Admin Session 1

ADMIN LAW | Nov 14, 2015 1

G.R. No. 114711 February 13, 1997

GARMENTS and TEXTILE EXPORT BOARD (GTEB), petitioner, vs.COURT OF APPEALS and AMERICAN INTER-FASHION CORPORATION, respondents.

G.R. No. 115889 February 13, 1997

AMERICAN INTER-FASHION CORPORATION, petitioner, vs.GLORIOUS SUN FASHION GARMENTS MANUFACTURING (PHILS.), INC. and GARMENTS and TEXTILE EXPORT BOARD (GTEB), respondents.

HERMOSISIMA, JR., J.:

The doctrine of "primary jurisdiction" of Government administrative agencies has herein come into play. Should courts of justice interfere with their purely administrative and discretionary functions and have supervisory powers over their proceedings and actions involving the exercise of judgment and findings of fact? Verily, over matters falling under their jurisdiction, we have repeatedly held that administrative agencies are in a better position to pass judgment thereon and their findings of fact in that regard are generally accorded respect, if not finality, by the courts. 1

In this connection, the Garments and Textile Export Board (GTEB) filed the herein petition for Certiorari from the January 21, 1994 Decision and the March 22, 1994 Resolution of the Court of Appeals in CA-G.R. SP No. 31596 (G.R. No. 114711). Up for our resolution likewise is the petition for Certiorari filed by the American Inter-Fashion Corporation (AIFC) against the GTEB Resolution of June 21, 1994 (G.R. No. 115889). These petitions, being interrelated, were ordered consolidated.

Antecedent facts to set us on a proper perspective are those lucidly set out by the Court of Appeals:

Petitioner American Inter-Fashion Corporation (AIFC) was a corporation organized under Philippine Laws engaged in the business of manufacturing and exporting garments. Prior to its incorporation, the original incorporators of AIFC were awarded the initial export quota (EQ) allocation by virtue of the resolution of the Garments & Export Textile Board (GTEB) dated July 30, 1984.

Before AIFC's incorporation, Glorious Sun, a corporation organized under Philippine Laws sometime in 1977, was a recipient of a

substantial number of EQ allocations from the GTEB. On April 27, 1984, Glorious Sun was charged before the GTEB in OSC No. 84-B-1 with, and was found guilty of, misdeclaration of values of its imported raw materials resulting in dollar salting, and other related frauds, in connection with its importations in 1983. As a result, the EQs of Glorious Sun as well as its license to operate a bonded manufacturing warehouse were cancelled and its stockholders and officers were disqualified from engaging in garment exports. Its export quotas were thereafter given to two newly-formed corporations — the De Soleil Apparel Manufacturing Corporation (De Soleil) and the herein petitioner American Inter-Fashion Corporation (AIFC). These corporations were joint ventures of Hongkong investors and majority stockholders of Glorious Sun on one hand and, allegedly, one member of the family and one crony of President Marcos on the other (American Inter-Fashion Corp. vs. Office of the President, 197 SCRA 409, 413 & 414 [1991]). The cancelled EQs of Glorious Sun which were given to AIFC pertains to those under Cat 347/8 equivalent to 113,341-3 dozens which are the subject of dispute between GTEB and petitioner. Glorious Sun continues to claim its rights over the aforementioned EQ.

In the meantime, AIFC was able to maintain its EQ from 1984 up to the time of the filing of this petition (except for a brief period between 1986 and 1989 when AIFC was placed under sequestration) by continuously exporting or shipping out at least 95% of its current allocation as required by the rules and regulations of the GTEB. This fact was not denied by the respondents.

With the establishment of a new government in 1986, Glorious Sun, on September 7, 1989, filed an appeal with the Office of the President, which, in turn, set aside the GTEB decision adverse to Glorious Sun and remanded the case for genuine hearings where due process would be accorded both parties (supra). This decision was upheld by the Supreme Court in a petition docketed as G.R. No. 92422 and entitled American Inter-Fashion Corporation vs. Office of the President, GTEB and Glorious Sun. On May 23, 1991 and July 2, 1991, the Supreme Court, after finding that ". . . American Inter-Fashion . . . was created obviously to be the recipient of export quotas arbitrarily removed from the rightful owner [Glorious Sun]", affirmed the decision of the Office of the President remanding the case for further proceedings to the GTEB (supra, p. 426).

Pending its appeal to the Office of the President, Glorious Sun filed before the Securities and Exchange Commission (SEC) a Petition to Declare the Forfeiture of the Registration of AIFC on June 16, 1987. This was docketed as SEC-AC No. 319. On May 24, 1990,


the PED ordered there revocation of AIFC's registration on the ground of "fraud". AIFC thereafter appealed to the SEC en banc, but the latter upheld the revocation on May 22, 1992. The subsequent Motion for Reconsideration of AIFC was also denied by the SEC on September 16, 1992.

On September 30, 1992, the Petition for Review filed by AIFC before this Court docketed as CA-G.R. No. 29017 was denied for having been filed beyond the reglementary period. This denial was upheld by the Supreme Court (3rd Division) in a Petition for Review docketed as G.R. No. 107742. AIFC's subsequent Motion for Reconsideration was likewise denied on February 17, 1993 and on July 1, 1993, the Supreme Court, en banc, upheld the cancellation of petitioner's certificate of registration with finality.

Meanwhile, on August 20, 1992, after further proceedings were conducted in OSC No. 84-B-1 concerning Glorious Sun's alleged violations and frauds, the GTEB adopted a resolution which reads as follows:

"NOW THEREFORE, BE IT RESOLVED, as it is hereby resolved:

1. The instant case is hereby terminated with prejudice;

2. The disqualification of Glorious Sun and its principal stockholders and officers from engaging in the garments export business is hereby lifted;

3. The bonded manufacturing warehouse license of Glorious Sun shall be restored subject to the condition that it shall within a reasonable period of time, comply with the requirements for the operation of a BMW, and

4. The Board hereby awards to Glorious Sun the cancelled EQs of De Soleil Apparel Manufacturing Corporation as follows:

1.1 US Cat 347/348 = 63.839 dozens

1.2 Cat 2 Canada = 123.587 pieces

5. The Board, under existing rules, regulations and policies, is not in a position to restore the balance of the cancelled quotas.

(NOTE): Because:

1.1 Subject quota is currently being performed by AIF;

1.2 AIF vigorously contests Glorious Sun's claim for restoration, on the ground that AIF has already acquired vested rights over the quota;

1.3 The pending case with SEC (SEC-AC319) filed by Glorious Sun for cancellation of AIFC's corporate registration;

1.4 May 22, 1992-SEC, en banc Resolution cancelling AIFC's registration;

1.5 Pendency of AIFC's appeal with the Court of Appeals filed on September 25, 1992. (Comments, Rollo, p. 78).

Incidentally, Glorious Sun also filed on September 21, 1992, GTEB Case No. 92-50 for the cancellation of the subject quotas allotted to AIFC and for restoration of the same to Glorious Sun. This case has not yet been resolved by GTEB.

AIFC, on the other hand, prior to the Supreme Court denial of its petition for review of the cancellation of its registration, requested the GTEB to release its EQ allocation for 1993. This request was, however, refused by the GTEB in a resolution dated January 11, 1993, for the following reasons:

". . . relative to the request of American Inter-Fashion Corp. for the release of its 1993 Initial EQ/CEA entitlements under Cat. 347/8:

After a thorough discussion on the matter and, upon motion duly made and seconded, it was —

RESOLVED, That pending final decision/resolution of the Supreme Court in the case of American Inter-Fashion Corp. (AIFC) vs. SEC, the request of AIFC for release of its 1993 Initial EQ/CEA entitlements under Cat. 347/8, be, as it is hereby DEFERRED, pending study by the Committee created under GTEB Office Order No. 92-1, dated September 11, 1992, and


superseded by Office Order No. 92-2, dated November 7, 1992, to study and attend to the request of AIFC pertaining to the release of its export quotas which shall submit its findings/comments and recommendation on the matter to the Board in its next meeting. However, with regard to subject firm's goods ready for shipment, it can participate in the EQ allocation (flexibility) when the same is offered to enable them to fulfill their commitments."

The above-quoted resolution was the subject of the petition filed by AIFC before the respondent Judge after GTEB refused to lift said order. This case which was docketed as Special Civil Action Case No. 93-1173 for Certiorari, prayed for the annulment of GTEB's aforementioned order, for the issuance of a temporary injunction restraining the implementation of said order, and for the immediate release of the regular EQ of AIFC for 1993. A temporary restraining order (Annex D) was thereafter issued by respondent Judge on April 13, 1993, enjoining GTEB from implementing its questioned order and from otherwise delaying the release of AIFC's EQ entitlement for 1993.

On April 20, 1993, GTEB filed a Motion to Dismiss and also moved to quash the above-mentioned temporary restraining order. Thereafter, on May 3, 1993, the respondent Judge issued one of the Orders herein questioned which reads as follows:

"For resolution is the petitioner's prayer for the issuance of a writ of a preliminary prohibitory injunction . . . enjoining the GTEB and all persons acting under them from implementing the resolution of the respondent GTEB, suspending the petitioner's export quota entitlement for 1993 and, a writ of preliminary mandatory injunction commanding the GTEB to release the petitioner's 1993 initial export quotas.

xxx xxx xxx

It is clear from the express terms of the questioned Resolution of the respondent Garments & Textile Export Board that the petitioner's export quota has not been "suspended" as claimed by the petitioner but was merely "deferred" pending a study of certain matters by the committee created by GTEB. Said

resolution further made provisions for the petitioner's goods which are ready for shipment by stating in the questioned resolution that "with regard to subject firm's goods ready for shipment, it can participate in the REA flexibility when the same is offered to enable them to fulfill their commitments.

Thus it is clear that the respondent GTEB has not as of this time, suspended or cancelled the petitioner's Export Quota but merely deferred its release to the petitioner pending the resolution of certain matters. As a further indication that the GTEB has not suspended the petitioner's export quota, is the fact that it has provided for temporary measures which allows the petitioner to ship its products which are ready for shipment in order not to unduly cause damage to the petitioner.

WHEREFORE, in view of all the foregoing, the petitioner's prayer for writs of preliminary prohibitory and mandatory injunctions are hereby DENIED." (Annex A; Rollo, pp. 23-24)

AIFC's subsequent motion for reconsideration was likewise denied (Annex D). Hence, the instant petition.

Despite the Supreme Court's final decision upholding the cancellation of AIFC's certificate of registration, the latter, on July 13, 1993, filed another Petition for Certiorari before the Supreme Court docketed as SC-G.R. No. 110771, against SEC and Glorious Sun, assailing the SEC decision dated May 22, 1992 which ordered the revocation of AIFC's certificate of registration, and seeking to stop the cancellation of its certificate of registration. This petition (G.R. No. 110771) was denied by the Supreme Court on August 11, 1992 on the ground that the questioned decision of the SEC "is the same decision assailed in a petition for review on certiorari filed with [the Supreme Court] on 23 November 1992 under Rule 45 of the Rules of Court, docketed as G.R. No. 107742. Records show that the petition (in G.R. No. 107742) was denied and a motion for reconsideration of said denial wasdenied with finality in the resolution of the Court en banc, dated 01 July 1993' (Annex A to Respondent's Memorandum; Rollo, p. 326). Petitioner's Motion for Reconsideration in G.R. No. 110771 is still pending resolution by the Supreme Court.


In the meantime, AIFC was awarded by the GTEB a REA-Flexibility quota of exactly the same category and amount as that which is the subject of this petition the release of which was deferred by the GTEB. This was done by the GTEB allegedly so as not to prejudice AIFC's export commitments pending any action on its request for the release of its 1993 EQs. AIFC had allegedly performed on the REA-Flex quota since January 1993 up to the present (Annex B to Respondent's Memorandum). The GTEB also allowed AIFC to continue importing raw materials "to service the balance of its REA-Flex quota" (Annex C; Respondents' Memorandum, p. 17). Incidentally, the difference between the REA-Flex quota and the regular quota entitlement, is that the latter may be subject to restoration for the next quota year depending on performance of and compliance while the former is only good for one-time use and may not be carried over to the next quota year (Respondent's Memorandum, p. 16; Rollo,p. 326).

On September 10, 1993, this Court in the instant petition and through the former Seventeenth Division, required petitioner to amend its petition to include AIFC-International Fashion Corporation (hereinafter, AIFC-International) as co-petitioner considering AIFC's manifestation that it underwent a business reorganization which resulted in the establishment of AIFC-International as its wholly-owned subsidiary and the transfer to the latter of AIFC's regular export allocation with the GTEB (p. 167,Rollo).

Respondent GTEB objected to AIFC's motion to join AIFC-International as co-petitioner because the latter allegedly does not have any interest in the case at bar. Furthermore, the SEC had issued a restraining order on August 31, 1993 enjoining AIFC or any of its agents from transferring and conveying its assets to AIFC-International or any other subsidiary of AIFC (Annex A; p. 220, Rollo). The restraining order was issued in connection with SEC Case No. 08-93-4546 filed by Yeung Chun Kam, Yeung Chun Ho, and Archie Chan vs. American Inter-Fashion Crop. (Annex B, p. 221, Rollo).

