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G.R. No.

155650 July 20, 2006 On 17 July 2001, the City of Parañaque, through its City Treasurer, issued notices of levy and warrants of
MANILA INTERNATIONAL AIRPORT AUTHORITY, petitioner, levy on the Airport Lands and Buildings. The Mayor of the City of Parañaque threatened to sell at public
vs. auction the Airport Lands and Buildings should MIAA fail to pay the real estate tax delinquency. MIAA thus
COURT OF APPEALS, CITY OF PARAÑAQUE, CITY MAYOR OF PARAÑAQUE, SANGGUNIANG sought a clarification of OGCC Opinion No. 061.
PANGLUNGSOD NG PARAÑAQUE, CITY ASSESSOR OF PARAÑAQUE, and CITY TREASURER OF
PARAÑAQUE, respondents.
On 9 August 2001, the OGCC issued Opinion No. 147 clarifying OGCC Opinion No. 061. The OGCC pointed
The Antecedents
out that Section 206 of the Local Government Code requires persons exempt from real estate tax to show
proof of exemption. The OGCC opined that Section 21 of the MIAA Charter is the proof that MIAA is exempt
Petitioner Manila International Airport Authority (MIAA) operates the Ninoy Aquino International Airport from real estate tax.
(NAIA) Complex in Parañaque City under Executive Order No. 903, otherwise known as the Revised Charter
of the Manila International Airport Authority ("MIAA Charter"). Executive Order No. 903 was issued on 21
On 1 October 2001, MIAA filed with the Court of Appeals an original petition for prohibition and injunction,
July 1983 by then President Ferdinand E. Marcos. Subsequently, Executive Order Nos. 909 1 and
with prayer for preliminary injunction or temporary restraining order. The petition sought to restrain the
2982 amended the MIAA Charter.
City of Parañaque from imposing real estate tax on, levying against, and auctioning for public sale the
Airport Lands and Buildings. The petition was docketed as CA-G.R. SP No. 66878.
As operator of the international airport, MIAA administers the land, improvements and equipment within
the NAIA Complex. The MIAA Charter transferred to MIAA approximately 600 hectares of land, 3 including
On 5 October 2001, the Court of Appeals dismissed the petition because MIAA filed it beyond the 60-day
the runways and buildings ("Airport Lands and Buildings") then under the Bureau of Air
reglementary period. The Court of Appeals also denied on 27 September 2002 MIAA's motion for
Transportation.4 The MIAA Charter further provides that no portion of the land transferred to MIAA shall
reconsideration and supplemental motion for reconsideration. Hence, MIAA filed on 5 December 2002 the
be disposed of through sale or any other mode unless specifically approved by the President of the
present petition for review.7
Philippines.5

Meanwhile, in January 2003, the City of Parañaque posted notices of auction sale at the Barangay Halls
On 21 March 1997, the Office of the Government Corporate Counsel (OGCC) issued Opinion No. 061. The
of Barangays Vitalez, Sto. Niño, and Tambo, Parañaque City; in the public market of Barangay La Huerta;
OGCC opined that the Local Government Code of 1991 withdrew the exemption from real estate tax granted
and in the main lobby of the Parañaque City Hall. The City of Parañaque published the notices in the 3
to MIAA under Section 21 of the MIAA Charter. Thus, MIAA negotiated with respondent City of Parañaque
and 10 January 2003 issues of the Philippine Daily Inquirer, a newspaper of general circulation in the
to pay the real estate tax imposed by the City. MIAA then paid some of the real estate tax already due.
Philippines. The notices announced the public auction sale of the Airport Lands and Buildings to the
highest bidder on 7 February 2003, 10:00 a.m., at the Legislative Session Hall Building of Parañaque City.
On 28 June 2001, MIAA received Final Notices of Real Estate Tax Delinquency from the City of Parañaque
for the taxable years 1992 to 2001. MIAA's real estate tax delinquency is broken down as follows:
A day before the public auction, or on 6 February 2003, at 5:10 p.m., MIAA filed before this Court an
Urgent Ex-Parte and Reiteratory Motion for the Issuance of a Temporary Restraining Order. The motion
TAX DECLARATION TAXABLE YEAR TAX DUE PENALTY TOTAL sought to restrain respondents — the City of Parañaque, City Mayor of Parañaque, Sangguniang
Panglungsod ng Parañaque, City Treasurer of Parañaque, and the City Assessor of Parañaque
E-016-01370 1992-2001 19,558,160.00 11,201,083.20 30,789,243.20
("respondents") — from auctioning the Airport Lands and Buildings.
E-016-01374 1992-2001 111,689,424.90 68,149,479.59 179,838,904.49
E-016-01375 1992-2001 20,276,058.00 12,371,832.00 32,647,890.00
On 7 February 2003, this Court issued a temporary restraining order (TRO) effective immediately. The
E-016-01376 1992-2001 58,144,028.00 35,477,712.00 93,621,740.00 Court ordered respondents to cease and desist from selling at public auction the Airport Lands and
E-016-01377 1992-2001 18,134,614.65 11,065,188.59 29,199,803.24 Buildings. Respondents received the TRO on the same day that the Court issued it. However, respondents
E-016-01378 1992-2001 111,107,950.40 67,794,681.59 178,902,631.99 received the TRO only at 1:25 p.m. or three hours after the conclusion of the public auction.
E-016-01379 1992-2001 4,322,340.00 2,637,360.00 6,959,700.00
E-016-01380 1992-2001 7,776,436.00 4,744,944.00 12,521,380.00 On 10 February 2003, this Court issued a Resolution confirming nunc pro tunc the TRO.
*E-016-013-85 1998-2001 6,444,810.00 2,900,164.50 9,344,974.50
*E-016-01387 1998-2001 34,876,800.00 5,694,560.00 50,571,360.00 On 29 March 2005, the Court heard the parties in oral arguments. In compliance with the directive issued
during the hearing, MIAA, respondent City of Parañaque, and the Solicitor General subsequently submitted
*E-016-01396 1998-2001 75,240.00 33,858.00 109,098.00 their respective Memoranda.
GRAND TOTAL P392,435,861.95 P232,070,863.47 P 624,506,725.42
MIAA admits that the MIAA Charter has placed the title to the Airport Lands and Buildings in the name of
1992-1997 RPT was paid on Dec. 24, 1997 as per O.R.#9476102 for P4,207,028.75 MIAA. However, MIAA points out that it cannot claim ownership over these properties since the real owner
of the Airport Lands and Buildings is the Republic of the Philippines. The MIAA Charter mandates MIAA to
devote the Airport Lands and Buildings for the benefit of the general public. Since the Airport Lands and
#9476101 for P28,676,480.00
Buildings are devoted to public use and public service, the ownership of these properties remains with the
State. The Airport Lands and Buildings are thus inalienable and are not subject to real estate tax by local
#9476103 for P49,115.006 governments.
MIAA also points out that Section 21 of the MIAA Charter specifically exempts MIAA from the payment of (13) Government-owned or controlled corporation refers to any agency organized as a stock or
real estate tax. MIAA insists that it is also exempt from real estate tax under Section 234 of the Local non-stock corporation, vested with functions relating to public needs whether governmental or
Government Code because the Airport Lands and Buildings are owned by the Republic. To justify the proprietary in nature, and owned by the Government directly or through its instrumentalities
exemption, MIAA invokes the principle that the government cannot tax itself. MIAA points out that the either wholly, or, where applicable as in the case of stock corporations, to the extent of at least
reason for tax exemption of public property is that its taxation would not inure to any public advantage, fifty-one (51) percent of its capital stock: x x x. (Emphasis supplied)
since in such a case the tax debtor is also the tax creditor.
A government-owned or controlled corporation must be "organized as a stock or non-stock corporation."
Respondents invoke Section 193 of the Local Government Code, which expressly withdrew the tax MIAA is not organized as a stock or non-stock corporation. MIAA is not a stock corporation because it
exemption privileges of "government-owned and-controlled corporations" upon the effectivity of the Local has no capital stock divided into shares. MIAA has no stockholders or voting shares. Section 10 of the
Government Code. Respondents also argue that a basic rule of statutory construction is that the express MIAA Charter9 provides:
mention of one person, thing, or act excludes all others. An international airport is not among the
exceptions mentioned in Section 193 of the Local Government Code. Thus, respondents assert that MIAA
SECTION 10. Capital. — The capital of the Authority to be contributed by the National
cannot claim that the Airport Lands and Buildings are exempt from real estate tax.
Government shall be increased from Two and One-half Billion (P2,500,000,000.00) Pesos to Ten
Billion (P10,000,000,000.00) Pesos to consist of:
Respondents also cite the ruling of this Court in Mactan International Airport v. Marcos8 where we held
that the Local Government Code has withdrawn the exemption from real estate tax granted to international
(a) The value of fixed assets including airport facilities, runways and equipment and such other
airports. Respondents further argue that since MIAA has already paid some of the real estate tax
properties, movable and immovable[,] which may be contributed by the National Government or
assessments, it is now estopped from claiming that the Airport Lands and Buildings are exempt from real
transferred by it from any of its agencies, the valuation of which shall be determined jointly with
estate tax.
the Department of Budget and Management and the Commission on Audit on the date of such
contribution or transfer after making due allowances for depreciation and other deductions taking
The Issue into account the loans and other liabilities of the Authority at the time of the takeover of the assets
and other properties;
This petition raises the threshold issue of whether the Airport Lands and Buildings of MIAA are exempt
from real estate tax under existing laws. If so exempt, then the real estate tax assessments issued by the (b) That the amount of P605 million as of December 31, 1986 representing about seventy
City of Parañaque, and all proceedings taken pursuant to such assessments, are void. In such event, the percentum (70%) of the unremitted share of the National Government from 1983 to 1986 to be
other issues raised in this petition become moot. remitted to the National Treasury as provided for in Section 11 of E. O. No. 903 as amended, shall
be converted into the equity of the National Government in the Authority. Thereafter, the
Government contribution to the capital of the Authority shall be provided in the General
The Court's Ruling
Appropriations Act.

We rule that MIAA's Airport Lands and Buildings are exempt from real estate tax imposed by local
Clearly, under its Charter, MIAA does not have capital stock that is divided into shares.
governments.

Section 3 of the Corporation Code10 defines a stock corporation as one whose "capital stock is divided
First, MIAA is not a government-owned or controlled corporation but an instrumentality of the National
into shares and x x x authorized to distribute to the holders of such shares dividends x x x." MIAA
Government and thus exempt from local taxation. Second, the real properties of MIAA are owned by the
has capital but it is not divided into shares of stock. MIAA has no stockholders or voting shares. Hence,
Republic of the Philippines and thus exempt from real estate tax.
MIAA is not a stock corporation.

1. MIAA is Not a Government-Owned or Controlled Corporation


MIAA is also not a non-stock corporation because it has no members. Section 87 of the Corporation Code
defines a non-stock corporation as "one where no part of its income is distributable as dividends to its
Respondents argue that MIAA, being a government-owned or controlled corporation, is not exempt from members, trustees or officers." A non-stock corporation must have members. Even if we assume that the
real estate tax. Respondents claim that the deletion of the phrase "any government-owned or controlled so Government is considered as the sole member of MIAA, this will not make MIAA a non-stock corporation.
exempt by its charter" in Section 234(e) of the Local Government Code withdrew the real estate tax Non-stock corporations cannot distribute any part of their income to their members. Section 11 of the
exemption of government-owned or controlled corporations. The deleted phrase appeared in Section 40(a) MIAA Charter mandates MIAA to remit 20% of its annual gross operating income to the National
of the 1974 Real Property Tax Code enumerating the entities exempt from real estate tax. Treasury.11 This prevents MIAA from qualifying as a non-stock corporation.

There is no dispute that a government-owned or controlled corporation is not exempt from real estate tax. Section 88 of the Corporation Code provides that non-stock corporations are "organized for charitable,
However, MIAA is not a government-owned or controlled corporation. Section 2(13) of the Introductory religious, educational, professional, cultural, recreational, fraternal, literary, scientific, social, civil service,
Provisions of the Administrative Code of 1987 defines a government-owned or controlled corporation as or similar purposes, like trade, industry, agriculture and like chambers." MIAA is not organized for any of
follows: these purposes. MIAA, a public utility, is organized to operate an international and domestic airport for
public use.
SEC. 2. General Terms Defined. – x x x x
Since MIAA is neither a stock nor a non-stock corporation, MIAA does not qualify as a government-owned
or controlled corporation. What then is the legal status of MIAA within the National Government?
MIAA is a government instrumentality vested with corporate powers to perform efficiently its When local governments invoke the power to tax on national government instrumentalities, such power is
governmental functions. MIAA is like any other government instrumentality, the only difference is that construed strictly against local governments. The rule is that a tax is never presumed and there must be
MIAA is vested with corporate powers. Section 2(10) of the Introductory Provisions of the Administrative clear language in the law imposing the tax. Any doubt whether a person, article or activity is taxable is
Code defines a government "instrumentality" as follows: resolved against taxation. This rule applies with greater force when local governments seek to tax national
government instrumentalities.
SEC. 2. General Terms Defined. –– x x x x
Another rule is that a tax exemption is strictly construed against the taxpayer claiming the exemption.
However, when Congress grants an exemption to a national government instrumentality from local
(10) Instrumentality refers to any agency of the National Government, not integrated within the
taxation, such exemption is construed liberally in favor of the national government instrumentality. As this
department framework, vested with special functions or jurisdiction by law, endowed with some
Court declared in Maceda v. Macaraig, Jr.:
if not all corporate powers, administering special funds, and enjoying operational autonomy,
usually through a charter. x x x (Emphasis supplied)
The reason for the rule does not apply in the case of exemptions running to the benefit of the
government itself or its agencies. In such case the practical effect of an exemption is merely to
When the law vests in a government instrumentality corporate powers, the instrumentality does not become
reduce the amount of money that has to be handled by government in the course of its operations.
a corporation. Unless the government instrumentality is organized as a stock or non-stock corporation, it
For these reasons, provisions granting exemptions to government agencies may be construed
remains a government instrumentality exercising not only governmental but also corporate powers. Thus,
liberally, in favor of non tax-liability of such agencies.19
MIAA exercises the governmental powers of eminent domain,12 police authority13 and the levying of fees
and charges.14 At the same time, MIAA exercises "all the powers of a corporation under the Corporation
Law, insofar as these powers are not inconsistent with the provisions of this Executive Order."15 There is, moreover, no point in national and local governments taxing each other, unless a sound and
compelling policy requires such transfer of public funds from one government pocket to another.
Likewise, when the law makes a government instrumentality operationally autonomous, the
instrumentality remains part of the National Government machinery although not integrated with the There is also no reason for local governments to tax national government instrumentalities for rendering
department framework. The MIAA Charter expressly states that transforming MIAA into a "separate and essential public services to inhabitants of local governments. The only exception is when the legislature
autonomous body"16 will make its operation more "financially viable."17 clearly intended to tax government instrumentalities for the delivery of essential public services for
sound and compelling policy considerations. There must be express language in the law empowering
local governments to tax national government instrumentalities. Any doubt whether such power exists is
Many government instrumentalities are vested with corporate powers but they do not become stock or non-
resolved against local governments.
stock corporations, which is a necessary condition before an agency or instrumentality is deemed a
government-owned or controlled corporation. Examples are the Mactan International Airport Authority, the
Philippine Ports Authority, the University of the Philippines and Bangko Sentral ng Pilipinas. All these Thus, Section 133 of the Local Government Code states that "unless otherwise provided" in the Code,
government instrumentalities exercise corporate powers but they are not organized as stock or non-stock local governments cannot tax national government instrumentalities. As this Court held in Basco v.
corporations as required by Section 2(13) of the Introductory Provisions of the Administrative Code. These Philippine Amusements and Gaming Corporation:
government instrumentalities are sometimes loosely called government corporate entities. However, they
are not government-owned or controlled corporations in the strict sense as understood under the
The states have no power by taxation or otherwise, to retard, impede, burden or in any
Administrative Code, which is the governing law defining the legal relationship and status of government
manner control the operation of constitutional laws enacted by Congress to carry into
entities.
execution the powers vested in the federal government. (MC Culloch v. Maryland, 4
Wheat 316, 4 L Ed. 579)
A government instrumentality like MIAA falls under Section 133(o) of the Local Government Code, which
states:
This doctrine emanates from the "supremacy" of the National Government over local governments.

SEC. 133. Common Limitations on the Taxing Powers of Local Government Units. – Unless
"Justice Holmes, speaking for the Supreme Court, made reference to the entire absence
otherwise provided herein, the exercise of the taxing powers of provinces, cities,
of power on the part of the States to touch, in that way (taxation) at least, the
municipalities, and barangays shall not extend to the levy of the following:
instrumentalities of the United States (Johnson v. Maryland, 254 US 51) and it can be
agreed that no state or political subdivision can regulate a federal instrumentality in such
xxxx a way as to prevent it from consummating its federal responsibilities, or even to seriously
burden it in the accomplishment of them." (Antieau, Modern Constitutional Law, Vol. 2,
p. 140, emphasis supplied)
(o) Taxes, fees or charges of any kind on the National Government, its agencies and
instrumentalitiesand local government units.(Emphasis and underscoring supplied)
Otherwise, mere creatures of the State can defeat National policies thru extermination of what
local authorities may perceive to be undesirable activities or enterprise using the power to tax as
Section 133(o) recognizes the basic principle that local governments cannot tax the national government,
"a tool for regulation" (U.S. v. Sanchez, 340 US 42).
which historically merely delegated to local governments the power to tax. While the 1987 Constitution
now includes taxation as one of the powers of local governments, local governments may only exercise such
power "subject to such guidelines and limitations as the Congress may provide."18
The power to tax which was called by Justice Marshall as the "power to destroy" (Mc Culloch v. not change the character of MIAA as an airport for public use. Such fees are often termed user's tax. This
Maryland, supra) cannot be allowed to defeat an instrumentality or creation of the very entity means taxing those among the public who actually use a public facility instead of taxing all the public
which has the inherent power to wield it. 20 including those who never use the particular public facility. A user's tax is more equitable — a principle of
taxation mandated in the 1987 Constitution.21
2. Airport Lands and Buildings of MIAA are Owned by the Republic
The Airport Lands and Buildings of MIAA, which its Charter calls the "principal airport of the Philippines
for both international and domestic air traffic,"22 are properties of public dominion because they are
a. Airport Lands and Buildings are of Public Dominion
intended for public use. As properties of public dominion, they indisputably belong to the State or
the Republic of the Philippines.
The Airport Lands and Buildings of MIAA are property of public dominion and therefore owned by the
State or the Republic of the Philippines. The Civil Code provides:
b. Airport Lands and Buildings are Outside the Commerce of Man

ARTICLE 419. Property is either of public dominion or of private ownership.


The Airport Lands and Buildings of MIAA are devoted to public use and thus are properties of public
dominion. As properties of public dominion, the Airport Lands and Buildings are outside the
ARTICLE 420. The following things are property of public dominion: commerce of man. The Court has ruled repeatedly that properties of public dominion are outside the
commerce of man. As early as 1915, this Court already ruled in Municipality of Cavite v. Rojas that
properties devoted to public use are outside the commerce of man, thus:
(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges
constructed by the State, banks, shores, roadsteads, and others of similar character;
According to article 344 of the Civil Code: "Property for public use in provinces and in towns
comprises the provincial and town roads, the squares, streets, fountains, and public waters, the
(2) Those which belong to the State, without being for public use, and are intended for some public
promenades, and public works of general service supported by said towns or provinces."
service or for the development of the national wealth. (Emphasis supplied)

The said Plaza Soledad being a promenade for public use, the municipal council of Cavite could
ARTICLE 421. All other property of the State, which is not of the character stated in the preceding
not in 1907 withdraw or exclude from public use a portion thereof in order to lease it for the sole
article, is patrimonial property.
benefit of the defendant Hilaria Rojas. In leasing a portion of said plaza or public place to the
defendant for private use the plaintiff municipality exceeded its authority in the exercise of its
ARTICLE 422. Property of public dominion, when no longer intended for public use or for public powers by executing a contract over a thing of which it could not dispose, nor is it empowered so
service, shall form part of the patrimonial property of the State. to do.

No one can dispute that properties of public dominion mentioned in Article 420 of the Civil Code, like The Civil Code, article 1271, prescribes that everything which is not outside the commerce of man
"roads, canals, rivers, torrents, ports and bridges constructed by the State," are owned by the may be the object of a contract, and plazas and streets are outside of this commerce, as was
State. The term "ports" includes seaports and airports. The MIAA Airport Lands and Buildings constitute decided by the supreme court of Spain in its decision of February 12, 1895, which says:
a "port" constructed by the State. Under Article 420 of the Civil Code, the MIAA Airport Lands and Buildings "Communal things that cannot be sold because they are by their very nature outside of
are properties of public dominion and thus owned by the State or the Republic of the Philippines. commerce are those for public use, such as the plazas, streets, common lands, rivers,
fountains, etc." (Emphasis supplied) 23
The Airport Lands and Buildings are devoted to public use because they are used by the public for
international and domestic travel and transportation. The fact that the MIAA collects terminal fees and Again in Espiritu v. Municipal Council, the Court declared that properties of public dominion are outside
other charges from the public does not remove the character of the Airport Lands and Buildings as the commerce of man:
properties for public use. The operation by the government of a tollway does not change the character of
the road as one for public use. Someone must pay for the maintenance of the road, either the public
xxx Town plazas are properties of public dominion, to be devoted to public use and to be made
indirectly through the taxes they pay the government, or only those among the public who actually use the
available to the public in general. They are outside the commerce of man and cannot be
road through the toll fees they pay upon using the road. The tollway system is even a more efficient and
disposed of or even leased by the municipality to private parties. While in case of war or during
equitable manner of taxing the public for the maintenance of public roads.
an emergency, town plazas may be occupied temporarily by private individuals, as was done and
as was tolerated by the Municipality of Pozorrubio, when the emergency has ceased, said
The charging of fees to the public does not determine the character of the property whether it is of public temporary occupation or use must also cease, and the town officials should see to it that the town
dominion or not. Article 420 of the Civil Code defines property of public dominion as one "intended for plazas should ever be kept open to the public and free from encumbrances or illegal private
public use." Even if the government collects toll fees, the road is still "intended for public use" if anyone constructions.24 (Emphasis supplied)
can use the road under the same terms and conditions as the rest of the public. The charging of fees, the
limitation on the kind of vehicles that can use the road, the speed restrictions and other conditions for the
The Court has also ruled that property of public dominion, being outside the commerce of man, cannot be
use of the road do not affect the public character of the road.
the subject of an auction sale.25

The terminal fees MIAA charges to passengers, as well as the landing fees MIAA charges to airlines,
constitute the bulk of the income that maintains the operations of MIAA. The collection of such fees does
Properties of public dominion, being for public use, are not subject to levy, encumbrance or disposition MIAA is merely holding title to the Airport Lands and Buildings in trust for the Republic. Section 48,
through public or private sale. Any encumbrance, levy on execution or auction sale of any property of Chapter 12, Book I of the Administrative Code allows instrumentalities like MIAA to hold title to real
public dominion is void for being contrary to public policy. Essential public services will stop if properties properties owned by the Republic, thus:
of public dominion are subject to encumbrances, foreclosures and auction sale. This will happen if the City
of Parañaque can foreclose and compel the auction sale of the 600-hectare runway of the MIAA for non-
SEC. 48. Official Authorized to Convey Real Property. — Whenever real property of the Government
payment of real estate tax.
is authorized by law to be conveyed, the deed of conveyance shall be executed in behalf of the
government by the following:
Before MIAA can encumber26 the Airport Lands and Buildings, the President must first withdraw from
public usethe Airport Lands and Buildings. Sections 83 and 88 of the Public Land Law or Commonwealth
(1) For property belonging to and titled in the name of the Republic of the Philippines, by the
Act No. 141, which "remains to this day the existing general law governing the classification and disposition
President, unless the authority therefor is expressly vested by law in another officer.
of lands of the public domain other than timber and mineral lands,"27 provide:

(2) For property belonging to the Republic of the Philippines but titled in the name of any
SECTION 83. Upon the recommendation of the Secretary of Agriculture and Natural Resources,
political subdivision or of any corporate agency or instrumentality, by the executive head of
the President may designate by proclamation any tract or tracts of land of the public domain as
the agency or instrumentality. (Emphasis supplied)
reservations for the use of the Republic of the Philippines or of any of its branches, or of the
inhabitants thereof, in accordance with regulations prescribed for this purposes, or for quasi-
public uses or purposes when the public interest requires it, including reservations for highways, In MIAA's case, its status as a mere trustee of the Airport Lands and Buildings is clearer because even its
rights of way for railroads, hydraulic power sites, irrigation systems, communal pastures or lequas executive head cannot sign the deed of conveyance on behalf of the Republic. Only the President of the
communales, public parks, public quarries, public fishponds, working men's village and other Republic can sign such deed of conveyance.28
improvements for the public benefit.
d. Transfer to MIAA was Meant to Implement a Reorganization
SECTION 88. The tract or tracts of land reserved under the provisions of Section eighty-
three shall be non-alienable and shall not be subject to occupation, entry, sale, lease, or
The MIAA Charter, which is a law, transferred to MIAA the title to the Airport Lands and Buildings from
other disposition until again declared alienable under the provisions of this Act or by
the Bureau of Air Transportation of the Department of Transportation and Communications. The MIAA
proclamation of the President. (Emphasis and underscoring supplied)
Charter provides:

Thus, unless the President issues a proclamation withdrawing the Airport Lands and Buildings from public
SECTION 3. Creation of the Manila International Airport Authority. — x x x x
use, these properties remain properties of public dominion and are inalienable. Since the Airport Lands
and Buildings are inalienable in their present status as properties of public dominion, they are not subject
to levy on execution or foreclosure sale. As long as the Airport Lands and Buildings are reserved for public The land where the Airport is presently located as well as the surrounding land area of
use, their ownership remains with the State or the Republic of the Philippines. approximately six hundred hectares, are hereby transferred, conveyed and assigned to the
ownership and administration of the Authority, subject to existing rights, if any. The Bureau
of Lands and other appropriate government agencies shall undertake an actual survey of the area
The authority of the President to reserve lands of the public domain for public use, and to withdraw such
transferred within one year from the promulgation of this Executive Order and the corresponding
public use, is reiterated in Section 14, Chapter 4, Title I, Book III of the Administrative Code of 1987, which
title to be issued in the name of the Authority. Any portion thereof shall not be disposed
states:
through sale or through any other mode unless specifically approved by the President of
the Philippines. (Emphasis supplied)
SEC. 14. Power to Reserve Lands of the Public and Private Domain of the Government. — (1) The
President shall have the power to reserve for settlement or public use, and for specific
SECTION 22. Transfer of Existing Facilities and Intangible Assets. — All existing public airport
public purposes, any of the lands of the public domain, the use of which is not otherwise
facilities, runways, lands, buildings and other property, movable or immovable, belonging to
directed by law. The reserved land shall thereafter remain subject to the specific public
the Airport, and all assets, powers, rights, interests and privileges belonging to the Bureau of
purpose indicated until otherwise provided by law or proclamation;
Air Transportation relating to airport works or air operations, including all equipment which are
necessary for the operation of crash fire and rescue facilities, are hereby transferred to the
x x x x. (Emphasis supplied) Authority. (Emphasis supplied)

There is no question, therefore, that unless the Airport Lands and Buildings are withdrawn by law or SECTION 25. Abolition of the Manila International Airport as a Division in the Bureau of Air
presidential proclamation from public use, they are properties of public dominion, owned by the Republic Transportation and Transitory Provisions. — The Manila International Airport including the Manila
and outside the commerce of man. Domestic Airport as a division under the Bureau of Air Transportation is hereby abolished.

c. MIAA is a Mere Trustee of the Republic x x x x.

The MIAA Charter transferred the Airport Lands and Buildings to MIAA without the Republic receiving
cash, promissory notes or even stock since MIAA is not a stock corporation.
The whereas clauses of the MIAA Charter explain the rationale for the transfer of the Airport Lands and This exemption should be read in relation with Section 133(o) of the same Code, which prohibits local
Buildings to MIAA, thus: governments from imposing "[t]axes, fees or charges of any kind on the National Government, its agencies
and instrumentalitiesx x x." The real properties owned by the Republic are titled either in the name of the
Republic itself or in the name of agencies or instrumentalities of the National Government. The
WHEREAS, the Manila International Airport as the principal airport of the Philippines for both
Administrative Code allows real property owned by the Republic to be titled in the name of agencies or
international and domestic air traffic, is required to provide standards of airport accommodation
instrumentalities of the national government. Such real properties remain owned by the Republic and
and service comparable with the best airports in the world;
continue to be exempt from real estate tax.

WHEREAS, domestic and other terminals, general aviation and other facilities, have to be
The Republic may grant the beneficial use of its real property to an agency or instrumentality of the national
upgraded to meet the current and future air traffic and other demands of aviation in Metro Manila;
government. This happens when title of the real property is transferred to an agency or instrumentality
even as the Republic remains the owner of the real property. Such arrangement does not result in the loss
WHEREAS, a management and organization study has indicated that the objectives of of the tax exemption. Section 234(a) of the Local Government Code states that real property owned by the
providing high standards of accommodation and service within the context of a financially Republic loses its tax exemption only if the "beneficial use thereof has been granted, for consideration or
viable operation, will best be achieved by a separate and autonomous body; and otherwise, to a taxable person." MIAA, as a government instrumentality, is not a taxable person under
Section 133(o) of the Local Government Code. Thus, even if we assume that the Republic has granted to
MIAA the beneficial use of the Airport Lands and Buildings, such fact does not make these real properties
WHEREAS, under Presidential Decree No. 1416, as amended by Presidential Decree No. 1772,
subject to real estate tax.
the President of the Philippines is given continuing authority to reorganize the National
Government, which authority includes the creation of new entities, agencies and
instrumentalities of the Government[.] (Emphasis supplied) However, portions of the Airport Lands and Buildings that MIAA leases to private entities are not exempt
from real estate tax. For example, the land area occupied by hangars that MIAA leases to private
corporations is subject to real estate tax. In such a case, MIAA has granted the beneficial use of such land
The transfer of the Airport Lands and Buildings from the Bureau of Air Transportation to MIAA was not
area for a consideration to a taxable person and therefore such land area is subject to real estate tax.
meant to transfer beneficial ownership of these assets from the Republic to MIAA. The purpose was merely
In Lung Center of the Philippines v. Quezon City, the Court ruled:
to reorganize a division in the Bureau of Air Transportation into a separate and autonomous body.
The Republic remains the beneficial owner of the Airport Lands and Buildings. MIAA itself is owned solely
by the Republic. No party claims any ownership rights over MIAA's assets adverse to the Republic. Accordingly, we hold that the portions of the land leased to private entities as well as those parts
of the hospital leased to private individuals are not exempt from such taxes. On the other hand,
the portions of the land occupied by the hospital and portions of the hospital used for its patients,
The MIAA Charter expressly provides that the Airport Lands and Buildings "shall not be disposed through
whether paying or non-paying, are exempt from real property taxes.29
sale or through any other mode unless specifically approved by the President of the Philippines."
This only means that the Republic retained the beneficial ownership of the Airport Lands and Buildings
because under Article 428 of the Civil Code, only the "owner has the right to x x x dispose of a thing." Since 3. Refutation of Arguments of Minority
MIAA cannot dispose of the Airport Lands and Buildings, MIAA does not own the Airport Lands and
Buildings.
The minority asserts that the MIAA is not exempt from real estate tax because Section 193 of the Local
Government Code of 1991 withdrew the tax exemption of "all persons, whether natural or juridical" upon
At any time, the President can transfer back to the Republic title to the Airport Lands and Buildings without the effectivity of the Code. Section 193 provides:
the Republic paying MIAA any consideration. Under Section 3 of the MIAA Charter, the President is the
only one who can authorize the sale or disposition of the Airport Lands and Buildings. This only confirms
SEC. 193. Withdrawal of Tax Exemption Privileges – Unless otherwise provided in this Code,
that the Airport Lands and Buildings belong to the Republic.
tax exemptions or incentives granted to, or presently enjoyed by all persons, whether natural
or juridical, including government-owned or controlled corporations, except local water districts,
e. Real Property Owned by the Republic is Not Taxable cooperatives duly registered under R.A. No. 6938, non-stock and non-profit hospitals and
educational institutions are hereby withdrawn upon effectivity of this Code. (Emphasis supplied)
Section 234(a) of the Local Government Code exempts from real estate tax any "[r]eal property owned by
the Republic of the Philippines." Section 234(a) provides: The minority states that MIAA is indisputably a juridical person. The minority argues that since the Local
Government Code withdrew the tax exemption of all juridical persons, then MIAA is not exempt from real
estate tax. Thus, the minority declares:
SEC. 234. Exemptions from Real Property Tax. — The following are exempted from payment of
the real property tax:
It is evident from the quoted provisions of the Local Government Code that the withdrawn
exemptions from realty tax cover not just GOCCs, but all persons. To repeat, the provisions
(a) Real property owned by the Republic of the Philippines or any of its political subdivisions
lay down the explicit proposition that the withdrawal of realty tax exemption applies to all persons.
except when the beneficial use thereof has been granted, for consideration or otherwise, to
The reference to or the inclusion of GOCCs is only clarificatory or illustrative of the explicit
a taxable person;
provision.

x x x. (Emphasis supplied)
The term "All persons" encompasses the two classes of persons recognized under our laws,
natural and juridical persons. Obviously, MIAA is not a natural person. Thus, the
determinative test is not just whether MIAA is a GOCC, but whether MIAA is a juridical Development Authority,32 Fisheries Development Authority,33 Bases Conversion Development
person at all. (Emphasis and underscoring in the original) Authority,34Philippine Ports Authority,35 Cagayan de Oro Port Authority,36 San Fernando Port
Authority,37 Cebu Port Authority,38 and Philippine National Railways.39
The minority posits that the "determinative test" whether MIAA is exempt from local taxation is its status
— whether MIAA is a juridical person or not. The minority also insists that "Sections 193 and 234 may be The minority's theory violates Section 133(o) of the Local Government Code which expressly prohibits local
examined in isolation from Section 133(o) to ascertain MIAA's claim of exemption." governments from imposing any kind of tax on national government instrumentalities. Section 133(o) does
not distinguish between national government instrumentalities with or without juridical personalities.
Where the law does not distinguish, courts should not distinguish. Thus, Section 133(o) applies to all
The argument of the minority is fatally flawed. Section 193 of the Local Government Code expressly
national government instrumentalities, with or without juridical personalities. The determinative test
withdrew the tax exemption of all juridical persons "[u]nless otherwise provided in this Code." Now,
whether MIAA is exempt from local taxation is not whether MIAA is a juridical person, but whether it is a
Section 133(o) of the Local Government Code expressly provides otherwise, specifically prohibiting local
national government instrumentality under Section 133(o) of the Local Government Code. Section 133(o)
governments from imposing any kind of tax on national government instrumentalities. Section 133(o)
is the specific provision of law prohibiting local governments from imposing any kind of tax on the national
states:
government, its agencies and instrumentalities.

