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G.R. No. 96266 July 18, 1991 ERNESTO M. MACEDA, petitioner, vs.

ENERGY REGULATORY BOARD, CALTEX (Philippines), INC., PILIPINAS SHELL PETROLEUM CORPORATION AND PETRON CORPORATION, respondents. G.R. No. 96349 July 18, 1991 EUGENIO O. ORIGINAL, IRENEO N. AARON, JR., RENE LEDESMA, ROLANDO VALLE, ORLANDO MONTANO, STEVE ABITANG, NERI JINON, WILFREDO DELEONIO, RENATO BORRO, RODRIGO DE VERA, ALVIN BAYUANG, JESUS MELENDEZ, NUMERIANO CAJILIG JR., RUFINO DE LA CRUZ AND JOVELINO G. TIPON, petitioners, vs. ENERGY REGULATORY BOARD, CALTEX (Philippines), INC., PILIPINAS SHELL PETROLEUM CORPORATION AND PETRON CORPORATION, respondents. G.R. No. 96284 July 18,1991 CEFERINO S. PAREDES, JR., petitioner, vs. ENERGY REGULATORY BOARD, CALTEX (Philippines), INC., PILIPINAS SHELL, INC. AND PETROPHIL CORPORATION, respondents. RESOLUTION

MEDIALDEA, J.:p In G.R. No. 96266, petitioner Maceda seeks nullification of the Energy Regulatory Board (ERB) Orders dated December 5 and 6, 1990 on the ground that the hearings conducted on the second provisional increase in oil prices did not allow him substantial crossexamination, in effect, allegedly, a denial of due process. The facts of the case are as follows: Upon the outbreak of the Persian Gulf conflict on August 2, 1990, private respondents oil companies filed with the ERB their respective applications on oil price increases (docketed as ERB Case Nos. 90-106, 90-382 and 90-384, respectively). On September 21, 1990, the ERB issued an order granting a provisional increase of P1.42 per liter. Petitioner Maceda filed a petition for Prohibition on September 26, 1990 (E. Maceda v. ERB, et al., G.R. No. 95203), seeking to nullify the provisional increase. We dismissed the petition on December 18, 1990, reaffirming ERB's authority to grant provisional increase even without prior hearing, pursuant to Sec. 8 of E.O. No. 172, clarifying as follows: What must be stressed is that while under Executive Order No. 172, a hearing is indispensable, it does not preclude the Board from ordering, ex-parte, a provisional increase, as it did here, subject to its final disposition of whether or not: (1) to make it permanent; (2) to reduce or increase it further; or (3) to deny the application. Section 3, paragraph (e) is akin to a temporary restraining order or a writ of preliminary attachment issued by the courts, which are given ex-parte and which are subject to the resolution of the main case. Section 3, paragraph (e) and Section 8 do not negate each other, or otherwise, operate exclusively of the other, in that the Board may resort to one but not to both at the same time. Section 3(e) outlines the jurisdiction of the Board and the grounds for which it may decree a price adjustment, subject to the requirements of notice and hearing. Pending that, however, it may order, under Section 8, an authority to increase provisionally, without need of a hearing, subject to the final outcome of the proceeding. The Board, of course, is not prevented from conducting a hearing on the grant of provisional authority-which is of course, the better procedure however, it cannot be stigmatized later if it failed to conduct one. (pp. 129-130, Rollo) (Emphasis supplied) In the same order of September 21, 1990, authorizing provisional increase, the ERB set the applications for hearing with due notice to all interested parties on October 16, 1990. Petitioner Maceda failed to appear at said hearing as well as on the second hearing on October 17, 1990.

To afford registered oppositors the opportunity to cross-examine the witnesses, the ERB set the continuation of the hearing to October 24, 1990. This was postponed to November 5, 1990, on written notice of petitioner Maceda. On November 5, 1990, the three oil companies filed their respective motions for leave to file or admit amended/supplemental applications to further increase the prices of petroleum products. The ERB admitted the respective supplemental/amended petitions on November 6, 1990 at the same time requiring applicants to publish the corresponding Notices of Public Hearing in two newspapers of general circulation (p. 4, Rollo and Annexes "F" and "G," pp. 60 and 62, Rollo). Hearing for the presentation of the evidence-in-chief commenced on November 21, 1990 with ERB ruling that testimonies of witnesses were to be in the form of Affidavits (p. 6, Rollo). ERB subsequently outlined the procedure to be observed in the reception of evidence, as follows: CHAIRMAN FERNANDO: Well, at the last hearing, applicant Caltex presented its evidence-in-chief and there is an understanding or it is the Board's wish that for purposes of good order in the presentation of the evidence considering that these are being heard together, we will defer the cross-examination of applicant Caltex's witness and ask the other applicants to present their evidence-in-chief so that the oppositors win have a better Idea of what an of these will lead to because as I mentioned earlier, it has been traditional and it is the intention of the Board to act on these applications on an industry-wide basis, whether to accept, reject, modify or whatever, the Board win do it on an industry wide basis, so, the best way to have (sic) the oppositors and the Board a clear picture of what the applicants are asking for is to have all the evidence-in-chief to be placed on record first and then the examination will come later, the cross-examination will come later. . . . (pp. 5-6, tsn., November 23, 1990, ERB Cases Nos. 90-106, 90382 and 90-384). (p. 162, Rollo) Petitioner Maceda maintains that this order of proof deprived him of his right to finish his cross-examination of Petron's witnesses and denied him his right to cross-examine each of the witnesses of Caltex and Shell. He points out that this relaxed procedure resulted in the denial of due process. We disagree. The Solicitor General has pointed out: . . . The order of testimony both with respect to the examination of the particular witness and to the general course of the trial is within the discretion of the court and the exercise of this discretion in permitting to be introduced out of the order prescribed by the rules is not improper (88 C.J.S. 206-207). Such a relaxed procedure is especially true in administrative bodies, such as the ERB which in matters of rate or price fixing is considered as exercising a quasi-legislative, not quasi-judicial, function As such administrative agency, it is not bound by the strict or technical rules of evidence governing court proceedings (Sec. 29, Public Service Act; Dickenson v. United States, 346, U.S. 389, 98 L. ed. 132, 74 S. St. 152). (Emphasis supplied) In fact, Section 2, Rule I of the Rules of Practice and Procedure Governing Hearings Before the ERB provides that These Rules shall govern pleadings, practice and procedure before the Energy Regulatory Board in all matters of inquiry, study, hearing, investigation and/or any other proceedings within the jurisdiction of the Board. However, in the broader interest of justice, the Board may, in any particular matter, except itself from these rules and apply such suitable procedure as shall promote the objectives of the Order. (pp. 163-164, Rollo) Petitioner Maceda also claims that there is no substantial evidence on record to support the provisional relief. We have, in G.R. Nos. 95203-05, previously taken judicial notice of matters and events related to the oil industry, as follows: . . . (1) as of June 30, 1990, the OPSF has incurred a deficit of P6.1 Billion; (2) the exchange rate has fallen to P28.00 to $1.00; (3) the country's balance of payments is expected to reach $1 Billion; (4) our trade deficit is at P2.855 Billion as of the first nine months of the year. . . . (p. 150, Rollo)

The Solicitor General likewise commented: Among the pieces of evidence considered by ERB in the grant of the contested provisional relief were: (1) certified copies of bins of lading issued by crude oil suppliers to the private respondents; (2) reports of the Bankers Association of the Philippines on the peso-dollar exchange rate at the BAP oil pit; and (3) OPSF status reports of the Office of Energy Affairs. The ERB was likewise guided in the determination of international crude oil prices by traditional authoritative sources of information on crude oil and petroleum products, such as Platt's Oilgram and Petroleum Intelligence Weekly. (p. 158, Rollo) Thus, We concede ERB's authority to grant the provisional increase in oil price, as We note that the Order of December 5, 1990 explicitly stated: in the light, therefore, of the rise in crude oil importation costs, which as earlier mentioned, reached an average of $30.3318 per barrel at $25.551/US $ in September-October 1990; the huge OPSF deficit which, as reported by the Office of Energy Affairs, has amounted to P5.7 Billion (based on filed claims only and net of the P5 Billion OPSF) as of September 30, 1990, and is estimated to further increase to over P10 Billion by end December 1990; the decision of the government to discontinue subsidizing oil prices in view of inflationary pressures; the apparent inadequacy of the proposed additional P5.1 Billion government appropriation for the OPSF and the sharp drop in the value of the peso in relation to the US dollar to P28/US $, this Board is left with no other recourse but to grant applicants oil companies further relief by increasing the prices of petroleum products sold by them. (p. 161, Rollo) Petitioner Maceda together with petitioner Original (G.R. No. 96349) also claim that the provisional increase involved amounts over and above that sought by the petitioning oil companies. The Solicitor General has pointed out that aside from the increase in crude oil prices, all the applications of the respondent oil companies filed with the ERB covered claims from the OPSF. We shall thus respect the ERB's Order of December 5, 1990 granting a provisional price increase on petroleum products premised on the oil companies' OPSF claims, crude cost peso differentials, forex risk for a subsidy on sale to NPC (p. 167, Rollo), since the oil companies are "entitled to as much relief as the fact alleged constituting the course of action may warrant," (Javellana v. D.O. Plaza Enterprises, Inc., G.R. No. L-28297, March 30, 1970, 32 SCRA 261 citing Rosales v. Reyes, 25 Phil. 495; Aguilar v. Rubiato, 40 Phil. 470) as follows: Per Liter Weighted Petron Shell Caltex Average Crude Cost P3.11 P3.6047 P2.9248 P3.1523 Peso Cost Diffn'l 2.1747 1.5203 1.5669 1.8123 Forex Risk Fee -0.1089 -0,0719 -0.0790 -0.0896 Subsidy on Sales to NPC 0.1955 0.0685 0.0590 0.1203 Total Price Increase Applied for P59.3713 P5.1216 P4.4717 P4.9954

Less: September 21 Price Relief Actual Price Increase P1.42 Actual Tax Reduction: Ad Valorem Tax (per Sept. 1, 1990 price build-up) P1.3333 Specific Tax (per Oct. 5, 1990 price build-up) .6264 .7069 2.1269 Net Price Increase Applied for 2.8685 Nonetheless, it is relevant to point out that on December 10, 1990, the ERB, in response to the President's appeal, brought back the increases in Premium and Regular gasoline to the levels mandated by the December 5, 1990 Order (P6.9600 and P6.3900, respectively), as follows: Product In Pesos Per Liter OPSF Premium Gasoline 6.9600 Regular Gasoline 6.3900 Avturbo 4.9950 Kerosene 1.4100 Diesel Oil 1.4100 Fuel Oil/Feedstock 0.2405 LPG 1.2200 Asphalt 2.5000 Thinner 2.5000 In G.R. No. 96349, petitioner Original additionally claims that if the price increase will be used to augment the OPSF this will constitute illegal taxation. In the Maceda case, (G.R. Nos. 95203-05, supra) this Court has already ruled that "the Board Order authorizing the proceeds generated by the increase to be deposited to the OPSF is not an act of taxation but is authorized by Presidential Decree No. 1956, as amended by Executive Order No. 137. The petitions of E.O. Original et al. (G.R. No. 96349) and C.S. Povedas, Jr. (G.R. No. 96284), insofar as they question the ERB's authority under Sec. 8 of E.O. 172, have become moot and academic.

We lament Our helplessness over this second provisional increase in oil price. We have stated that this "is a question best judged by the political leadership" (G.R. Nos. 95203-05, G.R. Nos. 95119-21, supra). We wish to reiterate Our previous pronouncements therein that while the government is able to justify a provisional increase, these findings "are not final, and it is up to petitioners to demonstrate that the present economic picture does not warrant a permanent increase." In this regard, We also note the Solicitor General's comments that "the ERB is not averse to the idea of a presidential review of its decision," except that there is no law at present authorizing the same. Perhaps, as pointed out by Justice Padilla, our lawmakers may see the wisdom of allowing presidential review of the decisions of the ERB since, despite its being a quasi-judicial body, it is still "an administrative body under the Office of the President whose decisions should be appealed to the President under the established principle of exhaustion of administrative remedies," especially on a matter as transcendental as oil price increases which affect the lives of almost an Filipinos. ACCORDINGLY, the petitions are hereby DISMISSED. SO ORDERED. Narvasa, Melencio-Herrera, Feliciano, Gancayco, Bidin, Grio-Aquino and Regalado, JJ., concur. Davide, J., concurs in the result. Fernan, C.J., took no part.

