declared for tourism, not agricultural purposes. 78 In 1975, then President Marcos issued Proclamation No. 1520 declaring the municipality of Nasugbu, Batangas a tourist zone. Lands in Nasugbu, including the subject haciendas, were allegedly reclassified as non-agricultural 13 years before the effectivity of R. A. No. 6657. 79 In 1993, the Regional Director for Region IV of the Department of Agriculture certified that the haciendas are not feasible and sound for agricultural development. 80 On March 20, 1992, pursuant to Proclamation No. 1520, the Sangguniang Bayan of Nasugbu, Batangas adopted Resolution No. 19 reclassifying certain areas of Nasugbu as non-agricultural. 81 This Resolution approved Municipal Ordinance No. 19, Series of 1992, the Revised Zoning Ordinance of Nasugbu 82 which zoning ordinance was based on a Land Use Plan for Planning Areas for New Development allegedly prepared by the University of the Philippines. 83 Resolution No. 19 of the Sangguniang Bayan was approved by the Sangguniang Panlalawigan of Batangas on March 8, 1993. 84 Petitioner claims that proclamation No. 1520 was also upheld by respondent DAR in 1991 when it approved conversion of 1,827 hectares in Nasugbu into a tourist area known as the Batulao Resort Complex, and 13.52 hectares in Barangay Caylaway as within the potential tourist belt. 85 Petitioner present evidence before us that these areas are adjacent to the haciendas subject of this petition, hence, the haciendas should likewise be converted. Petitioner urges this Court to take cognizance of the conversion proceedings and rule accordingly. 6 We do not agree. Respondent DAR's failure to observe due process in the acquisition of petitioner's landholdings does not ipso facto give this Court the power to adjudicate over petitioner's application

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for conversion of its haciendas from agricultural to non-agricultural. The agency charged with the mandate of approving or disapproving applications for conversion is the DAR. At the time petitioner filed its application for conversion, the Rules of Procedure governing the processing and approval of applications for land use conversion was the DAR A.O. No. 2, Series of 1990. Under this A.O., the application for conversion is filed with the MARO where the property is located. The MARO reviews the application and its supporting documents and conducts field investigation and ocular inspection of the property. The findings of the MARO are subject to review and evaluation by the Provincial Agrarian Reform Officer (PARO). The PARO may conduct further field investigation and submit a supplemental report together with his recommendation to the Regional Agrarian Reform Officer (RARO) who shall review the same. For lands less than five hectares, the RARO shall approve or disapprove applications for conversion. For lands exceeding five hectares, the RARO shall evaluate the PARO Report and forward the records and his report to the Undersecretary for Legal Affairs. Applications over areas exceeding fifty hectares are approved or disapproved by the Secretary of Agrarian Reform. The DAR's mandate over applications for conversion was first laid down in Section 4 (j) and Section 5 (l) of Executive Order No. 129-A, Series of 1987 and reiterated in the CARL and Memorandum Circular No. 54, Series of 1993 of the Office of the President. The DAR's jurisdiction over applications for conversion is provided as follows: A. The Department of Agrarian Reform (DAR) is mandated to "approve or disapprove applications for conversion, restructuring or readjustment of agricultural lands into non-agricultural uses," pursuant to Section 4 (j) of Executive Order No. 129-A, Series of 1987. B. Sec. 5 (l) of E.O. 129-A, Series of 1987, vests in the DAR, exclusive authority to approve or disapprove applications for conversion of agricultural lands for residential, commercial, industrial and other land uses. C. Sec. 65 of R.A. No. 6657, otherwise known as the Comprehensive Agrarian Reform Law of 1988, likewise empowers the DAR to authorize under certain conditions, the conversion of agricultural lands. D. Sec. 4 of Memorandum Circular No. 54, Series of 1993 of the Office of the President, provides that "action on applications for land use conversion on individual landholdings shall remain as the responsibility of the DAR, which shall utilize as its primary reference, documents on the comprehensive land use plans and accompanying ordinances passed upon and approved by the local government units concerned, together with the National Land Use Policy, pursuant to R.A. No. 6657 and E.O. No. 129-A. 87 Applications for conversion were initially governed by DAR A.O. No. 1, Series of 1990 entitled "Revised Rules and Regulations Governing Conversion of Private Agricultural Lands and NonAgricultural Uses," and DAR A.O. No. 2, Series of 1990 entitled "Rules of Procedure Governing the Processing and Approval of Applications for Land Use Conversion." These A.O.'s and other implementing guidelines, including Presidential issuances and national policies related to land use conversion have been consolidated in DAR A.O. No. 07, Series of 1997. Under this recent issuance, the guiding principle in land use conversion is: to preserve prime agricultural lands for food production while, at the same time, recognizing the need of the other sectors of society (housing, industry and commerce) for land, when coinciding with the objectives of the Comprehensive Agrarian Reform Law to promote social justice, industrialization and the optimum use of land as a national resource for public welfare. 88 "Land Use" refers to the manner of utilization of land, including its allocation, development and management. "Land Use Conversion" refers to the act or process of changing the current use of a piece of agricultural land into some other use as approved by the DAR. 89 The conversion of agricultural land to uses other than agricultural requires field investigation and conferences with the occupants of the land. They involve factual findings and highly technical matters within the special training and expertise of the DAR. DAR A.O. No. 7, Series of 1997 lays down with specificity how the DAR must go about its task. This time, the field investigation is not conducted by the MARO but by a special task force, known as the Center for Land Use Policy Planning and Implementation (CLUPPI-DAR Central Office). The procedure is that once an application for conversion is filed, the CLUPPI prepares the Notice of Posting. The MARO only posts the notice and thereafter issues a certificate to the fact of posting. The CLUPPI conducts the field investigation and dialogues with the

applicants and the farmer beneficiaries to ascertain the information necessary for the processing of the application. The Chairman of the CLUPPI deliberates on the merits of the investigation report and recommends the appropriate action. This recommendation is transmitted to the Regional Director, thru the Undersecretary, or Secretary of Agrarian Reform. Applications involving more than fifty hectares are approved or disapproved by the Secretary. The procedure does not end with the Secretary, however. The Order provides that the decision of the Secretary may be appealed to the Office of the President or the Court of Appeals, as the case may be, viz: Appeal from the decision of the Undersecretary shall be made to the Secretary, and from the Secretary to the Office of the President or the Court of Appeals as the case may be. The mode of appeal/motion for reconsideration, and the appeal fee, from Undersecretary to the Office of the Secretary shall be the same as that of the Regional Director to the Office of the Secretary. 90 Indeed, the doctrine of primary jurisdiction does not warrant a court to arrogate unto itself authority to resolve a controversy the jurisdiction over which is initially lodged with an administrative body of special competence. 91 Respondent DAR is in a better position to resolve petitioner's application for conversion, being primarily the agency possessing the necessary expertise on the matter. The power to determine whether Haciendas Palico, Banilad and Caylaway are non-agricultural, hence, exempt from the coverage of the CARL lies with the DAR, not with this Court. Finally, we stress that the failure of respondent DAR to comply with the requisites of due process in the acquisition proceedings does not give this Court the power to nullify the CLOA's already issued to the farmer beneficiaries. To assume the power is to short-circuit the administrative process, which has yet to run its regular course. Respondent DAR must be given the chance to correct its procedural lapses in the acquisition proceedings. In Hacienda Palico alone, CLOA's were issued to 177 farmer beneficiaries in 1993. 92 Since then until the present, these farmers have been cultivating their lands. 93 It goes against the basic precepts of justice, fairness and equity to deprive these people, through no fault of their own, of the land they till. Anyhow, the farmer beneficiaries hold the property in trust for the rightful owner of the land. IN VIEW WHEREOF, the petition is granted in part and the acquisition proceedings over the three haciendas are nullified for respondent DAR's failure to observe due process therein. In accordance with the guidelines set forth in this decision and the applicable administrative procedure, the case is hereby remanded to respondent DAR for proper acquisition proceedings and determination of petitioner's application for conversion. G.R. No. 96882 March 12, 1996 EUTIQUIANO PAGARA, ALEJANDRO BUTOHAN, JUANITO ARJA, REMIGIO SARONA, BALDOMERO MONTALBO, RAYMUNDO MUOZ, BERNARDO LIMBAGA, ANDRES PROCORATO, CRISPOLO AMAGA, EUTIQUIO AMATANIS, SEVERO BUTOHAN, FRANCISCO BUTOHAN, BONIFACIO TORRES, GENEROSO MAPA and the SECRETARY OF AGRARIAN REFORM, petitioners, vs. THE HONORABLE COURT OF APPEALS, JORGE C. PADERANGA, OSCAR REMULLA, ROMMEL GEORGE PADERANGA, HILDA GENER PADERANGA and GOERING GEORGE C. PADERANGA, respondents. VITUG, J.:p The Court of Appeals, in its resolution of 18 October 1990, denied due course to the special civil action of certiorari interposed to it by petitioners assailing the decision of the Regional Trial Court of Pagadian City, Branch 18, 1 that ordered petitioners to vacate the parcels of land here in dispute and the cancellation of the Operation Land Transfer ("OLT") Certificates of Title issued to them by the Department of Agrarian Reform ("DAR"). The instant petition for review on certiorari questions the above resolution 2 of the appellate court. In 1967, private respondents acquired from Santiago Ceniza parcels of land, each with an average area of five (5) hectares, in Taguitic, Aurora, Zamboanga del Sur, evidenced by transfer certificates of title. Originally, the parcels were part of a large tract of land covered by Original Certificate of Title No. P-9515. The property was later subdivided into twenty-four (24) sub-lots under Subdivision Plan (LRC) Psd-187203 which, on 10 September 1973, was approved by the Land Registration Commission.

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On 22 December 1973, the Department of Agrarian Reform, through a certain Honorio Tequero, sent a telegram to private respondent Jorge C. Paderanga informing him that the several parcels had been placed under the Operation Land Transfer of the Land Reform Program of the government. In February 1974, a parcellary map was prepared by the Department of Agrarian Reform in collaboration with the Bureau of Lands. Forthwith, the parcels were adjudicated to private petitioners and corresponding OLT certificates were issued to them. Private respondents thereupon filed their complaint with the then Ministry of Agrarian Reform office in Pagadian City and Molave, Zamboanga del Sur, vehemently contesting the issuance of the OLT certificates. On 23 October 1978, after the local agency had failed to act on the protest, private respondents elevated their case to the Minister of Agrarian Reform. The matter remained pending with the agency. On 03 September 1986, private respondents finally decided to file a complaint against petitioners before the Regional Trial Court of Pagadian City to regain possession of the parcels of land, as well as for the annulment and/or cancellation of the OLT certificates, and for recovery of damages. Private respondents averred that private petitioners were mere "opportunists and/or squatters" who took advantage of the government's operation land transfer program; that private petitioners were not qualified under the program with each of them already owning over four (4) hectares of agricultural land; that, not being tenanted, the land was not covered by the land reform program and thus beyond the jurisdiction of the Ministry of Agrarian Reform; and that, even assuming that private petitioners were tenants, the property should still be deemed excluded from the program since the parcels of land averaged less than five (5) hectares each. Petitioners moved for the dismissal of the complaint due allegedly to the failure of private respondents "to (first) refer the matter to the Department of Agrarian Reform." The motion was denied by the trial court. Petitioners thereupon filed their answer reiterating, by way of affirmative defenses, the grounds that they relied on in their motion to dismiss. The court found for private respondents and, on 26 March 1990, it rendered a decision disposing of the case; thus: WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the defendants: 1. Ordering the defendants to vacate and relinquish their respective possessions over the lands subject of this case to the plaintiffs and to pay yearly rentals of 18 cavans of palay or its equivalent based on the government support price for every hectare from the filing of this complaint on August 25, 1986, and until the said possession is returned to the plaintiffs; 2. Ordering the Secretary of Department of Agrarian Reform to cancel the OLT Certificates as issued to the defendants; 3. Ordering the Registry of Deeds of Zamboanga del Sur to cancel the annotations of the OLT liens in the titles of the plaintiffs over the lands subject of this case; 4. Ordering the defendants Eutiquiano Pagara, Juanito Aroja and Alejandro Butohan to pay the plaintiffs the value of the coconut trees, approximately 150 coconut trees, cut or uprooted at P150.00 per tree; 5. Ordering the defendants to jointly and severally pay attorney's fees of P10,000.00, plus expenses of litigation in the amount of P10,000.00, and to pay the costs. SO ORDERED. 3 Grappling initially with the issues raised in the affirmative defenses, the lower court ruled (a) that private respondents had substantially complied with the requirement of having the case first referred to the Department of Agrarian Reform, and (b) that the latter's recommendatory resolution that found the existence of a tenant-landlord relationship was not binding on the court, citing Graza vs. Court of Appeals, 4 as well as the last paragraph of Section 2 of Presidential Decree No. 1038 providing that The preliminary determination of the relationship between the contending parties by the Secretary of Agrarian Reform, or his authorized representative, is not binding upon the court, judge or hearing officer to whom the case is certified as a proper case for trial. Said court, judge or hearing officer may, after due hearing, confirm, reverse or modify said preliminary determination as the evidence and substantial merits of the case may warrant. The lower court went on to hold that private petitioners, having failed to prove the existence of a tenancy relationship with private respondents, as well as their membership in the Samahang

Nayon, were disqualified from the land reform program. In the case of petitioners Pagara, Mapa and Torres, furthermore, the court said that they were also disqualified as beneficiaries for being themselves owners of other agricultural lands. A copy of the court's decision was received on 03 April 1990 by private petitioners. A motion for its reconsideration 5 was denied in the court's order of 15 May 1990 which private petitioners received on 28 May 1990. A notice of appeal was filed by public petitioner on 14 May 1990 and that of private petitioners on 15 May 1990. The notices of appeal were both denied in two separate orders, dated 30 May 1990 and 31 May 1990, of the court for having been filed out of time. Upon motion of private respondents to have the structures found on the property removed or demolished, the lower court, on 29 August 1990, issued a writ of demolition. The Sheriff's Report, dated 27 September 1990, would show that the writs of execution and of demolition were satisfied except for the payment of rentals and other money judgments awarded to private respondents. On 26 September 1990, the OLT liens annotated on the titles of private respondents were voided. Likewise cancelled were the OLT certificates issued to private petitioners by the Secretary of Agrarian Reform through the Zamboanga del Sur Agrarian Reform Office. Petitioners sought the extraordinary remedy of certiorari before the respondent Court of Appeals (CA-G.R. SP No. 23111). On 18 October 1990, however, the appellate court dismissed the petition for its failure to comply with the requirement set forth in Section 2, Rule 6, of the Revised Internal Rules 6 of the Court of Appeals and for its lack of sufficient legal basis. The appellate court held that the court a quo had lawfully acquired jurisdiction over the case for recovery of possession and annulment of titles. There is no merit in the instant petition for review on certiorari. Petitioners, proceeding from the premise that a tenancy relationship existed between the private parties, would posit that the court of origin was devoid of jurisdiction and thus all its acts, including the issuance of the writs of execution and demolition, were null and void on the basis of Section 12 7 of P.D. No. 946 which withdrew from regular courts jurisdiction over issues relating to the administrative implementation of land-transfer under P.D. 27, along with its amendatory and related laws, and conferred the matter on the Department of Agrarian Reform whose authority, petitioners added, remained unaffected by the passage of Batas Pambansa Blg. 129 or the Judiciary Reorganization Act of 1981. Moreover, petitioners averred, the lower court was in error when it applied the Rules of Court in holding that the notices of appeal were filed out of time. It should be said at the outset that the present petition can outrightly be discarded (a) for its failure to have a verified statement of material dates and an affidavit of service in violation of Circular No. 1-88, 8 and (b) because of the pendency of another petition with the Court of Appeals (docketed CA-G.R. SP No. 23993), filed by petitioners, for annulment of the same decision of the lower court in disregard of No. 17 of the Interim Rules which prohibits forum-shopping. 9 Even on merits, the instant petition must still be denied. The primordial issue is whether or not the Regional Trial Court has acquired jurisdiction to take cognizance of the action taken by private respondents against petitioners. Section 12 of Presidential Decree No. 946, 10 promulgated on 17 June 1976, expressed the original and exclusive jurisdiction of the Court of Agrarian Relations. 11 On 14 August 1981, the Judiciary Reorganization Act of 1980, also known as Batas Pambansa Blg. 129, took effect and vested on Regional Trial Courts exclusive original jurisdiction in all civil actions and special proceedings theretofore falling under the exclusive original jurisdiction of the Court of Agrarian Relations. 12 When, accordingly, the complaint was filed by private respondents on 03 September 1986, jurisdiction thereover was already and appropriately with the Regional Trial Court. 13 Petitioners assail, nevertheless, the exercise of jurisdiction by the court a quo on the ground of nonexhaustion of administrative remedies and for failure to secure a referral from the Secretary of Agrarian Reform pursuant to Section 12 of P.D. 946. The court, however, has correctly pointed out that The rule regarding exhaustion of administrative remedies is not a hard and fast rule. It is not applicable (1) where the question in dispute is purely a legal one, or (2) where the controverted act is patently illegal or was performed without jurisdiction or in excess of jurisdiction; or (3) where the respondent is a department secretary, whose acts as an alter ego of the President bear the implied or assumed approval of the latter, unless actually disapproved by him, or (4) where there are

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circumstances indicating the urgency of judicial intervention, Gonzales vs. Hechanova, L-21897, October 22, 1963, 9 SCRA 230; Abaya vs. Villegas, L-25641, December 17, 1966, 18 SCRA; Mitra vs. Subido, L-21691, September 15, 1967, 21 SCRA 127. Said principle may also be disregarded when it does not provide a plain, speedy and adequate remedy, (Cipriano vs. Marcelino, 43 SCRA 291), when there is no due process observed (Villanos vs. Subido, 45 SCRA 299), or where the protestant has no other recourse (Sta. Maria vs. Lopez, 31 SCRA 637). The foregoing jurisprudence when applied to the case at bar will point out that exhaustion of administrative remedies is not applicable. First, the issue of tenancy involves legal questions as "tenancy is not purely factual relationship dependent on what the alleged tenants does upon the land, but it is also a legal relationship" (Tuazon vs. Court of Appeals, 118 SCRA 484). Second, one of the principal respondents herein is the Secretary of Agrarian Reform who acts as the alter ego of the President, and whose act of issuing land transfer certificate is the subject matter of this case. Third, plaintiffs' claims of denial of due process in the issuance of the land transfer certificates finds merit in this case for it was only after the certificates were issued that they were able to protest. Finally, there is an exhaustive presentation of evidence that plaintiffs availed of the administrative processes, (testimonies of Attys. Jorge and Goering Paderanga and exhibits "J," "K," "L," "L-1" to "L-3" and "L-4" to "L-11" that fourteen (14) years had already elapsed and the Department Secretary had not yet resolved plaintiffs' protest leaving plaintiffs with no other recourse but to seek the relief of this Court as there is no other plain, speedy and adequate remedy in law. 14 Relative to the question of prior referral to the Department of Agrarian Reform, it would appear that there was substantial compliance with the requirements of P.D. 946. In fact, Exhibit 6 is a resolution of the DAR Regional Director, finding, although recommendatory in nature, a tenancy relationship between the parties. Having arrived at the foregoing conclusions, the Court need not further delve on the other issues raised by the parties. WHEREFORE, the petition is DENIED. Costs against petitioners. G.R. No. L-53485 February 6, 1991 PATRIA ESUERTE and HERMINIA JAYME, petitioners, vs. HON. COURT OF APPEALS (Eleventh Division), HON. RAFAEL T. MENDOZA, Judge, Branch VI, Court of First Instance of Cebu and MA. BEVERLY TAN, respondents. Romeo B. Esuerte for petitioners. Eleno V. Andales & Sisinio M. Andales for private respondent. MEDIALDEA, J.:p This petition for certiorari with a prayer for preliminary injunction seeks to set aside the decision of the Court of Appeals in CA G.R. No. SP-08999-R, involving the same parties. An action for damages was filed by private respondent Beverly Tan against herein petitioners Patria Esuerte and Herminia Jayme with the Court of First Instance (now Regional Trial Court) of Cebu and docketed as Civil Case No. R-17584. The claim for damages arose from an incident involving the parties and summarized by the Court of Appeals, as follows: . . . that on September 22, 23 and 27, 1978, private respondent Ma. Beverly Tan, a Junior Resident Physician of Corazon Locsin-Montelibano Memorial Hospital, Bacolod City, without any justifiable reason shouted at, humiliated and insulted the petitioner, Patria Esuerte, Head Nurse, Medicare Department of the said hospital and as a result of the said incident, said petitioner complained to the Chief of the Hospital, Dr. Teodoro P. Motus, in writing. The other petitioner, Herminia Jayme, who was one of those who were present at the time of the incident also sent a letter to the Chief of the Hospital, Dr. Teodoro Motus, informing the latter of what she had witnessed. As a result thereof, private respondent was advised to explain in writing by the Chief of the Hospital, but private respondent instead of explaining only her side of the incident also complained against the petitioners. The Discipline and Grievance Committee, Corazon Locsin-Montelibano Memorial Hospital, conducted a fact-finding investigation and later, the Chief of the Hospital, Dr. Teodoro P.