SEC. 133. Common Limitations on the Taxing Powers of Local Government Units. – Unless otherwise
Section 133 of the Local Government Code starts with the saving clause "[u]nless otherwise provided in
provided herein, the exercise of the taxing powers of provinces, cities, municipalities, and
this Code." This means that unless the Local Government Code grants an express authorization, local
barangays shall not extend to the levy of the following:
governments have no power to tax the national government, its agencies and instrumentalities. Clearly,
the rule is local governments have no power to tax the national government, its agencies and
xxxx instrumentalities. As an exception to this rule, local governments may tax the national government, its
agencies and instrumentalities only if the Local Government Code expressly so provides.
(o) Taxes, fees or charges of any kinds on the National Government, its agencies and
instrumentalities, and local government units. (Emphasis and underscoring supplied) The saving clause in Section 133 refers to the exception to the exemption in Section 234(a) of the Code,
which makes the national government subject to real estate tax when it gives the beneficial use of its real
properties to a taxable entity. Section 234(a) of the Local Government Code provides:
By express mandate of the Local Government Code, local governments cannot impose any kind of tax on
national government instrumentalities like the MIAA. Local governments are devoid of power to tax the
national government, its agencies and instrumentalities. The taxing powers of local governments do not SEC. 234. Exemptions from Real Property Tax – The following are exempted from payment of the
extend to the national government, its agencies and instrumentalities, "[u]nless otherwise provided in this real property tax:
Code" as stated in the saving clause of Section 133. The saving clause refers to Section 234(a) on the
exception to the exemption from real estate tax of real property owned by the Republic.
(a) Real property owned by the Republic of the Philippines or any of its political subdivisions
except when the beneficial use thereof has been granted, for consideration or otherwise, to a
The minority, however, theorizes that unless exempted in Section 193 itself, all juridical persons are subject taxable person.
to tax by local governments. The minority insists that the juridical persons exempt from local taxation are
limited to the three classes of entities specifically enumerated as exempt in Section 193. Thus, the minority
x x x. (Emphasis supplied)
states:

Under Section 234(a), real property owned by the Republic is exempt from real estate tax. The exception to
x x x Under Section 193, the exemption is limited to (a) local water districts; (b) cooperatives duly
this exemption is when the government gives the beneficial use of the real property to a taxable entity.
registered under Republic Act No. 6938; and (c) non-stock and non-profit hospitals and
educational institutions. It would be belaboring the obvious why the MIAA does not fall within
any of the exempt entities under Section 193. (Emphasis supplied) The exception to the exemption in Section 234(a) is the only instance when the national government, its
agencies and instrumentalities are subject to any kind of tax by local governments. The exception to the
exemption applies only to real estate tax and not to any other tax. The justification for the exception to the
The minority's theory directly contradicts and completely negates Section 133(o) of the Local Government
exemption is that the real property, although owned by the Republic, is not devoted to public use or public
Code. This theory will result in gross absurdities. It will make the national government, which itself is a
service but devoted to the private gain of a taxable person.
juridical person, subject to tax by local governments since the national government is not included in the
enumeration of exempt entities in Section 193. Under this theory, local governments can impose any kind
of local tax, and not only real estate tax, on the national government. The minority also argues that since Section 133 precedes Section 193 and 234 of the Local Government
Code, the later provisions prevail over Section 133. Thus, the minority asserts:
Under the minority's theory, many national government instrumentalities with juridical personalities will
also be subject to any kind of local tax, and not only real estate tax. Some of the national government x x x Moreover, sequentially Section 133 antecedes Section 193 and 234. Following an accepted
instrumentalities vested by law with juridical personalities are: Bangko Sentral ng Pilipinas,30 Philippine rule of construction, in case of conflict the subsequent provisions should prevail. Therefore, MIAA,
Rice Research Institute,31Laguna Lake as a juridical person, is subject to real property taxes, the general exemptions attaching to
instrumentalities under Section 133(o) of the Local Government Code being qualified by Sections
193 and 234 of the same law. (Emphasis supplied)
The minority assumes that there is an irreconcilable conflict between Section 133 on one hand, and The minority does not point to any provision in the Local Government Code defining the phrase
Sections 193 and 234 on the other. No one has urged that there is such a conflict, much less has any one "government-owned or controlled corporation" differently from the definition in the Administrative Code.
presenteda persuasive argument that there is such a conflict. The minority's assumption of an Indeed, there is none. The Local Government Code is silent on the definition of the phrase "government-
irreconcilable conflict in the statutory provisions is an egregious error for two reasons. owned or controlled corporation." The Administrative Code, however, expressly defines the phrase
"government-owned or controlled corporation." The inescapable conclusion is that the Administrative Code
definition of the phrase "government-owned or controlled corporation" applies to the Local Government
First, there is no conflict whatsoever between Sections 133 and 193 because Section 193 expressly admits
Code.
its subordination to other provisions of the Code when Section 193 states "[u]nless otherwise provided in
this Code." By its own words, Section 193 admits the superiority of other provisions of the Local
Government Code that limit the exercise of the taxing power in Section 193. When a provision of law grants The third whereas clause of the Administrative Code states that the Code "incorporates in a unified
a power but withholds such power on certain matters, there is no conflict between the grant of power and document the major structural, functional and procedural principles and rules of governance." Thus, the
the withholding of power. The grantee of the power simply cannot exercise the power on matters withheld Administrative Code is the governing law defining the status and relationship of government departments,
from its power. bureaus, offices, agencies and instrumentalities. Unless a statute expressly provides for a different status
and relationship for a specific government unit or entity, the provisions of the Administrative Code prevail.
Second, Section 133 is entitled "Common Limitations on the Taxing Powers of Local Government Units."
Section 133 limits the grant to local governments of the power to tax, and not merely the exercise of a The minority also contends that the phrase "government-owned or controlled corporation" should apply
delegated power to tax. Section 133 states that the taxing powers of local governments "shall not extend to only to corporations organized under the Corporation Code, the general incorporation law, and not to
the levy" of any kind of tax on the national government, its agencies and instrumentalities. There is no corporations created by special charters. The minority sees no reason why government corporations with
clearer limitation on the taxing power than this. special charters should have a capital stock. Thus, the minority declares:

Since Section 133 prescribes the "common limitations" on the taxing powers of local governments, Section I submit that the definition of "government-owned or controlled corporations" under the
133 logically prevails over Section 193 which grants local governments such taxing powers. By their very Administrative Code refer to those corporations owned by the government or its instrumentalities
meaning and purpose, the "common limitations" on the taxing power prevail over the grant or exercise of which are created not by legislative enactment, but formed and organized under the Corporation
the taxing power. If the taxing power of local governments in Section 193 prevails over the limitations on Code through registration with the Securities and Exchange Commission. In short, these are
such taxing power in Section 133, then local governments can impose any kind of tax on the national GOCCs without original charters.
government, its agencies and instrumentalities — a gross absurdity.
xxxx
Local governments have no power to tax the national government, its agencies and instrumentalities, except
as otherwise provided in the Local Government Code pursuant to the saving clause in Section 133 stating
It might as well be worth pointing out that there is no point in requiring a capital structure for
"[u]nless otherwise provided in this Code." This exception — which is an exception to the exemption of the
GOCCs whose full ownership is limited by its charter to the State or Republic. Such GOCCs are
Republic from real estate tax imposed by local governments — refers to Section 234(a) of the Code. The
not empowered to declare dividends or alienate their capital shares.
exception to the exemption in Section 234(a) subjects real property owned by the Republic, whether titled
in the name of the national government, its agencies or instrumentalities, to real estate tax if the beneficial
use of such property is given to a taxable entity. The contention of the minority is seriously flawed. It is not in accord with the Constitution and existing
legislations. It will also result in gross absurdities.
The minority also claims that the definition in the Administrative Code of the phrase "government-owned
or controlled corporation" is not controlling. The minority points out that Section 2 of the Introductory First, the Administrative Code definition of the phrase "government-owned or controlled corporation" does
Provisions of the Administrative Code admits that its definitions are not controlling when it provides: not distinguish between one incorporated under the Corporation Code or under a special charter. Where
the law does not distinguish, courts should not distinguish.
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: Second, Congress has created through special charters several government-owned corporations organized
as stock corporations. Prime examples are the Land Bank of the Philippines and the Development Bank of
the Philippines. The special charter40 of the Land Bank of the Philippines provides:
xxxx

SECTION 81. Capital. — The authorized capital stock of the Bank shall be nine billion pesos,
The minority then concludes that reliance on the Administrative Code definition is "flawed."
divided into seven hundred and eighty million common shares with a par value of ten pesos each,
which shall be fully subscribed by the Government, and one hundred and twenty million preferred
The minority's argument is a non sequitur. True, Section 2 of the Administrative Code recognizes that a shares with a par value of ten pesos each, which shall be issued in accordance with the provisions
statute may require a different meaning than that defined in the Administrative Code. However, this does of Sections seventy-seven and eighty-three of this Code. (Emphasis supplied)
not automatically mean that the definition in the Administrative Code does not apply to the Local
Government Code. Section 2 of the Administrative Code clearly states that "unless the specific words x x x
Likewise, the special charter41 of the Development Bank of the Philippines provides:
of a particular statute shall require a different meaning," the definition in Section 2 of the Administrative
Code shall apply. Thus, unless there is specific language in the Local Government Code defining the phrase
"government-owned or controlled corporation" differently from the definition in the Administrative Code, SECTION 7. Authorized Capital Stock – Par value. — The capital stock of the Bank shall be Five
the definition in the Administrative Code prevails. Billion Pesos to be divided into Fifty Million common shares with par value of P100 per share.
These shares are available for subscription by the National Government. Upon the effectivity of Constitution is to prevent the creation of government-owned or controlled corporations that cannot survive
this Charter, the National Government shall subscribe to Twenty-Five Million common shares of on their own in the market place and thus merely drain the public coffers.
stock worth Two Billion Five Hundred Million which shall be deemed paid for by the Government
with the net asset values of the Bank remaining after the transfer of assets and liabilities as
Commissioner Blas F. Ople, proponent of the test of economic viability, explained to the Constitutional
provided in Section 30 hereof. (Emphasis supplied)
Commission the purpose of this test, as follows:

Other government-owned corporations organized as stock corporations under their special charters are the
MR. OPLE: Madam President, the reason for this concern is really that when the government
Philippine Crop Insurance Corporation,42 Philippine International Trading Corporation,43 and the
creates a corporation, there is a sense in which this corporation becomes exempt from the test of
Philippine National Bank44 before it was reorganized as a stock corporation under the Corporation Code.
economic performance. We know what happened in the past. If a government corporation loses,
All these government-owned corporations organized under special charters as stock corporations are
then it makes its claim upon the taxpayers' money through new equity infusions from the
subject to real estate tax on real properties owned by them. To rule that they are not government-owned
government and what is always invoked is the common good. That is the reason why this year,
or controlled corporations because they are not registered with the Securities and Exchange Commission
out of a budget of P115 billion for the entire government, about P28 billion of this will go into
would remove them from the reach of Section 234 of the Local Government Code, thus exempting them
equity infusions to support a few government financial institutions. And this is all taxpayers'
from real estate tax.
money which could have been relocated to agrarian reform, to social services like health and
education, to augment the salaries of grossly underpaid public employees. And yet this is all going
Third, the government-owned or controlled corporations created through special charters are those that down the drain.
meet the two conditions prescribed in Section 16, Article XII of the Constitution. The first condition is that
the government-owned or controlled corporation must be established for the common good. The second
Therefore, when we insert the phrase "ECONOMIC VIABILITY" together with the "common good,"
condition is that the government-owned or controlled corporation must meet the test of economic viability.
this becomes a restraint on future enthusiasts for state capitalism to excuse themselves from the
Section 16, Article XII of the 1987 Constitution provides:
responsibility of meeting the market test so that they become viable. And so, Madam President, I
reiterate, for the committee's consideration and I am glad that I am joined in this proposal by
SEC. 16. The Congress shall not, except by general law, provide for the formation, organization, Commissioner Foz, the insertion of the standard of "ECONOMIC VIABILITY OR THE ECONOMIC
or regulation of private corporations. Government-owned or controlled corporations may be TEST," together with the common good.45
created or established by special charters in the interest of the common good and subject to the
test of economic viability. (Emphasis and underscoring supplied)
Father Joaquin G. Bernas, a leading member of the Constitutional Commission, explains in his textbook
The 1987 Constitution of the Republic of the Philippines: A Commentary:
The Constitution expressly authorizes the legislature to create "government-owned or controlled
corporations" through special charters only if these entities are required to meet the twin conditions of
The second sentence was added by the 1986 Constitutional Commission. The significant addition,
common good and economic viability. In other words, Congress has no power to create government-owned
however, is the phrase "in the interest of the common good and subject to the test of economic
or controlled corporations with special charters unless they are made to comply with the two conditions of
viability." The addition includes the ideas that they must show capacity to function efficiently in
common good and economic viability. The test of economic viability applies only to government-owned or
business and that they should not go into activities which the private sector can do better.
controlled corporations that perform economic or commercial activities and need to compete in the market
Moreover, economic viability is more than financial viability but also includes capability to make
place. Being essentially economic vehicles of the State for the common good — meaning for economic
profit and generate benefits not quantifiable in financial terms.46(Emphasis supplied)
development purposes — these government-owned or controlled corporations with special charters are
usually organized as stock corporations just like ordinary private corporations.
Clearly, the test of economic viability does not apply to government entities vested with corporate powers
and performing essential public services. The State is obligated to render essential public services
In contrast, government instrumentalities vested with corporate powers and performing governmental or
regardless of the economic viability of providing such service. The non-economic viability of rendering such
public functions need not meet the test of economic viability. These instrumentalities perform essential
essential public service does not excuse the State from withholding such essential services from the public.
public services for the common good, services that every modern State must provide its citizens. These
instrumentalities need not be economically viable since the government may even subsidize their entire
operations. These instrumentalities are not the "government-owned or controlled corporations" referred to However, government-owned or controlled corporations with special charters, organized essentially for
in Section 16, Article XII of the 1987 Constitution. economic or commercial objectives, must meet the test of economic viability. These are the government-
owned or controlled corporations that are usually organized under their special charters as stock
corporations, like the Land Bank of the Philippines and the Development Bank of the Philippines. These
Thus, the Constitution imposes no limitation when the legislature creates government instrumentalities
are the government-owned or controlled corporations, along with government-owned or controlled
vested with corporate powers but performing essential governmental or public functions. Congress has
corporations organized under the Corporation Code, that fall under the definition of "government-owned
plenary authority to create government instrumentalities vested with corporate powers provided these
or controlled corporations" in Section 2(10) of the Administrative Code.
instrumentalities perform essential government functions or public services. However, when the legislature
creates through special charters corporations that perform economic or commercial activities, such entities
— known as "government-owned or controlled corporations" — must meet the test of economic viability The MIAA need not meet the test of economic viability because the legislature did not create MIAA to
because they compete in the market place. compete in the market place. MIAA does not compete in the market place because there is no competing
international airport operated by the private sector. MIAA performs an essential public service as the
primary domestic and international airport of the Philippines. The operation of an international airport
This is the situation of the Land Bank of the Philippines and the Development Bank of the Philippines and
requires the presence of personnel from the following government agencies:
similar government-owned or controlled corporations, which derive their income to meet operating
expenses solely from commercial transactions in competition with the private sector. The intent of the
1. The Bureau of Immigration and Deportation, to document the arrival and departure of corporation. Neither is MIAA a government-owned or controlled corporation under Section 16, Article XII
passengers, screening out those without visas or travel documents, or those with hold departure of the 1987 Constitution because MIAA is not required to meet the test of economic viability. MIAA is a
orders; government instrumentality vested with corporate powers and performing essential public services
pursuant to Section 2(10) of the Introductory Provisions of the Administrative Code. As a government
2. The Bureau of Customs, to collect import duties or enforce the ban on prohibited importations;
instrumentality, MIAA is not subject to any kind of tax by local governments under Section 133(o) of the
3. The quarantine office of the Department of Health, to enforce health measures against the Local Government Code. The exception to the exemption in Section 234(a) does not apply to MIAA because
spread of infectious diseases into the country; MIAA is not a taxable entity under the Local Government Code. Such exception applies only if the beneficial
use of real property owned by the Republic is given to a taxable entity.
4. The Department of Agriculture, to enforce measures against the spread of plant and animal
diseases into the country;
Finally, the Airport Lands and Buildings of MIAA are properties devoted to public use and thus are
5. The Aviation Security Command of the Philippine National Police, to prevent the entry of properties of public dominion. Properties of public dominion are owned by the State or the Republic. Article
terrorists and the escape of criminals, as well as to secure the airport premises from terrorist 420 of the Civil Code provides:
attack or seizure;
6. The Air Traffic Office of the Department of Transportation and Communications, to authorize Art. 420. The following things are property of public dominion:
aircraft to enter or leave Philippine airspace, as well as to land on, or take off from, the airport;
and
(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges
7. The MIAA, to provide the proper premises — such as runway and buildings — for the constructed by the State, banks, shores, roadsteads, and others of similar character;
government personnel, passengers, and airlines, and to manage the airport operations.

(2) Those which belong to the State, without being for public use, and are intended for some public
All these agencies of government perform government functions essential to the operation of an service or for the development of the national wealth. (Emphasis supplied)
international airport.

The term "ports x x x constructed by the State" includes airports and seaports. The Airport Lands and
MIAA performs an essential public service that every modern State must provide its citizens. MIAA derives Buildings of MIAA are intended for public use, and at the very least intended for public service. Whether
its revenues principally from the mandatory fees and charges MIAA imposes on passengers and airlines. intended for public use or public service, the Airport Lands and Buildings are properties of public dominion.
The terminal fees that MIAA charges every passenger are regulatory or administrative fees47 and not income As properties of public dominion, the Airport Lands and Buildings are owned by the Republic and thus
from commercial transactions. exempt from real estate tax under Section 234(a) of the Local Government Code.

MIAA falls under the definition of a government instrumentality under Section 2(10) of the Introductory 4. Conclusion
Provisions of the Administrative Code, which provides:

Under Section 2(10) and (13) of the Introductory Provisions of the Administrative Code, which governs the
SEC. 2. General Terms Defined. – x x x x legal relation and status of government units, agencies and offices within the entire government machinery,
MIAA is a government instrumentality and not a government-owned or controlled corporation. Under
(10) Instrumentality refers to any agency of the National Government, not integrated within the Section 133(o) of the Local Government Code, MIAA as a government instrumentality is not a taxable person
department framework, vested with special functions or jurisdiction by law, endowed with some because it is not subject to "[t]axes, fees or charges of any kind" by local governments. The only exception
if not all corporate powers, administering special funds, and enjoying operational autonomy, is when MIAA leases its real property to a "taxable person" as provided in Section 234(a) of the Local
usually through a charter. x x x (Emphasis supplied) Government Code, in which case the specific real property leased becomes subject to real estate tax. Thus,
only portions of the Airport Lands and Buildings leased to taxable persons like private parties are subject
to real estate tax by the City of Parañaque.
The fact alone that MIAA is endowed with corporate powers does not make MIAA a government-owned or
controlled corporation. Without a change in its capital structure, MIAA remains a government
instrumentality under Section 2(10) of the Introductory Provisions of the Administrative Code. More Under Article 420 of the Civil Code, the Airport Lands and Buildings of MIAA, being devoted to public use,
importantly, as long as MIAA renders essential public services, it need not comply with the test of economic are properties of public dominion and thus owned by the State or the Republic of the Philippines. Article
viability. Thus, MIAA is outside the scope of the phrase "government-owned or controlled corporations" 420 specifically mentions "ports x x x constructed by the State," which includes public airports and
under Section 16, Article XII of the 1987 Constitution. seaports, as properties of public dominion and owned by the Republic. As properties of public dominion
owned by the Republic, there is no doubt whatsoever that the Airport Lands and Buildings are expressly
exempt from real estate tax under Section 234(a) of the Local Government Code. This Court has also
The minority belittles the use in the Local Government Code of the phrase "government-owned or controlled repeatedly ruled that properties of public dominion are not subject to execution or foreclosure sale.
corporation" as merely "clarificatory or illustrative." This is fatal. The 1987 Constitution prescribes explicit
conditions for the creation of "government-owned or controlled corporations." The Administrative Code
defines what constitutes a "government-owned or controlled corporation." To belittle this phrase as WHEREFORE, we GRANT the petition. We SET ASIDE the assailed Resolutions of the Court of Appeals of
"clarificatory or illustrative" is grave error. 5 October 2001 and 27 September 2002 in CA-G.R. SP No. 66878. We DECLARE the Airport Lands and
Buildings of the Manila International Airport Authority EXEMPT from the real estate tax imposed by the
City of Parañaque. We declare VOID all the real estate tax assessments, including the final notices of real
To summarize, MIAA is not a government-owned or controlled corporation under Section 2(13) of the estate tax delinquencies, issued by the City of Parañaque on the Airport Lands and Buildings of the Manila
Introductory Provisions of the Administrative Code because it is not organized as a stock or non-stock International Airport Authority, except for the portions that the Manila International Airport Authority has
leased to private parties. We also declare VOID the assailed auction sale, and all its effects, of the Airport Upon receipt of the aforementioned letter, plaintiff immediately accepted the said award
Lands and Buildings of the Manila International Airport Authority. by means of a letter dated December 15, 1965, whereby plaintiff also requested
permission for its workmen to enter the site of the project, build a temporary shelter and
enclosure, and do some clearing job thereat. Accordingly, said permission was granted
No costs.
by the defendant as embodied in its letter dated January 4, 1966, addressed to the
plaintiff..
SO ORDERED.
G.R. No. L-33022 April 22, 1975
Within five (5) days from receipt by the plaintiff of the said notice of award, and several
CENTRAL BANK OF THE PHILIPPINES, petitioner,
times thereafter Mr. Nicomedes C. Ablaza, an officer of the plaintiff corporation, went
vs.
personally to see Mr. Rizalino L. Mendoza at the latter's Central Bank office to follow up
COURT OF APPEALS and ABLAZA CONSTRUCTION & FINANCE CORPORATION, respondents.
the signing of the corresponding contract. A performance bond in the total amount of
P962,250.00 (P275,000.00 of which was in cash and P687,250.00 in the form of a surety
Petition of the Central Bank of the Philippines for review of the decision of the Court of Appeals in CA-G.R. bond) was subsequently posted by the plaintiff in compliance with the above-stated
No. 43638-R affirming the judgment of the Court of First Instance of Rizal in Civil Case No. Q-10919 Instructions to Bidders, which bond was duly accepted by the defendant.
sentenced petitioner to pay respondent Ablaza Construction and Finance Corporation damages for breach
contract in that after having formally and officially awarded, pursuant to the results of the usual bidding
Pursuant to the permission granted by the defendant, as aforesaid, plaintiff commenced
to Ablaza in December 1965 the "contract" for the construction of its San Fernando, La Union branch
actual construction work on the project about the middle of January, 1966. On February
building and allowed said contractor to commence the work up to about May, 1966, albeit without any
8, 1966, by means of a formal letter, defendant requested the plaintiff to submit a
written formal contract having been executed, the Bank failed and refused to proceed with the project,
schedule of deliveries of materials which, according to plaintiff's accepted proposal, shall
unless the plans were revised and a lower price were agreed to by Ablaza, the Bank claiming that its action
be furnished by the defendant. In compliance therewith, on February 16, 1966, plaintiff
was pursuant to the policy of fiscal restraint announced by the then new President of the Philippines on
submitted to the defendant the schedule of deliveries requested for.
December 30, 1965 and the Memorandum Circular No. 1 dated December 31, 1965 of the same President.

During the period when the actual construction work on the project was in progress, Mr.
The factual background of this case is related in the following portions of the decision of the trial court,
Nicomedes G. Ablaza had several meetings with Mr. Rizalino L. Mendoza at the latter's
which the Court of Appeals affirmed without modification: têñ.£îhqwâ£
office in the Central Bank. During those meetings, they discussed the progress of the
construction work being then undertaken by the plaintiff of the projects of the defendant
Sometime in 1965, defendant Central Bank of the Philippines issued Invitations to Bid in San Fernando, La Union, including the progress of the excavation work.
and Instructions to Bidders for the purpose of receiving sealed proposals for the general
construction of its various proposed regional offices, including the Central Bank regional
Sometime during the early part of March, 1966, Mr. Rizalino L. Mendoza was at the
office building in San Fernando, La Union.
construction site of the said project. While he was there, he admitted having seen pile of
soil in the premises. At that time, the excavation work being undertaken by the plaintiff
In response to the aforesaid Invitations to Bid, the plaintiff Ablaza Construction and was about 20% complete. On March 22, 1966, defendant again wrote the plaintiff,
Finance Corporation, which was one of the qualified bidders, submitted a bid proposal requesting the latter to submit the name of its representative authorized to sign the
for the general construction of defendant's proposed regional office building in San building contract with the defendant. In compliance with the said request, plaintiff
Fernando, La Union at the public bidding held on November 3, 1965. The said proposal submitted to the defendant the name of its duly authorized representative by means of
was, as required by the defendant accompanied by a cash bidder's bond in the sum of a letter dated March 24, 1966.
P275,000.00.
A meeting called by the defendant was held at the conference room of the Central Bank
On December 7, 1965, the Monetary Board of the defendant Central Bank of the on May 20, 1966. At the said meeting, the defendant, thru Finance Secretary Eduardo
Philippines, after evaluating all the bid proposals submitted during the above-mentioned Romualdez, announced, among other things, the reduction of the appropriations for the
bidding, unanimously voted and approved the award to the plaintiff of the contract for construction of the defendant's various proposed regional offices, including that of the
the general construction of defendant's proposed regional office building in San proposed San Fernando, La Union regional office building, the construction of which had
Fernando, La Union, for the sum of P3,749,000.00 under plaintiff's Proposal Item No. 2. already been started by the plaintiff. He also stated that the Central Bank Associated
Architects would be asked to prepare new plans and designs based on such reduced
appropriations. The defendant, during that same meeting, also advised the plaintiff, thru
Pursuant thereto, on December 10, 1965, Mr. Rizalino L. Mendoza, Assistant to the
Messrs. Nicomedes G. Ablaza and Alfredo G. Ablaza (who represented the plaintiff
Governor and concurrently the Chairman of the Management Building Committee of the
corporation at the said meeting), to stop its construction work on the Central Bank
defendant Central Bank of the Philippines, set a telegram to the plaintiff, informing the
Regional office building in San Fernando, La Union. This was immediately complied with
latter that the contract for the general construction of defendant's proposed regional
by the plaintiff, although its various construction equipment remained in the jobsite.
office building in San Fernando, La Union, had been awarded to the plaintiff. The said
The defendant likewise presented certain offer and proposals to the plaintiff, among
telegram was followed by a formal letter, also dated December 10, 1965, duly signed by
which were: (a) the immediate return of plaintiff's cash bidder's bond of P275,000.00; (b)
said Mr. Rizalino L. Mendoza, confirming the approval of the award of the above-stated
the payment of interest on said bidder's bond at 12% per annum; (c) the reimbursement
contract under plaintiff's Proposal Item No. 2 in the amount of P3,749,000.00.
to the plaintiff of the value of all the work accomplished at the site; (d) the entering into
a negotiated contract with the plaintiff on the basis of the reduced appropriation for the
project in question; and (e) the reimbursement of the premium on plaintiff's performance
bond. Not one of these offers and proposals of the defendant, however, was accepted by I. THE COURT OF APPEALS ERRED IN HOLDING THAT THERE WAS A PERFECTED
the plaintiff during that meeting of May 20, 1966. CONTRACT BETWEEN PETITIONER CENTRAL BANK OF THE PHILIPPINES AND
RESPONDENT ABLAZA CONSTRUCTION & FINANCE CORPORATION FOR THE
GENERAL CONSTRUCTION WORK OF PETITIONER'S REGIONAL OFFICE BUILDING AT
On June 3, 1966, plaintiff, thru counsel, wrote the defendant, demanding for the formal
SAN FERNANDO, LA UNION.
execution of the corresponding contract, without prejudice to its claim for damages. The
defendant, thru its Deputy Governor, Mr. Amado R. Brinas, on June 15, 1966, replied
to the said letter of the plaintiff, whereby the defendant claimed that an agreement was II. THE COURT OF APPEALS ERRED IN HOLDING THAT PETITIONER HAS COMMITTED
reached between the plaintiff and the defendant during the meeting held on May 20, A BREACH OF CONTRACT.
1966. On the following day, however, in its letter dated June 16, 1966, the plaintiff, thru
counsel, vehemently denied that said parties concluded any agreement during the
III. THE COURT OF APPEALS ERRED IN HOLDING THAT PETITIONER HAD GIVEN ITS
meeting in question.
APPROVAL TO THE WORK DONE BY RESPONDENT ABLAZA CONSTRUCTION &
FINANCE CORPORATION.
On July 5, 1966, defendant again offered to return plaintiff's cash bidder's bond in the
amount of P275,000.00. The plaintiff, thru counsel, on July 6, 1966, agreed to accept
IV. THE COURT OF APPEALS ERRED IN HOLDING THAT THE AWARD OF ACTUAL AND
the return of the said cash bond, without prejudice, however, to its claims as contained
COMPENSATORY DAMAGES, ATTORNEY'S FEES AND RETAINING FEE IS FAIR AND
in its letters to the defendant dated June 3, June 10, and June 16, 1966, and with
REASONABLE, AND IN HOLDING THAT PETITIONER IS LIABLE FOR COSTS." (Pp. A &
further reservation regarding payment of the corresponding interest thereon. On July 7,
B, Petitioner-Appellant's Brief.)
1966, the said sum of P275,000.00 was returned by the defendant to the plaintiff.

Under the first assigned error, petitioner denotes the major part of its effort to the discussion of its
On January 30, 1967, in accordance with the letter of the plaintiff, thru counsel, dated
proposition that there could be no perfected contract in this case, (contrary to the conclusion of the courts
January 26, 1967, the construction equipment of the plaintiff were pulled out from the
below) because there is no showing of compliance, and in fact, there has been no compliance with the
construction site, for which the plaintiff incurred hauling expenses.
requirement that there must be a certification of the availability of funds by the Auditor General pursuant
to Section 607 of the Revised Administrative Code which provides thus: têñ.£îhqwâ£
The negotiations of the parties for the settlement of plaintiff's claims out of court proved
to be futile; hence, the present action was instituted by plaintiff against the defendant."
Section 607. Certificate showing appropriation to meet contract. — Except in the case of
(Pp. 249-256, Rec. on Appeal).
a contract for personal service or for supplies to be carried in stock, no contract involving
an expenditure by the National Government of three thousand pesos or more shall be
It may be added that the Instructions to Bidders on the basis of which the bid and award in question were entered into or authorized until the Auditor General shall have certified to the officer
submitted and made contained, among others, the following provisions: têñ.£îhqw⣠entering into such obligation that funds have been duly appropriated for such purpose
and that the amount necessary to cover the proposed contract is available for
expenditure on account thereof. When application is made to the Auditor General for the
IB 113.4 The acceptance of the Proposal shall be communicated in writing by the Owner
certificate herein required, a copy of the proposed contract or agreement shall be
and no other act of the Owner shall constitute the acceptance of the Proposal. The
submitted to him accompanied by a statement in writing from the officer making the
acceptance of a Proposal shall bind the successful bidder to execute the Contract and to
application showing all obligations not yet presented for audit which have been incurred
be responsible for liquidated damages as herein provided. The rights and obligations
against the appropriation to which the contract in question would be chargeable; and
provided for in the Contract shall become effective and binding upon the parties only
such certificate, when signed by the Auditor, shall be attached to and become a part of
with its formal execution.
the proposed contract, and the sum so certified shall not thereafter be available for
expenditure for any other purposes until the Government is discharged from the contract
xxx xxx xxx in question.

IB 114.1 The bidder whose proposal is accepted will be required to appear at the Office Except in the case of a contract for supplies to be carried in stock, no contract involving
of the Owner in person, or, if a firm or corporation, a duly authorized representative the expenditure by any province, municipality, chartered city, or municipal district of
shall so appear, and to execute that contract within five (5) days after notice that the two thousand pesos or more shall be entered into or authorized until the treasurer of
contract has been awarded to him. Failure or neglect to do so shall constitute a breach the political division concerned shall have certified to the officer entering into such
of agreement effected by the acceptance of the Proposal. contract that funds have been duly appropriated for such purpose and that the amount
necessary to cover the proposed contract is available for expenditure on account thereof.
Such certificate, when signed by the said treasurer, shall be attached to and become
xxx xxx xxx
part of the proposed contract and the sum so certified shall not thereafter be available
for expenditure for any other purpose until the contract in question is lawfully abrogated
IB 118.1 The Contractor shall commence the work within ten (10) calendar days from or discharged.
the date he receives a copy of the fully executed Contract, and he shall complete the
work within the time specified." (Pp. 18-19 & 58-59, Petitioner-Appellant's Brief.)
For the purpose of making the certificate hereinabove required ninety per centum of the
estimated revenues and receipts which should accrue during the current fiscal year but
In the light of these facts, petitioner has made the following assignment of errors: têñ.£îhqw⣠which are yet uncollected, shall be deemed to be in the treasury of the particular branch
of the Government against which the obligation in question would create a charge." (Pp. administrative order was no longer in force, the same having been revoked on January 17, 1964 by
23-25, Petitioner-Appellant's Brief.) President Macapagal under Administrative Order No. 81, s. 1964.

It is contended that in view of such omission and considering the provisions of Section 608 of the same Hence, if only for the reason that it is a familiar rule in procedure that defenses not pleaded in the answer
code to the effect that "a purported contract entered into contrary to the requirements of the next preceding may not be raised for the first time on appeal, petitioner's position cannot be sustained. Indeed, in the
section hereof shall be wholly void", "no contract between the petitioner and respondent Ablaza Court of Appeals, petitioner could only bring up such questions as are related to the issues made by the
Construction and Finance Corporation for the general construction of the proposed regional office building parties in their pleadings, particularly where factual matters may be involved, because to permit a party to
of the Central Bank in San Fernando, La Union, was ever perfected because only the first stage, that is the change his theory on appeal "would be unfair to the adverse party." (II, Moran, Rules of Court, p. 505, 1970
award of the contract to the lowest responsible bidder, respondent Ablaza Construction and Finance ed.) Furthermore, under Section 7 of Rule 51, the appellate court cannot consider any error of the lower
Corporation, was completed." (p. 29, Petitioner-Appellant's Brief.) And in support of this pose, petitioner court "unless stated in the assignment of errors and properly argued in the brief."
relies heavily on Tan C. Tee & Co. vs. Wright thus: têñ.£îhqwâ£
Even prescinding from this consideration of belatedness, however, it is Our considered view that contracts
The aforesaid requirements of the Revised Administrative Code for the perfection of entered into by petitioner Central Bank are not within the contemplation of Sections 607 and 608 cited by
government contracts have been upheld by this Honorable Court in the case of Tan C. it. Immediately to be noted, Section 607 specifically refers to "expenditure(s) of the National Government"
Tee Co. vs. Wright, 53 Phil. 172, in which case it was held that the award of the contract and that the term "National Government" may not be deemed to include the Central Bank. Under the
to the lowest bidder does not amount to entering into the contract because of the Administrative Code itself, the term "National Government" refers only to the central government,
requirement of Section 607 of the Revised Administrative Code that a copy of the consisting of the legislative, executive and judicial departments of the government, as distinguished from
proposed contract shall be submitted to the Auditor General together with a request for local governments and other governmental entities and is not synonymous, therefore, with the terms "The
the availability of funds to cover the proposed contract. Thus, this Honorable Court Government of the Republic of the Philippines" or "Philippine Government", which are the expressions
held: têñ.£îhqw⣠broad enough to include not only the central government but also the provincial and municipal
governments, chartered cities and other government-controlled corporations or agencies, like the Central
Bank. (I, Martin, Administrative Code, p. 15.)
'To award the contract to the lowest responsible bidder is not the
equivalent of entering into the contract. Section 607 of the
Administrative Code requires that a copy of the proposed contract To be sure the Central Bank is a government instrumentality. But it was created as an autonomous body
shall be submitted along with the request for the certificate of corporate to be governed by the provisions of its charter, Republic Act 265, "to administer the monetary
availability of funds, but there could be no proposed contract to be and banking system of the Republic." (Sec. 1) As such, it is authorized "to adopt, alter and use a corporate
submitted until after the award was made.' seal which shall be judicially noticed; to make contracts; to lease or own real and personal property, and
to sell or otherwise dispose of the same; to sue and be sued; and otherwise to do and perform any and all
things that may be necessary or proper to carry out the purposes of this Act. The Central Bank may acquire
And to guide government authorities in the letting of government contracts, this
and hold such assets and incur such liabilities as result directly from operations authorized by the
Honorable Court, in said case of Tan C. Tee vs. Wright, supra, laid down the procedure
provisions of this Act, or as are essential to the proper conduct of such operations." (Sec. 4) It has capital
which should be followed, as follows: têñ.£îhqwâ£
of its own and operates under a budget prepared by its own Monetary Board and otherwise appropriates
money for its operations and other expenditures independently of the national budget. It does not depend
`PROCEDURE WHICH SHOULD BE FOLLOWED IN THE LETTING OF on the National Government for the financing of its operations; it is the National Government that
CONTRACTS FOR INSULAR WORKS. — The procedure which should occasionally resorts to it for needed budgetary accommodations. Under Section 14 of the Bank's charter,
be followed in the letting of contracts for Insular works is the the Monetary Board may authorize such expenditures by the Central Bank as are in the interest of the
following: First, there is an award of the contract by the Director of effective administration and operation of the Bank." Its prerogative to incur such liabilities and
Public Works to the lowest responsible bidder. Second, there is a expenditures is not subject to any prerequisite found in any statute or regulation not expressly applicable
certificate of availability of funds to be obtained from the Insular to it. Relevantly to the issues in this case, it is not subject, like the Social Security Commission, to Section
Auditor, and in some cases from the Insular Treasurer, to cover the 1901 and related provisions of the Revised Administrative Code which require national government
proposed contract. And third, there is a contract to be executed on constructions to be done by or under the supervision of the Bureau of Public Works. (Op. of the Sec. of
behalf of the Government by the Director of Public Works with the Justice No. 92, Series of 1960) For these reasons, the provisions of the Revised Administrative Code invoked
approval of the department head.'" (Pp. 27-28, Petitioner-Appellant's by the Bank do not apply to it. To Our knowledge, in no other instance has the Bank ever considered itself
Brief.) subject thereto.

