You are on page 1of 399

G.R. No.

L-49705-09 February 8, 1979


TOMATIC ARATUC, SERGIO TOCAO, CISCOLARIO DIAZ, FRED TAMULA,
MANGONTAWAR GURO and BONIFACIO LEGASPI, petitioners,
vs.
The COMMISSION ON ELECTIONS, REGIONAL BOARD OF
CANVASSERS for Region XII (Central Mindanao), ABDULLAH
DIMAPORO, JESUS AMPARO, ANACLETO BADOY, et al., respondents.
Nos. L-49717-21 February 8,1979.
LINANG MANDANGAN, petitioner,
vs.
THE COMMISSION ON ELECTIONS, THE REGIONAL BOARD OF
CANVASSERS for Region XII, and ERNESTO ROLDAN, respondents.
L-49705-09 Lino M. Patajo for petitioners.
Estanislao A. Fernandez for private respondents.
L-49717-21 Estanislao A. Fernandez for petitioner.
Lino M. Patajo for private respondent.
Office of the Solicitor General, for Public respondents.
BARREDO, J.:
Petition in G. R. Nos. L-49705-09 for certiorari with restraining order and
preliminary injunction filed by six (6) independent candidates for
representatives to tile Interim Batasang Pambansa who had joined together
under the banner of the Kunsensiya ng Bayan which, however, was not
registered as a political party or group under the 1976 Election Code, P.D.
No. 1296, namely Tomatic Aratuc, Sorgio Tocao, Ciscolario Diaz, Fred Tamula,
Mangontawar Guro and Bonifacio Legaspi her referred to as petitioners, to
review the decision of the respondent Commission on Election (Comelec)
resolving their appeal from the Of the respondent Regional Board of
Canvasses for Region XII regarding the canvass of the results of the election
in said region for representatives to the I.B.P. held on April 7, 1978. Similar
petition in G.R. Nos. L49717-21, for certiorari with restraining order and
preliminary injunction filed by Linang Mandangan, abo a candidate for
representative in the same election in that region, to review the decision of
the Comelec declaring respondent Ernesto Roldan as entitled to be
proclaimed as one of the eight winners in said election.
The instant proceedings are sequels of Our decision in G.R. No. L- 48097,
wherein Tomatic Aratuc et al. sought the suspension of the canvass then
being undertaken by respondent dent Board in Cotabato city and in which
canvass, the returns in 1966 out of a total of 4,107 voting centers in the
whole region had already been canvassed showing partial results as follows:
NAMES OF CANDIDATES

1. Roldan, Ernesto (KB)

2. Valdez, Estanislao (KBL)

3. Dimporo, Abdullah (KBL)

199,244

4. Tocao, Sergio (KB)

199,062

5. Badoy, Anacleto (KBL)

198,966

6. Amparo, Jesus (KBL)

184,764

7. Pangandaman, Sambolayan (KBL)

183,646

8. Sinsuat, Datu Blah (KBL)

182,457

9. Baga, Tomas (KBL)

171,656

10. Aratuc, Tomatic (KB)

165,795

11. Mandangan, Linang(KB)

165,032

12. Diaz, Ciscolario (KB)

159,977

13. Tamalu, Fred (KB)

153,734

14. Legaspi Bonifacio (KB)

148,200

NO. OF VOTES

225,674

217,789

15. Guro, Mangontawar (KB)

139,386

16. Loma, Nemesio (KB)

107,455

17.
Macapeges,
(Independent)

Malamama

101,350

(Votes Of the independent candidates who actually were not in contention


omitted)" (Page 6, Record, L-49705-09.)
A supervening panel headed by Commissioner of Elections, Hon- Venancio S.
Duque, had conducted of the complaints of the petitioners therein of alleged
irregularities in the election records in all the voting centers in the whole
province of Lanao del Sur, the whole City of Marawi, eight (8) towns of Lanao
del Norte, namely, Baloi, Karomatan, Matungao, Munai, Nunungan, Pantao
Ragat, Tagoloan and Tangcal, seven (7) towns in Maguindanao, namely,
Barrira, Datu Piang, Dinaig, Matanog Parang, South Upi and Upi, ten (10)
towns in North Cotabato, namely, Carmen, Kabacan, Kidapwan, Magpet,
Matalam Midsayap, Pigcawayan, Pikit, Pres. Roxas and Tulonan, and eleven
(11) towns in Sultan Kudarat, namely, Bagumbayan, Columbia Don Mariano
Marcos, Esperanza, Isulan, Kalamansig, Lebak, Lutayan, Palimbang,
President Quirino and Tacurong, by reason for which, petitioners had asked
that the returns from said voting centers be excluded from the canvass.
Before the start of the hearings, the canvass was suspended but after the
supervisory panel presented its report, on May 15, 1978, the Comelec lifted
its order of suspension and directed the resumption of the canvass to be
done in Manila. This order was the one assailed in this Court. We issued a
restraining order.
After hearing the parties, the Court allowed the resumption of the canvass
but issued the following guidelines to be observed thereat:
1. That the resumption of said canvass shall be held in the Comelec main
office in Manila starting not later than June 1, 1978;
2. That in preparation therefor, respondent Commission on Elections shall
see to it that all the material election paragraph corresponding to all the
voting center involved in Election Nos. 78-8, 78-9, 78-10, 78-11 and 78-12
are taken to its main office in Manila, more particularly, the ballot boxes,
with the contents, used during the said elections, the books of voters or
records of voting and the lists or records of registered voters, on or before
May 31, 1978;
3. That as soon as the corresponding records are available, petitioners and
their counsel shall be allowed to examine the same under such security
measures as the respondent Board may determine, except the contents of
the ballot boxes which shall be opened only upon orders of either the
respondent Board or respondent Commission, after the need therefor has
become evident, the purpose of such examination being to enable
petitioners, and their counsel to expeditiously determine which of them they

would wish to be scrutinized and passed upon by the Board as supporting


their charges of election frauds and anomalies, petitioners and their counsel
being admonished in this connection, that no dilatory tactics should be in by
them and that only such records substantial objections should be offered by
them for the scrutiny by the Board;
4. That none of the election returns reffered to in the petition herein shall be
canvassed without first giving the herein petitioners ample opportunity to
make their specific objections thereto, if they have any, and to show
sufficient basis for the rejection of any of the returns, and, in this connection,
the respondent Regional Board of Canvassers should give due consideration
to the points raised in the memorandum filed by said petitioners with the
Commission on Election in the above cases dated April 26, 1978;
5. That should it appear to the board upon summary scrutiny of the records
to be offered by petitioners indication that in the voting center actually held
and/or that election returns were prepared either before the day of the
election returns or at any other time, without regard thereto or that there
has been massive substitution of voters, or that ballots and/or returns were
prepared by the same groups of persons or individuals or outside of the
voting centers, the Board should exclude the corresponding returns from the
canvass;
6. That appeals to the commission on Election of the Board may be made
only after all the returns in question in all the above, the above five cases
shall have been passed upon by the Board and, accordingly, no proclamation
made until after the Commission shall have finally resolved the appeal
without prejudice to recourse to this court, if warranted as provided by the
Code and the Constitution, giving the parties reasonable time therefor;
7. That the copies of the election returns found in the corresponding ballot
boxes shall be the one used in the canvass;
8. That the canvass shall be conducted with utmost dispatch, to the end that
a proclamation, if feasible, may be made not later than June 10, 1978; thus,
the canvass may be terminated as soon as it is evident that the possible
number of votes in the still uncanvassed returns with no longer affect the
general results of the elections here in controversy;
9. That respondent Commission shall promulgate such other directive not
inconsistent with this resolution y necessary to expedite the proceedings
herein contemplated and to accomplish the purposes herein intended. (Pp.
8-9, Record.
On June 1, 1978, upon proper motion, said guidelines were modified:
... in the sense that the ballot boxes for the voting centers just referred to
need not be taken to Manila, EXCEPT those of the particular voting centers
as to which the petitioners have the right to demand that the corresponding
ballot boxes be opened in order that the votes therein may be counted
because said ballots unlike the election returns, have not been tampered
with or substituted, which instances the results of the counting shall be
specified and made known by petitioners to the Regional Board of
Canvassers not later than June 3, 1978; it being understood, that for the
purposes of the canvass, the petitioners shall not be allowed to invoke any
objection not already alleged in or comprehend within the allegations in their
complaint in the election cases above- mentioned. (Page 8, Id.)
Thus respondent Board proceeded with the canvass, with the herein
petitioners presenting objections, most of them supported by the report of

handwriting and finger print experts who had examined the voting records
and lists of voters in 878 voting centers, out of 2,700 which they specified in
their complaints or petitions in Election Cases 78-8, 78-9, 78-10, 78-11 and
7812 in the Comelec. In regard to 501 voting centers, the records cf. which,
consisting of the voters lists and voting records were not available- and
could not be brought to Manila, petitions asked that the results therein be
completely excluded from the canvass. On July 11, 1978, respondent Board
terminated its canvass and declared the result of the voting to be as follows:
NAME OF CANDIDATE

VALDEZ, Estanislao

DIMAPORO, Abdullah

PANGANDAMAN, Sambolayan

SINSUAT, Blah

ARATUC, Tomatic

205,829

GURO, Mangontawar

190,489

DIAZ, Ciscolario

190,077

TAMULA, Fred

180,280

LEGASPI, Bonifacio

174,396

MACAPEGES, Malamana

160,271

VOTES OBTAIN

436,069

429,351

406,106

403,445
(Pp. 11-12, Record.)

AMPARO, Jesus

399,997

MANDANGAN, Linang

387,025

BAGA, Tomas

386,393

BADOY,Anacleto

374,933

ROLDAN, Ernesto

275,141

TOCAO, Sergio

239,914

Without loss of time, the petitioners brought the resolution of respondent


Board to the Comelec. Hearing was held on April 25, 1978, after which , the
case was declared submitted for decision. However, on August 30,1978, the
Comelec issued a resolution stating inter alia that :
In order to enable the Commission to decide the appeal properly :
a. It will have to go deeper into the examination of the voting records and
registration records and in the case of voting centers whose voting and
registration records which have not yet been submitted for the Commission
to decide to open the ballot boxes; and
b. To interview and get statements under oath of impartial and disinterested
persons from the area to determine whether actual voting took place on
April 7, 1978, as well as those of the military authorities in the areas affects
(Page 12). Record, L-49705-09 .)
On December 11, 1978, the Comelec required the parties "to file their
respective written comments on the reports they shall periodically receive
from the NBI-Comelec team of finger-print and signature experts within the
inextendible period of seven (7) days from their receipt thereof". According
to counsel for Aratuc, et al., "Petitioners submitted their various comments
on the report 4, the principal gist of which was that it would appear
uniformly in all the reports submitted by the Comelec-NBI experts that the
registered voters were not the ones who voted as shown by the fact that the

thumbprints appearing in Form 1 were different from the thumbprints of the


voters in Form 5. " But the Comelec denied a motion of petitioners asking
that the ballot boxes corresponding to the voting centers the record of which
are not available be opened and that a date be set when the statements of
witnesses referred to in the August 30, 1978 resolution would be taken, on
the ground that in its opinion, it was no longer necessary to proceed with
such opening of ballot boxes and taking of statements.
For his part, counsel for petitioner M in G.R. No. L-49717-21 filed with
Comelec on December 19,1978 a Memorandum. To quote from the petition:
On December 19, 1978, the KBL, through counsel, filed a Memorandum for
the Kilusang Bagong Lipunan (KBL) Candidates on the Comelec's Resolution
of December 11, 1978, a xerox copy of which is attached hereto and made a
part hereof as Annex 2, wherein they discussed the following topics: (I) Brief
History of the President Case; (II) Summary of Our Position and Submission
Before the Honorable commission; and (III) KBL's Appeal Ad Cautelam. And
the fourth topic, because of its relevance to the case now before this
Honorable Court, we hereby quote for ready reference:
IV
OUR POSITION WITH RESPECT TO THE
ESOLUTION OF THE HONORABLE
COMMISSION OF DECEMBER 11, 1978
We respectfully submit that the Resolution of this case by this Honorable
Commission should be limited to the precincts and municipalities involved in
the KB'S Petitions in Cases Nos. 78-8 to 78-12, on which evidence had been
submitted by the parties, and on which the KB submitted the reports of their
handwriting-print. Furthermore, it should be limited by the appeal of the KB.
For under the Supreme Court Resolution of May 23, 1978, original
jurisdiction was given to the Board, with appeal to this Honorable
Commission-Considerations of other matters beyond these would be, in our
humble opinion, without jurisdiction.
For the present, we beg to inform this Honorable Commission that we stand
by the reports and findings of the COMELEC/NBI experts as submitted by
them to the Regional Board of Canvassers and as confirmed by the said
Regional Board of Canvassers in its Resolution of July 11, 1978, giving the 8
KBL candidates the majorities we have already above mentioned. The Board
did more than make a summary scrutiny of the records' required by the
Supreme Court Resolution, Guideline No. 5, of May 23, 1978. Hence, if for
lack of material time we cannot file any Memorandum within the nonextendible period of seven (7) days, we would just stand by said
COMELEC/NBI experts' reports to the Regional Board, as confirmed by the
Board (subject to our appeal ad cautelam).
The COMELEC sent to the parties copies of the reports of the NBI-COMELEC
experts. For lack of material time due to the voluminous reports and number
of voting centers involved, the Christmas holidays, and our impression that
the COMELEC will exercise only its appellate jurisdiction, specially as per
resolution of this Honorable Court of May 23, 1978 (in G.R. No. L-48097), we,
the KBL, did not comment any more on said reports. (Pp. 5-6, Record, L49717-21.)
On January 13, 1979, the Comelec rendered its resolution being assailed in
these cases, declaring the final result of the canvass to be as follows:

CANDIDATES

VOTES

VALDEZ, Estanislao

319,514

DIMAPORO, Abdullah

289.751

AMPARO, Jesus

286,180

BADOY, Anacleto

285,985

BAGA, Tomas

271,473

PANGANDAMAN, Sambolayan

271,393

SINSUAT, Blah

269,905

ROLDAN, Ernesto

268,287

MANDANGAN, Linang

251,226

TACAO, Sergio

229,124

DIAZ, Ciscolario

187,986

ARATUC, Tomatic

183,316

LEGASPI, Bonifacio

178,564

TAMULA, Fred

177,270

GURO, Mangontawar

163,449

LOMA, Nemesio

129,450

(Page 14, Record, L-49705-09.)

It is alleged in the Aratuc petition that:


The Comelec committee grave abuse of dicretion, amounting to lack of
jurisdiction:
1. In not pursuing further the examination of the registration records and
voting records from the other voting centers questioned by petitioners after
it found proof of massive substitute voting in all of the voting records and
registration records examined by Comelec and NBI experts;
2. In including in the canvass returns from the voting centers whose book of
voters and voting records could not be recovered by the Commission in spite
of its repeated efforts to retrieve said records;
3. In not excluding from the canvass returns from voting centers showing a
very high percentage of voting and in not considering that high percentage
of voting, coupled with massive substitution of voters is proof of
manufacturing of election returns;
4. In denying petitioners' petition for the opening of the ballot boxes from
voting centers whose records are not available for examination to determine
whether or not there had been voting in said voting centers;
5. In not Identifying the ballot boxes that had no padlocks and especially
those that were found to be empty while they were shipped to Manila
pursuant to the directive of the Commission in compliance with the
guidelines of this Honorable Court;
6. In not excluding from the canvass returns where the results of
examination of the voting records and registration records show that the
thumbprints of the voters in CE Form 5 did not correspond to those of the
registered voters as shown in CE Form 1;
7. In giving more credence to the affidavits of chairmen and members of the
voting centers, municipal treasurers and other election officials in the voting
centers where irregularities had been committed and not giving credence to
the affidavits of watchers of petitioners;

8. In not including among those questioned before the Board by petitioners


those included among the returns questioned by them in their Memorandum
filed with the Commission on April 26, 1978, which Memorandum was
attached as Annex 'I' to their petition filed with this Honorable Court G.R. No.
L-48097 and which the Supreme Court said in its Guidelines should be
considered by the Board in the course of the canvass (Guidelines No. 4). (Pp.
15-16, Record, Id.)
On the other hand, the Mandangan petition submits that the Comelec
comitted the following errors:
1. In erroneously applying the earlier case of Diaz vs. Commission on
Elections (November 29, 1971; 42 SCRA 426), and particularly the highly
restrictive criterion that when the votes obtained by the candidates with the
highest number of votes exceed the total number of highest possible valid
votes, the COMELEC ruled to exclude from the canvass the election return
reflecting such rests, under which the COMELEC excluded 1,004 election
returns, involving around 100,000 votes, 95 % of which are for KBL
candidates, particularly the petitioner Linang Mandangan, and which rule is
so patently unfair, unjust and oppressive.
2. In not holding that the real doctrine in the Diaz Case is not the total
exclusion of election returns simply because the total number of votes
exceed the total number of highest possible valid votes, but 'even if all the
votes cast by persons Identified as registered voters were added to the
votes cast by persons who can not be definitely ascertained as registered or
not, and granting, ad arguendo, that all of them voted for respondent Daoas,
still the resulting total is much below the number of votes credited to the
latter in returns for Sagada, 'and that 'of the 2,188 ballots cast in Sagada,
nearly one-half (1,012) were cast by persons definitely Identified as not
registered therein or still more than 40 % of substitute voting which was the
rule followed in the later case of Bashier/Basman (Diaz Case, November
19,1971,42 SCRA 426,432).
3. In not applying the rule and formula in the later case of Bashier and
Basman vs. Commission on Election(February 24, 1972, 43 SCRA 238) which
was the one followed by the Regional Board of Canvassers, to wit:
In Basman vs Comelec (L-33728, Feb. 24, 1972) the Supreme Court upheld
the Supreme Court upheld the ruling of the Commission setting the standard
of 40 % excess votes to justify the exclusion of election returns. In line with
the above ruling, the Board of Canvassers may likewise set aside election
returns with 40 % substitute votes. Likewise, where excess voting occured
and the excess was such as to destroy the presumption of innocent mistake,
the returns was excluded.
(COMELEC'S Resolution, Annex I hereof, p. 22), which this Honorable Court
must have meant when its Resolution of May 23, 1978 (G.R. No. 7), it
referred to "massive substitution of voters.
4. In examining, through the NBI/COMELEC experts, the records in more than
878 voting centers examined by the KB experts and passed upon by the
Regional Board of Canvassers which was all that was within its appellate
jurisdiction is examination of more election records to make a total of 1,085
voting centers (COMELEC'S Resolution, Annex 1 hereof, p. 100), being
beyond its jurisdiction and a denial of due process as far as the KBL,
particularly the petitioner Mandangan, were concerned because they were
informed of it only on December, 1978, long after the case has been

submitted for decision in September, 1978; and the statement that the KBL
acquiesced to the same is absolutely without foundation.
5. In excluding election returns from areas where the conditions of peace
and order were allegedly unsettled or where there was a military operation
going on immediately before and during election and where the voter turn
out was high (90 % to 100 %), and where the people had been asked to
evacuate, as a ruling without jurisdiction and in violation of due process
because no evidence was at all submitted by the parties before the Regional
Board of Canvasssers. (Pp. 23-25, Record, L-47917-21.)
Now before discussing the merits of the foregoing contentions, it is
necessary to clarify first the nature and extent of the Supreme Court's power
of review in the premises. The Aratuc petition is expressly predicated on the
ground that respondent Comelec "committed grave abuse of discretion,
amounting to lack of jurisdiction" in eight specifications. On the other hand,
the Mandangan petition raises pure questions of law and jurisdiction. In
other words, both petitions invoked the Court's certiorari jurisdiction, not its
appellate authority of review.
This is as it should be. While under the Constitution of 1935, "the decisions,
orders and rulings of the Commission shall be subject to review by the
Supreme Court" (Sec. 2, first paragraph, Article X) and pursuant to the Rules
of Court, the petition for "certiorari or review" shall be on the ground that
the Commission "has decided a question of substance not theretofore
determined by the Supreme Court, or has decided it in a way not in accord
with law or the applicable decisions of the Supreme Court" (Sec. 3. Rule 43),
and such provisions refer not only to election contests but even to preproclamation proceedings, the 1973 Constitution provides somewhat
differently thus: "Any decision, order or ruling of the Commissionmay be
brought to the Supreme Court on certiorari by the aggrieved party within
thirty days from his receipt of a copy thereof" (Section 11, Article XII c), even
as it ordains that the Commission shall "be the sole judge of all contests
relating to the elections, returns and qualifications of all members of the
National Assembly and elective provincial and city official" (Section 2(2).)
Correspondingly, the ElectionCode of 1978, which is the first legislative
constructionof the pertinent constitutional provisions, makes the
Commission also the "sole judge of all pre-proclamation controversies" and
further provides that "any of its decisions, orders or rulings (in such
contoversies) shall be final and executory", just as in election contests, "the
decision of the Commission shall be final, and executory and inappealable."
(Section 193)
It is at once evident from these constitutional and statutory modifications
that there is a definite tendency to enhance and invigorate the role of the
Commission on Elections as the independent constitutinal body charged with
the safeguarding of free, peaceful and honest elections. The framers of the
new Constitution must be presumed ot have definite knowledge of what it
means to make the decisions, orders and rulings of the Commission "subject
to review by the Supreme Court". And since instead of maintaining that
provision intact, it ordained that the Commission's actuations be instead
"brought to the Supreme Court on certiorari", We cannot insist that there
was no intent to change the nature of the remedy, considering that the
limited scope of certiorari, compared to a review, is well known in remedial
law.

Withal, as already stated, the legislative construction of the modified


peritinent constitutional provision is to the effect that the actuations of the
Commission are final, executory and even inappealable. While such
construction does not exclude the general certiorari jurisdiction of the
Supreme Court which inheres in it as the final guardian of the Constitution,
particularly, of its imperious due process mandate, it correspondingly
narrows down the scope and extent of the inquiry the Court is supposed to
undertake to what is strictly the office of certiorari as distinguished from
review. We are of the considered opinion that the statutory modifications are
consistent with the apparent new constitional intent. Indeed, it is obvious
that to say that actuations of the Commission may be brought to the
Supreme Court on certiorari technically connotes something less than saying
that the same "shall be subject to review by the Supreme Court", when it
comes to the measure of the Court's reviewing authority or prerogative in
the premises.
A review includes digging into the merits and unearthing errors of judgment,
while certiorari deals exclusively with grave abuse of discretion, which may
not exist even when the decision is otherwise erroneous. certiorari implies
an indifferent disregard of the law, arbitrariness and caprice, an omission to
weight pertinent considerations, a decision arrived at without rational
deliberation. While the effecdts of an error of judgment may not differ from
that of an indiscretion, as a matter of policy, there are matters taht by their
nature ought to be left for final determination to the sound discretion of
certain officers or entities, reserving it to the Supreme Court to insure the
faithful observance of due process only in cases of patent arbitrariness.
Such, to Our mind, is the constitutional scheme relative to the Commission
on Elections. Conceived by the charter as the effective instrument to
preserve the sanctity of popular suffrage, endowed with independence and
all the needed concommittant powers, it is but proper that the Court should
accord the greatest measure of presumption of regularity to its course of
action and choice of means in performing its duties, to the end that it may
achieve its designed place in the democratic fabric of our government.
Ideally, its members should be free from all suspicions of partisan
inclinations, but the fact that actually some of them have had stints in the
arena of politics should not, unless the contrary is shown, serve as basis for
denying to its actuations the respect and consideration that the Constitution
contemplates should be accorded to it, in the same manner that the
Supreme Court itself which from time to time may have members drawn
from the political ranks or even from military is at all times deemed
insulated from every degree or form of external pressure and influence as
well as improper internal motivations that could arise from such background
or orientation.
We hold, therefore that under the existing constitution and statutory
provisions, the certiorari jurisdiction of the Court over orders, and decisions
of the Comelec is not as broad as it used to be and should be confined to
instances of grave abuse of discretion amounting to patent and substantial
denial of due process. Accordingly, it is in this light that We the opposing
contentions of the parties in this cases.
THE MANDANGAN CASE
Being more simple in Our view, We shall deal with the petition in G.R. No. L49717-21 first.

The errors assigned in this petition boil down to two main propositions,
namely, (1) that it was an error of law on the part of respondent Comelec to
have applied to the extant circumstances hereof the ruling of this Court in
Diaz vs. Comelec 42 SCRA 426 instead of that of Bashier vs. Comelec 43
SCRA 238; and (2) that respondent Comelec exceeded its jurisdiction and
denied due process to petitioner Mandangan in extending its inquiry beyond
the election records of "the 878 voting centers examined by the KB experts
and passed upon by the Regional Board of Canvassers" and in excluding
from the canvass the returns showing 90 to 100 % voting, from voting
centers where military operations were by the Army to be going on, to the
extent that said voting centers had to be transferred to the poblaciones the
same being by evidence.
Anent the first proposition, it must be made clear that the Diaz and Bashier
rulings are not mutually exclusive of each other, each being an outgrowth of
the basic rationale of statistical improbability laid down in Lagumbay vs.
Comelec and , 16 SCRA 175. Whether they be apply together or separately
or which of them be applied depends on the situation on hand. In the factual
milieu of the instant case as found by the Comelec, We see no cogent
reason, and petitioner has not shown any, why returns in voting centers
showing that the votes of the candidate obtaining highest number of votes
of the candidate obtaining the highest number of votes exceeds the highest
possible number of valid votes cast therein should not be deemed as
spurious and manufactured just because the total number of excess votes in
said voting centers were not more than 40 %. Surely, this is not the
occasion, consider the historical antecedents relative to the highly
questionable manner in which elections have been bad in the past in the
provinces herein involved, of which the Court has judicial notice as attested
by its numerous decisions in cases involving practically every such election,
of the Court to move a whit back from the standards it has enunciated in
those decisions.
In regard to the jurisdictional and due process points raised by herein
petitioner, it is of decisive importance to bear in mind that under Section
168 of the Revised Election Code of 1978, "the Commission (on Elections)
shall have direct control and supervision on over the board of canvassers"
and that relatedly, Section 175 of the same Code provides that it "shall be
the sole judge of all pre-proclamation controversies." While nominally, the
procedure of bringing to the Commission objections to the actuations of
boards of canvassers has been quite loosely referred to in certain quarters,
even by the Commission and by this Court, such as in the guidelines of May
23,1978 quoted earlier in this opinion, as an appeal, the fact of the matter is
that the authority of the Commission in reviewing such actuations does not
spring from any appellate jurisdiction conferred by any specific provision of
law, for there is none such provision anywhere in the Election Code, but from
the plenary prerogative of direct control and supervision endowed to it by
the above-quoted provisions of Section 168. And in administrative law, it is a
too well settled postulate to need any supporting citation here, that a
superior body or office having supervision and control over another may do
directly what the latter is supposed to do or ought to have done.
Consequently, anything said in Lucman vs. Dimaporo, 33 SCRA 387, cited by
petitioner, to the contrary notwithstanding, We cannot fault respondent
Comelec for its having extended its inquiry beyond that undertaken by the

Board of Canvass On the contrary, it must be stated that Comelec correctly


and commendably asserted its statutory authority born of its envisaged
constitutional duties vis-a-vis the preservation of the purity of elections and
electoral processes and p in doing what petitioner it should not have done.
Incidentally, it cannot be said that Comelec went further than even what
Aratuc et al. have asked, since said complaints had impugned from the
outset not only the returns from the 878 voting centers examined by their
experts but all those mentioned in their complaints in the election cases
filed originally with the Comelec enumerated in the opening statements
hereof, hence respondent Comelec had that much field to work on.
The same principle should apply in respect to the ruling of the Commission
regarding the voting centers affected by military operations. It took
cognizance of the fact, not considered by the board of canvass, that said
voting centers had been transferred to the poblaciones. And, if only for
purposes of pre-proclamation proceedings, We are persuaded it did not
constitute a denial of due process for the Commission to have taken into
account, without the need or presentation of evidence by the parties, a
matter so publicly notorious as the unsettled situation of peace and order in
localities in the provinces herein involved that their may perhaps be taken
judicial notice of, the same being capable of unquestionable demonstration.
(See 1, Rule 129)
In this connection, We may as well perhaps, say here as later that
regrettably We cannot, however, go along with the view, expressed in the
dissent of our respected Chief Justice, that from the fact that some of the
voting centers had been transferred to the poblaciones there is already
sufficient basis for Us to rule that the Commission should have also
subjected all the returns from the other voting centers of the some
municipalities, if not provinces, to the same degree of scrutiny as in the
former. The majority of the Court feels that had the Commission done so, it
would have fallen into the error by petitioner Mandangan about denial of due
process, for it is relatively unsafe to draw adverse conclusions as to the
exact conditions of peace and order in those other voting centers without at
list some prima facie evidence to rely on considering that there is no
allegation, much less any showing at all that the voting centers in question
are so close to those excluded by the Comelec on as to warrant the
inescapable conclusion that the relevant circumstances by the Comelec as
obtaining in the latter were Identical to those in the former.
Premises considered the petition in G.R. Nos. L-49717-21 is hereby dismiss
for lack of merit.
THE ARATUC ET AL. PETITION
Of the eight errors assigned by herein petitioners earlier adverted to, the
seventh and the sight do not require any extended disquisition. As to the
issue of whether the elections in the voting centers concerned were held on
April 7, 1978, the date designated by law, or earlier, to which the seventh
alleged error is addressed, We note that apparently petitioners are not
seriously pressing on it anymore, as evidenced by the complete absence of
any reference thereto during the oral argument of their counsel and the
practically cavalier discussion thereof in the petition. In any event, We are
satisfied from a careful review of the analysis by the Comelec in its
resolution now before Us that it took pains to consider as meticulously as the
nature of the evidence presented by both parties would permit all the

contentions of petitioners relative to the weight that should be given to such


evidence. The detailed discussion of said evidence is contained in not less
than nineteen pages (pp. 70-89) of the resolution. In these premises, We are
not prepared to hold that Comelec acted wantonly and arbitrarily in drawing
its conclusions adverse to petitioners' position. If errors there are in any of
those conclusions, they are errors of judgment which are not reviewable in
certiorari, so long as they are founded on substantial evidence.
As to eighth assigned error. the thrust of respondents, comment is that the
results in the voting centers mentioned in this assignment of error had
already been canvassed at the regional canvass center in Cotabato City.
Again, We cannot say that in sustaining the board of canvassers in this
regard, Comelec gravely abused its discretion, if only because in the
guidelines set by this Court, what appears to have been referred to is, rightly
or wrongly, the resumption only of the canvass, which does not necessarily
include the setting aside and repetition of the canvass already made in
Cotabato City.
The second and fourth assignments of error concern the voting centers the
corresponding voters' record (C.E. Form 1) and record of voting, (C.E. Form
5) of which have never been brought to Manila because they, were not
available The is not clear as to how many are these voting centers.
According to petitioners they are 501, but in the Comelec resolution in
question, the number mentioned is only 408, and this number is directly
challenged in the petition. Under the second assignment, it is contended
that the Comelec gravely abused its discretion in including in the canvass
the election returns from these voting centers and, somewhat alternatively,
it is alleged as fourth assignment that the petitioners motion for the opening
of the ballot boxes pertaining to said voting centers was arbitraly denied by
respondent Comelec.
The resolution under scrutiny explains the situation that confronted the
Commission in regard to the 408 voting centers reffered to as follows :
The Commission had the option of excluding from the canvass the election
returns under category. By deciding to exclude, the Commission would be
summarily disenfranchising the voters registered in the voting centers
affected without any basis. The Commission could also order the inclusion in
the canvass of these elections returns under the injunction of the Supreme
Court that extremes caution must be exercised in rejecting returns unless
these are palpably irregular. The Commission chose to give prima facie
validity to the election returns mentioned and uphold the votes cast by the
voters in those areas. The Commission held the view that the failure of some
election officials to comply with Commission orders(to submit the records)
should not parties to such official disobedience. In the case of Lino Luna vs.
Rodriguez, 39 Phil. 208, the Supreme Court ruled that when voters have
honestly cast their ballots, the same should not be nullified because the
officers appointed under the law to direct the election and guard the purity
of the ballot have not complied with their duty. (cited in Laurel on Elections,
p. 24)
On page 14 of the comment of the Solicitor General, however, it is stated
that:
At all events, the returns corresponding to these voting centers were
examined by the Comelec and 141 of such returns were excluded, as
follows:

SUMMARY
PROVINCE

TOTAL

EXCLUDED

INCLUDED

Lanao del Norte

30

30

Lanao del Sur

342

137

205

Maguindanao

21

20

North Cotabato

Sultan Kudarat

12

10

totals -----

412

141

271

(Page 301, Record.)


This assertion has not been denied by petitioners.
Thus, it appears that precisely use of the absence or unavailability of the CE
Forms 1 and 5 corresponding to the more than 400 voting centers concerned
in our present discussion the Comelec examined the returns from said voting
centers to determine their trustworthiness by scrutinizing the purported
relevant data appearing on their faces, believing that such was the next best
thing that could be done to avoid total disenfranchisement of the voters in
all of them On the Other hand, Petitioners' insist that the right thing to do
was to order the opening of the ballot boxes involved.
In connection with such opposing contentions, Comelec's explanation in its
resolution is:
... The commission had it seen fit to so order, could have directed the
opening of the ballot boxes. But the Commission did not see the necessity of
going to such length in a that was in nature and decided that there was
sufficient bases for the revolution of the appeal. That the Commission has
discretion to determine when the ballot boxes should be opened is implicit in
the guidelines set by the Supreme Court which states that '. . . the ballot
bones [which] shall be opened only upon orders of either the respondent
Board or respondent Commission, after the need therefor has become
evident ... ' (guideline No. 3; emphasissupplied). Furthermore, the Court on
June 1, 1978, amended the guidelines that the "ballot boxes for the voting
centers ... need not be taken to Manila EXCEPT those of the centers as to
which the petitioners have the right to demand that the corresponding ballot
boxes be opened ... provided that the voting centers concerned shall be
specified and made known by petitioners to the Regional Board of
Canvassers not later than June 3,1978 ... ' (Emphasis supplied). The KB,
candidates did not take advantage of the option granted them under these
guidelines.( Pp 106-107, Record.)
Considering that Comelec, if it had wished to do so, had the facilities to
Identify on its own the voting centers without CE Forms I and 5, thereby
precluding the need for the petitioners having to specify them, and under
the circumstances the need for opening the ballot boxes in question should
have appeared to it to be quite apparent, it may be contended that Comelec
would have done greater service to the public interest had it proceeded to
order such opening, as it had announced it had thoughts of doing in its

resolution of August 30, 1978. On the other hand, We cannot really blame
the Commission too much, since the exacting tenor of the guidelines issued
by Us left it with very little elbow room, so to speak, to use its own discretion
independently of what We had ordered. What could have saved matters
altogether would have been a timely move on the part of petitioners on or
before June 3, 1978, as contemplated in Our resolution. After all come to
think of it, that the possible outcome of the opening of the ballot boxes
would favor the petitioners was not a certainty the contents them could
conceivably boomerang against them, such as, for example, if the ballots
therein had been found to be regular and preponderantly for their
opponents. Having in mind that significantly, petitioners filed their motion
for only on January 9, 1979, practically on the eve of the promulgation of the
resolution, We hold that by having adhered to Our guidelines of June 1,
1978, Comelec certainly cannot be held to be guilty of having gravely
abused its discretion, in examining and passing on the returns from the
voting centers reffered to in the second and fourth assignments of error in
the canvass or in denying petitioners' motion for the of the ballot boxes
concerned.
The first, third and sixth assignment of involve related matters and maybe
discussed together. They all deal with the inclusion in or exclusion from the
canvass of returns on the basis of the percentage of voting in specified
voting centers and the corresponding findings of the Comelec on the extent
of substitute voting therein as indicated by the result of either the technical
examination by experts of the signatures and thumb-prints of the voters
threat.
To begin with, petitioners' complaint that the Comelec did not examine and
study 1,694 of the records in an the 2,775 voting centers questioned by
them is hardly accurate. To be more exact, the Commission excluded a total
of 1,267 returns coming under four categories namely: 1,001 under the Diaz,
supra, ruling, 79 because of 90-100 % turnout of voters despite military
operations, 105 palpably manufactured owe and 82 returns excluded by the
board of canvass on other grounds. Thus, 45.45 % of the of the petitioners
were sustained by the Comelec. In contrast, in the board of canvassers, only
453 returns were excluded. The board was reversed as to 6 of these, and
821 returns were excluded by Comelec over and above those excluded by
the board. In other words, the Comelec almost doubled the exclusions by the
board.
Petitioners would give the impression by their third assignment of error that
Comelec refused to consider high percentage of voting, coupled with mass
substitute voting, as proof that the pertinent returns had been
manufactured. That such was not the case is already shown in the above
specifications. To add more, it can be gleaned from the resolution that in t to
the 1,065 voting centers in Lanao del Sur and Marawi City where a high
percentage of voting appeared, the returns from the 867 voting centers
were excluded by the Comelec and only 198 were included a ratio of roughly
78 % to 22 %. The following tabulation drawn from the figures in the
resolution shows how the Comelec went over those returns center by center
and acted on them individually:
90% 100% VOTING
MARAWI CITY AND LANAO DEL SUR
NO. OF V/C THAT V/C WITH 90% to 100%

MUNICIPALITIES FUNCTIONED VOTING


No. of V/C

Exclude
d

Included

Marawi City

151

112

107

Bacolod Grande

28

28

27

Balabagan

53

53

49

Balindong

22

22

15

Bayang

29

20

13

Binidayan

37

33

29

Buadiposo Bunton

41

10

10

Bubong

24

23

21

Bumbaran

21 (All excluded)

Butig

35

33

32

Calanogas

23

21

21

Ditsaan-Ramain

Ganassi

Lumba Bayabao

Lumbatan

Lumbayanague

Madalum

Madamba

Maguing

Malabang

42

39

64

30

37

14

20

57

59

39

38

63

28

33

13

20

55

47

38

23

47

17

28

53

1
Piagapo

39

39

36

Poona-Bayabao

44

44

42

Pualas

23

20

20

Saguiaran

36

32

21

11

Sultan Gumander

35

31

31

Tamparan

24

21

15

Taraka

31

31

31

Tubaran

23

19

19

1,218

1,065

867

198

15

16

11

15

42
TOTALS: Marawi &

Marantao

79

63

41

22
Lanao del Sur

Marugong

37

35

32

Masiu

27

26

24

Pagayawan

15

13

We are convinced, apart from presuming regularity in the performance of its


duties, that there is enough showing in the record that it did examine and
study the returns and pertinent records corresponding to all the 2775 voting
centers subject of petitioners' complaints below. In one part of its resolution
the Comelec states:
The Commission as earlier stated examined on its own the Books of Voters
(Comelec Form No. 1) and the Voters Rewards Comelec Form No. 5) to
determine for itself which of these elections form needed further
examination by the COMELEC-NBI experts. The Commission, aware of the

nature of this pre-proclamation controversy, believes that it can decide,


using common sense and perception, whether the election forms in
controversy needed further examination by the experts based on the
presence or absence of patent signs of irregularity. (Pp. 137-138, Record.)
In the face of this categorical assertion of fact of the Commission, the bare
charge of petitioners that the records pertaining to the 1,694 voting centers
assailed by them should not create any ripple of serious doubt. As We view
this point under discussion, what is more factually accurate is that those
records complained of were not examined with the aid of experts and that
Comelec passed upon the returns concerned "using common sense and
perception only." And there is nothing basically objectionable in this. The
defunct Presidential Senate and House Electoral Tribunals examine passed
upon and voided millions of votes in several national elections without the
assistance of experts and "using" only common sense and perception". No
one ever raised any eyebrows about such procedure. Withal, what we
discern from the resolution is that Comelec preliminary screened the records
and whatever it could not properly pass upon by "using common sense and
perception" it left to the experts to work on. We might disagree with he
Comelec as to which voting center should be excluded or included, were We
to go over the same records Ourselves, but still a case of grave abuse of
discretion would not come out, considering that Comelec cannot be said to
have acted whimsically or capriciously or without any rational basis,
particularly if it is considered that in many respects and from the very nature
of our respective functions, becoming candor would dictate to Us to concede
that the Commission is in a better position to appreciate and assess the vital
circumstances closely and accurately. By and large, therefore, the first, third
and sixth assignments of error of the petitioners are not well taken.
The fifth assignment of error is in Our view moot and academic. The
Identification of the ballot boxes in defective condition, in some instances
open and allegedly empty, is at best of secondary import because, as
already discussed, the records related thereto were after all examined,
studied and passed upon. If at all, deeper inquiry into this point would be of
real value in an electoral protest.
CONCLUSION
Before closing, it may not be amiss to state here that the Court had initially
agreed to dispose of the cases in a minute resolution, without prejudice to
an extended or reasoned out opinion later, so that the Court's decision may
be known earlier. Considering, however, that no less than the Honorable
Chief Justice has expressed misgivings as to the propriety of yielding to the
conclusions of respondent Commission because in his view there are strong
considerations warranting farther meticulous inquiry of what he deems to be
earmarks of seemingly traditional faults in the manner elections are held in
the municipalities and provinces herein involved, and he is joined in this
pose by two other distinguished colleagues of Ours, the majority opted to
ask for more time to put down at least some of the important considerations
that impelled Us to see the matters in dispute the other way, just as the
minority bidded for the opportunity to record their points of view. In this
manner, all concerned will perhaps have ample basis to place their
respective reactions in proper perspective.
In this connection, the majority feels it is but meet to advert to the following
portion of the ratiocination of respondent Board of Canvassers adopted by

respondent Commission with approval in its resolution under question:


First of all this Board was guided by the legal doctrine that canvassing
boards must exercise "extreme caution" in rejecting returns and they may
do so only when the returns are palpably irregular. A conclusion that an
election return is obviously manufactured or false and consequently should
be disregarded in the canvass must be approached with extreme caution,
and only upon the most convincing proof. Any plausible explanation one
which is acceptable to a reasonable man in the light of experience and of
the probabilities of the situation, should suffice to avoid outright nullification,
with the resulting t of those who exercised their right of suffrage. (Anni vs.
Isquierdo et at L-35918, Jude 28,1974; Villavon v. Comelec L-32008, August
31,1970; Tagoranao v. Comelec 22 SCRA 978). In the absence of strong
evidence establishing the spuriousness of the return, the basis rule of their
being accorded prima facie status as bona fide reports of the results of the
count of the votes for canvassing and proclamation purposes must be
applied, without prejudice to the question being tried on the merits with the
presentation of evidence, testimonial and real in the corresponding electoral
protest. (Bashier vs. Comelec L-33692, 33699, 33728, 43 SCRA 238,
February 24, 1972). The decisive factor is that where it has been duly de ed
after investigation and examination of the voting and registration records
hat actual voting and election by the registered voters had taken place in
the questioned voting centers, the election returns cannot be disregarded
and excluded with the resting disenfranchisement of the voters, but must be
accorded prima facie status as bona fide reports of the results of the voting
for canvassing and registration purposes. Where the grievances relied upon
is the commission of irregularities and violation of the Election Law the
proper remedy is election protest. (Anni vs. Isquierdo et al. Supra). (P. 69,
Record, L-49705-09).
The writer of this opinion has taken care to personally check on the citations
to be doubly sure they were not taken out of context, considering that most,
if not all of them arose from similar situations in the very venues of the
actual milieu of the instant cases, and We are satisfied they do fit our chosen
posture. More importantly, they actually came from the pens of different
members of the Court, already retired or still with Us, distinguished by their
perspicacity and their perceptive prowess. In the context of the
constitutional and legislative intent expounded at the outset of this opinion
and evident in the modifications of the duties and responsibilities of the
Commission on Elections vis-a-vis the matters that have concerned Us
herein, particularly the elevation of the Commission as the "sole judge of
pre-proclamation controversies" as well as of all electoral contests, We find
the afore-quoted doctrines compelling as they reveal through the clouds of
existing jurisprudence the pole star by which the future should be guided in
delineating and circumscribing separate spheres of action of the Commission
as it functions in its equally important dual role just indicated bearing as
they do on the purity and sanctity of elections in this country.
In conclusion, the Court finds insufficient merit in the petition to warrant its
being given due course. Petition dismissed, without pronouncement as to
costs. Justices Fernando, Antonio and Guerrero who are presently on official
missions abroad voted for such dismissal.
Fernando, Antonio, Concepcion Jr., Santos Fernandez, and Guerrero, JJ.,
concur.

Teehankee, J. took no part.


Aquino and Abad Santos, Jr., took no part.
Separate Opinions
CASTRO, C.J., dissenting:
1
At the outset I must state that constraints of time effectively prevent me
from writing an extended dissent. Hence, this abbreviated exposition of my
views.
For a clear understanding of the issues, a summary of the essential events
relative to these cases is necessary.
On April 7, 1978, elections of representatives to the Batasang Pambansa
were held throughout the Philippines. The cases at bar concern only the
results of the elections in Region XII (Central Mindanao) which compromises
the p s Of Lanao del Sur, Lanao del Norte, Maguindanao, North Cotabato and
Sultan Kudarat, and the cities of Marawi, Iligan and Cotabato. (The entire
Region had a total of 4,107 voting center but only 3,984 were functions).
On June 11, 1978, the Region Board of Canvassers issued a resolution, Over
the objection of the Konsensiya ng Bayan (KB) candidates d all the eight
Kilusang ng Bagong Lipunan (KBL) candidates elected. Appeal was taken by
the KB candidates to the On January 13, 1979, the Comelec its questioned
resolution KBL can candidates and one KB candidate as having obtained the
first eight places, and ordering the Regional Board of Can to p the winning
candidates. The KB candidate forewith the present petition ; in due time the
respondents filed their comments.
Oral argument was had before the Court for two days, specifically on January
31 and February 1, 1979. Atty. Lino Patajo argued for and in behalf of the KB
candidates, Assemblyman Estanislao Fernandez for the KBL and the private
respondents and Solicitor General Estelito P. Mendoza for the public
respondents. The Court subjected the three counsels to intensive
interrogation. The cases were then sub. muted for decision in the afternoon
of February 1.
2
I have carefully read the entire record, more particularly the Comelec
resolution of January 13, 1979, and I must confess that until now my mind
cannot rest easy on a number of questions sharply in issue, some of which
are hereunder briefly discussed.
a. After the Comelec examined very closely the voting returns, books of
voting and voting records from 1, 116 voting centers protested by the KB
candidates, to the extent of subjecting them to detailed documentary
examination and finger print comparison by Comelec experts, and thereafter
annulled 31.84% of the votes cast, why did it refuse to proceed to subject all
the records of the remaining 1,659 voting centers protested by the KB
candidates to the same manner of close scrutiny?
b. Why did not the Comelec examine, utilizing the same meticulous method,
similar documents and records appertaining to a total of 164 voting centers
in Lanao del Sur and 19 voting centers in Lanao del Nortetwo provinces
where concededly there had been military operationsand an additional
number of voting centers in the other provinces, all of which registered a

100 % turnout of voters? The peace and order conditions in the two cities of
Iligan and Cotabato on the day of the elections were normal and yet the
total percentages of voting were only 73 % and 52 %, lively. How then can
the Comelec explained why and how in many voting centers located in areas
where there had been military operations there was a voting turnout of 100
%? Assuming that the KB candidates did not call the attention of the
Comelecalthough they actually didto the stark improbability of 100 %
vote turnout in the said places, because the peace and order conditions
were far from normal it perforce devolved on the Comelec to conduct, motu
propio, an in-depth and full-blown inquiry into this paradox. The record
shows that there was l00 % voting in the whole of each of three
municipalities, over 99 % viting in each of thirteen other municipalities, and
an average 97 % turnout in five more municipalities. Of inescapable
significance is the fact that most of these municipalities are located in the
provinces of Lanao del Sur and Lanao del Norte, the past election history of
which is replete with the perpetration of massive frauds, terrorism and
scandalous substitutions of voters.
c. Why did the Comelec deny the motion of the KB candidates for the
opening of ballot boxes Pertaining to a total of 408 voting centers the
voting record of which were not available as they had somehow mysteriously
disappeared to determine whether or not the election in each of the said
voting centers was a sham? This remedial measure was resorted to by the
Comelec in 1969 when it Order the opening of a number of ballot boxes in
the pre-proclamation contest inLucman vs. Dimaporo in order to see
whether or not there were ballots, and determine whether there had been an
actual election in each of the disputed precincts. In that case to almost 200
ballot boxes found to be without padlocks?
3
Of incalculable significance is the abscence of any statement in the Comelec
resolution that indicates that, granting that all the questions I have above
raised would be resolved in favor of the KB candidates, the election results
would not be materially altered.Upon the other hand , the KB candidates
state categorically, with benefit of extrapolation, that the election results
would be considerably changed in their favor.
4
The majority of my brethren anchor their denial of the petition on two
principal grounds, namely:
a. The issues raised by the KB candidates would be better and properly
ventilated in an election protest; and
b. No grave abuse of discretion is discernible from the actuations of the
Comelec.
Anent the first ground, it is a notorious fact in the history of Philippine
politics that an election protest not only is usually inordinately protracted
but as well entails heavy and prohibitive expenditure of time, money and
effort on the part of the protestant. More than this, should the protestant in
the end win, very little time or none at all is left for him to assume and
discharge the duties of his office. In the meantime, the person previously
proclaimed elected continues to fraudulently represent the people who had
in law and in fact duly elected someone else to represent them.
Besides, taking a broad view of the fundamental issues raised by the KB
candidates, I am of the opinion that resolution of these issues by the

Comelec would not take more than six months of conscientious laborand
surely this period is short, very short indeed, compared to the time that win
be wasted by the Comelec in deciding a formal electoral protest. Is it not
time the Supreme Court asserted its powers in order to excise completely
the Old Society pernicious evil of "grab the proclamation at all costs"?
Anent the second ground, I squarely traverse the statement that no grave
abuse of discretion can be imputed to the Comelec. The grave misgivings I
have above articulated demonstrate what to my mind constitute the size
and shape of the remissness of the Comelec. And more compelling and overriding a consideration than the overwrought technicality of "grave abuse of
discretion" is the fundamental matter of the faith of the people of Region XII
in the electoral process. There will always be the nagging question in the
minds of the voters in that Region as to the legitimacy of those who will be
proclaimed elected under the Comelec resolution should the Court refuse to
direct that body to continue the meticulous for legitimacy and truth.
5
Upon all the foregoing, it behooves the Court to remand these cases to the
Comelec, with the direction that body immediately convene and within an
unextendible period and as speedily as possible, resolve with definitiveness
all the questions I have above posed, under such unequivocal guidelines as
the Court may prescribe.
For my part, unless and until this is done, I shall continue to enter grave
doubt as to the correctness and validity of the results already reached by the
Comelec, especially when political history, placed in perspective, pointedly
reminds me of the massive frauds, terrorism and scandalous substitutions of
voters that have characterized past elections in the two Lanao provinces.
DE CASTRO, J., concuring:
The present case has afforded Us an early opportunity to examine and
define the extent of the power of judicial review as granted to the Supreme
Court over any decision, order or ruling of the Commission on Elections
under the new Constitution the pertinent provision of which reads:
Section 11. Any decision order or ruling of the on may be brought to the
Supreme Court on certiorari by the party within thirty days from his receipt
of a copy thereof XII, Constitution).
The Commission on Elections has been granted powers under the new
Constitution which, under the old Constitution, belonged either to the
legislative body(Electoral Tribunals) or the courts. This evident from the
provision of the new Constitution which reads:
(2) Be the sole judge of all contents relating to the elections, returns, and
quallifications of all Members of the National Assembly and elective
provincial and city officials. (Section 2, Article XII, Constitution).
The Commission is thus envisioned to exercise exclusive powers on all
electoral matters except the right to vote, such as the enforcement and
administration of laws relative to the conduct of elections deciding
administrative questions affecting elections, except those involving the right
to vote, but also those that heretofore have been agreed as matters for
strictly judicial inquiry, such as the hearing and disposition of election
contests, as is doubtlessly shown by the transfer thereto of the powers
previously conferred upon the Electoral Tribunal of Congress and the Courts.
(see Section 2, par. 2, Article XII, New Constitution). This change may
properly be viewed as having the intention to relieve the Courts, particularly

the Supreme Court, of those burdens placed upon them relating to the
conduct of election and matters incident thereto. It could have been,
likewise, intended to insulate judicial bodies from the baneful effects of
partisan politics, the more deleterious ones being those that could come
from the higher mats of political power, such a those in the Assembly and in
the provincial and city government levels.
It is, therefore, my view that what was intended by the new Constitution is to
limit the intervention of the Supreme Court in the acts of the Commission as
constitutional body like said Court, but with broadened powers, allocating to
it a domain as exclusive as that of the legislative body (which includes the
President or Prime Minister) on matters of lawmaking , to that of "judicial
inquiry". This power is confined to justifiable questions not of political
nature, and always involving alleged violation of constitutional rights or the
constitution itself.. For a controversy of a political character, commonly
referred to as "Political questions", is excluded from the scope of the
Supreme Courts power of judicial inquiry. 1 The exclusive character of the
Power conferred upon the Commission on Elections, and considering that
political rights, as distinguished from civil and personal Or Property rights, 2
are for the most part, if not in their totality, the subject of its authority,
should counsel an expansive intervention by the Supreme Court in the acts
of the Commission on Election. With the confernment of exclusive authority
on the electoral process upon it, the Commission may be said to have been
given hill discretionary authority, the exercise of which would give rise to a
controversy involving a political question. 3
What then is the test or criterion in de whether the Supreme Court may
exercise its power under Article XII, Section 11 of the new Constitution? It is
my humble submission that the aforecited provision is merely a reassertion
of the power of the Supreme Court as guardian of the Constitution and
protector of constitutional rights, of which, under no circumstance, could it
be deprived, if our present Constitution system is to be maintained. For it is
a power constitutionally assigned to it as the essence of the high judicial
power of the Supreme Court, for the orderly and salutary apportionment of
governmental powers among the different b of the government, as well as
the Constitution bodies created to deal more effectively with specific matters
requiring governmental actions.
Examining the instant petition, nothing reveals itself as raising more than
questions merely affecting the conduct of the election held on April 7, 1978,
much less a truly constitutional question, aside perhaps from the alegation
that the COMELEC undertook an examination of election records beyond
those examined during the pendency of the controversy before the Regional
Board of Canvassers, allegedly without notice to the petitioners, thus
intimating a violation of due process. This particular matter, however, can
easily be disposed of by citing the provision of Section 175 of the Electoral
Code of 1978 which reads:
... The Commission shall be the sole judge of all pre-proclamation
controversies and any of its decisions, orders or rulings shall be final and
executory. It may, motu proprio or upon written petition, and after due
notice and heating order the suspension of the proclamation of a candidateelect or annul any proclamation, if one has been made, on any of the
grounds mentioned in Sections 172, 173 and 174 hereof.
If the Commission has the power to suspend motu proprio the proclamation

of a candidate-elect it must have the power to conduct inquiry into the


cause for which it ordains the suspension of the proclamation such as
making its own examination of the integrity of election returns or inquiring
into any relevant matter affecting the purity of the ballot. Notice is required
by the legal provision cited, but this must be notice to the party adversely
affected, the candidate-elect whose proclamation is suspended. The action
taken by the COMELEC in e additional election documents to those
examined by the KB experts during the pendency of the controversy with
the Regional Board of Canvassers was, therefore, one of which petitioners
cannot be heard, nor have any reason, one of which petitioners cannot be
heard, nor have any reason, to complain, for it even resulted in one KB
candidate getting into the winners column. If the COMELEC stopped at a
certain point in its examination, instead of going through all those
questioned by the petitioners, evidently due to time constraint as fixed in
the guidelines, set by this Court, and the character of pre-proclamation
proceedings , it cannot be charged with abuse of discretion, much less a
grave one. it did not have to conduct the additional examination, in the first
place. The controversy which was heard and decided in the first instance, by
the Regional Board of Canvassers, with guidelines set by this Court, was
appealed to the COMELEC. The latter's appellate authority was thus limited
to a review of the decision of the Board on the basis of the evidence
presented before it, rendering its own decision on the basis of the evidence,
and no more. It incorporated the result of its own examination of additional
election returns, and found one KB as one of the candidate, a fact clearly
showing that COMELEC did examine the said documents, otherwise , the
result as previously declared by the Board of Canvassers with a clean sweep
of the KBL candidate would have remained unaltered.
Expounding more on the one circumstance inclining me to the theory that
with the enlarged power and broadened authority of the COMELEC which to
and cover virtually the entire electoral process, as exclusively as the power
of legislation is constitutionally lodged in the law-making body, what is given
to the Supreme Court as its reviewing authority over acts of the COMELEC is
no more than what it could exercise under its power of judicial inquiry with
to acts of the legislative body, which is the transfer to the COMELEC of the
powers pertaining to the Electoral Tribunals and the courts under the old
Constitution over election contests, it must not be hard to concede that with
the composition of the electoral tribunals in which six of the justices of the
Supreme Court sit in said bodies, the Supreme Court crowd no longer
exercise any reviewing authority over the acts of the said electoral tribunals
except possibly when violation of the Constitution or constitution rights are
involved. With this limited concept of this Court's authority over the defunct
electoral tribunals now applied to an equally constitutional body that the
COMELEC is that took over the function of the Election Tribunal would
hesitate to hold that Supreme Court may grant the relief as in prayed for in
the present petition.
If this is so under the law and the Constitution, it should also be upon
consideration of public policy. The last elections were called by the President
as a test or t as to how the vital reforms and changes of political and social
discipline and moral values he has instituted to evolve a new order have
affected the thinking and the attitudes of our Tribunal should be extreme
caution, if not restraint, in any act on our part that might reflect on the

success or failure of that experiment intended, at the time as a big stride in


the way back to normalization. This is specially true in the field of politics
where the ills of the Old Society has been most grave, because our elections
then as a democratic process, have tarnished the image of our country as a
representative democracy. Except on very compelling reasons then, which I
believe do not exist in the case before Us, should we make any
pronouncement that would detract on how successful the last political
exercise had been, as the first election held under the new Constitution. We
must refrain from imputing to the COMELEC which has been enlarged with
fresh mandate and a bigger trust by the Constitution failure in the
performance of its functions either by willfull neglect, official incompetence,
much less by deliberate partiality, in the first real test of its capability.
In the light of the foregoing, I vote, in concurrence with the majority, to
dismiss the petition, first, as to the matter allegedly involving a violation of
the petitioners' right of due process on the ground that there was no denial
thereof, and second, as to the other matters involving no violation of
constitutional rights, on the ground they are purely political questions, and
that in any case, no grave abuse of discretion has been committed by, much
leas is there lack or excess of jurisdiction on the part of, the Commission on
Elections.

[G.R. Nos. 95203-05 : December 18, 1990.]


192 SCRA 363
SENATOR ERNESTO MACEDA, Petitioner, vs. ENERGY REGULATORY
BOARD (ERB); MARCELO N. FERNANDO, ALEJANDRO B. AFURONG;
REX V. TANTIONGCO; and OSCAR E. ALA, in their collective official
capacities as Chairman and Members of the Board (ERB),
respectively; CATALINO MACARAIG, in his quadruple official
capacities as Executive Secretary, Chairman of Philippine National
Oil Company; Office of the Energy Affairs, and with MANUEL
ESTRELLA, in their respective official capacities as Chairman and
President of the Petron Corporation; PILIPINAS SHELL PETROLEUM
CORPORATION; with CESAR BUENAVENTURA and REY GAMBOA as
chairman and President, respectively; CALTEX PHILIPPINES with
FRANCIS ABLAN, President and Chief Executive Officer; and the
Presidents of Philippine Petroleum Dealer's Association, Caltex
Dealer's Co., Petron Dealer's Asso., Shell Dealer's Asso. of the Phil.,
Liquefied Petroleum Gas Institute of the Phils., any and all
concerned gasoline and petrol dealers or stations; and such other
persons, officials, and parties, acting for and on their behalf; or in
representation of and/or under their authority, Respondents.
[G.R. Nos. 95119-21 : December 18, 1990.]
192 SCRA 363
OLIVER O. LOZANO, Petitioner, vs. ENERGY REGULATORY BOARD
(ERB), PILIPINAS SHELL PETROLEUM CORPORATION, CALTEX (PHIL.),
INC., and PETRON CORPORATION, Respondents.

DECISION

SARMIENTO, J.:

The petitioners pray for injunctive relief, to stop the Energy Regulatory Board
(Board hereinafter) from implementing its Order, dated September 21, 1990,
mandating a provisional increase in the prices of petroleum and petroleum
products, as follows:
PRODUCTS IN PESOS PER LITER
OPSF

Premium Gasoline 1.7700


Regular Gasoline 1.7700
Avturbo 1.8664
Kerosene 1.2400
Diesel Oil 1.2400
Fuel Oil 1.4900
Feedstock 1.4900
LPG 0.8487
Asphalts 2.7160
Thinners 1.7121 1
It appears that on September 10, 1990, Caltex (Philippines), Inc., Pilipinas
Shell Petroleum Corporation, and Petron Corporation proferred separate
applications with the Board for permission to increase the wholesale posted
prices of petroleum products, as follows:
Caltex P3.2697 per liter
Shell 2.0338 per liter
Petron 2.00 per liter 2
and meanwhile, for provisional authority to increase temporarily such
wholesale posted prices pending further proceedings.:-cralaw
On September 21, 1990, the Board, in a joint (on three applications) Order
granted provisional relief as follows:
WHEREFORE, considering the foregoing, and pursuant to Section 8 of
Executive Order No. 172, this Board hereby grants herein applicants' prayer
for provisional relief and, accordingly, authorizes said applicants a weighted
average provisional increase of ONE PESO AND FORTY-TWO CENTAVOS
(P1.42) per liter in the wholesale posted prices of their various petroleum
products enumerated below, refined and/or marketed by them locally. 3
The petitioners submit that the above Order had been issued with grave
abuse of discretion, tantamount to lack of jurisdiction, and correctible by
Certiorari.
The petitioner, Senator Ernesto Maceda, 4 also submits that the same was
issued without proper notice and hearing in violation of Section 3, paragraph
(e), of Executive Order No. 172; that the Board, in decreeing an increase,
had created a new source for the Oil Price Stabilization Fund (OPSF), or
otherwise that it had levied a tax, a power vested in the legislature, and/or
that it had "re-collected", by an act of taxation, ad valorem taxes on oil
which Republic Act No. 6965 had abolished.
The petitioner, Atty. Oliver Lozano, 5 likewise argues that the Board's Order
was issued without notice and hearing, and hence, without due process of
law.

The intervenor, the Trade Union of the Philippines and Allied Services
(TUPAS/FSM)-W.F.T.U., 6 argues on the other hand, that the increase cannot
be allowed since the respondents oil companies had not exhausted their
existing oil stock which they had bought at old prices and that they cannot
be allowed to charge new rates for stock purchased at such lower rates.
The Court set the cases (in G.R. Nos. 95203-05) for hearing on October 25,
1990, in which Senator Maceda and his counsel, Atty. Alexander Padilla,
argued. The Solicitor General, on behalf of the Board, also presented his
arguments, together with Board Commissioner Rex Tantiangco. Attys.
Federico Alikpala, Jr. and Joselia Poblador represented the oil firms (Petron
and Caltex, respectively).
The parties were thereafter required to submit their memorandums after
which, the Court considered the cases submitted for resolution.
On November 20, 1990, the Court ordered these cases consolidated.
On November 27, 1990, we gave due course to both petitions.
The Court finds no merit in these petitions.
Senator Maceda and Atty. Lozano, in questioning the lack of a hearing, have
overlooked the provisions of Section 8 of Executive Order No. 172, which we
quote:
"SECTION 8. Authority to Grant Provisional Relief . The Board may, upon
the filing of an application, petition or complaint or at any stage thereafter
and without prior hearing, on the basis of supporting papers duly verified or
authenticated, grant provisional relief on motion of a party in the case or on
its own initiative, without prejudice to a final decision after hearing, should
the Board find that the pleadings, together with such affidavits, documents
and other evidence which may be submitted in support of the motion,
substantially support the provisional order: Provided, That the Board shall
immediately schedule and conduct a hearing thereon within thirty (30) days
thereafter, upon publication and notice to all affected parties.: nad
As the Order itself indicates, the authority for provisional increase falls within
the above provision.
There is no merit in the Senator's contention that the "applicable" provision
is Section 3, paragraph (e) of the Executive Order, which we quote:
(e) Whenever the Board has determined that there is a shortage of any
petroleum product, or when public interest so requires, it may take such
steps as it may consider necessary, including the temporary adjustment of
the levels of prices of petroleum products and the payment to the Oil Price
Stabilization Fund created under Presidential Decree No. 1956 by persons or
entities engaged in the petroleum industry of such amounts as may be
determined by the Board, which will enable the importer to recover its cost
of importation.
What must be stressed is that while under Executive Order No. 172, a
hearing is indispensable, it does not preclude the Board from ordering, ex
parte, a provisional increase, as it did here, subject to its final disposition of
whether or not: (1) to make it permanent; (2) to reduce or increase it

further; or (3) to deny the application. Section 37 paragraph (e) is akin to a


temporary restraining order or a writ of preliminary attachment issued by
the courts, which are given ex parte, and which are subject to the resolution
of the main case.
Section 3, paragraph (e) and Section 8 do not negate each other, or
otherwise, operate exclusively of the other, in that the Board may resort to
one but not to both at the same time. Section 3(e) outlines the jurisdiction of
the Board and the grounds for which it may decree a price adjustment,
subject to the requirements of notice and hearing. Pending that, however, it
may order, under Section 8, an authority to increase provisionally, without
need of a hearing, subject to the final outcome of the proceeding. The
Board, of course, is not prevented from conducting a hearing on the grant of
provisional authority which is of course, the better procedure however,
it cannot be stigmatized later if it failed to conduct one. As we held in
Citizens' Alliance for Consumer Protection v. Energy Regulatory Board. 7
In the light of Section 8 quoted above, public respondent Board need not
even have conducted formal hearings in these cases prior to issuance of its
Order of 14 August 1987 granting a provisional increase of prices. The
Board, upon its own discretion and on the basis of documents and evidence
submitted by private respondents, could have issued an order granting
provisional relief immediately upon filing by private respondents of their
respective applications. In this respect, the Court considers the evidence
presented by private respondents in support of their applications i.e.,
evidence showing that importation costs of petroleum products had gone up;
that the peso had depreciated in value; and that the Oil Price Stabilization
Fund (OPSF) had by then been depleted as substantial and hence
constitutive of at least prima facie basis for issuance by the Board of a
provisional relief order granting an increase in the prices of petroleum
products. 8
We do not therefore find the challenged action of the Board to have been
done in violation of the due process clause. The petitioners may contest
however, the applications at the hearings proper.
Senator Maceda's attack on the Order in question on premises that it
constitutes an act of taxation or that it negates the effects of Republic Act
No. 6965, cannot prosper. Republic Act No. 6965 operated to lower taxes on
petroleum and petroleum products by imposing specific taxes rather than ad
valorem taxes thereon; it is, not, however, an insurance against an "oil hike",
whenever warranted, or is it a price control mechanism on petroleum and
petroleum products. The statute had possibly forestalled a larger hike, but it
operated no more.: nad
The Board Order authorizing the proceeds generated by the increase to be
deposited to the OPSF is not an act of taxation. It is authorized by
Presidential Decree No. 1956, as amended by Executive Order No. 137, as
follows:
SECTION 8. There is hereby created a Trust Account in the books of
accounts of the Ministry of Energy to be designated as Oil Price Stabilization
Fund (OPSF) for the purpose of minimizing frequent price changes brought
about by exchange rate adjustments and/or changes in world market prices

of crude oil and imported petroleum products. The Oil Price Stabilization
Fund (OPSF) may be sourced from any of the following:
a) Any increase in the tax collection from ad valorem tax or customs duty
imposed on petroleum products subject to tax under this Decree arising from
exchange rate adjustment, as may be determined by the Minister of Finance
in consultation with the Board of Energy;
b) Any increase in the tax collection as a result of the lifting of tax
exemptions of government corporations, as may be determined by the
Minister of Finance in consultation with the Board of Energy;
c) Any additional amount to be imposed on petroleum products to augment
the resources of the Fund through an appropriate Order that may be issued
by the Board of Energy requiring payment by persons or companies engaged
in the business of importing, manufacturing and/or marketing petroleum
products;
d) Any resulting peso cost differentials in case the actual peso costs paid by
oil companies in the importation of crude oil and petroleum products is less
than the peso costs computed using the reference foreign exchange rates as
fixed by the Board of Energy.
Anent claims that oil companies cannot charge new prices for oil purchased
at old rates, suffice it to say that the increase in question was not prompted
alone by the increase in world oil prices arising from tension in the Persian
Gulf. What the Court gathers from the pleadings as well as events of which it
takes judicial notice, is that: (1) as of June 30, 1990, the OPSF has incurred a
deficit of P6.1 Billion; (2) the exchange rate has fallen to P28.00 to $1.00; (3)
the country's balance of payments is expected to reach $1 Billion; (4) our
trade deficit is at $2.855 Billion as of the first nine months of the year.
Evidently, authorities have been unable to collect enough taxes necessary to
replenish the OPSF as provided by Presidential Decree No. 1956, and hence,
there was no available alternative but to hike existing prices.
The OPSF, as the Court held in the aforecited CACP cases, must not be
understood to be a funding designed to guarantee oil firms' profits although
as a subsidy, or a trust account, the Court has no doubt that oil firms make
money from it. As we held there, however, the OPSF was established
precisely to protect the consuming public from the erratic movement of oil
prices and to preclude oil companies from taking advantage of fluctuations
occurring every so often. As a buffer mechanism, it stabilizes domestic
prices by bringing about a uniform rate rather than leaving pricing to the
caprices of the market.
In all likelihood, therefore, an oil hike would have probably been imminent,
with or without trouble in the Gulf, although trouble would have probably
aggravated it.: nad
The Court is not to be understood as having prejudged the justness of an oil
price increase amid the above premises. What the Court is saying is that it
thinks that based thereon, the Government has made out a prima facie case
to justify the provisional increase in question. Let the Court therefore make
clear that these findings are not final; the burden, however, is on the

petitioners' shoulders to demonstrate the fact that the present economic


picture does not warrant a permanent increase.
There is no doubt that the increase in oil prices in question (not to mention
another one impending, which the Court understands has been under
consideration by policy-makers) spells hard(er) times for the Filipino people.
The Court can not, however, debate the wisdom of policy or the logic behind
it (unless it is otherwise arbitrary), not because the Court agrees with policy,
but because the Court is not the suitable forum for debate. It is a question
best judged by the political leadership which after all, determines policy, and
ultimately, by the electorate, that stands to be better for it or worse off,
either in the short or long run.
At this point, the Court shares the indignation of the people over the
conspiracy of events and regrets its own powerlessness, if by this Decision it
has been powerless. The constitutional scheme of things has simply left it
with no choice.

majority says that "the Board Order authorizing the proceeds generated by
the increases" is "authorized by Presidential Decree No. 1456, as amended
by Executive Order No. 137" (See Decision, pp. 7-8). Assuming that such is
authorized by law, still a law, no matter how imperative, cannot prevail over
the Constitution which grants only to Congress the power to tax. And indeed,
there can be no denying the fact that when revenue is earned by the
government from the consuming public (except when only licenses are
concerned) there is an exercise of the taxing power.
I am of course aware of the dangerous economic quagmire to which our
country has been plunged by the sadism precipitating the Middle East crisis,
but certainly one error cannot be corrected by another error. Besides there
are more significant and clear-cut reasons for our economic crisis: namely,
the intentional depreciation (actually, a devaluation) of our already
demeaned currency, our unfortunate liberalization of imports, and our
slavish subservience to the dictates of the IMF.:-cralaw

In fine, we find no grave abuse of discretion committed by the respondent


Board in issuing its questioned Order.
WHEREFORE, these petitions are DISMISSED. No costs.
SO ORDERED.
Narvasa, Gutierrez, Jr ., Cruz, Gancayco, Bidin, Grio Aquino,
Medialdea and Regalado, JJ., concur.
Fernan, C.J., Melencio-Herrera and Padilla, JJ., no part.
Feliciano, J., is on leave.

Separate Opinions
PARAS, J., dissenting:
I dissent.
In fixing the oil prices complained of, the Energy Regulatory Board (ERB)
gravely abused its discretion
(1) in approving the prices without due process of law, and
(2) in exercising the taxing power in gross violation of the 1987 Constitution
which vests such power only in Congress.: nad
With respect to due process, it will be noted that it is Sec. 3(e) (and not Sec.
8) of Ex. Order No. 172 which should apply to the instant case (and therefore
a hearing is essential) 1 for it is Sec. 3(e) that refers to "the temporary
adjustment of the levels of prices of petroleum products" or instances "when
public interest so requires." Sec. 8, which is relied upon by the majority
opinion, does NOT speak of price increases. Additionally it is clear that in the
instant case, "public interest" [also mentioned in Sec. 3 (e)] necessitated a
prior hearing.
Anent the unconstitutional use of the taxing power, the decision of the

G.R. No. 1051


May 19, 1903
THE UNITED STATES, complainant-appellee,
vs.
FRED L. DORR, ET AL., defendants-appellants.
F. G. Waite for appellants.

Solicitor-General Araneta for appellee.


LADD, J.:
The defendants have been convicted upon a complaint charging them with
the offense of writing, publishing, and circulating a scurrilous libel against
the Government of the United States and the Insular Government of the
Philippine Islands. The complaint is based upon section 8 of Act No. 292 of
the Commission, which is as follows:
Every person who shall utter seditious words or speeches, write, publish, or
circulate scurrilous libels against the Government of the United States or the
Insular Government of the Philippine Islands, or which tend to disturb or
obstruct any lawful officer in executing his office, or which tend to instigate
others to cabal or meet together for unlawful purposes, or which suggest or
incite rebellious conspiracies or riots, or which tend to stir up the people
against the lawful authorities, or to disturb the peace of the community, the
safety and order of the Government, or who shall knowingly conceal such
evil practices, shall be punished by a fine not exceeding two thousand
dollars or by imprisonment not exceeding two years, or both, in the
discretion of the court.
The alleged libel was published as an editorial in the issue of the "Manila
Freedom" of April 6, 1902, under the caption of "A few hard facts."
The Attorney-General in his brief indicates the following passages of the
article as those upon which he relies to sustain the conviction:
Sidney Adamson, in a late letter in "Leslie's Weekly," has the following to say
of the action of the Civil Commission in appointing rascally natives to
important Government positions:
"It is a strong thing to say, but nevertheless true, that the Civil Commission,
through its ex-insurgent office holders, and by its continual disregard for the
records of natives obtained during the military rule of the Islands, has, in its
distribution of offices, constituted a protectorate over a set of men who
should be in jail or deported. . . . [Reference is then made to the
appointment of one Tecson as justice of the peace.] This is the kind of foolish
work that the Commission is doing all over the Islands, reinstating
insurgents and rogues and turning down the men who have during the
struggle, at the risk of their lives, aided the Americans."
xxx xxx xxx
There is no doubt but that the Filipino office holders of the Islands are in a
good many instances rascals.
xxx xxx xxx
The commission has exalted to the highest positions in the Islands Filipinos
who are alleged to be notoriously corrupt and rascally, and men of no
personal character.
xxx xxx xxx
Editor Valdez, of "Miau," made serious charges against two of the native
Commissioners charges against Trinidad H. Pardo de Tavera, which, if true,
would brand the man as a coward and a rascal, and with what result? . . .
[Reference is then made to the prosecution and conviction of Valdez for libel
"under a law which specifies that the greater the truth the greater the
libel."] Is it the desire of the people of the United States that the natives
against whom these charges have been made (which, if true, absolutely
vilify their personal characters) be permitted to retain their seats on the Civil
Commission, the executive body of the Philippine Government, without an

investigation?
xxx xxx xxx
It is a notorious fact that many branches of the Government organized by
the Civil Commission are rotten and corrupt. The fiscal system, upon which
life, liberty, and justice depends, is admitted by the Attorney-General himself
to be most unsatisfactory. It is a fact that the Philippine judiciary is far from
being what it should. Neither fiscals nor judges can be persuaded to convict
insurgents when they wish to protect them.
xxx xxx xxx
Now we hear all sorts of reports as to rottenness existing in the province [of
Tayabas], and especially the northern end of it; it is said that it is impossible
to secure the conviction of lawbreakers and outlaws by the native justices,
or a prosecution by the native fiscals.
xxx xxx xxx
The long and short of it is that Americans will not stand for an arbitrary
government, especially when evidences of carpetbagging and rumors of
graft are too thick to be pleasant.
We do not understand that it is claimed that the defendants succeeded in
establishing at the trial the truth of any of the foregoing statements. The
only question which we have considered is whether their publication
constitutes an offense under section 8 of Act No. 292, above cited.
Several allied offenses or modes of committing the same offense are defined
in that section, viz: (1) The uttering of seditious words or speeches; (2) the
writing, publishing, or circulating of scurrilous libels against the Government
of the United States or the Insular Government of the Philippine Islands; (3)
the writing, publishing, or circulating of libels which tend to disturb or
obstruct any lawful officer in executing his office; (4) or which tend to
instigate others to cabal or meet together for unlawful purposes; (5) or
which suggest or incite rebellious conspiracies or riots; (6) or which tend to
stir up the people against the lawful authorities or to disturb the peace of
the community, the safety and order of the Government; (7) knowingly
concealing such evil practices.
The complaint appears to be framed upon the theory that a writing, in order
to be punishable as a libel under this section, must be of a scurrilous nature
and directed against the Government of the United States or the Insular
Government of the Philippine Islands, and must, in addition, tend to some
one of the results enumerated in the section. The article in question is
described in the complaint as "a scurrilous libel against the Government of
the United States and the Insular Government of the Philippine Islands,
which tends to obstruct the lawful officers of the United States and the
Insular Government of the Philippine Islands in the execution of their offices,
and which tends to instigate others to cabal and meet together for unlawful
purposes, and which suggests and incites rebellious conspiracies, and which
tends to stir up the people against the lawful authorities, and which disturbs
the safety and order of the Government of the United States and the Insular
Government of the Philippine Islands." But it is "a well-settled rule in
considering indictments that where an offense may be committed in any of
several different modes, and the offense, in any particular instance, is
alleged to have been committed in two or more modes specified, it is
sufficient to prove the offense committed in any one of them, provided that
it be such as to constitute the substantive offense" (Com. vs. Kneeland, 20

Pick., Mass., 206, 215), and the defendants may, therefore, be convicted if
any one of the substantive charges into which the complaint may be
separated has been made out.
We are all, however, agreed upon the proposition that the article in question
has no appreciable tendency to "disturb or obstruct any lawful officer in
executing his office," or to "instigate" any person or class of persons "to
cabal or meet together for unlawful purposes," or to "suggest or incite
rebellious conspiracies or riots," or to "stir up the people against the lawful
authorities or to disturb the peace of the community, the safety and order of
the Government." All these various tendencies, which are described in
section 8 of Act No. 292, each one of which is made an element of a certain
form of libel, may be characterized in general terms as seditious tendencies.
This is recognized in the description of the offenses punished by this section,
which is found in the title of the act, where they are defined as the crimes of
the "seditious utterances, whether written or spoken."
Excluding from consideration the offense of publishing "scurrilous libels
against the Government of the United States or the Insular Government of
the Philippine Islands," which may conceivably stand on a somewhat
different footing, the offenses punished by this section all consist in inciting,
orally or in writing, to acts of disloyalty or disobedience to the lawfully
constituted authorities in these Islands. And while the article in question,
which is, in the main, a virulent attack against the policy of the Civil
Commission in appointing natives to office, may have had the effect of
exciting among certain classes dissatisfaction with the Commission and its
measures, we are unable to discover anything in it which can be regarded as
having a tendency to produce anything like what may be called disaffection,
or, in other words, a state of feeling incompatible with a disposition to
remain loyal to the Government and obedient to the laws. There can be no
conviction, therefore, for any of the offenses described in the section on
which the complaint is based, unless it is for the offense of publishing a
scurrilous libel against the Government of the of the United States or the
Insular Government of the Philippine Islands.
Can the article be regarded as embraced within the description of "scurrilous
libels against the Government of the United States or the Insular
Government of the Philippine Islands?" In the determination of this question
we have encountered great difficulty, by reason of the almost entire lack of
American precedents which might serve as a guide in the construction of the
law. There are, indeed, numerous English decisions, most of them of the
eighteenth century, on the subject of libelous attacks upon the
"Government, the constitution, or the law generally," attacks upon the
Houses of Parliament, the Cabinet, the Established Church, and other
governmental organisms, but these decisions are not now accessible to us,
and, if they were, they were made under such different conditions from
those which prevail at the present day, and are founded upon theories of
government so foreign to those which have inspired the legislation of which
the enactment in question forms a part, that they would probably afford but
little light in the present inquiry. In England, in the latter part of the
eighteenth century, any "written censure upon public men for their conduct
as such," as well as any written censure "upon the laws or upon the
institutions of the country," would probably have been regarded as a libel
upon the Government. (2 Stephen, History of the Criminal Law of England,

348.) This has ceased to be the law in England, and it is doubtful whether it
was ever the common law of any American State. "It is true that there are
ancient dicta to the effect that any publication tending to "possess the
people with an ill opinion of the Government" is a seditious libel ( per Holt, C.
J., in R. vs. Tuchin, 1704, 5 St. Tr., 532, and Ellenborough, C. J., in R. vs.
Cobbett, 1804, 29 How. St. Tr., 49), but no one would accept that doctrine
now. Unless the words used directly tend to foment riot or rebellion or
otherwise to disturb the peace and tranquility of the Kingdom, the utmost
latitude is allowed in the discussion of all public affairs." (11 Enc. of the Laws
of England, 450.) Judge Cooley says (Const. Lim., 528): "The English
common law rule which made libels on the constitution or the government
indictable, as it was administered by the courts, seems to us unsuited to the
condition and circumstances of the people of America, and therefore never
to have been adopted in the several States."
We find no decisions construing the Tennessee statute (Code, sec. 6663),
which is apparently the only existing American statute of a similar character
to that in question, and from which much of the phraseology of then latter
appears to have been taken, though with some essential modifications.
The important question is to determine what is meant in section 8 of Act No.
292 by the expression "the Insular Government of the Philippine Islands."
Does it mean in a general and abstract sense the existing laws and
institutions of the Islands, or does it mean the aggregate of the individuals
by whom the government of the Islands is, for the time being, administered?
Either sense would doubtless be admissible.
We understand, in modern political science, . . . by the term government,
that institution or aggregate of institutions by which an independent society
makes and carries out those rules of action which are unnecessary to enable
men to live in a social state, or which are imposed upon the people forming
that society by those who possess the power or authority of prescribing
them. Government is the aggregate of authorities which rule a society. By
"dministration, again, we understand in modern times, and especially in
more or less free countries, the aggregate of those persons in whose hands
the reins of government are for the time being (the chief ministers or heads
of departments)." (Bouvier, Law Dictionary, 891.) But the writer adds that
the terms "government" and "administration" are not always used in their
strictness, and that "government" is often used for "administration."
In the act of Congress of July 14, 1798, commonly known as the "Sedition
Act," it is made an offense to "write, print, utter, or published," or to
"knowingly and willingly assist or aid in writing, printing, uttering, or
publishing any false, scandalous, and malicious writing or writings against
the Government of the United States, or either House of the Congress of the
United States, or the President of the United States, with intent to defame
the said Government, or either House of the said Congress, or the said
President, or to bring them, or either of them, into contempt or disrepute, or
to excite against them or either or any of them the hatred of the good
people of the United States," etc. The term "government" would appear to
be used here in the abstract sense of the existing political system, as
distinguished from the concrete organisms of the Government the Houses
of Congress and the Executive which are also specially mentioned.
Upon the whole, we are of the opinion that this is the sense in which the
term is used in the enactment under consideration.

It may be said that there can be no such thing as a scurrilous libel, or any
sort of a libel, upon an abstraction like the Government in the sense of the
laws and institutions of a country, but we think an answer to this suggestion
is that the expression "scurrilous libel" is not used in section 8 of Act No. 292
in the sense in which it is used in the general libel law (Act No. 277) that
is, in the sense of written defamation of individuals but in the wider
sense, in which it is applied in the common law to blasphemous, obscene, or
seditious publications in which there may be no element of defamation
whatever. "The word 'libel' as popularly used, seems to mean only
defamatory words; but words written, if obscene, blasphemous, or seditious,
are technically called libels, and the publication of them is, by the law of
England, an indictable offense." (Bradlaugh vs. The Queen, 3 Q. B. D., 607,
627, per Bramwell L. J. See Com. vs. Kneeland, 20 Pick., 206, 211.)
While libels upon forms of government, unconnected with defamation of
individuals, must in the nature of things be of uncommon occurrence, the
offense is by no means an imaginary one. An instance of a prosecution for
an offense essentially of this nature is Republica vs. Dennie, 4 Yeates (Pa.),
267, where the defendant was indicted "as a factious and seditious person
of a wicked mind and unquiet and turbulent disposition and conversation,
seditiously, maliciously, and willfully intending, as much as in him lay, to
bring into contempt and hatred the independence of the United States, the
constitution of this Commonwealth and of the United States, to excite
popular discontent and dissatisfaction against the scheme of polity
instituted, and upon trial in the said United States and in the said
Commonwealth, to molest, disturb, and destroy the peace and tranquility of
the said United States and of the said Commonwealth, to condemn the
principles of the Revolution, and revile, depreciate, and scandalize the
characters of the Revolutionary patriots and statesmen, to endanger,
subvert, and totally destroy the republican constitutions and free
governments of the said United States and this Commonwealth, to involve
the said United States and this Commonwealth in civil war, desolation, and
anarchy, and to procure by art and force a radical change and alteration in
the principles and forms of the said constitutions and governments, without
the free will, wish, and concurrence of the people of the said United States
and this Commonwealth, respectively," the charge being that "to fulfill,
perfect, and bring to effect his wicked, seditious, and detestable intentions
aforesaid he . . . falsely, maliciously, factiously, and seditiously did make,
compose, write, and publish the following libel, to wit; 'A democracy is
scarcely tolerable at any period of national history. Its omens are always
sinister and its powers are unpropitious. With all the lights or experience
blazing before our eyes, it is impossible not to discover the futility of this
form of government. It was weak and wicked at Athens, it was bad in Sparta,
and worse in Rome. It has been tried in France and terminated in despotism.
it was tried in England and rejected with the utmost loathing and
abhorrence. It is on its trial here and its issue will be civil war, desolation,
and anarchy. No wise man but discerns its imperfections; no good man but
shudders at its miseries; no honest man but proclaims its fraud, and no
brave man but draws his sword against its force. The institution of a scheme
of polity so radically contemptible and vicious is a memorable example of
what the villainy of some men can devise, the folly of others receive, and
both establish, in despite of reason, reflection, and sensation.'"