Motus, issued a resolution dated November 8, 1978, transmitting the records of the case to the Regional Health Office, No. 6, Jaro, Iloilo City for appropriate action; . . . . (pp. 91-92, Rollo) Esuerte and Jayme filed a motion to dismiss the complaint on the ground of improper venue and for being premature for failure of Tan to exhaust administrative remedies. On January 2, 1979, the trial court denied the motion to dismiss. The motion for reconsideration of the denial was likewise denied by the court on February 16, 1979. Esuerte and Jayme filed a petition for certiorari and prohibition with a prayer for preliminary injunction with the Court of Appeals. On September 18, 1979, the petition was dismissed without pronouncement as to costs. The motion for reconsideration of the decision was likewise denied for lack of merit on February 18, 1980. The following reasons were advanced by petitioners for the allowance of this petition: 1) The Court of Appeals committed gross error and grave abuse of discretion when it dismissed the petition despite petitioners' overwhelming evidence showing that the venue of private respondent's action (Civil Case No. R-17584) was improperly laid. 2) The Court of Appeals committed gross error and grave abuse of discretion when it dismissed the petition despite petitioners' overwhelming evidence showing that the filing of Civil Case No. R17584 is premature due to non-exhaustion of administrative remedies. It is the contention of petitioners that the proper venue of the action filed by Tan should be Bacolod City and not Cebu City. At the time of the filing of her action in court, Tan was actually residing and may be found in Bacolod City. In fact, in her "Statement of Assets and Liabilities," submitted by Tan to her employer, the Corazon Locsin Montelibano Memorial Hospital, she declared that she is a resident of FRAYU INTERIOR, 6th Street, Bacolod City. Section 2(b), Rule 4 of the Rules of Court provides: Sec. 2.Venue in Courts of First Instance. xxx xxx xxx (b) Personal Actions. All other actions may be commenced and tried where the defendants or any of the defendants resides or may be found, or where the plaintiff or any of the plaintiffs resides, at the election of the plaintiff. The choice of venue for personal actions cognizable by the Regional Trial Court is given to the plaintiff but not to the plaintiff's caprice because the matter is regulated by the Rules of Court ( see Clavecilla Radio System v. Antillon, 19 SCRA 379). The rule on venue, like other procedural rules, are designed to insure a just and orderly administration of justice or the impartial and evenhanded determination of every action and proceeding (Sy v. Tyson Enterprises Inc., 19 SCRA 367). The option of the plaintiff in personal actions cognizable by the Regional Trial Court is either the place where the defendant resides or may be found or the place where the plaintiff resides. If plaintiff opts for the latter, he is limited to that place. "Resides" in the rules on venue on personal actions means the place of abode, whether permanent or temporary, of the plaintiff or defendants as distinguished from "domicile" which denotes a fixed permanent residence (Dangwa Transportation Co., Inc. v. Sarmiento, G.R. No. L-22795, January 31, 1977, 75 SCRA 124).And, in Hernandez v. Rural Bank of Lucena, Inc., G.R. No. L-29791, January 10, 1978, 81 SCRA 75), venue of personal actions should be at the place of abode or place where plaintiffs actually reside, not in domicile or legal residence. In Koh v. CA, L-40428, December 17, 1975, 70 SCRA 298; 305, We ruled: Applying the foregoing observation to the present case, We are fully convinced that private respondent Coloma's protestations of domicile in San Nicolas, Ilocos Norte, based on his manifested intention to return there after the retirement of his wife from government service to justify his bringing of an action for damages against petitioner in the C.F.I. of Ilocos Norte, is entirely of no moment since what is of paramount importance is where he actually resided or where he may be found at the time he brought the action, to comply substantially with the requirements of Sec. 2(b) of Rule 4, Rules of Court, on venue of personal actions. . .. As perspicaciously observed by Justice Moreland, the purpose of procedure is not to restrict the court's jurisdiction over the subject matter but to give it effective facility "in righteous action," "to facilitate and promote the administration of justice" or to insure "just judgments" by means of a fair hearing. If the objective is not achieved, then "the administration of justice becomes incomplete and

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unsatisfactory and lays itself open to criticism." (Manila Railroad Co. v. Attorney General, 20 Phil. 523, 530). There is no question that private respondent as plaintiff in the Civil Case is a legal resident of Cebu City. Her parents live there. However, it cannot also be denied that at the time of her filing of the complaint against petitioners, she was a temporary resident of Bacolod City. She was then employed with the Corazon Locsin Montelibano Memorial Hospital, Bacolod City, as resident physician. Moreover, the acts complained of were committed in Bacolod City. The private respondents were all residents of Bacolod City at the time of the bringing of the action. Though Tan's employment was only temporary there was no showing when this employment will end. Justice would be better served if the complaint were heard and tried in Bacolod City where all the parties resided. The second ground raised by petitioners is devoid of merit. The alleged need by private respondent Tan to exhaust administrative remedies before filing the complaint for damages does not apply to the instant case. Private respondent as plaintiff in the civil Case for damages has no administrative remedy available to her. It is true that the same incident complained of in the administrative case filed by petitioners against Tan is the subject of the action for damages filed by Tan against the petitioners in the trial court. However, the cause of action in the administrative case is different from that of the civil case for damages. While the complainant in the administrative case may be a private person, it is the government who is the aggrieved party and no award for damages may be granted in favor of private persons. In the civil action for damages, the trial court's concern is whether or not damages, personal to the plaintiff, were caused by the acts of the defendants. The civil action for damages can proceed notwithstanding the pendency of the administrative action. WHEREFORE, the position is GRANTED. The questioned decision of the Court of Appeals is SET ASIDE. Civil Case No. R-17584 is DISMISSED for improper venue.

JUDICIAL REVIEW OF ADMINISTRATIVE DECISIONS G.R. No. L-39919 January 30, 1934 FORTUNATO ORTUA, petitioner-appellant, vs. VICENTE SINGSON ENCARNACION, Secretary of Agriculture and Commerce, ET AL., respondents-appellees. Villafuerte, Tible and Valer for appellant. Office of the Solicitor-General Hilado for appellees. MALCOLM, J.: in this case the petitioner and appellant seeks the issuance of a writ of mandamus directed against the Secretary of Agriculture and Commerce and the Director of Lands, for the purpose of compelling them to give due course to his sale's application for a tract of public land. The demurrers interposed to the complaint by the respondents and appellees were sustained in the trial court, and on the failure of the petitioner further to amend his complaint, the action was dismissed, without costs. The principal facts admitted by the pleadings may be stated as follows: In January, 1920, the petitioner Fortunato Ortua filed an application with the Bureau of Lands for the purchase of a tract of public land situated in the municipality of San Jose, Province of Camarines Sur. Following an investigation conducted by the Bureau of Lands, Ortua's application was rejected, allowing him, however, to file a sale or lease application for the portion of the land classified to be suitable for commercial purposes, within a period of sixty days from the date of the decision and upon payment

of P3,000 for accrued rents. Two motions for reconsideration of the decision were filed and denied. On appeal to the then Secretary of Agriculture and Natural Resources (Agriculture and Commerce), the decision was affirmed, except that the sum of P3,000 was reduced to P400. It should be explained that one condition for the purchase of a tract of public agricultural land, provided by the Public Land Law, Act No. 2874, in its sections 23 and 88, is that the purchaser shall be a citizen of lawful age of the Philippine Islands or of the United States. Fortunato Ortua in his application stated that he was a Filipino citizen, but the Director of Lands held that on the contrary, Ortua was a Chinese citizen. On this question, the Director of Lands found established the following facts: Fortunato Ortua was born in 1885 in Lagonoy, Camarines Sur, Philippine Islands, being the natural son of Irene Demesa, a Filipina, and Joaquin Ortua, a Chinese. In 1896 Fortunato was sent to China to study. While he was in China his father and mother were legally married. Fortunato returned to the Philippines in 1906, that is, when he was twenty-one years of age. It was conceded by the Director of Lands that presumptively Fortunato Ortua was a Philippine citizen, but certain acts of Ortua were pointed to as demonstrating that he had forfeited his Philippine citizenship. Thus it was stated that Ortua voluntarily applied for a landing certificate of residence which was issued by the Insular Collector of Customs and which is only given to Chinese persons. Also, when Ortua applied for the registration of a boat, and it was denied by the Insular Collector of Customs on the ground that the appellant was a Chinese citizen, Ortua submitted to the ruling. The Director of Lands performs his functions pursuant to the provisions of the Public Land Law. In accordance with this law, the Secretary of Agriculture and Commerce is made the executive officer charged with carrying out the provisions of the Public Land Law, and he performs this duty through the Director of Lands (sec. 3). Subject to the control of the executive head, the Director of Lands is by law vested with direct executive control over land matters, "and his decisions as to questions of fact shall be conclusive when approved by the Secretary of Agriculture and Commerce." (Sec. 4). The foregoing analysis of the pertinent provisions of the Public Land Law will show why in the opening paragraphs of this decision, we accepted the decision of the Director of Lands on questions of facts as conclusive. We would even go farther and would hold that the Director of Lands has been made by law a quasi-judicial officer. As such officer he makes findings of fact, even passes upon questions of mixed fact and law, and considers and decides the qualifications of applicants for the purchase of public lands. A discretion is lodged by law in the Director of Lands which should not be interfered with. The decisions of the Director of Lands on the construction of the Public Land Law are entitled to great respect by the courts. Accordingly, to paraphrase the authorities and decisions coming principally from the United States Supreme Court, we deduce the rule on the subject to be, that a decision rendered by the Director of Lands and approved by the Secretary of Agriculture and Commerce, upon a question of fact is conclusive and not subject to be reviewed by the courts, in the absence of a showing that such decision was rendered in consequence of fraud, imposition, or mistake, other than error of judgment in estimating the value or effect of evidence, regardless of whether or not it is consistent with the preponderance of the evidence, so long as there is some evidence upon which the finding in question could be made. (Vargas and Maalac, The Philippine Land Registration Law, pp. 738740; Julian vs. Apostol [1928], 52 Phil., 422; 50 C. J., 1089 et seq.; Johnson vs. Riddle [1916], 240 U.S., 467.) There is, however, another side to the case. It certainly was not intended by the legislative body to remove from the jurisdiction of courts all right to review decisions of the Bureau of Lands, for to do so would be to attempt something which could not be done legally. Giving force to all possible intendments regarding the facts as found by the Director of Lands, yet so much of the decision of the Director of Lands as relates to a question of law is in no sense conclusive upon the courts, but is subject to review. In other words, any action of the Director of Lands which is based upon a misconstruction of the law can be corrected by the courts. (Shepley vs. Cowan [1876], 91 U.S., 330; Moore vs. Robbins [1878], 96 U.S., 530; Marquez vs. Frisbie [1879], 101 U.S., 473; Black vs. Jackson [1900], 177 U.S., 349; Johnson vs. Riddle, supra.) Having adjusted this fundamental matter, it is now for the court to determine if the question of law arising from the undisputed evidence was correctly decided by the Director of Lands. This question is, if the petitioner Fortunato Ortua should be considered to be a Philippine citizen or a Chinese

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citizen. Presumptively it is admitted that he is a Philippine citizen. More correctly stated, Fortunato Ortua had a sort of a dual citizenship, and had it within his power either to elect to become a Philippine citizen or a Chinese citizen. Predicated on these assumptions, we doubt very much if it could be found that Ortua has by his own acts repudiated his Philippine citizenship and chosen Chinese citizenship. The Director of Lands gave too much prominence, we think, to two minor facts, susceptible of explanation. When Ortua returned from China at the age of twenty-one, it was the most natural thing in the world for him to land as a Chinese, for this would facilitate entry and obviate complications. Again, when Ortua applied for the registration of a boat, there may have been any number of reasons why he did not care to appeal from the decision of the Insular Collector of Customs. On the other hand, some consideration should be given to the intention of the petitioner, and he vigorously insists that it is his desire to be considered a Philippine citizen. He has taken a Filipino name. He has gone into business and has improved the property here in question to a great extent. There has been no implied renunciation of citizenship, because the petitioner has been domiciled in these Islands except for a short period during his infancy when he temporarily sojourned in China for study. On the contrary, he states that he has always considered himself to be a Filipino, and that he has elected to remain as a Philippine citizen. Therefore, on the facts found by the Director of Lands, we hold that clear error of law resulted in not considering petitioner a Philippine citizen and so qualified under the Public Land Law to purchase public agricultural lands. Sustaining the assigned errors, the order of the trial court will be set aside, and the record will be remanded to the court of origin for further proceedings in accordance with law. No pronouncement as to costs in this instance. G.R. Nos. L-34267-68 January 25, 1991 BIAK-NA-BATO MINING COMPANY, petitioner, vs. HON. ARTURO R. TANCO, JR., in his capacity as the Secretary of Agriculture and Natural Resources and BALATOC-LUBUAGAN MINES, INC., respondents. BIAK-NA-BATO MINING COMPANY, petitioner, vs. HONORABLE ARTURO R. TANCO JR., in his capacity as the Secretary of Agriculture and Natural Resources and MOUNTAIN MINES, INC., respondents. Taada, Vivo & Tan for petitioner. Norberto J. Quisumbing, Francisco Catral & A.N. Bolinao, Jr. and Bengzon, Villegas & Zarraga for private respondents. PARAS, J.:p This is a petition for review on certiorari which seeks to annul and set aside the September 17, 1971 decision of the Honorable Secretary of Agriculture and Natural Resources * in DANR Case Nos. 3613-3613-A entitled "Biak-Na-Bato Mining Company vs. Balatoc-Lubuagan Mines, Inc. and Mountain Mines, Inc." affirming the decision of the Director of Mines ** dated December 17, 1970 in Mines Administrative Cases Nos. V-494 and V-495, finding the respondents to have a better right to the 170 mining claims of about 1,520 hectares located at the Cordillera Mountains, in Pasil, Municipality of Balatoc, Province of Kalinga-Apayao. As gathered from the records, the facts of the case are as follows: During the mining boom in 1933, a group of hopeful and enthusiastic individuals from the North, among them Jose Moldero, Saturnino Moldero, Miguel Moldero and Manuel Dirige, appeared to have located from November, 1933 to February, 1934 one hundred seventy (170) mining claims in hinterlands of the Cordillera Mountains in Sitios of Pasil and Balatoc, Municipality of Lubuagan, Mountain Province (now known as the Municipality of Balatoc, Province of Kalinga-Apayao). The land covered by said 170 mining claims is adjacent and surrounds the mining properties of Batong Buhay Gold Mines, Inc. The said 170 mining claims were divided into four (4) groups, viz: NAGASAT Group consisting of 42 claims; MUGAO Group consisting of 40 claims; LUCKY STRIKE Group consisting of 40 claims; and BUMABAG Group consisting of 48 claims ( Rollo, Vol. III, Appellant's Brief, p. 1122 [pp. 25-26]).

