G.R. No.

L-11390

March 26, 1918

EL BANCO ESPAOL-FILIPINO, plaintiff-appellant, vs. VICENTE PALANCA, administrator of the estate of Engracio Palanca Tanquinyeng, defendant-appellant. Aitken and DeSelms for appellant. Hartigan and Welch for appellee. STREET, J.: This action was instituted upon March 31, 1908, by "El Banco EspanolFilipino" to foreclose a mortgage upon various parcels of real property situated in the city of Manila. The mortgage in question is dated June 16, 1906, and was executed by the original defendant herein, Engracio Palanca Tanquinyeng y Limquingco, as security for a debt owing by him to the bank. Upon March 31, 1906, the debt amounted to P218,294.10 and was drawing interest at the rate of 8 per centum per annum, payable at the end of each quarter. It appears that the parties to this mortgage at that time estimated the value of the property in question at P292,558, which was about P75,000 in excess of the indebtedness. After the execution of this instrument by the mortgagor, he returned to China which appears to have been his native country; and he there died, upon January 29, 1810, without again returning to the Philippine Islands. As the defendant was a nonresident at the time of the institution of the present action, it was necessary for the plaintiff in the foreclosure proceeding to give notice to the defendant by publication pursuant to section 399 of the Code of Civil Procedure. An order for publication was accordingly obtained from the court, and publication was made in due form in a newspaper of the city of Manila. At the same time that the order of the court should deposit in the post office in a stamped envelope a copy of the summons and complaint directed to the defendant at his last place of residence, to wit, the city of Amoy, in the Empire of China. This order was made pursuant to the following provision contained in section 399 of the Code of Civil Procedure: In case of publication, where the residence of a nonresident or absent defendant is known, the judge must direct a copy of the summons and complaint to be forthwith deposited by the clerk in the post-office, postage prepaid, directed to the person to be served, at his place of residence Whether the clerk complied with this order does not affirmatively appear. There is, however, among the papers pertaining to this case, an affidavit,

dated April 4, 1908, signed by Bernardo Chan y Garcia, an employee of the attorneys of the bank, showing that upon that date he had deposited in the Manila post-office a registered letter, addressed to Engracio Palanca Tanquinyeng, at Manila, containing copies of the complaint, the plaintiff's affidavit, the summons, and the order of the court directing publication as aforesaid. It appears from the postmaster's receipt that Bernardo probably used an envelope obtained from the clerk's office, as the receipt purports to show that the letter emanated from the office. The cause proceeded in usual course in the Court of First Instance; and the defendant not having appeared, judgment was, upon July 2, 1908, taken against him by default. Upon July 3, 1908, a decision was rendered in favor of the plaintiff. In this decision it was recited that publication had been properly made in a periodical, but nothing was said about this notice having been given mail. The court, upon this occasion, found that the indebtedness of the defendant amounted to P249,355. 32, with interest from March 31, 1908. Accordingly it was ordered that the defendant should, on or before July 6, 1908, deliver said amount to the clerk of the court to be applied to the satisfaction of the judgment, and it was declared that in case of the failure of the defendant to satisfy the judgment within such period, the mortgage property located in the city of Manila should be exposed to public sale. The payment contemplated in said order was never made; and upon July 8, 1908, the court ordered the sale of the property. The sale took place upon July 30, 1908, and the property was bought in by the bank for the sum of P110,200. Upon August 7, 1908, this sale was confirmed by the court. About seven years after the confirmation of this sale, or to the precise, upon June 25, 1915, a motion was made in this cause by Vicente Palanca, as administrator of the estate of the original defendant, Engracio Palanca Tanquinyeng y Limquingco, wherein the applicant requested the court to set aside the order of default of July 2, 1908, and the judgment rendered upon July 3, 1908, and to vacate all the proceedings subsequent thereto. The basis of this application, as set forth in the motion itself, was that the order of default and the judgment rendered thereon were void because the court had never acquired jurisdiction over the defendant or over the subject of the action. At the hearing in the court below the application to vacate the judgment was denied, and from this action of the court Vicente Planca, as administrator of the estate of the original defendant, has appealed. No other feature of the case is here under consideration than such as related to the action of the court upon said motion. The case presents several questions of importance, which will be discussed in what appears to be the sequence of most convenient development. In the first part of this opinion we shall, for the purpose of argument, assume that

the clerk of the Court of First Instance did not obey the order of the court in the matter of mailing the papers which he was directed to send to the defendant in Amoy; and in this connection we shall consider, first, whether the court acquired the necessary jurisdiction to enable it to proceed with the foreclosure of the mortgage and, secondly, whether those proceedings were conducted in such manner as to constitute due process of law. The word "jurisdiction," as applied to the faculty of exercising judicial power, is used in several different, though related, senses since it may have reference (1) to the authority of the court to entertain a particular kind of action or to administer a particular kind of relief, or it may refer to the power of the court over the parties, or (2) over the property which is the subject to the litigation. The sovereign authority which organizes a court determines the nature and extent of its powers in general and thus fixes its competency or jurisdiction with reference to the actions which it may entertain and the relief it may grant. Jurisdiction over the person is acquired by the voluntary appearance of a party in court and his submission to its authority, or it is acquired by the coercive power of legal process exerted over the person. Jurisdiction over the property which is the subject of the litigation may result either from a seizure of the property under legal process, whereby it is brought into the actual custody of the law, or it may result from the institution of legal proceedings wherein, under special provisions of law, the power of the court over the property is recognized and made effective. In the latter case the property, though at all times within the potential power of the court, may never be taken into actual custody at all. An illustration of the jurisdiction acquired by actual seizure is found in attachment proceedings, where the property is seized at the beginning of the action, or some subsequent stage of its progress, and held to abide the final event of the litigation. An illustration of what we term potential jurisdiction over the res, is found in the proceeding to register the title of land under our system for the registration of land. Here the court, without taking actual physical control over the property assumes, at the instance of some person claiming to be owner, to exercise a jurisdiction in rem over the property and to adjudicate the title in favor of the petitioner against all the world. In the terminology of American law the action to foreclose a mortgage is said to be a proceeding quasi in rem, by which is expressed the idea that while it is not strictly speaking an action in rem yet it partakes of that nature and is substantially such. The expression "action in rem" is, in its narrow application, used only with reference to certain proceedings in courts of

admiralty wherein the property alone is treated as responsible for the claim or obligation upon which the proceedings are based. The action quasi rem differs from the true action in rem in the circumstance that in the former an individual is named as defendant, and the purpose of the proceeding is to subject his interest therein to the obligation or lien burdening the property. All proceedings having for their sole object the sale or other disposition of the property of the defendant, whether by attachment, foreclosure, or other form of remedy, are in a general way thus designated. The judgment entered in these proceedings is conclusive only between the parties. In speaking of the proceeding to foreclose a mortgage the author of a well known treaties, has said: Though nominally against person, such suits are to vindicate liens; they proceed upon seizure; they treat property as primarily indebted; and, with the qualification above-mentioned, they are substantially property actions. In the civil law, they are styled hypothecary actions, and their sole object is the enforcement of the lien against the res; in the common law, they would be different in chancery did not treat the conditional conveyance as a mere hypothecation, and the creditor's right ass an equitable lien; so, in both, the suit is real action so far as it is against property, and seeks the judicial recognition of a property debt, and an order for the sale of the res. (Waples, Proceedings In Rem. sec. 607.) It is true that in proceedings of this character, if the defendant for whom publication is made appears, the action becomes as to him a personal action and is conducted as such. This, however, does not affect the proposition that where the defendant fails to appear the action is quasi in rem; and it should therefore be considered with reference to the principles governing actions in rem. There is an instructive analogy between the foreclosure proceeding and an action of attachment, concerning which the Supreme Court of the United States has used the following language: If the defendant appears, the cause becomes mainly a suit in personam, with the added incident, that the property attached remains liable, under the control of the court, to answer to any demand which may be established against the defendant by the final judgment of the court. But, if there is no appearance of the defendant, and no service of process on him, the case becomes, in its essential nature, a proceeding in rem, the only effect of which is to subject the property attached to the payment of the defendant which

the court may find to be due to the plaintiff. (Cooper vs. Reynolds, 10 Wall., 308.) In an ordinary attachment proceeding, if the defendant is not personally served, the preliminary seizure is to, be considered necessary in order to confer jurisdiction upon the court. In this case the lien on the property is acquired by the seizure; and the purpose of the proceedings is to subject the property to that lien. If a lien already exists, whether created by mortgage, contract, or statute, the preliminary seizure is not necessary; and the court proceeds to enforce such lien in the manner provided by law precisely as though the property had been seized upon attachment. (Roller vs. Holly, 176 U. S., 398, 405; 44 L. ed., 520.) It results that the mere circumstance that in an attachment the property may be seized at the inception of the proceedings, while in the foreclosure suit it is not taken into legal custody until the time comes for the sale, does not materially affect the fundamental principle involved in both cases, which is that the court is here exercising a jurisdiction over the property in a proceeding directed essentially in rem. Passing now to a consideration of the jurisdiction of the Court of First Instance in a mortgage foreclosure, it is evident that the court derives its authority to entertain the action primarily from the statutes organizing the court. The jurisdiction of the court, in this most general sense, over the cause of action is obvious and requires no comment. Jurisdiction over the person of the defendant, if acquired at all in such an action, is obtained by the voluntary submission of the defendant or by the personal service of process upon him within the territory where the process is valid. If, however, the defendant is a nonresident and, remaining beyond the range of the personal process of the court, refuses to come in voluntarily, the court never acquires jurisdiction over the person at all. Here the property itself is in fact the sole thing which is impleaded and is the responsible object which is the subject of the exercise of judicial power. It follows that the jurisdiction of the court in such case is based exclusively on the power which, under the law, it possesses over the property; and any discussion relative to the jurisdiction of the court over the person of the defendant is entirely apart from the case. The jurisdiction of the court over the property, considered as the exclusive object of such action, is evidently based upon the following conditions and considerations, namely: (1) that the property is located within the district; (2) that the purpose of the litigation is to subject the property by sale to an obligation fixed upon it by the mortgage; and (3) that the court at a proper stage of the proceedings takes the property into custody, if necessary, and expose it to sale for the purpose of satisfying the mortgage debt. An obvious corollary is that no other relief can be granted in this proceeding than such as can be enforced against the property. We may then, from what has been stated, formulated the following proposition relative to the foreclosure proceeding against the property of a

nonresident mortgagor who fails to come in and submit himself personally to the jurisdiction of the court: (I) That the jurisdiction of the court is derived from the power which it possesses over the property; (II) that jurisdiction over the person is not acquired and is nonessential; (III) that the relief granted by the court must be limited to such as can be enforced against the property itself. It is important that the bearing of these propositions be clearly apprehended, for there are many expressions in the American reports from which it might be inferred that the court acquires personal jurisdiction over the person of the defendant by publication and notice; but such is not the case. In truth the proposition that jurisdiction over the person of a nonresident cannot be acquired by publication and notice was never clearly understood even in the American courts until after the decision had been rendered by the Supreme Court of the United States in the leading case of Pennoyer vs. Neff (95 U. S. 714; 24 L. ed., 565). In the light of that decision, and of other decisions which have subsequently been rendered in that and other courts, the proposition that jurisdiction over the person cannot be thus acquired by publication and notice is no longer open to question; and it is now fully established that a personal judgment upon constructive or substituted service against a nonresident who does not appear is wholly invalid. This doctrine applies to all kinds of constructive or substituted process, including service by publication and personal service outside of the jurisdiction in which the judgment is rendered; and the only exception seems to be found in the case where the nonresident defendant has expressly or impliedly consented to the mode of service. (Note to Raher vs. Raher, 35 L. R. A. [N. S. ], 292; see also 50 L .R. A., 585; 35 L. R. A. [N. S.], 312 The idea upon which the decision in Pennoyer vs. Neff (supra) proceeds is that the process from the tribunals of one State cannot run into other States or countries and that due process of law requires that the defendant shall be brought under the power of the court by service of process within the State, or by his voluntary appearance, in order to authorize the court to pass upon the question of his personal liability. The doctrine established by the Supreme Court of the United States on this point, being based upon the constitutional conception of due process of law, is binding upon the courts of the Philippine Islands. Involved in this decision is the principle that in proceedings in rem or quasi in rem against a nonresident who is not served personally within the state, and who does not appear, the relief must be confined to the res, and the court cannot lawfully render a personal judgment against him. (Dewey vs. Des Moines, 173 U. S., 193; 43 L. ed., 665; Heidritter vs. Elizabeth Oil Cloth Co., 112 U. S., 294; 28 L. ed., 729.) Therefore in an action to foreclose a mortgage against a nonresident, upon whom service has been effected exclusively by publication, no personal judgment for the deficiency can be entered. (Latta vs. Tutton, 122 Cal., 279; Blumberg vs. Birch, 99 Cal., 416.)

It is suggested in the brief of the appellant that the judgment entered in the court below offends against the principle just stated and that this judgment is void because the court in fact entered a personal judgment against the absent debtor for the full amount of the indebtedness secured by the mortgage. We do not so interpret the judgment. In a foreclosure proceeding against a nonresident owner it is necessary for the court, as in all cases of foreclosure, to ascertain the amount due, as prescribed in section 256 of the Code of Civil Procedure, and to make an order requiring the defendant to pay the money into court. This step is a necessary precursor of the order of sale. In the present case the judgment which was entered contains the following words: Because it is declared that the said defendant Engracio Palanca Tanquinyeng y Limquingco, is indebted in the amount of P249,355.32, plus the interest, to the 'Banco Espanol-Filipino' . . . therefore said appellant is ordered to deliver the above amount etc., etc. This is not the language of a personal judgment. Instead it is clearly intended merely as a compliance with the requirement that the amount due shall be ascertained and that the evidence of this it may be observed that according to the Code of Civil Procedure a personal judgment against the debtor for the deficiency is not to be rendered until after the property has been sold and the proceeds applied to the mortgage debt. (sec. 260). The conclusion upon this phase of the case is that whatever may be the effect in other respects of the failure of the clerk of the Court of First Instance to mail the proper papers to the defendant in Amoy, China, such irregularity could in no wise impair or defeat the jurisdiction of the court, for in our opinion that jurisdiction rest upon a basis much more secure than would be supplied by any form of notice that could be given to a resident of a foreign country. Before leaving this branch of the case, we wish to observe that we are fully aware that many reported cases can be cited in which it is assumed that the question of the sufficiency of publication or notice in a case of this kind is a question affecting the jurisdiction of the court, and the court is sometimes said to acquire jurisdiction by virtue of the publication. This phraseology was undoubtedly originally adopted by the court because of the analogy between service by the publication and personal service of process upon the defendant; and, as has already been suggested, prior to the decision of Pennoyer vs. Neff (supra) the difference between the legal effects of the two forms of service was obscure. It is accordingly not surprising that the modes of expression which had already been molded into legal tradition before that

case was decided have been brought down to the present day. But it is clear that the legal principle here involved is not effected by the peculiar language in which the courts have expounded their ideas. We now proceed to a discussion of the question whether the supposed irregularity in the proceedings was of such gravity as to amount to a denial of that "due process of law" which was secured by the Act of Congress in force in these Islands at the time this mortgage was foreclosed. (Act of July 1, 1902, sec. 5.) In dealing with questions involving the application of the constitutional provisions relating to due process of law the Supreme Court of the United States has refrained from attempting to define with precision the meaning of that expression, the reason being that the idea expressed therein is applicable under so many diverse conditions as to make any attempt ay precise definition hazardous and unprofitable. As applied to a judicial proceeding, however, it may be laid down with certainty that the requirement of due process is satisfied if the following conditions are present, namely; (1) There must be a court or tribunal clothed with judicial power to hear and determine the matter before it; (2) jurisdiction must be lawfully acquired over the person of the defendant or over the property which is the subject of the proceeding; (3) the defendant must be given an opportunity to be heard; and (4) judgment must be rendered upon lawful hearing. Passing at once to the requisite that the defendant shall have an opportunity to be heard, we observe that in a foreclosure case some notification of the proceedings to the nonresident owner, prescribing the time within which appearance must be made, is everywhere recognized as essential. To answer this necessity the statutes generally provide for publication, and usually in addition thereto, for the mailing of notice to the defendant, if his residence is known. Though commonly called constructive, or substituted service of process in any true sense. It is merely a means provided by law whereby the owner may be admonished that his property is the subject of judicial proceedings and that it is incumbent upon him to take such steps as he sees fit to protect it. In speaking of notice of this character a distinguish master of constitutional law has used the following language: . . . if the owners are named in the proceedings, and personal notice is provided for, it is rather from tenderness to their interests, and in order to make sure that the opportunity for a hearing shall not be lost to them, than from any necessity that the case shall assume that form. (Cooley on Taxation [2d. ed.], 527, quoted in Leigh vs. Green, 193 U. S., 79, 80.) It will be observed that this mode of notification does not involve any absolute assurance that the absent owner shall thereby receive actual notice. The periodical containing the publication may never in fact come to his hands, and the chances that he should discover the notice may often be very slight.

Even where notice is sent by mail the probability of his receiving it, though much increased, is dependent upon the correctness of the address to which it is forwarded as well as upon the regularity and security of the mail service. It will be noted, furthermore, that the provision of our law relative to the mailing of notice does not absolutely require the mailing of notice unconditionally and in every event, but only in the case where the defendant's residence is known. In the light of all these facts, it is evident that actual notice to the defendant in cases of this kind is not, under the law, to be considered absolutely necessary. The idea upon which the law proceeds in recognizing the efficacy of a means of notification which may fall short of actual notice is apparently this: Property is always assumed to be in the possession of its owner, in person or by agent; and he may be safely held, under certain conditions, to be affected with knowledge that proceedings have been instituted for its condemnation and sale. It is the duty of the owner of real estate, who is a nonresident, to take measures that in some way he shall be represented when his property is called into requisition, and if he fails to do this, and fails to get notice by the ordinary publications which have usually been required in such cases, it is his misfortune, and he must abide the consequences. (6 R. C. L., sec. 445 [p. 450]). It has been well said by an American court: If property of a nonresident cannot be reached by legal process upon the constructive notice, then our statutes were passed in vain, and are mere empty legislative declarations, without either force, or meaning; for if the person is not within the jurisdiction of the court, no personal judgment can be rendered, and if the judgment cannot operate upon the property, then no effective judgment at all can be rendered, so that the result would be that the courts would be powerless to assist a citizen against a nonresident. Such a result would be a deplorable one. (Quarl vs. Abbett, 102 Ind., 233; 52 Am. Rep., 662, 667.) It is, of course universally recognized that the statutory provisions relative to publication or other form of notice against a nonresident owner should be complied with; and in respect to the publication of notice in the newspaper it may be stated that strict compliance with the requirements of the law has been held to be essential. In Guaranty Trust etc. Co. vs. Green Cove etc., Railroad Co. (139 U. S., 137, 138), it was held that where newspaper publication was made for 19 weeks, when the statute required 20, the publication was insufficient.

With respect to the provisions of our own statute, relative to the sending of notice by mail, the requirement is that the judge shall direct that the notice be deposited in the mail by the clerk of the court, and it is not in terms declared that the notice must be deposited in the mail. We consider this to be of some significance; and it seems to us that, having due regard to the principles upon which the giving of such notice is required, the absent owner of the mortgaged property must, so far as the due process of law is concerned, take the risk incident to the possible failure of the clerk to perform his duty, somewhat as he takes the risk that the mail clerk or the mail carrier might possibly lose or destroy the parcel or envelope containing the notice before it should reach its destination and be delivered to him. This idea seems to be strengthened by the consideration that placing upon the clerk the duty of sending notice by mail, the performance of that act is put effectually beyond the control of the plaintiff in the litigation. At any rate it is obvious that so much of section 399 of the Code of Civil Procedure as relates to the sending of notice by mail was complied with when the court made the order. The question as to what may be the consequences of the failure of the record to show the proof of compliance with that requirement will be discussed by us further on. The observations which have just been made lead to the conclusion that the failure of the clerk to mail the notice, if in fact he did so fail in his duty, is not such an irregularity, as amounts to a denial of due process of law; and hence in our opinion that irregularity, if proved, would not avoid the judgment in this case. Notice was given by publication in a newspaper and this is the only form of notice which the law unconditionally requires. This in our opinion is all that was absolutely necessary to sustain the proceedings. It will be observed that in considering the effect of this irregularity, it makes a difference whether it be viewed as a question involving jurisdiction or as a question involving due process of law. In the matter of jurisdiction there can be no distinction between the much and the little. The court either has jurisdiction or it has not; and if the requirement as to the mailing of notice should be considered as a step antecedent to the acquiring of jurisdiction, there could be no escape from the conclusion that the failure to take that step was fatal to the validity of the judgment. In the application of the idea of due process of law, on the other hand, it is clearly unnecessary to be so rigorous. The jurisdiction being once established, all that due process of law thereafter requires is an opportunity for the defendant to be heard; and as publication was duly made in the newspaper, it would seem highly unreasonable to hold that failure to mail the notice was fatal. We think that in applying the requirement of due process of law, it is permissible to reflect upon the purposes of the provision which is supposed to have been violated and the principle underlying the exercise of judicial power in these proceedings. Judge in the light of these conceptions, we think that the provision of Act of

Congress declaring that no person shall be deprived of his property without due process of law has not been infringed. In the progress of this discussion we have stated the two conclusions; (1) that the failure of the clerk to send the notice to the defendant by mail did not destroy the jurisdiction of the court and (2) that such irregularity did not infringe the requirement of due process of law. As a consequence of these conclusions the irregularity in question is in some measure shorn of its potency. It is still necessary, however, to consider its effect considered as a simple irregularity of procedure; and it would be idle to pretend that even in this aspect the irregularity is not grave enough. From this point of view, however, it is obvious that any motion to vacate the judgment on the ground of the irregularity in question must fail unless it shows that the defendant was prejudiced by that irregularity. The least, therefore, that can be required of the proponent of such a motion is to show that he had a good defense against the action to foreclose the mortgage. Nothing of the kind is, however, shown either in the motion or in the affidavit which accompanies the motion. An application to open or vacate a judgment because of an irregularity or defect in the proceedings is usually required to be supported by an affidavit showing the grounds on which the relief is sought, and in addition to this showing also a meritorious defense to the action. It is held that a general statement that a party has a good defense to the action is insufficient. The necessary facts must be averred. Of course if a judgment is void upon its face a showing of the existence of a meritorious defense is not necessary. (10 R. C. L., 718.) The lapse of time is also a circumstance deeply affecting this aspect of the case. In this connection we quote the following passage from the encyclopedic treatise now in course of publication: Where, however, the judgment is not void on its face, and may therefore be enforced if permitted to stand on the record, courts in many instances refuse to exercise their quasi equitable powers to vacate a judgement after the lapse of the term ay which it was entered, except in clear cases, to promote the ends of justice, and where it appears that the party making the application is himself without fault and has acted in good faith and with ordinary diligence. Laches on the part of the applicant, if unexplained, is deemed sufficient ground for refusing the relief to which he might otherwise be entitled. Something is due to the finality of judgments, and acquiescence or unnecessary delay is fatal to motions of this character, since courts are always reluctant to interfere with judgments, and especially where they have been executed or satisfied. The moving party has the burden of showing diligence, and

unless it is shown affirmatively the court will not ordinarily exercise its discretion in his favor. (15 R. C. L., 694, 695.) It is stated in the affidavit that the defendant, Engracio Palanca Tanquinyeng y Limquingco, died January 29, 1910. The mortgage under which the property was sold was executed far back in 1906; and the proceedings in the foreclosure were closed by the order of court confirming the sale dated August 7, 1908. It passes the rational bounds of human credulity to suppose that a man who had placed a mortgage upon property worth nearly P300,000 and had then gone away from the scene of his life activities to end his days in the city of Amoy, China, should have long remained in ignorance of the fact that the mortgage had been foreclosed and the property sold, even supposing that he had no knowledge of those proceedings while they were being conducted. It is more in keeping with the ordinary course of things that he should have acquired information as to what was transpiring in his affairs at Manila; and upon the basis of this rational assumption we are authorized, in the absence of proof to the contrary, to presume that he did have, or soon acquired, information as to the sale of his property. The Code of Civil Procedure, indeed, expressly declares that there is a presumption that things have happened according to the ordinary habits of life (sec. 334 [26]); and we cannot conceive of a situation more appropriate than this for applying the presumption thus defined by the lawgiver. In support of this presumption, as applied to the present case, it is permissible to consider the probability that the defendant may have received actual notice of these proceedings from the unofficial notice addressed to him in Manila which was mailed by an employee of the bank's attorneys. Adopting almost the exact words used by the Supreme Court of the United States in Grannis vs. Ordeans (234 U. S., 385; 58 L. ed., 1363), we may say that in view of the well-known skill of postal officials and employees in making proper delivery of letters defectively addressed, we think the presumption is clear and strong that this notice reached the defendant, there being no proof that it was ever returned by the postal officials as undelivered. And if it was delivered in Manila, instead of being forwarded to Amoy, China, there is a probability that the recipient was a person sufficiently interested in his affairs to send it or communicate its contents to him. Of course if the jurisdiction of the court or the sufficiency of the process of law depended upon the mailing of the notice by the clerk, the reflections in which we are now indulging would be idle and frivolous; but the considerations mentioned are introduced in order to show the propriety of applying to this situation the legal presumption to which allusion has been made. Upon that presumption, supported by the circumstances of this case, ,we do not hesitate to found the conclusion that the defendant voluntarily abandoned all thought of saving his property from the obligation which he had placed upon it; that knowledge of the proceedings should be imputed to