An attack upon the lawfully established system of civil government in the


Philippine Islands, like that which Dennie was accused of making upon the
republican form of government lawfully established in the United States and
in the State of Pennsylvania would, we think, if couched in scandalous
language, constitute the precise offense described in section 8 of Act No.
292 as a scurrilous libel against the Insular Government of the Philippine
Islands.
Defamation of individuals, whether holding official positions or not, and
whether directed to their public conduct or to their private life, may always
be adequately punished under the general libel law. Defamation of the Civil
Commission as an aggregation, it being "a body of persons definite and
small enough for its individual members to be recognized as such" (Stephen,
Digest of the Criminal Law, art. 277), as well as defamation of any of the
individual members of the Commission or of the Civil Governor, either in his
public capacity or as a private individual, may be so punished. The general
libel law enacted by the Commission was in force when Act No. 292, was
passed. There was no occasion for any further legislation on the subject of
libels against the individuals by whom the Insular Government is
administered against the Insular Government in the sense of the
aggregate of such individuals. There was occasion for stringent legislation
against seditious words or libels, and that is the main if not the sole purpose
of the section under consideration. It is not unreasonable to suppose that
the Commission, in enacting this section, may have conceived of attacks of
a malignant or scurrilous nature upon the existing political system of the
United States, or the political system established in these Islands by the
authority of the United States, as necessarily of a seditious tendency, but it
is not so reasonable to suppose that they conceived of attacks upon the
personnel of the government as necessarily tending to sedition. Had this
been their view it seems probable that they would, like the framers of the
Sedition Act of 1798, have expressly and specifically mentioned the various
public officials and collegiate governmental bodies defamation of which they
meant to punish as sedition.
The article in question contains no attack upon the governmental system of
the United States, and it is quite apparent that, though grossly abusive as
respects both the Commission as a body and some of its individual
members, it contains no attack upon the governmental system by which the
authority of the United States is enforced in these Islands. The form of
government by a Civil Commission and a Civil Governor is not assailed. It is
the character of the men who are intrusted with the administration of the
government that the writer is seeking to bring into disrepute by impugning
the purity of their motives, their public integrity, and their private morals,
and the wisdom of their policy. The publication of the article, therefore, no
seditious tendency being apparent, constitutes no offense under Act No.
292, section 8.
The judgment of conviction is reversed and the defendants are acquitted,
with costs de oficio.
Arellano, C.J. Torres, Willard and Mapa, JJ., concur.

114 U.S. 270


I

U.S. Supreme Court


Poindexter v. Greenhow, 114 U.S. 270 (1885)
Poindexter v. Greenhow
Argued March 20, 23-25
Decided April 20, 1885

N ERROR TO THE HUSTINGS COURT OF THECITY OF RICHMOND, STATE OF


VIRGINIA
Syllabus
In an action of detinue for personal property distrained by the defendant for
delinquent taxes in payment of which the plaintiff had duly tendered
coupons cut from bonds issued by the State of Virginia under the Funding
Act of March 30, 1871,
Held:
1. That, by the terms of that act and the issue of bonds and coupons in
virtue of the same, a contract was made between every coupon holder and
the state that such coupons should "be receivable at and after maturity for
all taxes, debts, dues, and demands due the state," the right of the coupon
holder under which was to have his coupons received for taxes when
offered, and that any act of the state which forbids the receipt of these
coupons for taxes is a violation of the contract, and void as against coupon
holders.
2. The faculty of being receivable in payment of taxes was of the essence of
the right. It constituted a self-executing remedy in the hands of a taxpayer,
and it became thereby the legal duty of every tax collector to receive such
coupons in payment of taxes upon an equal footing and with equal effect, as
though they were money; after a tender of such coupons duly made for that
purpose, the situation and rights of the taxpayer and coupon holder were
precisely what they would have been if he had made a like tender in money.
3. It is well settled by many decisions of this Court that, for the purpose of
affecting proceedings to enforce the payment of taxes, a lawful tender of
payment is equivalent to actual payment, either being sufficient to deprive
the collecting officer of all authority for further action, and making every
subsequent step illegal and void.
4. The coupons in question are not "bills of credit" in the sense of the
Constitution, which forbids the states to "emit bills of credit," because,
although issued by the Virginia on its credit and made receivable in payment
of taxes, and negotiable so as to pass from hand to hand by delivery merely,
they were not intended to circulate as money between individuals and
between government and individuals for the ordinary purposes of society.
5. An action or suit brought by a taxpayer, who has duly tendered such
coupons in payment of his taxes, against the person who, under color of
office as tax collector, and acting in the enforcement of a void law, passed
by the legislature of the state, having refused such tender of coupons,
proceeds by seizure and sale of the property of the plaintiff, to enforce the
collection
Page 114 U. S. 271
of such taxes, is an action or suit against him personally as a wrongdoer,
and not against the state, within the meaning of the Eleventh Amendment to
the Constitution of the United States.
6. Such a defendant, sued as a wrongdoer, who seeks to substitute the state
in his place, or to justify by the authority of the state, or to defend on the

ground that the state has adopted his act and exonerated him, cannot rest
on the bare assertion of his defense, but is bound to establish it, and, as the
state is a political corporate body which can act only through agents and
command only by laws in order to complete his defense, he must produce a
valid law of the state, which constitutes his commission as its agent, and a
warrant for his act.
7. The act of the General Assembly of Virginia of January 26, 1882, "to
provide for the more efficient collection of the revenue to support
government, maintain the public schools, and to pay interest on the public
debt," requiring tax collectors to receive in discharge of the taxes, license
taxes, and other dues gold, silver, United States Treasury notes, national
bank currency, and nothing else, and thereby forbidding the receipt of
coupons issued under the Act of March 30, 1871, in payment therefor,
although it is a legislative act of the government of Virginia, is not a law of
the Virginia, because it impairs the obligation of its contract, and is annulled
by the Constitution of the United States.
8. The state has passed no such law, for it cannot, and what it cannot do, in
contemplation of law, it has not done. The Constitution of the United States,
and its own contract, both irrepealable by any act on its part, are the law of
Virginia, and that law made it the duty o4 the defendant to receive the
coupons tendered in payment of taxes, and declared every step to enforce
the tax thereafter taken to be without warrant of law, and therefore a wrong.
This strips the defendant of his official character, and convicts him of a
personal violation of the plaintiff's rights, for which he must personally
answer.
9. It is no objection to the remedy in such cases that the statute the
application of which in the particular case is sought to be prevented is not
void on its face, but is complained of only because its operation in the
particular instance works a violation of a constitutional right, for the cases
are numerous where the tax laws of a state, which in their general and
proper application are perfectly valid, have been held to become void in
particular cases either as unconstitutional regulations of commerce, or as
violations of contracts prohibited by the Constitution, or because in some
other way they operate to deprive the party complaining of a right secured
to him by the Constitution of the United States.
10. In cases of detinue, the action is purely defensive on the part of the
plaintiff. Its object is merely to resist an attempted wrong and to restore the
status in quo as it was when the right to be vindicated was invaded. It is
analogous to the preventive remedy of injunction in equity when that
jurisdiction is invoked, of which frequent examples occur in cases to prevent
the illegal taxation of national banks by state authorities.
11. The suit authorized by the act of the General Assembly of Virginia of
January
Page 114 U. S. 272
26, 1882, against the collector of taxes refusing to accept a tender of
coupons, to recover back the amount paid under protest, is no remedy at all
for the breach of the contract, which required him to receive the coupons in
payment. The taxpayer and coupon holder has a right to say he will not pay
the amount a second time, and, insisting upon his tender as equivalent to
payment, to resist the further exaction and treat as a wrongdoer the officer
who seizes his property to enforce it.

12. Neither can it be considered an adequate remedy, in view of the


supposed necessity for summary proceedings in matters of revenue and the
convenience of the state, which requires that the prompt collection of taxes
should not be hindered or embarrassed, for the revenue system must yield
to the contract which the state has lawfully made, and the obligation of
which, by the Constitution, it is forbidden to impair.
13. The right to pay in coupons cannot be treated as a mere right of setoff,
which is part of the remedy merely, when given by the general law, and
therefore subject to modification or repeal, because the law which gave it is
also a contract, and therefore cannot be changed without mutual consent.
14. The acts of the General Assembly of Virginia of January 28, 1882, and
the amendatory Act of March 13, 1884, are unconstitutional and void
because they impair the obligation of the contract of the state with the
coupon holder under the Act of March 30, 1871, and that being the main
object of the two acts, the vice which invalidates them pervades them
throughout and in all their provisions. It is not practicable to separate those
parts which repeal and abolish the actions of trespass and trespass on the
case and other particular forms of action as remedies for the taxpayer who
has tendered his coupons in payment of taxes from the main object of the
acts which that prohibition was intended to effectuate, and it follows that the
whole of these and similar statutes must be declared to be unconstitutional,
null and void. It also follows that these statutes cannot be regarded in the
courts of the United States as laws of the state, to be obeyed as rules of
decision in trials at common law, under 721 Rev.Stat. nor as regulating the
practice of those courts under 914 Rev.Stat.
16. The present case is not covered by the decision in Antoni v. Greenhow,
107 U. S. 789, the points now involved being expressly reserved in the
judgment in that case.
Page 114 U. S. 273
MR. JUSTICE MATTHEWS delivered the opinion of the Court.
The plaintiff in error, who was also plaintiff below, brought his action in
detinue on the 26th day of April, 1883, against Samuel C. Greenhow, for the
recovery of specific personal property, to-wit, one office desk of the value of
$30, before a police justice in the City of Richmond, who dismissed the same
for want of Jurisdiction. An appeal was taken by the plaintiff to the Hustings
Court for the City of Richmond, where the facts were found by agreement of
parties to be as follows:
That the plaintiff was a resident of the City of Richmond, in the State of
Virginia; that he owed to the State of Virginia, for taxes on property owned
by him in said city for the year 1882, $12.45, which said taxes were due and
leviable for, under the laws of Virginia, on the first day of December, 1882;
that the defendant, Samuel C. Greenhow, was the Treasurer of the City of
Richmond, and as such is charged by law with the duty of collecting taxes
due to the State of Virginia by all residents of said city; that on the 25th day
of April, 1883, the defendant, as such treasurer and collector of taxes, made
upon the plaintiff demand for the payment of the taxes due by him to the
state as aforesaid; that the plaintiff, when demand was so made for
payment of his taxes, tendered to the defendant in payment thereof fortyfive cents in lawful money of the United States, and coupons issued by the
State of Virginia under the provisions of the act of the General Assembly of
that State of March 30, 1871, entitled "An act to provide for the funding and

payment of the public debt;" that said coupons so tendered by plaintiff were
all due and past maturity, and amounted in the aggregate to twelve dollars,
and were all cut from bonds issued by the said State of Virginia under the
provisions of the said Act of March 30, 1871; that the said coupons and
money so tendered by the plaintiff amounted together to exactly the sum so
due the state by the plaintiff for taxes; that the defendant refused to receive
the said coupons and money so tendered in payment of the plaintiff's taxes;
that the defendant, after said tender was made, as he deemed himself
required to do by the acts of assembly of Virginia, entered the plaintiff's
place of business in said city
Page 114 U. S. 274
and levied upon and took possession of the desk, the property of the plaintiff
now sued for, for the purpose of selling the same to pay the taxes due from
him, and that the said desk is of the value of thirty dollars, and still remains
in possession of the defendant for the purpose aforesaid, he having refused
to return the same to the plaintiff on demand.
The hustings court was of the opinion that the police justice erred in
deciding that he had no jurisdiction, and that the issue in the action might
have been tried by him, and that it should be tried by that court on the
appeal, but it was also of the opinion that in tendering to the defendant, as
part of the tender in payment of the plaintiff's taxes, the coupons mentioned
and described, the plaintiff did not tender what the law required, nor what
the defendant was, as treasurer, obliged to or should have received in
payment of the plaintiff's taxes under the provisions of the Act of the
General Assembly of Virginia, approved January 26, 1882, entitled "An act to
provide for the more efficient collection of the revenue to support
government, maintain the public schools, and to pay interest on the public
debt;" that the plaintiff's remedy for the failure of the defendant, as
treasurer, to receive coupons in payment of taxes, was to be found in the
provisions of said Act of January 26, 1882, and that therefore the defendant
does not unlawfully or wrongfully detain the plaintiff's property levied on by
the defendant, as treasurer of the City of Richmond, for the plaintiff's taxes,
and judgment was accordingly rendered for the defendant.
It appears from the record that there was drawn in question the validity of
the said Act of the General Assembly of Virginia approved January 26, 1882,
and of the eighteenth section of the act of the General Assembly of the State
of Virginia, approved April 1, 1879, which authorizes the collection of
delinquent taxes by distraint of personal property, upon the ground that
these acts are repugnant to Section 10 of Article I of the Constitution of the
United States, which declares that no state shall pass any law impairing the
obligation of contracts, the judgment of the court being in favor of the
validity of said acts and against the rights claimed by the plaintiff under the
Page 114 U. S. 275
Constitution of the United States. The hustings court is the highest court of
the state to which the said cause could be taken.
The Act of January 26, 1882, the validity of which is thus questioned, is as
follows:
"Be it enacted by the General Assembly of the State of Virginia that the
several tax collectors of this commonwealth shall receive, in discharge of the
taxes, license taxes, and other dues, gold, silver, United States Treasury
notes, national bank currency, and nothing else, provided that in all cases in

which an officer charged by law with the collection of revenue due the state,
shall take any steps for the collection of same, claimed to be due from any
citizen or taxpayer, such person against whom such step is taken, if he
conceives the same to be unjust or illegal or against any statute, or to be
unconstitutional, may pay the same under protest, and under such payment
the officer collecting the same shall pay such revenue into the state
Treasury, giving notice at the time of such payment to the treasurer that the
same was paid under protest. The person so paying such revenue may at
any time within thirty days after making such payment, and not longer
thereafter, sue the said officer so collecting such revenue in the court having
jurisdiction of the parties and amounts."
"If it be determined that the same was wrongfully collected, for any reason
going to the merits of the same, then the court trying the case may certify of
record that the same was wrongfully paid and ought to be refunded and
thereupon the auditor of public accounts shall issue his proper warrant for
the same, which shall be paid in preference to other claims on the treasury
except such as have priority by constitutional requirement."
"There shall be no other remedy in any case of the collection of revenue or
the attempt to collect revenues illegally or the attempt to collect revenue in
funds only receivable by said officers under this law, the same being other
and different funds than the taxpayer may tender or claim the right to pay,
than such as are herein provided, and no writ for the prevention of any
revenue claim or to hinder or delay the collection
Page 114 U. S. 276
of the same, shall in any wise issue, either injunction, supersedeas,
mandamus, prohibition, or any other writ or process whatever; but in all
cases, if for any reason any person shall claim that the revenue so collected
of him was wrongfully or illegally collected, the remedy for such person shall
be as above provided, and in no other manner. In all such cases, if the court
certify of record that the officer defendant acted in good faith and diligently
defended the action, the necessary costs incurred by him shall be taxed to
and paid by the state, as in criminal cases. The commonwealth attorney for
the county or corporation in which suit is brought shall appear and represent
the defense. In every case where judgment is rendered for the defendant, a
fee of five dollars shall be taxed in favor of said attorney and against the
plaintiff, and whenever the court shall refuse to certify the good faith and
diligence of the officer defending the case, a like fee of five dollars shall be
taxed against said officer. Any officer charged with the collection of revenue
who shall receive payment thereof in anything other than that hereinbefore
provided shall be deemed guilty of a misdemeanor and fined not less than
one hundred nor more than five hundred dollars, in the discretion of the
court, but nothing herein contained shall be construed to subject any officer
of the state to any suit, other than as hereinbefore provided, for any refusal
on his part to accept in payment of revenue due the state any kind or
description of funds, security, or paper not authorized by this act."
"2. This act shall be in force from and after the first day of December,
eighteen hundred and eighty-two."
18 of the Act of April 1, 1879, Acts 1878-79, p. 318, so far as material, is
that
"It shall be the duty of the treasurer, after the first day of December, to call
upon each person chargeable with taxes and levies, who has not paid the

same prior to that time, or upon the agent of such person resident within the
county or corporation, and, upon failure or refusal of such person or agent to
pay the same, he shall proceed to collect by distress or otherwise."
Goods and chattels distrained by an officer, by provisions of other statutes
then in force, were required to be sold at public sale after due notice, as
prescribed.
Page 114 U. S. 277
The Act of January 26, 1882, was amended by an act which was passed and
took effect March 13, 1884, by the addition of the following sections:
" 2. Whenever any papers, purporting to be coupons cut from bonds of this
state shall be tendered to the collecting officer in payment of any taxes due
to the state by any party desiring to bring a suit under this statute, it shall
be the duty of the collecting officer to place the coupons so tendered in an
envelope, to seal the said envelope, write his name across the seal thereof,
endorse it with the numbers of the coupons enclosed, and return it to the
taxpayer. Upon the trial of any proceeding under this act, the said coupons,
enclosed in the said envelope so sealed and endorsed, must be produced in
evidence to prove the tender. If the court shall certify that the money paid
under protest ought to be refunded, the said coupons shall be delivered to
the auditor of public accounts, to be cancelled simultaneously with the issue
of his warrant."
" 3. No action of trespass or trespass on the case shall be brought or
maintained against any collecting officer for levying upon the property of
any taxpayer who may have tendered in payment, in whole or in part, any
coupon, or paper purporting to be a coupon, cut from bonds of this state for
such taxes, and who shall refuse to pay his taxes in gold, silver, United
States Treasury notes, or national banknotes. The suit contemplated by this
act shall be commenced by a petition filed at rules, upon which a summons
shall be issued to the collecting officer, and the said suit shall be regularly
matured like other actions at law, and the coupons tendered shall be filed
with said petition."
The contract which the plaintiff in error alleges has been violated is with the
State of Virginia, and is contained in the Act of March 30, 1871, known as
the "Funding Act," entitled "An act to provide for the funding and payment of
the public debt," and in the bonds and coupons issued under its authority. It
provided for the funding of two-thirds of the existing state debt, and of twothirds of the interest accrued thereon to July 1, 1871, in new six percent
bonds, to run thirty-four years, the bonds, coupon or registered, payable to
Page 114 U. S. 278
order or bearer, and the coupons to bearer, and declared that the coupons
should be payable semiannually, and "be receivable at and after maturity for
all taxes, debts, dues, and demands due the state," and that this should be
expressed on their face. For the remaining one-third, certificates were to be
issued to the creditors to hold as claims against the State of West Virginia,
that being assumed as her just proportion of the entire debt. "Under this
act," it was said by this Court, in Hartman v. Greenhow, 102 U. S. 672, 102
U. S. 679,
"a large number of the creditors of the state, holding bonds amounting,
including interest thereon, to about thirty millions of dollars, surrendered
them and took new bonds with interest coupons annexed for two-thirds of
their amount, and certificates for the balance. A contract was thus

consummated between the state and the holders of the new bonds and the
holders of the coupons, from the obligation of which she could not, without
their consent, release herself by any subsequent legislation. She thus bound
herself not only to pay the bonds when they became due, but to receive the
interest coupons from the bearer at and after their maturity, to their full
amount, for any taxes or dues by him to the state. This receivability of the
coupons for such taxes and dues was written on their face, and
accompanied them in whatever hands they passed. It constituted their chief
value, and was the main consideration offered to the holders of the old
bonds to surrender them and accept new bonds for two-thirds of their
amount."
The same view had been taken by the Supreme Court of Appeals of Virginia
in the cases of Antoni v. Wright, 22 Grattan 833; Wise v. Rogers, 24 Grattan
169, and Clarke v. Tyler, 30 Grattan 134, in the last of which cases it was
declared to be the settled law of the state. It was repeated by this Court in
Antoni v. Greenhow, 107 U. S. 769, where it was said, p. 107 U. S. 775: "The
right of the coupon holder is to have his coupon received for taxes when
offered," and p. 107 U. S. 771, "any act of the state which forbids the receipt
of these coupons for taxes is a violation of the contract, and void as against
coupon holders." Upon these propositions there was an entire agreement
between the majority and minority of the Court in that case.
Page 114 U. S. 279
The nature and value of this contract right to the coupon holder deserve to
be further explained. It was evidently a part of the consideration on which
the creditors of the state were induced to accept, under the Act of March 30,
1871, from the State of Virginia, new obligations for two-thirds of their claim,
in exchange for the surrender of the original bonds. The latter depended for
their payment, as to both principle and interest, upon the continued good
faith of the state in making, from time to time, necessary appropriations out
of the public treasury to meet its recurring liabilities by positive legislation to
that effect. In case of default, there was no remedy by legal process. The
state itself could not be sued. Its bare promises to pay had no sanction but
the public sense of duty to the public creditors. The only security for their
performance was the public faith.
But immediately on the passage of the Act of March 30, 1871, and
thereafter, occasional or continued default in the payment of interest on the
bonds issued in pursuance of its provisions by reason of failures to provide
by laws necessary appropriations for its payment was met, if not obviated,
by a self-executing remedy lodged by the law in the hands of the creditor
himself. For from that time it became the legal duty of every tax collector to
receive coupons from these bonds, offered for that purpose by taxpayers in
payment of taxes upon an equal footing at an equal value and with equal
effect as though they were gold or silver or legal tender treasury notes. They
were by that act reduced in effect into money, and as between the state and
its taxpayers, were a legal tender as money. And, being not only a law but a
contract, it became, by force of the Constitution of the United States,
irrepealable, and therefore is today what it was when first enacted -- the
unchangeable law of Virginia. After a tender of such coupons by a taxpayer
in payment of taxes and a refusal by a tax collector to receive them, the
situation and rights of the taxpayer and coupon holder were precisely what
they would have been if he had made a like tender in gold coin and it had

been refused. What they would be we shall have occasion presently to


inquire. In the meantime, it is clear that the contract
Page 114 U. S. 280
obligation embodied in the quality imparted by law to these coupons, of
being receivable in payment of taxes, is a distinct, collateral, and real
security, placed in the hands of the creditor, intended to enable him to
collect them without process of law. As long as the annual taxes of the state
are sufficient in amount to absorb all coupons that are overdue and unpaid,
a certain market is created for them which will maintain them at or near
their par value. In the hands of the taxpayer who buys them for tender, they
are practically no longer choses in action, but equal in value and quality to
money, and equivalent to receipts for taxes already paid.
At the time of the passage of the Act of March 30, 1871, there existed a
remedy by mandamus, in case a tax collector refused to receive the
coupons, issued under that act tendered in payment of taxes, to compel him
specifically to do so. The case of Hartman v. Greenhow, 102 U. S. 672, was
one in which that relief was administered, and in Antoni v. Greenhow,107 U.
S. 769, it is stated to have been the settled practice of the Supreme Court of
Appeals of Virginia to entertain suits for similar relief. By an Act of January
14, 1882, the General Assembly of that state modified the proceedings in
mandamus is such cases so as to require the taxpayer first to pay his taxes
in money, and then the coupons gendered having, in another proceeding,
been determined to be genuine, he was entitled to a judgment upon the
mandamus, requiring them to be received in payment of the taxes, and the
money previously paid refunded. The validity of this act became the
question in Antoni v. Greenhow, ubi supra, and it was affirmed on the ground
that, for the purpose of specifically enforcing the right to have the coupons
received in payment of taxes, the new remedy was substantially equivalent
to the old one. The Court was not willing to decide that it was a suit against
the state in which the mode of proceeding could be modified, or the remedy
taken away altogether at the pleasure of the state. And it affirmed the right
of the coupon holder to have his coupon received for taxes when offered.
"The question here," said the Court, "is not as to that right, but as to the
remedy the holder has for its enforcement when denied." "The question,"
Page 114 U. S. 281
said THE CHIEF JUSTICE, delivering the opinion of the Court,
"we are now to consider is not whether, if the coupon tendered is in fact
genuine and such as ought under the contract to be received, and the
tender is kept good, the treasurer can proceed to collect the tax by distraint,
or such other process as the law allows, without making himself personally
responsible for any trespass he may commit, but whether the act of 1882
violates any implied obligation of the state in respect to the remedies that
may be employed for the enforcement of its contract if the collector refuses
to take the coupon."
That was a case in which it was sought by mandamus specifically to enforce
the contract of the state with the coupon holder by compelling by affirmative
action and process of law the collector actually to receive the coupons
tendered in satisfaction of taxes. It left unaffected the right of the coupon
holder and taxpayer, after his tender had been unlawfully refused, to stand
upon his contract and the law in defense of his rights, both of person and
property, against all unlawful assaults and seizures. In the former, he was an

actor, seeking affirmative relief, to compel the specific performance of the


contract. In the latter, he is a defendant, passively resting on his rights and
resisting only demands and exactions sought to be enforced against him in
denial of them. He has himself in all things performed the contract on his
part and obeyed the law, and simply insists that if more is illegally exacted
and taken from him, he shall have the remedy which the law gives to every
other citizen, not himself in default, against the wrongdoer, who, under color
of law, but without law, disturbs or dispossesses him. As we have seen, the
coupon holder, whose tender of genuine coupons in payment of taxes has
been refused, stands upon the same footing in this respect as though he had
tendered gold coin in similar circumstances and with like result.
The question next in order is whether he has any, and, if any, what remedy
for the recovery of property distrained to pay the same tax which he has
thus already offered and attempted to pay in money or its equivalent. It is
well settled by many decisions of this Court that for the purpose of affecting
Page 114 U. S. 282
proceedings to enforce the payment of taxes, a lawful tender of payment is
equivalent to actual payment, either being sufficient to deprive the
collecting officer of all authority for further action, and making every
subsequent step illegal and void. In Woodruff v. Trapnall, 10 How. 190, 51 U.
S. 208, it was held that a tender of the notes of the bank of the State of
Arkansas, by law and a contract with the note holders made receivable in
payment of public dues to the state, was equivalent to payment, in
extinguishing the judgment in satisfaction of which they were offered. The
Court said:
"The law of tender which avoids future interest and costs has no application
in this case. The right to make payment to the state in this paper arises out
of a continuing contract, which is limited in time by the circulation of the
notes to be received. They may be offered in payment of debts due to the
state, in its own right, before or after judgment, and without regard to the
cause of indebtment."
In the case of United States v. Lee, 106 U. S. 196, it was held that a
certificate of a sale of land for taxes, made by commissioners, which by law
was rendered impeachable by proof that the taxes had been paid previous to
sale, was rendered void by proof that the commissioners had refused to
receive the taxes, without proof of an actual tender, where the
commissioners had waived it by a previous notice that they would not
accept it. In the opinion of the Court it is said:
"This Court has in a series of cases established the proposition that where
the commissioners refused to receive such taxes, their action in thus
preventing payment was the equivalent of payment in its effect upon the
certificate of sale,"
citing Bennett v. Hunter, 9 Wall. 326; Taxey v. Irwin, 18 Wall. 549; Atwood v.
Weems, 99 U. S. 183, and Hills v. Exchange Bank,105 U. S. 319.
The case, then, of the plaintiff below is reduced to this: he had paid the
taxes demanded of him by a lawful tender. The defendant had no authority
of law thereafter to attempt to enforce other payment by seizing his
property. In doing so, he ceased to be an officer of the law and became a
private wrongdoer. It is the simple case in which the defendant, a natural
private person, has unlawfully, with force and arms, seized,
Page 114 U. S. 283

taken, and detained the personal property of another. That an action of


detinue will lie in such a case according to the law of Virginia has not been
questioned. The right of recovery would seem to be complete unless this
case can be met and overthrown on some of the grounds maintained in
argument by counsel for the defendant in error. These we proceed now to
examine in their order.
It is objected in the first place that the law and contract by which the quality
of being receivable in payment of taxes to the state is imputed to the
coupons is itself in violation of that clause of the Constitution of the United
States, Art. I, Section 10, which declares that no state shall "emit bills of
credit," and is therefore void. The coupons in question are in the ordinary
form, and one of them reads as follows:
"Receivable at and after maturity for all taxes, debts, and demands due the
state."
"The Commonwealth of Virginia will pay the bearer thirty dollars, interest
due first January, 1884, on bond No. 2,731."
"Coupon No. 20."
"GEO. RYE, Treasurer"
It is contended that this is a bill of credit in the sense of the Constitution
because, being receivable in payment of debts due the state, and negotiable
by delivery merely, it was intended to pass from hand to hand and circulate
as money. The meaning of the term "bills of credit" as used in the
Constitution has been settled by decisions of this Court. By a sound rule of
interpretation it has been construed in the light of the historical
circumstances which are known to have led to the adoption of the clause
prohibiting their emission by the states, and in view of the great public and
private mischiefs experienced during and prior to the period of the war of
independence, in consequence of unrestrained issues by the colonial and
state governments of paper money based alone upon credit. The definition
thus deduced was not founded on the abstract meaning of the words, so as
to include everything in the
Page 114 U. S. 284
nature of an obligation to pay money, reposing on the public faith, and
subject to future redemption, but was limited to those particular forms of
evidences of debt which had been so abused to the detriment of both
private and public interests. Accordingly, Chief Justice Marshall, in Craig v.
Missouri, 4 Pet. 410, 29 U. S. 432, said that
"bills of credit signify a paper medium intended to circulate between
individuals, and between government and individuals, for the ordinary
purposes of society."
This definition was made more exact by merely expressing, however, its
implications, in Briscoe v. Bank of Kentucky, 11 Pet. 257, 36 U. S. 314, where
it was said:
"The definition, then, which does include all classes of bills of credit, emitted
by the colonies or states is a paper issued by the sovereign power
containing a pledge of its faith and designed to circulate as money."
And again, p. 36 U. S. 318:
"To constitute a bill of credit within the Constitution, it must be issued by a
state, on the faith of the state, and be designed to circulate as money. It
must be a paper which circulates on the credit of the state, and is so
received and used in the ordinary business of life."

The definition was repeated in Darrington v. Bank of Alabama, 13 How. 12.


It is very plain to us that the coupons in question are not embraced within
these terms. They are not bills of credit in the sense of this constitutional
prohibition. They are issued by the state, it is true. They are promises to pay
money. Their payment and redemption are based on the credit of the state,
but they were not emitted by the state in the sense in which a government
emits its treasury notes, or a bank its banknotes -- a circulating medium or
paper currency -- as a substitute for money. And there is nothing on the face
of the instruments, nor in their form or nature, nor in the terms of the law
which authorize their issue, nor in the circumstances of their creation or use,
as shown by the record, on which to found an inference that these coupons
were designed to circulate in the common transactions of business as
money, nor that in fact they were so used. The only feature relied on to
show such a design or to prove such a use is that they are made receivable
in payment of taxes and other dues to the state. From this
Page 114 U. S. 285
it is argued that they would obtain such a circulation from hand to hand as
money as the demand for them, based upon such a quality, would naturally
give. But this falls far short of their fitness for general circulation in the
community as a representative and substitute for money in the common
transactions of business, which is necessary to bring them within the
constitutional prohibition against bills of credit. The notes of the Bank of the
State of Arkansas, which were the subject of controversy in Woodruff v.
Trapnall, 10 How. 190, were by law receivable by the state in payment of all
dues to it, and this circumstance was not supposed to make them bills of
credit. It is true, however, that in that case it was held they were not so
because they were not issued by the state and in its name, although the
entire stock of the bank was owned by the state, which furnished the whole
capital and was entitled to all the profits. In this case the coupons were
issued by the State of Virginia and in its name, and were obligations based
on its credit, and which it had agreed, as one mode of redemption, to
receive in payment of all dues to itself in the hands of any holder; but they
were not issued as and for money, nor was this quality impressed upon them
to fit them for use as money or with the design to facilitate their circulation
as such. It was conferred, as is apparent from all the circumstances of their
creation and issue, merely as an assurance, by way of contract with the
holder, of the certainty of their due redemption in the ordinary transactions
between the state treasury and the taxpayers. They do not become
receivable in payment of taxes till they are due, and the design, we are
bound to presume, was that they would be paid at maturity. This necessarily
excludes the idea that they were intended for circulation at all.
It is next objected that the suit of the plaintiff below could not be maintained
because it is substantially an action against the State of Virginia to which it
has not assented. It is said that the tax collector who is sued was an officer
and agent of the state, engaged in collecting its revenue under a valid law,
and that the tax he sought to collect from the plaintiff was lawfully due; that
consequently he was guilty of no personal wrong, but acted only in an
official capacity representing
Page 114 U. S. 286
the state, and, in refusing to receive the coupons tendered, simply obeyed
the commands of his principal whom he was lawfully bound to obey, and

that if any wrong has been done, it has been done by the state in refusing to
perform its contract, and for that wrong the state is alone liable, but is
exempted from suit by the Eleventh Article of Amendment to the
Constitution of the United States, which declares that
"The judicial power of the United States shall not be construed to extend to
any suit in law or equity, commenced or prosecuted against one of the
United States by citizens of another state, or by citizens or subjects of any
foreign state."
This immunity from suit secured to the states is undoubtedly a part of the
Constitution of equal authority with every other, but no greater, and to be
construed and applied in harmony with all the provisions of that instrument.
That immunity, however, does not exempt the state from the operation of
the constitutional provision that no state shall pass any law impairing the
obligation of contracts, for it has long been settled that contracts between a
state and an individual are as fully protected by the Constitution as
contracts between two individuals. It is true that no remedy for a breach of
its contract by a state, by way of damages as compensation or by means of
process to compel its performance, is open under the Constitution in the
courts of the United States by a direct suit against the state itself on the part
of the injured party, being a citizen of another state or a citizen or subject of
a foreign state. But it is equally true that whenever, in a controversy
between parties to a suit of which these courts have jurisdiction, the
question arises upon the validity of a law by a state impairing the obligation
of its contract, the jurisdiction is not thereby ousted, but must be exercised
with whatever legal consequences to the rights of the litigants may be the
result of the determination. The cases establishing these propositions, which
have been decided by this Court since the adoption of the Eleventh
Amendment to the Constitution are numerous. Fletcher v. Peck, 6 Cranch 87;
New Jersey v. Wilson, 7 Cranch 164; Green v. Biddle, 8 Wheat. 1, 21 U. S. 84;
Providence Bank v. Billings, 4 Pet. 514; Woodruff v. Trapnall, 10
Page 114 U. S. 287
How. 190; Wolff v. New Orleans, 103 U. S. 358; Jefferson Branch Bank v.
Skelly, 1 Black 436.
It is also true that the question whether a suit is within the prohibiting of the
Eleventh Amendment is not always determined by reference to the nominal
parties on the record. The provision is to be substantially applied in
furtherance of its intention, and not to be evaded by technical and trivial
subtleties. Accordingly, it was held in New Hampshire v. Louisiana and New
York v. Louisiana, 108 U. S. 76, that although the judicial power of the United
States extends to "controversies between two or more states," it did not
embrace a suit in which, although nominally between two states, the
plaintiff state had merely permitted the use of its name for the benefit of its
citizens in the prosecution of their claims, for the enforcement of which they
could not sue in their own names. So, on the other hand, in Cunningham v.
Macon & Brunswick Railroad Co., 109 U. S. 446, where the State of Georgia
was not nominally a party on the record, it was held that as it clearly
appeared that the state was so interested in the property that final relief
could not be granted without making it a party, the Court was without
jurisdiction.
In that case, the general question was discussed in the light of the
authorities, and the cases in which the Court has taken jurisdiction, when

the objection has been interposed that a state was a necessary party to
enable the Court to grant relief, were examined and classified. The second
head of that classification is thus described:
"Another class of cases is where an individual is sued in tort for some act
injurious to another in regard to person or property, to which his defense is
that he has acted under the orders of the government. In these cases, he is
not sued as, or because he is, the officer of the government, but as an
individual, and the Court is not ousted of jurisdiction because he asserts
authority as such officer. To make out his defense, he must show that his
authority was sufficient in law to protect him."
And in illustration of this principle, reference was made to Mitchell v.
Harmony, 13 How. 115; Bates v. Clark, 95 U. S. 204;Meigs v. McClung's
Lessee, 9 Cranch 11; Wilcox v. Jackson, 13 Pet. 498; Brown v. Huger, 21 How.
315;
Page 114 U. S. 288
Grisar v. McDowell, 6 Wall. 363, and United States v Lee, 106 U. S. 196.
The ratio decidendi in this class of cases is very plain. A defendant sued as a
wrongdoer who seeks to substitute the state in his place or to justify by the
authority of the state or to defend on the ground that the state has adopted
his act and exonerated him cannot rest on the bare assertion of his defense.
He is bound to establish it. The state is a political corporate body, can act
only through agents, and can command only by laws. It is necessary,
therefore, for such a defendant, in order to complete his defense, to produce
a law of the state which constitutes his commission as its agent and a
warrant for his act. This the defendant in the present case undertook to do.
He relied on the Act of January 26, 1882, requiring him to collect taxes in
gold, silver, United States Treasury notes, national bank currency, and
nothing else, and thus forbidding his receipt of coupons in lieu of money.
That, it is true, is a legislative act of the government of Virginia, but it is not
a law of the State of Virginia. The state has passed no such law, for it
cannot, and what it cannot do, it certainly, in contemplation of law, has not
done. The Constitution of the United States, and its own contract, both
irrepealable by any act on its part, are the law of Virginia, and that law made
it the duty of the defendant to receive the coupons tendered in payment of
taxes, and declared every step to enforce the tax thereafter taken to be
without warrant of law, and therefore a wrong. He stands, then, stripped of
his official character, and, confessing a personal violation of the plaintiff's
rights for which he must personally answer, he is without defense.
No better illustration of this principle can be found than that which is
furnished by the case of United States v. Lee, 106 U. S. 196, in which it was
applied to a claim made on behalf of the national government. The action
was one in ejectment to recover possession of lands to which the plaintiff
claimed title. The defendants were natural persons whose defense was that
they were in possession as officers of the United States under the orders of
the government and for its
Page 114 U. S. 289
uses. The Attorney General called this aspect of the case to the attention of
the Court, but without making the United States a party defendant. It was
decided by this Court that to sustain the defense and to defeat the plaintiff's
cause of action it was necessary to show that the defendants were in
possession under the United States, and on their behalf, by virtue of some

valid authority. As this could not be shown, the contrary clearly appearing,
possession of lands, actually in use as a national cemetery, was adjudged to
the plaintiffs. The decision in that case was rested largely upon the authority
of Osborn v. Bank of the United States, 9 Wheat. 738, which was a suit in
equity against an officer of the State of Ohio who sought to enforce one of
her statutes which was in violation of rights secured to the bank by the
Constitution of the United States. The defendants, Osborn and others,
denied the jurisdiction of the court upon the ground that the state was the
real party in interest and could not be sued, and that a suit against her
officers, who were executing her will, was in violation of the Eleventh
Amendment of the Constitution. To this objection Chief Justice Marshall
replied:
"If the State of Ohio could have been made a party defendant, it can
scarcely be denied that this would be a strong case for an injunction. The
objection is that, as the real party cannot be brought before the court, a suit
cannot be sustained against the agents of that party, and cases have been
cited to show that a court of chancery will not make a decree unless all
those who are substantially interested be made parties to the suit. This is
certainly true where it is in the power of the plaintiff to make them parties,
but if the person who is the real principal -- the person who is the true
source of the mischief, by whose power and for whose advantage it is done
-- be himself above the law, be exempt from all judicial process, it would be
subversive of the best-established principles to say that the laws could not
afford the same remedies against the agent employed in doing the wrong
which they would afford against him could his principal be joined in the suit."
This language, it may be observed, was quoted with approval in United
States v. Lee. The principle which it enunciates constitutes
Page 114 U. S. 290
the very foundation upon which the decision in that case rested.
In the discussion of such questions, the distinction between the government
of a state and the state itself is important, and should be observed. In
common speech and common apprehension, they are usually regarded as
identical, and as ordinarily the acts of the government are the acts of the
state, because within the limits of its delegation of power, the government
of the state is generally confounded with the state itself, and often the
former is meant when the latter is mentioned. The state itself is an ideal
person, intangible, invisible, immutable. The government is an agent, and,
within the sphere of the agency, a perfect representative; but outside of
that, it is a lawless usurpation. The constitution of the state is the limit of the
authority of its government, and both government and state are subject to
the supremacy of the Constitution of the United States and of the laws made
in pursuance thereof. So that, while it is true in respect to the government of
a state, as was said in Langford v. United States, 101 U. S. 341, that the
maxim that the King can do no wrong has no place in our system of
government, yet it is also true, in respect to the state itself, that whatever
wrong is attempted in its name is imputable to its government, and not to
the state, for, as it can speak and act only by law, whatever it does say and
do must be lawful. That which therefore is unlawful because made so by the
supreme law, the Constitution of the United States, is not the word or deed
of the state, but is the mere wrong and trespass of those individual persons
who falsely speak and act in its name. It was upon the ground of this

important distinction that this Court proceeded in the case of Texas v. White,
7 Wall. 700, when it adjudged that the acts of secession, which constituted
the civil war of 1861, were the unlawful acts of usurping state governments,
and not the acts of the states themselves, inasmuch as "the Constitution, in
all its provisions, looks to an indestructible Union, composed of
indestructible states," and that consequently the war itself was not a war
between the states, nor a war of the United States against states, but a war
of the United States against
Page 114 U. S. 291
unlawful and usurping governments representing not the states, but a
rebellion against the United States. This is, in substance, what was said by
Chief Justice Chase, delivering the opinion of the Court in Thorington v.
Smith, 8 Wall. 1, 75 U. S. 9, when he declared, speaking of the Confederate
government, that "it was regarded as simply the military representative of
the insurrection against the authority of the United States." The same
distinction was declared and enforced in Williams v. Bruffy, 96 U. S. 176, 96
U. S. 192, and in Horn v. Lockhart, 17 Wall. 570, both of which were referred
to and approved in Keith v. Clark, 97 U. S. 454, 97 U. S. 465.
This distinction is essential to the idea of constitutional government. To deny
it or blot it out obliterates the line of demarcation that separates
constitutional government from absolutism, free self-government based on
the sovereignty of the people from that despotism, whether of the one or the
many, which enables the agent of the state to declare and decree that he is
the state; to say "L'Etat, c'est moi." Of what avail are written constitutions,
whose bills of right for the security of individual liberty have been written too
often with the blood of martyrs shed upon the battlefield and the scaffold, if
their limitations and restraints upon power may be overpassed with impunity
by the very agencies created and appointed to guard, defend, and enforce
them, and that too with the sacred authority of law, not only compelling
obedience, but entitled to respect? And how else can these principles of
individual liberty and right be maintained if, when violated, the judicial
tribunals are forbidden to visit penalties upon individual offenders, who are
the instruments of wrong, whenever they interpose the shield of the state?
The doctrine is not to be tolerated. The whole frame and scheme of the
political institutions of this country, state and federal, protest against it.
Their continued existence is not compatible with it. It is the doctrine of
absolutism, pure, simple, and naked, and of communism, which is its twin,
the double progeny of the same evil birth.
It was said by Chief Justice Chase, speaking for the whole Court in Lane
County v. Oregon, 7 Wall. 71, 74 U. S. 76, that the people,
Page 114 U. S. 292
through the Constitution of the United States,
"established a more perfect union by substituting a national government,
acting, with ample power, directly upon the citizens, instead of the
Confederate government, which acted with powers, greatly restricted, only
upon the states."
In no other way can the supremacy of that Constitution be maintained. It
creates a government in fact as well as in name, because its Constitution is
the supreme law of the land, "anything in the constitution or laws of any
state to the contrary notwithstanding," and its authority is enforced by its
power to regulate and govern the conduct of individuals, even where its

prohibitions are laid only upon the states themselves. The mandate of the
state affords no justification for the invasion of rights secured by the
Constitution of the United States; otherwise, that Constitution would not be
the supreme law of the land.
When, therefore, an individual defendant pleads a statute of a state, which
is in violation of the Constitution of the United States as his authority for
taking or holding property to which the citizen asserts title and for the
protection or possession of which he appeals to the courts, to say that the
judicial enforcement of the supreme law of the land, as between the
individual parties, is to coerce the state ignores the fundamental principles
on which the Constitution rest, as contrasted with the Articles of
Confederation, which it displaced, and practically makes the statutes of the
states the supreme law of the land within their respective limits.
When, therefore, by the Act of March 30, 1871, the contract was made by
which it was agreed that the coupons issued under that act should
thereafter be receivable in payment of taxes, it was the contract of the State
of Virginia, because, though made by the agency of the government, for the
time being, of the state, that government was acting within the scope of its
authority, and spoke with its voice as its true representative, and inasmuch
as, by the Constitution of the United States, which is also the supreme law of
Virginia, that contract, when made, became thereby unchangeable and
irrepealable by the state, the subsequent Act of January 26, 1882, and all
other like acts, which deny the obligation of that contract
Page 114 U. S. 293
and forbid its performance, are not the acts of the State of Virginia. The true
and real commonwealth which contracted the obligation is incapable in law
of doing anything in derogation of it. Whatever having that effect, if
operative, has been attempted or done is the work of its government acting
without authority, in violation of its fundamental law, and must be looked
upon in all courts of justice as if it were not and never had been. The
argument, therefore, which seeks to defeat the present action for the reason
that it is a suit against the State of Virginia, because the nominal defendant
is merely its officer and agent, acting in its behalf, in its name, and for its
interest, and amenable only to it, falls to the ground because its chief
postulate fails. The State of Virginia has done none of these things with
which this defense charges her. The defendant in error is not her officer, her
agent, or her representative in the matter complained of, for he has acted
not only without her authority, but contrary to her express commands. The
plaintiff in error, in fact and in law, is representing her as he seeks to
establish her law, and vindicates her integrity as he maintains his own right.
Tried by every test which has been judicially suggested for the determination
of the question, this cannot be considered to be a suit against the state. The
state is not named as a party in the record; the action is not directly upon
the contract; it is not for the purpose of controlling the discretion of
executive officers, or administering funds actually in the public Treasury, as
was held to be the case in Louisiana v. Junel, 107 U. S. 711; it is not an
attempt to compel officers of the state to do the acts which constitute a
performance of its contract by the state, as suggested by a minority of the
court in Antoni v. Greenhow, 107 U. S. 769, 107 U. S. 783, nor is it a case
where the state is a necessary party, that the defendant may be protected
from liability to it, after having answered to the present plaintiff. For, on this

supposition, if the accounting officers of the state government refuse to


credit the tax collector with coupons received by him in payment of taxes, or
seek to hold him responsible for a failure to execute the void statute, which
required him to refuse coupons in payment of taxes, in any action or
Page 114 U. S. 294
prosecution brought against him in the name of the state, the grounds of the
judgment rendered in favor of the present plaintiff will constitute his perfect
defense. And as that defense made in any cause, though brought in a state
court, would present a question arising under the Constitution and laws of
the United States, it would be within the jurisdiction of this Court to give it
effect, upon a writ of error, without regard to the amount or value in dispute.
In the case of Osborn v. Bank of the United States, 9 Wheat. 738, 22 U. S.
853, Chief Justice Marshall put by way of argument and illustration the very
case we are now considering. He said:
"Controversies respecting boundary have lately existed between Virginia and
Tennessee, between Kentucky and Tennessee, and now exist between New
York and New Jersey. Suppose, while such a controversy is pending, the
collecting officer of one state should seize property for taxes belonging to a
man who supposes himself to reside in the other state and who seeks
redress in the federal court of that state in which the officer resides. The
interest of the state is obvious. Yet it is admitted that in such a case, the
action would lie, because the officer might be treated as a trespasser, and
the verdict and judgment against him would not act directly on the property
of the state. That it would not so act may perhaps depend on circumstances.
The officer may retain the amount of the taxes in his hands, and, on the
proceedings of the state against him, may plead in bar the judgment of a
court of competent jurisdiction. If this plea ought to be sustained, and it is
far from being certain that it ought not, the judgment so pleaded would have
acted directly on the revenue of the state in the hands of its officers. And yet
the argument admits that the action, in such a case, would be sustained. But
suppose in such a case the party conceiving himself to be injured, instead of
bringing an action sounding in damages, should sue for the specific thing
while yet in possession of the seizing officer. It being admitted in argument
that the action sounding in damages would lie, we are unable to perceive
the line of distinction between that and the action of detinue. Yet the latter
action would claim the specific article seized for the tax,
Page 114 U. S. 295
and would obtain it should the seizure be deemed unlawful."
Although the plaintiff below was nominally the actor, the action itself is
purely defensive. Its object is merely to resist an attempted wrong, and to
restore the status in quo as it was when the right to be vindicated was
invaded. In this respect it is upon the same footing with the preventive
remedy of injunction in equity, when that jurisdiction is invoked, and of
which a conspicuous example, constantly followed in the courts of the
United States, was the case of Osborn v. Bank of the United States, ubi
supra. In that case, the taxing power of the state was resisted on the ground
that its exercise threatened to deprive the complainant of a right conferred
by the Constitution of the United States. The jurisdiction has been constantly
exerted by the courts of the United States to prevent the illegal taxation of
national banks by the officers of the states. And in Cummings v. National
Bank, 101 U. S. 153, 101 U. S. 157, it was laid down as a general principle of

equity jurisdiction
"that when a rule or system of valuation is adopted by those whose duty it is
to make the assessment, which is designed to operate unequally and to
violate a fundamental principle of the Constitution, and when this rule is
applied not solely to one individual, but to a large class of individuals or
corporations, equity may properly interfere to restrain the operation of this
unconstitutional exercise of power."
And it is no objection to the remedy in such cases that the statute whose
application in the particular case is sought to be restrained is not void on its
face, but is complained of only because its operation in the particular
instance works a violation of a constitutional right, for the cases are
numerous where the tax laws of a state which in their general and proper
application are perfectly valid have been held to become void in particular
cases either as unconstitutional regulations of commerce or as violations of
contracts prohibited by the Constitution, or because in some other way they
operate to deprive the party complaining of a right secured to him by the
Constitution of the United States. At the present term of this Court, at least
three cases have been decided in which railroad companies
Page 114 U. S. 296
have been complainants in equity seeking to restrain officers of states from
collecting taxes on the ground of an exemption by contract, and no question
of jurisdiction has been raised. The practice has become common, and is
well settled on incontestable principles of equity procedure. Memphis
Railroad v. Railroad Commissioners, 112 U. S. 609; St. Louis &c. Ry. Co. v.
Berry, 113 U. S. 465; Chesapeake & Ohio Railroad Co. v. Miller, ante, 114 U.
S. 176.
It is still urged upon us, however, in argument that notwithstanding all that
has been or can be said, it still remains that the controversy disclosed by the
record is between an individual and the state; that the state alone has any
real interest in its determination; that the practical effect of such
determination is to control the action of the state in the regular and orderly
administration of its public affairs, and that therefore the suit is and must be
regarded as a suit against the state within the prohibition of the Eleventh
Amendment to the Constitution. Omitting for the time being the
consideration already enforced of the fallacy that lies at the bottom of this
objection, arising from the distinction to be kept in view between the
government of a state and the state itself, the premises which it assumes
may all be admitted, but the conclusion would not follow. The same
argument was employed in the name of the United States in the Lee case,
and did not prevail. It was pressed with the greatest force of which it was
susceptible in the case of Osborn v. Bank of the United States, and was met
and overcome by the masterly reasoning of Chief Justice Marshall. It
appeared early in the history of this Court, in 1799, in the case of Fowler v.
Lindsey, 3 Dall. 411, in which that able magistrate Mr. Justice Washington
pronounced his first reported opinion. On a motion to remove the cause by
certiorari from the circuit court on the ground that it was a suit in which a
state was a party, it being an ejectment for lands the title to which was
claimed under grants from different states, he said:
"A case which belongs to the jurisdiction of the Supreme Court on account of
the interest that a state has in the controversy must be a case in which a
state is either nominally or substantially the party.

Page 114 U. S. 297


It is not sufficient that a state may be consequentially affected, for in such
case (as where the grants of different states are brought into litigation), the
circuit court has clearly a jurisdiction. And this remark furnishes an answer
to the suggestions that have been founded on the remote interest of the
state in making retribution to her grantees upon the event of an eviction."
The thing prohibited by the Eleventh Amendment is the exercise of
jurisdiction in a
"suit in law or equity commenced or prosecuted against one of the United
States by citizens of another state, or by citizens or subjects of any foreign
state."
Nothing else is touched, and suits between individuals, unless the state is
the party in a substantial sense, are left untouched, no matter how much
their determination may incidentally and consequentially affect the interests
of a state or the operations of its government. The fancied inconvenience of
an interference with the collection of its taxes by the government of Virginia
by suits against its tax collectors vanishes at once upon the suggestion that
such interference is not possible except when that government seeks to
enforce the collection of its taxes contrary to the law and contract of the
state and in violation of the Constitution of the United States. The immunity
from suit by the state, now invoked, vainly, to protect the individual
wrongdoers, finds no warrant in the Eleventh Amendment to the
Constitution, and is in fact a protest against the enforcement of that other
provision which forbids any state from passing laws impairing the obligation
of contracts. To accomplish that result requires a new amendment which
would not forbid any state from passing laws impairing the obligation of its
own contracts.
What we are asked to do is in effect to overrule the doctrine in Fletcher v.
Peck, 6 Cranch 87, and hold that a state is not under a constitutional
obligation to perform its contracts, for it is equivalent to that to say that it is
not subject to the consequences when that constitutional prohibition is
applied to suits between individuals. We could not stop there. We should be
required to go still further and reverse the doctrine on which that
constitutional provision rests, stated by Chief Justice Marshall
Page 114 U. S. 298
in that case when he said, pages 10 U. S. 135-136:
"When, then, a law is in its nature a contract, when absolute rights have
vested under that contract, a repeal of the law cannot divest those rights,
and the act of annulling them, if legitimate, is rendered so by a power
applicable to the case of every individual in the community. It may well be
doubted whether the nature of society and of government does not
prescribe some limits to the legislative power, and if any be prescribed
where are they to be found if the property of an individual, fairly and
honestly acquired, may be seized without compensation? To the legislature
all legislative power is granted, but the question whether the act of
transferring the property of an individual to the public be in the nature of
legislative power is well worthy of serious reflection."
And in view of such a contention, we may well add the impressive and
weighty words of the same illustrious man, when he said in Marbury v.
Madison, 1 Cranch 137, 5 U. S. 163:
"The government of the United States has been emphatically termed a

government of laws, and not of men. It will certainly cease to deserve this
high appellation if the laws furnish no remedy for the violation of a vested
legal right."
It is contended, however, in behalf of the defendant in error that the Act of
January 26, 1882, under which he justified his refusal of the tender of
coupons, does not impair the obligation of the contract between the coupon
holder and the State of Virginia inasmuch as it secures to him a remedy
equal in legal value to all that it takes away, and that consequently, as the
state may lawfully legislate by changing remedies so that it does not destroy
rights, the remedy thus provided is exclusive, and must defeat the plaintiff's
action. The remedy thus substituted and declared exclusive is one that
requires the taxpayer demanding to have coupons received in payment of
taxes, first, to pay the taxes due from him in money, under protest, when,
within thirty days thereafter, he may sue the officer to recover back the
amount paid, which, on obtaining judgment therefor, shall be refunded by
the auditor of public accounts out of the treasury. By the amendment passed
March 13, 1884, the coupons tendered are required to
Page 114 U. S. 299
be sealed up and marked for identification, filed with the petition at the
commencement of the suit, produced on the trial as evidence of the tender,
and delivered to the auditor of public accounts, to be cancelled when he
issues his warrant for the amount of the judgment.
It is contended that in view of this remedy, the case is ruled by the decision
of this Court in Antoni v. Greenhow, 107 U. S. 769. We have, however,
already shown by extracts from the opinion of the Court in that case that the
question involved in the present proceeding was not covered by that
judgment. In that case, the plaintiff in error was seeking to compel the
officer specifically to receive his coupons in payment of taxes by mandamus
on the ground that he was entitled to that remedy when the contract was
made by the law of March 30, 1871. The law giving that remedy was
subsequently amended, requiring the petitioner to pay the taxes in money in
the first instance, and permitting the writ to issue only after a trial in which
the genuineness of the coupons tendered had been established. The Court
held that he might have been put to the same proof in the former mode of
proceeding, and that the amendment did not destroy the efficiency of the
remedy.
But here the plaintiff did not seek any compulsory process against the officer
to require him specifically to receive the coupons tendered. He offered them
and they were refused. He chose to stand upon the defensive and maintain
his rights as they might be assailed. His right was to have his coupon
received for taxes when offered. That was the contract. To refuse to receive
them was an open breach of its obligation. It is no remedy for this that he
may acquiesce in the wrong, pay his taxes in money which he was entitled
to pay in coupons and bring suit to recover it back. His tender, as we have
already seen, was equivalent to payment, so far as concerns the legality of
all subsequent steps by the collector to enforce payment by distraint of his
property. He has the right to say he will not pay the amount a second time,
even for the privilege of recovering it back. And if he chooses to stand upon
a lawful payment once made, he asks no remedy to recover back taxes
illegally collected, but may resist the exaction, and treat
Page 114 U. S. 300

as a wrongdoer the officer who seizes his property to enforce it.


It is suggested that the right to have coupons received in payment of taxes
is a mere right of setoff, and is itself but a remedy subject to the control of
legislation. Ordinarily, it is true, the right to set off mutual independent
debts, by way of compensation and satisfaction, is dependent on the general
law, does not enter into the contract, although it may be thelex loci
contractus, and is dependent for its enforcement upon the lex fori, when suit
is brought, and consequently may be changed by the legislature without
impairing vested rights. But in such cases, the right is entirely dependent
upon the general law, and changes with it. It is different when, as in many
cases of equitable setoff, it inheres in the transaction, or arises out of the
relations of the parties, and it may in any case, as it was in this, be made the
subject of contract between parties. When this is done, it stands upon the
footing of every other lawful contract, upon valuable consideration, the
obligation of which cannot be impaired by subsequent legislation.
It is urged upon us, however, that in a revenue system, a provision of law
which gives to a party complaining of an illegal exaction of taxes, the right
to recover back the amount in dispute only after previous payment under
protest, as the sole remedy, against either the officer or the government, is
a just and reasonable rule, sufficiently securing private rights, and
convenient, if not necessary, to the interests of the public. We are referred to
the revenue laws of the United States for illustration and example, and the
question is put why a similar provision, as it is assumed to be, should not be
considered adequate as a remedy for the holders of coupons in Virginia, who
have been denied the right to use them in payment of taxes.
The answer is obvious and complete. Virginia, by a contract which the
Constitution of the United States disables her from impairing, has bound
herself that it shall be otherwise. The state has agreed that the coupons cut
from her bonds shall be received in payment of taxes due to her, as though
they were money. When the taxpayer has tendered such coupons, he has
complied with the agreement, and in legal contemplation
Page 114 U. S. 301
has paid the debt he owed the state. So far as that tax is concerned, and
every step taken for enforcing its payment in disregard of that tender, the
coupon holder is with drawn from the power and jurisdiction of the state. He
is free from all further disturbance, and is securely shielded by the
Constitution in his immunity. No proceeding, whatever its pretext, which
does not respect this right can be judicially upheld. The question is not of
the reasonableness of a remedy for a breach of the contract to receive the
tendered coupons in payment of the tax; it is whether the right to have them
so received, and the use of that right as a defense against all further efforts
to exact and compel payment of the tax, in denial and defiance of that right,
can be taken away without a violation of that provision of the Constitution
which prohibits the states from passing laws which impair the obligation of
contracts. Certainly a law which takes from the party his whole contract, and
all the rights which it was intended to confer, must be regarded as a law
impairing its obligation.
Another point remains for consideration. Rev.Stat. 721 provides that
"The laws of the several states, except where the Constitution, treaties, or
statutes of the United States otherwise require or provide, shall be regarded
as rules of decision in trials at common law in the courts of the United

States, in cases where they apply,"


and 914 declares that
"The practice, pleadings, and forms and modes of proceeding in civil causes,
other that equity and admiralty causes, in the circuit and district courts shall
conform as near as may be to the practice, pleadings, and forms and modes
of proceeding existing at the time in like causes in the courts of record of the
state within which such circuit or district courts are held, any rule of court to
the contrary notwithstanding."
Upon these sections it is argued that, admitting the Acts of the General
Assembly of Virginia of January 26, 1882, and the amendment by the Act of
March 13, 1884, to be unconstitutional and void so far as they forbid tax
collectors from receiving coupons in payment of taxes, nevertheless, as the
state has control over the forms of action and modes of proceeding by way
of remedy, and has forbidden, in cases where the tax collector has refused
Page 114 U. S. 302
coupons in payment of taxes, any personal action against him other than the
suit to recover back the tax demanded and paid under protest, the same
law, by force of the Revised Statutes of the United States, must govern in
the courts of the United States.
It is not entirely clear on the face of the Act of January 26, 1882, that it does
forbid actions against the officer for illegally levying upon the property of the
coupon holder for the tax which he has offered to pay. The language of the
act seems to embrace only such suits as are framed with the direct object of
preventing or restraining him from taking steps to collect the tax. And this
uncertainty is not made clear by the Amendatory Act of March 13, 1884,
which, by expressly forbidding actions of trespass or trespass on the case to
be brought or maintained against any collecting officer for levying upon the
property of any taxpayer who may have tendered coupons in payment of the
tax demanded, would seem to have left the action of detinue, which was
authorized in such cases by the previously existing law of Virginia,
untouched by the prohibition.
We shall assume, however, for the purposes of this opinion that these acts of
the General Assembly of Virginia were intended to and do forbid every
action of whatever kind against the collecting officer for the recovery of
specific property taken by distraint or of damages for its caption or
detention, and leaves to the coupon holder, as his sole right of action, the
suit to recover back the money illegally collected from him.
This action, as we have already seen, is no remedy whatever for the loss of
the specific right of paying his taxes with coupons. It does not even profess
so to be. Neither is it a remedy for the loss of the right sought to be
vindicated in this and other personal actions against the collector for
unlawfully taking from the plaintiff his property. And upon the supposition
made, this wrong is without remedy by any law of Virginia.
The direct result, then, of giving effect to these provisions of the act in
question is to defeat entirely the right of the
Page 114 U. S. 303
coupon holder to pay his taxes with his coupons, which we have already said
avoids that part of the acts in question which forbids it in terms, and to take
from him that right as a defense against the wrongs and trespasses
committed upon him and his property in denial and defiance of it. All
persons whose property is unlawfully taken otherwise than to enforce

payment of taxes are secured in their right of action for redress. But the
coupon holder, to whom the Constitution of the United States guarantees
the right, conferred upon him by the law and contract of Virginia, to pay his
taxes in coupons is excepted. The discrimination is made against him in
order to deprive him of that right, and, if permitted, will have the effect of
denying to him all redress for a deprivation of a right secured to him by the
Constitution. To take away all remedy for the enforcement of a right is to
take away the right itself. But that is not within the power of the state.
Rev.Stat. 721, it will be observed, makes an express exception, in
reference to the adoption of state laws as rules of decision, of cases where
the Constitution otherwise requires, which it does wherever the adoption of
the state law deprives a complaining party of a remedy essential to the
vindication of a right and that right is derived from or protected by the
Constitution of the United States. The same exception is implied in 914,
the language of which indeed is not imperative, as the conformity required
in the practice and procedure of the courts of the United States with that of
the state courts needs only to be "as near as may be." No one would
contend that a law of a state forbidding all redress by actions at law for
injuries to property would be upheld in the courts of the United States, for
that would be to deprive one of his property without due process of law. This
is exactly what the statutes in question undertake to do in respect to that
class of persons whose property is taken from them for the offense of
asserting, under the protection of the Constitution, the right to pay their
taxes in coupons. The contract with Virginia was not only that the coupons
should be received in payment of taxes, but, by necessary implication, that
the taxpayer making such a tender should not be molested further, as
though he were a
Page 114 U. S. 304
delinquent, and that for every illegal attempt subsequently to enforce the
collection of the tax by the seizure of property, he should have the remedies
of the law in force when the contract was made for redress, or others equally
effective. "The obligation of a contract," said this Court in McCracken v.
Hayward, 2 How. 608, 43 U. S. 612,
"consists in its binding force on the party who makes it. This depends on the
laws in existence when it is made. These are necessarily referred to in all
contracts, and forming a part of them, as the measure of the obligation to
perform them by the one party and the right acquired by the other. There
can be no other standard by which to ascertain the extent of either than that
which the terms of the contract indicate, according to their settled legal
meaning; when it becomes consummated, the law defines the duty and the
right, compels one party to perform the thing contracted for, and gives the
other a right to enforce the performance by the remedies then in force. If
any subsequent law affect to diminish the duty or to impair the right, it
necessarily bears on the obligation of the contract in favor of one party to
the injury of the other; hence, any law which in its operation amounts to a
denial or obstruction of the rights accruing by a contract, though professing
to act only on the remedy, is directly obnoxious to the prohibition of the
Constitution."
The acts of assembly in question must be taken together, as one is but an
amendment to the other. The scheme of the whole is indivisible. It cannot be
separated into parts. It must stand or fall together. The substantive part of it,

which forbids the tax collector to receive coupons in payment of taxes, as


we have already declared, as, indeed, on all sides is admitted, cannot stand,
because it is not consistent with the Constitution. That which is merely
auxiliary to the main design must also fall with the principal of which it is
merely an incident, and it follows that the acts in question are not laws of
Virginia, and are therefore not within the sections of the Revised Statutes
referred to, nor obligatory upon the courts of the United States.
It is undoubtedly true that there may be cases where one part of a statute
may be enforced as constitutional and another
Page 114 U. S. 305
be declared inoperative and void because unconstitutional, but these are
cases where the parts are so distinctly separable that each can stand alone,
and where the court is able to see and to declare that the intention of the
legislature was that the part pronounced valid should be enforceable even
though the other part should fail. To hold otherwise would be to substitute
for the law intended by the legislature one they may never have been willing
by itself to enact. An illustration of this principle is found in the Trademark
Cases, 100 U. S. 82, where an act of Congress which, it was claimed, would
have been valid as a regulation of commerce with foreign nations and
among the states was held to be void altogether because it embraced all
commerce, including that between citizens of the same state, which was not
within the jurisdiction of Congress, and its language could not be restrained
to that which was subject to the control of Congress. "If we should," said the
Court in that case, p. 100 U. S. 99,
"in the case before us undertake to make by judicial construction a law
which Congress did not make, it is quite probable we should do what, if the
matter were now before that body, it would be unwilling to do."
Indeed, it is quite manifest from the face of the laws themselves that they
are together but parts of a larger whole. By an Act of the General Assembly
of Virginia passed February 14, 1882, the legislature restated the account
between the state and its creditors on a basis of readjustment which
reduced it to the sum of $21,035,377.15, including interest in arrears to July
1, 1882, which was thereby declared to be her equitable share of the debt of
the old and entire state, and on which it was also declared that the state was
not able to pay interest for the future at a larger rate than three percent per
annum. The outstanding debt, of which this was a reduction, was then
classified, and bonds of the state were authorized to be issued, bearing
interest at the rate of three percent per annum, in exchange for outstanding
bonds of the different classes, scaled at rates of fifty-three percent, sixty
percent, sixty-nine percent, sixty-three percent, and, as to one class, as high
as eighty percent, which were to be retired
Page 114 U. S. 306
and cancelled. The coupons on the new bonds were not made receivable in
payment of taxes. To coerce creditors holding bonds issued under the Act of
March 30, 1871, to exchange them for these new bonds at these reduced
rates, and with them to give up their security for the payment of interest
arising out of the receivability of coupons in payment of taxes, is the evident
purpose of the Acts of January 26, 1882, and of March 13, 1884, and all
together form a single scheme the undisguised object of which is to enable
the state to rid itself of a considerable portion of its public debt and to place
the remainder on terms to suit its own convenience, without regard to the

obligation it owes to its creditors.


The whole legislation, in all its parts, as to creditors affected by it and not
consenting to it, must be pronounced null and void. Such is the sentence of
the Constitution itself, the fundamental and supreme law for Virginia, as for
all the states and for all the people, both of the states separately and of the
United States, and which speaks with sovereign and commanding voice,
expecting and receiving ready and cheerful obedience, not so much for the
display of its power, as on account of the majesty of its authority and the
justice of its mandates.
The judgment of the hustings court of the City of Richmond is accordingly
reversed, and the cause will be remanded with directions to render
judgment upon the agreed statement of facts in favor of the plaintiff.
MR. JUSTICE BRADLEY, with whom concurred THE CHIEF JUSTICE, MR.
JUSTICE MILLER, and MR. JUSTICE GRAY dissented. Their dissenting opinion
will be found post, page 114 U. S. 330, after the opinion of the Court in
Marye v. Parsons.

G.R. No. 86695. September 3, 1992. MARIA ELENA MALAGA, doing


business under the name B.E. CONSTRUCTION; JOSIELEEN NAJARRO,
doing business under the name BEST BUILT CONSTRUCTION; JOSE N.
OCCEA, doing business under the name THE FIRM OF JOSE N.
OCCEA; and the ILOILO BUILDERS CORPORATION, petitioners, vs.
MANUEL R. PENACHOS, JR., ALFREDO MATANGGA, ENRICO TICAR
AND TERESITA VILLANUEVA, in their respective capacities as
Chairman and Members of the Pre-qualification Bids and Awards
Committee (PBAC)-BENIGNO PANISTANTE, in his capacity as
President of Iloilo State College of Fisheries, as well as in their
respective personal capacities; and HON. LODRIGIO L. LEBAQUIN,

respondents. Salas, Villareal & Velasco for petitioners. Virgilio A. Sindico for
respondents. SYLLABUS 1. ADMINISTRATIVE LAW; GOVERNMENT
INSTRUMENTALITY, DEFINED. The 1987 Administrative Code defines a
government instrumentality as follows: Instrumentality refers to any agency
of the National Government, not integrated within the department
framework, vested with special functions or jurisdiction by law, endowed
with some if not all corporate powers, administering special funds, and
enjoying operational autonomy, usually through a charter. This term includes
regulatory agencies, chartered institutions, and government-owned or
controlled corporations. (Sec. 2 (5) Introductory Provisions). 2. ID.;
CHARTERED INSTITUTION; DEFINED; APPLICATION IN CASE AT BAR. The
1987 Administrative Code describes a chartered institution thus: Chartered
institution refers to any agency organized or operating under a special
charter, and vested by law with functions relating to specific constitutional
policies or objectives. This term includes the state universities and colleges,
and the monetary authority of the state. (Sec. 2 (12) Introductory
Provisions). It is clear from the above definitions that ISCOF is a chartered
institution and is therefore covered by P.D. 1818. There are also indications
in its charter that ISCOF is a government instrumentality. First, it was created
in pursuance of the integrated fisheries development policy of the State, a
priority program of the government to effect the socioeconomic life of the
nation. Second, the Treasurer of the Republic of the Philippines shall also be
the ex-officio Treasurer of the state college with its accounts and expenses
to be audited by the Commission on Audit or its duly authorized
representative. Third, heads of bureaus and offices of the National
Government are authorized to loan or transfer to it, upon request of the
president of the state college, such apparatus, equipment, or supplies and
even the services of such employees as can be spared without serious
detriment to public service. Lastly, an additional amount of P1.5M had been
appropriated out of the funds of the National Treasury and it was also
decreed in its charter that the funds and maintenance of the state college
would henceforth be included in the General Appropriations Law.
(Presidential Decree No. 1523) 3. ID.; PROHIBITION OF ANY COURT FROM
ISSUING INJUNCTION IN CASES INVOLVING INFRASTRUCTURE PROJECTS OF
GOVERNMENT (P.D. 1818); POWER OF THE COURTS TO RESTRAIN
APPLICATION. In the case of Datiles and Co. vs. Sucaldito, (186 SCRA 704)
this Court interpreted a similar prohibition contained in P.D. 605, the law
after which P.D. 1818 was patterned. It was there declared that the
prohibition pertained to the issuance of injunctions or restraining orders by
courts against administrative acts in controversies involving facts or the
exercise of discretion in technical cases. The Court observed that to allow
the courts to judge these matters would disturb the smooth functioning of
the administrative machinery. Justice Teodoro Padilla made it clear, however,
that on issues definitely outside of this dimension and involving questions of
law, courts could not be prevented by P.D. No. 605 from exercising their
power to restrain or prohibit administrative acts. We see no reason why the
above ruling should not apply to P.D. 1818. There are at least two
irregularities committed by PBAC that justified injunction of the bidding and
the award of the project. 4. ID.; POLICIES AND GUIDELINES PRESCRIBED FOR
GOVERNMENT INFRASTRUCTURE (PD 1594); RULES IMPLEMENTING
THEREOF, NOT SUFFICIENTLY COMPLIED WITH IN CASE AT BAR. Under the

Rules Implementing P.D. 1594, prescribing policies and guidelines for


government infrastructure contracts, PBAC shall provide prospective bidders
with the Notice to Pre-qualification and other relevant information regarding
the proposed work. Prospective contractors shall be required to file their
ARC-Contractors Confidential Application for Registration & Classifications &
the PRE-C2 Confidential Pre-qualification Statement for the Project (prior to
the amendment of the rules, this was referred to as PreC1) not later than the
deadline set in the published Invitation to Bid, after which date no PRE-C2
shall be submitted and received. Invitations to Bid shall be advertised for at
least three times within a reasonable period but in no case less than two
weeks in at least two newspapers of general circulations. (IB 13 1.2-19,
Implementing Rules and Regulations of P.D. 1594 as amended) PBAC
advertised the pre-qualification deadline as December 2, 1988, without
stating the hour thereof, and announced that the opening of bids would be
at 3 o'clock in the afternoon of December 12, 1988. This scheduled was
changed and a notice of such change was merely posted at the ISCOF
bulletin board. The notice advanced the cut-off time for the submission of
pre-qualification documents to 10 o'clock in the morning of December 2,
1988, and the opening of bids to 1 o'clock in the afternoon of December 12,
1988. The new schedule caused the pre-disqualification of the petitioners as
recorded in the minutes of the PBAC meeting held on December 6, 1988.
While it may be true that there were fourteen contractors who were prequalified despite the change in schedule, this fact did not cure the defect of
the irregular notice. Notably, the petitioners were disqualified because they
failed to meet the new deadline and not because of their expired licenses.
(B.E. & Best Built's licenses were valid until June 30, 1989. [Ex. P & O
respectively: both were marked on December 28, 1988]) We have held that
where the law requires a previous advertisement before government
contracts can be awarded, non-compliance with the requirement will, as a
general rule, render the same void and of no effect. (Caltex Phil. v. Delgado
Bros., 96 Phil. 368) The fact that an invitation for bids has been
communicated to a number of possible bidders is not necessarily sufficient
to establish compliance with the requirements of the law if it is shown that
other possible bidders have not been similarly notified. 5. ID.; ID.; ID.;
PURPOSE THEREOF; CASE AT BAR. The purpose of the rules implementing
P.D. 1594 is to secure competitive bidding and to prevent favoritism,
collusion and fraud in the award of these contracts to the detriment of the
public. This purpose was defeated by the irregularities committed by PBAC.
It has been held that the three principles in public bidding are the offer to
the public, an opportunity for competition and a basis for exact comparison
of bids. A regulation of the matter which excludes any of these factors
destroys the distinctive character of the system and thwarts the purpose of
its adoption. (Hannan v. Board of Education, 25 Okla. 372) In the case at bar,
it was the lack of proper notice regarding the pre-qualification requirement
and the bidding that caused the elimination of petitioners B.E. and Best
Built. It was not because of their expired licenses, as private respondents
now claim. Moreover, the plans and specifications which are the contractors'
guide to an intelligent bid, were not issued on time, thus defeating the
guaranty that contractors be placed on equal footing when they submit their
bids. The purpose of competitive bidding is negated if some contractors are
informed ahead of their rivals of the plans and specifications that are to be

the subject of their bids. 6. ID.; ID.; ID.; EFFECT OF NON-COMPLIANCE


THEREOF. It has been held in a long line of cases that a contract granted
without the competitive bidding required by law is void, and the party to
whom it is awarded cannot benefit from it. It has not been shown that the
irregularities committed by PBAC were induced by or participated in by any
of the contractors. Hence, liability shall attach only to the private
respondents for the prejudice sustained by the petitioners as a result of the
anomalies described above. 7. CIVIL LAW; NOMINAL DAMAGES; AWARD
THEREOF, WHEN AVAILABLE. As there is no evidence of the actual loss
suffered by the petitioners, compensatory damage may not be awarded to
them. Moral damages do not appear to be due either. Even so, the Court
cannot close its eyes to the evident bad faith that characterized the conduct
of the private respondents, including the irregularities in the announcement
of the bidding and their efforts to persuade the ISCOF president to award the
project after two days from receipt of the restraining order and before they
moved to lift such order. For such questionable acts, they are liable in
nominal damages at least in accordance with Article 2221 of the Civil Code,
which states: Art. 2221. Nominal damages are adjudicated in order that a
right of the plaintiff, which has been violated or invaded by the defendant
may be vindicated or, recognized, and not for the purpose of indemnifying
the plaintiff for any loss suffered by him. These damages are to be assessed
against the private respondents in the amount of P10,000.00 each, to be
paid separately for each of petitioners B.E. Construction and Best Built
Construction. D E C I S I O N CRUZ, J: This controversy involves the extent
and applicability of P.D. 1818, which prohibits any court from issuing
injunctions in cases involving infrastructure projects of the government. The
facts are not disputed. The Iloilo State College of Fisheries (henceforth
ISCOF) through its Pre-qualification, Bids and Awards Committee (henceforth
PBAC) caused the publication in the November 25, 26, 28, 1988 issues of the
Western Visayas Daily an Invitation to Bid for the construction of the Micro
Laboratory Building at ISCOF. The notice announced that the last day for the
submission of pre-qualification requirements (PRE C-1) ** was December 2,
1988, and that the bids would be received and opened on December 12,
1988, 3 o'clock in the afternoon. 1 Petitioners Maria Elena Malaga and
Josieleen Najarro, respectively doing business under the name of the B.E.
Construction and Best Built Construction, submitted their pre-qualification
documents at two o'clock in the afternoon of December 2, 1988. Petitioner
Jose Occea submitted his own PRE-C1 on December 5, 1988. All three of
them were not allowed to participate in the bidding because their
documents were considered late, having been submitted after the cut-off
time of ten o'clock in the morning of December 2, 1988. On December 12,
1988, the petitioners filed a complaint with the Regional Trial Court of Iloilo
against the chairman and members of PBAC in their official and personal
capacities. The plaintiffs claimed that although they had submitted their
PRE-C1 on time, the PBAC refused without just cause to accept them. As a
result, they were not included in the list of pre-qualified bidders, could not
secure the needed plans and other documents, and were unable to
participate in the scheduled bidding. In their prayer, they sought the
resetting of the December 12, 1988 bidding and the acceptance of their
PRE-C1 documents. They also asked that if the bidding had already been
conducted, the defendants be directed not to award the project pending

resolution of their complaint. On the same date, Judge Lodrigio L. Lebaquin


issued a restraining order prohibiting PBAC from conducting the bidding and
awarding the project. 2 On December 16, 1988, the defendants filed a
motion to lift the restraining order on the ground that the Court was
prohibited from issued restraining orders, preliminary injunctions and
preliminary mandatory injunctions by P.D. 1818. cdll The decree reads
pertinently as follows: Section 1. No Court in the Philippines shall have
jurisdiction to issue any restraining order, preliminary injunction, or
preliminary infrastructure project, or a mining, fishery, forest or other natural
resource development project of the government, or any public utility
operated by the government, including among others public utilities for the
transport of the goods and commodities, stevedoring and arrastre contracts,
to prohibit any person or persons, entity or government official from
proceeding with, or continuing the execution or implementation of any such
project, or the operation of such public utility, or pursuing any lawful activity
necessary for such execution, implementation or operation. The movants
also contended that the question of the propriety of a preliminary injunction
had become moot and academic because the restraining order was received
late, at 2 o'clock in the afternoon of December 12, 1988, after the bidding
had been conducted and closed at eleven thirty in the morning of that date.
In their opposition of the motion, the plaintiffs argued against the
applicability of P.D. 1818, pointing out that while ISCOF was a state college,
it had its own charter and separate existence and was not part of the
national government or of any local political subdivision. Even if P.D. 1818
were applicable, the prohibition presumed a valid and legal government
project, not one tainted with anomalies like the project at bar. They also
cited Filipinas Marble Corp. vs. IAC, 3 where the Court allowed the issuance
of a writ of preliminary injunction despite a similar prohibition found in P.D.
385. The Court therein stated that: The government, however, is bound by
basic principles of fairness and decency under the due process clauses of
the Bill of Rights. P.D. 385 was never meant to protect officials of
government-lending institutions who take over the management of a
borrower corporation, lead that corporation to bankruptcy through
mismanagement or misappropriation of its funds, and who, after ruining it,
use the mandatory provisions of the decree to avoid the consequences of
their misleads (p. 188, emphasis supplied). On January 2, 1989, the trial
court lifted the restraining order and denied the petition for preliminary
injunction. It declared that the building sought to be construed at the ISCOF
was an infrastructure project of the government falling within the coverage
of P.D. 1818. Even if it were not, the petition for the issuance of a writ of
preliminary injunction would still fail because the sheriff's return showed that
PBAC was served a copy of the restraining order after the bidding sought to
be restrained had already been held. Furthermore, the members of the PBAC
could not be restrained from awarding the project because the authority to
do so was lodged in the President of the ISCOF, who was not a party to the
case. 4 In the petition now before us, it is reiterated that P.D. 1818 does not
cover the ISCOF because of its separate and distinct corporate personality. It
is also stressed again that the prohibition under P.D. 1818 could not apply to
the present controversy because the project was vitiated with irregularities,
to wit: 1. The invitation to bid as published fixed the deadline of submission
of prequalification document on December 2, 1988 without indicating any

time, yet after 10:00 o'clock of the given late, the PBAC already refused to
accept petitioners' documents. 2. The time and date of bidding was
published as December 12, 1988 at 3:00 p.m. yet it was held at 10:00
o'clock in the morning. 3. Private respondents, for the purpose of inviting
bidders to participate, issued a mimeographed "Invitation to Bid" form,
which by law (P.D. 1594 and Implementing Rules, Exh. B-1) is to contain the
particulars of the project subject of bidding for the purpose of. (i) enabling
bidders to make an intelligent and accurate bids; (ii) for PBAC to have a
uniform basis for evaluating the bids; (iii) to prevent collusion between a
bidder and the PBAC, by opening to all the particulars of a project.
Additionally, the Invitation to Bid prepared by the respondents and the
Itemized Bill of Quantities therein were left blank. 5 And although the project
in question was a "Construction," the private respondents used an Invitation
to Bid form for "Materials." 6 The petitioners also point out that the validity
of the writ of preliminary injunction had not yet become moot and academic
because even if the bids had been opened before the restraining order was
issued, the project itself had not yet been awarded. The ISCOF president was
not an indispensable party because the signing of the award was merely a
ministerial function which he could perform only upon the recommendation
of the Award Committee. At any rate, the complaint had already been duly
amended to include him as a party defendant. In their Comment, the private
respondents maintain that since the members of the board of trustees of the
ISCOF are all government officials under Section 7 of P.D. 1523 and since the
operations and maintenance of the ISCOF are provided for in the General
Appropriations Law, it is should be considered a government institution
whose infrastructure project is covered by P.D. 1818. Regarding the schedule
for pre-qualification, the private respondents insist that PBAC posted on the
ISCOF bulletin board an announcement that the deadline for the submission
of pre-qualifications documents was at 10 o'clock of December 2, 1988, and
the opening of bids would be held at 1 o'clock in the afternoon of December
12, 1988. As of ten o'clock in the morning of December 2, 1988, B.E.
construction and Best Built construction had filed only their letters of intent.
At two o'clock in the afternoon, B.E., and Best Built filed through their
common representative, Nenette Garuello, their pre-qualification documents
which were admitted but stamped "submitted late." The petitioners were
informed of their disqualification on the same date, and the disqualification
became final on December 6, 1988. Having failed to take immediate action
to compel PBAC to pre-qualify them despite their notice of disqualification,
they cannot now come to this Court to question the binding proper in which
they had not participated. In the petitioners' Reply, they raise as an
additional irregularity the violation of the rule that where the estimate
project cost is from P1M to P5M, the issuance of plans, specifications and
proposal book forms should made thirty days before the date of bidding. 7
They point out that these forms were issued only on December 2, 1988, and
not at the latest on November 12, 1988, the beginning of the 30-day period
prior to the scheduled bidding. In their Rejoinder, the private respondents
aver that the documents of B.E. and Best Built were received although filed
late and were reviewed by the Award Committee, which discovered that the
contractors had expired licenses. B.E.'s temporary certificate of Renewal of
Contractor's License was valid only until September 30, 1988, while Best
Built's license was valid only up to June 30, 1988. The Court has considered

the arguments of the parties in light of their testimonial and documentary


evidence and the applicable laws and jurisprudence. It finds for the
petitioners. The 1987 Administrative Code defines a government
instrumentality as follows: Instrumentality refers to any agency of the
National Government, not integrated within the department framework,
vested with special functions or jurisdiction by law, endowed with some if
not all corporate powers, administering special funds, and enjoying
operational autonomy, usually through a charter. This term includes
regulatory agencies, chartered institutions, and government-owned or
controlled corporations. (Sec. 2 (5) Introductory Provisions). The same Code
describes a chartered institution thus: Chartered institution refers to any
agency organized or operating under a special charter, and vested by law
with functions relating to specific constitutional policies or objectives. This
term includes the state universities and colleges, and the monetary
authority of the state. (Sec. 2 (12) Introductory Provisions). It is clear from
the above definitions that ISCOF is a chartered institution and is therefore
covered by P.D. 1818. There are also indications in its charter that ISCOF is a
government instrumentality. First, it was created in pursuance of the
integrated fisheries development policy of the State, a priority program of
the government of effect the socio-economic life of the nation. Second, the
Treasurer of the Republic of the Philippines also be the ex-officio Treasurer of
the state college with its accounts and expenses to be audited by the
Commission on Audit or its duly authorized representative. Third, heads of
bureaus and offices of the National Government are authorized to loan or
transfer to it, upon request of the president of the state college, such
apparatus, equipment, or supplies and even the services of such employees
as can be spared without serious detriment to public service. Lastly, an
additional amount of P1.5M had been appropriated out of the funds of the
National Treasury and it was also decreed in its charter that the funds and
maintenance of the state college would henceforth be included in the
General Appropriations Law. 8 Nevertheless, it does not automatically follow
that ISCOF is covered by the prohibition in the said decree. In the case of
Datiles and Co. vs. Sucaldito, 9 this Court interpreted a similar prohibition
contained in P.D. 605, the law after which P.D. 1818 was patterned. It was
there declared that the prohibition pertained to the issuance of injunctions
or restraining orders by courts against administrative acts in controversies
involving facts or the exercise of discretion in technical cases. The Court
observed that to allow the courts to judge these matters would disturb the
smooth functioning of the administrative machinery. Justice Teodoro Padilla
made it clear, however, that on issues definitely outside of this dimension
and involving questions of law, courts could not be prevented by P.D. No.
605 from exercising their power to restrain or prohibit administrative acts.
We see no reason why the above ruling should not apply to P.D. 1818. There
are at least two irregularities committed by PBAC that justified injunction of
the bidding and the award of the project. First, PBAC set deadlines for the
filing of the PRE-C1 and the opening of bids and then changed these
deadlines without prior notice to prospective participants. Under the Rules
Implementing P.D. 1594, prescribing policies and guidelines for government
infrastructure contracts, PBAC shall provide prospective bidders with the
Notice of Prequalification and other relevant information regarding the
proposed work. Prospective contractors shall be required to file their ARC-

Contractors Confidential Application for Registration & Classifications & the


PRE-C2 Confidential Pre-qualification Statement for the Project (prior to the
amendment of the rules, this was referred to as PRE-C1) not later than the
deadline set in the published Invitation to Bid, after which date no PRE-C2
shall be submitted and received. Invitations to Bid shall be advertised for at
least three times within a reasonable period but in no case less than two
weeks in at least two newspapers of general circulations. 10 PBAC
advertised the pre-qualification deadline as December 2, 1988, without
stating the hour thereof, and announced that the opening of bids would be
at 3 o'clock in the afternoon of December 12, 1988. This schedule was
changed and a notice of such change was merely posted at the ISCOF
bulletin board. The notice advanced the cut-off time for the submission of
pre-qualification documents to 10 o'clock in the morning of December 2,
1988, and the opening of bids to 1 o'clock in the afternoon of December 12,
1988. The new schedule caused the pre-disqualification of the petitioners as
recorded in the minutes of the PBAC meeting held on December 6, 1988.
While it may be true that there were fourteen contractors who were prequalified despite the change in schedule, this fact did not cure the defect of
the irregular notice. Notably, the petitioners were disqualified because they
failed to meet the new deadline and not because of their expired licenses.
*** We have held that where the law requires a previous advertisement
before government contracts can be awarded, non-compliance with the
requirement will, as a general rule, render the same void and of no effect 11
The facts that an invitation for bids has been communicated to a number of
possible bidders is not necessarily sufficient to establish compliance with the
requirements of the law if it is shown that other public bidders have not
been similarly notified. 12 Second, PBAC was required to issue to prequalified applicants the plans, specifications and proposal book forms for the
project to be bid thirty days before the date of bidding if the estimate project
cost was between P1M and P5M. PBAC has not denied that these forms were
issued only on December 2, 1988, or only ten days before the bidding
scheduled for December 12, 1988. At the very latest, PBAC should have
issued them on November 12, 1988, or 30 days before the scheduled
bidding. It is apparent that the present controversy did not arise from the
discretionary acts of the administrative body nor does it involve merely
technical matters. What is involved here is non-compliance with the
procedural rules on bidding which required strict observance. The purpose of
the rules implementing P.D. 1594 is to secure competitive bidding and to
prevent favoritism, collusion and fraud in the award of these contracts to the
detriment of the public. This purpose was defeated by the irregularities
committed by PBAC. It has been held that the three principles in public
bidding are the offer to the public, an opportunity for competition and a
basis for exact comparison of bids. A regulation of the matter which
excludes any of these factors destroys the distinctive character of the
system and thwarts and purpose of its adoption. 13 In the case at bar, it was
the lack of proper notice regarding the pre-qualification requirement and the
bidding that caused the elimination of petitioners B.E. and Best Built. It was
not because of their expired licenses, as private respondents now claim.
Moreover, the plans and specifications which are the contractors' guide to an
intelligent bid, were not issued on time, thus defeating the guaranty that
contractors be placed on equal footing when they submit their bids. The

purpose of competitive bidding is negated if some contractors are informed


ahead of their rivals of the plans and specifications that are to be the subject
of their bids. P.D. 1818 was not intended to shield from judicial scrutiny
irregularities committed by administrative agencies such as the anomalies
above described. Hence, the challenged restraining order was not
improperly issued by the respondent judge and the writ of preliminary
injunction should not have been denied. We note from Annex Q of the
private respondent's memorandum, however, that the subject project has
already been "100% completed as to the Engineering Standard." This fait
accompli has made the petition for a writ of preliminary injunction moot and
academic. We come now to the liabilities of the private respondents. It has
been held in a long line of cases that a contract granted without the
competitive bidding required by law is void, and the party to whom it is
awarded cannot benefit from it14. It has not been shown that the
irregularities committed by PBAC were induced by or participated in by any
of the contractors. Hence, liability shall attach only to the private
respondents for the prejudice sustained by the petitioners as a result of the
anomalies described above. As there is no evidence of the actual loss
suffered by the petitioners, compensatory damage may not be awarded to
them. Moral damages do not appear to be due either. Even so, the Court
cannot close its eyes to the evident bad faith that characterized the conduct
of the private respondents, including the irregularities in the announcement
of the bidding and their efforts to persuade the ISCOF president to award the
project after two days from receipt of the restraining order and before they
moved to lift such order. For such questionable acts, they are liable in
nominal damages at least in accordance with Article 2221 of the Civil Code,
which states: "Art. 2221. Nominal damages are adjudicated in order that a
right of the plaintiff, which has been violated or invaded by the defendant
may be vindicated or, recognized, and not for the purpose of indemnifying
the plaintiff for any loss suffered by him. These damages are to assessed
against the private respondents in the amount of P10,000.00 each, to be
paid separately for each of petitioners B.E. Construction and Best Built
Construction. The other petitioner, Occea Builders, is not entitled to relief
because it admittedly submitted its pre-qualification documents on
December 5, 1988, or three days after the deadline. WHEREFORE, judgment
is hereby rendered: a) upholding the restraining order dated December 12,
1988, as not covered by the prohibition in P.D. 1818; b) ordering the
chairman and the members of the PBAC board of trustees, namely Manuel R.
Penachos, Jr., Alfredo Matangga, Enrico Ticar, and Teresita Villanueva, to
each pay separately to petitioners Maria Elena Malaga and Josieleen Najarro
nominal damages P10,000.00 each; and c) removing the said chairman and
members from the PBAC board of trustees, or whoever among them is still
incumbent therein, for their malfeasance in office. Costs against PBAC. Let a
copy of this decision be sent to the Office of the Ombudsman. SO ORDERED.
Grio-Aquino, Medialdea and Bellosillo, JJ., concur.