It seems that Yeung Chun Kam, Yeung Chun Ho and Archie Chan are among the stockholders of petitioner AIFC known as the "Hongkong Investors" who allegedly own an aggregate thirty-three percent (33%) of the total subscription of AIFC's capital stock of P2.5 Million. They alleged in their petition that they voted against the resolution adopted by AIFC which increased the corporation's capital stock from P2 Million to P60 Million, which resolved that the authorized capital stock be paid-up with the advances of the Campa Group representing 63% of the

subscription of the capital stock of AIFC, and which also resolved that the corporation's creditors-stockholders would be given the right to subscribe to the authorized capital stocks by converting their advances to the Corporation into equity.

The Hongkong group allegedly disagreed with and voted against the resolution since they wanted the additional paid-up capital to be entirely in cash with all the stockholders infusing new money. The resolution was allegedly not implemented, instead, the Hongkong group claims to have discovered that without their knowledge the Campa group organized and registered a partnership called American Inter-fashion Ltd., Co., as well as another subsidiary, the AIFC-International. Claiming that these acts of establishing the two business entities violated their rights as minority stockholders of AIFC, Yeung Chun Ho, Yeung Chun Kam and Archie Chan filed SEC Case No. 08-93-4546 seeking to restrain the transfer and conveyance of AIFC's assets to AIFC-International and American Inter-Fashion Ltd., Co.; to cause the appointment of trustees for the purpose of the liquidation of AIFC under Sec. 122 of the Corporation Code; and to order AIFC to provide Yeung Chun Kam company copies of its financial statements from 1989 to 1993 and to render an accounting of its operations during the said years (Rollo, pp. 222 to 235). This case is still pending before the SEC. 2

As can be seen, there were triggered by the controversy of the parties herein innumerable pleadings and interminable complaints:

On April 7, 1993, AIFC filed a petition for certiorari, prohibition and mandamus under Rule 65 against the GTEB with the Regional Trial Court of Makati, Branch 138, entitled "American Inter-Fashion Corporation, Petitioner, v. Garments and Textile Export Board, Respondent" docketed as Civil Case No. 93-1173 (Annex "D" of GTEB's petition).

In the said petition AIFC sought to annul, on the alleged ground of lack of jurisdiction or grave abuse of discretion, the GTEB's Resolution dated January 11, 1993 deferring AIFC's request for the release of its 1993 EQs (Initial EQ/CEA entitlements under Cat. 347/8) for the reasons therein stated. Said Resolution provided in part:

RESOLVED, that pending final decision/resolution of the Supreme Court on the case of American Inter-Fashion Corp. (AIFC) vs. SEC, the request of AIFC for release of its 1993 Initial EQ/CEA entitlements under Cat. 347/8, be, as it is hereby DEFERRED pending study by the Committee created under GTEB Office Order No. 92-1, dated September 11, 1992, and superseded by Office Order No. 92-2, dated November 17, 1992, to study and attend to the request of AIFC pertaining to the release of its export quotas which shall submit its findings/comments and recommendation on


the matter to the Board in its next meeting. However, with regard to subject firm's goods ready for shipment, it can participate in the REA flexibility when the same is offered to enable them to fulfill their commitments.

On April 13, 1993, the trial court issued a temporary restraining order against GTEB pending hearing on AIFC's application for the issuance of a writ of preliminary prohibitory injunction.

On April 24, 1993, GTEB filed its "1. Motion to Dismiss the Instant Petition and 2. Motion to Quash or Recall the Temporary Restraining Order." 3

On April 29, 1993, GTEB filed its "Motion to Resolve Motion to Dismiss Prior to Hearing of the Petition for Injunction." 4

On or about 19 April 1993, Glorious Sun Fashion Garments Manufacturing (Phils.), Inc. (Glorious Sun) filed an "Urgent 1) Motion for Leave to Intervene and File Answer as Respondent-Intervenor and 2) Motion to Quash or Recall Temporary Restraining Order." This motion was opposed by AIFC.

In its Order dated May 3, 1993, the trial court denied AIFC's application for the issuance of the writs of preliminary prohibitory and mandatory injunction. The pertinent portions of the May 3, 1993 Order 5 state:

It is clear from the express terms of the questioned Resolution of the respondent Garments and Textile Export Board that the petitioner's export quota has not been "suspended" as claimed by the petitioner but was only "Deferred" pending a study of certain matters by the committee created by GTEB. Said resolution further made provisions for the petitioner's goods which are ready for shipment by stating in the questioned resolution that "with regard to subject firm's goods ready for shipment, it can participate in the REA flexibility when the same is offered to enable them to fulfill their commitments."

Thus, it is clear that the respondent GTEB has not as of this time, suspended or cancelled the petitioner's Export Quota but merely deferred its release to the petitioner pending the resolution of certain matters. As a further indication that the GTEB has not suspended the petitioner's export quota, is the fact that it has provided for temporary measures which allows the petitioner to ship its products which are ready for shipment in order not to unduly cause damage to the petitioner.

WHEREFORE, in view of all the foregoing, the petitioner's prayer for writs of preliminary prohibitory and mandatory injunctions are hereby DENIED.

Through its Order dated May 25, 1993, 6 the trial court denied AIFC's motion for reconsideration of the May 3, 1993 Order. As a result thereof, AIFC filed with the Court of Appeals a petition for certiorari and mandamus from the aforementioned Orders of the trial court in Civil Case No. 93-1173 (docketed as CA-G.R. SP No. 31596) where it prayed that the May 3, 1993 and May 25, 1993 Orders be set aside and a writ of mandamus be issued directing the GTEB to release AIFC's EQs for 1993.

Thereafter, AIFC filed a "Manifestation" where it alleged that in July 1993, it underwent a business reorganization which resulted in the establishment of a wholly-owned subsidiary, the AIFC International Fashion Corporation. AIFC further alleged that its regular export quota allocation with the GTEB was transferred to the aforesaid subsidiary, for which reason, the said subsidiary may be joined as a co-petitioner in CA-G.R. SP No. 31596.

After the GTEB filed its "Comments" on the petition in CA-G.R. SP No. 31596 on August 19, 1993, 7 AIFC filed a "Motion" 8 where it prayed that AIFC International Fashion Corporation be joined as a co-petitioner. Thereafter, on or about August 26, 1993, AIFC (and AIFC International) filed a "Reply" to the Comments of GTEB. 9

Subsequent to the above, on September 14, 1993, upon being directed by the Court of Appeals to amend its petition to include "AIFC International Fashion Corporation" as co-petitioner, AIFC filed an amended petition. 10

After hearing the oral arguments of the GTEB and AIFC, and after receiving their respective memoranda, 11 as well as other additional pleadings (including an "Addendum To Respondent's Memorandum" 12 filed by the GTEB for purposes of informing the Court of Appeals of this Court's September 22, 1993 Resolution issued in G.R. No. 110771 denying with finality AIFC's motion for reconsideration of the August 11, 1993 Resolution dismissing the said petition, and affirmed the revocation of AIFC's certificate of corporate registration), or on January 21, 1994, the Court of Appeals rendered the Decision subject of GTEB's petition in G.R. No. 114711 in favor of AIFC and AIFC International, 13 annulling the trial court's Orders of May 3, 1993 and May 25, 1993 in this wise:

WHEREFORE, the instant petition is GRANTED and the Orders of the respondent Judge dated May 3, 1993 and May 25, 1993 are hereby annuled and set aside with no pronouncement as to costs.

On February 11, 1994, the GTEB filed a "Motion For Reconsideration" 14 of the 21 January 1994 Decision.


Shortly thereafter, motions to intervene as well as motions for reconsideration of the said Decision were filed by Glorious Sun Fashion Garments Manufacturing Co., (Phils.) Inc. and by the minority stockholders of AIFC (Yeung Chun Kam, Yeung Chun Ho and Archie Chan).

On or about January 31, 1994, on the ground that the Court of Appeals in its January 21, 1994 Decision had granted the petition, AIFC and AIFC International filed a "Motion For Issuance Of Writ Of Mandamus" 15 asking that a writ of mandamus be issued to compel the GTEB to release EQs for 1993 to AIFC.

On February 15, 1994, the GTEB filed its "Opposition To Petitioners' Motion for Issuance of Writ of Mandamus. 16

On March 22, 1994, the Court of Appeals issued its Resolution 17 denying (1) AIFC and AIFC International's motion for the issuance of a writ of mandamus, (2) the motions for intervention filed by Glorious Sun, and Yeung Chun Kam, et al., and (3) GTEB's motion for reconsideration. The more pertinent portions of said Resolution read:

It bears stressing that the subject matter of the petition as well as of the decision sought to be reconsidered was only the 1993 allocation. Our decision herein did not concern itself with, nor was it called upon to rule upon, any future allocations the grant or release of which is the prerogative of the GTEB in accordance with law.

We never ordered the GTEB to release the 1993 allocation to AIFC, since the lapse of the year 1993 had rendered this issue moot and academic.

We wish to make it clear that this Court is not intruding in, nor are we adjudicating upon ourselves, the powers and functions of the GTEB. The decision to annul the orders in question was called for in view of the grave abuse of discretion exercised both by GTEB and the lower court in refusing to release petitioner's 1993 allocations despite the fact that it was clearly entitled to such release. This is well within the jurisdiction of this Court which has the authority to check the abuses which may have been committed by any officer, board or tribunal exercising judicial functions (Sec. 1, Rule 65, Rules of Court).

Neither are we ordering the GTEB to release or grant export quota allocations to the transferee of AIFC's 1993 EQ allocations. The decision never granted such right to the transferee since we know that this issue is solely within the jurisdiction of the GTEB. What the decision discussed was petitioner's act of transferring the interest and assets of the former AIFC to its transferee. We do not consider this as an adjudication of GTEB functions.

As regards the Motions to Intervene filed by Glorious Sun and Yeung Chun Kam and company, we find said motions improper. Intervention is not an independent action but is auxiliary and supplemental to existing litigation (Clareza vs. Rosales, 2 SCRA 455). The office of a petition forcertiorari is only to check abuses or excesses in the exercise by a tribunal, board or officer, of its judicial functions and not to determine the respective rights and interests of the parties in the subject matter of the litigation. This petition is therefore not the proper forum for the discussion of the respective rights either or Glorious Sun or Yeung Chun Kam, and company. Whether or not Glorious Sun is entitled to quota allocations is an issue which could be properly raised before the GTEB. And regarding the interests of Yeung Chun Kam and company vis-a-vis those of AIFC's, the same should be properly ventilated in another appropriate proceeding.

Moreover, intervention is generally allowed only before or during trial (Sec. 2, Rule 12, Rules of Court) unless there are strong considerations to allow such intervention. None exists in this case.

In view of the denial of the Motions to Intervene filed by Glorious Sun, Yeung Chun Kam and company, there is no reason for us to discuss their motions for reconsideration.

WHEREFORE, premises considered, petitioner's Motion for the issuance of a Writ of Mandamus is DENIED. GTEB's motion for reconsideration is also DENIED as well as the Motions for Intervention filed by Glorious Sun, Yeung Chun Kam, Yeung Chun Ho, and Archie Chan.

GTEB thus filed its petition in G.R. No. 114711, where it prayed:

WHEREFORE, premises considered, it is respectfully prayed that the 21 January 1994 Decision and 22 March 1994 Resolution of the Court of Appeals (except insofar as the latter correctly denied AIFC and AIFC International Fashion Corporation's "Motion For Issuance Of Writ Of Mandamus') BE ANNULLED AND SET ASIDE; and that instead a Resolution be issued DISMISSING the petition in CA-G.R. SP No. 31596 in its entirety for being moot and academic and/or for lack of merit.

AIFC's petition in G.R. No. 115889, on the other hand, is an offshoot of the petition filed by Glorious Sun with the GTEB on 21 September 1992. 18 In said GTEB petition, 19 Glorious Sun prayed that the export quotas which the GTEB had earlier awarded to AIFC on August 1, 1984 pursuant to its April 27, 1984 Decision in Adm. Case No. OSC 84-B-1, be cancelled and returned to Glorious Sun, on the alleged


ground that AIFC was not qualified to the said awards under the policies, rules and regulations of the GTEB, and more specifically because:

a. AIFC, at the time of the award on August 1, 1984, did not have its own in-house production capacity; in this connection, AIFC, to this date, still has no in-house production capacity as it has continued not owning any factory, plant, or even a single sewing machine, nor can it show any lease agreement for the use of any manufacturing facilities;

b. AIFC had no personality at the time of the award on August 1, 1984 as it was not yet a corporation, its incorporation having been effected only on September 6, 1984; in this connection, on May 22, 1992, the certificate of registration of AIFC was revoked by order of the Securities and Exchange Commission on the ground that the same was secured through fraud; and

c. AIFC, upon its incorporation, included as stockholders persons who were at the time disqualified from engaging in the garments export business.