The contention is without merit. To start with, the record reveals that it is more of an afterthought. In Zobel vs. City of Manila, 47 Phil. 169, this Court adopted a restrictive construction of Section 607 of the
Respondent never raised this question whether in its pleadings or at the hearings in the trial court. We Administrative Code thus:
have also read its brief in the appellate court and no mention is made therein of this point. Not even in its
memorandum submitted to that court in lieu of oral argument is there any discussion thereof, even as it
The second question to be considered has reference to the applicability of section 607 of the Administrative
appears that emphasis was given therein to various portions of the Revised Manual of Instructions to
Code to contracts made by the City of Manila. In the second paragraph of said section it is declared that
Treasurers regarding the perfection and constitution of public contracts. In fact, reference was made
no contract involving the expenditure by any province, municipality, township, or settlement of two
therein to Administrative Order No. 290 of the President of the Philippines, dated February 5, 1959,
thousand pesos or more shall be entered into or authorized until the treasurer of the political division
requiring "all contracts of whatever nature involving P10,000 or more to be entered into by all bureaus and
concerned shall have certified to the officer entering into such contract that funds have been duly
offices, ... including the ... Central Bank ... shall be submitted to the Auditor General for examination and
appropriated for such purpose and that the amount necessary to cover the proposed contract is available
review before the same are perfected and/or consummated, etc.", without mentioning, however, that said
for expenditure on account thereof. It is admitted that no such certificate was made by the treasurer of
Manila at the time the contract now in question was made. We are of the opinion that the provision cited formal contract has yet been signed by the parties herein, there is yet no perfected contract to speak of and
has no application to contracts of a chartered city, such as the City of Manila. Upon examining said respondent has, therefore, no cause of action against the Bank. And in refutation of respondent's argument
provision (sec. 607) it will be found that the term chartered city, or other similar expression, such as would that it had already started the work with some clearing job and foundation excavations, which has never
include the City of Manila, is not used; and it is quite manifest from the careful use of terms in said section been stopped by petitioner who had previously given express permission to respondent to enter the jobsite,
that chartered cities were intended to be excluded. In this connection the definitions of "province," build a temporary shelter and enclosures thereon, petitioner counters that under the above instructions,
"municipality," and "chartered city," given in section 2 of the Administrative Code are instructive. The respondent is supposed to commence the work "within ten (10) calendar days from the date he receives a
circumstance that for certain purposes the City of Manila has the status both of a province and a copy of the fully executed Contract," and for said respondent to have started actual construction work
municipality (as is true in the distribution of revenue) is not inconsistent with this conclusion."1 before any contract has been signed was unauthorized and was consequently undertaken at his own risk,
all the above circumstances indicative of estoppel notwithstanding.
We perceive no valid reason why the Court should not follow the same view now in respect to the first
paragraph of the section by confirming its application only to the offices comprised within the term National We are not persuaded that petitioner's posture conforms with law and equity. According to Paragraph IB
Government as above defined, particularly insofar as government-owned or created corporations or entities 114.1 of the Instructions to Bidders, Ablaza was "required to appear in the office of the Owner (the Bank)
having powers to make expenditures and to incur liabilities by virtue of their own corporate authority in person, or, if a firm or corporation, a duly authorized representative (thereof), and to execute the contract
independently of the national or local legislative bodies, as in the case of the petitioner herein, are within five (5) days after notice that the contract has been awarded to him. Failure or neglect to do so shall
concerned. Whenever necessary, the Monetary Board, like any other corporate board, makes all required constitute a breach of agreement effected by the acceptance of the Proposal." There can be no other meaning
appropriations directly from the funds of the Bank and does not need any official statement of availability of this provision than that the Bank's acceptance of the bid of respondent Ablaza effected an actionable
from its treasurer or auditor and without submitting any papers to, much less securing the approval of the agreement between them. We cannot read it in the unilateral sense suggested by petitioner that it bound
Auditor General or any outside authority before doing so. Indeed, this is readily to be inferred from the only the contractor, without any corresponding responsibility or obligation at all on the part of the Bank.
repeal already mentioned earlier of Administrative Order No. 290, s. 1959, which petitioner tried to invoke, An agreement presupposes a meeting of minds and when that point is reached in the negotiations between
overlooking perhaps such repeal. In other words, by that repeal, the requirement that the Central Bank two parties intending to enter into a contract, the purported contract is deemed perfected and none of them
should submit to the Auditor General for examination and review before contracts involving P10,000 or may thereafter disengage himself therefrom without being liable to the other in an action for specific
more to be entered into by it "before the same are perfected and/or consummated" had already been performance.
eliminated at the time the transaction herein involved took place. Consequently, the point of invalidity
pressed, belatedly at that, by petitioner has no leg to stand on.
The rather ambiguous terms of Paragraph IB 113.4 of the Instructions to Bidders relied upon by petitioner
have to be reconciled with the other paragraphs thereof to avoid lack of mutuality in the relation between
The other main contention of petitioner is that the purported or alleged contract being relied upon by the parties. This invoked paragraph stipulates that "the acceptance of (respondent's) Proposal shall bind
respondent never reached the stage of perfection which would make it binding upon the parties and entitle said respondent to execute the Contract and to be responsible for liquidated damages as herein provided."
either of them to sue for specific performance in case of breach thereof. In this connection, since the And yet, even if the contractor is ready and willing to execute the formal contract within the five (5) day
transaction herein involved arose from the award of a construction contract2 by a government corporation period given to him, petitioner now claims that under the invoked provision, it could refuse to execute such
and the attempt on its part to discontinue with the construction several months after such award had been contract and still be absolutely free from any liability to the contractor who, in the meantime, has to make
accepted by the contractor and after the latter had already commenced the work without any objection on necessary arrangements and incur expenditures in order to be able to commence work "within ten (10)
the part of the corporation, so much so that entry into the site for the purpose was upon express permission days from the date he receives a copy of the fully executed Contract," or be responsible for damages for
from it, but before any written contract has been executed, it is preferable that certain pertinent points be delay. The unfairness of such a view is too evident to be justified by the invocation of the principle that
clarified for the proper resolution of the issue between the parties here and the general guidance of all who every party to a contract who is sui juris and who has entered into it voluntarily and with full knowledge of
might be similarly situated. its unfavorable provisions may not subsequently complain about them when they are being enforced, if
only because there are other portions of the Instruction to Bidders which indicate the contrary. Certainly,
We cannot sanction that in the absence of unavoidable just reasons, the Bank could simply refuse to
Petitioner buttresses its position in regard to this issue on the provisions earlier quoted in this opinion of
execute the contract and thereby avoid it entirely. Even a government owned corporation may not under
the Instruction to Bidders: têñ.£îhqwâ£
the guise of protecting the public interest unceremoniously disregard contractual commitments to the
prejudice of the other party. Otherwise, the door would be wide open to abuses and anomalies more
IB 113.4 The acceptance of the Proposal shall be communicated in writing by the Owner detrimental to public interest. If there could be instances wherein a government corporation may justifiably
and no other act of the Owner shall constitute the acceptance of the Proposal. The withdraw from a commitment as a consequence of more paramount considerations, the case at bar is not,
acceptance of a Proposal shall bind the successful bidder to execute the Contract and to for the reasons already given, one of them.
be responsible for liquidated damages as herein provided. The rights and obligations
provided for in the Contract shall become effective and binding upon the parties only
As We see it then, contrary to the contention of the Bank, the provision it is citing may not be considered
with its formal execution.
as determinative of the perfection of the contract here in question. Said provision only means that as
regards the violation of any particular term or condition to be contained in the formal contract, the
xxx xxx xxx corresponding action therefor cannot arise until after the writing has been fully executed. Thus, after the
Proposal of respondent was accepted by the Bank thru its telegram and letter both dated December 10,
1965 and respondent in turn accepted the award by its letter of December 15, 1965, both parties became
IB 118.1 The Contractor shall commence the work within ten (10) calendar days from
bound to proceed with the subsequent steps needed to formalize and consummate their agreement. Failure
the date he receives a copy of the fully executed Contract, and he shall complete the
on the part of either of them to do so, entities the other to compensation for the resulting damages. To such
work within the time specified." (Pp. 18-19, Petitioner-Appellant's Brief.)
effect was the ruling of this Court in Valencia vs. RFC 103 Phil. 444. We held therein that the award of a
contract to a bidder constitutes an acceptance of said bidder's proposal and that "the effect of said
Petitioner insists that under these provisions, the rights and obligations of the Bank and Ablaza could acceptance was to perfect a contract, upon notice of the award to (the bidder)". (at p. 450) We further held
become effective and binding only upon the execution of the formal contract, and since admittedly no therein that the bidder's "failure to (sign the corresponding contract) do not relieve him of the obligation
arising from the unqualified acceptance of his offer. Much less did it affect the existence of a contract The Bulk of plaintiffs claims consists of expected profit which it failed to realize due to the breach of the
between him and respondent". (at p. 452) contract in question by the defendant. As previously stated, the plaintiff seeks to recover the amount of
P814,190.00 by way of unrealized expected profit. This figure represents 18% of P4,523,275.00 which is
the estimated direct cost of the subject project.
It is neither just nor equitable that Valencia should be construed to have sanctioned a one-sided view of
the perfection of contracts in the sense that the acceptance of a bid by a duly authorized official of a
government-owned corporation, financially and otherwise autonomous both from the National Government As it has been established by the evidence that the defendant in fact was guilty of breach of contract and,
and the Bureau of Public Works, insofar as its construction contracts are concerned, binds only the bidder therefore, liable for damages (Art. 1170, New Civil Code), the Court finds that the plaintiff is entitled to
and not the corporation until the formal execution of the corresponding written contract. recover from the defendant unrealized expected profit as part of the actual or compensatory damages.
Indemnification for damages shall comprehend not only the value of the loss suffered, but also that of the
profits which the obligee failed to obtain (Art. 2200, New Civil Code).
Such unfairness and inequity would even be more evident in the case at bar, if We were to uphold
petitioner's pose. Pertinently to the point under consideration, the trial court found as follows:
Where a party is guilty of breach of contract, the other party is entitled to recover the profit which the latter
would have been able to make had the contract been performed (Paz P. Arrieta, et al., plaintiffs-appellees,
To determine the amount of damages recoverable from the defendant, plaintiff's claim for actual damages
vs. National Rice Corporation defendant-appellant, G.R. No. L-15645, promulgated on January 31, 1964;
in the sum of P298,433.35, as hereinabove stated, and the recommendation of Messrs. Ambrosio R. Flores
Vivencio Cerrano, plaintiff-appellee, vs. Tan Chuco, defendant-appellant, 38 Phil. 392).
and Ricardo Y. Mayuga, as contained in their separate reports (Exhs. "13" and "15"), in the amounts of
P154,075.00 and P147,500.00, respectively, should be taken into account.
Regarding the expected profit, a number of questions will have to be answered: Is the 18% unrealized
expected profit being claimed by the plaintiff reasonable? Would the plaintiff be entitled to the whole
There is evidence on record showing that plaintiff incurred the sum of P48,770.30 for the preparation of
amount of said expected profit although there was only partial performance of the contract? Would the
the jobsite, construction of bodegas, fences field offices, working sheds, and workmen's quarters; that the
18% expected profit be based on the estimated direct cost of the subject in the amount of P4,523,275.00,
value of the excavation work accomplished by the plaintiff at the site was P113,800.00; that the rental of
or on plaintiff's bid proposal of P3,749,000.00?
the various construction equipment of the plaintiff from the stoppage of work until the removal thereof
from the jobsite would amount to P78,540.00 (Exhs. "K" - "K-l"); that the interest on the cash bond of
P275,000.00 from November 3, 1965 to July 7, 1966 at 12% per annum would be P22,000.00; that for On the question of reasonableness of the 18% expected profit, the Court noted that according to defendant's
removing said construction equipment from the jobsite to Manila, plaintiff paid a hauling fee of P700.00 own expert witness, Mr. Ambrosio R. Flores, 25% contractor's profit for a project similar in magnitude as
(Exhs. "L" - "L-1" ); that for the performance bond that the plaintiff posted as required under its contract the one involved in the present case would be ample and reasonable. Plaintiff's witness, Mr. Nicomedes G.
with the defendant, the former was obliged to pay a premium of P2,216.55; and that the plaintiff was Ablaza, an experienced civil engineer who has been actively engaged in the construction business, testified
likewise made to incur the sum of P32,406.50, representing the 3% contractor's tax (Exhs. "AA" - "A-l"). that 15% to 20% contractor's profit would be in accordance with the standard engineering practice.
The itemized list of all these expenditures, totalling P298,433.35 is attached to the records of this case Considering the type of the project involved in this case, he stated, the contractor's profit was placed at
(Annex "B", Complaint) and forms part of the evidence of the plaintiff. Mr. Nicomedes G. Ablaza, the witness 18%. Taking into consideration the fact that this percentage of profit is even lower than what defendant's
for the plaintiff, properly identified said document and affirmed the contents thereof when he testified witness considered to be ample and reasonable, the Court believes that the reasonable percentage should
during the hearing. The same witness likewise explained in detail the various figures contained therein, be 18% inasmuch as the actual work was not done completely and the plaintiff has not invested the whole
and identified the corresponding supporting papers. amount of money called for by the project." (Pp. 263-268, Record on Appeal.)

It is noteworthy, in this connection, that there is nothing in the records that would show that the defendant These findings have not been shown to Us to be erroneous. And additional and clarificatory details, which
assailed the accuracy and/or reasonableness of the figures presented by the plaintiff; neither does it appear We find to be adequately supported by the record, are stated in Respondents' brief thus: têñ.£îhqwâ£
that the defendant offered any evidence to refute said figures.
23. In a letter dated January 4, 1966, petitioner Central Bank, through the same Mr.
While it is claimed by the defendant that the plaintiff incurred a total expense of only P154,075.00 Mendoza, to this request of respondent Ablaza. (Annex "D-1" to the Partial Stipulation of
according to the report of Mr. Ambrosio R. Flores, or P147,500.00, according to the report of Mr. Ricardo Facts, R.A., p. 146).
Y. Mayuga, the Court finds said estimates to be inaccurate. To cite only an instance, in estimating, the
value of the excavation work, the defendant merely measured the depth, length and width of the excavated,
24. Acting upon this written permission, respondent Ablaza immediately brought its men
area which was submerged in water, without ascertaining the volume of rock and the volume of earth
and equipment from Manila to the construction site in San Fernando, La Union, and
actually excavated as was done by the plaintiff who prepared a detailed plan showing the profile of the
promptly commenced construction work thereat. This work, consisted of the setting up
excavation work performed in the site (Exh. "B"). Likewise, the unit measure adopted by the defendant was
of an enclosure around the site, the building of temporary shelter for its workmen, and
in cubic meter while it should be in cubic yard. Also the unit price used by the defendant was only P8.75
the making of the necessary excavation works. (Commissioner's Report, R.A., p. 181).
for rock excavation while it should be P10.00 per cubic yard; and only P4.95 for earth excavation while it
should be P5.50 per cubic yard as clearly indicated in plaintiff's proposal (Annex "A", Complaint; same as
Annex "1", Answer). The Court, therefore, can not give credence to defendant's, aforementioned estimates 25. Following the commencement of such construction work, petitioner Central Bank,
in view of their evident inaccuracies. through a letter dated February 8, 1966, formally requested respondent Ablaza to submit
to petitioner the following:têñ.£îhqwâ£
The Court finds from the evidence adduced that Plaintiff claim for actual damages in the sum of
P298,433.35 is meritorious. (a) A schedule of deliveries of material which, under the terms of
respondent Ablaza's approved proposal, were to be furnished by
petitioner.
(b) A time-table for the accomplishment of the construction work. 34. Obviously to induce acceptance of the above proposal, Secretary Romualdez offered
the following concessions to respondent Ablaza: têñ.£îhqwâ£
In short, as early as February 8, 1966, or more than three months prior
to petitioner's repudiation of the contract in question the latter (a) That its cash bond in the amount of P275,000.00 be released
(petitioner) already took the above positive steps it compliance with its immediately, and that interest be paid thereon at the rate of 12% per
own obligations under the contract. annum.

26. Acting upon petitioner's above letter of February 8, 1966, on February 16, 1966, (b) That respondent Ablaza be reimbursed for expenses incurred for
respondent Ablaza submitted the schedule of deliveries requested by petitioner. the premiums on the performance bond which it posted, and which
(Commissioner's Report, R.A., p. 182; Decision id., 252; also Exhs. "D" to "D-7", petitioner had already accepted. (Decision, R.A., pp. 253-254).
inclusive.)
35. In addition, Secretary Romualdez also proposed the conclusion of a new contract
27. During the period of actual construction, respondent Ablaza, on several occasions, with respondent Ablaza for the construction of a more modest regional office building at
actually discussed the progress of the work with Mr. Mendoza. In addition, in March San Fernando, La Union, on a negotiated basis. However, the sincerity and feasibility of
1966, the latter (Mr. Mendoza) personally visited the construction site. There he saw the this proposal was rendered dubious by a caveat attached to it, as follows: têñ.£îhqwâ£
work which respondent had by that time already accomplished which consisted of the
completion of approximately 20% of the necessary excavation works. (Commissioner's
'4. Where auditing regulations would permit, the Central Bank would
Report, R.A., p. 182; Decision, id., p. 252).
enter into a negotiated contract with the said corporation (Ablaza) for
the construction work on the building on the basis of the revised
28. Following Mr. Mendoza's visit at the construction site, or more specifically on March estimates.' (Annex "8" to Answer, R.A., p. 95).
22, 1966, the latter (Mendoza) wrote to respondent Ablaza, instructing the latter to
formally designate the person to represent the corporation at the signing of the formal
36. The revised cost fixed for this proposed alternative regional office building was fixed
construction contract. (Exh. "H"; also t.s.n., pp. 119-121, December 18, 1967).
at a maximum of P3,000,000.00 (compared to P3,749,000.00 under the contract
originally awarded to respondent). (Annex "6-A" to Answer, R.A., p. 87).
29. By a letter dated March 24, 1966, respondent Ablaza promptly complied with the
above request. (Exh. "I"; also t.s.n., pp 121-123, December 18, 1967).
37. Needless perhaps to state, respondent Ablaza rejected the above proposals (pars. 34
and 35, supra.), and on June 3, 1966, through counsel, wrote to petitioner demanding
30. Subsequently, respondent Ablaza posted the required performance guaranty bond the formal execution of the contract previously awarded to it, or in the alternative, to pay
in the total amount of P962,250.00, consisting of (a) a cash bond in the amount of "all damages and expenses suffered by (it) in the total amount of P1,181,950.00 ...
P275,000.00, and (b) a surety bond, PSIC Bond No. B-252-ML, dated May 19, 1966, in "(Annex "7" to Answer, R.A., pp. 89-91; Decision, id., p. 254).
the amount of P687,250.00. In this connection, it is important to note that the specific
purpose of this bond was to guarantee "the faithful Performance of the Contract" by
38. In a letter dated June 15, 1966, petitioner Central Bank, through Deputy Governor
respondent Ablaza. (Partial Stipulation of Facts, par. 6, R.A., p. 141). This performance
Amado R. Brinas, replied to respondent Ablaza's demand denying any liability on the
guaranty bond was duly accepted by petitioner.(Id.)
basis of the following claim: têñ.£îhqwâ£

31. However, on May 20, 1966, petitioner Central Bank called for a meeting with
`(That, allegedly) in line with the agreement ... reached between the
representatives of respondent Ablaza and another contractor. This meeting was held at
Central Bank and Ablaza Construction and Finance Corporation at a
the Conference Room of the Central Bank Building. At this meeting, then Finance
meeting held ... on May 20, 1966,' "whatever agreements might have
Secretary Eduardo Romualdez, who acted as the representative of petitioner, announced
been previously agreed upon between (petitioner and respondent)
that the Monetary Board had decided to reduce the appropriations for the various
would be considered set aside." (Decision, R.A., p. 255; Annex "8" to
proposed Central Bank regional office buildings, including the one for San Fernando, La
Answer, id., pp. 93-96.)
Union.

39. The above claim was, however, promptly and peremptorily denied by respondent
32. In view of this decision, Secretary Romualdez informed respondent Ablaza that new
Ablaza, through counsel, in a letter dated June 16, 1966. (Partial Stipulation of Facts,
plans and designs for the proposed regional office building in San Fernando would have
par. 9, R.A., p. 142, also Annex "G" thereof; Commissioner's Report, R.A., p.
to be drawn up to take account of the reduction in appropriation. Secretary Romualdez
185; Decision, id., p. 255.)" (Appellee's Brief, pars. 23 to 39, pp. 14-19.)
then advised respondent to suspendwork at the construction site in San Fernando in
the meanwhile. (Decision, R.A., pp. 253-254).
None of these facts is seriously or in any event sufficiently denied in petitioner's reply brief.
33. After making the above announcements, Secretary Romualdez proposed that all
existing contracts previously entered into between petitioner Central Bank and the Considering all these facts, it is quite obvious that the Bank's insistence now regarding the need for the
several winning contractors (among them being respondent Ablaza) be considered set execution of the formal contract comes a little too late to be believable. Even assuming arguendo that the
aside. Revised Manual of Instructions to Treasurers were applicable to the Central Bank, which is doubtful,
considering that under the provisions of its charter already referred to earlier, disbursements and P5,000 already paid as retaining fee. All of these items were the subject of evidence presented by the parties.
expenditures of the Bank are supposed to be governed by rules and regulations promulgated by the According to the Court of Appeals: têñ.£îhqwâ£
Monetary Board, in this particular case, the attitude and actuations then of the Bank in relation to the
work being done by Ablaza prior to May 20, 1966 clearly indicate that both parties assumed that the actual
As regard the accuracy and reasonableness of the award for damages, both actual and
execution of the written contract is a mere formality which could not materially affect their respective
compensatory, it is to be noted that the trial court subjected the Commissioner's report
contractual rights and obligations. In legal effect, therefore, the Bank must be considered as having waived
and the evidence adduced therein to a careful scrutiny. Thus, when the appellant called
such requirement.
the trial court's attention to the fact that the P814,190.00 unrealized expected profit
being claimed by appellee represented 18% of P4,523,275.00 which was the estimated
To be more concrete, from December 15, 1965, when Ablaza accepted the award of the contract in question, cost of the project, while the contract awarded to appellee was only in the amount of
both parties were supposed to have seen to it that the formal contract were duly signed. Under the P3,749,000.00 as per its bid proposal, the Court made the necessary modification. It is
Instructions to Bidders, Ablaza was under obligation to sign the same within five (5) days from notice of further to be noted that the amount of 18% of the estimated cost considered in the said
the award, and so, he called on the Bank at various times for that purpose. The Bank never indicated until award is much less than that given by appellant's own expert witness, Ambrosio R.
May, 1966 that it would not comply. On the contrary, on February 8, 1966, Ablaza was requested to submit Flores. He testified that 25% as contractor's profit "would be fair, ample and reasonable."
a "schedule of deliveries of materials" which under the terms of the bid were to be furnished by the Bank. (T.s.n, p. 557, Batalla.)" (p. 17 A, Appellant's brief.)
On March 22, 1966, Ablaza received a letter from the Bank inquiring as to who would be Ablaza's
representative to sign the formal contract. In the meanwhile, no less than Mr. Rizalino Mendoza, the
Basically, these are factual conclusions which We are not generally at liberty to disregard. And We have
Chairman of the Management Building Committee of the Central Bank who had been signing for the Bank
not been shown that they are devoid of reasonable basis.
all the communications regarding the project at issue, had visited the construction site in March, 1966,
just before he wrote the request abovementioned of the 22nd of that month for the nomination of the
representative to sign the formal contract, and actually saw the progress of the work and that it was being There can be no dispute as to the legal obligation of petitioner to pay respondent the actual expenses it has
continued, but he never protested or had it stopped. All these despite the fact that the Memorandum incurred in performing its part of the contract.
Circular being invoked by the Bank was issued way back on December 31, 1965 yet. And when finally on
May 20, 1966 the Bank met with the representatives of Ablaza regarding the idea of changing the plans to
Upon the other hand, the legal question of whether or not the Bank is liable for unrealized profits presents
more economical ones, there was no mention of the non-execution of the contract as entitling the Bank to
no difficulty. In Arrieta vs. Naric G.R. No. L-15645, Jan. 31, 1964, 10 SCRA 79, this Court sustained as a
back out of it unconditionally. Rather, the talk, according to the findings of the lower courts, was about
matter of law the award of damages n the amount of U.S. $286,000, payable in Philippine Currency,
the possibility of setting aside whatever agreement there was already. Under these circumstances, it
measured in the rate of exchange prevailing at the time the obligation was incurred (August, 1952),
appears that respondent has been made to believe up to the time the Bank decided definitely not to honor
comprising of unrealized profits of the plaintiff, Mrs. Paz Arrieta, in a case where a government-owned
any agreement at all that its execution was not indispensable to a contract to be considered as already
corporation, the Naric failed to proceed with the purchase of imported rice after having accepted and
operating and respondent could therefore proceed with the work, while the contract could be formalized
approved the bid of Arrieta and after she had already closed her contract with her foreign sellers.
later.

Actually, the law on the matter is unequivocally expressed in Articles 2200 and 2201 of the Civil Code
Petitioner contends next that its withdrawal from the contract is justified by the policy of economic restraint
thus: têñ.£îhqwâ£
ordained by Memorandum Circular No. 1. We do not see it that way. Inasmuch as the contract here in
question was perfected before the issuance of said Memorandum Circular, it is elementary that the same
may not be enforced in such a manner as to result in the impairment of the obligations of the contract, for ART. 2200. Identification for damages shall comprehend not only the value of the loss
that is not constitutionally permissible. Not even by means of a statute, which is much more weighty than suffered, but also that of the profits, which the obligee failed to obtain..
a mere declaration of policy, may the government issue any regulation relieving itself or any person from
the binding effects of a contract. (Section 1 (10), Article III, Philippine Constitution of 1953 and Section 11,
ART. 2201. In contracts and quasi-contracts, the damages for which the obligor who
Article IV, 1973 Constitution of the Philippines.) Specially in the case of the Central Bank, perhaps, it might
acted in good faith is liable shall be those that are the natural and probable
not have been really imperative that it should have revised its plans, considering that it has its own
consequences of the breach of the obligation, and which the parties have forseen or could
resources independent of those of the national government and that the funds of the Central Bank are
have reasonably foreseen at the time the obligation was constituted.
derived from its own operations, not from taxes. In any event, if the memorandum circular had to be
implemented, the corresponding action in that direction should have been taken without loss of time and
before the contract in question had taken deeper roots. It is thus clear that in unjustifiably failing to honor In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible
its contract with respondent, petitioner has to suffer the consequences of its action. for all damages which may be reasonably attributed to the non- performance of the
obligation.
The last issue submitted for Our resolution refers to the amount of damages awarded to Ablaza by the trial
court and found by the Court of Appeals to be "fair and reasonable." Again, after a review of the record, We Construing these provisions, the following is what this Court held in Cerrano vs. Tan Chuco, 38 Phil.
do not find sufficient ground to disturb the appealed judgment even in this respect, except as to attorney's 392: têñ.£îhqwâ£
fees.
.... Article 1106 (now 2200) of the Civil Code establishes the rule that prospective profits
There are three principal items of damages awarded by the courts below, namely: (1) compensation for may be recovered as damages, while article 1107 (now 2201) of the same Code provides
actual work done in the amount of P298,433.35, (2) unrealized profits equivalent to 18% of the contract that the damages recoverable for the breach of obligations not originating in fraud (dolo)
price of P3,749,000 or P674,820.00 and (3) 15% of the total recovery as attorney's fees in addition to the are those which were or might have been foreseen at the time the contract was entered
into. Applying these principles to the facts in this case, we think that it is unquestionable
that defendant must be deemed to have foreseen at the time he made the contract that The above figures tally with those of Exhibit N. In its brief (p. 141) appellant claims that
in the event of his failure to perform it, the plaintiff would be damaged by the loss of the in less than six months' time appellee received by way of commission the amount of
profit he might reasonably have expected to derive from its use. P117,859.54, while in its memorandum, appellant makes the following statement:

When the existence of a loss is established, absolute certainty as to its amount is not `11. The invoice F.O.B. price of the sale through plaintiff General is P767,798.82 but the
required. The benefit to be derived from a contract which one of the parties has agreed F.O.B. price was P799,319.00, the commission at 13% (F.O.B.) is P117,859.54.
absolutely failed to perform is of necessity to some extent, a matter of speculation, but But, as there were always two prices — Invoice F.O.B price and F.O.B. price as per
the injured party is not to be denied all remedy for that reason alone. He must produce contract, because of the sales difference amounting to P31,920.18, and the same was
the best evidence of which his case is susceptible and if that evidence warrants the deducted from the commission, actually paid to plaintiff General is only P79,580.82.' "
inference that he has been damaged by the loss of profits which he might with reasonable It appears, therefore, that during the period of June to December, 1959, in spite of the
certainty have anticipated but for the defendant's wrongful act, he is entitled to recover. short delivery incurred by appellant, appellee had been earning its commission whenever
As stated in Sedgwick on Damages (Ninth Ed., par. 177): logs were delivered to it. But from January, 1960, appellee had ceased to earn any
commission because appellant failed to deliver any log in violation of their agreement.
Had appellant continued to deliver the logs as it was bound to pursuant to the agreement
The general rule is, then, that a plaintiff may recover compensation for any gain which
it is reasonable to expect that it would have continued earning its commission in much
he can make it appear with reasonable certainty the defendant's wrongful act prevented
the same manner as it used to in connection with the previous shipments of logs, which
him from acquiring, ...'. (See also Algarra vs. Sandejas, 27 Phil. Rep., 284, 289; Hicks
clearly indicates that it failed to earn the commissions it should earn during this period
vs. Manila Hotel Co., 28 Phil. Rep., 325.) (At pp. 398-399.)
of time. And this commission is not difficult to estimate. Thus, during the seventeen
remaining months of the contract, at the rate of at least 2,000,000 board feet, appellant
Later, in General Enterprises, Inc. vs. Lianga Bay Logging Co. Inc., 11 SCRA 733, Article 2200 of the Civil should have delivered thirty-four million board feet. If we take the number of board feet
Code was again applied as follows: têñ.£îhqw⣠delivered during the months prior to the interruption, namely, 7,405,861 board feet, and
the commission received by appellee thereon, which amounts to P79,580.82, we would
have that appellee received a commission of P.0107456 per board feet. Multiplying 34
Regarding the actual damages awarded to appellee, appellant contends that they are
million board feet by P.0107456, the product is P365,350.40, which represents
unwarranted inasmuch as appellee has failed to adduce any evidence to substantiate
the lucrum cessans that should accrue to appellee. The award therefore, made by the
them even assuming arguendo that appellant has failed to supply the additional monthly
court a quo of the amount of P400,000.00 as compensatory damages is not speculative,
2,000,000 board feet for the remainder of the period agreed upon in the contract Exhibit
but based on reasonable estimate.
A. Appellant maintains that for appellee to be entitled to demand payment of sales that
were not effected it should have proved (1) that there are actual sales made of appellee's
logs which were not fulfilled, (2) that it had obtained the best price for such sales, (3) In the light of these considerations, We cannot say that the Court of Appeals erred in making the
that there are buyers ready to buy at such price stating the volume they are ready to aforementioned award of damages for unrealized profits to respondent Ablaza.
buy, and (4) appellee could not cover the sales from the logs of other suppliers. Since
these facts were not proven, appellee's right to unearned commissions must fail.
With respect to the award for attorney's fees, We believe that in line with the amount fixed in Lianga, supra.,
an award of ten per centum (10%) of the amount of the total recovery should be enough.
This argument must be overruled in the light of the law and evidence on the matter.
Under Article 2200 of the Civil Code, indemnification for damages comprehends not only
PREMISES CONSIDERED, the decision of the Court of Appeals in this case is affirmed, with the
the value of the loss suffered but also that of the profits which the creditor fails to obtain.
modification that the award for attorney's fees made therein is hereby reduced to ten per centum (10%) of
In other words, lucrum cessans is also a basis for indemnification. The question then
the total recovery of respondent Ablaza.
that arises is: Has appellee failed to make profits because of appellant's breach of
contract, and in the affirmative, is there here basis for determining with reasonable
certainty such unearned profits? Costs against petitioner.

Appellant's memorandum (p. 9) shows that appellee has sold to Korea under the contract G.R. No. 167810. October 4, 2010.]
in question the following board feet of logs, Breareton Scale: têñ.£îhqwâ£
REPUBLIC OF THE PHILIPPINES, represented by the NATIONAL POWER CORPORATION, petitioner, vs.
Months Board Feet ATTY. RICHARD B. RAMBUYONG, respondent.

From June to August 1959 3,007,435 This petition for review assails the May 20, 2004 Decision 1 and April 13, 2005 Resolution 2 of the Court
September, 1959 none of Appeals (CA) in CA-G.R. SP No. 72800, which dismissed the petition before it and denied reconsideration,
October, 1959 2,299,805 respectively.
November, 1959 801,021
December, 1959 1,297,510
Factual Antecedents
Total 7,405,861
Alfredo Y. Chu (Chu) filed a case for collection of a sum of money and/or damages against the National It ruled that if ever there has been an erroneous interpretation of the law, the same may be attributed to a
Power Corporation (NPC) docketed as Civil Case No. I-197 which was raffled to the Regional Trial Court mere error of judgment which is definitely not the same as "grave abuse of discretion." The dispositive
(RTC) of Ipil, Zamboanga Sibugay, Branch 24. Appearing as counsel for Chu is Atty. Richard B. Rambuyong portion of the Decision states:
(Atty. Rambuyong) who was then the incumbent Vice-Mayor of Ipil, Zamboanga Sibugay.
WHEREFORE, in view of the foregoing, the instant petition is DISMISSED.
Thereafter, NPC filed a Motion for Inhibition 3 of Atty. Rambuyong arguing that under Section 90 (b), (1) of
Republic Act (RA) No. 7160, otherwise known as the Local Government Code, sanggunian members are
SO ORDERED. 8
prohibited "to appear as counsel before any court wherein . . . any office, agency or instrumentality of the
government is the adverse party." NPC contended that being a government-owned or controlled corporation,
it is embraced within the term "instrumentality." The motion for reconsideration of NPC was denied. Hence, the present petition.
Issues
Ruling of the Regional Trial Court
Petitioner raises the following arguments:

In an Order 4 dated January 4, 2002, the RTC ruled that government-owned or controlled corporations are I
expressly excluded from Section 90 (b), (1) of the Local Government Code. Citing other provisions of the BOTH THE LOCAL GOVERNMENT CODE AND THE 1987 ADMINISTRATIVE [CODE] ESSENTIALLY
Local Government Code wherein the phrase "including government-owned or controlled corporations" is REQUIRE ATTY. RAMBUYONG TO INHIBIT HIMSELF FROM ACTING AS COUNSEL AGAINST NPC IN THE
explicitly included, the trial court held that if it was the intention of the framers of RA 7160 to impose PROCEEDINGS BELOW.
obligations or give rights and privileges to local government units, agencies, instrumentalities or corporate
entities, then they would have explicitly stated so. The RTC further held that "to insistently maintain that II
'government-owned or controlled corporations' are included in the signification of 'agency and NPC IS INCLUDED IN THE TERM "INSTRUMENTALITY" OF GOVERNMENT.
instrumentality of the government' . . . would be leaving behind what is apparent in favor of opening the
door to the realm of presumption, baseless conjecture and even absurdity." 5 III
THE PROHIBITION IN SECTION 90(b), (1) OF RA 7160 INTENDS TO PREVENT PUBLIC OFFICIALS FROM
The dispositive portion of the Order reads: REPRESENTING INTEREST ADVERSE TO THE GOVERNMENT.
IV
WHEREFORE, upon the foregoing disquisition, the defendant's motion is DENIED due course, and this BACANI CASE IS NO LONGER THE PREVAILING JURISPRUDENCE ON THE REAL MEANING OF
Court declares: GOVERNMENT INSTRUMENTALITIES.
V
1. Sec. 90 of R.A. 7160 does not include government-owned or controlled corporations as among the
political units against which lawyer members of the Sanggunian cannot appear as counsel of the adverse ATTY. RICHARD RAMBUYONG IS THE REAL-PARTY-IN-INTEREST IN THE SUBJECT PETITION. 9
party;
In the main the issue is whether NPC is an instrumentality of government such that Atty. Rambuyong, as
a sanggunian member, should not appear as counsel against it.
2. That Atty. Richard B. Rambuyong, who is the incumbent Vice-Mayor of the Municipality of Ipil,
Zamboanga Sibugay, is not disqualified to continue acting as counsel for the plaintiff in this case.
Petitioner's Arguments

SO ORDERED. 6
Petitioner contends that the trial court refused to apply the law, specifically Section 90 (b), (1) of RA 7160,
which clearly states that lawyer-sanggunian members cannot appear as counsel in any case where the
Petitioner filed a motion for reconsideration but it was denied. 7 adverse party is a local government unit, office, agency or instrumentality. It argues that courts are not
authorized to distinguish where the law makes no distinction.
Hence, petitioner filed a petition for certiorari with the CA alleging grave abuse of discretion on the part of
the trial judge in ruling that the statutory prohibition pertaining to the private practice of law by Petitioner alleges that the RTC gravely abused its discretion when it failed to recognize that the 1987
sanggunian members does not apply to cases where the adverse party is a government-owned or controlled Administrative Code and the Local Government Code are in pari materia in defining the terms used in the
corporation. latter, such as "office, agency or instrumentality." It argues that the RTC acted beyond the scope of its
jurisdiction when it constricted the definition of "instrumentality" in Section 90 (b), (1) of RA 7160 to
exclude government-owned and controlled corporations.
Ruling of the Court of Appeals

Petitioner argues that NPC is an instrumentality of government and that there is no cogent reason to
On May 20, 2004, the CA dismissed the petition for lack of merit. The CA pointed out that for certiorari to
exclude government-owned and controlled corporations from the operation of Section 90 (b), (1) of RA 7160.
lie, there must be a capricious, arbitrary and whimsical exercise of power. It held that there was no showing
that the trial judge exercised his power of judgment capriciously, arbitrarily and whimsically. Neither did
it find proof that the trial judge, in making the rulings, was motivated by passion or personal hostility
towards the petitioner.
Finally, petitioner claims that the government's challenge against Atty. Rambuyong's appearance is It is the rule in statutory construction that if the words and phrases of a statute are not obscure or
directed against him alone to the exclusion of his client whose right to prosecute his claim as party litigant ambiguous, its meaning and the intention of the legislature must be determined from the language
is beyond question. employed, and, where there is no ambiguity in the words, there is no room for construction. The courts
may not speculate as to the probable intent of the legislature apart from the words. The reason for the rule
is that the legislature must be presumed to know the meaning of words, to have used words advisedly and
Respondent's Arguments
to have expressed its intent by use of such words as are found in the statute.