Separate Opinions

PARAS, J., dissenting: I dissent. As I have long previously indicated, the ERB has absolutely no power to tax which is solely the prerogative of Congress. This is what the ERB is precisely doing by getting money from the people to ultimately subsidize the ravenous oil companies. Additionally, the stubborn refusal of the ERB to effectively rollback oil prices is a continuing bestial insult to the intelligence of our countrymen, and a gross abandonment of the people in their hour of economic misery. I therefore vote for a complete and effective rollback of all oil prices. Cruz, J., concurs. PADILLA, J., dissenting: I regret that I can not concur in the majority opinion. In the matter of price increases of oil products, which vitally affects the people, especially those in the middle and low income groups, any increase, provisional or otherwise, should be allowed only after the Energy Regulatory Board (ERB) shall have fully determined, through bona fide and full-dress hearings, that it is absolutely necessary and by how much it shall be effected. The people, represented by reputable oppositors, deserve to be given full opportunity to be heard in their opposition to any increase in the prices of fuel. The right to be heard includes not only the right to present one's case and submit evidence in support thereof, but also the right to confront and cross-examine the witnesses of the adverse parties. Because of the procedure adopted by the ERB in the reception of evidence leading to the price increases of 5 and 6 December 1990, petitioner Maceda was not able to finish his cross-examination of Petron's sole witness. And, even before each of the witnesses of Shell and Caltex could be cross-examined by petitioners and before they could present evidence in support of their opposition to the increase, the ERB had already issued its 5 December 1990 order allowing a "provisional increase" sought by the oil companies in their respective supplemental applications. That there were postponements of scheduled hearings before the ERB, at the instance of oppositor Maceda, did not justify a denial of the right of oppositors to be heard. The postponements were not intended to delay the proceedings. In fact, the resetting of the scheduled hearings on November 14, 15 and 16 to a later date, upon motion of petitioner Maceda, was to enable him to file a written opposition to the supplemental applications filed by the oil companies.

The ERB acted hastily in granting the provisional increases sought by the oil companies even before the oppositors could submit evidence in support of their opposition. The fact that the questioned orders merely allowed a provisional increase is beside the point, for past experiences have shown that so-called provisional increases" allowed by the ERB ultimately became permanent. ERB's claim that the second provisional increase was duly supported by evidence, is belied by its own act of modifying said order (of provisional increase) not only once but twice, upon the "request" of the President. First, the ERB rolled back the prices of fuel just a day after it issued the questioned order, altering the allocation of the increase. Second, on 10 December 1990, the ERB further modified the price of petroleum products resulting in reduction of the weighted average provisional increase from P2.82 to P2.05 per liter, but only after the President had announced that she would meet with the leaders of both Houses of Congress, to discuss the creation of a special fund to be raised from additional taxes, to subsidize the prices of petroleum products. 1 These acts of the ERB ostensibly sparked by "presidential requests" clearly demonstrate that the evidence did not, in the first place, justify the price increases it had ordered on 5 and 6 December 1990. Furthermore, the ERB never came out with a categorical and official declaration of how much was the so-called deficit of the Oil Price Stabilization Fund (OPSF) and how much of the oil price increases was intended to cover such deficit. In the midst of a national crisis related to oil price increases, each and every one is called upon to assume his/its share of continuing sacrifices. The public, the government, as well as the oil companies should work hand in hand in solving the present problem that confronts us. We are not unmindful of the fact that the oil companies are profit-oriented. However, profits should not be their only concern in times of deepening inability of the people to cope with their prices with "built-in-margins". A reduction of profits during these crucial and trying times, is certainly in order considering that in the past, the oil companies had unquestionably made tremendous profits. In view of the foregoing, I vote to GRANT the petition for the nullification of the 5 and 6 December 1990 orders of the ERB and for a roll-back of the prices of oil products to levels existing before 5 and 6 December 1990 until hearings before the ERB are finally concluded. Before closing, I also would like to submit for congressional consideration two (2) proposals in the public interest. They are: (1) to do away with the present scheme of allowing provisional price increases of oil products. This scheme, to my mind, is misleading and serves as an excuse for unilateral and arbitrary ERB-action. As already noted, these provisional price increases are, to all intents and purposes, permanent when fixed. To that extent, the scheme is a fraud on the people. (2) all decisions and orders of the ERB should be expressly made appealable by statute to the President of the Philippines whose decisions shall be final, except in cases involving questions of law or grave abuse of discretion which may be elevated to the Supreme Court in a special civil action for certiorari under Rule 65 of the Rules of Court. While at present, decisions and orders of the ERB are, in my considered opinion, appealable to the President under the principle of "exhaustion of administrative remedies", it is nevertheless desirable that the appealability of ERB decisions and orders to the President be placed beyond any and all doubts. In this way, the President of the Philippines has to assume full responsibility for all price increases in oil products, which should be the case because the matter involved is not only one of national interest but profoundly one of people's survival. Gutierrez, Jr. and Cruz, JJ., concur. SARMIENTO, J., separate opinion: I would like to point out a few things in view of the majority's reliance on the first Maceda case. 1 The first Maceda case was a challenge on provisional oil price increases decreed by the Energy Regulatory Board (ERB). This Court sustained the Board, as it is sustaining the Board in this case, on a few economic outputs, namely, the Oil Price Stabilization Fund (OPSF) deficit, the deteriorating exchange rate, and the balance of payments and trade gaps. As I held in my dissent in yet another Maceda case, Maceda v. Macaraig, 2 the current oil price increases were (are) also the result of the devaluation of the currency, since a devalued peso forced oil companies to pay more pesos for oil worth in dollars. I simply wish to state what has apparently been left unstated in the course of debate and perhaps, the real score behind recurring oil price hikes and why the ERB has been very quick in granting them. The truth is that petroleum prices have been dictated by the Government's economic maneuvers, and not rather the vagaries of the world market. The truth is that the recent oil hikes have nothing to do with Saddam Hussein or the Gulf crisis (during which oil prices

in fact dropped) and are, rather, the natural consequences of calculated moves by the Government in its effort to meet so-called International Monetary Fund (IMF) targets. In 1989, the Government of the Republic of the Philippines submitted its letter of intent to the IMF outlining the country's economic program from 1989 through 1992. In its paragraph 19, it states that: The Government intends to continue with the floating exchange rate system established in October 1984 . . . 3 Since exchange control was abolished and the floating rate system was established, the Philippine peso has seen a series of devaluations that have progressively pushed up prices, significantly, prices of petroleum. According to one authority, devaluation has been a "standard prescription" to correct balance of payments (BOP) deficits. 4 It makes dollars expensive, discourages import and encourages exports, and forces dollars conservation. 5 It is a matter of opinion whether or not devaluation has been good for the country and whether or not it has realized these objectives. The truth is that, whatever it has accomplished, oil which is imported has been subject to the effects of devaluation. Early this year, Governor Jose Cuisia of the Central Bank, Secretary Jesus Estanislao of the Department of Finance, and Secretary Guillermo Carague of the Budget and Management Department, wrote Mr. Michael Camdessus of the International Monetary Fund (the letter of intent) and informed him of the country's "Economic Stabilization Plan, 1991-92". The Plan recognized certain economic imbalances that have supposedly inhibited growth, in particular, inflation and an increasing balance of payments deficit, and drew a program centered on "a strong effort to bring down the overall fiscal deficit "through, among other things, "the gradual elimination of the deficit of the Oil Price Stabilization Fund." 6 It spelled out, among other things, a "[r]estoration of a sustainable external position requir[ing] the continuation of a flexible exchange rate policy . . . " 7 and described in detail an "Oil Price and Energy Policy" focused on wiping out the OPSF deficit, to wit: xxx xxx xxx A substantial erosion in the overall fiscal position occurred in 1989 and 1990 as a result of official price support for oil products provided through the OPSF. Despite a lowering of the excise tax on oil in September 1990 and average domestic oil price increases of about 30 percent in September and 32 percent in December 1990, the fund continued to incur a deficit during the second half of 1990. The cumulative OPSF deficit (excluding unfiled claims) at end December 1990 is estimated at P8.8 billion, and this deficit will rise in the first part of 1991. However the cumulative OPSF deficit is to be eliminated by the end of the third quarter of 1991. To this end, the Government intends to follow a pricing policy that ensures attainment of zero balance within the specific time. In particular, the Government will maintain present price levels despite projected world price declines. In addition, a budgetary transfer of P5 billion will be provided in 1991 to settle outstanding claim of the OPSF. 15. Full deregulation of oil prices continues to be an important objective of the Government once calm has been restored to world oil markets. Meanwhile the technical and legal groundwork is being laid with a view to full deregulation as soon as practicable. 16. The principal objectives of the Government's policy in the energy sector are: (i) the development of economically viable indigenous energy resources, mainly thermal, geothermal and hydro-electric power, together with ensuring adequate maintenance of existing facilities; (ii) promoting more efficient use of energy resources through various energy conservation measures; and (ii) the elimination of distortions in every resource allocation through appropriate pricing policies. 8 xxx xxx xxx As I said, Philippine oil prices today have nothing to do with the law on supply and demand, if they had anything to do with it in recent years. (I also gather that the Government is intending to re-adjust the prices of gasoline and diesel fuel soon since apparently, low diesel prices have reduced the demand for gasoline resulting in "distortions".) As the Court held in the first Maceda v. Energy Regulatory Board, 9 oil pricing "is a question best judged by the political leadership" and oil prices are (and have been apparently), political, rather than economic, decisions. I am not to be mistaken as accepting the "letter of intent" as a correct prescription much less a necessary medicine although I will be lacking in candor if I did not say that it is a bitter pill to swallow. What I must be understood as saying is that "oil" is a political card to be played on a political board rather than the courts, so long, of course, as nobody has done anything illegal. The "politics of oil" as spelled out in the Government's letter of intent likewise bring to light the true nature of the ERB Under the Memorandum on Philippine Economic Stabilization Plan:

xxx xxx xxx In the past, energy prices had been set to broadly reflect the average cost of supply. However, the lack of transparency of the pricing mechanism and subsidization of consumption have increasingly become a cause for concern. To alleviate some of these problems, in mid-1987, the Government established the Energy Regulatory Board ERB a quasi-judicial body empowered with the setting and regulation of the pricing of petroleum products and electricity tariffs, the regulation of additions to oil refining capacity, and the regulation of importing, transporting, processing and distributing all energy resources. (Petroleum pricing policy is described in paragraphs 14 and 15.) In addition to the full pass-through of changes in oil prices to power tariffs, the Government is committed to the adoption of longrun marginal cost pricing for electricity. To this end, NPC intends to introduce a marginal cost imported-has tariff structure to ensure that it meets its target of achieving a rate of return of eight percent on its rate base. 10 it is apparent that the Board, in spite of its "independence" (from the Office of the President), is bound by the terms of the program and that it has after all, no genuine discretion to deny requests for price adjustments by oil companies. I seriously doubt whether or not it is possessed of that discretion judging, first, from its performance since 1987 (in which it has not overruled the Government on "oil cases") and the fact that the exchange rate, the balance of payment deficit, and the OPSF deficiency are matters of simple arithmetic. And certainly, the Board can not possibly overrule the Government's "letter of intent." The first Maceda case sustained the grant of provisional price increases ex parte not only because Section 8 of Executive Order No. 172 authorized the grant of provisional relief without a hearing but because fluctuations in the foreign exchange rates, for instance, were, and are, a matter of judicial notice, and a hearing thereafter was necessary only to see whether or not the ERB determined the rates correctly. This likewise brings to light the necessity for an ERB to fix rates since it does not, after all fix (meaning decide) rates but merely announces their imminence on demonstrable figures of higher rates. The Court however can not question the wisdom of a statute and after all, I suppose the Government can make use of an accountant. I agree with Justice Padilla insofar as he refers to the "present scheme of allowing provisional price increase" as a "scheme [to defraud] the people." I would like to go further. As I indicated the ERB does no more than to punch calculators for the Governmentwhich decides oil price increases. The comedy of December, 1990, when the Board adjusted prices in a matter of days, is a confirmation of this point. As Justice Padilla noted, the re-adjustment of December 10, 1990 was in fact prompted by "presidential requests" which does not speak well of the Board's independence and which in fact bares the truth as to who really makes the decision. (The readjustment, consisting in the reduction in diesel fuel and a corresponding increase in gasoline, sought to mollify the indignation of the public.) I agree with Justice Padilla that it amounts to fraud on the people to make them believe that the ERB can give them a fair hearing, indeed, if it can do anything at all. I agree, finally, with Justice Padilla that the nation is one in crisis, and evidently, the "ravenous" oil companies Justice Paras refers to, have not helped any. I submit however that we have not succeeded in fingering the real villain the letter of intent. Saddam's Middle East folly has nothing to do with that.

Separate Opinions PARAS, J., dissenting: I dissent. As I have long previously indicated, the ERB has absolutely no power to tax which is solely the prerogative of Congress. This is what the ERB is precisely doing by getting money from the people to ultimately subsidize the ravenous oil companies. Additionally, the stubborn refusal of the ERB to effectively rollback oil prices is a continuing bestial insult to the intelligence of our countrymen, and a gross abandonment of the people in their hour of economic misery. I therefore vote for a complete and effective rollback of all oil prices. Cruz, J., concurs. PADILLA, J., dissenting: I regret that I can not concur in the majority opinion.