G.R. No. 135945


March 7, 2001
THE UNITED RESIDENTS OF DOMINICAN HILL, INC., represented by
its President RODRIGO S. MACARIO, SR., petitioner,
vs.
COMMISSION ON THE SETTLEMENT OF LAND PROBLEMS,
represented by its Commissioner, RUFINO V. MIJARES; MARIO
PADILAN, PONCIANO BASILAN, HIPOLITO ESLAVA, WILLIAM
LUMPISA, PACITO MOISES, DIONISIO ANAS, NOLI DANGLA,
NAPOLEON BALESTEROS, ELSIE MOISES, SEBIO LACWASAN, BEN
FLORES, DOMINGO CANUTAB, MARCELINO GABRIANO, TINA
TARNATE, ANDREW ABRAZADO, DANNY LEDDA, FERNANDO DAYAO,
JONATHAN DE LA PENA, JERRY PASSION, PETER AGUINSOD, and
LOLITA DURAN, respondents.
DE LEON, JR., J.:
Before us is a petition for prohibition and declaratory relief seeking the
annulment of a status quo order 1 dated September 29, 1998 issued by the
public respondent Commission on the Settlement of Land Problems
(COSLAP, for brevity) in COSLAP Case No. 98-253.
The facts are:
The property being fought over by the parties is a 10.36-hectare property in
Baguio City called Dominican Hills, formerly registered in the name of
Diplomat Hills, Inc. It appeared that the property was mortgaged to the
United Coconut Planters Bank (UCPB) which eventually foreclosed the
mortgage thereon and acquired the same as highest bidder. On April 11,
1983, it was donated to the Republic of the Philippines by UCPB through its
President, Eduardo Cojuangco. The deed of donation stipulated that
Dominican Hills would be utilized for the "priority programs, projects,
activities in human settlements and economic development and
governmental purposes" of the Ministry of Human Settlements.
On December 12, 1986, the then President Corazon C. Aquino issued
Executive Order No. 85 abolishing the Office of Media Affairs and the
Ministry of Human Settlements. All agencies under the latter's supervision as
well as all its assets, programs and projects, were transferred to the
Presidential Management Staff (PMS).2
On October 18, 1988, the PMS received an application from petitioner
UNITED RESIDENTS OF DOMINICAN HILL, INC. (UNITED, for brevity), a
community housing association composed of non-real property owning
residents of Baguio City, to acquire a portion of the Dominican Hills property.
On February 2, 1990, PMS Secretary Elfren Cruz referred the application to
the HOME INSURANCE GUARANTY CORPORATION (HIGC). HIGC consented to
act as originator for UNITED. 3 Accordingly, on May 9, 1990, a Memorandum

of Agreement was signed by and among the PMS, the HIGC, and UNITED.
The Memorandum of Agreement called for the PMS to sell the Dominican
Hills property to HIGC which would, in turn, sell the same to UNITED. The
parties agreed on a selling price of P75.00 per square meter.
Thus, on June 12, 1991, HIGC sold 2.48 hectares of the property to UNITED.
The deed of conditional sale provided that ten (10) per cent of the purchase
price would be paid upon signing, with the balance to be amortized within
one year from its date of execution. After UNITED made its final payment on
January 31, 1992, HIGC executed a Deed of Absolute Sale dated July 1, 1992.
Petitioner alleges that sometime in 1993, private respondents entered the
Dominican Hills property allocated to UNITED and constructed houses
thereon. Petitioner was able to secure a demolition order from the city
mayor.4
Unable to stop the razing of their houses, private respondents, under the
name DOMINICAN HILL BAGUIO RESIDENTS HOMELESS ASSOCIATION
(ASSOCIATION, for brevity) filed an action 5 for injunction docketed as Civil
Case No. 3316-R, in the Regional Trial Court of Baguio City, Branch 4. Private
respondents were able to obtain a temporary restraining order but their
prayer for a writ of preliminary injunction was later denied in an Order dated
March 18, 1996.6
While Civil Case No. 3316-R was pending, the ASSOCIATION, this time
represented by the Land Reform Beneficiaries Association, Inc.
(BENEFICIARIES, for brevity), filed Civil Case No. 3382-R before Branch 61 of
the same court. The complaint 7 prayed for damages, injunction and
annulment of the said Memorandum of Agreement between UNITED and
HIGC. Upon motion of UNITED, the trial court in an Order dated May 27,
1996 dismissed Civil Case No. 3382-R. 8 The said Order of dismissal is
currently on appeal with the Court of Appeals.9
Demolition Order No. 1-96 was subsequently implemented by the Office of
the City Mayor and the City Engineer's Office of Baguio City. However,
petitioner avers that private respondents returned and reconstructed the
demolished structures.
To forestall the re-implementation of the demolition order, private
respondents filed on September 29, 1998 a petition 10 for annulment of
contracts with prayer for a temporary restraining order, docketed as COSLAP
Case No. 98-253, in the Commission on the Settlement of Land Problems
(COSLAP) against petitioner, HIGC, PMS, the City Engineer's Office, the City
Mayor, as well as the Register of Deeds of Baguio City. On the very same
day, public respondent COSLAP issued the contested order requiring the
parties to maintain the status quo.
Without filing a motion for reconsideration from the aforesaid status quo
order, petitioner filed the instant petition questioning the jurisdiction of the
COSLAP.
The issues we are called upon to resolve are:
1
IS THE COMMISSION ON THE SETTLEMENT OF LAND PROBLEMS [COSLAP]
CREATED UNDER EXECUTIVE ORDER NO. 561 BY THE OFFICE OF THE
PHILIPPINES [sic] EMPOWERED TO HEAR AND TRY A PETITION FOR
ANNULMENT OF CONTRACTS WITH PRAYER FOR A TEMPORARY RESTRAINING
ORDER AND THUS, ARROGATE UNTO ITSELF THE POWER TO ISSUE STATUS
QUO ORDER AND CONDUCT A HEARING THEREOF [sic]?

2
ASSUMING THAT THE COMMISSION ON THE SETTLEMENT OF LAND
PROBLEMS [COSLAP] HAS JURISDICTION ON THE MATTER, IS IT EXEMPTED
FROM OBSERVING A CLEAR CASE OF FORUM SHOPPING ON THE PART OF THE
PRIVATE RESPONDENTS?
To the extent that the instant case is denominated as one for declaratory
relief, we initially clarify that we do not possess original jurisdiction to
entertain such petitions.11 Such is vested in the Regional Trial
Courts.12Accordingly, we shall limit our review to ascertaining if the
proceedings before public respondent COSLAP are without or in excess, of its
jurisdiction. In this wise, a recounting of the history of the COSLAP may
provide useful insights into the extent of its powers and functions.
The COSLAP was created by virtue of Executive Order No. 561 dated
September 21, 1979. Its forerunner was the Presidential Action Committee
on Land Problems (PACLAP) founded on July 31, 1970 by virtue of Executive
Order No. 251. As originally conceived, the committee was tasked "to
expedite and coordinate the investigation and resolution of land disputes,
streamline and shorten administrative procedures, adopt bold and decisive
measures to solve land problems, and/or recommend other solutions." It was
given the power to issue subpoenasduces tecum and ad testificandum and
to call upon any department, office, agency or instrumentality of the
government, including government owned or controlled corporations and
local government units, for assistance in the performance of its functions. At
the time, the PACLAP did not exercise quasi-judicial functions.
On March 19, 1971, Executive Order No. 305 was issued reconstituting the
PACLAP.13 The committee was given exclusive jurisdiction over all cases
involving public lands and other lands of the public domain and accordingly
was tasked:
1. To investigate, coordinate, and resolve expeditiously land disputes,
streamline administrative procedures, and in general, to adopt bold and
decisive measures to solve problems involving public lands and lands of the
public domain;
2. To coordinate and integrate the activities of all government agencies
having to do with public lands or lands of the public domain;
3. To study and review present policies as embodied in land laws and
administrative rules and regulations, in relation to the needs for land of the
agro-industrial sector and small farmers, with the end in view to evolving
and recommending new laws and policies and establishing priorities in the
grant of public land, and the simplification of processing of land applications
in order to relieve the small man from the complexities of existing laws,
rules and regulations;
4. To evolve and implement a system for the speedy investigation and
resolution of land disputes;
5. To receive all complaints of settlers and small farmers, involving public
lands or other lands of the public domain;
6. To look into the conflicts between Christians and non-Christians, between
corporations and small settlers and farmers; cause the speedy settlement of
such conflicts in accordance with priorities or policies established by the
Committee; and
7. To perform such other functions as may be assigned to it by the President.
Thereafter, the PACLAP was reorganized pursuant to Presidential Decree No.

832 dated November 27, 1975.14Its jurisdiction was revised thus:


xxx
xxx
xxx
2. Refer for immediate action any land problem or dispute brought to the
attention of the PACLAP, to any member agency having jurisdiction thereof:
Provided, that when the Executive Committee decides to act on a case, its
resolution, order or decision thereon, shall have the force and effect of a
regular administrative resolution, order or decision, and shall be binding
upon the parties therein involved and upon the member agency having
jurisdiction thereof;
xxx
xxx
xxx
Notably, the said Presidential Decree No. 832 did not contain any provision
for judicial review of the resolutions, orders or decisions of the PACLAP.
On September 21, 1979, the PACLAP was abolished and its functions
transferred to the present Commission on the Settlement of Land Problems
by virtue of Executive Order No. 561. This reorganization, effected in line
with Presidential Decree No. 1416, brought the COSLAP directly under the
Office of the President.15 It was only at this time that a provision for judicial
review was made from resolutions, orders or decisions of the said agency, as
embodied in section 3(2) thereof, to wit:
Powers and functions. The Commission shall have the following powers
and functions:
1. Coordinate the activities, particularly the investigation work, of the
various government offices and agencies involved in the settlement of land
problems or disputes, and streamline administrative procedures to relieve
small settlers and landholders and members of cultural minorities of the
expense and time-consuming delay attendant to the solution of such
problems or disputes;
2. Refer and follow-up for immediate action by the agency having
appropriate jurisdiction any land problem or dispute referred to the
Commission: Provided, that the Commission may, in the following cases,
assume jurisdiction and resolve land problems or disputes which are critical
and explosive in nature considering, for instance, the large number of the
parties involved, the presence or emergence of social tension or unrest, or
other similar critical situations requiring immediate action:
(a) Between occupants/squatters and pasture lease agreement holders or
timber concessionaires;
(b) Between occupants/squatters and government reservation grantees;
(c) Between occupants/squatters and public land claimants or applicants;
(d) Petitions for classification, release and/or subdivision of lands of the
public domain; and
(e) Other similar land problems of grave urgency and magnitude.
The Commission shall promulgate such rules of procedure as will insure
expeditious resolution and action on the above cases. The resolution, order
or decision of the Commission on any of the foregoing cases shall have the
force and effect of a regular administrative resolution, order or decision and
shall be binding upon the parties therein and upon the agency having
jurisdiction over the same. Said resolution, order or decision shall become
final and executory within thirty (30) days from its promulgation and shall be
appealable by certiorari only to the Supreme Court.
xxx
xxx
xxx
In the performance of its functions and discharge of its duties, the

Commission is authorized, through the Commission, to issue subpoena and


subpoena duces tecum for the appearance of witnesses and the production
of records, books and documents before it. It may also call upon any
ministry, office, agency or instrumentality of the National Government,
including government-owned or controlled corporations, and local
governments for assistance. This authority is likewise, conferred upon the
provincial offices as may be established pursuant to Section 5 of this
Executive Order.
In Baaga v. Commission on the Settlement of Land Problems,16 we
characterized the COSLAP's jurisdiction as being general in nature, as
follows:
Petitioners also contend in their petition that the COSLAP itself has no
jurisdiction to resolve the protest and counter-protest of the parties because
its power to resolve land problems is confined to those cases "which are
critical and explosive in nature."
This contention is devoid of merit. It is true that Executive Order No. 561
provides that the COSLAP may take cognizance of cases which are "critical
and explosive in nature considering, for instance, the large number of
parties involved, the presence or emergence of social tension or unrest, or
other similar critical situations requiring immediate action." However, the
use of the word "may" does not mean that the COSLAP's jurisdiction is
merely confined to the above mentioned cases. The provisions of the said
Executive Order are clear that the COSLAP was created as a means of
providing a more effective mechanism for the expeditious settlement of land
problems in general, which are frequently the source of conflicts among
settlers, landowners and cultural minorities. Besides, the COSLAP merely
took over from the abolished PACLAP whose functions, including its
jurisdiction, power and authority to act on, decide and resolve land disputes
(Sec. 2, P.D. No. 832) were all assumed by it. The said Executive Order No.
561 containing said provision, being enacted only on September 21, 1979,
cannot affect the exercise of jurisdiction of the PACLAP Provincial Committee
of Koronadal on September 29, 1978. Neither can it affect the decision of the
COSLAP which merely affirmed said exercise of jurisdiction.
Given the facts of the case, it is our view that the COSLAP is not justified in
assuming jurisdiction over the controversy. As matters stand, it is not the
judiciary's place to question the wisdom behind a law; 17 our task is to
interpret the law. We feel compelled to observe, though, that by reason of
the ambiguous terminology employed in Executive Order No. 561, the power
to assume jurisdiction granted to the COSLAP provides an ideal breeding
ground for forum shopping, as we shall explain subsequently. Suffice it to
state at this stage that the COSLAP may not assume jurisdiction over cases
which are already pending in the regular courts.
The reason is simple. Section 3(2) of Executive Order 561 speaks of any
resolution, order or decision of the COSLAP as having the "force and effect of
a regular administrative resolution, order or decision." The qualification
places an unmistakable emphasis on the administrative character of the
COSLAP's determination, amplified by the statement that such resolutions,
orders or decisions "shall be binding upon the parties therein and upon the
agency having jurisdiction over the same." An agency is defined by statute
as "any of the various units of the Government, including a department,
bureau, office, instrumentality, or government-owned or controlled

corporation, or a local government or a distinct unit therein." 18 A


department, on the other hand, "refers to anexecutive department created
by law."19 Whereas, a bureau is understood to refer "to any principal
subdivision of any department."20 In turn, an office "refers, within the
framework of governmental organization, to any major functional unit of a
department or bureau including regional offices. It may also refer to any
position held or occupied by individual persons, whose functions are defined
by law or regulation."21 An instrumentality is deemed to refer "to any agency
of the National Government, not integrated within the department
framework, vested with special functions or jurisdiction by law, endowed
with some if not all corporate powers, administering special funds and
enjoying operational autonomy, usually through a charter. This term includes
regulatory agencies, chartered institutions and government-owned or
controlled corporations."22 Applying the principle in statutory construction of
ejusdem generis, i.e., "where general words follow an enumeration or
persons or things, by words of a particular and specific meaning, such
general words are not to be construed in their widest extent, but are to be
held as applying only to persons or things of the same kind or class as those
specifically mentioned,"23 section 3(2) of Executive Order 561 patently
indicates that the COSLAP's dispositions are binding on administrative
orexecutive agencies. The history of the COSLAP itself bolsters this view.
Prior enactments enumerated its member agencies among which it was to
exercise a coordinating function.
The COSLAP discharges quasi-judicial functions:
"Quasi-judicial function" is a term which applies to the actions, discretion,
etc. of public administrative officers or bodies, who are required to
investigate facts, or ascertain the existence of facts, hold hearings, and
draw conclusions from them, as a basis for their official action and to
exercise discretion of a judicial nature."24
However, it does not depart from its basic nature as an administrative
agency, albeit one that exercises quasi-judicial functions. Still, administrative
agencies are not considered courts; they are neither part of the judicial
system nor are they deemed judicial tribunals. 25 The doctrine of separation
of powers observed in our system of government reposes the three (3) great
powers into its three (3) branches the legislative, the executive, and the
judiciary each department being co-equal and coordinate, and supreme in
its own sphere. Accordingly, the executive department may not, by its own
fiat, impose the judgment of one of its own agencies, upon the judiciary.
Indeed, under the expanded jurisdiction of the Supreme Court, it is
empowered "to determine whether or not there has been grave abuse of
discretion amounting to lack of or excess of jurisdiction on the part of any
branch or instrumentality of the Government."26
There is an equally persuasive reason to grant the petition. As an additional
ground for the annulment of the assailed status quo order of COSLAP,
UNITED accuses private respondents of engaging in forum shopping. Forum
shopping exists when a party "repetitively avail[s] of several judicial
remedies in different courts, simultaneously or successively, all substantially
founded on the same transactions and the same essential facts and
circumstances, and all raising substantially the same issues either pending
in, or already resolved adversely by some other court." 27 In this connection,
Supreme Court Administrative Circular No. 04-94 dated February 8, 1994

provides:
Revised Circular No. 28-91, dated February 8, 1994, applies to and governs
the filing of petitions in the Supreme Court and the Court of Appeals and is
intended to prevent the multiple filing of petitions or complaints involving
the same issues in other tribunals or agencies as a form of forum shopping.
Complementary thereto and for the same purpose, the following
requirements, in addition to those in pertinent provisions of the Rules of
Court and existing circulars, shall be strictly complied with in the filing of
complaints, petitions, applications or other initiatory pleadings in all courts
and agencies other than the Supreme Court and the Court of Appeals and
shall be subject to the sanctions provided hereunder.
1. The plaintiff, petitioner, applicant or principal part seeking relief in the
complaint, petition, application or other initiatory pleading shall certify under
oath in such original pleading, or in a sworn certification annexed thereto
and simultaneously filed therewith, to the truth of the following facts and
undertakings: (a) he has not theretofore commenced any other action or
proceeding involving the same issues in the Supreme Court, the Court of
Appeals, or any other tribunal or agency; (b) to the best of his knowledge, no
such action or proceedings is pending in the Supreme Court, the Court of
Appeals, or any other tribunal or agency; (c) if there is any such action or
proceeding which is either pending or may have been terminated, he must
state the status thereof; and (d) if he should thereafter learn that a similar
action or proceeding has been filed or is pending before the Supreme Court,
the Court of Appeals or any other tribunal or agency, he undertakes to
report that fact within five (5) days therefrom to the court or agency wherein
the original pleading and sworn certification contemplated herein have been
filed.
The complaint and other initiatory pleadings referred to and subject of this
Circular are the original civil complaint, counterclaim, cross-claim, third
(fourth, etc.) party complaint, or complaint-in-intervention, petition, or
application wherein a party asserts his claim for relief.
2. Any violation of this Circular shall be a cause for the dismissal of the
complaint, petition, application or other initiatory pleading, upon motion and
after hearing. However, any clearly willful and deliberate forum shopping by
any other party and his counsel through the filing of multiple complaints or
other initiatory pleadings to obtain favorable action shall be a ground for the
summary dismissal thereof and shall constitute contempt of court.
Furthermore, the submission of a false certification or non-compliance with
the undertakings therein, as provided in Paragraph 1 hereof, shall constitute
indirect contempt of court, without prejudice to disciplinary proceedings
against the counsel and the filing of a criminal action against the part.
[emphasis supplied]
xxx
xxx
xxx
The said Administrative Circular's use of the auxiliary verb "shall" imports
"an imperative obligation . . . inconsistent with the idea of discretion." 28
Hence, compliance therewith is mandatory.29
It bears stressing that there is a material distinction between the
requirement of submission of the certification against forum shopping from
the undertakings stated therein. Accordingly,
x x x [f]ailure to comply with this requirement cannot be excused by the fact
that plaintiff is not guilty of forum shopping. The Court of Appeals, therefore,

erred in concluding that Administrative Circular No. 04-94 did not apply to
private respondent's case merely because her complaint was not based on
petitioner's cause of action. The Circular applies to any complaint, petition,
application, or other initiatory pleading, regardless of whether the party
filing it has actually committed forum shopping. Every party filing a
complaint or any other initiatory pleading is required to swear under oath
that he has not committed nor will he commit forum shopping. Otherwise,
we would have an absurd situation where the parties themselves would be
the judge of whether their actions constitute a violation of said Circular, and
compliance therewith would depend on their belief that they might or might
not have violated the requirement. Such interpretation of the requirement
would defeat the very purpose of Circular 04-94.
Indeed, compliance with the certification against forum shopping is separate
from, and independent of, the avoidance of forum shopping itself. Thus,
there is a difference in the treatment in terms of imposable sanctions
between failure to comply with the certification requirement and violation of
the prohibition against forum shopping. The former is merely a cause for the
dismissal, without prejudice, of the complaint or initiatory pleading, while
the latter is a ground for summary dismissal thereof and constitutes direct
contempt.30
A scrutiny of the pleadings filed before the trial courts and the COSLAP
sufficiently establishes private respondents' propensity for forum shopping.
We lay the premise that the certification against forum shopping must be
executed by the plaintiff or principal party, and not by his counsel. 31 Hence,
one can deduce that the certification is a peculiar personal representation
on the part of the principal party, an assurance given to the court or other
tribunal that there are no other pending cases involving basically the same
parties, issues and causes of action. In the case at bar, private respondents'
litany of omissions range from failing to submit the required certification
against forum shopping to filing a false certification, and then to forum
shopping itself. First, the petition filed before the COSLAP conspicuously
lacked a certification against forum shopping. Second, it does not appear
from the record that the ASSOCIATION informed Branch 4 of the Regional
Trial Court of Baguio City before which Civil Case No. 3316-R was pending,
that another action, Civil Case No. 3382-R, was filed before Branch 61 of the
same court. Another group of homeless residents of Dominican Hill, the
LAND REFORM BENEFICIARIES ASSOCIATION, INC. initiated the latter case.
The aforesaid plaintiff, however, does not hesitate to admit that it filed the
second case in representation of private respondent, as one of its affiliates.
In the same manner, the certification against forum shopping accompanying
the complaint in Civil Case No. 3382-R does not mention the pendency of
Civil Case No. 3316-R. In fact, the opposite assurance was given, that there
was no action pending before any other tribunal. Another transgression is
that both branches of the trial court do not appear to have been notified of
the filing of the subject COSLAP Case No. 98-253.
It is evident from the foregoing facts that private respondents, in filing
multiple petitions, have mocked our attempts to eradicate forum shopping
and have thereby upset the orderly administration of justice. They sought
recourse from three (3) different tribunals in order to obtain the writ of
injunction they so desperately desired. "The willful attempt by private
respondents to obtain a preliminary injunction in another court after it failed

to acquire the same from the original court constitutes grave abuse of the
judicial process."32
In this connection, we expounded on forum shopping in Viva Productions,
Inc. v. Court of Appeals33 that:
Private respondent's intention to engage in forum shopping becomes
manifest with undoubted clarity upon the following considerations. Notably,
if not only to ensure the issuance of an injunctive relief, the significance of
the action for damages before the Makati court would be nil. What damages
against private respondent would there be to speak about if the Paraaque
court already enjoins the performance of the very same act complained of in
the Makati court? Evidently, the action for damages is premature if not for
the preliminary injunctive relief sought. Thus, we find grave abuse of
discretion on the part of the Makati court, being a mere co-equal of the
Paraaque court, in not giving due deference to the latter before which the
issue of the alleged violation of the sub-judice rule had already been raised
and submitted. In such instance, the Makati court, if it was wary of
dismissing the action outrightly under Administrative Circular No. 04-94,
should have, at least, ordered the consolidation of its case with that of the
Paraaque court, which had first acquired jurisdiction over the related case x
x x, or it should have suspended the proceedings until the Paraaque court
may have ruled on the issue x x x.
xxx
xxx
xxx
Thus, while we might admit that the causes of action before the Makati
court and the Paraaque court are distinct, and that private respondent
cannot seek civil indemnity in the contempt proceedings, the same being in
the nature of criminal contempt, we nonetheless cannot ignore private
respondent's intention of seeking exactly identical reliefs when it sought the
preliminary relief of injunction in the Makati court. As earlier indicated, had
private respondent been completely in good faith there would have been no
hindrance in filing the action for damages with the regional trial court of
Paraaque and having it consolidated with the contempt proceedings before
Branch 274, so that the same issue on the alleged violation of the sub judice
rule will not have to be passed upon twice, and there would be no possibility
of having two courts of concurrent jurisdiction making two conflicting
resolutions.
Yet from another angle, it may be said that when the Paraaque court
acquired jurisdiction over the said issue, it excluded all other courts of
concurrent jurisdiction from acquiring jurisdiction over the same. To hold
otherwise would be to risk instances where courts of concurrent jurisdiction
might have conflicting orders. This will create havoc and result in an
extremely disordered administration of justice. Therefore, even on the
assumption that the Makati court may acquire jurisdiction over the subject
matter of the action for damages, without prejudice to the application of
Administrative Circular No. 04-94, it cannot nonetheless acquire jurisdiction
over the issue of whether or not petitioner has violated the sub judice rule.
At best, theMakati court may hear the case only with respect to the alleged
injury suffered by private respondent afterthe Paraaque court shall have
ruled favorably on the said issue.
We also noted several indications of private respondents' bad faith. The
complaint filed in Civil Case No. 3316-R was prepared by the ASSOCIATION's
counsel, Atty. Conrado Villamor Catral, Jr. whereas the complaint filed in Civil

Case No. 3382-R was signed by a different lawyer, Atty. Thomas S. Tayengco.
With regard to the petition filed with the COSLAP, the same was signed by
private respondents individually. As to the latter case, we noted that the
petition itself could not have been prepared by ordinary laymen, inasmuch
as it exhibits familiarity with statutory provisions and legal concepts, and is
written in a lawyerly style.
In the same manner, the plaintiffs in the three (3) different cases were made
to appear as dissimilar: in Civil Case No. 3316-R, the plaintiff was
ASSOCIATION of which private respondent Mario Padilan was head, while the
plaintiff in Civil Case No. 3382-R was the BENEFICIARIES. Before the COSLAP,
private respondents themselves were the petitioners, led again by Padilan. 34
Private respondents also attempted to vary their causes of action: in Civil
Case No. 3382-R and COSLAP Case No. 98-253, they seek the annulment of
the Memorandum of Agreement executed by and among UNITED, the PMS,
and HIGC as well as the transfer certificates of title accordingly issued to
petitioner. All three (3) cases sought to enjoin the demolition of private
respondents' houses.
It has been held that forum shopping is evident where the elements of litis
pendentia or res judicata are present. Private respondents' subterfuge
comes to naught, for the effects of res judicata or litis pendentia may not be
avoided by varying the designation of the parties or changing the form of
the action or adopting a different mode of presenting one's case. 35
In view of the foregoing, all that remains to be done is the imposition of the
proper penalty. A party's willful and deliberate act of forum shopping is
punishable by summary dismissal of the actions filed. 36 The summary
dismissal of both COSLAP Case No. 98-253 and Civil Case No. 3316-R is
therefore warranted under the premises. We shall refrain from making any
pronouncement on Civil Case No. 3382-R, the dismissal of which was
elevated on appeal to the Court of Appeals where it is still pending.
WHEREFORE, the petition is hereby GRANTED. The status quo order dated
September 29, 1998 issued in COSLAP Case No. 98-253 by respondent
Commission On The Settlement Of Land Problems (COSLAP) is hereby SET
ASIDE; and the petition filed in COSLAP Case No. 98-253 and the complaint
in Civil Case No. 3316-R are hereby DISMISSED for lack of jurisdiction and
forum shopping. Costs against private respondents.
SO ORDERED.
G.R. No. 97149 March 31, 1992
FIDENCIO Y. BEJA, SR., petitioner,
vs.
COURT OF APPEALS, HONORABLE REINERIO O. REYES, in his
capacity as Secretary of the Department of Transportation and
Communications; COMMODORE ROGELIO A. DAYAN, in his capacity
as General Manager of the Philippine Ports Authority; DEPARTMENT
OF TRANSPORTATION AND COMMUNICATIONS, ADMINISTRATIVE
ACTION BOARD; and JUSTICE ONOFRE A. VILLALUZ, in his capacity
as Chairman of the Administrative Action Board, DOTC, respondents.
ROMERO, J.:
The instant petition for certiorari questions the jurisdiction of the Secretary
of the Department of Transportation and Communications (DOTC) and/or its
Administrative Action Board (AAB) over administrative cases involving

personnel below the rank of Assistant General Manager of the Philippine


Ports Authority (PPA), an agency attached to the said Department.
Petitioner Fidencio Y. Beja, Sr. 1 was first employed by the PPA as arrastre
supervisor in 1975. He became Assistant Port Operations Officer in 1976 and
Port Operations Officer in 1977. In February 1988, as a result of the
reorganization of the PPA, he was appointed Terminal Supervisor.
On October 21, 1988, the PPA General Manager, Rogelio A. Dayan, filed
Administrative Case No. 11-04-88 against petitioner Beja and Hernando G.
Villaluz for grave dishonesty, grave misconduct, willful violation of
reasonable office rules and regulations and conduct prejudicial to the best
interest of the service. Beja and Villaluz allegedly erroneously assessed
storage fees resulting in the loss of P38,150.77 on the part of the PPA.
Consequently, they were preventively suspended for the charges. After a
preliminary investigation conducted by the district attorney for Region X,
Administrative Case No. 11-04-88 was "considered closed for lack of merit."
On December 13, 1988, another charge sheet, docketed as Administrative
Case No. 12-01-88, was filed against Beja by the PPA General Manager also
for dishonesty, grave misconduct, violation of reasonable office rules and
regulations, conduct prejudicial to the best interest of the service and for
being notoriously undesirable. The charge consisted of six (6) different
specifications of administrative offenses including fraud against the PPA in
the total amount of P218,000.00. Beja was also placed under preventive
suspension pursuant to Sec. 41 of P.D. No. 807.
The case was redocketed as Administrative Case No. PPA-AAB-1-049-89 and
thereafter, the PPA general manager indorsed it to the AAB for "appropriate
action." At the scheduled hearing, Beja asked for continuance on the ground
that he needed time to study the charges against him. The AAB proceeded
to hear the case and gave Beja an opportunity to present evidence.
However, on February 20, 1989, Beja filed a petition for certiorari with
preliminary injunction before the Regional Trial Court of Misamis Oriental. 2
Two days later, he filed with the AAB a manifestation and motion to suspend
the hearing of Administrative Case No. PPA-AAB-1-049-89 on account of the
pendency of the certiorari proceeding before the court. AAB denied the
motion and continued with the hearing of the administrative case.
Thereafter, Beja moved for the dismissal of the certiorari case below and
proceeded to file before this Court a petition for certiorari with preliminary
injunction and/or temporary restraining order. The case was docketed as
G.R. No. 87352 captioned "Fidencio Y. Beja v. Hon. Reinerio 0. Reyes, etc., et
al." In the en banc resolution of March 30, 1989, this Court referred the case
to the Court of Appeals for "appropriate action." 3 G.R. No. 87352 was
docketed in the Court of Appeals as CA-G.R. SP No. 17270.
Meanwhile, a decision was rendered by the AAB in Administrative Case No.
PPA-AAB-049-89. Its dispositive portion reads:
WHEREFORE, judgment is hereby rendered, adjudging the following, namely:
a) That respondents Geronimo Beja, Jr. and Hernando Villaluz are exonerated
from the charge against them;
b) That respondent Fidencio Y. Beja be dismissed from the service;
c) That his leave credits and retirement benefits are declared forfeited;
d) That he be disqualified from re-employment in the government service;
e) That his eligibility is recommended to be cancelled.
Pasig, Metro Manila, February 28, 1989.

On December 10, 1990, after appropriate proceedings, the Court of Appeals


also rendered a decision 4 in CA-G.R. SP No. 17270 dismissing the petition for
certiorari for lack of merit. Hence, Beja elevated the case back to this Court
through an "appeal by certiorari with preliminary injunction and/or
temporary restraining order."
We find the pleadings filed in this case to be sufficient bases for arriving at a
decision and hence, the filing of memoranda has been dispensed with.
In his petition, Beja assails the Court of Appeals for having "decided
questions of substance in a way probably not in accord with law or with the
applicable decisions" of this Court. 5 Specifically, Beja contends that the
Court of Appeals failed to declare that: (a) he was denied due process; (b)
the PPA general manager has no power to issue a preventive suspension
order without the necessary approval of the PPA board of directors; (c) the
PPA general manager has no power to refer the administrative case filed
against him to the DOTC-AAB, and (d) the DOTC Secretary, the Chairman of
the DOTC-AAB and DOTC-AAB itself as an adjudicatory body, have no
jurisdiction to try the administrative case against him. Simply put, Beja
challenges the legality of the preventive suspension and the jurisdiction of
the DOTC Secretary and/or the AAB to initiate and hear administrative cases
against PPA personnel below the rank of Assistant General Manager.
Petitioner anchors his contention that the PPA general manager cannot
subject him to a preventive suspension on the following provision of Sec. 8,
Art. V of Presidential Decree No. 857 reorganizing the PPA:
(d) the General Manager shall, subject to the approval of the Board, appoint
and remove personnel below the rank of Assistant General Manager.
(Emphasis supplied.)
Petitioner contends that under this provision, the PPA Board of Directors and
not the PPA General Manager is the "proper disciplining authority. 6
As correctly observed by the Solicitor General, the petitioner erroneously
equates "preventive suspension" as a remedial measure with "suspension"
as a penalty for administrative dereliction. The imposition of preventive
suspension on a government employee charged with an administrative
offense is subject to the following provision of the Civil Service Law, P.D. No.
807:
Sec. 41. Preventive Suspension. The proper disciplining authority may
preventively suspend any subordinate officer or employee under his
authority pending an investigation, if the charge against such officer or
employee involves dishonesty, oppression or grave misconduct, or neglect in
the performance of duty, or if there are reasons to believe that the
respondent is guilty of charges which would warrant his removal from the
service.
Imposed during the pendency of an administrative investigation, preventive
suspension is not a penalty in itself. It is merely a measure of precaution so
that the employee who is charged may be separated, for obvious reasons,
from the scene of his alleged misfeasance while the same is being
investigated. 7 Thus, preventive suspension is distinct from the
administrative penalty of removal from office such as the one mentioned in
Sec. 8(d) of P.D. No 857. While the former may be imposed on a respondent
during the investigation of the charges against him, the latter is the penalty
which may only be meted upon him at the termination of the investigation

or the final disposition of the case.


The PPA general manager is the disciplining authority who may, by himself
and without the approval of the PPA Board of Directors, subject a respondent
in an administrative case to preventive suspension. His disciplinary powers
are sanctioned, not only by Sec. 8 of P.D. No. 857 aforequoted, but also by
Sec. 37 of P.D. No. 807 granting heads of agencies the "jurisdiction to
investigate and decide matters involving disciplinary actions against officers
and employees" in the PPA.
Parenthetically, the period of preventive suspension is limited. It may be
lifted even if the disciplining authority has not finally decided the
administrative case provided the ninety-day period from the effectivity of
the preventive suspension has been exhausted. The employee concerned
may then be reinstated. 8 However, the said ninety-day period may be
interrupted. Section 42 of P.D. No. 807 also mandates that any fault,
negligence or petition of a suspended employee may not be considered in
the computation of the said period. Thus, when a suspended employee
obtains from a court of justice a restraining order or a preliminary injunction
inhibiting proceedings in an administrative case, the lifespan of such court
order should be excluded in the reckoning of the permissible period of the
preventive suspension. 9
With respect to the issue of whether or not the DOTC Secretary and/or the
AAB may initiate and hear administrative cases against PPA Personnel below
the rank of Assistant General Manager, the Court qualifiedlyrules in favor of
petitioner.
The PPA was created through P.D. No. 505 dated July 11, 1974. Under that
Law, the corporate powers of the PPA were vested in a governing Board of
Directors known as the Philippine Port Authority Council. Sec. 5(i) of the
same decree gave the Council the power "to appoint, discipline and remove,
and determine the composition of the technical staff of the Authority and
other personnel."
On December 23, 1975, P.D. No. 505 was substituted by P.D. No. 857, See.
4(a) thereof created the Philippine Ports Authority which would be
"attached" to the then Department of Public Works, Transportation and
Communication. When Executive Order No. 125 dated January 30, 1987
reorganizing the Ministry of Transportation and Communications was issued,
the PPA retained its "attached" status. 10 Even Executive Order No. 292 or
the Administrative Code of 1987 classified the PPA as an agency "attached"
to the Department of Transportation and Communications (DOTC). Sec. 24 of
Book IV, Title XV, Chapter 6 of the same Code provides that the agencies
attached to the DOTC "shall continue to operate and function in accordance
with the respective charters or laws creating them, except when they
conflict with this Code."
Attachment of an agency to a Department is one of the three administrative
relationships mentioned in Book IV, Chapter 7 of the Administrative Code of
1987, the other two being supervision and control and administrative
supervision. "Attachment" is defined in Sec. 38 thereof as follows:
(3) Attachment. (a) This refers to the lateral relationship between the
Department or its equivalent and the attached agency or corporation for
purposes of policy and program coordination. The coordination shall be
accomplished by having the department represented in the governing board

of the attached agency or corporation, either as chairman or as a member,


with or without voting rights, if this is permitted by the charter; having the
attached corporation or agency comply with a system of periodic reporting
which shall reflect the progress of programs and projects; and having the
department or its equivalent provide general policies through its
representative in the board, which shall serve as the framework for the
internal policies of the attached corporation or agency;
(b) Matters of day-to-day administration or all those pertaining to internal
operations shall he left to the discretion or judgment of the executive officer
of the agency or corporation. In the event that the Secretary and the head of
the board or the attached agency or corporation strongly disagree on the
interpretation and application of policies, and the Secretary is unable to
resolve the disagreement, he shall bring the matter to the President for
resolution and direction;
(c) Government-owned or controlled corporations attached to a department
shall submit to the Secretary concerned their audited financial statements
within sixty (60) days after the close of the fiscal year; and
(d) Pending submission of the required financial statements, the corporation
shall continue to operate on the basis of the preceding year's budget until
the financial statements shall have been submitted. Should any
government-owned or controlled corporation incur an operation deficit at the
close of its fiscal year, it shall be subject to administrative supervision of the
department; and the corporation's operating and capital budget shall be
subject to the department's examination, review, modification and approval.
(emphasis supplied.)
An attached agency has a larger measure of independence from the
Department to which it is attached than one which is under departmental
supervision and control or administrative supervision. This is borne out by
the "lateral relationship" between the Department and the attached agency.
The attachment is merely for "policy and program coordination." With
respect to administrative matters, the independence of an attached agency
from Departmental control and supervision is further reinforced by the fact
that even an agency under a Department's administrative supervision is free
from Departmental interference with respect to appointments and other
personnel actions "in accordance with the decentralization of personnel
functions" under the Administrative Code of 1987. 11 Moreover, the
Administrative Code explicitly provides that Chapter 8 of Book IV on
supervision and control shall not apply to chartered institutions attached to
a Department. 12
Hence, the inescapable conclusion is that with respect to the management
of personnel, an attached agency is, to a certain extent, free from
Departmental interference and control. This is more explicitly shown by P.D.
No. 857 which provides:
Sec. 8. Management and Staff. a) The President shall, upon the
recommendation of the Board, appoint the General Manager and the
Assistant General Managers.
(b) All other officials and employees of the Authority shall be selected and
appointed on the basis of merit and fitness based on a comprehensive and
progressive merit system to be established by the Authority immediately
upon its organization and consistent with Civil Service rules and

regulations.The recruitment, transfer, promotion, and dismissal of all


personnel of the Authority, including temporary workers, shall be governed
by such merit system.
(c) The General Manager shall, subject to the approval of the Board,
determine the staffing pattern and the number of personnel of the Authority,
define their duties and responsibilities, and fix their salaries and
emoluments. For professional and technical positions, the General Manager
shall recommend salaries and emoluments that are comparable to those of
similar positions in other government-owned corporations, the provisions of
existing rules and regulations on wage and position classification
notwithstanding.
(d) The General Manager shall, subject to the approval by the Board, appoint
and remove personnel below the rank of Assistant General Manager.
xxx xxx xxx
(emphasis supplied.)
Although the foregoing section does not expressly provide for a mechanism
for an administrative investigation of personnel, by vesting the power to
remove erring employees on the General Manager, with the approval of the
PPA Board of Directors, the law impliedly grants said officials the power to
investigate its personnel below the rank of Assistant Manager who may be
charged with an administrative offense. During such investigation, the PPA
General Manager, as earlier stated, may subject the employee concerned to
preventive suspension. The investigation should be conducted in accordance
with the procedure set out in Sec. 38 of P.D. No. 807. 13 Only after gathering
sufficient facts may the PPA General Manager impose the proper penalty in
accordance with law. It is the latter action which requires the approval of the
PPA Board of Directors. 14
From an adverse decision of the PPA General Manager and the Board of
Directors, the employee concerned mayelevate the matter to the
Department Head or Secretary. Otherwise, he may appeal directly to the
Civil Service Commission. The permissive recourse to the Department
Secretary is sanctioned by the Civil Service Law (P.D. No. 807) under the
following provisions:
Sec. 37. Disciplinary Jurisdiction. (a) The Commission shall decide upon
appeal all administrative disciplinary cases involving the imposition of a
penalty of suspension for more than thirty days, or fine in an amount
exceeding thirty days salary, demotion in rank or salary or transfer, removal
or dismissal from office. A complaint may be filed directly with the
Commission by a private citizen against a government official or employee
in which case it may hear and decide the case or it may deputize any
department or agency or official or group of officials to conduct the
investigation. The results of the investigation shall be submitted to the
Commission with recommendation as to the penalty to be imposed or other
action to be taken.
(b) The heads of departments, agencies and instrumentalities, provinces,
cities and municipalities shall have jurisdiction to investigate and decide
matters involving disciplinary action against officers and employees under
their jurisdiction. The decisions shall be final in case the penalty imposed is
suspension for not more than thirty days or fine in an amount not exceeding
thirty days' salary. In case the decision rendered by a bureau or office head

is appealable to the Commission, the same may be initially appealed to the


department and finally to the Commission and pending appeal, the same
shall be executory except when the penalty is removal, in which case the
same shall be executory only after confirmation by the department head.
xxx xxx xxx
(Emphasis supplied.)
It is, therefore, clear that the transmittal of the complaint by the PPA General
Manager to the AAB was premature. The PPA General Manager should have
first conducted an investigation, made the proper recommendation for the
imposable penalty and sought its approval by the PPA Board of Directors. It
was discretionary on the part of the herein petitioner to elevate the case to
the then DOTC Secretary Reyes. Only then could the AAB take jurisdiction of
the case.
The AAB, which was created during the tenure of Secretary Reyes under
Office Order No. 88-318 dated July 1, 1988, was designed to act, decide and
recommend to him "all cases of administrative malfeasance, irregularities,
grafts and acts of corruption in the Department." Composed of a Chairman
and two (2) members, the AAB came into being pursuant to Administrative
Order No. 25 issued by the President on May 25, 1987. 15 Its special nature
as a quasi-judicial administrative body notwithstanding, the AAB is not
exempt from the observance of due process in its proceedings. 16 We are not
satisfied that it did so in this case the respondents protestation that
petitioner waived his right to be heard notwithstanding. It should be
observed that petitioner was precisely questioning the AAB's jurisdiction
when it sought judicial recourse.
WHEREFORE, the decision of the Court of Appeals is AFFIRMED insofar as it
upholds the power of the PPA General Manager to subject petitioner to
preventive suspension and REVERSED insofar as it validates the jurisdiction
of the DOTC and/or the AAB to act on Administrative Case No. PPA-AAB-1049-89 and rules that due process has been accorded the petitioner.
The AAB decision in said case is hereby declared NULL and VOID and the
case in REMANDED to the PPA whose General Manager shall conduct with
dispatch its reinvestigation.
The preventive suspension of petitioner shall continue unless after a
determination of its duration, it is found that he had served the total of
ninety (90) days in which case he shall be reinstated immediately.
SO ORDERED.
Narvasa, C.J., Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Bidin, GrioAquino, Medialdea, Regalado, Davide, Jr. and Nocon JJ., concur.
Padilla and Bellosillo, JJ., took no part.
Feliciano, J., is on leave.

"WHEREAS, Section 1(1) of Article IX-B provides that the Civil Service shall
be administered by the Civil Service Commission, . . . ";
"WHEREAS, Section 3, Article IX-B of the 1987 Philippine Constitution
provides that 'The Civil Service Commission, as the central personnel agency
of the government, is mandated to establish a career service and adopt
measures to promote morale, efficiency, integrity, responsiveness,
progressiveness and courtesy in the civil service, . . . ';
"WHEREAS, Section 12 (1), Title I, Subtitle A, Book V of the Administrative
Code of 1981 grants the Commission the power, among others, to
administer and enforce the constitutional and statutory provisions on the
merit system for all levels and ranks in the Civil Service;
"WHEREAS, Section 7, Title I, Subtitle A, Book V of the Administrative Code
of 1987 provides, among others, that 'The Career Service shall be
characterized by (1) entrance based on merit and fitness to be determined
as far as practicable by competitive examination, or based on highly
technical qualifications; (2) opportunity for advancement to higher career
positions; and (3) security of tenure;
"WHEREAS, Section 8 (c), Title I, Subtitle A, Book V of the Administrative
Code of 1987 provides that 'The third level shall cover position in the Career
Executive Service';
AIDA D. EUGENIO, Petitioner, v. CIVIL SERVICE COMMISSION,
DAVIDE, JR., HON. TEOFISTO T. GUINGONA. JR. & HON. SALVADOR
ENRIQUEZ, JR., Respondent.

"WHEREAS, the Commission recognizes the imperative need to consolidate,


integrate and unify the administration of all levels of positions in the career
service;

PUNO, J.:

"WHEREAS, the provisions of Section 17, Title I, Subtitle A, Book V of the


Administrative Code of 1987 confers on the Commission the power and
authority to effect changes in its organization as the need arises.

The power of the Civil Service Commission to abolish the Career Executive
Service Board is challenged in this petition for Certiorari and prohibition.

"WHEREAS, Section 5, Article IX-A of the Constitution provides that the Civil
Service Commission shall enjoy fiscal autonomy and the necessary
implications thereof;

DECISION

First the facts. Petitioner is the Deputy Director of the Philippine Nuclear
Research Institute. She applied for a Career Executive Service (CES)
Eligibility and a CESO rank. On August 2, 1993, she was given a CES
eligibility. nadchanroblesvirtuallawlibrary
On September 15, 1993, she Was recommended to the President for a CESO
rank by the Career Executive Service Board. 1
All was not to turn well for petitioner. On October 1, 1993, respondent Civil
Service
Commission
2
passed
Resolution
No.
93-4359,
viz:nadchanroblesvirtualawlibrary

"NOW THEREFORE, foregoing premises considered, the Civil Service


Commission hereby resolves to streamline, reorganize and effect changes in
its organizational structure. Pursuant thereto, the Career Executive Service
Board, shall now be known as the Office for Career Executive Service of the
Civil Service Commission. Accordingly, the existing personnel, budget,
properties and equipment of the Career Executive Service Board shall now
form part of the Office for Career Executive Service."
The above resolution became an impediment to the appointment of
petitioner as Civil Service Officer, Rank IV. In a letter to petitioner, dated June
7, 1994. the Honorable Antonio T. Carpio, Chief Presidential Legal Counsel.
stated:nadchanroblesvirtualawlibrary

RESOLUTION NO. 93-4359


xxx xxx xxx

"On 1 October 1993, the Civil Service Commission issued CSC Resolution No.
93-4359 which abolished the Career Executive Service Board.
nadchanroblesvirtuallawlibrary
"Several legal issues have arisen as a result of the issuance of CSC
Resolution No. 93-4359, including whether the Civil Service Commission has
authority to abolish the Career Executive Service Board. Because these
issues remain unresolved, the Office of the President has refrained from
considering appointments of career service eligibles to career executive
ranks.
xxx xxx xxx
"You may, however, bring a case before the appropriate court to settle the
legal issues arising from the issuance by the Civil Service Commission of
CSC Resolution No. 93-4359, for guidance of all concerned.
"Thank you."
Finding herself bereft of further administrative relief as the Career Executive
Service Board which recommended her CESO Bank IV has been abolished,
petitioner filed the petition at bench to annul, among others, resolution No.
93-4359.
The
petition
is
anchored
on
the
following
arguments:nadchanroblesvirtualawlibrary
"A.
IN VIOLATION OF THE CONSTITUTION, RESPONDENT COMMISSION USURPED
THE LEGISLATIVE FUNCTIONS OF CONGRESS WHEN IT ABOLISHED THE CESB,
AN OFFICE CREATED BY LAW, THROUGH THE ISSUANCE OF CSC RESOLUTION
NO. 93-4359;
"B.
ALSO IN VIOLATION OF THE CONSTITUTION, RESPONDENT CSC USURPED
THE LEGISLATIVE FUNCTIONS OF CONGRESS WHEN IT ILLEGALLY
AUTHORIZED THE TRANSFER OF PUBLIC MONEY, THROUGH THE ISSUANCE.
OF CSC RESOLUTION NO. 93-4359."
Required to file its Comment, the Solicitor General agreed with the
contentions of petitioner, Respondent Commission, however, chose to
defend
its
ground.
It
posited
the
following
position:nadchanroblesvirtualawlibrary

"II. THE RECOMMENDATION SUBMITTED TO THE PRESIDENT FOR


APPOINTMENT TO A CESO RANK OF PETITIONER EUGENIO WAS A VALID ACT
OF THE CAREER EXECUTIVE SERVICE BOARD OF THE CIVIL SERVICE
COMMISSION AND IT DOES, NOT HAVE ANY DEFECT.
"III. THE OFFICE OF THE PRESIDENT IS ESTOPPED FROM QUESTIONING THE
VALIDITY OF THE RECOMMENDATION OF THE CESB IN FAVOR OF PETITIONER
EUGENIO SINCE THE PRESIDENT HAS PREVIOUSLY APPOINTED TO CESO
RANK FOUR (4) OFFICIALS SIMILARLY SITUATED AS SAID PETITIONER.
FURTHERMORE, LACK OF MEMBERS TO CONSTITUTE A QUORUM ASSUMING
THERE WAS NO QUORUM IS NOT THE FAULT OF PUBLIC RESPONDENT CIVIL
SERVICE COMMISSION BUT OF THE PRESIDENT WHO HAS THE POWER TO
APPOINT THE OTHER MEMBERS OF THE CESB.
"IV. THE INTEGRATION OF THE CESB INTO THE, COMMISSION IS AUTHORIZED
BY LAW (Sec. 12(1), Title I, Subtitle A, Book V of the Administrative (Code of
1987). THIS PARTICULAR ISSUE HAD ALREADY BEEN SETTLED WHEN THE
HONORABLE COURT DISMISSED THE PETITION FILED BY THE HONORABLE
MEMBERS OF THE HOUSE OF REPRESENTATIVES, NAMELY: SIMEON A.
DATUMANONG, FELICIANO R. BELMONTE, JR., RENATO V. DIAZ, AND MANUEL
M. GARCIA IN G.R. NO. 114380. THE AFOREMENTIONED PETITIONERS ALSO
QUESTIONED THE INTEGRATION OF THE CESB WITH THE COMMISSION."
We find merit in the petition. 3
The controlling fact is that the Career Executive Service Board (CESB) was
created by Presidential Decree (P.D.) No 1 on September 1, 1994 4 which
adopted the Integrated Reorganization Plan. Article IV, Chapter I, Part III of
the said Plan provides:nadchanroblesvirtualawlibrary
"Article IV Career Executive Service
"1. A Career Executive Service is created to form a continuing pool of wellselected and development-oriented career administrators who shall provide
competent and faithful service.
"2. A Career Executive Service Board, hereinafter referred to in this Chapter
as the Board, is created to serve as the governing body of the Career
Executive Service. The Board shall consist of the Chairman of the Civil
Service Commission as presiding officer, the Executive Secretary and the
Commissioner of the Budget as ex-officio members and two other members
from the private sector and/or the academic community who are familiar
with the principles and methods of personnel administration.
xxx xxx xxx

"ARGUMENTS FOR PUBLIC RESPONDENT-CSC


"I. THE INSTANT PETITION STATES NO CAUSE OF ACTION, AGAINST THE
PUBLIC RESPONDENT-CSC.

"5. The Board shall promulgate rules, standards and procedures on the
selection, classification, compensation and career development of members
of the Career Executive Service. The Board shall set up the organization and

operation of the service." (Emphasis supplied)


It cannot be disputed, therefore, that as the CESB was created by law, it can
only be abolished by the legislature. This follows an unbroken stream of
rulings that the creation and abolition of public offices is primarily a
legislative function. As aptly summed up in AM JUR 2d on Public Officers and
Employees, 5 viz:nadchanroblesvirtualawlibrary
"Except for such offices as are created by the Constitution, the creation of
public offices is primarily a legislative function. In so far as the legislative
power in this respect is not restricted by constitutional provisions, it is
supreme, and the legislature may decide for itself what offices are suitable,
necessary, or convenient. When in the exigencies of government it is
necessary to create and define duties, the legislative department has the
discretion to determine whether additional offices shall be created, or
whether these duties shall be attached to and become ex-officio duties of
existing offices. An office created by the legislature is wholly within the
power of that body, and it may prescribe the mode of filling the office and
the powers and duties of the incumbent and, if it sees fit, abolish the office."
In the petition at bench, the legislature has not enacted any law authorizing
the abolition of the CESB. On the contrary, in all the General Appropriations
Acts from 1975 to 1993, the legislature has set aside funds for the operation
of CESB. Respondent Commission, however, invokes Section 17, Chapter 3,
Subtitle A, Title I Book V of the Administrative Code of 1987 as the source of
its
power
to
abolish
the
CESB.
Section
17
provides:nadchanroblesvirtualawlibrary

xxx xxx xxx


"(3) The Office of Legal Affairs shall provide the Chairman with legal advice
and assistance; render counselling, services; undertake legal studies and
researches; prepare opinions and ruling in the interpretation and application
of the Civil Service law, rules and regulations; prosecute violations of such
law, rules and regulations; and represent the Commission, before any court
or tribunal.
"(4) The Office of Planning and Management shall formulate development
plans, programs and projects; undertake research and studies on the
different aspects of public personnel management; administer management
improvement programs; and provide fiscal and budgetary services.
"(5) The Central Administrative Office shall provide the Commission with
personnel, financial, logistics and other basic support services.
"(6) The Office of Central Personnel Records shall formulate and implement
policies, standards, rules and regulations pertaining to personnel records
maintenance, security, control and disposal; provide storage and extension
services; and provide and maintain library services.
"(7) The Office of Position Classification and Compensation shall formulate
and implement policies, standards rules and regulations relative to the
administration of position classification and compensation.

"Section 17. Organizational Structure Each office of the Commission shall


be headed by a Director with at least one Assistant Director, and may have
such divisions as are necessary to carry out their respective functions. As an
independent constitutional body, the Commission may effect changes in the
organization as the need arises."

"(8) The Office of Recruitment, Examination and Placement shall provide


leadership and assistance in developing and implementing the overall
Commission programs relating to recruitment, execution and placement, and
formulate policies, standards, rules and regulations for the proper
implementation of the Commission's examination and placement programs.

But, as well pointed out by petitioner and the Solicitor General, Section 17
must be read together with Section 16 of the said Code which enumerates
the
offices
under
the
respondent
Commission,
viz:nadchanroblesvirtualawlibrary

"(9) The Office of Career Systems and Standards shall provide leadership
and assistance in the formulation and evaluation of personnel systems and
standards relative to performance appraisal merit promotion, and employee
incentive benefits and awards.

"Sec. 16. The Office in the Commission. The Commission shall have the
following offices:nadchanroblesvirtualawlibrary

"(10) The Office of Human Resource Development shall provide leadership


and assistance in the development and retention of qualified and efficient
work force in the Civil Service; formulate standards for training and staff
development; administer service-wide scholarship programs; develop
training literature and materials; coordinate and integrate all training
activities and evaluate training programs.

"(1) The Office of the Executive Director headed by an Executive Director,


with a Deputy Executive Director shall implement policies, standards, rules
and regulations promulgated by the Commission; coordinate the programs
of the offices of the Commission and render periodic reports on their
operations, and perform such other functions as may be assigned by the
Commission. nadchanroblesvirtuallawlibrary
"(2) The Merit System Protection Board composed of a Chairman and two (2)
members shall have the following functions:nadchanroblesvirtualawlibrary

"(11) The Office of Personnel Inspection and Relations and Audit shall
develop policies, standards rules and regulations for the effective conduct or
inspection and audit personnel and personnel management programs and
the exercise of delegated authority; provide technical and advisory services
to Civil Service Regional Offices and government agencies in the

implementation of their personnel programs and evaluation systems.

internal policies of the attached corporation or agency."

"(12) The Office of Personnel Relations shall provide leadership and


assistance in the development implementation of policies, standards, rules
and regulations in the accreditation of employee associations or
organizations and in the adjustment and settlement of employee grievances
and management of employee disputes.

Respondent Commission also relies on the case of Datumanong, et al., vs.


Civil Service Commission, G.R. No. 114380 where the petition assailing the
abolition of the CESB was dismissed for lack of cause of action. Suffice to
states that the reliance is misplaced considering that the cited case was
dismissed for lack of standing of the petitioner, hence, the lack of cause of
action.

"(13) The Office of Corporate Affairs shall formulate and implement policies,
standards, wales regulations governing corporate officials and employees in
the areas of recruitment, examination, placement, career development,
merit and awards systems, position classification and compensation,
performing appraisal, employee welfare and benefit, discipline and other
aspects of personnel management on the basis of comparable industry
practices.
"(14) The Office of Retirement Administration shall be responsible for the
enforcement of the constitutional and statutory provisions, relative to
retirement and the regulation for the effective implementation of the
retirement of government officials and employees.
"(15) The Regional and Field Offices. The Commission shall have not less
than thirteen (13) Regional offices each to be headed by a Director, and
such field offices as may be needed, each to be headed by an official with at
least the rank of an Assistant Director.
As read together, the inescapable conclusion is that respondent
Commissions power to reorganize is limited to offices under its control as
enumerated in Section 16, supra. From its inception. the CESB was intended
to be an autonomous entity, albeit administratively attached to respondent
Commission. As conceptualized by the Reorganization Committee "the CESB
shall be autonomous. It is expected to view the problem of building up
executive manpower in the government with a broad and positive outlook."
6 The essential autonomous character of the CESB is not negated by its
attachment to respondent Commission. By said attachment, CESB was not
made to fall within the control of respondent Commission. Under the
Administrative Code of 1987, the purpose of attaching and functionally interrelated government agency to another is to attain "policy and program
coordination." This is clearly etched out in Section 38(3), Chapter 7, Book IV
of the aforecited Code, to wit:nadchanroblesvirtualawlibrary
"(3) Attachment. (a) This refers to the lateral relationship between the
department or its equivalent and the attached agency or corporation for
purposes of policy and program coordination. The coordination may be
accomplished by having the department represented in the governing board
of the attached agency or corporation, either as chairman or as a member,
with or without voting rights, if this is permitted by the charter; having the
attached corporation or agency comply with a system of periodic reporting
which shall reflect the progress of programs and projects: and having the
department or its equivalent provide general policies through its
representative in the board, which shall serve as the framework: for the

IN VIEW WHEREOF, the petition is granted and Resolution No. 93-4359 of the
respondent Commission is hereby annulled and set aside. No costs.
SO ORDERED.
G.R. No. 120319 October 6, 1995
LUZON DEVELOPMENT BANK, petitioner,
vs.
ASSOCIATION OF LUZON DEVELOPMENT BANK EMPLOYEES and ATTY.
ESTER S. GARCIA in her capacity as VOLUNTARY ARBITRATOR,
respondents.
ROMERO, J.:
From a submission agreement of the Luzon Development Bank (LDB) and
the Association of Luzon Development Bank Employees (ALDBE) arose an
arbitration case to resolve the following issue:
Whether or not the company has violated the Collective Bargaining
Agreement provision and the Memorandum of Agreement dated April 1994,
on promotion.
At a conference, the parties agreed on the submission of their respective
Position Papers on December 1-15, 1994. Atty. Ester S. Garcia, in her
capacity as Voluntary Arbitrator, received ALDBE's Position Paper on January
18, 1995. LDB, on the other hand, failed to submit its Position Paper despite
a letter from the Voluntary Arbitrator reminding them to do so. As of May 23,
1995 no Position Paper had been filed by LDB.
On May 24, 1995, without LDB's Position Paper, the Voluntary Arbitrator
rendered a decision disposing as follows:
WHEREFORE, finding is hereby made that the Bank has not adhered to the
Collective Bargaining Agreement provision nor the Memorandum of
Agreement on promotion.
Hence, this petition for certiorari and prohibition seeking to set aside the
decision of the Voluntary Arbitrator and to prohibit her from enforcing the
same.
In labor law context, arbitration is the reference of a labor dispute to an
impartial third person for determination on the basis of evidence and
arguments presented by such parties who have bound themselves to accept
the decision of the arbitrator as final and binding.
Arbitration may be classified, on the basis of the obligation on which it is
based, as either compulsory or voluntary.
Compulsory arbitration is a system whereby the parties to a dispute are
compelled by the government to forego their right to strike and are
compelled to accept the resolution of their dispute through arbitration by a
third party. 1The essence of arbitration remains since a resolution of a
dispute is arrived at by resort to a disinterested third party whose decision is

final and binding on the parties, but in compulsory arbitration, such a third
party is normally appointed by the government.
Under voluntary arbitration, on the other hand, referral of a dispute by the
parties is made, pursuant to a voluntary arbitration clause in their collective
agreement, to an impartial third person for a final and binding resolution.
2
Ideally, arbitration awards are supposed to be complied with by both parties
without delay, such that once an award has been rendered by an arbitrator,
nothing is left to be done by both parties but to comply with the same. After
all, they are presumed to have freely chosen arbitration as the mode of
settlement for that particular dispute. Pursuant thereto, they have chosen a
mutually acceptable arbitrator who shall hear and decide their case. Above
all, they have mutually agreed to de bound by said arbitrator's decision.
In the Philippine context, the parties to a Collective Bargaining Agreement
(CBA) are required to include therein provisions for a machinery for the
resolution of grievances arising from the interpretation or implementation of
the CBA or company personnel policies. 3 For this purpose, parties to a CBA
shall name and designate therein a voluntary arbitrator or a panel of
arbitrators, or include a procedure for their selection, preferably from those
accredited by the National Conciliation and Mediation Board (NCMB). Article
261 of the Labor Code accordingly provides for exclusive original jurisdiction
of such voluntary arbitrator or panel of arbitrators over (1) the interpretation
or implementation of the CBA and (2) the interpretation or enforcement of
company personnel policies. Article 262 authorizes them, but only upon
agreement of the parties, to exercise jurisdiction over other labor disputes.
On the other hand, a labor arbiter under Article 217 of the Labor Code has
jurisdiction over the following enumerated cases:
. . . (a) Except as otherwise provided under this Code the Labor Arbiters shall
have original and exclusive jurisdiction to hear and decide, within thirty (30)
calendar days after the submission of the case by the parties for decision
without extension, even in the absence of stenographic notes, the following
cases involving all workers, whether agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that workers
may file involving wages, rates of pay, hours of work and other terms and
conditions of employment;
4. Claims for actual, moral, exemplary and other forms of damages arising
from the employer-employee relations;
5. Cases arising from any violation of Article 264 of this Code, including
questions involving the legality of strikes and lockouts;
6. Except claims for Employees Compensation, Social Security, Medicare and
maternity benefits, all other claims, arising from employer-employee
relations, including those of persons in domestic or household service,
involving an amount exceeding five thousand pesos (P5,000.00) regardless
of whether accompanied with a claim for reinstatement.
xxx xxx xxx
It will thus be noted that the jurisdiction conferred by law on a voluntary
arbitrator or a panel of such arbitrators is quite limited compared to the
original jurisdiction of the labor arbiter and the appellate jurisdiction of the
National Labor Relations Commission (NLRC) for that matter. 4 The state of
our present law relating to voluntary arbitration provides that "(t)he award

or decision of the Voluntary Arbitrator . . . shall be final and executory after


ten (10) calendar days from receipt of the copy of the award or decision by
the parties," 5 while the "(d)ecision, awards, or orders of the Labor Arbiter
are final and executory unless appealed to the Commission by any or both
parties within ten (10) calendar days from receipt of such decisions, awards,
or orders." 6 Hence, while there is an express mode of appeal from the
decision of a labor arbiter, Republic Act No. 6715 is silent with respect to an
appeal from the decision of a voluntary arbitrator.
Yet, past practice shows that a decision or award of a voluntary arbitrator is,
more often than not, elevated to the Supreme Court itself on a petition for
certiorari, 7 in effect equating the voluntary arbitrator with the NLRC or the
Court of Appeals. In the view of the Court, this is illogical and imposes an
unnecessary burden upon it.
In Volkschel Labor Union, et al. v. NLRC, et al., 8 on the settled premise that
the judgments of courts and awards of quasi-judicial agencies must become
final at some definite time, this Court ruled that the awards of voluntary
arbitrators determine the rights of parties; hence, their decisions have the
same legal effect as judgments of a court. In Oceanic Bic Division (FFW), et
al. v. Romero, et al., 9 this Court ruled that "a voluntary arbitrator by the
nature of her functions acts in a quasi-judicial capacity." Under these rulings,
it follows that the voluntary arbitrator, whether acting solely or in a panel,
enjoys in law the status of a quasi-judicial agency but independent of, and
apart from, the NLRC since his decisions are not appealable to the latter. 10
Section 9 of B.P. Blg. 129, as amended by Republic Act No. 7902, provides
that the Court of Appeals shall exercise:
xxx xxx xxx
(B) Exclusive appellate jurisdiction over all final judgments, decisions,
resolutions, orders or awards of Regional Trial Courts and quasi-judicial
agencies, instrumentalities, boards or commissions, including the Securities
and Exchange Commission, the Employees Compensation Commission and
the Civil Service Commission, except those falling within the appellate
jurisdiction of the Supreme Court in accordance with the Constitution, the
Labor Code of the Philippines under Presidential Decree No. 442, as
amended, the provisions of this Act, and of subparagraph (1) of the third
paragraph and subparagraph (4) of the fourth paragraph of Section 17 of the
Judiciary Act of 1948.
xxx xxx xxx
Assuming arguendo that the voluntary arbitrator or the panel of voluntary
arbitrators may not strictly be considered as a quasi-judicial agency, board
or commission, still both he and the panel are comprehended within the
concept of a "quasi-judicial instrumentality." It may even be stated that it
was to meet the very situation presented by the quasi-judicial functions of
the voluntary arbitrators here, as well as the subsequent arbitrator/arbitral
tribunal operating under the Construction Industry Arbitration Commission, 11
that the broader term "instrumentalities" was purposely included in the
above-quoted provision.
An "instrumentality" is anything used as a means or agency. 12 Thus, the
terms governmental "agency" or "instrumentality" are synonymous in the
sense that either of them is a means by which a government acts, or by
which a certain government act or function is performed. 13 The word

"instrumentality," with respect to a state, contemplates an authority to


which the state delegates governmental power for the performance of a
state function. 14 An individual person, like an administrator or executor, is a
judicial instrumentality in the settling of an estate, 15 in the same manner
that a sub-agent appointed by a bankruptcy court is an instrumentality of
the court, 16 and a trustee in bankruptcy of a defunct corporation is an
instrumentality of the state. 17
The voluntary arbitrator no less performs a state function pursuant to a
governmental power delegated to him under the provisions therefor in the
Labor Code and he falls, therefore, within the contemplation of the term
"instrumentality" in the aforequoted Sec. 9 of B.P. 129. The fact that his
functions and powers are provided for in the Labor Code does not place him
within the exceptions to said Sec. 9 since he is a quasi-judicial
instrumentality as contemplated therein. It will be noted that, although the
Employees Compensation Commission is also provided for in the Labor
Code, Circular No. 1-91, which is the forerunner of the present Revised
Administrative Circular No. 1-95, laid down the procedure for the
appealability of its decisions to the Court of Appeals under the foregoing
rationalization, and this was later adopted by Republic Act No. 7902 in
amending Sec. 9 of B.P. 129.
A fortiori, the decision or award of the voluntary arbitrator or panel of
arbitrators should likewise be appealable to the Court of Appeals, in line with
the procedure outlined in Revised Administrative Circular No. 1-95, just like
those of the quasi-judicial agencies, boards and commissions enumerated
therein.
This would be in furtherance of, and consistent with, the original purpose of
Circular No. 1-91 to provide a uniform procedure for the appellate review of
adjudications of all quasi-judicial entities 18 not expressly excepted from the
coverage of Sec. 9 of B.P. 129 by either the Constitution or another statute.
Nor will it run counter to the legislative intendment that decisions of the
NLRC be reviewable directly by the Supreme Court since, precisely, the
cases within the adjudicative competence of the voluntary arbitrator are
excluded from the jurisdiction of the NLRC or the labor arbiter.
In the same vein, it is worth mentioning that under Section 22 of Republic
Act No. 876, also known as the Arbitration Law, arbitration is deemed a
special proceeding of which the court specified in the contract or
submission, or if none be specified, the Regional Trial Court for the province
or city in which one of the parties resides or is doing business, or in which
the arbitration is held, shall have jurisdiction. A party to the controversy
may, at any time within one (1) month after an award is made, apply to the
court having jurisdiction for an order confirming the award and the court
must grant such order unless the award is vacated, modified or corrected. 19
In effect, this equates the award or decision of the voluntary arbitrator with
that of the regional trial court. Consequently, in a petition for certiorari from
that award or decision, the Court of Appeals must be deemed to have
concurrent jurisdiction with the Supreme Court. As a matter of policy, this
Court shall henceforth remand to the Court of Appeals petitions of this
nature for proper disposition.
ACCORDINGLY, the Court resolved to REFER this case to the Court of

Appeals.
SO ORDERED.
Padilla, Regalado, Davide, Jr., Bellosillo, Puno, Vitug, Kapunan, Mendoza,
Francisco and Hermosisima, Jr., JJ., concur.
Feliciano, J., concurs in the result.
Narvasa, C.J. and Melo, J. are on leave.