On September 3, 1936, Balatoc-Lubuagan Mines Association entered into an Operating Agreement with Jose Moldero as Attorney-in-fact of the claimowners of the Nagasat and Mugao Groups of claims (Rollo, Vol. I, Annex "M-1", pp. 449-451-A). On September 19, 1936, Saturnino Moldero sold to Balatoc-Lubuagan Mines Association twenty (20) claims of the Nagasat group (Rollo, Vol. I, Annex "M-2", pp. 452-453) while Miguel Moldero sold seven (7) claims (Rollo, Vol. I, Annex "M-5", pp. 459-460). Subsequently, Balatoc-Lubuagan Mines, Inc. then already organized as a mining corporation acquired fifty two (52) claims, of the Nagasat and Mugao Groups and acquired the operating right on thirty (30) claims also of the Nagasat and Mugao groups belonging to Miguel Modero, Emilia L. Villanueva, A.D. Salvador, Esteban Flores, Nicasio Balinag, Rufino Custaran, Felipe Tuason, Rita A. de Pardo and Hilario T. Agatep which was later on conveyed to respondent Balatoc-Lubuagan Mines, Inc. (Rollo, Vol. III, Appellees' Brief, p. 1144 [P. 20]). On the same date September 3, 1936, Mountain Mines, Association entered into an agreement with Jose Moldero over forty (40) mining claims known as Lucky Strike Group and on September 22, 1936, Mountains Mines, Inc. already a corporation entered into an agreement with Jose Moldero over forty eight (48) mining claims known as Bumabag Group (Rollo, Vol. I, Annexes "M", "M-4", pp. 446-448; 456-458). On September 19, 1936, Mountain Mines, Inc. purchased from Saturnino Moldero ten (10) claims of the Lucky Strike Group and two (2) more claims of the Lucky Strike Group on October 6, 1936 purchased from Miguel Moldero (Rollo, Vol. I, Annexes "M-3", "M-6", pp. 254-255; 461-462). That in September 1936, Mountain Mines, Inc. acquired the entire eighty-eight (88) claims under a deed of sale executed in its favor by Feliciano Arceo, the attorney-in-fact of Jose Moldero, Saturnino Moldero and Miguel Moldero as claimowners and attorney-in-fact of the other claimowners (Rollo, Vol. I, Annexes "C", "F", pp. 287-289; 296-297). That all these mining claims were located under the Act of Congress of July 1, 1902 ( Rollo, Vol. III, Appellees' Brief, p. 1144 [p. 21]). In 1936-37 said mining corporations (Balatoc-Lubuagan Mines, Inc. and Mountain Mines, Inc.) engaged the services of Mining Engineers, Thomas F. Breslin, Bernardo Cuesta and Fulgencio Consolacion to explore and develop the mining area; for its pre-war exploration and development, Mountain Mines, Inc. spent the sum of P142,219.00 and increased its authorized capital in 1937 from P200,000.00 to P1,000,000.00 to meet the cost of exploration ( Rollo, Vol. III, Solicitor's Brief, p. 1156 [p. 7]). After the war, in 1949-50, private respondents (Balatoc-Lubuagan Mines, Inc. and Mountain Mines, Inc.) reconstituted their corporate records before the Securities and Exchange Commission. In 1953, pursuant to the provisions of Republic Act No. 739, they filed reconstitution proceedings before the Bureau of Mines to reconstitute the records of the 170 lode claims. The reconstitution proceedings filed by Balatoc-Lubuagan Mines, Inc. over 42 lode claims known as Nagasat Group and 40 lode claims known as Mugao Mining Group were docketed before the Bureau of Mines as MAC Case No. V-79 Rollo, Vol. III, Solicitor's Brief, p. 1156 [p. 8]). The reconstitution proceedings of Mountain Mines, Inc. over the 48 lode claims known as Bumabag Mining Group and 40 lode claims known as Lucky Strike Mining Group was docketed as MAC Case No.V-80 (Rollo, Ibid.). The Bureau of Mines published the requisite notice of hearing of the reconstitution proceedings in the newspapers of general circulation in Manila, and posted the notice of hearing in the Bulletin Board in Manila and served copies thereof to the District Mining Office in Baguio, Mining Recorder in Bontoc, and in Lubuagan, Sub-province of Kalinga-Apayao, where the mineral claims are situated (Rollo, Ibid.). The Bureau of Mines in accordance with the provision of R.A. 739 conducted hearings and heard the testimonies of Apolonio Navarro, Anacleto Navarro, Atty. Macario Gacanes. Also presented was Atty. Isidro Berruyo, and the affidavits of Miguel Moldero, one of the original locators and attorneysin-fact of the claimowners, who confirmed the sale of Mountain Mines, Inc. of the 88 lode claims and to Balatoc-Lubuagan Mines, Inc. of the 82 lode claims (Rollo, Ibid.). On May 23, 1956, the Bureau of Mines after due hearing and notice issued the corresponding orders of reconstitution and eighty-eight (88) mining claims of Mountain Mines, Inc. and eighty-two (82) mining claims of Balatoc-Lubuagan Mines, Inc. claim maps, lists of mining claims, option

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agreement, deeds of sale, power of attorney and other documents were reconstituted ( Rollo, Vol. II, pp. 679-681; 682-684). After the finality of the Order of Reconstitution, on July 26, 1956, the Balatoc-Lubuagan Mines, Inc. and Mountain Mines, Inc. entered into an Operating Agreement on Royalty basis with Benguet Consolidated, Inc. over the 170 lode claims as reconstituted. Benguet Consolidated, Inc. recorded the Royalty Agreement as well as the 170 lode claims in the Office of the Mining Recorder of Bontoc. Benguet Consolidated, Inc. explored the respondents' mining area for a period of one (1) year and thereafter, operating rights over the mining property were granted to Messrs. Spellmeyer and Stewart, A. Soriano & Company, Lepanto Consolidated Mining Corporation in 1958; Mitsubishi Shij Kaisha, Ltd. in 1959; Jacinto Steel, Inc. in 1961; Messrs. Thomas J. Weck and Robert N. Jones and Alfonso M. Villaaba Company in 1963; Philmetals Mining Corporation in 1968 and Industrial and Commercial Earthmovers, Inc. (now Inco Mining Corporation) in 1969 (Rollo, Vol. III, Appellees' Brief, p. 1156 [pp. 10-11]). In 1960, a geological survey of the entire area of Balatoc-Lubuagan Mines, Inc. and Mountain Mines, Inc.'s properties was conducted by Engr. Tranquilino Medina who rendered a favorable report thereon; that up to 1970, said mining companies have assigned men working in the area guarding the properties under field superintendent Miguel Moldero who had employed some natives for the reopening and driving of tunnels, blazing trails in the mining area; that some of these men are Felix Gumisa, Francisco Aguac, Dacuyag Balinggao and these men have continuously performed the required assessment works on the area; that affidavits of annual assessment works for the years 1965, 1966 and 1967 were duly filed with the Mining Recorder of Bontoc, Mt. Province; and that they have paid the real estate tax for the one hundred seventy (170) claims for the years 1956 to 1970 (Rollo, Vol. III, Appellees' Brief, p. 1144 [p. 22]). In March, 1968, Mountain Mines, Inc. filed an application for lease over 9 lode claims identified as Mold, Roque, Ifugao, President, Nicodemus, Isabel, Inting, Iscariote and Judas, as well as the application for order of survey (Rollo, Vol. III, pp. 1091-1093). On the other hand, Balatoc-Lubuagan Mines, Inc. filed a lease application over 11 lode claims identified as Z-13, Z-14, Z-15, Z-19, Z-20, Z-21, Z-25, Z-26, Z-27, Z-31, Z-32 and Z-33 and an application for order of survey (Rollo, Vol. III, pp. 1095-1097). The Bureau of Mines issued the order of survey in November 1968 and actual survey of 21 lode claims was conducted in December 1969 (Rollo, Vol. III, Solicitor's Brief, p. 1156 [pp. 1213]). Meanwhile, on different dates in 1967, Bernardo Ardiente, Emilio Peralta, Mario Villarica, Anastacio Canao and Salvador Ellone located several claims covering a wide area of vacant, unoccupied and unclaimed land of the public mineral lands situated in Sitios Pasil and Balatoc, Municipality of Lubuagan, Kalinga-Apayao. The land covering the mining claims is adjacent to the patentable mining properties of the Batong Buhay Gold Mines, Inc. (Rollo, Vol. I, Petition, pp. 40-41). On February 8, 1969, the petitioner Biak-na-Bato Mining Co. was created as a partnership in accordance with law. And on November 19, 1969, the above-named locators, namely: Bernardo Ardiente, Emilio Peralta, Mario Villarica, Anastacio Cano and Salvador Ellone, each executed a Deed of Transfer of Mining Rights assigning, transferring and conveying to the petitioner the mining claims covered by the aforesaid declarations of location (Rollo, Ibid., pp. 41-42). On December 4,1969, Biak-Na-Bato Mining Co. filed with the Bureau of Mines the application for lease and a petition for an order of lease survey of the aforementioned mining claims ( Rollo, Ibid., p. 42). However, it received a notice of the letter of the Director of Mines refusing to issue the order of lease survey because the areas covered by the mining claims were allegedly in conflict with the four (4) groups of mining claims purportedly owned by the Balatoc-Lubuagan Mines, Inc. and Mountain Mines, Inc. (Rollo, Ibid., pp. 45-46). On January 12, 1970, Biak-Na-Bato Mining Company filed its separate protest with the Bureau of Mines against Balatoc-Lubuagan Mines, Inc. docketed as MAC No. 494 and the other against Mountain Mines, Inc. docketed as MAC No. 495. In said protest, Biak-Na-Bato Mining Company contests and disputes the right of Balatoc-Lubuagan Mines, Inc. to eleven (11) mining claims and the right of Mountain Mines, Inc. to another nine (9) mining claims (Rollo, Vol. I, Petition, p. 12). Actually, Biak-Na-Bato Mining Company raised in its protest only the issue of abandonment while Balatoc-Lubuagan Mines, Inc. and Mountain Mines, Inc. questioned the validity of the former's location as "table location". Biak-Na-Bato Mining Company without amending its pleadings

questioned the reconstitution proceedings in MAC Cases Nos. V-79 and V-80 by claiming that the two (2) deeds of sale over the 88 lode claims in favor of Mountain Mines, Inc. and the other two (2) deeds of sale over 52 lode claims of Balatoc-Lubuagan Mines, Inc. were fake, fictitious or manufactured. However, Biak-Na-Bato Mining Company did not contest the validity of the reconstitution of the declarations of location of the 170 lode claims (Rollo, Vol. III, Solicitor's Brief, p. 1156 [p. 13]). In March 1970, while its protest was being heard, it filed with the Bureau of Mines a motion claiming that Balatoc-Lubuagan Mines, Inc. and Mountain Mines, Inc.'s men had entered the area in controversy by force and have been molesting, harassing and threatening petitioner's supposed workers in the area. The Bureau of Mines issued a restraining order directing both parties to desist from performing any further mining activities in the area in controversy. On April 7, 1970, Balatoc-Lubuagan Mines, Inc. and Mountain Mines, Inc. filed a motion for reconsideration for the immediate lifting of said restraining order. They denied under oath that they entered the area by force or that there was violence or even threat to peace in the area, contrary to the pretensions of Biak-Na-Bato Mining Company who had never been in the area (Rollo, Ibid., p. 5). To determine the truth of the Biak-Na-Bato Mining Company's claim in its motion as well as to ascertain the assessment work done in the area claimed by both parties, the Director of Mines ordered an ocular inspection of the mining area in May 1970 (Rollo, Ibid.). On June 8, 1970, after the ocular inspection was conducted and having determined the falsity of the allegations of petitioner's motion, the Director of Mines lifted the restraining order (Rollo, Ibid.). After the ocular inspection conducted by the Bureau of Mines inspection team, a report was submitted with topographic map and pictures of the improvements. According to the report, the ground works improvements and other form of assessment works in the mining properties of said respondents were significant and extensive, all evaluated and assessed at P582,996.60 ( Rollo, Vol. II, pp. 621-690). On December 17,1970, the Director of Mines promulgated its decision in both cases, MAC Cases Nos. V-494 and V-495, holding that as against Biak-Na-Bato Mining Company, the BalatocLubuagan Mines, Inc. and Mountain Mines, Inc., have a better right to the 170 mining claims of about 1,520 hectares located at the Cordillera Mountains, in Pasil, Municipality of Balatoc, Province of Kalinga-Apayao (Rollo, Annex "B", pp. 134-145). From the said decision of the Director of Mines, petitioner appealed to the Secretary of Agriculture and Natural Resources, docketed as DANR Case No. 3613 entitled "Biak-Na-Bato Mining Company vs. Balatoc-Lubuagan Mines, Inc." and DANR Case No. 3613-A entitled "Biak-Na-Bato Mining Company vs. Mountain Mines, Inc." (Rollo, Petition, p. 9). In its appeal, the Biak-Na-Bato Mining Company questioned the first ocular inspection report. The Secretary in the exercise of his appellate power and in justice to the petitioner ordered a second ocular inspection, after which the second inspection team submitted a report confirming the findings of the first ocular inspection team, and also reported that Biak-Na-Bato Mining Company despite opportunity afforded was not able to show its location in the area (Rollo, Vol. II, pp. 693-701). On September 17, 1971, the Secretary rendered his decision on the appeal, affirming the findings of facts of the Director of Mines and declaring Balatoc-Lubuagan Mines, Inc. and Baguio Mines, Inc.'s mining area not open for relocation in 1967-1968 and therefore Biak-Na-Bato Mining Company's locations null and void. The Secretary also declared that its mining claims are table located, and therefore, null and void, and that it had no legal personality to file the protest in the Bureau of Mines. The dispositive portion of the decision reads: IN VIEW OF ALL THE FOREGOING, the appeal should be, as hereby it is, DISMISSED, the decision of the Director of Mines, dated December 17, 1970, AFFIRMED. ( Rollo, Vol. I, Annex "A", pp. 121-133,). Biak-Na-Bato Mining Company questions the findings of fact of the Secretary of Agriculture and Natural Resources that: (a) its mining claims are mere table locations: (b) that Balatoc-Lubuagan Mines, Inc. and Mountain Mines, Inc. did not abandon their claims; and (c) that the documents presented by the latter for reconstitution are not fraudulent. The petition is devoid of merit. The Secretary of Agriculture and Natural Resources made the following findings and conclusions: (a) that the locations made by Biak-Na-Bato Mining Company's assignors were mere table locations not actually made on the ground as required by Sections 39, 40, 41 and 47 of the Mining

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Law and, therefore, the declarations made thereunder are null and void. As such, no rights could accrue in favor of the so-called locators, and having no rights the latter could not assign any rights in favor of Biak-Na-Bato Mining Company. Neither the latter nor its assignors have the personality to file any protest before the Bureau of Mines: (b) that the presumption of abandonment was overturned by the showing that Balatoc-Lubuagan Mines, Inc. and Mountain Mines, Inc. have filed their affidavits of annual assessment work for the years 1965, 1966 and 1967 in question and have paid the real estate taxes for 170 claims for the years 1956 to 1970; and (c) that the only irregularity pointed out by Biak-Na-Bato Mining Company is the fact that the original locators were not notified, which was settled by the Order of Reconstitution which was preceded by publications and hearings and which have become final. Even the fact that the questioned documents did not appear in the notarial register, did not make said documents spurious, fake and non-existent because the notarial register is not always the memorial of all the daily transactions of a notary public. The notary being only human, lapses by way of omission may happen. As a general rule, under the principles of administrative law in force in this jurisdiction, decisions of administrative officers shall not be disturbed by the courts, except when the former have acted without or in excess of their jurisdiction, or with grave abuse of discretion. Findings of administrative officials and agencies who have acquired expertise because their jurisdiction is confined to specific matters are generally accorded not only respect but at times even finality if such findings are supported by substantial evidence (San Luis v. Court of Appeals, 174 SCRA 261 [1989], Lianga Bay Logging Co., Inc. v. Lopez Enage, 152 SCRA 80 [1987]) and are controlling on the reviewing authorities (Doruelo v. Ministry of National Defense, 169 SCRA 448 [1989]) because of their acknowledged expertise in the fields of specialization to which they are assigned. Even the courts of justice, including this Court, are bound by such findings in the absence of a clear showing of a grave abuse of discretion, which is not present in this case at bar (Gordon v. Veridiano II, 167 SCRA 53 [1988]). There is no question that the decision of the Director of Mines as affirmed by the Secretary of Agriculture and Natural Resources is substantially supported by evidence. Substantial evidence has been defined or construed to mean not necessarily preponderant proof as required in ordinary civil cases but such kind of relevant evidence as a reasonable mind might accept as adequate to support a conclusion (Castro v. CA, 169 SCRA 383 [1989]; Bagsican v. CA, 141 SCRA 226 [1980]; Lustre v. CAR, 10 SCRA 659 [1964]). PREMISES CONSIDERED, the petition is hereby DISMISSED, and the assailed decision of the Secretary of Agriculture and Natural Resources is hereby AFFIRMED. [G.R. No. 140128. June 6, 2001] Arnold P. Mollaneda, petitioner, vs. Leonida C. Umacob, respondent. DECISION SANDOVAL-GUTIERREZ, J.: Before us is a petition for review on certiorari of the (a) Decisionxxviii[1] dated May 14, 1999 of the Court of Appeals in CA-G.R. SP No. 48902 affirming in toto Resolution No. 973277 of the Civil Service Commission; and (b) Resolutionxxix[2] dated August 26, 1999 of the said court denying the motion for reconsideration of its Decision. The case stemmed from the affidavit-complaint for sexual harassment filed by Leonida Umacob (respondent) against Arnold Mollaneda (petitioner) with the Civil Service Commission - Regional Office XI, Davao City (CSC-RO XI) in September 1994 alleging: That sometime on September 7, 1994 at around 7:30 oclock more or less, in the mornin g, while inside the office of Mr. Rolando P. Suase, Admin Officer 2 of Davao City Schools, located at the Division Office Building, along Palma Gil St., Davao City, to follow-up my request for transfer from my present assignment to either Buhangin District or Bangoy District, Davao City, Mr. Rolando P. Suase was not around and it was school Division Superintendent, Mr. Arnold P. Mollaneda who was seated at his (Rolando's) table, as at the time, the office of Mr. Arnold Mollaneda just adjacent was being cleaned by a janitor. That immediately I approached him and seated opposite to him and handed to him my letter of recommendation from DECS Regional Director, Region XI, Dr. Ramon Y. Alba, recommending my possible transfer and after reading the same advised her to return next week as there is no

available item and that he will think about it. However, I insisted that he will give me a note to fix the time and date of our next meeting and or appointment at his office. At this instance, he handed me a piece of paper with his prepared signature and requested me to write my name on it, after which, he took it back from me and assured me to grant my request and at the same time, he made some notations on the same piece of paper below my name, indicating my possible transfer to Buhangin or Bangoy District of which I thanked him for the accomodation. At this point, he stood up, bringing along with him the paper so that I also stood up. However, before I could get outside the office, he then handed to me the said piece of paper and advised me to give it to a certain May Pescadero, personnel clerk, for the making/cutting of the order of transfer. All of a sudden he hugged and embraced me, then he kissed my nose and lip in a torrid manner. That I tried to resist but he forcibly held my neck so that he was able to kiss me in an easy way. That - not contented, he then mashed my left breast. He did the malicious act for several times, afterwhich he warned me not to tell anybody what he did to me inside the office. That as a result of the very unfortunate incident, I was so shocked, that I was not able to speak or talk or confess to my husband what our School Superintendent did to me. Likewise, I also informed one Venus Mariano, also DECS employee, who advised me to stay and remain calm. However, I decided to report the matter to San Pedro Patrol Station.xxx[3] (Emphasis supplied) Respondent furnished the Department of Education, Culture and Sports - Regional Office XI, Davao City (DECS-RO XI) a copy of her affidavit-complaint. Thus, on September 30, 1994, Regional Director Susana Cabahug issued an orderxxxi[4] directing the formation of a committee to conduct an investigation of respondent's complaint against petitioner. On October 4, 1994, petitioner filed with the CSC-RO XI his answer to the affidavit-complaint denying the allegations therein and alleging that there are material contradictions, in respondents version of the incident, thus: 1) On the date of the alleged happening of the incident, she was with her husban d who was just outside the Office of Mr. Mollaneda according to witness Security Guard Raul Moncada, but she did not report the incident to her husband, nor did she register any complaint on that date September 7, 1994; She reported the alleged acts of lasciviousness complained of to the police only the following day, September 8, 1994, at about 3:45 P.M. as shown by the extract of the entry of the police blotter attached to her AFFIDAVIT-COMPLAINT in this case. 2) In her report to the police as shown by the said police blotter, she said that While at the office of Mr. Arnold Mollaneda, Division Superintendent DECS XI, she was requested by the latter to transfer in the office of Mr. Rolando Suase as the janitor/security guard was cleaning the room of the respondent. And her version as published in The Mindanao Daily Mirror in the issue of September 10, 1994 (see ANNEX C of the complaint of Mollaneda to the City Prosecution Office). Omacob said Mollaneda in a written note told her to transfer to the room of a certain Rolando Suase since the janitor will clean his room. But before she could move to the other room Mollaneda allegedly hugged, kissed and mashed her breast and told her not to tell it to anybody. 3) In her instant Affidavit-Complaint, she again says while inside the Office of Mr. Rolando P. Suase x x x to follow-up my request for transfer x x x Mr. Suase was not around and it was Schools Division Superintendent, Mr. Arnold P. Mollaneda who was seated at his (Rolando) table, as at that time, the Office of Mr. Arnold P. Mollaneda just adjacent was being cleaned by a janitor x x x. It was inside the office of Mr. Suase that she was given a note on her request for transfer by Mr. Mollaneda to be given to May Pescadero when At this point, he stood up bringing along with him the paper so that I also stood-up, however, before I could get outside the office, he then handed to me the said piece of paper and advised me to give it to a certain May Pescadero, personnel clerk for the making/cutting of the order of transfer and at the same time all of a sudden, he hug and embraced me, then he kissed my nose and lips in a torrid manner. That I tried to resist but he forcibly held my neck so that he was able to kiss me in an easy way. That not contented, he then mashed my left breast, which he did the malicious act for several times, afterwhich he warned me not to tell anybody what he did to me inside the office.xxxii[5] In the present petition, petitioner alleged his own version of the incident,xxxiii[6]thus:

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"Petitioner, in his sworn statement, stated that on September 7, 1994, he had interviewed or conferred with about three (3) persons already who were applying for new teaching positions or for transfers when Respondent came to HIS OFFICE. When it was her turn to be interviewed, petitioner told her that she could not be transferred immediately because the Division only had very few vacant items and the same were already given to earlier applicants. Nevertheless, she was told to wait while he searched for a new vacant item. Petitioner gave the Respondent a note for her to give to the Acting Personnel Officer Mildred "May" Pescadero so that Respondent may be included in the list of teachers applying for transfer. Upon reading the note, however, the Respondent angrily told him why could she not be immediately accommodated when she had the written recommendation of Dir. Ramon Alba. She told Petitioner that asking her to wait was unfair because there were other applicants from Marilog district who were transferred and one of them who was slated to be transferred was Mrs. Daylinda Bacoy. Petitioner explained to the Respondent that Mrs. Bacoy suffered an injury when she fell off the horse she was riding on when she went to her school in Kiopao Elementary School. Petitioner scolded the Respondent for her insubordinate attitude toward him. She was counting so much on the recommendation of Dir. Ramon Alba who was Petitioner's superior, and could not believe that no positive action was made by Petitioner on the basis of said recommendation. In going OUT OF THE OFFICE OF PETITIONER, she was heard to have murmured that Petitioner would regret his act of discrimination. There was no act of sexual harassment that occurred during the relatively brief conversation between the herein parties. The witnesses, whose affidavits were attached to the Affidavit of Mr. Mollaneda, all swore to the fact that they saw what transpired between Petitioner and the Respondent and that there was no act of sexual harassment that occurred. Moreover, they swore to the fact that the interview took place inside Mr. Mollaneda's office as the both parties were seen through a glass panel separating Petitioner's office and the anteroom." Meanwhile, pending resolution by the CSC-RO XI of respondents complaint, the DECS investigating committee recommended to the DECS Regional Director "the dropping of the case" for lack of merit.8 On June 5, 1995, the CSC-RO XI issued a resolution charging petitioner with grave misconduct, oppression, abuse of authority and conduct prejudicial to the best interest of the service. The said office found there was a prima facie case against him9 and eventually elevated to the Civil Service Commission (Commission) the records of the case. Thereafter, the Commission designated Atty. Anacleto Buena to hear and receive the evidence in the case. A formal hearing was conducted in Davao City. Both parties were assisted by counsel. On July 7, 1997, the Commission issued Resolution No. 973277 finding petitioner guilty of grave misconduct and conduct grossly prejudicial to the best interest of the service . He was meted the penalty of dismissal from the government service with all its accessory penalties.10 Forthwith, petitioner filed a motion for reconsideration but was denied in Resolution No. 981761.11 Feeling aggrieved, petitioner filed with the Court of Appeals a petition for review alleging: first, that the Commission erred in finding him guilty x x x notwithstanding the fact that he was denied his right to due process; and second, that the Commission erred in giving weight to the hearsay testimonies of the witnesses for respondent.12 On May 14, 1999, the Court of Appeals rendered its Decision13 affirming in toto Resolution No. 973277 of the Commission. The appellate court held: It is a time-honored rule that the matter of assigning values to the testimony of witnesses is best performed by the trial courts, tribunals, or administrative bodies or agencies exercising quasijudicial powers. Unlike appellate courts, they can weigh such testimony in clear observance of the demeanor, conduct and attitude of the witnesses at the trial or hearing. Thus, absent any showing that they have overlooked facts of substance and value that if considered might affect the result, their findings must be given weight and respect. In the present case, nothing significant has been shown to convince this Court that the Commission acted with bias or ignored something of substance that could have, in any degree, warranted an exoneration of petitioner from the charges hurled against him. It bears mentioning that respondent victim is a public school teacher. If she is not motivated by the truth, she would not have subjected herself to the rigors of a hearing before the Commission and

airing in public matters that affect her honor. It is hard to conceive that respondent would reveal and admit the shameful and humiliating experience she had undergone if it were not true. In any case, the fact that petitioner could not proffer any explanation as to why respondent and the prosecution witnesses would falsely testify against him logically proves that no improper motive impelled them to accuse the former of such serious offense as sexual harassment. xxx xxx xxx Petitioner, in the present case, may not successfully plead violation of his right to due process as he, in fact, participated at the pre-trial, agreed to matters therein taken up, attended the hearing, and lengthily cross-examined the prosecution witnesses. Anent petitioners contention that the decision of the Commission was in conflict with newspaper reports of a decision dismissing the case against him for insufficiency of evidence, suffice it to state that what the movant considers as a decision is merely a newspaper report. Newspaper accounts and clippings are hearsay and have no evidentiary value. (People vs. Aguel, 97 SCRA 795).14 Rebuffed in his bid for reconsideration of the Court of Appeals Decision, petitioner filed the instant petition, and as grounds therefor alleges: I THE RELIANCE OF THE COURT OF APPEALS ON THE THEORY THAT FINDINGS OF QUASIJUDICIAL AGENCIES ARE GIVEN CONSIDERABLE WEIGHT, IS MISPLACED IN VIEW OF THE PERTINENT FACTS OF THE CASE. II A SIMILAR ADMINISTRATIVE CASE WAS INSTITUTED IN AND INVESTIGATED BY THE D.E.C.S. AND A RESOLUTION WAS RENDERED DISMISSING THE CASE AGAINST PETITIONER. III THE TESTIMONIES OF THE WITNESSES FOR THE PETITIONER WERE ALL EYE-WITNESSES TO THE ACTUAL INCIDENT, WHICH CAST DOUBT ON THE CREDIBILITY OF THE RESPONDENTS TESTIMONY.15 Petitioner contends that the oft-cited rule - the matter of assigning values to the testimony of witnesses is best performed by the x x x administrative bodies or agencies exercising quasi-judicial powers - finds no application in the present case. According to petitioner, the failure of the CSC Commissioners to personally observe the demeanor, conduct and attitude of the witnesses and their reliance solely on Atty. Buenas recommendation and notes should have discouraged the Court of Appeals from giving weight to the findings of the Commission. Petitioner also argues that respondent engaged in forum shopping by filing her affidavit-complaint with the DECS-RO XI and CSC-RO XI; and that the Court of Appeals should have considered in his favor the DECS-RO XIs resolution dismissing the administrative case against him. Finally, petitioner insists that the Court of Appeals erroneously gave credence to the hearsay testimonies of Melencio Umacob, respondent's husband, and Venus Mariano, secretary of the Assistant Division Superintendent of the Davao City Schools. These witnesses testified that respondent narrated to them the events concerning the sexual harassment committed against her by petitioner. For her part, respondent reiterates the ruling of the Court of Appeals that in reviewing administrative cases, the appellate court is traditionally sanctioned to subscribe to the findings of the lower court or administrative body or agency since it is in a better position to determine the credibility of witnesses. As to the alleged act of forum-shopping, petitioner claims that in pursuing redress of her grievances, she sought refuge both in the court and in the Commission for she believed they are the proper fora for her criminal and administrative complaints. And lastly, respondent counters that the Commission did not err in giving more credence to the testimonies of her witnesses, stressing that petitioners witnesses are biased, they being his subordinates. During the pendency of this case in this Court, petitioner submitted the decision of the Municipal Trial Court, Branch 5, Davao City, acquitting him of the crime of acts of lasciviousness which arose from the same incident involved in the present administrative case. The petition is bereft of merit. In assailing the Decision of the Court of Appeals, petitioner is actually urging us not to give credence to the factual findings of the Commission on the ground that the Commissioners did not personally hear the case.

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The fact that the Commission assigned Atty. Buena to hear and receive evidence does not render its factual findings unworthy of credence. In laying down the precedent that the matter of assigning values to the testimony of witnesses is best performed by trial courts or administrative bodies rather than by appellate courts, this Court merely recognizes that the trial court or the administrative body as a trier of facts is in a better position to assess the demeanor of the witnesses and the credibility of their testimonies as they were within its proximal view during the hearing or investigation. At any rate, it cannot be gainsaid that the term administrative body or agency includes the subordinate officials upon whose hand the body or agency delegates a portion of its authority. Included therein are the hearing officers through whose eyes and ears the administrative body or agency observes the demeanor, conduct and attitude of the witnesses and listens to their testimonies.16 It must be emphasized that the appointment of competent officers to hear and receive evidence is commonly resorted to by administrative bodies or agencies in the interest of an orderly and efficient disposition of administrative cases. This Court, in American Tobacco Company v. Director of Patents,17ruled: Thus, it is well-settled that while the power to decide resides solely in the administrative agency vested by law, this does not preclude a delegation of the power to hold a hearing on the basis of which the decision of the administrative agency will be made. The rule that requires an administrative officer to exercise his own judgment and discretion does not preclude him from utilizing, as a matter of practical administrative procedure, the aid of subordinates to investigate and report to him the facts, on the basis of which the officer makes his decisions. It is sufficient that the judgment and discretion finally exercised are those of the officer authorized by law. Neither does due process of law nor the requirements of fair hearing require that the actual taking of testimony be before the same officer who will make the decision in the case. As long as a party is not deprived of his right to present his own case and submit evidence in support thereof, and the decision is supported by the evidence in the record, there is no question that the requirements of due process and fair trial are fully met. In short, there is no abnegation of responsibility on the part of the officer concerned as the actual decision remains with and is made by said officer. It is, however, required that to give the substance of a hearing, which is for the purpose of making determinations upon evidence the officer who makes the determinations must consider and appraise the evidence which justifies them. In the case at bar, while the hearing officer may make preliminary rulings on the myriad of questions raised at the hearings of these cases, the ultimate decision on the merits of all the issues and questions involved is left to the Director of Patents. Apart from the circumstance that the point involved is procedural and not jurisdictional, petitioners have not shown in what manner they have been prejudiced by the proceedings. Under our jurisprudence, an administrative agency may employ other persons, such as a hearing officer, examiner or investigator, to receive evidence, conduct hearing and make reports on the basis of which the agency shall render its decision. Such a procedure is a practical necessity. Corollarily, in a catena of cases, this Court laid down the cardinal requirements of due process in administrative proceedings, one of which is that the tribunal or body or any of its judges 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.18 Thus, it is logical to say that this mandate was rendered precisely to ensure that in cases where the hearing or reception of evidence is assigned to a subordinate, the body or agency shall not merely rely on his recommendation but instead shall personally weigh and assess the evidence which the said subordinate has gathered. In the case at bar, it is evident that the Commission itself evaluated in detail the evidence of both parties as reported by Atty. Buena. In fact, in laying down its conclusion, it made constant reference to the testimonies of the parties and of their witnesses and to the documentary evidence presented. It must be addressed that, the Commissions act of delegating the authority to hear and receive evidence to Atty. Buena is not without legal basis. Section 47, Book V of Executive Order No. 292 (otherwise known as the Administrative Code of 1987) provides that the Commission may deputize any department or agency or official or group of officials to conduct an investigation on the complaint filed by a private citizen against a government official or employee. The results of the investigation shall be submitted to the Commission with recommendation as to the penalty to be imposed or other action to be taken.

Going further, petitioner complains that he was not furnished a copy of Atty. Buenas notes and recommendation. The Court cannot empathize with him. In Ruiz v. Drilon,18 we unequivocally held that a respondent in an administrative case is not entitled to be informed of the findings and recommendation of any investigating committee created to inquire into the charges filed against him. He is entitled only to the administrative decision based on substantial evidence made of record and a reasonable opportunity to meet the charges and the evidence presented against him during the hearing.20 Besides, Atty. Buena's findings and recommendation are internal communications between him and the Commission and, therefore, confidential. In Pefianco v. Moral,21 this Court held: Respondents (Moral) counsel is reminded that the Report of the DECS Investigating Committee is not an integral part of the Decision itself x x x [t]he report is an internal communication between the Investigating Committee and the DECS Secretary, and therefore, confidential until the latter had already read and used the same in making his own determination of the facts and applicable law of the case, to be expressed in the Decision he may make. The Report remains an internal and confidential matter to be used as part - although not controlling - of the basis for the decision. Only when the party adversely affected by the decision has filed and perfected an appeal to the Civil Service Commission may all the records of the case, including the aforesaid Report be forwarded to the CSC. In the latter appellate tribunal, the respondents counsel may be allowed to read and/or be given a copy of the Report to enable the appellant to file an intelligent and exhaustive appellants Brief Memorandum. Petitioners second argument requires no lengthy discussion. First, he did not raise the issue of forum-shopping before the Commission.22 It bears emphasis that respondent merelyfurnished the DECS-RO XI a copy of her affidavit-complaint. And second, we surveyed the records and there is nothing therein which supports petitioners claim that the DECS-RO XI dismissed respondent's affidavit-complaint. The resolution22 of the DECS mainly recommended to the Regional Director of the DECS-RO XI the dropping of the case. A recommendatory resolution does not have the effect of actually disposing of a case. Its function is merely to advise the disciplining authority of what action should be taken or what penalty should be imposed. It is not controlling and the disciplining authority may or may not conform with the recommended action. On petitioners assertion that the testimony of respondents witnesses are hearsay and, therefore, inadmissible in evidence, we are constrained to hold a different view. A reading of the testimonies of Umacob and Mariano shows that they were not presented to prove the truth of respondents accusations against petitioner, but only to establish the fact that respondent narrated to them what transpired between her and petitioner. While it is true that the testimony of a witness regarding a statement made by another person, if intended to establish the truth of the facts asserted in the statement, is clearly hearsay evidence, it is otherwise if the purpose of placing the statement in the record is merely to establish the fact that the statement was made.23 Regardless of the truth or falsity of a statement, when the fact that it has been made is relevant, the hearsay rule does not apply and the statement may be shown. As a matter of fact, evidence as to the making of the statement is not secondary but primary, for the statement itself may constitute a fact in issue, or be circumstantially relevant as to the existence of such a fact.24 Significantly, respondent herself and her witnesses were present during the hearing of the case. Hence, petitioner was given the opportunity to cross-examine them. The real basis for the exclusion of hearsay evidence lies in the fact that a hearsay testimony is not subject to the tests which can ordinarily be applied for the ascertainment of the truth of testimony, since the declarant is not present and available for cross-examination.25 Lastly, petitioner cannot find solace in the dismissal of the criminal case against him. Longingrained in our jurisprudence is the rule that the dismissal of a criminal case against an accused who is a respondent in an administrative case on the ground of insufficiency of evidence does not foreclose the administrative proceeding against him or give him a clean bill of health in all respects. In dismissing the case, the court is simply saying that the prosecution was unable to prove the guilt of the respondent beyond reasonable doubt, a condition sine qua non for conviction because of the presumption of innocence which the Constitution guarantees an accused.27 However, in administrative proceedings, the quantum of proof required is only substantial evidence.28 Substantial evidence means such relevant evidence as a reasonable mind might accept as

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adequate to support a conclusion.29 After a more incisive scrutiny of the records, we are convinced that petitioners culpability has been proven by substantial evidence. Respondents testimony was found by the Commission to be natural, straightforward, spontaneous and convincing.30 Unlike petitioners testimony, that of respondent is replete with details consistent with human nature. Clearly, the dismissal of the criminal case against petitioner by the Municipal Trial Court, Branch 5, Davao City cannot bind this Court in the disposition of the instant administrative case.31 In sum, we find no reason to reverse the decision of the Court of Appeals. While it is unfotunate that petitioner will lose his job because of a moments indiscretion, this Court shall not flinch in imposing upon him the severe penalty of dismissal. As Schools Division Superintendent, petitioner is bound by a high standard of work ethics. By succumbing to his moral perversity, he failed to live up to such standard. Indeed, he provided a justifiable ground for his dismissal from the service. WHEREFORE, the appealed decision of the Court of Appeals is hereby AFFIRMED. No costs. BIRAOGO VS OCHOA DECISION MENDOZA, J.:

For consideration before the Court are two consolidated cases5[5] both of which essentially assail the validity and constitutionality of Executive Order No. 1, dated July 30, 2010, entitled Creating the Philippine Truth Commission of 2010.

The first case is G.R. No. 192935, a special civil action for prohibition instituted by petitioner Louis Biraogo (Biraogo) in his capacity as a citizen and taxpayer. Biraogo assails Executive Order No. 1 for being violative of the legislative power of Congress under Section 1, Article VI of the Constitution6[6] as it usurps the constitutional authority of the legislature to create a public office and to appropriate funds therefor.7[7] The second case, G.R. No. 193036, isa special civil action for certiorari and prohibition filed by petitioners Edcel C. Lagman, Rodolfo B. Albano Jr., Simeon A. Datumanong, and Orlando B. Fua, Sr. (petitioners-legislators) as incumbent members of the House of Representatives. The genesis of the foregoing cases can be traced to the events prior to the historic May 2010 elections, when then Senator Benigno Simeon Aquino III declared his staunch condemnation of graft and corruption with his slogan, Kung walang corrupt, walang mahirap. The Filipino people, convinced of his sincerity and of his ability to carry out this noble objective, catapulted the good senator to the presidency. To transform his campaign slogan into reality, President Aquino found a need for a special body to investigate reported cases of graft and corruption allegedly committed during the previous administration. Thus, at the dawn of his administration, the President on July 30, 2010, signed Executive Order No. 1 establishing the Philippine Truth Commission of 2010 (Truth Commission). Pertinent provisions of said executive order read: EXECUTIVE ORDER NO. 1 CREATING THE PHILIPPINE TRUTH COMMISSION OF 2010

When the judiciary mediates to allocate constitutional boundaries, it does not assert any superiority over the other departments; it does not in reality nullify or invalidate an act of the legislature, but only asserts the solemn and sacred obligation assigned to it by the Constitution to determine conflicting claims of authority under the Constitution and to establish for the parties in an actual controversy the rights which that instrument secures and guarantees to them. --Laurel1[1] The role of the Constitution cannot be overlooked. It is through the Constitution that the fundamental powers of government are established, limited and defined, and by which these powers are distributed among the several departments.2[2] The Constitution is the basic and paramount law to which all other laws must conform and to which all persons, including the highest officials of the land, must defer.3[3] Constitutional doctrines must remain steadfast no matter what may be the tides of time. It cannot be simply made to sway and accommodate the call of situations and much more tailor itself to the whims and caprices of government and the people who run it.4[4] Justice Jose P.