The events leading to the filing of GTEB Case No. 92-50 are in turn summed up in the succeeding paragraphs of Glorious Sun's "Comment on Petition with Memorandum" dated August 1, 1995: 20

8. On 27 April 1984, the GTEB, on the basis of trumped-up charges of misdeclaration of importations, issued a Decision in Adm. Case No. OSC 84-B-1, cancelling the export quotas and export authorizations of Glorious Sun, and on 01 August 1984 illegally awarded part thereof to AIFC. The dispositive portion of said Decision reads thus:

WHEREFORE, the Board finds that the Respondent firm violated its rules and regulations on importations and hereby imposes the following administrative penalties:

1. Cancellation of Export Quotas and Export Authorizations of the firm and disqualification of the firm and the major stockholders and officers from engaging in garment exports;

2. Cancellation of the firm's license to operate a bonded manufacturing warehouse.

The Board will likewise endorse the case to the Presidential Anti-Dollar Salting Task Force for further investigation and prosecution and will request the Bureau of Customs to seal the firm's bonded manufacturing warehouse and to conduct an inventory of the contents thereof.

9. Subsequently, Glorious Sun appealed the said Decision to the Office of the President. On September 7, 1989, the Office of the President, in O.P. Case No. 3781, nullified the Decision of the GTEB in the succeeding manner:

WHEREFORE, the case is hereby remanded to the Garments and Textile Export Board for further proceedings, affording the Appellant an opportunity (a) of full disclosure of all the evidence and/or GTEB records relative to the charges in the Show Cause Order dated February 14, 1984, which evidence/records must be properly identified and their due execution and existence duly established by appropriate competent witnesses, and (b) of rebutting the same evidence/records through the presentation of additional evidence, after which the Board may, on the basis of said evidence and records, maintain or revise its decision in this case.

10. Thereafter, acting on Motions for Reconsideration of its September 7, 1989 decision, the Office of the President, on February 20, 1990, expanded its previous decision. The pertinent portion of the Resolution denying said motions are hereunder quoted, to wit:

It is, however, insisted by the movants that the GTEB decision of April 27, 1984 had already become final and that Glorious Sun abandoned its right when it elevated the case to the Supreme Court by way of certiorari, docketed as G.R. No. 67180, "Glorious Sun Fashion Garments and Textile Manufacturing Company (Philippines), Inc. vs. Garments and Textile Export Board, etc. et al." We disagree. For, as explicitly shown by the resolution promulgated on June 4, 1984 by the Supreme Court in the said case and as found by this Office in the decision presently sought to be reconsidered, the said April 27, 1984 decision was rendered by the GTEB in flagrant violation of Glorious Sun's right to due process. Hence, the


GTEB may be said to have "acted without or in excess of jurisdiction and with grave abuse of discretion" (Barranza vs. Campos, Jr. 120 SCRA 881, 888-889) and, therefore, the said decision is null and void (Bacus vs. Ople, 132 SCRA 690, 710; Free Employees and Workers Assn. [FEWA] vs. Court of Industrial Relations, 14 SCRA 781, 784-787) as if it was not rendered at all. As succinctly held by the Supreme Court:

In this jurisdiction, a void judgment or order is in legal effect no judgment or order. By it no rights are divested. From it no rights can be obtained. Being worthless, it neither binds nor bars anyone. All acts performed under it and all claims flowing out of it are void (Paredes vs. Moya, 61 SCRA 525, 533, citing Chavez vs. Court of Appeals, 24 SCRA 663, 685; Comia vs. Nicolas, 29 SCRA 492, 503-504, quoting Chavez vs. CA, supra, and Gomez vs. Concepcion, 47 Phil. 717, 722).

Thus, being null and void, rendered as it was in violation of the due process clause (Bacus vs. Ople, supra) and consequently for want of jurisdiction (Barranza vs. Campos, Jr., supra), the GTEB decision of April 27, 1984 "is not a decision in contemplation of law" (Planas vs. Collector of Internal Revenue, 3 SCRA 395, 399) and is, therefore, "inexistent" (Free Telephone Workers Union vs. PLDT, 160 SCRA 43, 46). Consequently, the same decision can "never become final" (Manila Railroad Company vs. Moya, 14 SCRA 358, 363-364), much less executory (Planas vs. Collector

of Internal Revenue, supra). Indeed, the parties attempting to enforce (such void judgment) may be responsible as "trespassers" (Comia vs. Nicolas, supra, at p. 504).

What right then could Glorious Sun have abandoned when, as illustrated by the aforecited authorities, the void and inexistent GTEB decision of April 27, 1984 neither vests nor divests any rights, neither binds nor bars anyone?

11. The Decision of the Office of the President was in turn upheld by the Supreme Court in a Resolution dated May 23, 1991 and another Resolution dated July 2, 1991 in American Inter-Fashion Corporation v. Office of the President (197 SCRA 409 [1991]). In said case, the Supreme Court, citing Mabuhay Textile Mills Corporation v. Ongpin (141 SCRA 437 [1986]), ruled that the export quota allocations of Glorious Sun had evolved into some form of property right, which should not be removed from it arbitrarily and without due process. Thus:

Contrary to the petitioner's posture, the record clearly manifests that in cancelling the export quotas of the private respondent GTEB violated the private respondent's constitutional right to due process. Before the cancellation in 1984, the private respondent had been enjoying export quotas granted to it since 1977. In effect the private respondent's export quota allocation which initially was a privilege evolved into some form of property right which should not be removed from it arbitrarily and without due process only to hurriedly confer it on another. Thus, in the case of Mabuhay Textile Mills Corporation v. Ongpin (Ibid), we stated:

In the case at bar, the petitioner was never given the chance to present its side before its export quota allocations were revoked and its officers suspended. While it is true that such allocations as


alleged by the Board are mere privileges which it can revoke and cancel as it may deem fit, these privileges have been accorded to petitioner for so long that they have become impressed with property rights especially since not only do these privileges determine the continued existence of the petitioner with assets of over P80,000,000.00 but also the livelihood of some 700,000 workers who are employed by the petitioner and their families. . . . (Emphasis supplied).

The decision penned by Deputy Executive Secretary Magdangal B. Elma and the resolution penned by Acting Deputy Executive Secretary Mariano Sarmiento II are not tainted in the slightest by any grave abuse of discretion. They outline in detail why the private respondent was denied due process when its export quotas were cancelled by GTEB. The findings are supported by the records.

Finally, American Inter-Fashion is hardly the proper party to question the Malacañang decision. It was incorporated after the incidents in this case happened. It was created obviously to be the recipient of export quotas arbitrarily removed from the rightful owner. It was sequestered precisely because of the allegation that it is a crony corporation which profited from an act of injustice inflicted on another private corporation.

xxx xxx xxx

PREMISES CONSIDERED, the motion for reconsideration is GRANTED. The instant petition is DISMISSED. The questioned decision and resolution of the Office of the President are hereby AFFIRMED (American Inter-Fashion Corporation v. Office of the President, 197 SCRA 409 [1991]).

12. After the aforementioned Decision of the Office of the President was affirmed by the Supreme Court, and pursuant to the directive embodied in the said O.P. Decision, the case was remanded to the GTEB for further proceedings. However, while Glorious Sun presented additional evidence in support of its position, the GTEB did not, as it could not, present any evidence relative to the charges in the show Cause Order dated 14 February 1984. Instead, and in view of this dearth of evidence against Glorious Sun, the GTEB encouraged the latter to enter into a compromise agreement.

13. Glorious Sun assented to the execution of a compromise agreement primarily on the basis of an understanding with the GTEB that insofar as the balance of the export quotas due to Glorious Sun was concerned (which quotas AIFC was illegally and obstinately holding on to), Glorious Sun would be allowed to initiate separate proceedings for the recovery thereof against AIFC. Incidentally, this arrangement was rendered necessary by the fact that AIFC was never a proper party to, and had no personality to participate in Adm. Case No. OSC 84-B-1.

14. On August 20, 1992, the GTEB finally dismissed the complaint against Glorious Sun which formed the basis for the April 27, 1984 decision, restoring part of the export quota allocations of Glorious Sun. The dispositive portion of the said Resolution reads:

NOW THEREFORE, BE IT RESOLVED, as it is hereby resolved that:

a) The instant case is hereby terminated with prejudice;


b) The disqualification of Glorious Sun and its principal stockholders and officers from engaging in the garments export business is hereby lifted;

c) The bonded manufacturing warehouse license of Glorious Sun shall be restored subject to the condition that it shall within a reasonable period of time, comply with the requirements for the operations of a BMW, and

d) The Board hereby awards to Glorious Sun the canceled EQs of De Soleil Apparel Manufacturing Corporation as follows:

1. US Cat. 347/348-63,839 dzs.

2. Cat. 2 Canada-123,587 pcs.

e) The Board, under existing rules, regulations and policies, is not in a position to restore the balance of the cancelled quotas (p. 4, GTEB Resolution dated August 20, 1992).

15. It will be noted that the Board restored to Glorious Sun the portion of the export quotas illegally taken away from Glorious Sun and given to DE Soleil Apparel Manufacturing Corporation (DSA), the same having been already taken back by the Board by cancellation. But, as stated above, with respect to the balance of the export quotas illegally taken away from Glorious Sun still being stubbornly illegally held on to by AIFC, additional steps became necessary for the recovery thereof.

16. Accordingly, on September 21, 1992, Glorious Sun filed GTEB Case No. 92-50 for the cancellation of the quotas illegally awarded to AIFC and for the restoration of the said quotas to Glorious Sun.

17. On August 3, 1993, the Hearing Officer submitted his Report with the recommendation that AIFC's export quotas he revoked/cancelled and the same be returned or awarded to Glorious Sun subject to GTEB rules and regulations on performance and forfeiture. However, instead of approving the Report of the Hearing Officer assigned to hear the case and who conducted the proceedings, the GTEB appointed a committee to prepare a Report.

18. The Committee submitted its Report and Recommendation under date of May 10, 1994. On June 21, 1994, the GTEB issued a Resolution adopting and approving in toto the Report and Recommendation. The pertinent portion of the Resolution reads:

THE FOREGOING PREMISES CONSIDERED, the Board hereby RESOLVES:

1. That the export quotas and export authorizations awarded to AIFC be cancelled;

2. That the petition of Glorious Sun to be restored the export quota allocations which were awarded to AIFC be denied;

3. That said export quotas and export authorizations of AIFC be reverted to the allocable balance (open basket) which shall be made available to other garment manufacturers, including Glorious Sun, for application therefor; and

4. That AIFC's motion to dismiss be denied for lack of any merit.

19. AIFC filed the instant petition to annul the above-quoted June 21, 1994 Resolution of the GTEB, as well as to compel the latter to restore the cancelled export authorizations which AIFC claims it is entitled to.

After Glorious Sun presented evidence in support of its petition in GTEB Case No. 92-50, AIFC filed a motion to dismiss the same for lack of jurisdiction. 21 On June 21, 1994, the GTEB issued its resolution subject of AIFC's petition in G.R. No. 115889, 22 the entirety whereof reads as follows:

RESOLVED, that the findings and recommendation of the Committee on Administrative Case No. 92-50, as contained in Annex "C", be, as they are hereby ADOPTED and APPROVED, in toto, wit:

1. That the export quotas and export authorizations awarded to AIFC be cancelled;

2. That the petition of Glorious Sun to be restored the export allocations which were awarded to AIFC be denied;


3. That the said export quotas and export authorizations of AIFC be reverted to the allocable balance which shall be made available to other garment manufacturers, including Glorious Sun, for application therefor;

4. That AIFC's motion to dismiss be denied for lack of merit.

Consequently, on 6 July 1994, AIFC filed its petition in G.R. No. 115889, where it sought to:

(a) annul and set aside the respondent Garments and Textile Export Board's (GTEB's) resolution dated 21 June 1994 in GTEB Case No. 92-0, entitled Glorious Sun vs. AIFC, for having been issued without or in excess of jurisdiction, or in grave abuse of discretion; and

(b) have respondent GTEB commanded to restore or release petitioner AIFC's regular export quota entitlement for 1994. 23

Simultaneous with the filing of its petition, AIFC filed a motion to consolidate the said petition with GTEB's petition in G.R. No. 114711. On July 20, 1994, after praying for time for the filing thereof, Glorious Sun filed, in G.R. No. 115889, a "Motion for Outright Dismissal of the Petition (with Opposition to Motion to Consolidate)", where it sought the dismissal of said petition on the grounds that (1) AIFC has no personality to file the petition; (2) AIFC failed to exhaust administrative remedies; and (3) AIFC is guilty of forum-shopping.

In view of Our July 20, 1994 Resolution: (1) requiring the respondents in G.R. No. 115889 to comment on the petition, and not to file a motion to dismiss, and (2) granting AIFC's motion to consolidate, Glorious Sun filed a "Manifestation" on August 15, 1994 whereby it withdrew the aforesaid "Motion for Outright Dismissal of the Petition (with Opposition to Motion to Consolidate)." At the same time it made manifest its intention to file a motion for reconsideration of the same July 20, 1994 Resolution insofar as it ordered AIFC's petition in G.R. No. 115889 consolidated with the GTEB's petition in G.R. No. 114711.