him; and that he acquiesced in the consequences of those proceedings after they had been accomplished. Under these circumstances it is clear that the merit of this motion is, as we have already stated, adversely affected in a high degree by the delay in asking for relief. Nor is it an adequate reply to say that the proponent of this motion is an administrator who only qualified a few months before this motion was made. No disability on the part of the defendant himself existed from the time when the foreclosure was effected until his death; and we believe that the delay in the appointment of the administrator and institution of this action is a circumstance which is imputable to the parties in interest whoever they may have been. Of course if the minor heirs had instituted an action in their own right to recover the property, it would have been different. It is, however, argued that the defendant has suffered prejudice by reason of the fact that the bank became the purchaser of the property at the foreclosure sale for a price greatly below that which had been agreed upon in the mortgage as the upset price of the property. In this connection, it appears that in article nine of the mortgage which was the subject of this foreclosure, as amended by the notarial document of July 19, 1906, the parties to this mortgage made a stipulation to the effect that the value therein placed upon the mortgaged properties should serve as a basis of sale in case the debt should remain unpaid and the bank should proceed to a foreclosure. The upset price stated in that stipulation for all the parcels involved in this foreclosure was P286,000. It is said in behalf of the appellant that when the bank bought in the property for the sum of P110,200 it violated that stipulation. It has been held by this court that a clause in a mortgage providing for a tipo, or upset price, does not prevent a foreclosure, nor affect the validity of a sale made in the foreclosure proceedings. (Yangco vs. Cruz Herrera and Wy Piaco, 11 Phil. Rep., 402; Banco-Espaol Filipino vs. Donaldson, Sim and Co., 5 Phil. Rep., 418.) In both the cases here cited the property was purchased at the foreclosure sale, not by the creditor or mortgagee, but by a third party. Whether the same rule should be applied in a case where the mortgagee himself becomes the purchaser has apparently not been decided by this court in any reported decision, and this question need not here be considered, since it is evident that if any liability was incurred by the bank by purchasing for a price below that fixed in the stipulation, its liability was a personal liability derived from the contract of mortgage; and as we have already demonstrated such a liability could not be the subject of adjudication in an action where the court had no jurisdiction over the person of the defendant. If the plaintiff bank became liable to account for the difference between the upset price and the price at which in bought in the property, that liability remains unaffected by the disposition which the court made of this case; and the fact that the bank may have violated such an obligation can in

no wise affect the validity of the judgment entered in the Court of First Instance. In connection with the entire failure of the motion to show either a meritorious defense to the action or that the defendant had suffered any prejudice of which the law can take notice, we may be permitted to add that in our opinion a motion of this kind, which proposes to unsettle judicial proceedings long ago closed, can not be considered with favor, unless based upon grounds which appeal to the conscience of the court. Public policy requires that judicial proceedings be upheld. The maximum here applicable is non quieta movere. As was once said by Judge Brewer, afterwards a member of the Supreme Court of the United States: Public policy requires that judicial proceedings be upheld, and that titles obtained in those proceedings be safe from the ruthless hand of collateral attack. If technical defects are adjudged potent to destroy such titles, a judicial sale will never realize that value of the property, for no prudent man will risk his money in bidding for and buying that title which he has reason to fear may years thereafter be swept away through some occult and not readily discoverable defect. (Martin vs. Pond, 30 Fed., 15.) In the case where that language was used an attempt was made to annul certain foreclosure proceedings on the ground that the affidavit upon which the order of publication was based erroneously stated that the State of Kansas, when he was in fact residing in another State. It was held that this mistake did not affect the validity of the proceedings. In the preceding discussion we have assumed that the clerk failed to send the notice by post as required by the order of the court. We now proceed to consider whether this is a proper assumption; and the proposition which we propose to establish is that there is a legal presumption that the clerk performed his duty as the ministerial officer of the court, which presumption is not overcome by any other facts appearing in the cause. In subsection 14 of section 334 of the Code of Civil Procedure it is declared that there is a presumption "that official duty has been regularly performed;" and in subsection 18 it is declared that there is a presumption "that the ordinary course of business has been followed." These presumptions are of course in no sense novelties, as they express ideas which have always been recognized. Omnia presumuntur rite et solemniter esse acta donec probetur in contrarium. There is therefore clearly a legal presumption that the clerk performed his duty about mailing this notice; and we think that strong considerations of policy require that this presumption should be allowed to operate with full force under the circumstances of this case. A party to an

action has no control over the clerk of the court; and has no right to meddle unduly with the business of the clerk in the performance of his duties. Having no control over this officer, the litigant must depend upon the court to see that the duties imposed on the clerk are performed. Other considerations no less potent contribute to strengthen the conclusion just stated. There is no principle of law better settled than that after jurisdiction has once been required, every act of a court of general jurisdiction shall be presumed to have been rightly done. This rule is applied to every judgment or decree rendered in the various stages of the proceedings from their initiation to their completion (Voorhees vs. United States Bank, 10 Pet., 314; 35 U. S., 449); and if the record is silent with respect to any fact which must have been established before the court could have rightly acted, it will be presumed that such fact was properly brought to its knowledge. (The Lessee of Grignon vs. Astor, 2 How., 319; 11 L. ed., 283.) In making the order of sale [of the real state of a decedent] the court are presumed to have adjudged every question necessary to justify such order or decree, viz: The death of the owners; that the petitioners were his administrators; that the personal estate was insufficient to pay the debts of the deceased; that the private acts of Assembly, as to the manner of sale, were within the constitutional power of the Legislature, and that all the provisions of the law as to notices which are directory to the administrators have been complied with. . . . The court is not bound to enter upon the record the evidence on which any fact was decided. (Florentine vs. Barton, 2 Wall., 210; 17 L. ed., 785.) Especially does all this apply after long lapse of time. Applegate vs. Lexington and Carter County Mining Co. (117 U. S., 255) contains an instructive discussion in a case analogous to that which is now before us. It there appeared that in order to foreclose a mortgage in the State of Kentucky against a nonresident debtor it was necessary that publication should be made in a newspaper for a specified period of time, also be posted at the front door of the court house and be published on some Sunday, immediately after divine service, in such church as the court should direct. In a certain action judgment had been entered against a nonresident, after publication in pursuance of these provisions. Many years later the validity of the proceedings was called in question in another action. It was proved from the files of an ancient periodical that publication had been made in its columns as required by law; but no proof was offered to show the publication of the order at the church, or the posting of it at the front door of the courthouse. It was insisted by one of the parties that the judgment of the court was void for lack of jurisdiction. But the Supreme Court of the United States said:

The court which made the decree . . . was a court of general jurisdiction. Therefore every presumption not inconsistent with the record is to be indulged in favor of its jurisdiction. . . . It is to be presumed that the court before making its decree took care of to see that its order for constructive service, on which its right to make the decree depended, had been obeyed. It is true that in this case the former judgment was the subject of collateral , or indirect attack, while in the case at bar the motion to vacate the judgment is direct proceeding for relief against it. The same general presumption, however, is indulged in favor of the judgment of a court of general jurisdiction, whether it is the subject of direct or indirect attack the only difference being that in case of indirect attack the judgment is conclusively presumed to be valid unless the record affirmatively shows it to be void, while in case of direct attack the presumption in favor of its validity may in certain cases be overcome by proof extrinsic to the record. The presumption that the clerk performed his duty and that the court made its decree with the knowledge that the requirements of law had been complied with appear to be amply sufficient to support the conclusion that the notice was sent by the clerk as required by the order. It is true that there ought to be found among the papers on file in this cause an affidavit, as required by section 400 of the Code of Civil Procedure, showing that the order was in fact so sent by the clerk; and no such affidavit appears. The record is therefore silent where it ought to speak. But the very purpose of the law in recognizing these presumptions is to enable the court to sustain a prior judgment in the face of such an omission. If we were to hold that the judgment in this case is void because the proper affidavit is not present in the file of papers which we call the record, the result would be that in the future every title in the Islands resting upon a judgment like that now before us would depend, for its continued security, upon the presence of such affidavit among the papers and would be liable at any moment to be destroyed by the disappearance of that piece of paper. We think that no court, with a proper regard for the security of judicial proceedings and for the interests which have by law been confided to the courts, would incline to favor such a conclusion. In our opinion the proper course in a case of this kind is to hold that the legal presumption that the clerk performed his duty still maintains notwithstanding the absence from the record of the proper proof of that fact. In this connection it is important to bear in mind that under the practice prevailing in the Philippine Islands the word "record" is used in a loose and broad sense, as indicating the collective mass of papers which contain the history of all the successive steps taken in a case and which are finally deposited in the archives of the clerk's office as a memorial of the litigation. It is a matter of general information that no judgment roll, or book of final record, is commonly kept in our courts for the purpose of recording the

pleadings and principal proceedings in actions which have been terminated; and in particular, no such record is kept in the Court of First Instance of the city of Manila. There is, indeed, a section of the Code of Civil Procedure which directs that such a book of final record shall be kept; but this provision has, as a matter of common knowledge, been generally ignored. The result is that in the present case we do not have the assistance of the recitals of such a record to enable us to pass upon the validity of this judgment and as already stated the question must be determined by examining the papers contained in the entire file. But it is insisted by counsel for this motion that the affidavit of Bernardo Chan y Garcia showing that upon April 4, 1908, he sent a notification through the mail addressed to the defendant at Manila, Philippine Islands, should be accepted as affirmative proof that the clerk of the court failed in his duty and that, instead of himself sending the requisite notice through the mail, he relied upon Bernardo to send it for him. We do not think that this is by any means a necessary inference. Of course if it had affirmatively appeared that the clerk himself had attempted to comply with this order and had directed the notification to Manila when he should have directed it to Amoy, this would be conclusive that he had failed to comply with the exact terms of the order; but such is not this case. That the clerk of the attorneys for the plaintiff erroneously sent a notification to the defendant at a mistaken address affords in our opinion very slight basis for supposing that the clerk may not have sent notice to the right address. There is undoubtedly good authority to support the position that when the record states the evidence or makes an averment with reference to a jurisdictional fact, it will not be presumed that there was other or different evidence respecting the fact, or that the fact was otherwise than stated. If, to give an illustration, it appears from the return of the officer that the summons was served at a particular place or in a particular manner, it will not be presumed that service was also made at another place or in a different manner; or if it appears that service was made upon a person other than the defendant, it will not be presumed, in the silence of the record, that it was made upon the defendant also (Galpin vs. Page, 18 Wall., 350, 366; Settlemier vs. Sullivan, 97 U. S., 444, 449). While we believe that these propositions are entirely correct as applied to the case where the person making the return is the officer who is by law required to make the return, we do not think that it is properly applicable where, as in the present case, the affidavit was made by a person who, so far as the provisions of law are concerned, was a mere intermeddler. The last question of importance which we propose to consider is whether a motion in the cause is admissible as a proceeding to obtain relief in such a case as this. If the motion prevails the judgment of July 2, 1908, and all subsequent proceedings will be set aside, and the litigation will be renewed,

proceeding again from the date mentioned as if the progress of the action had not been interrupted. The proponent of the motion does not ask the favor of being permitted to interpose a defense. His purpose is merely to annul the effective judgment of the court, to the end that the litigation may again resume its regular course. There is only one section of the Code of Civil Procedure which expressly recognizes the authority of a Court of First Instance to set aside a final judgment and permit a renewal of the litigation in the same cause. This is as follows: SEC. 113. Upon such terms as may be just the court may relieve a party or legal representative from the judgment, order, or other proceeding taken against him through his mistake, inadvertence, surprise, or excusable neglect; Provided, That application thereof be made within a reasonable time, but in no case exceeding six months after such judgment, order, or proceeding was taken. An additional remedy by petition to the Supreme Court is supplied by section 513 of the same Code. The first paragraph of this section, in so far as pertinent to this discussion, provides as follows: When a judgment is rendered by a Court of First Instance upon default, and a party thereto is unjustly deprived of a hearing by fraud, accident, mistake or excusable negligence, and the Court of First Instance which rendered the judgment has finally adjourned so that no adequate remedy exists in that court, the party so deprived of a hearing may present his petition to the Supreme Court within sixty days after he first learns of the rendition of such judgment, and not thereafter, setting forth the facts and praying to have judgment set aside. . . . It is evident that the proceeding contemplated in this section is intended to supplement the remedy provided by section 113; and we believe the conclusion irresistible that there is no other means recognized by law whereby a defeated party can, by a proceeding in the same cause, procure a judgment to be set aside, with a view to the renewal of the litigation. The Code of Civil Procedure purports to be a complete system of practice in civil causes, and it contains provisions describing with much fullness the various steps to be taken in the conduct of such proceedings. To this end it defines with precision the method of beginning, conducting, and concluding the civil action of whatever species; and by section 795 of the same Code it is declared that the procedure in all civil action shall be in accordance with the provisions of this Code. We are therefore of the opinion that the remedies

prescribed in sections 113 and 513 are exclusive of all others, so far as relates to the opening and continuation of a litigation which has been once concluded. The motion in the present case does not conform to the requirements of either of these provisions; and the consequence is that in our opinion the action of the Court of First Instance in dismissing the motion was proper. If the question were admittedly one relating merely to an irregularity of procedure, we cannot suppose that this proceeding would have taken the form of a motion in the cause, since it is clear that, if based on such an error, the came to late for relief in the Court of First Instance. But as we have already seen, the motion attacks the judgment of the court as void for want of jurisdiction over the defendant. The idea underlying the motion therefore is that inasmuch as the judgment is a nullity it can be attacked in any way and at any time. If the judgment were in fact void upon its face, that is, if it were shown to be a nullity by virtue of its own recitals, there might possibly be something in this. Where a judgment or judicial order is void in this sense it may be said to be a lawless thing, which can be treated as an outlaw and slain at sight, or ignored wherever and whenever it exhibits its head. But the judgment in question is not void in any such sense. It is entirely regular in form, and the alleged defect is one which is not apparent upon its face. It follows that even if the judgment could be shown to be void for want of jurisdiction, or for lack of due process of law, the party aggrieved thereby is bound to resort to some appropriate proceeding to obtain relief. Under accepted principles of law and practice, long recognized in American courts, a proper remedy in such case, after the time for appeal or review has passed, is for the aggrieved party to bring an action to enjoin the judgment, if not already carried into effect; or if the property has already been disposed of he may institute suit to recover it. In every situation of this character an appropriate remedy is at hand; and if property has been taken without due process, the law concedes due process to recover it. We accordingly old that, assuming the judgment to have been void as alleged by the proponent of this motion, the proper remedy was by an original proceeding and not by motion in the cause. As we have already seen our Code of Civil Procedure defines the conditions under which relief against a judgment may be productive of conclusion for this court to recognize such a proceeding as proper under conditions different from those defined by law. Upon the point of procedure here involved, we refer to the case of People vs. Harrison (84 Cal., 607) wherein it was held that a motion will not lie to vacate a judgment after the lapse of the time limited by statute if the judgment is not void on its face; and in all cases, after the lapse of the time limited by statute if the judgment is not void on its face; and all cases, after the lapse of such time, when an attempt is made to vacate the judgment by a proceeding in court for

that purpose an action regularly brought is preferable, and should be required. It will be noted taken verbatim from the California Code (sec. 473). The conclusions stated in this opinion indicate that the judgment appealed from is without error, and the same is accordingly affirmed, with costs. So ordered. G.R. No. 111397 August 12, 2002

HON. ALFREDO LIM and RAFAELITO GARAYBLAS, petitioners, vs. THE COURT OF APPEALS, HON. WILFREDO REYES and BISTRO PIGALLE, INC., respondents. CARPIO, J.: The Case Before us is a petition for review on certiorari of the Decision of the Court of 2 3 Appeals dated March 25, 1993, and its Resolution dated July 13, 1993 which denied petitioners motion for reconsideration. The assailed Decision sustained the orders dated December 29, 1992, January 20, 1993 and March 4 2, 1993, issued by Branch 36 of the Regional Trial Court of Manila. The trial courts orders enjoined petitioner Alfredo Lim ("Lim" for brevity), then Mayor of Manila, from investigating, impeding or closing down the business operations of the New Bangkok Club and the Exotic Garden Restaurant owned by respondent Bistro Pigalle Inc. ("Bistro" for brevity). The Antecedent Facts On December 7, 1992 Bistro filed before the trial court a petition for mandamus and prohibition, with prayer for temporary restraining order or writ of preliminary injunction, against Lim in his capacity as Mayor of the City of Manila. Bistro filed the case because policemen under Lims instructions inspected and investigated Bistros license as well as the work permits and health certificates of its staff. This caused the stoppage of work in Bistros 6 night club and restaurant operations. Lim also refused to accept Bistros application for a business license, as well as the work permit applications of 7 Bistros staff, for the year 1993. In its petition, Bistro argued that Lims refusal to issue the business license and work permits violated the doctrine laid down this Court in De la Cruz vs. 8 Paras, to wit:
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"Municipal corporations cannot prohibit the operation of nightclubs. They may be regulated, but not prevented from carrying on their business." Acting on Bistros application for injunctive relief, the trial court issued the first assailed temporary restraining order on December 29, 1992, the dispositive portion of which reads: "WHEREFORE, respondent and/or his agents and representatives are ordered to refrain from inspecting or otherwise interfering in the 9 operation of the establishments of petitioner (Bistro Pigalle, Inc.)." At the hearing, the parties submitted their evidence in support of their respective positions. On January 20, 1993, the trial court granted Bistros application for a writ of prohibitory preliminary injunction. The dispositive portion of the trial courts order declared: "WHEREFORE, in view of all the foregoing, Petitioners application for a writ of prohibitory preliminary injunction is granted, and Respondent, and any/all persons acting under his authority, are and (sic) ordered to cease and desist from inspecting, investigating and otherwise closing or impeding the business operations of Petitioner Corporations establishments while the petition here is pending resolution on the merits. Considering that the Respondent is a government official and this injunction relates to his official duties, the posting of an injunction bond by the Petitioners is not required. On the other hand, Petitioners application for a writ of mandatory injunction is hereby denied, for to grant the same would amount to granting the writ of mandamus prayed for. The Court reserves resolution thereof until the parties shall have been heard on the 10 merits." However, despite the trial courts order, Lim still issued a closure order on Bistros operations effective January 23, 1993, even sending policemen to carry out his closure order. On January 25, 1993, Bistro filed an "Urgent Motion for Contempt" against Lim and the policemen who stopped Bistros operations on January 23, 1993. At the hearing of the motion for contempt on January 29, 1993, Bistro withdrew its motion on condition that Lim would respect the courts injunction.

However, on February 12, 13, 15, 26 and 27, and on March 1 and 2, 1993, Lim, acting through his agents and policemen, again disrupted Bistros business operations. Meanwhile, on February 17, 1993, Lim filed a motion to dissolve the injunctive order of January 20, 1993 and to dismiss the case. Lim insisted that the power of a mayor to inspect and investigate commercial establishments and their staff is implicit in the statutory power of the city mayor to issue, suspend or revoke business permits and licenses. This statutory power is expressly provided for in Section 11 (l), Article II of the Revised Charter of the City of Manila and in Section 455, paragraph 3 (iv) of the Local Government Code of 1991. The trial court denied Lims motion to dissolve the injunction and to dismiss the case in an order dated March 2, 1993, the dispositive portion of which stated: "WHEREFORE, premises considered, the Court hereby orders: (1) The denial of respondents motion to dissolve the writ of preliminary prohibitory injunction or the dismissal of the instant case; (2) Petitioner-corporation is authorized to remove the wooden crossbars or any other impediments which were placed at its establishments, namely, New Bangkok Club and Exotic Garden Restaurant on February 12, 1993 and February 15, 1993, respectively, and thereafter said establishments are allowed to resume their operations; (3) All the other petitioners are allowed to continue working in the aforenamed establishments of petitioner-corporation if they have not yet reported; and (4) The hearing on the contempt proceedings is deferred to give sufficient time to respondent to elevate the matters assailed herein to 11 the Supreme Court." On March 10, 1993, Lim filed with the Court of Appeals a petition for certiorari, prohibition and mandamus against Bistro and Judge Wilfredo Reyes. Lim claimed that the trial judge committed grave abuse of discretion amounting to lack of jurisdiction in issuing the writ of prohibitory preliminary injunction.

On March 25, 1993, the Court of Appeals rendered the assailed decision. In a resolution dated July 13, 1993, the Court of Appeals denied Lims motion 13 for reconsideration. On July 1, 1993, Manila City Ordinance No. 7783 took effect. On the same day, Lim ordered the Western Police District Command to permanently close 15 down the operations of Bistro, which order the police implemented at once. The Ruling of the Court of Appeals In denying Lims petition, the Court of Appeals held that the trial court did not commit grave abuse of discretion since it issued the writ after hearing on the basis of the evidence adduced. The Court of Appeals reasoned thus: "x x x. A writ of preliminary injunction may issue if the act sought to be enjoined will cause irreparable injury to the movant or destroy the status quo before a full hearing can be had on the merits of the case. A writ of preliminary injunction, as an ancillary or preventive remedy, may only be resorted to by a litigant to protect or preserve his rights or interests and for no other purpose during the pendency of the principal action. It is primarily intended to maintain the status quo between the parties existing prior to the filing of the case. In the case at bar, We find that the respondent Judge did not act improvidently in issuing the assailed orders granting the writ of preliminary injunction in order to maintain the status quo, while the petition is pending resolution on the merits. The private respondent correctly points out that the questioned writ was regularly issued after several hearings, in which the parties were allowed to adduce evidence, and argue their respective positions. The issuance of a writ of preliminary injunction is within the limits of the sound exercise of discretion of the court and the appellate court will not interfere, except, in a clear case of abuse thereof. x x x. WHEREFORE, the petition is DENIED DUE COURSE and is 16 accordingly DISMISSED." Hence, this petition. The Issues
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In their Memorandum, petitioners raise the following issues: 1. "DID RESPONDENT JUDGE COMMIT GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN ISSUING HIS SAID ASSAILED ORDERS OF DECEMBER 29, 1992, JANUARY 20, 1993 AND MARCH 2, 1993?" 2. "DID RESPONDENT COURT OF APPEALS COMMIT REVERSIBLE ERRORS IN RENDERING ITS ASSAILED DECISION OF MARCH 25, 1993 AND ITS ASSAILED RESOLUTION OF JULY 13, 1993?" 3. "DID SAID CIVIL CASE NO. 92-63712 AND SAID CA-G.R. SP NO. 30381 BECOME MOOT AND ACADEMIC WHEN THE NEW BANGKOK CLUB AND THE EXOTIC GARDEN RESTAURANT OF PRIVATE RESPONDENT WERE CLOSED ON JULY 1, 1993 PURSUANT TO ORDINANCE NO. 7783?" The Ruling of the Court The petition is without merit. Considering that the constitutionality of Ordinance No. 7783 was not raised before the trial court or the Court of Appeals, and this issue is still under 17 litigation in another case, the Court will deal only with the first two issues raised by petitioner. Validity of the Preliminary Injunction Bistros cause of action in the mandamus and prohibition proceedings before the trial court is the violation of its property right under its license to operate. The violation consists of the work disruption in Bistros operations c aused by Lim and his subordinates as well as Lims refusal to issue a business license to Bistro and work permits to its staff for the year 1993. The primary relief prayed for by Bistro is the issuance of writs of mandatory and prohibitory injunction. The mandatory injunction seeks to compel Lim to accept Bistros 1993 business license application and to issue Bistros business license. Also, the mandatory injunction seeks to compel Lim to accept the applications of Bistros staff for work permits. The writ of prohibitory injunction seeks to enjoin Lim from interfering, impeding or otherwise closing down Bistros operations. The trial court granted only the prohibitory injunction. This enjoined Lim from interfering, impeding or otherwise closing down Bistros operations pending

resolution of whether Lim can validly refuse to issue Bistros business license and its staffs work permits for the year 1993. Lim contends that the Court of Appeals erred in upholding the prohibitory injunction. Lim relies primarily on his power, as Mayor of the City of Manila, to grant and refuse municipal licenses and business permits as expressly provided for in the Local Government Code and the Revised Charter of the City of Manila. Lim argues that the powers granted by these laws implicitly include the power to inspect, investigate and close down Bistros operations for violation of the conditions of its licenses and permits. On the other hand, Bistro asserts that the legal provisions relied upon by Lim do not apply to the instant case. Bistro maintains that the Local Government Code and the Revised Charter of the City of Manila do not expressly or impliedly grant Lim any power to prohibit the operation of night clubs. Lim failed to specify any violation by Bistro of the conditions of its licenses and permits. In refusing to accept Bistros business license application for the year 1993, Bistro claims that Lim denied Bistro due process of law. The Court of Appeals held that the trial court did not commit grave abuse of discretion in issuing the prohibitory preliminary injunction. We uphold the findings of the Court of Appeals. The authority of mayors to issue business licenses and permits is beyond question. The law expressly provides for such authority. Section 11 (l), Article II of the Revised Charter of the City of Manila, reads: "Sec. 11. General duties and powers of the mayor. The general duties and powers of the mayor shall be: x x x. (l) To grant and refuse municipal licenses or permits of all classes and to revoke the same for violation of the conditions upon which they were granted, or if acts prohibited by law or municipal ordinances are being committed under the protection of such licenses or in the premises in which the business for which the same have been granted is carried on, or for any other reason of general interest." (Emphasis supplied) On the other hand, Section 455 (3) (iv) of the Local Government Code provides:

"Sec. 455. Chief Executive, Powers, Duties and Compensation: xxx. (b) For efficient, effective and economical governance the purpose of which is the general welfare of the City and its inhabitants pursuant to Section 16 of this Code, the City Mayor shall: (3) x x x. (iv) Issue licenses and permits and suspend or revoke the same for any violation of the condition upon which said licenses or permits had been issued, pursuant to law or ordinance." (Emphasis supplied) From the language of the two laws, it is clear that the power of the mayor to issue business licenses and permits necessarily includes the corollary power to suspend, revoke or even refuse to issue the same. However, the power to suspend or revoke these licenses and permits is expressly premised on the violation of the conditions of these permits and licenses. The laws specifically refer to the "violation of the condition(s)" on which the licenses and permits were issued. Similarly, the power to refuse to issue such licenses and permits is premised on non-compliance with the prerequisites for the issuance of such licenses and permits. The mayor must observe due process in exercising these powers, which means that the mayor must give the applicant or licensee notice and opportunity to be heard. True, the mayor has the power to inspect and investigate private commercial establishments for any violation of the conditions of their licenses and permits. However, the mayor has no power to order a police raid on these establishments in the guise of inspecting or investigating these commercial establishments. Lim acted beyond his authority when he directed policemen to raid the New Bangkok Club and the Exotic Garden Restaurant. Such act of 18 Lim violated Ordinance No. 7716 which expressly prohibits police raids and inspections, to wit: "Section 1. No member of the Western Police District shall conduct inspection of food and other business establishments for the purpose of enforcing sanitary rules and regulations, inspecting licenses and permits, and/or enforcing internal revenue and customs laws and regulations. This responsibility should be properly exercised by Local Government Authorities and other concerned agencies." (Emphasis supplied) These local government officials include the City Health Officer or his representative, pursuant to the Revised City Ordinances of the City of

Manila, and the City Treasurer pursuant to Section 470 of the Local 20 Government Code. Lim has no authority to close down Bistros business or any business establishment in Manila without due process of law. Lim cannot take refuge under the Revised Charter of the City of Manila and the Local Government Code. There is no provision in these laws expressly or impliedly granting the mayor authority to close down private commercial establishments without notice and hearing, and even if there is, such provision would be void. The due process clause of the Constitution requires that Lim should have given Bistro an opportunity to rebut the allegations that it violated the conditions of its licenses and permits. The regulatory powers granted to municipal corporations must always be exercised in accordance with law, with utmost observance of the rights of the 21 people to due process and equal protection of the law. Such power cannot be exercised whimsically, arbitrarily or despotically. In the instant case, we find that Lims exercise of this power violated Bistros property rights that are protected under the due process clause of the Constitution. Lim did not charge Bistro with any specific violation of the conditions of its business license or permits. Still, Lim closed down Bistros operations even before the expiration of its business license on December 31, 1992. Lim also refused to accept Bistros license application for 1993, in effect denying the application without examining whether it complies with legal prerequisites. Lims zeal in his campaign against prostitution is commendable. The presumption is that he acted in good faith and was motivated by his concern for his constituents when he implemented his campaign against prostitution in the Ermita-Malate area. However, there is no excusing Lim for arbitrarily closing down, without due process of law, the business operations of Bistro. For this reason, the trial court properly restrained the acts of Lim. Consequently, the Court of Appeals did not err in upholding the tr ial courts orders. The sole objective of a writ of preliminary injunction is to preserve the status quo until the merits of the case can be heard fully. It is generally availed of to prevent actual or threatened acts, until the merits of the case 22 can be disposed of. In the instant case, the issuance of the writ of prohibitory preliminary injunction did not dispose of the main case for mandamus. The trial court issued the injunction in view of the disruptions and stoppage in Bistros operations as a consequence of Lims closure orders. The injunction was intended to maintain the status quo while the petition has not been resolved on the merits.

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WHEREFORE, the petition is denied for lack of merit. The assailed Decision of the Court of Appeals in CA-G.R. SP NO. 30381 is AFFIRMED in toto. SO ORDERED.

G.R. No. 93891 March 11, 1991 POLLUTION ADJUDICATION BOARD, petitioner vs. COURT OF APPEALS and SOLAR TEXTILE FINISHING CORPORATION, respondents. Oscar A. Pascua and Charemon Clio L. Borre for petitioner. Leonardo A. Aurelio for respondent Solar Textile Finishing Corp.

RESOLUTION

FELICIANO, J.:p Petitioner Pollution Adjudication Board ("Board") asks us to review the Decision and Resolution promulgated on 7 February 1990 and 10 May 1990, respectively, by the Court of Appeals in C.A.-G R. No. SP 18821 entitled "Solar Textile Finishing Corporation v. Pollution Adjudication Board." In that Decision and Resolution, the Court of Appeals reversed an order of the Regional Trial Court, Quezon City, Branch 77, in Civil Case No. Q-89-2287 dismissing private respondent Solar Textile Finishing Corporation's ("Solar") petition for certiorari and remanded the case to the trial court for further proceedings. On 22 September 1988, petitioner Board issued an ex parte Order directing Solar immediately to cease and desist from utilizing its wastewater pollution source installations which were discharging untreated wastewater directly into a canal leading to the adjacent Tullahan-Tinejeros River. The Order signed by Hon. Fulgencio Factoran, Jr., as Board Chairman, reads in full as follows:

Respondent, Solar Textile Finishing Corporation with plant and place of business at 999 General Pascual Avenue, Malabon, Metro Manila is involved in bleaching, rinsing and dyeing textiles with wastewater of about 30 gpm. being directly discharged untreated into the sewer. Based on findings in the Inspections conducted on 05 November 1986 and 15 November 1986, the volume of untreated wastewater discharged in the final out fall outside of the plant's compound was even greater. The result of inspection conducted on 06 September 1988 showed that respondent's Wastewater Treatment Plant was noted unoperational and the combined wastewater generated from its operation was about 30 gallons per minute and 80% of the wastewater was being directly discharged into a drainage canal leading to the Tullahan-Tinejeros River by means of a by-pass and the remaining 20% was channelled into the plant's existing Wastewater Treatment Plant (WTP). Result of the analyses of the sample taken from the by-pass showed that the wastewater is highly pollutive in terms of Color units, BOD and Suspended Solids, among others. These acts of respondent in spite of directives to comply with the requirements are clearly in violation of Section 8 of Presidential Decree No. 984 and Section 103 of its Implementing Rules and Regulations and the 1982 Effluent Regulations. WHEREFORE, pursuant to Section 7 of P.D. 984 and Section 38 of its Implementing Rules and Regulations, respondent is hereby ordered to cease and desist from utilizing its wastewater pollution source installation and discharging its untreated wastewater directly into the canal leading to the Tullahan-Tinejeros River effective immediately upon receipt hereof and until such time when it has fully complied with all the requirements and until further orders from this Board. SO ORDERED.
1

b. the inspection conducted on 6 September 1988 by the Department of Environment and Natural Resources ("DENR"). The findings of these two (2) inspections were that Solar's wastewater treatment plant was non-operational and that its plant generated about 30 gallons per minute of wastewater, 80% of which was being directly discharged into a drainage canal leading to the Tullahan-Tinejeros River. The remaining 20% of the wastewater was being channeled through Solar's nonoperational wastewater treatment plant. Chemical analysis of samples of Solar's effluents showed the presence of pollutants on a level in excess of what was permissible under P.D. No. 984 and its Implementing Regulations. A copy of the above Order was received by Solar on 26 September 1988. A Writ of Execution issued by the Board was received by Solar on 31 March 1989. Meantime, Solar filed a motion for reconsideration/appeal with prayer for stay of execution of the Order dated 22 September 1988. Acting on this motion, the Board issued an Order dated 24 April 1989 allowing Solar to operate temporarily, to enable the Board to conduct another inspection and evaluation of Solar's wastewater treatment facilities. In the same Order, the Board directed the Regional Executive Director of the DENR/ NCR to conduct the inspection and evaluation within thirty (30) days. On 21 April 1989, however, Solar went to the Regional Trial Court of Quezon City, Branch 77, on petition for certiorari with preliminary injunction against the Board, the petition being docketed as Civil Case No. Q-89-2287. On 21 July 1989, the Regional Trial Court dismissed Solar's petition upon two (2) grounds, i.e., that appeal and not certiorari from the questioned Order of the Board as well as the Writ of Execution was the proper remedy, and that the Board's subsequent Order allowing Solar to operate temporarily had rendered Solar's petition moot and academic. Dissatisfied, Solar went on appeal to the Court of Appeals which, in the Decision here assailed, reversed the Order of dismissal of the trial court and remanded the case to that court for further proceedings. In addition, the Court of Appeals declared the Writ of Execution null and void. At the same time, the Court of Appeals said in the dispositive portion of its Decision that: . . .. Still and all, this decision is without prejudice to whatever action the appellee [Board] may take relative to the projected 'inspection and evaluation' of appellant's [Solar's] 3 water treatment facilities.

We note that the above Order was based on findings of several inspections of Solar's plant: a. inspections conducted on 5 November 1986 and 12 November 1986 by the National Pollution Control 2 Commission ("NPCC"), the predecessor of the Board ; and

The Court of Appeals, in so ruling, held that certiorari was a proper remedy since the Orders of petitioner Board may result in great and irreparable injury to Solar; and that while the case might be moot and academic, "larger issues" demanded that the question of due process be settled. Petitioner Board moved for reconsideration, without success. The Board is now before us on a Petition for Review basically arguing that: 1. its ex parte Order dated 22 September 1988 and the Writ of Execution were issued in accordance with law and were not violative of the requirements of due process; and 2. the ex parte Order and the Writ of Execution are not the proper subjects of a petition for certiorari. The only issue before us at this time is whether or not the Court of Appeals erred in reversing the trial court on the ground that Solar had been denied due process by the Board. Petitioner Board claims that under P.D. No. 984, Section 7(a), it has legal authority to issue ex parte orders to suspend the operations of an establishment when there is prima facie evidence that such establishment is discharging effluents or wastewater, the pollution level of which exceeds the maximum permissible standards set by the NPCC (now, the Board). Petitioner Board contends that the reports before it concerning the effluent discharges of Solar into the Tullahan-Tinejeros River provided prima facie evidence of violation by Solar of Section 5 of the 1982 Effluent Code. Solar, on the other hand, contends that under the Board's own rules and regulations, an ex parte order may issue only if the effluents discharged pose an "immediate threat to life, public health, safety or welfare, or to animal and plant life." In the instant case, according to Solar, the inspection reports before the Board made no finding that Solar's wastewater discharged posed such a threat. The Court is not persuaded by Solar's contention. Section 7(a) of P.D. No. 984 authorized petitioner Board to issue ex parte cease and desist orders under the following circumstances: P.D. 984, Section 7, paragraph (a), provides: (a) Public Hearing. . . . Provided, That whenever the Commission finds prima facie evidence that the discharged sewage or wastes are of immediate threat to life, public health, safety or welfare, or to animal or plant life, or

exceeds the allowable standards set by the Commission, the Commissioner may issue an ex-parte order directing the discontinuance of the same or the temporary suspension or cessation of operation of the establishment or person generating such sewage or wastes without the necessity of a prior public hearing. The said ex-parte order shall be immediately executory and shall remain in force until said establishment or person prevents or abates the said pollution within the allowable standards or modified or nullified by a competent court. (Emphasis supplied) We note that under the above-quoted portion of Section 7(a) of P.D. No. 984, an ex parte cease and desist order may be issued by the Board (a) whenever the wastes discharged by an establishment pose an "immediate threat to life, public health, safety or welfare, or to animal or plant life," or (b) whenever such discharges or wastes exceed "the allowable standards set by the [NPCC]." On the one hand, it is not essential that the Board prove that an "immediate threat to life, public health, safety or welfare, or to animal or plant life" exists before an ex parte cease and desist order may be issued. It is enough if the Board finds that the wastes discharged do exceed "the allowable standards set by the [NPCC]." In respect of discharges of wastes as to which allowable standards have been set by the Commission, the Board may issue an ex parte cease and desist order when there is prima facie evidence of an establishment exceeding such allowable standards. Where, however, the effluents or discharges have not yet been the subject matter of allowable standards set by the Commission, then the Board may act on an ex parte basis when it finds at least prima facie proof that the wastewater or material involved presents an "immediate threat to life, public health, safety or welfare or to animal or plant life." Since the applicable standards set by the Commission existing at any given time may well not cover every possible or imaginable kind of effluent or waste discharge, the general standard of an "immediate threat to life, public health, safety or welfare, or to animal and plant life" remains necessary. Upon the other hand, the Court must assume that the extant allowable standards have been set by the Commission or Board precisely in order to avoid or neutralize an "immediate threat to life, public health, safety or welfare, or to animal or plant life.'' Section 5 of the Effluent Regulations of 1982 sets out the maximum permissible levels of physical and chemical substances which effluents from domestic wastewater treatment plants and industrial plants" must not exceed "when discharged into bodies of water classified as Class A, B, C, D, SB and SC in accordance with the 1978 NPCC Rules and Regulations." The waters of Tullahan-Tinejeros River are classified as inland waters Class D under
4

Section 68 of the 1978 NPCC Rules and Regulations which in part provides that: Sec. 68. Water Usage and Classification. The quality of Philippine waters shall be maintained in a safe and satisfactory condition according to their best usages. For this purpose, all water shall be classified according to the following beneficial usages: (a) Fresh Surface Water Classification Best usage xxx xxx xxx Class D For agriculture, irrigation, livestock watering and industrial cooling and processing. xxx xxx xxx (Emphases supplied) The reports on the inspections carried on Solar's wastewater treatment facilities on 5 and 12 November 1986 and 6 September 1988 set forth the following Identical finding: a. For legal action in [view of] implementing rules and regulations of P.D. No. 984 and Section 5 of the Effluent 6 Regulations of 1982. Placing the maximum allowable standards set in Section 5 of the Effluent Regulations of 1982 alongside the findings of the November 1986 and September 1988 inspection reports, we get the following results:

a) Color in 100 a) Color units 250 125 platinum (Apparent cobalt Color) b) pH 6-8.5 b) pH 9.3 8.7 c) Tempera- 40 c) Temperature ture in C (C) d) Phenols in 0.1 d) Phenols in mg./1. mg.1 e) Suspended 75 e) Suspended 340 80 solids in solids in mg./1. mg./1. f) BOD in 80 f) BOD (5-day) 1,100 152 mg./1. mg./1 g) oil/Grease 10 g) Oil/Grease h) Detergents 5 h) Detergents 2.93 in mg./1/" mg./1. MBAS i) Dissolved 0 oxygen, mg./1. j) Settleable 0.4 1.5 Matter, mg./1. k) Total Dis 800 610 solved Solids mg./1. l) Total Solids 1,400 690 mg./1. m) Turbidity NTU / ppm, SiO 70 The November 1986 inspections report concluded that: Records of the Commission show that the plant under its previous owner, Fine Touch Finishing Corporation, was issued a Notice of Violation on 20 December 1985 directing same to cease and desist from conducting dyeing operation until such time the waste treatment plant is already completed and operational. The new owner Solar Textile Corporation informed the Commission of the plant acquisition thru its letter dated March 1986 (sic). The new owner was summoned to a hearing held on 13 October 1986 based on the adverse findings during the inspection/water sampling test conducted on 08 August 1986. As per instruction of the Legal Division a reinspection/sampling text should be conducted first before an appropriate legal action is instituted; hence, this inspection.
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"Inland November September Waters 1986 1988 9 (Class C & D 7 Report 8 Report Station 1 Station 1

Based on the above findings, it is clear that the new owner continuously violates the directive of the Commission by undertaking dyeing operation without completing first and operating its existing WTP. The analysis of results on water samples taken showed that the untreated wastewater from the firm pollutes our water resources. In this connection, it is recommended that appropriate legal action be instituted 10 immediately against the firm. . . . The September 1988 inspection report's conclusions were: 1. The plant was undertaking dyeing, bleaching and rinsing operations during the inspection. The combined wastewater generated from the said operations was estimated at about 30 gallons per minute. About 80% of the wastewater was traced directly discharged into a drainage canal leading to the Tullahan-Tinejeros river by means of a bypass. The remaining 20% was channeled into the plant's existing wastewater treatment plant (WTP). 2. The WTP was noted not yet fully operational- some accessories were not yet installed. Only the sump pit and the holding/collecting tank are functional but appeared seldom used. The wastewater mentioned channeled was noted held indefinitely into the collection tank for primary treatment. There was no effluent discharge [from such collection tank]. 3. A sample from the bypass wastewater was collected for laboratory analyses. Result of the analyses show that the bypass wastewater is polluted in terms of color units, BOD and suspended solids, among others. (Please see attached 11 laboratory resul .) From the foregoing reports, it is clear to this Court that there was at least prima facie evidence before the Board that the effluents emanating from Solar's plant exceeded the maximum allowable levels of physical and chemical substances set by the NPCC and that accordingly there was adequate basis supporting the ex parte cease and desist order issued by the Board. It is also well to note that the previous owner of the plant facility Fine Touch Finishing Corporation had been issued a Notice of Violation on 20 December 1985 directing it to cease and refrain from carrying out dyeing operations until the water treatment plant was completed and operational. Solar, the new owner, informed the NPCC of the acquisition of the plant on March 1986. Solar was summoned by the NPCC to a hearing on 13 October 1986 based on the results of the sampling test conducted by the NPCC on 8

August 1986. Petitioner Board refrained from issuing an ex parte cease and desist order until after the November 1986 and September 1988 reinspections were conducted and the violation of applicable standards was confirmed. In other words, petitioner Board appears to have been remarkably forbearing in its efforts to enforce the applicable standards vis-a-vis Solar. Solar, on the other hand, seemed very casual about its continued discharge of untreated, pollutive effluents into the Tullahan- Tinerejos River, presumably loath to spend the money necessary to put its Wastewater Treatment Plant ("WTP") in an operating condition. In this connection, we note that in Technology Developers, Inc. v. Court of 12 appeals, et al., the Court very recently upheld the summary closure ordered by the Acting Mayor of Sta. Maria, Bulacan, of a pollution-causing establishment, after finding that the records showed that: 1. No mayor's permit had been secured. While it is true that the matter of determining whether there is a pollution of the environment that requires control if not prohibition of the operation of a business is essentially addressed to the then National Pollution Control Commission of the Ministry of Human Settlements, now the Environmental Management Bureau of the Department of Environment and Natural Resources, it must be recognized that the mayor of a town has as much responsibility to protect its inhabitants from pollution, and by virtue of his police power, he may deny the application for a permit to operate a business or otherwise close the same unless appropriate measures are taken to control and/or avoid injury to the health of the residents of the community from the emission in the operation of the business. 2. The Acting Mayor, in a letter of February l6, 1989, called the attention of petitioner to the pollution emitted by the fumes of its plant whose offensive odor "not only pollute the air in the locality but also affect the health of the residents in the area," so that petitioner was ordered to stop its operation until further orders and it was required to bring the following: xxx xxx xxx (3) Region III-Department of Environment and Natural Resources Anti-Pollution permit. (Annex A-2, petition)

3. This action of the Acting Mayor was in response to the complaint of the residents of Barangay Guyong, Sta. Maria, Bulacan, directed to the Provincial Governor through channels (Annex A-B, petition).. . . 4. The closure order of the Acting Mayor was issued only after an investigation was made by Marivic Guina who in her report of December 8, 1988 observed that the fumes emitted by the plant of petitioner goes directly to the surrounding houses and that no proper air pollution device has been installed. (Annex A-9, petition) xxx xxx xxx 6. While petitioner was able to present a temporary permit to operate by the then National Pollution Control Commission on December 15,1987, the permit was good only up to May 25,1988 (Annex A-12, petition). Petitioner had not exerted any effort to extend or validate its permit much less to install any device to control the pollution and prevent any hazard to the health of the residents of the community." In the instant case, the ex parte cease and desist Order was issued not by a local government official but by the Pollution Adjudication Board, the very agency of the Government charged with the task of determining whether the effluents of a particular industrial establishment comply with or violate applicable anti-pollution statutory and regulatory provisions. Ex parte cease and desist orders are permitted by law and regulations in situations like that here presented precisely because stopping the continuous discharge of pollutive and untreated effluents into the rivers and other inland waters of the Philippines cannot be made to wait until protracted litigation over the ultimate correctness or propriety of such orders has run its full course, including multiple and sequential appeals such as those which Solar has taken, which of course may take several years. The relevant pollution control statute and implementing regulations were enacted and promulgated in the exercise of that pervasive, sovereign power to protect the safety, health, and general welfare and comfort of the public, as well as the protection of plant and animal life, commonly designated as the police power. It is a constitutional commonplace that the ordinary requirements of procedural due process yield to the necessities of protecting vital public interests like those here involved, through the exercise of police power. The Board's ex parte Order and Writ of Execution would, of course, have compelled Solar temporarily to stop its plant operations, a state of affairs Solar could in any case have avoided by simply absorbing the bother and

burden of putting its WTP on an operational basis. Industrial establishments are not constitutionally entitled to reduce their capitals costs and operating expenses and to increase their profits by imposing upon the public threats and risks to its safety, health, general welfare and comfort, by disregarding the requirements of anti- pollution statutes and their implementing regulations. It should perhaps be made clear the Court is not here saying that the correctness of the ex parte Order and Writ of Execution may not be contested by Solar in a hearing before the Board itself. Where the establishment affected by an ex parte cease and desist order contests the correctness of the prima facie findings of the Board, the Board must hold a public hearing where such establishment would have an opportunity to controvert the basis of such ex parte order. That such an opportunity is subsequently available is really all that is required by the due process clause of the Constitution in situations like that we have here. The Board's decision rendered after the public hearing may then be tested judicially by an appeal to the Court of Appeals in accordance with Section 7(c) of P.D. No. 984 and Section 42 of the Implementing Rules and Regulations. A subsequent public hearing is precisely what Solar should have sought instead of going to court to seek nullification of the Board's Order and Writ of Execution and instead of appealing to the Court of Appeals. It will be recalled the at the Board in fact gave Solar authority temporarily to continue operations until still another inspection of its wastewater treatment facilities and then another analysis of effluent samples could be taken and evaluated. Solar claims finally that the petition for certiorari was the proper remedy as the questioned Order and Writ of Execution issued by the Board were patent nullities. Since we have concluded that the Order and Writ of Execution were entirely within the lawful authority of petitioner Board, the trial court did not err when it dismissed Solar's petition for certiorari. It follows that the proper remedy was an appeal from the trial court to the Court of Appeals, as Solar did in fact appeal. ACCORDINGLY, the Petition for Review is given DUE COURSE and the Decision of the Court of Appeals dated 7 February 1990 and its Resolution dated 10 May 1990 in A.C.-G.R. No. SP 18821 are hereby SET ASIDE. The Order of petitioner Board dated 22 September 1988 and the Writ of Execution, as well as the decision of the trial court dated 21 July 1989, are hereby REINSTATED, without prejudice to the right of Solar to contest the correctness of the basis of the Board's Order and Writ of Execution at a public hearing before the Board. G.R. No. L-61689 June 20, 1988

RURAL BANK OF BUHI, INC., and HONORABLE JUDGE CARLOS R. BUENVIAJE, petitioners, vs. HONORABLE COURT OF APPEALS, CENTRAL BANK OF THE PHILIPPINES and CONSOLACION ODRA, respondents. Manuel B. Tomacruz and Rustico Pasilavan for petitioners. I.B. Regalado, Jr. and Pacifica T. Torres for respondents.