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WHEREAS, Article XI, Section 1 of the 1987 Constitution of the Philippines solemnly enshrines the principle that a public office is a public trust and mandates that public officers and employees, who are servants of the people, must at all times be accountable to the latter, serve them with utmost responsibility, integrity, loyalty and efficiency, act with patriotism and justice, and lead modest lives; WHEREAS, corruption is among the most despicable acts of defiance of this principle and notorious violation of this mandate; WHEREAS, corruption is an evil and scourge which seriously affects the political, economic, and social life of a nation; in a very special way it inflicts untold misfortune and misery on the poor, the marginalized and underprivileged sector of society; WHEREAS, corruption in the Philippines has reached very alarming levels, and undermined the peoples trust and confidence in the Government and its institutions; WHEREAS, there is an urgent call for the determination of the truth regarding certain reports of large scale graft and corruption in the government and to put a closure to them by the filing of the appropriate cases against those involved, if warranted, and to deter others from committing the evil, restore the peoples faith and confidence in the Government and in their public servants; WHEREAS, the Presidents battlecry during his campaign for the Presidency in the last elections kung walang corrupt, walang mahirap expresses a solemn pledge that if elected, he would end corruption and the evil it breeds; WHEREAS, there is a need for a separate body dedicated solely to investigating and finding out the truth concerning the reported cases of graft and corruption during the previous administration, and which will recommend the prosecution of the offenders and secure justice for all; WHEREAS, Book III, Chapter 10, Section 31 of Executive Order No. 292, otherwise known as the Revised Administrative Code of the Philippines, gives the President the continuing authority to reorganize the Office of the President. NOW, THEREFORE, I, BENIGNO SIMEON AQUINO III, President of the Republic of the Philippines, by virtue of the powers vested in me by law, do hereby order: SECTION 1.Creation of a Commission. There is hereby created the PHILIPPINE TRUTH COMMISSION, hereinafter referred to as the COMMISSION, which shall primarily seek and find the truth on, and toward this end, investigate reports of graft and corruption of such scale and magnitude that shock and offend the moral and ethical sensibilities of the people, committed by public officers and employees, their co-principals, accomplices and accessories from the private sector, if any, during the previous administration; and thereafter recommend the appropriate action or measure to be taken thereon to ensure that the full measure of justice shall be served without fear or favor. The Commission shall be composed of a Chairman and four (4) members who will act as an independent collegial body. SECTION 2.Powers and Functions. The Commission, which shall have all the powers of an investigative body under Section 37, Chapter 9, Book I of the Administrative Code of 1987, is primarily tasked to conduct a thorough fact-finding investigation of reported cases of graft and corruption referred to in Section 1, involving third level public officers and higher, their co-principals, accomplices and accessories from the private sector, if any, during the previous administration and

thereafter submit its finding and recommendations to the President, Congress and the Ombudsman. In particular, it shall: a) Identify and determine the reported cases of such graft and corruption which it will investigate;

b) Collect, receive, review and evaluate evidence related to or regarding the cases of large scale corruption which it has chosen to investigate, and to this end require any agency, official or employee of the Executive Branch, including government-owned or controlled corporations, to produce documents, books, records and other papers; c) Upon proper request or representation, obtain information and documents from the Senate and the House of Representatives records of investigations conducted by committees thereof relating to matters or subjects being investigated by the Commission; d) Upon proper request and representation, obtain information from the courts, including the Sandiganbayan and the Office of the Court Administrator, information or documents in respect to corruption cases filed with the Sandiganbayan or the regular courts, as the case may be; e) Invite or subpoena witnesses and take their testimonies and for that purpose, administer oaths or affirmations as the case may be; f) Recommend, in cases where there is a need to utilize any person as a state witness to ensure that the ends of justice be fully served, that such person who qualifies as a state witness under the Revised Rules of Court of the Philippines be admitted for that purpose; g) Turn over from time to time, for expeditious prosecution, to the appropriate prosecutorial authorities, by means of a special or interim report and recommendation, all evidence on corruption of public officers and employees and their private sector co-principals, accomplices or accessories, if any, when in the course of its investigation the Commission finds that there is reasonable ground to believe that they are liable for graft and corruption under pertinent applicable laws; h) Call upon any government investigative or prosecutorial agency such as the Department of Justice or any of the agencies under it, and the Presidential Anti-Graft Commission, for such assistance and cooperation as it may require in the discharge of its functions and duties; i) Engage or contract the services of resource persons, professionals and other personnel determined by it as necessary to carry out its mandate; j) Promulgate its rules and regulations or rules of procedure it deems necessary to effectively and efficiently carry out the objectives of this Executive Order and to ensure the orderly conduct of its investigations, proceedings and hearings, including the presentation of evidence; k) Exercise such other acts incident to or are appropriate and necessary in connection with the objectives and purposes of this Order. SECTION 3.Staffing Requirements. x x x. SECTION 4.Detail of Employees. x x x. SECTION 5.Engagement of Experts. x x x SECTION 6.Conduct of Proceedings. x x x.

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SECTION 7.Right to Counsel of Witnesses/Resource Persons. x x x. SECTION 8.Protection of Witnesses/Resource Persons. x x x. SECTION 9.Refusal to Obey Subpoena, Take Oath or Give Testimony. Any government official or personnel who, without lawful excuse, fails to appear upon subpoena issued by the Commission or who, appearing before the Commission refuses to take oath or affirmation, give testimony or produce documents for inspection, when required, shall be subject to administrative disciplinary action. Any private person who does the same may be dealt with in accordance with law. SECTION 10.Duty to Extend Assistance to the Commission. x x x.

principals, accomplices and accessories during the previous administration, and thereafter to submit its finding and recommendations to the President, Congress and the Ombudsman. Though it has been described as an independent collegial body, it is essentially an entity within the Office of the President Proper and subject to his control. Doubtless, it constitutes a public office, as an ad hoc body is one.8[8] To accomplish its task, the PTC shall have all the powers of an investigative body under Section 37, Chapter 9, Book I of the Administrative Code of 1987. It is not, however, a quasi-judicial body as it cannot adjudicate, arbitrate, resolve, settle, or render awards in disputes between contending parties. All it can do is gather, collect and assess evidence of graft and corruption and make recommendations. It may have subpoena powers but it has no power to cite people in contempt, much less order their arrest. Although it is a fact-finding body, it cannot determine from such facts if probable cause exists as to warrant the filing of an information in our courts of law. Needless to state, it cannot impose criminal, civil or administrative penalties or sanctions. The PTC is different from the truth commissions in other countries which have been created as official, transitory and non-judicial fact-finding bodies to establish the facts and context of serious violations of human rights or of international humanitarian law in a countrys past.9[9] They are usually established by states emerging from periods of internal unrest, civil strife or authoritarianism to serve as mechanisms for transitional justice. Truth commissions have been described as bodies that share the following characteristics: (1) they examine only past events; (2) they investigate patterns of abuse committed over a period of time, as opposed to a particular event; (3) they are temporary bodies that finish their work with the submission of a report containing conclusions and recommendations; and (4) they are officially sanctioned, authorized or empowered by the State.10[10] Commissions members are usually empowered to conduct research, support victims, and propose policy recommendations to prevent recurrence of crimes. Through their investigations, the commissions may aim to discover and learn more about past abuses, or formally acknowledge them. They may aim to prepare the way for prosecutions and recommend institutional reforms.11[11]

SECTION 11. Budget for the Commission. The Office of the President shall provide the necessary funds for the Commission to ensure that it can exercise its powers, execute its functions, and perform its duties and responsibilities as effectively, efficiently, and expeditiously as possible. SECTION 12.Office. x x x. SECTION 13.Furniture/Equipment. x x x. SECTION 14.Term of the Commission. The Commission shall accomplish its mission on or before December 31, 2012. SECTION 15.Publication of Final Report. x x x. SECTION 16.Transfer of Records and Facilities of the Commission. x x x. SECTION 17.Special Provision Concerning Mandate. If and when in the judgment of the President there is a need to expand the mandate of the Commission as defined in Section 1 hereof to include the investigation of cases and instances of graft and corruption during the prior administrations, such mandate may be so extended accordingly by way of a supplemental Executive Order.

SECTION 18.Separability Clause. If any provision of this Order is declared unconstitutional, the same shall not affect the validity and effectivity of the other provisions hereof. SECTION 19.Effectivity. This Executive Order shall take effect immediately. DONE in the City of Manila, Philippines, this 30th day of July 2010. (SGD.) BENIGNO S. AQUINO III By the President: (SGD.) PAQUITO N. OCHOA, JR. Executive Secretary Nature of the Truth Commission As can be gleaned from the above-quoted provisions, the Philippine Truth Commission (PTC) is a mere ad hoc body formed under the Office of the President with the primary task to investigate reports of graft and corruption committed by third-level public officers and employees, their co-

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Thus, their main goals range from retribution to reconciliation. The Nuremburg and Tokyo war crime tribunals are examples of a retributory or vindicatory body set up to try and punish those responsible for crimes against humanity. A form of a reconciliatory tribunal is the Truth and Reconciliation Commission of South Africa, the principal function of which was to heal the wounds of past violence and to prevent future conflict by providing a cathartic experience for victims. The PTC is a far cry from South Africas model. The latter placed more emphasis on reconciliation than on judicial retribution, while the marching order of the PTC is the identification and punishment of perpetrators. As one writer12[12] puts it:

(f) The creation of the Truth Commission is an exercise in futility, an adventure in partisan hostility, a launching pad for trial/conviction by publicity and a mere populist propaganda to mistakenly impress the people that widespread poverty will altogether vanish if corruption is eliminated without even addressing the other major causes of poverty. (g) The mere fact that previous commissions were not constitutionally challenged is of no moment because neither laches nor estoppel can bar an eventual question on the constitutionality and validity of an executive issuance or even a statute.13[13]

The order ruled out reconciliation. It translated the Draconian code spelled out by Aquino in his inaugural speech: To those who talk about reconciliation, if they mean that they would like us to simply forget about the wrongs that they have committed in the past, we have this to say: There can be no reconciliation without justice. When we allow crimes to go unpunished, we give consent to their occurring over and over again. The Thrusts of the Petitions Barely a month after the issuance of Executive Order No. 1, the petitioners asked the Court to declare it unconstitutional and to enjoin the PTC from performing its functions. A perusal of the arguments of the petitioners in both cases shows that they are essentially the same. The petitioners-legislators summarized them in the following manner: (a) E.O. No. 1 violates the separation of powers as it arrogates the power of the Congress to create a public office and appropriate funds for its operation. (b) The provision of Book III, Chapter 10, Section 31 of the Administrative Code of 1987 cannot legitimize E.O. No. 1 because the delegated authority of the President to structurally reorganize the Office of the President to achieve economy, simplicity and efficiency does not include the power to create an entirely new public office which was hitherto inexistent like the Truth Commission. (c) E.O. No. 1 illegally amended the Constitution and pertinent statutes when it vested the Truth Commission with quasi-judicial powers duplicating, if not superseding, those of the Office of the Ombudsman created under the 1987 Constitution and the Department of Justice created under the Administrative Code of 1987. (d) E.O. No. 1 violates the equal protection clause as it selectively targets for investigation and prosecution officials and personnel of the previous administration as if corruption is their peculiar species even as it excludes those of the other administrations, past and present, who may be indictable. (e) The creation of the Philippine Truth Commission of 2010 violates the consistent and general international practice of four decades wherein States constitute truth commissions to exclusively investigate human rights violations, which customary practice forms part of the generally accepted principles of international law which the Philippines is mandated to adhere to pursuant to the Declaration of Principles enshrined in the Constitution.

In their Consolidated Comment,14[14] the respondents, through the Office of the Solicitor General (OSG), essentially questioned the legal standing of petitioners and defended the assailed executive order with the following arguments: 1] E.O. No. 1 does not arrogate the powers of Congress to create a public office because the Presidents executive power and power of control necessarily include the inherent power to conduct investigations to ensure that laws are faithfully executed and that, in any event, the Constitution, Revised Administrative Code of 1987 (E.O. No. 292), 15[15] Presidential Decree (P.D.) No. 141616[16] (as amended by P.D. No. 1772), R.A. No. 9970,17[17] and settled jurisprudence that authorize the President to create or form such bodies. 2] E.O. No. 1 does not usurp the power of Congress to appropriate funds because there is no appropriation but a mere allocation of funds already appropriated by Congress. 3] The Truth Commission does not duplicate or supersede the functions of the Office of the Ombudsman (Ombudsman) and the Department of Justice (DOJ), because it is a fact-finding body

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and not a quasi-judicial body and its functions do not duplicate, supplant or erode the latters jurisdiction. 4] The Truth Commission does not violate the equal protection clause because it was validly created for laudable purposes.

Among all these limitations, only the legal standing of the petitioners has been put at issue. Legal Standing of the Petitioners The OSG attacks the legal personality of the petitioners-legislators to file their petition for failure to demonstrate their personal stake in the outcome of the case. It argues that the petitioners have not shown that they have sustained or are in danger of sustaining any personal injury attributable to the creation of the PTC. Not claiming to be the subject of the commissions investigations, petitioners will not sustain injury in its creation or as a result of its proceedings.20[20] The Court disagrees with the OSG in questioning the legal standing of the petitioners-legislators to assail Executive Order No. 1. Evidently, their petition primarily invokes usurpation of the power of the Congress as a body to which they belong as members. This certainly justifies their resolve to take the cudgels for Congress as an institution and present the complaints on the usurpation of their power and rights as members of the legislature before the Court. As held in Philippine Constitution Association v. Enriquez,21[21] To the extent the powers of Congress are impaired, so is the power of each member thereof, since his office confers a right to participate in the exercise of the powers of that institution. An act of the Executive which injures the institution of Congress causes a derivative but nonetheless substantial injury, which can be questioned by a member of Congress. In such a case, any member of Congress can have a resort to the courts. Indeed, legislators have a legal standing to see to it that the prerogative, powers and privileges vested by the Constitution in their office remain inviolate. Thus, they are allowed to question the validity of any official action which, to their mind, infringes on their prerogatives as legislators.22[22] With regard to Biraogo, the OSG argues that, as a taxpayer, he has no standing to question the creation of the PTC and the budget for its operations.23[23] It emphasizes that the funds to be used for the creation and operation of the commission are to be taken from those funds already appropriated by Congress. Thus, the allocation and disbursement of funds for the commission will

The OSG then points to the continued existence and validity of other executive orders and presidential issuances creating similar bodies to justify the creation of the PTC such as Presidential Complaint and Action Commission (PCAC) by President Ramon B. Magsaysay, Presidential Committee on Administrative Performance Efficiency (PCAPE) by President Carlos P. Garcia and Presidential Agency on Reform and Government Operations (PARGO) by President Ferdinand E. Marcos.18[18] From the petitions, pleadings, transcripts, and memoranda, the following are the principal issues to be resolved: 1. Whether or not the petitioners have the legal standing to file their respective petitions and question Executive Order No. 1; 2. Whether or not Executive Order No. 1 violates the principle of separation of powers by usurping the powers of Congress to create and to appropriate funds for public offices, agencies and commissions; 3. Whether or not Executive Order No. 1 supplants the powers of the Ombudsman and the DOJ; 4. Whether or not Executive Order No. 1 violates the equal protection clause; and 5. Whether or not petitioners are entitled to injunctive relief. Essential requisites for judicial review Before proceeding to resolve the issue of the constitutionality of Executive Order No. 1, the Court needs to ascertain whether the requisites for a valid exercise of its power of judicial review are present. Like almost all powers conferred by the Constitution, the power of judicial review is subject to limitations, to wit: (1) there must be an actual case or controversy calling for the exercise of judicial power; (2) the person challenging the act must have the standing to question the validity of the subject act or issuance; otherwise stated, he must have a personal and substantial interest in the case such that he has sustained, or will sustain, direct injury as a result of its enforcement; (3) the question of constitutionality must be raised at the earliest opportunity; and (4) the issue of constitutionality must be the very lis mota of the case.19[19]

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not entail congressional action but will simply be an exercise of the Presidents power over contingent funds. As correctly pointed out by the OSG, Biraogo has not shown that he sustained, or is in danger of sustaining, any personal and direct injury attributable to the implementation of Executive Order No. 1. Nowhere in his petition is an assertion of a clear right that may justify his clamor for the Court to exercise judicial power and to wield the axe over presidential issuances in defense of the Constitution. The case of David v. Arroyo24[24]explained the deep-seated rules on locus standi. Thus: Locus standi is defined as a right of appearance in a court of justice on a given question. In private suits, standing is governed by the real-parties-in interest rule as contained in Section 2, Rule 3 of the 1997 Rules of Civil Procedure, as amended. It provides that every act ion must be prosecuted or defended in the name of the real party in interest. Accordingly, the real -party-in interest is the party who stands to be benefited or injured by the judgment in the suit or the party entitled to the avails of the suit. Succinctly put, the plaintiffs standing is based on his own right to the relief sought. The difficulty of determining locus standi arises in public suits. Here, the plaintiff who asserts a public right in assailing an allegedly illegal official action, does so as a representative of the general public. He may be a person who is affected no differently from any other person. He could be suing as a stranger, or in the category of a citizen, or taxpayer. In either case, he has to adequately show that he is entitled to seek judicial protection. In other words, he has to make out a sufficient interest in the vindication of the public order and the securing of relief as a citizen or taxpayer. Case law in most jurisdictions now allows both citizen and taxpayer standing in public actions. The distinction was first laid down in Beauchamp v. Silk, where it was held that the plaintiff in a taxpayers suit is in a different category from the plaintiff in a citizens suit. In the former, the plaintiff is affected by the expenditure of public funds, while in the latter, he is but the mere instrument of the public concern. As held by the New York Supreme Court in People ex rel Case v. Collins: In matter of mere public right, howeverthe people are the real partiesIt is at least the right, if not the duty, of every citizen to interfere and see that a public offence be properly pursued and punished, and that a public grievance be remedied. With respect to taxpayers suits, Terr v. Jordan held that the right of a citizen and a taxpayer to maintain an action in courts to restrain the unlawful use of public funds to his injury cannot be denied. However, to prevent just about any person from seeking judicial interference in any official policy or act with which he disagreed with, and thus hinders the activities of governmental agencies engaged in public service, the United State Supreme Court laid down the more stringent direct injury test in Ex Parte Levitt, later reaffirmed in Tileston v. Ullman. The same Court ruled that for a private individual to invoke the judicial power to determine the validity of an executive or legislative action, he must show that he has sustained a direct injury as a result of that action, and it is not sufficient that he has a general interest common to all members of the public. This Court adopted the direct injury test in our jurisdiction. In People v. Vera, it held that the person who impugns the validity of a statute must have a personal and substantial inter est in the case such that he has sustained, or will sustain direct injury as a result. The Vera doctrine was

upheld in a litany of cases, such as, Custodio v. President of the Senate, Manila Race Horse Trainers Association v. De la Fuente, Pascual v. Secretary of Public Works and Anti-Chinese League of the Philippines v. Felix. [Emphases included. Citations omitted] Notwithstanding, the Court leans on the doctrine that the rule on standing is a matter of procedure, hence, can be relaxed for nontraditional plaintiffs like ordinary citizens, taxpayers, and legislators when the public interest so requires, such as when the matter is of transcendental importance, of overreaching significance to society, or of paramount public interest.25[25] Thus, in Coconut Oil Refiners Association, Inc. v. Torres,26[26] the Court held that in cases of paramount importance where serious constitutional questions are involved, the standing requirements may be relaxed and a suit may be allowed to prosper even where there is no direct injury to the party claiming the right of judicial review. In the first Emergency Powers Cases,27[27] ordinary citizens and taxpayers were allowed to question the constitutionality of several executive orders although they had only an indirect and general interest shared in common with the public. The OSG claims that the determinants of transcendental importance28[28] laid down in CREBA v. ERC and Meralco29[29]are non-existent in this case. The Court, however, finds reason in Biraogos assertion that the petition covers matters of transcendental importance to justify the exercise of jurisdiction by the Court. There are constitutional issues in the petition which deserve the attention of this Court in view of their seriousness, novelty and weight as precedents. Where the issues are of transcendental and paramount importance not only to the public but also to the Bench and the Bar, they should be resolved for the guidance of all.30[30] Undoubtedly, the Filipino people