Accordingly, on September 7, 1994, Glorious Sun filed a "Motion for Reconsideration 24 with Motion to Suspend Period to File Comment."

However, prior to the filing of Glorious Sun's aforesaid "Motion for Reconsideration, etc.," or on September 5, 1994, we issued our Resolution in the above-numbered cases, where we resolved to:

(a) NOTE WITHOUT ACTION the motions filed by: (1) Glorious Sun Fashion Garments Manufacturing in G.R. No. 115889 for first and second extensions totalling fifteen (15) days from July 13, 1994 within which to file motion to dismiss petition and opposition to the motion to consolidate; and (2) American Inter-Fashion Corporation [N.B. this should have read "Glorious Sun Fashion Garments Manufacturing" in G.R. No. 114711 for the outright dismissal of the case with opposition to the motion to consolidate, it appearing that the: (1) motion for outright dismissal with opposition to the motion to consolidate was withdrawn by private respondent Glorious Sun Fashion Garments Manufacturing in G.R. No. 115889 through its manifestation dated August 11, 1994; and (2) motion to consolidate these cases was granted by the Second Division on July 20, 1994;

(b) GRANT the motions of: (1) private respondent American Inter-Fashion corporation: (aa) for a fourth (final) extension of five (5) days from July 23, 1994 within which to file comment on the petition for review on certiorari; and (bb) to admit comment on the petition in G.R. No. 114711;

(c) NOTE the: (1) urgent motion of petitioner in G.R. No. 115889 to resolve application for temporary restraining order or injunction; and (2) comment on the petition with motion for the issuance of a show cause order filed by private respondent American Inter-Fashion Corporation in G.R. No. 114711;

(d) require the petitioners [N.B. this should have read petitioner] to file a REPLY within ten (10) days from notice hereof to the comment on the petition filed by American Inter-Fashion Corporation; and

(e) NOTE the manifestation dated August 12, 1994 by Atty. Benjamin D. de Asis, manifesting his withdrawal as counsel for petitioner Garments and Textile Export Board in G.R. No. 114711 but require aforesaid counsel to SUBMIT the conformity of his client within five (5) days from notice hereof. 25

Thereafter, Glorious Sun filed on September 22, 1994 with the First Division of this Court, its "Manifestation and Motion to Suspend Further Proceedings Until After Resolution by Second Division of Motion for Reconsideration of Order of July 20, 1994 on Consolidation." 26 On the other hand, the GTEB, pursuant to Our above directive, filed its Reply to AIFC's Comment in G.R. No. 115889.

AIFC, as petitioner in G.R. No. 114711, filed with the Second Division of this Court an "Urgent Motion to Resolve Application for Injunction," 27 which it followed up with an "Urgent Motion to Restore Status Quo Ante." 28 The latter motion was filed with the Third Division of this Court, to whom the above-numbered petitions had, in the


meantime, been assigned. In response to these urgent motions, Glorious Sun filed, also with the Third Division of this Court, its "Comment (Re: Petitioner's Urgent Motions: [1] to Resolve Application for Injunction; and [2] to Restore Status Quo Ante)" where it argued that:

I. The First Division of this Honorable Court, as far back as 05 September 1994, had already acted upon petitioner's urgent motion for the issuance of a temporary restraining order or injunction, by merely noting the same.

II. In any event, the instant motions should nevertheless be denied, there being absolutely no showing that petitioner is clearly entitled to injunctive relief. 29

Subsequent to the filing of the above pleadings, AIFC filed yet another "Urgent Motion to Resolve," to which Glorious Sun replied through a pleading denominated as "Manifestation (Re: Petitioner's March 30, 1995 Urgent Motion to Resolve) with Motion for Summary Dismissal and Motion to Cite Petitioner for Direct Contempt (For Violation of SC Revised Circular 28-91)." 30

On April 3, 1995, we issued a resolution, the pertinent portions whereof reads:

Considering the allegations contained, the issues raised and the arguments adduced in the petitions for review on certiorari, as well as the respective comments of the private respondents thereon and the replies of petitioner to said comments, the Court Resolved to give DUE COURSE to the petition, and to require the parties to FILE their respective MEMORANDA in both cases, within twenty (20) days from notice.

The Court further Resolved:

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(b) to NOTE:

(1) the urgent motion to resolve application for injunction, dated March 2, 1995, filed by counsel for petitioner American Inter-Fashion Corporation; and

(2) the urgent motion to restore status quo ante, dated March 14, 1995, filed by counsel for petitioner.

Thereafter, both American Inter-Fashion Corporation and the GTEB filed their respective Memoranda. On the other hand, on August 4, 1995, Glorious Sun filed its "Comment on Petition with Memorandum," 31 which pleading included the succeeding explanatory remarks:

1. At the outset, it should be mentioned that contrary to the 05 April 1995 Resolution of the Honorable Court, Glorious Sun has not yet filed its comment to American Inter-Fashion Corporation's (AIFC's) petition in the above-numbered case.

2. On 07 September 1994, Glorious Sun filed a motion for reconsideration of the order of this Honorable Court which consolidated the instant petition with the petition of the Garments and Textile Export Board (GTEB) in G.R. No. 114711. Glorious Sun included in said motion for reconsideration a "Motion to Suspend Period to File Comment," pending resolution by the Honorable Court of the consolidation incident.

3. Subsequent thereto, or on 22 September 1994, Glorious Sun filed a "Manifestation and Motion to Suspend Further Proceedings Until After Resolution by Second Division of Motion for Reconsideration of Order of July 20, 1994 on Consolidation.

4. In view of the filing of the aforementioned motions, Glorious Sun held off the filing of its comment to the petition until said motions were resolved by the Honorable Court. To this day, however, no resolution has as yet been rendered by the Honorable Court relative to the above-stated motions.

5. We surmise that the comment being referred to by the Honorable Court as having been filed by Glorious Sun is that which the latter filed in connection with AIFC's Urgent Motions (1) to Resolve Application for Injunction; and (2) to Restore Status Quo Ante.

6. Be that as it may, Glorious Sun is filing the instant pleading which it prays be treated as its comment and memorandum. 32

A "Motion for Leave to Intervene and Submit Manifestation" 33 in the above-entitled cases was subsequently filed by Messrs. Yeung Chun Kam and Yeung Chun Ho, who purport to be the Hongkong investors referred to by American Inter-Fashion Corporation in its 23 June 1995 Memorandum.

On July 19, 1996, Glorious Sun filed a "Manifestation," whereby it informed this Court of the May 20, 1996 Order of the Securities and Exchange Commission (SEC), the entirety whereof reads thus:


The articles of incorporation of American Inter-Fashion Corporation (the new AIFC, for short) with SEC Reg. No. AS093-008101-A reveal that said corporation was formed for the purpose of re-registering American Inter-Fashion Corporation (the old AIFC) with SEC Reg. No. 12236 registered with the SEC on July 16, 1985 and that the same appear to have been approved by the Commission en banc in its Commission meeting held on October 14, 1993. What was actually approved in said meeting was the "registration of a new corporation" and that it was not the intention of this Commission to approve the re-registration of the old AIFC.

American Inter-Fashion Corporation (SEC Reg. 12236), whose corporate registration had been ordered revoked, cannot avoid liquidation by reason of the revocation of its franchise and it cannot also be allowed to continue its business by virtue of its so-called "re-registration."

Viewed in this light, this Commission en banc hereby RECALLS the certificate of registration issued to American Inter-Fashion Corporation on October 14, 1993 under SEC Reg. No. AS093-008101-A without prejudice to the registration of a new corporation. 34

In the same "Manifestation," Glorious Sun prayed, among others, for the dismissal of the above-entitled petitions, citing as ground therefor the above-quoted SEC Order recalling American Inter-Fashion Corporation's certificate of registration. Thereafter, American Inter-Fashion Corporation filed its "Counter Manifestation (To Glorious Sun's Manifestation dated July 15, 1996)," 35 to which Glorious Sun responded by way of its "Reply (Re: Counter-Manifestation). 36

In G.R. No. 114711, the GTEB made the following assignment of errors:

I. The respondent Court of Appeals erred gravely in failing to rule that it had no jurisdiction over the petition in CA-G.R. SP No. 31596.

II. The respondent Court of Appeals erred gravely in failing to rule that the petition in CA-G.R. SP No. 31596 did not state a cause of action against GTEB.

III. The respondent Court of Appeals erred gravely in failing to hold that the 11 January 1993 Resolution issued by GTEB was valid and in the proper exercise of its administrative discretion and jurisdiction.

IV. The respondent Court of Appeals erred gravely in failing to hold that the petition in CA-G.R. SP No. 31596 was rendered moot and academic in its entirety by the mere passage of the year 1993.

V. The respondent Court of Appeals erred gravely in failing to deny and/or to dismiss the petition in CA-G.R. SP No. 31596 for lack of merit. 37

On the other hand, AIFC makes the following assignment of errors in its petition: 38

The GTEB has no jurisdiction to take cognizance of Glorious Sun's action against AIFC for "recovery" of property. 39

In any case, the GTEB's issuance of a resolution deciding the action on its "merits" without hearing AIFC's evidence is a violation of AIFC's right to due process. 40

The GTEB's cancellation of AIFC's EQs is a confiscation of property without due process of law. 41

THE ISSUES

1. Considering that AIFC's Certificate of Registration had been effectively revoked by the Securities and Exchange Commission on May 22, 1990, may AIFC still engage in business and claim entitlement to the export allocations subject of these petitions?

2. Does the Garments and Textile Export Board (GTEB) have the power and authority to grant or cancel export quotas or authorizations?

3. Did the GTEB, in issuing the assailed Resolutions, afford AIFC the right to due process?

I

This is not the first time that we have been asked to resolve an issue relative to AIFC's corporate personality. In G.R. No. 110711, entitled "American Inter-Fashion Corporation v. Securities and Exchange Commission, et al.," this Court en banc upheld the resolutions of the Prosecution and Enforcement Department (PED) of the Securities and Exchange Commission (SEC) in PED Case No. 87-0321 revoking AIFC's certificate of registration, on the basis of Glorious Sun's assertions that AIFC committed fraud and misrepresentation in securing said certificate of registration, after we had likewise effectively upheld the very same resolutions in an earlier petition filed by AIFC, entitled "American Inter-Fashion Corporation v. Court of Appeals, et al." 42


In said G.R. No. 110711, we recounted the factual circumstances pertinent to the revocation of AIFC's certificate of registration in the succeeding manner:

The complaint was assigned for investigation and hearing to SEC's Prosecution and Enforcement Department (PED). On 14 May 1990, PED issued a resolution recommending the revocation of petitioner's SEC certificate of registration; however, on 24 May 1990, PED issued an amended resolution this time revoking the said certificate on the basis of its ruling that "there was in effect no payment of at least P1,657,000.00 of the P2,500,000.00 supposed payment on subscription, contrary to the treasurer's affidavit that the subscription of P2,500,000.00 was fully paid and the payment had been fully received." In PED's resolution of 15 October 1990, petitioner's motion for reconsideration was denied.

Acting on petitioner's appeal (docketed as Sec-AC No. 319) from the said resolutions of PED, the SEC affirmed the same, in its decisions of 22 May 1992. A copy of which was received by petitioner on 25 May 1992. Petitioner's motion for reconsideration was denied by the SEC in the latter's order dated September 16, 1992, copy of which order was received by petitioner's counsel on September 18, 1992 (three [3] SEC commissioners concurred; two [2] dissented). On September 25, 1992, petitioner then filed a petition for review with the Court of Appeals docketed as CA-G.R. SP No. 29017. But on September 30, 1992, the Court of Appeals dismissed the petition on the ground that it was filed late (last day to file petition was on September 19, 1992, but petition was filed only on September 25, 1992, thus, petition was filed six [6] days late).

On November 23, 1992, petitioner filed a petition for review (under Rule 45 of the Rules of Court) with this Court, docketed as G.R. No. 107742 assailing the resolution of the Court of Appeals in said CA-G.R. SP No. 29017, and questioning the SEC decision of 22 May 1992 in SEC-AC No. 319. On January 13, 1993, this Court (Third Division) denied AIFC's petition, thus affirming the Court of Appeals' assailed resolution of September 30, 1992, on the ground that the appellate court committed no reversible error in dismissing the petition in CA-G.R. SP No. 29017. Petitioner's motion for reconsideration was referred to the Court en banc. On July 1, 1993 the Court en banc denied with finality petitioner's motion for reconsideration and held that the reason given by petitioner's counsel for late filing of its petition (i.e. petition was filed late with the Court of Appeals because petitioner's counsel Atty. Ceniza of Sycip Law got seriously ill) was not a valid excuse and not a compelling reason to reconsider the Court's resolution of January 13, 1993.

Petitioner's counsel has filed the present petition (filed on 13 July 1993) under Rule 65 of the Rules of Court, assailing the same PED resolutions and SEC decision assailed in G.R. No. 107742 (filed under Rule 45 of the Rules), this time on the ground that they were issued or rendered without jurisdiction.