On the other hand, respondent contends that the party who would be benefited or injured by the
Section 2 of the Administrative Code of 1987 is clear and unambiguous. It categorically provides that the
compulsory inhibition of plaintiff's counsel is the plaintiff in Civil Case No. I-197. Thus, he insists that the
term "instrumentality" includes government-owned or controlled corporations. Hence there is no room for
plaintiff is the real party in interest and his (Atty. Rambuyong) inclusion as respondent in the present
construction. All that has to be done is to apply the law as called for by the circumstances of the case. It
petition is erroneous.
is not disputed that the NPC is a government-owned or controlled corporation. Therefore following Section
2 of the Administrative Code of 1987, the NPC is clearly an instrumentality of the government.
Our Ruling
The petition has merit. It is also significant to point out that in Maceda v. Macaraig, Jr. 14 the Court stated that "[t]he NPC is a
government instrumentality with the enormous task of undertaking development of hydroelectric
Instrumentality of the Government
generation of power and production of electricity from other sources, as well as the transmission of electric
The provisions of law relevant to the present case state: power on a nationwide basis, to improve the quality of life of the people pursuant to the State policy
embodied in Section [9], Article II of the 1987 Constitution."
Sec. 90. 10 Practice of Profession. — (a) All governors, city and municipal mayors are prohibited
from practicing their profession or engaging in any occupation, other than the exercise of their functions
as local chief executives. Given the categorical words of both the law and jurisprudence, to still go to extra-ordinary lengths to
interpret the intention of the lawmakers and come out with the construction that a government-owned or
(b) Sanggunian members may practice their professions, engage in any occupation, or teach in controlled corporation like the NPC is not included within the term "instrumentality of the government" is
schools except during session hours: Provided, That sanggunian members who are also members of the grave abuse of discretion.
Bar shall not:
(1) Appear as counsel before any court in any civil case wherein a local government unit or any office, "By grave abuse of discretion is meant, such capricious and whimsical exercise of judgment as is equivalent
agency, or instrumentality of the government is the adverse party; to lack of jurisdiction." 15 "Grave abuse of discretion is an evasion of a positive duty or a virtual refusal to
xxx xxx xxx perform a duty enjoined by law or to act in contemplation of law as when the judgment rendered is not
based on law and evidence but on caprice, whim and despotism." 16
Sec. 5. 11 Rules of Interpretation. — In the interpretation of the provisions of this Code, the
following rules shall apply:
The strained and contrary interpretation of clearly worded provisions of law, which therefore should be
xxx xxx xxx merely applied and not interpreted, is an earmark of despotism and grave abuse of discretion.
(e) In the resolution of controversies arising under this Code where no legal provision or
jurisprudence applies, resort may be had to the customs and traditions in the place where the controversies Finally, Section 446 of the Local Government Code provides that "[t]he sangguniang bayan, the legislative
take place. (Emphasis supplied.) body of the municipality, shall be composed of the municipal vice mayor as the presiding officer . . . ."
Sec. 2. 12 General Terms Defined. — Unless the specific words of the text, or the context as a Thus, pursuant to Sec. 90 (b), (1) of the Local Government Code, Atty. Rambuyong, as sanggunian member,
whole, or a particular statute, shall require a different meaning: cannot appear as counsel of a party adverse to the NPC, which is an instrumentality of government.

xxx xxx xxx


WHEREFORE, the petition is GRANTED. The May 20, 2004 Decision and April 13, 2005 Resolution of the
Court of Appeals in CA-G.R. SP No. 72800 are REVERSED and SET ASIDE. Atty. Richard B. Rambuyong
(4) "Agency of the Government" refers to any of the various units of the Government, including a is disqualified from appearing in Civil Case No. I-197.
department, bureau, office, instrumentality, or government-owned or controlled corporations, or a local
government or a distinct unit therein.
SO ORDERED.

xxx xxx xxx


A.M. No. RTJ-06-2017 June 19, 2008
LT. GEN. ALFONSO P. DAGUDAG (Ret.), complainant,
(10) Instrumentality — refers to any agency of the National Government, not integrated within the vs.
department framework, vested with special functions or jurisdiction by law, endowed with some if not all JUDGE MAXIMO G.W. PADERANGA, Regional Trial Court, Branch 38, Cagayan de Oro City, respondent.
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. (Emphasis supplied.) This is a complaint for gross ignorance of the law and conduct unbecoming a judge filed by retired Lt. Gen.
Alfonso P. Dagudag (Gen. Dagudag), Head of Task Force Sagip Kalikasan, against Judge Maximo G. W.
Paderanga (Judge Paderanga), Presiding Judge of the Regional Trial Court, Branch 38, Cagayan de Oro
In Aparri v. Court of Appeals, 13 the Court instructs: City.
On or about 30 January 2005, the Region VII Philippine National Police Regional Maritime Group (PNPRMG) seized under the Revised Forestry Code of the Philippines; (8) replevin was not proper; (9) courts could not
received information that MV General Ricarte of NMC Container Lines, Inc. was shipping container vans take cognizance of cases pending before the DENR; (10) Edma failed to exhaust administrative remedies;
containing illegal forest products from Cagayan de Oro to Cebu. The shipments were falsely declared as and (11) the DENR was the agency responsible for the enforcement of forestry laws. In a motion to
cassava meal and corn grains to avoid inspection by the Department of Environment and Natural dismiss ad cautelam10 dated 12 April 2005, the defendants prayed that the complaint for replevin and
Resources (DENR).1 damages be dismissed: (1) the real defendant is the Republic of the Philippines; (2) Edma failed to exhaust
administrative remedies; (3) the State cannot be sued without its consent; and (4) Edma failed to allege
that he is the owner or is entitled to the possession of the forest products.
On 30 and 31 January 2005, a team composed of representatives from the PNPRMG, DENR, and the
Philippine Coast Guard inspected the container vans at a port in Mandaue City, Cebu. The team discovered
the undocumented forest products and the names of the shippers and consignees: In an order11 dated 14 April 2005, Judge Paderanga denied the motion to quash the writ of replevin for
lack of merit.
Container Van No. Shipper Consignee
NCLU – 2000492-22GI Polaris Chua Polaris Chua Gen. Dagudag filed with the Office of the Court Administrator (OCA) an affidavit-complaint12 dated 8 July
2005 charging Judge Paderanga with gross ignorance of the law and conduct unbecoming a judge. Gen.
IEAU – 2521845-2210 Polaris Chua Polaris Chua
Dagudag stated that:
NOLU – 2000682-22GI Rowena Balangot Rowena Balangot
INBU – 3125757-BB2210 Rowena Balangot Rowena Balangot
During the x x x hearing, [Judge Paderanga] showed manifest partiality in favor of x x x Edma.
NCLU – 20001591-22GI Jovan Gomez Jovan Gomez DENR’s counsel was lambasted, cajoled and intimidated by [Judge Paderanga] using words such
GSTU – 339074-US2210 Jovan Gomez Jovan Gomez as "SHUT UP" and "THAT’S BALONEY."
CRXU – 2167567 Raffy Enriquez Raffy Enriquez
NCLU – 2001570-22GI Raffy Enriquez Raffy Enriquez xxxx

The crew of MV General Ricarte failed to produce the certificate of origin forms and other pertinent transport Edma in the replevin case cannot seek to recover the wood shipment from the DENR since he had
documents covering the forest products, as required by DENR Administrative Order No. 07-94. Gen. not sought administrative remedies available to him. The prudent thing for [Judge Paderanga] to
Dagudag alleged that, since nobody claimed the forest products within a reasonable period of time, the have done was to dismiss the replevin suit outright.
DENR considered them as abandoned and, on 31 January 2005, the Provincial Environment and Natural
Resources Office (PENRO) Officer-in-Charge (OIC), Richard N. Abella, issued a seizure receipt to NMC
xxxx
Container Lines, Inc.2

[Judge Paderanga’s] act[s] of taking cognizance of the x x x replevin suit, issuing the writ of
On 1 February 2005, Community Environment and Natural Resources Office (CENRO) OIC Loreto A. Rivac
replevin and the subsequent denial of the motion to quash clearly demonstrates [sic] ignorance
(Rivac) sent a notice to NMC Container Lines, Inc. asking for explanation why the government should not
of the law.
confiscate the forest products.3 In an affidavit4 dated 9 February 2005, NMC Container Lines, Inc.’s Branch
Manager Alex Conrad M. Seno stated that he did not see any reason why the government should not
confiscate the forest products and that NMC Container Lines, Inc. had no knowledge of the actual content In its 1st Indorsement13 dated 1 August 2005, the OCA directed Judge Paderanga to comment on the
of the container vans. affidavit-complaint. In his comment14 dated 6 September 2005, Judge Paderanga stated that he exercised
judicial discretion in issuing the writ of replevin and that he could not delve into the issues raised by Gen.
Dagudag because they were related to a case pending before him.
On 2, 9, and 15 February 2005, DENR Forest Protection Officer Lucio S. Canete, Jr. posted notices on the
CENRO and PENRO bulletin boards and at the NMC Container Lines, Inc. building informing the unknown
owner about the administrative adjudication scheduled on 18 February 2005 at the Cebu City CENRO. In its Report15 dated 10 July 2006, the OCA found that Judge Paderanga (1) violated the doctrine of
Nobody appeared during the adjudication.5 In a resolution6 dated 10 March 2005, Rivac, acting as exhaustion of administrative remedies; (2) violated the doctrine of primary jurisdiction; and (3) used
adjudication officer, recommended to DENR Regional Executive Director Clarence L. Baguilat that the inappropriate language in court. The OCA recommended that the case be re-docketed as a regular
forest products be confiscated in favor of the government. administrative matter; that Judge Paderanga be held liable for gross ignorance of the law and for violation
of Section 6, Canon 6 of the New Code of Judicial Conduct for the Philippine Judiciary; 16 and that he be
fined P30,000.
In a complaint7 dated 16 March 2005 and filed before Judge Paderanga, a certain Roger C. Edma (Edma)
prayed that a writ of replevin be issued ordering the defendants DENR, CENRO, Gen. Dagudag, and others
to deliver the forest products to him and that judgment be rendered ordering the defendants to pay him In its Resolution17 dated 16 August 2006, the Court re-docketed the case as a regular administrative matter
moral damages, attorney’s fees, and litigation expenses. On 29 March 2005, Judge Paderanga issued a writ and required the parties to manifest whether they were willing to submit the case for decision based on the
of replevin8 ordering Sheriff Reynaldo L. Salceda to take possession of the forest products. pleadings already filed. Judge Paderanga manifested his willingness to submit the case for decision based
on the pleadings already filed.18 Since Gen. Dagudag did not file any manifestation, the Court considered
him to have waived his compliance with the 16 August 2006 Resolution.19
In a motion to quash the writ of replevin,9 the defendants DENR, CENRO, and Gen. Dagudag prayed that
the writ of replevin be set aside: (1) Edma’s bond was insufficient; (2) the forest products were falsely
declared as cassava meal and corn grains; (3) Edma was not a party-in-interest; (4) the forest products The Court finds Judge Paderanga liable for gross ignorance of the law and for conduct unbecoming a judge.
were not covered by any legal document; (5) nobody claimed the forest products within a reasonable period
of time; (6) the forest products were already considered abandoned; (7) the forest products were lawfully
The DENR is the agency responsible for the enforcement of forestry laws. Section 4 of Executive Order No. Moreover, the suit for replevin is never intended as a procedural tool to question the orders
192 states that the DENR shall be the primary agency responsible for the conservation, management, of confiscation and forfeiture issued by the DENR in pursuance to the authority given under
development, and proper use of the country’s natural resources. P.D. 705, as amended. Section 8 of the said law is explicit that actions taken by the

Section 68 of Presidential Decree No. 705, as amended by Executive Order No. 277, states that possessing Director of the Bureau of Forest Development concerning the enforcement of the provisions of
forest products without the required legal documents is punishable. Section 68-A states that the DENR the said law are subject to review by the Secretary of DENR and that courts may not review
Secretary or his duly authorized representatives may order the confiscation of any forest product illegally the decisions of the Secretary except through a special civil action for certiorari or
cut, gathered, removed, possessed, or abandoned. prohibition. (Emphasis ours)

In the instant case, the forest products were possessed by NMC Container Lines, Inc. without the required Second, under the doctrine of primary jurisdiction, courts cannot take cognizance of cases pending before
legal documents and were abandoned by the unknown owner. Consequently, the DENR seized the forest administrative agencies of special competence. The DENR is the agency responsible for the enforcement of
products. forestry laws. The complaint for replevin itself stated that members of DENR’s Task Force Sagip
Kalikasan took over the forest products and brought them to the DENR Community Environment and
Natural Resources Office. This should have alerted Judge Paderanga that the DENR had custody of the
Judge Paderanga should have dismissed the replevin suit outright for three reasons. First, under the
forest products, that administrative proceedings may have been commenced, and that the replevin suit
doctrine of exhaustion of administrative remedies, courts cannot take cognizance of cases pending before
had to be dismissed outright. In Tabao v. Judge Lilagan25 — a case with a similar set of facts as the instant
administrative agencies. In Factoran, Jr. v. Court of Appeals,20 the Court held that:
case — the Court held that:

The doctrine of exhaustion of administrative remedies is basic. Courts, for reasons of law,
The complaint for replevin itself states that the shipment x x x [was] seized by the NBI for
comity and convenience, should not entertain suits unless the available administrative
verification of supporting documents. It also states that the NBI turned over the seized items to
remedies have first been resorted to and the proper authorities have been given an
the DENR "for official disposition and appropriate action." x x x To our mind, these
appropriate opportunity to act and correct their alleged errors, if any, committed in the
allegations [should] have been sufficient to alert respondent judge that the DENR has
administrative forum. (Emphasis ours)
custody of the seized items and that administrative proceedings may have already been
commenced concerning the shipment. Under the doctrine of primary jurisdiction, courts
In Dy v. Court of Appeals,21 the Court held that a party must exhaust all administrative remedies before he cannot take cognizance of cases pending before administrative agencies of special
can resort to the courts. In Paat v. Court of Appeals,22 the Court held that: competence. x x x The prudent thing for respondent judge to have done was to dismiss the
replevin suit outright. (Emphasis ours)
This Court in a long line of cases has consistently held that before a party is allowed to seek
the intervention of the court, it is a pre-condition that he should have availed of all the In Paat,26 the Court held that:
means of administrative processes afforded him. Hence, if a remedy within the
administrative machinery can still be resorted to by giving the administrative officer
[T]he enforcement of forestry laws, rules and regulations and the protection, development and
concerned every opportunity to decide on a matter that comes within his jurisdiction then such
management of forest lands fall within the primary and special responsibilities of the Department
remedy should be exhausted first before court’s judicial power can be sought. The
of Environment and
premature invocation of court’s intervention is fatal to one’s cause of action. Accordingly,
absent any finding of waiver or estoppel the case is susceptible of dismissal for lack of cause of
action. (Emphasis ours) Natural Resources. By the very nature of its function, the DENR should be given a free hand
unperturbed by judicial intrusion to determine a controversy which is well within its
jurisdiction. The assumption by the trial court, therefore, of the replevin suit filed by
In the instant case, Edma did not resort to, or avail of, any administrative remedy. He went straight to
private respondents constitutes an unjustified encroachment into the domain of the
court and filed a complaint for replevin and damages. Section 8 of Presidential Decree No. 705, as amended,
administrative agency’s prerogative. The doctrine of primary jurisdiction does not warrant
states that (1) all actions and decisions of the Bureau of Forest Development Director are subject to review
a court to arrogate unto itself the authority to resolve a controversy the jurisdiction over
by the DENR Secretary; (2) the decisions of the DENR Secretary are appealable to the President; and (3)
which is initially lodged with an administrative body of special competence. (Emphasis ours)
courts cannot review the decisions of the DENR Secretary except through a special civil action
for certiorari or prohibition. In Dy,23 the Court held that all actions seeking to recover forest products in
the custody of the DENR shall be directed to that agency — not the courts. In Paat,24 the Court held that: Third, the forest products are already in custodia legis and thus cannot be the subject of replevin. There
was a violation of the Revised Forestry Code and the DENR seized the forest products in accordance with
law. In Calub v. Court of Appeals,27 the Court held that properties lawfully seized by the DENR cannot be
Dismissal of the replevin suit for lack of cause of action in view of the private respondents’
the subject of replevin:
failure to exhaust administrative remedies should have been the proper course of action by
the lower court instead of assuming jurisdiction over the case and consequently issuing the
writ [of replevin]. Exhaustion of the remedies in the administrative forum, being a condition Since there was a violation of the Revised Forestry Code and the seizure was in accordance
precedent prior to one’s recourse to the courts and more importantly, being an element of private with law, in our view the [properties seized] were validly deemed in custodia legis.
respondents’ right of action, is too significant to be waylaid by the lower court. [They] could not be subject to an action for replevin. For it is property lawfully taken by virtue
of legal process and considered in the custody of the law, and not otherwise. (Emphasis ours)
xxxx
Judge Paderanga’s acts of taking cognizance of the replevin suit and of issuing the writ of replevin Atty. Luego: I apologize, Your Honor. We are ready to...
constitute gross ignorance of the law. In Tabao,28 the Court held that: Judge Paderanga: Ready to what? Proceed.
Atty. Luego: Yes, Your Honor. We filed this motion to quash replevin, Your Honor, on the grounds,
first and foremost, it is our contention, Your Honor, with all due respect of [sic] this Honorable
Under the doctrine of primary jurisdiction, courts cannot take cognizance of cases pending before
Court, that the writ of replevin dated March 29, 2005 was improper, Your Honor, for the reasons
administrative of special competence. x x x [T]he plaintiff in the replevin suit who [sought] to
that the lumber, subject matter of this case, were apprehended in accordance with...
recover the shipment from the DENR had not exhausted the administrative remedies
Judge Paderanga: Where is your proof that it was apprehended? Where is your proof? Is that
available to him. The prudent thing for respondent judge to have done was to dismiss the
apprehension proven by a seizure receipt? Where is your seizure receipt?
replevin suit outright.
Atty. Luego: Under the rules...
Judge Paderanga: Where is your seizure receipt? You read your rules. What does [sic] the rules
Under Section 78-A of the Revised Forestry Code, the DENR secretary or his authorized say? Where in your rules does it say that it does not need any seizure receipt? You look at your
representatives may order the confiscation of forest products illegally cut, gathered, removed, or rules. You point out the rules. You take out your rules and then you point out. Do you have the
possessed or abandoned. rules?
xxxx
Atty. Luego: Your Honor, there was no seizure receipt, but during the apprehension, Your Honor,
xxxx
there was no claimant.
Judge Paderanga: Answer me. Is there a seizure receipt?
Respondent judge’s act of taking cognizance of the x x x replevin suit clearly demonstrates Atty. Luego: But during the apprehension, Your Honor, no owner has [sic] appeared.
ignorance of the law. x x x [J]udges are expected to keep abreast of all laws and prevailing xxxx
jurisprudence. Judges are duty bound to have more than just a cursory acquaintance with laws Atty. Luego: According to [the] rules, Your Honor, if there is no...
and jurisprudence. Failure to follow basic legal commands constitutes gross ignorance of Judge Paderanga: Whom are you seizing it from? To [sic] whom are you taking it from?
the law from which no one may be excused, not even a judge. (Emphasis ours) Atty. Luego: From the shipping company, Your Honor.
xxxx
Atty. Luego: Your Honor please, the shipping company denied the ownership of that lumber.
Canon 6 of the New Code of Judicial Conduct for the Philippine Judiciary states that competence is a
xxxx
prerequisite to the due performance of judicial office. Section 3 of Canon 6 states that judges shall take
Atty. Luego: But the shipping company, Your Honor,...
reasonable steps to maintain and enhance their knowledge necessary for the proper performance of judicial
Judge Paderanga: Shut up. That’s baloney. You are seizing it from nobody. Then how can you
duties. Judges should keep themselves abreast with legal developments and show acquaintance with
seize it from the shipping company. Are you not? You are a lawyer. Who is in possession of the
laws.29
property? The shipping company. Why did you not issue [a] seizure receipt to the shipping
company?
The rule that courts cannot prematurely take cognizance of cases pending before administrative agencies Atty. Luego: But the... May I continue, Your Honor?
is basic. There was no reason for Judge Paderanga to make an exception to this rule. The forest products xxxx
were in the custody of the DENR and Edma had not availed of any administrative remedy. Judge Paderanga Judge Paderanga: Stop talking about the shipping company. Still you did not issue a seizure
should have dismissed the replevin suit outright. In Español v. Toledo-Mupas,30 the Court held that: receipt here. Well, I’m telling you you should have issued [a] seizure receipt to the shipping
company.
xxxx
Being among the judicial front-liners who have direct contact with the litigants, a wanton display
Judge Paderanga: You are a lawyer. You should know how to write pleadings. You write the
of utter lack of familiarity with the rules by the judge inevitably erodes the confidence of the public
pleadings the way it should be, not the way you think it should be.
in the competence of our courts to render justice. It subjects the judiciary to embarrassment.
Worse, it could raise the specter of corruption. Atty. Luego: I’m sorry, Your Honor.
Judge Paderanga: You are an officer of the court. You should be careful with your language.
You say that I am wrong. It’s you who are [sic] wrong because you do not read the law.
When the gross inefficiency springs from a failure to consider so basic and elemental a rule, a xxxx
law, or a principle in the discharge of his or her duties, a judge is either too incompetent and Judge Paderanga: Then you read the law. How dare you say that the Court is wrong.
undeserving of the exalted position and title he or she holds, or the oversight or omission was xxxx
deliberately done in bad faith and in grave abuse of judicial authority. Judge Paderanga: Are you not representing [the DENR]?
Atty. Luego: Yes, in this case, Your Honor.
The OCA found Judge Paderanga liable for using inappropriate language in court: "We x x x find Judge Paderanga: Then you are representing them. They are your clients. What kind of a lawyer
respondent’s intemperate use of "Shut up!" and "Baloney!" well nigh inappropriate in court proceedings. are you?32
The utterances are uncalled for."31 xxxx
Atty. Tiamson: Specifically it was stated in the [Factoran] versus Court of Appeals [case] that the
Court should not interfere, Your Honor.
Indeed, the 14 and 22 April 2005 transcripts of stenographic notes show that Judge Paderanga was Judge Paderanga: No.
impatient, discourteous, and undignified in court: xxxx
Judge Paderanga: The problem with you people is you do not use your heads.
Atty. Luego: Your Honor, we want to have this motion because that is... Atty. Tiamson: We use our heads, your Honor.
Judge Paderanga: I am asking you why did you not make any rejoinder[?] xxxx
xxxx
Atty. Tiamson: Your Honor, we would like to put on record that we use our heads, your Judge Paderanga has two other administrative cases pending against him — one42 for gross ignorance of
Honor.33 (Emphasis ours) the law, knowingly rendering an unjust judgment, and grave abuse of authority, and the other 43 for gross
misconduct, grave abuse of authority, and gross ignorance of the law.
Section 6, Canon 6 of the New Code of Judicial Conduct for the Philippine Judiciary states that judges
shall be patient, dignified, and courteous in relation to lawyers. Rule 3.04, Canon 3 of the Code of Judicial The Court will not hesitate to impose the ultimate penalty on those who have fallen short of their
Conduct states that judges should be patient and courteous to lawyers, especially the inexperienced. They accountabilities. It will not tolerate any conduct that violates the norms of public accountability and
should avoid the attitude that the litigants are made for the courts, instead of the courts for the litigants. diminishes the faith of the people in the judicial system.44

Judicial decorum requires judges to be temperate in their language at all times. They must refrain from WHEREFORE, the Court finds Judge Maximo G.W. Paderanga, Regional Trial Court, Branch 38, Cagayan
inflammatory, excessively rhetoric, or vile language.34 They should (1) be dignified in demeanor and refined de Oro City, GUILTY of GROSS IGNORANCE OF THE LAW and UNBECOMING CONDUCT. Accordingly,
in speech; (2) exhibit that temperament of utmost sobriety and self-restraint; and (3) be considerate, the Court DISMISSES him from the service, with forfeiture of all retirement benefits, except accrued leave
courteous, and civil to all persons who come to their court.35 In Juan de la Cruz v. Carretas,36 the Court credits, and with prejudice to reinstatement or appointment to any public office, including government-
held that: owned or controlled corporations.

A judge who is inconsiderate, discourteous or uncivil to lawyers x x x who appear in his sala SO ORDERED.
commits an impropriety and fails in his duty to reaffirm the people’s faith in the judiciary. He also
violates Section 6, Canon 6 of the New Code of Judicial Conduct for the Philippine Judiciary. CARLOS T. GO, SR., G.R. No. 167569
Petitioner,
Present:
xxxx
- versus -
QUISUMBING, J., Chairperson,
It is reprehensible for a judge to humiliate a lawyer x x x. The act betrays lack of patience, LUIS T. RAMOS, CARPIO,*
prudence and restraint. Thus, a judge must at all times be temperate in his language. He must Respondent. CARPIO MORALES,
choose his words x x x with utmost care and sufficient control. The wise and just man is esteemed x----------------------------------------x DEL CASTILLO, and
for his discernment. Pleasing speech increases his persuasiveness. ABAD, JJ.
JIMMY T. GO, G.R. No. 167570
Petitioner,
Equanimity and judiciousness should be the constant marks of a dispenser of justice. A judge
should always keep his passion guarded. He can never allow it to run loose and overcome his
- versus -
reason. He descends to the level of a sharp-tongued, ill-mannered petty tyrant when he utters
harsh words x x x. As a result, he degrades the judicial office and erodes public confidence in the
LUIS T. RAMOS,
judiciary.
Respondent.
x----------------------------------------x
Judge Paderanga’s refusal to consider the motion to quash the writ of replevin, repeated interruption of HON. ALIPIO F. FERNANDEZ, JR., in his capacity as the G.R. No. 171946
the lawyers, and utterance of "shut up," "that’s baloney," "how dare you say that the court is wrong," "what Commissioner of the BUREAU OF IMMIGRATION; ATTY.
kind of a lawyer are you?," and "the problem with you people is you do not use your heads" are undignified FAISAL HUSSIN and ANSARI M. MACAAYAN, in their
and very unbecoming a judge. In Office of the Court Administrator v. Paderanga,37 the Court already capacity as Intelligence Officers of the BUREAU OF
reprimanded Judge Paderanga for repeatedly saying "shut up," being arrogant, and declaring that he had IMMIGRATION,
"absolute power" in court. He has not changed. Petitioners,

- versus -
Section 8, Rule 140 of the Rules of Court classifies gross ignorance of the law as a serious offense. It is
punishable by (1) dismissal from the service, forfeiture of benefits, and disqualification from reinstatement
JIMMY T. GO a.k.a. JAIME T. GAISANO,
to any public office; (2) suspension from office without salary and other benefits for more than three months
Respondent.
but not exceeding six months; or (3) a fine of more than P20,000 but not exceeding P40,000.38 Section 10
Promulgated:
of Rule 140 classifies conduct unbecoming a judge as a light offense. It is punishable by (1) a fine of not
less than P1,000 but not exceeding P10,000; (2) censure; (3) reprimand; or (4) admonition with warning.39
September 4, 2009
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
The Court notes that this is Judge Paderanga’s third offense. In Office of the Court Administrator v. DECISION
Paderanga,40the Court held him liable for grave abuse of authority and simple misconduct for QUISUMBING, J.:
unceremoniously citing a lawyer in contempt while declaring himself as having "absolute power" and for
repeatedly telling a lawyer to "shut up." In Beltran, Jr. v. Paderanga,41 the Court held him liable for undue Before us are three petitions. G.R. Nos. 167569 and 167570 are petitions for review on certiorari
delay in rendering an order for the delay of nine months in resolving an amended formal offer of exhibits. to set aside the October 25, 2004 Decision[1] and February 16, 2005 Resolution[2] of the Court of Appeals
In both cases, the Court sternly warned Judge Paderanga that the commission of another offense shall be in CA-G.R. SP No. 85143 that affirmed the Decision[3] dated January 6, 2004 and Order[4] dated May 3,
dealt with more severely. The instant case and the two cases decided against him demonstrate Judge 2004 of the Regional Trial Court (RTC) of Pasig City, Branch 167 in SCA No. 2218 upholding the
Paderanga’s arrogance, incorrigibility, and unfitness to become a judge.
preparation and filing of deportation charges against Jimmy T. Go, the corresponding Charge doubt by reason of his fathers questionable election thereof, the Board directed the preparation and filing of the
Sheet[5] dated July 3, 2001, and the deportation proceedings thereunder conducted. appropriate deportation charges against Jimmy.

On the other hand, G.R. No. 171946, also a petition for review on certiorari, seeks to set aside On July 3, 2001, the corresponding Charge Sheet was filed against Jimmy, charging him of violating
the December 8, 2005 Decision[6] and March 13, 2006 Resolution[7] of the appellate court in CA-G.R. SP Section 37(a)(9)[19] in relation to Section 45(c)[20] of Com. Act No. 613, otherwise known as The Philippine Immigration
No. 88277. Act of 1940,[21] as amended, committed as follows:
xxxx
Considering that the three cases arose from the same factual milieu, the Court resolved to
consolidate G.R. Nos. 167570 and 167569 with G.R. No. 171946 per Resolution[8] dated February 26, 2007. 1. That Respondent was born on October 25, 1952 in Iloilo City, as evidenced
by a copy of his birth certificate wherein his citizenship was recorded as Chinese;
These petitions stemmed from the complaint-affidavit[9] for deportation initiated by Luis T. Ramos
before the Bureau of Immigration and Deportation (now Bureau of Immigration) against Jimmy T. Go 2. That Respondent through some stealth machinations was able to
alleging that the latter is an illegal and undesirable alien. Luis alleged that while Jimmy represents himself subsequently cover up his true and actual citizenship as Chinese and illegally acquired
as a Filipino citizen, Jimmys personal circumstances and other records indicate that he is not so. To prove a Philippine Passport under the name JAIME T. GAISANO, with the use of falsified
his contention, Luis presented the birth certificate of Jimmy, issued by the Office of the Civil Registrar of documents and untruthful declarations, in violation of the above-cited provisions of the
Iloilo City, which indicated Jimmys citizenship as FChinese. Luis argued that although it appears from Immigration Act[;]
Jimmys birth certificate that his parents, Carlos and Rosario Tan, are Filipinos, the document seems to be
tampered, because only the citizenship of Carlos appears to be handwritten while all the other entries were 3. That [R]espondent being an alien, has formally and officially represent[ed]
typewritten. He also averred that in September 1989 or thereabout, Jimmy, through stealth, machination and introduce[d] himself as a citizen of the Philippines, for fraudulent purposes and in
and scheming managed to cover up his true citizenship, and with the use of falsified documents and order to evade any requirements of the immigration laws, also in violation of said law.
untruthful declarations, was able to procure a Philippine passport from the Department of Foreign Affairs.
CONTRARY TO LAW.[22]
Jimmy refuted the allegations in his counter-affidavit,[10]
averring that the complaint for
deportation initiated by Luis was merely a harassment case designed to oust him of his rightful share in
their business dealings. Jimmy maintained that there is no truth to the allegation that he is an alien, and On November 9, 2001, Carlos and Jimmy filed a petition for certiorari and prohibition [23] with
insisted that he is a natural-born Filipino. Jimmy alleged that his father Carlos, who was the son of a application for injunctive reliefs before the RTC of Pasig City, Branch 167, docketed as SCA No. 2218,
Chinese father and Filipina mother, elected Philippine citizenship in accordance with Article IV, Section 1, seeking to annul and set aside the March 8, 2001 Resolution of the Board of Commissioners, the Charge
paragraph 4[11] of the 1935 Constitution and Commonwealth Act No. 625[12] (Com. Act No. 625), as Sheet, and the proceedings had therein. In essence, they challenged the jurisdiction of the Board to
evidenced by his having taken the Oath of Allegiance on July 11, 1950 and having executed an Affidavit of continue with the deportation proceedings.
Election of Philippine citizenship on July 12, 1950. Although the said oath and affidavit were registered
only on September 11, 1956, the reason behind such late registration was sufficiently explained in an
affidavit. Jimmy added that he had even voted in the 1952 and 1955 elections.[13] He denied that his father In the interim, the Board issued a Decision[24] dated April 17, 2002, in BSI-D.C. No. ADD-01-117,
arrived in the Philippines as an undocumented alien, alleging that his father has no record of arrival in ordering the apprehension and deportation of Jimmy. The dispositive portion of the decision reads:
this country as alleged in the complaint-affidavit precisely because his father was born and raised in the
Philippines, and in fact, speaks fluent Ilonggo and Tagalog.[14] WHEREFORE, in view of the foregoing, the Board of Commissioners hereby
Orders the apprehension of respondent JIMMY T. GO @ JAIME T. GAISANO and that he
be then deported to CHINA of which he is a citizen, without prejudice, however, to the
With regard to the erroneous entry in his birth certificate that he is FChinese, he maintained that
continuation of any and all criminal and other proceedings that are pending in court or
such was not of his own doing, but may be attributed to the employees of the Local Civil Registrars Office
before the prosecution arm of the Philippine Government, if any. And that upon expulsion,
who might have relied on his Chinese-sounding surname when making the said entry. He asserted that
he is thereby ordered barred from entry into the Philippines.
the said office has control over his birth certificate; thus, if his fathers citizenship appears to be
handwritten, it may have been changed when the employees of that office realized that his father has
already taken his oath as a Filipino.[15] As regards the entry in his siblings certificates of birth, particularly SO ORDERED.[25]
Juliet Go and Carlos Go, Jr., that their father is Chinese, Jimmy averred that the entry was erroneous
because it was made without prior consultation with his father.[16]
In view of the said Decision, Carlos and Jimmy filed on June 13, 2002 a supplemental petition
In a Resolution[17] dated February 14, 2001, Associate Commissioner Linda L. Malenab-Hornilla for certiorari and prohibition[26] before the trial court and reiterated their application for injunctive
dismissed the complaint for deportation against Jimmy. Associate Commissioner Hornilla affirmed the reliefs. The trial court issued a writ of preliminary prohibitory injunction pending litigation on the main
findings of the National Bureau of Investigation tasked to investigate the case that Jimmys father elected issue, enjoining the Bureau from enforcing the April 17, 2002 Decision.[27] Later, however, the trial court
Filipino citizenship in accordance with the provisions of the 1935 Philippine Constitution. By operation of dissolved the writ in a Decision[28] dated January 6, 2004 as a consequence of the dismissal of the petition.
law, therefore, the citizenship of Carlos was transmitted to Jimmy, making him a Filipino as well.
Carlos and Jimmy moved for reconsideration. But their motion was likewise denied.[29]
On March 8, 2001,[18] the Board of Commissioners (Board) reversed said dismissal, holding that Carlos
election of Philippine citizenship was made out of time. Finding Jimmys claim to Philippine citizenship in serious
Following the dismissal of the petition in SCA No. 2218, the Board issued a warrant of Jimmy assailed the Orders of the trial court in a petition for certiorari and prohibition before the
deportation[30] which led to the apprehension of Jimmy. Jimmy commenced a petition for habeas corpus, appellate court, docketed as CA-G.R. No. 88277. The Court of Appeals granted the petition and enjoined
but the same was eventually dismissed by reason of his provisional release on bail.[31] the deportation of Jimmy until the issue of his citizenship is settled with finality by the court. The Court of
Appeals held as follows:
Carlos and Jimmy then questioned the Decision in SCA No. 2218 as well as the Resolution xxxx
denying their motion for reconsideration by way of a petition for certiorari before the Court of Appeals,
docketed as CA-G.R. SP No. 85143. They imputed grave abuse of discretion by the trial court for passing the issuance of a warrant to arrest and deport the petitioner without any proof
upon their citizenship, claiming that what they asked for in their petition was merely the nullification of whatsoever of his violation of the bail conditions [that he was previously granted] is
the March 8, 2001 Resolution and the charge sheet. arbitrary, inequitable and unjust, for the policies governing the grant of his bail should
likewise apply in the cancellation of the said bail.Although a deportation proceeding does
The appellate tribunal dismissed the petition.[32] It did not find merit in their argument that the not partake of the nature of a criminal action, yet considering that it is such a harsh
issue of citizenship should proceed only before the proper court in an independent action, and that neither and extraordinary administrative proceeding affecting the freedom and liberty of a
the Bureau nor the Board has jurisdiction over individuals who were born in the Philippinesand have person who all his life has always lived in the Philippines, where he has established his
exercised the rights of Filipino citizens. The appellate tribunal also rejected their claim that they enjoy the family and business interests, one who appears to be not completely devoid of any claim
presumption of being Filipino citizens. to Filipino citizenship, being the son of a Filipina, whose father is alleged to also have
elected to be a Filipino, the constitutional right of such person to due process cannot be
peremptorily dismissed or ignored altogether, and indeed should not be denied. If it later
The Court of Appeals held that the Board has the exclusive authority and jurisdiction to try and turns out that the petitioner is a Filipino after all, then the overly eager Immigration
hear cases against an alleged alien, and in the process, determine their citizenship. authorities would have expelled and relegated to statelessness one who might in fact be
a Filipino by blood.
The appellate court agreed with the trial court that the principle of jus soli was never extended to
the Philippines; hence, could not be made a ground to ones claim of Philippine citizenship. Like the trial xxxx
court, the appellate tribunal found that Carlos failed to elect Philippine citizenship within the reasonable
period of three years upon reaching the age of majority. Furthermore, it held that the belated submission WHEREFORE, in view of the foregoing, the petition with reference to the
to the local civil registry of the affidavit of election and oath of allegiance in September 1956 was defective Warrant of Deportation issued by the BID is hereby GRANTED. The Bureau of
because the affidavit of election was executed after the oath of allegiance, and the delay of several years Immigration and Deportation, through Commissioner Alipio F. Fernandez, Jr., Atty.
before their filing with the proper office was not satisfactorily explained. Faizal Hussin and Ansari Maca Ayan, and any of their deputized agents,
are ENJOINED from deporting petitioner Jimmy T. Go, a.k.a. Jaime T. Gaisano, until
The course of action taken by the trial court was also approved by the appellate tribunal. The the issue of petitioners citizenship is finally settled by the courts of justice.
Court of Appeals stated that the trial court necessarily had to rule on the substantial and legal bases
warranting the deportation proceeding in order to determine whether the Board acted without or in excess SO ORDERED.[39]
of jurisdiction, or with grave abuse of discretion. Moreover, the appellate court found that due process was
properly observed in the proceedings before the Board, contrary to the claim of Jimmy.
Their motion for reconsideration[40] having been denied on March 13, 2006, Hon. Alipio
Unfazed with the said ruling, they moved for reconsideration. Their motion having been Fernandez, in his capacity as the Commissioner of the Bureau of Immigration, and Atty. Faisal Hussin and
denied,[33] Carlos and Jimmy each filed a petition for review on certiorari before this Court, respectively Ansari M. Macaayan, in their capacity as Intelligence Officers of the Bureau of Immigration, are before this
docketed as G.R. Nos. 167569 and 167570. Court as petitioners in G.R. No. 171946.