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are more than interested to know the status of the Presidents first effort to bring about a promised change to the country. The Court takes cognizance of the petition not due to overwhelming political undertones that clothe the issue in the eyes of the public, but because the Court stands firm in its oath to perform its constitutional duty to settle legal controversies with overreaching significance to society. Power of the President to Create the Truth Commission In his memorandum in G.R. No. 192935, Biraogo asserts that the Truth Commission is a public office and not merely an adjunct body of the Office of the President.31[31] Thus, in order that the President may create a public office he must be empowered by the Constitution, a statute or an authorization vested in him by law. According to petitioner, such power cannot be presumed32[32] since there is no provision in the Constitution or any specific law that authorizes the President to create a truth commission.33[33] He adds that Section 31 of the Administrative Code of 1987, granting the President the continuing authority to reorganize his office, cannot serve as basis for the creation of a truth commission considering the aforesaid provision merely uses verbs such as reorganize, transfer, consolidate, merge, and abolish.34[34]Insofar as it vests in the President the plenary power to reorganize the Office of the President to the extent of creating a public office, Section 31 is inconsistent with the principle of separation of powers enshrined in the Constitution and must be deemed repealed upon the effectivity thereof.35[35] Similarly, in G.R. No. 193036, petitioners-legislators argue that the creation of a public office lies within the province of Congress and not with the executive branch of government. They maintain

that the delegated authority of the President to reorganize under Section 31 of the Revised Administrative Code: 1) does not permit the President to create a public office, much less a truth commission; 2) is limited to the reorganization of the administrative structure of the Office of the President; 3) is limited to the restructuring of the internal organs of the Office of the President Proper, transfer of functions and transfer of agencies; and 4) only to achieve simplicity, economy and efficiency.36[36] Such continuing authority of the President to reorganize his office is limited, and by issuing Executive Order No. 1, the President overstepped the limits of this delegated authority. The OSG counters that there is nothing exclusively legislative about the creation by the President of a fact-finding body such as a truth commission. Pointing to numerous offices created by past presidents, it argues that the authority of the President to create public offices within the Office of the President Proper has long been recognized.37[37] According to the OSG, the Executive, just like the other two branches of government, possesses the inherent authority to create fact-finding committees to assist it in the performance of its constitutionally mandated functions and in the exercise of its administrative functions.38[38] This power, as the OSG explains it, is but an adjunct of the plenary powers wielded by the President under Section 1 and his power of control under Section 17, both of Article VII of the Constitution.39[39] It contends that the President is necessarily vested with the power to conduct fact-finding investigations, pursuant to his duty to ensure that all laws are enforced by public officials and employees of his department and in the exercise of his authority to assume directly the functions of the executive department, bureau and office, or interfere with the discretion of his officials.40[40] The power of the President to investigate is not limited to the exercise of his power of control over his subordinates in the executive branch, but extends further in the exercise of his other powers,

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such as his power to discipline subordinates,41[41] his power for rule making, adjudication and licensing purposes42[42] and in order to be informed on matters which he is entitled to know.43[43] The OSG also cites the recent case of Banda v. Ermita,44[44] where it was held that the President has the power to reorganize the offices and agencies in the executive department in line with his constitutionally granted power of control and by virtue of a valid delegation of the legislative power to reorganize executive offices under existing statutes. Thus, the OSG concludes that the power of control necessarily includes the power to create offices. For the OSG, the President may create the PTC in order to, among others, put a closure to the reported large scale graft and corruption in the government.45[45] The question, therefore, before the Court is this: Does the creation of the PTC fall within the ambit of the power to reorganize as expressed in Section 31 of the Revised Administrative Code? Section 31 contemplates reorganization as limited by the following functional and structural lines: (1) restructuring the internal organization of the Office of the President Proper by abolishing, consolidating or merging units thereof or transferring functions from one unit to another; (2) transferring any function under the Office of the President to any other Department/Agency or vice versa; or (3) transferring any agency under the Office of the President to any other Department/Agency or vice versa. Clearly, the provision refers to reduction of personnel, consolidation of offices, or abolition thereof by reason of economy or redundancy of functions. These point to situations where a body or an office is already existent but a modification or alteration thereof has to be effected. The creation of an office is nowhere mentioned, much less envisioned in said provision. Accordingly, the answer to the question is in the negative.

To say that the PTC is borne out of a restructuring of the Office of the President under Section 31 is a misplaced supposition, even in the plainest meaning attributable to the term restructure an alteration of an existing structure. Evidently, the PTC was not part of the structure of the Office of the President prior to the enactment of Executive Order No. 1. As held in Buklod ng Kawaning EIIB v. Hon. Executive Secretary,46[46]

But of course, the list of legal basis authorizing the President to reorganize any department or agency in the executive branch does not have to end here. We must not lose sight of the very source of the power that which constitutes an express grant of power. Under Section 31, Book III of Executive Order No. 292 (otherwise known as the Administrative Code of 1987), "the President, subject to the policy in the Executive Office and in order to achieve simplicity, economy and efficiency, shall have the continuing authority to reorganize the administrative structure of the Office of the President." For this purpose, he may transfer the functions of other Departments or Agencies to the Office of the President. In Canonizado v. Aguirre [323 SCRA 312 (2000)], we ruled that reorganization "involves the reduction of personnel, consolidation of offices, or abolition thereof by reason of economy or redundancy of functions." It takes place when there is an alteration of the existing structure of government offices or units therein, including the lines of control, authority and responsibility between them. The EIIB is a bureau attached to the Department of Finance. It falls under the Office of the President. Hence, it is subject to the Presidents continuing authority to reorganize. [Emphasis Supplied] In the same vein, the creation of the PTC is not justified by the Presidents power of control. Control is essentially the power to alter or modify or nullify or set aside what a subordinate officer had done in the performance of his duties and to substitute the judgment of the former with that of the latter.47[47] Clearly, the power of control is entirely different from the power to create public offices. The former is inherent in the Executive, while the latter finds basis from either a valid delegation from Congress, or his inherent duty to faithfully execute the laws. The question is this, is there a valid delegation of power from Congress, empowering the President to create a public office? According to the OSG, the power to create a truth commission pursuant to the above provision finds statutory basis under P.D. 1416, as amended by P.D. No. 1772.48[48] The said law granted the President the continuing authority to reorganize the national government, including the power to group, consolidate bureaus and agencies, to abolish offices, to transfer functions, to create and

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classify functions, services and activities, transfer appropriations, and to standardize salaries and materials. This decree, in relation to Section 20, Title I, Book III of E.O. 292 has been invoked in several cases such as Larin v. Executive Secretary.49[49] The Court, however, declines to recognize P.D. No. 1416 as a justification for the President to create a public office. Said decree is already stale, anachronistic and inoperable. P.D. No. 1416 was a delegation to then President Marcos of the authority to reorganize the administrative structure of the national government including the power to create offices and transfer appropriations pursuant to one of the purposes of the decree, embodied in its last Whereas clause: WHEREAS, the transition towards the parliamentary form of government will necessitate flexibility in the organization of the national government.

17, Article VII of the Constitution, imposing upon the President the duty to ensure that the laws are faithfully executed. Section 17 reads: Section 17. The President shall have control of all the executive departments, bureaus, and offices. He shall ensure that the laws be faithfully executed. (Emphasis supplied). As correctly pointed out by the respondents, the allocation of power in the three principal branches of government is a grant of all powers inherent in them. The Presidents power to conduct investigations to aid him in ensuring the faithful execution of laws in this case, fundamental laws on public accountability and transparency is inherent in the Presidents powers as the Chief Executive. That the authority of the President to conduct investigations and to create bodies to execute this power is not explicitly mentioned in the Constitution or in statutes does not mean that he is bereft of such authority.51[51] As explained in the landmark case of Marcos v. Manglapus:52[52] x x x. The 1987 Constitution, however, brought back the presidential system of government and restored the separation of legislative, executive and judicial powers by their actual distribution among three distinct branches of government with provision for checks and balances. It would not be accurate, however, to state that "executive power" is the power to enforce the laws, for the President is head of state as well as head of government and whatever powers inhere in such positions pertain to the office unless the Constitution itself withholds it. Furthermore, the Constitution itself provides that the execution of the laws is only one of the powers of the President. It also grants the President other powers that do not involve the execution of any provision of law, e.g., his power over the country's foreign relations.

Clearly, as it was only for the purpose of providing manageability and resiliency during the interim, P.D. No. 1416, as amended by P.D. No. 1772, became functus oficio upon the convening of the First Congress, as expressly provided in Section 6, Article XVIII of the 1987 Constitution. In fact, even the Solicitor General agrees with this view. Thus:

ASSOCIATE JUSTICE CARPIO: Because P.D. 1416 was enacted was the last whereas clause of P.D. 1416 says it was enacted to prepare the transition from pres idential to parliamentary. Now, in a parliamentary form of government, the legislative and executive powers are fused, correct? SOLICITOR GENERAL CADIZ: Yes, Your Honor.

ASSOCIATE JUSTICE CARPIO: That is why, that P.D. 1416 was issued. Now would you agree with me that P.D. 1416 should not be considered effective anymore upon the promulgation, adoption, ratification of the 1987 Constitution. SOLICITOR GENERAL CADIZ: Not the whole of P.D. [No.] 1416, Your Honor.

On these premises, we hold the view that although the 1987 Constitution imposes limitations on the exercise of specific powers of the President, it maintains intact what is traditionally considered as within the scope of "executive power." Corollarily, the powers of the President cannot be said to be limited only to the specific powers enumerated in the Constitution. In other words, executive power is more than the sum of specific powers so enumerated. It has been advanced that whatever power inherent in the government that is neither legislative nor judicial has to be executive. x x x.

ASSOCIATE JUSTICE CARPIO: The power of the President to reorganize the entire National Government is deemed repealed, at least, upon the adoption of the 1987 Constitution, correct. SOLICITOR GENERAL CADIZ: Yes, Your Honor.50[50]

Indeed, the Executive is given much leeway in ensuring that our laws are faithfully executed. As stated above, the powers of the President are not limited to those specific powers under the Constitution.53[53] One of the recognized powers of the President granted pursuant to

While the power to create a truth commission cannot pass muster on the basis of P.D. No. 1416 as amended by P.D. No. 1772, the creation of the PTC finds justification under Section

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this constitutionally-mandated duty is the power to create ad hoc committees. This flows from the obvious need to ascertain facts and determine if laws have been faithfully executed. Thus, in Department of Health v. Camposano,54[54] the authority of the President to issue Administrative Order No. 298, creating an investigative committee to look into the administrative charges filed against the employees of the Department of Health for the anomalous purchase of medicines was upheld. In said case, it was ruled: The Chief Executives power to create the Ad hoc Investigating Committee cannot be doubted. Having been constitutionally granted full control of the Executive Department, to which respondents belong, the President has the obligation to ensure that all executive officials and employees faithfully comply with the law. With AO 298 as mandate, the legality of the investigation is sustained. Such validity is not affected by the fact that the investigating team and the PCAGC had the same composition, or that the former used the offices and facilities of the latter in conducting the inquiry. [Emphasis supplied] It should be stressed that the purpose of allowing ad hoc investigating bodies to exist is to allow an inquiry into matters which the President is entitled to know so that he can be properly advised and guided in the performance of his duties relative to the execution and enforcement of the laws of the land. And if history is to be revisited, this was also the objective of the investigative bodies created in the past like the PCAC, PCAPE, PARGO, the Feliciano Commission, the Melo Commission and the Zenarosa Commission. There being no changes in the government structure, the Court is not inclined to declare such executive power as non-existent just because the direction of the political winds have changed. On the charge that Executive Order No. 1 transgresses the power of Congress to appropriate funds for the operation of a public office, suffice it to say that there will be no appropriation but only an allotment or allocations of existing funds already appropriated. Accordingly, there is no usurpation on the part of the Executive of the power of Congress to appropriate funds. Further, there is no need to specify the amount to be earmarked for the operation of the commission because, in the words of the Solicitor General, whatever funds the Congress has provided for the Office of the President will be the very source of the funds for the commission. 55[55] Moreover, since the amount that would be allocated to the PTC shall be subject to existing auditing rules and regulations, there is no impropriety in the funding. Power of the Truth Commission to Investigate

The Presidents power to conduct investigations to ensure that laws are faithfully executed is well recognized. It flows from the faithful-execution clause of the Constitution under Article VII, Section 17 thereof.56[56] As the Chief Executive, the president represents the government as a whole and sees to it that all laws are enforced by the officials and employees of his department. He has the authority to directly assume the functions of the executive department.57[57] Invoking this authority, the President constituted the PTC to primarily investigate reports of graft and corruption and to recommend the appropriate action. As previously stated, no quasijudicial powers have been vested in the said body as it cannot adjudicate rights of persons who come before it. It has been said that Quasi-judicial powers involve the power to hear and determine questions of fact to which the legislative policy is to apply and to decide in accordance with the standards laid down by law itself in enforcing and administ ering the same law.58[58] In simpler terms, judicial discretion is involved in the exercise of these quasi-judicial power, such that it is exclusively vested in the judiciary and must be clearly authorized by the legislature in the case of administrative agencies. The distinction between the power to investigate and the power to adjudicate was delineated by the Court in Cario v. Commission on Human Rights.59[59] Thus: "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: x x to subject to an official probe x x: to conduct an official inquiry." 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;" "to inquire; to make an investigation," "investigation" being in turn described as "(a)n administrative

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function, the exercise of which ordinarily does not require a hearing. 2 Am J2d Adm L Sec. 257; x x an inquiry, judicial or otherwise, for the discovery and collection of facts concerning a certain matter or matters." "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: x x to pass judgment on: settle judicially: x x act as judge." And "adjudge" means "to decide or rule upon as a judge or with judicial or quasi-judicial powers: x x to award or grant judicially in a case of controversy x x." 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. x x. Implies a judicial determination of a fact, and the entry of a judgment." [Italics included. Citations Omitted] Fact-finding is not adjudication and it cannot be likened to the judicial function of a court of justice, or even a quasi-judicial agency or office. The function of receiving evidence and ascertaining therefrom the facts of a controversy is not a judicial function. To be considered as such, the act of receiving evidence and arriving at factual conclusions in a controversy must be accompanied by the authority of applying the law to the factual conclusions to the end that the controversy may be decided or resolved authoritatively, finally and definitively, subject to appeals or modes of review as may be provided by law.60[60] Even respondents themselves admit that the commission is bereft of any quasi-judicial power.61[61] Contrary to petitioners apprehension, the PTC will not supplant the Ombudsman or the DOJ or erode their respective powers. If at all, the investigative function of the commission will complement those of the two offices. As pointed out by the Solicitor General, the recommendation to prosecute is but a consequence of the overall task of the commission to conduct a fact-finding investigation.62[62] The actual prosecution of suspected offenders, much less adjudication on the merits of the charges against them,63[63] is certainly not a function given to the commission. The phrase, when in the course of its investigation, under Section 2(g), highlights this fact and gives credence to a contrary interpretation from that of the petitioners. The function of determining

probable cause for the filing of the appropriate complaints before the courts remains to be with the DOJ and the Ombudsman.64[64] At any rate, the Ombudsmans power to investigate under R.A. No. 6770 is not exclusive but is shared with other similarly authorized government agencies. Thus, in the case of Ombudsman v. Galicia,65[65] it was written: This power of investigation granted to the Ombudsman by the 1987 Constitution and The Ombudsman Act is not exclusive but is shared with other similarly authorized government agencies such as the PCGG and judges of municipal trial courts and municipal circuit trial courts. The power to conduct preliminary investigation on charges against public employees and officials is likewise concurrently shared with the Department of Justice. Despite the passage of the Local Government Code in 1991, the Ombudsman retains concurrent jurisdiction with the Office of the President and the local Sanggunians to investigate complaints against local elective officials. [Emphasis supplied].

Also, Executive Order No. 1 cannot contravene the power of the Ombudsman to investigate criminal cases under Section 15 (1) of R.A. No. 6770, which states: (1) Investigate and prosecute on its own or on complaint by any person, any act or omission of any public officer or employee, office or agency, when such act or omission appears to be illegal, unjust, improper or inefficient. It has primary jurisdiction over cases cognizable by the Sandiganbayan and, in the exercise of its primary jurisdiction, it may take over, at any stage, from any investigatory agency of government, the investigation of such cases. [Emphases supplied]

The act of investigation by the Ombudsman as enunciated above contemplates the conduct of a preliminary investigation or the determination of the existence of probable cause. This is categorically out of the PTCs sphere of functions. Its power to investigate is limited to obtaining facts so that it can advise and guide the President in the performance of his duties relative to the execution and enforcement of the laws of the land. In this regard, the PTC commits no act of usurpation of the Ombudsmans primordial duties. The same holds true with respect to the DOJ. Its authority under Section 3 (2), Chapter 1, Title III, Book IV in the Revised Administrative Code is by no means exclusive and, thus, can be shared with a body likewise tasked to investigate the commission of crimes. Finally, nowhere in Executive Order No. 1 can it be inferred that the findings of the PTC are to be accorded conclusiveness. Much like its predecessors, the Davide Commission, the Feliciano Commission and the Zenarosa Commission, its findings would, at best, be recommendatory in nature. And being so, the Ombudsman and the DOJ have a wider degree of latitude to decide whether or not to reject the recommendation. These offices, therefore, are not