Central Bank of the Philippines, which by law, has charge of the supervision and examination of rural banks and savings and loan associations in the Philippines. However, said petitioner refused to be examined and as a result thereof, financial assistance was suspended. On January 10, 1980, a general examination of the bank's affairs and operations was conducted and there were found by DRBSLA represented by herein respondent, Consolacion V. Odra, Director of DRBSLA, among others, massive irregularities in its operations consisting of loans to unknown and fictitious borrowers, where the sum of P 1,704,782.00 was past due and another sum of P1,130,000.00 was also past due in favor of the Central Bank (Rollo, p. 86). The promissory notes evidencing these loans were rediscounted with the Central Bank for cash. As a result thereof, the bank became insolvent and prejudiced its depositors and creditors. Respondent, Consolacion V. Odra, submitted a report recommending to the Monetary Board of the Central Bank the placing of Buhi under receivership in accordance with Section 29 of Republic Act No. 265, as amended, the designation of the Director, DRBSLA, as receiver thereof. On March 28, 1980, the Monetary Board, finding the report to be true, adopted Resolution No. 583 placing Buhi, petitioner herein, under receivership and designated respondent, Consolacion V. Odra, as Receiver, pursuant to the provisions of Section 29 of Republic Act No. 265 as amended (Rollo, p. 111). In a letter dated April 8, 1980, respondent Consolacion V. Odra, as receiver, implemented and carried out said Monetary Board Resolution No. 583 by authorizing deputies of the receiver to take control, possession and charge of Buhi, its assets and liabilities (Rollo, p. 109). Imelda del Rosario, Manager of herein petitioner Buhi, filed a petition for injunction with Restraining Order dated April 23, 1980, docketed as Special Proceedings IR-428 against respondent Consolacion V. Odra and DRBSLA deputies in the Court of First Instance of Camarines Sur, Branch VII, Iriga City, entitled Rural Bank of Buhi vs. Central Bank, which assailed the action of herein respondent Odra in recommending the receivership over Buhi as a violation of the provisions of Sections 28 and 29 of Republic Act No. 265 as amended, and Section 10 of Republic Act No. 720 (The Rural Banks Act) and as being ultra vires and done with grave abuse of discretion and in excess of jurisdiction (Rollo, p. 120). Respondents filed their motion to dismiss dated May 27, 1980 alleging that the petition did not allege a cause of action and is not sufficient in form and substance and that it was filed in violation of Section 29, Republic Act No. 265 as amended by Presidential Decree No. 1007 (Rollo, p. 36).

PARAS, J.: This is a petition for review on certiorari with preliminary mandatory injunction seeking the reversal of the orders of the Court of Appeals dated March 19, 1982 and March 24, 1982 and its decision * (HATOL) promulgated on June 17,1982 in CA-G.R. No. 13944 entitled "Banko Central ng Pilipinas at Consolacion Odra Laban Kina Rural Bank of Buhi (Camarines Sur), Inc." and praying for a restraining order or a preliminary mandatory injunction to restrain respondents from enforcing aforesaid orders and decision of the respondent Court, and to give due course to the petitioners' complaint in IR428, pending before Hon. Judge Carlos R. Buenviaje of Branch VII, CFI, Camarines Sur. The decretal portion of the appealed decision reads: DAHIL DITO, ang utos ng pinasasagot sa Hukom noong ika9 ng Marso, 1982, ay isinasang-tabi. Kapalit nito, isang utos and ipinalabas na nag-uutos sa pinasasagot sa Hukom na itigil ang anumang pagpapatuloy o pagdidinig kaugnay sa usaping IR-428 na pinawawalang saysay din ng Hukumang ito. SIYANG IPINAG-UUTOS. The antecedent facts of the case are as follows: The petitioner Rural Bank of Buhi, Inc. (hereinafter referred to as Buhi) is a juridical entity existing under the laws of the Philippines. Buhi is a rural bank that started its operations only on December 26,1975 (Rollo, p. 86). In 1980, an examination of the books and affairs of Buhi was ordered conducted by the Rural Banks and Savings and Loan Association (DRBSLA),

Petitioners, through their counsel, filed an opposition to the motion to dismiss dated June 17, 1980 averring that the petition alleged a valid cause of action and that respondents have violated the due process clause of the Constitution (Rollo, p. 49). Later, respondents filed a reply to the opposition dated July 1, 1980, claiming that the petition is not proper; that Imelda del Rosario is not the proper representative of the bank; that the petition failed to state a cause of action; and, that the provisions of Section 29 of Republic Act No. 265 had been faithfully observed (Rollo, p. 57). On August 22, 1980, the Central Bank Monetary Board issued a Resolution No. 1514 ordering the liquidation of the Rural Bank of Buhi (Rollo, p. 108). On September 1, 1981, the Office of the Solicitor General, in accordance with Republic Act No. 265, Section 29, filed in the same Court of First Instance of Camarines Sur, Branch VII, a petition for Assistance in the Liquidation of Buhi, which petition was docketed as SP-IR-553, pursuant to the Monetary Board Resolution No. 1514 (Rollo, pp. 89; 264). Meanwhile, respondent Central Bank filed on September 15, 1981, in Civil Case No. IR-428 a Supplemental Motion To Dismiss on the ground that the receivership of Buhi, in view of the issuance of the Monetary Board Resolution No. 1514 had completely become moot and academic (Rollo, p. 68) and the fact that Case SP-IR-553 for the liquidation of Buhi was already pending with the same Court (Rollo, p. 69). On October 16, 1981, petitioners herein filed their amended complaint in Civil Case No. IR-428 alleging that the issuance of Monetary Board Resolution No. 583 was plainly arbitrary and in bad faith under aforequoted Section 29 of Republic Act No. 265 as amended, among others (Rollo, p. 28). On the same day, petitioner herein filed a rejoinder to its opposition to the motion to dismiss (Rollo, p. 145). On March 9,1982, herein petitioner Judge Buenviaje, issued an order denying the respondents' motion to dismiss, supplemental motion to dismiss and granting a temporary restraining order enjoining respondents from further managing and administering the Rural Bank of Buhi and to deliver the possession and control thereof to the petitioner Bank under the same conditions and with the same financial status as when the same was taken over by herein respondents (defendants) on April 16, 1980 and further enjoining petitioner to post a bond in the amount of three hundred thousand pesos (P300,000.00) (Rollo, p. 72). The dispositive portion of said decision reads:

WHEREFORE, premises considered, the motion to dismiss and supplemental motion to dismiss, in the light of petitioners' opposition, for want of sufficient merit is denied. Respondents are hereby directed to file their answer within ten (10) days from receipt of a copy of this order. (Rollo, p. 4). On March 11, 1982, petitioner Buhi through counsel, conformably with the above-mentioned order, filed a Motion to Admit Bond in the amount of P300,220.00 (Rollo, pp. 78-80). On March 15,1982, herein petitioner Judge issued the order admitting the bond of P300,220.00 filed by the petitioner, and directing the respondents to surrender the possession of the Rural Bank of Buhi, together with all its equipments, accessories, etc. to the petitioners (Rollo, p. 6). Consequently, on March 16, 1982, herein petitioner Judge issued the writ of execution directing the Acting Provincial Sheriff of Camarines Sur to implement the Court's order of March 9, 1982 (Rollo, p. 268). Complying with the said order of the Court, the Deputy Provincial Sheriff went to the Buhi premises to implement the writ of execution but the vault of the petitioner bank was locked and no inventory was made, as evidenced by the Sheriffs Report (Rollo, pp. 83-84). Thus, the petitioner herein filed with the Court an "Urgent Ex-Parte Motion to Allow Sheriff Calope to Force Open Bank Vault" on the same day (Rollo, p. 268). Accordingly, on March 17, 1982, herein petitioner Judge granted the aforesaid Ex-Parte Motion to Force Open the Bank Vault (Rollo, p. 269). On March 18, 1982, counsel for petitioner filed another "Urgent Ex-Parte Motion to Order Manager of City Trust to Allow Petitioner to Withdraw Rural Bank Deposits" while a separate "Urgent Ex-Parte Motion to Order Manager of Metrobank to Release Deposits of Petitioners" was filed on the same date. The motion was granted by the Court in an order directing the Manager of Metro Bank-Naga City (Rollo, p. 269) to comply as prayed for. In view thereof, herein respondents filed in the Court of Appeals a petition for certiorari and prohibition with preliminary injunction docketed as CA-G.R. No. 13944 against herein petitioners, seeking to set aside the restraining order and reiterating therein that petitioner Buhi's complaint in the lower court be dismissed (Rollo, p. 270). On March 19, 1982, the Court of Appeals issued a Resolution (KAPASIYAHAN) in tagalog, restraining the Hon. Judge Carlos R. Buenviaje, from enforcing his order of March 9,1982 and suspending further proceedings in Sp. Proc. No. IR-428 pending before him while giving the

Central Bank counsel, Atty. Ricardo Quintos, authority to carry out personally said orders and directing the "Punong Kawani" of the Court of Appeals to send telegrams to the Office of the President and the Supreme Court (Rollo, p. 168). Herein petitioners did not comply with the Court of Appeals' order of March 19, 1982, but filed instead on March 21, 1982 a motion for reconsideration of said order of the Court of Appeals, claiming that the lower court's order of March 9, 1982 referred only to the denial of therein respondents' motion to dismiss and supplemental motion to dismiss and that the return of Buhi to the petitioners was already an accomplished fact. The motion was denied by the respondent court in a resolution dated June 1, 1982 (Rollo, p. 301). In view of petitioners' refusal to obey the Court of Appeals' Order of March 19, 1982, herein respondents filed with the Court of Appeals a Motion to Cite Petitioners in Contempt, dated April 22, 1982 (Rollo, p. 174). The Court of Appeals issued on May 24, 1982 an order requiring herein petitioner Rural Bank of Buhi, Inc., through its then Acting Manager, Imelda del Rosario and herein petitioner Judge Carlos Buenviaje, as well as Manuel Genova and Rodolfo Sosa, to show cause within ten (10) days from notice why they should not be held in contempt of court and further directing the Ministry of National Defense or its representative to cause the return of possession and management of the Rural Bank to the respondents Central Bank and Consolacion Odra (Rollo, p. 180). On June 9, 1982, petitioners filed their objection to respondents' motion for contempt dated June 5, 1982 claiming that the properties, subject of the order, had already been returned to the herein petitioners who are the lawful owners thereof and that the returning could no longer be undone (Rollo, p. 181). Later, petitioners filed another motion dated June 17, 1982 for the reconsideration of the resolution of June 1, 1982 of the Court of Appeals alleging that the same contravened and departed from the rulings of the Supreme Court that consummated acts or acts already done could no longer be the subject of mandatory injunction and that the respondent Court of Appeals had no jurisdiction to issue the order unless it was in aid of its appellate jurisdiction, claiming that the case (CA-G.R. No. 13944) did not come to it on appeal (Rollo, p. 302). As aforestated, on June 17, 1982, respondent Court of Appeals rendered its decision (HATOL) setting aside the lower court's restraining order dated March 9,1982 and ordering the dismissal of herein petitioners' amended complaint in Civil Case No. IR-428 (Rollo, p. 186).

On July 9, 1982, petitioners (respondents in CA-G.R. No. 13944) filed a Motion for Reconsideration of the Decision dated June 17, 1982 insofar as the complaint with the lower court (Civil Case No. IR-428 was ordered dismissed (Rollo, p. 305). On August 23, 1982, the respondent Court of Appeals issued its Resolution denying for lack of merit, herein petitioners' motion for reconsideration of the resolution issued by the respondent Court of Appeals on June 1, 1982 and set on August 31, 1982 the hearing of the motion to cite the respondents in CA-G.R. No. SP-13944 (herein petitioner) for contempt (Rollo, p. 193). At said hearing, counsel for Rural Bank of Buhi agreed and promised in open court to restore and return to the Central Bank the possession and control of the Bank within three (3) days from August 31, 1982. However on September 3,1982, Rosalia Guevara, Manager thereof, vigorously and adamantly refused to surrender the premises unless she received a written order from the Court. In a subsequent hearing of the contempt incident, the Court of Appeals issued its Order dated October 13,1982, but Rosalia Guevara still refused to obey, whereupon she was placed under arrest and the Court of Appeals ordered her to be detained until she decided to obey the Court's Order (Rollo, pp. 273-274). Earlier, on September 14, 1982 petitioners had filed this petition even while a motion for reconsideration of the decision of June 17,1982 was still pending consideration in the Court of Appeals. In the resolution of October 20, 1982, the Second Division of this Court without giving due course to the petition required respondents to COMMENT (Rollo, p. 225). Counsel for respondents manifested (Rollo, p. 226) that they could not file the required comment because they were not given a copy of the petition. Meanwhile, they filed an urgent motion dated October 28, 1982 with the Court of Appeals to place the bank through its representatives in possession of the Rural Bank of Buhi (Camarines Sur), Inc. (Rollo, p. 237). On December 9, 1982, petitioners filed a Supplemental Petition with urgent motion for the issuance of a restraining order dated December 2, 1982 praying that the restraining order be issued against respondent court (Rollo, p. 229).

In the resolution of December 15,1982, the Court resolved to require petitioners to furnish the respondents with a copy of the petition and to require the respondents to comment on both the original and the supplemental petitions (Rollo, p. 243). In a resolution of February 21, 1983, the Court NOTED Rosalia V. Guevara's letter dated February 4, 1983 (Rollo, p. 252) addressed to Hon. Chief Justice Enrique M. Fernando, requesting that she be allowed to file a petition for the issuance of a writ of habeas corpus (Rollo, p. 256). At the hearing of the said petition on February 23, 1983 where the counsel of both parties appeared, this Court noted the Return of the Writ of Habeas Corpus as well as the release of petitioner Rosalia V. Guevara from detention by the National Bureau of Investigation. After hearing aforesaid counsel and petitioner herself, and it appearing that the latter had resigned since January 18,1983 as Manager of the Rural Bank of Buhi, Inc. and that the Central Bank might avail of more than adequate legal measures to take over the management, possession and control of the said bank (and not through contempt proceedings and detention and confinement of petitioner), with Assistant Solicitor General Andin manifesting that respondents were not insisting on the continued detention of petitioner, the Court Resolved to SET the petitioner at liberty and to consider the contempt incident closed (Rollo, p. 339). On April 11, 1983, respondents filed their comment on the original and supplemental petitions. Meanwhile, the Court of Appeals, acting on respondents' urgent motion filed on October 28, 1982 ordered on April 13, 1983 the return to the petitioners (herein respondents) or their duly authorized representatives of the possession, management and control of subject Rural Bank (Rollo, p. 319), together with its properties. On April 28, 1983, petitioner filed an urgent motion: (1) to give due course to the petition and (2) for immediate issuance of a Restraining Order against the respondent court to prevent it from enforcing its aforesaid resolution dated April 13, 1983 and from further proceeding in AC-G.R. No. 13944-SP (Rollo, p. 315). On May 16, 1983, this Court resolved to deny the petition for lack of merit (Rollo, p. 321). On July 25, 1983, petitioners filed their verified Motion for Reconsideration (Rollo, p. 337) praying that the HATOL dated June 17, 1982 of the Court of Appeals be set aside as null and void and that Special Proceedings No. IR-428 of CFI-Camarines Sur, Iriga City, Branch VII, be

ordered remanded to the RTC of Camarines Sur, Iriga City, for further proceedings. A Motion for Early Resolution was filed by herein petitioners on March 12,1984 (Rollo, p. 348). Petitioners raised the following legal issues in their motion for reconsideration: I. UNDER SEC. 29, R.A. 265, AS AMENDED, MAY THE MONETARY BOARD (MB) OF THE CENTRAL BANK (CB) PLACE A RURAL BANK UNDER RECEIVERSHIP WITHOUT PRIOR NOTICE TO SAID RURAL BANK TO ENABLE IT TO BE HEARD ON THE GROUND RELIED UPON FOR SUCH RECEIVERSHIP? II. UNDER THE SAME SECTION OF SAID LAW, WHERE THE MONETARY BOARD (MB) OF THE CENTRAL BANK (CB) HAS PLACED A RURAL BANK UNDER RECEIVERSHIP, IS SUCH ACTION OF THE MONETARY BOARD (MB) SUBJECT TO JUDICIAL REVIEW? IF SO, WHICH COURT MAY EXERCISE SUCH POWER AND WHEN MAY IT EXERCISE THE SAME? III. UNDER THE SAID SECTION OF THE LAW, SUPPOSE A CIVIL CASE IS INSTITUTED SEEKING ANNULMENT OF THE RECEIVERSHIP ON THE GROUND OF ARBITRARINESS AND BAD FAITH ON THE PART OF THE MONETARY BOARD (MB), MAY SUCH CASE BE DISMISSED BY THE IAC (THEN CA) ON THE GROUND OF INSUFFICIENCY OF EVIDENCE EVEN IF THE TRIAL COURT HAS NOT HAD A CHANCE YET TO RECEIVE EVIDENCE AND THE PARTIES HAVE NOT YET PRESENTED EVIDENCE EITHER IN THE TRIAL COURT OR IN SAID APPELLATE COURT? (Rollo, pp. 330-331). I. Petitioner Rural Bank's position is to the effect that due process was not observed by the Monetary Board before said bank was placed under receivership. Said Rural Bank claimed that it was not given the chance to deny and disprove such claim of insolvency and/or any other ground which the Monetary Board used in justification of its action. Relative thereto, the provision of Republic Act No. 265 on the proceedings upon insolvency reads: SEC. 29. Proceedings upon insolvency. Whenever, upon examination by the head of the appropriate supervising and examining department or his examiners or agents into the condition of any banking institution, it shall be disclosed that

the condition of the same is one of insolvency, or that its continuance in business would involve probable loss to its depositors or creditors, it shall be the duty of the department head concerned forthwith, in writing, to inform the Monetary Board of the facts, and the Board may, upon finding the statements of the department head to be true, forbid the institution to do business in the Philippines and shall designate an official of the Central Bank, or a person of recognized competence in banking, as receiver to immediately take charge of its assets and liabilities, as expeditiously as possible collect and gather all the assets and administer the same for the benefit of its creditors, exercising all the powers necessary for these purposes including, but not limited to, bringing suits and foreclosing mortgages in the name of the banking institution. The Monetary Board shall thereupon determine within sixty days whether the institution may be recognized or otherwise placed in such a condition so that it may be permitted to resume business with safety to its depositors and creditors and the general public and shall prescribe the conditions under which such redemption of business shall take place as the time for fulfillment of such conditions. In such case, the expenses and fees in the collection and administration of the assets of the institution shall be determined by the Board and shall be paid to the Central Bank out of the assets of such banking institution. If the Monetary Board shall determine and confirm within the said period that the banking institution is insolvent or cannot resume business with safety to its depositors, creditors and the general public, it shall, if the public interest requires, order its liquidation, indicate the manner of its liquidation and approve a liquidation plan. The Central Bank shall, by the Solicitor General, file a petition in the Court of First Instance reciting the proceedings which have been taken and praying the assistance of the court in the liquidation of the banking institution. The Court shall have jurisdiction in the same proceedings to adjudicate disputed claims against the bank and enforce individual liabilities of the stockholders and do all that is necessary to preserve the assets of the banking institution and to implement the liquidation plan approved by the Monetary Board. The Monetary Board shall designate an official of the Central Bank or a person of recognized competence in banking, as liquidator who shall take over the functions of the receiver previously appointed by the

Monetary Board under this Section. The liquidator shall, with all convenient speed, convert the assets of the banking institution to money or sell, assign or otherwise dispose of the same to creditors and other parties for the purpose of paying the debts of such bank and he may, in the name of the banking institution, institute such actions as may be necessary in the appropriate court to collect and recover accounts and assets of the banking institution. The provisions of any law to the contrary notwithstanding the actions of the Monetary Board under this Section and the second paragraph of Section 34 of this Act shall be final and executory, and can be set aside by the court only if there is convincing proof that the action is plainly arbitrary and made in bad faith. No restraining order or injunction shall be issued by the court enjoining the Central Bank from implementing its actions under this Section and the second paragraph of Section 34 of this Act, unless there is convincing proof that the action of the Monetary Board is plainly arbitrary and made in bad faith and the petitioner or plaintiff files with the clerk or judge of the court in which the action is pending a bond executed in favor of the Central Bank, in an amount to be fixed by the court. The restraining order or injunction shall be refused or, if granted, shall be dissolved upon filing by the Central Bank of a bond, which shall be in the form of cash or Central Bank cashier's check, in an amount twice the amount of the bond of the petitioner, or plaintiff conditioned that it will pay the damages which the petitioner or plaintiff may suffer by the refusal or the dissolution of the injunction. The provisions of Rule 58 of the New Rules of Court insofar as they are applicable and not inconsistent with the provisions of this Section shall govern the issuance and dissolution of the restraining order or injunction contemplated in this Section. Insolvency, under this Act, shall be understood to mean the inability of a banking institution to pay its liabilities as they fall due in the usual and ordinary course of business: Provided, however, that this shall not include the inability to pay of an otherwise non-insolvent bank caused by extraordinary demands induced by financial panic commonly evidenced by a run on the banks in the banking community. The appointment of a conservator under Section 28-A of this Act or the appointment of receiver under this Section shall be vested exclusively with the Monetary Board, the provision

of any law, general or special, to the contrary not withstanding. It will be observed from the foregoing provision of law, that there is no requirement whether express or implied, that a hearing be first conducted before a banking institution may be placed under receivership. On the contrary, the law is explicit as to the conditions prerequisite to the action of the Monetary Board to forbid the institution to do business in the Philippines and to appoint a receiver to immediately take charge of the bank's assets and liabilities. They are: (a) an examination made by the examining department of the Central Bank; (b) report by said department to the Monetary Board; and (c) prima facie showing that the bank is in a condition of insolvency or so situated that its continuance in business would involve probable loss to its depositors or creditors. Supportive of this theory is the ruling of this Court, which established the authority of the Central Bank under the foregoing circumstances, which reads: As will be noted, whenever it shall appear prima facie that a banking institution is in "a condition of insolvency" or so situated "that its continuance in business would involved probable loss to its depositors or creditors," the Monetary Board has authority: First, to forbid the institution to do business and appoint a receiver therefor; and Second, to determine, within 60 days, whether or not: 1) the institution may be reorganized and rehabilitated to such an extent as to be permitted to resume business with safety to depositors, creditors and the general public; or 2) it is indeed insolvent or cannot resume business with safety to depositors, creditors and the general public, and public interest requires that it be liquidated. In this latter case (i.e., the bank can no longer resume business with safety to depositors, creditors and the public, etc.) its liquidation will be ordered and a liquidator appointed by the Monetary Board. The Central Bank shall thereafter file a petition in the Regional Trial Court praying for the Court's

assistance in the liquidation of the bank." ... (Salud vs. Central Bank, 143 SCRA 590 [1986]). Petitioner further argues, that there is also that constitutional guarantee that no property shall be taken without due process of law, so that Section 29, R.A. 265, as amended, could not have intended to disregard and do away with such constitutional requirement when it conferred upon the Monetary Board the power to place Rural Banks under receivership (Rollo, p. 333). The contention is without merit. It has long been established and recognized in this jurisdiction that the closure and liquidation of a bank may be considered as an exercise of police power. Such exercise may, however, be subject to judicial inquiry and could be set aside if found to be capricious, discriminatory, whimsical, arbitrary, unjust or a denial of the due process and equal protection clauses of the Constitution (Central Bank vs. Court of Appeals, 106 SCRA 155 [1981]). The evident implication of the law, therefore, is that the appointment of a receiver may be made by the Monetary Board without notice and hearing but its action is subject to judicial inquiry to insure the protection of the banking institution. Stated otherwise, due process does not necessarily require a prior hearing; a hearing or an opportunity to be heard may be subsequent to the closure. One can just imagine the dire consequences of a prior hearing: bank runs would be the order of the day, resulting in panic and hysteria. In the process, fortunes may be wiped out, and disillusionment will run the gamut of the entire banking community. In Mendiola vs. Court of Appeals, (106 SCRA 130), the Supreme Court held: The pivotal issue raised by petitioner is whether or not the appointment of a receiver by the Court of First Instance on January 14, 1969 was in order. Respondent Court correctly stated that the appointment of a receiver pendente lite is a matter principally addressed to and resting largely on the sound discretion of the court to which the application is made. This Tribunal has so held in a number of cases. However, receivership being admittedly a harsh remedy, it should be granted with extreme caution. Sound reasons for receivership must appear of record, and there should be a clear showing of a necessity therefor. Before granting the remedy, the court is advised to consider the consequence or effects thereof in order to avoid irreparable injustice or injury to others who are entitled to as much consideration as those seeking it.

xxx xxx xxx This is not to say that a hearing is an indispensable requirement for the appointment of a receiver. As petitioner correctly contends in his first assignment of error, courts may appoint receivers without prior presentation of evidence and solely on the basis of the averments of the pleadings. Rule 59 of the Revised Rules of Court allows the appointment of a receiver upon an ex parte application. There is no question that the action of the Monetary Board in this regard may be subject to judicial review. Thus, it has been held that the courts may interfere with the Central Bank's exercise of discretion in determining whether or not a distressed bank shall be supported or liquidated. Discretion has its limits and has never been held to include arbitrariness, discrimination or bad faith (Ramos vs. Central Bank of the Philippines, 41 SCRA 567 [1971]). It has likewise been held that resolutions of the Monetary Board under Section 29 of the Central Bank Act, such as: forbidding bank institutions to do business on account of a "condition of insolvency" or because its continuance in business would involve probable loss to depositors or creditors; or appointing a receiver to take charge of the bank's assets and liabilities, or determining whether the bank may be rehabilitated or should be liquidated and appointing a liquidator for that purpose, are under the law "final and executory" and may be set aside only on one ground, that is "if there is convincing proof that the action is plainly arbitrary and made in bad faith" (Salud vs. Central Bank, supra). There is no dispute that under the above-quoted Section 29 of the Central Bank Act, the Regional Trial Court has jurisdiction to adjudicate the question of whether or not the action of the Monetary Board directing the dissolution of the subject Rural Bank is attended by arbitrariness and bad faith. Such position has been sustained by this Court in Salud vs. Central Bank of the Philippines (supra). In the same case, the Court ruled further that a banking institution's claim that a resolution of the Monetary Board under Section 29 of the Central Bank Act should be set aside as plainly arbitrary and made in bad faith, may be asserted as an affirmative defense (Sections 1 and 4[b], Rule 6, Rules of Court) or a counterclaim (Section 6, Rule 6; Section 2, Rule 72 of the Rules of Court) in the proceedings for assistance in liquidation or as a cause of action in a separate and distinct action where the latter was filed ahead of the petition for assistance in liquidation (ibid; Central Bank vs. Court of Appeals, 106 SCRA 143 [1981]).