Meanwhile, in view of the dismissal of CA-G.R. SP. No. 85143, Bureau of Immigration The parties have raised the following grounds for their respective petitions:
Commissioner Alipio F. Fernandez, Jr. issued Warrant of Deportation No. AFF-04-003[34] dated November
16, 2004 to carry out the April 17, 2002 Decision in BSI-D.C. No. ADD-01-117. This resulted in the G.R. No. 167569
apprehension and detention of Jimmy at the Bureau of Immigration Bicutan Detention Center, pending I.
his deportation to China.[35]
THE PROCEEDINGS HAD BEFORE THE BUREAU OF IMMIGRATION AND
DEPORTATION (B.I.D.) ARE NULL AND VOID FOR ITS FAILURE TO IMPLEAD AN
On account of his detention, Jimmy once again filed a petition for habeas corpus [36]
before the INDISPENSABLE PARTY IN THE PERSON OF PETITIONER CARLOS GO, SR.
RTC of Pasig City, Branch 167, docketed as SP. Proc. No. 11507 assailing his apprehension and detention
despite the pendency of his appeal and his release on recognizance. II.
GIVEN THE SUBSTANTIAL EVIDENCE TO PROVE HEREIN PETITIONER CARLOS GO
In an Order[37] dated December 6, 2004, the trial court dismissed the said petition ruling that the SR.S FILIPINO CITIZENSHIP, A FULL BLOWN TRIAL UNDER THE MORE RIGID RULES
remedy of habeas corpus cannot be availed of to obtain an order of release once a deportation order has OF EVIDENCE PRESCRIBED IN COURT PROCEEDINGS SHOULD HAVE BEEN
already been issued by the Bureau. Jimmy moved for reconsideration of the Order, but this was also denied CONDUCTED TO DETERMINE HIS FILIPINO CITIZENSHIP AND NOT THROUGH MERE
by the trial court in an Order[38] dated December 28, 2004. SUMMARY PROCEEDINGS SUCH AS THE ONE HAD BEFORE THE B.I.D. AS WELL AS IN
THE COURT A QUO.
III.
A FILIPINO CITIZEN IS NOT REQUIRED TO ELECT PHILIPPINE CITIZENSHIP. In any event, they argue that the deportation proceeding should be nullified altogether for failure
to implead Carlos as an indispensable party therein. Jimmy posits that the deportation case against him
IV.
was made to depend upon the citizenship of his father, Carlos, in that the Board found justification to
ASSUMING CARLOS GO, SR. STILL NEEDS TO ELECT PHILIPPINE CITIZENSHIP, HE order his deportation by declaring that his father is a Chinese citizen even though the latter was never
HAD COMPLIED WITH ALL THE REQUIREMENTS OF COM. ACT NO. 625. made a party in the deportation proceedings. They argue that the Board could not simply strip Carlos of
his citizenship just so they could question the citizenship of Jimmy. To do so without affording Carlos the
V. opportunity to adduce evidence to prove his claim to Philippine citizenship would be the height of
PETITIONER CARLOS GO, SR. ENJOYS THE PRESUMPTION OF CITIZENSHIP. injustice. For failing to accord him the requisite due process, the whole proceeding should perforce be stuck
down.
VI.
RESPONDENTS CAUSE OF ACTION HAD LONG PRESCRIBED.[41]
While they concede that the Board has jurisdiction to hear cases against an alleged alien, they
G.R. No. 167570 insist that judicial intervention may be resorted to when the claim to citizenship is so substantial that there
I. are reasonable grounds to believe that the claim is correct, like in this case. Their claim to Philippine
citizenship, they said, is clearly shown by the fact that they were born, had been raised and had lived in
THE PROCEEDINGS HAD BEFORE THE BUREAU OF IMMIGRATION AND DEPORTATION this country all their lives; they speak fluent Tagalog and Ilonggo; they engage in businesses reserved solely
(B.I.D.) ARE NULL AND VOID FOR ITS FAILURE TO IMPLEAD AN INDISPENSABLE PARTY for Filipinos; they exercise their right to suffrage; they enjoy the rights and privileges accorded only to
IN THE PERSON OF PETITIONERS FATHER, CARLOS GO, SR. citizens; and they have no record of any Alien Certificate of Registration.More importantly, they contend
II. that they were validly issued Philippine passports. They further posit that the judicial intervention required
is not merely a judicial review of the proceedings below, but a full-blown, adversarial, trial-type proceedings
THE DEPORTATION PROCEEDINGS BEFORE THE B.I.D. ARE NULL AND VOID FOR where the rules of evidence are strictly observed.
ITS FAILURE TO OBSERVE DUE PROCESS.
III. Considering that his citizenship affects that of his son, Carlos opted to present controverting
arguments to sustain his claim to Philippine citizenship, notwithstanding the fact that according to him,
THE B.I.D.S CAUSE OF ACTION AGAINST HEREIN PETITIONER JIMMY T. GO HAD he was never impleaded in the deportation proceedings.
ALREADY PRESCRIBED.
IV. Carlos takes exception to the ruling of the appellate court that the doctrine of jus soli failed to
GIVEN THE SUBSTANTIAL EVIDENCE TO PROVE HEREIN PETITIONERS FILIPINO accord him Philippine citizenship for the reason that the same was never extended to the Philippines. He
CITIZENSHIP, A FULL BLOWN TRIAL UNDER THE MORE RIGID RULES OF EVIDENCE insists that if his Philippine citizenship is not recognized by said doctrine, it is nonetheless recognized by
PRESCRIBED IN COURT PROCEEDINGS SHOULD HAVE BEEN CONDUCTED TO the laws enforced prior to the 1935 Constitution, particularly the Philippine Bill of 1902 [44] and the
DETERMINE HIS FILIPINO CITIZENSHIP AND NOT THROUGH MERE SUMMARY Philippine Autonomy Act of August 29, 1916 (Jones Law of 1916).[45]
PROCEEDINGS SUCH AS THE ONE HAD BEFORE THE B.I.D.[42]
G.R. No. 171946 According to Carlos, the Philippine Bill of 1902 and the Jones Law of 1916 deemed all inhabitants
of the Philippine Islands as well as their children born after the passage of said laws to be citizens of
THE COURT OF APPEALS ERRED ON A QUESTION OF LAW IN ENJOINING the Philippines. Because his father, Go Yin An, was a resident of the Philippines at the time of the passage
RESPONDENTS DEPORTATION.[43] of the Jones Law of 1916, he (Carlos) undoubtedly acquired his fathers citizenship. Article IV, first
paragraph, of the 1935 Constitution therefore applies to him. Said constitutional provision reads:
Succinctly stated, the issues for our resolution are: (a) whether the cause of action of the Bureau
against Carlos and Jimmy had prescribed; (b) whether the deportation proceedings are null and void for ARTICLE IV. Citizenship
failure to implead Carlos as an indispensable party therein; (c) whether the evidence adduced by Carlos
and Jimmy to prove their claim to Philippine citizenship is substantial and sufficient to oust the Board of SECTION 1. The following are citizens of the Philippines:
its jurisdiction from continuing with the deportation proceedings in order to give way to a formal judicial
action to pass upon the issue of alienage; (d) whether due process was properly observed in the proceedings
before the Board; and (e) whether the petition for habeas corpus should be dismissed. (1) Those who are citizens of the Philippine Islands at the time of the adoption
of this Constitution.

The arguments raised by Carlos and Jimmy in their respective petitions are merely a rehash of xxxx
the arguments they adduced before the appellate tribunal and the trial court. Once again, they raised the
same argument of prescription. As to Carlos, it is his position that being recognized by the government to
have acquired Philippine citizenship, evidenced by the Certificate of Election issued to him on September Even assuming that his father remained as a Chinese, Carlos also claims that he followed the
11, 1956, his citizenship could no longer be questioned at this late date. As for Jimmy, he contends that citizenship of his Filipina mother, being an illegitimate son, and that he even validly elected Philippine
the Boards cause of action to deport him has prescribed for the simple reason that his arrest was not made citizenship when he complied with all the requirements of Com. Act No. 625. He submits that what is being
within five (5) years from the time the cause of action arose, which according to him commenced in 1989 disputed is not whether he complied with Com. Act No. 625, but rather, the timeliness of his compliance. He
when he was alleged to have illegally acquired a Philippine passport. stresses that the 3-year compliance period following the interpretation given by Cuenco v. Secretary of
Justice[46] to Article IV, Section 1(4) of the 1935 Constitution and Com. Act No. 625 when election must be
made, is not an inflexible rule. He reasoned that the same decision held that such period may be extended
under certain circumstances, as when the person concerned has always considered himself a Filipino, like Jimmy claims that he is a Filipino under Section 1(3),[56] Article IV of the 1935 Constitution because Carlos,
in his case.[47] his father, is allegedly a citizen.[57] Since his citizenship hinges on that of his fathers, it becomes necessary
to pass upon the citizenship of the latter. However, whatever will be the findings as to Carlos citizenship
will in no way prejudice him.
We deny the appeal of Carlos and Jimmy for lack of merit.

Carlos and Jimmys claim that the cause of action of the Bureau has prescribed is untenable.Cases Citizenship proceedings, as aforestated, are a class of its own, in that, unlike other cases, res
involving issues on citizenship are sui generis. Once the citizenship of an individual is put into question, it judicata does not obtain as a matter of course. In a long line of decisions, this Court said that every time
necessarily has to be threshed out and decided upon. In the case of Frivaldo v. Commission on the citizenship of a person is material or indispensable in a judicial or administrative case, whatever the
Elections,[48] we said that decisions declaring the acquisition or denial of citizenship cannot govern a corresponding court or administrative authority decides therein as to such citizenship is generally not
persons future status with finality. This is because a person may subsequently reacquire, or for that considered as res judicata; hence, it has to be threshed out again and again as the occasion may
matter, lose his citizenship under any of the modes recognized by law for the purpose.[49]Indeed, if the issue demand.[58] Res judicata may be applied in cases of citizenship only if the following concur:
of ones citizenship, after it has been passed upon by the courts, leaves it still open to future adjudication,
then there is more reason why the government should not be precluded from questioning ones claim to 1. a persons citizenship must be raised as a material issue in a controversy
Philippine citizenship, especially so when the same has never been threshed out by any tribunal. where said person is a party;
Jimmys invocation of prescription also does not persuade us. Section 37 (b) of Com. Act No. 613
states: 2. the Solicitor General or his authorized representative took active part in
the resolution thereof; and
Section 37.
xxxx 3. the finding or citizenship is affirmed by this Court.[59]
(b) Deportation may be effected under clauses 2, 7, 8, 11 and 12 of this section
at any time after entry, but shall not be effected under any other clause unless the arrest
in the deportation proceedings is made within five years after the cause of deportation In the event that the citizenship of Carlos will be questioned, or his deportation sought, the same
arises. has to be ascertained once again as the decision which will be rendered hereinafter shall have no preclusive
effect upon his citizenship. As neither injury nor benefit will redound upon Carlos, he cannot be said to be
xxxx
an indispensable party in this case.
As shown in the Charge Sheet, Jimmy was charged for violation of Section 37(a)(9),[50] in relation
to Section 45(e)[51] of Com. Act No. 613. From the foregoing provision, his deportation may be effected only
if his arrest is made within 5 years from the time the cause for deportation arose. The court a quo is correct There can be no question that the Board has the authority to hear and determine the deportation
when it ruled that the 5-year period should be counted only from July 18, 2000, the time when Luis filed case against a deportee and in the process determine also the question of citizenship raised by
his complaint for deportation. It is the legal possibility of bringing the action which determines the starting him.[60]However, this Court, following American jurisprudence, laid down the exception to the primary
point for the computation of the period of prescription.[52] Additionally, Section 2 of Act No. 3326,[53] as jurisdiction enjoyed by the deportation board in the case of Chua Hiong v. Deportation Board[61]wherein we
amended, entitled An Act to Establish Periods of Prescription for Violations Penalized by Special Acts and stressed that judicial determination is permitted in cases when the courts themselves believe that there is
Municipal Ordinances and to Provide When Prescription Shall Begin to Run, provides: substantial evidence supporting the claim of citizenship, so substantial that there are reasonable grounds for
the belief that the claim is correct.[62] Moreover, when the evidence submitted by a deportee is conclusive of
his citizenship, the right to immediate review should also be recognized and the courts shall promptly enjoin
Sec. 2. Prescription shall begin to run from the day of the commission of the
the deportation proceedings.[63]
violation of the law, and if the same be not known at the time, from the discovery thereof
and the institution of judicial proceedings for its investigation and punishment.
While we are mindful that resort to the courts may be had, the same should be allowed only in
xxxx the sound discretion of a competent court in proper proceedings.[64] After all, the Boards jurisdiction is not
divested by the mere claim of citizenship.[65] Moreover, a deportee who claims to be a citizen and not
therefore subject to deportation has the right to have his citizenship reviewed by the courts, after the
The counting could not logically start in 1989 when his passport was issued because the deportation proceedings.[66] The decision of the Board on the question is, of course, not final but subject to
government was unaware that he was not a Filipino citizen. Had the government been aware at such time review by the courts.[67]
that he was not a Filipino citizen or there were certain anomalies attending his application for such
passport, it would have denied his application.
After a careful evaluation of the evidence, the appellate court was not convinced that the same
was sufficient to oust the Board of its jurisdiction to continue with the deportation proceedings considering
As to the issue of whether Carlos is an indispensable party, we reiterate that an indispensable that what were presented particularly the birth certificates of Jimmy, as well as those of his siblings, Juliet
party is a party in interest without whom no final determination can be had of an action, and who shall be Go and Carlos Go, Jr. indicate that they are Chinese citizens. Furthermore, like the Board, it found the
joined either as plaintiff or defendant.[54] To be indispensable, a person must first be a real party in interest, election of Carlos of Philippine citizenship, which was offered as additional proof of his claim, irregular as
that is, one who stands to be benefited or injured by the judgment of the suit, or the party entitled to the it was not made on time.
avails of the suit.[55] Carlos clearly is not an indispensable party as he does not stand to be benefited or
injured by the judgment of the suit. What is sought is the deportation of Jimmy on the ground that he is
an alien. Hence, the principal issue that will be decided on is the propriety of his deportation. To recall,
We find no cogent reason to overturn the above findings of the appellate tribunal. The question of that Carlos exercised his right of suffrage in 1952 and 1955 does not demonstrate such belief, considering
whether substantial evidence had been presented to allow immediate recourse to the regular courts is a that the acts were done after he elected Philippine citizenship. On the other hand, the mere fact that he
question of fact which is beyond this Courts power of review for it is not a trier of facts. [68] None of the was able to vote does not validate his irregular election of Philippine citizenship. At most, his registration
exceptions[69] in which this Court may resolve factual issues has been shown to exist in this case. Even if as a voter indicates his desire to exercise a right appertaining exclusively to Filipino citizens but does not
we evaluate their arguments and the evidence they presented once again, the same conclusion will still be alter his real citizenship, which, in this jurisdiction, is determined by blood (jus sanguinis). The exercise of
reached. the rights and privileges granted only to Filipinos is not conclusive proof of citizenship, because a person
may misrepresent himself to be a Filipino and thus enjoy the rights and privileges of citizens of this
country.[79]
One of the arguments raised to sustain Carlos claim to Philippine citizenship is the doctrine of jus
soli, or the doctrine or principle of citizenship by place of birth. To recall, both the trial court and the Court
of Appeals ruled that the doctrine of jus soli was never extended to the Philippines. We agree. The doctrine It is incumbent upon one who claims Philippine citizenship to prove to the satisfaction of the court
of jus soli was for a time the prevailing rule in the acquisition of ones citizenship.[70] However, the Supreme that he is really a Filipino. No presumption can be indulged in favor of the claimant of Philippine
Court abandoned the principle of jus soli in the case of Tan Chong v. Secretary of Labor.[71] Since then, said citizenship, and any doubt regarding citizenship must be resolved in favor of the state.[80]
doctrine only benefited those who were individually declared to be citizens of the Philippines by a final
court decision on the mistaken application of jus soli.[72]
As Carlos and Jimmy neither showed conclusive proof of their citizenship nor presented
substantial proof of the same, we have no choice but to sustain the Boards jurisdiction over the deportation
Neither will the Philippine Bill of 1902[73] nor the Jones Law of 1916[74] make Carlos a citizen of proceedings. This is not to say that we are ruling that they are not Filipinos, for that is not what we are
the Philippines. His bare claim that his father, Go Yin An, was a resident of the Philippinesat the time of called upon to do. This Court necessarily has to pass upon the issue of citizenship only to determine
the passage of the said laws, without any supporting evidence whatsoever will not suffice. whether the proceedings may be enjoined in order to give way to a judicial determination of the same. And
we are of the opinion that said proceedings should not be enjoined.

It is a settled rule that only legitimate children follow the citizenship of the father and that
illegitimate children are under the parental authority of the mother and follow her nationality.[75]Moreover, In our considered view, the allegation of Jimmy that due process was not observed in the
we have also ruled that an illegitimate child of a Filipina need not perform any act to confer upon him all deportation proceedings must likewise fail.
the rights and privileges attached to citizens of the Philippines; he automatically becomes a citizen
himself.[76] However, it is our considered view that absent any evidence proving that Carlos is indeed an
illegitimate son of a Filipina, the aforestated established rule could not be applied to him. Deportation proceedings are administrative in character, summary in nature, and need not be
conducted strictly in accordance with the rules of ordinary court proceedings.[81] The essence of due process
is simply an opportunity to be heard, or as applied to administrative proceedings, an opportunity to explain
As to the question of whether the election of Philippine citizenship conferred on Carlos Filipino ones side or an opportunity to seek reconsideration of the action or ruling complained of.[82] As long as the
citizenship, we find that the appellate court correctly found that it did not. parties are given the opportunity to be heard before judgment is rendered, the demands of due process are
sufficiently met.[83] Although Jimmy was not furnished with a copy of the subject Resolution and Charge
Sheet as alleged by him, the trial court found that he was given ample opportunity to explain his side and
Com. Act No. 625 which was enacted pursuant to Section 1(4), Article IV of the 1935 Constitution, present controverting evidence, thus:
prescribes the procedure that should be followed in order to make a valid election of Philippine
citizenship. Under Section 1 thereof, legitimate children born of Filipino mothers may elect Philippine x x x It must be stressed that after receiving the Order dated September 11,
citizenship by expressing such intention in a statement to be signed and sworn to by the party concerned 2001 signed by BSI Chief Ronaldo P. Ledesma on October 4, 2001, petitioner Jimmy T.
before any officer authorized to administer oaths, and shall be filed with the nearest civil registry. The said Go admitted that when his representative went to the B.I.D. to inquire about the said
party shall accompany the aforesaid statement with the oath of allegiance to the Constitution and the Order, the latter chanced upon the Resolution dated February 14, 2001 and March 8,
Government of the Philippines.[77] 2001 as well as the Charge Sheet dated July 3, 2001. Hence on October 5, 2001, he filed
a Motion for Extension of Time to File Memorandum and as such, was allowed by
Ronaldo P. Ledesma an extension of ten (10) days to submit his required
However, the 1935 Constitution and Com. Act No. 625 did not prescribe a time period within
memorandum. x x x[84]
which the election of Philippine citizenship should be made. The 1935 Charter only provides that the
election should be made upon reaching the age of majority. The age of majority then commenced upon
reaching 21 years. In the opinions of the then Secretary of Justice on cases involving the validity of election
of Philippine citizenship, this dilemma was resolved by basing the time period on the decisions of this Court This circumstance satisfies the demands of administrative due process.
prior to the effectivity of the 1935 Constitution. In these decisions, the proper period for electing Philippine
citizenship was, in turn, based on the pronouncements of the Department of State of the United States
Government to the effect that the election should be made within a reasonable time after attaining the age As regards the petition in G.R. No. 171946, petitioners contend that the appellate tribunal erred
of majority. The phrase reasonable time has been interpreted to mean that the election should be made in enjoining Jimmys deportation.[85]
within three (3) years from reaching the age of majority.[78]

Petitioners question the remedy availed of by Jimmy. They argue that the existence of the remedy
It is true that we said that the 3-year period for electing Philippine citizenship may be extended of an ordinary appeal proscribes the filing of the petition for certiorari as was done in this case. They point
as when the person has always regarded himself as a Filipino. Be that as it may, it is our considered view out that the appeal period in habeas corpus cases is only 48 hours, compared to a special civil action under
that not a single circumstance was sufficiently shown meriting the extension of the 3-year period.The fact Rule 65 of the Rules of Court which is 60 days. This clearly shows that an ordinary appeal is the more
plain, speedy and adequate remedy; hence, it must be the one availed of.[86] Since the decision of the trial instances mentioned in Section 4[98] of Rule 102, be no longer illegal at the time of the filing of the
court was not properly appealed, the same may be said to have attained finality, and may no longer be application.[99]
disturbed.[87]

Once a person detained is duly charged in court, he may no longer question his detention through
They maintain that the dismissal of the petition for habeas corpus by the trial court was proper.A a petition for issuance of a writ of habeas corpus. His remedy would be to quash the information and/or
petition for habeas corpus has for its purpose only the determination of whether or not there is a lawful the warrant of arrest duly issued. The writ of habeas corpus should not be allowed after the party sought
ground for Jimmys apprehension and continued detention. They urge that the decision of the Board to be released had been charged before any court. The term court in this context includes quasi-judicial
dated April 17, 2002 that ordered Jimmys deportation has already attained finality by reason of the belated bodies of governmental agencies authorized to order the persons confinement, like the Deportation Board
appeal taken by Jimmy from the said decision on April 2, 2004 before the Office of the President, or after of the Bureau of Immigration.[100] Likewise, the cancellation of his bail cannot be assailed via a petition for
almost two years from the time the decision was rendered. Said decision of the Board, they insist, is the habeas corpus. When an alien is detained by the Bureau of Immigration for deportation pursuant to an
lawful ground that sanctions Jimmys apprehension and detention.[88] order of deportation by the Deportation Board, the Regional Trial Courts have no power to release such
alien on bail even in habeas corpus proceedings because there is no law authorizing it.[101]

Petitioners in G.R. No. 171946 also argue that Jimmy cannot rely on the bail on recognizance he
was previously granted to question his subsequent apprehension and detention. Under the Philippine Given that Jimmy has been duly charged before the Board, and in fact ordered arrested pending
Immigration Act of 1940, the power to grant bail can only be exercised while the alien is still under his deportation, coupled by this Courts pronouncement that the Board was not ousted of its jurisdiction
investigation, and not when the order of deportation had already been issued by the Board.[89] Hence, the to continue with the deportation proceedings, the petition for habeas corpus is rendered moot and
bail granted was irregular as it has no legal basis. Furthermore, they said the petition for habeas corpus academic. This being so, we find it unnecessary to touch on the other arguments advanced by respondents
necessarily has to be dismissed because the same is no longer proper once the applicant thereof has been regarding the same subject.
charged before the Board, which is the case with Jimmy.[90] Nonetheless, they claim that the habeas corpus
case is rendered moot and academic as Jimmy is no longer being detained.[91]
WHEREFORE, the petitions in G.R. Nos. 167569 and 167570 are DENIED. The Decision
dated October 25, 2004 and Resolution dated February 16, 2005 of the Court of Appeals in CA-G.R. SP
On the other hand, Jimmy counters that the instant petition for certiorari and prohibition is the most No. 85143 are AFFIRMED. The petition in G.R. No. 171946 is hereby GRANTED. The Decision
appropriate, speedy and adequate remedy in spite of the availability of ordinary appeal considering that what is dated December 8, 2005 and Resolution dated March 13, 2006 of the Court of Appeals in CA-G.R. SP No.
involved in this case is his cherished liberty. Grave abuse of discretion on the part of the petitioners in ordering 88277 are REVERSED and SET ASIDE. The December 6, 2004 and December 28, 2004 Orders of
his arrest and detention, he argues, all the more justifies the avails of the extraordinary writ.[92] Contrary to the the Regional Trial Court of Pasig City, Branch 167 are hereby REINSTATED.
petitioners stand, Jimmy argues that the April 17, 2002 Decision of the Board has not attained finality owing to
the availability of various remedies, one of which is an appeal, and in fact is actually void because it was rendered
without due process.[93] He also insists that the bail issued to him is valid and effective until the final
G.R. No. 156287 February 16, 2010
determination of his citizenship before the proper courts.[94] Moreover, he maintains that the petition for habeas
corpus was proper since its object is to inquire into the legality of ones detention, and if found illegal, to order
the release of the detainee.[95] As in his petition in G.R. No. 167570, Jimmy also contends that the proceedings FELICITAS M. MACHADO and MARCELINO P. MACHADO, Petitioners,
before the Board is void for failure to implead therein his father, and that he should have been given a full blown vs.
trial before a regular court where he can prove his citizenship.[96] RICARDO L. GATDULA, COMMISSION ON THE SETTLEMENT OF LAND PROBLEMS, and IRINEO S.
PAZ, Sheriff IV, Office of the Provincial Sheriff, San Pedro, Laguna, Respondents.

Considering the arguments and contentions of the parties, we find the petition in G.R. No. 171946
Before this Court is the Petition for Review on Certiorari1 filed by petitioners Felicitas M. Machado and
meritorious.
Marcelino P. Machado (the Machados), assailing the decision2 of the Court of Appeals (CA) dated January
31, 2002 and the resolution3 dated December 5, 2002 in CA-G.R. SP No. 65871. The CA decision dismissed
We have held in a litany of cases that the extraordinary remedies of certiorari, prohibition and the Machados’ petition for certiorari and their motion for reconsideration, and upheld the jurisdiction of
mandamus are available only when there is no appeal or any plain, speedy and adequate remedy in the the Commission on Settlement of Land Problems (COSLAP) to render judgment over a private land and to
ordinary course of law. The writ of certiorari does not lie where an appeal may be taken or where another issue the corresponding writs of execution and demolition.
adequate remedy is available for the correction of the error.[97]
THE FACTUAL ANTECEDENTS

The petitioners correctly argue that appeal should have been the remedy availed of as it is more
plain, speedy and adequate. The 48-hour appeal period demonstrates the adequacy of such remedy in that The dispute involves two adjoining parcels of land located in Barangay San Vicente, San Pedro, Laguna,
no unnecessary time will be wasted before the decision will be re-evaluated. one belonging to the Machados, and the other belonging to respondent Ricardo L. Gatdula (Gatdula).

On February 2, 1999, Gatdula wrote a letter4 to the COSLAP requesting assistance because the Machados
A petition for the issuance of a writ of habeas corpus is a special proceeding governed by Rule allegedly blocked the right of way to his private property by constructing a two-door apartment on their
102 of the Revised Rules of Court. The objective of the writ is to determine whether the confinement or property.
detention is valid or lawful. If it is, the writ cannot be issued. What is to be inquired into is the legality of
a persons detention as of, at the earliest, the filing of the application for the writ of habeas corpus, for even
if the detention is at its inception illegal, it may, by reason of some supervening events, such as the
Acting on Gatdula’s letter, the COSLAP conducted a mediation conference on February 25, 1999; the The CA found the Machados’ claim unfounded and, accordingly, dismissed their petition in its decision of
parties then agreed to have a verification survey conducted on their properties and to share the attendant January 31, 2002.12 It declared that the COSLAP correctly issued the assailed writs because the October
expenses. Thereafter, the COSLAP issued an Order dated March 16, 1999 directing the Chief of the Survey 25, 1999 COSLAP Resolution had already become final and executory for failure of the Machados to avail
Division of the Community Environment and Natural Resources Office – Department of Environment and of the proper remedy against the COSLAP orders and resolutions. Under Section 3 (2)13 of Executive Order
Natural Resources (CENRO-DENR), to conduct a verification survey on May 9, 1999. The order likewise No. 561 (EO 561), the resolutions, orders, and decisions of the COSLAP become final and executory 30
stated that in the event that no surveyor is available, the parties may use the services of a private surveyor, days after promulgation, and are appealable by certiorari only to the Supreme Court. In Sy v. Commission
whom the CENRO-DENR Survey Division would deputize. on the Settlement of Land Problems,14 it was held that under the doctrine of judicial hierarchy, the orders,
resolutions and decisions of the COSLAP, as a quasi-judicial agency, are directly appealable to the CA
under Rule 43 of the 1997 Rules of Civil Procedure, and not to the Supreme Court. Thus, the CA ruled that
As scheduled, a private surveyor, Junior Geodetic Engineer Abet F. Arellano (Engr. Arellano), conducted a
the Machados’ appeal to the OP was not the proper remedy and did not suspend the running of the period
verification survey of the properties in the presence of both parties. Engr. Arellano submitted a report to
for finality of the October 25, 1999 COSLAP Resolution.
the COSLAP finding that the structure built by the Machados encroached upon an alley found within the
Gatdula property. Engr. Arellano’s findings corroborated the separate report of Engineer Noel V. Soqueco
of the CENRO, Los Baños, Laguna that had also been submitted to the COSLAP. On the issue of jurisdiction, the CA found that the COSLAP was created to provide a more effective
mechanism for the expeditious settlement of land problems, in general; the present case, therefore, falls
within its jurisdiction.15Moreover, the Machados’ active participation in the mediation conference and their
The Machados contested these reports in their position paper dated August 26, 1999. They alleged that
consent to bring about the verification survey bound them to the COSLAP’s decisions, orders and
Gatdula had no right of action since they did not violate Gatdula’s rights. 5 They further assailed the
resolutions.
jurisdiction of the COSLAP, stating that the proper forum for the present case was the Regional Trial Court of
San Pedro, Laguna.
From this CA decision, the Machados filed a motion for reconsideration,16 which the CA subsequently
denied in its Resolution of December 5, 2002.17
The COSLAP Ruling

The Machados thus filed the present Rule 45 petition with this Court, raising two vital issues:
On October 25, 1999, the COSLAP issued a resolution6 (October 25, 1999 COSLAP Resolution) directing
the Machados to reopen the right of way in favor of Gatdula. In so ruling, the COSLAP relied on the
verification survey made by Engr. Arellano, which established that the Machados had encroached on the 1. Whether the COSLAP has jurisdiction over Gatdula’s complaint for right of way against the
existing alley in Gatdula’s property. Machados; and

The COSLAP declared the Machados estopped from questioning its jurisdiction to decide the case, since 2. Whether the COSLAP can validly issue the writs of execution and demolition against the
they actively participated in the mediation conferences and the verification surveys without raising any Machados.
jurisdictional objection. It ruled that its jurisdiction does not depend on the convenience of the Machados.
THE COURT’S RULING
The Machados filed a motion for reconsideration which the COSLAP denied in a resolution dated January
24, 2000.
We find the petition meritorious.

On February 18, 2000, the Machados filed a notice of appeal7 with the Office of the President (OP).
The COSLAP does not have jurisdiction over the present case

While this appeal was pending, the COSLAP, upon Gatdula’s motion, issued a writ of execution8 enforcing
In resolving the issue of whether the COSLAP has jurisdiction over the present case, a review of the history
the terms of the October 25, 1999 COSLAP Resolution. The Machados opposed the writ by filing a motion
of the COSLAP and an account of the laws creating the COSLAP and its predecessor, the Presidential Action
to quash on March 30, 2001.9 They argued that the October 25, 1999 COSLAP Resolution was not yet ripe
Committee on Land Problems (PACLAP), is in order.
for execution in view of the pending appeal before the OP.

The COSLAP’s forerunner, the PACLAP, was created on July 31, 1970 pursuant to Executive Order No.
Since the Machados persistently refused to reopen the right of way they closed, the provincial sheriff
251. As originally conceived, the committee was tasked to expedite and coordinate the investigation and
recommended to COSLAP the issuance of a writ of demolition. The COSLAP issued the writ of
resolution of land disputes, streamline and shorten administrative procedures, adopt bold and decisive
demolition10 on July 12, 2001.
measures to solve land problems, and/or recommend other solutions.