In the matter of price increases of oil products, which vitally affects the people, especially those in the middle and low income groups, any increase, provisional or otherwise, should be allowed only after the Energy Regulatory Board (ERB) shall have fully determined, through bona fide and full-dress hearings, that it is absolutely necessary and by how much it shall be effected. The people, represented by reputable oppositors, deserve to be given full opportunity to be heard in their opposition to any increase in the prices of fuel. The right to be heard includes not only the right to present one's case and submit evidence in support thereof, but also the right to confront and cross-examine the witnesses of the adverse parties. Because of the procedure adopted by the ERB in the reception of evidence leading to the price increases of 5 and 6 December 1990, petitioner Maceda was not able to finish his cross-examination of Petron's sole witness. And, even before each of the witnesses of Shell and Caltex could be cross-examined by petitioners and before they could present evidence in support of their opposition to the increase, the ERB had already issued its 5 December 1990 order allowing a "provisional increase" sought by the oil companies in their respective supplemental applications. That there were postponements of scheduled hearings before the ERB, at the instance of oppositor Maceda, did not justify a denial of the right of oppositors to be heard. The postponements were not intended to delay the proceedings. In fact, the resetting of the scheduled hearings on November 14, 15 and 16 to a later date, upon motion of petitioner Maceda, was to enable him to file a written opposition to the supplemental applications filed by the oil companies. The ERB acted hastily in granting the provisional increases sought by the oil companies even before the oppositors could submit evidence in support of their opposition. The fact that the questioned orders merely allowed a provisional increase is beside the point, for past experiences have shown that so-called provisional increases" allowed by the ERB ultimately became permanent. ERB's claim that the second provisional increase was duly supported by evidence, is belied by its own act of modifying said order (of provisional increase) not only once but twice, upon the "request" of the President. First, the ERB rolled back the prices of fuel just a day after it issued the questioned order, altering the allocation of the increase. Second, on 10 December 1990, the ERB further modified the price of petroleum products resulting in reduction of the weighted average provisional increase from P2.82 to P2.05 per liter, but only after the President had announced that she would meet with the leaders of both Houses of Congress, to discuss the creation of a special fund to be raised from additional taxes, to subsidize the prices of petroleum products. 1 These acts of the ERB ostensibly sparked by "presidential requests" clearly demonstrate that the evidence did not, in the first place, justify the price increases it had ordered on 5 and 6 December 1990. Furthermore, the ERB never came out with a categorical and official declaration of how much was the so-called deficit of the Oil Price Stabilization Fund (OPSF) and how much of the oil price increases was intended to cover such deficit. In the midst of a national crisis related to oil price increases, each and every one is called upon to assume his/its share of continuing sacrifices. The public, the government, as well as the oil companies should work hand in hand in solving the present problem that confronts us. We are not unmindful of the fact that the oil companies are profit-oriented. However, profits should not be their only concern in times of deepening inability of the people to cope with their prices with "built-in-margins". A reduction of profits during these crucial and trying times, is certainly in order considering that in the past, the oil companies had unquestionably made tremendous profits. In view of the foregoing, I vote to GRANT the petition for the nullification of the 5 and 6 December 1990 orders of the ERB and for a roll-back of the prices of oil products to levels existing before 5 and 6 December 1990 until hearings before the ERB are finally concluded. Before closing, I also would like to submit for congressional consideration two (2) proposals in the public interest. They are: (1) to do away with the present scheme of allowing provisional price increases of oil products. This scheme, to my mind, is misleading and serves as an excuse for unilateral and arbitrary ERB-action. As already noted, these provisional price increases are, to all intents and purposes, permanent when fixed. To that extent, the scheme is a fraud on the people. (2) all decisions and orders of the ERB should be expressly made appealable by statute to the President of the Philippines whose decisions shall be final, except in cases involving questions of law or grave abuse of discretion which may be elevated to the Supreme Court in a special civil action for certiorari under Rule 65 of the Rules of Court. While at present, decisions and orders of the ERB are, in my considered opinion, appealable to the President under the principle of "exhaustion of administrative remedies", it is nevertheless desirable that the appealability of ERB decisions and orders to the President be placed beyond any and all doubts. In this way, the President of the Philippines has to assume full responsibility for all price increases in oil products, which should be the case because the matter involved is not only one of national interest but profoundly one of people's survival. Gutierrez, Jr. and Cruz, JJ., concur.

SARMIENTO, J., separate opinion: I would like to point out a few things in view of the majority's reliance on the first Maceda case. 1 The first Maceda case was a challenge on provisional oil price increases decreed by the Energy Regulatory Board (ERB). This Court sustained the Board, as it is sustaining the Board in this case, on a few economic outputs, namely, the Oil Price Stabilization Fund (OPSF) deficit, the deteriorating exchange rate, and the balance of payments and trade gaps. As I held in my dissent in yet another Maceda case, Maceda v. Macaraig, 2 the current oil price increases were (are) also the result of the devaluation of the currency, since a devalued peso forced oil companies to pay more pesos for oil worth in dollars. I simply wish to state what has apparently been left unstated in the course of debate and perhaps, the real score behind recurring oil price hikes and why the ERB has been very quick in granting them. The truth is that petroleum prices have been dictated by the Government's economic maneuvers, and not rather the vagaries of the world market. The truth is that the recent oil hikes have nothing to do with Saddam Hussein or the Gulf crisis (during which oil prices in fact dropped) and are, rather, the natural consequences of calculated moves by the Government in its effort to meet so-called International Monetary Fund (IMF) targets. In 1989, the Government of the Republic of the Philippines submitted its letter of intent to the IMF outlining the country's economic program from 1989 through 1992. In its paragraph 19, it states that: The Government intends to continue with the floating exchange rate system established in October 1984 . . .
3

Since exchange control was abolished and the floating rate system was established, the Philippine peso has seen a series of devaluations that have progressively pushed up prices, significantly, prices of petroleum. According to one authority, devaluation has been a "standard prescription" to correct balance of payments (BOP) deficits. 4 It makes dollars expensive, discourages import and encourages exports, and forces dollars conservation. 5 It is a matter of opinion whether or not devaluation has been good for the country and whether or not it has realized these objectives. The truth is that, whatever it has accomplished, oil which is imported has been subject to the effects of devaluation. Early this year, Governor Jose Cuisia of the Central Bank, Secretary Jesus Estanislao of the Department of Finance, and Secretary Guillermo Carague of the Budget and Management Department, wrote Mr. Michael Camdessus of the International Monetary Fund (the letter of intent) and informed him of the country's "Economic Stabilization Plan, 1991-92". The Plan recognized certain economic imbalances that have supposedly inhibited growth, in particular, inflation and an increasing balance of payments deficit, and drew a program centered on "a strong effort to bring down the overall fiscal deficit "through, among other things, "the gradual elimination of the deficit of the Oil Price Stabilization Fund." 6 It spelled out, among other things, a "[r]estoration of a sustainable external position requir[ing] the continuation of a flexible exchange rate policy . . . " 7 and described in detail an "Oil Price and Energy Policy" focused on wiping out the OPSF deficit, to wit: xxx xxx xxx A substantial erosion in the overall fiscal position occurred in 1989 and 1990 as a result of official price support for oil products provided through the OPSF. Despite a lowering of the excise tax on oil in September 1990 and average domestic oil price increases of about 30 percent in September and 32 percent in December 1990, the fund continued to incur a deficit during the second half of 1990. The cumulative OPSF deficit (excluding unfiled claims) at end December 1990 is estimated at P8.8 billion, and this deficit will rise in the first part of 1991. However the cumulative OPSF deficit is to be eliminated by the end of the third quarter of 1991. To this end, the Government intends to follow a pricing policy that ensures attainment of zero balance within the specific time. In particular, the Government will maintain present price levels despite projected world price declines. In addition, a budgetary transfer of P5 billion will be provided in 1991 to settle outstanding claim of the OPSF. 15. Full deregulation of oil prices continues to be an important objective of the Government once calm has been restored to world oil markets. Meanwhile the technical and legal groundwork is being laid with a view to full deregulation as soon as practicable. 16. The principal objectives of the Government's policy in the energy sector are: (i) the development of economically viable indigenous energy resources, mainly thermal, geothermal and hydro-electric power, together with ensuring adequate maintenance of existing facilities; (ii) promoting more efficient use of energy resources through various energy conservation measures; and (ii) the elimination of distortions in every resource allocation through appropriate pricing policies. 8

xxx xxx xxx As I said, Philippine oil prices today have nothing to do with the law on supply and demand, if they had anything to do with it in recent years. (I also gather that the Government is intending to re-adjust the prices of gasoline and diesel fuel soon since apparently, low diesel prices have reduced the demand for gasoline resulting in "distortions".) As the Court held in the first Maceda v. Energy Regulatory Board, 9 oil pricing "is a question best judged by the political leadership" and oil prices are (and have been apparently), political, rather than economic, decisions. I am not to be mistaken as accepting the "letter of intent" as a correct prescription much less a necessary medicine although I will be lacking in candor if I did not say that it is a bitter pill to swallow. What I must be understood as saying is that "oil" is a political card to be played on a political board rather than the courts, so long, of course, as nobody has done anything illegal. The "politics of oil" as spelled out in the Government's letter of intent likewise bring to light the true nature of the ERB Under the Memorandum on Philippine Economic Stabilization Plan: xxx xxx xxx In the past, energy prices had been set to broadly reflect the average cost of supply. However, the lack of transparency of the pricing mechanism and subsidization of consumption have increasingly become a cause for concern. To alleviate some of these problems, in mid-1987, the Government established the Energy Regulatory Board ERB a quasi-judicial body empowered with the setting and regulation of the pricing of petroleum products and electricity tariffs, the regulation of additions to oil refining capacity, and the regulation of importing, transporting, processing and distributing all energy resources. (Petroleum pricing policy is described in paragraphs 14 and 15.) In addition to the full pass-through of changes in oil prices to power tariffs, the Government is committed to the adoption of longrun marginal cost pricing for electricity. To this end, NPC intends to introduce a marginal cost imported-has tariff structure to ensure that it meets its target of achieving a rate of return of eight percent on its rate base. 10 it is apparent that the Board, in spite of its "independence" (from the Office of the President), is bound by the terms of the program and that it has after all, no genuine discretion to deny requests for price adjustments by oil companies. I seriously doubt whether or not it is possessed of that discretion judging, first, from its performance since 1987 (in which it has not overruled the Government on "oil cases") and the fact that the exchange rate, the balance of payment deficit, and the OPSF deficiency are matters of simple arithmetic. And certainly, the Board can not possibly overrule the Government's "letter of intent." The first Maceda case sustained the grant of provisional price increases ex parte not only because Section 8 of Executive Order No. 172 authorized the grant of provisional relief without a hearing but because fluctuations in the foreign exchange rates, for instance, were, and are, a matter of judicial notice, and a hearing thereafter was necessary only to see whether or not the ERB determined the rates correctly. This likewise brings to light the necessity for an ERB to fix rates since it does not, after all fix (meaning decide) rates but merely announces their imminence on demonstrable figures of higher rates. The Court however can not question the wisdom of a statute and after all, I suppose the Government can make use of an accountant. I agree with Justice Padilla insofar as he refers to the "present scheme of allowing provisional price increase" as a "scheme [to defraud] the people." I would like to go further. As I indicated the ERB does no more than to punch calculators for the Governmentwhich decides oil price increases. The comedy of December, 1990, when the Board adjusted prices in a matter of days, is a confirmation of this point. As Justice Padilla noted, the re-adjustment of December 10, 1990 was in fact prompted by "presidential requests" which does not speak well of the Board's independence and which in fact bares the truth as to who really makes the decision. (The readjustment, consisting in the reduction in diesel fuel and a corresponding increase in gasoline, sought to mollify the indignation of the public.) I agree with Justice Padilla that it amounts to fraud on the people to make them believe that the ERB can give them a fair hearing, indeed, if it can do anything at all. I agree, finally, with Justice Padilla that the nation is one in crisis, and evidently, the "ravenous" oil companies Justice Paras refers to, have not helped any. I submit however that we have not succeeded in fingering the real villain the letter of intent. Saddam's Middle East folly has nothing to do with that.