III. It will be noted that in the issuance of the Order of the Court of First Instance of Camarines Sur, Branch VII, Iriga City, dated March 9, 1982 (Rollo, pp. 72-77), there was no trial on the merits. Based on the pleadings filed, the Court merely acted on the Central Bank's Motion to Dismiss and Supplemental Motion to Dismiss, denying both for lack of sufficient merit. Evidently, the trial court merely acted on an incident and has not as yet inquired, as mandated by Section 29 of the Central Bank Act, into the merits of the claim that the Monetary Board's action is plainly arbitrary and made in bad faith. It has not appreciated certain facts which would render the remedy of liquidation proper and rehabilitation improper, involving as it does an examination of the probative value of the evidence presented by the parties properly belonging to the trial court and not properly cognizable on appeal (Central Bank vs. Court of Appeals, supra, p. 156). Still further, without a hearing held for both parties to substantiate their allegations in their respective pleadings, there is lacking that "convincing proof" prerequisite to justify the temporary restraining order (mandatory injunction) issued by the trial court in its Order of March 9, 1982. PREMISES CONSIDERED, the decision of the Court of Appeals is MODIFIED; We hereby order the remand of this case to the Regional Trial Court for further proceedings, but We LIFT the temporary restraining order issued by the trial court in its Order dated March 9, 1982. SO ORDERED. G.R. No. L-46496 February 27, 1940

ANG TIBAY, represented by TORIBIO TEODORO, manager and propietor, and NATIONAL WORKERS BROTHERHOOD, petitioners, vs. THE COURT OF INDUSTRIAL RELATIONS and NATIONAL LABOR UNION, INC., respondents. Office of the Solicitor-General Ozaeta and Assistant Attorney Barcelona for the Court of Industrial Relations. Antonio D. Paguia for National Labor Unon. Claro M. Recto for petitioner "Ang Tibay". Jose M. Casal for National Workers' Brotherhood. LAUREL, J.: The Solicitor-General in behalf of the respondent Court of Industrial Relations in the above-entitled case has filed a motion for reconsideration and moves

that, for the reasons stated in his motion, we reconsider the following legal conclusions of the majority opinion of this Court: 1. Que un contrato de trabajo, asi individual como colectivo, sin termino fijo de duracion o que no sea para una determinada, termina o bien por voluntad de cualquiera de las partes o cada vez que ilega el plazo fijado para el pago de los salarios segun costumbre en la localidad o cunado se termine la obra; 2. Que los obreros de una empresa fabril, que han celebrado contrato, ya individual ya colectivamente, con ell, sin tiempo fijo, y que se han visto obligados a cesar en sus tarbajos por haberse declarando paro forzoso en la fabrica en la cual tarbajan, dejan de ser empleados u obreros de la misma; 3. Que un patrono o sociedad que ha celebrado un contrato colectivo de trabajo con sus osbreros sin tiempo fijo de duracion y sin ser para una obra determiminada y que se niega a readmitir a dichos obreros que cesaron como consecuencia de un paro forzoso, no es culpable de practica injusta in incurre en la sancion penal del articulo 5 de la Ley No. 213 del Commonwealth, aunque su negativa a readmitir se deba a que dichos obreros pertenecen a un determinado organismo obrero, puesto que tales ya han dejado deser empleados suyos por terminacion del contrato en virtud del paro. The respondent National Labor Union, Inc., on the other hand, prays for the vacation of the judgement rendered by the majority of this Court and the remanding of the case to the Court of Industrial Relations for a new trial, and avers: 1. That Toribio Teodoro's claim that on September 26, 1938, there was shortage of leather soles in ANG TIBAY making it necessary for him to temporarily lay off the members of the National Labor Union Inc., is entirely false and unsupported by the records of the Bureau of Customs and the Books of Accounts of native dealers in leather. 2. That the supposed lack of leather materials claimed by Toribio Teodoro was but a scheme to systematically prevent the forfeiture of this bond despite the breach of his CONTRACT with the Philippine Army. 3. That Toribio Teodoro's letter to the Philippine Army dated September 29, 1938, (re supposed delay of leather soles from the States) was but a scheme to systematically prevent the forfeiture of

this bond despite the breach of his CONTRACT with the Philippine Army. 4. That the National Worker's Brotherhood of ANG TIBAY is a company or employer union dominated by Toribio Teodoro, the existence and functions of which are illegal. (281 U.S., 548, petitioner's printed memorandum, p. 25.) 5. That in the exercise by the laborers of their rights to collective bargaining, majority rule and elective representation are highly essential and indispensable. (Sections 2 and 5, Commonwealth Act No. 213.) 6. That the century provisions of the Civil Code which had been (the) principal source of dissensions and continuous civil war in Spain cannot and should not be made applicable in interpreting and applying the salutary provisions of a modern labor legislation of American origin where the industrial peace has always been the rule. 7. That the employer Toribio Teodoro was guilty of unfair labor practice for discriminating against the National Labor Union, Inc., and unjustly favoring the National Workers' Brotherhood. 8. That the exhibits hereto attached are so inaccessible to the respondents that even with the exercise of due diligence they could not be expected to have obtained them and offered as evidence in the Court of Industrial Relations. 9. That the attached documents and exhibits are of such far-reaching importance and effect that their admission would necessarily mean the modification and reversal of the judgment rendered herein. The petitioner, Ang Tibay, has filed an opposition both to the motion for reconsideration of the respondent National Labor Union, Inc. In view of the conclusion reached by us and to be herein after stead with reference to the motion for a new trial of the respondent National Labor Union, Inc., we are of the opinion that it is not necessary to pass upon the motion for reconsideration of the Solicitor-General. We shall proceed to dispose of the motion for new trial of the respondent labor union. Before doing this, however, we deem it necessary, in the interest of orderly procedure in cases of this nature, in interest of orderly procedure in cases of this nature, to make several observations regarding the nature of the powers of the Court of Industrial Relations and emphasize certain guiding principles which should be observed in the trial of cases brought before it. We have re-

examined the entire record of the proceedings had before the Court of Industrial Relations in this case, and we have found no substantial evidence that the exclusion of the 89 laborers here was due to their union affiliation or activity. The whole transcript taken contains what transpired during the hearing and is more of a record of contradictory and conflicting statements of opposing counsel, with sporadic conclusion drawn to suit their own views. It is evident that these statements and expressions of views of counsel have no evidentiary value. The Court of Industrial Relations is a special court whose functions are specifically stated in the law of its creation (Commonwealth Act No. 103). It is more an administrative than a part of the integrated judicial system of the nation. It is not intended to be a mere receptive organ of the Government. Unlike a court of justice which is essentially passive, acting only when its jurisdiction is invoked and deciding only cases that are presented to it by the parties litigant, the function of the Court of Industrial Relations, as will appear from perusal of its organic law, is more active, affirmative and dynamic. It not only exercises judicial or quasi-judicial functions in the determination of disputes between employers and employees but its functions in the determination of disputes between employers and employees but its functions are far more comprehensive and expensive. It has jurisdiction over the entire Philippines, to consider, investigate, decide, and settle any question, matter controversy or dispute arising between, and/or affecting employers and employees or laborers, and regulate the relations between them, subject to, and in accordance with, the provisions of Commonwealth Act No. 103 (section 1). It shall take cognizance or purposes of prevention, arbitration, decision and settlement, of any industrial or agricultural dispute causing or likely to cause a strike or lockout, arising from differences as regards wages, shares or compensation, hours of labor or conditions of tenancy or employment, between landlords and tenants or farm-laborers, provided that the number of employees, laborers or tenants of farm-laborers involved exceeds thirty, and such industrial or agricultural dispute is submitted to the Court by the Secretary of Labor or by any or both of the parties to the controversy and certified by the Secretary of labor as existing and proper to be by the Secretary of Labor as existing and proper to be dealth with by the Court for the sake of public interest. (Section 4, ibid.) It shall, before hearing the dispute and in the course of such hearing, endeavor to reconcile the parties and induce them to settle the dispute by amicable agreement. (Paragraph 2, section 4, ibid.) When directed by the President of the Philippines, it shall investigate and study all industries established in a designated locality, with a view to determinating the necessity and fairness of fixing and adopting for such industry or locality a minimum wage or share of laborers or tenants, or a maximum "canon" or rental to be paid by the "inquilinos" or tenants or less to landowners. (Section 5, ibid.) In fine, it may appeal to voluntary arbitration in the settlement of industrial disputes; may employ mediation or conciliation for that purpose, or recur to the more

effective system of official investigation and compulsory arbitration in order to determine specific controversies between labor and capital industry and in agriculture. There is in reality here a mingling of executive and judicial functions, which is a departure from the rigid doctrine of the separation of governmental powers. In the case of Goseco vs. Court of Industrial Relations et al., G.R. No. 46673, promulgated September 13, 1939, we had occasion to joint out that the Court of Industrial Relations et al., G. R. No. 46673, promulgated September 13, 1939, we had occasion to point out that the Court of Industrial Relations is not narrowly constrained by technical rules of procedure, and the Act requires it to "act according to justice and equity and substantial merits of the case, without regard to technicalities or legal forms and shall not be bound by any technicalities or legal forms and shall not be bound by any technical rules of legal evidence but may inform its mind in such manner as it may deem just and equitable." (Section 20, Commonwealth Act No. 103.) It shall not be restricted to the specific relief claimed or demands made by the parties to the industrial or agricultural dispute, but may include in the award, order or decision any matter or determination which may be deemed necessary or expedient for the purpose of settling the dispute or of preventing further industrial or agricultural disputes. (section 13, ibid.) And in the light of this legislative policy, appeals to this Court have been especially regulated by the rules recently promulgated by the rules recently promulgated by this Court to carry into the effect the avowed legislative purpose. The fact, however, that the Court of Industrial Relations may be said to be free from the rigidity of certain procedural requirements does not mean that it can, in justifiable cases before it, entirely ignore or disregard the fundamental and essential requirements of due process in trials and investigations of an administrative character. There are primary rights which must be respected even in proceedings of this character: (1) The first of these rights is the right to a hearing, which includes the right of the party interested or affected to present his own case and submit evidence in support thereof. In the language of Chief Hughes, in Morgan v. U.S., 304 U.S. 1, 58 S. Ct. 773, 999, 82 Law. ed. 1129, "the liberty and property of the citizen shall be protected by the rudimentary requirements of fair play. (2) Not only must the party be given an opportunity to present his case and to adduce evidence tending to establish the rights which he asserts but the tribunal must consider the evidence presented. (Chief Justice Hughes in Morgan v. U.S. 298 U.S. 468, 56 S. Ct. 906, 80 law. ed. 1288.) In the language of this court in Edwards vs. McCoy, 22 Phil., 598, "the right to adduce evidence, without the corresponding duty on the part of the board to consider it, is vain. Such right is conspicuously futile if the person or persons to whom

the evidence is presented can thrust it aside without notice or consideration." (3) "While the duty to deliberate does not impose the obligation to decide right, it does imply a necessity which cannot be disregarded, namely, that of having something to support it is a nullity, a place when directly attached." (Edwards vs. McCoy, supra.) This principle emanates from the more fundamental is contrary to the vesting of unlimited power anywhere. Law is both a grant and a limitation upon power. (4) Not only must there be some evidence to support a finding or conclusion (City of Manila vs. Agustin, G.R. No. 45844, promulgated November 29, 1937, XXXVI O. G. 1335), but the evidence must be "substantial." (Washington, Virginia and Maryland Coach Co. v. national labor Relations Board, 301 U.S. 142, 147, 57 S. Ct. 648, 650, 81 Law. ed. 965.) It means such relevant evidence as a reasonable mind accept as adequate to support a conclusion." (Appalachian Electric Power v. National Labor Relations Board, 4 Cir., 93 F. 2d 985, 989; National Labor Relations Board v. Thompson Products, 6 Cir., 97 F. 2d 13, 15; Ballston-Stillwater Knitting Co. v. National Labor Relations Board, 2 Cir., 98 F. 2d 758, 760.) . . . The statute provides that "the rules of evidence prevailing in courts of law and equity shall not be controlling.' The obvious purpose of this and similar provisions is to free administrative boards from the compulsion of technical rules so that the mere admission of matter which would be deemed incompetent inn judicial proceedings would not invalidate the administrative order. (Interstate Commerce Commission v. Baird, 194 U.S. 25, 44, 24 S. Ct. 563, 568, 48 Law. ed. 860; Interstate Commerce Commission v. Louisville and Nashville R. Co., 227 U.S. 88, 93 33 S. Ct. 185, 187, 57 Law. ed. 431; United States v. Abilene and Southern Ry. Co. S. Ct. 220, 225, 74 Law. ed. 624.) But this assurance of a desirable flexibility in administrative procedure does not go far as to justify orders without a basis in evidence having rational probative force. Mere uncorroborated hearsay or rumor does not constitute substantial evidence. (Consolidated Edison Co. v. National Labor Relations Board, 59 S. Ct. 206, 83 Law. ed. No. 4, Adv. Op., p. 131.)" (5) The decision must be rendered on the evidence presented at the hearing, or at least contained in the record and disclosed to the parties affected. (Interstate Commence Commission vs. L. & N. R. Co., 227 U.S. 88, 33 S. Ct. 185, 57 Law. ed. 431.) Only by confining the administrative tribunal to the evidence disclosed to the parties, can the latter be protected in their right to know and meet the case against them. It should not, however, detract from their duty actively

to see that the law is enforced, and for that purpose, to use the authorized legal methods of securing evidence and informing itself of facts material and relevant to the controversy. Boards of inquiry may be appointed for the purpose of investigating and determining the facts in any given case, but their report and decision are only advisory. (Section 9, Commonwealth Act No. 103.) The Court of Industrial Relations may refer any industrial or agricultural dispute or any matter under its consideration or advisement to a local board of inquiry, a provincial fiscal. a justice of the peace or any public official in any part of the Philippines for investigation, report and recommendation, and may delegate to such board or public official such powers and functions as the said Court of Industrial Relations may deem necessary, but such delegation shall not affect the exercise of the Court itself of any of its powers. (Section 10, ibid.) (6) The Court of Industrial Relations or any of its judges, therefore, must act on its or his own independent consideration of the law and facts of the controversy, and not simply accept the views of a subordinate in arriving at a decision. It may be that the volume of work is such that it is literally Relations personally to decide all controversies coming before them. In the United States the difficulty is solved with the enactment of statutory authority authorizing examiners or other subordinates to render final decision, with the right to appeal to board or commission, but in our case there is no such statutory authority. (7) The Court of Industrial Relations should, in all controversial questions, render its decision in such a manner that the parties to the proceeding can know the various issues involved, and the reasons for the decision rendered. The performance of this duty is inseparable from the authority conferred upon it. In the right of the foregoing fundamental principles, it is sufficient to observe here that, except as to the alleged agreement between the Ang Tibay and the National Worker's Brotherhood (appendix A), the record is barren and does not satisfy the thirst for a factual basis upon which to predicate, in a national way, a conclusion of law. This result, however, does not now preclude the concession of a new trial prayed for the by respondent National Labor Union, Inc., it is alleged that "the supposed lack of material claimed by Toribio Teodoro was but a scheme adopted to systematically discharged all the members of the National Labor Union Inc., from work" and this avernment is desired to be proved by the petitioner with the "records of the Bureau of Customs and the Books of Accounts of native dealers in leather"; that "the National Workers Brotherhood Union of Ang Tibay is a company or employer union dominated

by Toribio Teodoro, the existence and functions of which are illegal." Petitioner further alleges under oath that the exhibits attached to the petition to prove his substantial avernments" are so inaccessible to the respondents that even within the exercise of due diligence they could not be expected to have obtained them and offered as evidence in the Court of Industrial Relations", and that the documents attached to the petition "are of such far reaching importance and effect that their admission would necessarily mean the modification and reversal of the judgment rendered herein." We have considered the reply of Ang Tibay and its arguments against the petition. By and large, after considerable discussions, we have come to the conclusion that the interest of justice would be better served if the movant is given opportunity to present at the hearing the documents referred to in his motion and such other evidence as may be relevant to the main issue involved. The legislation which created the Court of Industrial Relations and under which it acts is new. The failure to grasp the fundamental issue involved is not entirely attributable to the parties adversely affected by the result. Accordingly, the motion for a new trial should be and the same is hereby granted, and the entire record of this case shall be remanded to the Court of Industrial Relations, with instruction that it reopen the case, receive all such evidence as may be relevant and otherwise proceed in accordance with the requirements set forth hereinabove. So ordered G.R. No. 153166 December 16, 2005 TERESITA L. VERTUDES, Petitioner, vs. JULIE BUENAFLOR and BUREAU OF IMMIGRATION, Respondents. DECISION PUNO, J.: Before us is a petition for review by certiorari under Rule 45 of the Rules of 2 3 Court, seeking to review and set aside the decision and resolution of the Court of Appeals (CA), which affirmed the decision of the Civil Service Commission (CSC) finding petitioner guilty of grave misconduct and dismissing her from government service. Petitioner Teresita L. Vertudes was a fingerprint examiner at the Alien 4 Registration Division of the Bureau of Immigration (BI). In a facsimile letter dated July 27, 1998, a certain Peng Villas, a news editor of the Philippine Weekly Newspaper, referred to then BI Commissioner Rufus Rodriguez the complaints of private respondent Julie Buenaflor, Amy Cosino and Manuelito Lao, against petitioner.
1

According to Villas, private respondent Buenaflor complained of having been convinced by petitioner into paying the total amount of P79,000.00 in exchange for the processing of her visa, passport and other travel documents for Japan. Private respondent delivered to petitioner Security Bank (SB) Check Nos. 0014797 and 0014798 in the amounts of P30,000.00 and P20,000.00, respectively, and cash worth P29,000.00. However, no visa was delivered. Private respondent insisted that petitioner return her money, to no avail. Villas also referred to Commissioner Rodriguez the complaint of Lao who allegedly told him that he paid P60,000.00 to petitioner in exchange for a Chinese Visa and a passport for Taiwan. Likewise, Villas referred Cosinos complaint that the latter collected from Virfinia Dumbrique, Jaime Santos Flores and Mariano Evangelista, the amounts of P20,000.00 each, upon petitioner's word that they would be in exchange for tourist visas. Both Lao and Cosino claimed that the promised passport and visas did not materialize and despite many requests for the return of the amounts paid to petitioner, she refused to comply. Allegedly, "Vertudez threatened them that they cannot force her to pay back the said amount as she has the back up [of] higher BID officials." Acting upon Villas' letter, Commissioner Rodriguez issued a memorandum, directing the petitioner to submit a sworn written explanation. In her sworn 6 written memorandum, petitioner assailed the credibility of Villas. She alleged that Villas was not a member of the National Press Club as he claimed to be. She averred that the sum of P50,000.00, as evidenced by SB Check Nos. 0014797 and 0014798, was extended to her by private respondent Buenaflor as a loan. She was constrained to borrow money from private respondent and other close friends when her brother became seriously ill. However, she claimed that she had fully settled her obligation to private respondent through installment. She also claimed that private respondent was the one engaged in illegal recruitment through the use of falsified or forged passports. Private respondent was allegedly using petitioners name in de aling with some immigration officials and employees to expedite the processing of the documents of her (private respondents) clients. Petitioner allegedly informed said officers and employees that she was not connected to private respondent in any way. Private respondent allegedly resented this "abrupt disassociation." Also, her repeated refusal to "escort" private respondent's clients who were leaving for abroad using falsified travel documents allegedly led private respondent to threaten her that she could easily use SB Check Nos. 0014797 and 0014798 as evidence to file charges against petitioner by making it appear that she (private respondent) gave the money because of petitioner's promise to facilitate her travel to Japan. Petitioner denied having received the sum of P29,000.00 from private respondent, contending that such claim is "pure falsehood because of the absence of document to prove
5

the alleged receipt." As regards the complaints of Lao and Cosino, petitioner denied having met or known said persons. Finding petitioners explanation "unsatisfactory and [her] defense weak," 7 Commissioner Rodriguez issued Personnel Order No. RBR 98-60, preventively suspending her for sixty (60) days pending the investigation of the case. The instant case was assigned to Special Prosecutor Norberto dela 8 Cruz, who issued a subpoena ordering private respondent and petitioner to appear before him on October 15, 1998 for the formal investigation of the case. It appears that in the meantime, Villas died and private respondent personally took on the instant complaint with the BI for Grave Misconduct against petitioner, docketed as Administrative Charge No. 0004. Lao and 9 Cosino filed their respective complaint-affidavits with the BI which became 10 the subject of another administrative case against petitioner. On August 21, 1998, petitioner filed a Motion for Reconsideration (Re: 11 Personnel Order No. RBR-98-60) with Motion to Dismiss. On September 2, 1998, petitioner filed a Manifestation with Urgent Prayer to Resolve Motion to 12 Dismiss, averring that the complaint instituted by Villas in behalf of private respondent was a harassment case against her. Petitioner sought the dismissal of the instant action on the ground that in addition to the instant administrative case, private respondent had personally filed her complaintaffidavit "of similar nature and character" with the Manila City Prosecutor's Office, docketed as 98-H-44000-1, and with the Office of the Ombudsman, docketed as OMB-98-1701. Private respondent narrated the pertinent events in her complaint-affidavit as follows:
13

City and she volunteered to work-out [and] facilitate the processing of my passport and visa and that [all] I need to do is give her my picture which I did; 5. That she even added that she has a brother in Japan who could also help me find a job and I will be going there along with her son, Jimmy V[e]rtudes Santos. She showed to me her son's passport and application for a Visa, copies of which are attached and marked as Annexes "A", "B" and "C"; 6. That according to Ms. Vertudes I will be receiving a salary of one lapad per day as a factory worker and that should I accept to her offer, all that will be required of me is to give her the amount of P80,000.00; 7. That on December 24, 1997 Ms. Vertudes received from me Security Bank Check No. 0014797 in the amount of P30,000.00 which she was able to encash and likewise Security Bank Check No. 0014798 in the amount of P20,000.00 x x x Annexes "D" and "E"; 8. That on February 8, 1998, because of her insistence and persistence that I should deliver the balance of P30,000.00 to her so that I could leave in a week's time, I was forced to produce the said amount by requesting a friend to pawn my jewelry in the amount of P29,000.00 and the aforesaid amount was handed to Ms. Vertudes in the presence of Ms. Joy Gutierrez at her office in (BID), Intramuros, Manila; 9. That after that last payment, I have been asking her as to when I am suppose[d] to leave because I was already prepared to leave and have in fact told my relatives and friends that I will be leaving soon for Japan but she did not stop making promises; 10. That upon the advi[c]e of a lawyer and to be able to know once and for all whether I could still leave, I requested my lawyer to write a letter to Ms. Vertudes for her to refund the sums of money which I delivered to her in the total amount of P79,000.00 for the processing of my Passport and Visa for job deployment abroad but she did not even answer the letter and neither called up my lawyer to explain her side; letter is attached as Annex "E"; 11. That for Ms. Teresita Vertudes' failure to make good her promise to deploy me after receiving the amount of P79,000.00 in consideration of a job placement in Japan, I hereby charge her for the crime of Illegal Recruitment and Estafa; x x x Annexed to private respondent's complaint-affidavit were: a) the affidavit of a 14 certain Jessilyn Gutierrez who attested that she accompanied private respondent in going to the office of petitioner and she was with private respondent when the latter delivered to petitioner the checks amounting to

1. That I met Ms. Teresita Vertudes, an employee of the Bureau of Immigration and Deportation, Intramuros, Manila sometime in the middle part of 1996; 2. That from that time on, we became friends because we come from the same region and that she used to tell us that she is capable of deploying job applicants to Japan; 3. That during one of those times that I dropped by her office, she intimated to me that a group of Immigration Officers are scheduled to leave for Japan for training and that she was the one who received a call from a Japanese Consul; 4. That Ms. Teresita Vertudes asked me if I am interested in going to Japan because she will find a way to accommodate me and I told her that I am deeply interested but my problem was that my passport was left in Bacolod