G.R. No. 102976 October 25, 1995


IRON AND STEEL AUTHORITY, petitioner,
vs.
THE COURT OF APPEALS and MARIA CRISTINA FERTILIZER
CORPORATION, respondents.
FELICIANO, J.:
Petitioner Iron and Steel Authority ("ISA") was created by Presidential Decree
(P.D.) No. 272 dated 9 August 1973 in order, generally, to develop and
promote the iron and steel industry in the Philippines. The objectives of the
ISA are spelled out in the following terms:
Sec. 2. Objectives The Authority shall have the following objectives:

(a) to strengthen the iron and steel industry of the Philippines and to expand
the domestic and export markets for the products of the industry;
(b) to promote the consolidation, integration and rationalization of the
industry in order to increase industry capability and viability to service the
domestic market and to compete in international markets;
(c) to rationalize the marketing and distribution of steel products in order to
achieve a balance between demand and supply of iron and steel products
for the country and to ensure that industry prices and profits are at levels
that provide a fair balance between the interests of investors, consumers
suppliers, and the public at large;
(d) to promote full utilization of the existing capacity of the industry, to
discourage investment in excess capacity, and in coordination, with
appropriate government agencies to encourage capital investment in
priority areas of the industry;
(e) to assist the industry in securing adequate and low-cost supplies of raw
materials and to reduce the excessive dependence of the country on imports
of iron and steel.
The list of powers and functions of the ISA included the following:
Sec. 4. Powers and Functions. The authority shall have the following
powers and functions:
xxx xxx xxx
(j) to initiate expropriation of land required for basic iron and steel facilities
for subsequent resale and/or lease to the companies involved if it is shown
that such use of the State's power is necessary to implement the
construction of capacity which is needed for the attainment of the objectives
of the Authority;
xxx xxx xxx
(Emphasis supplied)
P.D. No. 272 initially created petitioner ISA for a term of five (5) years
counting from 9 August 1973. 1 When ISA's original term expired on 10
October 1978, its term was extended for another ten (10) years by Executive
Order No. 555 dated 31 August 1979.
The National Steel Corporation ("NSC") then a wholly owned subsidiary of
the National Development Corporation which is itself an entity wholly owned
by the National Government, embarked on an expansion program
embracing, among other things, the construction of an integrated steel mill
in Iligan City. The construction of such a steel mill was considered a priority
and major industrial project of the Government. Pursuant to the expansion
program of the NSC, Proclamation No. 2239 was issued by the President of
the Philippines on 16 November 1982 withdrawing from sale or settlement a
large tract of public land (totalling about 30.25 hectares in area) located in
Iligan City, and reserving that land for the use and immediate occupancy of
NSC.
Since certain portions of the public land subject matter Proclamation No.
2239 were occupied by a non-operational chemical fertilizer plant and
related facilities owned by private respondent Maria Cristina Fertilizer
Corporation ("MCFC"), Letter of Instruction (LOI), No. 1277, also dated 16
November 1982, was issued directing the NSC to "negotiate with the owners
of MCFC, for and on behalf of the Government, for the compensation of
MCFC's present occupancy rights on the subject land." LOI No. 1277 also
directed that should NSC and private respondent MCFC fail to reach an

agreement within a period of sixty (60) days from the date of LOI No. 1277,
petitioner ISA was to exercise its power of eminent domain under P.D. No.
272 and to initiate expropriation proceedings in respect of occupancy rights
of private respondent MCFC relating to the subject public land as well as the
plant itself and related facilities and to cede the same to the NSC. 2
Negotiations between NSC and private respondent MCFC did fail.
Accordingly, on 18 August 1983, petitioner ISA commenced eminent domain
proceedings against private respondent MCFC in the Regional Trial Court,
Branch 1, of Iligan City, praying that it (ISA) be places in possession of the
property involved upon depositing in court the amount of P1,760,789.69
representing ten percent (10%) of the declared market values of that
property. The Philippine National Bank, as mortgagee of the plant facilities
and improvements involved in the expropriation proceedings, was also
impleaded as party-defendant.
On 17 September 1983, a writ of possession was issued by the trial court in
favor of ISA. ISA in turn placed NSC in possession and control of the land
occupied by MCFC's fertilizer plant installation.
The case proceeded to trial. While the trial was ongoing, however, the
statutory existence of petitioner ISA expired on 11 August 1988. MCFC then
filed a motion to dismiss, contending that no valid judgment could be
rendered against ISA which had ceased to be a juridical person. Petitioner
ISA filed its opposition to this motion.
In an Order dated 9 November 1988, the trial court granted MCFC's motion
to dismiss and did dismiss the case. The dismissal was anchored on the
provision of the Rules of Court stating that "only natural or juridical persons
or entities authorized by law may be parties in a civil case." 3 The trial court
also referred to non-compliance by petitioner ISA with the requirements of
Section 16, Rule 3 of the Rules of Court. 4
Petitioner ISA moved for reconsideration of the trial court's Order,
contending that despite the expiration of its term, its juridical existence
continued until the winding up of its affairs could be completed. In the
alternative, petitioner ISA urged that the Republic of the Philippines, being
the real party-in-interest, should be allowed to be substituted for petitioner
ISA. In this connection, ISA referred to a letter from the Office of the
President dated 28 September 1988 which especially directed the Solicitor
General to continue the expropriation case.
The trial court denied the motion for reconsideration, stating, among other
things that:
The property to be expropriated is not for public use or benefit [__] but for
the use and benefit [__] of NSC, a government controlled private corporation
engaged in private business and for profit, specially now that the
government, according to newspaper reports, is offering for sale to the
public its [shares of stock] in the National Steel Corporation in line with the
pronounced policy of the present administration to disengage the
government from its private business ventures. 5 (Brackets supplied)
Petitioner went on appeal to the Court of Appeals. In a Decision dated 8
October 1991, the Court of Appeals affirmed the order of dismissal of the
trial court. The Court of Appeals held that petitioner ISA, "a government

regulatory agency exercising sovereign functions," did not have the same
rights as an ordinary corporation and that the ISA, unlike corporations
organized under the Corporation Code, was not entitled to a period for
winding up its affairs after expiration of its legally mandated term, with the
result that upon expiration of its term on 11 August 1987, ISA was
"abolished and [had] no more legal authority to perform governmental
functions." The Court of Appeals went on to say that the action for
expropriation could not prosper because the basis for the proceedings, the
ISA's exercise of its delegated authority to expropriate, had become
ineffective as a result of the delegate's dissolution, and could not be
continued in the name of Republic of the Philippines, represented by the
Solicitor General:
It is our considered opinion that under the law, the complaint cannot
prosper, and therefore, has to be dismissed without prejudice to the refiling
of a new complaint for expropriation if the Congress sees it fit." (Emphases
supplied)
At the same time, however, the Court of Appeals held that it was premature
for the trial court to have ruled that the expropriation suit was not for a
public purpose, considering that the parties had not yet rested their
respective cases.
In this Petition for Review, the Solicitor General argues that since ISA
initiated and prosecuted the action for expropriation in its capacity as agent
of the Republic of the Philippines, the Republic, as principal of ISA, is entitled
to be substituted and to be made a party-plaintiff after the agent ISA's term
had expired.
Private respondent MCFC, upon the other hand, argues that the failure of
Congress to enact a law further extending the term of ISA after 11 August
1988 evinced a "clear legislative intent to terminate the juridical existence
of ISA," and that the authorization issued by the Office of the President to
the Solicitor General for continued prosecution of the expropriation suit
could not prevail over such negative intent. It is also contended that the
exercise of the eminent domain by ISA or the Republic is improper, since
that power would be exercised "not on behalf of the National Government
but for the benefit of NSC."
The principal issue which we must address in this case is whether or not the
Republic of the Philippines is entitled to be substituted for ISA in view of the
expiration of ISA's term. As will be made clear below, this is really the only
issue which we must resolve at this time.
Rule 3, Section 1 of the Rules of Court specifies who may be parties to a civil
action:
Sec. 1. Who May Be Parties. Only natural or juridical persons or entities
authorized by law may be parties in a civil action.
Under the above quoted provision, it will be seen that those who can be
parties to a civil action may be broadly categorized into two (2) groups:
(a) those who are recognized as persons under the law whether natural, i.e.,
biological persons, on the one hand, or juridical person such as corporations,
on the other hand; and
(b) entities authorized by law to institute actions.
Examination of the statute which created petitioner ISA shows that ISA falls
under category (b) above. P.D. No. 272, as already noted, contains express
authorization to ISA to commence expropriation proceedings like those here

involved:
Sec. 4. Powers and Functions. The Authority shall have the following
powers and functions:
xxx xxx xxx
(j) to initiate expropriation of land required for basic iron and steel facilities
for subsequent resale and/or lease to the companies involved if it is shown
that such use of the State's power is necessary to implement the
construction of capacity which is needed for the attainment of the objectives
of the Authority;
xxx xxx xxx
(Emphasis supplied)
It should also be noted that the enabling statute of ISA expressly authorized
it to enter into certain kinds of contracts "for and in behalf of the
Government" in the following terms:
xxx xxx xxx
(i) to negotiate, and when necessary, to enter into contracts for and in
behalf of the government, for the bulk purchase of materials, supplies or
services for any sectors in the industry, and to maintain inventories of such
materials in order to insure a continuous and adequate supply thereof and
thereby reduce operating costs of such sector;
xxx xxx xxx
(Emphasis supplied)
Clearly, ISA was vested with some of the powers or attributes normally
associated with juridical personality. There is, however, no provision in P.D.
No. 272 recognizing ISA as possessing general or comprehensive juridical
personality separate and distinct from that of the Government. The ISA in
fact appears to the Court to be a non-incorporated agency or instrumentality
of the Republic of the Philippines, or more precisely of the Government of
the Republic of the Philippines. It is common knowledge that other agencies
or instrumentalities of the Government of the Republic are cast in corporate
form, that is to say, are incorporated agencies orinstrumentalities,
sometimes with and at other times without capital stock, and accordingly
vested with a juridical personality distinct from the personality of the
Republic. Among such incorporated agencies or instrumentalities are:
National Power Corporation; 6 Philippine Ports Authority; 7 National Housing
Authority; 8 Philippine National Oil Company; 9 Philippine National Railways; 10
Public Estates Authority; 11 Philippine Virginia Tobacco Administration, 12 and
so forth. It is worth noting that the term "Authority" has been used to
designate
both
incorporated
and
non-incorporated
agencies
or
instrumentalities of the Government.
We consider that the ISA is properly regarded as an agent or delegate of the
Republic of the Philippines. The Republic itself is a body corporate and
juridical person vested with the full panoply of powers and attributes which
are compendiously described as "legal personality." The relevant definitions
are found in the Administrative Code of 1987:
Sec. 2. General Terms Defined. Unless the specific words of the text, or
the context as a whole, or a particular statute, require a different meaning:
(1) Government of the Republic of the Philippines refers to the corporate
governmental entity through which the functions of government are
exercised throughout the Philippines, including, save as the contrary
appears from the context, the various arms through which political authority

is made effective in the Philippines, whether pertaining to the autonomous


regions, the provincial, city, municipal or barangay subdivisions or other
forms of local government.
xxx xxx xxx
(4) Agency of the Government refers to any of the various units of the
Government, including a department, bureau, office, instrumentality, or
government-owned or controlled corporation, or a local government or a
distinct unit therein.
xxx xxx xxx
(10) Instrumentality refers to any agency of the National Government, not
integrated within the department framework, vested with special functions
or jurisdiction by law, endowed with some if not all corporate powers,
administering special funds, and enjoying operational autonomy, usually
through a charter. This term includes regulatory agencies, chartered
institutions and government-owned or controlled corporations.
xxx xxx xxx
(Emphases supplied)
When the statutory term of a non-incorporated agency expires, the powers,
duties and functions as well as the assets and liabilities of that agency revert
back to, and are re-assumed by, the Republic of the Philippines, in the
absence of special provisions of law specifying some other disposition
thereof such as, e.g., devolution or transmission of such powers, duties,
functions, etc. to some other identified successor agency or instrumentality
of the Republic of the Philippines. When the expiring agency is an
incorporated one, the consequences of such expiry must be looked for, in
the first instance, in the charter of that agency and, by way of
supplementation, in the provisions of the Corporation Code. Since, in the
instant case, ISA is a non-incorporated agency or instrumentality of the
Republic, its powers, duties, functions, assets and liabilities are properly
regarded as folded back into the Government of the Republic of the
Philippines and hence assumed once again by the Republic, no special
statutory provision having been shown to have mandated succession thereto
by some other entity or agency of the Republic.
The procedural implications of the relationship between an agent or
delegate of the Republic of the Philippines and the Republic itself are, at
least in part, spelled out in the Rules of Court. The general rule is, of course,
that an action must be prosecuted and defended in the name of the real
party in interest. (Rule 3, Section 2) Petitioner ISA was, at the
commencement of the expropriation proceedings, a real party in interest,
having been explicitly authorized by its enabling statute to institute
expropriation proceedings. The Rules of Court at the same time expressly
recognize the role of representative parties:
Sec. 3. Representative Parties. A trustee of an expressed trust, a
guardian, an executor or administrator, or a party authorized by statute may
sue or be sued without joining the party for whose benefit the action is
presented or defended; but the court may, at any stage of the proceedings,
order such beneficiary to be made a party. . . . . (Emphasis supplied)
In the instant case, ISA instituted the expropriation proceedings in its
capacity as an agent or delegate or representative of the Republic of the
Philippines pursuant to its authority under P.D. No. 272. The present
expropriation suit was brought on behalf of and for the benefit of the

Republic as the principal of ISA. Paragraph 7 of the complaint stated:


7. The Government, thru the plaintiff ISA, urgently needs the subject parcels
of land for the construction and installation of iron and steel manufacturing
facilities that are indispensable to the integration of the iron and steel
making industry which is vital to the promotion of public interest and
welfare. (Emphasis supplied)
The principal or the real party in interest is thus the Republic of the
Philippines and not the National Steel Corporation, even though the latter
may be an ultimate user of the properties involved should the condemnation
suit be eventually successful.
From the foregoing premises, it follows that the Republic of the Philippines is
entitled to be substituted in the expropriation proceedings as party-plaintiff
in lieu of ISA, the statutory term of ISA having expired. Put a little differently,
the expiration of ISA's statutory term did not by itself require or justify the
dismissal of the eminent domain proceedings.
It is also relevant to note that the non-joinder of the Republic which occurred
upon the expiration of ISA's statutory term, was not a ground for dismissal of
such proceedings since a party may be dropped or added by order of the
court, on motion of any party or on the court's own initiative at any stage of
the action and on such terms as are just. 13 In the instant case, the Republic
has precisely moved to take over the proceedings as party-plaintiff.
In E.B. Marcha Transport Company, Inc. v. Intermediate Appellate Court, 14
the Court recognized that the Republic may initiate or participate in actions
involving its agents. There the Republic of the Philippines was held to be a
proper party to sue for recovery of possession of property although the
"real" or registered owner of the property was the Philippine Ports Authority,
a government agency vested with a separate juridical personality. The Court
said:
It can be said that in suing for the recovery of the rentals, the Republic of
the Philippines acted as principal of the Philippine Ports Authority, directly
exercising the commission it had earlier conferred on the latter as its
agent. . . . 15 (Emphasis supplied)
In E.B. Marcha, the Court also stressed that to require the Republic to
commence all over again another proceeding, as the trial court and Court of
Appeals had required, was to generate unwarranted delay and create
needless repetition of proceedings:
More importantly, as we see it, dismissing the complaint on the ground that
the Republic of the Philippines is not the proper party would result in
needless delay in the settlement of this matter and also in derogation of the
policy against multiplicity of suits. Such a decision would require the
Philippine Ports Authority to refile the very same complaint already proved
by the Republic of the Philippines and bring back as it were to square one. 16
(Emphasis supplied)
As noted earlier, the Court of Appeals declined to permit the substitution of
the Republic of the Philippines for the ISA upon the ground that the action
for expropriation could not prosper because the basis for the proceedings,
the ISA's exercise of its delegated authority to expropriate, had become
legally ineffective by reason of the expiration of the statutory term of the
agent or delegated i.e., ISA. Since, as we have held above, the powers and
functions of ISA have reverted to the Republic of the Philippines upon the

termination of the statutory term of ISA, the question should be addressed


whether fresh legislative authority is necessary before the Republic of the
Philippines may continue the expropriation proceedings initiated by its own
delegate or agent.
While the power of eminent domain is, in principle, vested primarily in the
legislative department of the government, we believe and so hold that no
new legislative act is necessary should the Republic decide, upon being
substituted for ISA, in fact to continue to prosecute the expropriation
proceedings. For the legislative authority, a long time ago, enacted a
continuing or standing delegation of authority to the President of the
Philippines to exercise, or cause the exercise of, the power of eminent
domain on behalf of the Government of the Republic of the Philippines. The
1917 Revised Administrative Code, which was in effect at the time of the
commencement of the present expropriation proceedings before the Iligan
Regional Trial Court, provided that:
Sec. 64. Particular powers and duties of the President of the Philippines. In
addition to his general supervisory authority, the President of the Philippines
shall have such other specific powers and duties as are expressly conferred
or imposed on him by law, and also, in particular, the powers and duties set
forth in this Chapter.
Among such special powers and duties shall be:
xxx xxx xxx
(h) To determine when it is necessary or advantageous to exercise the right
of eminent domain in behalf of the Government of the Philippines; and to
direct the Secretary of Justice, where such act is deemed advisable, to cause
the condemnation proceedings to be begun in the court having proper
jurisdiction. (Emphasis supplied)
The Revised Administrative Code of 1987 currently in force has substantially
reproduced the foregoing provision in the following terms:
Sec. 12. Power of eminent domain. The President shall determine when it
is necessary or advantageous to exercise the power of eminent domain in
behalf of the National Government, anddirect the Solicitor General,
whenever he deems the action advisable, to institute expopriation
proceedings in the proper court. (Emphasis supplied)
In the present case, the President, exercising the power duly delegated
under both the 1917 and 1987 Revised Administrative Codes in effect made
a determination that it was necessary and advantageous to exercise the
power of eminent domain in behalf of the Government of the Republic and
accordingly directed the Solicitor General to proceed with the suit. 17
It is argued by private respondent MCFC that, because Congress after
becoming once more the depository of primary legislative power, had not
enacted a statute extending the term of ISA, such non-enactment must be
deemed a manifestation of a legislative design to discontinue or abort the
present expropriation suit. We find this argument much too speculative; it
rests too much upon simple silence on the part of Congress and casually
disregards the existence of Section 12 of the 1987 Administrative Code
already quoted above.
Other contentions are made by private respondent MCFC, such as, that the
constitutional requirement of "public use" or "public purpose" is not present
in the instant case, and that the indispensable element of just compensation

is also absent. We agree with the Court of Appeals in this connection that
these contentions, which were adopted and set out by the Regional Trial
Court in its order of dismissal, are premature and are appropriately
addressed in the proceedings before the trial court. Those proceedings have
yet to produce a decision on the merits, since trial was still on going at the
time the Regional Trial Court precipitously dismissed the expropriation
proceedings. Moreover, as a pragmatic matter, the Republic is, by such
substitution as party-plaintiff, accorded an opportunity to determine whether
or not, or to what extent, the proceedings should be continued in view of all
the subsequent developments in the iron and steel sector of the country
including, though not limited to, the partial privatization of the NSC.
WHEREFORE, for all the foregoing, the Decision of the Court of Appeals
dated 8 October 1991 to the extent that it affirmed the trial court's order
dismissing the expropriation proceedings, is hereby REVERSED and SET
ASIDE and the case is REMANDED to the court a quo which shall allow the
substitution of the Republic of the Philippines for petitioner Iron and Steel
Authority and for further proceedings consistent with this Decision. No
pronouncement as to costs.
SO ORDERED.
Romero, Melo, Vitug and Panganiban, JJ., concur.

G.R. No. 134990


April 27, 2000
MANUEL M. LEYSON JR., petitioner,
vs.
OFFICE OF THE OMBUDSMAN, TIRSO ANTIPORDA, Chairman, UCPB
and CIIF Oil Mills, and OSCAR A. TORRALBA, President, CIIF Oil Mills,
respondents.
BELLOSILLO, J.:
On 7 February 1996 International Towage and Transport Corporation (ITTC), a
domestic corporation engaged in the lighterage or shipping business,
entered into a one (1)-year contract with Legaspi Oil Company, Inc. (LEGASPI
OIL), Granexport Manufacturing Corporation (GRANEXPORT) and United
Coconut Chemicals, Inc. (UNITED COCONUT), comprising the Coconut
Industry Investment Fund (CIIF) companies, for the transport of coconut oil in
bulk through MT Transasia. The majority shareholdings of these CIIF
companies are owned by the United Coconut Planters Bank (UCPB) as
administrator of the CIIF. Under the terms of the contract, either party could
terminate the agreement provided a three (3)-month advance notice was
given to the other party. However, in August 1996, or prior to the expiration
of the contract, the CIIF companies with their new President, respondent
Oscar A. Torralba, terminated the contract without the requisite advance
notice. The CIIF companies engaged the services of another vessel, MT
Marilag, operated by Southwest Maritime Corporation.
On 11 March 1997 petitioner Manuel M. Leyson Jr., Executive Vice President
of ITTC, filed with public respondent Office of the Ombudsman a grievance
case against respondent Oscar A. Torralba. The following is a summary of the
irregularities and corrupt practices allegedly committed by respondent
Torralba: (a) breach of contract - unilateral cancellation of valid and existing
contract; (b) bad faith - falsification of documents and reports to stop the
operation of MT Transasia; (c) manipulation - influenced their insurance to
disqualify MT Transasia; (d) unreasonable denial of requirement imposed; (e)
double standards and inconsistent in favor of MT Marilag; (f) engaged and
entered into a contract with Southwest Maritime Corp. which is not the
owner of MT Marilag, where liabilities were waived and whose paid-up capital
is only P250,000.00; and, (g) overpricing in the freight rate causing losses of
millions of pesos to Cocochem.1
On 2 January 1998 petitioner charged respondent Tirso Antiporda, Chairman
of UCPB and CIIF Oil Mills, and respondent Oscar A. Torralba with violation of
The Anti-Graft and Corrupt Practices Act also before the Ombudsman
anchored on the aforementioned alleged irregularities and corrupt practices.
On 30 January 1998 public respondent dismissed the complaint based on its
finding that
The case is a simple case of breach of contract with damages which should
have been filed in the regular court. This Office has no jurisdiction to
determine the legality or validity of the termination of the contract entered
into by CIIF and ITTC. Besides the entities involved are private corporations
(over) which this Office has no jurisdiction.2
On 4 June 1998 reconsideration of the dismissal of the complaint was
denied. The Ombudsman was unswayed in his finding that the present
controversy involved breach of contract as he also took into account the

circumstance that petitioner had already filed a collection case before the
Regional Trial Court of Manila-Br. 15, docketed as Civil Case No. 97-83354.
Moreover, the Ombudsman found that the filing of the motion for
reconsideration on 31 March 1998 was beyond the inextendible period of
five (5) days from notice of the assailed resolution on 19 March 1998. 3
Petitioner now imputes grave abuse of discretion on public respondent in
dismissing his complaint. He submits that inasmuch as Philippine Coconut
Producers Federation, Inc. (COCOFED) v. PCGG4 and Republic
v.Sandiganbayan5 have declared that the coconut levy funds are public
funds then, conformably with Quimpo v. Tanodbayan,6 corporations formed
and organized from those funds or whose controlling stocks are from those
funds should be regarded as government owned and/or controlled
corporations. As in the present case, since the funding or controlling interest
of the companies being headed by private respondents was given or owned
by the CIIF as shown in the certification of their Corporate Secretary, 7 it
follows that they are government owned and/or controlled corporations.
Corollarily, petitioner asserts that respondents Antiporda and Torralba are
public officers subject to the jurisdiction of the Ombudsman.
Petitioner alleges next that public respondent's conclusion that his complaint
refers to a breach of contract is whimsical, capricious and irresponsible
amounting to a total disregard of its main point, i. e., whether private
respondents violated The Anti-Graft and Corrupt Practices Act when they
entered into a contract with Southwest Maritime Corporation which was
grossly disadvantageous to the government in general and to the CIIF in
particular. Petitioner admits that his motion for reconsideration was filed out
of time. Nonetheless, he advances that public respondent should have
relaxed its rules in the paramount interest of justice; after all, the delay was
just a matter of days and he, a layman not aware of technicalities,
personally filed the complaint.
Private respondents counter that the CIIF companies were duly organized
and are existing by virtue of the Corporation Code. Their stockholders are
private individuals and entities. In addition, private respondents contend
that they are not public officers as defined under The Anti-Graft and Corrupt
Practices Act but are private executives appointed by the Boards of Directors
of the CIIF companies. They asseverate that petitioner's motion for
reconsideration was filed through the expert assistance of a learned counsel.
They then charge petitioner with forum shopping since he had similarly filed
a case for collection of a sum of money plus damages before the trial court.
The Office of the Solicitor General maintains that the Ombudsman approved
the recommendation of the investigating officer to dismiss the complaint
because he sincerely believed there was no sufficient basis for the criminal
indictment of private respondents.
We find no grave abuse of discretion committed by the Ombudsman.
COCOFED v. PCGG referred to in Republic v. Sandiganbayan reviewed the
history of the coconut levy funds. These funds actually have four (4) general
classes: (a) the Coconut Investment Fund created under R. A. No. 6260; 8 (b)
the Coconut Consumers Stabilization Fund created under P. D. No. 276; 9 (c)
the Coconut Industry Development Fund created under P. D. No. 582; 10 and,
(d) the Coconut Industry Stabilization Fund created under P. D. No. 1841. 11
The various laws relating to the coconut industry were codified in 1976. On
21 October of that year, P. D. No. 961 12 was promulgated. On 11 June 1978 it

was amended by P. D. No. 1468 13 by inserting a new provision authorizing


the use of the balance of the Coconut Industry Development Fund for the
acquisition of "shares of stocks in corporations organized for the purpose of
engaging in the establishment and operation of industries . . . commercial
activities and other allied business undertakings relating to coconut and
other palm oil indust(ries)." 14From this fund thus created, or the CIIF, shares
of stock in what have come to be known as the "CIIF companies" were
purchased.
We then stated in COCOFED that the coconut levy funds were raised by the
State's police and taxing powers such that the utilization and proper
management thereof were certainly the concern of the Government. These
funds have a public character and are clearly affected with public interest.
Quimpo v. Tanodbayan involved the issue as to whether PETROPHIL was a
government owned or controlled corporation the employees of which fell
within the jurisdictional purview of the Tanodbayan for purposes of The AntiGraft and Corrupt Practices Act. We upheld the jurisdiction of the
Tanodbayan on the ratiocination that
While it may be that PETROPHIL was not originally "created" as a
government-owned or controlled corporation, after it was acquired by PNOC,
which is a government-owned or controlled corporation, PETROPHIL became
a subsidiary of PNOC and thus shed-off its private status. It is now funded
and owned by the government as, in fact, it was acquired to perform
functions related to government programs and policies on oil, a vital
commodity in the economic life of the nation. It was acquired not
temporarily but as a permanent adjunct to perform essential government or
government-related functions, as the marketing arm of the PNOC to assist
the latter in selling and distributing oil and petroleum products to assure and
maintain an adequate and stable domestic supply.
But these jurisprudential rules invoked by petitioner in support of his claim
that the CIIF companies are government owned and/or controlled
corporations are incomplete without resorting to the definition of
"government owned or controlled corporation" contained in par. (13), Sec. 2,
Introductory Provisions of the Administrative Code of 1987, i. e., any agency
organized as a stock or non-stock corporation vested with functions relating
to public needs whether governmental or proprietary in nature, and owned
by the Government directly or through its instrumentalities either wholly, or,
where applicable as in the case of stock corporations, to the extent of at
least fifty-one (51) percent of its capital stock. The definition mentions three
(3) requisites, namely, first, any agency organized as a stock or non-stock
corporation; second, vested with functions relating to public needs whether
governmental or proprietary in nature; and, third, owned by the Government
directly or through its instrumentalities either wholly, or, where applicable as
in the case of stock corporations, to the extent of at least fifty-one (51)
percent of its capital stock.
In the present case, all three (3) corporations comprising the CIIF companies
were organized as stock corporations.1wphi1 The UCPB-CIIF owns 44.10%
of the shares of LEGASPI OIL, 91.24% of the shares of GRANEXPORT, and
92.85% of the shares of UNITED COCONUT. 15 Obviously, the below 51%
shares of stock in LEGASPI OIL removes this firm from the definition of a
government owned or controlled corporation. Our concern has thus been
limited to GRANEXPORT and UNITED COCONUT as we go back to the second

requisite. Unfortunately, it is in this regard that petitioner failed to


substantiate his contentions. There is no showing that GRANEXPORT and/or
UNITED COCONUT was vested with functions relating to public needs
whether governmental or proprietary in nature unlike PETROPHIL in Quimpo.
The Court thus concludes that the CIIF companies are, as found by public
respondent, private corporations not within the scope of its jurisdiction.
With the foregoing conclusion, we find it unnecessary to resolve the other
issues raised by petitioner.
A brief note on private respondents' charge of forum shopping. Executive
Secretary v. Gordon 16 is instructive that forum shopping consists of filing
multiple suits involving the same parties for the same cause of action, either
simultaneously or successively, for the purpose of obtaining a favorable
judgment. It is readily apparent that the present charge will not prosper
because the cause of action herein, i. e., violation of The Anti-Graft and
Corrupt Practices Act, is different from the cause of action in the case
pending before the trial court which is collection of a sum of money plus
damages.
WHEREFORE, the petition is DISMISSED. The Resolution of public respondent
Office of the Ombudsman of 30 January 1998 which dismissed the complaint
of petitioner Manuel M. Leyson Jr., as well as its Order of 4 June 1998
denying his motion for reconsideration, is AFFIRMED. Costs against
petitioner.1wphi1.nt
SO ORDERED.
Mendoza, Quisumbing, Buena and De Leon, Jr., JJ., concur.

[G.R. Nos. 147706-07. February 16, 2005]


PEOPLE OF THE PHILIPPINES, petitioner, vs. THE HONORABLE
SANDIGANBAYAN (Fifth Division) and EFREN L. ALAS, respondents.

DECISION

CORONA, J.:
Does the Sandiganbayan have jurisdiction over presidents, directors or
trustees, or managers of government-owned or controlled corporations
organized and incorporated under the Corporation Code for purposes of the
provisions of RA 3019, otherwise known as the Anti-Graft and Corrupt
Practices Act? The petitioner, represented by the Office of the Special
Prosecutor (OSP), takes the affirmative position in this petition for certiorari
under Rule 65 of the Rules of Court. Respondent Efren L. Alas contends
otherwise, together with the respondent court.
Pursuant to a resolution dated September 30, 1999 of the Office of the

Ombudsman, two separate informations [1] for violation of Section 3(e) of RA


3019, otherwise known as the Anti-Graft and Corrupt Practices Act, were
filed with the Sandiganbayan on November 17, 1999 against Efren L. Alas.
The charges emanated from the alleged anomalous advertising contracts
entered into by Alas, in his capacity as President and Chief Operating Officer
of the Philippine Postal Savings Bank (PPSB), with Bagong Buhay Publishing
Company which purportedly caused damage and prejudice to the
government.
On October 30, 2002, Alas filed a motion to quash the informations for
lack of jurisdiction, which motion was vehemently opposed by the
prosecution. After considering the arguments of both parties, the respondent
court ruled that PPSB was a private corporation and that its officers,
particularly herein respondent Alas, did not fall under Sandiganbayan
jurisdiction. According to the Sandiganbayan:
After a careful consideration of the arguments of the accused-movant as
well as of that of the prosecution, we are of the considered opinion that the
instant motion of the accused is well taken. Indeed, it is the basic thrust of
Republic Act as well as (sic) Presidential Decree No. 1606 as amended by
President Decree No. 1486 and Republic Act No. 7975 and Republic Act No.
8249 that the Sandiganbayan has jurisdiction only over public officers unless
private persons are charged with them in the commission of the offenses.
The records disclosed that while Philippine Postal Savings Bank is a
subsidiary of the Philippine Postal Corporation which is a government owned
corporation, the same is not created by a special law. It was organized and
incorporated under the Corporation Code which is Batas Pambansa Blg. 68.
It was registered with the Securities and Exchange Commission under SEC
No. AS094-005593 on June 22, 1994 with a lifetime of fifty (50) years. Under
its Articles of Incorporation the purpose for which said entity is formed was
primarily for business, xxx
Likewise, a scrutiny of the seven (7) secondary purposes of the corporation
points to the conclusion that it exists for business. Obviously, it is not
involved in the performance of a particular function in the exercise of
government power. Thus, its officers and employees are not covered by the
GSIS and are under the SSS law, and actions for reinstatement and
backwages are not within the jurisdiction of the Civil Service Commission but
by the National Labor Relations Commission (NLRC).
The Supreme Court, in the case of Trade Unions of the Philippines and Allied
Services vs. National Housing Corp., 173 SCRA 33, held that the Civil Service
now covers only government owned or controlled corporations with original
or legislative charters, those created by an act of Congress or by special law,
and not those incorporated under and pursuant to a general legislation. The
Highest Court categorically ruled that the Civil Service does not include
government-owned or controlled corporation which are organized as
subsidiaries of government-owned or controlled corporation under the
general corporation law.
In Philippine National Oil Company Energy Development Corporation vs.
Leogardo, 175 SCRA 26, the Supreme Court emphasized that:
The test in determining whether a government-owned or controlled
corporation is subject to the Civil Service Law is the manner of its creation
such that government corporation created by special charter are subject to

its provision while those incorporated under the general corporation law are
not within its coverage.
Likewise in Davao City Water District vs. Civil Service Commission, 201 SCRA
601 it was held that by government-owned or controlled corporation with
original charter we mean government-owned or controlled corporation
created by a special law and not under the Corporation Code of the
Philippines while in Llenes vs. Dicdican, et al., 260 SCRA 207, a public officer
has been ruled, as a person whose duties involve the exercise of discretion
in the performance of the function of government.
Clearly, on the basis of the foregoing pronouncements of the Supreme Court,
the accused herein cannot be considered a public officer. Thus, this Court
may not exercise jurisdiction over his act.[2]
Dissatisfied, the People, through the Office of the Special Prosecutor
(OSP), filed this petition[3] arguing, in essence, that the PPSB was a
government-owned or controlled corporation as the term was defined under
Section 2(13) of the Administrative Code of 1987. [4] Likewise, in further
defining the jurisdiction of the Sandiganbayan, RA 8249 did not make a
distinction as to the manner of creation of the government-owned or
controlled corporations for their officers to fall under its jurisdiction. Hence,
being President and Chief Operating Officer of the PPSB at the time of
commission of the crimes charged, respondent Alas came under the
jurisdiction of the Sandiganbayan.
Quoting at length from the assailed resolution dated February 15, 2001,
respondent Alas, on the other hand, practically reiterated the
pronouncements made by the respondent court in support of his conclusion
that the PPSB was not created by special law, hence, its officers did not fall
within the jurisdiction of the Sandiganbayan.[5]
We find merit in the petition.
Section 2(13) of EO 292[6] defines government-owned or controlled
corporations as follows:
Sec. 2. General Terms Defined Unless the specific words of the text or the
context as a whole or a particular statute, shall require a different meaning:
xxx xxx xxx
(13) government owned or controlled corporations refer to any agency
organized as a stock or non-stock corporation vested with functions relating
to public needs whether governmental or proprietary in nature, and owned
by the government directly or indirectly or through its instrumentalities
either wholly, or where applicable as in the case of stock corporations to the
extent of at least 51% of its capital stock: provided, that government owned
or controlled corporations maybe further categorized by the department of
the budget, the civil service commission and the commission on audit for the
purpose of the exercise and discharge of their respective powers, functions
and responsibilities with respect to such corporations.
From the foregoing, PPSB fits the bill as a government-owned or
controlled corporation, and organized and incorporated under the
Corporation Code as a subsidiary of the Philippine Postal Corporation
(PHILPOST). More than 99% of the authorized capital stock of PPSB belongs

to the government while the rest is nominally held by its incorporators who
are/were themselves officers of PHILPOST. The creation of PPSB was
expressly sanctioned by Section 32 of RA 7354, otherwise known as the
Postal Service Act of 1992, for purposes of, among others, to encourage and
promote the virtue of thrift and the habit of savings among the general
public, especially the youth and the marginalized sector in the countryside
xxx and to facilitate postal service by receiving collections and making
payments, including postal money orders.[7]
It is not disputed that the Sandiganbayan has jurisdiction over
presidents, directors or trustees, or managers of government-owned or
controlled corporations with original charters whenever charges of graft and
corruption are involved. However, a question arises whether the
Sandiganbayan has jurisdiction over the same officers in government-owned
or controlled corporations organized and incorporated under the Corporation
Code in view of the delimitation provided for in Article IX-B Section 2(1) of
the 1987 Constitution which states that:
SEC. 2. (1) The Civil Service embraces all branches, subdivisions,
instrumentalities, and agencies of the government, including governmentowned or controlled corporations with original charters.
It should be pointed out however, that the jurisdiction of the
Sandiganbayan is separate and distinct from the Civil Service Commission.
The same is governed by Article XI, Section 4 of the 1987 Constitution which
provides that the present anti-graft court known as the Sandiganbayan shall
continue to function and exercise its jurisdiction as now or hereafter may be
provided by law. This provision, in effect, retained the jurisdiction of the antigraft court as defined under Article XIII, Section 5 of the 1973 Constitution
which mandated its creation, thus:
Sec. 5. The Batasang Pambansa shall create a special court, to be known as
Sandiganbayan, which shall have jurisdiction over criminal and civil cases
involving graft and corrupt practices and such other offense committed by
public officers and employees, including those in government-owned or
controlled corporations, in relation to their office as may be determined by
law. (Italics ours)

time of the commission of the offense,


(1) Officials of the executive branch occupying the
positions of regional director, and higher, otherwise classified
as grade 27 and higher, of the Compensation and Position
Classification Act of 1989 (Republic Act No. 6758) specifically
including:
xxx xxx xxx
(g) Presidents, directors or trustees, or
managers of government-owned or controlled
corporations, state universities or educational
institutions or foundations. (Italics ours)
The legislature, in mandating the inclusion of presidents, directors or
trustees, or managers of government-owned or controlled corporations
within the jurisdiction of the Sandiganbayan, has consistently refrained from
making any distinction with respect to the manner of their creation.
The deliberate omission, in our view, clearly reveals the intention of the
legislature to include the presidents, directors or trustees, or managers of
both types of corporations within the jurisdiction of the Sandiganbayan
whenever they are involved in graft and corruption. Had it been otherwise, it
could have simply made the necessary distinction. But it did not.
It is a basic principle of statutory construction that when the law does
not distinguish, we should not distinguish. Ubi lex non distinguit nec nos
distinguere debemos. Corollarily, Article XI Section 12 of the 1987
Constitution, on the jurisdiction of the Ombudsman (the governments
prosecutory arm against persons charged with graft and corruption),
includes officers and employees of government-owned or controlled
corporations, likewise without any distinction.

On March 30, 1995, Congress, pursuant to its authority vested under


the 1987 Constitution, enacted RA 7975 [8] maintaining the jurisdiction of the
Sandiganbayan over presidents, directors or trustees, or managers of
government-owned or controlled corporations without any distinction
whatsoever. Thereafter, on February 5, 1997, Congress enacted RA 8249 [9]
which preserved the subject provision:

In Quimpo v. Tanodbayan,[10] this Court, already mindful of the pertinent


provisions of the 1987 Constitution, ruled that the concerned officers of
government-owned or controlled corporations, whether created by special
law or formed under the Corporation Code, come under the jurisdiction of
the Sandiganbayan for purposes of the provisions of the Anti-Graft and
Corrupt Practices Act. Otherwise, as we emphasized therein, a major policy
of Government, which is to eradicate, or at the very least minimize, the graft
and corruption that has permeated the fabric of the public service like a
malignant social cancer, would be seriously undermined. In fact, Section 1 of
the Anti-Graft and Corrupt Practices Act embodies this policy of the
government, that is, to repress certain acts not only of public officers but
also of private persons constituting graft or corrupt practices or which may
lead thereto.

Section 4, Jurisdiction. The Sandiganbayan shall exercise exclusive original


jurisdiction in all cases involving:
a. Violations of Republic Act No. 3019, as amended, otherwise
known as the Anti-Graft and Corrupt Practices Act, Republic
Act No. 1379, and Chapter II, Section, Title VII, Book II of the
Revised Penal Code, where one or more of the accused are
officials occupying the following positions in the government,
whether in a permanent, acting or interim capacity, at the

The foregoing pronouncement has not outlived its usefulness. On the


contrary, it has become even more relevant today due to the rampant cases
of graft and corruption that erode the peoples faith in government. For
indeed, a government-owned or controlled corporation can conceivably
create as many subsidiary corporations under the Corporation Code as it
might wish, use public funds, disclaim public accountability and escape the
liabilities and responsibilities provided by law. By including the concerned
officers of government-owned or controlled corporations organized and

incorporated under the Corporation Code within the jurisdiction of the


Sandiganbayan, the legislature evidently seeks to avoid just that.
WHEREFORE, in view of the foregoing, the petition is hereby GRANTED
and the assailed resolution dated February 15, 2001 of the respondent court
is hereby REVERSED and SET ASIDE.
SO ORDERED.
Panganiban, (Chairman),
Garcia, JJ., concur.

Sandoval-Gutierrez,

Carpio-Morales,

and

[G.R. Nos. L-10123 & L-10355. April 26, 1957.]


GENARO URSAL, as City Assessor of Cebu, Petitioner, v. COURT OF
TAX APPEALS and JESUSA SAMSON, Respondents.
City Fiscal of Cebu Jose L. Abad for Petitioner.
Francisco M. Alonso for Respondents.
SYLLABUS
1. COURT OF TAX APPEALS; JURISDICTION OF; MATTERS COGNIZABLE;
CONFLICTS OF OPINION BETWEEN ADMINISTRATIVE OFFICERS EXCLUDED.
The Court of Tax Appeals as created by Republic Act No. 1125 is a part of the
judicial system and was not made to decide mere conflicts of opinion
between administrative officers or agencies.
2. ID.; ID.; JURISDICTION OF COURT ON MATTERS ENUMERATED IN THE LAW,
EXCLUSIVE. Republic Act No. 1125 is a complete law by itself and
expressly enumerates the matters which the Court of Tax Appeals may
consider; such enumeration excludes all others by implication.
3. ID.; APPEAL FROM THE RULINGS OF THE BOARD OF ASSESSMENT
APPEALS. The City Assessor may not appeal to the Court of Tax Appeals
from the rulings of the local Board of Assessment Appeals.
DECISION
BENGZON, J.:
In these two cases Genaro Ursal as City Assessor of Cebu challenges the
correctness of the order of the Court of Tax Appeals dismissing his appeals
to that body from two rulings of the Cebu Board of Assessment Appeals.
The record shows that said city assessors in the exercise of his powers
assessed for taxation certain real properties of Consuelo Noel and Jesusa
Samson in the City of Cebu, and that upon protest of the taxpayers, the
Cebu Board of Assessment Appeals reduced the assessments. It also shows
he took the matter to the Court of Tax Appeals insisting on his valuation; but
said Court refused to entertain the appeal saying it was late, and, besides,
the assessor had no personality to bring the matter before it under section
11 of Republic Act No. 1125, which reads as follows:jgc:chanrobles.com.ph
"SEC. 11. Who may appeal; effect of appeal. Any person, association or

corporation adversely affected by a decision or ruling of the Collector of


Internal Revenue, the Collector of Customs or any provincial or city Board of
Assessment Appeals may file an appeal in the Court of Tax Appeals within
thirty days after the receipt of such decision or ruling."cralaw virtua1aw
library
We share the view that the assessor had no personality to resort to the Court
of Tax Appeals. The rulings of the Board of Assessment Appeals did not
"adversely affect" him. At most it was the City of Cebu 1 that had been
adversely affected in the sense that it could not thereafter collect higher
realty taxes from the abovementioned property owners. His opinion, it is
true had been overruled; but the overruling indicted no material damage
upon him or his office. And the Court of Tax Appeals was not created to
decide mere conflicts of opinion between administrative officers or agencies.
Imagine an income tax examiner resorting to the Court of Tax Appeals
whenever the Collector of Internal Revenue modifies, or lower his
assessment on the return of a tax payer!
Republic Act No. 1125 creating the Court of Tax Appeals did not grant it
blanket authority to decide any and all tax disputes. Defining such special
courts jurisdiction, the Act necessarily limited its authority to those matters
enumerated therein. In line with this idea we recently approved said courts
order rejecting an appeal to it by Lopez & Sons from the decision of the
Collector of Customs, because in our opinion its jurisdiction extended only to
a review of the decisions of the Commissioner of Customs, as provided by
the statute and not to decisions of the Collector of Customs. (Lopez &
Sons v. The Court of Tax Appeals, 100 Phil., 850, 53 Off. Gaz., [10] 3065).
The appellant invites attention to the fact that the Court of Tax Appeals is
the successor of the former Central Board of Tax Appeals created by
Commonwealth Act No. 530 and of the Board of Tax Appeals established by
Executive Order No. 401-A, and that said Commonwealth Act No. 530
(section 2) explicitly authorized the city assessor to appeal to the Central
Board of Tax Appeals. Here is precisely another argument against his
position: as Republic Act No. 1125 failed to reenact such express permission,
it is deemed withheld.
Oversight could not have been the cause of such withholding, since there
were proper grounds therefor: (a) discipline and command responsibility in
the executive branches; and (b) instead of being another superior
administrative agency as was the former Board of Tax Appeals 2 the Court of
Tax Appeals as created by Republic Act No. 1125 is a part of the judicial
system presumably to act only on protests of private persons adversely
affected by the tax, custom, or assessment.
There is no merit to the contention that section 2 of Commonwealth Act No.
530 is still in force and justifies Ursals appeal. Apart from the reasons
already advanced, Republic Act No. 1125 is a complete law by itself and
expressly enumerates the matters which the Court of Tax Appeals may
consider; such enumeration excludes all others by implication. Expressio
unius est exclusio alterius.

"parts of an original act which are omitted from the act as revised are to be
considered as annulled and repealed, provided it clearly appears to have
been the intention of the legislature to cover the whole subject by the
revision." (82 C. J. S. p. 501.)
Inasmuch as we agree to the appellants lack of personality before the Court
of Tax Appeals, we find it unnecessary to review the question whether or not
his appeal had been perfected in due time.
Wherefore, the challenge order is hereby affirmed.
G.R. No. 143672
April 24, 2003
COMMISSIONER OF INTERNAL REVENUE, petitioner,
vs.
GENERAL FOODS (PHILS.), INC., respondent.
CORONA, J.:
Petitioner Commissioner of Internal Revenue (Commissioner) assails the
resolution1 of the Court of Appeals reversing the decision 2 of the Court of Tax
Appeals which in turn denied the protest filed by respondent General Foods
(Phils.), Inc., regarding the assessment made against the latter for deficiency
taxes.
The records reveal that, on June 14, 1985, respondent corporation, which is
engaged in the manufacture of beverages such as "Tang," "Calumet" and
"Kool-Aid," filed its income tax return for the fiscal year ending February 28,
1985. In said tax return, respondent corporation claimed as deduction,
among other business expenses, the amount of P9,461,246 for media
advertising for "Tang."
On May 31, 1988, the Commissioner disallowed 50% or P4,730,623 of the
deduction claimed by respondent corporation. Consequently, respondent
corporation was assessed deficiency income taxes in the amount of P2,635,
141.42. The latter filed a motion for reconsideration but the same was
denied.
On September 29, 1989, respondent corporation appealed to the Court of
Tax Appeals but the appeal was dismissed:
With such a gargantuan expense for the advertisement of a singular
product, which even excludes "other advertising and promotions" expenses,
we are not prepared to accept that such amount is reasonable "to stimulate
the current sale of merchandise" regardless of Petitioners explanation that
such expense "does not connote unreasonableness considering the grave
economic situation taking place after the Aquino assassination characterized
by capital fight, strong deterioration of the purchasing power of the
Philippine peso and the slacking demand for consumer products"
(Petitioners Memorandum, CTA Records, p. 273). We are not convinced with
such an explanation. The staggering expense led us to believe that such
expenditure was incurred "to create or maintain some form of good will for
the taxpayers trade or business or for the industry or profession of which
the taxpayer is a member." The term "good will" can hardly be said to have
any precise signification; it is generally used to denote the benefit arising
from connection and reputation (Words and Phrases, Vol. 18, p. 556 citing

Douhart vs. Loagan, 86 III. App. 294). As held in the case of Welch vs.
Helvering, efforts to establish reputation are akin to acquisition of capital
assets and, therefore, expenses related thereto are not business expenses
but capital expenditures. (Atlas Mining and Development Corp. vs.
Commissioner of Internal Revenue, supra). For sure such expenditure was
meant not only to generate present sales but more for future and
prospective benefits. Hence, "abnormally large expenditures for advertising
are usually to be spread over the period of years during which the benefits
of the expenditures are received" (Mertens, supra, citing Colonial Ice Cream
Co., 7 BTA 154).
WHEREFORE, in all the foregoing, and finding no error in the case appealed
from, we hereby RESOLVE to DISMISS the instant petition for lack of merit
and ORDER the Petitioner to pay the respondent Commissioner the assessed
amount of P2,635,141.42 representing its deficiency income tax liability for
the fiscal year ended February 28, 1985."3
Aggrieved, respondent corporation filed a petition for review at the Court of
Appeals which rendered a decision reversing and setting aside the decision
of the Court of Tax Appeals:
Since it has not been sufficiently established that the item it claimed as a
deduction is excessive, the same should be allowed.
WHEREFORE, the petition of petitioner General Foods (Philippines), Inc. is
hereby GRANTED. Accordingly, the Decision, dated 8 February 1994 of
respondent Court of Tax Appeals is REVERSED and SET ASIDE and the letter,
dated 31 May 1988 of respondent Commissioner of Internal Revenue is
CANCELLED.
SO ORDERED.4
Thus, the instant petition, wherein the Commissioner presents for the
Courts consideration a lone issue: whether or not the subject media
advertising expense for "Tang" incurred by respondent corporation was an
ordinary and necessary expense fully deductible under the National Internal
Revenue Code (NIRC).
It is a governing principle in taxation that tax exemptions must be construed
in strictissimi juris against the taxpayer and liberally in favor of the taxing
authority;5 and he who claims an exemption must be able to justify his claim
by the clearest grant of organic or statute law. An exemption from the
common burden cannot be permitted to exist upon vague implications. 6
Deductions for income tax purposes partake of the nature of tax
exemptions; hence, if tax exemptions are strictly construed, then deductions
must also be strictly construed.
We then proceed to resolve the singular issue in the case at bar. Was the
media advertising expense for "Tang" paid or incurred by respondent
corporation for the fiscal year ending February 28, 1985 "necessary and
ordinary," hence, fully deductible under the NIRC? Or was it a capital
expenditure, paid in order to create "goodwill and reputation" for respondent
corporation and/or its products, which should have been amortized over a
reasonable period?
Section 34 (A) (1), formerly Section 29 (a) (1) (A), of the NIRC provides:
(A) Expenses.(1) Ordinary and necessary trade, business or professional expenses.(a) In general.- There shall be allowed as deduction from gross income all
ordinary and necessary expenses paid or incurred during the taxable year in

carrying on, or which are directly attributable to, the development,


management, operation and/or conduct of the trade, business or exercise of
a profession.
Simply put, to be deductible from gross income, the subject advertising
expense must comply with the following requisites: (a) the expense must be
ordinary and necessary; (b) it must have been paid or incurred during the
taxable year; (c) it must have been paid or incurred in carrying on the trade
or business of the taxpayer; and (d) it must be supported by receipts,
records or other pertinent papers.7
The parties are in agreement that the subject advertising expense was paid
or incurred within the corresponding taxable year and was incurred in
carrying on a trade or business. Hence, it was necessary. However, their
views conflict as to whether or not it was ordinary. To be deductible, an
advertising expense should not only be necessary but also ordinary. These
two requirements must be met.
The Commissioner maintains that the subject advertising expense was not
ordinary on the ground that it failed the two conditions set by U.S.
jurisprudence: first, "reasonableness" of the amount incurred and second,
the amount incurred must not be a capital outlay to create "goodwill" for the
product and/or private respondents business. Otherwise, the expense must
be considered a capital expenditure to be spread out over a reasonable
time.
We agree.
There is yet to be a clear-cut criteria or fixed test for determining the
reasonableness of an advertising expense. There being no hard and fast rule
on the matter, the right to a deduction depends on a number of factors such
as but not limited to: the type and size of business in which the taxpayer is
engaged; the volume and amount of its net earnings; the nature of the
expenditure itself; the intention of the taxpayer and the general economic
conditions. It is the interplay of these, among other factors and properly
weighed, that will yield a proper evaluation.
In the case at bar, the P9,461,246 claimed as media advertising expense for
"Tang" alone was almost one-half of its total claim for "marketing expenses."
Aside from that, respondent-corporation also claimed P2,678,328 as "other
advertising and promotions expense" and another P1,548,614, for consumer
promotion.
Furthermore, the subject P9,461,246 media advertising expense for "Tang"
was almost double the amount of respondent corporations P4,640,636
general and administrative expenses.
We find the subject expense for the advertisement of a single product to be
inordinately large. Therefore, even if it is necessary, it cannot be considered
an ordinary expense deductible under then Section 29 (a) (1) (A) of the
NIRC.
Advertising is generally of two kinds: (1) advertising to stimulate the current
sale of merchandise or use of services and (2) advertising designed to
stimulate the future sale of merchandise or use of services. The second type
involves expenditures incurred, in whole or in part, to create or maintain
some form of goodwill for the taxpayers trade or business or for the
industry or profession of which the taxpayer is a member. If the
expenditures are for the advertising of the first kind, then, except as to the
question of the reasonableness of amount, there is no doubt such

expenditures are deductible as business expenses. If, however, the


expenditures are for advertising of the second kind, then normally they
should be spread out over a reasonable period of time.
We agree with the Court of Tax Appeals that the subject advertising expense
was of the second kind. Not only was the amount staggering; the respondent
corporation itself also admitted, in its letter protest 8 to the Commissioner of
Internal Revenues assessment, that the subject media expense was
incurred in order to protect respondent corporations brand franchise, a
critical point during the period under review.
The protection of brand franchise is analogous to the maintenance of
goodwill or title to ones property. This is a capital expenditure which should
be spread out over a reasonable period of time.9
Respondent corporations venture to protect its brand franchise was
tantamount to efforts to establish a reputation. This was akin to the
acquisition of capital assets and therefore expenses related thereto were not
to be considered as business expenses but as capital expenditures. 10
True, it is the taxpayers prerogative to determine the amount of advertising
expenses it will incur and where to apply them. 11 Said prerogative, however,
is subject to certain considerations. The first relates to the extent to which
the expenditures are actually capital outlays; this necessitates an inquiry
into the nature or purpose of such expenditures.12 The second, which must
be applied in harmony with the first, relates to whether the expenditures are
ordinary and necessary. Concomitantly, for an expense to be considered
ordinary, it must be reasonable in amount. The Court of Tax Appeals ruled
that respondent corporation failed to meet the two foregoing limitations.
We find said ruling to be well founded. Respondent corporation incurred the
subject advertising expense in order to protect its brand franchise. We
consider this as a capital outlay since it created goodwill for its business
and/or product. The P9,461,246 media advertising expense for the
promotion of a single product, almost one-half of petitioner corporations
entire claim for marketing expenses for that year under review, inclusive of
other advertising and promotion expenses of P2,678,328 and P1,548,614 for
consumer promotion, is doubtlessly unreasonable.
It has been a long standing policy and practice of the Court to respect the
conclusions of quasi-judicial agencies such as the Court of Tax Appeals, a
highly specialized body specifically created for the purpose of reviewing tax
cases. The CTA, by the nature of its functions, is dedicated exclusively to the
study and consideration of tax problems. It has necessarily developed an
expertise on the subject. We extend due consideration to its opinion unless
there is an abuse or improvident exercise of authority. 13 Since there is none
in the case at bar, the Court adheres to the findings of the CTA.
Accordingly, we find that the Court of Appeals committed reversible error
when it declared the subject media advertising expense to be deductible as
an ordinary and necessary expense on the ground that "it has not been
established that the item being claimed as deduction is excessive." It is not
incumbent upon the taxing authority to prove that the amount of items
being claimed is unreasonable. The burden of proof to establish the validity
of claimed deductions is on the taxpayer.14 In the present case, that burden
was not discharged satisfactorily.
WHEREFORE, premises considered, the instant petition is GRANTED. The
assailed decision of the Court of Appeals is hereby REVERSED and SET

ASIDE. Pursuant to Sections 248 and 249 of the Tax Code, respondent
General Foods (Phils.), Inc. is hereby ordered to pay its deficiency income
tax in the amount of P2,635,141.42, plus 25% surcharge for late payment
and 20% annual interest computed from August 25, 1989, the date of the
denial of its protest, until the same is fully paid.
SO ORDERED.
Puno, (Chairman), Panganiban, Sandoval-Gutierrez, and Carpio-Morales, JJ.,
concur.

CARPIO, and
- versus - AZCUNA, JJ.
Promulgated:
COURT OF APPEALS, COURT OF
TAX APPEALS and COMMISSIONER December 9, 2005
OF INTERNAL REVENUE,
Respondents.
x ---------------------------------------------------------------------------------------- x
DECISION
AZCUNA, J.:

This is a Petition for Review on Certiorari assailing the decision of the


Court of Appeals (CA) dated May 7, 1997 in CA-G.R. SP No. 41666.

The CA affirmed in toto the decision of the Court of Tax Appeals


(CTA) dated January 24, 1996 and its resolution of July 31, 1996, dismissing
petitioner Far East Bank and Trust Companys claim for refund of excess
creditable withholding taxes in the aggregate amount of Seven Hundred
Fifty-Five Thousand Seven Hundred and Fifteen Pesos (P755,715) allegedly
paid and remitted to the Bureau of Internal Revenue (BIR) sometime in 1990
and 1991.

The antecedent facts are as follows:

FAR EAST BANK AND TRUST GR No. 129130


COMPANY,
Petitioner, Present:
DAVIDE, JR., C.J. (Chairman),
QUISUMBING,
YNARES-SANTIAGO,

Petitioner is a domestic banking corporation duly organized


and existing under and by virtue of Philippine laws. In the
early part of 1992, the Cavite Development Bank [CDB], also
a domestic banking corporation, was merged with Petitioner
with the latter as its surviving entity [under] the merger.
Petitioner being the surviving entity[, it] acquired all [the]
assets of CDB.
During the period from 1990 to 1991, CDB sold some

acquired assets in the course of which it allegedly withheld


the creditable tax from the sales proceeds which amounted
to P755,715.00.
In said years, CDB filed income tax returns which reflected
that CDB incurred negative taxable income or losses for both
years. Since there was no tax against which to credit or
offset the taxes withheld by CDB, the result was that CDB,
according to petitioner, had excess creditable withholding
tax.
Thus, petitioner, being the surviving entity of the merger,
filed this Petition for Review after its administrative claim for
refund was not acted upon.[1]

In denying petitioners claim, the CA held that the evidence


presented by petitioner consisting of (1) confirmation receipts, payment

1. THE DECISION OF MAY 7,1997 WHEREBY RESPONDENT CA


DISMISSED PETITIONERS APPEAL, AND RESPONDENT
CTAS DECISION DATED JANUARY 24, 1996 AND
RESOLUTION OF JULY 31,1996, ARE NOT BASED ON
THE FACTS AND THE LAW.
2. PETITIONER HAS ADDUCED EVIDENCE A QUO WHICH
SUFFICIENTLY AND SUBSTANTIALLY ESTABLISH[ES]
THE FACT THAT THE CREDITABLE WITHHOLDING TAX
ON THE SALE OF ACQUIRED ASSETS WAS WITHHELD
AND THEN REMITTED TO THE BUREAU OF INTERNAL
REVENUE; AND,
3. THE DISMISSAL OF THE CLAIM FOR REFUND BEFORE
RESPONDENT CTA ARISES FROM AN UNDULY STRICT
APPLICATION OF THE REGULATIONS WHICH IS NOT
WARRANTED IN VIEW OF THE CLEAR PROOFS
ADDUCED BY PETITIONER WHICH ESTABLISH THE
BASIS FOR THE RELIEFS SOUGHT.[5]

orders, and official receipts issued by the Central Bank and the BIR with CDB
as the payor;

[2]

(2) Income Tax Returns for 1990 and 1991 with attached

financial statements filed by petitioner with the BIR;[3] and, (3) a list
prepared by the Accounting Department of petitioner purportedly showing
the CDB schedule of creditable withholding tax applied for refund for 1990
and 1991,[4] all failed to clearly establish that the taxes arising from the sale
of its acquired assets sometime in 1990 and 1991 were properly withheld
and remitted to the BIR. The CA likewise ruled that it was incumbent upon
petitioner to present BIR Form No. 1743.1 as required under Revenue
Regulation 6-85 to conclusively prove its right to the refund. It held that
petitioners failure to do so was fatal to its cause.

Petitioner contends that the confirmation receipts presented by it


constitute competent and irrefutable proof of the fact that taxes were
withheld and remitted to the BIR.[6]It is admitted that the taxes reflected on
the confirmation receipts as well as on the payment orders and official
receipts issued by the BIR were withheld by CDB. Petitioner maintains that
these pertained to the proceeds of the sale of its acquired assets in 1990
and 1991. According to petitioner, CDB took the initiative of paying the
withholding tax accruing thereon notwithstanding the fact that it was the
recipient of the income, to ensure that the correct taxes were remitted to the
BIR. Petitioner further argues that the list prepared by its Accounting
Department identifying the persons to whom the various sales were made

Hence, this Petition.

and indicating the amount of taxes withheld for each transaction should
have been given more weight by the court a quo as this document, when

Petitioner anchors its arguments on the following grounds:

taken with the tax withholding forms, indubitably establishes the fact of

withholding and the basis for the claims for refund. [7] Considering, therefore,

system, possession of the amount that is used to settle the tax liability is

that petitioner had adequately established by other evidence the basis for

acquired by the payor as the withholding agent of the government. [13] For

the grant of the claim for tax refund, petitioner asserts that its failure to

this reason, the Tax Code imposes, among others, certain obligations upon

submit BIR Form No. 1743.1 is not fatal to its cause.

the withholding agent to monitor its compliance with this duty. These include
the filing of the quarterly withholding tax returns, [14] the submission to the

The crucial issue in this case turns on a question of fact, that is,

payee, in respect of his or its receipts during the calendar quarter or year, of

whether petitioner adduced sufficient evidence to prove its entitlement to a

a written statement showing the income or other payments made by the

refund.

withholding agent during such quarter or year and the amount of the tax
deducted and withheld therefrom, [15] and the filing with the BIR of a
The findings of fact of the CTA, a special court exercising particular

reconciliation statement of quarterly payments and a list of payees and

expertise on the subject of tax, are generally regarded as final, binding and

income payments.[16] Codal provisions on withholding tax are mandatory and

conclusive[8] upon this Court, especially if these are substantially similar to

must be complied with by the withholding agent. This is significant in that a

the findings of the CA which is normally the final arbiter of questions of fact.

taxpayer cannot be compelled to answer for the non-performance by the

The findings shall not be reviewed nor disturbed on appeal [10] unless a

withholding agent of its legal duty to withhold unless there is collusion or

party can show that these are not supported by evidence, [11] or when the

bad faith. In addition, the former could not be deemed to have evaded the

judgment is premised on a misapprehension of facts, or when the lower

tax had the withholding agent performed its duty. [17]

[9]

courts failed to notice certain relevant facts which if considered would justify
a different conclusion.[12]

On the other hand, it is incumbent upon the payee to reflect in his or


its own return the income upon which any creditable tax is required to be

Petitioner has not sufficiently presented a case for the application of


an exception from the rule.

withheld at the source. Only when there is an excess of the amount of tax so
withheld over the tax due on the payees return can a refund become
possible.

Firstly, the CA cannot be faulted for not lending credence to


petitioners contention that it withheld, for its own account, the creditable

A taxpayer must thus do two things to be able to successfully make

withholding taxes on the sale of its acquired assets. In our withholding tax

a claim for the tax refund: (a) declare the income payments it received as

veritable doubts on the nature and identity of the taxes


withheld, when it declared, in part, in its Decision (Annex A
of the Petition) that, It can not well be said that the
amounts paid and remitted to the BIR were for CDBs account
and not for the other possible payees of withholding taxes
which CDB may also be liable to remit as a withholding
agent x x x . [20]

part of its gross income and (b) establish the fact of withholding. [18] On this
score, the relevant revenue regulation provides as follows:
Section 10. Claims for tax credit or refund. -- Claims
for tax credit or refund of income tax deducted and withheld
on income payments shall be given due course only when it
is shown on the return that the income payment received
was declared as part of the gross income and the fact of
withholding is established by a copy of the statement duly
issued by the payor to the payee (BIR Form No. 1743.1)
showing the amount paid and the amount of tax withheld
therefrom.[19]

Petitioner, apparently aware of the foregoing deficiency, offered into


evidence a CDB Schedule of Creditable Withholding Tax for the period 1990
to 1991[21] prepared by petitioners representative to show that the taxes
CDB withheld did, indeed, pertain to the taxes accruing on the sale of the

As mentioned, petitioner relies heavily on the confirmation receipts

acquired assets. The CA, however, found the same to be self-serving and

with the corresponding official receipts and payment orders to support its

unverifiable and therefore barren of evidentiary weight. [22] We accord this

case. Standing alone, however, these documents only establish that CDB

finding on an issue of fact the highest respect and we will not set it aside

withheld certain amounts in 1990 and 1991. It does not follow that the

lightly.

payments reflected in the confirmation receipts relate to the creditable


withholding taxes arising from the sale of the acquired properties. The claim

It bears emphasis that questions on whether certain items of

that CDB had excess creditable withholding taxes can only be upheld if it

evidence should be accorded probative value or weight, or rejected as feeble

were clearly and positively shown that the amounts on the various

or spurious, or whether the proofs on one side or the other are clear and

confirmation receipts were the amounts withheld by virtue of the sale of the

convincing and adequate to establish a proposition in issue, are without

acquired assets. On this point, the CA correctly pronounced:

doubt questions of fact. This is true regardless of whether the body of proofs
presented by a party, weighed and analyzed in relation to contrary evidence

The confirmation receipts alone, by themselves, will not


suffice to prove that the taxes reflected in the income tax
returns are the same taxes withheld from CDBs income
payments from the sale of its acquired assets. This is
because a cursory examination of the said Confirmation
Receipts, Payment Orders and Official Receipts will show that
what are reflected therein are merely the names of the
payors and the amount of tax. The nature of the tax paid, or
at the very least, the income payments from which the taxes
paid were withheld are not reflected therein. If these are the
only entries that are found on these proferred documents,
We cannot begrudge the Respondent Court from nurturing

submitted by the adverse party, may be said to be strong, clear and


convincing. Whether certain documents presented by one side should be
accorded full faith and credit in the face of protests as to their spurious
character by the other side; whether inconsistencies in the body of proofs of
a party are of such gravity as to justify refusing to give said proofs weightall
these are issues of fact. Questions like these are not reviewable by us. As a

rule, we confine our review of cases decided by the CA only to questions of

Petitioner also asserts that the confusion or difficulty in the

law raised in the petition and therein distinctly set forth. [23] We note that

implementation of Revenue Memorandum Circular 7-90 [27] was the reason

without the CDB Schedule, no evidence links the Confirmation Receipts,

why CDB took upon itself the task of withholding the taxes arising from the

Payment Orders and Official Receipts to the taxes allegedly withheld by CDB

sale, to ensure accuracy. Assuming this were true, CDB should have,

on the sale of the acquired assets.

nevertheless, accomplished the necessary returns to clearly identify the


nature of the payments made and file the same with the BIR. Section 2 of

As to the annual income tax returns for 1990 and 1991

presented

the circular clearly provides that the amount of withholding tax paid by a

by petitioner, we must stress that the mere admission into the records of

corporation to the BIR during the quarter on sales or exchanges of property

these returns does not automatically make their contents or entries

and which are creditable against the corporations tax liability are evidenced

undisputed and binding facts. Mere allegations by petitioner of the figures in

by Confirmation/Official Receipts and covered by BIR Form Nos. 1743W and

its returns are not a sufficient proof of the amount of its refund entitlement.

1743-B. On the other hand, Revenue Regulation 6-85 states that BIR Form

They do not even constitute evidence adverse to respondent, against whom

No. 1743.1 establishes the fact of withholding. Since no competent evidence

these are being presented.[25]

was adduced by petitioner, the failure to offer these returns as evidence of

[24]

the amount of petitioners entitlement during the trial phase of this case is
Furthermore, we note that in the proceedings below, respondent

fatal to its cause. For its negligence, petitioner cannot be allowed to seek

Commissioner of Internal Revenue (CIR) raised the fact that there was a

refuge in a liberal application of the [r]ules. [28] The liberal interpretation and

discrepancy in the excess creditable withholding tax reflected in the returns

application of rules apply only in proper cases of demonstrable merit and

with the amounts sought to be refunded by petitioner. Whereas the 1990

under justifiable causes and circumstances.[29]

and 1991 Income Tax Returns indicated that CDB had excess creditable
withholding tax in the amounts of P535,310 and P357,511, respectively, the

We must emphasize that tax refunds, like tax exemptions, are

amounts claimed by petitioner as indicated in the CDB Schedule were

construed strictly against the taxpayer and liberally in favor of the taxing

P512,940.50 for 1990 and P242,774.50 for 1991.[26] The records are bereft of

authority.[30] In the event, petitioner has not met its burden of proof in

any explanation for such discrepancy. This further undermines petitioners

establishing the factual basis for its claim for refund and we find no reason

contentions, and its reliance on the CDB Schedule.

to disturb the ruling of the lower courts.

WHEREFORE, the petition is DENIED and the Decision of the Court


of Appeals dated May 7, 1997 in CA-G.R. SP No. 41666 is AFFIRMED. No
pronouncement as to costs.
SO ORDERED.

[G.R. No. 122605. April 30, 2001]

SEA-LAND SERVICE, INC., petitioner, vs. COURT OF APPEALS and


COMMISSIONER OF INTERNAL REVENUE, respondents.

Claiming that it paid the aforementioned income tax by mistake, a written


claim for refund was filed with the BIR on 15 April 1987. However, before the
said claim for refund could be acted upon by public respondent
Commissioner of Internal Revenue, petitioner-appellant filed a petition for
review with the CTA docketed as CTA Case No. 4149, to judicially pursue its
claim for refund and to stop the running of the two-year prescriptive period
under the then Section 243 of the NIRC.
On 21 February 1995, CTA rendered its decision denying SEA-LANDs claim
for refund of the income tax it paid in 1984.[2]
On March 30, 1995, petitioner appealed the decision of the Court of Tax
Appeals to the Court of Appeals.[3]
After due proceedings, on October 26, 1995, the Court of Appeals
promulgated its decision dismissing the appeal and affirming in toto the
decision of the Court of Tax Appeals.[4]
Hence, this petition.[5]

DECISION

The Issue

PARDO, J.:

The Case

The issue raised is whether or not the income that petitioner derived
from services in transporting the household goods and effects of U. S.
military personnel falls within the tax exemption provided in Article XII,
paragraph 4 of the RP-US Military Bases Agreement.

Appeal via certiorari from the decision of the Court of Appeals affirming
in toto that of the Court of Tax Appeals which denied petitioners claim for tax
credit or refund of income tax paid on its gross Philippine billings for taxable
year 1984, in the amount of P870,093.12.[1]

The Courts Ruling

We deny the petition.


The Facts

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


Sea-Land Service Incorporated (SEA-LAND), an American international
shipping company licensed by the Securities and Exchange Commission to
do business in the Philippines entered into a contract with the United States
Government to transport military household goods and effects of U. S.
military personnel assigned to the Subic Naval Base.
From the aforesaid contract, SEA-LAND derived an income for the taxable
year 1984 amounting to P58,006,207.54. During the taxable year in
question, SEA-LAND filed with the Bureau of Internal Revenue (BIR) the
corresponding corporate Income Tax Return (ITR) and paid the income tax
due thereon of 1.5% as required in Section 25 (a) (2) of the National Internal
Revenue Code (NIRC) in relation to Article 9 of the RP-US Tax Treaty,
amounting to P870,093.12.

The RP-US Military Bases Agreement provides:


No national of the United States, or corporation organized under the laws of
the United States, resident in the United States, shall be liable to pay income
tax in the Philippines in respect of any profits derived under a contract made
in the United States with the government of the United States in connection
with the construction, maintenance, operation and defense of the bases, or
any tax in the nature of a license in respect of any service or work for the
United States in connection with the construction, maintenance, operation
and defense of the bases.[6]
Petitioner Sea-Land Service, Inc. a US shipping company licensed to do
business in the Philippines earned income during taxable year 1984
amounting to P58,006,207.54, and paid income tax thereon of 1.5%
amounting to P870,093.12.
The question is whether petitioner is exempted from the payment of
income tax on its revenue earned from the transport or shipment of

household goods and effects of US personnel assigned at Subic Naval Base.


Laws granting exemption from tax are construed strictissimi juris
against the taxpayer and liberally in favor of the taxing power. Taxation is
the rule and exemption is the exception. [7] The law does not look with favor
on tax exemptions and that he who would seek to be thus privileged must
justify it by words too plain to be mistaken and too categorical to be
misinterpreted.[8]
Under Article XII (4) of the RPUS Military Bases Agreement, the
Philippine Government agreed to exempt from payment of Philippine income
tax nationals of the United States, or corporations organized under the laws
of the United States, residents in the United States in respect of any profit
derived under a contract made in the United States with the Government of
the United States in connection with the construction, maintenance,
operation and defense of the bases.
It is obvious that the transport or shipment of household goods and
effects of U. S. military personnel is not included in the term construction,
maintenance, operation and defense of the bases. Neither could the
performance of this service to the U. S. government be interpreted as
directly related to the defense and security of the Philippine territories.
When the law speaks in clear and categorical language, there is no reason
for interpretation or construction, but only for application. [9] Any
interpretation that would give it an expansive construction to encompass
petitioners exemption from taxation would be unwarranted.
The avowed purpose of tax exemption is some public benefit or
interest, which the lawmaking body considers sufficient to offset the
monetary loss entailed in the grant of the exemption. [10] The hauling or
transport of household goods and personal effects of U. S. military personnel
would not directly contribute to the defense and security of the Philippines.
We see no reason to reverse the ruling of the Court of Appeals, which
affirmed the decision of the Court of Tax Appeals. The Supreme Court will not
set aside lightly the conclusion reached by the Court of Tax Appeals which,
by the very nature of its function, is dedicated exclusively to the
consideration of tax problems and has necessarily developed an expertise
on the subject, unless there has been an abuse or improvident exercise of
authority.[11]
Hence, the Court of Appeals did not err or gravely abuse its discretion in
dismissing the petition for review. We can not grant the petition.

The Judgment

WHEREFORE, the Court DENIES the petition for lack of merit.


No costs.
SO ORDERED.

Davide, Jr., C.J., (Chairman), Puno, Kapunan, and Ynares-Santiago, JJ.,


concur.

proper mode of judicial review undertaken from decisions of the regional trial
courts resolving the denial of tax protests made by local government
treasurers, pursuant to the Local Government Code. The second is whether a
local government unit can, under the Local Government Code, impel a
condominium corporation to pay business taxes.[1]
While we agree with the City Treasurers position on the first issue,
there ultimately is sufficient justification for the Court to overlook what is
essentially a procedural error. We uphold respondents on the second issue.
Indeed, there are disturbing aspects in both procedure and substance that
attend the attempts by the City of Makati to flex its taxing muscle.
LUZ R. YAMANE, in her G.R. No. 154993
capacity as the CITY
TREASURER OF MAKATI Present:
CITY,
Petitioner, PUNO, J.,
Chairman,
AUSTRIA-MARTINEZ,
CALLEJO, SR.,
- versus - TINGA, and

Considering that the tax imposition now in question has utterly no basis in
law, judicial relief is imperative. There are fewer indisputable causes for the
exercise of judicial review over the exercise of the taxing power than when
the tax is based on whim, and not on law.
CHICO-NAZARIO, JJ.

BA LEPANTO CONDOMINUM Promulgated:


CORPORATION,
Respondent. October 25, 2005

The facts, as culled from the record, follow.


Respondent BA-Lepanto Condominium Corporation (the Corporation) is a

x-------------------------------------------------------------------x
duly organized condominium corporation constituted in accordance with the
DECISION
TINGA, J.:

Condominium Act,[2]which owns and holds title to the common and limited
common areas of the BA-Lepanto Condominium (the Condominium), situated
in Paseo de Roxas, Makati City. Its membership comprises the various unit

Petitioner City Treasurer of Makati, Luz Yamane (City Treasurer),

owners of the Condominium. The Corporation is authorized, under Article V

presents for resolution of this Court two novel questions: one procedural, the

of its Amended By-Laws, to collect regular assessments from its members

other substantive, yet both of obvious significance. The first pertains to the

for operating expenses, capital expenditures on the common areas, and

other special assessments as provided for in the Master Deed with

is defined as trade or commercial activity regularly engaged in as a means

Declaration of Restrictions of the Condominium.

of livelihood or with a view to profit. It was submitted that the Corporation,


as a condominium corporation, was organized not for profit, but to hold title

On 15 December 1998, the Corporation received a Notice of Assessment


over the common areas of the Condominium, to manage the Condominium
dated 14 December 1998 signed by the City Treasurer. The Notice of
for the unit owners, and to hold title to the parcels of land on which the
Assessment stated that the Corporation is liable to pay the correct city
Condominium was located. Neither was the Corporation authorized, under its
business taxes, fees and charges, computed as totaling P1,601,013.77 for
articles of incorporation or by-laws to engage in profit-making activities. The
the years 1995 to 1997.[3] The Notice of Assessment was silent as to the
assessments it did collect from the unit owners were for capital expenditures
statutory basis of the business taxes assessed.
and operating expenses.[5]
Through counsel, the Corporation responded with a written tax
protest dated 12 February 1999, addressed to the City Treasurer. It was
evident in the protest that the Corporation was perplexed on the statutory
The protest was rejected by the City Treasurer in a letter dated 4
basis of the tax assessment.
March 1999. She insisted that the collection of dues from the unit owners
With due respect, we submit that the Assessment has
no basis as the Corporation is not liable for business taxes and
surcharges and interest thereon, under the Makati [Revenue]
Code or even under the [Local Government] Code.

was effected primarily to sustain and maintain the expenses of the common
areas, with the end in view [sic] of getting full appreciative living values [sic]
for the individual condominium

The Makati [Revenue] Code and the [Local


Government] Code do not contain any provisions on which the
Assessment could be based. One might argue that Sec.
3A.02(m) of the Makati [Revenue] Code imposes business tax
on owners or operators of any business not specified in the
said code. We submit, however, that this is not applicable to
the Corporation as the Corporation is not an owner or operator
of any business in the contemplation of the Makati [Revenue]
Code and even the [Local Government] Code.[4]

occupants

and to

command better

marketable [sic] prices for those occupants who would in the future sell their
respective units.[6] Thus, she concluded since the chances of getting higher
prices for well-managed common areas of any condominium are better and
more effective that condominiums with poor [sic] managed common areas,
the corporation activity is a profit venture making [sic].[7]
From the denial of the protest, the Corporation filed an Appeal with the

Proceeding from the premise that its tax liability arose from Section
Regional Trial Court (RTC) of Makati. [8] On 1 March 2000, the Makati RTC
3A.02(m) of the Makati Revenue Code, the Corporation proceeded to argue
Branch 57 rendered aDecision[9] dismissing the appeal for lack of merit.
that under both the Makati Code and the Local Government Code, business

Accepting the premise laid by the City Treasurer, the RTC acknowledged, in

reversed the RTC and declared that the Corporation was not liable to pay

sadly risible language:

business taxes to the City of Makati. [17] In doing so, the Court of Appeals
delved into jurisprudential definitions of profit, [18]and concluded that the

Herein appellant, to defray the improvements and beautification


of the common areas, collect [sic] assessments from its
members. Its end view is to get appreciate living rules for the
unit owners [sic], to give an impression to outsides [sic] of the
quality of service the condominium offers, so as to allow present
owners to command better prices in the event of sale. [10]

Corporation was not engaged in profit. For one, it was held that the very
statutory concept of a condominium corporation showed that it was not a
juridical entity intended to make profit, as its sole purpose was to hold title to
the common areas in the condominium and to maintain the condominium. [19]

With this, the RTC concluded that the activities of the Corporation fell
squarely under the definition of business under Section 13(b) of the Local
Government Code, and thus subject to local business taxation. [11]

The Court of Appeals likewise cited provisions from the Corporations


Amended Articles of Incorporation and Amended By-Laws that, to its
estimation, established that the Corporation was not engaged in business

From this Decision of the RTC, the Corporation filed a Petition for Review

and the assessment collected from unit owners limited to those necessary to

under Rule 42 of the Rules of Civil Procedure with the Court of Appeals.

defray the expenses in the maintenance of the common areas and

Initially, the petition was dismissed outright [12] on the ground that only

management the condominium.[20]

decisions of the RTC brought on appeal from a first level court could be
elevated for review under the mode of review prescribed under Rule 42. [13]
However, the Corporation pointed out in its Motion for Reconsideration that
under Section 195 of the Local Government Code, the remedy of the
taxpayer on the denial of the protest filed with the local treasurer is to

Upon denial of her Motion for Reconsideration,[21] the City Treasurer

appeal the denial with the court of competent jurisdiction. [14] Persuaded by

elevated the present Petition for Review under Rule 45. It is argued that the

this contention, the Court of Appeals reinstated the petition. [15]

Corporation is engaged in business, for the dues collected from the different
unit owners is utilized towards the beautification and maintenance of the
Condominium, resulting in full appreciative living values for the condominium
units which would command better market prices should they be sold in the

On 7 June 2002, the Court of Appeals Special Sixteenth Division

future. The City Treasurer likewise avers that the rationale for business taxes

rendered the Decision[16] now assailed before this Court. The appellate court

is not on the income received or profit earned by the business, but the

privilege to engage in business. The fact that the

protests by local treasurers, exercises appellate jurisdiction. This position is

Corporation is empowered to acquire, own, hold, enjoy, lease, operate and

anchored on the language of Section 195 of the Local Government Code

maintain, and to convey sell, transfer or otherwise dispose of real or personal

which states that the remedy of the taxpayer whose protest is denied by the

property allegedly qualifies as incident to the fact of [the Corporations] act of

local treasurer is to appeal with the court of competent jurisdiction. [24]

engaging in business.[22]

Apparently though, the Local Government Code does not elaborate on how
such appeal should be undertaken.

The City Treasurer also claims that the Corporation had filed the
wrong mode of appeal before the Court of Appeals when the latter filed its
The other view, as maintained by the City Treasurer, is that the
Petition for Review under Rule 42. It is reasoned that the decision of the
jurisdiction exercised by the RTC is original in character. This is the first time
Makati RTC was rendered in the exercise of original jurisdiction, it being the
that the position has been presented to the court for adjudication. Still, this
first court which took cognizance of the case. Accordingly, with the
argument does find jurisprudential mooring in our ruling in Garcia v. De
Corporation having pursued an erroneous mode of appeal, the RTC Decision
Jesus,[25] where the Court proffered the following distinction between original
is deemed to have become final and executory.
jurisdiction and appellate jurisdiction: Original jurisdiction is the power of the
Court to take judicial cognizance of a case instituted for judicial action for the
First, we dispose of the procedural issue, which essentially boils down
first time under conditions provided by law. Appellate jurisdiction is the
to whether the RTC, in deciding an appeal taken from a denial of a protest by
authority of a Court higher in rank to re-examine the final order or judgment
a local treasurer under Section 195 of the Local Government Code, exercises
of a lower Court which tried the case now elevated for judicial review. [26]
original jurisdiction or appellate jurisdiction. The question assumes a
measure of importance to this petition, for the adoption of the position of the
The quoted definitions were taken from the commentaries of the
City Treasurer that the mode of review of the decision taken by the RTC is
esteemed Justice Florenz Regalado. With the definitions as beacon, the
governed by Rule 41 of the Rules of Civil Procedure means that the decision
review taken by the RTC over the denial of the protest by the local treasurer
of the RTC would have long become final and executory by reason of the
would fall within that courts original jurisdiction. In short, the review is the
failure of the Corporation to file a notice of appeal.[23]
initial judicial cognizance of the matter. Moreover, labeling the said review as
an exercise of appellate jurisdiction is inappropriate, since the denial of the
There are discernible conflicting views on the issue. The first, as
protest is not the judgment or order of a lower court, but of a local
expressed by the Court of Appeals, holds that the RTC, in reviewing denials of

government official.

non-judicial entities.

The stringent concept of original jurisdiction may seemingly be

From these premises, it is evident that the stance of the City

neutered by Rule 43 of the 1997 Rules of Civil Procedure, Section 1 of which

Treasurer is correct as a matter of law, and that the proper remedy of the

lists a slew of administrative agencies and quasi-judicial tribunals or their

Corporation from the RTC judgment is an ordinary appeal under Rule 41 to

officers whose decisions may be reviewed by the Court of Appeals in the

the Court of Appeals. However, we make this pronouncement subject to two

exercise of its appellate jurisdiction. However, the basic law of jurisdiction,

important qualifications. First, in this particular case there are nonetheless

Batas Pambansa Blg. 129 (B.P. 129), [27] ineluctably confers appellate

significant reasons for the Court to overlook the procedural error and

jurisdiction on the Court of Appeals over final rulings of quasi-judicial

ultimately uphold the adjudication of the jurisdiction exercised by the Court

agencies, instrumentalities, boards or commission, by explicitly using the

of Appeals in this case. Second, the doctrinal weight of the pronouncement is

phrase appellate jurisdiction.[28] The power to create or characterize

confined to cases and controversies that emerged prior to the enactment of

jurisdiction of courts belongs to the legislature. While the traditional notion of

Republic Act No. 9282, the law which expanded the jurisdiction of the Court

appellate jurisdiction connotes judicial review over lower court decisions, it

of Tax Appeals (CTA).

has to yield to statutory redefinitions that clearly expand its breadth to


encompass even review of decisions of officers in the executive branches of
government.

Republic Act No. 9282 definitively proves in its Section 7(a)(3) that
the CTA exercises exclusive appellate jurisdiction to review on appeal
decisions, orders or resolutions of the Regional Trial Courts in local tax cases

Yet significantly, the Local Government Code, or any other statute for

original decided or resolved by them in the exercise of their originally or

that matter, does not expressly confer appellate jurisdiction on the part of

appellate jurisdiction. Moreover, the provision also states that the review is

regional trial courts from the denial of a tax protest by a local treasurer. On

triggered by filing a petition for review under a procedure analogous to that

the other hand, Section 22 of B.P. 129 expressly delineates the appellate

provided for under Rule 42 of the 1997 Rules of Civil Procedure. [29]

jurisdiction of the Regional Trial Courts, confining as it does said appellate


jurisdiction to cases decided by Metropolitan, Municipal, and Municipal Circuit

Republic Act No. 9282, however, would not apply to this case simply

Trial Courts. Unlike in the case of the Court of Appeals, B.P. 129 does not

because it arose prior to the effectivity of that law. To declare otherwise

confer appellate jurisdiction on Regional Trial Courts over rulings made by

would be to institute a jurisdictional rule derived not from express statutory

grant, but from implication. The jurisdiction of a court to take cognizance of a

committed an error that would warrant the reversal or modification of the

case should be clearly conferred and should not be deemed to exist on mere

decision under review.[34] There is no similar requirement of a prima facie

implications,[30] and this settled rule would be needlessly emasculated should

determination of error in the case of ordinary appeal, which is perfected upon

we declare that the Corporations position is correct in law.

the filing of the notice of appeal in due time.[35]

Be that as it may, characteristic of all procedural rules is adherence

Evidently, by employing the Rule 42 mode of review, the Corporation

to the precept that they should not be enforced blindly, especially if

faced a greater risk of having its petition rejected by the Court of Appeals as

mechanical application would defeat the higher ends that animates our civil

compared to having filed an ordinary appeal under Rule 41. This was not an

procedurethe just, speedy and inexpensive disposition of every action and

error that worked to the prejudice of the City Treasurer.

proceeding.[31] Indeed, we have repeatedly upheldand utilized ourselvesthe


discretion of courts to nonetheless take cognizance of petitions raised on an
erroneous mode of appeal and instead treat these petitions in the manner as

We now proceed to the substantive issue, on whether the City of


Makati may collect business taxes on condominium corporations.

they should have appropriately been filed. [32] The Court of Appeals could very
well have treated the Corporations petition for review as an ordinary appeal.

We begin with an overview of the power of a local government unit to impose


business taxes.

Moreover, we recognize that the Corporations error in elevating the


RTC decision for review via Rule 42 actually worked to the benefit of the City
Treasurer. There is wider latitude on the part of the Court of Appeals to refuse
cognizance over a petition for review under Rule 42 than it would have over
an ordinary appeal under Rule 41. Under Section 13, Rule 41, the stated

The power of local government units to impose taxes within its territorial

grounds for the dismissal of an ordinary appeal prior to the transmission of

jurisdiction derives from the Constitution itself, which recognizes the power

the case records are when the appeal was taken out of time or when the

of these units to create its own sources of revenue and to levy taxes, fees,

docket fees were not paid. [33] On the other hand, Section 6, Rule 42 provides

and charges subject to such guidelines and limitations as the Congress may

that in order that the Court of Appeals may allow due course to the petition

provide, consistent with the basic policy of local autonomy. [36] These

for review, it must first make aprima facie finding that the lower court has

guidelines and limitations as provided by Congress are in main contained in

the Local Government Code of 1991 (the Code), which provides for

impose taxes on any other businesses not otherwise specified under Section

comprehensive instances when and how local government units may impose

143 which the sanggunian concerned may deem proper to tax.

taxes. The significant limitations are enumerated primarily in Section 133 of


the Code, which include among others, a prohibition on the imposition of

The coverage of business taxation particular to the City of Makati is

income taxes except when levied on banks and other financial institutions. [37]

provided by the Makati Revenue Code (Revenue Code), enacted through

None of the other general limitations under Section 133 find application to

Municipal Ordinance No. 92-072. The Revenue Code remains in effect as of

the case at bar.

this
writing. Article A, Chapter III of the Revenue Code governs business taxes in

The most well-known mode of local government taxation is perhaps the real

Makati, and it is quite specific as to the particular businesses which are

property tax, which is governed by Title II, Book II of the Code, and which

covered by business taxes. To give a sample of the specified businesses

bears no application in this case. A different set of provisions, found under

under the Revenue Code which are not enumerated under the Local

Title I of Book II, governs other taxes imposable by local government units,

Government Code, we cite Section 3A.02(f) of the Code, which levies a gross

including business taxes. Under Section 151 of the Code, cities such as

receipt tax :

Makati are authorized to levy the same taxes fees and charges as provinces
and municipalities. It is in Article II, Title II, Book II of the Code, governing
municipal taxes, where the provisions on business taxation relevant to this
petition may be found.[38]

Section 143 of the Code specifically enumerates several types of business on


which

municipalities

and

cities

may

impose

taxes.

These

include

manufacturers, wholesalers, distributors, dealers of any article of commerce


of whatever nature; those engaged in the export or commerce of essential
commodities; contractors and other independent contractors; banks and
financial institutions; and peddlers engaged in the sale of any merchandise
or article of commerce. Moreover, the local sanggunian is also authorized to

(f) On contractors and other independent contractors


defined in Sec. 3A.01(q) of Chapter III of this Code, and on
owners or operators of business establishments rendering
or offering services such as: advertising agencies; animal
hospitals; assaying laboratories; belt and buckle shops;
blacksmith shops; bookbinders; booking officers for film
exchange; booking offices for transportation on
commission basis; breeding of game cocks and other
sporting
animals
belonging
to
others;
business
management services; collecting agencies; escort
services; feasibility studies; consultancy services; garages;
garbage disposal contractors; gold and silversmith shops;
inspection services for incoming and outgoing cargoes;
interior decorating services; janitorial services; job
placement
or
recruitment
agencies;
landscaping
contractors;
lathe
machine
shops;
management
consultants not subject to professional tax; medical and
dental laboratories; mercantile agencies; messsengerial
services; operators of shoe shine stands; painting shops;
perma press establishments; rent-a-plant services; polo
players; school for and/or horse-back riding academy; real
estate appraisers; real estate brokerages; photostatic,
white/blue printing, Xerox, typing, and mimeographing
services; rental of bicycles and/or tricycles, furniture,

shoes, watches, household appliances, boats, typewriters,


etc.; roasting of pigs, fowls, etc.; shipping agencies;
shipyard for repairing ships for others; shops for shearing
animals; silkscreen or T-shirt printing shops; stables; travel
agencies; vaciador shops; veterinary clinics; video rentals
and/or
coverage
services;
dancing
schools/speed
reading/EDP; nursery, vocational and other schools not
regulated by the Department of Education, Culture and
Sports, (DECS), day care centers; etc.[39]

Corporation, the RTC, the Court of Appeals, or this Court for that matter, as to
what exactly is the precise statutory basis under the Makati Revenue Code
for the levying of the business tax on petitioner. We have examined all of the
pleadings submitted by the City Treasurer in all the antecedent judicial
proceedings, as well as in this present petition, and also the communications
by the City Treasurer to the Corporation which form part of the record.

Other provisions of the Revenue Code likewise subject hotel and

Nowhere therein is there any citation made by the City Treasurer of any

restaurant owners and operators[40], real estate dealers, and lessors of real

provision of the Revenue Code which would serve as the legal authority for

estate[41] to business taxes.

the collection of business taxes from condominiums in Makati.

Should the comprehensive listing not prove encompassing enough,

Ostensibly, the notice of assessment, which stands as the first

there is also a catch-all provision similar to that under the Local Government

instance the taxpayer is officially made aware of the pending tax liability,

Code. This is found in Section 3A.02(m) of the Revenue Code, which

should be sufficiently informative to apprise the taxpayer the legal basis of

provides:

the tax. Section 195 of the Local Government Code does not go as far as to
expressly require that the notice of assessment specifically cite the provision

(m) On owners or operators of any business not specified


above shall pay the tax at the rate of two percent (2%) for 1993,
two and one-half percent (2 %) for 1994 and 1995, and three
percent (3%) for 1996 and the years thereafter of the gross
receipts during the preceding year.[42]

of the ordinance involved but it does require that it state the nature of the
tax, fee or charge, the amount of deficiency, surcharges, interests and
penalties. In this case, the notice of assessment sent to the Corporation did
state that the assessment was for business taxes, as well as the amount of

The initial inquiry is what provision of the Makati Revenue Code does
the assessment. There may have been prima faciecompliance with the
the City Treasurer rely on to make the Corporation liable for business taxes.
requirement under Section 195. However in this case, the Revenue Code
Even at this point, there already stands a problem with the City Treasurers
provides multiple provisions on business taxes, and at varying rates. Hence,
cause of action.
we could appreciate the Corporations confusion, as expressed in its protest,
as to the exact legal basis for the tax. [43] Reference to the local tax ordinance
Our careful examination of the record reveals a highly disconcerting
is vital, for the power of local government units to impose local taxes is
fact. At no point has the City Treasurer been candid enough to inform the

exercised through the appropriate ordinance enacted by the sanggunian, and


not by the Local Government Code alone. [44] What determines tax liability is

Certainly, the City Treasurer has not been helpful in that regard, as

the tax ordinance, the Local Government Code being the enabling law for the

she has been silent all through out as to the exact basis for the tax

local legislative body.

imposition which she wishes that this Court uphold. Indeed, there is only one
thing that prevents this Court from ruling that there has been a due process

Moreover, a careful examination of the Revenue Code shows that

violation on account of the City Treasurers failure to disclose on paper the

while Section 3A.02(m) seems designed as a catch-all provision, Section

statutory basis of the taxthat the Corporation itself does not allege injury

3A.02(f), which provides for a different tax rate from that of the former

arising from such failure on the part of the City Treasurer.

provision, may be construed to be of similar import. While Section 3A.02(f) is


quite exhaustive in enumerating the class of businesses taxed under the

We do not know why the Corporation chose not to put this issue into

provision, the listing, while it does not include condominium-related

litigation, though we can ultimately presume that no injury was sustained

enterprises, ends with the abbreviation etc., or et cetera.

because the City Treasurer failed to cite the specific statutory basis of the
tax. What is essential though is that the local treasurer be required to explain

We do note our discomfort with the unlimited breadth and the


dangerous uncertainty which are the twin hallmarks of the words et cetera.

to the taxpayer with sufficient particularity the basis of the tax, so as to


leave no doubt in the mind of the taxpayer as to the specific tax involved.