G.R. No. 135945

March 7, 2001

THE UNITED RESIDENTS OF DOMINICAN HILL, INC., represented by its President RODRIGO S. MACARIO, SR., petitioner, vs. COMMISSION ON THE SETTLEMENT OF LAND PROBLEMS, represented by its Commissioner, RUFINO V. MIJARES; MARIO PADILAN, PONCIANO BASILAN, HIPOLITO ESLAVA, WILLIAM LUMPISA, PACITO MOISES, DIONISIO ANAS, NOLI DANGLA, NAPOLEON BALESTEROS, ELSIE MOISES, SEBIO LACWASAN, BEN FLORES, DOMINGO CANUTAB, MARCELINO GABRIANO, TINA TARNATE, ANDREW ABRAZADO, DANNY LEDDA, FERNANDO DAYAO, JONATHAN DE LA PENA, JERRY PASSION, PETER AGUINSOD, and LOLITA DURAN, respondents. DE LEON, JR., J.: Before us is a petition for prohibition and declaratory relief seeking the annulment of a status quo order1 dated September 29, 1998 issued by the public respondent Commission on the Settlement of Land Problems (COSLAP, for brevity) in COSLAP Case No. 98253. The facts are: The property being fought over by the parties is a 10.36-hectare property in Baguio City called Dominican Hills, formerly registered in the name of Diplomat Hills, Inc. It appeared that the property was mortgaged to the United Coconut Planters Bank (UCPB) which eventually foreclosed the mortgage thereon and acquired the same as highest bidder. On April 11, 1983, it was donated to the Republic of the Philippines by UCPB through its President, Eduardo Cojuangco. The deed of donation stipulated that Dominican Hills would be utilized for the "priority programs, projects, activities in human settlements and economic development and governmental purposes" of the Ministry of Human Settlements. On December 12, 1986, the then President Corazon C. Aquino issued Executive Order No. 85 abolishing the Office of Media Affairs and the Ministry of Human Settlements. All agencies under the latter's supervision as well as all its assets, programs and projects, were transferred to the Presidential Management Staff (PMS). 2 On October 18, 1988, the PMS received an application from petitioner UNITED RESIDENTS OF DOMINICAN HILL, INC. (UNITED, for brevity), a community housing association composed of non-real property owning residents of Baguio City, to acquire a portion of the Dominican Hills property. On February 2, 1990, PMS Secretary Elfren Cruz referred the application to the HOME INSURANCE GUARANTY CORPORATION (HIGC). HIGC consented to act as originator for UNITED. 3 Accordingly, on May 9, 1990, a Memorandum of Agreement was signed by and among the PMS, the HIGC, and UNITED. The Memorandum of Agreement called for the PMS to sell the Dominican Hills property to HIGC which would, in turn, sell the same to UNITED. The parties agreed on a selling price of P75.00 per square meter. Thus, on June 12, 1991, HIGC sold 2.48 hectares of the property to UNITED. The deed of conditional sale provided that ten (10) per cent of the purchase price would be paid upon signing, with the balance to be amortized within one year from its date of execution. After UNITED made its final payment on January 31, 1992, HIGC executed a Deed of Absolute Sale dated July 1, 1992. Petitioner alleges that sometime in 1993, private respondents entered the Dominican Hills property allocated to UNITED and constructed houses thereon. Petitioner was able to secure a demolition order from the city mayor. 4 Unable to stop the razing of their houses, private respondents, under the name DOMINICAN HILL BAGUIO RESIDENTS HOMELESS ASSOCIATION (ASSOCIATION, for brevity) filed an action5 for injunction docketed as Civil Case No. 3316-R, in the Regional Trial Court of Baguio City, Branch 4. Private respondents were able to obtain a temporary restraining order but their prayer for a writ of preliminary injunction was later denied in an Order dated March 18, 1996.6 While Civil Case No. 3316-R was pending, the ASSOCIATION, this time represented by the Land Reform Beneficiaries Association, Inc. (BENEFICIARIES, for brevity), filed Civil Case No. 3382-R before Branch 61 of the same court. The complaint 7 prayed for damages, injunction and annulment of the said Memorandum of Agreement between UNITED and HIGC. Upon motion of UNITED, the trial court in an Order dated May 27, 1996 dismissed Civil Case No. 3382-R.8 The said Order of dismissal is currently on appeal with the Court of Appeals.9 Demolition Order No. 1-96 was subsequently implemented by the Office of the City Mayor and the City Engineer's Office of Baguio City. However, petitioner avers that private respondents returned and reconstructed the demolished structures. To forestall the re-implementation of the demolition order, private respondents filed on September 29, 1998 a petition 10 for annulment of contracts with prayer for a temporary restraining order, docketed as COSLAP Case No. 98-253, in the Commission on the Settlement of Land Problems (COSLAP) against petitioner, HIGC, PMS, the City Engineer's Office, the City Mayor, as well as the Register of Deeds of Baguio City. On the very same day, public respondent COSLAP issued the contested order requiring the parties to maintain the status quo.

Without filing a motion for reconsideration from the aforesaid status quo order, petitioner filed the instant petition questioning the jurisdiction of the COSLAP. The issues we are called upon to resolve are: 1 IS THE COMMISSION ON THE SETTLEMENT OF LAND PROBLEMS [COSLAP] CREATED UNDER EXECUTIVE ORDER NO. 561 BY THE OFFICE OF THE PHILIPPINES [sic] EMPOWERED TO HEAR AND TRY A PETITION FOR ANNULMENT OF CONTRACTS WITH PRAYER FOR A TEMPORARY RESTRAINING ORDER AND THUS, ARROGATE UNTO ITSELF THE POWER TO ISSUE STATUS QUO ORDER AND CONDUCT A HEARING THEREOF [sic]? 2 ASSUMING THAT THE COMMISSION ON THE SETTLEMENT OF LAND PROBLEMS [COSLAP] HAS JURISDICTION ON THE MATTER, IS IT EXEMPTED FROM OBSERVING A CLEAR CASE OF FORUM SHOPPING ON THE PART OF THE PRIVATE RESPONDENTS? To the extent that the instant case is denominated as one for declaratory relief, we initially clarify that we do not possess original jurisdiction to entertain such petitions.11 Such is vested in the Regional Trial Courts.12 Accordingly, we shall limit our review to ascertaining if the proceedings before public respondent COSLAP are without or in excess, of its jurisdiction. In this wise, a recounting of the history of the COSLAP may provide useful insights into the extent of its powers and functions. The COSLAP was created by virtue of Executive Order No. 561 dated September 21, 1979. Its forerunner was the Presidential Action Committee on Land Problems (PACLAP) founded on July 31, 1970 by virtue of Executive Order No. 251. As originally conceived, the committee was tasked "to expedite and coordinate the investigation and resolution of land disputes, streamline and shorten administrative procedures, adopt bold and decisive measures to solve land problems, and/or recommend other solutions." It was given the power to issue subpoenas duces tecum and ad testificandum and to call upon any department, office, agency or instrumentality of the government, including government owned or controlled corporations and local government units, for assistance in the performance of its functions. At the time, the PACLAP did not exercise quasi-judicial functions. On March 19, 1971, Executive Order No. 305 was issued reconstituting the PACLAP. 13 The committee was given exclusive jurisdiction over all cases involving public lands and other lands of the public domain and accordingly was tasked: 1. To investigate, coordinate, and resolve expeditiously land disputes, streamline administrative procedures, and in general, to adopt bold and decisive measures to solve problems involving public lands and lands of the public domain; 2. To coordinate and integrate the activities of all government agencies having to do with public lands or lands of the public domain; 3. To study and review present policies as embodied in land laws and administrative rules and regulations, in relation to the needs for land of the agro-industrial sector and small farmers, with the end in view to evolving and recommending new laws and policies and establishing priorities in the grant of public land, and the simplification of processing of land applications in order to relieve the small man from the complexities of existing laws, rules and regulations; 4. To evolve and implement a system for the speedy investigation and resolution of land disputes; 5. To receive all complaints of settlers and small farmers, involving public lands or other lands of the public domain; 6. To look into the conflicts between Christians and non-Christians, between corporations and small settlers and farmers; cause the speedy settlement of such conflicts in accordance with priorities or policies established by the Committee; and 7. To perform such other functions as may be assigned to it by the President. Thereafter, the PACLAP was reorganized pursuant to Presidential Decree No. 832 dated November 27, 1975. 14 Its jurisdiction was revised thus: xxx xxx xxx

2. Refer for immediate action any land problem or dispute brought to the attention of the PACLAP, to any member agency having jurisdiction thereof: Provided, that when the Executive Committee decides to act on a case, its resolution, order or decision thereon, shall have the force and effect of a regular administrative resolution, order or decision, and shall be binding upon the parties therein involved and upon the member agency having jurisdiction thereof; Notably, the said Presidential Decree No. 832 did not contain any provision for judicial review of the resolutions, orders or decisions of the PACLAP. On September 21, 1979, the PACLAP was abolished and its functions transferred to the present Commission on the Settlement of Land Problems by virtue of Executive Order No. 561. This reorganization, effected in line with Presidential Decree No. 1416, brought the COSLAP directly under the Office of the President.15 It was only at this time that a provision for judicial review was made from resolutions, orders or decisions of the said agency, as embodied in section 3(2) thereof, to wit: Powers and functions. The Commission shall have the following powers and functions: 1. Coordinate the activities, particularly the investigation work, of the various government offices and agencies involved in the settlement of land problems or disputes, and streamline administrative procedures to relieve small settlers and landholders and members of cultural minorities of the expense and time-consuming delay attendant to the solution of such problems or disputes; 2. Refer and follow-up for immediate action by the agency having appropriate jurisdiction any land problem or dispute referred to the Commission: Provided, that the Commission may, in the following cases, assume jurisdiction and resolve land problems or disputes which are critical and explosive in nature considering, for instance, the large number of the parties involved, the presence or emergence of social tension or unrest, or other similar critical situations requiring immediate action: (a) Between occupants/squatters and pasture lease agreement holders or timber concessionaires; (b) Between occupants/squatters and government reservation grantees; (c) Between occupants/squatters and public land claimants or applicants; (d) Petitions for classification, release and/or subdivision of lands of the public domain; and (e) Other similar land problems of grave urgency and magnitude. The Commission shall promulgate such rules of procedure as will insure expeditious resolution and action on the above cases. The resolution, order or decision of the Commission on any of the foregoing cases shall have the force and effect of a regular administrative resolution, order or decision and shall be binding upon the parties therein and upon the agency having jurisdiction over the same. Said resolution, order or decision shall become final and executory within thirty (30) days from its promulgation and shall be appealable by certiorari only to the Supreme Court. In the performance of its functions and discharge of its duties, the Commission is authorized, through the Commission, to issue subpoena and subpoena duces tecum for the appearance of witnesses and the production of records, books and documents before it. It may also call upon any ministry, office, agency or instrumentality of the National Government, including government-owned or controlled corporations, and local governments for assistance. This authority is likewise, conferred upon the provincial offices as may be established pursuant to Section 5 of this Executive Order. In Baaga v. Commission on the Settlement of Land Problems,16 we characterized the COSLAP's jurisdiction as being general in nature, as follows: Petitioners also contend in their petition that the COSLAP itself has no jurisdiction to resolve the protest and counterprotest of the parties because its power to resolve land problems is confined to those cases "which are critical and explosive in nature." This contention is devoid of merit. It is true that Executive Order No. 561 provides that the COSLAP may take cognizance of cases which are "critical and explosive in nature considering, for instance, the large number of parties involved, the presence or emergence of social tension or unrest, or other similar critical situations requiring immediate action." However, the use of the word "may" does not mean that the COSLAP's jurisdiction is merely confined to the above mentioned cases. The provisions of the said Executive Order are clear that the COSLAP was created as a means of providing a more effective mechanism for the expeditious settlement of land problems in general, which are frequently the source of conflicts among settlers, landowners and cultural minorities. Besides, the COSLAP merely took over from the