The CA Ruling
On March 19, 1971, Executive Order No. 305 was issued reconstituting the PACLAP. The committee was
given exclusive jurisdiction over all cases involving public lands and other lands of the public domain,18 and
On July 31, 2001, the Machados went to the CA for relief through a Petition for Certiorari and was likewise vested with adjudicatory powers phrased in broad terms:
Prohibition,11 claiming that the COSLAP issued the writs of execution and demolition with grave abuse of
discretion.
1. To investigate, coordinate, and resolve expeditiously land disputes, streamline administrative
proceedings, and, in general, to adopt bold and decisive measures to solve problems involving public lands
and lands of the public domain.19 [emphasis supplied]
Thereafter, Presidential Decree No. 832 (PD 832)20 was issued on November 27, 1975 reorganizing the cases shall have the force and effect of a regular administrative resolution, order or decision and shall be
PACLAP and enlarging its functions and duties. The decree also granted PACLAP quasi-judicial functions. binding upon the parties therein and upon the agency having jurisdiction over the same. Said resolution,
Section 2 of PD 832 states: 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. [emphasis supplied]
Section 2. Functions and duties of the PACLAP. – The PACLAP shall have the following functions and
duties: Under these terms, the COSLAP has two different rules in acting on a land dispute or problem lodged before
it, e.g., COSLAP can assume jurisdiction only if the matter is one of those enumerated in paragraph 2(a) to
(e) of the law. Otherwise, it should refer the case to the agency having appropriate jurisdiction for settlement
1. Direct and coordinate the activities, particularly the investigation work, of the various
or resolution.21 In resolving whether to assume jurisdiction over a case or to refer it to the particular agency
government agencies and agencies involved in land problems or disputes, and streamline
concerned, the COSLAP considers: (a) the nature or classification of the land involved; (b) the parties to the
administrative procedures to relieve small settlers and landholders and members of cultural
case; (c) the nature of the questions raised; and (d) the need for immediate and urgent action thereon to
minorities of the expense and time-consuming delay attendant to the solution of such problems
prevent injury to persons and damage or destruction to property. The terms of the law clearly do not vest
or disputes;
on the COSLAP the general power to assume jurisdiction over any land dispute or problem.22 Thus, under
EO 561, the instances when the COSLAP may resolve land disputes are limited only to those involving
2. Refer for immediate action any land problem or dispute brought to the attention of the PACLAP, public lands or those covered by a specific license from the government, such as pasture lease agreements,
to any member agency having jurisdiction thereof: Provided, That when the Executive Committee timber concessions, or reservation grants.23
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
Undisputably, the properties involved in the present dispute are private lands owned by private parties,
therein involved and upon the member agency having jurisdiction thereof;
none of whom is a squatter, a patent lease agreement holder, a government reservation grantee, a public
land claimant or a member of any cultural minority.24
xxxx
Moreover, the dispute between the parties can hardly be classified as critical or explosive in nature that
4. Evolve and implement a system of procedure for the speedy investigation and resolution of land would generate social tension or unrest, or a critical situation that would require immediate and urgent
disputes or problems at provincial level, if possible. [emphasis supplied] action. The issues raised in the present case primarily involve the application of the Civil Code provisions
on Property and the Easement of Right of Way. As held in Longino v. General,25 "disputes requiring no
special skill or technical expertise of an administrative body that could be resolved by applying pertinent
The PACLAP was abolished by EO 561 effective on September 21, 1979, and was replaced by the COSLAP.
provisions of the Civil Code are within the exclusive jurisdiction of the regular courts."
Unlike the former laws, EO 561 specifically enumerated the instances when the COSLAP can exercise its
adjudicatory functions:
The Machados cannot invoke Section 3, paragraph 2(e) of EO 561, which provides that the COSLAP may
assume jurisdiction over complaints involving "other similar land problems of grave urgency," to justify the
Section 3. Powers and Functions. – The Commission shall have the following powers and functions:
COSLAP’s intervention in this case. The statutory construction principle of ejusdem generic prescribes that
where general words follow an enumeration of persons or things, by words of a particular and specific
xxxx 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 as those specifically mentioned.26 A dispute between two parties
concerning the right of way over private lands cannot be characterized as similar to those enumerated
2. Refer and follow up for immediate action by the agency having appropriate jurisdiction any land problem
under Section 3, paragraph 2(a) to (d) of EO 561.1avvphi1
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, In Davao New Town Development Corporation v. Commission on the Settlement of Land Problems 27 – where
or other similar critical situations requiring immediate action: we ruled that the COSLAP does not have blanket authority to assume every matter referred to it – we made
it clear that its jurisdiction is confined only to disputes over lands in which the government has a
proprietary or regulatory interest.
(a) Between occupants/squatters and pasture lease agreement holders or timber concessionaires;

The CA apparently misread and misapplied the Court’s ruling in Bañaga v. Court of Appeals. 28 Bañaga
(b) Between occupants/squatters and government reservation grantees;
involved two contending parties who filed free patent applications for a parcel of public land with the
Bureau of Lands. Because of the Bureau of Lands’ failure to act within a reasonable time on the
(c) Between occupants/squatters and public land claimants or applicants; applications and to conduct an investigation, the COSLAP decided to assume jurisdiction over the case.
Since the dispute involved a public land on a free patent issue, the COSLAP undeniably had jurisdiction
over the Bañaga case.
(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. Jurisdiction is conferred by law and a judgment issued by a quasi-judicial body without
jurisdiction is void

The Commission shall promulgate such rules and procedures as will ensure expeditious resolution and
action on the above cases. The resolution, order or decision of the Commission on any of the foregoing
By reason of the Machados’ active participation in the mediation conferences and the COSLAP - versus -
verification surveys, the CA declared the Machados estopped from questioning the body’s jurisdiction and
bound by its decisions, orders and resolutions. We disagree with this ruling. DANES B. SANCHEZ, Promulgated:
Respondent. ________________July 29, 2010
x-------------------------------------------------------------------x
Jurisdiction over a subject matter is conferred by law and not by the parties’ action or conduct.29 Estoppel
generally does not confer jurisdiction over a cause of action to a tribunal where none, by law, exists. In
Where a valid cause of action exists, parties may not simply bypass litigation by the simple expediency of a Motion to
Lozon v. NLRC,30 we declared that:
Dismiss. Instead of abbreviating the proceedings, it has had the opposite effect: unnecessary litigation for almost
seven years. Here, in particular, where any resolution of the case will depend on the appreciation of evidence, a full-
Lack of jurisdiction over the subject matter of the suit is yet another matter. Whenever it appears that the blown trial is necessary to unearth all relevant facts and circumstances.
court has no jurisdiction over the subject matter, the action shall be dismissed. This defense may be
interposed at any time, during appeal or even after final judgment. Such is understandable, as this kind This petition for review on certiorari assails the Decision[1] dated July 20, 2004 of the Court of Appeals (CA) in CA-G.R.
of jurisdiction is conferred by law and not within the courts, let alone the parties, to themselves determine SP No. 79404 which affirmed the denial of petitioners motion to dismiss and directed the Regional Trial Court (RTC) of
or conveniently set aside. In People v. Casiano, this Court, on the issue of estoppel, held: Dinalupihan, Bataan, Branch 5, to proceed with trial. Also assailed is the Resolution[2]dated September 22, 2004
denying the motion for reconsideration.
The operation of the principle of estoppel on the question of jurisdiction seemingly depends upon whether
Factual Antecedents
the lower court actually had jurisdiction or not. If it had no jurisdiction, but the case was tried and decided
upon the theory that it had jurisdiction, the parties are not barred, on appeal, from assailing such
This case began with a Complaint[3] for Damages filed by respondent Danes B. Sanchez (respondent) against the
jurisdiction, for the same ‘must exist as a matter of law, and may not be conferred by consent of the parties
University of Santo Tomas (UST) and its Board of Directors, the Dean and the Assistant Dean of the UST College of
or by estoppel’ However if the lower court had jurisdiction, and the case was heard and decided upon a
Nursing, and the University Registrar for their alleged unjustified refusal to release the respondents Transcript of
given theory, such, for instance, as that the court had no jurisdiction, the party who induced it to adopt
Records (ToR). The case was raffled to Branch 5 of the RTC of Dinalupihan, Bataan, and docketed as Civil Case No.
such theory will not be permitted, on appeal, to assume an inconsistent position – that the lower court had
DH-788-02.
jurisdiction. Here, the principle of estoppel applies. The rule that jurisdiction in conferred by law, and does
not depend upon the will of the parties, has no bearing thereon. [emphasis supplied]
In his Complaint, respondent alleged that he graduated from UST on April 2, 2002 with a Bachelors Degree of Science
in Nursing. He was included in the list of candidates for graduation and attended graduation ceremonies. On April 18,
In this case, the COSLAP did not have jurisdiction over the subject matter of the complaint filed by Gatdula, 2002, respondent sought to secure a copy of his ToR with the UST Registrars Office, paid the required fees, but was
yet it proceeded to assume jurisdiction over the case and even issued writs of execution and demolition only given a Certificate of Graduation by the Registrar. Despite repeated attempts by the respondent to secure a copy
against the Machados. The lack of jurisdiction cannot be cured by the parties’ participation in the of his ToR, and submission of his class cards as proof of his enrolment, UST refused to release his records, making it
proceedings before the COSLAP.31 Under the circumstances, the Machados can rightfully question its impossible for him to take the nursing board examinations, and depriving him of the opportunity to make a living. The
jurisdiction at anytime, even during appeal or after final judgment. A judgment issued by a quasi-judicial respondent prayed that the RTC order UST to release his ToR and hold UST liable for actual, moral, and exemplary
body without jurisdiction is void.32 It cannot be the source of any right or create any obligation. All acts damages, attorneys fees, and the costs of suit.
pursuant to it and all claims emanating from it have no legal effect. The void judgment can never become
final and any writ of execution based on it is likewise void.33 Instead of filing an Answer, petitioners filed a Motion to Dismiss[4] where they claimed that they refused to release
respondents ToR because he was not a registered student, since he had not been enrolled in the university for the last
three semesters. They claimed that the respondents graduation, attendance in classes, and taking/passing of
WHEREFORE, premises considered, we GRANT the petition for review on certiorari. The assailed Court of
examinations were immaterial because he ceased to be a student when he failed to enroll during the second semester
Appeals decision dated January 31, 2002 and resolution dated December 5, 2002 in CA-G.R. SP No. 65871
of school year 2000-2001. They also sought the dismissal of the case on the ground that the complaint failed to state
are REVERSED and SET ASIDE. The Decision of the Commission on the Settlement of Land Problems
a cause of action, as paragraph 10 of the complaint admitted that:
dated October 25, 1999 in COSLAP Case No. 99-59, as well as the writ of execution dated March 21, 2001
and the writ of demolition dated July 12, 2001, are declared NULL and VOID for having been issued without
10. On several occasions, [respondent] went to see the [petitioners] to get his ToR, but
jurisdiction.
all of these were futile for he was not even entertained at the Office of the Dean. Worst, he was
treated like a criminal forcing him to admit the fact that he did not enroll for the last three (3)
FIRST DIVISION semesters of his schooling. [Petitioner] Dean tried to persuade the [respondent] to give the original
copies of the Class Cards which he has in his possession. These are the only [bits of] evidence on
UNIVERSITY OF SANTO G.R. No. 165569 hand to prove that he was in fact officially enrolled. [Respondent] did not give the said class cards
TOMAS, GLENDA A. VARGAS, and instead gave photo copies to the [Petitioner] Dean. The Office of the Dean of Nursing of
MA. SOCORRO S. GUANHING, [petitioner] UST became very strict in receiving documents from the [respondent]. [They have] to
in their capacities as Dean and be scrutinized first before the same are received. Receiving, as [respondent] believes, is merely a
Assistant Dean, respectively, of Present: ministerial function [of] the [petitioners] and the documents presented for receiving need not be
the College of Nursing of the scrutinized especially so when x x x they are not illegal. Copies of the class cards are hereto
University of Santo Tomas, and CORONA, C. J., Chairperson, attached as F hereof.[5]
RODOLFO N. CLAVIO, in his VELASCO, JR.,
capacity as Registrar of the LEONARDO-DE CASTRO,
University of Santo Tomas, DEL CASTILLO, and After the parties filed their responsive pleadings,[6] petitioners filed a Supplement to their Motion to Dismiss,[7] alleging
Petitioners, PEREZ, JJ. that respondent sought administrative recourse before the Commission on Higher Education (CHED) through a letter-
complaint dated January 21, 2003. Thus, petitioners claimed that the CHED had primary jurisdiction to resolve ascertain the existence of facts, hold hearings, weigh evidence, and draw conclusions.[20] Indeed, Section 8 of Republic
matters pertaining to school controversies, and the filing of the instant case was premature. Act No. 7722[21] otherwise known as the Higher Education Act of 1994, certainly does not contain any express grant to
the CHED of judicial or quasi-judicial power.
Ruling of the Regional Trial Court
Petitioners also claim that even without any express grant of quasi-judicial power by the legislature, the CHED is
After another exchange of pleadings,[8] the RTC issued an Order[9] dated April 1, 2003 denying the Motion to authorized to adjudicate the case filed by respondent on the strength of the following provisions of the Manual of
Dismiss on the ground that the issues involved required an examination of the evidence, which should be threshed Regulations of Private Schools:[22]
out during trial. Petitioners Motion for Reconsideration[10] was denied in an Order[11] dated August 1, 2003, so
petitioners sought recourse before the CA. (1) Section 33, which authorizes the CHED to cancel or revoke the graduation of any student whose records
are found to be fraudulent:
Ruling of the Court of Appeals
Section 33. Authority to Graduate Without Department Approval. One of the benefits which may
The CA affirmed the denial of petitioners Motion to Dismiss, and directed the RTC to proceed with trial. be made available for accredited schools of the appropriate level is the authority to graduate
students from accredited courses or programs of study without prior approval of the Department,
Issues the conditions of which are as follows:

Petitioners seek recourse before us raising the following issues: a) The school head must furnish the Regional Office of the region where the school is
situated a copy of its certificate of accreditation.
1) The CHED exercises quasi-judicial power over controversies involving school matters and has primary
jurisdiction over respondents demand for the release of his ToR. Thus, respondent failed to exhaust administrative b) Within two weeks after the graduation exercise, the school shall submit to the
remedies; Regional Office concerned an alphabetical list of graduates by course, accompanied by a
certification under oath signed by the school registrar certifying that the students listed (1) have
2) Since respondent sought recourse with both the CHED and the RTC, respondent violated the rule against complied with all the requirements of the Department, (2) were conferred their respective
forum-shopping; and certificates or degrees on a specific date, (3) have complete scholastic records on file in the school,
and (4) have their Form 137 for high school and Form IX for college, as the case may be, in the
3) The Complaint failed to state a cause of action, since respondent admitted that he was not enrolled in UST in custody of the school. This list shall be sufficient basis for issuing special orders, if still necessary.
the last three semesters prior to graduation.
The school will be held fully liable for the veracity of the records without prejudice to any legal
Our Ruling action, including revocation of government recognition, as may be called for under the
circumstances.
The petition is denied for lack of merit.
The Department reserves the right to cancel or revoke the graduation of any student whose records
The doctrine of exhaustion of administrative remedies are found to be fraudulent.
does not apply in this case.

The doctrine of exhaustion of administrative remedies requires that where a (2) Section 72, which permits the school to withhold students credentials under
remedy before an administrative agency is provided, the administrative agency concerned must be given the certain specified circumstances, and authorizes the CHED to
opportunity to decide a matter within its jurisdiction before an action is brought before the courts.[12] Failure to exhaust issue a students credentials in case these are unlawfully withheld by the school:
administrative remedies is a ground for dismissal of the action.[13]
Section 72. Withholding of Credentials. The release of the transfer credentials of any pupil or
In this case, the doctrine does not apply because petitioners failed to demonstrate that recourse to the CHED is student may be withheld for reasons of suspension, expulsion, or non-payment of financial
mandatory or even possible in an action such as that brought by the respondent, which is essentially one for obligations or property responsibility of the pupil or student to the school. The credentials shall be
mandamus and damages. The doctrine of exhaustion of administrative remedies admits of numerous released as soon as his obligation shall have been settled or the penalty of suspension or expulsion
exceptions,[14] one of which is where the issues are purely legal and well within the jurisdiction of the trial court, as in lifted.
the present case.[15] Petitioners liability if any for damages will have to be decided by the courts, since any judgment
inevitably calls for the application and the interpretation of the Civil Code.[16] As such, exhaustion of administrative However, if, after due inquiry, a school is found to have unjustifiably refused to issue transfer
remedies may be dispensed with. As we held in Regino v. Pangasinan Colleges of Science and Technology:[17] credentials or student records, the Department may issue the same without prejudice to the
imposition of appropriate administrative sanctions against the school concerned.
x x x exhaustion of administrative remedies is applicable when there is competence on the part of
the administrative body to act upon the matter complained of. Administrative agencies are not
courts; x x x neither [are they] part of the judicial system, [or] deemed judicial tribunals. The most cursory perusal of these provisions shows that they are inapplicable. Section 33 concerns the conditions and
Specifically, the CHED does not have the power to award damages.Hence, petitioner could not authority of accredited schools to authorize the graduation of students without the prior authority of the
have commenced her case before the Commission.(Emphasis ours) CHED. Corollarily, the CHED may cancel or revoke the graduation if it is found to be fraudulent. We are not aware
that the CHED has taken any action to revoke the respondents graduation, though it is free to do so.
In addition, the rule on primary jurisdiction applies only where the administrative agency exercises quasi-judicial or
adjudicatory functions.[18] Thus, an essential requisite for this doctrine to apply is the actual existence of quasi-judicial
power.[19] However, petitioners have not shown that the CHED possesses any such power to investigate facts or
As regards Section 72, it refers to a schools right to withhold the release of credentials due to suspension, expulsion,
or non-payment of financial obligations or property responsibility. None of these circumstances is present, and there This statement certainly does not support petitioners claim that respondent admitted that he was not
has been no intimation that respondents ToR has been withheld on any of these grounds. enrolled. On the contrary, any allegation concerning the use of force or intimidation by petitioners, if substantiated,
can only serve to strengthen respondents complaint for damages.
In any event, even if we were to assume that these provisions were applicable, the CHED remains without authority to
adjudicate an action for damages. We fully agree with the RTCs finding that a resolution of the case requires the presentation of evidence during
trial. Based on the parties allegations, the issues in this case are far from settled. Was respondent enrolled or not? Was
Respondent is not guilty of forum shopping his degree obtained fraudulently? If so, why was he permitted by the petitioners to graduate? Was there fault or
negligence on the part of any of the parties? Clearly, these are factual matters which can be best ventilated in a full-
Forum shopping exists when, as a result of an adverse opinion in one blown proceeding before the trial court.
forum, a party seeks a favorable opinion (other than by appeal or certiorari) in another, or when he institutes two or
more actions or proceedings grounded on the same cause, on the gamble that one or the other court would make a WHEREFORE, the petition is DENIED. The Decision dated July 20, 2004 and the Resolution dated September 22,
favorable disposition.[23] Here, there can be no forum shopping precisely because the CHED is without quasi-judicial 2004 of the Court of Appeals in CA-G.R. SP No. 79404 are AFFIRMED. The Regional Trial Court of Dinalupihan,
power, and cannot make any disposition of the case whether favorable or otherwise. As we held in Cabarrus, Jr. v. Bataan, Branch 5, is DIRECTED to continue the proceedings in Civil Case No. DH-788-02 with all deliberate speed.
Bernas:[24] [G.R. No. 96681. December 2, 1991.]

The courts, tribunal and agencies referred to under Circular No. 28-91, revised Circular
HON. ISIDRO CARIÑO, in his capacity as Secretary of the Department of Education, Culture & Sports, DR.
No. 28-91 and Administrative Circular No. 04-94 are those vested with judicial powers
ERLINDA LOLARGA, in her capacity as Superintendent of City Schools of Manila, petitioners, vs. THE
or quasi-judicial powers and those who not only hear and determine controversies
COMMISSION ON HUMAN RIGHTS, GRACIANO BUDOY, JULIETA BABARAN, ELSA IBABAO, HELEN
between adverse parties, but to make binding orders or judgments. As succinctly put by
LUPO, AMPARO GONZALES, LUZ DEL CASTILLO, ELSA REYES and APOLINARIO ESBER, respondents.
R.A. 157, the NBI is not performing judicial or quasi-judicial functions. The NBI cannot
therefore be among those forums contemplated by the Circular that can entertain an
action or proceeding, or even grant any relief, declaratory or otherwise. The issue raised in the special civil action of certiorari and prohibition at bar, instituted by the Solicitor
General, may be formulated as follows: where the relief sought from the Commission on Human Rights by
a party in a case consists of the review and reversal or modification of a decision or order issued by a court
The Complaint states a cause of action of justice or government agency or official exercising quasi-judicial functions, may the Commission take
cognizance of the case and grant that relief? Stated otherwise, where a particular subject-matter is placed
Under Rule 16, Section 1(g) of the Rules of Court, a motion to dismiss may be made on the ground that the by law within the jurisdiction of a court or other government agency or official for purposes of trial and
pleading asserting the claim states no cause of action.[25] To clarify the essential test required to sustain dismissal on adjudgment, may the Commission on Human Rights take cognizance of the same subject-matter for the
this ground, we have explained that [t]he test of the sufficiency of the facts found in a petition, to constitute a cause of same purposes of hearing and adjudication?
action, is whether admitting the facts alleged, the court could render a valid judgment upon the same in accordance
with the prayer of the petition.[26] Stated otherwise, a complaint is said to assert a sufficient cause of action if, admitting
The facts narrated in the petition are not denied by the respondents and are hence taken as substantially
what appears solely on its face to be correct, the plaintiff would be entitled to the relief prayed for.[27]
correct for purposes of ruling on the legal questions posed in the present action. These facts, 1 together
The Complaint makes the following essential allegations: that petitioners unjustifiably refused to release
with others involved in related cases recently resolved by this Court, 2 or otherwise undisputed on the
respondents ToR despite his having obtained a degree from UST; that petitioners claim that respondent was not
record, are hereunder set forth.
officially enrolled is untrue; that as a result of petitioners unlawful actions, respondent has not been able to take the
nursing board exams since 2002; that petitioners actions violated Articles 19-21 of the Civil Code; and that petitioners
should be ordered to release respondents ToR and held liable for P400,000.00 as moral damages, P50,000.00 as 1. On September 17, 1990, a Monday and a class day, some 800 public school teachers, among
exemplary damages, P50,000.00 as attorneys fees and costs of suit, and P15,000.00 as actual damages. Clearly, them members of the Manila Public School Teachers Association (MPSTA) and Alliance of Concerned
assuming that the facts alleged in the Complaint are true, the RTC would be able to render a valid judgment in Teachers (ACT) undertook what they described as "mass concerted actions" to "dramatize and highlight"
accordance with the prayer in the Complaint. their plight resulting from the alleged failure of the public authorities to act upon grievances that had time
and again been brought to the latter's attention. According to them they had decided to undertake said
Petitioners argue that paragraph 10 of the Complaint contains an admission that respondent was not officially enrolled "mass concerted actions" after the protest rally staged at the DECS premises on September 14, 1990
at UST. Said paragraph reads: without disrupting classes as a last call for the government to negotiate the granting of demands had
elicited no response from the Secretary of Education. The "mass actions" consisted in staying away from
10. On several occasions, [respondent] went to see the [petitioners] to get his ToR, but their classes, converging at the Liwasang Bonifacio, gathering in peaceable assemblies, etc. Through their
all of these were futile for he was not even entertained at the Office of the Dean. Worst, he was representatives, the teachers participating in the mass actions were served with an order of the Secretary
treated like a criminal forcing him to admit the fact that he did not enroll for the last three (3) of Education to return to work in 24 hours or face dismissal, and a memorandum directing the DECS
semesters of his schooling. [Petitioner] Dean tried to persuade the [respondent] to give the original officials concerned to initiate dismissal proceedings against those who did not comply and to hire their
copies of the Class Cards which he has in his possession. These are the only [bits of] evidence on replacements. Those directives notwithstanding, the mass actions continued into the week, with more
hand to prove that he was in fact officially enrolled. [Respondent] did not give the said class cards teachers joining in the days that followed. 3
and instead gave photo copies to the [Petitioner] Dean. The Office of the Dean of Nursing of
[petitioner] UST became very strict in receiving documents from the [respondent]. [They have] to
Among those who took part in the "concerted mass actions" were the eight (8) private respondents herein,
be scrutinized first before the same are received. Receiving, as [respondent] believes, is merely a
teachers at the Ramon Magsaysay High School, Manila, who had agreed to support the non-political
ministerial function [of] the [petitioners] and the documents presented for receiving need not be
demands of the MPSTA. 4
scrutinized especially so when x x x they are not illegal. Copies of the class cards are hereto
attached as F hereof.[28]
2. "For failure to heed the return-to-work order, the CHR complainants (private respondents) were to assist the Commission in this matter. Otherwise, the Commission will resolve the complaint on the basis
administratively charged on the basis of the principal's report and given five (5) days to answer the charges. of complainants' evidence.
They were also preventively suspended for ninety (90) days 'pursuant to Section 41 of P.D. 807' and
temporarily replaced (unmarked CHR Exhibits, Annexes F, G, H). An investigation committee was
xxx xxx xxx."
consequently formed to hear the charges in accordance with P.D. 807." 5

7. Through the Office of the Solicitor General, Secretary Cariño sought and was granted leave to file
3. In the administrative case docketed as Case No. DECS 90-082 in which CHR complainants
a motion to dismiss the case. His motion to dismiss was submitted on November 14, 1990 alleging as
Graciano Budoy, Jr., Julieta Babaran, Luz del Castillo, Apolinario Esber were, among others, named
grounds therefor, "that the complaint states no cause of action and that the CHR has no jurisdiction over
respondents, 6 the latter filed separate answers, opted for a formal investigation, and also moved "for
the case." 14
suspension of the administrative proceedings pending resolution by . . . (the Supreme) Court of their
application for issuance of an injunctive writ/temporary restraining order." But when their motion for
suspension was denied by Order dated November 8, 1990 of the Investigating Committee, which later also 8. Pending determination by the Commission of the motion to dismiss, judgments affecting the
denied their motion for reconsideration orally made at the hearing of November 14, 1990, "the respondents "striking teachers" were promulgated in two (2) cases, as aforestated, viz.: llcd
led by their counsel staged a walkout signifying their intent to boycott the entire proceedings." 7 The case
eventually resulted in a Decision of Secretary Cariño dated December 17, 1990, rendered after evaluation
a) The Decision dated December 17, 1990 of Education Secretary Cariño in Case No. DECS 90-082,
of the evidence as well as the answers, affidavits and documents submitted by the respondents, decreeing
decreeing dismissal from the service of Apolinario Esber and the suspension for nine (9) months of Babaran,
dismissal from the service of Apolinario Esber and the suspension for nine (9) months of Babaran, Budoy
Budoy and del Castillo; 15 and
and del Castillo. 8

b) The joint Resolution of this Court dated August 6, 1991 in G.R. Nos. 95445 and 95590 dismissing
4. In the meantime, the "MPSTA filed a petition for certiorari before the Regional Trial Court of Manila
the petitions without prejudice to any appeals, if still timely, that the individual petitioners may take to
against petitioner (Cariño), which was dismissed (unmarked CHR Exhibit, Annex I). Later, the MPSTA went
the Civil Service Commission on the matters complained of," 16 and inter alia "ruling that it was prima
to the Supreme Court (on certiorari, in an attempt to nullify said dismissal, grounded on the) alleged
facie lawful for petitioner Cariño to issue return-to-work orders, file administrative charges against
violation of the striking teachers' right to due process and peaceable assembly docketed as G.R. No. 95445,
recalcitrants, preventively suspend them, and issue decision on those charges." 17
supra. The ACT also filed a similar petition before the Supreme Court . . . docketed as G.R. No. 95590." 9
Both petitions in this Court were filed in behalf of the teacher associations, a few named individuals, and
"other teacher-members so numerous similarly situated" or "other similarly situated public school teachers 9. In an Order dated December 28, 1990, respondent Commission denied Sec. Cariño's motion to
too numerous to be impleaded. " LLjur dismiss and required him and Superintendent Lolarga "to submit their counter-affidavits within ten (10)
days . . . (after which) the Commission shall proceed to hear and resolve the case on the merits with or
without respondents counter affidavit." 18 It held that the "striking teachers" "were denied due process of
5. In the meantime, too, the respondent teachers submitted sworn statements dated September 27,
law; . . . they should not have been replaced without a chance to reply to the administrative charges;" there
1990 to the Commission on Human Rights to complain that while they were participating in peaceful mass
had been a violation of their civil and political rights which the Commission was empowered to investigate;
actions, they suddenly learned of their replacements as teachers, allegedly without notice and consequently
and while expressing its "utmost respect to the Supreme Court . . . the facts before . . . (it) are different
for reasons completely unknown to them. 10
from those in the case decided by the Supreme Court" (the reference being unmistakably to this Court's
joint Resolution of August 6, 1991 in G.R. Nos. 95445 and 95590, supra).
6. Their complaints — and those of other teachers also "ordered suspended by the . . . (DECS)," all
numbering forty-two (42) — were docketed as "Striking Teachers CHR Case No. 90-775." In connection
It is to invalidate and set aside this Order of December 28, 1990 that the Solicitor General, in behalf of
therewith the Commission scheduled a "dialogue" on October 11, 1990, and sent a subpoena to Secretary
petitioner Cariño, has commenced the present action of certiorari and prohibition.
Cariño requiring his attendance therein. 11

The Commission on Human Rights has made clear its position that it does not feel bound by this Court's
On the day of the "dialogue," although it said that it was "not certain whether he (Sec. Cariño) received the
joint Resolution in G.R. Nos. 95445 and 95590, supra. It has also made plain its intention "to hear and
subpoena which was served at his office, . . . (the) Commission, with the Chairman presiding, and
resolve the case (i.e., Striking Teachers HRC Case No. 90-775) on the merits." It intends, in other words,
Commissioners Hesiquio R. Mallilin and Narciso C. Monteiro, proceeded to hear the case;" it heard the
to try and decide or hear and determine, i.e., exercise jurisdiction over the following general issues:
complainants' counsel (a) explain that his clients had been "denied due process and suspended without
formal notice, and unjustly, since they did not join the mass leave," and (b) expatiate on the grievances
which were "the cause of the mass leave of MPSTA teachers, (and) with which causes they (CHR 1) whether or not the striking teachers were denied due process, and just cause exists for the
complainants) sympathize." 12 The Commission thereafter issued an Order 13 reciting these facts and imposition of administrative disciplinary sanctions on them by their superiors; and
making the following disposition:
2) whether or not the grievances which were "the cause of the mass leave of MPSTA teachers, (and)
"To be properly apprised of the real facts of the case and be accordingly guided in its investigation and with which causes they (CHR complainants) sympathize," justify their mass action or strike.
resolution of the matter, considering that these forty two teachers are now suspended and deprived of their
wages, which they need very badly, Secretary Isidro Cariño, of the Department of Education, Culture and
The Commission evidently intends to itself adjudicate, that is to say, determine with character of finality
Sports, Dr. Erlinda Lolarga, school superintendent of Manila and the Principal of Ramon Magsaysay High
and definiteness, the same issues which have been passed upon and decided by the Secretary of Education,
School, Manila, are hereby enjoined to appear and enlighten the Commission en banc on October 19, 1990
Culture & Sports, subject to appeal to the Civil Service Commission, this Court having in fact, as
at 11:00 AM. and to bring with them any and all documents relevant to the allegations aforestated herein
aforementioned, declared that the teachers affected may take appeals to the Civil Service Commission on
said matters, if still timely. LLjur
The threshold question is whether or not the Commission on Human Rights has the power under the (9) Bequest the assistance of any department, bureau, office, or agency in the performance of its
Constitution to do so; whether or not, like a court of justice, 19 or even a quasi-judicial agency, 20 it has functions; LLjur
jurisdiction or adjudicatory powers over, or the power to try and decide, or hear and determine, certain
specific type of cases, like alleged human rights violations involving civil or political rights.
(10) Appoint its officers and employees in accordance with law; and

The Court declares the Commission on Human Rights to have no such power; and that it was not meant
(11) Perform such other duties and functions as may be provided by law."
by the fundamental law to be another court or quasi-judicial agency in this country, or duplicate much
less take over the functions of the latter.
As should at once be observed, only the first of the enumerated powers and functions bears any
resemblance to adjudication or adjudgment. The Constitution clearly and categorically grants to the
The most that may be conceded to the Commission in the way of adjudicative power is that it may
Commission the power to investigate all forms of human rights violations involving civil and political rights.
investigate, i.e., receive evidence and make findings of fact as regards claimed human rights violations
It can exercise that power on its own initiative or on complaint of any person. It may exercise that power
involving civil and political rights. But fact-finding is not adjudication, and cannot be likened to the judicial
pursuant to such rules of procedure as it may adopt and, in cases of violations of said rules, cite for
function of a court of justice, or even a quasi-judicial agency or official. The function of receiving evidence
contempt in accordance with the Rules of Court. In the course of any investigation conducted by it or under
and ascertaining therefrom the facts of a controversy is not a judicial function, properly speaking. To be
its authority, it may grant immunity from prosecution to any person whose testimony or whose possession
considered such, the faculty of receiving evidence and making factual conclusions in a controversy must
of documents or other evidence is necessary or convenient to determine the truth. It may also request the
be accompanied by the authority of applying the law to those factual conclusions to the end that the
assistance of any department, bureau, office, or agency in the performance of its functions, in the conduct
controversy may be decided or determined authoritatively, finally and definitively, subject to such appeals
of its investigation or in extending such remedy as may be required by its findings. 26
or modes of review as may be provided by law. 21 This function, to repeat, the Commission does not have.
22
But it cannot try and decide cases (or hear and determine causes) as courts of justice, or even quasijudicial
bodies do. To investigate is not to adjudicate or adjudge. Whether in the popular or the technical sense,
The proposition is made clear by the constitutional provisions specifying the powers of the Commission on
these terms have well understood and quite distinct meanings.
Human Rights.

"Investigate," commonly understood, means to examine, explore, inquire or delve or probe into, research
The Commission was created by the 1987 Constitution as an independent office. 23 Upon its constitution,
on, study. The dictionary definition of "investigate" is "to observe or study closely: inquire into
it succeeded and superseded the Presidential Committee on Human Rights existing at the time of the
systematically: "to search or inquire into: . . . to subject to an official probe . . .: to conduct an official
effectivity of the Constitution. 24 Its powers and functions are the following: 25
inquiry." 27 The purpose of investigation, of course, is to discover, to find out, to learn, obtain information.
Nowhere included or intimated is the notion of settling, deciding or resolving a controversy involved in the
"(1) Investigate, on its own or on complaint by any party, all forms of human rights violations involving facts inquired into by application of the law to the facts established by the inquiry.
civil and political rights;
The legal meaning of "investigate" is essentially the same: "(t)o follow up step by step by patient inquiry or
(2) Adopt its operational guidelines and rules of procedure, and cite for contempt for violations thereof observation. To trace or track; to search into; to examine and inquire into with care and accuracy; to find
in accordance with the Rules of Court; out by careful inquisition; examination; the taking of evidence; a legal inquiry;" 28 "to inquire; to make an
investigation," "investigation" being in turn described as "(a)n administrative function, the exercise of which
ordinarily does not require a hearing. 2 Am J2d Adm L Sec. 257; . . . an inquiry, judicial or otherwise, for
(3) Provide appropriate legal measures for the protection of human rights of all persons within the
the discovery and collection of facts concerning a certain matter or matters." 29
Philippines, as well as Filipinos residing abroad, and provide for preventive measures and legal aid services
to the underprivileged whose human rights have been violated or need protection;
"Adjudicate," commonly or popularly understood, means to adjudge, arbitrate, judge, decide, determine,
resolve, rule on, settle. The dictionary defines the term as "to settle finally (the rights and duties of the
(4) Exercise visitorial powers over jails, prisons, or detention facilities;
parties to a court case) on the merits of issues raised: . . . to pass judgment on: settle judicially: . . . act as
judge." 30 And "adjudge" means "to decide or rule upon as a judge or with judicial or quasi-judicial powers:
(5) Establish a continuing program of research, education, and information to enhance respect for . . . to award or grant judicially in a case of controversy . . ." 31
the primacy of human rights;
In the legal sense, "adjudicate" means: "To settle in the exercise of judicial authority. To determine finally.
(6) Recommend to the Congress effective measures to promote human rights and to provide for Synonymous with adjudge in its strictest sense;" and "adjudge" means: "To pass on judicially, to decide,
compensation to victims of violations of human rights, or their families; settle or decree, or to sentence or condemn. . . . Implies a judicial determination of a fact, and the entry of
a judgment." 32
(7) Monitor the Philippine Government's compliance with international treaty obligations on human
rights; Hence it is that the Commission on Human Rights, having merely the power "to investigate," cannot and
should not "try and resolve on the merits" (adjudicate) the matters involved in Striking Teachers HRC Case
No. 90-775, as it has announced it means to do; and it cannot do so even if there be a claim that in the
(8) Grant immunity from prosecution to any person whose testimony or whose possession of
administrative disciplinary proceedings against the teachers in question, initiated and conducted by the
documents or other evidence is necessary or convenient to determine the truth in any investigation
DECS, their human rights, or civil or political rights had been transgressed. More particularly, the
conducted by it or under its authority;
Commission has no power to "resolve on the merits" the question of (a) whether or not the mass concerted
actions engaged in by the teachers constitute a strike and are prohibited or otherwise restricted by law; (b)
whether or not the act of carrying on and taking part in those actions, and the failure of the teachers to G.R. No. 186652. October 6, 2010.]
discontinue those actions and return to their classes despite the order to this effect by the Secretary of ATTY. ALICE ODCHIGUE-BONDOC, petitioner, vs. TAN TIONG BIO A.K.A. HENRY TAN, respondent.
Education, constitute infractions of relevant rules and regulations warranting administrative disciplinary DECISION
sanctions, or are justified by the grievances complained of by them; and (c) what where the particular acts
done by each individual teacher and what sanctions, if any, may properly be imposed for said acts or
Tan Tiong Bio (respondent) had fully paid the installment payments of a 683-square-meter lot in the Manila
omissions. LLjur
Southwoods Residential Estates, a project of Fil-Estate Golf & Development, Inc. (Fil-Estate) in Carmona,
Cavite, but Fil-Estate failed to deliver to him the title covering the lot, despite repeated demands. Fil-Estate
These are matters undoubtedly and clearly within the original jurisdiction of the Secretary of Education, also failed to heed the demand for the refund of the purchase price. 1 IDSaAH
being within the scope of the disciplinary powers granted to him under the Civil Service Law, and also,
within the appellate jurisdiction of the Civil Service Commission.
Respondent, later learning that the lot "sold" to him was inexistent, 2 filed a complaint for Estafa against
Fil-Estate officials including its Corporate Secretary Atty. Alice Odchigue-Bondoc (petitioner) and other
Indeed, the Secretary of Education has, as above narrated, already taken cognizance of the issues and employees. 3
resolved them, 33 and it appears that appeals have been seasonably taken by the aggrieved parties to the In her Counter-Affidavit, petitioner alleged that, inter alia,
Civil Service Commission; and even this Court itself has had occasion to pass upon said issues. 34 xxx xxx xxx
5. I had no participation at all in the acts or transactions alleged in the Complaint-Affidavit. As a
Corporate Secretary, I have never been involved in the management and day-to-day operations of [Fil-
Now, it is quite obvious that whether or not the conclusions reached by the Secretary of Education in
Estate]. . . .
disciplinary cases are correct and are adequately based on substantial evidence; whether or not the
xxx xxx xxx
proceedings themselves are void or defective in not having accorded the respondents due process; and
7. . . . . [Herein respondent] alleges:
whether or not the Secretary of Education had in truth committed "human rights violations involving civil
and political rights," are matters which may be passed upon and determined through a motion for
reconsideration addressed to the Secretary of Education himself, and in the event of an adverse verdict, "The letter showed that the request was approved by [herein petitioner], provided that the transfer fee was
may be renewed by the Civil Service Commission and eventually by the Supreme Court. paid, and that there be payment of full downpayment, with the balance payable in two years."