As earlier noted, substantially and even principally the same issues and subject matter are raised and involved in the present petition (filed under Rule 65 of the Rules of Court) and those in the petition in G.R. No. 107742 (filed under Rule 45 of the Rules).

In said G.R. No. 107742, petitioner had availed of the remedy of appeal by certiorari, i.e., appealing from the decision of the Court of Appeals in CA-G.R. SP No. 29017. Settled is the rule that a special civil action of certiorari (under Rule 65) is not a substitute for a lost appeal (Bank of America, et al., vs. CA, G.R. No. 78917, June 8, 1990, 186 SCRA 417).

By the resolution of this Court en banc, dated July 1, 1993, rendered in G.R. No. 107742, the petitioner's privilege (or opportunity) to question the SEC decision dated May 22, 1993 rendered in SEC-AC No. 319 was lost when the Court sitting en banc denied with finality the motion of petitioner to reconsider this Court's resolution of 13 January 1993, denying its petition for review (G.R. No. 107742).

Thus, since petitioner had already lost its privilege to question the SEC resolution dated May 22, 1992, petitioner can no longer assail the same SEC resolution, not even by certiorari under Rule 65 of the Rules of Court. A contrary rule would swamp this Court with petitions for certiorari under Rule 65 after an appeal is lost under Rule 45 of the Rules. This would subvert the long established public policy that litigations must come to an end at one time or other.

But even granting ex gratia arguendo that petitioner can still avail itself of the remedy of a special civil action of certiorari (under Rule 65) said remedy should be availed of within a reasonable period from the date of receipt of the assailed order/decision. In Reas vs. Bonife, we held that "a petition forcertiorari under Rule 65 is required to be filed within a reasonable period, no time frame being provided in the Rules within which such petition has to be filed." In the subsequent case of Philsec Workers' Union vs. Hon. Romeo A. Young (Resolution dated 22 January 1992, G.R. No. 101734), it was held that ninety (90) days from notice of the questioned order/decision is a reasonable period within which to file a petition for certiorari under Rule 65.


In the present petition, the assailed decision of the respondent SEC dated May 22, 1992, was received by petitioner's counsel on May 25, 1992, and the SEC's resolution denying petitioner's motion for reconsideration was received by petitioner on September 18, 1992. The present petition was filed on July 13, 1993. From September 18, 1992 to July 13, 1993, almost ten (10) months had lapsed. Undoubtedly, said period of ten (10) months is no longer a "reasonable period" within which a petition for certiorari under Rule 65 may be filed.

As earlier said the denial of the petition in G.R. No. 107742 is final. We must all be reminded of the settled rule that once a judgment has become final, the issues raised therein should be laid to rest. Hence, the issues raised anew regarding the again assailed decision of SEC, dated May 22, 1992, in SEC-AC No. 319, are no longer open to debate and/or adjudication.

ACCORDINGLY, the present petition is DISMISSED. 43

It appears that subsequent to the revocation of AIFC's certificate of registration, or on October 14, 1993, AIFC registered anew with the SEC, this time under SEC Reg. No. AS093-008101-A under the name and style: AIFC International Fashion Corporation. Evidently then, the AIFC which filed the petition in G.R. No. 115889 is the AIFC which was "re-registered" on the above date, the original AIFC's certificate of registration having been revoked with finality by virtue of our resolutions referred to in our above-quoted 11 August 1993 Resolution. 44 In the same manner, the AIFC which the GTEB refers to in its petition in G.R. No. 114711 could not have been any one other than this same "re-registered" AIFC, said petition having been filed subsequent to the revocation of the original AIFC's certificate of registration.

It is obvious that the "re-registered" AIFC does not possess the legal personality necessary for it to prosecute these petitions. In view of the May 20, 1990 Order of the SEC, "the certificate of registration issued to American Inter-Fashion Corporation on October 14, 1993 under SEC Reg. No. AS093-008101-A" 45 was revoked. For all legal intents and purposes. AIFC no longer exists, and it may no longer claim to be entitled to the export allocations subject of these petitions. After all, it stands to reason that where there is no claimant, there can be no claim. The AIFC International is a personality separate and distinct from AIFC. For this reason, we cannot grant to AIFC International Fashion Corporationthe personality to pursue the petition in G.R. No. 114711. It has not applied for and is thus equally devoid of any personality to lay claim on the export allocations subject of said petition.

In fine, if only for AIFC's lack of legal personality to maintain its claim relative to the export allocations subject of these petitions, its petition in G.R. No. 115889 is rendered dismissible. On the other hand, and in view likewise of this lack of legal personality, we would be justified in annulling the January 26, 1994 and March 22,

1994 Resolutions of the Court of Appeals in CA-G.R. SP No. 31596, and in dismissing the said petition, as prayed for by the GTEB in G.R. No. 114711.

II

In support of its assertion that it is "the sole entity possessed with the power, jurisdiction and discretion to grant and disapprove export allocations such as export quotas," the GTEB makes reference to Executive Order No. 537, as amended, including its implementing rules and regulations, and the fact that among the functions of the GTEB therein enumerated are "the approval of export allocations, as well as the monitoring, administration and regulation thereof." 46 Citing the doctrine of primary jurisdiction, the GTEB further argues that being "a highly specialized administrative agency endowed with regulatory and quasi-judicial powers . . . it enjoys the fundamental presumption that it has the technical expertise and mastery over such specialized matters, so much so that its findings as to the latter would ordinarily deserve the respect of the courts." 47

AIFC, on the other hand, argues that inasmuch as none of the powers specified in Executive Order 537, specifically Section 3 thereof, gives the GTEB any judicial powers, nor any specific jurisdiction to hear and decideactions, as the term is understood under Section 1, Rule 2 of the Rules of Court, and inasmuch as GTEB Case No. 92-50 is such an action between private litigants, the GTEB has no jurisdiction over said case. 48 To reinforce its argument, AIFC cites our ruling in Globe Wireless Ltd. v. PSC. 49 In said case, we held:

Too basic in administrative law to need citation of jurisprudence is the rule that the jurisdiction and powers of administrative agencies . . . are limited to those expressly granted or necessarily implied from those granted in the legislation creating such body; and any order without or beyond such jurisdiction is void and ineffective . . . . 50

For its part, Glorious Sun joins the GTEB in the latter's assertion that it is the GTEB which has the jurisdiction to act and rule on Glorious Sun's petition for the cancellation and restoration to it of the quotas awarded to AIFC. Thus it argues:

48. Contrary to AIFC's assertions, it is beyond dispute that the GTEB has the jurisdiction to act and rule on Glorious Sun's Petition for the cancellation and restoration to it of the quotas illegally awarded to AIFC. A simple reference to the pertinent provisions of the various Executive Orders (E.O.s) relative to the functions of the GTEB easily reveals as much.

49. Under E.O. No. 952, which amended E.O. Nos. 537 and 823, it is provided:


Sec 1. Section 3 subparagraphs (a), (h), and (i) of Executive Order No. 537 [on the powers and functions of the Board] is hereby amended to read as follows:

xxx xxx xxx

(h) In case of violations of its rules and regulations, cancel or suspend quota allocations, export authorizations and licenses for the operations of bonded garment manufacturing warehouses or disqualify the firm and/or its principal stockholders and officers from engaging in garment exports and from doing business with the Board; . . .

50. Thus, if only on the basis of the above-quoted provision, and even in the face of the criteria set forth in Globe, it is at once evident that the power to adjudicate on the question of the AIFC's entitlement to the subject EQs is "necessarily implied" from the Board's power to "cancel or suspend quota allocations, export authorizations and licenses."

xxx xxx xxx

51. However, in addition to the above, E.O. No. 913, entitled "Strengthening the Rule-Making and Adjudicatory Powers of the Minister of Trade and Industry in Order to Further Protect Consumers,' was likewise issued, which E.O., we respectfully submit, made the GTEB's power to adjudicate on the question of the AIFC's entitlement to the subject EQs more than just being merely "necessarily implied."

52. Thus, Section 5 of Article III of the above-numbered E.O. reads:

Sec. 5. Formal investigation. — (a) Whenever the Minister has verified that violation/s of "Trade and Industry Laws" has/have been committed, he may motu proprio charge said violator/s, and thereafter proceed with a formal investigation, independent of the corresponding criminal or civil action for the said violation/s. The imposition of administrative penalties in the formal investigation is without prejudice to the imposition of penalties in the criminal action and/or judgment in the civil action, and vice versa.Provided, however, that in deciding the

case the Minister or the judge, as the case may be, shall consider the decision of the other and impose further penalties, or consider the penalties imposed by the other as already sufficient, as his sense of justice dictates.

(b) The Minister may proceed to hear and determine the violation in the absence of any party who has been served with notice to appear in the hearing.

(c) The Minister shall use every and all reasonable means to ascertain the facts of the case speedily and objectively without regard to technicalities of law or procedure and strict rules of evidence prevailing in courts of law and equity. The Minister shall decide the case within thirty working days from the time the formal investigation was terminated.

(d) The minister shall have the same power to punish direct and indirect contempts granted to superior courts under Rule 71 of the Rules of Court and the power to issue subpoena duces tecum.

(e) When the "trade and industry law" violated provides for its own administrative procedure and penalties, including a procedure where a Board Council, Authority, or Committee takes part as a body, the Minister shall have the option of selecting that procedure and penalties or the procedure and penalties provided in this Executive Order. If he opts for the latter, the approval of such Board, Council, Authority, or Committee of the Minister's decision shall not be necessary.

53. The above-quoted provisions are very significant in light of the definition of the "Ministry" as the Ministry of Trade and Industry "and/or any of its bureaus, offices, or attached agencies, or any other office, unit or committee by whatever name which is placed under or attached to the Ministry of Trade and Industry (Section 1, Article I, E.O. 913; Emphasis supplied)." The GTEB is one such bureau, office or agency.


54. In this connection, AIFC's statement to the effect that GTEB Case No. 92-50 is an action by one party against another for the enforcement or protection of a right, is not entirely accurate. It will be remembered that said GTEB case was initiated principally for the purpose of securing the cancellation of EQs being illegally held onto by AIFC, a proceeding which is undoubtedly within the ambit of the Board's powers; that Glorious Sun stood to benefit from such cancellation was merely incidental to said proceeding. 51

After examining the arguments raised by all parties concerned, we find the arguments of the GTEB and Glorious Sun to be impressed with merit, and accordingly hold that the power and jurisdiction to adjudicate on the question of AIFC's entitlement to the export allocations subject of the above-entitled petitions (be they export quotas or export authorizations), which includes the discretion to grant and disapprove said export allocations, belongs solely to the GTEB, and not to the regular courts.

Semantics notwithstanding, it cannot be denied that GTEB Case No. 92-50 was instituted by Glorious Sun for the purpose of securing the cancellation of EQs then alleged by it as being illegally held by AIFC. This being the case, it likewise cannot be denied that, as Glorious Sun correctly observes, such a proceeding is clearly within the ambit of the GTEB's powers, more specifically, the power granted to it by Section 3 subparagraph (h) of Executive Order No. 537 (as amended by E.O. No. 952) to "cancel or suspend quota allocations, export authorizations and licenses for the operations of bonded garment manufacturing warehouses or disqualify the firm and/or its principal stockholders and officers from engaging in garment exports and from doing business with the Board," in case of violations of its rules and regulations.

In light of the above, AIFC's reliance on our ruling in Globe Wireless Ltd. v. PSC, 52 is clearly misplaced. On the basis of the provisions of law cited by both the GTEB and Glorious Sun, that the power to adjudicate on the question of an entity's entitlement to export allocations was expressly granted to the GTEB, or at the very least, was necessarily impliedfrom the power to cancel or suspend quota allocations, is beyond cavil.

In addition, we must take judicial notice of the fact that AIFC, in cases involving the same controversy as that in the above-entitled petitions, has recognized the exclusive jurisdiction of the GTEB to award or cancel export allocations to deserving entities.

AIFC categorically declared in its "Motion to Dismiss," Civil Case No. 93-138 53 that "Executive Order No. 537, as amended by Executive Order Nos. 823 and 952, vests upon defendant GTEB exclusive jurisdiction to grant export quota allocations," and that "(u)nder the doctrine of primary jurisdiction, only defendant GTEB has the authority to award/cancel export quotas." In fact, it is noteworthy that in said motion to dismiss, AIFC relied upon the very principles cited by both the GTEB and Glorious Sun in the above-entitled petitions in support of their argument that it is the GTEB which has jurisdiction over the export allocations subject of said petitions, to wit:

Courts of justice should not generally interfere with purely administrative and discretionary functions; that courts have no supervisory power over the proceedings and actions of the administrative departments of the government involving the exercise of judgment and findings of fact, because by reason of their special knowledge and expertise over matters falling under their jurisdiction, the latter are in a better position to pass judgment on such matters and their findings of facts in that regard are generally accorded respect, if not finality, by the courts. (Ateneo de Manila v. CA, 145 SCRA 105) 54

AIFC reiterated this stance in its "Motion to Dismiss" in Civil Case No. 64010 55 in this wise:

As stated above, this Court cannot grant the reliefs sought in the Complaint without first deciding that AIFC is not entitled to EQs, and that, in effect, the EQs now in AIFC's name should be cancelled. This power, however, has been granted not to the courts but to the GTEB, which is vested with jurisdiction —

[i]n case of violations of its rules and regulations, [to] cancel or suspend quota allocations, export authorizations and licenses for the operations of bonded garment manufacturing warehouses and/or to disqualify the firm and/or its principal stockholders and officers from engaging in garment exports and from doing business with the Board (Section 3[h], Exec. Order No. 537 [1979], as amended by Exec. Order No. 823 [1982] and Exec. Order No. 952 [1984]).