abolished PACLAP whose functions, including its jurisdiction, power and authority to act on, decide and resolve land disputes (Sec. 2, P.D. No. 832) were all assumed by it. The said Executive Order No. 561 containing said provision, being enacted only on September 21, 1979, cannot affect the exercise of jurisdiction of the PACLAP Provincial Committee of Koronadal on September 29, 1978. Neither can it affect the decision of the COSLAP which merely affirmed said exercise of jurisdiction. Given the facts of the case, it is our view that the COSLAP is not justified in assuming jurisdiction over the controversy. As matters stand, it is not the judiciary's place to question the wisdom behind a law; 17 our task is to interpret the law. We feel compelled to observe, though, that by reason of the ambiguous terminology employed in Executive Order No. 561, the power to assume jurisdiction granted to the COSLAP provides an ideal breeding ground for forum shopping, as we shall explain subsequently. Suffice it to state at this stage that the COSLAP may not assume jurisdiction over cases which are already pending in the regular courts. The reason is simple. Section 3(2) of Executive Order 561 speaks of any resolution, order or decision of the COSLAP as having the "force and effect of a regular administrative resolution, order or decision." The qualification places an unmistakable emphasis on the administrative character of the COSLAP's determination, amplified by the statement that such resolutions, orders or decisions "shall be binding upon the parties therein and upon the agency having jurisdiction over the same." An agency is defined by statute as "any of the various units of the Government, including a department, bureau, office, instrumentality, or government-owned or controlled corporation, or a local government or a distinct unit therein."18 A department, on the other hand, "refers to an executive department created by law."19 Whereas, a bureau is understood to refer "to any principal subdivision of any department." 20 In turn, an office "refers, within the framework of governmental organization, to any major functional unit of a department or bureau including regional offices. It may also refer to any position held or occupied by individual persons, whose functions are defined by law or regulation."21 An instrumentality is deemed to refer "to any agency of the National Government, not integrated within the department framework, vested with special functions or jurisdiction by law, endowed with some if not all corporate powers, administering special funds and enjoying operational autonomy, usually through a charter. This term includes regulatory agencies, chartered institutions and government-owned or controlled corporations."22 Applying the principle in statutory construction of ejusdem generis, i.e., "where general words follow an enumeration or persons or things, by words of a particular and specific meaning, such general words are not to be construed in their widest extent, but are to be held as applying only to persons or things of the same kind or class as those specifically mentioned,"23 section 3(2) of Executive Order 561 patently indicates that the COSLAP's dispositions are binding on administrative or executive agencies. The history of the COSLAP itself bolsters this view. Prior enactments enumerated its member agencies among which it was to exercise a coordinating function. The COSLAP discharges quasi-judicial functions: "Quasi-judicial function" is a term which applies to the actions, discretion, etc. of public administrative officers or bodies, who are required to investigate facts, or ascertain the existence of facts, hold hearings, and draw conclusions from them, as a basis for their official action and to exercise discretion of a judicial nature." 24 However, it does not depart from its basic nature as an administrative agency, albeit one that exercises quasi-judicial functions. Still, administrative agencies are not considered courts; they are neither part of the judicial system nor are they deemed judicial tribunals.25 The doctrine of separation of powers observed in our system of government reposes the three (3) great powers into its three (3) branches the legislative, the executive, and the judiciary each department being co-equal and coordinate, and supreme in its own sphere. Accordingly, the executive department may not, by its own fiat, impose the judgment of one of its own agencies, upon the judiciary. Indeed, under the expanded jurisdiction of the Supreme Court, it is empowered "to determine whether or not there has been grave abuse of discretion amounting to lack of or excess of jurisdiction on the part of any branch or instrumentality of the Government."26 There is an equally persuasive reason to grant the petition. As an additional ground for the annulment of the assailed status quo order of COSLAP, UNITED accuses private respondents of engaging in forum shopping. Forum shopping exists when a party "repetitively avail[s] of several judicial remedies in different courts, simultaneously or successively, all substantially founded on the same transactions and the same essential facts and circumstances, and all raising substantially the same issues either pending in, or already resolved adversely by some other court."27 In this connection, Supreme Court Administrative Circular No. 04-94 dated February 8, 1994 provides: Revised Circular No. 28-91, dated February 8, 1994, applies to and governs the filing of petitions in the Supreme Court and the Court of Appeals and is intended to prevent the multiple filing of petitions or complaints involving the same issues in other tribunals or agencies as a form of forum shopping. Complementary thereto and for the same purpose, the following requirements, in addition to those in pertinent provisions of the Rules of Court and existing circulars, shall be strictly complied with in the filing of complaints, petitions, applications or other initiatory pleadings in all courts and agencies other than the Supreme Court and the Court of Appeals and shall be subject to the sanctions provided hereunder. 1. The plaintiff, petitioner, applicant or principal part seeking relief in the complaint, petition, application or other initiatory pleading shall certify under oath in such original pleading, or in a sworn certification annexed thereto and simultaneously filed therewith, to the truth of the following facts and undertakings: (a) he has not theretofore

commenced any other action or proceeding involving the same issues in the Supreme Court, the Court of Appeals, or any other tribunal or agency; (b) to the best of his knowledge, no such action or proceedings is pending in the Supreme Court, the Court of Appeals, or any other tribunal or agency; (c) if there is any such action or proceeding which is either pending or may have been terminated, he must state the status thereof; and (d) if he should thereafter learn that a similar action or proceeding has been filed or is pending before the Supreme Court, the Court of Appeals or any other tribunal or agency, he undertakes to report that fact within five (5) days therefrom to the court or agency wherein the original pleading and sworn certification contemplated herein have been filed. The complaint and other initiatory pleadings referred to and subject of this Circular are the original civil complaint, counterclaim, cross-claim, third (fourth, etc.) party complaint, or complaint-in-intervention, petition, or application wherein a party asserts his claim for relief. 2. Any violation of this Circular shall be a cause for the dismissal of the complaint, petition, application or other initiatory pleading, upon motion and after hearing. However, any clearly willful and deliberate forum shopping by any other party and his counsel through the filing of multiple complaints or other initiatory pleadings to obtain favorable action shall be a ground for the summary dismissal thereof and shall constitute contempt of court. Furthermore, the submission of a false certification or non-compliance with the undertakings therein, as provided in Paragraph 1 hereof, shall constitute indirect contempt of court, without prejudice to disciplinary proceedings against the counsel and the filing of a criminal action against the part. [emphasis supplied] The said Administrative Circular's use of the auxiliary verb "shall" imports "an imperative obligation . . . inconsistent with the idea of discretion."28 Hence, compliance therewith is mandatory.29 It bears stressing that there is a material distinction between the requirement of submission of the certification against forum shopping from the undertakings stated therein. Accordingly, x x x [f]ailure to comply with this requirement cannot be excused by the fact that plaintiff is not guilty of forum shopping. The Court of Appeals, therefore, erred in concluding that Administrative Circular No. 04-94 did not apply to private respondent's case merely because her complaint was not based on petitioner's cause of action. The Circular applies to any complaint, petition, application, or other initiatory pleading, regardless of whether the party filing it has actually committed forum shopping. Every party filing a complaint or any other initiatory pleading is required to swear under oath that he has not committed nor will he commit forum shopping. Otherwise, we would have an absurd situation where the parties themselves would be the judge of whether their actions constitute a violation of said Circular, and compliance therewith would depend on their belief that they might or might not have violated the requirement. Such interpretation of the requirement would defeat the very purpose of Circular 04-94. Indeed, compliance with the certification against forum shopping is separate from, and independent of, the avoidance of forum shopping itself. Thus, there is a difference in the treatment in terms of imposable sanctions between failure to comply with the certification requirement and violation of the prohibition against forum shopping. The former is merely a cause for the dismissal, without prejudice, of the complaint or initiatory pleading, while the latter is a ground for summary dismissal thereof and constitutes direct contempt.30 A scrutiny of the pleadings filed before the trial courts and the COSLAP sufficiently establishes private respondents' propensity for forum shopping. We lay the premise that the certification against forum shopping must be executed by the plaintiff or principal party, and not by his counsel.31 Hence, one can deduce that the certification is a peculiar personal representation on the part of the principal party, an assurance given to the court or other tribunal that there are no other pending cases involving basically the same parties, issues and causes of action. In the case at bar, private respondents' litany of omissions range from failing to submit the required certification against forum shopping to filing a false certification, and then to forum shopping itself. First, the petition filed before the COSLAP conspicuously lacked a certification against forum shopping. Second, it does not appear from the record that the ASSOCIATION informed Branch 4 of the Regional Trial Court of Baguio City before which Civil Case No. 3316-R was pending, that another action, Civil Case No. 3382-R, was filed before Branch 61 of the same court. Another group of homeless residents of Dominican Hill, the LAND REFORM BENEFICIARIES ASSOCIATION, INC. initiated the latter case. The aforesaid plaintiff, however, does not hesitate to admit that it filed the second case in representation of private respondent, as one of its affiliates. In the same manner, the certification against forum shopping accompanying the complaint in Civil Case No. 3382-R does not mention the pendency of Civil Case No. 3316-R. In fact, the opposite assurance was given, that there was no action pending before any other tribunal. Another transgression is that both branches of the trial court do not appear to have been notified of the filing of the subject COSLAP Case No. 98-253. It is evident from the foregoing facts that private respondents, in filing multiple petitions, have mocked our attempts to eradicate forum shopping and have thereby upset the orderly administration of justice. They sought recourse from three (3) different tribunals in order to obtain the writ of injunction they so desperately desired. "The willful attempt by private respondents to obtain a preliminary injunction in another court after it failed to acquire the same from the original court constitutes grave abuse of the judicial process."32

In this connection, we expounded on forum shopping in Viva Productions, Inc. v. Court of Appeals33 that: Private respondent's intention to engage in forum shopping becomes manifest with undoubted clarity upon the following considerations. Notably, if not only to ensure the issuance of an injunctive relief, the significance of the action for damages before the Makati court would be nil. What damages against private respondent would there be to speak about if the Paraaque court already enjoins the performance of the very same act complained of in the Makati court? Evidently, the action for damages is premature if not for the preliminary injunctive relief sought. Thus, we find grave abuse of discretion on the part of the Makati court, being a mere co-equal of the Paraaque court, in not giving due deference to the latter before which the issue of the alleged violation of the sub-judice rule had already been raised and submitted. In such instance, the Makati court, if it was wary of dismissing the action outrightly under Administrative Circular No. 04-94, should have, at least, ordered the consolidation of its case with that of the Paraaque court, which had first acquired jurisdiction over the related case x x x, or it should have suspended the proceedings until the Paraaque court may have ruled on the issue x x x. Thus, while we might admit that the causes of action before the Makati court and the Paraaque court are distinct, and that private respondent cannot seek civil indemnity in the contempt proceedings, the same being in the nature of criminal contempt, we nonetheless cannot ignore private respondent's intention of seeking exactly identical reliefs when it sought the preliminary relief of injunction in the Makati court. As earlier indicated, had private respondent been completely in good faith there would have been no hindrance in filing the action for damages with the regional trial court of Paraaque and having it consolidated with the contempt proceedings before Branch 274, so that the same issue on the alleged violation of the sub judice rule will not have to be passed upon twice, and there would be no possibility of having two courts of concurrent jurisdiction making two conflicting resolutions. Yet from another angle, it may be said that when the Paraaque court acquired jurisdiction over the said issue, it excluded all other courts of concurrent jurisdiction from acquiring jurisdiction over the same. To hold otherwise would be to risk instances where courts of concurrent jurisdiction might have conflicting orders. This will create havoc and result in an extremely disordered administration of justice. Therefore, even on the assumption that the Makati court may acquire jurisdiction over the subject matter of the action for damages, without prejudice to the application of Administrative Circular No. 04-94, it cannot nonetheless acquire jurisdiction over the issue of whether or not petitioner has violated the sub judice rule. At best, the Makati court may hear the case only with respect to the alleged injury suffered by private respondent after the Paraaque court shall have ruled favorably on the said issue. We also noted several indications of private respondents' bad faith. The complaint filed in Civil Case No. 3316-R was prepared by the ASSOCIATION's counsel, Atty. Conrado Villamor Catral, Jr. whereas the complaint filed in Civil Case No. 3382-R was signed by a different lawyer, Atty. Thomas S. Tayengco. With regard to the petition filed with the COSLAP, the same was signed by private respondents individually. As to the latter case, we noted that the petition itself could not have been prepared by ordinary laymen, inasmuch as it exhibits familiarity with statutory provisions and legal concepts, and is written in a lawyerly style. In the same manner, the plaintiffs in the three (3) different cases were made to appear as dissimilar: in Civil Case No. 3316-R, the plaintiff was ASSOCIATION of which private respondent Mario Padilan was head, while the plaintiff in Civil Case No. 3382-R was the BENEFICIARIES. Before the COSLAP, private respondents themselves were the petitioners, led again by Padilan. 34 Private respondents also attempted to vary their causes of action: in Civil Case No. 3382-R and COSLAP Case No. 98-253, they seek the annulment of the Memorandum of Agreement executed by and among UNITED, the PMS, and HIGC as well as the transfer certificates of title accordingly issued to petitioner. All three (3) cases sought to enjoin the demolition of private respondents' houses. It has been held that forum shopping is evident where the elements of litis pendentia or res judicata are present. Private respondents' subterfuge comes to naught, for the effects of res judicata or litis pendentia may not be avoided by varying the designation of the parties or changing the form of the action or adopting a different mode of presenting one's case. 35 In view of the foregoing, all that remains to be done is the imposition of the proper penalty. A party's willful and deliberate act of forum shopping is punishable by summary dismissal of the actions filed. 36 The summary dismissal of both COSLAP Case No. 98253 and Civil Case No. 3316-R is therefore warranted under the premises. We shall refrain from making any pronouncement on Civil Case No. 3382-R, the dismissal of which was elevated on appeal to the Court of Appeals where it is still pending. WHEREFORE, the petition is hereby GRANTED. The status quo order dated September 29, 1998 issued in COSLAP Case No. 98253 by respondent Commission On The Settlement Of Land Problems (COSLAP) is hereby SET ASIDE; and the petition filed in COSLAP Case No. 98-253 and the complaint in Civil Case No. 3316-R are hereby DISMISSED for lack of jurisdiction and forum shopping. Costs against private respondents. SO ORDERED. Bellosillo, Mendoza, Quisumbing, and Buena, JJ ., concur.

G.R. No. 97149 March 31, 1992 FIDENCIO Y. BEJA, SR., petitioner, vs. COURT OF APPEALS, HONORABLE REINERIO O. REYES, in his capacity as Secretary of the Department of Transportation and Communications; COMMODORE ROGELIO A. DAYAN, in his capacity as General Manager of the Philippine Ports Authority; DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS, ADMINISTRATIVE ACTION BOARD; and JUSTICE ONOFRE A. VILLALUZ, in his capacity as Chairman of the Administrative Action Board, DOTC, respondents.