The Commission on Human Rights simply has no place in this scheme of things. It has no business 8) The handwritten approval and endorsement, however, are not mine. I have never transacted,
intruding into the jurisdiction and functions of the Education Secretary or the Civil Service Commission. either directly or indirectly, with Mrs. Ona or [herein respondent]. . . . 4 (emphasis partly in the original,
It has no business going over the same ground traversed by the latter and making its own judgment on the partly supplied; underscoring supplied) cACEHI
questions involved. This would accord success to what may well have been the complaining teachers'
strategy to abort, frustrate or negate the judgment of the Education Secretary in the administrative cases
On the basis of petitioner's above-quoted allegations in her Counter-Affidavit, respondent filed a complaint
against them which they anticipated would be adverse to them.
for Perjury against petitioner, docketed as I.S. No. PSG 03-07-11855 before the Pasig City Prosecutor's
Office, which dismissed it by Resolution of June 17, 2004 5 for insufficiency of evidence, and denied
This cannot be done. It will not be permitted to be done. respondent's Motion for Reconsideration. 6

In any event, the investigation by the Commission on Human Rights would serve no useful purpose. If its On petition for review, the Department of Justice (DOJ), by Resolution of July 20, 2005 signed by the Chief
investigation should result in conclusions contrary to those reached by Secretary Cariño, it would have no State Prosecutor for the Secretary of Justice, 7 motu proprio dismissed the petition on finding that there
power anyway to reverse the Secretary's conclusions. Reversal thereof can only by done by the Civil Service was no showing of any reversible error, following Section 12(c) of Department Circular No. 70 dated July
Commission and lastly by this Court. The only thing the Commission can do, if it concludes that Secretary 3, 2000 (National Prosecution Service [NPS] Rule on Appeal).
Cariño was in error, is to refer the matter to the appropriate Government agency or tribunal for assistance;
that would be the Civil Service Commission. 35 It cannot arrogate unto itself the appellate jurisdiction of
Respondent's motion for reconsideration having been denied 8 by Resolution of January 23, 2006, he filed
the Civil Service Commission.
a petition for certiorari before the Court of Appeals which, by Decision of September 5, 2008, 9 set aside
the DOJ Secretary's Resolution, holding that it committed grave abuse of discretion in issuing its
WHEREFORE, the petition is granted; the Order of December 29, 1990 is ANNULLED and SET ASIDE, and Resolution dismissing respondent's petition for review without therein expressing clearly and distinctly the
the respondent Commission on Human Rights and the Chairman and Members thereof are prohibited "to facts on which the dismissal was based, in violation of Section 14, Article VIII of the Constitution. 10
hear and resolve the case (i.e., Striking Teachers HRC Case No. 90-775) on the merits." SCIcTD

SO ORDERED The appellate court went on to hold that the matter of disposing the petition outright is clearly delineated,
not under Section 12 but, under Section 7 of the NPS Rule on Appeal which categorically directs the
Secretary to dismiss outright an appeal or a petition for review filed after arraignment; and that under
Melencio-Herrera, Cruz, Feliciano, Bidin, Griño-Aquino, Medialdea, Regalado, Davide, Jr. and Romero, JJ.,
Section 7, the Secretary may dismiss the petition outright if he finds the same to be patently without merit,
concur.
or manifestly intended for delay, or when the issues raised are too unsubstantial to require consideration.
11
Gutierrez, Jr., J., concurs in the result. The teachers are not to be blamed for exhausting all means to
overcome the Secretary's arbitrary act of not reinstating them.
Petitioner's Motion for Reconsideration having been denied by the appellate court, she filed the present SEC. 2. Evaluation. — Upon evaluating the complaint, the investigating officer shall recommend whether
petition for review on certiorari. it may be:

Petitioner asserts that the requirement in Section 14, Article VIII of the Constitution applies only to a) dismissed outright for want of palpable merit;
decisions of "courts of justice"; 12 that, citing Solid Homes, Inc. v. Laserna, 13 the constitutional provision
b) referred to respondent for comment;
does not extend to decisions or rulings of executive departments such as the DOJ; and that Section 12(c)
of the NPS Rule on Appeal allows the DOJ to dismiss a petition for review motu proprio, and the use of the c) indorsed to the proper government office or agency which has jurisdiction over the case;
word "outright" in the DOJ Resolution simply means "altogether," "entirely" or "openly." 14
d) forwarded to the appropriate officer or official for fact-finding investigation;

In his Comment, respondent counters that the constitutional requirement is not limited to courts, citing e) referred for administrative adjudication; or
Presidential Ad hoc Fact-Finding Committee on Behest Loans v. Desierto, 15 as it extends to quasi-judicial f) subjected to a preliminary investigation. (emphasis supplied) TSEcAD
and administrative bodies, as well as to preliminary investigations conducted by these tribunals. HICcSA
Respecting the action of the Secretary of Justice on respondent's petition for review under Section 12 of
Further, respondent, citing Adasa v. Abalos, 16 argues that the DOJ "muddled" the distinction between the NPS Rule on Appeal, respondent posits that "outright" dismissal is not sanctioned thereunder but
Sections 7 and 12 of the NPS Rule on Appeal and that an "outright" dismissal is not allowed since the DOJ under Section 7. Respondent's position similarly fails.
must set the reasons why it finds no reversible error 17 in an assailed resolution.
That the DOJ Secretary used the word "outright" in dismissing respondent's petition for review under
The petition is impressed with merit. Section 12 of the Rule which reads:

A preliminary investigation is not a quasi-judicial proceeding since "the prosecutor in a preliminary SEC. 12. Disposition of the appeal. — The Secretary may reverse, affirm or modify the appealed resolution.
investigation does not determine the guilt or innocence of the accused." 18 He may, motu proprio or upon motion, dismiss the petition for review on any of the following grounds:

. . . [A prosecutor] does not exercise adjudication nor rule-making functions. Preliminary investigation is xxx xxx xxx
merely inquisitorial, and is often the only means of discovering the persons who may be reasonably charged
[of] a crime and to enable the [prosecutor] to prepare his complaint or information. It is not a trial of the
case on the merits and has no purpose except that of determining whether a crime has been committed (a) That there is no showing of any reversible error;
and whether there is probable cause to believe that the accused is guilty thereof. While the [prosecutor]
makes that determination, he cannot be said to be acting as a quasi-court, for it is the courts, ultimately, . . . (italics in the original; emphasis and underscoring supplied)
that pass judgment on the accused, not the [prosecutor]. 19 (emphasis and underscoring supplied)
SDAcaT
does not dent his action. To be sure, the word "outright" was merely used in conjunction with the motu
proprio action. HIACac
A preliminary investigation thus partakes of an investigative or inquisitorial power for the sole purpose of
obtaining information on what future action of a judicial nature may be taken. 20
Section 7 has an altogether different set of grounds for the outright dismissal of a petition for review. These
are (a) when the petition is patently without merit; (b) when the petition is manifestly intended for delay;
Balangauan v. Court of Appeals 21 in fact iterates that even the action of the Secretary of Justice in (c) when the issues raised therein are too unsubstantial to require consideration; and (d) when the accused
reviewing a prosecutor's order or resolution via appeal or petition for review cannot be considered a quasi- has already been arraigned in court. 24
judicial proceeding since the "DOJ is not a quasi-judicial body." 22 Section 14, Article VIII of the
Constitution does not thus extend to resolutions issued by the DOJ Secretary.
When the Secretary of Justice is convinced that a petition for review does not suffer any of the infirmities
laid down in Section 7, it can decide what action to take (i.e., reverse, modify, affirm or dismiss the appeal
Respondent posits, however, that Balangauan finds no application in the present case for, as the Supreme altogether), conformably with Section 12. In other words, Sections 7 and 12 are part of a two-step approach
Court stated, the DOJ "rectified the shortness of its first resolution by issuing a lengthier one when it in the DOJ Secretary's review power.
resolved [the therein] respondent['s] . . . motion for reconsideration." 23 Respondent's position fails.
As for respondent's reliance on Adasa, it too fails for, unlike in the case of Adasa, herein petitioner has not
Whether the DOJ in Balangauan issued an extended resolution in resolving the therein respondent's been arraigned as in fact no Information has been filed against her.
motion for reconsideration is immaterial. The extended resolution did not detract from settling that the
DOJ is not a quasi-judicial body. IcaHCS
In the absence of grave abuse of discretion on the part of a public prosecutor who alone determines the
sufficiency of evidence that will establish probable cause in filing a criminal information, 25 courts will not
Respondent's citation of Presidential Ad Hoc Fact-Finding Committee on Behest Loans is misplaced as the interfere with his findings; otherwise, courts would be swamped with petitions to review the exercise of
Ombudsman dismissed the therein subject complaint prior to any preliminary investigation. The discretion on his part each time a criminal complaint is dismissed or given due course. 26 CHATcE
Ombudsman merely evaluated the complaint pursuant to Section 2, Rule II of the Rules of Procedure of
the Office of the Ombudsman which reads:
WHEREFORE, the petition for review on certiorari is GRANTED. The assailed Decision of the Court of 1987, respondents Yeung Chun Kam Yeung Chun Ho and Archie Chan who are all in Hongkong, instituted
Appeals is REVERSED AND SET ASIDE and the Resolutions of July 20, 2005 and January 23, 2006 of the through Yim Kam Shing an action for damages with prayer for a writ of preliminary injunction against the
Secretary of Justice are REINSTATED. said bank, the Commission, then Commissioner Mary Concepcion Bautista and the OIC, Saludo, docketed
as Civil Case No. 54298 of Branch 152 of the Regional Trial Court at Pasig, Metro Manila, presided by
respondent judge, and questioning the aforesaid revocation of the authorization as signatory previously
SO ORDERED.
granted to Mr. Yim Kam Shing as private respondents' representative. On February 16, 1987, respondent
judge issued ex-parte the questioned temporary restraining order enjoining the bank, its attorneys, agents
or persons acting in their behalf "from releasing any funds of American Inter-fashion Corporation without
the signature of plaintiff Yim Kam Shing and to desist from committing any other acts complained of ..."
and the Commission "from enforcing the questioned memorandum dated February 3, 1987" (Annex "J"
G.R. No. 77663 April 12, 1988
Petition).

PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT, petitioner,


On February 20, 1987, the Commission filed a motion to dismiss with opposition to plaintiffs' (private
vs.
respondents herein) prayer for a writ of preliminary injunction on the ground that the trial court has no
HON. EMMANUEL G. PEÑA, as Presiding Judge, RTC, NCJR, Br. CLII, Pasig, Metropolitan Manila,
jurisdiction over the Commission or over the subject of the case and that assuming arguendo its
and YEUNG CHUN KAM, YEUNG CHUM HO and ARCHIE CHAN represented by YIM KAM
jurisdiction, it acted with grave abuse of discretion since private respondents as 33% minority shareholders
SHING, respondents.
are not entitled to any restraining order or preliminary injunction. On March 5, 1987, respondent judge
issued the other assailed order denying the Commission's motion to dismiss and granting private
This special civil action for certiorari, prohibition and mandamus with preliminary injunction and/or respondents prayer for a writ of preliminary injunction on a P10,000 bond (Annex "L," Petition). On March
restraining order seeks to set aside the orders, dated February 16 and March 5, 1987, rendered by 20, 1987, the Commission filed the petition at bar questioning the jurisdiction of respondent judge's court
respondent trial judge on grounds of lack of jurisdiction and grave abuse of discretion. The main issue is over it and praying for (a) the nullification of the aforesaid February 16 and March 5, 1987 orders and (b)
whether regional trial courts have jurisdiction over the petitioner Presidential Commission on Good the issuance of a writ of prohibition ordering the respondent judge to cease and desist from proceeding
Government (hereinafter referred to as the Commission) and properties sequestered and placed in its with the said case.
custodia legis in the exercise of its powers under Executive Orders Nos. 1, 2 and 14, as amended, and
whether said regional trial courts may interfere with and restrain or set aside the orders and actions of the
On March 24, 1987, the Court issued a temporary restraining order, "ordering respondent judge to cease
Commission. The Court holds that regional trial courts do not have such jurisdiction over the Commission
and desist from enforcing his orders dated February 16 and March 5, 1987 and from proceeding with Civil
and accordingly grants the petition. To eliminate all doubts, the Court upholds the primacy of
Case No. 54298 ... subject to the condition that the amounts that the petitioner may withdraw from the
administrative jurisdiction as vested in the Commission and holds that jurisdiction over all sequestration
accounts of (the sequestered corporations) with the Metropolitan Bank and Trust Company, Inc., shall be
cases of ill-gotten wealth, assets and properties under the past discredited regime fall within the exclusive
limited to the 'necessary operating expenses of the two companies and for the payment of the salaries,
and original jurisdiction of the Sandiganbayan, subject to review exclusively by this Court. *
wages and allowances of the companies" staff, employees and laborers" ... and that the proceeds and
income received shall likewise in due course be deposited with the said companies' accounts with the said
The antecedent facts are: Metropolitan Bank and Trust Company, Inc."

On March 25, 1986, the Commission issued an order freezing the assets, effects, documents and records On the issue of jurisdiction squarely raised, as above indicated, the Court sustains petitioner's stand and
of two export garment manufacturing firms denominated as American Inter-fashion Corporation and De holds that regional trial courts and the Court of Appeals for that matter have no jurisdiction over the
Soleil Apparel Manufacturing Corporation. Said firms had both been organized by joint venture agreement Presidential Commission on Good Government in the exercise of its powers under the applicable Executive
on July 2,1984 with the approval of the Garments & Textile Export Board. Two-thirds or 67% of the stock Orders and Article XVIII, section 26 of the Constitution and therefore may not interfere with and restrain
of both corporations were subscribed by so-called Local Investors represented by Renato Z. Francisco and or set aside the orders and actions of the Commission. Under section 2 of the President's Executive Order
Atty. Gregorio R. Castillo and one-third or 33% thereof were subscribed by the so-called Hongkong No. 14 issued on May 7, 1986, all cases of the Commission regarding "the Funds, Moneys, Assets, and
Investors, namely respondents Yeung Chun Kam and Yeung Chun Ho. The Commission appointed Ms. Properties Illegally Acquired or Misappropriated by Former President Ferdinand Marcos, Mrs. Imelda
Noemi L. Saludo as Officer-in-Charge (OIC) of the said corporations with full authority to manage and Romualdez Marcos, their Close Relatives, Subordinates, Business Associates, Dummies, Agents, or
operate the same. On June 27, 1986, the Commission designated the OIC, Saludo, and Mr.Yeung Chun Nominees" 1 whether civil or criminal, are lodged within the "exclusive and original jurisdiction of the
Ho private respondent herein, as authorized signatories to effect deposits and withdrawals of the funds of Sandiganbayan" 2 and all incidents arising from, incidental to, or related to, such cases necessarily fall
the two corporations. On September 4, 1986, the Commission designated Mr. Yim Kam Shing as co- likewise under the Sandiganbayan's exclusive and original jurisdiction, subject to review on certiorari
signatory, in the absence of Mr. Yeung Chun Ho and Mr. Marcelo de Guzman, in the absence of Ms. Saludo. exclusively by the Supreme Court. 3
However, in a memorandum dated February 3, 1987, and addressed to depository banks of the said two
corporations, Ms. Saludo revoked the authorizations previously issued upon finding that Mr. Yim Kam
The Constitution and the applicable Executive Orders and established legal principles and jurisprudence
Shing was a Hongkong Chinese national staying in the country on a mere tourist visa, and designated
fully support the Court's ruling at bar.
James Dy as her co-signatory and Enrico Reyes Santos as the other authorized signatory with Teresita Yu
as the latter's co-signatory. The said memorandum was approved by then Commissioner Mary Concepcion
Bautista of the Commission. 1. The very first Executive Order issued by President Corazon C. Aquino after her assumption of office and
the ouster of deposed President Ferdinand E. Marcos on February 25, 1986 was Executive Order No. 1
issued on February 28, 1986 creating the Presidential Commission on Good Government, charging it with
On February 11, 1987, the OIC withdrew the amount of P400,000.00, more or less, from the Metropolitan
the task of assisting the President in regard to the "recovery of all ill-gotten wealth accumulated by former
Bank and Trust Company against the accounts of the said corporations for payment of the salaries of the
President Ferdinand E. Marcos, his immediate family, relatives, subordinates and close associates, whether
staff, employees and laborers of the same for the period from February 1 to 15 of 1987. On February 13,
located in the Philippines or abroad, including the takeover or sequestration of all business enterprises
and entities owned or controlled by them, during his administration, directly or through nominees, by The sequestration or freeze order is deemed automatically lifted if no judicial action or
taking undue advantage of their public office and/or using their powers, authority, influence, connections proceeding is commenced as herein provided. 11
or relationship." 4
3. As can be readily seen from the foregoing discussion of the duties and functions and the power and
In the discharge of its vital task "to recover the tremendous wealth plundered from the people by the past authority of the Commission, it exercises quasi-judicial functions. In the exercise of quasi-judicial
regime in the most execrable thievery perpetrated in all history," 5 or "organized pillage" (to borrow a phrase functions, the Commission is a co-equal body with regional trial courts and "co-equal bodies have no power
from the articulate Mr. Blas Ople 6 ), the Commission was vested with the ample power and authority to control the other." 12 The Solicitor General correctly submits that the lack of jurisdiction of regional trial
courts over quasi-judicial agencies is recognized in section 9, paragraph 3 of Batas Pambansa Blg. 129 (the
Judiciary Reorganization Act of 1980), which otherwise vests exclusive appellate jurisdiction in the Court
(a) x x x
of Appeals over all final judgment, decisions, resolutions, orders, or awards of regional trial courts and
quasi judicial agencies, instrumentalities, boards or commissions. But as already indicated hereinabove,
(b) to sequester or place or cause to be placed under its control or possession any the Court of Appeals is not vested with appellate or supervisory jurisdiction over the Commission. Executive
building or office wherein any ill-gotten wealth or properties may be found, and any Order No. 14, which defines the jurisdiction over cases involving the ill-gotten wealth of former President
records pertaining thereto, in order to prevent their destruction, concealment or Marcos, his wife, Imelda, members of their immediate family, close relatives, subordinates, close and/or
disappearance which would frustrate or hamper the investigation or otherwise prevent business associates, dummies, agents and nominees, specifically provides in section 2 that "The
the Commission from accomplishing its task. Presidential Commission on Good Government shall file all such cases, whether civil or criminal, with the
Sandiganbayan which shall have exclusive and original jurisdiction thereof." Necessarily, those who wish
to question or challenge the Commission's acts or orders in such cases must seek recourse in the same
(c) to provisionally takeover in the public interest or to prevent the disposal or dissipation
court, the Sandiganbayan, which is vested with exclusive and original jurisdiction. The Sandiganbayan's
of business enterprises and properties taken over by the government of the Marcos
decisions and final orders are in turn subject to review on certiorari exclusively by this Court.
Administration or by entities or persons close to former President Marcos, until the
transactions leading to such acquisition by the latter can be disposed of by the
appropriate authorities. 4. Having been charged with the herculean task of bailing the country-out of the financial bankruptcy and
morass of the previous regime and returning to the people what is rightfully theirs, the Commission could
ill-afford to be impeded or restrained in the performance of its functions by writs or injunctions emanating
(d) to enjoin or restrain any actual or threatened commission of acts by any person or
from tribunals co-equal to it and inferior to this Court. Public policy dictates that the Commission be not
entity that may render moot and academic, or frustrate or otherwise make ineffectual
embroiled in and swamped by legal suits before inferior courts all over the land, since the loss of time and
the efforts of the Commission to carry out its task under this Order. ... 7
energy required to defend against such suits would defeat the very purpose of its creation. Hence, section
4(a) of Executive Order No. 1 has expressly accorded the Commission and its members immunity from suit
As stressed in Baseco "So that it might ascertain the facts germane to its objectives, it [the Commission] for damages in that: "No civil action shall lie against the Commission or any member thereof for anything
was granted power to conduct investigations; require submission of evidence by subpoena ad testificandum done or omitted in the discharge of the task contemplated by this order."
and duces tecum; administer oaths; punish for contempt. It was given power also to promulgate such rules
and regulations as may be necessary to carry out the purposes of (its creation)." 8
The law and the courts frown upon split jurisdiction and the resultant multiplicity of actions. To paraphrase
the leading case of Rheem of the Phil., Inc. vs. Ferrer, et al,12-a to draw a tenuous jurisdiction line is to
2. These ample powers and authority vested in the Commission by the President in the exercise of legislative undermine stability in litigations. A piecemeal resort to one court and another gives rise to multiplicity of
power granted her in the Provisional (Freedom) Constitution 9 were confirmed in said Constitution and in suits, To force the parties to shuttle from one court to another to secure full determination of their suit is
the 1987 Constitution. Thus, the Freedom Constitution (Proc. No. 3) mandated that 'The President shall a situation gravely prejudicial to the administration of justice. The time lost, the effort wasted, the anxiety
give priority to measures to achieve the mandate of the people to: .. (d) recover ill-gotten properties amassed augmented, additional expenses incurred, the irreparable injury to the public interest – are considerations
by the leaders and supporters of the previous regime and protect the interest of the people through orders which weigh heavily against split jurisdiction.
of sequestration or freezing of assets or accounts. ..." 10 The Constitution overwhelmingly ratified by the
people in the February 2, 1987 plebiscite likewise expressly confirmed that:
Civil Case No. 54298 pending before respondent judge is expressly denominated as one "for damages with
prayer for a writ of preliminary injunction" (Annex "I," petition) filed by private respondents against the
Sec. 26. The authority to issue sequestration or freeze orders under Proclamation No. 3 Commission and then Commissioner Mary Concepcion Bautista. The said case is clearly barred by the
dated March 25, 1986 in relation to the recovery of ill- gotten wealth shall remain aforequoted immunity provision of Executive Order No. 1, as buttressed by section 4(b) thereof which
operative for not more than eighteen months after the ratification of this Constitution. further provides that: "No member or staff of the Commission shall be required to testify or produce
However, in the national interest, as certified by the President, the Congress may extend evidence in any judicial, legislative or administrative proceeding concerning matters within its official
said period. cognizance."

A sequestration or freeze order shall be issued only upon showing of a prima facie case. Executive Order No. 1 thus effectively withholds jurisdiction over cases against the Commission from all
The order and the list of the sequestered or frozen properties shall forthwith be registered lower courts, including the Court of Appeals, except the Sandiganbayan in whom is vested original and
with the proper court. For orders issued before the ratification of this Constitution, the exclusive jurisdiction and this Court. Early on, in special civil actions questioning challenged acts of the
corresponding judicial action or proceeding shall be filed within six months from its Commission, its submittal that the cited Executive Order bars such actions in this Court was given short
ratification. For those issued after such ratification, the judicial action or proceeding shrift because this Court, as the third great department of government vested with the judicial power and
shall be commenced within six months from the issuance thereof. as the guardian of the Constitution, cannot be deprived of its certiorari jurisdiction to pass upon and
determine alleged violations of the citizens' constitutional and legal rights under the Rule of Law.
5. The rationale of the exclusivity of such jurisdiction is readily understood. Given the magnitude of the competence." Applying these fundamental doctrines to the case at bar, the questions and disputes raised
past regime's "organized pillage" and the ingenuity of the plunderers and pillagers with the assistance of by respondents seeking to controvert the Commission's finding of prima facie basis for the issuance of its
the experts and best legal minds available in the market, it is a matter of sheer necessity to restrict access sequestration orders as well as the interjection of the claims of the predecessor of American Inter-fashion
to the lower courts, which would have tied into knots and made impossible the Commission's gigantic task and De Soleil Corporations, viz. Glorious Sun Phil., headed by Nemesis Co are all questions that he within
of recovering the plundered wealth of the nation, whom the past regime in the process had saddled and the primary administrative jurisdiction of the Commission that cannot be prematurely brought up to clog
laid prostrate with a huge $27 billion foreign debt that has since ballooned to $28.5 billion. the court dockets without first resorting to the exhaustion of the prescribed administrative remedies. The
administrative procedure and remedies for contesting orders of sequestration issued by the Commission
are provided for in its rules and regulations. Thus, the person against whom a writ of sequestration is
To cite an example as recorded in Baseco, "in the ongoing case filed by the government to recover from the
directed may request the lifting thereof, in writing; after due hearing or motu proprio for good cause shown,
Marcoses valuable real estate holdings in New York and the Lindenmere estate in Long Island, former
the Commission may lift the writ unconditionally or subject to such conditions as it may deem necessary,
PCGG chairman Jovito Salonga has revealed that their names do not appear on any title to the property.
taking into consideration the evidence and the circumstances of the case. The resolution of the Commission
Every building in New York is titled in the name of a Netherlands Antilles Corporation, which in turn is
is appealable to the President of the Philippines. The Commission conducts a hearing, after due notice to
purportedly owned by three Panamanian corporations, with bearer shares. This means that the shares of
the parties concerned to ascertain whether any particular asset, property or enterprise constitutes ill-gotten
this corporation can change hands any time, since they can be transferred, under the law of Panama,
wealth. The Commission's order of sequestration is not final, at the proper time, the question of ownership
without previous registration on the books of the corporation. One of the first documents that we discovered
of the sequestered properties shall be exclusively determined in the Sandiganbayan, whose own decisions
shortly after the February revolution was a declaration of trust handwritten by Mr. Joseph Bernstein on
in turn are subject to review exclusively by the Supreme Court.
April 4, 1982 on a Manila Peninsula Hotel stationery stating that he would act as a trustee for the benefit
of President Ferdinand Marcos and would act solely pursuant to the instructions of Marcos with respect to
the Crown Building; in New York." 13 Were it not for this stroke of good fortune, it would have been It should be emphasized here, as again stressed by the Court in the recent case of Republic, et al. vs. De
impossible, legally and technically, to prove and recover this ill-gotten wealth from the deposed President los Angeles, et al., G.R. No. L-30240, March 25, 1988, that "it is well-recognized principle that purely
and his family, although their ownership of these fabulous real estate holdings were a matter of public administrative and discretionary function may not be interfered with by the courts. In general, courts have
notoriety no supervising power over the proceedings and actions of the administrative departments of government.
This is generally true with respect to acts involving the exercise of judgment or discretion, and findings of
fact. There should be no thought of disregarding the traditional line separating judicial and administrative
Hence, the imperative need for the Government of the restored Republic as its first official act to create the
competence, the former being entrusted with the determination of legal questions and the latter being
Commission as an administrative and quasi- judicial commission to recover the ill-gotten wealth "amassed
limited as a result of its expertise to the ascertainment of the decisive facts." This is specially true in
from vast resources of the government by the former President, his immediate family, relatives and close
sequestration cases affected by the Commission for the recovery of the nation' s plundered wealth that may
associates." 14
affect the nation's very survival, in the light of the constitutional mandate that such sequestration or freeze
orders "shall be issued only upon showing of a prima facie case" 17 and the settled principle that findings
This is the only possible and practical way to enable the Commision to begin to do its formidable job. Thus, by administrative or quasi-judicial agencies like the Commission are entitled to the greatest respect and
in the fifties in an analogous case, the Court taking cognizance of the trend to vest jurisdiction in are practically binding and conclusive, like the factual findings of the trial and appellate courts, save where
administrative commissions and boards the power to resolve specialized disputes ruled that Congress in they are patently arbitrary or capricious or are not supported by substantial evidence.
requiring the Industrial Court's intervention in the resolution of labor-management controversies likely to
cause strikes or lockouts meant such jurisdiction to be exclusive, although it did not so expressly state in
7. The Solicitor General has herein picturesquely submitted its "more than prima facie evidence" for its
the law. The court held that under the sense-making and expeditious doctrine of primary jurisdiction ...
sequestration and provisional take-over of the subject assets and properties as follows:
the courts cannot or will not determine a controversy involving a question which is within the jurisdiction
of an administrative tribunal, where the question demands the exercise of sound administrative discretion
requiring the special knowledge, experience, and services of the administrative tribunal to determine ... the subject sequestered assets are completely owned and/or completely utilized
technical and intricate matters of fact, and of the regulatory statute administered.15 and/or otherwise taken over by the Marcoses, with due 'compensation' to their co-
participants in terms of tacitly agreed upon 'mutual benefits,' for their personal benefits
and selfish economic interests, including particularly the salting, stashing and secreting
In this era of clogged court dockets, the need for specialized administrative boards or commissions with
of dollars abroad, cum loculo et pera as witness the following, by way of summarizing
the special knowledge, experience and capability to hear and determine promptly disputes on technical
PCGG's submission, ... as supported by more than prima facie evidence:
matters or essentially factual matters, subject to judicial review in case of grave abuse of discretion, has
become well nigh indispensable. For example, the Court in the case of Ebon vs. de Guzman16 noted that
the lawmaking authority, in restoring to the labor arbiters and the NLRC their jurisdiction to award all The fun: Glorious Sun, Phils., headed by Nemesio G. Co and with private respondents
kinds of damages in labor cases, as against the previous P.D. amendment splitting their jurisdiction with herein holding 40% of the shares of stock, soon after its incorporation on June 8, 1977,
the regular courts, "evidently..... had second thoughts about depriving the Labor Arbiters and the NLRC of engaged in dollar salting, among other business unlawful manipulations. This was
the jurisdiction to award damages in labor cases because that setup would mean duplicity of suits, splitting unearthed by the Garments and Textiles Export Board (GTEB) in January 1984. At that
the cause of action and possible conflicting findings and conclusions by two tribunals on one and the same time, in the reign of Marcos, it had been decreed that the matter of dollar salting was
claim." the exclusive domain of the so-called 'Binondo Central Bank,' and any other person or
en entity found engaging therein was guilty of 'economic sabotage,' more so where the
'saboteurs' are aliens like the herein private respondents who are otherwise known as
6. The Court recently had occasion to stress once more, in G.R. No. 82218, Reyes vs. Caneba March 17,
the 'Hongkong investors.
1988, that "(T)he thrust of the related doctrines of primary administrative jurisdiction and exhaustion of
administrative remedies is that courts must allow administrative agencies to carry out their functions and
discharge their responsibilities within the specialized areas of their respective competence. Acts of an The squeeze: GTEB, under the Ministry of Trade, under then .Minister Roberto V.
administrative agency must not casually be overturned by a court, and a court should as a rule not Ongpin, on April 27,1984 choked the lifeliness of Glorious Sun in terms of cancelling its
substitute its judgment for that of the administrative agency acting within the perimeters of its own export quotas, export authorizations, and license to maintain bonded warehouses and
of disqualifying its 'major stockholders and officers from engaging in exports.' With Such proliferation of suits filed against the Commission in the trial courts, and gross disregard of the
protestations of innocence, Glorious Sun on May 25, 1984 even had the temerity to file Commission's primacy of administrative jurisdiction has of course compelled the Commission to question
a Petition with the Supreme Court (G.R. No. 67180). How did Glorious Sun extricate in turn in this Court and obtain restraining orders against the lower courts' usurpation of jurisdiction, in
itself from the tightening .screws let loose upon its neck by the then reigning Ceasar the following pending cases:
with his apparently legal contretemps?
1. G.R. No. 79901 (PCGG v. Hon. Eutropio Migriño Executive Judge, Regional Trial Court
Easy: Give unto Ceasar what is Ceasar's. In July, 1984, herein private respondents came of Pasig and Glorious Sun Fashion Manufacturing Co., Inc. and Nemesio Co )
up with two (2) joint venture agreements. and within the month, respondents themselves
withdrew their Petition in G.R. No. 67180. Pursuant to the two (2) joint venture
2. G.R. No. 80072 (PCGG v. Emilio Opinion, Presiding Judge of the Metropolitan Trial
agreements, American Inter-Fashion Co. was incorporated on August 22, 1984 and De
Court, Branch 56, Malabon, Metro Manila; Glorious Sun Fashion Manufacturing Co.,
Soleil on September 3, 1984, in each of which herein private respondents, the Hongkong
Inc. and Nemesio Co )
investors, held 33% of the shares of stock while the 'Filipino investors' held 67%.