Certainly, we cannot be disposed to uphold any tax imposition that derives


In this case, the Corporation seems confident enough in litigating
its authority from enigmatic and uncertain words such as et cetera. Yet we
despite the failure of the City Treasurer to admit on what exact provision of
cannot even say with definiteness whether the tax imposed on the
the Revenue Code the tax liability ensued. This is perhaps because the
Corporation in this case is based on et cetera, or on Section 3A.02(m), or on
Corporation has anchored its central argument on the position that the Local
any other provision of the Revenue Code. Assuming that the assessment
Government Code itself does not sanction the imposition of business taxes
made on the Corporation is on a provision other than Section 3A.02(m), the
against it. This position was sustained by the Court of Appeals, and now
main legal issue takes on a different complexion. For example, if it is based
merits our analysis.
on et cetera under Section 3A.02(f), we would have to examine whether the
Corporation faces analogous comparison with the other businesses listed
under that provision.

As stated earlier, local tax on businesses is authorized under Section


143 of the Local Government Code. The word business itself is defined under

Section 131(d) of the Code as trade or commercial activity regularly engaged

in proportion to the appurtenant interest of their respective

in as a means of livelihood or with a view to profit. [45] This definition of

units.[47] The necessity of a condominium corporation has not gained

business takes on importance, since Section 143 allows local government

widespread acceptance[48], and even is merely permissible under the

units to impose local taxes on businesses other than those specified under

Condominium Act.[49] Nonetheless, the condominium corporation has been

the provision. Moreover, even those business activities specifically named in

resorted to by many condominium projects, such as the Corporation in this

Section 143 are themselves susceptible to broad interpretation. For example,

case.

Section 143(b) authorizes the imposition of business taxes on wholesalers,


In line with the authority of the condominium corporation to manage
distributors, or dealers in any article of commerce of whatever kind or
the condominium project, it may be authorized, in the deed of restrictions, to
nature.
make reasonable assessments to meet authorized expenditures, each
It is thus imperative that in order that the Corporation may be

condominium unit to be assessed separately for its share of such expenses in

subjected to business taxes, its activities must fall within the definition of

proportion (unless otherwise provided) to its owners fractional interest in any

business as provided in the Local Government Code. And to hold that they do

common areas.[50] It is the collection of these assessments from unit owners

is to ignore the very statutory nature of a condominium corporation.

that form the basis of the City Treasurers claim that the Corporation is doing
business.

The creation of the condominium corporation is sanctioned by


Republic Act No. 4726, otherwise known as the Condominium Act. Under the

The

Condominium

Act

imposes

several

limitations

on

the

law, a condominium is an interest in real property consisting of a separate

condominium corporation that prove crucial to the disposition of this case.

interest in a unit in a residential, industrial or commercial building and an

Under Section 10 of the law, the

undivided interest in common, directly or indirectly, in the land on which it is

corporate purposes of a condominium corporation are limited to the holding

located and in other common areas of the building. [46] To enable the orderly

of the common areas, either in ownership or any other interest in real

administration over these common areas which are jointly owned by the

property recognized by law; to the management of the project; and to such

various unit owners, the Condominium Act permits the creation of a

other purposes as may be necessary, incidental or convenient to the

condominium corporation, which is specially formed for the purpose of

accomplishment of such purpose. [51] Further, the same provision prohibits the

holding title to the common area, in which the holders of separate interests

articles of incorporation or by-laws of the condominium corporation from

shall automatically be members or shareholders, to the exclusion of others,

containing any provisions which are contrary to the provisions of the

Condominium Act, the enabling or master deed, or the declaration of

operation of the Condominium Project; (g) to discharge any lien or

restrictions of the condominium project.[52]

encumbrances upon the Condominium Project; (h) to enforce the terms


contained in the Master Deed with Declaration of Restrictions of the Project;

We can elicit from the Condominium Act that a condominium


(i) to levy and
corporation is precluded by statute from engaging in corporate activities
collect those assessments as provided in the Master Deed, in order to defray
other than the holding of the common areas, the administration of the
the costs, expenses and losses of the condominium; (j) to acquire, own, hold,
condominium project, and other acts necessary, incidental or convenient to
enjoy, lease operate and maintain, and to convey, sell transfer, mortgage or
the accomplishment of such purposes. Neither the maintenance of livelihood,
otherwise dispose of real or personal property in connection with the
nor the procurement of profit, fall within the scope of permissible corporate
purposes and activities of the corporation; and (k) to exercise and perform
purposes of a condominium corporation under the Condominium Act.
such other powers reasonably necessary, incidental or convenient to
The Court has examined the particular Articles of Incorporation and

accomplish the foregoing purposes.[53]

By-Laws of the Corporation, and these documents unmistakably hew to the


limitations

contained

in

the

Condominium

Act.

Per

the

Articles

of

Obviously, none of these stated corporate purposes are geared

Incorporation, the Corporations corporate purposes are limited to: (a) owning

towards maintaining a livelihood or the obtention of profit. Even though the

and holding title to the common and limited common areas in the

Corporation is empowered to levy assessments or dues from the unit owners,

Condominium Project; (b) adopting such necessary measures for the

these amounts collected are not intended for the incurrence of profit by the

protection and safeguard of the unit owners and their property, including the

Corporation or its members, but to shoulder the multitude of necessary

power to contract for security services and for insurance coverage on the

expenses that arise from the maintenance of the Condominium Project. Just

entire project; (c) making and adopting needful rules and regulations

as much is confirmed by Section 1, Article V of the Amended By-Laws, which

concerning the use, enjoyment and occupancy of the units and common

enumerate

areas, including the power to fix penalties and assessments for violation of

assessments collected from the unit owners. These would include the

such rules; (d) to provide for the maintenance, repair, sanitation, and

salaries of the employees of the Corporation, and the cost of maintenance

cleanliness of the common and limited common areas; (e) to provide and

and ordinary repairs of the common areas.[54]

the

particular

expenses

to

be

defrayed

by

the

regular

contract for public utilities and other services to the common areas; (f) to
The City Treasurer nonetheless contends that the collection of these
contract for the services of persons or firms to assist in the management and
assessments and dues are with the end view of getting full appreciative

living values for the condominium units, and as a result, profit is obtained

basis of the standard of full appreciative living values, a phrase that defies

once these units are sold at higher prices. The Court cites with approval the

statutory explication, commonsensical meaning, the English language, or

two counterpoints raised by the Court of Appeals in rejecting this contention.

even definition from Google. The exercise of the power of taxation

First, if any profit is obtained by the sale of the units, it accrues not to the

constitutes a deprivation of property under the

corporation but to the unit owner. Second, if the unit owner does obtain profit
from the sale of the corporation, the owner is already required to pay capital
gains tax on the appreciated value of the condominium unit. [55]

due process clause,[56] and the taxpayers right to due process is violated
when arbitrary or oppressive methods are used in assessing and collecting
taxes.[57] The fact that the Corporation did not fall within the enumerated
classes of taxable businesses under either the Local Government Code or the
Makati Revenue Code already forewarns that a clear demonstration is

Moreover, the logic on this point of the City Treasurer is baffling. By

essential on the part of the City Treasurer on why the Corporation should be

this rationale, every Makati City car owner may be considered as being

taxed anyway. Full appreciative living values is nothing but blather in search

engaged in business, since the repairs or improvements on the car may be

of meaning, and to impose a tax hinged on that standard is both arbitrary

deemed oriented towards appreciating the value of the car upon resale.

and oppressive.

There is an evident distinction between persons who spend on repairs and


The City Treasurer also contends that the fact that the Corporation is
improvements on their personal and real property for the purpose of
engaged in business is evinced by the Articles of Incorporation, which
increasing its resale value, and those who defray such expenses for the
specifically empowers the Corporation to acquire, own, hold, enjoy, lease,
purpose of preserving the property. The vast majority of persons fall under
operate and maintain, and to convey, sell, transfer mortgage or otherwise
the second category, and it would be highly specious to subject these
dispose of real or personal property. [58] What the City Treasurer fails to add is
persons to local business taxes. The profit motive in such cases is hardly the
that every corporation
driving factor behind such improvements, if it were contemplated at all. Any
profit that would be derived under such circumstances would merely be
incidental, if not accidental.
organized under the Corporation Code [59] is so specifically empowered.
Besides, we shudder at the thought of upholding tax liability on the

Section 36(7) of the Corporation Code states that every corporation

incorporated under the Code has the power and capacity to purchase,

they are engaged in beyond the legal capacity of the condominium

receive, take or grant, hold, convey, sell, lease, pledge, mortgage and

corporation[62], the principle of estoppel would preclude the corporation or its

otherwise deal with such real and personal property . . . as the transaction of

officers and members from invoking the void nature of its undertakings for

the lawful business of the corporation may reasonably and necessarily

profit as a means of acquitting itself of tax liability.

require . . . .[60] Without this power, corporations, as juridical persons, would


Still, the City Treasurer has not posited the claim that the Corporation
be deprived of the capacity to engage in most meaningful legal relations.
is engaged in business activities beyond the statutory purposes of a
condominium corporation. The assessment appears to be based solely on the
Again, whatever capacity the Corporation may have pursuant to its
Corporations collection of assessments from unit owners, such assessments
power to exercise acts of ownership over personal and real property is
being utilized to defray the necessary expenses for the Condominium Project
limited by its stated corporate purposes, which are by themselves further
and the common areas. There is no contemplation of business, no orientation
limited by the Condominium Act. A condominium corporation, while enjoying
towards profit in this case. Hence, the assailed tax assessment has no basis
such powers of ownership, is prohibited by law from transacting its properties
under the Local Government Code or the Makati Revenue Code, and the
for the purpose of gainful profit.
insistence of the city in its collection of the void tax constitutes an attempt at
deprivation of property without due process of law.
Accordingly, and with a significant degree of comfort, we hold that
condominium corporations are generally exempt from local business taxation
under the Local Government Code, irrespective of any local ordinance that
WHEREFORE, the petition is DENIED. No costs.
seeks to declare otherwise.
SO ORDERED.
Still, we can note a possible exception to the rule. It is not
unthinkable that the unit owners of a condominium would band together to
engage in activities for profit under the shelter of the condominium
corporation.[61] Such activity would be prohibited under the Condominium
Act, but if the fact is established, we see no reason why the condominium
corporation may be made liable by the local government unit for business
taxes. Even though such activities would be considered as ultra vires, since

[G. R. No. 141658. March 18, 2005]

COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. THE


PHILIPPINE AMERICAN ACCIDENT INSURANCE COMPANY,
INC., THE PHILIPPINE AMERICAN ASSURANCE COMPANY,
INC., and THE PHILIPPINE AMERICAN GENERAL INSURANCE
CO., INC., respondents.

such were not subject to the 3% lending investors tax under Section 195A.
The CTA archived respondents case for several years while another
case with a similar issue was pending before the higher courts. When
respondents case was reinstated, the CTA ruled that respondents were
entitled to their refund.

The Ruling of the Court of Tax Appeals


DECISION
CARPIO, J.:

The Case
Before the Court is a petition for review [1] assailing the Decision[2] of 7
January 2000 of the Court of Appeals in CA-G.R. SP No. 36816. The Court
of Appeals affirmed the Decision [3]of 5 January 1995 of the Court of Tax
Appeals (CTA) in CTA Cases Nos. 2514, 2515 and 2516. The CTA ordered
the Commissioner of Internal Revenue (petitioner) to refund a total
ofP29,575.02 to respondent companies (respondents).

Antecedent Facts

The CTA held that respondents are not taxable as lending investors
because the term lending investors does not embrace insurance
companies. The CTA traced the history of the tax on lending investors, as
follows:
Originally, a person who was engaged in lending money at interest was
taxed as a money lender. [Sec. 1464(x), Rev. Adm. Code] The term money
lenders was defined as including all persons who make a practice of
lending money for themselves or others at interest. [Sec. 1465(v), id.]
Under this law, an insurance company was not considered a money lender
and was not taxable as such. To quote from an old BIR Ruling:
The lending of money at interest by insurance companies constitutes a
necessary incident of their regular business. For this reason, insurance
companies are not liable to tax as money lenders or real estate brokers for
making or negotiating loans secured by real property. (Ruling, February 28,
1920; BIR 135.2) (The Internal Revenue Law, Annotated, 2nd ed., 1929, by
B.L. Meer, page 143)
The same rule has been applied to banks.

Respondents are domestic corporations licensed to transact insurance


business in the country. From August 1971 to September 1972,
respondents paid the Bureau of Internal Revenue under protest the 3% tax
imposed on lending investors by Section 195-A[4] of Commonwealth Act No.
466 (CA 466), as amended by Republic Act No. 6110 (RA 6110) and other
laws. CA 466 was the National Internal Revenue Code (NIRC) applicable at
the time.
Respondents paid the following amounts: P7,985.25 from Philippine
American (PHILAM) Accident Insurance Company; P7,047.80 from PHILAM
Assurance Company; andP14,541.97 from PHILAM General Insurance
Company. These amounts represented 3% of each companys interest
income from mortgage and other loans. Respondents also paid the taxes
required of insurance companies under CA 466.
On 31 January 1973, respondents sent a letter-claim to petitioner
seeking a refund of the taxes paid under protest. When respondents did
not receive a response, each respondent filed on 26 April 1973 a petition
for review with the CTA. These three petitions, which were later
consolidated, argued that respondents were not lending investors and as

For making investments on salary loans, banks will not be required to pay
the money lenders tax imposed by this subsection, for the reason that
money lending is considered a mere incident of the banking business. [See
Ruling No. 43, (October 8, 1926) 25 Off. Gaz. 1326) (The Internal Revenue
Law, Annotated, id.)
The term money lenders was later changed to lending investors but the
definition of the term remains the same. [Sec. 1464(x), Rev. Adm. Code, as
finally amended by Com. Act No. 215, and Sec. 1465(v) of the same Code,
as finally amended by Act No. 3963] The same law is embodied in the
present National Internal Revenue Code (Com. Act No. 466) without
change, except in the amount of the tax. [See Secs. 182(A) (3) (dd) and
194(u), National Internal Revenue Code.]
It is a well-settled rule that an administrative interpretation of a law which
has been followed and applied for a long time, and thereafter the law is reenacted without substantial change, such administrative interpretation is
deemed to have received legislative approval. In short, the administrative
interpretation becomes part of the law as it is presumed to carry out the
legislative purpose.[5]
The CTA held that the practice of lending money at interest is part of

the insurance business. CA 466 already taxes the insurance business. The
CTA pointed out that the law recognizes and even regulates this practice
of lending money by insurance companies.
The CTA observed that CA 466 also treated differently insurance
companies from lending investors in regard to fixed taxes. Under Section
182(A)(3)(gg), insurance companies were subject to the same fixed tax as
banks and finance companies. The CTA reasoned that insurance
companies were grouped with banks and finance companies because the
latters lending activities were also integral to their business. In contrast,
lending investors were taxed at a different fixed tax under Section 182(A)
(3)(dd) of CA 466. The CTA stated that insurance companies xxx had never
been required by respondent [CIR] to pay the fixed tax imposed on lending
investors xxx.[6]
The dispositive portion of the Decision of 5 January 1995 of the Court
of Tax Appeals (CTA Decision) reads:
WHEREFORE, premises considered, petitioners Philippine American
Accident Insurance Co., Philippine American Assurance Co., and Philippine
American General Insurance Co., Inc. are not taxable on their lending
transactions independently of their insurance business. Accordingly,
respondent is hereby ordered to refund to petitioner[s] the sum of
P7,985.25, P7,047.80 and P14,541.97 in CTA Cases No. 2514, 2515 and
2516, respectively representing the fixed and percentage taxes when (sic)
paid by petitioners as lending investor from August 1971 to September
1972.
No pronouncement as to cost.
SO ORDERED.[7]
Dissatisfied, petitioner elevated the matter to the Court of Appeals. [8]

The Ruling of the Court of Appeals


The Court of Appeals ruled that respondents are not taxable as
lending investors. In its Decision of 7 January 2000 (CA Decision), the
Court of Appeals affirmed the ruling of the CTA, thus:
WHEREFORE, premises considered, the petition is DISMISSED, hereby
AFFIRMING the decision, dated January 5, 1995, of the Court of Tax
Appeals in CTA Cases Nos. 2514, 2515 and 2516.
SO ORDERED.[9]
Petitioner appealed the CA Decision to this Court.

The Issues

Petitioner raises the sole issue:


WHETHER RESPONDENT INSURANCE COMPANIES ARE SUBJECT TO THE 3%
PERCENTAGE TAX AS LENDING INVESTORS UNDER SECTIONS 182(A)(3)
(DD) AND 195-A, RESPECTIVELY IN RELATION TO SECTION 194(U), ALL OF
THE NIRC.[10]

The Ruling of the Court


The petition lacks merit.

On the Additional Issue Raised by Petitioner


Section 182(A)(3)(dd) of CA 466 imposes an annual fixed tax on
lending investors, depending on their location. [11] The sole question before
the CTA was whether respondents were subject to the percentage tax on
lending investors under Section 195-A. Petitioner raised for the first time
the issue of the fixed tax in the Petition for Review [12] petitioner filed before
the Court of Appeals.
Ordinarily, a party cannot raise for the first time on appeal an issue
not raised in the trial court. [13] The Court of Appeals should not have taken
cognizance of the issue on respondents supposed liability under Section
182(A)(3)(dd). However, we cannot entirely fault the Court of Appeals or
petitioner. Even if the percentage tax on lending investors was the sole
issue before it, the CTA ordered petitioner to refund to the PHILAM
companies the fixed and percentage taxes [t]hen paid by petitioners as
lending investor.[14] Although the amounts for refund consisted only of
what respondents paid as percentage taxes, the CTA Decision also ordered
the refund to respondents of the fixed tax on lending investors.
Respondents in their pleadings deny any liability under Section 182(A)(3)
(dd), on the same ground that they are not lending investors.
The question of whether respondents should pay the fixed tax under
Section 182(A)(3)(dd) revolves around the same issue of whether
respondents are taxable as lending investors. In similar circumstances, the
Court has held that an appellate court may consider an unassigned error if
it is closely related to an error that was properly assigned. [15] This rule
properly applies to the present case. Thus, we shall consider and rule on
the issue of whether respondents are subject to the fixed tax under
Section 182(A)(3)(dd).

Whether Insurance Companies are


Taxable as Lending Investors

Invoking Sections 195-A and 182(A)(3)(dd) in relation to Section


194(u) of CA 466, petitioner argues that insurance companies are subject
to two fixed taxes and two percentage taxes. Petitioner alleges that:
As a lending investor, an insurance company is subject to an annual fixed
tax of P500.00 and another P500.00 under Section 182 (A)(3)(dd) and (gg)
of the Tax Code. As an underwriter, an insurance company is subject to the
3% tax of the total premiums collected and another 3% on the gross
receipts as a lending investor under Sections 255 and 195-A, respectively
of the same Code. xxx[16]

insurance companies are lending investors for purposes of taxation.


In this case, petitioner does not dispute that respondents are in the
insurance business. Petitioner merely alleges that the definition of lending
investors under CA 466 is broad enough to encompass insurance companies.
Petitioner insists that because of Section 194(u), the two principal activities
of the insurance business, namely, underwriting and investment, are
separately taxable.[20]
Section 194(u) of CA 466 states:

Petitioner also contends that the refund granted to respondents is in


the nature of a tax exemption, and cannot be allowed unless granted
explicitly and categorically.

(u) Lending investor includes all persons who make a practice of lending
money for themselves or others at interest.
xxx

The rule that tax exemptions should be construed strictly against the
taxpayer presupposes that the taxpayer is clearly subject to the tax being
levied against him. Unless a statute imposes a tax clearly, expressly and
unambiguously, what applies is the equally well-settled rule that the
imposition of a tax cannot be presumed. [17] Where there is doubt, tax laws
must be construed strictly against the government and in favor of the
taxpayer.[18] This is because taxes are burdens on the taxpayer, and should
not be unduly imposed or presumed beyond what the statutes expressly
and clearly import.[19]

As can be seen, Section 194(u) does not tax the practice of lending per
se. It merely defines what lending investors are. The question is whether the
lending activities of insurance companies make them lending investors for
purposes of taxation.

Section 182(A)(3)(dd) of CA 466 also provides:


Sec. 182. Fixed taxes. (A) On business xxx
xxx
(3) Other fixed taxes. The following fixed taxes shall be collected as
follows, the amount stated being for the whole year, when not
otherwise specified;
xxx
(dd) Lending investors
1. In chartered cities and first class municipalities, five
hundred pesos;
2. In second and third class municipalities, two hundred and
fifty pesos;
3. In fourth and fifth class municipalities and municipal
districts, one hundred and twenty-five pesos; Provided,
That lending investors who do business as such in more
than one province shall pay a tax of five hundred pesos.
Section 195-A of CA 466 provides:
Sec. 195-A. Percentage tax on dealers in securities; lending investors.
Dealers in securities and lending investors shall pay a tax equivalent to
three per centum on their gross income.
Neither Section 182(A)(3)(dd) nor Section 195-A mentions insurance
companies. Section 182(A)(3)(dd) provides for the taxation of lending
investors in different localities. Section 195-A refers to dealers in securities
and lending investors. The burden is thus on petitioner to show that

We agree with the CTA and Court of Appeals that it does not. Insurance
companies cannot be considered lending investors under CA 466, as
amended.

Definition of Lending
Investors under CA 466 Does
Not Include Insurance
Companies.
The definition in Section 194(u) of CA 466 is not broad enough to
include the business of insurance companies. The Insurance Code of 1978 [21]
is very clear on what constitutes an insurance company. It provides that an
insurer or insurance company shall include all individuals, partnerships,
associations or corporations xxx engaged as principals in the insurance
business, excepting mutual benefit associations. [22] More specifically,
respondents fall under the category of insurance corporations as defined in
Section 185 of the Insurance Code, thus:
SECTION 185. Corporations formed or organized to save any person or
persons or other corporations harmless from loss, damage, or liability arising
from any unknown or future or contingent event, or to indemnify or to
compensate any person or persons or other corporations for any such loss,
damage, or liability, or to guarantee the performance of or compliance with
contractual obligations or the payment of debts of others shall be known as
insurance corporations.
Plainly, insurance companies and lending investors are different
enterprises in the eyes of the law. Lending investors cannot, for a
consideration, hold anyone harmless from loss, damage or liability, nor
provide compensation or indemnity for loss. The underwriting of risks is the

prerogative of insurers, the great majority of which are incorporated


insurance companies[23] like respondents.

Granting of Mortgage and


other Loans are Investment
Practices that are Part of the
Insurance Business.
True, respondents granted mortgage and other kinds of loans. However,
this was not done independently of respondents insurance business. The
granting of certain loans is one of several means of investment allowed to
insurance companies. No less than the Insurance Code mandates and
regulates this practice.[24]
Unlike the practice of lending investors, the lending activities of
insurance companies are circumscribed and strictly regulated by the State.
Insurance companies cannot freely lend to themselves or others as lending
investors can,[25] nor can insurance companies grant simply any kind of loan.
Even prior to 1978, the Insurance Code prescribed strict rules for the
granting of loans by insurance companies. [26] These provisions on mortgage,
collateral and policy loans were reiterated in the Insurance Code of 1978 and
are still in force today.
Petitioner concedes that respondents investment practices are as much
a part of the insurance business as the task of underwriting. Nevertheless,
petitioner argues that such investment practices are separately taxable
under CA 466.
The CTA and the Court of Appeals found that the investment of
premiums and other funds received by respondents through the granting of
mortgage and other loans was necessary to respondents business and
hence, should not be taxed separately.
Insurance companies are required by law to possess and maintain
substantial legal reserves to meet their obligations to policyholders. [27] This
obviously cannot be accomplished through the collection of premiums alone,
as the legal reserves and capital and surplus insurance companies are
obligated to maintain run into millions of pesos. As such, the creation of
investment income has long been held to be generally, if not necessarily,
essential to the business of insurance.[28]
The creation of investment income in the manner sanctioned by the
laws on insurance is thus part of the business of insurance, and the fruits of
these investments are essentially income from the insurance business. This
is particularly true if the invested assets are held either as reserved funds to
provide for policy obligations or as capital and surplus to provide an extra
margin of safety which will be attractive to insurance buyers. [29]
The Court has also held that when a company is taxed on its main
business, it is no longer taxable further for engaging in an activity or work

which is merely a part of, incidental to and is necessary to its main business.
[30]
Respondents already paid percentage and fixed taxes on their insurance
business. To require them to pay percentage and fixed taxes again for an
activity which is necessarily a part of the same business, the law must
expressly require such additional payment of tax. There is, however, no
provision of law requiring such additional payment of tax.
Sections 195-A and 182(A)(3)(dd) of CA 466 do not require insurance
companies to pay double percentage and fixed taxes. They merely tax
lending investors, not lending activities. Respondents were not transformed
into lending investors by the mere fact that they granted loans, as these
investments were part of, incidental and necessary to their insurance
business.

Different Tax Treatment of


Insurance Companies and
Lending Investors.
Section 182(A)(3) of CA 466 accorded different tax treatments to
lending investors and insurance companies. The relevant portions of Section
182 state:
Sec. 182. Fixed taxes. (A) On business xxx
(3) Other fixed taxes. The following fixed taxes shall be collected as follows,
the amount stated being for the whole year, when not otherwise specified;
xxx
(dd) Lending investors
1. In chartered cities and first class municipalities,
five hundred pesos;
2. In second and third class municipalities, two
hundred and fifty pesos;
3. In fourth and fifth class municipalities and
municipal districts, one hundred and twenty-five
pesos; Provided, That lending investors who do
business as such in more than one province shall
pay a tax of five hundred pesos.
xxx
(gg) Banks, insurance companies, finance and investment companies doing
business in the Philippines and franchise grantees, five hundred pesos.
xxx (Emphasis supplied.)
The separate provisions on lending investors and insurance companies
demonstrate an intention to treat these businesses differently. If Congress
intended insurance companies to be taxed as lending investors, there would
be no need for Section 182(A)(3)(gg). Section 182(A)(3)(dd) would have
been sufficient. That insurance companies were included with banks, finance
and investment companies also supports the CTAs conclusion that insurance
companies had more in common with the latter enterprises than with

lending investors. As the CTA pointed out, banks also regularly lend money
at interest, but are not taxable as lending investors.
We find no merit in petitioners contention that Congress intended to
subject respondents to two percentage taxes and two fixed taxes. Petitioners
argument goes against the doctrine of strict interpretation of tax
impositions.
Petitioners argument is likewise not in accord with existing
jurisprudence. In Commissioner of Internal Revenue v. Michel J.
Lhuillier Pawnshop, Inc.,[31] the Court ruled that the different tax
treatment accorded to pawnshops and lending investors in the NIRC of 1977
and the NIRC of 1986 showed the intent of Congress to deal with both
subjects differently. The same reasoning applies squarely to the present
case.
Even the current tax law does not treat insurance companies as lending
investors. Under Section 108(A)[32] of the NIRC of 1997, lending investors and
non-life insurance companies, except for their crop insurances, are subject
to value-added tax (VAT). Life insurance companies are exempt from VAT,
but are subject to percentage tax under Section 123 of the NIRC of 1997.
Indeed, the fact that Sections 195-A and 182(A)(3)(dd) of CA 466 failed
to mention insurance companies already implies the latters exclusion from
the coverage of these provisions. When a statute enumerates the things
upon which it is to operate, everything else by implication must be excluded
from its operation and effect.[33]

Definition of Lending
Investors in CA 466 is Not
New.
Petitioner does not dispute that it issued a ruling in 1920 to the effect
that the lending of money at interest was a necessary incident of the
insurance business, and that insurance companies were thus not subject to
the tax on money lenders. Petitioner argues only that the 1920 ruling does
not apply to the instant case because RA 6110 introduced the definition of
lending investors to CA 466 only in 1969.
The subject definition was actually introduced much earlier, at a time
when lending investors were still referred to as money lenders. Sections 45
and 46 of the Internal Revenue Law of 1914[34] (1914 Tax Code) state:
SECTION 45. Amount of Tax on Business. Fixed taxes on business shall be
collected as follows, the amount stated being for the whole year, when not
otherwise specified:
xxx
(x) Money lenders, eighty pesos;
xxx
SECTION 46. Words and Phrases Defined. In applying the provisions

of the preceding section words and phrases shall be taken in the


sense and extension indicated below:
xxx
Money lender includes all persons who make a practice of lending
money for themselves or others at interest. (Emphasis supplied)
As can be seen, the definitions of money lender under the 1914 Tax
Code and lending investor under CA 466 are identical. The term money
lender was merely changed to lending investor when Act No. 3963 amended
the Revised Administrative Code in 1932. [35] This same definition of lending
investor has since appeared in Section 194(u) of CA 466 and later tax laws.
Note that insurance companies were not included among the
businesses subject to an annual fixed tax under the 1914 Tax Code. [36] That
Congress later saw the need to introduce Section 182(A)(3)(gg) in CA 466
bolsters our view that there was no legislative intent to tax insurance
companies as lending investors. If insurance companies were already taxed
as lending investors, there would have been no need for a separate
provision specifically requiring insurance companies to pay fixed taxes.

The Court Accords Great


Weight to the Factual Findings
of the CTA.
Dedicated exclusively to the study and consideration of tax problems,
the CTA has necessarily developed an expertise in the subject of taxation
that this Court has recognized time and again. For this reason, the findings
of fact of the CTA, particularly when affirmed by the Court of Appeals, are
generally conclusive on this Court absent grave abuse of discretion or
palpable error,[37] which are not present in this case.
WHEREFORE, we DENY the instant petition and AFFIRM the Decision of
7 January 2000 of the Court of Appeals in CA-G.R. SP No. 36816.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Quisumbing, Ynares-Santiago, and Azcuna,
JJ., concur.

Humphrey's Executor v. United States, 295 U.S. 602 (1935)


Humphrey's Executor v. United States*
No. 637
Argued 1, 1935
Decided May 27, 1935
295 U.S. 602
CERTIFICATE FROM THE COURT OF CLAIMS
Syllabus
1. The Federal Trade Commission Act fixes the terms of the Commissioners
and provides that any Commissioner may be removed by the President for
inefficiency, neglect of duty, or malfeasance in office. Held that Congress
intended to restrict the power of removal to one or more of those causes.
Shurtleff v. United States, 189 U. S. 311, distinguished. Pp. 295 U. S. 621,
295 U. S. 626.
2. This construction of the Act is confirmed by a consideration of the
character of the Commission -- an independent, nonpartisan body of
experts, charged with duties neither political nor executive, but
predominantly quasi-judicial andquasi-legislative, and by the legislative
history of the Act. P. 295 U. S. 624.
3. When Congress provides for the appointment of officers whose functions,
like those of the Federal Trade Commissioners, are of Legislative and judicial
quality, rather than executive, and limits the grounds upon which they may
be removed from office, the President has no constitutional power to remove
them for reasons other than those so specified. Myers v. United States, 272
U. S. 52, limited, and expressions in that opinion in part disapproved. Pp.
295 U. S. 626, 295 U. S. 627.
Page 295 U. S. 603
The Myers case dealt with the removal of a postmaster, an executive officer
restricted to executive functions and charged with no duty at all related to
either the legislative or the judicial power. The actual decision in the Myers
case finds support in the theory that such an officer is merely one of the
units in the executive department, and, hence, inherently subject to the
exclusive and illimitable power of removal by the Chief Executive, whose
subordinate he is. That decision goes no farther than to include purely
executive officers. The Federal Trade Commission, in contrast, is an
administrative body created by Congress to carry into effect legislative
policies embodied in the statute in accordance with the legislative standard
therein prescribed, and to perform other specified duties as a legislative or
as a judicial aid. Such a body cannot in any proper sense be characterized as
an arm or an eye of the executive. Its duties are performed without
executive leave, and, in the contemplation of the statute, must be free from

executive control. To the extent that it exercises any executive function -- as


distinguished from executive power in the constitutional sense -- it does so
in the discharge and effectuation of its quasi-legislative or quasi-judicial
powers, or as an agency of the legislative or judicial departments of the
Government. Pp. 295 U. S. 627-628.
4. The authority of Congress, in creating quasi-legislative or quasi-judicial
agencies, to require them to act in discharge of their duties independently of
executive control cannot well be doubted, and that authority includes, as an
appropriate incident, power to fix the period during which they shall
continue in office, and to forbid their removal except for cause in the
meantime. P. 295 U. S. 629.
5. The fundamental necessity of maintaining each of the three general
departments of government entirely free from the control or coercive
influence, direct or indirect, of either of the others has often been stressed,
and is hardly open to serious question. So much is implied in the very fact of
the separation of the powers of these departments by the Constitution, and
in the rule which recognizes their essential coequality. P. 295 U. S. 629.
6. Whether the power of the President to remove an officer shall prevail over
the authority of Congress to condition the power by fixing a definite term
and precluding a removal except for cause will depend upon the character of
the office. To the extent that, between the decision in the Myers case, which
sustains the unrestrictable power of the President to remove purely
executive officers, and the present decision that such power does not extend
to an office
Page 295 U. S. 604
such as that here involved there shall remain a field of doubt, such cases as
may fall within it are left for future consideration and determination as they
may arise. P. 295 U. S. 631.
7. While the general rule preclude the use of congressional debates to
explain the meaning of the words of a statute, they may be considered as
reflecting light upon its general purposes and the evils which it sought to
remedy. P. 295 U. S. 625.
8. Expressions in an opinion which are beyond the point involved do not
come within the rule of stare decisis. P. 295 U. S. 626.
CERTIFICATE from the Court of Claims, propounding questions arising on a
claim for the salary withheld from the plaintiff's testator, from the time when
the President undertook to remove him from office to the time of his death.
Page 295 U. S. 618
MR. JUSTICE SUTHERLAND delivered the opinion of the Court.
Plaintiff brought suit in the Court of Claims against the United States to
recover a sum of money alleged to be due the deceased for salary as a
Federal Trade Commissioner from October 8, 1933, when the President
undertook to remove him from office, to the time of his death on February
14, 1934. The court below has certified to this court two questions (Act of
February 13, 1925, 3(a), c. 229, 43 Stat. 936, 939; 28 U.S.C. 288) in
respect of the power of the President to make the removal. The material
facts which give rise to the questions are as follows:
William E. Humphrey, the decedent, on December 10, 1931, was nominated
by President Hoover to succeed himself as a member of the Federal Trade
Commission, and was confirmed by the United States Senate. He was duly
commissioned for a term of seven years expiring September 25, 1938; and,

after taking the required oath of office, entered upon his duties. On July 25,
1933, President Roosevelt addressed a letter to the commissioner asking for
his resignation, on the ground
"that the aims and purposes of the Administration with respect to the work
of the Commission can be carried out most effectively with personnel of my
own selection,"
but disclaiming any reflection upon the commissioner personally or upon his
services. The commissioner replied, asking time to consult
Page 295 U. S. 619
his friends. After some further correspondence upon the subject, the
President, on August 31, 1933, wrote the commissioner expressing the hope
that the resignation would be forthcoming, and saying:
"You will, I know, realize that I do not feel that your mind and my mind go
along together on either the policies or the administering of the Federal
Trade Commission, and, frankly, I think it is best for the people of this
country that I should have a full confidence."
The commissioner declined to resign, and on October 7, 1933, the President
wrote him:
"Effective as of this date, you are hereby removed from the office of
Commissioner of the Federal Trade Commission."
Humphrey never acquiesced in this action, but continued thereafter to insist
that he was still a member of the commission, entitled to perform its duties
and receive the compensation provided by law at the rate of $10,000 per
annum. Upon these and other facts set forth in the certificate, which we
deem it unnecessary to recite, the following questions are certified:
"1. Do the provisions of section 1 of the Federal Trade Commission Act,
stating that 'any commissioner may be removed by the President for
inefficiency, neglect of duly, or malfeasance in office,' restrict or limit the
power of the President to remove a commissioner except upon one or more
of the causes named?"
"If the foregoing question is answered in the affirmative, then -- "
"2. If the power of the President to remove a commissioner is restricted or
limited as shown by the foregoing interrogatory and the answer made
thereto, is such a restriction or limitation valid under the Constitution of the
United States?"
The Federal Trade Commission Act, c. 311, 38 Stat. 717; 15 U.S.C. 41, 42,
creates a commission of five
Page 295 U. S. 620
members to be appointed by the President by and with the advice and
consent of the Senate, and 1 provides:
"Not more than three of the commissioners shall be members of the same
political party. The first commissioners appointed shall continue in office for
terms of three, four, five, six, and seven years, respectively, from the date of
the taking effect of this Act, the term of each to be designated by the
President, but their successors shall be appointed for terms of seven years,
except that any person chosen to fill a vacancy shall be appointed only for
the unexpired term of the commissioner whom he shall succeed. The
commission shall choose a chairman from its own membership. No
commissioner shall engage in any other business, vocation, or employment.
Any commissioner may be removed by the President for inefficiency, neglect
of duty, or malfeasance in office. . . ."

Section 5 of the act in part provides:


"That unfair methods of competition in commerce are hereby declared
unlawful."
"The commission is hereby empowered and directed to prevent persons,
partnerships, or corporations, except banks, and common carriers subject to
the Acts to regulate commerce, from using unfair methods of competition in
commerce."
In exercising this power, the commission must issue a complaint stating its
charges and giving notice of hearing upon a day to be fixed. A person,
partnership, or corporation proceeded against is given the right to appear at
the time and place fixed and show cause why an order to cease and desist
should not be issued. There is provision for intervention by others interested.
If the commission finds the method of competition is one prohibited by the
act, it is directed to make a report in writing stating its findings as to the
facts, and to issue and cause to be served a cease and desist order. If the
order is disobeyed, the commission may apply to the appropriate circuit
court of
Page 295 U. S. 621
appeals for its enforcement. The party subject to the order may seek and
obtain a review in the circuit court of appeals in a manner provided by the
act.
Section 6, among other things, gives the commission wide powers of
investigation in respect of certain corporations subject to the act and in
respect of other matters, upon which it must report to Congress with
recommendations. Many such investigations have been made, and some
have served as the basis of congressional legislation.
Section 7 provides:
"That in any suit in equity brought by or under the direction of the Attorney
General as provided in the antitrust Acts, the court may, upon the conclusion
of the testimony therein, if it shall be then of opinion that the complainant is
entitled to relief, refer said suit to the commission, as a master in chancery,
to ascertain and report an appropriate form of decree therein. The
commission shall proceed upon such notice to the parties and under such
rules of procedure as the court may prescribe, and upon the coming in of
such report such exceptions may be filed and such proceedings had in
relation thereto as upon the report of a master in other equity causes, but
the court may adopt or reject such report, in whole or in part, and enter such
decree as the nature of the case may in its judgment require."
First. The question first to be considered is whether, by the provisions of 1
of the Federal Trade Commission Act, already quoted, the President's power
is limited to removal for the specific causes enumerated therein. The
negative contention of the government is based principally upon the
decision of this court in Shrutleff v. United States, 189 U. S. 311. That case
involved the power of the President to remove a general appraiser of
merchandise appointed under the Act of June 10, 1890, 26 Stat. 131. Section
12 of the act provided for the appointment by the President, by and with the
advice and consent
Page 295 U. S. 622
of the Senate, of nine general appraisers of merchandise, who "may be
removed from office at any time by the President for inefficiency, neglect of
duty, or malfeasance in office." The President removed Shurtleff without

assigning any cause therefor. The Court of Claims dismissed plaintiff's


petition to recover salary, upholding the President's power to remove for
causes other than those stated. In this court, Shurtleff relied upon the
maxim expressio unius est exclusio alterius, but this court held that, while
the rule expressed in the maxim was a very proper one, and founded upon
justifiable reasoning in many instances, it
"should not be accorded controlling weight when to do so would involve the
alteration of the universal practice of the government for over a century and
the consequent curtailment of the powers of the executive in such an
unusual manner."
What the court meant by this expression appears from a reading of the
opinion. That opinion -- after saying that no term of office was fixed by the
act and that, with the exception of judicial officers provided for by the
Constitution, no civil officer had ever held office by life tenure since the
foundation of the government -- points out that to construe the statute as
contended for by Shurtleff would give the appraiser the right to hold office
during his life or until found guilty of some act specified in the statute, the
result of which would be a complete revolution in respect of the general
tenure of office, effected by implication with regard to that particular office
only.
"We think it quite inadmissible," the court said (pp. 189 U. S. 316, 189 U. S.
318),
"to attribute an intention on the part of Congress to make such an
extraordinary change in the usual rule governing the tenure of office, and
one which is to be applied to this particular office only, without stating such
intention in plain and explicit language, instead of leaving it to be implied
from doubtful inferences. . . . We cannot bring ourselves to the belief that
Congress ever
Page 295 U. S. 623
intended this result while omitting to use language which would put that
intention beyond doubt."
These circumstances, which led the court to reject the maxim as
inapplicable, are exceptional. In the face of the unbroken precedent against
life tenure, except in the case of the judiciary, the conclusion that Congress
intended that, from among all other civil officers, appraisers alone should be
selected to hold office for life was so extreme as to forbid, in the opinion of
the court, any ruling which would produce that result if it reasonably could
be avoided. The situation here presented is plainly and wholly different. The
statute fixes a term of office, in accordance with many precedents. The first
commissioners appointed are to continue in office for terms of three, four,
five, six, and seven years, respectively, and their successors are to be
appointed for terms of seven years -- any commissioner being subject to
removal by the President for inefficiency, neglect of duty, or malfeasance in
office. The words of the act are definite and unambiguous.
The government says the phrase "continue in office" is of no legal
significance, and, moreover, applies only to the first commissioners. We
think it has significance. It may be that, literally, its application is restricted
as suggested; but it nevertheless lends support to a view contrary to that of
the government as to the meaning of the entire requirement in respect of
tenure; for it is not easy to suppose that Congress intended to secure the
first commissioners against removal except for the causes specified, and

deny like security to their successors. Putting this phrase aside, however,
the fixing of a definite term subject to removal for cause, unless there be
some countervailing provision or circumstance indicating the contrary, which
here we are unable to find, is enough to establish the legislative intent that
the term is not to be curtailed in the absence of such cause. But if the
intention of
Page 295 U. S. 624
Congress that no removal should be made during the specified term except
for one or more of the enumerated causes were not clear upon the face of
the statute, as we think it is, it would be made clear by a consideration of
the character of the commission and the legislative history which
accompanied and preceded the passage of the act. The commission is to be
nonpartisan, and it must, from the very nature of its duties, act with entire
impartiality. It is charged with the enforcement of no policy except the policy
of the law. Its duties are neither political nor executive, but
predominantlyquasi-judicial and quasi-legislative. Like the Interstate
Commerce Commission, its members are called upon to exercise the trained
judgment of a body of experts "appointed by law and informed by
experience." Illinois Central R. Co. v. Interstate Commerce Comm'n, 206 U.
S. 441, 206 U. S. 454; Standard Oil Co. v. United States, 283 U. S. 235, 283
U. S. 238-239. The legislative reports in both houses of Congress clearly
reflect the view that a fixed term was necessary to the effective and fair
administration of the law. In the report to the Senate (No. 597, 63d Cong., 2d
Sess., pp. 10-11) the Senate Committee on Interstate Commerce, in support
of the bill which afterwards became the act in question, after referring to the
provision fixing the term of office at seven years, so arranged that the
membership would not be subject to complete change at any one time, said:
"The work of this commission will be of a most exacting and difficult
character, demanding persons who have experience in the problems to be
met -- that is, a proper knowledge of both the public requirements and the
practical affairs of industry. It is manifestly desirable that the terms of the
commissioners shall be long enough to give them an opportunity to acquire
the expertness in dealing with these special questions concerning industry
that comes from experience. "
Page 295 U. S. 625
The report declares that one advantage which the commission possessed
over the Bureau of Corporations (an executive subdivision in the Department
of Commerce which was abolished by the act) lay in the fact of its
independence, and that it was essential that the commission should not be
open to the suspicion of partisan direction. The report quotes (p. 22) a
statement to the committee by Senator Newlands, who reported the bill,
that the tribunal should be of high character and
"independent of any department of the government . . . a board or
commission of dignity, permanence, and ability, independent of executive
authority, except in its selection, and independent in character."
The debates in both houses demonstrate that the prevailing view was that
the commission was not to be "subject to anybody in the government, but . .
. only to the people of the United States"; free from "political domination or
control" or the "probability or possibility of such a thing"; to be "separate
and apart from any existing department of the government -- not subject to
the orders of the President."

More to the same effect appears in the debates, which were long and
thorough, and contain nothing to the contrary. While the general rule
precludes the use of these debates to explain the meaning of the words of
the statute, they may be considered as reflecting light upon its general
purposes and the evils which it sought to remedy. Federal Trade Comm'n v.
Raladam Co., 283 U. S. 643, 283 U. S. 650.
Thus, the language of the act, the legislative reports, and the general
purposes of the legislation as reflected by the debates all combine to
demonstrate the Congressional intent to create a body of experts who shall
gain experience by length of service -- a body which shall be independent of
executive authority except in its selection, and free to exercise its judgment
without the leave or hindrance
Page 295 U. S. 626
of any other official or any department of the government. To the
accomplishment of these purposes it is clear that Congress was of opinion
that length and certainty of tenure would vitally contribute. And to hold that,
nevertheless, the members of the commission continue in office at the mere
will of the President might be to thwart, in large measure, the very ends
which Congress sought to realize by definitely fixing the term of office.
We conclude that the intent of the act is to limit the executive power of
removal to the causes enumerated, the existence of none of which is
claimed here, and we pass to the second question.
Second. To support its contention that the removal provision of 1, as we
have just construed it, is an unconstitutional interference with the executive
power of the President, the government's chief reliance is Myers v. United
States, 272 U. S. 52. That case has been so recently decided, and the
prevailing and dissenting opinions so fully review the general subject of the
power of executive removal, that further discussion would add little of value
to the wealth of material there collected. These opinions examine at length
the historical, legislative and judicial data bearing upon the question,
beginning with what is called "the decision of 1789" in the first Congress and
coming down almost to the day when the opinions were delivered. They
occupy 243 pages of the volume in which they are printed. Nevertheless, the
narrow point actually decided was only that the President had power to
remove a postmaster of the first class without the advice and consent of the
Senate as required by act of Congress. In the course of the opinion of the
court, expressions occur which tend to sustain the government's contention,
but these are beyond the point involved, and, therefore do not come within
the rule of stare decisis. Insofar as they are out of harmony with the views
here set forth, these expressions are disapproved. A like situation was
Page 295 U. S. 627
presented in the case of Cohens v. Virginia, 6 Wheat. 264, 19 U. S. 399, in
respect of certain general expressions in the opinion in Marbury v. Madison,
1 Cranch 137. Chief Justice Marshall, who delivered the opinion in the
Marbury case, speaking again for the court in the Cohens case, said:
"It is a maxim not to be disregarded that general expressions, in every
opinion, are to be taken in connection with the case in which those
expressions are used. If they go beyond the case, they may be respected,
but ought not to control the judgment in a subsequent suit when the very
point is presented for decision. The reason of this maxim is obvious. The
question actually before the Court is investigated with care, and considered

in its full extent. Other principles which may serve to illustrate it are
considered in their relation to the case decided, but their possible bearing on
all other cases is seldom completely investigated."
And he added that these general expressions in the case of Marbury v.
Madison were to be understood with the limitations put upon them by the
opinion in the Cohens case. See also Carroll v. Lessee of Carroll, 16 How.
275, 57 U. S. 286-287; O'Donoghue v. United States, 289 U. S. 516, 289 U. S.
550.
The office of a postmaster is so essentially unlike the office now involved
that the decision in the Myers case cannot be accepted as controlling our
decision here. A postmaster is an executive officer restricted to the
performance of executive functions. He is charged with no duty at all related
to either the legislative or judicial power. The actual decision in theMyers
case finds support in the theory that such an officer is merely one of the
units in the executive department, and, hence, inherently subject to the
exclusive and illimitable power of removal by the Chief Executive, whose
subordinate and aid he is. Putting aside dicta, which may be followed if
sufficiently persuasive but which are not controlling, the necessary reach of
the decision goes far enough to include
Page 295 U. S. 628
all purely executive officers. It goes no farther; much less does it include an
officer who occupies no place in the executive department, and who
exercises no part of the executive power vested by the Constitution in the
President.
The Federal Trade Commission is an administrative body created by
Congress to carry into effect legislative policies embodied in the statute in
accordance with the legislative standard therein prescribed, and to perform
other specified duties as a legislative or as a judicial aid. Such a body cannot
in any proper sense be characterized as an arm or an eye of the executive.
Its duties are performed without executive leave, and, in the contemplation
of the statute, must be free from executive control. In administering the
provisions of the statute in respect of "unfair methods of competition" -- that
is to say, in filling in and administering the details embodied by that general
standard -- the commission acts in part quasi-legislatively and in part quasijudicially. In making investigations and reports thereon for the information of
Congress under 6, in aid of the legislative power, it acts as a legislative
agency. Under 7, which authorizes the commission to act as a master in
chancery under rules prescribed by the court, it acts as an agency of the
judiciary. To the extent that it exercises any executive function -- as
distinguished from executive power in the constitutional sense -- it does so
in the discharge and effectuation of its quasi-legislative or quasi-judicial
powers, or as an agency of the legislative or judicial departments of the
government.*
Page 295 U. S. 629
If Congress is without authority to prescribe causes for removal of members
of the trade commission and limit executive power of removal accordingly,
that power at once becomes practically all-inclusive in respect of civil
officers with the exception of the judiciary provided for by the Constitution.
The Solicitor General, at the bar, apparently recognizing this to be true, with
commendable candor, agreed that his view in respect of the removability of
members of the Federal Trade Commission necessitated a like view in

respect of the Interstate Commerce Commission and the Court of Claims. We


are thus confronted with the serious question whether not only the members
of these quasi-legislative and quasi-judicial bodies, but the judges of the
legislative Court of Claims, exercising judicial power (Williams v. United
States, 289 U. S. 553,289 U. S. 565-567), continue in office only at the
pleasure of the President.
We think it plain under the Constitution that illimitable power of removal is
not possessed by the President in respect of officers of the character of
those just named. The authority of Congress, in creating quasi-legislative or
quasi-judicial agencies, to require them to act in discharge of their duties
independently of executive control cannot well be doubted, and that
authority includes, as an appropriate incident, power to fix the period during
which they shall continue in office, and to forbid their removal except for
cause in the meantime. For it is quite evident that one who holds his office
only during the pleasure of another cannot be depended upon to maintain
an attitude of independence against the latter's will.
The fundamental necessity of maintaining each of the three general
departments of government entirely free from the control or coercive
influence, direct or indirect, of either of the others has often been stressed,
and is hardly open to serious question. So much is implied in
Page 295 U. S. 630
the very fact of the separation of the powers of these departments by the
Constitution, and in the rule which recognizes their essential coequality. The
sound application of a principle that makes one master in his own house
precludes him from imposing his control in the house of another who is
master there. James Wilson, one of the framers of the Constitution and a
former justice of this court, said that the independence of each department
required that its proceedings "should be free from the remotest influence,
direct or indirect, of either of the other two powers." Andrews, The Works of
James Wilson (1896), vol. 1, p. 367. And Mr. Justice Story, in the first volume
of his work on the Constitution, 4th ed., 530, citing No. 48 of the Federalist,
said that neither of the departments in reference to each other "ought to
possess, directly or indirectly, an overruling influence in the administration
of their respective powers." And see O'Donoghue v. United States, supra., at
pp. 289 U. S. 530-531.
The power of removal here claimed for the President falls within this
principle, since its coercive influence threatens the independence of a
commission which is not only wholly disconnected from the executive
department, but which, as already fully appears, was created by Congress as
a means of carrying into operation legislative and judicial powers, and as an
agency of the legislative and judicial departments.
In the light of the question now under consideration, we have reexamined
the precedents referred to in the Myers case, and find nothing in them to
justify a conclusion contrary to that which we have reached. The so-called
"decision of 1789" had relation to a bill proposed by Mr. Madison to establish
an executive Department of Foreign Affairs. The bill provided that the
principal officer was "to be removable from office by the President of the
United States." This clause was changed to read "whenever the principal
officer shall be removed
Page 295 U. S. 631
from office by the President of the United States," certain things should

follow, thereby, in connection with the debates, recognizing and confirming,


as the court thought in the Myers case, the sole power of the President in
the matter. We shall not discuss the subject further, since it is so fully
covered by the opinions in the Myers case, except to say that the office
under consideration by Congress was not only purely executive, but the
officer one who was responsible to the President, and to him alone, in a very
definite sense. A reading of the debates shows that the President's
illimitable power of removal was not considered in respect of other than
executive officers. And it is pertinent to observe that, when, at a later time,
the tenure of office for the Comptroller of the Treasury was under
consideration, Mr. Madison quite evidently thought that, since the duties of
that office were not purely of an executive nature, but partook of the
judiciary quality as well, a different rule in respect of executive removal
might well apply. 1 Annals of Congress, cols. 611-612.
In Marbury v. Madison, supra, pp. 5 U. S. 162, 5 U. S. 165-166, it is made
clear that Chief Justice Marshall was of opinion that a justice of the peace for
the District of Columbia was not removable at the will of the President, and
that there was a distinction between such an officer and officers appointed
to aid the President in the performance of his constitutional duties. In the
latter case, the distinction he saw was that "their acts are his acts," and his
will, therefore, controls; and, by way of illustration, he adverted to the act
establishing the Department of Foreign Affairs, which was the subject of the
"decision of 1789."
The result of what we now have said is this: whether the power of the
President to remove an officer shall prevail over the authority of Congress to
condition the power by fixing a definite term and precluding a removal
except for cause will depend upon the character of the office; the Myers
decision, affirming the power of the President
Page 295 U. S. 632
alone to make the removal, is confined to purely executive officers, and, as
to officers of the kind here under consideration, we hold that no removal can
be made during the prescribed term for which the officer is appointed except
for one or more of the causes named in the applicable statute. To the extent
that, between the decision in the Myers case, which sustains the
unrestrictable power of the President to remove purely executive officers,
and our present decision that such power does not extend to an office such
as that here involved, there shall remain a field of doubt, we leave such
cases as may fall within it for future consideration and determination as they
may arise. In accordance with the foregoing, the questions submitted are
answered.
Question No. 1, Yes. Question No. 2, Yes.
* The docket title of this case is: Rathbun, Executor v. United States.
* The provision of 6(d) of the act which authorizes the President to direct
an investigation and report by the commission in relation to alleged
violations of the antitrust acts is so obviously collateral to the main design of
the act as not to detract from the force of this general statement as to the
character of that body.

20, 1988, 2 reversing its Decision, dated October 24, 1986. 3 The Decision
set aside an Order, dated April 16, 1985, of the Regional Trial Court, 4 as
well as its Order, dated August 21, 1985. The Resolution, dated September
24, 1987 disposed of, and granted, the private respondent Karamfil ImportExport Co., Inc.'s motion for reconsideration of the October 24, 1986
Decision; the Resolution dated May 20, 1988, in turn, denied the petitioner's
own motion for reconsideration.
The facts are not in controversy. We quote:
On March 12, 1985, State Prosecutor Jose B. Rosales, who is assigned with
the Presidential Anti-Dollar Salting Task Force hereinafter referred to as PADS
Task Force for purposes of convenience, issued search warrants Nos. 156,
157, 158, 159, 160 and 161 against the petitioners Karamfil Import-Export
Co., Inc., P & B Enterprises Co., Inc., Philippine Veterans Corporation,
Philippine Veterans Development Corporation, Philippine Construction
Development Corporation, Philippine Lauan Industries Corporation, Intertrade Development (Alvin Aquino), Amelili U. Malaquiok Enterprises and
Jaime P. Lucman Enterprises.
The application for the issuance of said search warrants was filed by Atty.
Napoleon Gatmaytan of the Bureau of Customs who is a deputized member
of the PADS Task Force. Attached to the said application is the affidavit of
Josefin M. Castro who is an operative and investigator of the PADS Task
Force. Said Josefin M. Castro is likewise the sole deponent in the purported
deposition to support the application for the issuance of the six (6) search
warrants involved in this case. The application filed by Atty. Gatmaytan, the
affidavit and deposition of Josefin M. Castro are all dated March 12, 1985. 5
Shortly thereafter, the private respondent (the petitioner below) went to the
Regional Trial Court on a petition to enjoin the implementation of the search
warrants in question. 6 On March 13, 1985, the trial court issued a
temporary restraining order [effective "for a period of five (5) days notice " 7
] and set the case for hearing on March 18, 1985.
In disposing of the petition, the said court found the material issues to be:
1) Competency of this Court to act on petition filed by the petitioners;
2) Validity of the search warrants issued by respondent State Prosecutor;
3) Whether or not the petition has become moot and academic because all
the search warrants sought to be quashed had already been implemented
and executed. 8
G.R. No. 83578 March 16, 1989
THE PRESIDENTIAL ANTI-DOLLAR SALTING TASK FORCE, petitioner,
vs.
HONORABLE COURT OF APPEALS, HONORABLE TEOFILO L, GUADIZ,
JR.,Presiding Judge, REGIONAL TRIAL COURT, Branch 147: NCR
(MAKATI), and KARAMFIL IMPORT-EXPORT CO., INC., respondents.
K. V. Faylona & Associates for respondents.
SARMIENTO, J.:
The petitioner, the Presidential Anti-Dollar Salting Task Force, the President's
arm assigned to investigate and prosecute so-called "dollar salting"
activities in the country (per Presidential Decree No. 1936 as amended by
Presidential Decree No. 2002), asks the Court to hold as null and void two
Resolutions of the Court of Appeals, dated September 24, 1987 1 and May

On April 16, 1985, the lower court issued the first of its challenged Orders,
and held:
WHEREFORE, in view of all the foregoing, the Court hereby declares Search
Warrant Nos. 156, 157, 158, 159, 160, and 161 to be null and void.
Accordingly, the respondents are hereby ordered to return and surrender
immediately all the personal properties and documents seized by them from
the petitioners by virtue of the aforementioned search warrants.
SO ORDERED. 9
On August 21, 1985, the trial court denied reconsideration.
On April 4, 1986, the Presidential Anti-Dollar Salting Task Force went to the
respondent Court of Appeals to contest, on certiorari, the twin Order(s) of

the lower court.


In ruling initially for the Task Force, the Appellate Court held:
Herein petitioner is a special quasi-judicial body with express powers
enumerated under PD 1936 to prosecute foreign exchange violations defined
and punished under P.D. No. 1883.
The petitioner, in exercising its quasi-judicial powers, ranks with the Regional
Trial Courts, and the latter in the case at bar had no jurisdiction to declare
the search warrants in question null and void.
Besides as correctly pointed out by the Assistant Solicitor General the
decision of the Presidential Anti-Dollar Salting Task Force is appealable to the
Office of the President.10
On November 12, 1986, Karamfil Import-Export Co., Inc. sought a
reconsideration, on the question primarily of whether or not the Presidential
Anti-Dollar Salting Task Force is "such other responsible officer'
countenanced by the 1973 Constitution to issue warrants of search and
seizure.
As we have indicated, the Court of Appeals, on Karamfil's motion, reversed
itself and issued its Resolution, dated September 1987, and subsequently,
its Resolution, dated May 20, 1988, denying the petitioner's motion for
reconsideration.
In its petition to this Court, the petitioner alleges that in so issuing the
Resolution(s) above-mentioned, the respondent Court of Appeals
"committed grave abuse of discretion and/or acted in excess of its appellate
jurisdiction," 11 specifically:
a) In deviating from the settled policy and rulings of the Supreme Court that
no Regional Trial Courts may countermand or restrain the enforcement of
lawful writs or decrees issued by a quasi-judicial body of equal and
coordinate rank, like the PADS Task Force;
b) For resorting to judicial legislation to arrive at its erroneous basis for
reconsidering its previous Decision dated October 24, 1986 (see Annex "I")
and thus promulgated the questioned Resolutions (Annexes "A" and "B"),
which violated the constitutional doctrine on separation of powers;
c) In not resolving directly the other important issues raised by the petitioner
in its Petition in CA-G.R. No. 08622-SP despite the fact that petitioner has
demonstrated sufficiently and convincingly that respondent RTC, in issuing
the questioned Orders in Special Proceeding No. M-624 (see Annexes "C"
and 'D"), committed grave abuse of discretion and/or acted in excess of
jurisdiction:
1. In ruling that (a) the description of the things to be seized as stated in the
contested search warrant were too general which allegedly render the
search warrants null and void; (b) the applications for the contested search
warrants actually charged two offenses in contravention of the 2nd
paragraph, Section 3, Rule 126 of the Rules of Court; and (c) this case has
not become moot and academic, even if the contested search warrants had
already been fully implemented with positive results; and
2. In ruling that the petitioner PADS Task Force has not been granted under
PD 1936 'judicial or quasi-judicial jurisdiction. 12

We find, upon the foregoing facts, that the essential questions that confront
us are- (i) is the Presidential Anti-Dollar Salting Task Force a quasi-judicial
body, and one co-equal in rank and standing with the Regional Trial Court,
and accordingly, beyond the latter's jurisdiction; and (ii) may the said
presidential body be said to be "such other responsible officer as may be
authorized by law" to issue search warrants under the 1973 Constitution
questions we take up seriatim.**
In submitting that it is a quasi-judicial entity, the petitioner states that it is
endowed with "express powers and functions under PD No. 1936, to
prosecute foreign exchange violations as defined and punished under PD No.
1883." 13 "By the very nature of its express powers as conferred by the
laws," so it is contended, "which are decidedly quasi-judicial or discretionary
function, such as to conduct preliminary investigation on the charges of
foreign exchange violations, issue search warrants or warrants of arrest, hold
departure orders, among others, and depending upon the evidence
presented, to dismiss the charges or to file the corresponding information in
court of Executive Order No. 934, PD No. 1936 and its Implementing Rules
and Regulations effective August 26, 1984), petitioner exercises quasijudicial power or the power of adjudication ." 14
The Court of Appeals, in its Resolution now assailed, 15 was of the opinion
that "[t]he grant of quasi-judicial powers to petitioner did not diminish the
regular courts' judicial power of interpretation. The right to interpret a law
and, if necessary to declare one unconstitutional, exclusively pertains to the
judiciary. In assuming this function, courts do not proceed on the theory that
the judiciary is superior to the two other coordinate branches of the
government, but solely on the theory that they are required to declare the
law in every case which come before them." 16
This Court finds the Appellate Court to be in error, since what the petitioner
puts to question is the Regional Trial Court's act of assuming jurisdiction over
the private respondent's petition below and its subsequent countermand of
the Presidential Anti-Dollar Salting Task Force's orders of search and seizure,
for the reason that the presidential body, as an entity (allegedly) coordinate
and co-equal with the Regional Trial Court, was (is) not vested with such a
jurisdiction. An examination of the Presidential Anti-Dollar Salting Task
Force's petition shows indeed its recognition of judicial review (of the acts of
Government) as a basic privilege of the courts. Its objection, precisely, is
whether it is the Regional Trial Court, or the superior courts, that may
undertake such a review.
Under the Judiciary Reorganization Act of 1980, 17 the Court of Appeals
exercises:
(3) Exclusive appellate jurisdiction over all final judgments, decisions,
resolutions, orders or awards of Regional Trial Court and quasi-judicial
agencies, instrumentalities, boards or commissions, except those falling
within the appellate jurisdiction of the Supreme Court in accordance with the
Constitution, the provisions of this Act, and of subparagraph (1) of the third
paragraph and subparagraph (4) of the fourth paragraph of Section 17 of the
Judiciary Act of 1948. 18
xxx xxx xxx

Under the present Constitution, with respect to its provisions on


Constitutional Commissions, it is provided, in part that:
... Unless otherwise provided by this Constitution or by law, any decision,
order, or ruling of each Commission may be brought to the Supreme Court
on certiorari by the aggrieved party within thirty days from receipt of a copy
thereof. 19
On the other hand, Regional Trial Courts have exclusive original jurisdiction:
(6) In all cases not within the exclusive jurisdiction of any court, tribunal,
person or body exercising judicial or quasi-judicial functions. 20
xxx xxx xxx
Likewise:
... The Supreme Court may designate certain branches of the Regional Trial
Court to handle exclusively criminal cases, juvenile and domestic relations
cases, agrarian case, urban land reform cases which do not fall under the
jurisdiction of quasi- judicial bodies and agencies and/or such other special
cases as the Supreme Court may determine in the interest of a speedy and
efficient administration of justice. 21
xxx xxx xxx
Under our Resolution dated January 11, 1983: 22
... The appeals to the Intermediate Appellate Court [now, Court of Appeals]
from quasi-judicial bodies shall continue to be governed by the provisions of
Republic Act No. 5434 insofar as the same is not inconsistent with the
provisions of B.P. Blg. 129. 23
The pertinent provisions of Republic Act No. 5434 are as follows:
SECTION 1. Appeals from specified agencies. Any provision of existing law
or Rule of Court to the contrary notwithstanding, parties aggrieved by a final
ruling, award, order, decision, or judgment of the Court of Agrarian
Relations; the Secretary of Labor under Section 7 of Republic Act Numbered
Six hundred and two, also known as the "Minimum Wage Law"; the
Department of Labor under Section 23 of Republic Act Numbered Eight
hundred seventy-five, also known as the "Industrial Peace Act"; the Land
Registration Commission; the Securities and Exchange Commission; the
Social Security Commission; the Civil Aeronautics Board; the Patent Office
and the Agricultural Inventions Board, may appeal therefrom to the Court of
Appeals, within the period and in the manner herein provided, whether the
appeal involves questions of fact, mixed questions of fact and law, or
questions of law, or all three kinds of questions. From final judgments or
decisions of the Court of Appeals, the aggrieved party may appeal by
certiorari to the Supreme Court as provided in Rule 45 of the Rules of Court.
24

Because of subsequent amendments, including the abolition of various


special courts, 25 jurisdiction over quasi-judicial bodies has to be,
consequently, determined by the corresponding amendatory statutes. Under
the Labor Code, decisions and awards of the National Labor Relations
Commission are final and executory, but, nevertheless, 'reviewable by this
Court through a petition for certiorari and not by way of appeal." 26
Under the Property Registration Decree, decisions of the Commission of Land
Registration, en consults, are appealable to the Court of Appeals. 27
The decisions of the Securities and Exchange Commission are likewise
appealable to the Appellate Court, 28 and so are decisions of the Social
Security Commission.29
As a rule, where legislation provides for an appeal from decisions of certain
administrative bodies to the Court of Appeals, it means that such bodies are
co-equal with the Regional Trial Courts, in terms of rank and stature, and
logically, beyond the control of the latter.
As we have observed, the question is whether or not the Presidential AntiDollar Salting Task Force is, in the first place, a quasi-judicial body, and one
whose decisions may not be challenged before the regular courts, other than
the higher tribunals the Court of Appeals and this Court.
A quasi-judicial body has been defined as "an organ of government other
than a court and other than a legislature, which affects the rights of private
parties through either adjudication or rule making." 30 The most common
types of such bodies have been listed as follows:
(1) Agencies created to function in situations wherein the government is
offering some gratuity, grant, or special privilege, like the defunct Philippine
Veterans Board, Board on Pensions for Veterans, and NARRA, and Philippine
Veterans Administration.
(2) Agencies set up to function in situations wherein the government is
seeking to carry on certain government functions, like the Bureau of
Immigration, the Bureau of Internal Revenue, the Board of Special Inquiry
and Board of Commissioners, the Civil Service Commission, the Central Bank
of the Philippines.
(3) Agencies set up to function in situations wherein the government is
performing some business service for the public, like the Bureau of Posts,
the Postal Savings Bank, Metropolitan Waterworks & Sewerage Authority,
Philippine National Railways, the Civil Aeronautics Administration.
(4) Agencies set up to function in situations wherein the government is
seeking to regulate business affected with public interest, like the Fiber
Inspections Board, the Philippine Patent Office, Office of the Insurance
Commissioner.
(5) Agencies set up to function in situations wherein the government is
seeking under the police power to regulate private business and individuals,
like the Securities & Exchange Commission, Board of Food Inspectors, the
Board of Review for Moving Pictures, and the Professional Regulation
Commission.
(6) Agencies set up to function in situations wherein the government is
seeking to adjust individual controversies because of some strong social
policy involved, such as the National Labor Relations Commission, the Court
of Agrarian Relations, the Regional Offices of the Ministry of Labor, the Social

Security Commission, Bureau of Labor Standards, Women and Minors


Bureau. 31
As may be seen, it is the basic function of these bodies to adjudicate claims
and/or to determine rights, and unless its decision are seasonably appealed
to the proper reviewing authorities, the same attain finality and become
executory. A perusal of the Presidential Anti-Dollar Salting Task Force's
organic act, Presidential Decree No. 1936, as amended by Presidential
Decree No. 2002, convinces the Court that the Task Force was not meant to
exercise quasi-judicial functions, that is, to try and decide claims and
execute its judgments. As the President's arm called upon to combat the
vice of "dollar salting" or the blackmarketing and salting of foreign
exchange, 32 it is tasked alone by the Decree to handle the prosecution of
such activities, but nothing more. We quote:
SECTION 1. Powers of the Presidential Anti-Dollar Salting Task Force.-The
Presidential Anti-Dollar Salting Task Force, hereinafter referred to as Task
Force, shall have the following powers and authority:
a) Motu proprio or upon complaint, to investigate and prosecute all dollar
salting activities, including the overvaluation of imports and the
undervaluation of exports;
b) To administer oaths, summon persons or issue subpoenas requiring the
attendance and testimony of witnesses or the production of such books,
papers, contracts, records, statements of accounts, agreements, and other
as may be necessary in the conduct of investigation;
c) To appoint or designate experts, consultants, state prosecutors or fiscals,
investigators and hearing officers to assist the Task Force in the discharge of
its duties and responsibilities; gather data, information or documents;
conduct hearings, receive evidence, both oral and documentary, in all cases
involving violation of foreign exchange laws or regulations; and submit
reports containing findings and recommendations for consideration of
appropriate authorities;
d) To punish direct and indirect contempts with the appropriate penalties
therefor under Rule 71 of the Rules of Court; and to adopt such measures
and take such actions as may be necessary to implement this Decree.
xxx xxx xxx
f. After due investigation but prior to the filing of the appropriate criminal
charges with the fiscal's office or the courts as the case may be, to impose a
fine and/or administrative sanctions as the circumstances warrant, upon any
person found committing or to have committed acts constituting
blackmarketing or salting abroad of foreign exchange, provided said person
voluntarily admits the facts and circumstances constituting the offense and
presents proof that the foreign exchange retained abroad has already been
brought into the country.
Thereafter, no further civil or criminal action may be instituted against said
person before any other judicial regulatory or administrative body for
violation of Presidential Decree No. 1883.
The amount of the fine shall be determined by the Chairman of the
Presidential Anti- Dollar Salting Task Force and paid in Pesos taking into
consideration the amount of foreign exchange retained abroad, the
exchange rate differentials, uncollected taxes and duties thereon,
undeclared profits, interest rates and such other relevant factors.

The fine shall be paid to the Task Force which shall retain Twenty percent (20
%) thereof. The informer, if any, shall be entitled to Twenty percent (20 %) of
the fine. Should there be no informer, the Task Force shall be entitle to retain
Forty percent (40 %) of the fine and the balance shall accrue to the general
funds of the National government. The amount of the fine to be retained by
the Task Force shall form part of its Confidential Fund and be utilized for the
operations of the Task Force . 33
The Court sees nothing in the aforequoted provisions (except with respect to
the Task Force's powers to issue search warrants) that will reveal a
legislative intendment to confer it with quasi-judicial responsibilities relative
to offenses punished by Presidential Decree No. 1883. Its undertaking, as we
said, is simply, to determine whether or not probable cause exists to warrant
the filing of charges with the proper court, meaning to say, to conduct an
inquiry preliminary to a judicial recourse, and to recommend action "of
appropriate authorities". It is not unlike a fiscal's office that conducts a
preliminary investigation to determine whether or not prima facie evidence
exists to justify haling the respondent to court, and yet, while it makes that
determination, it cannot be said to be acting as a quasi-court. For it is the
courts, ultimately, that pass judgment on the accused, not the fiscal.
It is not unlike the Presidential Commission on Good Government either, the
executive body appointed to investigate and prosecute cases involving "illgotten wealth". It had been vested with enormous powers, like the issuance
of writs of sequestration, freeze orders, and similar processes, but that did
not, on account thereof alone, make it a quasi-judicial entity as defined by
recognized authorities. It cannot pronounce judgement of the accused's
culpability, the jurisdiction to do which is exclusive upon the Sandiganbayan.
34
If the Presidential Anti-Dollar Salting Task Force is not, hence, a quasi-judicial
body, it cannot be said to be co-equal or coordinate with the Regional Trial
Court. There is nothing in its enabling statutes that would demonstrate its
standing at par with the said court.
In that respect, we do not find error in the respondent Court of Appeal's
resolution sustaining the assumption of jurisdiction by the court a quo.
It will not do to say that the fact that the Presidential Task Force has been
empowered to issue warrants of arrest, search, and seizure, makes it, ergo, a
"semi-court". Precisely, it is the objection interposed by the private
respondent, whether or not it can under the 1973 Charter, issue such kinds
of processes.
It must be observed that under the present Constitution, the powers of
arrest and search are exclusive upon judges. 35 To that extent, the case has
become moot and academic. Nevertheless, since the question has been
specifically put to the Court, we find it unavoidable to resolve it as the final
arbiter of legal controversies, pursuant to the provisions of the 1973
Constitution during whose regime the case was commenced.
Since the 1973 Constitution took force and effect and until it was so
unceremoniously discarded in 1986, its provisions conferring the power to
issue arrest and search warrants upon an officer, other than a judge, by fiat
of legislation have been at best controversial. In Lim v. Ponce de Leon, 36 a

1975 decision, this Court ruled that a fiscal has no authority to issue search
warrants, but held in the same vein that, by virtue of the responsible officer"
clause of the 1973 Bill of Rights, "any lawful officer authorized by law can
issue a search warrant or warrant of arrest.37 Authorities, however, have
continued to express reservations whether or not fiscals may, by statute, be
given such a power. 38
Less than a year later, we promulgated Collector of Customs v. Villaluz, 39 in
which we categorically averred: Until now only the judge can issue the
warrant of arrest." 40 "No law or presidential decree has been enacted or
promulgated vesting the same authority in a particular responsible officer ."
41
Apparently, Villaluz had settled the debate, but the same question persisted
following this Courts subsequent rulings upholding the President's alleged
emergency arrest powers .42 [Mr. Justice Hugo Gutierrez would hold,
however, that a Presidential Commitment Order (PCO) is (was) not a species
of "arrest" in its technical sense, and that the (deposed) Chief Executive, in
issuing one, does not do so in his capacity as a "responsible officer" under
the 1973 Charter, but rather, as Commander-in-Chief of the Armed Forces in
times of emergency, or in order to carry out the deportation of undesirable
aliens.43 In the distinguished Justice's opinion then, these are acts that can
be done without need of judicial intervention because they are not,
precisely, judicial but Presidential actions.]
In Ponsica v. Ignalaga,44 however, we held that the mayor has been made a
"responsible officer' by the Local Government Code, 45 but had ceased to
be one with the approval of the 1987 Constitution according judges sole
authority to issue arrest and search warrants. But in the same breath, we did
not rule the grant under the Code unconstitutional based on the provisions
of the former Constitution. We were agreed, though, that the "responsible
officer" referred to by the fundamental law should be one capable of
approximating "the cold neutrality of an impartial judge." 46
In striking down Presidential Decree No. 1936 the respondent Court relied on
American jurisprudence, notably,Katz v. United States, 47 Johnson v. United
States, 48 and Coolidge v. New Hampshire 49 in which the American
Supreme Court ruled that prosecutors (like the petitioner) cannot be given
such powers because of their incapacity for a "detached scrutiny" 50 of the
cases before them. We affirm the Appellate Court.
We agree that the Presidential Anti-Dollar Salting Task Force exercises, or
was meant to exercise, prosecutorial powers, and on that ground, it cannot
be said to be a neutral and detached "judge" to determine the existence of
probable cause for purposes of arrest or search. Unlike a magistrate, a
prosecutor is naturally interested in the success of his case. Although his
office "is to see that justice is done and not necessarily to secure the
conviction of the person accused," 51 he stands, invariably, as the
accused's adversary and his accuser. To permit him to issue search warrants
and indeed, warrants of arrest, is to make him both judge and jury in his own
right, when he is neither. That makes, to our mind and to that extent,
Presidential Decree No. 1936 as amended by Presidential Decree No. 2002,
unconstitutional.
It is our ruling, thus, that when the 1973 Constitution spoke of "responsible
officer" to whom the authority to issue arrest and search warrants may be
delegated by legislation, it did not furnish the legislator with the license to

give that authority to whomsoever it pleased. It is to be noted that the


Charter itself makes the qualification that the officer himself must be
"responsible". We are not saying, of course, that the Presidential Anti-Dollar
Salting Task Force (or any similar prosecutor) is or has been irresponsible in
discharging its duty. Rather, we take "responsibility", as used by the
Constitution, to mean not only skill and competence but more significantly,
neutrality and independence comparable to the impartiality presumed of a
judicial officer. A prosecutor can in no manner be said to be possessed of the
latter qualities.
According to the Court of Appeals, the implied exclusion of prosecutors
under the 1973 Constitution was founded on the requirements of due
process, notably, the assurance to the respondent of an unbiased inquiry of
the charges against him prior to the arrest of his person or seizure of his
property. We add that the exclusion is also demanded by the principle of
separation of powers on which our republican structure rests. Prosecutors
exercise essentially an executive function (the petitioner itself is chaired by
the Minister, now Secretary, of Trade and Industry), since under the
Constitution, the President has pledged to execute the laws. 52 As such,
they cannot be made to issue judicial processes without unlawfully
impinging the prerogative of the courts.
At any rate, Ponsica v. Ignalaga should foreclose all questions on the matter,
although the Court hopes that this disposition has clarified a controversy
that had generated often bitter debates and bickerings.
The Court joins the Government in its campaign against the scourge of
"dollar- salting", a pernicious practice that has substantially drained the
nation's coffers and has seriously threatened its economy. We recognize the
menace it has posed (and continues to pose) unto the very stability of the
country, the urgency for tough measures designed to contain if not
eradicate it, and foremost, the need for cooperation from the citizenry in an
all-out campaign. But while we support the State's efforts, we do so not at
the expense of fundamental rights and liberties and constitutional
safeguards against arbitrary and unreasonable acts of Government. If in the
event that as a result of this ruling, we prove to be an "obstacle" to the vital
endeavour of stamping out the blackmarketing of valuable foreign
exchange, we do not relish it and certainly, do not mean it. The Constitution
simply does not leave us much choice.
WHEREFORE, the petition is DISMISSED. No costs. SO ORDERED.
Fernan, C.J., Narvasa, Gutierrez, Jr., Paras, Gancayco, Padilla, Bidin, GrioAquino, Medialdea and Regalado, JJ., concur.
Cruz, Feliciano and Cortes, JJ. concur in the result.
Melencio-Herrera, J., took no part.

G.R. No. L-57883 March 12, 1982


GUALBERTO J. DE LA LLANA Presiding Judge, Branch II of the City
Court of Olongapo, ESTANISLAO L. CESA, JR., FIDELA Y. VARGAS,
BENJAMIN C. ESCOLANGO, JUANITO C. ATIENZA, MANUEL REYES
ROSAPAPAN, JR., VIRGILIO E. ACIERTO, and PORFIRIO AGUILLON
AGUILA, petitioners,
vs.
MANUEL ALBA, Minister of Budget, FRANCISCO TANTUICO,
Chairman, Commission on Audit, and RICARDO PUNO, Minister of
Justice, Respondents.

FERNANDO, C.J.:
This Court, pursuant to its grave responsibility of passing upon the validity of
any executive or legislative act in an appropriate cases, has to resolve the
crucial issue of the constitutionality of Batas Pambansa Blg. 129, entitled
"An act reorganizing the Judiciary, Appropriating Funds Therefor and for
Other Purposes." The task of judicial review, aptly characterized as exacting
and delicate, is never more so than when a conceded legislative power, that
of judicial reorganization, 1 may possibly collide with the time-honored
principle of the independence of the judiciary 2 as protected and
safeguarded by this constitutional provision: "The Members of the Supreme
Court and judges of inferior courts shall hold office during good behavior
until they reach the age of seventy years or become incapacitated to
discharge the duties of their office. The Supreme Court shall have the power
to discipline judges of inferior courts and, by a vote of at least eight
Members, order their dismissal." 3 For the assailed legislation mandates that
Justices and judges of inferior courts from the Court of Appeals to municipal
circuit courts, except the occupants of the Sandiganbayan and the Court of
Tax Appeals, unless appointed to the inferior courts established by such Act,
would be considered separated from the judiciary. It is the termination of
their incumbency that for petitioners justifies a suit of this character, it being
alleged that thereby the security of tenure provision of the Constitution has
been ignored and disregarded,
That is the fundamental issue raised in this proceeding, erroneously entitled
Petition for Declaratory Relief and/or for Prohibition 4 considered by this
Court as an action for prohibited petition, seeking to enjoin respondent
Minister of the Budget, respondent Chairman of the Commission on Audit,
and respondent Minister of Justice from taking any action implementing
Batas Pambansa Blg. 129. Petitioners 5 sought to bolster their claim by
imputing lack of good faith in its enactment and characterizing as an undue
delegation of legislative power to the President his authority to fix the
compensation and allowances of the Justices and judges thereafter
appointed and the determination of the date when the reorganization shall
be deemed completed. In the very comprehensive and scholarly Answer of

Solicitor General Estelito P. Mendoza, 6 it was pointed out that there is no


valid justification for the attack on the constitutionality of this statute, it
being a legitimate exercise of the power vested in the Batasang Pambansa
to reorganize the judiciary, the allegations of absence of good faith as well
as the attack on the independence of the judiciary being unwarranted and
devoid of any support in law. A Supplemental Answer was likewise filed on
October 8, 1981, followed by a Reply of petitioners on October 13. After the
hearing in the morning and afternoon of October 15, in which not only
petitioners and respondents were heard through counsel but also the amici
curiae, 7 and thereafter submission of the minutes of the proceeding on the
debate on Batas Pambansa Blg. 129, this petition was deemed submitted for
decision.
The importance of the crucial question raised called for intensive and
rigorous study of all the legal aspects of the case. After such exhaustive
deliberation in several sessions, the exchange of views being supplemented
by memoranda from the members of the Court, it is our opinion and so hold
that Batas Pambansa Blg. 129 is not unconstitutional.
1. The argument as to the lack of standing of petitioners is easily resolved.
As far as Judge de la Llana is concerned, he certainly falls within the
principle set forth in Justice Laurel's opinion in People v. Vera. 8 Thus: "The
unchallenged rule is that the person who impugns the validity of a statute
must have a personal and substantial interest in the case such that he has
sustained, or will sustain, direct injury as a result of its enforcement." 9 The
other petitioners as members of the bar and officers of the court cannot be
considered as devoid of "any personal and substantial interest" on the
matter. There is relevance to this excerpt from a separate opinion in Aquino,
Jr. v. Commission on Elections: 10 "Then there is the attack on the standing of
petitioners, as vindicating at most what they consider a public right and not
protecting their rights as individuals. This is to conjure the specter of the
public right dogma as an inhibition to parties intent on keeping public
officials staying on the path of constitutionalism. As was so well put by Jaffe:
'The protection of private rights is an essential constituent of public interest
and, conversely, without a well-ordered state there could be no enforcement
of private rights. Private and public interests are, both in substantive and
procedural sense, aspects of the totality of the legal order.' Moreover,
petitioners have convincingly shown that in their capacity as taxpayers, their
standing to sue has been amply demonstrated. There would be a retreat
from the liberal approach followed in Pascual v. Secretary of Public
Works,foreshadowed by the very decision of People v. Vera where the
doctrine was first fully discussed, if we act differently now. I do not think we
are prepared to take that step. Respondents, however, would hark back to
the American Supreme Court doctrine in Mellon v. Frothingham with their
claim that what petitioners possess 'is an interest which is shared in
common by other people and is comparatively so minute and indeterminate
as to afford any basis and assurance that the judicial process can act on it.'
That is to speak in the language of a bygone era even in the United States.
For as Chief Justice Warren clearly pointed out in the later case of Flast v.