And even assuming for argument that it is indeed vested with original jurisdiction to cancel EQs, under the doctrine of primary jurisdiction, this Court cannot at this time take cognizance of the Complaint (Supra, at pp. 14-15).

Having already invoked the jurisdiction of the GTEB in earlier actions involving the same controversy as that before us, AIFC cannot now be heard to question that same jurisdiction simply because it was unable to obtain the reliefs prayed for by it from the GTEB. We have warned against such a practice on more than one occasion in the past. Most recently, in St. Luke's Medical Center, Inc. v. Torres, 56 we reiterated such warning:

It is a settled rule that a party cannot invoke the jurisdiction of a court to secure affirmative relief against his opponent and after failing to obtain such relief, repudiate or question that same jurisdiction. A party cannot invoke jurisdiction at one time and reject


it at another in the same controversy to suit its interests and convenience. The Court frowns upon and does not tolerate the undesirable practice of some litigants who submit voluntarily a cause and then accepting the judgment when favorable to them and attacking it for lack of jurisdiction when adverse (Tajonera v. Lamaroza, 110 SCRA 447, citing Tijam v. Sibonghanoy, 23 SCRA 35) 57

III

As to the allegations of AIFC that it was deprived of due process, we find no merit to this contention. With respect to the June 21, 1994 Resolution of the GTEB which AIFC assails in its petition in G.R. No. 115889, it is AIFC's contention that the GTEB issued said resolution 58 without giving AIFC the opportunity to be heard and without receiving its evidence in any form.

We disagree.

Insofar as the supposed failure of the GTEB to issue a show cause order to AIFC is concerned, we hold that the GTEB committed no grave abuse of discretion in instituting an action against AIFC on the basis of the allegations in Glorious Sun's petition in GTEB Case No. 92-50. It is apparent from the rule cited by AIFC 59 that the same was aimed primarily at ensuring that if any action is to be filed against a respondent, the same must have sufficient basis in fact. Consequently, for so long as this goal is achieved, albeit through some other means, no undue prejudice can be caused by the non-issuance of a show-cause order. In fact, as correctly pointed out by Glorious Sun, the GTEB, as a bureau, office or agency attached to the Ministry of Trade and Industry, may even motu proprio charge violators of "Trade and Industry Laws," and thereafter proceed with a formal investigation. 60

Anent AIFC's claim that it was not afforded the opportunity to present evidence in GTEB Case No. 92-50, we find such claim unworthy of belief. The GTEB, as an administrative agency, has in its favor the presumption that it has regularly performed its official duties, including those which are quasi-judicial in nature. In the absence of clear facts to rebut the same, said presumption of regularity must be upheld. This is also but in keeping with the doctrine of primary jurisdiction.

We are inclined to give credence instead to Glorious Sun's assertions relative to AIFC's presentation of evidence in GTEB Case No. 92-50, there being ample basis in the records therefor. Thus, after examining the "Motion to Dismiss" filed by AIFC in GTEB Case No. 92-50, 61 we find nothing therein to indicate that AIFC reserved its right to present evidence in said GTEB case, contrary to AIFC's claims. On the other hand, as correctly pointed out by Glorious Sun, if any reservation was made by AIFC in its "Sur Rejoinder (Re: Motion to Dismiss)," attached to AIFC's petition as Annex "E," this was limited to the reservation "to raise the question of jurisdiction." 62

More importantly, it is apparent that not only was AIFC afforded the opportunity to present evidence, it actuallytook advantage of this opportunity by presenting documentary evidence, as asserted by Glorious Sun, an assertion which AIFC most notably failed to refute. As we have declared time and again, what is repugnant to due process is the denial of the opportunity to be heard. 63 That AIFC was afforded this opportunity is beyond question.

From what has been discussed the following conclusions are made:

(1) AIFC no longer has the legal personality to prosecute the above-entitled petitions and may therefore no longer claim entitlement to the export allocations subject of these petitions;

(2) It is the GTEB, and not the regular courts, nor the Court of Appeals, has the jurisdiction to adjudicate on the question of AIFC's entitlement to the export allocations subject to these petitions; and

(3) AIFC's right to due process was in no wise violated by the GTEB, the former not having taken advantage of the opportunity afforded to it to present evidence in its behalf.

WHEREFORE, AIFC's petition in G.R. No. 115889 is hereby DENIED for lack of merit, as well as for being moot and academic, AIFC having lost the legal personality to prosecute the same. GTEB's petition is GRANTED, and the assailed January 21, 1994 Decision and March 22, 1994 Resolution of the Court of Appeals in CA-G.R. SP No. 31596 is hereby ANNULLED AND SET ASIDE (except insofar as it denied AIFC and AIFC International Fashion Corporation's "Motion for Issuance of Writ of Mandamus"). Said CA-G.R. SP No. 31596 is likewise ordered annulled and set aside.

SO ORDERED.


G.R. No. 96938 October 15, 1991

GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS), petitioner, vs.CIVIL SERVICE COMMISSION, HEIRS OF ELIZAR NAMUCO, and HEIRS OF EUSEBIO MANUEL, respondents.

Benigno M. Puno for private respondents.

Fetalino, Llamas-Villanueva and Noro for CSC.

NARVASA, J.:p

In May, 1981, the Government Service Insurance System (GSIS) dismissed six (6) employees as being "notoriously undersirable," they having allegedly been found to be connected with irregularities in the canvass of supplies and materials. The dismissal was based on Article IX, Presidential Decree No. 807 (Civil Service Law) 1 in relation to LOI 14-A and/or LOI No. 72. The employees' Motion for Reconsideration was subsequently denied.

Five of these six dismissed employees appealed to the Merit Systems Board. The Board found the dismissals to be illegal because effected without formal charges having been filed or an opportunity given to the employees to answer, and ordered the remand of the cases to the GSIS for appropriate disciplinary proceedings.

The GSIS appealed tothe Civil Service Commission. By Resolution dated October 21, 1987, the Commission ruled that the dismissal of all five was indeed illegal and disposed as follows:

WHEREFORE, it being obvious that respondents' separation from the service is illegal, the GSIS is directed to reinstate them with payment of back salaries and benefits due them not later than ten (10) days from receipt of a copy hereof, without prejudice to the right of the GSIS to pursue proper disciplinary action against them. It is also directed that the services of their replacement be terminated effective upon reinstatement of herein respondents.

xxx xxx xxx

Still unconvinced, the GSIS appealed to the Supreme Court (G.R. Nos. 80321-22). Once more, it was rebuffed. On July 4, 1988 this Court's Second Division promulgated a Resolution which:

a) denied its petition for failing to show any grave abuse of discretion on the part of the Civl Service Commission, the dismissals of the employees having in truth been made without formal charge and hearin, and

b) declared that reinstatement of said five employees was proper, "without prejudice to the right of the GSIS to pursue proper disciplinary action against them;"

c) MODIFIED, however, the challenged CSC Resolution of October 21, 1987 "by elminating the payment of back salaries to private respondents (employees) until the outcome of the disciplinary proceedings is known, considering the gravity of the offenses imputed to them ..., 2

d) ordered reinstateement only of three employees, namely: Domingo Canero, Renato Navarro and Belen Guerrero, "it appearing tht respondents Elizar Namuco and Eusebio Manuel have since passed away." 3

On January 8, 1990, the aforesaid Resolution of July 4, 1988 having become final, the heirs of Namuco and Manuel filed a motion for execution of the Civil Service Commission Resolution of October 21, 1987, supra. The GSIS opposed the motion. It argued that the CSC Resolution of October 21, 1987 — directing reinstatement of the employees and payment to them of back salaries and benefits — had been superseded by the Second Division's Resolution of July 4, 1988 — precisely eliminating the payment of back salaries.

The Civil Service Commission granted the motion for execution in an Order dated June 20, 1990. It accordingly directed the GSIS "to pay the compulsory heirs of deceased Elizar Namuco and Eusebio Manuel for the period from the date of their illegal separation up to the date of their demise." The GSIS filed a motion for reconsideration. It was denied by Order of the CSC dated November 22, 1990.

Once again the GSIS has come to this Court, this time praying that certiorari issue to nullify the Orders of June 20, 1990 and November 22, 1990. Here it contends that the Civil Service Commission has no pwer to execute its judgments and final orders or resolutions, and even conceding the contrary, the writ of execution issued on June 20, 1990 is void because it varies this Court's Resolution of July 4, 1988.

The Civil Service Commission, like the Commission on Elections and the Commission on Audit, is a consitutional commission invested by the Constitution and relevant laws not only with authority to administer the civil service, 4but also with quasi-judicial powers. 5 It has the authority to hear and decide administrative disciplinary cases instituted directly with it or brought to it on appeal. 6 The Commission shall decide by a majority vote of all its Members any case or matter brought before it within sixty days from the date of its submission for decision it within sixty days from the date of


its submission for on certiorari by any aggrieved party within thirty days from receipt of a copy thereof. 7 It has the power, too, sitting en banc, to promulgate its own rules concerning pleadings and practice before it or before any of its offices, which rules should not however diminish, increase, or modify substantive rights. 8

On October 9, 1989, the Civil Service Commission promulgated Resolution No. 89-779 adopting, approving and putting into effect simplified rules of procedure on administrative disciplinary and protest cases, pursuant tothe authority granted by the constitutional and statutory provisions above cited, as well as Republic Act No. 6713. 9Those rules provide, among other things, 10 that decision in "administrative disciplinary cases" shall be immediately executory unless a motion for reconsideration is seasonably filed. If the decision of the Commission is brought to the Supreme Court on certiorari, the same shall still be executory unless a restraining order or preliminary injunction is issued by the High Court." 11 This is similar to a provision in the former Civil Service Rules authorizing the Commissioner, "if public interest so warrants, ... (to) order his decision executed pending appeal to the Civil Service Board of Appeals." 12 The provisions are analogous and entirely consistent with the duty or responsibility reposed in the Chairman by PD 807, subject to policies and resolutions adopted by the Commission, "to enforce decision on administrative discipline involving officials of the Commission," 13 as well as with Section 37 of the same decree declaring that an appeal to the Commission 14 "shall not stop the decision from being executory, and in case the penalty is suspension or removal, the respondent shall be considered as having been under preventive suspension during the pendency of the appeal in the event he wins an appeal."

In light of all the foregoing consitutional and statutory provisions, it would appear absurd to deny to the Civil Service Commission the power or authority or order execution of its decisions, resolutions or orders which, it should be stressed, it has been exercising through the years. It would seem quite obvious that the authority to decide cases is inutile unless accompanied by the authority to see taht what has been decided is carried out. Hence, the grant to a tribunal or agency of adjudicatory power, or the authority to hear and adjudge cases, should normally and logically be deemed to include the grant of authority to enforce or execute the judgments it thus renders, unless the law otherwise provides.

In any event, the Commission's exercise of that power of execution has been sanctioned by this Court in several cases.

In Cucharo v. Subido, 15 for instance, this Court sustained the challenged directive of the Civil Service Commissioner, that his decision "be executed immediately 'but not beyond ten days from receipt thereof ...". The Court said:

As a major premise, it has been the repeated pronouncement of this Supreme Tribunal that the Civil Service Commissioner has the discretion toorder the immediate execution in the public interst of his decision separating petitioner-appellant from the service, always sbuject however to the rule that, in the event the Civil Service

Board of Appeals or the proper court determines that his dismissal is illegal, he should be paid the salary corresponding to the period of his separation from the service unitl his reinstatement.

Petitioner GSIS concedes that the heirs of Namuco and Manuel "are entitled tothe retirement/death and other benefits due them as government employees" since, at the time of their death, they "can be considered not to have been separated from the separated from the service." 16

It contend, however, that since Namuco and Manuel had not been "completely exonerated of the administrative charge filed against them — as the filing of the proper disciplinary action was yet to have been taken had death not claimed them" — no back salaries may be paid to them, although they "may charge the period of (their) suspension against (their) leave credits, if any, and may commute such leave credits to money value;" 17 this, on the authority of this Court's decision in Clemente v. Commission on Audit. 18 It is in line with these considerations, it argues, that the final and executory Resolution of this Court's Second Division of July 4, 1988 should be construed; 19 and since the Commission's Order of July 20, 1990 maikes a contrary disposition, the latter order obviously cannot prevail and must be deemed void and ineffectual.