ROMERO, J.: The instant petition for certiorari questions the jurisdiction of the Secretary of the Department of Transportation and Communications (DOTC) and/or its Administrative Action Board (AAB) over administrative cases involving personnel below the rank of Assistant General Manager of the Philippine Ports Authority (PPA), an agency attached to the said Department. Petitioner Fidencio Y. Beja, Sr. 1 was first employed by the PPA as arrastre supervisor in 1975. He became Assistant Port Operations Officer in 1976 and Port Operations Officer in 1977. In February 1988, as a result of the reorganization of the PPA, he was appointed Terminal Supervisor. On October 21, 1988, the PPA General Manager, Rogelio A. Dayan, filed Administrative Case No. 11-04-88 against petitioner Beja and Hernando G. Villaluz for grave dishonesty, grave misconduct, willful violation of reasonable office rules and regulations and conduct prejudicial to the best interest of the service. Beja and Villaluz allegedly erroneously assessed storage fees resulting in the loss of P38,150.77 on the part of the PPA. Consequently, they were preventively suspended for the charges. After a preliminary investigation conducted by the district attorney for Region X, Administrative Case No. 11-04-88 was "considered closed for lack of merit." On December 13, 1988, another charge sheet, docketed as Administrative Case No. 12-01-88, was filed against Beja by the PPA General Manager also for dishonesty, grave misconduct, violation of reasonable office rules and regulations, conduct prejudicial to the best interest of the service and for being notoriously undesirable. The charge consisted of six (6) different specifications of administrative offenses including fraud against the PPA in the total amount of P218,000.00. Beja was also placed under preventive suspension pursuant to Sec. 41 of P.D. No. 807. The case was redocketed as Administrative Case No. PPA-AAB-1-049-89 and thereafter, the PPA general manager indorsed it to the AAB for "appropriate action." At the scheduled hearing, Beja asked for continuance on the ground that he needed time to study the charges against him. The AAB proceeded to hear the case and gave Beja an opportunity to present evidence. However, on February 20, 1989, Beja filed a petition for certiorari with preliminary injunction before the Regional Trial Court of Misamis Oriental. 2 Two days later, he filed with the AAB a manifestation and motion to suspend the hearing of Administrative Case No. PPA-AAB-1049-89 on account of the pendency of the certiorari proceeding before the court. AAB denied the motion and continued with the hearing of the administrative case. Thereafter, Beja moved for the dismissal of the certiorari case below and proceeded to file before this Court a petition for certiorari with preliminary injunction and/or temporary restraining order. The case was docketed as G.R. No. 87352 captioned "Fidencio Y. Beja v. Hon. Reinerio 0. Reyes, etc., et al." In the en banc resolution of March 30, 1989, this Court referred the case to the Court of Appeals for "appropriate action." 3 G.R. No. 87352 was docketed in the Court of Appeals as CA-G.R. SP No. 17270. Meanwhile, a decision was rendered by the AAB in Administrative Case No. PPA-AAB-049-89. Its dispositive portion reads: WHEREFORE, judgment is hereby rendered, adjudging the following, namely: a) That respondents Geronimo Beja, Jr. and Hernando Villaluz are exonerated from the charge against them; b) That respondent Fidencio Y. Beja be dismissed from the service; c) That his leave credits and retirement benefits are declared forfeited; d) That he be disqualified from re-employment in the government service; e) That his eligibility is recommended to be cancelled.

Pasig, Metro Manila, February 28, 1989. On December 10, 1990, after appropriate proceedings, the Court of Appeals also rendered a decision 4 in CA-G.R. SP No. 17270 dismissing the petition for certiorari for lack of merit. Hence, Beja elevated the case back to this Court through an "appeal by certiorari with preliminary injunction and/or temporary restraining order." We find the pleadings filed in this case to be sufficient bases for arriving at a decision and hence, the filing of memoranda has been dispensed with. In his petition, Beja assails the Court of Appeals for having "decided questions of substance in a way probably not in accord with law or with the applicable decisions" of this Court. 5 Specifically, Beja contends that the Court of Appeals failed to declare that: (a) he was denied due process; (b) the PPA general manager has no power to issue a preventive suspension order without the necessary approval of the PPA board of directors; (c) the PPA general manager has no power to refer the administrative case filed against him to the DOTC-AAB, and (d) the DOTC Secretary, the Chairman of the DOTC-AAB and DOTC-AAB itself as an adjudicatory body, have no jurisdiction to try the administrative case against him. Simply put, Beja challenges the legality of the preventive suspension and the jurisdiction of the DOTC Secretary and/or the AAB to initiate and hear administrative cases against PPA personnel below the rank of Assistant General Manager. Petitioner anchors his contention that the PPA general manager cannot subject him to a preventive suspension on the following provision of Sec. 8, Art. V of Presidential Decree No. 857 reorganizing the PPA: (d) the General Manager shall, subject to the approval of the Board, appoint and remove personnel below the rank of Assistant General Manager. (Emphasis supplied.) Petitioner contends that under this provision, the PPA Board of Directors and not the PPA General Manager is the "proper disciplining authority. 6 As correctly observed by the Solicitor General, the petitioner erroneously equates "preventive suspension" as a remedial measure with "suspension" as a penalty for administrative dereliction. The imposition of preventive suspension on a government employee charged with an administrative offense is subject to the following provision of the Civil Service Law, P.D. No. 807: Sec. 41. Preventive Suspension. The proper disciplining authority may preventively suspend any subordinate officer or employee under his authority pending an investigation, if the charge against such officer or employee involves dishonesty, oppression or grave misconduct, or neglect in the performance of duty, or if there are reasons to believe that the respondent is guilty of charges which would warrant his removal from the service. Imposed during the pendency of an administrative investigation, preventive suspension is not a penalty in itself. It is merely a measure of precaution so that the employee who is charged may be separated, for obvious reasons, from the scene of his alleged misfeasance while the same is being investigated. 7 Thus, preventive suspension is distinct from the administrative penalty of removal from office such as the one mentioned in Sec. 8(d) of P.D. No 857. While the former may be imposed on a respondent during the investigation of the charges against him, the latter is the penalty which may only be meted upon him at the termination of the investigation or the final disposition of the case. The PPA general manager is the disciplining authority who may, by himself and without the approval of the PPA Board of Directors, subject a respondent in an administrative case to preventive suspension. His disciplinary powers are sanctioned, not only by Sec. 8 of P.D. No. 857 aforequoted, but also by Sec. 37 of P.D. No. 807 granting heads of agencies the "jurisdiction to investigate and decide matters involving disciplinary actions against officers and employees" in the PPA. Parenthetically, the period of preventive suspension is limited. It may be lifted even if the disciplining authority has not finally decided the administrative case provided the ninety-day period from the effectivity of the preventive suspension has been exhausted. The employee concerned may then be reinstated. 8 However, the said ninety-day period may be interrupted. Section 42 of P.D. No. 807 also mandates that any fault, negligence or petition of a suspended employee may not be considered in the computation of the said period. Thus, when a suspended employee obtains from a court of justice a restraining order or a preliminary injunction inhibiting proceedings in an administrative case, the lifespan of such court order should be excluded in the reckoning of the permissible period of the preventive suspension. 9 With respect to the issue of whether or not the DOTC Secretary and/or the AAB may initiate and hear administrative cases against PPA Personnel below the rank of Assistant General Manager, the Court qualifiedly rules in favor of petitioner. The PPA was created through P.D. No. 505 dated July 11, 1974. Under that Law, the corporate powers of the PPA were vested in a governing Board of Directors known as the Philippine Port Authority Council. Sec. 5(i) of the same decree gave the Council the power "to appoint, discipline and remove, and determine the composition of the technical staff of the Authority and other personnel."

On December 23, 1975, P.D. No. 505 was substituted by P.D. No. 857, See. 4(a) thereof created the Philippine Ports Authority which would be "attached" to the then Department of Public Works, Transportation and Communication. When Executive Order No. 125 dated January 30, 1987 reorganizing the Ministry of Transportation and Communications was issued, the PPA retained its "attached" status. 10 Even Executive Order No. 292 or the Administrative Code of 1987 classified the PPA as an agency "attached" to the Department of Transportation and Communications (DOTC). Sec. 24 of Book IV, Title XV, Chapter 6 of the same Code provides that the agencies attached to the DOTC "shall continue to operate and function in accordance with the respective charters or laws creating them, except when they conflict with this Code." Attachment of an agency to a Department is one of the three administrative relationships mentioned in Book IV, Chapter 7 of the Administrative Code of 1987, the other two being supervision and control and administrative supervision. "Attachment" is defined in Sec. 38 thereof as follows: (3) Attachment. (a) This refers to the lateral relationship between the Department or its equivalent and the attached agency or corporation for purposes of policy and program coordination. The coordination shall be accomplished by having the department represented in the governing board of the attached agency or corporation, either as chairman or as a member, with or without voting rights, if this is permitted by the charter; having the attached corporation or agency comply with a system of periodic reporting which shall reflect the progress of programs and projects; and having the department or its equivalent provide general policies through its representative in the board, which shall serve as the framework for the internal policies of the attached corporation or agency; (b) Matters of day-to-day administration or all those pertaining to internal operations shall he left to the discretion or judgment of the executive officer of the agency or corporation. In the event that the Secretary and the head of the board or the attached agency or corporation strongly disagree on the interpretation and application of policies, and the Secretary is unable to resolve the disagreement, he shall bring the matter to the President for resolution and direction; (c) Government-owned or controlled corporations attached to a department shall submit to the Secretary concerned their audited financial statements within sixty (60) days after the close of the fiscal year; and (d) Pending submission of the required financial statements, the corporation shall continue to operate on the basis of the preceding year's budget until the financial statements shall have been submitted. Should any government-owned or controlled corporation incur an operation deficit at the close of its fiscal year, it shall be subject to administrative supervision of the department; and the corporation's operating and capital budget shall be subject to the department's examination, review, modification and approval. (emphasis supplied.) An attached agency has a larger measure of independence from the Department to which it is attached than one which is under departmental supervision and control or administrative supervision. This is borne out by the "lateral relationship" between the Department and the attached agency. The attachment is merely for "policy and program coordination." With respect to administrative matters, the independence of an attached agency from Departmental control and supervision is further reinforced by the fact that even an agency under a Department's administrative supervision is free from Departmental interference with respect to appointments and other personnel actions "in accordance with the decentralization of personnel functions" under the Administrative Code of 1987. 11 Moreover, the Administrative Code explicitly provides that Chapter 8 of Book IV on supervision and control shall not apply to chartered institutions attached to a Department. 12 Hence, the inescapable conclusion is that with respect to the management of personnel, an attached agency is, to a certain extent, free from Departmental interference and control. This is more explicitly shown by P.D. No. 857 which provides: Sec. 8. Management and Staff. a) The President shall, upon the recommendation of the Board, appoint the General Manager and the Assistant General Managers. (b) All other officials and employees of the Authority shall be selected and appointed on the basis of merit and fitness based on a comprehensive and progressive merit system to be established by the Authority immediately upon its organization and consistent with Civil Service rules and regulations. The recruitment, transfer, promotion, and dismissal of all personnel of the Authority, including temporary workers, shall be governed by such merit system. (c) The General Manager shall, subject to the approval of the Board, determine the staffing pattern and the number of personnel of the Authority, define their duties and responsibilities, and fix their salaries and emoluments. For professional and technical positions, the General Manager shall recommend salaries and emoluments that are comparable to those of similar positions in other government-owned corporations, the provisions of existing rules and regulations on wage and position classification notwithstanding.