Cohen, the barrier thus set up if not breached has definitely been
lowered." 11
2. The imputation of arbitrariness to the legislative body in the enactment of
Batas Pambansa Blg. 129 to demonstrate lack of good faith does manifest
violence to the facts. Petitioners should have exercised greater care in
informing themselves as to its antecedents. They had laid themselves open
to the accusation of reckless disregard for the truth, On August 7, 1980, a
Presidential Committee on Judicial Reorganization was organized. 12 This
Executive Order was later amended by Executive Order No. 619-A., dated
September 5 of that year. It clearly specified the task assigned to it: "1. The
Committee shall formulate plans on the reorganization of the Judiciary which
shall be submitted within seventy (70) days from August 7, 1980 to provide
the President sufficient options for the reorganization of the entire Judiciary
which shall embrace all lower courts, including the Court of Appeals, the
Courts of First Instance, the City and Municipal Courts, and all Special
Courts, but excluding the Sandigan Bayan." 13 On October 17, 1980, a Report
was submitted by such Committee on Judicial Reorganization. It began with
this paragraph: "The Committee on Judicial Reorganization has the honor to
submit the following Report. It expresses at the outset its appreciation for
the opportunity accorded it to study ways and means for what today is a
basic and urgent need, nothing less than the restructuring of the judicial
system. There are problems, both grave and pressing, that call for remedial
measures. The felt necessities of the time, to borrow a phrase from Holmes,
admit of no delay, for if no step be taken and at the earliest opportunity, it is
not too much to say that the people's faith in the administration of justice
could be shaken. It is imperative that there be a greater efficiency in the
disposition of cases and that litigants, especially those of modest means
much more so, the poorest and the humblest can vindicate their rights in
an expeditious and inexpensive manner. The rectitude and the fairness in
the way the courts operate must be manifest to all members of the
community and particularly to those whose interests are affected by the
exercise of their functions. It is to that task that the Committee addresses
itself and hopes that the plans submitted could be a starting point for an
institutional reform in the Philippine judiciary. The experience of the
Supreme Court, which since 1973 has been empowered to supervise inferior
courts, from the Court of Appeals to the municipal courts, has proven that
reliance on improved court management as well as training of judges for
more efficient administration does not suffice. I hence, to repeat, there is
need for a major reform in the judicial so stem it is worth noting that it will
be the first of its kind since the Judiciary Act became effective on June 16,
1901." 14 I t went to say: "I t does not admit of doubt that the last two
decades of this century are likely to be attended with problems of even
greater complexity and delicacy. New social interests are pressing for
recognition in the courts. Groups long inarticulate, primarily those
economically underprivileged, have found legal spokesmen and are
asserting grievances previously ignored. Fortunately, the judicially has not
proved inattentive. Its task has thus become even more formidable. For so
much grist is added to the mills of justice. Moreover, they are likewise to be
quite novel. The need for an innovative approach is thus apparent. The
national leadership, as is well-known, has been constantly on the search for

solutions that will prove to be both acceptable and satisfactory. Only thus
may there be continued national progress." 15 After which comes: "To be less
abstract, the thrust is on development. That has been repeatedly stressed
and rightly so. All efforts are geared to its realization. Nor, unlike in the past,
was it to b "considered as simply the movement towards economic progress
and growth measured in terms of sustained increases in per capita income
and Gross National Product (GNP). 16 For the New Society, its implication
goes further than economic advance, extending to "the sharing, or more
appropriately, the democratization of social and economic opportunities, the
substantiation of the true meaning of social justice." 17 This process of
modernization and change compels the government to extend its field of
activity and its scope of operations. The efforts towards reducing the gap
between the wealthy and the poor elements in the nation call for more
regulatory legislation. That way the social justice and protection to labor
mandates of the Constitution could be effectively implemented." 18 There is
likelihood then "that some measures deemed inimical by interests adversely
affected would be challenged in court on grounds of validity. Even if the
question does not go that far, suits may be filed concerning their
interpretation and application. ... There could be pleas for injunction or
restraining orders. Lack of success of such moves would not, even so, result
in their prompt final disposition. Thus delay in the execution of the policies
embodied in law could thus be reasonably expected. That is not conducive
to progress in development." 19 For, as mentioned in such Report, equally of
vital concern is the problem of clogged dockets, which "as is well known, is
one of the utmost gravity. Notwithstanding the most determined efforts
exerted by the Supreme Court, through the leadership of both retired Chief
Justice Querube Makalintal and the late Chief Justice Fred Ruiz Castro, from
the time supervision of the courts was vested in it under the 1973
Constitution, the trend towards more and more cases has continued." 20 It is
understandable why. With the accelerated economic development, the
growth of population, the increasing urbanization, and other similar factors,
the judiciary is called upon much oftener to resolve controversies. Thus
confronted with what appears to be a crisis situation that calls for a remedy,
the Batasang Pambansa had no choice. It had to act, before the ailment
became even worse. Time was of the essence, and yet it did not hesitate to
be duly mindful, as it ought to be, of the extent of its coverage before
enacting Batas Pambansa Blg. 129.
3. There is no denying, therefore, the need for "institutional reforms,"
characterized in the Report as "both pressing and urgent." 21 It is worth
noting, likewise, as therein pointed out, that a major reorganization of such
scope, if it were to take place, would be the most thorough after four
generations. 22 The reference was to the basic Judiciary Act generations .
enacted in June of 1901, 23 amended in a significant way, only twice previous
to the Commonwealth. There was, of course, the creation of the Court of
Appeals in 1935, originally composed "of a Presiding Judge and ten appellate
Judges, who shall be appointed by the President of the Philippines, with the
consent of the Commission on Appointments of the National Assembly, 24 It
could "sit en banc, but it may sit in two divisions, one of six and another of
five Judges, to transact business, and the two divisions may sit at the same
time." 25 Two years after the establishment of independence of the Republic

of the Philippines, the Judiciary Act of 1948 26 was passed. It continued the
existing system of regular inferior courts, namely, the Court of Appeals,
Courts of First Instance, 27 the Municipal Courts, at present the City Courts,
and the Justice of the Peace Courts, now the Municipal Circuit Courts and
Municipal Courts. The membership of the Court of Appeals has been
continuously increased. 28 Under a 1978 Presidential Decree, there would be
forty-five members, a Presiding Justice and forty-four Associate Justices, with
fifteen divisions. 29 Special courts were likewise created. The first was the
Court of Tax Appeals in 1954, 30 next came the Court of Agrarian Relations in
1955, 31 and then in the same year a Court of the Juvenile and Domestic
Relations for Manila in 1955, 32 subsequently followed by the creation of two
other such courts for Iloilo and Quezon City in 1966. 33 In 1967, Circuit
Criminal Courts were established, with the Judges having the same
qualifications, rank, compensation, and privileges as judges of Courts of First
Instance. 34
4. After the submission of such Report, Cabinet Bill No. 42, which later
became the basis of Batas Pambansa Blg. 129, was introduced. After setting
forth the background as above narrated, its Explanatory Note continues:
"Pursuant to the President's instructions, this proposed legislation has been
drafted in accordance with the guidelines of that report with particular
attention to certain objectives of the reorganization, to wit, the attainment of
more efficiency in disposal of cases, a reallocation of jurisdiction, and a
revision of procedures which do not tend to the proper meeting out of
justice. In consultation with, and upon a consensus of, the governmental and
parliamentary leadership, however, it was felt that some options set forth in
the Report be not availed of. Instead of the proposal to confine the
jurisdiction of the intermediate appellate court merely to appellate
adjudication, the preference has been opted to increase rather than diminish
its jurisdiction in order to enable it to effectively assist the Supreme Court.
This preference has been translated into one of the innovations in the
proposed Bill." 35 In accordance with the parliamentary procedure, the Bill
was sponsored by the Chairman of the Committee on Justice, Human Rights
and Good Government to which it was referred. Thereafter, Committee
Report No. 225 was submitted by such Committee to the Batasang
Pambansa recommending the approval with some amendments. In the
sponsorship speech of Minister Ricardo C. Puno, there was reference to the
Presidential Committee on Judicial Reorganization. Thus: "On October 17,
1980, the Presidential Committee on Judicial Reorganization submitted its
report to the President which contained the 'Proposed Guidelines for Judicial
Reorganization.' Cabinet Bill No. 42 was drafted substantially in accordance
with the options presented by these guidelines. Some options set forth in the
aforesaid report were not availed of upon consultation with and upon
consensus of the government and parliamentary leadership. Moreover, some
amendments to the bill were adopted by the Committee on Justice, Human
Rights and Good Government, to which The bill was referred, following the
public hearings on the bill held in December of 1980. The hearings consisted
of dialogues with the distinguished members of the bench and the bar who
had submitted written proposals, suggestions, and position papers on the bill
upon the invitation of the Committee on Justice, Human Rights and Good
Government." 36 Stress was laid by the sponsor that the enactment of such

Cabinet Bill would, firstly, result in the attainment of more efficiency in the
disposal of cases. Secondly, the improvement in the quality of justice
dispensed by the courts is expected as a necessary consequence of the
easing of the court's dockets. Thirdly, the structural changes introduced in
the bill, together with the reallocation of jurisdiction and the revision of the
rules of procedure, are designated to suit the court system to the exigencies
of the present day Philippine society, and hopefully, of the foreseeable
future." 37 it may be observed that the volume containing the minutes of the
proceedings of the Batasang Pambansa show that 590 pages were devoted
to its discussion. It is quite obvious that it took considerable time and effort
as well as exhaustive study before the act was signed by the President on
August 14, 1981. With such a background, it becomes quite manifest how
lacking in factual basis is the allegation that its enactment is tainted by the
vice of arbitrariness. What appears undoubted and undeniable is the good
faith that characterized its enactment from its inception to the affixing of the
Presidential signature.
5. Nothing is better settled in our law than that the abolition of an office
within the competence of a legitimate body if done in good faith suffers from
no infirmity. The ponencia of Justice J.B.L. Reyes in Cruz v. Primicias,
Jr. 38 reiterated such a doctrine: "We find this point urged by respondents, to
be without merit. No removal or separation of petitioners from the service is
here involved, but the validity of the abolition of their offices. This is a legal
issue that is for the Courts to decide. It is well-known rule also that valid
abolition of offices is neither removal nor separation of the incumbents. ...
And, of course, if the abolition is void, the incumbent is deemed never to
have ceased to hold office. The preliminary question laid at rest, we pass to
the merits of the case. As well-settled as the rule that the abolition of an
office does not amount to an illegal removal of its incumbent is the principle
that, in order to be valid, the abolition must be made in good faith." 39 The
above excerpt was quoted with approval in Bendanillo, Sr. v. Provincial
Governor, 40 two earlier cases enunciating a similar doctrine having
preceded it. 41 As with the offices in the other branches of the government,
so it is with the judiciary. The test remains whether the abolition is in good
faith. As that element is conspicuously present in the enactment of Batas
Pambansa Blg. 129, then the lack of merit of this petition becomes even
more apparent. The concurring opinion of Justice Laurel in Zandueta v. De la
Costa 42 cannot be any clearer. This is a quo warranto proceeding filed by
petitioner, claiming that he, and not respondent, was entitled to he office of
judge of the Fifth Branch of the Court of First Instance of Manila. There was a
Judicial Reorganization Act in 1936, 43 a year after the inauguration of the
Commonwealth, amending the Administrative Code to organize courts of
original jurisdiction known as the Courts of First Instance Prior to such
statute, petitioner was the incumbent of such branch. Thereafter, he
received an ad interim appointment, this time to the Fourth Judicial District,
under the new legislation. Unfortunately for him, the Commission on
Appointments of then National Assembly disapproved the same, with
respondent being appointed in his place. He contested the validity of the Act
insofar as it resulted in his being forced to vacate his position This Court did
not rule squarely on the matter. His petition was dismissed on the ground of
estoppel. Nonetheless, the separate concurrence of Justice Laurel in the

result reached, to repeat, reaffirms in no uncertain terms the standard of


good faith to preclude any doubt as to the abolition of an inferior court, with
due recognition of the security of tenure guarantee. Thus: " I am of the
opinion that Commonwealth Act No. 145 in so far as it reorganizes, among
other judicial districts, the Ninth Judicial District, and establishes an entirely
new district comprising Manila and the provinces of Rizal and Palawan, is
valid and constitutional. This conclusion flows from the fundamental
proposition that the legislature may abolish courts inferior to the Supreme
Court and therefore may reorganize them territorially or otherwise thereby
necessitating new appointments and commissions. Section 2, Article VIII of
the Constitution vests in the National Assembly the power to define,
prescribe and apportion the jurisdiction of the various courts, subject to
certain limitations in the case of the Supreme Court. It is admitted that
section 9 of the same article of the Constitution provides for the security of
tenure of all the judges. The principles embodied in these two sections of the
same article of the Constitution must be coordinated and harmonized. A
mere enunciation of a principle will not decide actual cases and
controversies of every sort. (Justice Holmes in Lochner vs. New York, 198
U.S., 45; 49 Law. ed; 937)" 44 justice Laurel continued: "I am not insensible to
the argument that the National Assembly may abuse its power and move
deliberately to defeat the constitutional provision guaranteeing security of
tenure to all judges, But, is this the case? One need not share the view of
Story, Miller and Tucker on the one hand, or the opinion of Cooley, Watson
and Baldwin on the other, to realize that the application of a legal or
constitutional principle is necessarily factual and circumstantial and that
fixity of principle is the rigidity of the dead and the unprogressive. I do say,
and emphatically, however, that cases may arise where the violation of the
constitutional provision regarding security of tenure is palpable and plain,
and that legislative power of reorganization may be sought to cloak an
unconstitutional and evil purpose. When a case of that kind arises, it will be
the time to make the hammer fall and heavily. But not until then. I am
satisfied that, as to the particular point here discussed, the purpose was the
fulfillment of what was considered a great public need by the legislative
department and that Commonwealth Act No. 145 was not enacted purposely
to affect adversely the tenure of judges or of any particular judge. Under
these circumstances, I am for sustaining the power of the legislative
department under the Constitution. To be sure, there was greater necessity
for reorganization consequent upon the establishment of the new
government than at the time Acts Nos. 2347 and 4007 were approved by the
defunct Philippine Legislature, and although in the case of these two Acts
there was an express provision providing for the vacation by the judges of
their offices whereas in the case of Commonwealth Act No. 145 doubt is
engendered by its silence, this doubt should be resolved in favor of the valid
exercise of the legislative power." 45
6. A few more words on the question of abolition. In the above-cited opinion
of Justice Laurel in Zandueta, reference was made to Act No. 2347 46 on the
reorganization of the Courts of First Instance and to Act No. 4007 47 on the
reorganization of all branches of the government, including the courts of first
instance. In both of them, the then Courts of First Instance were replaced by
new courts with the same appellation. As Justice Laurel pointed out, there

was no question as to the fact of abolition. He was equally categorical as to


Commonwealth Act No. 145, where also the system of the courts of first
instance was provided for expressly. It was pointed out by Justice Laurel that
the mere creation of an entirely new district of the same court is valid and
constitutional. such conclusion flowing "from the fundamental proposition
that the legislature may abolish courts inferior to the Supreme Court and
therefore may reorganize them territorially or otherwise thereby
necessitating new appointments and commissions." 48 The challenged
statute creates an intermediate appellate court, 49 regional trial
courts, 50 metropolitan trial courts of the national capital region, 51 and other
metropolitan trial courts, 52 municipal trial courts in cities, 53 as well as in
municipalities, 54 and municipal circuit trial courts. 55 There is even less
reason then to doubt the fact that existing inferior courts were abolished. For
the Batasang Pambansa, the establishment of such new inferior courts was
the appropriate response to the grave and urgent problems that pressed for
solution. Certainly, there could be differences of opinion as to the
appropriate remedy. The choice, however, was for the Batasan to make, not
for this Court, which deals only with the question of power. It bears
mentioning that in Brillo v. Eage 56 this Court, in an unanimous opinion
penned by the late Justice Diokno, citing Zandueta v. De la Costa, ruled: "La
segunda question que el recurrrido plantea es que la Carta de Tacloban ha
abolido el puesto. Si efectivamente ha sido abolido el cargo, entonces ha
quedado extinguido el derecho de recurente a ocuparlo y a cobrar el salario
correspodiente. Mc Culley vs. State, 46 LRA, 567. El derecho de un juez de
desempenarlo hasta los 70 aos de edad o se incapacite no priva al
Congreso de su facultad de abolir, fusionar o reorganizar juzgados no
constitucionales." 57 Nonetheless, such well-established principle was not
held applicable to the situation there obtaining, the Charter of Tacloban City
creating a city court in place of the former justice of the peace court. Thus:
"Pero en el caso de autos el Juzgado de Tacloban no ha sido abolido. Solo se
le ha cambiado el nombre con el cambio de forma del gobierno local." 58 The
present case is anything but that. Petitioners did not and could not prove
that the challenged statute was not within the bounds of legislative
authority.
7. This opinion then could very well stop at this point. The implementation of
Batas Pambansa Blg. 129, concededly a task incumbent on the Executive,
may give rise, however, to questions affecting a judiciary that should be
kept independent. The all-embracing scope of the assailed legislation as far
as all inferior courts from the Courts of Appeals to municipal courts are
concerned, with the exception solely of the Sandiganbayan and the Court of
Tax Appeals 59 gave rise, and understandably so, to misgivings as to its
effect on such cherished Ideal. The first paragraph of the section on the
transitory provision reads: "The provisions of this Act shall be immediately
carried out in accordance with an Executive Order to be issued by the
President. The Court of Appeals, the Courts of First Instance, the Circuit
Criminal Courts, the Juvenile and Domestic Relations Courts, the Courts of
Agrarian Relations, the City Courts, the Municipal Courts, and the Municipal
Circuit Courts shall continue to function as presently constituted and
organized, until the completion of the reorganization provided in this Act as
declared by the President. Upon such declaration, the said courts shall be

deemed automatically abolished and the incumbents thereof shall cease to


hold the office." 60 There is all the more reason then why this Court has no
choice but to inquire further into the allegation by petitioners that the
security of tenure provision, an assurance of a judiciary free from extraneous
influences, is thereby reduced to a barren form of words. The amended
Constitution adheres even more clearly to the long-established tradition of a
strong executive that antedated the 1935 Charter. As noted in the work of
former Vice-Governor Hayden, a noted political scientist, President Claro M.
Recto of the 1934 Convention, in his closing address, in stressing such a
concept, categorically spoke of providing "an executive power which, subject
to the fiscalization of the Assembly, and of public opinion, will not only know
how to govern, but will actually govern, with a firm and steady hand,
unembarrassed by vexatious interferences by other departments, or by
unholy alliances with this and that social group." 61 The above excerpt was
cited with approval by Justice Laurel in Planas v. Gil. 62 Moreover, under the
1981 Amendments, it may be affirmed that once again the principle of
separation of powers, to quote from the same jurist as ponente in Angara v.
Electoral Commission, 63 "obtains not through express provision but by
actual division." 64 The president, under Article VII, shall be the head of state
and chief executive of the Republic of the Philippines." 65Moreover, it is
equally therein expressly provided that all the powers he possessed under
the 1935 Constitution are once again vested in him unless the Batasang
Pambansa provides otherwise." 66 Article VII of the 1935 Constitution speaks
categorically: "The Executive power shall be vested in a President of the
Philippines." 67 As originally framed, the 1973 Constitution created the
position of President as the "symbolic head of state." 68 In addition, there
was a provision for a Prime Minister as the head of government exercising
the executive power with the assistance of the Cabinet 69 Clearly, a modified
parliamentary system was established. In the light of the 1981 amendments
though, this Court in Free Telephone Workers Union v. Minister of
Labor 70 could state: "The adoption of certain aspects of a parliamentary
system in the amended Constitution does not alter its essentially
presidential character." 71 The retention, however, of the position of the
Prime Minister with the Cabinet, a majority of the members of which shall
come from the regional representatives of the Batasang Pambansa and the
creation of an Executive Committee composed of the Prime Minister as
Chairman and not more than fourteen other members at least half of whom
shall be members of the Batasang Pambansa, clearly indicate the evolving
nature of the system of government that is now operative. 72 What is equally
apparent is that the strongest ties bind the executive and legislative
departments. It is likewise undeniable that the Batasang Pambansa retains
its full authority to enact whatever legislation may be necessary to carry out
national policy as usually formulated in a caucus of the majority party. It is
understandable then why in Fortun v. Labang 73 it was stressed that with the
provision transferring to the Supreme Court administrative supervision over
the Judiciary, there is a greater need "to preserve unimpaired the
independence of the judiciary, especially so at present, where to all intents
and purposes, there is a fusion between the executive and the legislative
branches." 74

8. To be more specific, petitioners contend that the abolition of the existing


inferior courts collides with the security of tenure enjoyed by incumbent
Justices and judges under Article X, Section 7 of the Constitution. There was
a similar provision in the 1935 Constitution. It did not, however, go as far as
conferring on this Tribunal the power to supervise administratively inferior
courts. 75 Moreover, this Court is em powered "to discipline judges of inferior
courts and, by a vote of at least eight members, order their
dismissal." 76 Thus it possesses the competence to remove judges. Under
the Judiciary Act, it was the President who was vested with such
power. 77 Removal is, of course, to be distinguished from termination by
virtue of the abolition of the office. There can be no tenure to a non-existent
office. After the abolition, there is in law no occupant. In case of removal,
there is an office with an occupant who would thereby lose his position. It is
in that sense that from the standpoint of strict law, the question of any
impairment of security of tenure does not arise. Nonetheless, for the
incumbents of inferior courts abolished, the effect is one of separation. As to
its effect, no distinction exists between removal and the abolition of the
office. Realistically, it is devoid of significance. He ceases to be a member of
the judiciary. In the implementation of the assailed legislation, therefore, it
would be in accordance with accepted principles of constitutional
construction that as far as incumbent justices and judges are concerned, this
Court be consulted and that its view be accorded the fullest consideration.
No fear need be entertained that there is a failure to accord respect to the
basic principle that this Court does not render advisory opinions. No
question of law is involved. If such were the case, certainly this Court could
not have its say prior to the action taken by either of the two departments.
Even then, it could do so but only by way of deciding a case where the
matter has been put in issue. Neither is there any intrusion into who shall be
appointed to the vacant positions created by the reorganization. That
remains in the hands of the Executive to whom it properly belongs. There is
no departure therefore from the tried and tested ways of judicial power,
Rather what is sought to be achieved by this liberal interpretation is to
preclude any plausibility to the charge that in the exercise of the conceded
power of reorganizing tulle inferior courts, the power of removal of the
present incumbents vested in this Tribunal is ignored or disregarded. The
challenged Act would thus be free from any unconstitutional taint, even one
not readily discernidble except to those predisposed to view it with distrust.
Moreover, such a construction would be in accordance with the basic
principle that in the choice of alternatives between one which would save
and another which would invalidate a statute, the former is to be
preferred. 78 There is an obvious way to do so. The principle that the
Constitution enters into and forms part of every act to avoid any
constitutional taint must be applied Nuez v. Sandiganbayan, 79 promulgated
last January, has this relevant excerpt: "It is true that other Sections of the
Decree could have been so worded as to avoid any constitutional objection.
As of now, however, no ruling is called for. The view is given expression in
the concurring and dissenting opinion of Justice Makasiar that in such a case
to save the Decree from the direct fate of invalidity, they must be construed
in such a way as to preclude any possible erosion on the powers vested in
this Court by the Constitution. That is a proposition too plain to be
committed. It commends itself for approval." 80 Nor would such a step be

unprecedented. The Presidential Decree constituting Municipal Courts into


Municipal Circuit Courts, specifically provides: "The Supreme Court shall
carry out the provisions of this Decree through implementing orders, on a
province-to-province basis." 81 It is true there is no such provision in this Act,
but the spirit that informs it should not be ignored in the Executive Order
contemplated under its Section 44. 82 Thus Batas Pambansa Blg. 129 could
stand the most rigorous test of constitutionality. 83
9. Nor is there anything novel in the concept that this Court is called upon to
reconcile or harmonize constitutional provisions. To be specific, the Batasang
Pambansa is expressly vested with the authority to reorganize inferior courts
and in the process to abolish existing ones. As noted in the preceding
paragraph, the termination of office of their occupants, as a necessary
consequence of such abolition, is hardly distinguishable from the practical
standpoint from removal, a power that is now vested in this Tribunal. It is of
the essence of constitutionalism to assure that neither agency is precluded
from acting within the boundaries of its conceded competence. That is why
it has long been well-settled under the constitutional system we have
adopted that this Court cannot, whenever appropriate, avoid the task of
reconciliation. As Justice Laurel put it so well in the previously cited Angara
decision, while in the main, "the Constitution has blocked out with deft
strokes and in bold lines, allotment of power to the executive, the legislative
and the judicial departments of the government, the overlapping and
interlacing of functions and duties between the several departments,
however, sometimes makes it hard to say just where the one leaves off and
the other begins." 84 It is well to recall another classic utterance from the
same jurist, even more emphatic in its affirmation of such a view, moreover
buttressed by one of those insights for which Holmes was so famous "The
classical separation of government powers, whether viewed in the light of
the political philosophy of Aristotle, Locke, or Motesquieu or of the
postulations of Mabini, Madison, or Jefferson, is a relative theory of
government. There is more truism and actuality in interdependence than in
independence and separation of powers, for as observed by Justice Holmes
in a case of Philippine origin, we cannot lay down 'with mathematical
precision and divide the branches into water-tight compartments' not only
because 'the great ordinances of the Constitution do not establish and divide
fields of black and white but also because 'even the more specific of them
are found to terminate in a penumbra shading gradually from one extreme
to the other.'" 85 This too from Justice Tuazon, likewise expressing with force
and clarity why the need for reconciliation or balancing is well-nigh
unavodiable under the fundamental principle of separation of powers: "The
constitutional structure is a complicated system, and overlappings of
governmental functions are recognized, unavoidable, and inherent
necessities of governmental coordination." 86 In the same way that the
academe has noted the existence in constitutional litigation of right versus
right, there are instances, and this is one of them, where, without this
attempt at harmonizing the provisions in question, there could be a case of
power against power. That we should avoid.

10. There are other objections raised but they pose no difficulty. Petitioners
would characterize as an undue delegation of legislative power to the
President the grant of authority to fix the compensation and the allowances
of the Justices and judges thereafter appointed. A more careful reading of
the challenged Batas Pambansa Blg. 129 ought to have cautioned them
against raising such an issue. The language of the statute is quite clear. The
questioned provisions reads as follows: "Intermediate Appellate Justices,
Regional Trial Judges, Metropolitan Trial Judges, municipal Trial Judges, and
Municipal Circuit Trial Judges shall receive such receive such compensation
and allowances as may be authorized by the President along the guidelines
set forth in Letter of Implementation No. 93 pursuant to Presidential Decree
No. 985, as amended by Presidential Decree No. 1597." 87 The existence of a
standard is thus clear. The basic postulate that underlies the doctrine of nondelegation is that it is the legislative body which is entrusted with the
competence to make laws and to alter and repeal them, the test being the
completeness of the statue in all its terms and provisions when enacted. As
pointed out in Edu v. Ericta: 88 "To avoid the taint of unlawful delegation,
there must be a standard, which implies at the very least that the legislature
itself determines matters of principle and lays down fundamental policy.
Otherwise, the charge of complete abdication may be hard to repel. A
standard thus defines legislative policy, marks its limits, maps out its
boundaries and specifies the public agency to apply it. It indicates the
circumstances under which the legislative command is to be effected. It is
the criterion by which legislative purpose may be carried out. Thereafter, the
executive or administrative office designated may in pursuance of the above
guidelines promulgate supplemental rules and regulations. The standard
may be either express or implied. If the former, the non-delegation objection
is easily met. The standard though does not have to be spelled out
specifically. It could be implied from the policy and purpose of the act
considered as a whole." 89 The undeniably strong links that bind the
executive and legislative departments under the amended Constitution
assure that the framing of policies as well as their implementation can be
accomplished with unity, promptitude, and efficiency. There is accuracy,
therefore, to this observation in the Free Telephone Workers Union decision:
"There is accordingly more receptivity to laws leaving to administrative and
executive agencies the adoption of such means as may be necessary to
effectuate a valid legislative purpose. It is worth noting that a highlyrespected legal scholar, Professor Jaffe, as early as 1947, could speak of
delegation as the 'dynamo of modern government.'" 90 He warned against a
"restrictive approach" which could be "a deterrent factor to much-needed
legislation." 91 Further on this point from the same opinion" "The spectre of
the non-delegation concept need not haunt, therefore, party caucuses,
cabinet sessions or legislative chambers." 92 Another objection based on the
absence in the statue of what petitioners refer to as a "definite time frame
limitation" is equally bereft of merit. They ignore the categorical language of
this provision: "The Supreme Court shall submit to the President, within
thirty (30) days from the date of the effectivity of this act, a staffing pattern
for all courts constituted pursuant to this Act which shall be the basis of the
implementing order to be issued by the President in accordance with the
immediately succeeding section." 93 The first sentence of the next section is
even more categorical: "The provisions of this Act shall be immediately

carried out in accordance with an Executive Order to be issued by the


President." 94 Certainly petitioners cannot be heard to argue that the
President is insensible to his constitutional duty to take care that the laws be
faithfully executed. 95 In the meanwhile, the existing inferior courts affected
continue functioning as before, "until the completion of the reorganization
provided in this Act as declared by the President. Upon such declaration, the
said courts shall be deemed automatically abolished and the incumbents
thereof shall cease to hold office." 96 There is no ambiguity. The incumbents
of the courts thus automatically abolished "shall cease to hold office." No
fear need be entertained by incumbents whose length of service, quality of
performance, and clean record justify their being named anew, 97 in legal
contemplation without any interruption in the continuity of their service. 98 It
is equally reasonable to assume that from the ranks of lawyers, either in the
government service, private practice, or law professors will come the new
appointees. In the event that in certain cases a little more time is necessary
in the appraisal of whether or not certain incumbents deserve
reappointment, it is not from their standpoint undesirable. Rather, it would
be a reaffirmation of the good faith that will characterize its implementation
by the Executive. There is pertinence to this observation of Justice Holmes
that even acceptance of the generalization that courts ordinarily should not
supply omissions in a law, a generalization qualified as earlier shown by the
principle that to save a statute that could be done, "there is no canon
against using common sense in construing laws as saying what they
obviously mean." 99 Where then is the unconstitutional flaw
11. On the morning of the hearing of this petition on September 8, 1981,
petitioners sought to have the writer of this opinion and Justices Ramon C.
Aquino and Ameurfina Melencio-Herrera disqualified because the first-named
was the chairman and the other two, members of the Committee on Judicial
Reorganization. At the hearing, the motion was denied. It was made clear
then and there that not one of the three members of the Court had any hand
in the framing or in the discussion of Batas Pambansa Blg. 129. They were
not consulted. They did not testify. The challenged legislation is entirely the
product of the efforts of the legislative body. 100 Their work was limited, as
set forth in the Executive Order, to submitting alternative plan for
reorganization. That is more in the nature of scholarly studies. That the
undertook. There could be no possible objection to such activity. Ever since
1973, this Tribunal has had administrative supervision over interior courts. It
has had the opportunity to inform itself as to the way judicial business is
conducted and how it may be improved. Even prior to the 1973 Constitution,
it is the recollection of the writer of this opinion that either the then
Chairman or members of the Committee on Justice of the then Senate of the
Philippines 101 consulted members of the Court in drafting proposed
legislation affecting the judiciary. It is not inappropriate to cite this excerpt
from an article in the 1975 Supreme Court Review: "In the twentieth century
the Chief Justice of the United States has played a leading part in judicial
reform. A variety of conditions have been responsible for the development of
this role, and foremost among them has been the creation of explicit
institutional structures designed to facilitate reform." 102 Also: "Thus the
Chief Justice cannot avoid exposure to and direct involvement in judicial

reform at the federal level and, to the extent issues of judicial federalism
arise, at the state level as well." 103
12. It is a cardinal article of faith of our constitutional regime that it is the
people who are endowed with rights, to secure which a government is
instituted. Acting as it does through public officials, it has to grant them
either expressly or impliedly certain powers. Those they exercise not for
their own benefit but for the body politic. The Constitution does not speak in
the language of ambiguity: "A public office is a public trust." 104 That is more
than a moral adjuration It is a legal imperative. The law may vest in a public
official certain rights. It does so to enable them to perform his functions and
fulfill his responsibilities more efficiently. It is from that standpoint that the
security of tenure provision to assure judicial independence is to be viewed.
It is an added guarantee that justices and judges can administer justice
undeterred by any fear of reprisal or untoward consequence. Their
judgments then are even more likely to be inspired solely by their knowledge
of the law and the dictates of their conscience, free from the corrupting
influence of base or unworthy motives. The independence of which they are
assured is impressed with a significance transcending that of a purely
personal right. As thus viewed, it is not solely for their welfare. The
challenged legislation Thus subject d to the most rigorous scrutiny by this
Tribunal, lest by lack of due care and circumspection, it allow the erosion of
that Ideal so firmly embedded in the national consciousness There is this
farther thought to consider. independence in thought and action necessarily
is rooted in one's mind and heart. As emphasized by former Chief Justice
Paras in Ocampo v. Secretary of Justice, 105 there is no surer guarantee of
judicial independence than the God-given character and fitness of those
appointed to the Bench. The judges may be guaranteed a fixed tenure of
office during good behavior, but if they are of such stuff as allows them to be
subservient to one administration after another, or to cater to the wishes of
one litigant after another, the independence of the judiciary will be nothing
more than a myth or an empty Ideal. Our judges, we are confident, can be of
the type of Lord Coke, regardless or in spite of the power of Congress we
do not say unlimited but as herein exercised to reorganize inferior
courts." 106 That is to recall one of the greatest Common Law jurists, who at
the cost of his office made clear that he would not just blindly obey the
King's order but "will do what becomes [him] as a judge." So it was pointed
out in the first leading case stressing the independence of the
judiciary, Borromeo v. Mariano, 107 The ponencia of Justice Malcolm Identified
good judges with "men who have a mastery of the principles of law, who
discharge their duties in accordance with law, who are permitted to perform
the duties of the office undeterred by outside influence, and who are
independent and self-respecting human units in a judicial system equal and
coordinate to the other two departments of government." 108 There is no
reason to assume that the failure of this suit to annul Batas Pambansa Blg.
129 would be attended with deleterious consequences to the administration
of justice. It does not follow that the abolition in good faith of the existing
inferior courts except the Sandiganbayan and the Court of Tax Appeals and
the creation of new ones will result in a judiciary unable or unwilling to
discharge with independence its solemn duty or one recreant to the trust
reposed in it. Nor should there be any fear that less than good faith will

attend the exercise be of the appointing power vested in the Executive. It


cannot be denied that an independent and efficient judiciary is something to
the credit of any administration. Well and truly has it been said that the
fundamental principle of separation of powers assumes, and justifiably so,
that the three departments are as one in their determination to pursue the
Ideals and aspirations and to fulfilling the hopes of the sovereign people as
expressed in the Constitution. There is wisdom as well as validity to this
pronouncement of Justice Malcolm in Manila Electric Co. v. Pasay
Transportation Company, 109 a decision promulgated almost half a century
ago: "Just as the Supreme Court, as the guardian of constitutional rights,
should not sanction usurpations by any other department or the
government, so should it as strictly confine its own sphere of influence to the
powers expressly or by implication conferred on it by the Organic Act." 110 To
that basic postulate underlying our constitutional system, this Court remains
committed.
WHEREFORE, the unconstitutionality of Batas Pambansa Blg. 129 not having
been shown, this petition is dismissed. No costs.
Makasiar and Escolin, JJ., concur.
Concepcion, Jr., concur in the result.

Separate Opinions

BARREDO, J., concurring:


I join the majority of my brethren in voting that the Judiciary Reorganization
Act of 1980, Batas Pambansa Blg. 129, is not unconstitutional as a whole nor
in any of its parts.
The issue of unconstitutionality raised by petitioners relates particularly to
Section 44 of the Act which reads as follows:
SEC. 44. Transitory provisions. The provisions of this Act
shall be immediately carried out in accordance with an
Executive Order to be issued by the President. The Court of
Appeals, the Courts of First Instance, the Circuit Criminal
Courts, the Juvenile and Domestic Relations Courts, the
Courts of Agrarian Relations, the City Courts, the Municipal
Courts, and the Municipal Circuit Courts shall continue to

function as presently constituted and organized, until the


completion of the reorganization provided in this Act as
declared by the President. Upon such declaration, the said
courts shall be deemed automatically abolished and the
incumbents thereof shall cease to hold office. The cases
pending in the old Courts shall e transferred to the
appropriate Courts constituted pursuant to this Act, together
with the pertinent functions, records, equipment,. property
and the necessary personnel.
The applicable appropriations shall likewise be transferred to
the appropriate courts constituted pursuant to this Act, to be
augmented as may be necessary from the funds for
organizational changes as provided in Batas Pambansa Blg.
80. Said funding shall thereafter be included in the annual
General Appropriations Act.
It is contended by petitioners that the provision in the above section which
mandates that "upon the declaration upon the President that the
reorganization contemplated in the Act has been completed), the said courts
(meaning the Court of Appeals and all other lower courts, except the
Sandiganbayan and the Court of Tax Appeals) shall be deemed abolished
and the incumbents thereof shall cease to hold office" trenches on all the
constitutional safeguards and guarantees of the independence of the
judiciary, such as the security of tenure of its members (Section 7, Article X
of the Philippine Constitution of 1973), the prerogatives of the Supreme
Court to administratively supervise all courts and the personnel thereof
(Section 6, Id.) and principally, the power of the Supreme Court "to discipline
judges of inferior courts and, by a vote of at least eight Members, order their
dismissal. " (Section 7, Id.)
On the other hand, respondents maintain that thru the above-quoted Section
44. the Batasan did nothing more than to exercise the authority conferred
upon it be Section I of the same Article of the Constitution which provides
that The Judicial power shall be rested in one Supreme Court and in such
inferior courts as may be established by law."In other words, since all inferior
courts are, constitutionally speaking, mere creatures of the law (of the
legislature it follows that it is within the legislature's power to abolish or
reorganize them even if in so doing, it might result in the cessation from
office of the incumbents thereof before the expiration of their respective
constitutionally fixed tenures. Respondents emphasize that the legislative
power in this respect is broad and indeed plenary.
Viewing the problem before Us from the above perspectives, it would appear
that our task is either (1) to reconcile, on the one hand, the parliament's
power of abolition and reorganization with, on the other, the security of
tenure of members of the judiciary and the Supreme Court's authority to
discipline and remove judges or (2) to declare that either the power of the
Supreme Court or of the Batasan is more paramount than that of the other. I
believe. however, that such a manner of looking at the issue that confronts

Us only confuses and compounds the task We are called upon to perform.
For how can there be a satisfactory and rational reconciliation of the
pretended right of a judge to continue as such, when the position occupied
by him no longer exists? To suggest, as some do, that the solution is for the
court he is sitting in not to be deemed abolished or that he should in some
way be allowed to continue to function as judge until his constitutional
tenure expires is obviously impractical, if only because we would then have
the absurd spectacle of a judiciary with old and new courts functioning
under distinct set-ups, such as a district court continuing as such in a region
where the other judges are regional judges or of judges exercising powers
not purely judicial which is offensive to the Constitution. The other
suggestion that the incumbent of the abolished court should be deemed
appointed to the corresponding new court is even worse, since it would
deprive the appointing authority, the president, of the power to make his
own choices and would, furthermore, amount to an appointment by
legislation which is a Constitutional anachronism. more on this point later .
Inasmuch as pursuant to the analysis of the majority of the Members of this
Court, in fact and in law, the structure of judicial system created by Batas
Pambansa 129 is substantially different from that under the Judiciary Act of
1948, as amended, hence the courts now existing are actually being
abolished, why do We have to indulge in any reconciliation or feel bound to
determine whose power, that of the Batasang Pambansa or that of this
Court, should be considered more imperious? It being conceded that the
power to create or establish carries with it the power to abolish, and it is a
legal axiom, or at least a pragmatic reality that the tenure of the holder of
an office must of necessity end when his office no longer exists, as I see it,
be have no alternative than to hold that petitioners' invocation of the
independence of the judiciary principle of the Constitution is unavailing ill
the cases at bar. It is as simple as that. I might hasten to add, in this
connection, that to insist that what Batas Pambansa 129 is doing is just a
renaming and not a substantial and actual modification or alteration of the
present judicial structure or system assuming a close scrutiny might
somehow support such a conclusion, is pure wishful thinking, it being
explicitly and unequivocally provided in the section in question that said
courts are deemed abolished" and further, as if to make it most
unmistakably emphatic, that "the incumbents thereat shall cease to hold
office." Dura les, sed les. As a matter of fact, I cannot conceive of a more
emphatic way of manifesting and conveying the determined legislative
intent about it.
Now, why am I yielding to the above reasoning and conclusion? Why don't I
insist on championing the cause of the independence of the judiciary by
maintaining that the constitutional safeguards thereof I have already
enumerated earlier must be respected in any reorganization ordained by the
parliament My answer is simple. Practically all the Members of the Court
concede that what is contemplated is not only general reorganization but
abolition in other words, not only a rearrangement or remodelling of the
old structure but a total demolition thereof to be followed by the building of
a new and different one. I am practically alone in contemplating a different

view. True, even if I should appear as shouting in the wilderness, I would still
make myself a hero in the eyes of man justices and judges, members of the
bar and concerned discerning citizens, all lovers of the judicial
independence, but understandably, I should not be, as I am not, disposed to
play such a role virtually at the expense not only of my distinguished
colleagues but of the Batasang Pambansa that framed the law and, most of
all, the President who signed and, therefore, sanctioned the Act as it is,
unless I am absolutely sure that my position is formidable, unassailable and
beyond all possible contrary ratiocination, which I am not certain of, as I
shall demonstrate anon.
To start with, the jurisprudence, here and abroad, touching on the question
now before Us cannot be said to be clear and consistent, much less
unshakeable and indubitably definite either way. None of the local
cases 1 relied upon and discussed by the parties and by the Members of the
Court during the deliberations, such as
Borromeo, 2 Ocampo, 3Zandueta, 4 Brillo, 5 etc. can, to my mind, really serve
as reliable pole stars that could lead me to certainty of correctness.
Of course, my instinct and passion for an independent judiciary are
uncompromising and beyond diminution. Indeed, my initial reactions,
publicly known, about Batas Pambansa 129 explaining academically its
apparent tendency to invade the areas of authority of the Supreme Court,
not to speak of its dangerously impairing the independence of the judiciary,
must have, I imagine, created the impression that I would vote to declare
the law unconstitutional. But, during the deliberations of the Court, the
combined wisdom of my learned colleagues was something I could not
discount or just brush aside. Pondering and thinking deeper about all
relevant factors, I have come to the conviction that at least on this day and
hour there are justifiable grounds to uphold the Act, if only to try how it will
operate so that thereby the people may see that We are one with the
President and the Batasan in taking what appear to be immediate steps
needed to relieve the people from a fast spreading cancer in the judiciary of
our country.
Besides, the Philippines has somehow not yet returned to complete
normalcy The improved national discipline so evident during the earlier days
of martial law, has declined at a quite discernible degree. Different sectors of
society are demanding urgent reforms in their respective field And about the
most vehement and persistent, loud and clear, among their gripes, which as
a matter of fact is common to all of them is that about the deterioration in
the quality of performance of the judges manning our courts and the slow
and dragging pace of pending judicial proceedings. Strictly speaking, this is,
to be sure, something that may not necessarily be related to lack of
independence of the judiciary. It has more to do with the ineptness and/or
corruption among and corruptibility of the men sitting in the courts in some
parts of the country And what is worse, while in the communities concerned
the malady is known to factually exist and is actually graver and
widespread, very few, if any individuals or even associations and organized
groups, truly incensed and anxious to be of help, have the courage and

possess the requisite legal evidence to come out and file the corresponding
charges with the Supreme Court, And I am not vet referring to similar
situations that are not quite openly known but nevertheless just as
deleterious. On the other hand, if all these intolerable instances should
actually be formally brought to the Supreme Court, it would be humanly
impossible for the Court to dispose of them with desirable dispatch, what
with the thousands of other cases it has to attend to and the rather
cumbersome strict requirements of procedural due process it has to observe
in each and every such administrative case all of which are time consulting.
Verily, under the foregoing circumstances, it may be said that there is
justification for the patience of the people about the possibility of early
eradication of this disease or evil in our judiciary pictured above to be
nearing the breaking point.
Withal, we must bear in mind that judicial reorganization becomes urgent
and inevitable not alone because of structural inadequacies of the system or
of the cumbersomeness and technicality-peppered and dragging procedural
rules in force, but also when it becomes evident that a good number of
those occupying positions in the judiciary, make a mockery of justice and
take advantage of their office for selfish personal ends and yet, as already
explained, those in authority cannot expeditiously cope with the situation
under existing laws and rules. It is my personal assessment of the present
situation in our judiciary that its reorganization has to be of necessity twopronged, as I have just indicated, for the most Ideal judicial system with the
most perfect procedural rules cannot satisfy the people and the interests of
justice unless the men who hold positions therein possess the character,
competence and sense of loyalty that can guarantee their devotion to duty
and absolute impartiality, nay, impregnability to an temptations of graft and
corruption, including the usual importunings and the fearsome albeit
improper pressures of the powers that be. I am certain that the Filipino
people feel happy that Batas Pambansa 129 encompasses both of these
objectives, which indeed are aligned with the foundation of the principle of
independence of the judiciary.
The above premises considered, I have decided to tackle our problem from
the viewpoint of the unusual situation in which our judiciary is presently
perilously situated. Needless to say, to all of us, the Members of the Court,
the constitutional guarantees of security of tenure and removal only by the
Supreme Court, among others, against impairment of the independence of
the judiciary, which is one of the bedrock's and, therefore, of the essence in
any "democracy under a regime of justice, peace, liberty and equality
(Preamble of the 1973 Constitution), are priceless and should be defended,
most of all by the Supreme Court, with all the wisdom and courage God has
individually endowed to each of Us. Withal, we are all conscious of the fact
that those safeguards have never been intended to place the person of the
judge in a singular position of privilege and untouchability, but rather, that
they are essentially part and parcel of what is required of an independent
judiciary where judges can decide cases and do justice to everyone before
them ruat caelum. However, We find Ourselves face to face with a situation,
in our judiciary which is of emergency proportions and to insist on

rationalizing how those guarantees should be enforced under such a


circumstance seem to be difficult, aside from being controversial. And so, in
a real sense, We have to make a choice between adhering to the strictly
legalistic reasoning pursued by petitioners, on the one hand, and the
broader and more practical approach, which as I have said is within the spirit
at least of the Constitution.
My concept of the Constitution is that it is not just a cluster of high sounding
verbiages spelling purely Idealism and nobility in the recognition of human
dignity, protection of individual liberties and providing security and
promotion of the general welfare under a government of laws. With all
emphasis and vehemence, I say that the fundamental law of the land is a
living instrument which translates and adapts itself to the demands of
obtaining circumstances. It is written for all seasons, except for very unusual
instances that human ratiocination cannot justify to be contemplated by its
language even if read in its broadest sense and in the most liberal way.
Verily, it is paramount and supreme in peace and in war, but even in peace
grave critical situations arise demanding recourse to extraordinary solutions.
Paraphrasing the Spanish adage, "Grandes males, grandes remedios ", such
in ordinary problems justify exceptional remedies. And so, history records
that in the face of grave crises and emergencies, the most constitutionally
Idealistic countries have, at one time or another, under the pressure of
pragmatic considerations, adopted corresponding realistic measures, which
perilously tether along the periphery of their Charters, to the extent of
creating impressions, of course erroneous, that the same had been
transgressed, although in truth their integrity and imperiousness remained
undiminished and unimpaired.
The Philippines has but recently had its own experience of such
constitutional approach. When martial law was proclaimed here in 1972,
there were those who vociferously shouted not only that the President had
acted arbitrarily and without the - required factual bases contemplated in
the Commander-in-Chief clause of the 1935 Constitution, but more, that he
had gone beyond the traditional and universally recognized intent of said
clause by utilizing his martial law powers not only to maintain peace and
tranquility and preserve and defend the integrity and security of the state
but to establish a New Society The critics contended that martial law is only
for national security, not for the imposition of national discipline under a
New Society.
Due to its relevancy to Our present discussion, it is well for everyone to bear
in mind that in this jurisdiction, this concept of martial law has already been
upheld several times by this Court. 1, for one, accepted such a construction
because I firmly believe that to impose martial law for the sole end of
suppressing an insurrection or rebellion without coincidentally taking
corresponding measures to eradicate the root causes of the uprising is utter
folly, for the country would still continue to lay open to its recurrence.
I have made the foregoing discourse, for it is fundamentally in the fight of
this Court's doctrines about the imposition of martial law as I have stated

that I prefer to base this concurrence. To put it differently, if indeed there


could be some doubt as to the correctness of this Court's judgment that
Batas Pambansa 129 is not unconstitutional, particularly its Section 44, I am
convinced that the critical situation of our judiciary today calls for solutions
that may not in the eyes of some conform strictly with the letter of the
Constitution but indubitably justified by its spirit and intent. As 1 have earlier
indicated, the Charter is not just a construction of words to whose literal
iron-clad meanings we must feel hidebound without regard to every
Constitution's desirable inherent nature of adjustability and adaptability to
prevailing situations so that the spirit and fundamental intent and objectives
of the framers may remain alive. Batas Pambansa 129 is one such
adaptation that comes handy for the attainment of the transcendental
objectives it seeks to pursue While, to be sure, it has the effect of factually
easing out some justices and judges before the end of their respective
constitutional tenure sans the usual administrative investigation, the
desirable end is achieved thru means that, in the light of the prevailing
conditions, is constitutionally permissible.
Before closing, it may not be amiss for me to point out that Batas Pambansa
Blg. 129, aside from what has been discussed about its effect on the
guarantees of judicial independence, also preempts, in some of its
provisions, the primary rule-making power of the Supreme Court in respect
to procedure, practice and evidence. With the pardon of my colleagues, I
would just like to say that the Court should not decry this development too
much. After all, the legislature is expressly empowered by the Charter to do
so, (Section 5(5), Article X of the Constitution of 1973) so much so, that I
doubt if the Court has any authority to alter or modify any rule the Batasang
Pambansa enunciates. Truth to tell, as Chairman of the Committee on the
Revision of the Rules of Court, for one reason or another, principally the lack
of a clear consensus as to what some of my colleagues consider very radical
proposals voiced by me or my committee, We have regrettably
procrastinated long enough in making our procedural rules more practical
and more conducive to speedier disposal and termination of controversies
by dealing more with substantial justice.
So also have We, it must be confessed, failed to come up to expectations of
the framers of the Constitution in our ways of disposing of administrative
complaints against erring and misconducting judges. Of course, We can
excuse Ourselves with the explanation that not only are We overloaded with
work beyond human capability of its being performed expeditiously, but that
the strict requisites of due process which are time consuming have
precluded Us from being more expeditious and speedy.
I feel I must say all of these, because if the above-discussed circumstances
have not combined to create a very critical situation in our judiciary that is
making the people lose its faith and confidence in the administration of
justice by the existing courts, perhaps the Court could look with more
sympathy at the stand of petitioners. I want all the sundry to know, however,
that notwithstanding this decision, the independence of the judiciary in the
Philippines is far from being insubstantial, much less meaningless and dead.

Batas Pambansa 129 has precisely opened our eyes to how, despite doubts
and misgivings, the Constitution can be so construed as to make it possible
for those in authority to answer the clamor of the people for an upright
judiciary and overcome constitutional roadblocks more apparent than real.
To those justices, judges, members of the bar and concerned citizens whose
eyes may be dimming with tears of disappointment and disenchantment
because of the stand I have chosen to adopt in these cases, may I try to
assuage them by joining their fervent prayers that some other day,
hopefully in the near future, Divine Providence may dictate to another
constitutional convention to write the guarantees of judicial independence
with ink of deeper hue and words that are definite, clear, unambiguous and
unequivocal, in drawing the line of demarcation between the Parliament and
the Judiciary in the manner that in His Infinite wisdom would most promote
genuine and impartial justice for our people, free, not only from graft,
corruption, ineptness and incompetence but even from the tentacles of
interference and insiduous influence of the political powers that be.
Presently, I am constrained from going along with any other view than that
the Constitution allows abolition of existing courts even if the effect has to
be the elimination of any incumbent judge and the consequent cutting of his
constitutional tenure of office.
I cannot close this concurrence without referring to the apprehensions in
some quarters about the choice that will ultimately be made of those who
will be eased out of the judiciary in the course of the implementation of
Batas Pambansa 129. By this decision, the Court has in factual effect albeit
not in constitutional conception yielded generally to the Batasang
Pambansa, and more specifically to the President, its own constitutionally
conferred power of removal of judges. Section 44 of the Batasan's Act
declares that all of them shall be deemed to have ceased to hold office,
leaving it to the President to appoint those whom he may see fit to occupy
the new courts. Thus, those who will not be appointed can be considered as
"ceasing to hold their respective offices", or, as others would say they would
be in fact removed. How the President will make his choices is beyond Our
power to control. But even if some may be eased out even without being
duly informed of the reason therefor, much less being given the opportunity
to be heard the past actuations of the President on all matters of deep public
interest shouted serve as sufficient assurance that when lie ultimately acts,
he will faithfully adhere to his solemn oath "to do justice to every man
hence, lie will equip himself first with the fullest reliable information before
acts. This is not only my individual faith founded on my personal
acquaintance with the character and sterling qualities of President Ferdinand
E. Marcos. I dare say this is the faith of the nation in a man who has led it
successfully through crises and emergencies, with justice to all, with malice
towards none. I am certain, the President will deal with each and every
individual to be affected by this reorganization with the best light that God
will give him every moment he acts in each individual case as it comes for
his decision

AQUINO, J., concurring:


I concur in the result. The petitioners filed this petition for declaratory relief
and prohibition "to declare the Judiciary Reorganization Act of 1980 (Batas
Pambansa Blg. 129) unconstitutional".
The petition should have been dismissed outright because this Court has no
jurisdiction to grant declaratory relief and prohibition is not the proper
remedy to test the constitutionality of the law. the petition is premature. No
jurisdictional question is involved.
There is no justiciable controversy wherein the constitutionality of the said
law is in issue. It is presumed to be constitutional. The lawmaking body
before enacting it looked into the constitutional angle.
Seven of the eight petitioners are practising lawyers. They have no
personality to assail the constitutionality of the said law even as taxpayers.
The eighth petitioner, Gualberto J. de la Llana, a city judge (who in 1977 filed
a petition for declaratory relief assailing Presidential Decree No. 1229, which
called for a referendum. De la Llana his Comelec, 80 SCRA 525), has no
cause of action for prohibition. He is not being removed from his position.
The Judiciary Reorganization Law was enacted in utmost good faith and not
"to cloak an unconstitutional and evil purpose As ably expounded by the
Chief Justice, in enacting the said law, the lawmaking body acted within the
scope of its constitutional powers and prerogatives.

GUERRERO, J., concurring:


I concur with my distinguished and learned colleagues in upholding the
constitutionality of the Judiciary Reorganization Act of 1980. For the record,
however, I would like to state my personal convictions and observations on
this case, a veritable landmark case, for whatever they may be worth.
The legal basis of the Court's opinion rendered by our esteemed Chief Justice
having been exhaustively discussed and decisively justified by him, a highlyrespected expert and authority on constitutional law, it would be an exercise
in duplication to reiterate the same cases and precedents. I am then
constrained to approach the problem quite differently, not through the
classic methods of philosophy, history and tradition, but following what the
well-known jurist, Dean Pound, said that "the most significant advance in the
modern science of law is the change from the analytical to the functional
attitude." 1 And in pursuing this direct

ion, I must also reckon with and rely on the ruling that "another guide to the
meaning of a statute is found in the evil which it is designed to remedy, and
for this the court properly looks at contemporaneous events, the situation as
it existed, and as it was pressed upon the attention of the legislative body." 2
I have no doubt in my mind that the institutional reforms and changes
envisioned by the law are clearly conducive to the promotion of national
interests. The objectives of the legislation namely: (a) An institutional
restructuring by the creation of an Intermediate Appellate Court, thirteen (I
3) Regional Trial Courts, Metropolitan Trial Courts, Municipal Trial Courts and
Municipal Circuit Trial Courts: (b) A reappointment of jurisdiction geared
towards greater efficiency: (c) A simplification of procedures and (d) The
abolition of the inferior courts created by the Judiciary Act of 1948 and other
statutes, as approved by the Congress of the Philippines 3 are undoubtedly
intended to improve the regime of justice and thereby enhance public good
and order. Indeed, the purpose of the Act as further stated in the
Explanatory Note, which is "to embody reforms in the structure, organization
and composition of the Judiciary, with the aim of improving the
administration of justice, of decongesting judicial dockets, and coping with
the more complex problems on the present and forseeable future cannot but
"promote the welfare of society, since that is the final cause of law. 4
Hence, from the standpoint of The general utility and functional value of the
Judiciary Reorganization Act, there should be no difficulty, doubt or disbelief
in its legality and constitutionality. That there are ills and evils plaguing the
judicial system is undeniable. The notorious and scandalous congestion of
court dockets as too well-known to be ignored as are the causes which
create and produce such anomaly. Evident is the need to look for devices
and measures that are more practical, workable and economical. 5
From the figures alone (301,497 pending cases in 1976; 351, 943 in 1977;
404, 686 in 1978; 426, 911 in 1979; 441, 332 in 1980; and 450, 063 as of
February 3, 1982) 6 the congested character of court dockets rising year
after year is staggering and enormous, looming like a legal monster.
But greater than the need to dispense justice speedily and promptly is the
necessity to have Justices and Judges who are fair and impartial, honest and
incorruptible, competent and efficient. The general clamor that the prestige
of the Judiciary today has deteriorated and degenerated to the lowest ebb in
public estimation is not without factual basis. Records in the Supreme Court
attest to the unfitness and incompetence, corruption and immorality of
many dispensers of justice. According to the compiled data, the total
number of Justices and Judges against whom administrative charges have
been filed for various offenses, misconduct, venalities and other
irregularities reaches 322. Of this total, 8 are Justices of the Court of
Appeals, 119 CFI Judges, 2 Criminal Circuit Judges, 8 CAR Judges, 1 Juvenile
& Domestic Relations Court Judge, 38 City Judges, and 146 Municipal Judges.

The Supreme Court has found 102 of them guilty and punished them with
either suspension, admonition, reprimand or fine. The number includes 1 CA
Justice, 35 CFI Judges, 1 CCC Judge, 3 CAR Judges, 1 JDRC Judge, 9 City
Judges and 53 Municipal Judges.
Seventeen (17) Judges have been ordered dismissed and separated from the
service. And these are 3 CFI, 1 CAR, 1 City Judge and 12 Municipal Judges.
Going over these administrative proceedings, it took an average of two-year
period from the filing of the charge to the dismissal of the respondent. In one
case, the proceedings were terminated after seven years. How long the
pending administrative cases will be disposed of, only time will tell as an
increasing number of administrative cases are being filed by victims of
judicial misconduct, abuse and arbitrariness.
Excepting those who have been punished and dismissed from the service,
there are many who have been castigated and censured in final judgments
of the Supreme Court upon appeal or review of the decisions, orders and
other acts of the respondent courts, Justices and Judges. To cite a few cases,
Our decisions have categorically pronounced respondents' actuations, thus:
"deplorable, giving no credit to the Judiciary" 7; applicable rules. The whole
proceedings looked no more than a pre-arranged compromise between the
accused and the Judge to flaunt the law and every norm of propriety and
procedure" 8; "there was a deliberate failure of respondent Judge to respect
what is so clearly provided in the Rules of Court" 9; "It is unfortunate that
respondent Judge failed to acquaint himself with, 01' misinterpreted, those
controlling provisions and doctrines" 10; "The failure of the respondent
Municipal Judge to yield obedience to authoritative decisions of the Supreme
Court and of respondent Court of First Instance Judge and his deplorable
insistence on procedural technicalities was called down in L-49828, July 25,
1981. For peremptorily dismissing the third party complaint on the ground
that the motion to dismiss was 'well-taken' and respondent Judge did not
elaborate, the Court remarked: "May his tribe vanish." 11 In one case, We
noted "There is here so something unusual, but far from palliating the
gravity of the error incurred, it merely exacerbated it. ... it did render the
due process requirement nugatory, for instead of a fair and impartial trial,
there was an Idle form, a useless ceremony." 12
It is dishonorable enough to be publicly and officially rebuked but to allow
these Judges and their ilk to remain and continue to preside in their
courtrooms is a disgrace to the Judiciary. It is to be deplored that the
Supreme Court has not found time to exercise its power and authority in the
premises, for no charges or proceedings have been instituted against them.
We have a list of these crooked Judges whose actuations have been found to
be patiently wrong and manifestly in-defeasible. There ought to be no
objection or compunction in weeding them out from the service. If they are
not booted out now, it will take from here to eternity to clean this Augean
stable.

Candidly, one reason for writing this concurring opinion is to call attention to
these evils, abuses and wrongs which are surreptitiously but surely
destroying the trust and faith of the people in the integrity of the entire
Judiciary. Some members of the Court felt that these revelations would be
like washing dirty linen in public. But these facts are of public and official
record nay court cases, and sooner or later, Truth will come out.
In the light of these known evils and infirmities of the judiciary system, it
would be absurd and unreasonable to claim that the legislators did not act
upon them in good faith and honesty of purpose and with legitimate ends. It
is presumed that official duty has been regularly performed. 13 The
presumption of regularity is not confined to the acts of the individual officers
but also applies to the acts of boards, such as administrative board or
bodies, and to acts of legislative bodies. 14 Good faith is always to be
presumed in the absence of proof to the contrary, of which there is none in
the case at bar. It could not be otherwise if We are to accord as We must, full
faith and credit to the lawmakers' deep sense of public service and the
judicious exercise of their high office as the duly-elected representatives of
the people.
It is conceded that the abolition of an office is legal if attendant with good
faith. 15 The question of good faith then is the crux of the conflict at bar.
Good faith in the enactment of the law does not refer to the wisdom of the
measure, the propriety of the Act, or to its expediency. The questions raised
by petitioners and amicus curiae for their cause, viz: Why abolish all the
courts Why legislate out the judges Why not amend the Rules of Court only
Is abolition of all courts the proper remedy to weed out corrupt and misfits in
our Judiciary? may not be inquired into by Us. "It is not the province of the
courts to supervise legislation and keep it within the bounds of propriety and
common sense. That is primarily and exclusively a legislative
concern." 16 The Courts "are not supposed to override legitimate policy
and ... never inquire into the wisdom of the law." 17 Chief Justice Fernando
who penned the Morfe decision, writes that while "(i)t is thus settled, to
paraphrase Chief Justice Concepcion in Gonzales v. Commission on
Elections, that only congressional power or competence, not the wisdom of
the action taken, may be the basis for declaring a statute invalid," 18 he adds
that it is "useful to recall what was so clearly stated by Laurel that 'the
Judiciary in the determination of actual cases and controversies must reflect
the wisdom and justice of the people as expressed through their
representatives in the executive and legislative departments of the
government.'" 19In any case, petitioners have not shown an iota of proof of
bad faith. There is no factual foundation of bad faith on record. And I do not
consider the statement in the sponsorship speech for Cabinet Bill No. 42 of
Minister of Justice Ricardo J. Puno that the Bill would be a more efficient
vehicle of "eliminating incompetent and unfit Judges as indicative of
impermissible legislative motive. 20
It may be true that while the remedy or solution formulated by the
legislation will eradicate hopefully or at least minimize the evils and ills that
infect and pester the judicial body, it will result in the actual removal of the

Justices of the Court of Appeals and Judges of the lower courts. It is also true
that whether it is termed abolition of office or removal from office, the endresult is the same termination of the services of these incumbents.
Indeed, the law may be harsh, but that is the law. Dura lex sed lex.
The Justices and Judges directly affected by the law, being lawyers, should
know or are expected to know the nature and concept of a public office. It is
created for the purpose of effecting the ends for which government has
been instituted, which are for the common good, and not the profit, honor or
private interest of any one man, family or class of men. In our form of
government, it is fundamental that public offices are public trust, and that
the person to be appointed should be selected solely with a view to the
public welfare. 21 In the last analysis, a public office is a privilege in the gift
of the State. 22
There is no such thing as a vested interest or an estate in an office, or even
an absolute right to hold office. Excepting constitutional offices which
provide for special immunity as regards salary and tenure, no one can be
said to have any vested right in an office or its salary. When an office is
created by the Constitution, it cannot be abolished by the legislature, but
when created by the State under the authority of the Constitution, it may be
abolished by statute and the incumbent deprived of his office. 23 Acceptance
of a judicial appointment must be deemed as adherence to the rule that
"when the court is abolished, any unexpired term is abolished also. The
Judge of such a court takes office with that encumbrance and
knowledge." 24 "The Judge's right to his full term and his full salary are not
dependent alone upon his good conduct, but also upon the contingency that
the legislature may for the public good, in ordaining and establishing the
courts, from time to time consider his office unnecessary and abolish it." 25
The removal from office of the incumbent then is merely incidental to the
valid act of abolition of the office as demanded by the superior and
paramount interest of the people. The bad and the crooked Judges must be
removed. The good and the straight, sober Judges should be reappointed but
that is the sole power and prerogative of the President who, I am certain, will
act according to the best interest of the nation and in accordance with his
solemn oath of office "to preserve and defend its Constitution, execute its
laws, do justice to everyone ... " There and then the proper balance between
the desire to preserve private interest and the desideratum of promoting the
public good shall have been struck. 26
The Supreme Court has been called the conscience of the Constitution. It
may be the last bulwark of constitutional government. 27 It Must, however,
be remembered "that legislatures are ultimate guardians of the liberties and
welfare of the people in quite as great a degree as courts." 28 The
responsibility of upholding the Constitution rests not on the courts alone but
on the legislatures as well. It adheres, therefore, to the well-settled principle
that "all reasonable doubts should be resolved in favor of the
constitutionality of a statute" for which reason it will not set aside a law as
violative of the Constitution "except in a clear case." 29

Finally, I view the controversy presented to Us as a conflict of opinions on


judicial independence, whether impaired or strengthened by the law; on
reorganization of the courts, whether abolition of office or removal
therefrom, and on delegation of legislative power, whether authorized or
unauthorized. Without detracting from the merits, the force and brilliance of
their advocacies based on logic, history and precedents, I choose to stand
on the social justification and the functional utility of the law to uphold its
constitutionality. In the light of contemporaneous events from which the New
Republic emerged and evolved new Ideals of national growth and
development, particularly in law and government, a kind or form of judicial
activism, perhaps similar to it, is necessary to justify as the ratio
decidendi of Our judgment.
This is the time and the moment to perform a constitutional duty to affix my
imprimatur and affirmance to the law, hopefully an act of proper judicial
statesmanship.

ABAD SANTOS, J., concurring:


I agree with the learned Chief Justice of the Philippines that Batas Pambansa
Blg. 129 is not unconstitutional. Unlike Oscar Wilde, I choose not to yield to
temptation by embellishing my concurrence lest I be accrued of bringing
coal to Newcastle. Accordingly, I will simply vote to dismiss the petition
However, I cannot agree with the Chief Justice when he says:
... In the implementation of the assailed legislation, therefore
it should be in accordance with accepted principles of
constitutional construction that as far as incumbent justices
and judges are concerned, this Court be consulted and that
its view be accorded the fullest consideration. There would
be no plausibility then to the allegation that there is an
unconstitutional taint to the challenged Act. Moreover, such
a construction would be in accordance with the basic
principle that in the choice of alternatives between one
which would save and another which would invalidate a
statute, the former is to be preferred.
It has already been ruled that the statute does not suffer from any
constitutional infirmity because the abolition of certain judicial offices was
done in good faith. This being the case, I believe that the Executive is
entitled to exercise its constitutional power to fill the newly created judicial
positions without any obligation to consult with this Court and to accord its
views the fullest consideration. To require consultation will constitute an
invasion of executive territory which can be resented and even repelled. The
implicit suggestion that there could be an unconstitutional implementation

of the questioned legislation is not congruent with the basic conclusion that
it is not unconstitutional.

DE CASTRO, J., concurring:


I concur in the declaration that the law is not unconstitutional.
May I, however, submit this separate opinion more to avoid being
misunderstood by my brethren in the judiciary as not feeling for them as
much concern as I should for their security of tenure which is raised as the
main argument against the constitutionality of the law, than by way of
giving added force or support to the main opinion so well-written by Our
learned Chief Justice in his usual scholarly fashion. I, therefore, limit myself
to a discussion that the assailed statue is not unconstitutional without
having to suggest how it may be implemented in order that it could stand
the most rigid test of constitutionality, for in that area, what is involved is
purely an executive act of the President in whose wisdom, patriotism and
sense of justice We should trust in how he would fulfill his sworn duties to
see that the laws are faithfully executed and to do justice to every man.
Moreover, while I also concur in the dismissal of the petition, I do so on the
additional ground that petitioners have not fulfilled all the requisites for the
exercise by this Court of its power of judicial inquiry the power to declare
a law unconstitutional.
I
The creation and organization of courts inferior to the Supreme Court is a
constitutional prerogative of the legislature. This prerogative is plenary and
necessarily implies the power to reorganize said courts, and in the process,
abolish them to give way to new or substantially different ones. To contend
otherwise would be to forget a basic doctrine of constitutional law that no
irrepealable laws shall be passed. 1
The power to create courts and organize them is necessarily the primary
authority from which would thereafter arise the security of tenure of those
appointed to perform the functions of said courts. in the natural order of
things, therefore, since the occasion to speak of security of tenure of judges
arises only after the courts have first been brought into being, the right to
security of tenure takes a secondary position to the basic and primary power
of creating the courts to provide for a fair and strong judicial system. If the
legislature, in the exercise of its authority, deems it wise and urgent to
provide for a new set of courts, and in doing so, it feels the abolition of the
old courts would conduce more to its objective of improving the judiciary
and raising its standard, the matter involved is one of policy and wisdom
into which the courts, not even the Supreme Court, cannot inquire, much

less interfere with. By this secondary position it has to the primary power of
the legislature to create courts, the security of tenure given to the
incumbents should not be a legal impediment to the exercise of that basic
power of creating the statutory courts which, by necessary implication,
includes the power to abolish them in order to create new ones. This primary
legislative power is a continuing one, and the resultant right of security of
tenure of those appointed to said courts could not bring about the
exhaustion of that power. Unquestionably, the legislature can repeal its own
laws, and that power can never be exhausted without, as a consequence,
violating a fundamental precept of constitutional and representative
government that no irrepealable laws shall be passed.
If the creation of courts is a legislative prerogative their abolition is,
therefore, a matter of legislative intent. it involves the exercise of legislative
power, an act of legislation which generally concerns policy in the formation
of which the courts have no say Initially, when the legislature creates the
courts, it suffers from no limitation arising from the necessity or respecting
the security of tenure of judges who are not yea there. This inherent
character of fullness and plenitude of the power to create and abolish courts
does not change when that same power is once more exercised thereafter,
as the need therefor is felt. Which only goes to show that when done in good
faith and motivated solely by the good and the well-being of the people, the
exercise of the power is not meant to be restricted, curtailed, much less
exhausted by the so-called judicial security of tenure.
The passage of the Judiciary Reorganization Act of 1980 is no more than the
exercise of the power vested by the Constitution on the legislative body of
the Republic as described above. That power carries with it the duty and
responsibility of providing the people with the most effective and efficient
system of administration of justice. This is by far of more imperative and
transcedental importance than the security of tenure of judges which,
admittedly, is one of the factors that would conduce to independence of the
judiciary but first of all, a good, efficient and effective judiciary. A judiciary
wanting in these basic qualities does not deserve the independence that is
meant only for a judiciary that can serve best the interest and welfare of the
people which is the most primordial and paramount consideration, not a
judiciary in which the people's faith has been eroded, a condition which the
security of tenure, in some instances, may even be contributory.
In enacting the Judiciary Reorganization Act of 1980, the legislature is
presumed to have been motivated by no other objective than to provide the
people the kind of judicial machinery that would best serve their interest and
welfare, in its belief that the present machinery is falling short of that
measure of public service. It should, likewise, be presumed that it has been
led to this low estimate of the utility and effectiveness of the present set-up
of the judiciary after informing itself, with the facilities at its command, such
as the power of legislative investigation, of the actual condition of the
courts, particularly as to whether they continue to enjoy the trust, faith and
confidence of the public, and what the cause or causes are of their erosion, if
not loss, as is the keenly perceptible feeling of the people in general.

Responsibility for this more or less extensive slowdown of the delivery of


judicial service can be laid on no other than either of the two components of
a court the procedural laws or rules that govern the workings of the
courts, or the persons executing or applying them or both.
When two interests conflict as what had given rise to the present
controversy the duty of the legislature to provide society with a fair, efficient
and effective judicial system, on one hand, and the right of judges to
security of tenure, on the other, the latter must of necessity yield to the
former. One involves public welfare and interest more directly and on a
greater magnitude than the right of security of tenure of the judges which is,
as is easily discernible, more of a personal benefit to just a few, as indeed
only the judge affected could seek judicial redress of what he conceives to
be its violation.
Herein lies the propriety of the exercise of "police power" of the State, if this
concept which underlies even the Constitution, has to be invoked as a
constitutional justification of the passage of the Act in question. That is, if a
conflict between the primary power of the legislature to create courts, and
mere consequential benefit accorded to judges and justices after the
creation of the courts is indeed perceivable, which the writer fails to see, or,
at least, would disappear upon a reconciliation of the two apparently
conflicting interests which, from the above disquisition is not hard to find. It
is, without doubt, in the essence of the exercise of police power that a right
assertable by individuals may be infringed in the greater interest of the
public good and general welfare. This is demonstrated in how the rights and
freedoms enumerated in the Bill of Rights enjoyable by The entire people,
not just by a handful in comparison, are made subject to the lawful exercise
of the police power of the State.
Viewed, therefore, from the above-mentioned perspective, the general
revamp of the judiciary involving both its components the court as an
office or institution, and the judges and justices that man them should not
find any legal obstacle in the security of tenure of judges. This security, after
all, is no more than as provided for all other officials and employees in the
civil service of the government in Section 3, Article XII-B of the Constitution
which provides:
No officer or employees in the civil service shall be
suspended or dismissed except for cause as provided by law.
The provision of Article XVII, Section 10 of the Constitution gives to judicial
officials no more than a guarantee that their retirement age as fixed in the
Constitution shall not be alterable at mere legislative pleasure. The
equivalent provision in the 1935 Constitution was inserted for the first time
because the retirement age before then was provided merely by statute not
by the Constitution. If it comes to their removal or suspension, what gives
them constitutional protection is the aforequoted provision which does not
contemplate abolition of office when done in good faith, for removal implies

the existence of the office, not when it is abolished. Admittedly, as has been
held, abolition of office for no reason related to public welfare or for the good
of the service, let alone when done in bad faith, amounts to an unlawful
removal. 2 The abolition of the courts as declared in the Act as a result of a
reorganization of the judiciary, as the Title of the law curtly but announces,
can by no means, from any viewpoint, be so branded. And whether by said
reorganization, the present would be deemed abolished, as the law
expresses such an unmistakable intent, the matter is one for the sole and
exclusive determination of the legislature. It rests entirely on its discretion
whether by the nature and extent of the changes it has introduced, it has
done enough to consider them abolished. To give the Supreme Court the
power to determine the extent or nature of the changes as to their structure,
distribution and jurisdiction, before the clear intent to abolish them, or to
declare them so abolished, is given effect, would be to allow undue
interference in the function of legislation. This would be contrary to the
primary duty of courts precisely to give effect to the legislative intent as
expressed in the law or as my be discovered therefrom.
From the above observation, it would be futile to insist that the present
courts would not effectively be abolished by the Act in question. it might be
to arrogate power for Us to say that the changes the law brings to the
present judicial system, do not suffice for this Court to give effect to the
clear intent of the legislative body. Where would the agrarian courts, the
circuit criminal courts, the JDRC's be in the judicial structure as envisioned
by the law? Are they not abolished by merger with the regional trial courts,
which by such merger, and by the other changes introduced by the law,
would make said courts different from the present Courts of First Instance
which, as a consequence, may then be considered abolished Integrated as
the present courts are supposed to be, changes somewhere in the judicial
machinery would necessarily affect the entire system.
The fact that the Supreme Court may specially assign courts to function as
the special courts just mentioned, does not mean that the changes wrought
are only superficial or "cosmetic" as this term has been used so often in the
oral argument. Without the new law, these courts will remain fixed and
permanent where they are at present. Yet in the course of time, the need for
their independent existence may disappear, or that by changed conditions,
where they are needed at present at a certain place, the need for them may
be somewhere else in later years, if maximum benefit at the least expense is
to be achieved, as always should be a most desirable goal and objective of
government.
Demonstrably then, the abolition of the courts is a matter of legislative
intent into which no judicial inquiry is proper, except perhaps if they intent is
so palpably tainted with constitutional repugnancy, which is not so in the
instant case. We have, therefore, no occasion, as earlier intimated, to speak
of removal of judges when the reorganization of the judiciary would result in
the abolition of the courts other than the Supreme Court and the Court of
Tax Appeals. Hence, the provision of the Constitution giving to the Supreme
Court power to dismiss a judge by a vote of eight justices does not come

into the vortex of the instant controversy. Its possible violation by the
assailed statute cannot happen, and may, therefore, not constitute an
argument against the constitutionality of the law.
Former Justice Barrera, in a speech before the Philippine Bar
Association, 3 impliedly indorsed the judicial revamp when he enumerated
the qualities of a good judge that the appointing power should consider in
making new appointments to the judiciary upon its reorganization pursuant
to the questioned Act. The words of the eminent jurist may well reflect the
favorable reaction of the public in general to what the Act aim to achieve in
the name of good and clean government. The present judicial incumbents,
who have not in any way, by their acts and behavior while in office,
tarnished the good image that the judiciary should have, therefore, have no
cause for apprehension that what they are entitled to under the Constitution
by way of security of tenure wig be denied them, considering the publicly
known aim and purpose of the massive judicial revamp, specially as
cherished with deep concern by the President who initiated the move when
he created the Judiciary Reorganization Committee to recommend needed
and appropriate judicial reforms.
If the only obstacle to a verdict in favor of constitutionality of the law is its
possible effect of impairing the security of tenure of the incumbents, We
may have the following facts to consider:
1. Under the 1973 Constitution all incumbent judges and justices may
continue in office until replaced or reappointed by the President. As to those
judicial officials, no security of tenure, in the traditional concept, attaches to
their incumbency which is, in a real sense, only a holdover tenure. How the
President has exercised this immense power with admirable restraint should
serve as the strongest guarantee of how justice and fairness will be his sole
guide in implementing the law.
2. As to the rest of the incumbents, they are all appointees of Our present
President, and he should feel concerned more than anyone else to protect
whatever rights they may rightfully claim to maintain their official standing
and integrity. They need have no fear of being ignored for no reason at all,
much less for mere spirit of vindictiveness or lack of nobility of heart.
From the foregoing, it would become apparent that only in the
implementation of the law may there possibly be a taint of constitutional
repugnancy as when a judge of acknowledged honesty, industry and
competence is separated, because an act of arbitrariness would thereby be
committed, but the abolition of the courts as decreed by the law is not by
itself or per se unconstitutional.
Consequently, the law, the result of serious and concerned study by a highly
competent committee, deserves to be given a chance to prove its worth in
the way of improving the judiciary. If in its implementation, any one, if at all,
feels aggrieved, he can always seek judicial redress, if he can make out a

case of violation of his right of security of tenure with uncontrovertible


clarity, as when the separation is very arbitrary in the peculiar
circumstances of his case, for an act of arbitrariness, under any constitution,
is unpardonable.
This petition should also be dismissed for being premature, as is the stand of
Justice Aquino. The petition asks this Court to exercise its power of judicial
inquiry, the power to declare a law unconstitutional when it conflicts with the
fundamental law (People vs. Vera, 65 Phil. 56). This power has well-defined
limits, for it can be exercised only when the following requisites are present,
to wit: (1) There must be an actual case or controversy; (2) The question of
constitutionality must be raised by the proper party; (3) He should do so at
the earliest opportunity, and (4) The determination of the constitutionality of
the statute must be necessary to a final determination of the case.
I am of the opinion that the petition does not present an actual controversy
nor was it filed by the proper parties.
The main ground for which the constitutionality of the Judiciary
Reorganization Act of 1980 is assailed is that it is violative of the security of
tenure of justices and judges. The only persons who could raise the question
of constitutionality of the law are, therefore, the actual incumbents of the
courts who would be separated from the service upon the abolition of the
courts affected by the law, on the theory as advanced by petitioners that
their judicial security of tenure would be violated. Olongapo City Judge de la
Llana, the only judge among the petitioners, has not been separated from
the service. Nor is his separation already a certainty, for he may be
appointed to the court equivalent to his present court, or even promoted to
a higher court. Only when it has become certain that his tenure has been
terminated will an actual controversy arise on his allegation of a fact that
has become actual, not merely probable or hypothetical.
The present petition may neither be allowed as a taxpayer suit. A taxpayer
may bring an action to raise the question of constitutionality of a statute
only when no one else can more appropriately bring the suit to defend a
right exclusively belonging to him, and. therefore, would localize the actual
injury to his person, and to no other. For a "proper party" to invoke the
power of judicial inquiry, as one of the requisites in the exercise of such
power, does not mean one having no better right, one more personalized,
than what he has as a member of the public in general. With the incumbent
judges undoubtedly being the ones under petitioners' theory, who would
suffer direct and actual injury, they should exclude mere taxpayers who
cannot be said to suffer as "direct" and "actual" an injury as the judges and
justices by the enforcement of the assailed statute, from the right to bring
the suit.
The validity of the foregoing observation becomes more evident when We
consider that only after the fate of the present incumbents is known,
whether they have been actually separated or not, would the present courts

be declared abolished. For the law clearly continues their existence until all
the new courts have been filled up with new appointments, or at least such
number as would be equal to the number of actual incumbents, and they are
the very courts to which they may lay claim to the right to continue therein,
so that the status of each and everyone of them has thereby been made
certain. Only then, upon the actual abolition of the courts, may there
possibly be a violation of the security of tenure, as contented, that would
give rise to an "actual controversy" in which the 6 improper party" can be no
other than the judges who feel aggrieved by their non- appointment to the
new courts.
It would, therefore, not be proper to declare the law void at this stage,
before it has even been given a chance to prove its worth, as the legislature
itself and an those who helped by their exhaustive and scholarly study, felt it
to be an urgent necessity, and before any of the proper parties who could
assail its constitutionality would know for a fact, certain and actual, not
merely probable or hypothetical, that they have a right violated by what
they could possibly contend to be an unconstitutional enforcement of the
law, not by a law that is unconstitutional unto itself.
I am, therefore, for giving the law a chance to be put into application so as
not to douse great popular expectations for the courts to regain their highest
level of efficiency had reputation for probity. Inevitably, this is to be so since
only when the law is fully implemented will all the courts affected be
declared abolished, undoubtedly to avoid an interregnum when the country
is without any court, except the Supreme Court, the Court of Tax Appeals
and the Sandigan. Only then will it be known whether an actual controversy
would arise because any of the incumbents have been left out in the
restructured judiciary.
There would then be also a proper party to assail the constitutionality of the
law, conformably to the conditions requisite for the exercise of the power of
judicial inquiry which by their stringent character, together with the
constitutional prescription of a comparatively higher vote to declare a law
unconstitutional, reveal a salutary principle of government that a law should,
by all reasonable intendment and feasible means, be saved from the doom
of unconstitutionality, the rule corollary thereto being that if a law is
susceptible to two interpretations, one of which would make it constitutional,
that interpretation should be adopted that will not kill the law.
It is to adhere to the above principles that the submission is made herein,
that while in the implementation of the law, constitutional repugnancy may
not entirely be ruled out, a categorical ruling hereon not being necessary or
desirable at the moment, the law itself is definitely not
unconstitutional. 4 Any of the incumbent judges who feel injured after the
law shall have been implemented has adequate remedy in law, with full
relief as would be proper. But surely, the benefits envisioned by the law in
the discharge of one of the basic duties of government to the people the
administration of justice should not be sacrificed, as it would be, if the law
is, as sought in the present petition, declared void right now, on the claim of

a few of being allegedly denied a right, at best of doubtful character, for the
claim would seem to rest on an unsupportable theory that they have a
vested right to a public office.
Just one more point. The law in question is not self-executing in the sense
that upon its effectivity, certain judges and justices cease to be so by direct
action of the law. This is what distinguishes the Act in question from R.A. No.
1186 involved in the Ocampo case, 5 which by its direct action, no act of
implementation being necessary, all the judges whose positions were
abolished, automatically ceased as such. The Act in question, therefore, is
not as exposed to the same vulnerability to constitutional attack as R.A. No.
1186 was. Yet by the operation of the Constitution with its wise provision on
how a law may be declared unconstitutional, R.A. No. 1186 stood the test for
it to be enforced to the fullness of its intent, which was, as in the law under
consideration, Identified with public interest and general welfare, through a
more efficient and effective judicial system as the Judiciary Reorganization
Act of 1980 seeks to establish.
Hence, the constitutionality of the law should not be assailed, and the law
itself, striken down, on the ground that some judges or justices may be
removed or separated in violation of their security of tenure. The law does
not directly operate with Chat effect. It is in how the law would be
implemented that this feared eventuality may or may not occur. We would
then be killing the law on a mere speculation if We do so at this stage. This
would be an injudicious act done in reckless disregard of the safeguards built
around a law to defend it when its constitutionality is attacked; first the
presumption that a law is constitutional; second when a law is susceptible to
two interpretations one that would make it constitutional, the other,
unconstitutional, the former should be adopted; and third, the Constitution
itself which ordains that a law may not be declared unconstitutional except
on the vote of at least ten (10) members of the Supreme Court, more than
what is required for an ordinary decision of the Court en banc. This is not to
mention the stringent requisites for the exercise of the power of judicial
inquiry as already adverted to, all designed to save the law from the dire
fate of unconstitutionality.
To the writer, the question before this Court is a simple matter of choosing
between protecting some judges from possible separation, as the
implementation of the law to achieve its primary purpose of improving the
judiciary may have to result in, or serving the interest of the entire society
through an honest, efficient and effective judiciary. For, it is unthinkable that
what is for the good of the people as a whole could have been meant by the
Constitution to be sacrificed for the sake of only the few. The greatest good
for the greatest number is an unwritten rule, more firm and enduring than
any of the postulates spread in our written Constitution. This, I might say, is
the main theme of this separate opinion, otherwise expressed in the wellknown and time-honored maxim "Salus populi establish suprema lex."