3. G.R. No. 80121 (PCGG v. Hon. Maximo M. Japzon as Presiding Judge of the Regional
The sting:
Trial Court, Branch 36, Manila; Glorious Sun Fashion Garments Manufacturing Co.,
Inc. and Nemesio Co.)
In August, 1984, the GTEB informed Glorious Sun, Phils., that the
substantial portion of the latter's cancelled export quotas had been
4. G.R. No. 80281 (PCGG v. Hon. Felix Barbers as Presiding Judge of the Regional Trial
awarded to American Inter-Fashion and De Soleil. But while the
Court, Branch 33, Manila, Deputy Sheriff Salvador A. Pueca and Glorious Sun Fashion
Yeung brothers control only 33% of the two corporations, they,
Garments Manufacturing Co., Inc. and Nemesio Co )
however, operated and managed said corporation and utilized 100%
of their export quota allocations. The Yeung brothers paid
the nominees of the Filipino investors controlling 67%, the amount 5. G.R. No. 80395 (PCGG v. Hon. Emiho C. Opinion as Presiding Judge of Branch 56 of
of $3.75 per dozen as royalty for the utilization of the 67% export the Metropolitan Trial Court, Malabon, Metro Manila; Glorious Sun Garments
quotaof said two corporations. It may also be stated that even before Manufacturing Co., Inc. and Nemesio Co)
the export quota allocations were awarded to American Inter-Fashion
and De Soleil Glorious Sun, Phils., despite the GTEB decision, Annex
Going back to the pre-EDSA squeeze and scam, it need only be added that everything at the time seemingly
A hereof, was allowed to ship out garments worth US $1,261,794.00
ended to everybody's satisfaction. Nemesio Co's Glorious Sun, Phil. notwithstanding the GTEB's closure
under its [previously cancelled] quota from April 27 to May 30,1984.
order, continued to operate its bonded warehouse and to ship out millions of dollars of garments under its
And on petition of a foreign buyer, Generra Sports Company of
supposedly cancelled export quotas and peremptorily withdrew on August 20, 1984 19 its petition in G.R.
Seattle, Washington, Glorious Sun, Phils., was allowed to fin its 3rd
No. 67180 from this Court . The two new substitute corporations American Inter-Fashion Co. and De Soleil
and 4th fashion-quarter orders of 186,080 pieces valued at about US
cropped out of nowhere to take over the factories and export quotas and it was of public notoriety,
$1,159,531.00. As a result, Glorious Sun, Phils. continued to operate
particularly in the trade, that the family had taken over.
its bonded manufacturing warehouse ordered closed by the GTEB
(Please see GTEB Comment dated June 4, 1984 in G.R. No. 67180.).
(pp. 9-10, Consolidated Reply, May 15, 1987). 8. This is the thrust of the complaint filed on July 16, 1987 [well ahead of the Constitutional deadline of
August 2, 1987]by the Solicitor General on behalf of the Commission representing Plaintiff Republic of the
Philippines docketed as Civil Case No. 0002, PCGG-3, with the Sandiganbayan, against therein defendants
The end of the fun: All was fun that ended in fun for all the participants in the fun, the
Ferdinand E. Marcos, Imelda R. Marcos, Imelda (Imee) R. Marcos, Tomas Manotoc, Irene R. Marcos
squeeze and the sting, until of course the EDSA Revolution, when PCGG shortly
Araneta, Gregorio Ma. Araneta III and Ferdinand R. Marcos, Jr., for reversion, reconveyance, restitution,
sequestered the subject assets and provisionally took over the conservation thereof
accounting and damages, involving, among others, the subject matter of the petition at bar, namely,
pursuant to law (Secs. 2 & 3, Executive Order No. 1 and related issuances) and pursuant
American Inter-Fashion and De Soleil Corporations, together with their assets, shares of stocks, effects,
to the very Baseco case cited ironically in the Motion at bar. Again, with protestations of
evidence and records, which the Commission avers, based on documents in its possession, were "illegally
innocence, the herein private respondents through their counsel and now Congressman
acquired by said defendants in unlawful concert with one another and with gross abuse of power and
Francisco Sumulong with the game temerity have gone to the courts and other forum
authority. ... 20 The Commission correctly submits that "questions on whether or not the Plaintiff Republic
(Civil Case No. 54298 entitled Yeung Chun Kam et al. vs. PCGG, et al., RTC, Branch 151,
of the Philippines is entitled to reversion, reconveyance, restitution, accounting or damages in respect of
Pasig, Metro Manila: SEC Case No. 003144 entitled Yeung Chun Kam et al. vs. PCGG,
the above-subject matter is for the Sandiganbayan to resolve" — not in any of the scattershot cases that
et al., Securities and Exchange Commission) just as Nemesio Co allegedly President and
respondents have filed in the various courts of the land.
owner of Glorious Sun, through counsel Benjamin C. Santos, has gone to the courts
with the same protestations of innocence and equal temerity (Civil Cases Nos. 86-
37220 and 86-37221 before RTC, Branches 33 and 36, Manila; Civil Cases Nos. 761-87 The Court has so held in various cases, among them, Ofelia Trinidad vs. PCGG, et al., G.R. No. 77695, June
and 762-87, Metropolitan Trial Court, Branch 56, Malabon; Civil Case No. 54911, RTC, 16, 1987, wherein We pointed out that — "The Supreme Court is not a trier of facts: it cannot conceivably
Branch 151 Pasig, Metro Manila) and with his own 'brand' of private army to boot, go over all the minute evidence that may be presented by the PCGG. What is significant is that this Court
resorted to the midnight plunder of the subject sequestered assets under a "midnight" believes that in the instant case no abuse, much less a grave abuse of discretion has been exercised by the
writ (issued in Civil Case No. 54911 by Judge Eutropio Migriño). Obviously, the herein PCGG," and Agro-Industrial Foundation Colleges of Southern Philippines, et al. vs. Regional XI Operating
private respondent as well as Nemesio Co would like to continue their fun. 18 Team No. Five and/or the PCGG, G.R. No. 78116, July 28, 1987, wherein We ruled that the parties affected
"may raise their defenses at the appropriate time and before the proper forum [the Sandiganbayan]. They Settlement 9,669,781.00
will have their day in court." Proceeds of Auction Sale 17,231,429.00
Proceeds of Sale of
Paintings 8,879,500.00
9. What has not been appreciated by respondents and others similarly situated is that the provisional
SBTC (1st payment Seq. T/Ds) 250,000,000.00
remedies (including the encompassing and rarely availed of remedy of provisional takeover) granted to the
UPCB Bal of Profit Sharing 77,678,854.00
Commission in pursuing its life-and-death mission to recover from a well-entrenched plundering regime of
Other Cash Items
twenty years, the ill-gotten wealth which rightfully belongs to the Republic although pillaged and plundered
(Certificate of Time
in the name of dummy or front companies, in several known instances carried out with the bold and
Deposits) 1,492,951.00
mercenary, if not reckless, cooperation and assistance of members of the bar as supposed nominees, the
Contribution to CARP 140,000,000.00
full extent of which has yet to be uncovered, are rooted in the police power of the State, the most pervasive
Sub-Total P1,117,803,314.00
and the least limitable of the powers of Government since it represents "the power of sovereignty, the power
2. OTHER RECOVERED FUNDS
to govern men and things within the limits of its domain." 21Police power has been defined as the power
Government Funds in TRB/
inherent in the State "to prescribe regulations to promote the health, morals, education, good order or
National Treasury
safety, and general welfare of the people."22 Police power rests upon public necessity and upon the right of
(Casino Funds) 1,138,000,000.00
the State and of the public to self-protection. 23 " Salus populi suprema est lex" — the welfare of the people
T-Bills delivered to the
is the supreme law. For this reason, it is coextensive with the necessities of the case and the safeguards of
office of the President 100,020,000.00
public interest. Its scope expands and contracts with changing needs. 24 "It may be said in a general way
Funds from Filbakers 59,884,453.00
that the police power extends to all the great public needs. It may be put forth in aid of what is sanctioned
P1,297,904,453.00
by usage, or held by the prevailing morality or strong and preponderant opinion to be greatly and
3. RECEIVABLES
immediately necessary to the public welfare." 25
Projected Proceeds of Sale
of knick-knacks and
That the public interest and the general welfare are subserved by sequestering the purported ill-gotten Furnitures from Hachensach
assets and properties and taking over stolen properties of the government channeled to dummy or front in Olympic Towers 20,720,000.00
companies is stating the obvious. The recovery of these ill-gotten assets and properties would greatly aid Projected Proceeds of New York
our financially crippled government and hasten our national economic recovery, not to mention the fact Properties (Lindenmere,
that they rightfully belong to the people. While as a measure of self-protection, if, in the interest of general Olympic Towers Apartments,
welfare, police power, may be exercised to protect citizens and their businesses in financial and economic Makiki Properties) $9.0M 184,500,000.00
matters, it may similarly be exercised to protect the government itself against potential financial loss and SBTC Certificates of Time
the possible disruption of governmental functions. Police power as the power of self-protection on the part Deposits 731,407,842.00
of the community that the principle of self-defense bears to the individual. 26 Truly, it may be said that Sub-total P936,627,842.00
even more than self-defense, the recovery of ill-gotten wealth and of the government's own properties 4. FUNDS HELD IN TRUST
involves the material and moral survival of the nation, marked as the past regime was by the obliteration Funds with the Treasury 71,975,722.00
of any line between private funds and the public treasury and abuse of unlimited power and elimination of Funds with PNB-Ortigas 52,535,298.00
any accountability in public office, as is a matter of public record and knowledge. Sub-Total P124,511,020.00
GRAND TOTAL P3,476,846,629.00
5. JEWELRY
10 Despite all the complexities and difficulties, the original Commission created under Executive Order No.
Estimated Value P250 M
1 headed by its first chairman, now Senate President Jovito R. Salonga, and composed of Hon. Ramon
6. COMPANIES WHICH WERE AFFECTED
Diaz, the incumbent chairman, now Associate Justice Pedro L. Yap of this Court, Hon. Raul Daza, now a
BY SEQUESTRATION ORDER INCLUDING
ranking member of the House of Representatives, and Hon.. Mary Concepcion Bautista, now chairman of
RADION AND TV STATIONS
the Human Rights Commission, and the present Commission headed by Chairman Ramon Diaz have
297 Companies were subject to
produced unprecedented positive results for which they fully deserve the inadequately expressed (– at times
sequestration (including those
– ) appreciation and gratitude of the nation. The report as of the end of 1987 of Chairman Ramon Diaz
whose sequestrations was lifted and those surrendered companies
shows the great extent of the Commission's accomplishments despite its limited resources, but fortunately
by J.Y. Campos and those holding
bolstered by the spontaneous and welcome assistance of friendly foreign governments and lawyers, in the
companies whose investments in
brief period of less than two years since its creation and which are regarded yet as the tip of the iceberg:
shares were affected by Writs of
Sequestration)
PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT SUMMARY OF 74 Companies have available
ACCOMPLISHMENTS As of January 05, 1988 financial statements with
1. CASH & OTHER CASH ITEMS estimated total assets of P44B
Funds turned over to 223 Companies still without
the treasury — Gen. Fund 592,350,799.00 financial statements
Proceeds of Sale of 18 TV Stations were sequestered
Princeton Property with 38 Radio Stations were sequestered
PNB—New York 20,500,000.00 7. REAL PROPERTIES (BUILDING AND
Proceeds of New Jersey IMPROVEMENTS)
Coconut Palace Civil Case No. 2085 had not attained finality and was pending appeal when the July 19, 1989 decision was
13 Houses and improvements rendered. It is thus proper to consider the same as a supervening event the existence of which cannot just
12 Condominium units be disregarded by the appellate court. Indeed, it drastically changed the circumstances of the parties in
Offices of R.S. Benedicto, E. Garcia, etc. the civil case. To award possession of the fishpond area to petitioner is futile since he has already lost the
2 National Art and Museum Centers fishpond license by cancellation.
2 Fishponds
8. SEQUESTERED LANDS (INCLUDING
SYLLABUS
IMPROVEMENTS)
450 parcels of land (including
improvements) have been issued 1. POLITICAL LAW; ADMINISTRATIVE LAW; QUASI-JUDICIAL POWER; CANCELLATION OF A
with specific Writs of Sequestration FISHPOND LEASE AGREEMENT AFFIRMED BY THE OFFICE OF THE PRESIDENT; COURTS ARE
of which only 148 have an area of MANDATORILY TASKED TO TAKE JUDICIAL NOTICE THEREOF. — In the subject July 31, 1989 decision,
19,276,970.76 sq. m. the Office of the President dismissed petitioner's appeal and affirmed the cancellation of the subject
23 Haciendas of which 13 haciendas Fishpond Lease Agreement No. 3090 for violation of the terms thereof and/or fisheries rules. The action of
constituting RSB Farms, Inc. have an administrative agency in granting or denying, or in suspending or revoking, a license, permit, franchise,
an area of 27,859,207.00 sq m. or certificate of public convenience and necessity is administrative or quasi-judicial. The act is not purely
9. SURRENDERED LANDS BY JOSE YAO CAMPOS administrative but quasi-judicial or adjudicatory since it is dependent upon the ascertainment of facts by
Total area in sq. m. of all surrendered the administrative agency, upon which a decision is to be made and rights and liabilities determined (De
properties 19,684,435.45 sq. m. Leon, Administrative Law: Text and Cases, 1993 ed., pp. 143-144). As such, the July 31, 1989 decision of
Disposed to DAR (202 IRC titles) with the Office of the President is explicitly an official act of and an exercise of quasi-judicial power by the
total area of 13,997,529 sq. m. Executive Department headed by the highest officer of the land. It thus squarely falls under matters relative
Remaining balance of 75 titles recommended for to the executive department which courts are mandatorily tasked to take judicial notice of under Section
disposal, with total area of 5,686,906.45 sq. m. 1, Rule 129 of the Rules of Court. Judicial notice must be taken of the organization of the Executive
OTHER INFORMATION: Department, its principal officers, elected or appointed, such as the President, his powers and duties
81 Sequestered Vehicles (Francisco, Evidence [Rules 128-134], 1996 ed., p. 24, citing Canal Zone vs. Mena, 2 Canal Zone 170). The
29 Sequestered Aircrafts rendition of the subject July 31, 1989 Malacañang decision is premised on the essential function of the
13 Sequestered Vessels executive department — which is to enforce the law. In this instance, what is being enforced is Presidential
Decree No. 704 which consolidated and revised all laws and decrees affecting fishing and fisheries. Such
enforcement must be true to the policy behind such laws which is "to accelerate and promote the integrated
11. A final word about the alleged misdeeds of the OIC which the Solicitor General has denounced as false
development of the fishery industry and to keep the fishery resources of the country in optimum productive
and unfounded. 27 Such alleged misdeeds, even if taken as true for the nonce, do not and cannot detract
condition through proper conservation and protection" (Section 2, P.D. No. 704). cADSCT
from the Commission's accomplishments in the unselfish service of the nation, rendered with integrity and
honor and without the least taint of scandal and self-interest (in welcome contrast to the past regime's rape
and plunder sub-silentio of the nation!). In our free and democratic space now, with full restoration of a 2. ID.; ID.; ID.; ID.; FINDINGS OF PROPER ADMINISTRATIVE BODY, RESPECTED. — The issue of
free press and the people's liberties, it should be acknowledged with some sort of appreciation that any whether or not petitioner is still entitled to possession of the subject fishpond area is underpinned by an
such misdeeds on the part of the Commission's representative or agents have been subjected to full public ascertainment of facts. And such task belongs to the administrative body which has jurisdiction over the
exposure and the erring parties dismissed and replaced. matter — the Ministry of Agriculture and Food. The policy of the courts as regards such factual findings is
not to interfere with actions of the executive branch on administrative matters addressed to the sound
discretion of government agencies. This policy is specially applicable in the grant of licenses, permits, and
ACCORDINGLY, the writs of certiorari and prohibition shall issue. The orders of respondent Judge dated
leases, or the approval, rejection, or revocation of applications therefor (Manuel vs. Villena, 37 SCRA 745
February 16, 1987 and March 5, 1987 are hereby set aside as null and void. Respondent Judge is ordered
[1971]). Such respect is based on the time-honored doctrine of separation of powers and on the fact that
to cease and desist from any further proceeding in Civil Case No. 54298 which is hereby ordered
these bodies are considered co-equal and coordinate rank as courts. The only exception is when there is a
DISMISSED. This decision is IMMEDIATELY EXECUTORY, **
clear showing of capricious and whimsical exercise of judgment or grave abuse of discretion, which we find
absent in the case at bar. The reasons given by the Office of the President in dismissing petitioner's appeal
[G.R. No. 108338. April 17, 2001.] are quite clear. Transferring or subletting the fishpond granted to a license without the consent or approval
CALIXTO SAÑADO, petitioners, vs. THE COURT OF APPEALS and SIMEON G. NEPOMUCENO, of the administrative body concerned, as well as the failure to develop the area required by the fisheries
respondents. rules, are definitely solid and logical grounds for the cancellation of one's license. Withal, if petitioner
Jesus F. Balicanta and Simeon G. Nepomuceno for private respondent. disagrees with the decision of the Office of the President, he should have elevated the matter by petition for
Reuben B. Baldoza for petitioner. review before the Court of Appeals for the latter's exercise of judicial review. Nowhere in the record do we
SYNOPSIS find such action on petitioner's part.

When the Fishpond Lease Agreement No. 3090 issued to petitioner was cancelled, petitioner filed an appeal 3. REMEDIAL LAW; APPEAL; ISSUES RAISED FOR THE FIRST TIME ON APPEAL, NOT PROPER IF
to the Office of the President. The latter, however, dismissed the appeal and affirmed the cancellation of IT COULD HAVE BEEN RAISED DURING TRIAL; CASE AT BAR. — Rules of fair play, justice, and due
the Lease Agreement for violation of certain provisions therein. This was rendered on July 19, 1989, a few process dictate that parties cannot raise for the first time on appeal issues which they could have raised
days after the trial court ruled in Civil Case No. 2085 that petitioner should be restored to the possession but never did during the trial (Reburiano vs. Court of Appeals, 301 SCRA 342 [1999]). Significantly, private
of the fishpond area as against private respondent. The issue is the effect of the decision from the Office of respondent could have not been expected to present the July 31, 1989 decision during the trial because it
the President to Civil Case No. 2085, later modified in CA-GR CV No. 23165. HSIaAT was obviously not yet extant during that time. But one thing is for sure, petitioner knew that there was a
pending administrative case (O.P. Case No. 2958) on the subject fishpond area. He knew about the appeal (pp. 37-38, Rollo.)
since he was precisely the one who filed it, challenging the January 28, 1985 order of then Minister
Escudero which cancelled Fishpond Lease Agreement No. 3090. Hence, the presentation of the July 31,
The generative facts are chronicled as follows:
1989 decision before the appellate court had caused no undue surprise upon petitioner who, we repeat,
was the one who filed the appeal. Verily, the trial court's decision of July 19, 1989 did not attain finality.
It was appealed within the reglementary period. If the court could modify or alter a judgment even after the The controversy began on October 28, 1969 when the defunct Philippine Fisheries Commission issued in
same has become executory whenever circumstances transpire rendering its decision unjust and favor of petitioner Sañado Ordinary Fishpond Permit No. F-5810-X covering an area of fifty hectares
inequitable, as where certain facts and circumstances justifying or requiring such modification or alteration situated in Bo. Monching, Siay, Zamboanga del Sur. As a consequence, petitioner on January 6, 1972
transpired after the judgment has become final and executory (David vs. Court of Appeals, 316 SCRA 710 executed a deed of quitclaim involving twenty hectares of the original area of fifty hectares in favor of his
[1999]) and when it becomes imperative in the higher interest of justice or when supervening events warrant uncle and brother (Decision of the Office of the President, p. 46, Rollo).
it (People vs. Gallo, 315 SCRA 461 [1999]), what more if the judgment has not yet attained finality? It is
thus plain in the case at bar that the July 31, 1989 decision of the Office of the President is a substantial
On July 16, 1973, petitioner as First Party and private respondent Nepomuceno as Second Party executed
supervening event which drastically changed the circumstances of the parties to the subject fishpond lease
a contract entitled "Contract of Fishpond Development and Financing", which pertinently provided:
agreement. For to award possession to petitioner is futile since he has lost the fishpond license. HAIaEc

That the FIRST PARTY is the possessor and holder of a piece of agricultural land with an area of
DECISION
approximately FIFTY (50) HECTARES COVERED BY Ordinary Fishpond Permit No. F-5810-X situated at
Monching, Siay, Zamboanga del Sur;
MELO, J p:
That the SECOND PARTY agreed to undertake full expenses for the development of an area of THIRTY (30)
This case is one of the older ones which was raffled to undersigned ponente pursuant to the Court's hectares, out of the approximately FIFTY (50) hectares, covered by Ordinary Fishpond Permit No. F-5810-
Resolution in A.M. 00-9-03 dated February 27, 2001 and concerns a petition seeking the reversal of the X of the FIRST PARTY and which parcel is described and bounded as follows:
decision of the Court of Appeals dated September 11, 1992 and its resolution dated October 15, 1992
denying reconsideration. The Court of Appeals modified the decision of Branch 18 of the Regional Trial
xxx xxx xxx
Court of the Ninth Judicial Region stationed in Pagadian City which was rendered in favor of herein
petitioner. Disposed thus the Court of Appeals in its CA-G.R. CV No. 23165 per Justice Montenegro, with
Justices Paras and Ordoñez-Benitez concurring: DacASC That the development which shall be undertaken by the SECOND PARTY on the aforesaid area of THIRTY
(30) hectares, consists of:
WHEREFORE, premises considered, judgment is hereby rendered:
a Construction of dumps; gates, buildings and other accessories pertinent to the full development
of the fishpond area;
(a) affirming the judgment appealed from with modification as follows:

b Construction of dikes and the purchase of Bangus Fry for the said fishpond;
1. Ordering and sentencing defendant-appellant Simeon G. Nepomuceno to pay the share of
plaintiff-appellee in the amount of P168,000.00 covering the period of four (4) years from February 19,
1975 to February 19, 1979, with only eight (8) hectares considered to be productive; That the whole amount invested by the SECOND PARTY for the development of the aforesaid area for
fishpond shall first be recovered out of the products of the fishpond area;
2. Ordering defendant-appellant Simeon G. Nepomuceno to pay reasonable rental of the fishpond
area in question from February 20, 1979 to March 20, 1980 in the amount of P25,000.00; That after the full investment of the SECOND PARTY shall have been recovered, the sharing basis with the
FIRST PARTY shall immediately commence for a period of Four (4) years and the sharing basis shall be in
accordance with the following percentage:
3. Ordering and sentencing defendant-appellant Simeon G. Nepomuceno and defendant Edgar J.
Chu, to jointly pay plaintiff-appellee the reasonable rentals of the fishpond area in question at the rate of
P25,000.00 per annum from March 21, 1980 to January 2, 1985; THIRTY FIVE PERCENT (35%) of the Net per harvest — FIRST PARTY;

4. Ordering and sentencing defendant-appellant Simeon G. Nepomuceno and defendant Edgar J. SIXTY FIVE PERCENT (65%) of the Net per harvest — SECOND PARTY;
Chu, to jointly and severally pay plaintiff-appellee the sum of P100,000.00 as attorney' fees;
That after the expiration of the Four (4) years of sharing basis on the Net harvest, this contract of sharing
5. Ordering and sentencing defendant-appellant Simeon G. Nepomuceno and Edgar J. Chu to pay basis shall be renewed at the option of the second party for a period of another Four (4) years;
the costs; and
(pp. 26-27, Rollo.)
(b) reversing the decision appealed from insofar as it ordered "defendants jointly to restore possession
and control of the fishpond area in question to the plaintiff".
On July 18, 1973, the contracting parties executed a handwritten agreement, modifying the earlier
agreement by excluding the area of ten hectares already cultivated and fully developed by petitioner and
providing that "the contract will be renewed for another four (4) years with another agreement beneficial to 1. Ordering defendants jointly to restore possession and control of the fishpond area in question to
both parties." Simply stated, instead of the renewal being at the option of private respondent, it shall be the plaintiff;
renewed on terms acceptable to both petitioner and private respondent.
2. Declaring the Waiver of All Rights, Interests and Participations Over a Fishpond Area (Part)
Based on the agreement as modified by the aforestated handwritten agreement, private respondent (Exhibit "E") executed by defendant Nepomuceno in favor of defendant Edgar Chu as null and void;
proceeded with the development of the fishpond area, excluding the area of ten hectares already developed
by petitioner. CHDTIS
3. Ordering defendant Simeon Nepomuceno to pay the share of plaintiff in the amount of
P168,000.00 covering the period of four years from February 19, 1975 to February 19, 1979, with only
On September 28, 1979, the Director of Fisheries and Aquatic Resources recommended to the then Ministry eight (8) hectares considered to be productive;
of Natural Resources the conversion of Ordinary Fishpond Permit No. F-5810-X into a 25-year fishpond
loan agreement which covered a reduced area of 26.7450 hectares (p. 165, Rollo). Pursuant to said
4. Ordering defendants to jointly pay plaintiff the rentals of the fishpond area in question at the
recommendation, Fishpond Lease Agreement No. 3090 was issued to petitioner on October 8, 1979.
reasonable rate of P25,000.00 per annum reckoned from February 19, 1979 up to the time the same
fishpond area shall have been duly restored to the possession of the plaintiff;
On March 20, 1980, private respondent waived his rights, interest, and participation over the fishpond
area in favor of one Edgar J. Chu.
5. Ordering defendants jointly and severally pay plaintiff the sum of P100,000.00 as attorney's fees;
and
On March 28, 1980, apparently to oppose the issuance of the 25-year fishpond lease agreement in favor of
petitioner, private respondent informed the Bureau of Fisheries and Aquatic Resources in writing of his
6. To pay the costs.
financing/development contract with petitioner and that the fishpond was almost fully developed at his
expense (Ibid.).
IT IS SO ORDERED.;
Parenthetically, sometime that year, private respondent submitted to petitioner an accounting of the
income or proceeds of the fishpond as well as his expenditures in the development thereof (tsn, July 5, (pp. 24-25, Rollo.)
1983, pp. 10-14). This document, marked as Exhibit "D" and dated February 19, 1975, showed earnings
of the fishpond in the amount of P98,106.35, expenses and advances in the sum of P87,405.25, and cash
Private respondent and Edgar J. Chu both appealed the trial court's decision. However, for failure to file
on hand of P10,701.10. The original copy thereof was filed with the Bureau of Fisheries and Development
brief, Chu's appeal was dismissed.
as evidenced by the stamp of the office thereon.

For his part, private respondent maintained that: (a) the trial court erred in ruling that private respondent
On July 17, 1981, petitioner filed a complaint against private respondent and Edgar J. Chu with the
has fully recovered his financial investment in the fishpond area in question as of February 19, 1975 (hence
regional trial court docketed as Civil Case No. 2085 for recovery of possession and damages, wherein he
the sharing of the net harvest should not commence on said date); (b) the trial court erred in ruling that
alleged that on February 19, 1975, private respondent had already recovered his investment in full; that
private respondent cannot waive his right to finance the development of the fishpond area; and (c) the trial
as of said date, the total earnings had amounted to P98,106.35 leaving an excess of P10,701.10 to be
court committed grave error and injustice in not dismissing petitioner's complaint and in ordering
divided between petitioner and private respondent at 35-65 sharing; that the 4-year period during which
respondent to pay petitioner the amounts of P168,000.00 as petitioner's share covering the period
petitioner and private respondent would share the net harvest commenced on February 19, 1975 and
beginning February 19, 1975 to February 19, 1979, P25,000.00 per annum constituting reasonable rentals
expired on February 18, 1979; that after February 18, 1975, private respondent has not accounted for the
from February 19, 1979 up to the time the fishpond area shall have been restored to petitioner, as well as
income of the fishpond and has failed and refused, in gross and evident bad faith despite renewed and
P100,000.00 as attorney's fees.
repeated demands, to deliver petitioner's share of the net harvest for four years which totaled P250,000.00
more or less.
As mentioned earlier, the Court of Appeals affirmed the trial court's decision as regards petitioner's share
in the produce from February 19, 1975 to February 19, 1979 (P168,000.00), the reasonable rental of the
Meanwhile, during the pendency of the aforesaid Civil Case No. 2085 with the trial court, an order was
fishpond area (P25,000.00 per annum) from February 20, 1979 to March 20, 1980 and from March 21,
issued by then Minister of Agriculture and Food Salvador H. Escudero III, on January 28, 1985 cancelling
1980 to January 2, 1986, as well as attorney's fees (P100,000.00), and costs.
Fishpond Lease Agreement No. 3090 and forfeiting the improvements thereon in favor of the government.
Later, said order was reconsidered to the extent that private respondent was given priority to apply for the
area and that his improvements thereon were not considered forfeited in favor of the government. Petitioner The petition before us hinges on the argument that the Court of Appeals entertained evidence and/or other
elevated the matter to the Office of the President but his appeal was dismissed in a decision rendered on matters not duly covered or taken up in the trial of Civil Case No. 2085. Petitioner posits that the appellate
July 31, 1989. TaEIAS court committed grave abuse of discretion in doing so and in applying said matters in its disposition of the
case. Verily, petitioner's grumble and protest is confined to that portion of the June 19, 1989 decision of
the Court of Appeals directing "defendants jointly to restore possession and control of the fishpond area to
On June 19, 1989, the trial court rendered its decision in Civil Case No. 2085, the dispositive portion of
the plaintiff." HEcaIC
which reads as follows:

Petitioner points out that the July 31, 1989 decision rendered by the Office of the President through Deputy
WHEREFORE, IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered in favor of the plaintiff
Executive Secretary Magdangal B. Elma is a new matter which should not have been treated by the
and against the defendants:
appellate court with legal force and effect because "it was merely incidental to the propriety or impropriety
of the issuance of a writ of preliminary mandatory injunction respecting the earlier Writ of Execution later assigned its leasehold rights in favor of the Development Bank of the Philippines in consideration of
granted by the trial court in favor of Calixto Sañado" (p. 19, Rollo). the amount of P653,153.46; and (3) petitioner's failure to develop forty percent of the area within three
years and to completely develop the remaining portions within five years, both to commence from the date
of the issuance of the lease agreement in accordance with the terms and conditions of the lease agreement
In this light, petitioner mentions that on December 11, 1990, during the pendency of the appeal of Civil
(out of the whole area occupied by petitioner, only four hectares more or less, corresponding to 60% to 70%
Case No. 2085, he filed with the appellate court a motion for execution pending appeal, stating that the
was developed). The appellate court thus held that all these violations are recognized grounds for the
appeal of Edgar J. Chu (who was said to be the actual possessor of the area) had been dismissed. The
termination and cancellation of a fishpond lease agreement under Section 9 of the FAO No. 125, series of
appellate court denied the same. On May 21, 1991, petitioner filed another motion for issuance of writ of
1979. As a last note, the subject decision stated that it mainly deals with the validity of the cancellation by
execution, claiming that the Sheriff's Return of Service dated June 6, 1991 stated that "the restoration to
the Ministry of Agriculture and Food of petitioner's Fishpond Lease Agreement No. 3090 for violation of the
and/or placement of plaintiff Sañado thereof on said fishpond area in controversy . . . ., are hereby
terms thereof and/or fisheries rules, and that a decision in Civil Case No. 2085 which is a possessory
considered complied with." Thereafter private respondent filed a petition for relief from judgment and or
action has hardly any bearing in the resolution of the aforestated appeal.
execution which resulted in an order dated June 7, 1991 restoring possession of the fishpond area to him.
Petitioner then proceeds to mention that on June 11, 1991, private respondent filed with the appellate
court an "Ex-Parte Urgent Motion for Issuance of Writ of Preliminary Mandatory Injunction", alleging that True, the subject July 31, 1989 decision was rendered a few days after the trial court handed down its
the trial court has not yet issued the corresponding writ of preliminary mandatory injunction to restore decision ordering herein petitioner to be restored to the possession of the subject fishpond area. However,
private respondent to the possession of the subject fishpond area. Petitioner stresses that it was at this such fact is of no moment considering that said decision of the trial court did not attain finality and was
particular stage of the proceedings that the subject July 31, 1989 Malacañang decision was initially seasonably appealed. In other words, the July 31, 1989 decision was rendered while Civil Case No. 2085
mentioned by private respondent who thereby argued that the trial court failed to consider that prior to the was pending appeal. It is thus proper to consider the same a supervening event the existence of which
issuance of the writ of execution, the restoration of the subject fishpond to herein petitioner would in effect cannot just be disregarded by the appellate court.
destroy the essence of said Malacañang decision which affirmed the cancellation of the Fishpond Lease
Agreement No. 3050. In consequence thereof, the appellate court issued a resolution dated June 14, 1991
What is the nature of the July 31, 1989 Malacañang decision and what is its effect on the resolution of
ordering that anyone who had anything to do with the enforcement of the writ of execution issued by the
Civil Case No. 2085? The action of an administrative agency in granting or denying, or in suspending or
trial court was restrained temporarily from enforcing said writ, such that private respondent, who was
revoking, a license, permit, franchise, or certificate of public convenience and necessity is administrative
acknowledged to be in possession of the subject property consisting of five ponds at the time of the issuance
or quasi-judicial. The act is not purely administrative but quasi-judicial or adjudicatory since it is
of the aforesaid writs; should remain in the possession thereof until further notice by the court. Later, the
dependent upon the ascertainment of facts by the administrative agency, upon which a decision is to be
trial court itself ordered the immediate restoration of possession of the subject fishpond area to herein
made and rights and liabilities determined (De Leon, Administrative Law: Text and Cases, 1993 ed., pp.
private respondent. An exchange of pleadings followed where, as an attachment to his comment, private
143-144). As such, the July 31, 1989 decision of the Office of the President is explicitly an official act of
respondent presented a photostat copy of the subject July 31, 1989 decision of the Office of the President.
and an exercise of quasi-judicial power by the Executive Department headed by the highest officer of the
land. It thus squarely falls under matters relative to the executive department which courts are mandatorily
Setting aside the factual ramifications of the instant case, we find that the only issue thereof refers to the tasked to take judicial notice of under Section 1, Rule 129 of the Rules of Court. Judicial notice must be
legal effect and evidentiary weight of the July 19, 1989 decision rendered by the Office of the President in taken of the organization of the Executive Department, its principal officers, elected or appointed, such as
relation to Civil Case No. 2085 and CA-G.R. CV No. 23165. CHDAEc the President, his powers and duties (Francisco, Evidence [Rules 128-134], 1996 ed., p. 24, citing Canal
Zone vs. Mena, 2 Canal Zone 170). AEIcTD
Let us first examine the premise and basis of the aforesaid July 31, 1989 decision of the Office of the
President. A perusal thereof reveals that it resolved the appeal filed by petitioner and the Samahang The rendition of the subject July 31, 1989 Malacañang decision is premised on the essential function of
Kabuhayan ng Barangay Monching from the order of the then Minister of Agriculture and Food, dated the executive department — which is to enforce the law. In this instance, what is being enforced is
January 28, 1985 which cancelled the Fishpond Lease Agreement No. 3090 issued to petitioner and Presidential Decree No. 704 which consolidated and revised all laws and decrees affecting fishing and
forfeited in favor of the government the improvements thereof, including the bond, and ruled that the area fisheries. Such enforcement must be true to the policy behind such laws which is "to accelerate and
with the improvements shall be disposed of in accordance with Presidential Decree No. 704 (Revising and promote the integrated development of the fishery industry and to keep the fishery resources of the country
Consolidating All Laws and Decrees Affecting Fishing and Fisheries) to any qualified applicant pursuant to in optimum productive condition through proper conservation and protection" (Section 2, P.D. No. 704).
applicable rules and regulations thereon. Said cancellation was premised on the following factors: (1)
violation by petitioner of the terms of the fishpond lease agreement and of Fisheries Administrative Order
Further, the issue of whether or not petitioner is still entitled to possession of the subject fishpond area is
(FAO) 125 (s. 1979) when he transferred/subleased his leasehold rights without government approval; and
underpinned by an ascertainment of facts. And such task belongs to the administrative body which has
(2) failure of petitioner to comply with the development requirements.
jurisdiction over the matter — the Ministry of Agriculture and Food. The policy of the courts as regards
such factual findings is not to interfere with actions of the executive branch on administrative matters
In the subject July 31, 1989 decision, the Office of the President, through then Deputy Executive Secretary addressed to the sound discretion of government agencies. This policy is specially applicable in the grant
Magdangal B. Elma, upholding the January 28, 1985 Escudero Order, dismissed petitioner's appeal and of licenses, permits, and leases, or the approval, rejection, or revocation of applications therefor (Manuel
affirmed the cancellation of the subject Fishpond Lease Agreement No. 3090 on the following grounds: (1) vs. Villena, 37 SCRA 745 [1971]). Such respect is based on the time-honored doctrine of separation of
Section 5(k) of Fisheries Administrative Order (FAO) No. 125 prohibits the awardee of a fishpond lease powers and on the fact that these bodies are considered co-equal and coordinate rank as courts. The only
agreement from transferring or subletting the fishpond granted to him without the previous consent or exception is when there is a clear showing of capricious and whimsical exercise of judgment or grave abuse
approval of the ministry concerned, and similarly, the lessee shall not sublet or enter into a sub-lease of discretion, which we find absent in the case at bar.
contract over the area or portion covered by the fishpond lease agreement; (2) the Sañado-Nepomuceno
contract is not the only instance when petitioner transferred/subleased his rights over the fishpond area
The reasons given by the Office of the President in dismissing petitioner's appeal are quite clear.
without approval of the appropriate ministry head since on January 6, 1972, he transferred 20 hectares of
Transferring or subletting the fishpond granted to a licensee without the consent or approval of the
the original 50-hectare fishpond area to his brother and uncle, and on September 12, 1982, he transferred
administrative body concerned, as well as the failure to develop the area required by the fisheries rules,
his rights over the 26.7450 area to the Samahang Kabuhayan ng Barangay Monching Association which
are definitely solid and logical grounds for the cancellation of one's license. Withal, if petitioner disagrees
with the decision of the Office of the President, he should have elevated the matter by petition for review Verily, the trial court's decision of July 19, 1989 did not attain finality. It was appealed within the
before the Court of Appeals for the latter's exercise of judicial review. Nowhere in the record do we find reglementary period. If the court could modify or alter a judgment even after the same has become
such action on petitioner's part. executory whenever circumstances transpire rendering its decision unjust and inequitable, as where
certain facts and circumstances justifying or requiring such modification or alteration transpired after the
judgment has become final and executory (David vs. Court of Appeals, 316 SCRA 710 [1999]) and when it
Understandably, to restore petitioner to the possession of the fishpond area is to totally disregard the July
becomes imperative in the higher interest of justice or when supervening events warrant it (People vs. Gallo,
31, 1989 decision of the Office of the President which can hardly be described as an unrelated matter,
315 SCRA 461 [1999]), what more if the judgment has not yet attained finality? CAHTIS
considering its patent implications in the result of both Civil Case No. 2085 and CA-G.R. CV No. 23165.
For how could the appellate court award possession to the very same party whose license has been
cancelled by the executive or administrative officer tasked to exercise licensing power as regards the It is thus plain in the case at bar that the July 31, 1989 decision of the Office of the President is a
development of fishpond areas, and which cancellation has been sustained by the Office of the President? substantial supervening event which drastically changed the circumstances of the parties to the subject
Petitioner must remember the essence of the grant of a license. It is not a vested right given by the fishpond lease agreement. For to award possession to petitioner is futile since he has lost the fishpond
government but a privilege with corresponding obligations and is subject to governmental regulation. license. In point is our ruling in Baluyot vs. Guiao (315 SCRA 396 [1997]) where we held that judgment is
Hence, to allow petitioner to possess the subject area is to run counter to the execution and enforcement not confined to what appears on the face of the decision, but also covers those necessarily included therein
of the July 31, 1989 decision which would easily lose its "teeth" or force if petitioner were restored in or necessary thereto. For example, where the ownership of a parcel of land is decreed in the judgment, the
possession. In addition, as pointed out in the July 31, 1989 decision, petitioner is not assailing the May delivery of the possession of the land should be considered included in the decision, it appearing that the
14, 1985 order of Minister Escudero which gave private respondent priority in applying for the subject area defeated party's claim to the possession thereof is based on his claim of ownership. By analogy, the July
and which considered respondent's improvements thereon as not forfeited in favor of the government. In 31, 1989 decision, is not confined to the validity of the cancellation by the Ministry of Agriculture and Food
this regard, the July 31, 1989 decision stated: HAECID of petitioner's Fishpond Lease Agreement No. 3090 for violation of the terms thereof and/or the fisheries
rules. The right to possess the subject fishpond area is necessarily included in the decision. The
cancellation or revocation of petitioner's license necessarily eliminated his right to possess the same since
The Escudero Order of May 14, 1985 stands unchallenged. As such, the herein appeal of Sañado, et al.,
the new licensee would then be the one to enjoy this right. SEACTH
from the Escudero Order of January 25, 1985 remains the only obstacle, on the administrative level, to the
said May 14, 1985 Order being considered in force and effect.
WHEREFORE, the instant petition is hereby DENIED for lack of merit. The September 11, 1992 decision
of the Court of Appeals in CA-G.R. CV No. 23165 is hereby AFFIRMED.
(p. 50, Rollo.)

SO ORDERED.
Accordingly, the Court of Appeals correctly held —

. . . The issue (on waiver of rights and interests and participation by respondent) is rendered moot and
academic by the order of then MAF Minister Salvador H. Escudero III cancelling Fishpond Lease Agreement
No. 3090 of plaintiff-appellee which was affirmed on appeal by the Office of the President. The lease
agreement having been cancelled, possession of the fishpond area covered by the lease agreement cannot
be returned to plaintiff-appellee even if the waiver of rights, interests, and participation is held null and
void . . .

(p. 31, Rollo.)

In addition, petitioner considers the July 31, 1989 decision a foreign matter which was not raised in the
court below and hence should not have been treated by the Court of Appeals with legal force and effect. To
reiterate, petitioner also notes that the decision of the Office of the President is dated July 31, 1989,
whereas the decision of Civil Case No. 2085 was rendered June 19, 1989. Further, petitioner argues that
the subject decision of the Office of the President was merely incidental to the propriety or impropriety of
the issuance of a writ of preliminary mandatory injunction to restore private respondent to the possession
of the fishpond area after a writ of execution was issued by the trial court in favor of petitioner.

Rules of fair play, justice, and due process dictate that parties cannot raise for the first time on appeal
issues which they could have raised but never did during the trial (Reburiano vs. Court of Appeals, 301
SCRA 342 [1999]). Significantly, private respondent could have not been expected to present the July 31,
1989 decision during the trial because it was obviously not yet extant during that time. But one thing is
for sure, petitioner knew that there was a pending administrative case (O.P. Case No. 2958) on the subject
fishpond area. He knew about the appeal since he was precisely the one who filed it, challenging the
January 28, 1985 order of then Minister Escudero which cancelled Fishpond Lease Agreement No. 3090.
Hence, the presentation of the July 31, 1989 decision before the appellate court had caused no undue
surprise upon petitioner who, we repeat, was the one who filed the appeal.

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