P50,000.00 and cash worth P29,000.00 for private respondent's job placement to Japan; b) copies of the passport and application for a visa of petitioner's son, to prove that petitioner showed these documents to her so she would believe that she would be going to Japan with petitioner's son; c) copies of SB Check Nos. 0014797 and 0014798, to prove petitioner's receipt of the total amount of P50,000.00 from private respondent; and d) letter of private respondent's counsel to petitioner demanding the refund of P79,000.00 from petitioner. On October 15, 1998, petitioner, accompanied by her counsel, and private respondent appeared before Special Prosecutor dela Cruz for the formal 15 investigation of the case. The second hearing took place on October 27, 16 1998, during which, petitioner submitted her Counter-Affidavit and the affidavits of her witnesses. Her version was: 4.1. I first met Ms. Buenaflor sometime in 1996 when I was still assigned at the General Services Division of the Bureau of Immigration; 4.2. At that time, Ms. Buenaflor represented to me that she was connected with a travel agency assigned to process/facilitate documents of their clients in the Buereau of Immigration; 4.3. Indeed, I saw Ms. Buenaflor processing and making follow-ups of documents in the different Divisions/Departments of the Bureau of Immigration similar to what were being done by the representatives of other travel agencies transacting business therewith; 4.4. During that period, Ms. Buenaflor and me became close friends because she frequently visited me in my office at General Services Division and would even stay thereat while processing documents and waiting for their release. In fact, she often took her lunch and merienda with me and sometimes, with the other employees of our division; 4.5. Sometime in the third week of December 1997, I was informed by my relatives in our hometown that my brother, Mariano "Dido" Vertudes was seriously ill and was thereafter confined on December 22, 1997 at Gingoog General Hospital located at Gingoog City, Misamis Oriental; 4.6. The type of illness of my brother required extensive treatment and medication; and for this reason, they requested for financial assistance to defray the expenses therefor; 4.7. Since I was then in financial distress, I was constrained to borrow money with interests from Ms. Buenaflor and other close friends of mine. As a kind gesture on the part of Ms. Buenaflor she extended to me a loan in the total

amount of P50,000.00 as represented by Security Bank check nos. 0014797 and 0014798 in the respective amounts of P30,000.00 and P20,000.00 (citation omitted); 4.8. It is however our agreement that I would pay the amount of P50,000.00 with the additional amount of P10,000.00 representing the interests therefore for a total of P60,000.00; 4.9. We further agreed that I would pay my financial obligation to Ms. Buenaflor on or before the last day of May 1998 from December 1997 on installment basis; 4.10. With the aforementioned amount of P50,000.00 loaned to me by Julie Buenaflor and the other amounts x x x from other friends, I was able to contribute the total amount of P100,000.00 for the treatment and hospitalization of my brother. It was, however, to no avail because my brother died on January 6, 1998; 4.11. Pursuant to our agreement, I was able to pay Ms. Buenaflor on installment basis the total amount of P60,000.00 at my earlier indicated address on the following dates: DATE AMOUNT February 28, 1998 P15,000.00 March 31, 1998 15,000.00 April 30, 1998 15,000.00 May 30, 1998 15,000.00 4.12. I tendered the said payments to Ms. Buenaflor at my residence on the dates earlier enumerated in the presence of my housemaids, Eliza Compo and Jocelyn Reyes; x x x Petitioner averred that private respondent misrepresented to her (petitioner's) son, Jimmy Santos, Jr., that she (private respondent) would facilitate his travel to and employment in Japan. She also assailed the credibility of private respondent by accusing her of using several passports under different names. Attached to petitioner's counter-affidavit were: a) a copy of a passport application in the name of Honna Sumadia Araneta showing the photographs of private respondent; b) referral slip of the Pasay City Police Station and the sworn statement of a certain Armando Gambala charging

private respondent with Estafa and Illegal Recruitment; c) affidavits of 18 petitioner's son, Jimmy Santos, Jr., and a certain Enrico Tuazon, showing that they likewise filed a case for Estafa and Illegal Recruitment against private respondent; and d) a copy of the Certificate of Business Name and 19 Certification issued by Prudential Bank, to prove that private respondent misstated the address of her business establishment. Petitioner also submitted to Special Prosecutor dela Cruz the Pinagsamang Sinumpaang 20 Salaysay of her two housemaids, Eliza Compo and Jocelyn Reyes, to prove that she had fully paid her obligation to private respondent. Likewise, 21 she submitted the handwritten joint sworn statement of Ernesto V. Cloma and Jhun M. Romero, media practitioners, to prove that Villas asked for petitioners forgiveness before he died, admitting that he only sent his letter dated July 27, 1998 to Commissioner Rodriguez in consideration of the amount given by private respondent. On the same hearing, the parties agreed to submit the instant case for 22 23 resolution. Thus, in his Resolution dated November 12, 1998, Special Prosecutor dela Cruz found petitioner guilty of grave misconduct and recommended her dismissal from the service. Meantime, the case instituted by private respondent with the Office of the Ombudsman was referred to the Office of the City Prosecutor, thus: After evaluation, the undersigned finds that the charges imputed against the respondent are not office related and that the administrative aspect of the case had already been undertaken by the Bureau of Immigration. In view thereof, it is respectfully recommended that the instant complaint be referred to the Office of the City Prosecutor of Manila for appropriate action. SO ORDERED.
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17

Accordingly, she is ordered dismissed from the service effective immediately with forfeiture of all benefits under the law, with prejudice to her reinstatement in this Bureau and all its branches. SO ORDERED.
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The order quoted the pertinent portion of Special Prosecutor dela Cruz's resolution, viz: After carefully weighing and evaluating the versions of the complainant and the respondent, this Office is more incline[d] to give credence to complainant's declarations that she was indeed duped by the respondent into parting with the hard-earned money of P79,000.00 on the promise of the respondent that she would secure a passport and visa for the complainant to Japan. Respondent's alibi that the said amount was a loan from the complainant, who is her friend, is highly unbelievable. Complainant does not appear to be a rich person who would so easily part with such big amount of money without any security without any hope or assurance of being re-paid. The fact that complainant paid P79,000.00 to the respondent so she could get a passport and a visa to work in Japan as a factory worker clearly showed that she was desperately in need of a job. For her to give such amount to the respondent as an unsecured loan is extremely incredulous. Respondent's claim that the present complaint is pure harassment by the complainant is completely bereft of credence. What benefit or advantage would the complainant achieve in fabricating charges against the respondent? If the complainant filed this complaint, it was because she was wronged by the respondent. Likewise, respondent's allegation that the P50,000.00 she received from the complainant was a loan because she (respondent) was then in a financial distress and she needed money to help her sick brother in the province was belied by her own son, Jimmy V. Santos, Jr., who declared in his Affidavit that sometime in December 1997, he gave P50,000.00 to the complainant so that the latter could obtain a tourist visa for him to Japan. Why should the respondent bother to get a P50,000.00 loan from the complainant to assist her ailing brother when she could readily obtain this amount from her own son?

(emphases supplied)
25

Petitioner filed a Motion to Re-open with the BI, contending that the finding of the Ombudsman that "the charges imputed against [petitioner] are not office related" clearly shows that she is not administratively liable for grave misconduct. She moved for the re-opening of the case "to allow her to adduce further evidence mainly based on the findings of the Ombudsman." 26 The motion, however, was denied for lack of merit. On January 12, 1999, Commissioner Rodriguez issued an order, adopting the resolution of Special Prosecutor dela Cruz, viz: WHEREFORE, respondent Teresita L. Vertudez is hereby found liable for grave misconduct under PD No. 807 and the Administrative Code of 1987.

As to respondent's assertion that she was able to pay the P50,000.00 to the complainant, there is nothing to support such payment. The statements of her two (2) maids -- Eliza C[o]mpo and Jocelyn Reyes -- in their Sinumpaang Salaysay that respondent paid to the complainant the total amount of P60,000.00 during the months of February 1998 to May 1998 cannot be believed. Being the housemaids of the respondent, it is but natural and to be 28 expected of these persons to come to the aid of their employe[r]. Petitioner filed a Motion for Reconsideration and/or New Trial, reiterating 30 her argument in her Motion to Re-open. Again, the motion was denied. Subsequently, the assailed order of dismissal was affirmed by then 31 Department of Justice Secretary Serafin Cuevas. Petitioner appealed to the CSC, raising the issues of lack of due process and lack of substantial evidence. On November 19, 1999, the CSC dismissed petitioner's appeal. It held, in part, that: A careful study of the records in the light of the arguments of appellant reveals that the requirements of due process have been duly observed in the proceedings had in this case. xxx As to the second issue, the Commission finds substantial evidence to prove that respondent receive[d] money in exchange for her services in facilitating the issuance of passport and visa of Julie Bernardo (sic). The complaint-affidavit of Julie Buenaflor is reproduced in part as follows: x x x In the absence of any improper motive or malice on the part of the witness to foist said charges on respondent, the Commission is inclined to give credence to the statements of witness Bernardo (sic). In fact Vertudez has admitted that she received money from Buenaflor but argued that the money was a mere loan. However, if this were true, Buenaflor should have demanded for a collateral, considering the amount involved. Vertudez failed to present any evidence that she gave any security in return for said loan 33 which makes her version highly incredible. x x x Petitioner filed a motion for reconsideration avail. The CSC held:
34 32 29

from BI clients in return for a visa to Japan. The witnesses against Vertudez include Peng Villas (Deceased), Julie Buenflor ( sic), Amy Cosino, Virginia Lubriano, Manuelito Lao and Jaime Santos Flores. The affidavits of said witnesses all speak of the modus operandi of Vertudez at the BI, where she approaches BI clients and offers them a visa, passport and an employment contract in exchange for P120,000.00. In the case of witness Julie Buenaflor, she testified that respondent assured her of a visa, a passport and a job in Japan for a fee of P80,000.00 and that Vertudez after getting paid failed to fulfill her promise. It is observed that Vertudez seeks to destroy the credibility of witness Buenaflor by implying that the former has a pending case for illegal recruitment and estafa. Records, however, show that the charges against witness Buenaflor all came up after Vertudez was formally charged by the BI and that such charges have no reasonable connection with her administrative case pending before the Commission. In this regard, "There being nothing in record to show that witnesses were actuated by any improper motive, their testimony shall be entitled to full faith and credit." 35 (People v. Flores, 252 SCRA 31) Thereafter, petitioner filed a petition for review before the CA, raising the issues of: a) whether or not the BI and CSC violated petitioner's right to due process; b) whether or not respondents erred in finding that the alleged illegal recruitment activity of the petitioner had a direct relation to and connected with the performance of her duties and responsibilities as an employee of the BI; and c) whether or not there is substantial evidence to support the finding that petitioner is an illegal recruiter, thus, warranting her 36 removal from public service. On February 12, 2002, the CA dismissed the petition for lack of merit. The CA found that "petitioner was given more than ample opportunity to ventilate her defense and disprove the charges leveled against her, hence, there can 37 be no denial of her right to due process." Moreover, it held that "there is more than substantial evidence proving the charge of grave misconduct 38 against petitioner." The CA ratiocinated that: In the proceedings a quo, it was established that petitioner, indeed, received and encashed the two (2) checks given by private respondent in the total amount of Php50,000.00. This fact, therefore, gives credence to the claim of private respondent that she gave petitioner two (2) checks in consideration of the latter's promise to facilitate her employment abroad. This being the case, the burden was shifted to petitioner to refute this established fact through equally weighty and competent evidence.

of the CSC's Resolution, to no

In so far as Vertudez'[s] illegal recruitment activities are concerned, the Commission finds the existence of clear substantial evidence to establish the same. Evidence presented all point to the fact that Vertudez solicited money

Now, petitioner admitted having received, and encashed, the two checks from private respondent but offered the excuse that the same was extended to her as a loan. Aside from her testimony and that of her household helpers to prove this assertion, no other independent and unbiased evidence was offered to prove the fact of loan. As it is, her theory of loan stands on flimsy ground and is not sufficient enough to overthrow the fact established by complainant. This considering that it is highly improbable and even contrary to human experience for a person to loan a huge amount of money as Php50,000.00 without any document evidencing such loan nor a collateral to secure its payment. Note even that the two checks were made payable to "cash," a bearer instrument, and was not even crossed on its face, hence, can be encashed by any person holding the negotiable instrument. If, indeed, private respondent gave the two checks to petitioner as a clean loan (without any collateral) without any separate document embodying their loan agreement, the latter should have at least been made the payee of the checks and a memorandum written at the back of the check to the effect that it is being extended as a loan, in order to protect the interest of the lender. This is conventional business practice which is altogether absent in the case 39 at bar, hence, petitioner's theory of loan must necessarily crumble. Petitioner filed a Motion for Reconsideration, contending that the CA failed to resolve the issue of whether petitioner's alleged illegal recruitment activities are directly connected with her duties and responsibilities as a 41 Fingerprint Examiner of the BI. This motion was denied. Undaunted, petitioner filed this petition, summing up the issues as follows: 1. WHETHER OR NOT THE HONORABLE SUPREME COURT MAY REVIEW THE DECISION OF THE COURT OF APPEALS IN CA-G.R. SP NO. 58766; 2. WHETHER OR NOT THE COURT OF APPEALS RESOLVED THE SECOND ISSUE RAISED IN THE PETITION FOR REVIEW FILED BEFORE IT; 3. WHETHER OR NOT THERE IS SUBSTANTIAL EVIDENCE TO SUPPORT THE FINDINGS THAT PETITIONER IS GUILTY OF GRAVE MISCONDUCT; 4. WHETHER OR NOT A PROMISE TO FACILITATE EMPLOYMENT OF ANOTHER ABROAD CONSTITUTES GRAVE MISCONDUCT[;] 5. WHETHER OR NOT PETITIONER WAS ACCORDED DUE PROCESS;
40

6. WHETHER OR NOT THE ACT CONSTITUTING GRAVE MISCONDUCT MUST HAVE A DIRECT RELATION TO THE FUNCTION OF THE PUBLIC OFFICE HELD BY RESPONDENTS IN ADMINISTRATIVE CASES; AND 7. WHETHER OR NOT THE ALLEGED ACT COMMITTED BY THE PETITIONER IS DIRECTLY RELATED TO ANY OF HER FUNCTIONS AS 42 FINGERPRINT EXAMINER AT THE BUREAU OF IMMIGRATION. The petition is denied. We shall first resolve the issue of due process. Petitioner contends that the essential requirements of due process as laid down in Ang Tibay v. Court of 43 44 Industrial Relations and Doruelo v. COMELEC were violated in the case at bar. First, she contends that she was denied of her right to a full hearing when she was not accorded the opportunity to cross-examine the witnesses against her, as provided under Section 48, par. 5, Title I, Book V of the Administrative Code of 1987. She allegedly raised this issue in her 45 appeal before the CSC. The argument is unmeritorious. We have explained the meaning of the right to cross-examination as a vital element of due process as follows: The right of a party to confront and cross-examine opposing witnesses in a judicial litigation, be it criminal or civil in nature, or in proceedings before administrative tribunals with quasi-judicial powers, is a fundamental right which is part of due process. However, the right is a personal one which may be waived expressly or impliedly by conduct amounting to a renunciation of the right of cross-examination. Thus, where a party has had the opportunity to cross-examine a witness but failed to avail himself of it, he necessarily forfeits the right to cross-examine and the testimony given on direct examination of the witness will be received or 46 allowed to remain in the record. (emphasis supplied) In the case at bar, petitioner cannot argue that she was deprived of due process simply because no cross-examination took place. Nothing on record shows that petitioner asked for cross-examination during the formal investigation conducted by Special Prosecutor dela Cruz. Notably, two hearings were conducted, during which, both private respondent and petitioner appeared. During the hearing dated October 27, 1998, both parties agreed to submit the case for resolution after petitioner submitted her counter-affidavit and the affidavits of her witnesses. In fact, when petitioner filed her Motion to Re-open the case with the BI, she did not question the lack of cross-examination during the investigation proceedings. She merely

based her motion on the order of the Office of the Ombudsman finding the charge against her as "not office related." In the same pleading, she admitted that "[a]s early as October 27, 1998, the instant administrative action has been submitted for resolution after the contending parties have submitted their respective evidence" and that her move for the re-opening of the administrative case was merely "to allow her to adduce further evidence mainly based on the findings of the Office of the Ombudsman. " Again, in her Motion for Reconsideration and/or New Trial of Commissioner Rodriguez's order of dismissal, she merely reiterated her arguments in her Motion to Re-open. She never complained that she was deprived of her right to cross-examination during the investigation of Special Prosecutor dela Cruz. The right to cross-examination being a personal right, petitioner must be deemed to have waived this right by agreeing to submit the case for resolution and not questioning the lack of it in the proceedings before the BI. More importantly, it is well-settled that the essence of due process in administrative proceedings is an opportunity to explain one's side or an 47 opportunity to seek reconsideration of the action or ruling complained of. This was clearly satisfied in the case at bar. Records show that petitioner not only gave her sworn written explanation of the charges against her during the initial stage of the investigation, she also submitted: a) a sworn counteraffidavit refuting the charges against her, with all the attached annexes as evidence; b) a Motion to Re-open the case with the BI; c) a Motion for Reconsideration and/or New Trial with the BI; d) an Appeal to the CSC; e) a Motion for Reconsideration with the CSC; f) an Appeal to the CA; g) a Motion for Reconsideration with the CA; and h) the instant petition for review. Second, petitioner contends that Commissioner Rodriguez violated the principle 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 in arriving at a decision" when his denial of her Motion to Re-open and his order finding her guilty of grave misconduct were based exclusively on the resolution of Special Prosecutor 48 dela Cruz. This argument is likewise unavailing. There is nothing essentially wrong in the head of a bureau adopting the recommendation of a subordinate. Section 47, Book V of the Administrative Code of 1987 gives the chief of bureau or office or department the power to 49 delegate the task of investigating a case to a subordinate. What due process demands is for the chief of the bureau to personally weigh and assess the evidence which the subordinate has gathered and not merely to 50 rely on the recommendation of said investigating officer.

In the case at bar, the order of Commissioner Rodriguez enjoys the disputable presumption that official duties have been regularly performed. That his decision quotes the resolution of Special Prosecutor dela Cruz does not necessarily imply that he did not personally examine the affidavits and evidence presented by the parties. Petitioner's bare assertion that Commissioner Rodriguez did not personally examine the evidence, without more, is not sufficient to overcome this presumption. Third, petitioner contends that the CSC did not have basis in finding: a) that the affidavits of "Peng Villas (Deceased), Julie Buenaflor, Amy Cosino, Virginia Lubriano, Manuelito Lao and Jaime Santos Flores x x x all speak of the modus operandi of Vertudez at the BI" as these affidavits were not submitted to the CSC; and b) that petitioner "solicited money from BI clients" inasmuch as private respondent never alleged that she was a BI client. Moreover, the CSC's finding that private respondent "testified that respondent assured her of a visa, a passport and a job in Japan for a fee of P80,000.00 and that Vertudez, after getting paid, failed to fulfill her promise" is not supported by the complaint-affidavit of private respondent which merely stated that petitioner "volunteered to work-out and facilitate the processing of [private respondent's] passport and visa" and that petitioner 51 "has a brother in Japan who could also help [private respondent] find a job." Petitioner also assails the failure of the BI and CSC to consider the handwritten joint sworn statement of media practitioners Cloma and Romero 52 and the joint affidavit of the housemaids of petitioner, Compo and Reyes. Again, these arguments fail to impress. It is settled that only questions of law are entertained in petitions for review 53 on certiorari under Rule 45 of the Rules of Court. It is not the function of this Court, in a petition under Rule 45, to scrutinize, weigh and analyze evidence 54 all over again. Well-settled is the rule that the findings of fact of quasijudicial agencies, like the BI and the CSC, are accorded not only respect but 55 even finality if such findings are supported by substantial evidence. Substantial evidence is such amount of relevant evidence which a reasonable mind might accept as adequate to support a conclusion, even if 56 other equally reasonable minds might conceivably opine otherwise. In the case at bar, we note that contrary to petitioner's stance, the affidavits 57 of Lao and Cosino do appear in the records of the CSC. In any case, the affidavits of Villas, Cosino, Lubriano, Lao and Flores are of little relevance to the case at bar. If any, they are merely corroborating evidence. Note that it was only in the CSC's resolution on petitioner's Motion for Reconsideration that said affidavits were mentioned. These affidavits were not used as basis for the decision rendered by the BI, the main decision of the CSC denying the appeal of petitioner and the decision of the CA. We find the unanimous finding of guilt of the BI, the CSC and the CA amply supported by the

following evidence on record: a) the complaint-affidavit of private respondent; b) the affidavit of Jessilyn Gutierrez; c) copies of the passport and application for a visa of petitioner's son; d) copies of SB Check Nos. 0014797 and 0014798; and e) letter of private respondent's counsel to petitioner demanding from petitioner the refund of the P79,000.00 that private respondent paid to petitioner. As to the other contentions, we note that in addition to the self-serving quotations of petitioner from the complaint-affidavit of private respondent, said complaint-affidavit categorically alleged that petitioner told private respondent that the latter would "be receiving a salary of one lapad per day as a factory worker and that should [she] accept [petitioner's] offer, all that [would] be required of [her was] to give [petitioner] the amount of P80,000.00." Private respondent also categorically alleged that she was charging petitioner for her "failure to make good her promise to deploy [her] after receiving the amount of P79,000.00 in consideration of a job placement in Japan." Thus, contrary to petitioner's stance, the assailed findings of the CSC are supported by private respondent's complaintaffidavit. Moreover, it is well-settled that it is not for the appellate court to substitute its own judgment for that of the administrative agency on the sufficiency of the evidence and the credibility of the witnesses. Administrative decisions on matters within their jurisdiction are entitled to respect and can only be set aside on proof of grave abuse of discretion, fraud or error of law. None of 58 these vices has been shown in this case. We shall now proceed to the other issue: whether petitioner is guilty of grave misconduct warranting her removal from government service. Citing Sarigumba v. Pasok, petitioner contends that "[m]isconduct, warranting removal from office of a public officer, must have a direct relation to and connected with the performance of official duties, amounting either to maladministration or willful, intentional neglect and failure to discharge the duties of the office." Since the BI is a government agency principally responsible for the administration and enforcement of immigration, citizenship and alien admission and registration laws, "by no stretch of imagination" can there be a direct relation between the function of a fingerprint examiner and the alleged promise to facilitate private respondent's 60 employment abroad. Petitioner also capitalizes on the allegation of private respondent in her complaint-affidavit that she and petitioner "became friends" to contend that the acts being imputed against her are personal and not 61 office-related. These arguments lack merit.
59

The allegations in private respondents complaint-affidavit indicate that petitioner used her position as a BI employee to assure private respondent that she could facilitate petitioner's deployment to Japan. Private respondent alleged that "during one of those times that [she] dropped by [petitioner's] office, [petitioner] intimated to [her] that a group of Immigration officers [were] scheduled to leave for Japan for training and that [petitioner] was the one who received a call from a Japanese Consul." Petitioner "asked [private respondent] if [she was] interested in going to Japan because [petitioner] will find a way to accommodate [her]." Even petitioner's own admissions show that her position as an employee of the BI may be utilized in connection with illegal recruitment. In her memorandum to Commissioner Rodriguez, as reiterated in her counteraffidavit, petitioner alleged that private respondent was engaged in illegal recruitment and "was using [petitioner's] name in her dealings with some immigration officials and employees, presumably to expedite the processing of the documents belonging to her clients." Petitioner likewise claimed that she "declined [private respondent's] proposal that [she] 'escort' some of [private respondent's] clients who would be leaving for foreign countries but with falsified travel documents ." Private respondent even told her that the "proposed scheme could easily be done because being an employee of this Bureau, [petitioner has] several connections not only at the Ninoy Aquino International Airport (NAIA) but also in Mactan International Airport ." That her position is designated as "fingerprint examiner" is not determinative of the issue of whether the charge against her is work-related. The allegations in the complaint against petitioner and her own admissions show that her duties go beyond her job title and that the charge against her is connected with her position as an employee of the BI. Finally, petitioner contends that "a promise to find a way to accommodate private respondent and a representation that petitioner has a brother who could help private respondent find a job are not misconduct warranting the dismissal of petitioner from office" but, "[a]t most," only "entitle[s] private respondent to civil indemnity." Petitioner contends that the CA's finding that petitioner merely made a "promise to facilitate" private respondent's employment abroad, as distinguished from the CSC's finding that petitioner committed "shameful illegal recruitment activities," practically absolved petitioner from the charge of grave misconduct. This argument deserves scant consideration. Misconduct has been defined as an intentional wrongdoing or deliberate violation of a rule of law or standard of behavior, especially by a

government official. As distinguished from simple misconduct, the elements of corruption, clear intent to violate the law or flagrant disregard of 63 established rule, must be manifest in a charge of grave misconduct. Corruption, as an element of grave misconduct, consists in the act of an official or fiduciary person who unlawfully and wrongfully uses his station or character to procure some benefit for himself or for another person, contrary 64 to duty and the rights of others. An act need not be tantamount to a crime for it to be considered as grave misconduct as in fact, crimes involving moral turpitude are treated as a separate ground for dismissal under the 65 Administrative Code. In the case at bar, petitioner cannot downplay the charges against her. Whether the charges against petitioner satisfy the elements of illegal recruitment to make her criminally liable for such crime is not the issue at bar. At the very least, petitioner was found to have taken advantage of her position as an employee of the BI to falsely promise, for pecuniary gain, the facilitation of private respondent's travel to Japan, including the processing of her passport, visa and other travel documents. Worse, she was found to have refused to reimburse the amounts paid to her by private respondent even when the promised passport, visa, and travel documents did not materialize. Undoubtedly, these acts involve "corruption, clear intent to violate the law or flagrant disregard of established rule." Under Section 23(c), Rule XIV the Omnibus Civil Service Rules and Regulations, these acts constitute a grave offense for which petitioner must suffer the penalty of dismissal. IN VIEW WHEREOF, the petition is DENIED. The Court of Appeals Decision dated February 12, 2002 and Resolution dated April 16, 2002 in CA-G.R. SP No. 58766 are AFFIRMED. SO ORDERED. G.R. No. L-68288 July 11, 1986 DIOSDADO GUZMAN, ULYSSES URBIZTONDO, and ARIEL RAMACULA, petitioners, vs. NATIONAL UNIVERSITY and DOMINGO L. JHOCSON in his capacity as President of National University, respondents. Efren H. Mercado and Haydee Yorac for petitioners. Samson S. Alcantara for respondents.