MELENCIO-HERRERA, J., concurring:


There is unqualified adherence on my part to the dismissal of the Petition
filed in this case. If I am writing this separate concurrence, it is merely to
state certain views I entertain in regards to the constitutionality of Batas
Pambansa Blg. 129.
The controversy in this case involves two constitutional provisions. Article X,
Section 1, of the Organic law provides that the legislative has the power to
establish inferior Courts by law. Section 7 of the same Article reads:
SEC, 7. The Members of the Supreme Court and judges of
inferior courts shall hold office during good behavior until
they reach the age of seventy years or become
incapacitated to discharge the duties of their office. The
Supreme Court shall have the power to discipline judges of
inferior courts and, by a vote of at least eight Members order
their dismissal.
There should be no conflict Between the two provisions. Both should be
harmonized.
1. a) It is a fundamental proposition that the legislative power to create
Courts ordinarily includes the power to organize and to reorganize them, and
that the power to abolish Courts is generally coextensive with the power to
create them. The power to abolish was not intended to be qualified by the
permanence of tenure (Opinion of Chief Justice Ricardo Paras in Ocampo vs.
Secretary of Justice, 51 O.G. 147 [1955], citing McCulley vs. State, 53 SW
134; Halsey vs. Gaines 2 Lea 316). The right of Judges to hold office during
good behavior until they reach the age of 70 years, or become incapacitated
to discharge the duties of their office, does not deprive Congress of its power
to abolish, organize or reorganize inferior Courts (Brillo vs. Enage, 94 Phil.
732, 735, citing Zandueta vs. de la Costa, 66 Phil. 615; 42 Am. Jur., Pub.
Officer, 904-5). Judges of those Courts take office with that encumbrance
and knowledge.
The legislative power to create a court carries with it the
power to abolish it. When the court is abolished any
unexpired term is abolished also. The judge of such court
takes office with that encumbrance and knowledge. Perkins
v. Corbin, 45 Ala 103, 6 Am. Rep. 698; State, ex rel. Thomas
v. Gunter, 170 Ala. 165, 54 So 283, et al."
The importance and the imperative of maintaining the independence of the
Judiciary is undisputed. At the same time, the power of Congress under the
Constitution cannot be abridged. For, in the last analysis, it is not the
security of tenure per se that is the only safeguard to the independence of
the Judiciary. It is the character and the mettle of the Judges who sit on the
Bench. Has not the impression been created in the public and that there are

those who have abused the prerogatives of their judicial position knowing
that they are untouchables by virtue of the permanence of their tenure
b) A distinction should be made between tenure of Judges and tenure of
Courts. Section 1 heretofore mentioned refers to the "Judiciary" as a
fundamental department of Government. Section 7 quoted above refers to
the tenure of office of "individual" Judges (inclusive of Justices of inferior
Courts that is to say, tenure of office is a matter concerning the individual
Judge. This "individuality" character of Section 7 is supported by the clause
that the Supreme Court has the power to discipline individual judges of
inferior Courts.
A legislature is not bound to give security of tenure to Courts. Courts can be
abolished. In fact, the entire judicial system can be changed. If that system
can no longer admit of change, woe to the wheels of progress and the
imperatives of growth in the development of the Judiciary. To hold that
tenure of Judges is superior to the legislative power to reorganize is to
render impotent the exercise of that power.
It may even be stated that, under Section 7, supra, Judges are entailed to
their Courts, from which they cannot be separated before retirement age
except as a disciplinary action for bad behavior. Under Section 1, Courts are
not entailed to their Judges, because the power of the legislative to establish
inferior Courts presupposes the power to abolish those Courts. If an inferior
Court is abolished, the Judge presiding that Court will necessarily have to
lose his position because the abolished Court is not entailed to him.
c) The constitutional guarantee of tenure of Judges applies only as their
Courts exist. As long as those Courts exist, the Judges cannot be ousted
without just cause; that is the extent of the constitutional provision relative
to security of tenure of Judges. Upon declaration of the completion of the
reorganization as provided for in the Reorganization Act, the affected Courts
"shall be deemed automatically abolished There being no Courts, there are
no offices for which tenure of Judges may be claimed. By the abolition of
those offices, the rights to them are necessarily extinguished (Manalang vs.
Quitoriano, 94 Phil. 903 [1954]).
2. I am satisfied that the challenged law was enacted by the Batasang
Pambansa in response to an urgent and pressing public need and not for the
purpose of affecting adversely the security of tenure of all Judges or
legislating them out to the detriment of judicial independence. It should riot
be said of the Batasang Pambansa that its power of abolition of Courts has
been used to disguise an unconstitutional and evil purpose to defeat the
security of tenure of Judges. The Judiciary Reorganization Act of 1981
sufficiently complies with the bona fide rule in the abolition of public office,
as clearly explained in the main opinion. Besides, every presumption of good
faith in its actuations must be accorded a coordinate and coequal branch of
government, supreme within the limits of its own sphere, until that
presumption is clearly overcome. There is no showing that the

Reorganization Act was motivated for personal or political reasons as to


justify the interference by the Court (Garvey vs. Lowell, 199 Mass, 47, 85
N.E. 182, 127 A.S.R. 468; State vs. Eduards, 40 Mont. 287; 106 Pac. 695, 19
R.C.L. 236; Llanto vs. Dimaporo, 16 SCRA 599 [1966]). Public interest and
public good, as the legislative body views it, must be balanced with tenure
of Judges, which is an individual right. Reverting to Section 1 and Section
7, supra, the former is the weightier, because the "Judiciary" is of more
importance to the welfare of the country than the tenure of office of an
individual Judge. If a Judge is removed without cause there can be damage
to the public welfare to some extent, but maintenance of a Court that does
not meet the requirements of progressive Government, can cause
incalculable prejudice to the people.
3. Nor does a conflict exist with the power of discipline vested in the
Supreme Court by the present Constitution reading: the Supreme Court shall
have the power "to discipline Judges of inferior Courts, and, by a vote of at
least 8 members, order their dismissal Absent the Court, it would be futile to
speak of the Supreme Court's power to discipline. Thus, where the
legislature has willed that the Courts be abolished, the power to discipline
cannot pose an obstacle to the abolition. The power to discipline can come
into play only when there is removal from an existing judicial office but not
when that it office is abolished. The reorganization of the judicial system
with the abolition of certain Courts is not an exercise of the power to
discipline the Judges of the abolished Courts.
It is of significance to note that the power to dismissal vested in the
Supreme Court by the 1973 Constitution is delimited by its power to
discipline. Absent any need for discipline and the power to dismiss does not
exist. Being circumscribed in scope, it may well be asked: does the grant of
the power of discipline and dismissal in the Supreme Court deprive the
executive of the power of removal? Is it not more in keeping with the
allocation of powers in our government to state that the Supreme Court
shares its power to dismiss with the executive power of removal? For is not
the power of removal basically executive in nature, as an incident to the
power of appointment, which is the prerogative of the Chief Executive alone
As in the case of appointments, Section 5 (6), Article X of the Constitution
provides that the Supreme Court shall appoint its officials and employees.
However, is not this power shared with the power of appointment of the
executive who appoints some of the Court officials These questions could
lend themselves to an in-depth study in the proper case.
4. The abolition would be no deprivation either of due process of law. A
public office cannot be regarded as the "property " of the incumbent. A
public office is not a contract (Segovia vs. Noel, 47 Phil. 543 [1925]). A
public office is a public trust (Section 1, Article XIII. 1973 Constitution). It is a
privilege in the gift of the State (Brown vs. Russell, 166 Mass. 14, 43 NE
1005, 32 LRA, 253 cited also in Taada & Carreon, Political Law of the
Philippines, Vol. 2, p. 537). The officers are the servants of the people and
not their rulers (22 R.C.L. 378-379, cited in Martin, Administrative Law, Law

on Public Officers and Election Law, p. 112, 1970 ed.). Besides, it bears
stressing that there is no removal from office but abolition of the office itself.
5. The questioned statute is in keeping with major reforms in other
departments of government. "The thrust is on development." It is "the first
major reorganization after four generations." It does not provide for a
piecemeal change, which could be ineffective. It goes to the roots and does
not just scratch the surface of our judicial system. Its main objectives are an
improved administration of justice, the "attainment of more efficiency in the
disposal of cases, a reallocation of jurisdiction, and a revision of procedures
which do not tend to the proper meting out of justice." These aims are policy
matters of necessity in the pursuit of developmental goals within the
Judiciary.
6. The Reorganization Act reorganizing the entire judicial system excluding
the Supreme Court, which is the only constitutional Court, and the
Sandiganbayan. It envisages institutional reforms in the Philippine judiciary.
It does not simply change the names of the Courts. The facts herein are
dissimilar from those in Brillo vs. Enage (94 Phil. 732 [1954]) where the
position of Justice of the Peace, although ostensibly abolished, was merely
changed to Municipal Judge after the municipality of Tacloban was converted
into a city with its own charter.
Significant among the institutional changes and procedural reforms are:
The Intermediate Appellate Court
This Court is now constituted into ten (10) divisions instead of fifteen (15),
five members composing each division, and a majority vote of three
members being needed for a decision. This obviates the cumbersome
procedure, in case of dissent, of assigning two other members to compose a
"division of five". It also allows flexibility in that any three members of a
division, arriving at unanimity, can promulgate a decision. Now provided for
is specialization into four (4) Civil Cases Divisions, two (2) Criminal Cases
Divisions and four (4) Special Cases Divisions. The specialization is expected
to contribute to the expeditious disposal of cases. The Court has been given
original jurisdiction to issue Writs of mandamus, prohibition, certiorari,
habeas corpus, quo warranto and auxiliary writs or processes whether or not
in aid of its appellate jurisdiction. This would undoubtedly ease the burden of
the Supreme Court where numerous such cases are filed daily.
It has exclusive appellate jurisdiction over all final judgments, decisions,
resolutions, orders or awards of quasi-judicial agencies, instrumentalities,
boards or commissions, except those falling within the exclusive appellate
jurisdiction of the Supreme Court in accordance with the Constitution.
The Intermediate Appellate Court would now have the power to try cases
and conduct hearings, receive evidence and perform any and all acts
necessary to resolve factual issues raised in cases falling within its original

and appellate jurisdiction, including the power to grant and conduct new
trials or further proceedings (Sec. 9). This does away with the delays
attendant to the remand of cases to the lower trial Courts.
Regional Trial Courts

a) The confusing and illogical areas of concurrent jurisdiction between trial


Courts have been entirely eliminated.
b) Under Section 39, there is a uniform period for appeal of fifteen (15) days
counted from the notice of the final order, resolution, award, judgment, or
decision appealed from.

There are now thirteen (13) Judicial Regions, the same as the present
administrative and Batasang Pambansa Regions, instead of sixteen (16)
Judicial Districts.

A record on appeal is no longer required to take an appeal. The entire


original record is now to be transmitted.

A Judge is appointed to a region, which is his official station. This ensures


mobility since a Judge may be assigned anywhere within the Region without
applying the constitutional limitation of six months. Additionally, -it can
remedy temporary inequalities of caseloads in trial Courts.

c) Under Section 40, in deciding appealed cases, adoption by reference of


findings of fact and conclusions of law as set forth in the decision, order, or
resolution appealed from, is also provided for. This will expedite the rendition
of decisions in appealed cases.

Specialized Courts are integrated into the Regional Trial Courts. Thus,
Regional Trial Courts would try all cases within its jurisdiction unless special
cases are assigned to them, in which case, they remain as Branches of
Regional Trial Courts. Special procedures and technical rules governing
special Courts will continue to remain applicable in Branches assigned those
special cases.

d) Section 42 provides for "a monthly longevity pay equivalent to 5% of the


monthly basic pay for Justices and

Metropolitan Trial Courts


There is one Metropolitan Trial Court with several Branches for large urban
areas. The appointment of Judges would be to a Metropolitan Trial Court
although a Judge may be assigned by the Supreme Court to any Branch of
the Metropolitan Trial Court as demanded by the exigencies of the service.
The Supreme Court may designate certain Branches of said Courts to
exercise special jurisdiction over certain cases, unlike the present set-up
where special jurisdiction applies only to cases of traffic violations.
Municipal Trial Courts/Municipal Circuit Trial Courts
Municipal Trial Courts may now be designated by the Supreme Court to
exercise special jurisdiction over certain cases, thereby resulting in overall
flexibility. They can also be circuitized with those in cities not forming part of
metropolitan areas.
One notable change between the old and the new set up is that Judges of
these Courts will now be Presidential appointees unlike presently where the
incumbent Judges are merely designated by the Supreme Court in an
Administrative Order to sit in existing Municipal Courts and Municipal Circuit
Courts.
7. There are innovative features in the Act that commend themselves:

Judges of the courts herein created for each five years of continuous,
efficient, and meritorious service rendered in the Judiciary, Provided that, in
no case shall the total salary of each Justice or Judge concerned, after this
longevity pay is added, exceed the salary of the Justice or Judge next in
rank." Thus, Justices and Judges who may not reach the top, where
unfortunately there is not enough room for all, may have the satisfaction of
at least approximating the salary scale of those above him depending on his
length of service,
8. But while the law itself as written is constitutional, the manner in which it
will be administered should not be tainted with unconstitutionality (Myles
Salt Co. vs. Board of Commrs., 239 US 478, 60 L. Ed. 392, 36 Sct 204). To
obviate the possibility of an unconstitutional exercise of power the following
safeguards are recommended and/or expected to be undertaken:
a) The President can be expected to indicate a reasonable time frame for the
completion of the reorganization provided for in the Act and the issuance of
the corresponding implementing Order.
b) Appointments and their effectivity should be simultaneous with, or as
close as possible, to the declaration by the President of the completion of
the reorganization under Section 44 to avoid any detriment to the smooth
and continuous functioning of the judicial machinery.
c) The services of those not separated should be deemed uninterrupted, as
recommended by the Committee on Judicial Reorganization (Article XI of its
Report).
9. For the speedy implementation of the law, the Supreme Court can be
expected to submit to the President within thirty (30) days from the date of

finality of its Decision the staffing pattern for all Courts required by Section
43.
I am constrained to disagree with the suggestion of one of the amici
curiae that the staffing pattern be made to include the names of Judges. The
staffing pattern for Judges is already clearly and explicitly provided in the
law itself which enumerates the various Judges and Justices in their
hierarchical order. Furthermore, to include the superior positions of Judges
would depart from the traditional concept of a staffing pattern, which refers
more to personnel organization and corresponding salaries of inferior
employees. It is also constitutionally objectionable in that it would interfere
with the prerogative of appointment intrinsically executive in nature
(Guevara vs. Inocentes, 16 SCRA 379 [1966]; Government of the Philippines
vs. Springer, 50 Phil. 259 [1927]). The President may not be deprived of, nor
be limited in, the full use of his discretion in the appointment of persons to
any public office. Nothing should so trench upon executive choice as to be,
in effect, judicial designation.
10. A word of explanation. If I had resolved not to inhibit myself in this case
upon motion filed by petitioners, it was because the Committee on Judicial
Reorganization, of which I was privileged to be a member, confined its work
to the recommendation of options and guidelines in the task of
reorganization. The Committee had no part whatsoever in the drafting of the
bill nor in the public hearings conducted. In fact, some of its
recommendations like the circuitization or regionalization of the
Intermediate Appellate Court, the appellation of members of the Judiciary,
the confinement of the jurisdiction of the Intermediate Appellate Court
merely to appellate jurisdiction, the adoption of the system found in the
United Kingdom and in Commonwealth countries of having a Court of
general jurisdiction with trial and appellate divisions, were not availed of in
the final Act.
11. Lastly, but by no means the least, I entertain no doubt that reliance can
be placed on the good faith of the President that all the deserving, upon
considerations of "efficiency, integrity, length of service and other relevant
factors shall be appointed to a strengthened and revitalized judicial system
in the interest of public service; that appointments will not be unduly
delayed; and that appointees will be evaluated thoroughly to ensure quality
and impartiality in the men and women who will keep vigil over our judicial
ramparts.

The Constitution grants to the Batasang Pambansa the power to create


courts inferior to the Supreme Court (Article X, Section 1). All existing
inferior courts were created by law. No law is irrepealable. The power to
create an office includes the power to abolish the same. (Urgelio vs. Osmea
9 SCRA 317; Maza vs. Ochave, 20 SCRA 142)
Security of tenure cannot be invoked when there is no removal of a public
officer or employee but an abolition of his office. (Manalang vs. Quitoriano,
94 Phil. 903; Cruz vs. Primicias, 23 SCRA 998; Baldoz vs. Office of the
President, 78 SCRA 354, 362) A distinction should be made between removal
from office and abolition of an office. Removal implies that the office subsists
after ouster, while, in abolition, the office no longer exists thereby
terminating the right of the incumbent to exercise the rights and duties of
the office. (Canonigo vs. Ramiro, 31 SCRA 278)
The power of the legislative branch of the government to abolish courts
inferior to the Supreme Court has long been established. (Ocampo vs.
Secretary of Justice, 51 O.G. 147). What is only needed is that the abolition
passes the test of good faith. it need only be shown that said abolition of the
courts is merely incidental to a bona fide reorganization. (Urgelio vs.
Osmea supra.)
It is unthinkable to impute bad faith to the Presidential Committee on Judicial
Reorganization composed of four (4) distinguished members of the Supreme
Court, the Minister of Justice and the Deputy Minister of Justice, and to the
members of the Batasang Pambansa whose combined efforts after a careful
study and deliberation resulted to the enactment of a bill now signed into
law as Batasang Pambansa Blg. 129. In his sponsorship speech, Justice
Ricardo C. Puno declared the objectives of the Judiciary Reorganization Law
to be the following: (1) the attainment of more efficiency in the disposal of
cases; (2) the improvement in the quality of decisions by the courts that will
result from the easing of court dockets; and (3) structural changes to meet
the exigencies of present day Philippine Society and of the foreseeable
future.
Admittedly, in the implementation of the law, some Judges and Justices may
be adversely affected. But in a conflict between public interest and the
individual interest of some Judges and Justices, the public weal must prevail.
The welfare of the people is the supreme law.

ERICTA, J., concurring:

The implementation of the law will entail appointments to the new courts.
The power of appointment is the exclusive prerogative of the President. The
implementation of the law should be left exclusively to the wisdom,
patriotism and statesmanship of the President.

I concur in the view that the Judiciary reorganization law is not


unconstitutional. It does not violate the principle of security of tenure of
judges.

PLANA, J., concurring:

As the lawmaking body has the power to create inferior courts and define,
prescribe and apportion their jurisdiction, so it has the power to abolish or
replace them with other courts as long as the act is done in good faith and
not for the purpose of attaining an unconstitutional end. Good faith has thus
become the crucial issue in the case at bar.
Upon an examination of the legislative history of Batas Pambansa 129, as
has been done in the main opinion, it is manifest that actual, not merely
presumed good faith attended its enactment. On this basis, I concur in the
opinion penned by the learned Chief Justice, qualified only by the following
observations:
1. Executive consultation with the Supreme Court. I believe the President
is under no obligation to consult with the Supreme Court; and the Supreme
Court as such is not called upon to give legal advice to the President.
Indeed, as the Supreme Court itself has said, it cannot give advisory
opinions (Bacolod Murcia Planters' Asso., Inc. vs. Bacolod Murcia milling
Co., 30 SCRA 67; NWSA vs. Court of Industrial Relations, 90 SCRA 629) even
to the President.
In the drafting of the present Constitution, there was an attempt to vest the
Supreme Court with the function of giving advisory opinions. The framers of
the Constitution, however, did not see fit to adopt the proposal.
If the President should consult the Supreme Court on the implementation of
Batas Pambansa 129 and the Supreme Court should give its advice (leaving
aside the question of procedure), I believe the President would be free to
follow or disregard the advice; but, in either case, there would be no
guarantee that the implementing action would be upheld in one case or
stricken down in the other.

however radically changed the constitutional set-up. There is now a


commingling or fusion of executive and legislative powers in the hands of
the same group of officials. Cabinet members play a leading role in the
legislative process, and members of the Batasan actively discharge
executive functions. The Prime Minister indeed must come from its ranks.
Under the circumstances, there is really not much sense in rigidly upholding
the principle of non-delegation of legislative power, at least vis-a-vis the
Executive Department. In a very real sense, the present Constitution has
significantly eroded the hoary doctrine of non-delegation of legislative
power, although it has retained some provisions of the old Constitution
which were predicated on the principle of non-delegation, this time perhaps
not so much to authorize shifting of power and thereby correspondingly
reduce the incidence of "undue" delegation of legislative power, as to avert
the abdication thereof.
In times of war or other national emergency, the Batasang
Pambansa may by law authorize the President for a limited
period and subject to such restrictions as it may prescribe, to
exercise powers necessary and proper to carry out a
declared national policy. Unless sooner withdrawn by
resolution of the Batasang Pambansa, such powers shall
cease upon its next adjournment. (Art. VIII, Sec. 15.)
The Batasang Pambansa may by law authorize the President
to fix within specified this and subject to such stations and
restrictions as it may impose, tariff rates, import and export
quotas, tonnage and wharfage dues, and other duties or
imposts. [Ibid, Sec. 17(2).]

2. Undue delegation of legislative powers.

TEEHANKEE, J., dissenting:

The petitioners have also assailed the constitutionality of Batas Pambansa


129 on the ground that a provision thereof (regarding fixing of compensation
and allowances for members of the Judiciary) constitutes an undue
delegation unto the President of legislative power.

Undoubtedly, no more crucial and transcendental issue of such magnitude


has confronted the Philippine judiciary than in the present case. The
challenged Act, Batas Pambansa Blg. 129 by its title would reorganize all
existing courts (except the nine-member Sandiganbayan 1 and the threemember Court of Tax Appeals) and upon declaration by the President of the
completion of the reorganization would unprecedentedly deem all the said
courts "automatically abolished en masse and "the incumbents thereof shall
cease to hold office." 2 The total abolition involves a total of 1,663 judicial
positions with 1,180 incumbent judges and 483 vacancies) as of January 26,
1982 and the Act would effect an increase of 230 judicial positions raising
the total of judicial positions to be filled by new appointments to 1,893.
Notwithstanding the great deference due to enactments of the Batasan, I
regretably find myself unable to join the ranks of my esteemed colleagues in
the majority who uphold the constitutionality of the Act and have voted to
dismiss the petition, for the following main considerations and reasons:

As pointed out in the main opinion, the legislature has provided ample
standards or guidelines for the implementation of the delegated power,
which makes the delegation inoffensive. I would like to add however some
observations on the doctrine of undue delegation of legislative power.
Under the old Constitution, when the abiding rule was separation of
legislative and executive powers, there was good reason to maintain the
doctrine of non-delegation of legislative power. Otherwise, the principle
of separation of governmental powers could be negated via
unbridled delegation of legislative power. The 1973 Constitution has

1. I go by the ruling of the numerical majority of seven Justices (namely,


Pablo, Cesar Bengzon, Montemayor, Jugo, Bautista, Roberto Concepcion and
J.B.L. Reyes, JJ.) in the leading 1955 case of Ocampo 3 who fell short by one
vote to reach the constitutionally required 2/3 majority (at the time 8 out of
an 11-member Supreme Court) to declare unconstitutional and invalid
section 3 of Republic Act 1186 abolishing the positions of 18 judges-at-large
and 15 cadastral judges and removing or legislating out the incumbent
judges from office as against the contrary vote of a minority of 4 Justices
(namely, then Chief Justice Paras and Padilla, Alex Reyes and Labrador, JJ.)
with the paradoxical situation that the last three named Justices voted for
the validity of the Act as a remedial measure that abolished said positions
without permanent station which subjected them to a rigodon de
jueces without the consent of the Supreme Court, which they considered as
"repulsive to an independent judiciary" and violative of an express
prohibitory provision of the 1935 Constitution while Justice Alex Reyes
conceded that otherwise he would go with the majority that "Congress may
not, as a general rule, abolish a judicial post without allowing the incumbent
to finish his term of office."
2. As then Associate, later Chief Justice Cesar Bengzon remarked in his
separate opinion "(T)he [adverse] outcome of this litigation [sanctioning
the ouster from office of the ten petitioners who were presiding different
Courts of First Instance, some as judges-at-large, others as cadastral judges,
upon the enactment on June 19, 1954 of R.A. 1186 abolishing the positions
of judges-at large and cadastral judges] is apt to revive the speculation
whether wittingly or unwittingly the Constitution has further weakened the
usually weak judicial department because of its 'innovative' requirement of a
2/3 majority vote of the Supreme Court to declare a statute unconstitutional,
and 'never in our history has such a number of judges of first instance
[totalling 33 positions] been ousted through judicial reorganization.
His rationale that the express constitutional guaranty of security of tenure of
judges "during good behavior until they reach the age of seventy years or
become incapacitated to discharge the duties of their office" 4 must prevail
over the implied constitutional authority to abolish courts and to oust the
judges despite their constitutionally-secured tenure bears repeating thus:
A careful analysis will perceive that whereas petitioners
invoke an express guaranty or positivedefinition of their
term of office, the respondents rely on implied authority to
abolish courts and the positions of the respective judges.
Accurately stated, respondents' defense rests on
a second inference deduced from such implied power,
because they reason out thusly: Congress has express power
to establish courts; therefore it has implicit power to abolish
courts and the positions of judges of such abolished courts
(first inference); and therefore (second inference) Congress
likewise has power to eject the judges holding such
positions.

Resulting juridical situation. The implied authority invoked by


respondents collides with the expressguaranty of tenure
protecting the petitioners. Which shall prevail Obviously the
express guaranty must override the implied authority.
"Implications can never be permitted to contradict the
expressed intent or to defeat its purpose."
xxx xxx xxx
But the collision may he should be avoided, and both
sections given validity, if one be considered a proviso or
exception to the other. In other words, under the
Constitution the Congress may abolish existing courts,
provided it does not thereby remove the incumbent judges;
such abolition to take effect upon termination of their
incumbent The fundamental provisions on the matter are
thereby coordinated and harmonized' as Justice Laurel
suggested in his concurring opinion in Zandueta v. De la
Costa. To bring about reconciliations is the great work of
jurists. (Cardozo, Paradoxes of Legal Science, p. 6) 5
3. This reasoning that the express guaranty of tenure protecting incumbent
judges during good behavior unless removed from office after hearing and
due process or upon reaching the compulsory retirement age of seventy
years must override the implied authority of removing by legislation the
judges has been further strengthened and placed beyond doubt by the new
provisions of the 1973 Constitution that transferred the administrative
supervision over all courts and their personnel from the Chief Executive
through the then Secretary of Justice to the Supreme Court 6 and vested in
the Supreme Court exclusively "the power to discipline judges of inferior
courts and, by a vote of at least eight members, order their
dismissal," 7 Which power was formerly lodged by the Judiciary Act in the
Chief Executive.
As former Chief Justice Bengzon stressed in his opinion in Ocampo, the 1934
Constitutional Convention "frowned on removal of judges of first instance
through abolition of their offices or reorganization," citing Professor Jose
Aruego's observation that the security of judges' tenure provision was
intended to "help secure the independence of the judiciary" in that "during
good behavior, they may not be legislated out of office by the law-making
body nor removed by the Chief Executive for any reason and under the guise
of any pretense whatsoever; they may stay in office until they reach the age
of seventy years, or become incapacitated to discharge the duties of their
office. (Aruego, The Framing of the Philippine Constitution, Vol. 11, pp. 718719)" He further cited Aruego's report that a proposed amendment to the
effect that the prohibition against transfers of judges to another district
without the approval of the Supreme Court 8 "should not be applicable to a
reorganization of tribunals of justice or of districts, but the amendment was
defeated easily without debate" 9 and logically concluded that "(N)ow,
there . before, having vetoed the transfer of judges thru a re-organization,

the Convention evidently could not have permitted the removal of judges
thru re-organization.
Now, if the framers of the 1973 Constitution wished to dispel the strong
doubts, to say the least in the light of the 7 to 4 vote in the Ocampo case
against removal of incumbent judges through legislative action by abolition
of their courts, then they would have so clearly provided for such form of
removal in the 1973 Constitution, but on the contrary as already stated they
ruled out such removal or ouster of judges by legislative action by vesting
exclusively in the Supreme Court the power of discipline and removal of
judges of all inferior courts.
4. This being so, the fundamental point emphasized by former Chief Justice
Bengzon that abolition of the 33 judicial positions in the Ocampo case was
"merely an indirect manner of removing the petitioners-judges" while the
"positions [that] were eliminated . . . were in fact substituted or replaced by
other positions of judges" applies with greater force in the case at bar which
involves an unprecedented total "abolition," thus: "(C)all it reorganization, or
legislation or removal or abolition, this law disregards the constitutional
assurance that these judges, once appointed, shall hold office during good
behavior ... [unless incapacitated and until retirement].
The abolition of their offices was merely an indirect manner of removing
these petitioners. Remember that on June 19, 1954, there were 107 judges
of first instance, district judges, judges at-large and cadastral judges (Rep.
Act 296). After the passage of Republic Act No. 1186 there were 114
positions of judges of first instance. There was no reduction there was
increase in the number of judges, nor in the number of courts. The
positions of Judges-at-Large and Cadastral Judges were eliminated; but they
were in fact substituted or replaced by other positions of judges; or if you
please, there was a mere change of designation from 'Cadastral Judge or
Judge at large to district judge Hence it should be ruled that as their
positions had not been 'abolished' de facto, but actually retained with
another name, these petitioners are entitled to remain in the service. (Brillo
v. Enage, G.R. No. L-7115, March 30, 1954.) For it is not permissible to effect
the removal of one judge thru the expediency of abolishing his office even
as the office with same power is created with another name. (Brillo v. Enage,
Malone v. Williams, 118 tenn. 391, Gibbe's Case 4 A.L.R. p. 211). In this view
of the picture, we believe, Congress could have, and should haveas
suggested by Secretary Tuazon during the hearings in Congress directed in
said Republic Act No. 1186 that 'the present judges-at-large and cadastral
judges shall become district judges presiding such districts as may be fixed
by the President with the consent of the Commission on Appointments or by
the Secretary of Justice, as originally proposed by Senator Laurel in
connection with the same bill. Something similar was done before, and it
would not be objectionable as an encroachment on the President's
prerogative of appointment, because such judges had already been
appointed to the judiciary before the passage of the act, and the provision
may be construed in the light of mere change of official designation plus
increase in salary."

5. Concededly, the questioned Act effects certain changes and procedural


reforms with more specific delineation of jurisdiction as mentioned
particularly in the majority opinion, but they do not change the basic
structure of the existing courts. The present Municipal Courts, Municipal
Circuit Courts and City Courts are restructured and redesignated as
Municipal Trial Courts and Municipal Circuit Trial Courts and Metropolitan Trial
Courts in the challenged Act. The Courts of First Instance, Circuit Criminal
Courts, Juvenile & Domestic Relations Courts and Courts of Agrarian
Relations are all restructured and redesignated to be known by the common
name of Regional Trial Courts with provision for certain branches thereof "to
handle exclusively criminal cases, juvenile and domestic relations cases,
agrarian cases, urban land reform cases . . . . and/or such other special
cases as the Supreme Court may determine in the interest of a speedy and
efficient administration of justice" 10 and the Court of Appeals is restructured
and redesignated as the Intermediate Appellate Court with an increase in
the number of Appellate Justices from the present 45 to 50 but with a
reduction of the number of divisions from 15 (composed of 3 Justices each)
to 10 (composed of 5 members each) such that it is feared that there is
created a bottleneck at the appellate level in the important task discharged
by such appellate courts as reviewers of facts.
In my view, the "candid admission" by the Chief Justice in his opinion for the
Court "that he entertained doubts as to whether the intermediate court of
appeals provided for is a new tribunal" 10a is equally applicable to all the
other above mentioned courts provided for in the challenged Act as "new
courts". And the best proof of this is the plain and simple transitory provision
in section 44 thereof that upon the President's declaration of completion of
the reorganization (whereby the "old courts" shall "be deemed automatically
abolished and the incumbents thereof shall cease to hold office "(T)he cases
pending in the old Courts shall be transferred to the appropriate Courts
constituted pursuant to this Act, together with the pertinent functions,
records, equipment, property and the necessary personnel together with the
"applicable appropriations." This could not have been possible without a
specification and enumeration of what specific cases of the "old courts"
would be transferred to the particular "new courts," had these "new courts"
not been manifestly and substantially the "old courts" with a change of
name or as described by Justice Barredo to have been his first view, now
discarded, in his separate opinion: "just a renaming, and not a substantial
and actual modification or alteration of the present judicial structure or
system" or "a rearrangement or remodeling of the old structure." 11
6. I do not subscribe to the test of good faith or bad faith in the abolition of
the courts and consequent ouster of the incumbent judges from office as
expounded by the late eminent Justice Jose P. Laurel in his separate
concurring opinion in the pre-war case of Zandueta 12 wherein the Court
dismissed the petition for quo warranto on the ground of petitioner
Zandueta's estoppel and abandonment of office. 13 Realistically viewed from
the basis of the established legal presumptions of validity and
constitutionality of statutes (unless set aside by a 2/3 majority of 10
members of the Supreme Court) and of good faith in their enactment, one is

hard put to conjure a case where the Court could speculate on the good or
bad motives behind the enactment of the Act without appearing to be
imprudent and improper and declare that "the legislative power of
reorganization (is) sought to cloak an unconstitutional and evil purpose." The
good faith in the enactment of the challenged Act must needs be granted.
What must be reconciled is the legislative power to abolish courts as implied
from the power to establish them with the express constitutional guaranty of
tenure of the judges which is essential for a free and independent judiciary.
Adherents of the Rule of Law are agreed that indispensable for the
maintenance of the Rule of Law is a free and independent judiciary, sworn to
protect and enforce. it without fear or favor "free, not only from graft,
corruption, ineptness and incompetence but even from the tentacles of
interference and insiduous influence of the political powers that be to quote
again from Justice Barredo's separate concurring opinion. 14 Hence, my
adherence to the 7-member majority opinion of former Chief Justice Bengzon
in the Ocampo case, supra, as restated by the Philippine Association of Law
Professors headed by former Chief Justice Roberto Concepcion that "any
reorganization should at least snow the incumbents of the existing courts to
remain in office [the appropriate counterpart 'new courts'] unless they are
removed for cause."
7. The "judges' broader and stronger guarantees of tenure than ordinary civil
servants" as stressed by former Chief Justice Bengzon in Ms majority opinion
in Ocampo is based on the judiciary's status as a coequal and coordinate
branch of government, whereas the long line of Philippine cases upholding
the legislative power to abolish offices refers to officers or employees in the
executive branch of government and "the underlying consideration must be
borne in mind that Manalang [the aggrieved petitioner] belonged to the
Executive Department and because the President approved the law no
question or encroachment by one branch on the other could be
apprehended or alleged. 15 This is not a matter of personal privilege for the
incumbent judges but as aptly stated by former U.P. Law Dean Irene Cortez
in her memorandum as amicus curiae, "for the judiciary whose
independence is not only eroded but is in grave danger of being completely
destroyed." Dean Cortez aptly stressed that "judicial independence is not a
guarantee intended for the Supreme Court alone, it extends to the entire
court system and is even more vital to the courts at the lowest levels
because there are more of them and they operate closest to the people,"
and "(P)articularly under the present form of modified parliamentary
government with legislative and executive functions overlapping and in
certain areas merging, the judiciary is left to perform the checking function
in the performance of which its independence assumes an even more vital
importance. "
The extensive memoranda filed by Dean Cortez and other amici curiae such
as former Senator Jose W. Diokno who strongly urges the Court to strike
down the Act "to prevent further destruction of judicial independence,"
former Senator Lorenzo Sumulong, president of the Philippine Constitution
Association who advocates for the Court's adoption of the B Bengzon
majority opinion in the Ocampo case so as to abide by "the elementary rule

in the interpretation of constitutions that effect should be given to all parts


of the Constitution" and that the judges' security of tenure guaranty should
not be rendered meaningless and inoperative" former Solicitor General
Arturo A. Alafriz, president of the Philippine Lawyers' Association who
submits that the total abolition of all courts below the Supreme Court
(except the Sandiganbayan and the Court of Tax Appeals) and the removal
of the incumbent Justices and Judges "violates the independence of the
judiciary, their security of tenure and right to due process guaranteed them
by the Constitution" and Atty. Raul M. Gonzales, president of the National
Bar Association of the Philippines who invokes the Declaration of Delhi at the
ICJ Conference in 1959, that "The principles of unremovability of the
Judiciary and their Security of Tenure until death or until a retiring age fixed
by statute is reached, is an important safeguard of the Rule of Law" have
greatly helped in fortifying my views.
8. I had submitted in my memo of September 4, 1980 to the Presidential
Committee on Judicial Reorganization that "(W)hatever reorganization plans
the committee may recommend to meet the worldwide problem of
congested court dockets, and to improve judicial services in the public
interest, it should be borne in mind that the members of the judiciary as the
weakest branch of government, yet called upon to safeguard the people's
rights and protect them oppression, official and otherwise, are entitled to
security of tenure as guaranteed by the Constitution. Even though the lower
courts may be reshuffled or abolished in the process, the mandate and spirit
of the Constitution guaranteeing their security of tenure and maintaining the
independence of the judiciary should be respected, and they should be
retained in the new courts."
In the same vein, Dean Cortez warned of the dire consequences of giving the
questioned provisions of the Act the "absolutist sense which they appear to
have at first blush" thus: "(T)o accept legislative power to abolish courts
asserted under Batas Pambansa Blg. 129 which sweeps through practically
the entire judiciary would be to open the door to future court abolitions in
the guise of reorganization. At this stage of our political development, the
process of embarking upon a modified parliamentary system may well usher
in a situation where despite guarantees of judicial tenure, each ruling party
in the legislature or any alliance that can command a majority vote may
periodically undertake complete reorganization and remove judges, thus
making of the judiciary a veritable straw in the political wind and
"(F)urthermore, what can result in the modified parliamentary system from
the close working relationship between executive and legislature is made
manifest in Batas Pambansa Blg. 129. If the sweeping revamp provided were
to be carried out the President would appoint all of the justices and judges of
the courts affected and the whole membership in the judiciary from the
highest to the lowest courts would be his appointees. It is relevant to point
out that it is precisely a situation like this that the Constitution seeks to
avoid when it provides staggered terms for the chairman and members of
the constitutional commissions which like the judiciary are guaranteed
independence."

9. The judges' security of tenure was rendered nugatory by the Transitory


Provisions of the 1973 Constitution which granted the incumbent President
the unlimited power to remove and replace all judges and officials 16 (as
against the limited one-year period for the exercise of such power granted
President Quezon in the 1935 Constitution upon establishment of the
Philippine Commonwealth Upon the declaration of martial law in September,
1972, justices and judges of all courts, except the Supreme Court, had been
required to hand in their resignations. There is listed a total of 53 judges who
were replaced or whose resignations were accepted by the President during
the period from September, 1972 to April, 1976. The power to replace even
the judges appointed after the effectivity on January 17, 1973 of the 1973
Constitution is yet invoked on behalf of the President in the pending case
of Tapucar vs. Famador 17 notwithstanding the generally held view that such
post-1973 Constitution appointed judges are not subject to the Replacement
Clause of the cited Transitory Provision. (In this case, petitioner judge
appointed on January 30, 1976 as judge of the Court of First Instance of
Agusan del Norte and Butuan City, Branch 1, invoked his constitutional
security of tenure and questioned the appointment extended on February
26, 1980 to respondent to replace him, although he had not been removed
or otherwise dismissed from his position nor had be resigned therefrom. The
Court per its March 27, 1980 resolution ordered both to refrain from
discharging the functions of the questioned office And now comes this total
abolition of 1,663 judicial positions (and thousands of personnel positions)
unprecedented in its sweep and scope. The urgent need is to strengthen the
judiciary with the restoration of the security of tenure of judges, which is
essential for a free and independent judiciary as mandated by the
Constitution, not to make more enfeebled an already feeble judiciary,
possessed neither of the power of the sword nor the purse, as decried by
former Chief Justice Bengzon in his Ocampo majority opinion:
Shall we have judges of the type of Lord Coke Or judges,
who, in his place, would have answered 'I'll do what his
majesty pleases,' judges who, afraid of ouster thru a
judiciary reshuffle, would rather serve the interests of the
party in power or of the political boss, than the interests of
justice?
As it is, the Judicial Department is feeble enough. Shall we
render it feebler with judges precariously occupying their
official seats Judges performing their duties under the sword
of Damocles of future judicial reorganizations
10. The Chief Justice, in his opinion for the Court, equally stressed that "what
is equally apparent is that the strongest ties bind the executive and
legislative departments. It is likewise undeniable that the Batasang
Pambansa retains its full authority to enact whatever legislation may be
necessary to carry out national policy as usually formulated in a caucus of
the majority party. It is understandable then why in Fortun vs. Labang 18 it as
stressed that with the provision transferring to the Supreme Court
administrative supervision over the Judiciary, there is a greater need 'to

preserve unimpaired the independence of the judiciary, especially so at


present, where to all intends and purposes, there is a fusion between the
executive and the legislative branches,'" 19 with the further observation that
"many are the ways by which such independence could be eroded." In the
cited case of Judge Fortun (likewise penned by the Chief Justice for the
Court), the Court issued a writ of prohibition and certiorari ordering the
dismissal of the criminal complaint filed with respondent fiscal Labang by
"disgruntled members of the bar with a record of losing cases" in the judge's
court and imposed the penalty of censure on each and everyone of the
private respondents-lawyers for the "unseemly haste" with which they filed
the criminal complaint, abetted by "the appearance of sheer vindictiveness
or oppressive exercise of state authority." The Court marked the "violation of
the cardinal principles of fairness and due process that underlie the Rule of
Law. Petitioner-Judge was not heard; he was denied the opportunity to
defend himself against the accusation. There was, on the part of private
respondents then, a failure to abide by a Resolution of the Integrated Bar
stressing that precisely integration could shield 'the judiciary which
traditionally cannot defend itself except within its own forum, from the
assaults that politics and self-interest may level at it, and assist it to
maintain its integrity, impartiality and independence,' " and that such
subjection of a judge to public "harassment and humiliation . . . can diminish
public confidence in the courts."
11. This brings us to the allegedly underlying need for B.P. Blg. 129
discussed in the course of committee hearings of Cabinet Bill No. 42 and the
deliberation on second reading in the Batasang Pambansa to rid the judiciary
of incompetent and corrupt judges and to restore confidence in the integrity
of the courts. The purge has been the constant subject of headlines and
editorials, with the Ministry of Justice's Integrity Council reportedly screening
and conducting "integrity tests as to new applicants and the incumbent
judges 20 and seeking "confidential information on corrupt and incompetent
judges to help the government purge the judiciary." 21 Prime Minister Cesar
Virata was quoted as saying that "there will be a purge of the corrupt and
the misfits' when the Judiciary Reorganization Act is signed into law by
President Marcos and implemented in coordination with the Supreme
Court." 22 The public respondents' answer sidesteps the issue of such purge
contravening the rudiments of a fair hearing and due process and submits
that "no term of office is sacrosanct when demanded before the altar of the
public good." The metropolitan papers reported the "anxiety gripping the
judiciary as the Ministry of Justice has reportedly been asked to collate
information 'on the performance of the judges and on the qualifications of
those slated to take over the positions of the incompetent, the inefficient or
those involved in irregularities. As stated in an editorial, 'Somehow, the
uncertainty that now hovers over the judiciary has unduly subjected the
judges to mental torture since they do not know when or whether the axe
will fall on them. Worse, the sword of Damocles hanging over their heads
could provoke them into seeking the help of people claiming to have
influence with the powers that be." 23

But Dean Cortez in her memorandum states that "However, nowhere on


public record is there hard evidence on this. The only figures given in the
course of the committee hearings were to the effect that out of some 1,700
members of the judiciary, between 10 to 15 were of the undesirable
category, i.e. misfit, incompetent or corrupts. (Barredo, J., before the
Committee on Justice, human Rights and Good Government, December 4,
1980)," and that "(I)f this be the case, the unprecedented, sweeping and
wholesale abolition of judicial offices becomes an arbitrary act, the effect of
which is to assert the power to remove all the incumbents guilty or innocent
without due process of law." Now would it be of any avail to beg the question
and assert that due process is not available in mass abolitions of courts.
Justice Barredo, however, without citing any hard evidence, refers in his
separate concurrence to twin objectives of getting rid of " structural
inadequacies of the system or of the cumbersomeness and technicalitypeppered and dragging procedural rules in force and of "a good number of
those occupying positions in the judiciary (who') make a mockery of justice
and take advantage of their office for personal ends He adds that "it is my
personal assessment of the present situation in our judiciary that its
reorganization has to be of necessity two-pronged, as I have just indicated,
for the most Ideal judicial system with the most perfect procedural rules
cannot satisfy the people and the interests of justice unless the men who
hold positions therein possess the character, competence and sense of
loyalty that can guarantee their devotion to duty and absolute impartiality,
nay, impregnability to all temptations of graft and corruption, including the
usual importunings and the fearsome albeit improper pressures of the
powers that be," 24 and invokes the adage of "grandes males, grandes
remedios" to now uphold the validity of the Act.
Former Senator Diokno in his memorandum anticipates the argument that
"great ills demand drastic cures" thus: "Drastic, yes but not unfair nor
unconstitutional. One does not improve courts by abolishing them, any more
than a doctor cures a patient by killing him. The ills the judiciary suffers from
were caused by impairing its independence; they will not be cured by totally
destroying that independence. To adopt such a course would only breed
more perversity in the administration of justice, just as the abuses of martial
rule have bred more subversion."
12. Finally, as stated by the 19-i 5 integrated Bar of the Philippines 2nd
House of Delegates, "It would, indeed, be most ironical if Judges who are
called upon to give due process cannot count it on themselves. Observance
of procedural due process in the separation of misfits from (he Judiciary is
the right way to attain a laudable objective. '
As stressed by the Chief Justice in the Fortun case, judges are entitled to the
cardinal principles of fairness and due process and the opportunity to be
heard and defend themselves against the accusations made against their
and not to be subjected to harassment and humiliation, and the Court will
repudiate the "oppressive exercise of legal authority." More so, are judges
entitled to such due process when what is at stake is their constitutionally

guaranteed security of tenure and non-impairment of the independence of


the judiciary and the proper exercise of the constitutional power exclusively
vested in the Supreme Court to discipline and remove judges after fair
hearing.
In sum, I see no reason to change the stand submitted by me to the
Presidential Committee on Judicial Reorganization that
Judges of inferior courts should not be summarily removed and branded for
life in such reorganization on the basis of confidential adverse reports as to
their performance, competence or integrity, save those who may voluntarily
resign from office upon being confronted with such reports against them.
The trouble with such ex-parte reports, without due process or hearing, has
been proven from our past experience where a number of honest and
competent judges were summarily removed while others who were generally
believed to be basket cases have remained in the service; and
The power of discipline and dismissal of judges of all inferior courts, from the
Court of Appeals down, has been vested by the 1973 Constitution in the
Supreme Court, and if the judiciary is to be strengthened, it should be left to
clean its own house upon complaint and with the cooperation of the as
grieved parties and after due process and hearing.
The constitutional confrontation and conflict may wen be avoided by holding
that since the changes and provisions of the challenged Act do not
substantially change the nature and functions of the "new courts" therein
provided as compared to the "abolished old courts" but provide for
procedural changes, fixed delineation of jurisdiction and increases in the
number of courts for a more effective and efficient disposition of court cases,
-the incumbent judges guaranteed security of tenure require that they be
retained in the corresponding "new courts."
Fernandez, J., concur.

[G.R. No. 152845. August 5, 2003]

DRIANITA BAGAOISAN, FELY MADRIAGA, SHIRLY TAGABAN, RICARDO


SARANDI, SUSAN IMPERIAL, BENJAMIN DEMDEM, RODOLFO
DAGA, EDGARDO BACLIG, GREGORIO LABAYAN, HILARIO
JEREZ, and MARIA CORAZON CUANANG, petitioners, vs.
NATIONAL TOBACCO ADMINISTRATION, represented by
ANTONIO DE GUZMAN and PERLITA BAULA, respondents.
DECISION
VITUG, J.:
President Joseph Estrada issued on 30 September 1998 Executive Order
No. 29, entitled Mandating the Streamlining of the National Tobacco
Administration (NTA), a government agency under the Department of
Agriculture. The order was followed by another issuance, on 27 October
1998, by President Estrada of Executive Order No. 36, amending Executive
Order No. 29, insofar as the new staffing pattern was concerned, by
increasing from four hundred (400) to not exceeding seven hundred fifty
(750) the positions affected thereby. In compliance therewith, the NTA
prepared and adopted a new Organization Structure and Staffing Pattern
(OSSP) which, on 29 October 1998, was submitted to the Office of the
President.
On 11 November 1998, the rank and file employees of NTA Batac,
among whom included herein petitioners, filed a letter-appeal with the Civil
Service Commission and sought its assistance in recalling the OSSP. On 04
December 1998, the OSSP was approved by the Department of Budget and
Management (DBM) subject to certain revisions. On even date, the NTA
created a placement committee to assist the appointing authority in the
selection and placement of permanent personnel in the revised OSSP. The
results of the evaluation by the committee on the individual qualifications of
applicants to the positions in the new OSSP were then disseminated and
posted at the central and provincial offices of the NTA.
On 10 June 1996, petitioners, all occupying different positions at the
NTA office in Batac, Ilocos Norte, received individual notices of termination of

their employment with the NTA effective thirty (30) days from receipt
thereof. Finding themselves without any immediate relief from their
dismissal from the service, petitioners filed a petition for certiorari,
prohibition andmandamus, with prayer for preliminary mandatory injunction
and/or temporary restraining order, with the Regional Trial Court (RTC) of
Batac, Ilocos Norte, and prayed 1) that a restraining order be immediately issued enjoining the respondents
from enforcing the notice of termination addressed individually to the
petitioners and/or from committing further acts of dispossession and/or
ousting the petitioners from their respective offices;
2) that a writ of preliminary injunction be issued against the respondents,
commanding them to maintain the status quo to protect the rights of the
petitioners pending the determination of the validity of the implementation
of their dismissal from the service; and
3) that, after trial on the merits, judgment be rendered declaring the notice
of termination of the petitioners illegal and the reorganization null and void
and ordering their reinstatement with backwages, if applicable, commanding
the respondents to desist from further terminating their services, and
making the injunction permanent.[1]
The RTC, on 09 September 2000, ordered the NTA to appoint petitioners
in the new OSSP to positions similar or comparable to their respective
former assignments. A motion for reconsideration filed by the NTA was
denied by the trial court in its order of 28 February 2001. Thereupon, the
NTA filed an appeal with the Court of Appeals, raising the following issues:
I. Whether or not respondents submitted evidence as proof that
petitioners, individually, were not the best qualified and
most deserving among the incumbent applicant-employees.
II. Whether or not incumbent permanent employees, including
herein petitioners, automatically enjoy a preferential right
and the right of first refusal to appointments/reappointments
in the new Organization Structure And Staffing Pattern
(OSSP) of respondent NTA.
III. Whether or not respondent NTA in implementing the mandated
reorganization pursuant to E.O. No. 29, as amended by E.O.
No. 36, strictly adhere to the implementing rules on
reorganization, particularly RA 6656 and of the Civil Service
Commission Rules on Government Reorganization.
IV. Whether or not the validity of E.O. Nos. 29 and 36 can be put in
issue in the instant case/appeal.[2]
On 20 February 2002, the appellate court rendered a decision reversing and
setting aside the assailed orders of the trial court.
Petitioners went to this Court to assail the decision of the Court of
Appeals, contending that I. The Court of Appeals erred in making a finding that went beyond
the issues of the case and which are contrary to those of the
trial court and that it overlooked certain relevant facts not
disputed by the parties and which, if properly considered,

would justify a different conclusion;


II. The Court of Appeals erred in upholding Executive Order Nos. 29
and 36 of the Office of the President which are mere
administrative issuances which do not have the force and
effect of a law to warrant abolition of positions and/or
effecting total reorganization;
III. The Court of Appeals erred in holding that petitioners removal
from the service is in accordance with law;
IV. The Court of Appeals erred in holding that respondent NTA was
not guilty of bad faith in the termination of the services of
petitioners; (and)
V. The Court of Appeals erred in ignoring case law/jurisprudence in
the abolition of an office.[3]
In its resolution of 10 July 2002, the Court required the NTA to file its
comment on the petition. On 18 November 2002, after the NTA had filed its
comment of 23 September 2002, the Court issued its resolution denying the
petition for failure of petitioners to sufficiently show any reversible error on
the part of the appellate court in its challenged decision so as to warrant the
exercise by this Court of its discretionary appellate jurisdiction. A motion for
reconsideration filed by petitioners was denied in the Courts resolution of 20
January 2002.
On 21 February 2003, petitioners submitted a Motion to Admit Petition
For En Banc Resolution of the case allegedly to address a basic question, i.e.,
the legal and constitutional issue on whether the NTA may be reorganized by
an executive fiat, not by legislative action.[4] In their Petition for an En Banc
Resolution petitioners would have it that 1. The Court of Appeals decision upholding the reorganization of the National
Tobacco Administration sets a dangerous precedent in that:
a) A mere Executive Order issued by the Office of the President and procured
by a government functionary would have the effect of a blanket authority to
reorganize a bureau, office or agency attached to the various executive
departments;
b) The President of the Philippines would have the plenary power to
reorganize the entire government Bureaucracy through the issuance of an
Executive Order, an administrative issuance without the benefit of due
deliberation, debate and discussion of members of both chambers of the
Congress of the Philippines;
c) The right to security of tenure to a career position created by law or
statute would be defeated by the mere adoption of an Organizational
Structure and Staffing Pattern issued pursuant to an Executive Order which
is not a law and could thus not abolish an office created by law;
2. The case law on abolition of an office would be disregarded, ignored and
abandoned if the Court of Appeals decision subject matter of this Petition
would remain undisturbed and untouched. In other words, previous doctrines
and precedents of this Highest Court would in effect be reversed and/or
modified with the Court of Appeals judgment, should it remain unchallenged.
3. Section 4 of Executive Order No. 245 dated July 24, 1987 (Annex D,
Petition), issued by the Revolutionary government of former President
Corazon Aquino, and the law creating NTA, which provides that the

governing body of NTA is the Board of Directors, would be rendered


meaningless, ineffective and a dead letter law because the challenged NTA
reorganization which was erroneously upheld by the Court of Appeals was
adopted and implemented by then NTA Administrator Antonio de Guzman
without the corresponding authority from the Board of Directors as
mandated therein. In brief, the reorganization is an ultra vires act of the NTA
Administrator.
4. The challenged Executive Order No. 29 issued by former President Joseph
Estrada but unsigned by then Executive Secretary Ronaldo Zamora would in
effect be erroneously upheld and given legal effect as to supersede, amend
and/or modify Executive Order No. 245, a law issued during the Freedom
Constitution of President Corazon Aquino. In brief, a mere executive order
would amend, supersede and/or render ineffective a law or statute. [5]
In order to allow the parties a full opportunity to ventilate their views on
the matter, the Court ultimately resolved to hear the parties in oral
argument. Essentially, the core question raised by them is whether or not
the President, through the issuance of an executive order, can validly carry
out the reorganization of the NTA.
Notwithstanding the apparent procedural lapse on the part of petitioner
to implead the Office of the President as party respondent pursuant to
Section 7, Rule 3, of the 1997 Revised Rules of Civil Procedure, [6] this Court
resolved to rule on the merits of the petition.
Buklod ng Kawaning EIIB vs. Zamora[7] ruled that the President, based
on existing laws, had the authority to carry out a reorganization in any
branch or agency of the executive department. In said case, Buklod ng
Kawaning EIIB challenged the issuance, and sought the nullification, of
Executive Order No. 191 (Deactivation of the Economic Intelligence and
Investigation Bureau) and Executive Order No. 223 (Supplementary
Executive Order No. 191 on the Deactivation of the Economic Intelligence
and Investigation Bureau and for Other Matters) on the ground that they
were issued by the President with grave abuse of discretion and in violation
of their constitutional right to security of tenure. The Court explained:
The general rule has always been that the power to abolish a public office is
lodged with the legislature. This proceeds from the legal precept that the
power to create includes the power to destroy. A public office is either
created by the Constitution, by statute, or by authority of law. Thus, except
where the office was created by the Constitution itself, it may be abolished
by the same legislature that brought it into existence.
The exception, however, is that as far as bureaus, agencies or offices in the
executive department are concerned, the Presidents power of control may
justify him to inactivate the functions of a particular office, or certain laws
may grant him the broad authority to carry out reorganization measures.
The case in point is Larin v. Executive Secretary [280 SCRA 713]. In this
case, it was argued that there is no law which empowers the President to
reorganize the BIR. In decreeing otherwise, this Court sustained the following
legal basis, thus:
`Initially, it is argued that there is no law yet which empowers the President
to issue E.O. No. 132 or to reorganize the BIR.

`We do not agree.


`x x x x x x
`Section 48 of R.A. 7645 provides that:
``Sec. 48. Scaling Down and Phase Out of Activities of Agencies Within the
Executive Branch. The heads of departments, bureaus and offices and
agencies are hereby directed to identify their respective activities which are
no longer essential in the delivery of public services and which may be
scaled down, phased out or abolished, subject to civil service rules and
regulations. x x x. Actual scaling down, phasing out or abolition of the
activities shall be effected pursuant to Circulars or Orders issued for the
purpose by the Office of the President.
`Said provision clearly mentions the acts of `scaling down, phasing out and
abolition of offices only and does not cover the creation of offices or transfer
of functions. Nevertheless, the act of creating and decentralizing is included
in the subsequent provision of Section 62 which provides that:
``Sec. 62. Unauthorized organizational changes. Unless otherwise created
by law or directed by the President of the Philippines, no organizational unit
or changes in key positions in any department or agency shall be authorized
in their respective organization structures and be funded from
appropriations by this Act.
`The foregoing provision evidently shows that the President is authorized to
effect organizational changes including the creation of offices in the
department or agency concerned.
`x x x x x x
`Another legal basis of E.O. No. 132 is Section 20, Book III of E.O. No. 292
which states:
``Sec. 20. Residual Powers. Unless Congress provides otherwise, the
President shall exercise such other powers and functions vested in the
President which are provided for under the laws and which are not
specifically enumerated above or which are not delegated by the President
in accordance with law.
`This provision speaks of such other powers vested in the President under
the law. What law then gives him the power to reorganize? It is Presidential
Decree No. 1772 which amended Presidential Decree No. 1416. These
decrees expressly grant the President of the Philippines the continuing
authority to reorganize the national government, which includes the power
to group, consolidate bureaus and agencies, to abolish offices, to transfer
functions, to create and classify functions, services and activities and to
standardize salaries and materials. The validity of these two decrees are
unquestionable. The 1987 Constitution clearly provides that `all laws,
decrees, executive orders, proclamations, letter of instructions and other
executive issuances not inconsistent with this Constitution shall remain
operative until amended, repealed or revoked. So far, there is yet no law
amending or repealing said decrees.
Now, let us take a look at the assailed executive order.
In the whereas clause of E.O. No. 191, former President Estrada anchored his
authority to deactivate EIIB on Section 77 of Republic Act 8745 (FY 1999
General Appropriations Act), a provision similar to Section 62 of R.A. 7645

quoted in Larin, thus:


`Sec. 77. Organized Changes. Unless otherwise provided by law or directed
by the President of the Philippines, no changes in key positions or
organizational units in any department or agency shall be authorized in their
respective organizational structures and funded from appropriations
provided by this Act.
We adhere to the x x x ruling in Larin that this provision recognizes the
authority of the President to effect organizational changes in the department
or agency under the executive structure. Such a ruling further finds support
in Section 78 of Republic Act No. 8760. Under this law, the heads of
departments, bureaus, offices and agencies and other entities in the
Executive Branch are directed (a) to conduct a comprehensive review of this
respective mandates, missions, objectives, functions, programs, projects,
activities and systems and procedures; (b) identify activities which are no
longer essential in the delivery of public services and which may be scaled
down, phased-out or abolished; and (c) adopt measures that will result in the
streamlined organization and improved overall performance of their
respective agencies. Section 78 ends up with the mandate that the actual
streamlining and productivity improvement in agency organization and
operation shall be effected pursuant to Circulars or Orders issued for the
purpose by the Office of the President. The law has spoken clearly. We are
left only with the duty to sustain.
But of course, the list of legal basis authorizing the President to reorganize
any department or agency in the executive branch does not have to end
here. We must not lose sight of the very source of the power that which
constitutes an express grant of power. Under Section 31, Book III of
Executive Order No. 292 (otherwise known as the Administrative Code of
1987), the President, subject to the policy in the Executive Office and in
order to achieve simplicity, economy and efficiency, shall have the
continuing authority to reorganize the administrative structure of the Office
of the President. For this purpose, he may transfer the functions of other
Departments or Agencies to the Office of the President. In Canonizado vs.
Aguirre [323 SCRA 312], we ruled that reorganization involves the reduction
of personnel, consolidation of offices, or abolition thereof by reason of
economy or redundancy of functions. It takes place when there is an
alteration of the existing structure of government offices or units therein,
including the lines of control, authority and responsibility between them. The
EIIB is a bureau attached to the Department of Finance. It falls under the
Office of the President. Hence, it is subject to the Presidents continuing
authority to reorganize.
It having been duly established that the President has the authority to carry
out reorganization in any branch or agency of the executive department,
what is then left for us to resolve is whether or not the reorganization is
valid. In this jurisdiction, reorganizations have been regarded as valid
provided they are pursued in good faith. Reorganization is carried out in
`good faith if it is for the purpose of economy or to make bureaucracy more
efficient. Pertinently, Republic Act No. 6656 provides for the circumstances
which may be considered as evidence of bad faith in the removal of civil
service employees made as a result of reorganization, to wit: (a) where there
is a significant increase in the number of positions in the new staffing
pattern of the department or agency concerned; (b) where an office is

abolished and another performing substantially the same functions is


created; (c) where incumbents are replaced by those less qualified in terms
of status of appointment, performance and merit; (d) where there is a
classification of offices in the department or agency concerned and the
reclassified offices perform substantially the same functions as the original
offices, and (e) where the removal violates the order of separation.[8]
The Court of Appeals, in its now assailed decision, has found no
evidence of bad faith on the part of the NTA; thus In the case at bar, we find no evidence that the respondents committed bad
faith in issuing the notices of non-appointment to the petitioners.
Firstly, the number of positions in the new staffing pattern did not increase.
Rather, it decreased from 1,125 positions to 750. It is thus natural that ones
position may be lost through the removal or abolition of an office.
Secondly, the petitioners failed to specifically show which offices were
abolished and the new ones that were created performing substantially the
same functions.
Thirdly, the petitioners likewise failed to prove that less qualified employees
were appointed to the positions to which they applied.
x x x x x x x x x.
Fourthly, the preference stated in Section 4 of R.A. 6656, only means that
old employees should be considered first, but it does not necessarily follow
that they should then automatically be appointed. This is because the law
does not preclude the infusion of new blood, younger dynamism, or
necessary talents into the government service, provided that the acts of the
appointing power are bonafide for the best interest of the public service and
the person chosen has the needed qualifications.[9]
These findings of the appellate court are basically factual which this Court
must respect and be held bound.
It is important to emphasize that the questioned Executive
Orders No. 29 and No. 36 have not abolished the National Tobacco
Administration but merely mandated its reorganization through the
streamlining or reduction of its personnel. Article VII, Section 17,[10] of
the Constitution, expressly grants the President control of all executive
departments, bureaus, agencies and offices which may justify an executive
action to inactivate the functions of a particular office or to carry out
reorganization measures under a broad authority of law.[11]Section 78 of the
General Provisions of Republic Act No. 8522 (General Appropriations Act of
FY 1998) has decreed that the President may direct changes in the
organization and key positions in any department, bureau or agency
pursuant to Article VI, Section 25, [12] of the Constitution, which grants to the
Executive Department the authority to recommend the budget necessary for
its operation. Evidently, this grant of power includes the authority to
evaluate each and every government agency, including the determination of
the most economical and efficient staffing pattern, under the Executive
Department.
In the recent case of Rosa Ligaya C. Domingo, et al. vs. Hon. Ronaldo D.

Zamora, in his capacity as the Executive Secretary, et al.,[13] this Court has
had occasion to also delve on the Presidents power to reorganize the Office
of the President under Section 31(2) and (3) of Executive Order No. 292 and
the power to reorganize the Office of the President Proper. The Court has
there observed:
x x x. Under Section 31(1) of EO 292, the President can reorganize the Office
of the President Proper by abolishing, consolidating or merging units, or by
transferring functions from one unit to another. In contrast, under Section
31(2) and (3) of EO 292, the Presidents power to reorganize offices outside
the Office of the President Proper but still within the Office of the President is
limited to merely transferring functions or agencies from the Office of the
President to Departments or Agencies, and vice versa.
The provisions of Section 31, Book III, Chapter 10, of Executive Order No.
292 (Administrative Code of 1987), above-referred to, reads thusly:
SEC. 31. Continuing Authority of the President to Reorganize his Office. The
President, subject to the policy in the Executive Office and in order to
achieve simplicity, economy and efficiency, shall have continuing authority
to reorganize the administrative structure of the Office of the President. For
this purpose, he may take any of the following actions:
(1) Restructure the internal organization of the Office of the President
Proper, including the immediate Offices, the Presidential Special
Assistants/Advisers System and the Common Staff Support System, by
abolishing, consolidating or merging units thereof or transferring functions
from one unit to another;
(2) Transfer any function under the Office of the President to any other
Department or Agency as well as transfer functions to the Office of the
President from other Departments and Agencies; and
(3) Transfer any agency under the Office of the President to any other
department or agency as well as transfer agencies to the Office of the
President from other departments and agencies.
The first sentence of the law is an express grant to the President of a
continuing authority to reorganize the administrative structure of
the Office of the President. The succeeding numbered paragraphs are
not in the nature of provisos that unduly limit the aim and scope of the grant
to the President of the power to reorganize but are to be viewed in
consonance therewith. Section 31(1) of Executive Order No. 292 specifically
refers to the Presidents power to restructure the internal organization of the
Office of the President Proper, by abolishing, consolidating or merging units
hereof or transferring functions from one unit to another, while Section 31(2)
and (3) concern executive offices outside the Office of the President
Properallowing the President to transfer any function under the Office of the
President to any other Department or Agency and vice-versa, and the
transfer of any agency under the Office of the President to any other
department or agency and vice-versa.[14]
In the present instance, involving neither an abolition nor transfer of
offices, the assailed action is a mere reorganization under the general
provisions of the law consisting mainly ofstreamlining the NTA in the
interest of simplicity, economy and efficiency. It is an act well within the

authority of President motivated and carried out, according to the findings of


the appellate court, in good faith, a factual assessment that this Court could
only but accept.[15]
In passing, relative to petitioners Motion for an En Banc Resolution of
the Case, it may be well to remind counsel, that the Court En Banc is not an
appellate tribunal to which appeals from a Division of the Court may be
taken. A Division of the Court is the Supreme Court as fully and veritably as
the Court En Banc itself and a decision of its Division is as authoritative and
final as a decision of the Court En Banc. Referrals of cases from a Division to
the Court En Banc do not take place as just a matter of routine but only on
such specified grounds as the Court in its discretion may allow. [16]
WHEREFORE, the Motion to Admit Petition for En Banc resolution and
the Petition for an En Banc Resolution are DENIED for lack of merit. Let entry
of judgment be made in due course. No costs.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Ynares-Santiago, Carpio, and Azcuna, JJ.,
concur.

The DENR hereby adopts a policy to establish at least one Community


Environment and Natural Resources Office (CENRO) or Administrative Unit
per Congressional District except in the Autonomous Region of Muslim
Mindanao (ARMM) and the National Capital Region (NCR). The Regional
Executive Directors (REDs) are hereby authorized to realign/relocate existing
CENROs and implement this policy in accordance with the attached
distribution list per region which forms part of this Order. Likewise, the
following realignment and administrative arrangements are hereby adopted:
xxxxxxxxx
1.6. The supervision of the Provinces of South Cotabato and Sarangani shall
be transferred from Region XI to XII.[4]

[G.R. No. 149724. August 19, 2003]

DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES,


represented herein by its Secretary, HEHERSON T. ALVAREZ,
petitioner, vs. DENR REGION 12 EMPLOYEES, represented by
BAGUIDALI KARIM, Acting President of COURAGE (DENR
Region 12 Chapter), respondents.
DECISION
YNARES-SANTIAGO, J.:
This is a petition for review assailing the Resolutions dated May 31,
2000[1] of the Court of Appeals which dismissed the petition for certiorari in
CA-G.R. SP No. 58896, and its Resolution dated August 20, 2001 [2], which
denied the motion for reconsideration.
The facts are as follows:
On November 15, 1999, Regional Executive Director of the Department
of Environment and Natural Resources for Region XII, Israel C. Gaddi, issued
a Memorandum[3] directing the immediate transfer of the DENR XII Regional
Offices from Cotabato City to Koronadal (formerly Marbel), South Cotabato.
The Memorandum was issued pursuant to DENR Administrative Order No.
99-14, issued by then DENR Secretary Antonio H. Cerilles, which reads in
part:
Subject: Providing for the Redefinition of Functions and Realignment
of Administrative Units in the Regional and Field Offices:
Pursuant to Executive Order No. 192, dated June 10, 1987 and as an interim
administrative arrangement to improve the efficiency and effectiveness of
the Department of Environment and Natural Resources (DENR) in delivering
its services pending approval of the government-wide reorganization by
Congress, the following redefinition of functions and realignment of
administrative units in the regional and field offices are hereby promulgated:
Section 1. Realignment of Administrative Units:

Respondents, employees of the DENR Region XII who are members of


the employees association, COURAGE, represented by their Acting President,
Baguindanai A. Karim, filed with the Regional Trial Court of Cotabato, a
petition for nullity of orders with prayer for preliminary injunction.
On December 8, 1999, the trial court issued a temporary restraining
order enjoining petitioner from implementing the assailed Memorandum.
The dispositive portion of the Order reads:
WHEREFORE, defendants DENR Secretary Antonio H. Cerilles and Regional
Executive Director Israel C. Gaddi are hereby ordered to cease and desist
from doing the act complained of, namely, to stop the transfer of DENR
[Region] 12 offices from Cotabato City to Korandal (Marbel), South Cotabato.
xxx xxx xxx.
SO ORDERED.[5]
Petitioner filed a Motion for Reconsideration with Motion to Dismiss,
raising the following grounds:
I.
The power to transfer the Regional Office of the Department of Environment
and Natural Resources (DENR) is executive in nature.
II.
The decision to transfer the Regional Office is based on Executive Order No.
429, which reorganized Region XII.
III.
The validity of EO 429 has been affirmed by the Honorable Supreme Court in
the Case of Chiongbian vs. Orbos (1995) 245 SCRA 255.
IV.
Since the power to reorganize the Administrative Regions is Executive in
Nature citing Chiongbian, the Honorable Court has no jurisdiction to
entertain this petition.[6]
On January 14, 2000, the trial court rendered judgment, the dispositive
portion of which reads:

CONSEQUENTLY, order is hereby issued ordering the respondents herein to


cease and desist from enforcing their Memorandum Order dated November
15, 1999 relative to the transfer of the DENR Regional Offices from Region
12 to Region 11 at Koronadal, South Cotabato for being bereft of legal basis
and issued with grave abuse of discretion amounting to lack or excess of
jurisdiction on their part, and they are further ordered to return back the
seat of the DENR Regional Offices 12 to Cotabato City.
SO ORDERED.[7]
Petitioners motion for reconsideration was denied in an Order dated
April 10, 2000. A petition for certiorari under Rule 65 was filed before the
Court of Appeals, docketed as CA-G.R. SP No. 58896. The petition was
dismissed outright for: (1) failure to submit a written explanation why
personal service was not done on the adverse party; (2) failure to attach
affidavit of service; (3) failure to indicate the material dates when copies of
the orders of the lower court were received; (4) failure to attach certified
true copy of the order denying petitioners motion for reconsideration; (5) for
improper verification, the same being based on petitioners knowledge and
belief, and (6) wrong remedy of certiorari under Rule 65 to substitute a lost
appeal.[8]
The motion for reconsideration was denied in a resolution dated August
20, 2001.[9] Hence, this petition based on the following assignment of errors:
I
RULES OF PROCEDURE CAN NOT BE USED TO DEFEAT THE ENDS OF
SUBSTANTIAL JUSTICE
II
THE DECISION OF THE LOWER COURT DATED 14 JANUARY 2000 WHICH WAS
AFFIRMED IN THE QUESTIONED RESOLUTIONS OF THE COURT OF APPEALS
DATED 31 MAY 2000 AND 20 AUGUST 2001 IS PATENTLY ILLEGAL AND
SHOULD BE NULLIFIED, CONSIDERING THAT:
A. RESPONDENTS HAVE NO CAUSE OF ACTION AGAINST
PETITIONER AS THEY HAVE NO RIGHT TO CAUSE THE
DENR REGION 12 OFFICE TO REMAIN IN COTABATO
CITY.
B. THE STATE DID NOT GIVE ITS CONSENT TO BE SUED.
C. THE DECISION OF THE LOWER COURT DATED 14 JANUARY
2000 IS CONTRARY TO THE RULE OF PRESUMPTION
OF REGULARITY IN THE PERFORMANCE OF OFFICIAL
FUNCTIONS.
D. IN ANY EVENT, THE DECISION OF THE LOWER COURT
DATED 14 JANUARY 2000 IS CONTRARY TO THE
LETTER AND INTENT OF EXECUTIVE ORDER NO. 429
AND REPUBLIC ACT NO. 6734.
E. THE DETERMINATION OF THE PROPRIETY AND PRACTICALITY
OF THE TRANSFER OF REGIONAL OFFICES IS
INHERENTLY EXECUTIVE, AND THEREFORE, NONJUSTICIABLE.[10]

In essence, petitioner argues that the trial court erred in enjoining it


from causing the transfer of the DENR XII Regional Offices, considering that
it was done pursuant to DENR Administrative Order 99-14.
The issues to be resolved in this petition are: (1) Whether DAO-99-14
and the Memorandum implementing the same were valid; and (2) Whether
the DENR Secretary has the authority to reorganize the DENR.
Prefatorily, petitioner prays for a liberal application of procedural rules
considering the greater interest of justice.
This Court is fully aware that procedural rules are not to be simply
disregarded for these prescribed procedures ensure an orderly and speedy
administration of justice. However, it is equally true that litigation is not
merely a game of technicalities. Time and again, courts have been guided
by the principle that the rules of procedure are not to be applied in a very
rigid and technical manner, as rules of procedure are used only to help
secure and not to override substantial justice. [11] Thus, if the application of
the Rules would tend to frustrate rather than promote justice, it is always
within the power of this Court to suspend the rules, or except a particular
case from its operation.[12]
Despite the presence of procedural flaws, we find it necessary to
address the issues because of the demands of public interest, including the
need for stability in the public service and the serious implications this case
may cause on the effective administration of the executive department.
Although no appeal was made within the reglementary period to appeal,
nevertheless, the departure from the general rule that the extraordinary writ
of certiorari cannot be a substitute for the lost remedy of appeal is justified
because the execution of the assailed decision would amount to an
oppressive exercise of judicial authority.[13]
Petitioner maintains that the assailed DAO-99-14 and the implementing
memorandum were valid and that the trial court should have taken judicial
notice of Republic Act No. 6734, otherwise known as An Organic Act for the
Autonomous Region in Muslim Mindanao, and its implementing Executive
Order 429,[14] as the legal bases for the issuance of the assailed DAO-99-14.
Moreover, the validity of R.A. No. 6734 and E.O. 429 were upheld in the case
of Chiongbian v. Orbos.[15] Thus, the respondents cannot, by means of an
injunction, force the DENR XII Regional Offices to remain in Cotabato City, as
the exercise of the authority to transfer the same is executive in nature.
It is apropos to reiterate the elementary doctrine of qualified political
agency, thus:
Under this doctrine, which recognizes the establishment of a single
executive, all executive and administrative organizations are adjuncts of the
Executive Department, the heads of the various executive departments are
assistants and agents of the Chief Executive, and, except in cases where the
Chief Executive is required by the Constitution or law to act in person or the
exigencies of the situation demand that he act personally, the multifarious
executive and administrative functions of the Chief Executive are performed
by and through the executive departments, and the acts of the Secretaries

of such departments, performed and promulgated in the regular course of


business, are, unless disapproved or reprobated by the Chief Executive,
presumptively the acts of the Chief Executive.[16]
This doctrine is corollary to the control power of the President as
provided for under Article VII, Section 17 of the 1987 Constitution, which
reads:
Sec. 17. The President shall have control of all the executive departments,
bureaus, and offices. He shall ensure that the laws be faithfully executed.
However, as head of the Executive Department, the President cannot
be expected to exercise his control (and supervisory) powers personally all
the time. He may delegate some of his powers to the Cabinet members
except when he is required by the Constitution to act in person or the
exigencies of the situation demand that he acts personally. [17]
In Buklod ng Kawaning EIIB v. Zamora, [18] this Court upheld the
continuing authority of the President to carry out the reorganization in any
branch or agency of the executive department. Such authority includes the
creation, alteration or abolition of public offices.[19] The Chief Executives
authority to reorganize the National Government finds basis in Book III,
Section 20 of E.O. No. 292, otherwise known as the Administrative Code of
1987, viz:
Section 20. Residual Powers. Unless Congress provides otherwise, the
President shall exercise such other powers and functions vested in the
President which are provided for under the laws and which are not
specifically enumerated above or which are not delegated by the President
in accordance with law.
Further, in Larin v. Executive Secretary, [20] this Court had occasion to
rule:
This provision speaks of such other powers vested in the President under the
law. What law then gives him the power to reorganize? It is Presidential
Decree No. 1772 which amended Presidential Decree No. 1416. These
decrees expressly grant the President of the Philippines the continuing
authority to reorganize the national government, which includes the power
to group, consolidate bureaus and agencies, to abolish offices, to transfer
functions, to create and classify functions, services and activities and to
standardize salaries and materials. The validity of these two decrees is
unquestionable. The 1987 Constitution clearly provides that all laws,
decrees, executive orders, proclamations, letters of instructions and other
executive issuances not inconsistent with this Constitution shall remain
operative until amended, repealed or revoked. So far, there is yet no law
amending or repealing said decrees.
Applying the doctrine of qualified political agency, the power of the
President to reorganize the National Government may validly be delegated
to his cabinet members exercising control over a particular executive
department. Thus, in DOTC Secretary v. Mabalot,[21] we held that the
President through his duly constituted political agent and alter ego, the

DOTC Secretary may legally and validly decree the reorganization of the
Department, particularly the establishment of DOTC-CAR as the LTFRB
Regional Office at the Cordillera Administrative Region, with the concomitant
transfer and performance of public functions and responsibilities
appurtenant to a regional office of the LTFRB.
Similarly, in the case at bar, the DENR Secretary can validly reorganize
the DENR by ordering the transfer of the DENR XII Regional Offices from
Cotabato City to Koronadal, South Cotabato. The exercise of this authority by
the DENR Secretary, as an alter ego, is presumed to be the acts of the
President for the latter had not expressly repudiated the same.
The trial court should have taken judicial notice of R.A. No. 6734, as
implemented by E.O. No. 429, as legal basis of the Presidents power to
reorganize the executive department, specifically those administrative
regions which did not vote for their inclusion in the ARMM. It is axiomatic
that a court has the mandate to apply relevant statutes and jurisprudence in
determining whether the allegations in a complaint establish a cause of
action. While it focuses on the complaint, a court clearly cannot disregard
decisions material to the proper appreciation of the questions before it. [22] In
resolving the motion to dismiss, the trial court should have taken cognizance
of the official acts of the legislative, executive, and judicial departments
because they are proper subjects of mandatory judicial notice as provided
by Section 1 of Rule 129 of the Rules of Court, to wit:
A court shall take judicial notice, without the introduction of evidence, of the
existence and territorial extent of states, their political history, forms of
government and symbols of nationality, the law of nations, the admiralty
and maritime courts of the world and their seals, the political constitution
and history of the Philippines, the official acts of the legislative,
executive and judicial departments of the Philippines, the laws of
nature, the measure of time, and the geographical divisions. (Emphasis
supplied)
Article XIX, Section 13 of R.A. No. 6734 provides:
SECTION 13. The creation of the Autonomous Region in Muslim Mindanao
shall take effect when approved by a majority of the votes cast by the
constituent units provided in paragraph (2) of Sec. 1 of Article II of this Act in
a plebiscite which shall be held not earlier than ninety (90) days or later
than one hundred twenty (120) days after the approval of this Act: Provided,
That only the provinces and cities voting favorably in such plebiscite shall be
included in the Autonomous Region in Muslim Mindanao. The provinces and
cities which in the plebiscite do not vote for inclusion in the Autonomous
Region shall remain in the existing administrative regions: Provided,
however, That the President may, by administrative determination, merge
the existing regions.
Pursuant to the authority granted by the aforequoted provision, then
President Corazon C. Aquino issued on October 12, 1990 E.O. 429, Providing
for the Reorganization of the Administrative Regions in Mindanao. Section 4
thereof provides:

SECTION 4. REGION XII, to be known as CENTRAL MINDANAO, shall include


the following provinces and cities:
Provinces
Sultan Kudarat
Cotabato
South Cotabato
Cities
Cotabato
General Santos
The Municipality of Koronadal (Marinduque) in South Cotabato shall serve as
the regional center.
In Chiongbian v. Orbos, this Court stressed the rule that the power of
the President to reorganize the administrative regions carries with it the
power to determine the regional centers. In identifying the regional centers,
the President purposely intended the effective delivery of the field services
of government agencies.[23] The same intention can be gleaned from the
preamble of the assailed DAO-99-14 which the DENR sought to achieve, that
is, to improve the efficiency and effectiveness of the DENR in delivering its
services.
It may be true that the transfer of the offices may not be timely
considering that: (1) there are no buildings yet to house the regional offices
in Koronadal, (2) the transfer falls on the month of Ramadan, (3) the children
of the affected employees are already enrolled in schools in Cotabato City,
(4) the Regional Development Council was not consulted, and (5) the
Sangguniang Panglungsond, through a resolution, requested the DENR
Secretary to reconsider the orders. However, these concern issues
addressed to the wisdom of the transfer rather than to its legality. It is basic
in our form of government that the judiciary cannot inquire into the wisdom
or expediency of the acts of the executive or the legislative department, [24]
for each department is supreme and independent of the others, and each is
devoid of authority not only to encroach upon the powers or field of action
assigned to any of the other department, but also to inquire into or pass
upon the advisability or wisdom of the acts performed, measures taken or
decisions made by the other departments.[25]
The Supreme Court should not be thought of as having been tasked
with the awesome responsibility of overseeing the entire bureaucracy.
Unless there is a clear showing of constitutional infirmity or grave abuse of
discretion amounting to lack or excess of jurisdiction, the Courts exercise of
the judicial power, pervasive and limitless it may seem to be, still must
succumb to the paramount doctrine of separation of powers. [26] After a
careful review of the records of the case, we find that this jurisprudential
element of abuse of discretion has not been shown to exist.
WHEREFORE, in view of the foregoing, the petition for review is
GRANTED. The resolutions of the Court of Appeals in CA-G.R. SP No. 58896
dated May 31, 2000 and August 20, 2001, as well as the decision dated
January 14, 2000 of the Regional Trial Court of Cotabato City, Branch 15, in
Civil Case No 389, are REVERSED and SET ASIDE. The permanent injunction,
which enjoined the petitioner from enforcing the Memorandum Order of the

DENR XII Regional Executive Director, is LIFTED.


SO ORDERED.
Vitug, (Acting Chairman), Carpio, and Azcuna, JJ., concur.
Davide, Jr., C.J., (Chairman), abroad, on official business.
[G.R. Nos. L-8895 & L-9191. April 30, 1957.]
SALVADOR ARANETA, ETC., ET AL., Petitioners, v. THE HON. MAGNO
S. GATMAITAN, ETC., ET AL., Respondents. EXEQUIEL SORIANO, ET
AL., Petitioners-Appellees, v. SALVADOR ARANETA, ETC., ET AL.,
Respondents-Appellants.
Solicitor General Ambrosio Padilla, Assistant Solicitor General Jose
G. Bautista and Solicitor Troadio T. Quiazon, for Petitioners.
San Juan, Africa & Benedicto for Respondents.
SYLLABUS
1.
PLEADING
AND
PRACTICE;
ACTIONS;
DECLARATORY
RELIEF;
CONSTITUTIONALITY OF EXECUTIVE ORDER PROPER SUBJECT OF ACTION.
The constitutionality of an executive order can be ventilated in a declaratory
relief proceeding. (Hilado v. De la Costa, 83 Phil., 471).
2. ID.; APPEALS; EFFECT ON EXECUTION OF JUDGMENT; EXCEPTION. It is
an elementary rule of procedure that an appeal stays the execution of a
judgment. However in injunction, receivership and patent accounting cases,
a judgment shall not be stayed after its rendition and before an appeal is
taken or during the pendency of an appeal unless otherwise ordered by the
court. (Sec. 4, Rule 39, Rules of Court).
3. ID.; ID.; ID.; INJUNCTION; ISSUANCE RESTS IN SOUND DISCRETION OF
COURT; CASE AT BAR. The States counsel contends that while judgment
could be stayed in injunction, receivership and patent accounting cases, the
present complaint, although styled "Injunction and/or Declaratory Relief with
Preliminary Injunction," is one for declaratory relief, there being no
allegation sufficient to convince the Court that the plaintiffs intended it to be
one for injunction. But aside from the title of the complaint, plaintiffs pray for
the declaration of the nullity of Executive Orders Nos. 22, 66 and 80; the
issuance of a writ of preliminary injunction, and for such other relief as may
be deemed just and equitable. This Court has already held that there are
only two requisites to be satisfied if an injunction is to issue, namely, the
existence of the right sought to be protected, and that the acts against
which the injunction is to be directed are violative of said right (North Negros
Sugar Co., Inc. v. Serafin Hidalgo, 63 Phil., 664). There is no question that in
the case at bar, at least 11 of the complaining trawl operators were duly
licensed to operate in any of the national waters of the Philippines, and it is

undeniable that the executive enactments sought to be annulled are


detrimental to their interests. And considering further that the granting or
refusal of an injunction, whether temporary or permanent, rests in the sound
discretion of the Court, taking into account the circumstances and the facts
of the particular case (Rodulfa v. Alfonso, 42 Off. Gaz., 2439), the trial Court
committed no abuse of discretion when it treated the complaint as one for
injunction and declaratory relief and executed the judgment pursuant to the
provisions of section 4 of Rule 39 of the Rules of Court.

Order No. 80 absolutely prohibiting fishing by means of trawls in all waters


comprised within the San Miguel Bay, he did nothing but show an anxious
regard for the welfare of the inhabitants of said coastal province and dispose
of issues of general concern (Section 63, Revised Administrative Code) which
were in consonance and strict conformity with the law. The exercise of such
authority did not, therefore, constitute an undue delegation of the powers of
Congress.

4. ID.; ID.; ACTION AGAINST GOVERNMENT OFFICIALS IS ONE AGAINST


GOVERNMENT; BOND REQUIREMENT. An Action against Government
officials sued in their official capacity, is essentially one against the
Government, and to require these officials to file a bond would be indirectly
a requirement against the Government, for as regards bonds or damages
that may be proved, if any, the real party in interest would be the Republic
of the Philippines (L. S. Moom and Co. v. Harrison, 43 Phil., 39; Salgado v.
Ramos, 64 Phil., 724-727, and others). The reason for this pronouncement is
understandable; the State undoubtedly is always solvent (Tolentino v. Carlos,
66 Phil., 140; Government of the P. I. v. Judge of First Instance of Iloilo, 34
Phil., 157, cited in Joaquin Gutierrez Et. Al. v. Camus Et. Al., 96 Phil., 114).