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deprived of their mandated duties but will instead be aided by the reports of the PTC for possible indictments for violations of graft laws. Violation of the Equal Protection Clause Although the purpose of the Truth Commission falls within the investigative power of the President, the Court finds difficulty in upholding the constitutionality of Executive Order No. 1 in view of its apparent transgression of the equal protection clause enshrined in Section 1, Article III (Bill of Rights) of the 1987 Constitution. Section 1 reads: Section 1. No person shall be deprived of life, liberty, or property without due process of law, nor shall any person be denied the equal protection of the laws. The petitioners assail Executive Order No. 1 because it is violative of this constitutional safeguard. They contend that it does not apply equally to all members of the same class such that the intent of singling out the previous administration as its sole object makes the PTC an adventure in partisan hostility.66[66] Thus, in order to be accorded with validity, the commission must also cover reports of graft and corruption in virtually all administrations previous to that of former President Arroyo.67[67] The petitioners argue that the search for truth behind the reported cases of graft and corruption must encompass acts committed not only during the administration of former President Arroyo but also during prior administrations where the same magnitude of controversies and anomalies68[68] were reported to have been committed against the Filipino people. They assail the classification formulated by the respondents as it does not fall under the recognized exceptions because first, there is no substantial distinction between the group of officials targeted for investigation by Executive Order No. 1 and other groups or persons who abused their public office for personal gain; and second, the selective classification is not germane to the purpose of Executive Order No. 1 to end corruption.69[69] In order to attain constitutional permission, the petitioners advocate that

the commission should deal with graft and grafters prior and subsequent to the Arroyo administration with the strong arm of the law with equal force.70[70] Position of respondents According to respondents, while Executive Order No. 1 identifies the previous administration as the initial subject of the investigation, following Section 17 thereof, the PTC will not confine itself to cases of large scale graft and corruption solely during the said administration.71[71] Assumingarguendo that the commission would confine its proceedings to officials of the previous administration, the petitioners argue that no offense is committed against the equal protection clause for the segregation of the transactions of public officers during the previous administration as possible subjects of investigation is a valid classification based on substantial distinctions and is germane to the evils which the Executive Order seeks to correct.72[72] To distinguish the Arroyo administration from past administrations, it recited the following: First. E.O. No. 1 was issued in view of widespread reports of large scale graft and corruption in the previous administration which have eroded public confidence in public institutions. There is, therefore, an urgent call for the determination of the truth regarding certain reports of large scale graft and corruption in the government and to put a closure to them by the filing of the appropriate cases against those involved, if warranted, and to deter others from committing the evil, restore the peoples faith and confidence in the Government and in their public servants. Second. The segregation of the preceding administration as the object of fact-finding is warranted by the reality that unlike with administrations long gone, the current administration will most likely bear the immediate consequence of the policies of the previous administration. Third. The classification of the previous administration as a separate class for investigation lies in the reality that the evidence of possible criminal activity, the evidence that could lead to recovery of public monies illegally dissipated, the policy lessons to be learned to ensure that anti-corruption laws are faithfully executed, are more easily established in the regime that immediately precede the current administration. Fourth. Many administrations subject the transactions of their predecessors to investigations to provide closure to issues that are pivotal to national life or even as a routine measure of due diligence and good housekeeping by a nascent administration like the Presidential Commission on Good Government (PCGG), created by the late President Corazon C. Aquino under Executive Order No. 1 to pursue the recovery of ill-gotten wealth of her predecessor former President

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Ferdinand Marcos and his cronies, and the Saguisag Commission created by former President Joseph Estrada under Administrative Order No, 53, to form an ad-hoc and independent citizens committee to investigate all the facts and circumstances surrounding Philippine Centennial projects of his predecessor, former President Fidel V. Ramos.73[73] [Emphases supplied] Concept of the Equal Protection Clause One of the basic principles on which this government was founded is that of the equality of right which is embodied in Section 1, Article III of the 1987 Constitution. The equal protection of the laws is embraced in the concept of due process, as every unfair discrimination offends the requirements of justice and fair play. It has been embodied in a separate clause, however, to provide for a more specific guaranty against any form of undue favoritism or hostility from the government. Arbitrariness in general may be challenged on the basis of the due process clause. But if the particular act assailed partakes of an unwarranted partiality or prejudice, the sharper weapon to cut it down is the equal protection clause.74[74] According to a long line of decisions, equal protection simply requires that all persons or things similarly situated should be treated alike, both as to rights conferred and responsibilities imposed.75[75] It requires public bodies and institutions to treat similarly situated individuals in a similar manner.76[76] The purpose of the equal protection clause is to secure every person within a states jurisdiction against intentional and arbitrary discrimination, whether occasioned by the express terms of a statue or by its improper execution through the states duly constituted authorities.77[77] In other words, the concept of equal justice under the law requires the state to

govern impartially, and it may not draw distinctions between individuals solely on differences that are irrelevant to a legitimate governmental objective.78[78] The equal protection clause is aimed at all official state actions, not just those of the legislature.79[79] Its inhibitions cover all the departments of the government including the political and executive departments, and extend to all actions of a state denying equal protection of the laws, through whatever agency or whatever guise is taken. 80[80] It, however, does not require the universal application of the laws to all persons or things without distinction. What it simply requires is equality among equals as determined according to a valid classification. Indeed, the equal protection clause permits classification. Such classification, however, to be valid must pass the test of reasonableness. The test has four requisites: (1) The classification rests on substantial distinctions; (2) It is germane to the purpose of the law; (3) It is not limited to existing conditions only; and

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(4) It applies equally to all members of the same class.81[81] Superficial differences do not make for a valid classification.82[82] For a classification to meet the requirements of constitutionality, it must include or embrace all persons who naturally belong to the class.83[83] The classification will be regarded as invalid if all the members of the class are not similarly treated, both as to rights conferred and obligations imposed. It is not necessary that the classification be made with absolute symmetry, in the sense that the members of the class should possess the same characteristics in equal degree. Substantial similarity will suffice; and as long as this is achieved, all those covered by the classification are to be treated equally. The mere fact that an individual belonging to a class differs from the other members, as long as that class is substantially distinguishable from all others, does not justify the non-application of the law to him.84[84] The classification must not be based on existing circumstances only, or so constituted as to preclude addition to the number included in the class. It must be of such a nature as to embrace all those who may thereafter be in similar circumstances and conditions. It must not leave out or underinclude those that should otherwise fall into a certain classification. As elucidated in Victoriano v. Elizalde Rope Workers' Union85[85] and reiterated in a long line of cases,86[86] The guaranty of equal protection of the laws is not a guaranty of equality in the application of the laws upon all citizens of the state. It is not, therefore, a requirement, in order to avoid the

constitutional prohibition against inequality, that every man, woman and child should be affected alike by a statute. Equality of operation of statutes does not mean indiscriminate operation on persons merely as such, but on persons according to the circumstances surrounding them. It guarantees equality, not identity of rights. The Constitution does not require that things which are different in fact be treated in law as though they were the same. The equal protection clause does not forbid discrimination as to things that are different. It does not prohibit legislation which is limited either in the object to which it is directed or by the territory within which it is to operate. The equal protection of the laws clause of the Constitution allows classification. Classification in law, as in the other departments of knowledge or practice, is the grouping of things in speculation or practice because they agree with one another in certain particulars. A law is not invalid because of simple inequality. The very idea of classification is that of inequality, so that it goes without saying that the mere fact of inequality in no manner determines the matter of constitutionality. All that is required of a valid classification is that it be reasonable, which means that the classification should be based on substantial distinctions which make for real differences, that it must be germane to the purpose of the law; that it must not be limited to existing conditions only; and that it must apply equally to each member of the class. This Court has held that the standard is satisfied if the classification or distinction is based on a reasonable foundation or rational basis and is not palpably arbitrary. [Citations omitted] Applying these precepts to this case, Executive Order No. 1 should be struck down as violative of the equal protection clause. The clear mandate of the envisioned truth commission is to investigate and find out the truth concerning the reported cases of graft and corruption during the previous administration87[87]only. The intent to single out the previous administration is plain, patent and manifest. Mention of it has been made in at least three portions of the questioned executive order. Specifically, these are: WHEREAS, there is a need for a separate body dedicated solely to investigating and finding out the truth concerning the reported cases of graft and corruption during the previous administration, and which will recommend the prosecution of the offenders and secure justice for all; SECTION 1.Creation of a Commission. There is hereby created the PHILIPPINE TRUTH COMMISSION, hereinafter referred to as the COMMISSION, which shall primarily seek and find the truth on, and toward this end, investigate reports of graft and corruption of such scale and magnitude that shock and offend the moral and ethical sensibilities of the people, committed by public officers and employees, their co-principals, accomplices and accessories from the private sector, if any, during the previous administration; and thereafter recommend the appropriate action or measure to be taken thereon to ensure that the full measure of justice shall be served without fear or favor. SECTION 2.Powers and Functions. The Commission, which shall have all the powers of an investigative body under Section 37, Chapter 9, Book I of the Administrative Code of 1987, is primarily tasked to conduct a thorough fact-finding investigation of reported cases of graft and corruption referred to in Section 1, involving third level public officers and higher, their co-principals, accomplices and accessories from the private sector, if any, during the previous administration and thereafter submit its finding and recommendations to the President, Congress and the Ombudsman. [Emphases supplied]

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In this regard, it must be borne in mind that the Arroyo administration is but just a member of a class, that is, a class of past administrations. It is not a class of its own. Not to include past administrations similarly situated constitutes arbitrariness which the equal protection clause cannot sanction. Such discriminating differentiation clearly reverberates to label the commission as a vehicle for vindictiveness and selective retribution. Though the OSG enumerates several differences between the Arroyo administration and other past administrations, these distinctions are not substantial enough to merit the restriction of the investigation to the previous administration only. The reports of widespread corruption in the Arroyo administration cannot be taken as basis for distinguishing said administration from earlier administrations which were also blemished by similar widespread reports of impropriety. They are not inherent in, and do not inure solely to, the Arroyo administration. As Justice Isagani Cruz put it, Superficial differences do not make for a valid classification.88[88]

the truth, must not exclude the other past administrations. The PTC must, at least, have the authority to investigate all past administrations. While reasonable prioritization is permitted, it should not be arbitrary lest it be struck down for being unconstitutional. In the often quoted language of Yick Wo v. Hopkins,92[92]

Though the law itself be fair on its face and impartial in appearance, yet, if applied and administered by public authority with an evil eye and an unequal hand, so as practically to make unjust and illegal discriminations between persons in similar circumstances, material to their rights, the denial of equal justice is still within the prohibition of the constitution. [Emphasis supplied] It could be argued that considering that the PTC is an ad hoc body, its scope is limited. The Court, however, is of the considered view that although its focus is restricted, the constitutional guarantee of equal protection under the laws should not in any way be circumvented. The Constitution is the fundamental and paramount law of the nation to which all other laws must conform and in accordance with which all private rights determined and all public authority administered.93[93] Laws that do not conform to the Constitution should be stricken down for being unconstitutional.94[94] While the thrust of the PTC is specific, that is, for investigation of acts of graft and corruption, Executive Order No. 1, to survive, must be read together with the provisions of the Constitution. To exclude the earlier administrations in the guise of substantial distinctions would only confirm the petitioners lament that the subject executive order is only an adventure in partisan hostility. In the case of US v. Cyprian,95[95] it was written: A rather limited number of such classifications have routinely been held or assumed to be arbitrary; those include: race, national origin, gender, political activity or membership in a political party, union activity or membership in a labor union, or more generally the exercise of first amendment rights. To reiterate, in order for a classification to meet the requirements of constitutionality, it must include or embrace all persons who naturally belong to the class.96[96] Such a classification must not be

The public needs to be enlightened why Executive Order No. 1 chooses to limit the scope of the intended investigation to the previous administration only. The OSG ventures to opine that to include other past administrations, at this point, may unnecessarily overburden the commission and lead it to lose its effectiveness.89[89] The reason given is specious. It is without doubt irrelevant to the legitimate and noble objective of the PTC to stamp out or end corruption and the evil it breeds.90[90] The probability that there would be difficulty in unearthing evidence or that the earlier reports involving the earlier administrations were already inquired into is beside the point. Obviously, deceased presidents and cases which have already prescribed can no longer be the subjects of inquiry by the PTC. Neither is the PTC expected to conduct simultaneous investigations of previous administrations, given the bodys limited time and resources. The law does not require the impossible (Lex non cogit ad impossibilia).91[91] Given the foregoing physical and legal impossibility, the Court logically recognizes the unfeasibility of investigating almost a centurys worth of graft cases. However, the fact remains that Executive Order No. 1 suffers from arbitrary classification. The PTC, to be true to its mandate of searching for

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based on existing circumstances only, or so constituted as to preclude additions to the number included within a class, but must be of such a nature as to embrace all those who may thereafter be in similar circumstances and conditions. Furthermore, all who are in situations and circumstances which are relative to the discriminatory legislation and which are indistinguishable from those of the members of the class must be brought under the influence of the law and treated by it in the same way as are the members of the class.97[97] The Court is not unaware that mere underinclusiveness is not fatal to the validity of a law under the equal protection clause.98[98] Legislation is not unconstitutional merely because it is not all embracing and does not include all the evils within its reach.99[99] It has been written that a regulation challenged under the equal protection clause is not devoid of a rational predicate simply because it happens to be incomplete.100[100]In several instances, the underinclusiveness was not considered a valid reason to strike down a law or regulation where the purpose can be attained in future legislations or regulations. These cases refer to the step by step process. 101[101] With regard to equal protection claims, a legislature does not run the risk of losing the entire remedial scheme simply because it fails, through inadvertence or otherwise, to cover every evil that might conceivably have been attacked.102[102]

In Executive Order No. 1, however, there is no inadvertence. That the previous administration was picked out was deliberate and intentional as can be gleaned from the fact that it was underscored at least three times in the assailed executive order. It must be noted that Executive Order No. 1 does not even mention any particular act, event or report to be focused on unlike the investigative commissions created in the past. The equal protection clause is violated by purposeful and intentional discrimination.103[103] To disprove petitioners contention that there is deliberate discrimination, the OSG clarifies that the commission does not only confine itself to cases of large scale graft and corruption committed during the previous administration.104[104] The OSG points to Section 17 of Executive Order No. 1, which provides:

SECTION 17.Special Provision Concerning Mandate. If and when in the judgment of the President there is a need to expand the mandate of the Commission as defined in Section 1 hereof to include the investigation of cases and instances of graft and corruption during the prior administrations, such mandate may be so extended accordingly by way of a supplemental Executive Order.

The Court is not convinced. Although Section 17 allows the President the discretion to expand the scope of investigations of the PTC so as to include the acts of graft and corruption committed in other past administrations, it does not guarantee that they would be covered in the future. Such expanded mandate of the commission will still depend on the whim and caprice of the President. If he would decide not to include them, the section would then be meaningless. This will only fortify the fears of the petitioners that the Executive Order No. 1 was crafted to tailor -fit the prosecution of officials and personalities of the Arroyo administration.105[105]

The Court tried to seek guidance from the pronouncement in the case of Virata v. Sandiganbayan,106[106] that the PCGG Charter (composed of Executive Orders Nos. 1, 2 and 14) does not violate the equal protection clause. The decision, however, was devoid of any

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discussion on how such conclusory statement was arrived at, the principal issue in said case being only the sufficiency of a cause of action. A final word The issue that seems to take center stage at present is - whether or not the Supreme Court, in the exercise of its constitutionally mandated power of Judicial Review with respect to recent initiatives of the legislature and the executive department, is exercising undue interference. Is the Highest Tribunal, which is expected to be the protector of the Constitution, itself guilty of violating fundamental tenets like the doctrine of separation of powers? Time and again, this issue has been addressed by the Court, but it seems that the present political situation calls for it to once again explain the legal basis of its action lest it continually be accused of being a hindrance to the nations thrust to progress. The Philippine Supreme Court, according to Article VIII, Section 1 of the 1987 Constitution, is vested with Judicial Power that includes the duty of the courts of justice to settle actual controversies involving rights which are legally demandable and enforceable, and to determine whether or not there has been a grave of abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the government. Furthermore, in Section 4(2) thereof, it is vested with the power of judicial review which is the power to declare a treaty, international or executive agreement, law, presidential decree, proclamation, order, instruction, ordinance, or regulation unconstitutional. This power also includes the duty to rule on the constitutionality of the application, or operation of presidential decrees, proclamations, orders, instructions, ordinances, and other regulations. These provisions, however, have been fertile grounds of conflict between the Supreme Court, on one hand, and the two co-equal bodies of government, on the other. Many times the Court has been accused of asserting superiority over the other departments. To answer this accusation, the words of Justice Laurel would be a good source of enlightenment, to wit: And when the judiciary mediates to allocate constitutional boundaries, it does not assert any superiority over the other departments; it does not in reality nullify or invalidate an act of the legislature, but only asserts the solemn and sacred obligation assigned to it by the Constitution to determine conflicting claims of authority under the Constitution and to establish for the parties in an actual controversy the rights which that instrum ent secures and guarantees to them.107[107] Thus, the Court, in exercising its power of judicial review, is not imposing its own will upon a coequal body but rather simply making sure that any act of government is done in consonance with the authorities and rights allocated to it by the Constitution. And, if after said review, the Court finds no constitutional violations of any sort, then, it has no more authority of proscribing the actions under review. Otherwise, the Court will not be deterred to pronounce said act as void and unconstitutional. It cannot be denied that most government actions are inspired with noble intentions, all geared towards the betterment of the nation and its people. But then again, it is important to remember this ethical principle: The end does not justify the means. No matter how noble and worthy of admiration the purpose of an act, but if the means to be employed in accomplishing it is simply

irreconcilable with constitutional parameters, then it cannot still be allowed.108[108] The Court cannot just turn a blind eye and simply let it pass. It will continue to uphold the Constitution and its enshrined principles. The Constitution must ever remain supreme. All must bow to the mandate of this law. Expediency must not be allowed to sap its strength nor greed for power debase its rectitude.109[109]

Lest it be misunderstood, this is not the death knell for a truth commission as nobly envisioned by the present administration. Perhaps a revision of the executive issuance so as to include the earlier past administrations would allow it to pass the test of reasonableness and not be an affront to the Constitution. Of all the branches of the government, it is the judiciary which is the most interested in knowing the truth and so it will not allow itself to be a hindrance or obstacle to its attainment. It must, however, be emphasized that the search for the truth must be within constitutional bounds for ours is still a government of laws and not of men.110[110] WHEREFORE, the petitions are GRANTED. Executive Order No. 1 is hereby declared UNCONSTITUTIONAL insofar as it is violative of the equal protection clause of the Constitution. As also prayed for, the respondents are hereby ordered to cease and desist from carrying out the provisions of Executive Order No. 1. SO ORDERED. THIRD DIVISION [G.R. No. 140128. June 6, 2001] Arnold P. Mollaneda, petitioner, vs. Leonida C. Umacob, respondent. DECISION SANDOVAL-GUTIERREZ, J.: Before us is a petition for review on certiorari of the (a) Decisionxxxiv[1] dated May 14, 1999 of the Court of Appeals in CA-G.R. SP No. 48902 affirming in toto Resolution No. 973277 of the Civil Service Commission; and (b) Resolutionxxxv[2] dated August 26, 1999 of the said court denying the motion for reconsideration of its Decision. The case stemmed from the affidavit-complaint for sexual harassment filed by Leonida Umacob (respondent) against Arnold Mollaneda (petitioner) with the Civil Service Commission - Regional Office XI, Davao City (CSC-RO XI) in September 1994 alleging: That sometime on September 7, 1994 at around 7:30 oclock more or less, in the morning, while inside the office of Mr. Rolando P. Suase, Admin Officer 2 of Davao City Schools, located at the