This Court's Resolution of July 4, 1988, as already stated, modified the Civil Service Commission's Resolution of October 21, 1987 — inter alia granting back salaries tothe five dismissed employees, including Namuco and Manuel — and pertinently reads as follows:

We modify the said Order, however, by eliminating the payment of back salaries to private respondents until the outcome of the disciplinary proceedings is known, considering the gravity of the offense imputed to them in connection with the irregularities in the canvass of supplies and materials at the GSIS.

The reinstatement order shall apply only to respondents Domingo Canero, Renato Navarro and Belen Guerrero, it appearing that respondents Elizar Namuco and Eusebio Manuel have since passed away. ....

On the other hand, as also already stated, the Commission's Order of June 20, 1990 directed the GSIS "to pay the compulsory heirs of deceased Elizar Namuco and Eusebio Manuel for the period from the date of their illegal separation up to the date of their demise."

The Commission asserted that in promulgating its disparate ruling, it was acting "in the interest of justice and for other humanitarian reasons," since the question of whether or not Namuco and Manuel should receive back salaries was "dependent on the result of the disciplinary proceedings against their co-respondents in the


administrative case before the GSIS," and since at the tiem of their death, "no formal charge ... (had) as yet been made, nor any finding of their personal culpability ... and ... they are no longer in a position to refute the charge."

The Court agrees that the challenged orders of the Civil Service Commission should be upheld, and not merely upon compassionate grounds, but simply because there is no fair and feasible alternative in the circumstances. To be sure, if the deceased employees were still alive, it would at least be arguable, positing the primacy of this Court's final dispositions, that the issue of payment of their back salaries should properly await the outcome of the disciplinary proceedings referred to in the Second Division's Resolution of July 4, 1988.

Death, however, has already sealed that outcome, foreclosing the initiation of disciplinary administrative proceedings, or the continuation of any then pending, against the deceased employees. Whatever may be said of the binding force of the Resolution of July 4, 1988 so far as, to all intents and pursposes, it makes exoneration in the adminstrative proceedings a condition precedent to payment of back salaries, it cannot exact an impossible performance or decree a useless exercise. Even in the case of crimes, the death of the offender exteinguishes criminal liability, not only as to the personal, but also as to the pecuniary, penalties if it occurs before final judgment. 20 In this context, the subsequent disciplinary proceedings, even if not assailable on grounds of due process, would be an inutile, empty procedure in so far as the deceased employees are concerned; they could not possibly be bound by any substatiation in said proceedings of the original charges: irrigularities in the canvass of supplies and materials. The questioned order of the Civil Service Commission merely recognized the impossibility of complying with the Resolution of July 4, 1988 and the legal futility of attempting a post-mortem investigation of the character contemplated.

WHEREFORE, the petition is DISMISSED, without pronouncement as to costs.

SO ORDERED.


G.R. No. L-26862 March 30, 1970

REPUBLIC OF THE PHILIPPINES, plaintiff-appellant, vs.PHILIPPINE RABBIT BUS LINES, INC., defendant-appellee.

Office of the Solicitor General Antonio P. Barredo, Assistant Solicitor General Pacifico P. de Castro and Solicitor Enrique M. Reyes for plaintiff-appellant.

Angel A. Sison for defendant-appellee.

FERNANDO, J.:

The right of a holder of a backpay certificate to use the same in the payment of his taxes has been recognized by law.1 Necessarily, this Court, in Tirona v. Cudiamat,2 yielding obedience to such statutory prescription, saw nothing objectionable in a taxpayer taking advantage of such a provision. That much is clear; it is settled beyond doubt. What is involved in this appeal from a lower court decision of November 24, 1965, dismissing a complaint by plaintiff-appellant Republic of the Philippines, seeking the invalidation of the payment by defendant-appellee Philippine Rabbit Bus Lines, Inc. for the registration fees3 of its motor vehicles in the sum of P78,636.17, in the form of such negotiable backpay certificates of indebtedness, is the applicability of such a provision to such a situation. The lower court held that it did. The Republic of the Philippines appealed. While originally the matter was elevated to the Court of Appeals, it was certified to us, the decisive issue being one of law. The statute having restricted the privilege to the satisfaction of a tax, a liability for fees under the police power being thus excluded from its benefits, we cannot uphold the decision appealed from. We reverse.

The complaint of plaintiff-appellant Republic of the Philippines was filed on January 17, 1963 alleging that defendant-appellee, as the registered owner of two hundred thirty eight (238) motor vehicles, paid to the Motor Vehicles Office in Baguio the amount of P78,636.17, corresponding to the second installment of registration fees for 1959, not in cash but in the form of negotiable certificate of indebtedness, the defendant being merely an assignee and not the backpay holder itself. The complaint sought the payment of such amount with surcharges plus the legal rate of interest from the filing thereof and a declaration of the nullity of the use of such negotiable certificate of indebtedness to satisfy its obligation. The answer by defendant-appellee, filed on February 18, 1963, alleged that what it did was in accordance with law, both the Treasurer of the Philippines and the General Auditing Office having signified their conformity to such a mode of payment. It sought the dismissal of the complaint.

After noting the respective theories of both parties in its pleadings, the lower court, in its decision, stated that the issue before it "is whether or not the acceptance of the

negotiable certificates of indebtedness tendered by defendant bus firms to and accepted by the Motor Vehicles Office of Baguio City and the corresponding issuance of official receipts therefor acknowledging such payment by said office is valid and binding on plaintiff Republic."4

In the decision now on appeal, the lower court, after referring to a documentary evidence introduced by plaintiff-appellant continued: "From the evidence adduced by defendant bus firm, it appears that as early as August 28, 1958, the National Treasurer upon whom devolves the function of administering the Back Pay Law (Republic Act 304 as amended by Republic Act Nos. 800 and 897), in his letter to the Chief of the Motor Vehicles Office who in turn quoted and circularized same in his Circular No. 5 dated September 1, 1958, to draw the attention thereto of all Motor Vehicle Supervisors, Registrars and employees ..., had approved the acceptance of negotiable certificates of indebtedness in payment of registration fees of motor vehicles with the view that such certificates 'should be accorded with the same confidence by other governmental instrumentalities as other evidences of public debt, such as bonds and treasury certificates'. Significantly, the Auditor General concurred in the said view of the National Treasurer."5

The argument of plaintiff-appellant that only the holders of the backpay certificates themselves could apply the same to the payment of motor vehicle registration fees did not find favor with the lower court. Thus, "[Plaintiff] Republic urges that defendant bus firm being merely an assignee of the negotiable certificates of indebtedness in question, it could not use the same in payment of taxes. Such contention, this Court believes, runs counter to the recitals appearing on the said certificates which states that 'the Republic of the Philippines hereby acknowledges to (name) or assigns ...', legally allowing the assignment of backpay rights."6

It therefore, as above noted, rendered judgment in favor of defendant-appellee "upholding the validity and efficacy" of such payment made and dismissing the complaint. Hence this appeal which, on the decisive legal issue already set forth at the outset, we find meritorious.

1. If a registration fee were a tax, then what was done by defendant-appellee was strictly in accordance with law and its nullity, as sought by plaintiff-appellant Republic of the Philippines, cannot be decreed. But is it? The answer to that question is decisive of this controversy. A tax refers to a financial obligation imposed by a state on persons, whether natural or juridical, within its jurisdiction, for property owned, income earned, business or profession engaged in, or any such activity analogous in character for raising the necessary revenues to take care of the responsibilities of government.7 An often-quoted definition is that of Cooley: "Taxes are the enforced proportional contributions from persons and property levied by the state by virtue of its sovereignty for the support of government and for all public needs."8

As distinguished from other pecuniary burdens, the differentiating factor is that the purpose to be subserved is the raising of revenue. A tax then is neither a penalty that must be satisfied or a liability arising from contract.9 Much less can it be confused or


identified with a license or a fee as a manifestation of an exercise of the police power. It has been settled law in this jurisdiction as far back as Cu Unjieng v. Potstone, decided in 1962, 10 that this broad and all-encompassing governmental competence to restrict rights of liberty and property carries with it the undeniable power to collect a regulatory fee. Unlike a tax, it has not for its object the raising of revenue but looks rather to the enactment of specific measures that govern the relations not only as between individuals but also as between private parties and the political society. To quote from Cooley anew: "Legislation for these purposes it would seem proper to look upon as being made in the exercise of that authority ... spoken of as the police power." 11

The registration fee which defendant-appellee had to pay was imposed by Section 8 of the Revised Motor Vehicle Law. 12 Its heading speaks of "registration fees." The term is repeated four times in the body thereof. Equally so, mention is made of the "fee for registration." 13 A subsection starts with a categorical statement "No fees shall be charged." 14 The conclusion is difficult to resist therefore that the Motor Vehicle Act requires the payment not of a tax but of a registration fee under the police power. Hence the inapplicability of the section relied upon by defendant-appellee under the Back Pay Law. It is not held liable for a tax but for a registration fee. It therefore cannot make use of a backpay certificate to meet such an obligation.

Any vestige of any doubt as to the correctness of the above conclusion should be dissipated by Republic Act No. 5448. 15 A special science fund was thereby created and its title expressly sets forth that a tax on privately-owned passenger automobiles, motorcycles and scooters was imposed. The rates thereof were provided for in its Section 3 which clearly specifies that "additional tax" was to be paid as distinguished from the registration fee under the Motor Vehicle Act. There cannot be any clearer expression therefore of the legislative will, even on the assumption that the earlier legislation could be stretching the point be susceptible of the interpretation that a tax rather than a fee was levied. What is thus most apparent is that where the legislative body relies on its authority to tax it expressly so states, and where it is enacting a regulatory measure, it is equally explicit.

It may further be stated that a statute is meaningful not only by what it includes but also by what it omits. What is left out is not devoid of significance. As observed by Frankfurter: "An omission at the time of enactment, whether careless or calculated, cannot be judicially supplied however much later wisdom may recommend the inclusion. 16In the light of this consideration, the reversal of the appealed judgment is unavoidable.

2. In the brief for plaintiff-appellant Republic of the Philippines, filed by the then Solicitor General, now Justice Antonio P. Barredo, the principal error imputed to the trial court is its failure to hold that the Back Pay Law prohibits an assignee, as is defendant-appellee, from using certificates of indebtedness to pay their taxes. In view of the conclusion reached by us that the liability of defendant-appellee under the Motor Vehicle Act does not arise under the taxing power of the state, there is no need to pass upon this particular question.

3. The Republic of the Philippines, in its brief, likewise assigned as error the failure of the lower court to hold that estoppel does not lie against the government for mistakes committed by its agents. As could be discerned from an excerpt of the decision earlier referred to, the lower court was impressed by the fact that the national treasurer to whom it correctly referred as being vested with the function of administering the backpay law did in a communication to the Motor Vehicles Office approve the acceptance of negotiable certificate of indebtedness in payment of registration fees, a view with which the Auditor General was in concurrence. The appealed decision likewise noted: "By the testimonies of Pedro Flores, the then Registrar of the Motor Vehicles Office of Baguio City and Casiano Catbagan, the Cashier of the Bureau of Public Highways in the same city, defendant bus firm has undisputedly shown that, after the said certificates of indebtedness were properly indorsed in favor of the Motor Vehicles Office of Baguio City and accepted by the Bureau of Public Highways on May 29, 1959, it was duly and properly issued official receipts ... acknowledging full payment of its registration fees for the second installment of 1959 of its 238 vehicles, and that the Bureau of Public Highways, thru its collecting and disbursing officer, was validly and regularly authorized to receive such payment." 17

Thus did the lower court, as pointed out by the then Solicitor General, conclude that the government was bound by the mistaken interpretation arrived at by the national treasurer and the auditor general. It would consider estoppel as applicable. That is not the law. Estoppel does not lie. Such a principle dates back to Aguinaldo de Romero v. Director of Lands, 18 a 1919 decision. Insofar as the taxing power is concerned, Pineda v. Court of First Instance, a 1929 decision, speaks categorically: "The Government is never estopped by mistake or error on the part of its agents. It follows that, in so far as this record shows, the petitioners have not made it appear that the additional tax claimed by the Collector is not in fact due and collectible. The assessment of the tax by the Collector creates, it must be remembered, a charge that is at least prima facie valid." 19 That principle has since been subsequently followed. 20 While the question here is one of the collection of a regulatory fee under the police power, reliance on the above course of decisions is not inappropriate. There is nothing to stand in the way, therefore, of the collection of the registration fees from defendant-appellee.

WHEREFORE, the decision of November 24, 1965 is reversed and defendant-appellee ordered to pay the sum of P78,636.17. With costs against defendant-appellee.


G.R. No. L-46930 June 10, 1988

DALE SANDERS, AND A.S. MOREAU, JR, petitioners, vs.HON. REGINO T. VERIDIANO II, as Presiding Judge, Branch I, Court of First Instance of Zambales, Olongapo City, ANTHONY M. ROSSI and RALPH L. WYERS, respondents.