62

NARVASA, J.: Petitioners Diosdado Guzman, Ulysses Urbiztondo and Ariel Ramacula, students of respondent National University, have come to this Court to seek relief from what they describe as their school's "continued and persistent refusal to allow them to enrol." In their petition "for extraordinary legal and equitable remedies with prayer for preliminary mandatory injunction" dated August 7, 1984, they allege: 1) that respondent University's avowed reason for its refusal to re-enroll them in their respective courses is "the latter's participation in peaceful mass actions within the premises of the University. 2) that this "attitude of the (University) is simply a continuation of its cavalier if not hostile attitude to the student's exercise of their basic constitutional and human rights already recorded in Rockie C. San Juan vs. National University, S.C. G.R. No. 65443 (1983) and its utter contempt for the principle of due process of law to the prejudice of petitioners;" and 3) that "in effect petitioners are subjected to the extreme penalty of expulsion without cause or if there be any, without being informed of such cause and without being afforded the opportunity to defend themselves. Berina v. Philippine Maritime Institute (117 SCRA 581 [1983]). In the comment filed on September 24, 1986 for respondent University and 1 its President pursuant to this Court's requirement therefor , respondents make the claim: 1) that "petitioners' failure to enroll for the first semester of the school year 1984-1985 is due to their own fault and not because of their allegedexercise of their constitutional and human rights;" 2) that petitioner Urbiztondo, sought to re-enroll only on July 5, 1986 "when the enrollment period was already closed;" 3) that as regards petitioner Guzman, his "academic showing" was "poor", "due to his activities in leading boycotts of classes"; that when his father was notified of this development sometime in August, 1982, the latter had demanded that his son "reform or else we will recall him to the province"; that Guzman was one of the petitioners in G.R. No. 65443 entitled "Rockie San Juan, et al. vs. National University, et al.," at the hearing of which on

November 23, 1983 this Court had admonished "the students involved (to) take advantage and make the most of the opportunity given to them to study;" that Guzman "however continued to lead or actively participate in activities within the university premises, conducted without prior permit from school authorities, that disturbed or disrupted classes therein;" that moreover, Guzman "is facing criminal charges for malicious mischief before the Metropolitan Trial Court of Manila (Crim. Case No. 066446) in connection with the destruction of properties of respondent University on September 12, 1983 ", and "is also one of the defendants in Civil Case No. 8320483 of the Regional Trial Court of Manila entitled 'National University, Inc. vs. Rockie San Juan et al.' for damages arising from destruction of university properties 4) that as regards petitioner Ramacula, like Guzman "he continued to lead or actively participate, contrary to the spirit of the Resolution dated November 23, 1983 of this ... Court (in G.R. No. 65443 in which he was also one of the petitioners) and to university rules and regulations, within university premises but without permit from university officials in activities that disturbed or disrupted classes;" and 5) that petitioners have "failures in their records, (and) are not of good scholastic standing. " Respondents close their comment with the following assertions, to wit: 1) By their actuations, petitioners must be deemed to have forfeited their privilege, if any, to seek enrollment in respondent university. The rights of respondent university, as an institution of higher learning, must also be respected. It is also beyond comprehension why petitioners, who continually despise and villify respondent university and its officials and faculty members, should persist in seeking enrollment in an institution that they hate. 2) Under the circumstances, and without regard to legal technicalities, it is not to the best interest of all concerned that petitioners be allowed to enroll in respondent university. 3) In any event, petitioners' enrollment being on the semestral basis, respondents cannot be compelled to enroll them after the end of the semester. On October 2, 1984 this Court issued a resolution reading as follows: ... Acting on the Comment submitted by respondent, the Court Resolved to NOTE the same and to require a REPLY to such Comment. The Court further Resolved to ISSUE a MANDATORY INJUNCTION, enjoining respondent to allow

the enrolment of petitioners for the coming semester without prejudice to any disciplinary proceeding to which any or all of them may be subjected with their right to lawful defense recognized and respected. As regards petitioner Diosdado Guzman, even if it be a fact that there is a pending criminal charge against him for malicious mischief, the Court nonetheless is of the opinion that, as above-noted, without prejudice to the continuation of any disciplinary proceeding against him, that he be allowed to resume his studies in the meanwhile. As shown in Annex 2 of the petition itself, Mr. Juan P. Guzman, father of said petitioner, is extending full cooperation with petitioners to assure that whatever protest or grievance petitioner Guzman may have would be ventilated in a lawful and peaceful manner. Petitioners' REPLY inter alia 1) denied that Urbiztondo attempted to enroll only on July 5, 1984 (when enrollment was already closed), it being alleged that "while he did try to enroll that day, he also attempted to do so several times before that date, all to no avail, because respondents ... persistently refused to allow him to do so" respondents' ostensible reason being that Urbiztondo (had) participated in mass actions ... within the school premises," although there were no existing disciplinary charge against petitioner Urbiztondo" at the time; 2) asserted that "neither the text nor the context of the resolution justifies the conclusion that "petitioners' right to exercise their constitutional freedoms" had thereby been restricted or limited; and 3) alleged that "the holding of activities (mass action) in the school premises without the permission of the school ... can be explained by the fact that the respondents persistently refused to issue such permit repeatedly sought by the students. " On November 23, 1984, this Court promulgated another resolution, this time reading as follows: ... The Court, after considering the pleadings filed and deliberating on the issues raised in the petition for extraordinary legal and equitable remedies with prayer for preliminary mandatory injunction as well as the respondents' comment on the petition and the reply of counsel for petitioners to the respondents' comment, Resolved to (a) give DUE COURSE to the petition; (b) consider the respondents' comment as ANSWER to the petition; and (c)
2

require the parties to file their respective MEMORANDA within twenty (20) days from notice. ... . Immediately apparent from a reading of respondents' comment and memorandum is the fact that they had never conducted proceedings of any sort to determine whether or not petitioners-students had indeed led or participated "in activities within the university premises, conducted without prior permit from school authorities, that disturbed or disrupted classes 3 therein" or perpetrated acts of "vandalism, coercion and intimidation, slander, noise barrage and other acts showing disdain for and defiance of 4 University authority." Parenthetically, the pendency of a civil case for damages and a criminal case for malicious mischief against petitioner Guzman, cannot, without more, furnish sufficient warrant for his expulsion or debarment from re-enrollment. Also apparent is the omission of respondents to cite this Court to any duly published rule of theirs by which students may be expelled or refused re-enrollment for poor scholastic standing. Under the Education Act of 1982, the petitioners, as students, have the right among others "to freely choose their field of study subject to existing curricula and to continue their course therein up to graduation, except in case 6 of academic deficiency, or violation of disciplinary regulations." Petitioners were being denied this right, or being disciplined, without due process, in 7 violation of the admonition in the Manual of Regulations for Private Schools that "(n)o penalty shall be imposed upon any student except for cause as defined in ... (the) Manual and/or in the school rules and regulations as duly 8 promulgated and only after due investigation shall have been conducted." This Court is therefore constrained, as in Berina v. Philippine Maritime 9 Institute, to declare illegal this act of respondents of imposing sanctions on students without due investigation. Educational institutions of course have the power to "adopt and enforce such rules as may be deemed expedient for ... (its) government, ... (this being)" incident to the very object of incorporation, and indispensable to the 10 successful management of the college." The rules may include those governing student discipline. Indeed, the maintenance of "good school discipline" is a duty specifically enjoined on "every private school" by the 11 Manual of Regulations for Private Schools; and in this connection, the Manual further provides that... The school rules governing discipline and the corresponding sanctions therefor must be clearly specified and defined in writing and made known to the students and/or their parents or guardians. Schools shall have the authority and prerogative to promulgate such rules and regulations as they may deem necessary from time to time
5

effective as of the date of their promulgation unless 12 otherwise specified. But, to repeat, the imposition of disciplinary sanctions requires observance of procedural due process. And it bears stressing that due process in disciplinary cases involving students does not entail proceedings and hearings similar to those prescribed for actions and proceedings in courts of justice. The proceedings in student discipline cases may be summary; and cross-examination is not, 'contrary to petitioners' view, an essential part thereof. There are withal minimum standards which must be met to satisfy the demands of procedural due process; and these are, that (1) the students must be informed in writing of the nature and cause of any accusation against them; (2) they shag have the right to answer the charges against them, with the assistance of counsel, if desired; (3) they shall be informed of the evidence against them; (4) they shall have the right to adduce evidence in their own behalf; and (5) the evidence must be duly considered by the investigating committee or official designated by the school authorities to hear and decide the case. WHEREFORE, the petition is granted and the respondents are directed to allow the petitioners to re-enroll or otherwise continue with their respective courses, without prejudice to any disciplinary proceedings to which any or all of them may be subjected in accordance with the standards herein set forth. SO ORDERED. G.R. No. 127980 December 19, 2007

DE LA SALLE UNIVERSITY, INC., EMMANUEL SALES, RONALD HOLMES, JUDE DELA TORRE, AMPARO RIO, CARMELITA QUEBENGCO, AGNES YUHICO and JAMES YAP, petitioners, vs. THE COURT OF APPEALS, HON. WILFREDO D. REYES, in his capacity as Presiding Judge of Branch 36, Regional Trial Court of Manila, THE COMMISSION ON HIGHER EDUCATION, THE DEPARTMENT OF EDUCATION CULTURE AND SPORTS, ALVIN AGUILAR, JAMES PAUL BUNGUBUNG, RICHARD REVERENTE and ROBERTO VALDES, JR., respondents. DECISION REYES, R.T., J.:

NAGTATAGIS sa kasong ito ang karapatang mag-aral ng apat na estudyante na nasangkot sa away ng dalawang fraternity at ang karapatang akademiko ng isang pamantasan. PRIVATE respondents Alvin Aguilar, James Paul Bungubung, Richard Reverente and Roberto Valdes, Jr. are members of Tau Gamma Phi Fraternity who were expelled by the De La Salle University (DLSU) and 1 College of Saint Benilde (CSB) Joint Discipline Board because of their involvement in an offensive action causing injuries to petitioner James Yap and three other student members of Domino Lux Fraternity. This is the backdrop of the controversy before Us pitting private respondents' right to education vis-a-vis the University's right to academic freedom. ASSAILED in this Petition for Certiorari, Prohibition and Mandamus under Rule 65 of the Rules of Court are the following: (1) Resolution of the Court of Appeals (CA) dated July 30, 1996 dismissing DLSU's petition for certiorari against respondent Judge and private respondents Aguilar, Bungubung, 2 Reverente, and Valdes, Jr.; (2) Resolution of the CA dated October 15, 3 1996 denying the motion for reconsideration; (3) Order dated January 7, 1997 of the Regional Trial Court (RTC), Branch 36 Manila granting private 4 respondent Aguilar's motion to reiterate writ of preliminary injunction; and (4) Resolution No. 181-96 dated May 14, 1996 of the Commission on Higher Education (CHED) exonerating private respondent Aguilar and lowering the 5 penalties for the other private respondents from expulsion to exclusion. Factual Antecedents Gleaned from the May 3, 1995 Decision of the DLSU-CSB Joint Discipline Board, two violent incidents on March 29, 1995 involving private respondents occurred: x x x From the testimonies of the complaining witnesses, it appears that one week prior to March 29, 1995, Mr. James Yap was eating his dinner alone in Manang's Restaurant near La Salle, when he overheard two men bad-mouthing and apparently angry at Domino Lux. He ignored the comments of the two. When he arrived at his boarding house, he mentioned the remarks to his two other brods while watching television. These two brods had earlier finished eating their dinner at Manang's. Then, the three, together with four other persons went back to Manang's and confronted the two who were still in the restaurant. By admission of respondent Bungubung in his testimony, one of the two was a member of the Tau Gamma Phi Fraternity. There was no rumble or physical violence then.

After this incident, a meeting was conducted between the two heads of the fraternity through the intercession of the Student Council. The Tau Gamma Phi Fraternity was asking for an apology. "Kailangan ng apology" in the words of respondent Aguilar. But no apology was made. Then, 5 members of the Tau Gamma Phi Fraternity went to the tambayan of the Domino Lux Fraternity in the campus. Among them were respondents Bungubung, Reverente and Papio. They were looking for a person whose description matched James Yap. According to them, this person supposedly "nambastos ng brod." As they could not find Mr. Yap, one of them remarked "Paano ba iyan. Pasensiya na lang." Came March 29, 1995 and the following events. Ten minutes before his next class at 6:00 p.m., Mr. James Yap went out of the campus using the Engineering Gate to buy candies across Taft Avenue. As he was about to re-cross Taft Avenue, he heard heavy footsteps at his back. Eight to ten guys were running towards him. He panicked. He did not know what to do. Then, respondent Bungubung punched him in the head with something heavy in his hands "parang knuckles." Respondents Reverente and Lee were behind Yap, punching him. Respondents Bungubung and Valdes who were in front of him, were also punching him. As he was lying on the street, respondent Aguilar kicked him. People shouted; guards arrived; and the group of attackers left. Mr. Yap could not recognize the other members of the group who attacked him. With respect to respondent Papio, Mr. Yap said "hindi ko nakita ang mukha niya, hindi ko nakita sumuntok siya." What Mr. Yap saw was a long haired guy also running with the group. Two guards escorted Mr. Yap inside the campus. At this point, Mr. Dennis Pascual was at the Engineering Gate. Mr. Pascual accompanied Yap to the university clinic; reported the incident to the Discipline Office; and informed his fraternity brods at their tambayan. According to Mr. Pascual, their head of the Domino Lux Fraternity said: "Walang gagalaw. Uwian na lang." Mr. Ericson Cano, who was supposed to hitch a ride with Dennis Pascual, saw him under the clock in Miguel Building. However, they did not proceed directly for home. With a certain Michael Perez, they went towards the direction of Dagonoy Street because Mr. Pascual

was supposed to pick up a book for his friend from another friend who lives somewhere in the area. As they were along Dagonoy Street, and before they could pass the Kolehiyo ng Malate Restaurant, Mr. Cano first saw several guys inside the restaurant. He said not to mind them and just keep on walking. However, the group got out of the restaurant, among them respondents Reverente, Lee and Valdes. Mr. Cano told Mr. Lee: "Ayaw namin ng gulo." But, respondent Lee hit Mr. Cano without provocation. Respondent Reverente kicked Mr. Pascual and respondent Lee also hit Mr. Pascual. Mr. Cano and Mr. Perez managed to run from the mauling and they were chased by respondent Lee and two others. Mr. Pascual was left behind. After respondent Reverente first kicked him, Mr. Pascual was ganged-upon by the rest. He was able to run, but the group was able to catch up with him. His shirt was torn and he was hit at the back of his head with a lead pipe. Respondent Lee who was chasing Cano and Perez, then returned to Mr. Pascual. Mr. Pascual identified respondents Reverente and Lee, as among those who hit him. Although Mr. Pascual did not see respondent Valdes hit him, he identified respondent Valdez (sic) as also one of the members of the group. In fact, Mr. Cano saw respondent Valdes near Mr. Pascual. He was almost near the corner of Leon Guinto and Estrada; while respondent Pascual who managed to run was stopped at the end of Dagonoy along Leon Guinto. Respondent Valdes shouted: "Mga putang-ina niyo." Respondent Reverente hit Mr. Pascual for the last time. Apparently being satisfied with their handiwork, the group left. The victims, Cano, Perez and Pascual proceeded to a friend's house and waited for almost two hours, or at around 8:00 in the evening before they returned to the campus to have their wounds treated. 6 Apparently, there were three cars roaming the vicinity. The mauling incidents were a result of a fraternity war. The victims, namely: petitioner James Yap and Dennis Pascual, Ericson Cano, and Michael Perez, are members of the "Domino Lux Fraternity," while the alleged assailants, private respondents Alvin Aguilar, James Paul Bungubung, Richard Reverente and Roberto Valdes, Jr. are members of "Tau Gamma Phi Fraternity," a rival fraternity. The next day, March 30, 1995, petitioner Yap lodged a complaint with the Discipline Board of DLSU charging private respondents with "direct assault."
7

Similar complaints were also filed by Dennis Pascual and Ericson Cano against Alvin Lee and private respondents Valdes and Reverente. Thus, cases entitled "De La Salle University and College of St. Benilde v. Alvin Aguilar (AB-BSM/9152105), James Paul Bungubung (AB-PSM/9234403), Robert R. Valdes, Jr. (BS-BS-APM/9235086), Alvin Lee (EDD/9462325), Richard Reverente (AB-MGT/9153837) and Malvin A. Papio (ABMGT/9251227)" were docketed as Discipline Case No. 9495-3-25121. The Director of the DLSU Discipline Office sent separate notices to private respondents Aguilar, Bungubung and Valdes, Jr. and Reverente informing them of the complaints and requiring them to answer. Private respondents 9 filed their respective answers. As it appeared that students from DLSU and CSB were involved in the 11 mauling incidents, a joint DLSU-CSB Discipline Board was formed to investigate the incidents. Thus, petitioner Board Chairman Emmanuel Sales 12 sent notices of hearing to private respondents on April 12, 1995. Said notices uniformly stated as follows: Please be informed that a joint and expanded Discipline Board had been constituted to hear and deliberate the charge against you for violation of CHED Order No. 4 arising from the written complaints of James Yap, Dennis C. Pascual, and Ericson Y. Cano. You are directed to appear at the hearing of the Board scheduled on April 19, 1995 at 9:00 a.m. at the Bro. Connon Hall for you and your witnesses to give testimony and present evidence in your behalf. You may be assisted by a lawyer when you give your testimony or those of your witnesses. On or before April 18, 1995, you are further directed to provide the Board, through the Discipline Office, with a list of your witnesses as well as the sworn statement of their proposed testimony. Your failure to appear at the scheduled hearing or your failure to submit the list of witnesses and the sworn statement of their proposed testimony will be considered a waiver on your part to present evidence and as an admission of the principal act complained of. For your strict compliance.
13 10

During the proceedings before the Board on April 19 and 28, 1995, private respondents interposed the common defense of alibi, summarized by the DLSU-CSB Joint Discipline Board as follows:

First, in the case of respondent Bungubung, March 29, 1995 was one of the few instances when he was picked-up by a driver, a certain Romeo S. Carillo. Most of the time, respondent Bungubung goes home alone sans driver. But on this particular date, respondent Bungubung said that his dad asked his permission to use the car and thus, his dad instructed this driver Carillo to pick-up his son. Mr. Carillo is not a family driver, but works from 8:00 a.m. to 5:00 p.m. for the Philippine Ports Authority where the elder Bungubung is also employed. Thus, attempting to corroborate the alibi of respondent Bungubung, Mr. Carillo said that he arrived at La Salle at 4:56 p.m.; picked-up respondent at 5:02 p.m.; took the Roxas Blvd. route towards respondent's house in BF Paraaque (on a Wednesday in Baclaran); and arrived at the house at 6:15 p.m. Respondent Bungubung was dropped-off in his house, and taking the same route back, Mr. Carillo arrived at the South Harbor at 6:55 p.m. the Philippine Ports 14 Authority is located at the South Harbor. xxxx Secondly, respondent Valdes said that he was with his friends at McDonald's Taft just before 6:00 p.m. of March 29, 1995. He said that he left McDonald at 5:50 p.m. together to get some medicine at the university clinic for his throat irritation. He said that he was at the clinic at 5:52 p.m. and went back to McDonald, all within a span of 3 or even 4 minutes. Two witnesses, a certain Sharon Sia and the girlfriend of respondent Valdes, a certain Jorgette Aquino, attempted to corroborate Valdez' 15 alibi. xxxx Third, respondent Reverente told that (sic) the Board that he was at his home at 5:00 p.m. of March 29, 1995. He said that he was given the responsibility to be the paymaster of the construction workers who were doing some works in the apartment of his parents. Although he had classes in the evening, the workers according to him would wait for him sometimes up to 9:00 p.m. when he arrives from his classes. The workers get paid everyday. Respondent Reverente submitted an affidavit, unsigned by the workers listed there, supposedly attesting to the fact that he paid the 16 workers at the date and time in question.

xxxx Fourth, respondent Aguilar "solemnly sw[ore] that [he] left DLSU at 5:00 p.m. for Camp Crame for a meeting with some of the officers 17 that we were preparing." On May 3, 1995, the DLSU-CSB Joint Discipline Board issued a Resolution finding private respondents guilty. They were meted the supreme penalty of 19 20 automatic expulsion, pursuant to CHED Order No. 4. The dispositive part of the resolution reads: WHEREFORE, considering all the foregoing, the Board finds respondents ALVIN AGUILAR (AB-BSM/9152105), JAMES PAUL BUNGUBUNG (AB-PSM/9234403), ALVIN LEE (EDD/94623250) and RICHARD V. REVERENTE (AB-MGT/9153837) guilty of having violated CHED Order No. 4 and thereby orders their automatic expulsion. In the case of respondent MALVIN A. PAPIO (AB-MGT/9251227), the Board acquits him of the charge. SO ORDERED.
21 18

Private respondents separately moved for reconsideration before the Office of the Senior Vice-President for Internal Operations of DLSU. The motions 23 were all denied in a Letter-Resolution dated June 1, 1995. On June 5, 1995, private respondent Aguilar filed with the RTC, Manila, against petitioners a petition for certiorari and injunction under Rule 65 of the Rules of Court with prayer for temporary restraining order (TRO) and/or writ of preliminary injunction. It was docketed as Civil Case No. 95-74122 and assigned to respondent Judge of Branch 36. The petition essentially sought to annul the May 3, 1995 Resolution of the DLSU-CSB Joint Discipline Board and the June 1, 1995 Letter-Resolution of the Office of the Senior VicePresident for Internal Affairs. The following day, June 6, 1995, respondent Judge issued a TRO directing DLSU, its subordinates, agents, representatives and/or other persons acting for and in its behalf to refrain and desist from implementing Resolution dated May 3, 1995 and Letter-Resolution dated June 1, 1995 and to immediately desist from barring the enrollment of Aguilar for the second term of school year (SY) 1995. Subsequently, private respondent Aguilar filed an ex parte motion to amend 25 his petition to correct an allegation in paragraph 3.21 of his original petition.
24

22

Respondent Judge amended the TRO 27 the amended petition.

26

to conform to the correction made in

petitioners-in-intervention and the Letter-Resolution dated June 1, 1995; and 2. Barring the enrollment of petitioner and petitioners-inintervention in the courses offered at respondent (De La Salle University) and to forthwith allow all said petitioner and petitioners-in-intervention to enroll and complete their respective courses/degrees until their graduation thereat. The Writ of Preliminary Injunction shall take effect upon petitioner and petitioners-in-intervention posting an injunctive bond in the amount of P15,000.00 executed in favor of respondent to the effect that petitioner and petitioners-in-intervention will pay to respondent all damages that the latter may suffer by reason of the injunction if the Court will finally decide that petitioner and petitioners-inintervention are not entitled thereto. The motion to dismiss and the supplement thereto is denied for lack of merit. Respondents are directed to file their Answer to the Petition not later than fifteen (15) days from receipt thereof. SO ORDERED.
33

On June 7, 1995, the CHED directed DLSU to furnish it with copies of the 28 case records of Discipline Case No. 9495-3-25121, in view of the authority granted to it under Section 77(c) of the Manual of Regulations for Private Schools (MRPS). On the other hand, private respondents Bungubung and Reverente, and 29 later, Valdes, filed petitions-in-intervention in Civil Case No. 95-74122. Respondent Judge also issued corresponding temporary restraining orders to compel petitioner DLSU to admit said private respondents. On June 19, 1995, petitioner Sales filed a motion to dismiss in behalf of all petitioners, except James Yap. On June 20, 1995, petitioners filed a 31 supplemental motion to dismiss the petitions-in-intervention. On September 20, 1995, respondent Judge issued an Order denying petitioners' (respondents there) motion to dismiss and its supplement, and granted private respondents' (petitioners there) prayer for a writ of preliminary injunction. The pertinent part of the Order reads: For this purpose, respondent, its agents, representatives or any and all other persons acting for and in its behalf is/are restrained and enjoined from 1. Implementing and enforcing the Resolution dated May 3, 1995 ordering the automatic expulsion of petitioner and the petitioners-in-intervention from the De La Salle University and the letter-resolution dated June 1, 1995, affirming the Resolution dated May 3, 1995; and 2. Barring the enrolment of petitioner and petitioners-inintervention in the courses offered at respondent De La Salle University and to immediately allow them to enroll and complete their respective courses/degrees until their graduation thereat in accordance with the standards set by the latter. WHEREFORE, the ancillary remedy prayed for is granted. Respondent, its agents, representatives, or any and all persons acting for and its behalf are hereby restrained and enjoyed from: 1. Implementing and enforcing the Resolution dated May 3, 1995 ordering the automatic expulsion of petitioner and
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Despite the said order, private respondent Aguilar was refused enrollment by petitioner DLSU when he attempted to enroll on September 22, 1995 for the second term of SY 1995-1996. Thus, on September 25, 1995, Aguilar filed with respondent Judge an urgent motion to cite petitioners (respondents 34 there) in contempt of court. Aguilar also prayed that petitioners be compelled to enroll him at DLSU in accordance with respondent Judge's Order dated September 20, 1995. On September 25, 1995, respondent 35 Judge issued a writ of preliminary injunction, the relevant portion of which reads: IT IS HEREBY ORDERED by the undersigned of the REGIONAL TRIAL COURT OF MANILA that until further orders, you the said DE LA SALLE University as well as your subordinates, agents, representatives, employees and any other person assisting or acting for or on your behalf, to immediately desist from implementing the Resolution dated May 3, 1995 ordering the automatic expulsion of petitioner and the intervenors in DLSU, and the letter-resolution dated June 1, 1995 affirming the said Resolution of May 3, 1995 and to immediately desist from barring the enrolment of petitioner and intervenors in the courses offered at DLSU and to allow them to enroll and complete their degree courses until their graduation from 36 said school.