(d) The General Manager shall, subject to the approval by the Board, appoint and remove personnel below the rank of Assistant General Manager. xxx xxx xxx (emphasis supplied.) Although the foregoing section does not expressly provide for a mechanism for an administrative investigation of personnel, by vesting the power to remove erring employees on the General Manager, with the approval of the PPA Board of Directors, the law impliedly grants said officials the power to investigate its personnel below the rank of Assistant Manager who may be charged with an administrative offense. During such investigation, the PPA General Manager, as earlier stated, may subject the employee concerned to preventive suspension. The investigation should be conducted in accordance with the procedure set out in Sec. 38 of P.D. No. 807. 13 Only after gathering sufficient facts may the PPA General Manager impose the proper penalty in accordance with law. It is the latter action which requires the approval of the PPA Board of Directors. 14 From an adverse decision of the PPA General Manager and the Board of Directors, the employee concerned may elevate the matter to the Department Head or Secretary. Otherwise, he may appeal directly to the Civil Service Commission. The permissive recourse to the Department Secretary is sanctioned by the Civil Service Law (P.D. No. 807) under the following provisions: Sec. 37. Disciplinary Jurisdiction. (a) The Commission shall decide upon appeal all administrative disciplinary cases involving the imposition of a penalty of suspension for more than thirty days, or fine in an amount exceeding thirty days salary, demotion in rank or salary or transfer, removal or dismissal from office. A complaint may be filed directly with the Commission by a private citizen against a government official or employee in which case it may hear and decide the case or it may deputize any department or agency or official or group of officials to conduct the investigation. The results of the investigation shall be submitted to the Commission with recommendation as to the penalty to be imposed or other action to be taken. (b) The heads of departments, agencies and instrumentalities, provinces, cities and municipalities shall have jurisdiction to investigate and decide matters involving disciplinary action against officers and employees under their jurisdiction. The decisions shall be final in case the penalty imposed is suspension for not more than thirty days or fine in an amount not exceeding thirty days' salary. In case the decision rendered by a bureau or office head is appealable to the Commission, the same may be initially appealed to the department and finally to the Commission and pending appeal, the same shall be executory except when the penalty is removal, in which case the same shall be executory only after confirmation by the department head. xxx xxx xxx (Emphasis supplied.) It is, therefore, clear that the transmittal of the complaint by the PPA General Manager to the AAB was premature. The PPA General Manager should have first conducted an investigation, made the proper recommendation for the imposable penalty and sought its approval by the PPA Board of Directors. It was discretionary on the part of the herein petitioner to elevate the case to the then DOTC Secretary Reyes. Only then could the AAB take jurisdiction of the case. The AAB, which was created during the tenure of Secretary Reyes under Office Order No. 88-318 dated July 1, 1988, was designed to act, decide and recommend to him "all cases of administrative malfeasance, irregularities, grafts and acts of corruption in the Department." Composed of a Chairman and two (2) members, the AAB came into being pursuant to Administrative Order No. 25 issued by the President on May 25, 1987. 15 Its special nature as a quasi-judicial administrative body notwithstanding, the AAB is not exempt from the observance of due process in its proceedings. 16 We are not satisfied that it did so in this case the respondents protestation that petitioner waived his right to be heard notwithstanding. It should be observed that petitioner was precisely questioning the AAB's jurisdiction when it sought judicial recourse. WHEREFORE, the decision of the Court of Appeals is AFFIRMED insofar as it upholds the power of the PPA General Manager to subject petitioner to preventive suspension and REVERSED insofar as it validates the jurisdiction of the DOTC and/or the AAB to act on Administrative Case No. PPA-AAB-1-049-89 and rules that due process has been accorded the petitioner. The AAB decision in said case is hereby declared NULL and VOID and the case in REMANDED to the PPA whose General Manager shall conduct with dispatch its reinvestigation. The preventive suspension of petitioner shall continue unless after a determination of its duration, it is found that he had served the total of ninety (90) days in which case he shall be reinstated immediately. SO ORDERED.

PEOPLE OF THE PHILIPPINES, petitioner, vs. THE HONORABLE SANDIGANBAYAN (Fifth Division) and EFREN L. ALAS, respondents. DECISION CORONA, J.: Does the Sandiganbayan have jurisdiction over presidents, directors or trustees, or managers of government-owned or controlled corporations organized and incorporated under the Corporation Code for purposes of the provisions of RA 3019, otherwise known as the Anti-Graft and Corrupt Practices Act? The petitioner, represented by the Office of the Special Prosecutor (OSP), takes the affirmative position in this petition for certiorari under Rule 65 of the Rules of Court. Respondent Efren L. Alas contends otherwise, together with the respondent court. Pursuant to a resolution dated September 30, 1999 of the Office of the Ombudsman, two separate informations[1] for violation of Section 3(e) of RA 3019, otherwise known as the Anti-Graft and Corrupt Practices Act, were filed with the Sandiganbayan on November 17, 1999 against Efren L. Alas. The charges emanated from the alleged anomalous advertising contracts entered into by Alas, in his capacity as President and Chief Operating Officer of the Philippine Postal Savings Bank (PPSB), with Bagong Buhay Publishing Company which purportedly caused damage and prejudice to the government. On October 30, 2002, Alas filed a motion to quash the informations for lack of jurisdiction, which motion was vehemently opposed by the prosecution. After considering the arguments of both parties, the respondent court ruled that PPSB was a private corporation and that its officers, particularly herein respondent Alas, did not fall under Sandiganbayan jurisdiction. According to the Sandiganbayan: After a careful consideration of the arguments of the accused-movant as well as of that of the prosecution, we are of the considered opinion that the instant motion of the accused is well taken. Indeed, it is the basic thrust of Republic Act as well as (sic) Presidential Decree No. 1606 as amended by President Decree No. 1486 and Republic Act No. 7975 and Republic Act No. 8249 that the Sandiganbayan has jurisdiction only over public officers unless private persons are charged with them in the commission of the offenses. The records disclosed that while Philippine Postal Savings Bank is a subsidiary of the Philippine Postal Corporation which is a government owned corporation, the same is not created by a special law. It was organized and incorporated under the Corporation Code which is Batas Pambansa Blg. 68. It was registered with the Securities and Exchange Commission under SEC No. AS094005593 on June 22, 1994 with a lifetime of fifty (50) years. Under its Articles of Incorporation the purpose for which said entity is formed was primarily for business, xxx Likewise, a scrutiny of the seven (7) secondary purposes of the corporation points to the conclusion that it exists for business. Obviously, it is not involved in the performance of a particular function in the exercise of government power. Thus, its officers and employees are not covered by the GSIS and are under the SSS law, and actions for reinstatement and backwages are not within the jurisdiction of the Civil Service Commission but by the National Labor Relations Commission (NLRC). The Supreme Court, in the case of Trade Unions of the Philippines and Allied Services vs. National Housing Corp., 173 SCRA 33, held that the Civil Service now covers only government owned or controlled corporations with original or legislative charters, those created by an act of Congress or by special law, and not those incorporated under and pursuant to a general legislation. The Highest Court categorically ruled that the Civil Service does not include government-owned or controlled corporation which are organized as subsidiaries of government-owned or controlled corporation under the general corporation law. In Philippine National Oil Company Energy Development Corporation vs. Leogardo, 175 SCRA 26, the Supreme Court emphasized that: The test in determining whether a government-owned or controlled corporation is subject to the Civil Service Law is the manner of its creation such that government corporation created by special charter are subject to its provision while those incorporated under the general corporation law are not within its coverage. Likewise in Davao City Water District vs. Civil Service Commission, 201 SCRA 601 it was held that by government-owned or controlled corporation with original charter we mean government-owned or controlled corporation created by a special law and not under the Corporation Code of the Philippines while in Llenes vs. Dicdican, et al., 260 SCRA 207, a public officer has been ruled, as a person whose duties involve the exercise of discretion in the performance of the function of government. Clearly, on the basis of the foregoing pronouncements of the Supreme Court, the accused herein cannot be considered a public officer. Thus, this Court may not exercise jurisdiction over his act.[2]

Dissatisfied, the People, through the Office of the Special Prosecutor (OSP), filed this petition[3] arguing, in essence, that the PPSB was a government-owned or controlled corporation as the term was defined under Section 2(13) of the Administrative Code of 1987.[4] Likewise, in further defining the jurisdiction of the Sandiganbayan, RA 8249 did not make a distinction as to the manner of creation of the government-owned or controlled corporations for their officers to fall under its jurisdiction. Hence, being President and Chief Operating Officer of the PPSB at the time of commission of the crimes charged, respondent Alas came under the jurisdiction of the Sandiganbayan. Quoting at length from the assailed resolution dated February 15, 2001, respondent Alas, on the other hand, practically reiterated the pronouncements made by the respondent court in support of his conclusion that the PPSB was not created by special law, hence, its officers did not fall within the jurisdiction of the Sandiganbayan.[5] We find merit in the petition. Section 2(13) of EO 292[6] defines government-owned or controlled corporations as follows: Sec. 2. General Terms Defined Unless the specific words of the text or the context as a whole or a particular statute, shall require a different meaning: xxx xxx xxx

(13) government owned or controlled corporations refer to any agency organized as a stock or non-stock corporation vested with functions relating to public needs whether governmental or proprietary in nature, and owned by the government directly or indirectly or through its instrumentalities either wholly, or where applicable as in the case of stock corporations to the extent of at least 51% of its capital stock: provided, that government owned or controlled corporations maybe further categorized by the department of the budget, the civil service commission and the commission on audit for the purpose of the exercise and discharge of their respective powers, functions and responsibilities with respect to such corporations. From the foregoing, PPSB fits the bill as a government-owned or controlled corporation, and organized and incorporated under the Corporation Code as a subsidiary of the Philippine Postal Corporation (PHILPOST). More than 99% of the authorized capital stock of PPSB belongs to the government while the rest is nominally held by its incorporators who are/were themselves officers of PHILPOST. The creation of PPSB was expressly sanctioned by Section 32 of RA 7354, otherwise known as the Postal Service Act of 1992, for purposes of, among others, to encourage and promote the virtue of thrift and the habit of savings among the general public, especially the youth and the marginalized sector in the countryside xxx and to facilitate postal service by receiving collections and making payments, including postal money orders.[7] It is not disputed that the Sandiganbayan has jurisdiction over presidents, directors or trustees, or managers of government-owned or controlled corporations with original charters whenever charges of graft and corruption are involved. However, a question arises whether the Sandiganbayan has jurisdiction over the same officers in government-owned or controlled corporations organized and incorporated under the Corporation Code in view of the delimitation provided for in Article IX-B Section 2(1) of the 1987 Constitution which states that: SEC. 2. (1) The Civil Service embraces all branches, subdivisions, instrumentalities, and agencies of the government, including government-owned or controlled corporations with original charters. It should be pointed out however, that the jurisdiction of the Sandiganbayan is separate and distinct from the Civil Service Commission. The same is governed by Article XI, Section 4 of the 1987 Constitution which provides that the present anti-graft court known as the Sandiganbayan shall continue to function and exercise its jurisdiction as now or hereafter may be provided by law. This provision, in effect, retained the jurisdiction of the anti-graft court as defined under Article XIII, Section 5 of the 1973 Constitution which mandated its creation, thus: Sec. 5. The Batasang Pambansa shall create a special court, to be known as Sandiganbayan, which shall have jurisdiction over criminal and civil cases involving graft and corrupt practices and such other offense committed by public officers and employees, including those in government-owned or controlled corporations, in relation to their office as may be determined by law. (Italics ours) On March 30, 1995, Congress, pursuant to its authority vested under the 1987 Constitution, enacted RA 7975[8] maintaining the jurisdiction of the Sandiganbayan over presidents, directors or trustees, or managers of government-owned or controlled corporations without any distinction whatsoever. Thereafter, on February 5, 1997, Congress enacted RA 8249[9] which preserved the subject provision: Section 4, Jurisdiction. The Sandiganbayan shall exercise exclusive original jurisdiction in all cases involving: a. Violations of Republic Act No. 3019, as amended, otherwise known as the Anti-Graft and Corrupt Practices Act, Republic Act No. 1379, and Chapter II, Section, Title VII, Book II of the Revised Penal Code, where one or more

of the accused are officials occupying the following positions in the government, whether in a permanent, acting or interim capacity, at the time of the commission of the offense, (1) Officials of the executive branch occupying the positions of regional director, and higher, otherwise classified as grade 27 and higher, of the Compensation and Position Classification Act of 1989 (Republic Act No. 6758) specifically including: xxx xxx xxx

(g) Presidents, directors or trustees, or managers of government-owned or controlled corporations, state universities or educational institutions or foundations. (Italics ours) The legislature, in mandating the inclusion of presidents, directors or trustees, or managers of government-owned or controlled corporations within the jurisdiction of the Sandiganbayan, has consistently refrained from making any distinction with respect to the manner of their creation. The deliberate omission, in our view, clearly reveals the intention of the legislature to include the presidents, directors or trustees, or managers of both types of corporations within the jurisdiction of the Sandiganbayan whenever they are involved in graft and corruption. Had it been otherwise, it could have simply made the necessary distinction. But it did not. It is a basic principle of statutory construction that when the law does not distinguish, we should not distinguish. Ubi lex non distinguit nec nos distinguere debemos. Corollarily, Article XI Section 12 of the 1987 Constitution, on the jurisdiction of the Ombudsman (the governments prosecutory arm against persons charged with graft and corruption), includes officers and employees of government-owned or controlled corporations, likewise without any distinction. In Quimpo v. Tanodbayan,[10] this Court, already mindful of the pertinent provisions of the 1987 Constitution, ruled that the concerned officers of government-owned or controlled corporations, whether created by special law or formed under the Corporation Code, come under the jurisdiction of the Sandiganbayan for purposes of the provisions of the Anti-Graft and Corrupt Practices Act. Otherwise, as we emphasized therein, a major policy of Government, which is to eradicate, or at the very least minimize, the graft and corruption that has permeated the fabric of the public service like a malignant social cancer, would be seriously undermined. In fact, Section 1 of the Anti-Graft and Corrupt Practices Act embodies this policy of the government, that is, to repress certain acts not only of public officers but also of private persons constituting graft or corrupt practices or which may lead thereto. The foregoing pronouncement has not outlived its usefulness. On the contrary, it has become even more relevant today due to the rampant cases of graft and corruption that erode the peoples faith in government. For indeed, a government-owned or controlled corporation can conceivably create as many subsidiary corporations under the Corporation Code as it might wish, use public funds, disclaim public accountability and escape the liabilities and responsibilities provided by law. By including the concerned officers of government-owned or controlled corporations organized and incorporated under the Corporation Code within the jurisdiction of the Sandiganbayan, the legislature evidently seeks to avoid just that. WHEREFORE, in view of the foregoing, the petition is hereby GRANTED and the assailed resolution dated February 15, 2001 of the respondent court is hereby REVERSED and SET ASIDE. SO ORDERED.