DECISION

5. FISHERIES LAW; TRAWL FISHING; WHO MAY BAN OR RESTRICT TRAWL


FISHING; POWER OF PRESIDENT THROUGH EXECUTIVE ORDERS, TO BAN
TRAWL FISHING. Under sections 75 and 83 of the Fisheries Law, the
restriction and banning of trawl fishing from all Philippine waters come
within the powers of the Secretary of Agriculture and Natural Resources,
who, in compliance with his duties may even cause the criminal prosecution
of those who in violation of his instructions, regulations or orders are caught
fishing with trawls in Philippine waters. However, as the Secretary of
Agriculture and Natural Resources exercises its functions subject to the
general supervision and control of the President of the Philippines (Section
75, Revised Administrative Code), the President can exercise the same
power and authority through executive orders, regulations, decrees and
proclamations upon recommendation of the Secretary concerned (Section
79-A, Revised Administrative Code). Hence, Executive Orders Nos. 22, 66
and 80, series of 1954, restricting and banning of trawl fishing from San
Miguel Bay (Camarines) are valid and issued by authority of law.
6. ID.; ID.; ID.; ID.; EXERCISE OF AUTHORITY BY THE PRESIDENT DOES NOT
CONSTITUTE UNDUE DELEGATION OF LEGISLATIVE POWERS. For the
protection of fry or fish eggs and small and immature fishes, Congress
intended with the promulgation of Act No. 4003, to prohibit the use of any
fish net or fishing device like trawl nets that could endanger and deplete the
supply of sea food, and to that end authorized the Secretary of Agriculture
and Natural Resources to provide by regulations such restrictions as he
deemed necessary in order to preserve the aquatic resources of the land. In
so far as the protection of fish fry or fish eggs is concerned the Fisheries Act
is complete in itself leaving only to the Secretary of Agriculture & Natural
Resources the promulgation of rules and regulations to carry into effect the
legislative intent. Consequently, when the President, in response to the
clamor of the people and authorities of Camarines Sur issued Executive

FELIX, J.:
San Miguel Bay, located between the provinces of Camarines Norte and
Camarines Sur, a part of the National waters of the Philippines with an
extension of about 250 square miles and an average depth of approximately
6 fathoms (Otter trawl explorations in Philippine waters p. 21, Exh. B), is
considered as the most important fishing area in the Pacific side of the Bicol
region. Sometime in 1950, trawl 1 operators from Malabon, Navotas and
other places migrated to this region most of them settling at Sabang,
Calabanga, Camarines Sur, for the purpose of using this particular method of
fishing in said bay. On account of the belief of sustenance fishermen that the
operation of this kind of gear caused the depletion of the marine resources
of that area, there arose a general clamor among the majority of the
inhabitants of coastal towns to prohibit the operation of trawls in San Miguel
Bay. This move was manifested in the resolution of December 18, 1953 (Exh.
F), passed by the Municipal Mayors League condemning the operation of
trawls as the cause of the wanton destruction of the shrimp specie and
resolving to petition the President of the Philippines to regulate fishing in
San Miguel Bay by declaring it closed for trawl fishing at a certain period of
the year. In another resolution dated March 27, 1954, the same League of
Municipal Mayors prayed the President to protect them and the fish
resources of San Miguel Bay by banning the operation of trawls therein (Exh.
4). The Provincial Governor also made proper representations to this effect
and petitions in behalf of the non-trawl fishermen were likewise presented to
the President by social and civic organizations as the NAMFREL (National
Movement for Free Elections) and the COMPADRE (Committee for Philippine
Action in Development, Reconstruction and Education), recommending the
cancellation of the licenses of trawl operators after investigation, if such
inquiry would substantiate the charges that the operation of said fishing
method was detrimental to the welfare of the majority of the inhabitants
(Exh. 2).
In response to these pleas, the President issued on April 5, 1954, Executive
Order No. 22 (50 Off. Gaz., 1421) prohibiting the use of trawls in San Miguel
Bay, but said executive order was amended by Executive Order No. 66,
issued on September 23, 1954 (50 Off. Gaz., 4037), apparently in answer to
a resolution of the Provincial Board of Camarines Sur recommending the
allowance of trawl fishing during the typhoon season only. On November 2,

1954, however, Executive Order No. 80 (50 Off. Gaz., 5198) was issued
reviving Executive Order No. 22, to take effect after December 31, 1954.
A group of Otter trawl operators took the matter to the court by filing a
complaint for injunction and/or declaratory relief with preliminary injunction
with the Court of First Instance of Manila, docketed as Civil Case No. 24867,
praying that a writ of preliminary injunction be issued to restrain the
Secretary of Agriculture and Natural Resources and the Director of Fisheries
from enforcing said executive order; to declare the same null and void, and
for such other relief as may be just and equitable in the premises.
The Secretary of Agriculture and Natural Resources and the Director of
Fisheries, represented by the Legal Adviser of said Department and a Special
Attorney of the Office of the Solicitor General, answered the complaint
alleging, among other things, that of the 18 plaintiffs (Exequiel Soriano,
Teodora Donato, Felipe Concepcion, Venancio Correa, Santo Gaviana, Alfredo
General, Constancio Gutierrez, Arsenio de Guzman, Pedro Lazaro, Porfirio
Lazaro, Deljie de Leon, Jose Nepomuceno, Bayani Pingol, Claudio Salgado,
Porfirio San Juan, Luis Sioco, Casimiro Villar and Enrique Voluntad), only 11
were issued licenses to operate fishing boats for the year 1954 (Annex B,
petition L-8895); that the executive orders in question were issued in
accordance with law; that the encouragement by the Bureau of Fisheries of
the use of Otter trawls should not be construed to mean that the general
welfare of the public could be disregarded, and set up the affirmative
defenses that since plaintiffs question the validity of the executive orders
issued by the President, then the Secretary of Agriculture and Natural
Resources and the Director of Fisheries were not the real parties in interest;
that said executive orders do not constitute a deprivation of property
without due process of law, and therefore prayed that the complaint be
dismissed (Exh. B, petition, L-8895).
During the trial of the case, the Governor of Camarines Sur appearing for the
municipalities of Siruma, Tinambac, Calabanga, Cabusao and Sipocot, in said
province, called the attention of the Court that the Solicitor General had not
been notified of the proceeding. To this manifestation, the Court ruled that in
view of the circumstances of the case, and as the Solicitor General would
only be interested in maintaining the legality of the executive orders sought
to be impugned, Section 4 of Rule 66 could be interpreted to mean that the
trial could go on and the Solicitor General could be notified before judgment
is entered.
After the evidence for both parties was submitted and the Solicitor General
was allowed to file his memorandum, the Court rendered decision on
February
2,
1955,
the
last
part
of
which
reads
as
follows:jgc:chanrobles.com.ph
"The power to close any definite area of the Philippine waters, from the fact
that Congress has seen fit to define under what conditions it may be done
by the enactment of the sections cited, in the mind of Congress must be of
transcendental significance. It is primarily within the fields of legislation not
of execution; for it goes far and says who can and who can not fish in

definite territorial waters. The court can not accept that Congress had
intended to abdicate its inherent right to legislate on this matter of national
importance. To accept respondents view would be to sanction the exercise
of legislative power by executive decrees. If it is San Miguel Bay now, it may
be Davao Gulf tomorrow, and so on. That may be done only by Congress.
This being the conclusion, there is hardly need to go any further. Until the
trawler is outlawed by legislative enactment, it cannot be banned from San
Miguel Bay by executive proclamation. The remedy for respondents and
population of the coastal towns of Camarines Sur is to go to the Legislature.
The result will be to issue the writ prayed for, even though this be to strike
at public clamor and to annul the orders of the President issued in response
therefor. This is a task unwelcome and unpleasant; unfortunately, courts of
justice use only one measure for both the rich and poor, and are not bound
by the more popular cause when they give judgments.
"IN VIEW WHEREOF, granted; Executive Order Nos. 22, 66 and 80 are
declared invalid; the injunction prayed for is ordered to issue; no
pronouncement as to costs."
Petitioners immediately filed an ex-parte motion for the issuance of a writ of
injunction which was opposed by the Solicitor General and after the parties
had filed their respective memoranda, the Court issued an order dated
February 19, 1955, denying respondents motion to set aside judgment and
ordering them to file a bond in the sum of P30,000 on or before March 1,
1955, as a condition for the non- issuance of the injunction prayed for by
petitioners pending appeal. The Solicitor General filed a motion for
reconsideration which was denied for lack of merit, and the Court, acting
upon the motion for new trial filed by respondents, issued another order on
March 3, 1955, denying said motion and granting the injunction prayed for
by petitioners upon the latters filing a bond for P30,000 unless respondents
could secure a writ of preliminary injunction from the Supreme Court on or
before March 15, 1955. Respondents, therefore, brought the matter to this
Court in a petition for prohibition and certiorari with preliminary injunction,
docketed as G. R. No. L-8895, and on the same day filed a notice to appeal
from the order of the lower court dated February 2, 1955, which appeal was
docketed in this Court as G. R. No. L-9191.
In the petition for prohibition and certiorari, petitioners (respondents therein)
contended among other things, that the order of the respondent Judge
requiring petitioners Secretary of Agriculture and Natural Resources and the
Director of Fisheries to post a bond in the sum of P30,000 on or before March
1, 1955, had been issued without jurisdiction or in excess thereof, or at the
very least with grave abuse of discretion, because by requiring the bond, the
Republic of the Philippines was in effect made a party defendant and
therefore transformed the suit into one against the Government which is
beyond the jurisdiction of the respondent Judge to entertain; that the failure
to give the Solicitor General the opportunity to defend the validity of the
challenged executive orders resulted in the receipt of objectionable matters
at the hearing; that Rule 66 of the Rules of Court does not empower a court
of law to pass upon the validity of an executive order in a declaratory relief
proceeding; that the respondent Judge did not have the power to grant the

injunction as Section 4 of Rule 39 does not apply to declaratory relief


proceedings but only to injunction, receivership and patent accounting
proceedings; and prayed that a writ of preliminary injunction be issued to
enjoin the respondent Judge from enforcing its order of March 3, 1955, and
for such other relief as may be deem just and equitable in the premises. This
petition was given due course and the hearing on the merits was set by this
Court for April 12, 1955, but no writ of preliminary injunction was issued.
Meanwhile, the appeal (G. R. No. L-9191) was heard on October 3, 1956,
wherein respondents-appellants ascribed to the lower court the commission
of the following errors:chanrob1es virtual 1aw library
1. In ruling that the President has no authority to issue Executive Orders
Nos. 22, 66 and 80 banning the operation of trawls in San Miguel Bay;
2. In holding that the power to declare a closed area for fishing purposes has
not been delegated to the President of the Philippines under the Fisheries
Act;
3. In not considering Executive Orders Nos. 22, 66 and 80 as declaring a
closed season pursuant to Section 7, Act 4003, as amended, otherwise
known as the Fisheries Act;

resources of the area, I, RAMON MAGSAYSAY, President of the Philippines, by


virtue of the powers vested in me by law, do hereby order
that:jgc:chanrobles.com.ph
"1. Fishing by means of trawls (utase, otter and/or perenzella) of any kind, in
the waters comprised within San Miguel Bay, is hereby prohibited.
"2. Trawl shall mean, for the purpose of this Order, a fishing net made in the
form of a bag with the mouth kept open by a device, the whole affair being
towed, dragged, trailed or trawled on the bottom of the sea to capture
demersal, ground or bottom species.
"3. Violation of the provisions of this Order shall subject the offender to the
penalty provided under Section 83 of Act 4993, or a fine of not more than
two hundred pesos, or imprisonment for not more than six months, or both,
in the discretion of the Court.
"Done in the City of Manila, this 5th day of April, nineteen hundred and fiftyfour and of the Independence of the Philippines, the eighth." (50 Off. Gaz.
1421).
"EXECUTIVE ORDER NO. 66

4. In holding that to uphold the validity of Executive Orders Nos. 22 and 80


would be to sanction the exercise of legislative power by executive decrees;

"AMENDING EXECUTIVE ORDER NO. 22, DATED APRIL 5, 1954, ENTITLED


PROHIBITING THE USE OF TRAWLS IN SAN MIGUEL BAY

5. In its suggestion that the only remedy for respondents and the people of
the coastal towns of Camarines Sur and Camarines Norte is to go to the
Legislature; and

"By virtue of the powers vested in me by law, I, RAMON MAGSAYSAY,


President of the Philippines, do hereby amend Executive Order No. 22, dated
April 5, 1954, so as to allow fishing by means of trawls, as defined in said
Executive Order, within that portion of San Miguel Bay north of a straight
line drawn from Tacubtacuban Hill in the Municipality of Tinambac, Province
of Camarines Sur. Fishing by means of trawls south of said line shall still be
absolutely prohibited.

6. In declaring Executive Orders Nos. 22, 66 and 80 invalid and in ordering


the injunction prayed for to issue.
As Our decision in the prohibition and certiorari case (G. R. No. L-8895)
would depend, in the last analysis, on Our ruling in the appeal of the
respondents in case G. R. No. L-9191, We shall first proceed to dispose of the
latter case.

"Done in the City of Manila, this 23rd day of September, in the year of our
Lord, nineteen hundred and fifty-four, and of the Independence of the
Philippines, the ninth." (50 Off. Gaz. 4037).

It is indisputable that the President issued Executive Orders Nos. 22, 66 and
80 in response to the clamor of the inhabitants of the municipalities along
the coastline of San Miguel Bay. They read as follows:chanrob1es virtual 1aw
library

"EXECUTIVE ORDER NO. 80

EXECUTIVE ORDER NO. 22

"By virtue of the powers vested in me by law, I, RAMON MAGSAYSAY,


President of the Philippines, do hereby amend Executive Order No. 66, dated
September 23, 1954, so as to allow fishing by means of trawls, as defined in
Executive Order No. 22, dated April 5, 1954, within that portion of San
Miguel Bay north of a straight line drawn from Tacubtacuban Hill in the
Municipality of Mercedes, Province of Camarines Norte to Balocbaloc Point in
the Municipality of Tinambac, Province of Camarines Sur, until December 31,
1954, only.

"PROHIBITING THE USE OF TRAWLS IN


SAN MIGUEL BAY"
"In order to effectively protect the municipal fisheries of San Miguel Bay,
Camarines Norte and Camarines Sur, and to conserve fish and other aquatic

"FURTHER AMENDING EXECUTIVE ORDER NO. 22, DATED APRIL 5, 1954, AS


AMENDED BY EXECUTIVE ORDER NO. 66, DATED SEPTEMBER 23, 1954

Thereafter, the provisions of said Executive Order No. 22 absolutely


prohibiting fishing by means of trawls in all the waters comprised within the
San Miguel Bay shall be revived and given full force and effect as originally
provided therein.
"Done in the City of Manila, this 2nd day of November, in the year of Our
Lord, nineteen hundred and fifty-four and of the Independence of the
Philippines, the ninth." (50 Off. Gaz. 5198)
It is likewise admitted that petitioners assailed the validity of said executive
orders in their petition for a writ of injunction and/or declaratory relief filed
with the Court of First Instance of Manila, and that the lower court, upon
declaring Executive Orders Nos. 22, 66 and 80 invalid, issued an order
requiring the Secretary of Agriculture and Natural Resources and the
Director of Fisheries to post a bond for P30,000 if the writ of injunction
restraining them from enforcing the executive orders in question must be
stayed.
The Solicitor General avers that the constitutionality of an executive order
cannot be ventilated in a declaratory relief proceeding. We find this
untenable, for this Court taking cognizance of an appeal from the decision of
the lower court in the case of Hilado v. De la Costa Et. Al., 83 Phil., 471,
which involves the constitutionality of another executive order presented in
an action for declaratory relief, in effect accepted the propriety of such
action.
This question being eliminated, the main issues left for Our determination
with respect to defendants appeal (G. R. No. L-9191), are:chanrob1es virtual
1aw library
(1) Whether the Secretary of an Executive Department and the Director of a
Bureau, acting in their capacities as such Government officials, could
lawfully be required to post a bond in an action against them;
(2) Whether the President of the Philippines has authority to issue Executive
Orders Nos. 22, 66 and 80, banning the operation of trawls in San Miguel
Bay, or, said in other words, whether said Executive Orders Nos. 22, 66 and
80 were issued in accordance with law; and
(3) Whether Executive Orders Nos. 22, 66 and 80 were valid, for the
issuance thereof was not in the exercise of legislative powers unduly
delegated to the President.
Counsel for both parties presented commendable exhaustive defenses in
support of their respective stands. Certainly, these cases deserve such
efforts, not only because the constitutionality of an act of a coordinate
branch in our tripartite system of Government is in issue, but also because
of the number of inhabitants, admittedly classified as "subsistence
fishermen", that may be affected by any ruling that We may promulgate
herein.

I. As to the first proposition, it is an elementary rule of procedure that an


appeal stays the execution of a judgment. An exception is offered by section
4 of Rule 39 of the Rules of Court, which provides that:jgc:chanrobles.com.ph
"SEC. 4. INJUNCTION, RECEIVERSHIP AND PATENT ACCOUNTING, NOT
STAYED. Unless otherwise ordered by the court, a judgment in an action
for injunction or in a receivership action, or a judgment or order directing an
accounting in an action for infringement of letter patent, shall not be stayed
after its rendition and before an appeal is taken or during the pendency of
an appeal. The trial court, however, in its discretion, when an appeal is taken
from a judgment granting, dissolving or denying an injunction, may make an
order suspending, modifying, restoring, or granting such injunction during
the pendency of an appeal, upon such terms as to bond or otherwise as it
may consider proper for the security of the rights of the adverse
party."cralaw virtua1aw library
This provision was the basis of the order of the lower court dated February
19, 1955, requiring the filing by the respondents of a bond for P30,000 as a
condition for the non-issuance of the injunction prayed for by plaintiffs
therein, and which the Solicitor General charged to have been issued in
excess of jurisdiction. The States counsel, however, alleges that while
judgment could be stayed in injunction, receivership and patent accounting
cases and although the complaint was styled "Injunction and/or Declaratory
Relief with Preliminary Injunction", the case is necessarily one for
declaratory relief, there being no allegation sufficient to convince the Court
that the plaintiffs intended it to be one for injunction. But aside from the title
of the complaint, We find that plaintiffs pray for the declaration of the nullity
of Executive Order Nos. 22, 66 and 80; the issuance of a writ of preliminary
injunction, and for such other relief as may be deemed just and equitable.
This Court has already held that there are only two requisites to be satisfied
if an injunction is to issue, namely, the existence of the right sought to be
protected, and that the acts against which the injunction is to be directed
are violative of said right (North Negros Sugar Co., Inc. v. Serafin Hidalgo, 63
Phil., 664). There is no question that at least 11 of the complaining trawl
operators were duly licensed to operate in any of the national waters of the
Philippines, and it is undeniable that the executive enactments sought to be
annulled are detrimental to their interests. And considering further that the
granting or refusal of an injunction, whether temporary or permanent, rests
in the sound discretion of the Court, taking into account the circumstances
and the facts of the particular case (Rodulfa v. Alfonso, 76 Phil., 225, 42 Off.
Gaz., 2439), We find no abuse of discretion when the trial Court treated the
complaint as one for injunction and declaratory relief and executed the
judgment pursuant to the provisions of section 4 of Rule 39 of the Rules of
Court.
On the other hand, it shall be remembered that the party defendants in Civil
Case No. 24867 of the Court of First Instance of Manila are Salvador Araneta,
as Secretary of Agriculture and Natural Resources, and Deogracias Villadolid,
as Director of Fisheries, and were sued in such capacities because they were
the officers charged with duty of carrying out the statutes, orders and

regulations on fishing and fisheries. In its order of February 19, 1955, the
trial court denied defendants motion to set aside judgment and they were
required to file a bond for P30,000 to answer for damages that plaintiffs
were allegedly suffering at the time, as otherwise the injunction prayed for
by the latter would be issued.
Because of these facts, We agree with the Solicitor General when he says
that the action, being one against herein petitioners as such Government
officials, is essentially one against the Government, and to require these
officials to file a bond would be indirectly a requirement against the
Government, for as regards bonds or damages that may be proved, if any,
the real party in interest would be the Republic of the Philippines (L. S. Moon
and Co. v. Harrison, 43 Phil., 39; Salgado v. Ramos, 64 Phil., 724-727, and
others). The reason for this pronouncement is understandable; the State
undoubtedly is always solvent (Tolentino v. Carlos, 66 Phil., 140; Government
of the P. I. v. Judge of the Court of First Instance of Iloilo, 34 Phil., 157, cited
in Joaquin Gutierrez Et. Al. v. Camus Et. Al. * G. R. No. L-6725, promulgated
October 30, 1954). However, as the records show that herein petitioners
failed to put up the bond required by the lower court, allegedly due to
difficulties encountered with the Auditor Generals Office (giving the
impression that they were willing to put up said bond but failed to do so for
reasons beyond their control), and that the orders subjects of the prohibition
and certiorari proceedings in G. R. No. L-8895, were enforced, if at all, 1 in
accordance with section 4 of Rule 39, which We hold to be applicable to the
case at bar, the issue as to the regularity or adequacy of requiring herein
petitioners to post a bond, becomes moot and academic.
II. Passing upon the question involved in the second proposition, the trial
judge extending the controversy to the determination of which between the
Legislative and Executive Departments of the Government had "the power
to close any definite area of the Philippine waters" instead of limiting the
same to the real issue raised by the enactment of Executive Orders Nos. 22,
66 and 80, specially the first and the last "absolutely prohibiting fishing by
means of trawls in all the waters comprised within the San Miguel Bay",
ruled in favor of Congress, and as the closing of any definite area of the
Philippine waters is, according to His Honor, primarily within the fields of
legislation and Congress had not intended to abdicate its power to legislate
on the matter, he maintained, as stated before, that "until the trawler is
outlawed by legislative enactment, it cannot be banned from San Miguel Bay
by executive proclamation", and that "the remedy for respondents and
population of the coastal towns of Camarines Sur is to go to the Legislature,"
and thus declared said Executive Orders Nos. 22, 66 and 80 invalid."
The Solicitor General, on the contrary, asserts that the President is
empowered by law to issue the executive enactments in question.
Sections 6, 13 and 75 of Act No. 4003, known as the Fisheries Law, the latter
two sections as amended by section 1 of Commonwealth Act No. 471, read
as follows:jgc:chanrobles.com.ph
"SEC. 6. WORDS AND PHRASES DEFINED. Words and terms used in this

Act shall be construed as follows:chanrob1es virtual 1aw library


x

TAKE or TAKING, includes pursuing, shooting, killing, capturing, trapping,


snaring, and netting fish and other aquatic animals, and all lesser acts, such
as disturbing, wounding, stupefying, or placing, setting, drawing, or using
any net or other device commonly used to take or collect fish and other
aquatic animals, whether they result in taking or not, and includes every
attempt to take and every act of assistance to every other person in taking
or attempting to take or collect fish and other aquatic animals: PROVIDED,
That whenever taking is allowed by law, reference is had to taking by lawful
means and in lawful manner.
x

"SEC. 13. PROTECTION OF FRY OR FISH EGGS. Except for scientific or


educational purpose or for propagation, it shall be unlawful to take or catch
fry or fish eggs and the small fish, not more than three (3) centimeters long,
known as siliniasi, in the territorial waters of the Philippines. Towards this
end, the Secretary of Agriculture and Commerce shall be authorized to
provide by regulations such restrictions as may be deemed necessary to be
imposed on THE USE OF ANY FISHING NET OR FISHING DEVICE FOR THE
PROTECTION OF FRY OR FISH EGGS; Provided, however, That the Secretary
of Agriculture and Commerce shall permit the taking of young of certain
species of fish known as hipon under such restrictions as may be deemed
necessary.
"SEC. 75. FISH REFUGES AND SANCTUARIES. Upon the recommendation
of the officer or chief of the bureau, office or service concerned, the
Secretary of Agriculture and Commerce may set aside and establish fishery
reservation or fish refuges and sanctuaries to be administered in the manner
to be prescribed by him. All streams, ponds, and waters within the game
refuge, birds sanctuaries, national parks, botanical gardens, communal
forests and communal pastures are hereby declared fishing refuges and
sanctuaries. It shall be unlawful for any person, to take, destroy or kill in any
of the places aforementioned, or in any manner disturb or drive away or
take therefrom, any fish fry or fish eggs."cralaw virtua1aw library
Act No. 4003 further provides as follows:jgc:chanrobles.com.ph
"SEC. 83. OTHER VIOLATIONS. Any other violation of the provisions of this
Act or any rules and regulations promulgated thereunder shall subject the
offender to a fine of not more than two hundred pesos, or imprisonment for
not more than six months, or both, in the discretion of the Court."cralaw
virtua1aw library
As may be seen from the just quoted provisions, the law declares unlawful
and fixes the penalty for the taking (except for scientific or educational

purposes or for propagation), destroying or killing of any fish fry or fish eggs,
and the Secretary of Agriculture and Commerce (now the Secretary of
Agriculture and Natural Resources) is authorized to promulgate regulations
restricting the use of any fish net or fishing device (which includes the net
used by trawl fishermen) for the protection of fry or fish eggs, as well as to
set aside and establish fishery reservations or fish refuges and sanctuaries
to be administered in the manner prescribed by him, from which no person
could lawfully take, destroy or kill in any of the places aforementioned, or in
any manner disturb or drive away or take therefrom any small or immature
fish, fry or fish eggs. It is true that said section 75 mentions certain streams,
ponds and waters within the game refuges, . . . communal forests, etc.,
which the law itself declares fish refuges and sanctuaries, but this
enumeration of places does not curtail the general and unlimited power of
the Secretary of Agriculture and Natural Resources in the first part of section
75, to set aside and establish fishery reservations or fish refuges and
sanctuaries, which naturally include seas or bays, like the San Miguel Bay in
Camarines.
From the resolution passed at the Conference of Municipal Mayors held at
Tinambac, Camarines Sur, on December 18, 1953 (Exh. F), the following
manifestation is made:jgc:chanrobles.com.ph
"WHEREAS, the continuous operation of said trawls even during the close
season as specified in said Executive Order No. 20 caused the wanton
destruction of the mother shrimps laying their eggs and the millions of eggs
laid and the inevitable extermination of the shrimps specie; in order to save
the shrimps specie from eventual extermination and in order to conserve the
shrimps specie for posterity;"
In the brief submitted by the NAMFREL and addressed to the President of the
Philippines (Exh. 2), in support of the petition of San Miguel Bay fishermen
(allegedly 6,175 in number), praying that trawlers be banned from operating
in San Miguel Bay, it is also stated that:jgc:chanrobles.com.ph
"The trawls ram and destroy the fish corrals. The heavy trawl nets dig deep
into the ocean bed. They destroy the fish food which lies below the ocean
floor. Their daytime catches net millions of shrimps scooped up from the
mud. In their nets they bring up the life of the sea: algea, shell fish and star
fish . . .
"The absence of some species or the apparent decline in the catch of some
fishermen operating in the bay may be due to several factors, namely: the
indiscriminate catching of fry and immature sizes of fishes, the wide spread
use of explosives inside as well as at the mouth and approaches of the bay,
and the extensive operation of the trawls." (p. 9, Report of Santos B.
Rasalan, Exh. A).
Extensive Operation of Trawls: The strenuous effect of the operations of
the 17 TRAWLS of the demersal fisheries of San Miguel Bay is better
appreciated when we consider the fact that out of its about 850 square
kilometers area, only about 350 square kilometers of 5 fathoms up could be

trawled. With their continuous operation, coupled with those of the


numerous fishing methods, the fisheries is greatly strained. This is shown by
the fact that in view of the non- observance of the close season from May to
October, each year, majority of their catch are immature. If their operation
would continue unrestricted, the supply would be greatly depleted." (p. 11,
Report of Santos B. Rasalan, Exh. A).
San Miguel Bay can sustain 3 to 4 small trawlers (Otter Trawl Explorations
in Philippine Waters, Research Report 25 of the Fish and Wildlife Service,
United States Department of the Interior, p. 9, Exhibit B).
According to Annex A of the complaint filed in the lower court in Civil Case
No. 24867 G. R. No. L 9191 (Exh. D, p. 53 of the folder of Exhibits), the
18 plaintiffs-appellees operate 29 trawling boats, and their operation must
be in a big scale considering the investments plaintiffs have made therefor,
amounting to P387,000 (Record on Appeal, p. 16-17).
In virtue of the aforementioned provisions of law and the manifestations just
copied, We are of the opinion that with or without said Executive Orders, the
restriction and banning of trawl fishing from all Philippine waters come,
under the law, within the powers of the Secretary of Agriculture and Natural
Resources, who in compliance with his duties may even cause the criminal
prosecution of those who in violation of his instructions, regulations or orders
are caught fishing with trawls in Philippine waters.
Now, if under the law the Secretary of Agriculture and Natural Resources has
authority to regulate or ban the fishing by trawl which, it is claimed, is
obnoxious for it carries away fish eggs and frys which should be preserved,
can the President of the Philippines exercise that same power and authority?
Section 10(1), Article VII of the Constitution of the Philippines
prescribes:jgc:chanrobles.com.ph
"SEC. 10(1). The President shall have control of all the executive
departments, bureaus or offices, exercises general supervision over all local
governments as may be provided by law, and take care that the laws be
faithfully executed."cralaw virtua1aw library
Section
63
of
the
Revised
follows:jgc:chanrobles.com.ph

Administrative

Code

reads

as

"SEC. 63. EXECUTIVE ORDERS AND EXECUTIVE PROCLAMATION.


Administrative acts and commands of the President of the Philippines
touching the organization or mode of operation of the Government or
rearranging or readjusting any of the districts, divisions, parts or ports of the
Philippines, and all acts and commands governing the general performance
of duties by public employees or disposing of issues of general concern shall
be made in executive orders."cralaw virtua1aw library
x

Regarding department organization Section 74 of the Revised Administrative


Code also provides that:jgc:chanrobles.com.ph
"All executive functions of the Government of the Republic of the Philippines
shall be directly under the Executive Department subject to the supervision
and control of the President of the Philippines in matters of general policy.
The Departments are established for the proper distribution of the work of
the Executive, for the performance of the functions expressly assigned to
them by law, and in order that each branch of the administration may have
a chief responsible for its direction and policy. Each Department Secretary
shall assume the burden of, and responsibility for, all activities of the
Government under his control and supervision.
For administrative purposes the President of the Philippines shall be
considered the Department Head of the Executive Office.." . . .
One of the executive departments is that of Agriculture and Natural
Resources which by law is placed under the direction and control of the
Secretary, who exercises its functions subject to the general supervision and
control of the President of the Philippines (Sec. 75, R. A. C.) . Moreover,
"executive orders, regulations, decrees and proclamations relative to
matters under the supervision or jurisdiction of a Department, the
promulgation whereof is expressly assigned by law to the President of the
Philippines, shall as a general rule, be issued upon proposition and
recommendation of the respective Department" (Sec. 79-A, R.A.C.) , and
there can be no doubt that the promulgation of the questioned Executive
Orders was upon the proposition and recommendation of the Secretary of
Agriculture and Natural Resources and that is why said Secretary, who was
and is called upon to enforce said executive Orders, was made a party
defendant in one of the cases at bar (G. R. No. L-9191).
For the foregoing reasons We do not hesitate to declare that Executive
Orders Nos. 22, 66 and 80, series of 1954, of the President, are valid and
issued by authority of law.
III. But does the exercise of such authority by the President constitute an
undue delegation of the powers of Congress?
As already held by this Court, the true distinction between delegation of the
power to legislate and the conferring of authority or discretion as to the
execution of the law consists in that the former necessarily involves a
discretion as to what the law shall be, while in the latter the authority or
discretion as to its execution has to be exercised under and in pursuance of
the law. The first cannot be done; to the latter no valid objection can be
made (Cruz v. Youngberg, 56 Phil., 234, 239. See also Rubi, Et. Al. v. The
Provincial Board of Mindoro, 39 Phil., 660).
In the case of U. S. v.
held:jgc:chanrobles.com.ph

Ang

Tang

Ho.,

43

Phil.

1,

We

also

"THE POWER TO DELEGATE. The Legislature cannot delegate legislative

power to enact any law. If Act No. 2868 is a law unto itself, and within itself,
and it does nothing more than to authorize the Governor-General to make
rules and regulations to carry it into effect, then the Legislature created the
law. There is no delegation of power and it is valid. On the other hand, if the
act within itself does not define a crime and is not complete, and some
legislative act remains to be done to make it a law or a crime, the doing of
which is vested in the Governor-General, the act is a delegation of legislative
power, is unconstitutional and void."cralaw virtua1aw library
From the provisions of Act No. 4003 of the Legislature, as amended by
Commonwealth Act No. 471, which have been aforequoted, We find that
Congress (a) declared it unlawful "to take or catch fry or fish eggs in the
territorial waters of the Philippines; (b) towards this end, it authorized the
Secretary of Agriculture and Natural Resources to provide by the regulations
such restrictions as may be deemed necessary to be imposed on the use of
any fishing net or fishing device for the protection of fish fry or fish eggs
(Sec. 13); (c) it authorized the Secretary of, Agriculture and Natural
Resources to set aside and establish fishery reservations or fish refuges and
sanctuaries to be administered in the manner to be prescribed by him and
declared it unlawful for any person to take, destroy or kill in any of said
places, or in any manner disturb or drive away or take therefrom, any fish
fry or fish eggs (Sec. 75); and (d) it penalizes the execution of such acts
declared unlawful and in violation of this Act (No. 4003) or of any rules and
regulations promulgated thereunder, making the offender subject to a fine of
not more than P200, or imprisonment for not more than 6 months, or both,
in the discretion of the court (Sec. 83).
From the foregoing it may be seen that in so far as the protection of fish fry
or fish egg is concerned, the Fisheries Act is complete in itself, leaving to the
Secretary of Agriculture and Natural Resources the promulgation of rules and
regulations to carry into effect the legislative intent. It also appears from the
exhibits on record in these cases that fishing with trawls causes "a wanton
destruction of the mother shrimps laying their eggs and the millions of eggs
laid and the inevitable extermination of the shrimps specie" (Exh. F), and
that "the trawls ram and destroy the fish corrals. The heavy trawl nets dig
deep into the ocean bed. They destroy the fish food which lies below the
ocean floor. Their daytime catches net millions of shrimps scooped up from
the mud. In their nets they bring up the life of the sea" (Exh. 2).
In the light of these facts it is clear to Our mind that for the protection of fry
or fish eggs and small and immature fishes, Congress intended with the
promulgation of Act No. 4003, to prohibit the use of any fish net or fishing
device like trawl nets that could endanger and deplete our supply of sea
food, and to that end authorized the Secretary of Agriculture and Natural
Resources to provide by regulations such restrictions as he deemed
necessary in order to preserve the aquatic resources of the land.
Consequently, when the President, in response to the clamor of the people
and authorities of Camarines Sur issued Executive Order No. 80 absolutely
prohibiting fishing by means of trawls in all waters comprised within the San
Miguel Bay, he did nothing but show an anxious regard for the welfare of the
inhabitants of said coastal province and dispose of issues of general concern

(Sec. 63, R.A.C.) which were in consonance and strict conformity with the
law.
Wherefore, and on the strength of the foregoing considerations We render
judgment, as follows:chanrob1es virtual 1aw library
(a) Declaring that the issues involved in case G. R. No. L-8895 have become
moot, as no writ of preliminary injunction has been issued by this Court
enjoining the respondent Judge of the Court of First Instance of Manila,
Branch XIV, from enforcing his order of March 3, 1955; and
(b) Reversing the decision appealed from in case G. R. No. L- 9191;
dissolving the writ of injunction prayed for in the lower court by plaintiffs, if
any has been actually issued by the court a quo; and declaring Executive
Orders Nos. 22, 66 and 80, series of 1954, valid for having been issued by
authority of the Constitution, the Revised Administrative Code and the
Fisheries Act.
Without pronouncement as to costs. It is so ordered.
Bengzon, Padilla, Montemayor, Bautista Angelo, Labrador, Concepcion,
Reyes, J.B.L. and Endencia,JJ., concur.

G.R. No. L-27811


November 17, 1967
LACSON-MAGALLANES CO., INC., plaintiff-appellant,
vs.
JOSE PAO, HON. JUAN PAJO, in his capacity as Executive Secretary,
and HON. JUAN DE G. RODRIGUEZ, in his capacity as Secretary of
Agriculture and Natural Resources, defendants-appellees.
Leopoldo M. Abellera for plaintiff-appellant.
Victorio Advincula for defendant Jose Pao.
Office of the Solicitor General for defendant Secretary of Agriculture and
Natural Resources and Executive Secretary.
SANCHEZ, J.:
The question May the Executive Secretary, acting by authority of the
President, reverse a decision of the Director of Lands that had been affirmed
by the Executive Secretary of Agriculture and Natural Resources yielded
an affirmative answer from the lower court. 1
Hence, this appeal certified to this Court by the Court of Appeals upon the
provisions of Sections 17 and 31 of the Judiciary Act of 1948, as amended.
The undisputed controlling facts are:
In 1932, Jose Magallanes was a permittee and actual occupant of a 1,103hectare pasture land situated in Tamlangon, Municipality of Bansalan,
Province of Davao.
On January 9, 1953, Magallanes ceded his rights and interests to a portion
(392,7569 hectares) of the above public land to plaintiff.
On April 13, 1954, the portion Magallanes ceded to plaintiff was officially
released from the forest zone as pasture land and declared agricultural land.
On January 26, 1955, Jose Pao and nineteen other claimants 2 applied for
the purchase of ninety hectares of the released area.
On March 29, 1955, plaintiff corporation in turn filed its own sales application
covering the entire released area. This was protested by Jose Pao and his
nineteen companions upon the averment that they are actual occupants of
the part thereof covered by their own sales application.
The Director of Lands, following an investigation of the conflict, rendered a
decision on July 31, 1956 giving due course to the application of plaintiff
corporation, and dismissing the claim of Jose Pao and his companions. A
move to reconsider failed.

On July 5, 1957, the Secretary of Agriculture and Natural Resources on


appeal by Jose Pao for himself and his companions held that the appeal
was without merit and dismissed the same.
The case was elevated to the President of the Philippines.
On June 25, 1958, Executive Secretary Juan Pajo, "[b]y authority of the
President" decided the controversy, modified the decision of the Director of
Lands as affirmed by the Secretary of Agriculture and Natural Resources,
and (1) declared that "it would be for the public interest that appellants, who
are mostly landless farmers who depend on the land for their existence, be
allocated that portion on which they have made improvements;" and (2)
directed that the controverted land (northern portion of Block I, LC Map
1749, Project No. 27, of Bansalan, Davao, with Latian River as the dividing
line) "should be subdivided into lots of convenient sizes and allocated to
actual occupants, without prejudice to the corporation's right to
reimbursement for the cost of surveying this portion." It may be well to
state, at this point, that the decision just mentioned, signed by the Executive
Secretary, was planted upon the facts as found in said decision.
Plaintiff corporation took the foregoing decision to the Court of First Instance
praying that judgment be rendered declaring: (1) that the decision of the
Secretary of Agriculture and Natural Resources has full force and effect; and
(2) that the decision of the Executive Secretary is contrary to law and of no
legal force and effect.
And now subject of this appeal is the judgment of the court a quo dismissing
plaintiff's case.
1. Plaintiff's mainstay is Section 4 of Commonwealth Act 141. The precept
there is that decisions of the Director of Lands "as to questions of facts shall
be conclusive when approved" by the Secretary of Agriculture and Natural
Resources. Plaintiff's trenchment claim is that this statute is controlling not
only upon courts but also upon the President.
Plaintiff's position is incorrect. The President's duty to execute the law is of
constitutional origin.3 So, too, is his control of all executive departments. 4
Thus it is, that department heads are men of his confidence. His is the power
to appoint them; his, too, is the privilege to dismiss them at pleasure.
Naturally, he controls and directs their acts. Implicit then is his authority to
go over, confirm, modify or reverse the action taken by his department
secretaries. In this context, it may not be said that the President cannot rule
on the correctness of a decision of a department secretary.
Particularly in reference to the decisions of the Director of Lands, as affirmed
by the Secretary of Agriculture and Natural Resources, the standard practice
is to allow appeals from such decisions to the Office of the President. 5This
Court has recognized this practice in several cases. In one, the decision of
the Lands Director as approved by the Secretary was considered superseded
by that of the President's appeal. 6 In other cases, failure to pursue or resort
to this last remedy of appeal was considered a fatal defect, warranting
dismissal of the case, for non-exhaustion of all administrative remedies. 7
Parenthetically, it may be stated that the right to appeal to the President
reposes upon the President's power of control over the executive
departments.8 And control simply means "the power of an officer to alter or
modify or nullify or set aside what a subordinate officer had done in the
performance of his duties and to substitute the judgment of the former for
that of the latter."9

This unquestionably negates the assertion that the President cannot undo an
act of his department secretary.
2. Plaintiff next submits that the decision of the Executive Secretary herein is
an undue delegation of power. The Constitution, petitioner asserts, does not
contain any provision whereby the presidential power of control may be
delegated to the Executive Secretary. It is argued that it is the constitutional
duty of the President to act personally upon the matter.
It is correct to say that constitutional powers there are which the President
must exercise in person.10 Not as correct, however, is it so say that the Chief
Executive may not delegate to his Executive Secretary acts which the
Constitution does not command that he perform in person. 11 Reason is not
wanting for this view. The President is not expected to perform in person all
the multifarious executive and administrative functions. The Office of the
Executive Secretary is an auxiliary unit which assists the President. The rule
which has thus gained recognition is that "under our constitutional setup the
Executive Secretary who acts for and in behalf and by authority of the
President has an undisputed jurisdiction to affirm, modify, or even reverse
any order" that the Secretary of Agriculture and Natural Resources, including
the Director of Lands, may issue.12
3. But plaintiff underscores the fact that the Executive Secretary is equal in
rank to the other department heads, no higher than anyone of them. From
this, plaintiff carves the argument that one department head, on the pretext
that he is an alter ego of the President, cannot intrude into the zone of
action allocated to another department secretary. This argument betrays
lack of appreciation of the fact that where, as in this case, the Executive
Secretary acts "[b]y authority of the President," his decision is that of the
President's. Such decision is to be given full faith and credit by our courts.
The assumed authority of the Executive Secretary is to be accepted. For,
only the President may rightfully say that the Executive Secretary is not
authorized to do so. Therefore, unless the action taken is "disapproved or
reprobated by the Chief Executive,"13 that remains the act of the Chief
Executive, and cannot be successfully assailed. 14 No such disapproval or
reprobation is even intimated in the record of this case.
For the reasons given, the judgment under review is hereby affirmed. Costs
against plaintiff. So ordered.
Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Bengzon, J.P., Zaldivar,
Castro and Angeles, JJ., concur.
Separate Opinions
FERNANDO, J., concurring:
The learned opinion of Justice Sanchez possesses merit and inspires assent.
A further observation may not be amiss concerning that portion thereof
which speaks of "the standard practice" allowing appeals from [decisions of
Secretary of Natural Resources affirming the action taken by the Director of
Lands] to the Office of the President. That for me is more than a "standard
practice." It is sound law. The constitutional grant to the President of the
power of control over all executive departments, bureaus and offices yields
that implication.1
If this were all, there would be no need for an additional expression of my
views. I feel constrained to do so however in order to emphasize that the
opinion of the Court appears to me to reflect with greater fidelity the

constitutional intent as embodied in the above provision vesting the power


of control in the Presidency.
The question asked in the opening paragraph of the opinion "May the
Executive Secretary, acting by authority of the President, reverse a decision
of the Director of Lands that had been affirmed by the Secretary of
Agriculture and Natural Resources [?]" merits but one answer. It must be
in the unqualified affirmative. So the Court holds. That is as it should be. Any
other view would be highly unorthodox.
Nonetheless, the thought seems to lurk in the opinion of a respectable
number of members of the bar that a provision as that found in the Public
Land Act to the effect that decisions of Director of Lands on questions of
facts shall be conclusive when approved by the Secretary of Agriculture and
Natural Resources2 constitute a limitation of such power of control. This view
might have gained plausibility in the light of Ang-Angco vs. Castillo,3 where
the procedure set forth in the Civil Service Act in 1959 was held binding in so
far as the President is concerned in the case of disciplinary action taken
against non-presidential appointees.
The argument that what the then Executive Secretary acting for the
President did was justified by the constitutional grant of control elicited no
favorable response. The Court apparently was not receptive to a more
expansive view of such executive prerogative. This is not to say that what
was there decided was entirely lacking in justification. It is merely to suggest
that it may contain implications not in conformity with the broad grant of
authority constitutionally conferred on the President.
It is well-worth emphasizing that the President unlike any other official in the
Executive Department is vested with both "constitutional and legal
authority"4 as Justice Laurel noted. Care is to be taken then lest by a too
narrow interpretation what could reasonably be included in such
competence recognized by the Constitution be unduly restricted. If my
reading of the opinion of Justice Sanchez is correct, then there is a more
hospitable scope accorded such power of control. For me this is more in
keeping with the fundamental law. Moreover there would be a greater
awareness on the part of all of the broad range of authority the President
possesses by virtue of such a provision.
Reference to the words of Justice Laurel, who was himself one of the leading
framers of the Constitution and thereafter, as a member of this Court, one of
its most authoritative expounders in the leading case of Villena vs.
Secretary of Interior,5 is not inappropriate. Their reverberating clang, to
paraphrase Justice Cardozo, should drown all weaker sounds. Thus: "After
serious reflection, we have decided to sustain the contention of the
government in this case on the broad proposition, albeit not suggested, that
under the presidential type of government which we have adopted and
considering the departmental organization established and continued in
force by paragraph 1, section 12, Article VII, of our Constitution, all executive
and administrative organizations are adjuncts of the Executive Department,
the heads of the various executive departments are assistants and agents of
the Chief Executive, and except in cases where the Chief Executive is
required by the Constitution or the law to act in person or the exigencies of
the situation demand that he act personally, the multifarious executive and
administrative functions of the Chief Executive are performed by and
through the executive departments, and the acts of the secretaries of such

departments, performed and promulgated in the regular course of business,


are, unless disapproved or reprobated by the Chief Executive, presumptively
the acts of the Chief Executive. (Runkle vs. United States [1887], 122 U.S.,
543; 30 Law. ed., 1167; 7 Sup. St. Rep. 1141; see also U.S. vs. Eliason
[1839], 16 Pet., 291; 10 Law. ed., 968; Jones vs. U.S. [1890], 137 U.S. 202;
34 Law. ed., 691; 11 Sup. Ct. Rep. 80; Wolsey vs. Chapman [1880], 101 U.S.
775; 25 Law. ed. 915; Wilcox vs. Jackson [1836], 13 Pet. 498; 10 Law. ed.
264.)"
The opinion of Justice Laurel continues: "Fear is expressed by more than one
member of this court that the acceptance of the principle of qualified
political agency in this and similar cases would result in the assumption of
responsibility by the President of the Philippines for acts of any member of
his cabinet, however illegal, irregular or improper may be these acts. The
implications, it is said, are serious. Fear, however, is no valid argument
against the system once adopted, established and operated. Familiarity with
the essential background of the type of govenment established under our
Constitution, in the light of certain well-known principles and practices that
go with the system, should offer the necessary explanation. With reference
to the Executive Department of the government, there is one purpose which
is crystal clear and is readily visible without the projection of judicial
searchlight, and that is, the establishment of a single, not plural, Executive.
The first section of Article VII of the Constitution, dealing with the Executive
Department, begin with the enunciation of the principle that 'The executive
power shall be vested in a President of the Philippines.' This means that the
President of the Philippines is the Executive of the Government of the
Philippines, and no other. The heads of the executive departments occupy
political positions and hold office in an advisory capacity, and, in the
language of Thomas Jefferson, 'should be of the President's bosom
confidence' (7 Writings, Ford ed., 498), and, in the language of AttorneyGeneral Cushing, (7 Op., Attorney-General, 453), 'are subject to the direction
of the President.' Without minimizing the importance of the heads of the
various departments, their personality is in reality but the projection of that
of the President. Stated otherwise, and as forcibly characterized by Chief
Justice Taft of the Supreme Court of the United States, 'each head of a
department is, and must be the President's alter ego in the matters of that
department where the President is required by law to exercise authority'
(Myers vs. United States, 47 Sup. Ct. Rep. 21 at 30; 272 U.S. 52 at 133; 71
Law. ed., 160). Secretaries of departments, of course, exercise certain
powers under the law but the law cannot impair or in any way affect the
constitutional power of control and direction of the President. As a matter of
executive policy, they may be granted departmental autonomy as to certain
matters but this is by mere concession of the executive, in the absence of
valid legislation in the particular field. If the President, then, is the authority
in the Executive Department, he assumes the corresponding responsibility.
The head of a department is a man of his confidence; he controls and directs
his acts; he appoints him and can remove him at pleasure; he is the
executive, not any of his secretaries. It is therefore logical that he, the
President, should be answerable for the acts of administration of the entire
Executive Department before his own conscience no less than before that
undefined power of public opinion which, in the language of Daniel Webster,
is the last repository of popular government. These are the necessary

corollaries of the American presidential type of government, and if there is


any defect, it is attributable to the system itself. We cannot modify the
system unless we modify the Constitution, and we cannot modify the
Constitution by any subtle process of judicial interpretation or construction."
Concepcion, C.J. and Castro, J., concur.

[G.R. No. L-10759. May 20, 1957.]


LEONARDO MONTES, Petitioner-Appellant, v. THE CIVIL SERVICE
BOARD OF APPEALS and THE SECRETARY OF PUBLIC WORKS AND
COMMUNICATIONS, Respondents-Appellees.

care), the Commissioner of Civil Service exonerated him, on the basis of


findings made by a committee. But the Civil Service Board of Appeals
modified the decision, finding petitioner guilty of contributory negligence in
not pumping the water from the bilge, and ordered that he be considered
resigned effective his last day of duty with pay, without prejudice to
reinstatement at the discretion of the appointing officer.

Gonzalo U. Garcia for Appellant.


Solicitor General Ambrosio Padilla and Solicitor Eriberto D. Ignacio
for Appellees.

Petitioner filed an action in the Court of First Instance of Manila to review the
decision, but the said court dismissed the action on a motion to dismiss, on
the ground that petitioner had not exhausted all his administrative remedies
before he instituted the action. The case is now before us on appeal against
the order of dismissal.

SYLLABUS
The law which was applied by the lower court is Section 2 of Commonwealth
Act No. 598, which provides:jgc:chanrobles.com.ph
1. CIVIL SERVICE BOARD OF APPEALS; DECISION OF, REVIEWABLE BY THE
PRESIDENT; JUDICIAL REVIEW OF PRESIDENTS DECISION DOES NOT MAKE
EXECUTIVE SUBORDINATE TO COURTS. When a presidential act is
challenged before the courts of justice, it is not to be implied therefrom that
the Executive is being made subject and subordinate to the courts. The
legality of his acts are under judicial review, not because the executive is
inferior to the courts, but because the law is above the Chief Executive
himself, and the courts seek only to interpret, apply or implement the law. A
judicial review of the Presidents decision on a case of an employee decided
by the Civil Service Board of Appeals should be viewed in this light and the
bringing of the case to the courts should be governed by the same principles
as govern the judicial review of all administrative acts of all administrative
officers.
2. ID.; APPEAL FROM DECISION OF; EXHAUST ALL ADMINISTRATIVE
REMEDIES FIRST BEFORE RESOLVING TO COURTS. The doctrine of
exhaustion of administrative remedies requires that where an administrative
remedy is provided by statute, relief must be sought by exhausting this
remedy before the courts will act. If, as in this case, the President, under
whom the Civil Service directly falls in our administrative system as head of
the executive department may be able to grant the remedy that petitioner
pursues, reasons of comity and orderly procedure demand that resort be
made to him before recourse can be had to the courts.
DECISION
LABRADOR, J.:
Petitioner-appellant was on and before January, 1953, a watchman of the
Floating Equipment Section, Ports and Harbors Division, Bureau of Public
Works. In Administrative Case No. R-8182 instituted against him for
negligence in the performance of duty (Dredge No. 6 under him had sunk
because of water in the bilge, which he did not pump out while under his

"The Civil Service Board of Appeals shall have the power and authority to
hear and decide all administrative cases brought before it on appeal, and its
decisions in such cases shall be final, unless revised or modified by the
President of the Philippines."cralaw virtua1aw library
It is urged on the appeal that there is no duty imposed on a party against
whom a decision has been rendered by the Civil Service Board of Appeals to
appeal to the President, and that the tendency of courts has been not to
subject the decision of the President to judicial review. It is further argued
that if decisions of the Auditor General may be appealed to the courts, those
of the Civil Service Board of Appeals need not be acted upon by the
President also, before recourse may be had to the courts. It is also argued
that if a case is appealed to the President, his action should be final and not
reviewable by the courts because such a course of action would be
derogatory to the high office of the President.
The objection to a judicial review of a Presidential act arises from a failure to
recognize the most important principle in our system of government, i.e.,
the separation of powers into three co-equal departments, the executive,
the legislative and the judicial, each supreme within its own assigned powers
and duties. When a presidential act is challenged before the courts of
justice, it is not to be implied therefrom that the Executive is being made
subject and subordinate to the courts. The legality of his acts are under
judicial review, not because the Executive is inferior to the courts, but
because the law is above the Chief Executive himself, and the courts seek
only to interpret, apply or implement it (the law). A judicial review of the
Presidents decision on a case of an employee decided by the Civil Service
Board of Appeals should be viewed in this light and the bringing of the case
to the courts should be governed by the same principles as govern the
judicial review of all administrative acts of all administrative officers.
The doctrine of exhaustion of administrative remedies requires that where
an administrative remedy is provided by statute, as in this case, relief must
be sought by exhausting this remedy before the courts will act. (42 Am. Jur.
580-581.) The doctrine is a device based on considerations of comity and

convenience. If a remedy is still available within the administrative


machinery, this should be resorted to before resort can be made to the
courts, not only to give the administrative agency opportunity to decide the
matter by itself correctly, but also to prevent unnecessary and premature
resort to the courts. (Ibid.)
Section 2 of Commonwealth Act No. 598 above-quoted is a clear expression
of the policy or principle of exhaustion of administrative remedies. If the
President, under whom the Civil Service directly falls in our administrative
system as head of the executive department, may be able to grant the
remedy that petitioner pursues, reasons of comity and orderly procedure
demand that resort be made to him before recourse can be had to the
courts. We have applied this same rule in De la Paz v. Alcaraz, Et Al., 99 Phil.,
130, 52 Off. Gaz., 3037, Miguel, Et. Al. v. Reyes, Et Al., 93 Phil., 542, and
especially in Ang Tuan Kai & Co. v. The Import Control Commission, 91 Phil.,
143, and we are loathe to deviate from the rule we have consistently
followed, especially in view of the express provision of the law (section 2,
Commonwealth Act No. 598).
The judgment appealed from is affirmed, with costs against Appellant.
Bengzon, Padilla, Montemayor, Reyes, A., Bautista Angelo, Concepcion,
Reyes, J.B.L., Endencia and Felix, JJ., concur.

G.R. No. L-54554 March 30, 1981


EUSTAQUIO M. MEDALLA, JR., petitioner,
vs.
THE HONORABLE MARCELINO N. SAYO, Judge of the CFI of Rizal,
Branch XXXIII and HONORATO G. MACKAY, acting Hospital
Administrator of the Caloocan City General Hospital and the CITY
MAYOR OF CALOOCAN, respondents.
MELENCIO-HERRERA, J.:
In this Petition for "Certiorari, mandamus and Prohibition", seeking the
dismissal of Civil Case No. C-7770 below, we have, as factual background,
the following:
Petitioner, Dr. Eustaquio M. Medalla, Jr., is the Chief of Clinics of the Caloocan
City General Hospital, Caloocan City. Private respondent,, Dr. Honorato G.
Mackay was the Resident Physician thereat.
When the position of Assistant, hospital Administrator of the Caloocan City
General Hospital became vacant upon the resignation of the incumbent,
former Caloocan City Mayor Alejandro A. Fider designated and subsequently
appointed, as Assistant Hospital Administrator private respondent Dr.
Mackay, a Resident Physician in said hospital. Petitioner, Dr. Medalla, Jr.,
protested Dr. Mackay's designation and subsequent appointment alleging
among others that, as Chief of Clinics, he (Medalla) was next-in-rank. The
then Acting City Mayor Virgilio P. Robles, who succeeded former Mayor, now
Assemblyman Alejandro A. Fider, in his 4th Indorsement dated September
20, 1978, sustained Mackay's appointment stating:
... as of April 18, 1978 when Dr. Honorato G. Mackay was promoted to
Assistant Hospital Administrator from his previous position of Resident
Physician, he was next in rank to the said higher position by reason of his
having completed all academic requirements for the Certificate in Hospital
Administration ... contrary to the claim of Dr. Eustaquio Medalla, Jr. in his
letter of May 2, 1978.
xxx xxx xxx
Dissatisfied, Medalla elevated his case to the Civil Service Commission on
appeal. On December 29, 1978, the Civil Service Merit Systems Board issued
Resolution No. 49 sustaining Medalla's appeal and revoking Mackay's

appointment as Assistant Hospital Administrator. The pertinent portion of the


aforestated Resolution reads:
A perusal of the records shows that appellant Medalla is the Chief of Clinics
of the Caloocan City General Hospital; he is a holder of the Degree of Doctor
of Medicine; he has completed the requirements in Hospital Administration
and is recommended for the title of Certificate in Hospital Administration; he
is also a candidate of a Masters degree in Hospital Administration He
possesses the First Grade eligibility (BA 1080) and had undergone relevant
training in Hospital Administration. His performance rating is 'Very
Satisfactory'.
On the other hand, appellee Mackay had been a Resident Physician, the
position he held prior to his promotion to the contested position. He is a
holder of the degree of Doctor of Medicine and is a First Grade eligible (BA
1080-Medical Board). He is a graduate student in Hospital Administration
and as completed all academic requirements for a certificate in Hospital
Administration. His performance rating is "Very Satisfactory".
A perusal of the organizational chart of the Ospital ng Caloocan approved by
the Hospital Administrator would show that the Chief of Clinics is the next
lower position to the Assistant Hospital Administrator. The Resident
Physician is not a next lower position to the Assistant Hospital Administrator.
Therefore, Medalla and not Mackay is the person next in rank who may be
promoted to the position involved.
Moreover, even on the basis of competence and qualifications to perform
the duties of the position, the records show that Dr. Medalla is more
competent and qualified than Dr. Mackay. The qualification relied upon by
the Acting City Mayor in justifying the appointment of Dr. Mackay which is
his having completed the academic requirements for the Certificate in
Hospital Administration does not give Dr. Mackay the advantage inasmuch
as Dr. Medalla has also completed the academic requirements for a
certificate in Hospital Administration and is recommended for a title of
Certificate in Hospital Administration apart from being also a candidate for a
Masters degree in Hospital Administration. 1
xxx xxx xxx
Upon automatic review by the Office of the President, pursuant to section
19(6), PD No. 807, Presidential Executive Assistant Jacobo C. Clave rendered
a Decision on April 24, 1979 declaring that:
WHEREFORE, premises considered, and as recommended by Civil Service
Commission, the appointment of Dr. Honorato G. Mackay as Assistant
Hospital Administrator in the Caloocan City General Hospital is hereby
revoked and the position awarded in favor of appellant Dr. Eustaquio M.
Medalla. 2
The Acting City Mayor, on behalf of Mackay, moved for reconsideration.
On May 7, 1979, totally disregarding the Decision of the Office of the
President, the same Acting City Mayor appointed Mackay, this time as
Hospital Administrator, and designated Dr. Tantoco as his Assistant, thereby
again completely bypassing Medalla. Mackay took his oath of office on May
7, 1979.

On June 27, 1979, however, the Civil Service Commission, acting on


Medalla's protest, and besides calling attention to the penal provision of P.D.
No. 807, disapproved Mackay's appointment as follows:
Wherefore, premises considered and finding the protest of Dr. Medalla in
order, the appointment of Dr. Mackay as hospital Administrator at P26,388
per annum effective May 7, 1979 is hereby disapproved. it is hereby ordered
that Dr. Medalla be appointed to the position of Hospital Administrator of the
Caloocan City General Hospital. 3
On July 20, 1979, Mackay moved for reconsideration asserting 1) denial of
due process of law inasmuch as the contested Resolution/Decisions were
issued ex-parte, and 2) that the Civil Service Commission can not ignore nor
overrule an appointment made by a City Executive.
Without awaiting the resolution of his Motion for Consideration- Mackay filed,
on July 23, 1979, before tile Court of First Instance of Rizal, Caloocan City,
presided by respondent, Judge, a Petition for "Certiorari, Prohibition and
mandamus with Preliminary Injunction and Damages" civil Case No. C7770)
against Hon. Jacobo Clave, the Civil Service Commission, the Acting City
Mayor, the City Treasurer, and Medalla, praying that said respondents be
restrained from implementing the Decision of Hon. Jacobo Clave of April 24,
1979, the Resolution No. 49 of the Merit Systems Board dated December 29,
1978, and the Decision of the Civil Service Commission of June 27, 1979. The
Court a quo issued the Restraining Order prayed for on July 25, 1979
enjoining implementation of the aforestated Resolution/Decisions.
On August 2, 1979, Medalla moved to dissolve the Restraining Order and to
dismiss the Petition alleging mainly that Mackay had not exhausted his
administrative remedies and that the latter's right to a Writ of Preliminary
Injunction was not only dubious or debatable but was clearly non-existent.
Hon. Jacobo Clave and the Civil Service Commission likewise filed a Motion
to Dismiss on the same ground of failure to exhaust administrative
remedies.
On August 13, 1979, Mackay moved to suspend proceedings pending final
resolution by the Civil Service Commission of his Motion for the
reconsideration of the Decision of said Commission dated June 27, 1979.
On September 24, 1979, the Trial Court denied both Motions to Dismiss filed
by Medalla, on the one hand, and Hon. Clave and the Civil Service
Commission, on the other, holding that Mackay's failure to await resolution
of his Motions for Reconsideration pending before the Office of the President
and the Civil Service Commission did not deprive him of a cause of action
besides the fact that according to the respective Manifestations of the said
Offices, the Motions for Reconsideration had already been resolved
adversely against Mackay.
Acting on Medalla's Motion for Reconsideration thereof as well as his Motion
to Lift Restraining Order, the Court a quo, in its Order of July 15, 1980,
denied reconsideration but lifted the Restraining Order "there being no
showing that petitioner is entitled to the issuance of a Writ of Preliminary
Injunction. " Respondent Judge then set the case for hearing.
At this juncture, Medalla instituted this Petition before us praying that the
Court a quo be restrained from proceeding with the hearing and that
judgment be rendered as follows:
1. Ordering the Honorable Marcelino N. Sayo, Judge of the Court of First

Instance of Rizal Branch XXXIII, Caloocan City, to dismiss respondent


Mackay's petitions, on the ground of lack of jurisdiction and/or nonexhaustion of administrative remedies resulting to a lack of cause of action;
2. Declaring the decision of the Office of the President (Annex "C") and the
Merit Systems Board (Annex "E") as valid and enforceable. 4

We issued a Restraining Order on August 27, 1980 enjoining respondents


from proceeding with the case below.
On November 7, 1980, we required petitioner Medalla to implead the Mayor
of Caloocan City as party-respondent, and the latter to comment on the
Petition and to state whether he is ready to issue an appointment to Medalla
as Hospital Administrator, Medalla's rights thereto having been upheld by
the Civil Service Merit Systems Board and by the Office of the President.
In his Compliance, Medalla included an additional prayer that the City Mayor
of Caloocan be ordered to immediately appoint him as Hospital
Administrator and to pay him salary differentials.
In his Comment, the City Mayor of Caloocan invoked the privilege of an
appointing authority to determine who can best fulfill the functions of an
office citing the case of Aguilar vs. Nieva, Jr. 5 to that effect. And as to the
matter of his readiness to issue an appointment to Medalla, he manifested
his preference to withhold action pending Mackay's unresolved Motion for
Reconsideration of the Decision of June 27, 1979 of the Civil Service Merit
Systems Board.
Petitioner Medalla submits that the Trial Court erred in not dismissing
Mackay's Petition before it, there being a clear showing of non-exhaustion of
administrative remedies, and that said Court was devoid of jurisdiction in
reviewing on certiorari decisions of the Office of the President and of the
Civil service Commission rendered in the exercise of their quasi-judicial
functions.
Private respondent Mackay takes the contrary view and prays, instead, that
the contested Decisions/Resolution be declared null and void and
respondent Judge ordered to proceed with the hearing of the case below.
Although Mackay's Motions for Reconsideration were, in fact, still pending
resolution by Hon. Jacobo C. Clave and the Civil Service Commission,
respectively, at the time private respondent Mackay filed the Petition below,
dismissal of said Petition can no longer be anchored on the ground of nonexhaustion of administrative remedies, as Medalla prays, considering that
Manifestations dated August 17 and 23, 1979 filed by the said parties before
the Court a quo show that they had resolved the incidents adversely against
Mackay. 6 That issue, therefore, has become moot and academic.
In so far as jurisdiction of the Court below to review by certiorari decisions
and/or resolutions of the Civil Service Commission and of the Presidential
Executive Assistant is concerned, there should be no question but that the
power of judicial review should be upheld. The following rulings buttress this
conclusion:
The objection to a judicial review of a Presidential act arises from a failure to
recognize the most important principle in our system of government, i.e.,
the separation of powers into three coequal departments, the executive, the
legislative and the judicial, each supreme within its own assigned powers

and duties. When a presidential act is challenged before the courts of


justice, it is not to be implied therefrom that the Executive is being made
subject and subordinate to the courts. The legality of his acts are under
judicial review, not because the Executive is inferior to the courts, but
because the law is above the Chief Executive himself, and the courts seek
only to interpret, apply or implement it (the law). A judicial review of the
President's decision on a case of an employee decided by the Civil Service
Board of Appeals should be viewed in this light and the bringing of the case
to the Courts should be governed by the same principles as govern the
judicial review of all administrative acts of all administrative officers. 7
The courts may always examine into the exercise of power by a ministerial
officer to the extent of determining whether the particular power has been
granted to the officer, whether it is a legal power that could have been
granted to him, and whether it has been exercised in a legal manner. This
jurisdiction does not depend upon an act of the legislature authorizing it, but
inheres in the courts of general jurisdiction as an essential function of the
judicial department (State Racing Commission v. Latonia Agri. Asso. 123 SW
68 1). 8 (emphasis supplied).
For the speedy determination of the controversy, however, and considering
that the position involved is infused with public interest, rather than remand
the case to the Court below for further proceedings, we hold that grave
abuse of discretion on the part of Hon. Jacobo C. Clave and the Civil Service
Merit Systems Board is absent.
To start with, under the Revised Charter of the City of Caloocan RA No.
5502), it is clear that the power of appointment by the City Mayor of heads
of offices entirely paid out of city funds is subject to Civil Service law, rules
and regulations (ibid., section 19). The Caloocan City General Hospital is one
of the city departments provided for in the said law (ibid., sec. 17). The
Hospital Administrator is appointed by the City Mayor (ibid., section 66-B).
The Hospital Administrator is the head of the City General Hospital
empowered to administer, direct, and coordinate all activities of the hospital
to carry out its objectives as to the care of the sick and the injured (ibid.).
Under section 19 (3) of the Civil Service Decree (PD No. 807, effective on
October 6, 1975), the recruitment or selection of employees for promotions
is drawn from the next-in-rank.
SEC. 19. Recruitment and Selection of Employees.
xxx xxx xxx
(3) When a vacancy occurs in a position in the second level of the Career
Service as defined in Section 7, the employees in the government service
who occupy the next lower positions i the occupational group under which
the vacant position is classified and in other functionally related
occupational groups and who are competent, qualified and with the
appropriate civil service eligibility shall be considered for promotion.
Section 19 (6) of the same Decree provides for the administrative procedure
by an aggrieved employee in case of non-observance by the appointing
authority of the next-in-rank rule, thus:
Sec. 19(6) A qualified next-in-rank employee shall have the right to appeal
initially, to the department head and finally to the Office of the President an
appointment made ... (2. in favor of one who is not next-in-rank, ... if the
employee making the appeal is not satisfied with the written special reason

or reasons given by the appointing authority for such appointment: ... Before
deciding a contested appointment the Office of the President shall consult
the Civil Service Commission. For purposes of this Section, .qualified next-inrank' refers to an employee appointed on a permanent basis to a position
previously determined to be next-in- rank to the vacancy proposed to be
filled and who meets the requisites for appointment thereto as previously
determined by the appointing authority and approved by the Commission.
The prescribed procedure has been followed by petitioner Medalla He had
appealed to the department head and from thence, in view of the latter's
unfavorable action, to the Civil Service Commission and thereafter to the
Office of the President. Resolution No. 49 of the Civil Service Merit Systems
Board its Decision of June 27, 1979, and the Decision of the presidential
Executive Assistant dated April 24, 1979, were all rendered in Medalla's
favor. The special reason given by the Acting City Mayor for Mackay's
appointment, which is, that lie had completed all academic requirements for
the Certificate of Hospital Administration, is not tenable, since Medalla
himself was found to be in possession of the same qualification. But while
the qualifications of both petitioner Medalla and private respondent Mackay
are at par, yet, it is clear that the position of Chief of Clinics is the next lower
position to I hospital Administrator under the organizational line-up of the
hospital. Consequently, at the time of Mackays appointment as Assistant
Hospital Administrator and subsequently hospital Administrator, Medalla
outranked Mackay who was only a Resident Physician and, therefore, as the
next-in rank, Medalla is entitled to appointment as Hospital Administrator.
Respondent Mackay's urging that he was denied due process deserves scant
consideration considering that subsequent developsments in the case
establish that he was heardon his Motions for Reconsideration by both the
Civil Service Commission and the office of the President.
It is true that, as the respondent City Mayor alleges, a local executive should
be allowed the choice of men of his confidence, provided they are qualified
and elligible, who in his best estimation are possesses of the requisite
reputation, integrity, knowledgeability, energy and judgement. 9 However,
as reproduced heretofore, the Decision of the Civil Service Merit Systems
Board, upheld by the Office of the President, contains a judicious assessment
of the qualifications of both petitioner Medalla and private respondent
Mackay for the contested position, revealing a careful study of the
controversy between the parties, which cannot be ignored. The revocation of
Mackay's appointment reveals no arbitrariness nor grave abuse of
discretion.
WHEREFORE, 1) the appointment extended to private respondent, Dr.
Honorato C. Mackay, as Hospital Administrator is hereby declared null and
void; 2) respondent City Mayor of Caloocan City is hereby ordered to extend
an appointment to petitioner, Dr. Eustaquio M. Medalla, as Hospital
Administrator of the Caloocan City General Hospital immediately upon notice
of this Decision; 3) petitioner, Dr. Eustaquio M. Medalla, shall receive all
compensation and emoluments appertaining to said position thenceforth,
but without entitlement to salary differentials; and 4) respondent Judge is
hereby permanently enjoined from further proceeding with Civil Case No.
7770.
This Decision is immediately executory. No costs.
SO ORDERED.

Teehankee (Chairman), Makasiar, Fernandez and Guerrero, JJ., concur,.

G.R. No. L-30637


July 16, 1987
LIANGA BAY LOGGING, CO., INC., petitioner, vs.
HON. MANUEL LOPEZ ENAGE, in his capacity as Presiding Judge of
Branch II of the Court of First, Instance of Agusan, and AGO TIMBER
CORPORATION, respondents.
TEEHANKEE, C.J.:
The Court grants the petition for certiorari and prohibition and holds that
respondent judge, absent any showing of grave abuse of discretion, has no
competence nor authority to review anew the decision in administrative
proceedings of respondents public officials (director of forestry, secretary of
agriculture and natural resources and assistant executive secretaries of the
Office of the President) in determining the correct boundary line of the
licensed timber areas of the contending parties. The Court reaffirms the
established principle that findings of fact by an administrative board or
agency or official, following a hearing, are binding upon the courts and will
not be disturbed except where the board, agency and/or official(s) have
gone beyond their statutory authority, exercised unconstitutional powers or
clearly acted arbitrarily and without regard to their duty or with grave abuse
of discretion.
The parties herein are both forest concessionaries whose licensed areas are
adjacent to each other. The concession of petitioner Lianga Bay Logging
Corporation Co., Inc. (hereinafter referred to as petitioner Lianga) as
described in its Timber License Agreement No. 49, is located in the
municipalities of Tago, Cagwait, Marihatag and Lianga, all in the Province of
Surigao, consisting of 110,406 hectares, more or less, while that of
respondent Ago Timber Corporation (hereinafter referred to as respondent
Ago) granted under Ordinary Timber License No. 1323-60 [New] is located at
Los Arcos and San Salvador, Province of Agusan, with an approximate area
of 4,000 hectares. It was a part of a forest area of 9,000 hectares originally
licensed to one Narciso Lansang under Ordinary Timber License No. 584-'52.
Since the concessions of petitioner and respondent are adjacent to each
other, they have a common boundary-the Agusan-Surigao Provincial
boundary-whereby the eastern boundary of respondent Ago's concession is
petitioner Lianga's western boundary. The western boundary of petitioner
Lianga is described as "... Corner 5, a point in the intersection of the AgusanSurigao Provincial boundary and Los Arcos-Lianga Road; thence following
Agusan-Surigao Provincial boundary in a general northerly and northwesterly
and northerly directions about 39,500 meters to Corner 6, a point at the
intersection of the Agusan-Surigao Provincial boundary and Nalagdao
Creek ..." The eastern boundary of respondent Ago's concession is described
as "... point 4, along the Agusan-Surigao boundary; thence following AgusanSurigao boundary in a general southeasterly and southerly directions about
12,000 meters to point 5, a point along Los Arcos-Lianga Road; ..." 1
Because of reports of encroachment by both parties on each other's
concession areas, the Director of Forestry ordered a survey to establish on
the ground the common boundary of their respective concession areas.

Forester Cipriano Melchor undertook the survey and fixed the common
boundary as "Corner 5 of Lianga Bay Logging Company at Km. 10.2 instead
of Km. 9.7 on the Lianga-Arcos Road and lines N900E, 21,000 meters; N12
W, 21,150 meters; N40 W, 3,000 meters; N31 W, 2,800 meters; N50 W,
1,700 meters" which respondent Ago protested claiming that "its eastern
boundary should be the provincial boundary line of Agusan-Surigao as
described in Section 1 of Art. 1693 of the Philippine Commission as indicated
in the green pencil in the attached sketch" of the areas as prepared by the
Bureau of Forestry. 2 The Director of Forestry, after considering the evidence,
found:
That the claim of the Ago Timber Corporation portrays a line (green line) far
different in alignment with the line (red) as indicated in the original License
Control Map of this Office;
That the claim of the Ago Timber Corporation (green line does not conform
to the distance of 6,800 meters from point 3 to point 4 of the original
description of the area of Narciso Lansang but would project said line to a
distance of approximately 13,800 meters;
That to follow the claim of the Ago Timber Corporation would increase the
area of Narciso Lansang from 9,000 to 12,360 hectares;
That to follow the claim of the Ago Timber Corporation would reduce the
area of the Lianga Bay Logging, Co., Inc. to 107,046 hectares instead of the
area granted which is 110,406 hectares.
and ruled that "the claim of the Ago Timber Corporation runs counter to the
intentions of this Office is granting the license of Mr. Narciso Lansang; and
further, that it also runs counter to the intentions of this Office in granting
the Timber License Agreement to the Lianga Bay Logging Co., Inc. The
intentions of this Office in granting the two licenses (Lansang and Lianga
Bay Logging Co., Inc.) are patently manifest in that distances and bearings
are the controlling factors. If mention was ever made of the Agusan-Surigao
boundary, as the common boundary line of both licensees, this Office could
not have meant the Agusan-Surigao boundary as described under Section 1
of Act 1693 of the Philippine Commission for were it so it could have been so
easy for this Office to mention the distance from point 3 to point 4 of Narciso
Lansang as approximately 13,800 meters. This cannot be considered a
mistake considering that the percentage of error which is more or less 103%
is too high an error to be committed by an Office manned by competent
technical men. The Agusan-Surigao boundary as mentioned in the technical
descriptions of both licensees, is, therefore, patently an imaginary line based
on B.F. License Control Map. Such being the case, it is reiterated that
distance and bearings control the description where an imaginary line exists.
3
The decision fixed the common boundary of the licensed areas of the Ago
Timber Corporation and Lianga Bay Logging Co., Inc. as that indicated in red
pencil of the sketch attached to the decision.
In an appeal interposed by respondent Ago, docketed in the Department of
Agriculture and Natural Resources as DANR Case No. 2268, the then Acting
Secretary of Agriculture and Natural Resources Jose Y. Feliciano, in a decision
dated August 9, 1965 set aside the appealed decision of the Director of
Forestry and ruled that "(T)he common boundary line of the licensed areas
of the Ago Timber Corporation and the Lianga Bay Logging Co., Inc., should
be that indicated by the green line on the same sketch which had been
made an integral part of the appealed decision." 4

Petitioner elevated the case to the Office of the President, where in a


decision dated June 16, 1966, signed by then Assistant Executive Secretary
Jose J. Leido, Jr., the ruling of the then Secretary of Agriculture and Natural
Resources was affirmed. 5 On motion for reconsideration, the Office of the
President issued another decision dated August 9, 1968 signed by then
Assistant Executive Secretary Gilberto Duavit reversing and overturning the
decision of the then Acting Secretary of Agriculture and Natural Resources
and affirming in toto and reinstating the decision, dated March 20, 1961, of
the Director of Forestry. 6
Respondent Ago filed a motion for reconsideration of the decision dated
August 9, 1968 of the Office of the President but after written opposition of
petitioner Lianga, the same was denied in an order dated October 2, 1968,
signed by then Assistant Executive Secretary Jose J. Leido, Jr. 7
On October 21, 1968, a new action was commenced by Ago Timber
Corporation, as plaintiff, in the Court of First Instance of Agusan, Branch II,
docketed thereat as Civil Case No. 1253, against Lianga Bay Logging Co.,
Inc., Assistant Executive Secretaries Jose J. Leido, Jr. and Gilberto M. Duavit
and Director of Forestry, as defendants, for "Determination of Correct
Boundary Line of License Timber Areas and Damages with Preliminary
Injunction" reiterating once more the same question raised and passed upon
in DANR Case No. 2268 and insisting that "a judicial review of such divergent
administrative decisions is necessary in order to determine the correct
boundary fine of the licensed areas in question." 8
As prayed for, respondent judge issued a temporary restraining order on
October 28, 1968, on a bond of P20,000, enjoining the defendants from
carrying out the decision of the Office of the President. The corresponding
writ was issued the next day, or on October 29, 1968. 9
On November 10, 1968, defendant Lianga (herein petitioner) moved for
dismissal of the complaint and for dissolution of the temporary restraining
order on grounds that the complaint states no cause of action and that the
court has no jurisdiction over the person of respondent public officials and
respondent corporation. It also submitted its opposition to plaintiff's (herein
respondent prayer for the issuance of a writ of preliminary injunction. 10 A
supplemental motion was filed on December 6, 1968. 11
On December 19, 1968, the lower court issued an order denying petitioner
Lianga's motion to dismiss and granting the writ of preliminary injunction
prayed for by respondent Ago. 12 Lianga's Motion for Reconsideration of the
Order was denied on May 9, 1969. 13 Hence, this petition praying of the
Court (a) to declare that the Director of Forestry has the exclusive
jurisdiction to determine the common boundary of the licensed areas of
petitioners and respondents and that the decision of the Office of the
President dated August 9, 1968 is final and executory; (b) to order the
dismissal of Civil Case No. 1253 in the Court of First Instance of Agusan; (c)
to declare that respondent Judge acted without jurisdiction or in excess of
jurisdiction and with grave abuse of discretion, amounting to lack of
jurisdiction, in issuing the temporary restraining order dated October 28,
1968 and granting the preliminary injunction per its Order dated December
19, 1968; and (d) to annul the aforementioned orders.
After respondent's comments on the petition and petitioner's reply thereto,
this Court on June 30, 1969 issued a restraining order enjoining in turn the
enforcement of the preliminary injunction and related orders issued by the

respondent court in Civil Case No. 1253. 14


The Court finds merit in the petition.
Respondent Judge erred in taking cognizance of the complaint filed by
respondent Ago, asking for the determination anew of the correct boundary
fine of its licensed timber area, for the same issue had already been
determined by the Director of Forestry, the Secretary of Agriculture and
Natural Resources and the Office of the President, administrative officials
under whose jurisdictions the matter properly belongs. Section 1816 of the
Revised Administrative Code vests in the Bureau of Forestry, the jurisdiction
and authority over the demarcation, protection, management, reproduction,
reforestation, occupancy, and use of all public forests and forest reserves
and over the granting of licenses for game and fish, and for the taking of
forest products, including stone and earth therefrom. The Secretary of
Agriculture and Natural Resources, as department head, may repeal or in the
decision of the Director of Forestry when advisable in the public interests, 15
whose decision is in turn appealable to the Office of the President. 16
In giving due course to the complaint below, the respondent court would
necessarily have to assess and evaluate anew all the evidence presented in
the administrative proceedings, 17 which is beyond its competence and
jurisdiction. For the respondent court to consider and weigh again the
evidence already presented and passed upon by said officials would be to
allow it to substitute its judgment for that of said officials who are in a better
position to consider and weigh the same in the light of the authority
specifically vested in them by law. Such a posture cannot be entertained, for
it is a well-settled doctrine that the courts of justice will generally not
interfere with purely administrative matters which are addressed to the
sound discretion of government agencies and their expertise unless there is
a clear showing that the latter acted arbitrarily or with grave abuse of
discretion or when they have acted in a capricious and whimsical manner
such that their action may amount to an excess or lack of jurisdiction. 18
A doctrine long recognized is that where the law confines in an
administrative office the power to determine particular questions or matters,
upon the facts to be presented, the jurisdiction of such office shall prevail
over the courts. 19
The general rule, under the principles of administrative law in force in this
jurisdiction, is that decisions of administrative officers shall not be disturbed
by the courts, except when the former have acted without or in excess of
their jurisdiction, or with grave abuse of discretion. Findings of
administrative officials and agencies who have acquired expertise because
their jurisdiction is confined to specific matters are generally accorded not
only respect but at times even finality of such findings are supported by
substantial evidence. 20 As recently stressed by the Court, "in this era of
clogged court dockets, the need for specialized administrative boards or
commissions with the special knowledge, experience and capability to hear
and determine promptly disputes on technical matters or essentially factual
matters, subject to judicial review in case of grave abuse of discretion, has
become well nigh indispensable." 21
The facts and circumstances in the instant case are similar to the earlier
case of Pajo, et al. v. Ago, et al. 22(where therein respondent Pastor Ago is
the president of herein respondent Ago Timber Corporation). In the said
case, therein respondent Pastor Ago, after an adverse decision of the

Director of Forestry, Secretary of Agriculture and Natural Resources and


Executive Secretary in connection with his application for renewal of his
expired timber licenses, filed with the Court of First instance of Agusan a
petition for certiorari, prohibition and damages with preliminary injunction
alleging that the rejection of his application for renewal by the Director of
Forestry and Secretary of Agriculture and Natural Resources and its
affirmance by the Executive Secretary constituted an abuse of discretion and
was therefore illegal. The Court held that "there can be no question that
petitioner Director of Forestry has jurisdiction over the grant or renewal of
respondent Ago's timber license (Sec. 1816, Rev. Adm. Code); that petitioner
Secretary of Agriculture and Natural Resources as department head, is
empowered by law to affirm, modify or reject said grant or renewal of
respondent Ago's timber license by petitioner Director of Forestry (Sec.
79[c], Rev. Adm. Code); and that petitioner Executive Secretary, acting for
and in behalf and by authority of the President has, likewise, jurisdiction to
affirm, modify or reverse the orders regarding the grant or renewal of said
timber license by the two aforementioned officials." The Court went on to
say that, "(I)n the case of Espinosa, et al. v. Makalintal, et al. (79 Phil. 134;
45 Off. Gaz. 712), we held that the powers granted to the Secretary of
Agriculture and Commerce (Natural Resources) by law regarding the
disposition of public lands such as granting of licenses, permits, leases, and
contracts or approving, rejecting, reinstating, or cancelling applications or
deciding conflicting applications, are all executive and administrative in
nature. It is a well-recognized principle that purely administrative and
discretionary functions may not be interfered with by the courts. In general,
courts have no supervising power over the proceedings and actions of the
administrative departments of the government. This is generally true with
respect to acts involving the exercise of judgment or discretion, and findings
of act. Findings of fact by an administrative board, agency or official,
following a hearing, are binding upon the courts and will not be disturbed
except where the board, agency or official has gone beyond his statutory
authority, exercised unconstitutional powers or clearly acted arbitrarily and
without regard to his duty or with grave abuse of discretion. And we have
repeatedly held that there is grave abuse of discretion justifying the
issuance of the writ of certiorari only when there is capricious and whimsical
exercise of judgment as is equivalent to lack of jurisdiction. (Abad Santos v.
Province of Tarlac, 67 Phil. 480; Tan vs. People, 88 Phil. 609)"
Respondent Ago contends that the motion filed by petitioner Lianga for
reconsideration of the decision of the Office of the President was denied in
an alleged "decision" dated August 15, 1966, allegedly signed by then
Assistant Executive Secretary Jose J. Leido, Jr. that, "however, for some
mysterious, unknown if not anomalous reasons and/or illegal considerations,
the "decision" allegedly dated August 15, 1966(Annex "D") was never
released" and instead a decision was released on August 9, 1968, signed by
then Assistant Executive Secretary Gilberto M. Duavit, which reversed the
findings and conclusions of the Office of the President in its first decision
dated June 16, 1966 and signed by then Assistant Executive Secretary Leido.
It is elementary that a draft of a decision does not operate as judgment on a
case until the same is duly signed and delivered to the clerk for filing and
promulgation. A decision cannot be considered as binding on the parties
until its promulgation. 23 Respondent should be aware of this rule. In still

another case of Ago v. Court of Appeals,24 (where herein respondent Ago was
the petitioner) the Court held that, "While it is to be presumed that the
judgment that was dictated in open court will be the judgment of the court,
the court may still modify said order as the same is being put into writing.
And even if the order or judgment has already been put into writing and
signed, while it has not yet been delivered to the clerk for filing, it is stin
subject to amendment or change by the judge. It is only when the judgment
signed by the judge is actually filed wit