On October 16, 1995, petitioner DLSU filed with the CA a petition for 37 certiorari (CA-G.R. SP No. 38719) with prayer for a TRO and/or writ of preliminary injunction to enjoin the enforcement of respondent Judge's September 20, 1995 Order and writ of preliminary injunction dated September 25, 1995. On April 12, 1996, the CA granted petitioners' prayer for preliminary injunction. On May 14, 1996, the CHED issued its questioned Resolution No. 18196, summarily disapproving the penalty of expulsion for all private respondents. As for Aguilar, he was to be reinstated, while other private 38 respondents were to be excluded. The Resolution states: RESOLUTION 181-96 RESOLVED THAT THE REQUEST OF THE DE LA SALLE UNIVERSITY (DLSU), TAFT AVENUE, MANILA FOR THE APPROVAL OF THE PENALTY OF EXPULSION IMPOSED ON MR. ALVIN AGUILAR, JAMES PAUL BUNGUBUNG, ROBERT R. VALDES, JR., ALVIN LEE AND RICHARD V. REVERENTE BE, AS IT IS HEREBY IS, DISAPPROVED. RESOLVED FURTHER, THAT THE COMMISSION DIRECT THE DLSU TO IMMEDIATELY EFFECT THE REINSTATEMENT OF MR. AGUILAR AND THE LOWERING OF THE PENALTY OF MR. JAMES PAUL BUNGUBUNG, MR. ROBER R. VALDEZ, JR., (sic) MR. ALVIN LEE AND MR. RICHARD V. REVERENTE FROM 39 EXPULSION TO EXCLUSION. Despite the directive of CHED, petitioner DLSU again prevented private respondent Aguilar from enrolling and/or attending his classes, prompting his 40 lawyer to write several demand letters to petitioner DLSU. In view of the refusal of petitioner DLSU to enroll private respondent Aguilar, CHED wrote a letter dated June 26, 1996 addressed to petitioner Quebengco requesting that private respondent Aguilar be allowed to continue attending his classes pending the resolution of its motion for reconsideration of Resolution No. 181-96. However, petitioner Quebengco refused to do so, prompting CHED to promulgate an Order dated September 23, 1996 which states: Acting on the above-mentioned request of Mr. Aguilar through counsel enjoining De La Salle University (DLSU) to comply with CHED Resolution 181-96 (Re: Expulsion Case of Alvin Aguilar, et al. v. DLSU) directing DLSU to reinstate Mr. Aguilar and finding the urgent request as meritorious, there being no other plain and speedy

remedy available, considering the set deadline for enrollment this current TRIMESTER, and in order to prevent further prejudice to his rights as a student of the institution, DLSU, through the proper school authorities, is hereby directed to allow Mr. Alvin Aguilar to provisionally enroll, pending the Commission's Resolution of the instant Motion for Reconsideration filed by DLSU. SO ORDERED.
41

Notwithstanding the said directive, petitioner DLSU, through petitioner Quebengco, still refused to allow private respondent Aguilar to enroll. Thus, private respondent Aguilar's counsel wrote another demand letter to 42 petitioner DLSU. Meanwhile, on June 3, 1996, private respondent Aguilar, using CHED 43 Resolution No. 181-96, filed a motion to dismiss in the CA, arguing that CHED Resolution No. 181-96 rendered the CA case moot and academic. On July 30, 1996, the CA issued its questioned resolution granting the motion to dismiss of private respondent Aguilar, disposing thus: THE FOREGOING CONSIDERED, dismissal of herein petition is hereby directed. SO ORDERED.
44

On October 15, 1996, the CA issued its resolution denying petitioners' motion for reconsideration, as follows: It is obvious to Us that CHED Resolution No. 181-96 is immediately executory in character, the pendency of a Motion for Reconsideration notwithstanding. After considering the Opposition and for lack of merit, the Motion for Reconsideration is hereby denied. SO ORDERED.
45

On October 28, 1996, petitioners requested transfer of case records to the 46 Department of Education, Culture and Sports (DECS) from the CHED. Petitioners claimed that it is the DECS, not CHED, which has jurisdiction over expulsion cases, thus, necessitating the transfer of the case records of Discipline Case No. 9495-3-25121 to the DECS.

On November 4, 1996, in view of the dismissal of the petition for certiorari in CA-G.R. SP No. 38719 and the automatic lifting of the writ of preliminary injunction, private respondent Aguilar filed an urgent motion to reiterate writ of preliminary injunction dated September 25, 1995 before respondent RTC 47 Judge of Manila. On January 7, 1997, respondent Judge issued its questioned order granting private respondent Aguilar's urgent motion to reiterate preliminary injunction. The pertinent portion of the order reads: In light of the foregoing, petitioner Aguilar's urgent motion to reiterate writ of preliminary injunction is hereby granted, and respondents' motion to dismiss is denied. The writ of preliminary injunction dated September 25, 1995 is declared to be in force and effect. Let a copy of this Order and the writ be served personally by the Court's sheriff upon the respondents at petitioners' expense. SO ORDERED.
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We are tasked to resolve the following issues: 1. Whether it is the DECS or the CHED which has legal authority to review decisions of institutions of higher learning that impose disciplinary action on their students found violating disciplinary rules. 2. Whether or not petitioner DLSU is within its rights in expelling private respondents. 2.a Were private respondents accorded due process of law? 2.b Can petitioner DLSU invoke its right to academic freedom? 2.c Was the guilt of private respondents proven by substantial evidence? 3. Whether or not the penalty imposed by DLSU on private respondents is proportionate to their misdeed. Our Ruling Prefatorily, there is merit in the observation of petitioners that while CHED Resolution No. 181-96 disapproved the expulsion of other private respondents, it nonetheless authorized their exclusion from petitioner DLSU. However, because of the dismissal of the CA case, petitioner DLSU is now faced with the spectacle of having two different directives from the CHED and the respondent Judge CHED ordering the exclusion of private respondents Bungubung, Reverente, and Valdes, Jr., and the Judge ordering petitioner DLSU to allow them to enroll and complete their degree courses until their graduation. This is the reason We opt to decide the whole case on the merits, brushing aside technicalities, in order to settle the substantial issues involved. This Court has the power to take cognizance of the petition at bar due to compelling reasons, and the nature and importance of the issues raised 54 warrant the immediate exercise of Our jurisdiction. This is in consonance with our case law now accorded near-religious reverence that rules of procedure are but tools designed to facilitate the attainment of justice, such that when its rigid application tends to frustrate rather than promote 55 substantial justice, this Court has the duty to suspend their operation. I. It is the CHED, not DECS, which has the power of supervision and review over
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Accordingly, private respondent Aguilar was allowed to conditionally enroll in petitioner DLSU, subject to the continued effectivity of the writ of preliminary injunction dated September 25, 1995 and to the outcome of Civil Case No. 95-74122. On February 17, 1997, petitioners filed the instant petition. On June 15, 1998, We issued a TRO as prayed for by the urgent motion for 50 the issuance of a TRO dated June 4, 1998 of petitioners, and enjoined respondent Judge from implementing the writ of preliminary injunction dated September 25, 1995 issued in Civil Case No. 95-74122, effective immediately and until further orders from this Court. On March 27, 2006, private respondent Aguilar filed his manifestation stating that he has long completed his course at petitioner DLSU. He finished and passed all his enrolled subjects for the second trimester of 1997-1998, 52 as indicated in his transcript of records issued by DLSU. However, despite having completed all the academic requirements for his course, DLSU has not issued a certificate of completion/graduation in his favor. Issues
51 49

disciplinary cases decided by institutions of higher learning. Ang CHED, hindi ang DECS, ang may kapangyarihan ng pagsubaybay at pagrepaso sa mga desisyong pandisiplina ng mga institusyon ng mas mataas na pag-aaral. Petitioners posit that the jurisdiction and duty to review student expulsion cases, even those involving students in secondary and tertiary levels, is vested in the DECS not in the CHED. In support of their stance, petitioners 56 57 58 59 60 cite Sections 4, 15(2) & (3), 54, 57(3) and 70 of Batas Pambansa (B.P.) Blg. 232, otherwise known as the "Education Act of 1982." According to them, Republic Act (R.A.) No. 7722 did not transfer to the CHED the DECS' power of supervision/review over expulsion cases involving institutions of higher learning. They say that unlike B.P. Blg. 232, R.A. No. 7722 makes no reference to the right and duty of learning institutions to develop moral character and instill discipline among its students. The clear concern of R.A. No. 7722 in the creation of the CHED was academic, i.e., the formulation, recommendation, setting, and development of academic plans, programs and standards for institutions of higher learning. The enumeration of CHED's powers and functions under Section 8 does not include supervisory/review powers in student disciplinary cases. The reference in Section 3 to CHED's "coverage" of institutions of higher education is limited to the powers and functions specified in Section 8. The Bureau of Higher Education, which the CHED has replaced and whose functions and responsibilities it has taken over, never had any authority over student disciplinary cases. We cannot agree. On May 18, 1994, Congress approved R.A. No. 7722, otherwise known as "An Act Creating the Commission on Higher Education, Appropriating Funds Thereof and for other purposes." Section 3 of the said law, which paved the way for the creation of the CHED, provides: Section 3. Creation of the Commission on Higher Education. In pursuance of the abovementioned policies, the Commission on Higher Education is hereby created, hereinafter referred to as Commission. The Commission shall be independent and separate from the Department of Education, Culture and Sports (DECS) and attached

to the office of the President for administrative purposes only. Its coverage shall be both public and private institutions of higher education as well as degree-granting programs in all post secondary educational institutions, public and private. The powers and functions of the CHED are enumerated in Section 8 of R.A. No. 7722. They include the following: Sec. 8. Powers and functions of the Commission. The Commission shall have the following powers and functions: xxxx n) promulgate such rules and regulations and exercise such other powers and functions as may be necessary to carry out effectively the purpose and objectives of this Act; and o) perform such other functions as may be necessary for its effective operations and for the continued enhancement of growth or development of higher education. Clearly, there is no merit in the contention of petitioners that R.A. No. 7722 did not transfer to the CHED the DECS' power of supervision/review over expulsion cases involving institutions of higher learning. First, the foregoing provisions are all-embracing. They make no reservations of powers to the DECS insofar as institutions of higher learning are concerned. They show that the authority and supervision over all public and private institutions of higher education, as well as degree-granting programs in all post-secondary educational institutions, public and private, belong to the CHED, not the DECS. Second, to rule that it is the DECS which has authority to decide disciplinary cases involving students on the tertiary level would render nugatory the coverage of the CHED, which is "both public and private institutions of higher education as well as degree granting programs in all post secondary educational institutions, public and private." That would be absurd. It is of public knowledge that petitioner DLSU is a private educational institution which offers tertiary degree programs. Hence, it is under the CHED authority. Third, the policy of R.A. No. 7722 is not only the protection, fostering and promotion of the right of all citizens to affordable quality education at all
61

levels and the taking of appropriate steps to ensure that education shall be accessible to all. The law is likewise concerned with ensuring and protecting academic freedom and with promoting its exercise and observance for the continued intellectual growth of students, the advancement of learning and research, the development of responsible and effective leadership, the education of high-level and middle-level professionals, and the enrichment of our historical and cultural heritage. It is thus safe to assume that when Congress passed R.A. No. 7722, its members were aware that disciplinary cases involving students on the tertiary level would continue to arise in the future, which would call for the invocation and exercise of institutions of higher learning of their right to academic freedom. Fourth, petitioner DLSU cited no authority in its bare claim that the Bureau of Higher Education, which CHED replaced, never had authority over student disciplinary cases. In fact, the responsibilities of other government entities having functions similar to those of the CHED were transferred to the 62 CHED. Section 77 of the MRPS on the process of review in student discipline cases should therefore be read in conjunction with the provisions of R.A. No. 7722. Fifth, Section 18 of R.A. No. 7722 is very clear in stating that "[j]urisdiction over DECS-supervised or chartered state-supported post-secondary degree-granting vocational and tertiary institutions shall be transferred to the Commission [On Higher Education]." This provision does not limit or distinguish that what is being transferred to the CHED is merely the formulation, recommendation, setting and development of academic plans, programs and standards for institutions of higher learning, as what petitioners would have us believe as the only concerns of R.A. No. 7722. Ubi lex non distinguit nec nos distinguere debemus: Where the law does not distinguish, neither should we. To Our mind, this provision, if not an explicit grant of jurisdiction to the CHED, necessarily includes the transfer to the CHED of any jurisdiction which the DECS might have possessed by virtue of B.P. Blg. 232 or any other law or rule for that matter. IIa. Private respondents were accorded due process of law. Ang mga private respondents ay nabigyan ng tamang proseso ng batas.
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The Due Process Clause in Article III, Section 1 of the Constitution embodies a system of rights based on moral principles so deeply imbedded in the traditions and feelings of our people as to be deemed fundamental to a 64 civilized society as conceived by our entire history. The constitutional behest that no person shall be deprived of life, liberty or property without due 65 process of law is solemn and inflexible. In administrative cases, such as investigations of students found violating school discipline, "[t]here are withal minimum standards which must be met before to satisfy the demands of procedural due process and these are: that (1) the students must be informed in writing of the nature and cause of any accusation against them; (2) they shall have the right to answer the charges against them and with the assistance if counsel, if desired; (3) they shall be informed of the evidence against them; (4) they shall have the right to adduce evidence in their own behalf; and (5) the evidence must be duly considered by the investigating committee or official designated by the 66 school authorities to hear and decide the case." Where a party was afforded an opportunity to participate in the proceedings 67 but failed to do so, he cannot complain of deprivation of due process. Notice and hearing is the bulwark of administrative due process, the right to which is among the primary rights that must be respected even in 68 administrative proceedings. The essence of due process is simply an opportunity to be heard, or as applied to administrative proceedings, an opportunity to explain one's side or an opportunity to seek reconsideration of 69 the action or ruling complained of. So long as the party is given the opportunity to advocate her cause or defend her interest in due course, it 70 cannot be said that there was denial of due process. A formal trial-type hearing is not, at all times and in all instances, essential to due process it is enough that the parties are given a fair and reasonable opportunity to explain their respective sides of the controversy and to present 71 supporting evidence on which a fair decision can be based. "To be heard" does not only mean presentation of testimonial evidence in court one may also be heard through pleadings and where the opportunity to be heard 72 through pleadings is accorded, there is no denial of due process. Private respondents were duly informed in writing of the charges against them by the DLSU-CSB Joint Discipline Board through petitioner Sales. They were given the opportunity to answer the charges against them as they, in fact, submitted their respective answers. They were also informed of the evidence presented against them as they attended all the hearings before the Board. Moreover, private respondents were given the right to adduce evidence on their behalf and they did. Lastly, the Discipline Board considered all the pieces of evidence submitted to it by all the parties before rendering its resolution in Discipline Case No. 9495-3-25121.

Private respondents cannot claim that they were denied due process when they were not allowed to cross-examine the witnesses against them. This 73 argument was already rejected in Guzman v. National University where this Court held that "x x x the imposition of disciplinary sanctions requires observance of procedural due process. And it bears stressing that due process in disciplinary cases involving students does not entail proceedings and hearings similar to those prescribed for actions and proceedings in courts of justice. The proceedings in student discipline cases may be summary; and cross examination is not, x x x an essential part thereof." IIb. Petitioner DLSU, as an institution of higher learning, possesses academic freedom which includes determination of who to admit for study. Ang petitioner DLSU, bilang institusyon ng mas mataas na pag-aaral, ay nagtataglay ng kalayaang akademiko na sakop ang karapatang pumili ng mga mag-aaral dito. Section 5(2), Article XIV of the Constitution guaranties all institutions of higher learning academic freedom. This institutional academic freedom includes the right of the school or college to decide for itself, its aims and objectives, and how best to attain them free from outside coercion or interference save possibly when the overriding public interest calls for some 74 restraint. According to present jurisprudence, academic freedom encompasses the independence of an academic institution to determine for itself (1) who may teach, (2) what may be taught, (3) how it shall teach, and 75 (4) who may be admitted to study. It cannot be gainsaid that "the school has an interest in teaching the student discipline, a necessary, if not indispensable, value in any field of learning. By instilling discipline, the school teaches discipline. Accordingly, the right to 76 discipline the student likewise finds basis in the freedom "what to teach." Indeed, while it is categorically stated under the Education Act of 1982 that students have a right "to freely choose their field of study, subject to existing 77 curricula and to continue their course therein up to graduation," such right is subject to the established academic and disciplinary standards laid down by the academic institution. Petitioner DLSU, therefore, can very well exercise its academic freedom, which includes its free choice of students for admission to its school. IIc. The guilt of private respondents Bungubung, Reverente and Valdes, Jr. was proven by substantial evidence. Ang pagkakasala ng private respondents na sina Bungubung, Reverente at Valdes, Jr. ay napatunayan ng ebidensiyang substansyal.

As has been stated earlier, private respondents interposed the common defense of alibi. However, in order that alibi may succeed as a defense, "the accused must establish by clear and convincing evidence (a) his presence at another place at the time of the perpetration of the offense and (b) the 78 physical impossibility of his presence at the scene of the crime." On the other hand, the defense of alibi may not be successfully invoked 79 where the identity of the assailant has been established by witnesses. Positive identification of accused where categorical and consistent, without any showing of ill motive on the part of the eyewitness testifying, should prevail over the alibi and denial of appellants whose testimonies are not 80 substantiated by clear and convincing evidence. Well-settled is the rule that denial and alibi, being weak defenses, cannot overcome the positive 81 testimonies of the offended parties. Courts reject alibi when there are credible eyewitnesses to the crime who 82 can positively identify the accused. Alibi is an inherently weak defense and courts must receive it with caution because one can easily fabricate an 83 alibi. Jurisprudence holds that denial, like alibi, is inherently weak and crumbles in light of positive declarations of truthful witnesses who testified on affirmative matters that accused were at the scene of the crime and were the victim's assailants. As between categorical testimonies that ring of truth on 84 one hand and a bare denial on the other, the former must prevail. Alibi is the weakest of all defenses for it is easy to fabricate and difficult to disprove, and it is for this reason that it cannot prevail over the positive identification of 85 accused by the witnesses. The required proof in administrative cases, such as in student discipline cases, is neither proof beyond reasonable doubt nor preponderance of evidence but only substantial evidence. According to Ang Tibay v. Court of 86 Industrial Relations, it means "such reasonable evidence as a reasonable mind might accept as adequate to support a conclusion." Viewed from the foregoing, We reject the alibi of private respondents Bungubung, Valdes Jr., and Reverente.1awphi1 They were unable to show convincingly that they were not at the scene of the crime on March 29, 1995 and that it was impossible for them to have been there. Moreover, their alibi cannot prevail over their positive identification by the victims. We hark back to this Court's pronouncement affirming the expulsion of several students found guilty of hazing: No one can be so myopic as to doubt that the immediate reinstatement of respondent students who have been investigated and found guilty by the Disciplinary Board to have violated petitioner

university's disciplinary rules and standards will certainly undermine the authority of the administration of the school. This we would be most loathe to do. More importantly, it will seriously impair petitioner university's academic freedom which has been enshrined in the 1935, 1973 and 87 the present 1987 Constitution. Certainly, private respondents Bungubung, Reverente and Valdes, Jr. do not deserve to claim a venerable institution as their own, for they may foreseeably cast a malevolent influence on the students currently enrolled, as 88 well as those who come after them. It must be borne in mind that universities are established, not merely to develop the intellect and skills of the studentry, but to inculcate lofty values, ideals and attitudes; nay, the 89 development, or flowering if you will, of the total man. As for private respondent Aguilar, however, We are inclined to give credence to his alibi that he was at Camp Crame in Quezon City at the time of the incident in question on March 29, 1995. This claim was amply corroborated by the certification that he submitted before the DLSU-CSB Joint Discipline Board, to wit: CERTIFICATION TO WHOM THIS MAY CONCERN: We, the undersigned, hereby declare and affirm by way of this Certification that sometime on March 29, 1995, at about and between 4:30 P.M. and 5:30 P.M., we were together with Alvin A. Aguilar, at Kiangan Hall, inside Camp Crame, Quezon City, meeting in connection with an affair of our class known as Class 7, Batch 89 of the Philippine Constabulary discussing on the proposed sponsorship of TAU GAMMA PHI from said Batch '89 affair. That the meeting was terminated at about 6:30 P.M. that evening and Alvin Aguilar had asked our permission to leave and we saw him leave Camp Crame, in his car with the driver. April 18, 1995, Camp Crame, Quezon City.
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rule is that alibi assumes significance or strength when it is amply 91 corroborated by credible and disinterested witnesses. It is true that alibi is a weak defense which an accused can easily fabricate to escape criminal liability. But where the prosecution evidence is weak, and betrays lack of credibility as to the identification of defendant, alibi assumes commensurate strength. This is but consistent with the presumption of innocence in favor of 92 accused. Alibi is not always undeserving of credit, for there are times when accused has no other possible defense for what could really be the truth as to his whereabouts at the crucial time, and such defense may, in fact, tilt the scales 93 of justice in his favor. III. The penalty of expulsion imposed by DLSU on private respondents is disproportionate to their misdeed. Ang parusang expulsion na ipinataw ng DLSU sa private respondents ay hindi angkop sa kanilang pagkakasala. It is true that schools have the power to instill discipline in their students as subsumed in their academic freedom and that "the establishment of rules governing university-student relations, particularly those pertaining to student discipline, may be regarded as vital, not merely to the smooth and efficient 94 operation of the institution, but to its very survival." This power, however, does not give them the untrammeled discretion to impose a penalty which is not commensurate with the gravity of the misdeed. If the concept of proportionality between the offense committed and the sanction imposed is not followed, an element of arbitrariness intrudes. That would give rise to a 95 due process question. We agree with respondent CHED that under the circumstances, the penalty of expulsion is grossly disproportionate to the gravity of the acts committed by private respondents Bungubung, Reverente, and Valdes, Jr. Each of the two mauling incidents lasted only for few seconds and the victims did not suffer any serious injury. Disciplinary measures especially where they involve suspension, dismissal or expulsion, cut significantly into the future of a student. They attach to him for life and become a mortgage of his future, hardly redeemable in certain cases. Officials of colleges and universities must be anxious to protect it, conscious of the fact that, appropriately construed, a disciplinary action should be treated as an educational tool 96 rather than a punitive measure. Accordingly, We affirm the penalty of exclusion only, not expulsion, imposed on them by the CHED. As such, pursuant to Section 77(b) of the MRPS, petitioner DLSU may exclude or drop the names of the said private
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The said certification was duly signed by PO3 Nicanor R. Faustino (AntiOrganized Crime CIC, NCR), PO3 Alejandro D. Deluviar (ODITRM, Camp Crame, Quezon City), PO2 Severino C. Filler (TNTSC, Camp Crame, Quezon City), and PO3 Ireneo M. Desesto (Supply Center, PNPLSS). The

respondents from its rolls for being undesirable, and transfer credentials immediately issued. WHEREFORE, the petition is PARTIALLY GRANTED. The Court of Appeals Resolutions dated July 30, 1996 and dated October 15, 1996, and Regional Trial Court of Manila, Branch 36, Order dated January 7, 1997 are ANNULLED AND SET ASIDE, while CHED Resolution 181-96 dated May 14, 1996 is AFFIRMED. Petitioner DLSU is ordered to issue a certificate of completion/graduation in favor of private respondent Aguilar. On the other hand, it may exclude or drop the names of private respondents Bungubung, Reverente, and Valdes, Jr. from its rolls, and their transfer credentials immediately issued. SO ORDERED.