G.R. No. 129130 December 9, 2005 FAR EAST BANK AND TRUST COMPANY, Petitioner, vs. COURT OF APPEALS, COURT OF TAX APPEALS and COMMISSIONER OF INTERNAL REVENUE, Respondents. DECISION AZCUNA, J.: This is a Petition for Review on Certiorari assailing the decision of the Court of Appeals (CA) dated May 7, 1997 in CA-G.R. SP No. 41666. The CA affirmed in toto the decision of the Court of Tax Appeals (CTA) dated January 24, 1996 and its resolution of July 31, 1996, dismissing petitioner Far East Bank and Trust Companys claim for refund of excess creditable withholding taxes in the aggregate amount of Seven Hundred Fifty-Five Thousand Seven Hundred and Fifteen Pesos (P755,715) allegedly paid and remitted to the Bureau of Internal Revenue (BIR) sometime in 1990 and 1991. The antecedent facts are as follows: Petitioner is a domestic banking corporation duly organized and existing under and by virtue of Philippine laws. In the early part of 1992, the Cavite Development Bank [CDB], also a domestic banking corporation, was merged with Petitioner with the latter as its surviving entity [under] the merger. Petitioner being the surviving entity[, it] acquired all [the] assets of CDB. During the period from 1990 to 1991, CDB sold some acquired assets in the course of which it allegedly withheld the creditable tax from the sales proceeds which amounted to P755,715.00. In said years, CDB filed income tax returns which reflected that CDB incurred negative taxable income or losses for both years. Since there was no tax against which to credit or offset the taxes withheld by CDB, the result was that CDB, according to petitioner, had excess creditable withholding tax. Thus, petitioner, being the surviving entity of the merger, filed this Petition for Review after its administrative claim for refund was not acted upon.1 In denying petitioners claim, the CA held that the evidence presented by petitioner consisting of (1) confirmation receipts, payment orders, and official receipts issued by the Central Bank and the BIR with CDB as the payor; 2 (2) Income Tax Returns for 1990 and 1991 with attached financial statements filed by petitioner with the BIR; 3 and, (3) a list prepared by the Accounting Department of petitioner purportedly showing the CDB schedule of creditable withholding tax applied for refund for 1990 and 1991, 4 all failed to clearly establish that the taxes arising from the sale of its acquired assets sometime in 1990 and 1991 were properly withheld and remitted to the BIR. The CA likewise ruled that it was incumbent upon petitioner to present BIR Form No. 1743.1 as required under Revenue Regulation 6-85 to conclusively prove its right to the refund. It held that petitioners failure to do so was fatal to its cause. Hence, this Petition. Petitioner anchors its arguments on the following grounds: 1. THE DECISION OF MAY 7,1997 WHEREBY RESPONDENT CA DISMISSED PETITIONERS APPEAL, AND RESPONDENT CTAS DECISION DATED JANUARY 24, 1996 AND RESOLUTION OF JULY 31,1996, ARE NOT BASED ON THE FACTS AND THE LAW. 2. PETITIONER HAS ADDUCED EVIDENCE A QUO WHICH SUFFICIENTLY AND SUBSTANTIALLY ESTABLISH[ES] THE FACT THAT THE CREDITABLE WITHHOLDING TAX ON THE SALE OF ACQUIRED ASSETS WAS WITHHELD AND THEN REMITTED TO THE BUREAU OF INTERNAL REVENUE; AND, 3. THE DISMISSAL OF THE CLAIM FOR REFUND BEFORE RESPONDENT CTA ARISES FROM AN UNDULY STRICT APPLICATION OF THE REGULATIONS WHICH IS NOT WARRANTED IN VIEW OF THE CLEAR PROOFS ADDUCED BY PETITIONER WHICH ESTABLISH THE BASIS FOR THE RELIEFS SOUGHT.5 Petitioner contends that the confirmation receipts presented by it constitute "competent and irrefutable proof of the fact that taxes were withheld and remitted to the BIR."6 It is admitted that the taxes reflected on the confirmation receipts as well as on the payment orders and official receipts issued by the BIR were withheld by CDB. Petitioner maintains that these pertained to the proceeds of the

sale of its acquired assets in 1990 and 1991. According to petitioner, CDB took the initiative of paying the withholding tax accruing thereon notwithstanding the fact that it was the recipient of the income, to ensure that the correct taxes were remitted to the BIR. Petitioner further argues that the list prepared by its Accounting Department identifying the persons to whom the various sales were made and indicating the amount of taxes withheld for each transaction should have been given more weight by the court a quo as this document, when taken with the tax withholding forms, indubitably establishes the fact of withholding and the basis for the claims for refund.7 Considering, therefore, that petitioner had adequately established by other evidence the basis for the grant of the claim for tax refund, petitioner asserts that its failure to submit BIR Form No. 1743.1 is not fatal to its cause. The crucial issue in this case turns on a question of fact, that is, whether petitioner adduced sufficient evidence to prove its entitlement to a refund. The findings of fact of the CTA, a special court exercising particular expertise on the subject of tax, are generally regarded as final, binding and conclusive8 upon this Court, especially if these are substantially similar to the findings of the CA which is normally the final arbiter of questions of fact.9 The findings shall not be reviewed nor disturbed on appeal10 unless a party can show that these are not supported by evidence,11 or when the judgment is premised on a misapprehension of facts, or when the lower courts failed to notice certain relevant facts which if considered would justify a different conclusion. 12 Petitioner has not sufficiently presented a case for the application of an exception from the rule. Firstly, the CA cannot be faulted for not lending credence to petitioners contention that it withheld, for its own account, the creditable withholding taxes on the sale of its acquired assets. In our withholding tax system, possession of the amount that is used to settle the tax liability is acquired by the payor as the withholding agent of the government. 13 For this reason, the Tax Code imposes, among others, certain obligations upon the withholding agent to monitor its compliance with this duty. These include the filing of the quarterly withholding tax returns,14 the submission to the payee, in respect of his or its receipts during the calendar quarter or year, of a written statement showing the income or other payments made by the withholding agent during such quarter or year and the amount of the tax deducted and withheld therefrom, 15 and the filing with the BIR of a reconciliation statement of quarterly payments and a list of payees and income payments.16 Codal provisions on withholding tax are mandatory and must be complied with by the withholding agent. This is significant in that a taxpayer cannot be compelled to answer for the non-performance by the withholding agent of its legal duty to withhold unless there is collusion or bad faith. In addition, the former could not be deemed to have evaded the tax had the withholding agent performed its duty. 17 On the other hand, it is incumbent upon the payee to reflect in his or its own return the income upon which any creditable tax is required to be withheld at the source. Only when there is an excess of the amount of tax so withheld over the tax due on the payees return can a refund become possible. A taxpayer must thus do two things to be able to successfully make a claim for the tax refund: (a) declare the income payments it received as part of its gross income and (b) establish the fact of withholding. 18 On this score, the relevant revenue regulation provides as follows: Section 10. Claims for tax credit or refund. -- Claims for tax credit or refund of income tax deducted and withheld on income payments shall be given due course only when it is shown on the return that the income payment received was declared as part of the gross income and the fact of withholding is established by a copy of the statement duly issued by the payor to the payee (BIR Form No. 1743.1) showing the amount paid and the amount of tax withheld therefrom.19 As mentioned, petitioner relies heavily on the confirmation receipts with the corresponding official receipts and payment orders to support its case. Standing alone, however, these documents only establish that CDB withheld certain amounts in 1990 and 1991. It does not follow that the payments reflected in the confirmation receipts relate to the creditable withholding taxes arising from the sale of the acquired properties. The claim that CDB had excess creditable withholding taxes can only be upheld if it were clearly and positively shown that the amounts on the various confirmation receipts were the amounts withheld by virtue of the sale of the acquired assets. On this point, the CA correctly pronounced: The confirmation receipts alone, by themselves, will not suffice to prove that the taxes reflected in the income tax returns are the same taxes withheld from CDBs income payments from the sale of its acquired assets. This is because a cursory examination of the said Confirmation Receipts, Payment Orders and Official Receipts will show that what are reflected therein are merely the names of the payors and the amount of tax. The nature of the tax paid, or at the very least, the income payments from which the taxes paid were withheld are not reflected therein. If these are the only entries that are found on these proferred documents, We cannot begrudge the Respondent Court from nurturing veritable doubts on the nature and identity of the taxes withheld, when it declared, in part, in its Decision (Annex "A" of the Petition) that, It can not well be said that the amounts paid and remitted to the BIR were for CDBs account and not for the other possible payees of withholding taxes which CDB may also be liable to remit as a withholding agent x x x . 20 Petitioner, apparently aware of the foregoing deficiency, offered into evidence a CDB Schedule of Creditable Withholding Tax for the period 1990 to 199121 prepared by petitioners representative to show that the taxes CDB withheld did, indeed, pertain to the taxes accruing on the sale of the acquired assets. The CA, however, found the same to be "self-serving and unverifiable" and therefore "barren of evidentiary weight."22 We accord this finding on an issue of fact the highest respect and we will not set it aside lightly.

It bears emphasis that questions on whether certain items of evidence should be accorded probative value or weight, or rejected as feeble or spurious, or whether the proofs on one side or the other are clear and convincing and adequate to establish a proposition in issue, are without doubt questions of fact. This is true regardless of whether the body of proofs presented by a party, weighed and analyzed in relation to contrary evidence submitted by the adverse party, may be said to be strong, clear and convincing. Whether certain documents presented by one side should be accorded full faith and credit in the face of protests as to their spurious character by the other side; whether inconsistencies in the body of proofs of a party are of such gravity as to justify refusing to give said proofs weightall these are issues of fact. Questions like these are not reviewable by us. As a rule, we confine our review of cases decided by the CA only to questions of law raised in the petition and therein distinctly set forth. 23 We note that without the CDB Schedule, no evidence links the Confirmation Receipts, Payment Orders and Official Receipts to the taxes allegedly withheld by CDB on the sale of the acquired assets. As to the annual income tax returns for 1990 and 1991 24 presented by petitioner, we must stress that the mere admission into the records of these returns does not automatically make their contents or entries undisputed and binding facts. Mere allegations by petitioner of the figures in its returns are not a sufficient proof of the amount of its refund entitlement. They do not even constitute evidence adverse to respondent, against whom these are being presented.25 Furthermore, we note that in the proceedings below, respondent Commissioner of Internal Revenue (CIR) raised the fact that there was a discrepancy in the excess creditable withholding tax reflected in the returns with the amounts sought to be refunded by petitioner. Whereas the 1990 and 1991 Income Tax Returns indicated that CDB had excess creditable withholding tax in the amounts of P535,310 and P357,511, respectively, the amounts claimed by petitioner as indicated in the CDB Schedule were P512,940.50 for 1990 and P242,774.50 for 1991.26 The records are bereft of any explanation for such discrepancy. This further undermines petitioners contentions, and its reliance on the CDB Schedule. Petitioner also asserts that the confusion or difficulty in the implementation of Revenue Memorandum Circular 7-9027 was the reason why CDB took upon itself the task of withholding the taxes arising from the sale, to ensure accuracy. Assuming this were true, CDB should have, nevertheless, accomplished the necessary returns to clearly identify the nature of the payments made and file the same with the BIR. Section 2 of the circular clearly provides that the amount of withholding tax paid by a corporation to the BIR during the quarter on sales or exchanges of property and which are creditable against the corporations tax liability are evidenced by Confirmation/Official Receipts and covered by BIR Form Nos. 1743W and 1743-B. On the other hand, Revenue Regulation 6-85 states that BIR Form No. 1743.1 establishes the fact of withholding. Since no competent evidence was adduced by petitioner, the failure to offer these returns as evidence of the amount of petitioners entitlement during the trial phase of this case is fatal to its cause. For its negligence, petitioner "cannot be allowed to seek refuge in a liberal application of the [r]ules." 28 The liberal interpretation and application of rules apply only in proper cases of demonstrable merit and under justifiable causes and circumstances.29 We must emphasize that tax refunds, like tax exemptions, are construed strictly against the taxpayer and liberally in favor of the taxing authority.30 In the event, petitioner has not met its burden of proof in establishing the factual basis for its claim for refund and we find no reason to disturb the ruling of the lower courts. WHEREFORE, the petition is DENIED and the Decision of the Court of Appeals dated May 7, 1997 in CA-G.R. SP No. 41666 is AFFIRMED. No pronouncement as to costs. SO ORDERED.