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Division Office Building, along Palma Gil St., Davao City, to follow-up my request for transfer from my present assignment to either Buhangin District or Bangoy District, Davao City, Mr. Rolando P. Suase was not around and it was school Division Superintendent, Mr. Arnold P. Mollaneda who was seated at his (Rolando's) table, as at the time, the office of Mr. Arnold Mollaneda just adjacent was being cleaned by a janitor. That immediately I approached him and seated opposite to him and handed to him my letter of recommendation from DECS Regional Director, Region XI, Dr. Ramon Y. Alba, recommending my possible transfer and after reading the same advised her to return next week as there is no available item and that he will think about it. However, I insisted that he will give me a note to fix the time and date of our next meeting and or appointment at his office. At this instance, he handed me a piece of paper with his prepared signature and requested me to write my name on it, after which, he took it back from me and assured me to grant my request and at the same time, he made some notations on the same piece of paper below my name, indicating my possible transfer to Buhangin or Bangoy District of which I thanked him for the accomodation. At this point, he stood up, bringing along with him the paper so that I also stood up. However, before I could get outside the office, he then handed to me the said piece of paper and advised me to give it to a certain May Pescadero, personnel clerk, for the making/cutting of the order of transfer. All of a sudden he hugged and embraced me, then he kissed my nose and lip in a torrid manner. That I tried to resist but he forcibly held my neck so that he was able to kiss me in an easy way. That - not contented, he then mashed my left breast. He did the malicious act for several times, afterwhich he warned me not to tell anybody what he did to me inside the office. That as a result of the very unfortunate incident, I was so shocked, that I was not able to speak or talk or confess to my husband what our School Superintendent did to me. Likewise, I also informed one Venus Mariano, also DECS employee, who advised me to stay and remain calm. However, I decided to report the matter to San Pedro Patrol Station.xxxvi[3] (Emphasis supplied) Respondent furnished the Department of Education, Culture and Sports - Regional Office XI, Davao City (DECS-RO XI) a copy of her affidavit-complaint. Thus, on September 30, 1994, Regional Director Susana Cabahug issued an orderxxxvii[4] directing the formation of a committee to conduct an investigation of respondent's complaint against petitioner. On October 4, 1994, petitioner filed with the CSC-RO XI his answer to the affidavit-complaint denying the allegations therein and alleging that there are material contradictions, in respondents version of the incident, thus: 1) On the date of the alleged happening of the incident, she was with her husband who was just outside the Office of Mr. Mollaneda according to witness Security Guard Raul Moncada, but she did not report the incident to her husband, nor did she register any complaint on that date September 7, 1994; She reported the alleged acts of lasciviousness complained of to the police only the following day, September 8, 1994, at about 3:45 P.M. as shown by the extract of the entry of the police blotter attached to her AFFIDAVIT-COMPLAINT in this case. 2) In her report to the police as shown by the said police blotter, she said that While at the office of Mr. Arnold Mollaneda, Division Superintendent DECS XI, she was requested by the latter to transfer in the office of Mr. Rolando Suase as the janitor/security guard was cleaning the room of the respondent. And her version as published in The Mindanao Daily Mirror in the issue of September 10, 1994 (see ANNEX C of the complaint of Mollaneda to the City Prosecution Office). Omacob said Mollaneda in a written note told her to transfer to the room of a certain Rolando Suase since the janitor will clean his room. But before she could move to the other room Mollaneda allegedly hugged, kissed and mashed her breast and told her not to tell it to anybody. 3) In her instant Affidavit-Complaint, she again says while inside the Office of Mr. Rolando P. Suase x x x to follow-up my request for transfer x x x Mr. Suase was not around and it was Schools Division Superintendent, Mr. Arnold P. Mollaneda who was seated at his (Rolando) table, as at that time, the Office of Mr. Arnold P. Mollaneda just adjacent was being cleaned by a janitor x x x. It was inside the office of Mr. Suase that she was given a note on her request for transfer by Mr. Mollaneda to be given to May Pescadero when At this point, he stood up bringing along with him the paper so that I also stood-up, however, before I could get outside the office, he then handed to

me the said piece of paper and advised me to give it to a certain May Pescadero, personnel clerk for the making/cutting of the order of transfer and at the same time all of a sudden, he hug and embraced me, then he kissed my nose and lips in a torrid manner. That I tried to resist but he forcibly held my neck so that he was able to kiss me in an easy way. That not contented, he then mashed my left breast, which he did the malicious act for several times, afterwhich he warned me not to tell anybody what he did to me inside the office.xxxviii[5] In the present petition, petitioner alleged his own version of the incident,xxxix[6]thus: "Petitioner, in his sworn statement, stated that on September 7, 1994, he had interviewed or conferred with about three (3) persons already who were applying for new teaching positions or for transfers when Respondent came to HIS OFFICE. When it was her turn to be interviewed, petitioner told her that she could not be transferred immediately because the Division only had very few vacant items and the same were already given to earlier applicants. Nevertheless, she was told to wait while he searched for a new vacant item. Petitioner gave the Respondent a note for her to give to the Acting Personnel Officer Mildred "May" Pescadero so that Respondent may be included in the list of teachers applying for transfer. Upon reading the note, however, the Respondent angrily told him why could she not be immediately accommodated when she had the written recommendation of Dir. Ramon Alba. She told Petitioner that asking her to wait was unfair because there were other applicants from Marilog district who were transferred and one of them who was slated to be transferred was Mrs. Daylinda Bacoy. Petitioner explained to the Respondent that Mrs. Bacoy suffered an injury when she fell off the horse she was riding on when she went to her school in Kiopao Elementary School. Petitioner scolded the Respondent for her insubordinate attitude toward him. She was counting so much on the recommendation of Dir. Ramon Alba who was Petitioner's superior, and could not believe that no positive action was made by Petitioner on the basis of said recommendation. In going OUT OF THE OFFICE OF PETITIONER, she was heard to have murmured that Petitioner would regret his act of discrimination. There was no act of sexual harassment that occurred during the relatively brief conversation between the herein parties. The witnesses, whose affidavits were attached to the Affidavit of Mr. Mollaneda, all swore to the fact that they saw what transpired between Petitioner and the Respondent and that there was no act of sexual harassment that occurred. Moreover, they swore to the fact that the interview took place inside Mr. Mollaneda's office as the both parties were seen through a glass panel separating Petitioner's office and the anteroom." Meanwhile, pending resolution by the CSC-RO XI of respondents complaint, the DECS investigating committee recommended to the DECS Regional Director "the dropping of the case" for lack of merit.8 On June 5, 1995, the CSC-RO XI issued a resolution charging petitioner with grave misconduct, oppression, abuse of authority and conduct prejudicial to the best interest of the service . The said office found there was a prima facie case against him9 and eventually elevated to the Civil Service Commission (Commission) the records of the case. Thereafter, the Commission designated Atty. Anacleto Buena to hear and receive the evidence in the case. A formal hearing was conducted in Davao City. Both parties were assisted by counsel. On July 7, 1997, the Commission issued Resolution No. 973277 finding petitioner guilty of grave misconduct and conduct grossly prejudicial to the best interest of the service . He was meted the penalty of dismissal from the government service with all its accessory penalties.10 Forthwith, petitioner filed a motion for reconsideration but was denied in Resolution No. 981761.11 Feeling aggrieved, petitioner filed with the Court of Appeals a petition for review alleging: first, that the Commission erred in finding him guilty x x x notwithstanding the fact that he was denied his right to due process; and second, that the Commission erred in giving weight to the hearsay testimonies of the witnesses for respondent.12 On May 14, 1999, the Court of Appeals rendered its Decision13 affirming in toto Resolution No. 973277 of the Commission. The appellate court held: It is a time-honored rule that the matter of assigning values to the testimony of witnesses is best performed by the trial courts, tribunals, or administrative bodies or agencies exercising quasijudicial powers. Unlike appellate courts, they can weigh such testimony in clear observance of the demeanor, conduct and attitude of the witnesses at the trial or hearing. Thus, absent any showing

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that they have overlooked facts of substance and value that if considered might affect the result, their findings must be given weight and respect. In the present case, nothing significant has been shown to convince this Court that the Commission acted with bias or ignored something of substance that could have, in any degree, warranted an exoneration of petitioner from the charges hurled against him. It bears mentioning that respondent victim is a public school teacher. If she is not motivated by the truth, she would not have subjected herself to the rigors of a hearing before the Commission and airing in public matters that affect her honor. It is hard to conceive that respondent would reveal and admit the shameful and humiliating experience she had undergone if it were not true. In any case, the fact that petitioner could not proffer any explanation as to why respondent and the prosecution witnesses would falsely testify against him logically proves that no improper motive impelled them to accuse the former of such serious offense as sexual harassment. xxx xxx xxx Petitioner, in the present case, may not successfully plead violation of his right to due process as he, in fact, participated at the pre-trial, agreed to matters therein taken up, attended the hearing, and lengthily cross-examined the prosecution witnesses. Anent petitioners contention that the decision of the Commission was in conflict with newspaper reports of a decision dismissing the case against him for insufficiency of evidence, suffice it to state that what the movant considers as a decision is merely a newspaper report. Newspaper accounts and clippings are hearsay and have no evidentiary value. (People vs. Aguel, 97 SCRA 795).14 Rebuffed in his bid for reconsideration of the Court of Appeals Decision, petitioner filed the instant petition, and as grounds therefor alleges: I THE RELIANCE OF THE COURT OF APPEALS ON THE THEORY THAT FINDINGS OF QUASIJUDICIAL AGENCIES ARE GIVEN CONSIDERABLE WEIGHT, IS MISPLACED IN VIEW OF THE PERTINENT FACTS OF THE CASE. II A SIMILAR ADMINISTRATIVE CASE WAS INSTITUTED IN AND INVESTIGATED BY THE D.E.C.S. AND A RESOLUTION WAS RENDERED DISMISSING THE CASE AGAINST PETITIONER. III THE TESTIMONIES OF THE WITNESSES FOR THE PETITIONER WERE ALL EYE-WITNESSES TO THE ACTUAL INCIDENT, WHICH CAST DOUBT ON THE CREDIBILITY OF THE RESPONDENTS TESTIMONY.15 Petitioner contends that the oft-cited rule - the matter of assigning values to the testimony of witnesses is best performed by the x x x administrative bodies or agencies exercising quasi-judicial powers - finds no application in the present case. According to petitioner, the failure of the CSC Commissioners to personally observe the demeanor, conduct and attitude of the witnesses and their reliance solely on Atty. Buenas recommendation and notes should have discouraged the Court of Appeals from giving weight to the findings of the Commission. Petitioner also argues that respondent engaged in forum shopping by filing her affidavit-complaint with the DECS-RO XI and CSC-RO XI; and that the Court of Appeals should have considered in his favor the DECS-RO XIs resolution dismissing the administrative case against him. Finally, petitioner insists that the Court of Appeals erroneously gave credence to the hearsay testimonies of Melencio Umacob, respondent's husband, and Venus Mariano, secretary of the Assistant Division Superintendent of the Davao City Schools. These witnesses testified that respondent narrated to them the events concerning the sexual harassment committed against her by petitioner. For her part, respondent reiterates the ruling of the Court of Appeals that in reviewing administrative cases, the appellate court is traditionally sanctioned to subscribe to the findings of the lower court or administrative body or agency since it is in a better position to determine the credibility of witnesses. As to the alleged act of forum -shopping, petitioner claims that in pursuing redress of her grievances, she sought refuge both in the court and in the Commission for she believed they are the proper fora for her criminal and administrative complaints. And lastly, respondent counters that the Commission did not err in giving more credence to the testimonies of her witnesses, stressing that petitioners witnesses are biased, they being his subordinates.

During the pendency of this case in this Court, petitioner submitted the decision of the Municipal Trial Court, Branch 5, Davao City, acquitting him of the crime of acts of lasciviousness which arose from the same incident involved in the present administrative case. The petition is bereft of merit. In assailing the Decision of the Court of Appeals, petitioner is actually urging us not to give credence to the factual findings of the Commission on the ground that the Commissioners did not personally hear the case. The fact that the Commission assigned Atty. Buena to hear and receive evidence does not render its factual findings unworthy of credence. In laying down the precedent that the matter of assigning values to the testimony of witnesses is best performed by trial courts or administrative bodies rather than by appellate courts, this Court merely recognizes that the trial court or the administrative body as a trier of facts is in a better position to assess the demeanor of the witnesses and the credibility of their testimonies as they were within its proximal view during the hearing or investigation. At any rate, it cannot be gainsaid that the term administrative body or agency includes the subordina te officials upon whose hand the body or agency delegates a portion of its authority. Included therein are the hearing officers through whose eyes and ears the administrative body or agency observes the demeanor, conduct and attitude of the witnesses and listens to their testimonies.16 It must be emphasized that the appointment of competent officers to hear and receive evidence is commonly resorted to by administrative bodies or agencies in the interest of an orderly and efficient disposition of administrative cases. This Court, in American Tobacco Company v. Director of Patents,17ruled: Thus, it is well-settled that while the power to decide resides solely in the administrative agency vested by law, this does not preclude a delegation of the power to hold a hearing on the basis of which the decision of the administrative agency will be made. The rule that requires an administrative officer to exercise his own judgment and discretion does not preclude him from utilizing, as a matter of practical administrative procedure, the aid of subordinates to investigate and report to him the facts, on the basis of which the officer makes his decisions. It is sufficient that the judgment and discretion finally exercised are those of the officer authorized by law. Neither does due process of law nor the requirements of fair hearing require that the actual taking of testimony be before the same officer who will make the decision in the case. As long as a party is not deprived of his right to present his own case and submit evidence in support thereof, and the decision is supported by the evidence in the record, there is no question that the requirements of due process and fair trial are fully met. In short, there is no abnegation of responsibility on the part of the officer concerned as the actual decision remains with and is made by said officer. It is, however, required that to give the substance of a hearing, which is for the purpose of making determinations upon evidence the officer who makes the determinations must consider and appraise the evidence which justifies them. In the case at bar, while the hearing officer may make preliminary rulings on the myriad of questions raised at the hearings of these cases, the ultimate decision on the merits of all the issues and questions involved is left to the Director of Patents. Apart from the circumstance that the point involved is procedural and not jurisdictional, petitioners have not shown in what manner they have been prejudiced by the proceedings. Under our jurisprudence, an administrative agency may employ other persons, such as a hearing officer, examiner or investigator, to receive evidence, conduct hearing and make reports on the basis of which the agency shall render its decision. Such a procedure is a practical necessity. Corollarily, in a catena of cases, this Court laid down the cardinal requirements of due process in administrative proceedings, one of which is that the tribunal or body or any of its judges 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.18 Thus, it is logical to say that this mandate was rendered precisely to ensure that in cases where the hearing or reception of evidence is assigned to a subordinate, the body or agency shall not merely rely on his recommendation but instead shall personally weigh and assess the evidence which the said subordinate has gathered. In the case at bar, it is evident that the Commission itself evaluated in detail the evidence of both parties as reported by Atty. Buena. In fact, in laying down its conclusion, it made constant reference to the testimonies of the parties and of their witnesses and to the documentary evidence presented.

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It must be addressed that, the Commissions act of delegating the authority to hear and receive evidence to Atty. Buena is not without legal basis. Section 47, Book V of Executive Order No. 292 (otherwise known as the Administrative Code of 1987) provides that the Commission may deputize any department or agency or official or group of officials to conduct an investigation on the complaint filed by a private citizen against a government official or employee. The results of the investigation shall be submitted to the Commission with recommendation as to the penalty to be imposed or other action to be taken. Going further, petitioner complains that he was not furnished a copy of Atty. Buenas notes and recommendation. The Court cannot empathize with him. In Ruiz v. Drilon,18 we unequivocally held that a respondent in an administrative case is not entitled to be informed of the findings and recommendation of any investigating committee created to inquire into the charges filed against him. He is entitled only to the administrative decision based on substantial evidence made of record and a reasonable opportunity to meet the charges and the evidence presented against him during the hearing.20 Besides, Atty. Buena's findings and recommendation are internal communications between him and the Commission and, therefore, confidential. In Pefianco v. Moral,21 this Court held: Respondents (Moral) counsel is reminded that the Report of the DECS Investigating Committee is not an integral part of the Decision itself x x x [t]he report is an internal communication between the Investigating Committee and the DECS Secretary, and therefore, confidential until the latter had already read and used the same in making his own determination of the facts and applicable law of the case, to be expressed in the Decision he may make. The Report remains an internal and confidential matter to be used as part - although not controlling - of the basis for the decision. Only when the party adversely affected by the decision has filed and perfected an appeal to the Civil Service Commission may all the records of the case, including the aforesaid Report be forwarded to the CSC. In the latter appellate tribunal, the respondents counsel may be allowed to read and/or be given a copy of the Report to enable the appellant to file an intelligent and exhaustive appellants Brief Memorandum. Petitioners second argument requires no lengthy discussion. First, he did not raise the issue of forum-shopping before the Commission.22 It bears emphasis that respondent merelyfurnished the DECS-RO XI a copy of her affidavit-complaint. And second, we surveyed the records and there is nothing therein which supports petitioners claim that the DECS -RO XI dismissed respondent's affidavit-complaint. The resolution22 of the DECS mainly recommended to the Regional Director of the DECS-RO XI the dropping of the case. A recommendatory resolution does not have the effect of actually disposing of a case. Its function is merely to advise the disciplining authority of what action should be taken or what penalty should be imposed. It is not controlling and the disciplining authority may or may not conform with the recommended action. On petitioners assertion that the testimony of respondents witnesses are hearsay and, therefore, inadmissible in evidence, we are constrained to hold a different view. A reading of the testimonies of Umacob and Mariano shows that they were not presented to prove the truth of respondents accusations against petitioner, but only to establish the fact that respondent narrated to them what transpired between her and petitioner. While it is true that the testimony of a witness regarding a statement made by another person, if intended to establish the truth of the facts asserted in the statement, is clearly hearsay evidence, it is otherwise if the purpose of placing the statement in the record is merely to establish the fact that the statement was made.23 Regardless of the truth or falsity of a statement, when the fact that it has been made is relevant, the hearsay rule does not apply and the statement may be shown. As a matter of fact, evidence as to the making of the statement is not secondary but primary, for the statement itself may constitute a fact in issue, or be circumstantially relevant as to the existence of such a fact.24 Significantly, respondent herself and her witnesses were present during the hearing of the case. Hence, petitioner was given the opportunity to cross-examine them. The real basis for the exclusion of hearsay evidence lies in the fact that a hearsay testimony is not subject to the tests which can ordinarily be applied for the ascertainment of the truth of testimony, since the declarant is not present and available for cross-examination.25 Lastly, petitioner cannot find solace in the dismissal of the criminal case against him. Longingrained in our jurisprudence is the rule that the dismissal of a criminal case against an accused

who is a respondent in an administrative case on the ground of insufficiency of evidence does not foreclose the administrative proceeding against him or give him a clean bill of health in all respects. In dismissing the case, the court is simply saying that the prosecution was unable to prove the guilt of the respondent beyond reasonable doubt, a condition sine qua non for conviction because of the presumption of innocence which the Constitution guarantees an accused.27 However, in administrative proceedings, the quantum of proof required is only substantial evidence.28 Substantial evidence means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.29 After a more incisive scrutiny of the records, we are convinced that petitioners culpability has been proven by substantial evidence. Respondents testimon y was found by the Commission to be natural, straightforward, spontaneous and convincing.30 Unlike petitioners testimony, that of respondent is replete with details consistent with human nature. Clearly, the dismissal of the criminal case against petitioner by the Municipal Trial Court, Branch 5, Davao City cannot bind this Court in the disposition of the instant administrative case.31 In sum, we find no reason to reverse the decision of the Court of Appeals. While it is unfotunate that petitioner will lose his job because of a moments indiscretion, this Court shall not flinch in imposing upon him the severe penalty of dismissal. As Schools Division Superintendent, petitioner is bound by a high standard of work ethics. By succumbing to his moral perversity, he failed to live up to such standard. Indeed, he provided a justifiable ground for his dismissal from the service. WHEREFORE, the appealed decision of the Court of Appeals is hereby AFFIRMED. No costs. SO ORDERED. Melo, (Chairman), Vitug, Panganiban, and Gonzaga-Reyes, JJ., concur.

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