CRUZ, J.:

The basic issue to be resolved in this case is whether or not the petitioners were performing their official duties when they did the acts for which they have been sued for damages by the private respondents. Once this question is decided, the other answers will fall into place and this petition need not detain us any longer than it already has.

Petitioner Sanders was, at the time the incident in question occurred, the special services director of the U.S. Naval Station (NAVSTA) in Olongapo City. 1 Petitioner Moreau was the commanding officer of the Subic Naval Base, which includes the said station. 2 Private respondent Rossi is an American citizen with permanent residence in the Philippines, 3 as so was private respondent Wyer, who died two years ago. 4 They were both employed as gameroom attendants in the special services department of the NAVSTA, the former having been hired in 1971 and the latter in 1969. 5

On October 3, 1975, the private respondents were advised that their employment had been converted from permanent full-time to permanent part-time, effective October 18, 1975. 6 Their reaction was to protest this conversion and to institute grievance proceedings conformably to the pertinent rules and regulations of the U.S. Department of Defense. The result was a recommendation from the hearing officer who conducted the proceedings for the reinstatement of the private respondents to permanent full-time status plus backwages. The report on the hearing contained the observation that "Special Services management practices an autocratic form of supervision." 7

In a letter addressed to petitioner Moreau on May 17, 1976 (Annex "A" of the complaint), Sanders disagreed with the hearing officer's report and asked for the rejection of the abovestated recommendation. The letter contained the statements that: a ) "Mr. Rossi tends to alienate most co-workers and supervisors;" b) "Messrs. Rossi and Wyers have proven, according to their immediate supervisors, to be difficult employees to supervise;" and c) "even though the grievants were under oath not to discuss the case with anyone, (they) placed the records in public places where others not involved in the case could hear."

On November 7, 1975, before the start of the grievance hearings, a-letter (Annex "B" of the complaint) purportedly corning from petitioner Moreau as the commanding general of the U.S. Naval Station in Subic Bay was sent to the Chief of Naval Personnel explaining the change of the private respondent's employment status and requesting concurrence therewith. The letter did not carry his signature but was signed by W.B. Moore, Jr. "by direction," presumably of Moreau.

On the basis of these antecedent facts, the private respondent filed in the Court of First Instance of Olongapo City a for damages against the herein petitioners on November 8, 1976. 8 The plaintiffs claimed that the letters contained libelous imputations that had exposed them to ridicule and caused them mental anguish and that the prejudgment of the grievance proceedings was an invasion of their personal and proprietary rights.

The private respondents made it clear that the petitioners were being sued in their private or personal capacity. However, in a motion to dismiss filed under a special appearance, the petitioners argued that the acts complained of were performed by them in the discharge of their official duties and that, consequently, the court had no jurisdiction over them under the doctrine of state immunity.

After extensive written arguments between the parties, the motion was denied in an order dated March 8, 1977, 9on the main ground that the petitioners had not presented any evidence that their acts were official in nature and not personal torts, moreover, the allegation in the complaint was that the defendants had acted maliciously and in bad faith. The same order issued a writ of preliminary attachment, conditioned upon the filing of a P10,000.00 bond by the plaintiffs, against the properties of petitioner Moreau, who allegedly was then about to leave the Philippines. Subsequently, to make matters worse for the defendants, petitioner Moreau was declared in a default by the trial court in its order dated August 9, 1977. The motion to lift the default order on the ground that Moreau's failure to appear at the pre-trial conference was the result of some misunderstanding, and the motion for reconsideration of the denial of the motion to dismiss, which was filed by the petitioner's new lawyers, were denied by the respondent court on September 7, 1977.

This petition for certiorari, prohibition and preliminary injunction was thereafter filed before this Court, on the contention that the above-narrated acts of the respondent court are tainted with grave abuse of discretion amounting to lack of jurisdiction.

We return now to the basic question of whether the petitioners were acting officially or only in their private capacities when they did the acts for which the private respondents have sued them for damages.

It is stressed at the outset that the mere allegation that a government functionary is being sued in his personal capacity will not automatically remove him from the protection of the law of public officers and, if appropriate, the doctrine of state immunity. By the same token, the mere invocation of official character will not suffice to insulate him from suability and liability for an act imputed to him as a personal tort


committed without or in excess of his authority. These well-settled principles are applicable not only to the officers of the local state but also where the person sued in its courts pertains to the government of a foreign state, as in the present case.

The respondent judge, apparently finding that the complained acts were prima facie personal and tortious, decided to proceed to trial to determine inter alia their precise character on the strength of the evidence to be submitted by the parties. The petitioners have objected, arguing that no such evidence was needed to substantiate their claim of jurisdictional immunity. Pending resolution of this question, we issued a temporary restraining order on September 26, 1977, that has since then suspended the proceedings in this case in the courta quo.

In past cases, this Court has held that where the character of the act complained of can be determined from the pleadings exchanged between the parties before the trial, it is not necessary for the court to require them to belabor the point at a trial still to be conducted. Such a proceeding would be superfluous, not to say unfair to the defendant who is subjected to unnecessary and avoidable inconvenience.

Thus, in Baer v. Tizon, 10 we held that a motion to dismiss a complaint against the commanding general of the Olongapo Naval Base should not have been denied because it had been sufficiently shown that the act for which he was being sued was done in his official capacity on behalf of the American government. The United States had not given its consent to be sued. It was the reverse situation in Syquia v. Almeda Lopez," where we sustained the order of the lower court granting a where we motion to dismiss a complaint against certain officers of the U.S. armed forces also shown to be acting officially in the name of the American government. The United States had also not waived its immunity from suit. Only three years ago, in United States of America v. Ruiz, 12 we set aside the denial by the lower court of a motion to dismiss a complaint for damages filed against the United States and several of its officials, it appearing that the act complained of was governmental rather than proprietary, and certainly not personal. In these and several other cases 13 the Court found it redundant to prolong the other case proceedings after it had become clear that the suit could not prosper because the acts complained of were covered by the doctrine of state immunity.

It is abundantly clear in the present case that the acts for which the petitioners are being called to account were performed by them in the discharge of their official duties. Sanders, as director of the special services department of NAVSTA, undoubtedly had supervision over its personnel, including the private respondents, and had a hand in their employment, work assignments, discipline, dismissal and other related matters. It is not disputed that the letter he had written was in fact a reply to a request from his superior, the other petitioner, for more information regarding the case of the private respondents. 14 Moreover, even in the absence of such request, he still was within his rights in reacting to the hearing officer's criticism—in effect a direct attack against him—-that Special Services was practicing "an autocratic form of supervision."

As for Moreau,what he is claimed to have done was write the Chief of Naval Personnel for concurrence with the conversion of the private respondents' type of employment even before the grievance proceedings had even commenced. Disregarding for the nonce the question of its timeliness, this act is clearly official in nature, performed by Moreau as the immediate superior of Sanders and directly answerable to Naval Personnel in matters involving the special services department of NAVSTA In fact, the letter dealt with the financial and budgetary problems of the department and contained recommendations for their solution, including the re-designation of the private respondents. There was nothing personal or private about it.

Given the official character of the above-described letters, we have to conclude that the petitioners were, legally speaking, being sued as officers of the United States government. As they have acted on behalf of that government, and within the scope of their authority, it is that government, and not the petitioners personally, that is responsible for their acts. Assuming that the trial can proceed and it is proved that the claimants have a right to the payment of damages, such award will have to be satisfied not by the petitioners in their personal capacities but by the United States government as their principal. This will require that government to perform an affirmative act to satisfy the judgment, viz, the appropriation of the necessary amount to cover the damages awarded, thus making the action a suit against that government without its consent.

There should be no question by now that such complaint cannot prosper unless the government sought to be held ultimately liable has given its consent to' be sued. So we have ruled not only in Baer but in many other decisions where we upheld the doctrine of state immunity as applicable not only to our own government but also to foreign states sought to be subjected to the jurisdiction of our courts. 15

The practical justification for the doctrine, as Holmes put it, is that "there can be no legal right against the authority which makes the law on which the right depends. 16 In the case of foreign states, the rule is derived from the principle of the sovereign equality of states which wisely admonishes that par in parem non habet imperium and that a contrary attitude would "unduly vex the peace of nations." 17 Our adherence to this precept is formally expressed in Article II, Section 2, of our Constitution, where we reiterate from our previous charters that the Philippines "adopts the generally accepted principles of international law as part of the law of the land.

All this is not to say that in no case may a public officer be sued as such without the previous consent of the state. To be sure, there are a number of well-recognized exceptions. It is clear that a public officer may be sued as such to compel him to do an act required by law, as where, say, a register of deeds refuses to record a deed of sale; 18or to restrain a Cabinet member, for example, from enforcing a law claimed to be unconstitutional; 19 or to compel the national treasurer to pay damages from an already appropriated assurance fund; 20 or the commissioner of internal revenue to refund tax over-payments from a fund already available for the purpose; 21 or, in general, to secure a judgment that the officer impleaded may satisfy by himself without the government itself having to do a positive act to assist him. We have also


held that where the government itself has violated its own laws, the aggrieved party may directly implead the government even without first filing his claim with the Commission on Audit as normally required, as the doctrine of state immunity "cannot be used as an instrument for perpetrating an injustice." 22

This case must also be distinguished from such decisions as Festejo v. Fernando, 23 where the Court held that a bureau director could be sued for damages on a personal tort committed by him when he acted without or in excess of authority in forcibly taking private property without paying just compensation therefor although he did convert it into a public irrigation canal. It was not necessary to secure the previous consent of the state, nor could it be validly impleaded as a party defendant, as it was not responsible for the defendant's unauthorized act.

The case at bar, to repeat, comes under the rule and not under any of the recognized exceptions. The government of the United States has not given its consent to be sued for the official acts of the petitioners, who cannot satisfy any judgment that may be rendered against them. As it is the American government itself that will have to perform the affirmative act of appropriating the amount that may be adjudged for the private respondents, the complaint must be dismissed for lack of jurisdiction.

The Court finds that, even under the law of public officers, the acts of the petitioners are protected by the presumption of good faith, which has not been overturned by the private respondents. Even mistakes concededly committed by such public officers are not actionable as long as it is not shown that they were motivated by malice or gross negligence amounting to bad faith. 24 This, to, is well settled . 25 Furthermore, applying now our own penal laws, the letters come under the concept of privileged communications and are not punishable, 26 let alone the fact that the resented remarks are not defamatory by our standards. It seems the private respondents have overstated their case.

A final consideration is that since the questioned acts were done in the Olongapo Naval Base by the petitioners in the performance of their official duties and the private respondents are themselves American citizens, it would seem only proper for the courts of this country to refrain from taking cognizance of this matter and to treat it as coming under the internal administration of the said base.

The petitioners' counsel have submitted a memorandum replete with citations of American cases, as if they were arguing before a court of the United States. The Court is bemused by such attitude. While these decisions do have persuasive effect upon us, they can at best be invoked only to support our own jurisprudence, which we have developed and enriched on the basis of our own persuasions as a people, particularly since we became independent in 1946.

We appreciate the assistance foreign decisions offer us, and not only from the United States but also from Spain and other countries from which we have derived some if not most of our own laws. But we should not place undue and fawning reliance upon them and regard them as indispensable mental crutches without which we cannot

come to our own decisions through the employment of our own endowments We live in a different ambience and must decide our own problems in the light of our own interests and needs, and of our qualities and even idiosyncrasies as a people, and always with our own concept of law and justice.

The private respondents must, if they are still sominded, pursue their claim against the petitioners in accordance with the laws of the United States, of which they are all citizens and under whose jurisdiction the alleged offenses were committed. Even assuming that our own laws are applicable, the United States government has not decided to give its consent to be sued in our courts, which therefore has not acquired the competence to act on the said claim,.

WHEREFORE, the petition is GRANTED. The challenged orders dated March 8,1977, August 9,1977, and September 7, 1977, are SET ASIDE. The respondent court is directed to DISMISS Civil Case No. 2077-O. Our Temporary restraining order of September 26,1977, is made PERMANENT. No costs.

SO ORDERED.


G.R. No. 88211 October 27, 1989

FERDINAND E. MARCOS, IMELDA R. MARCOS, FERDINAND R. MARCOS. JR., IRENE M. ARANETA, IMEE M. MANOTOC, TOMAS MANOTOC, GREGORIO ARANETA, PACIFICO E. MARCOS, NICANOR YÑIGUEZ and PHILIPPINE CONSTITUTION ASSOCIATION (PHILCONSA), represented by its President, CONRADO F. ESTRELLA, petitioners, vs.HONORABLE RAUL MANGLAPUS, CATALINO MACARAIG, SEDFREY ORDOÑEZ, MIRIAM DEFENSOR SANTIAGO, FIDEL RAMOS, RENATO DE VILLA, in their capacity as Secretary of Foreign Affairs, Executive Secretary, Secretary of Justice, Immigration Commissioner, Secretary of National Defense and Chief of Staff, respectively, respondents.

R E S O L U T I O N

EN BANC:

In its decision dated September 15,1989, the Court, by a vote of eight (8) to seven (7), dismissed the petition, after finding that the President did not act arbitrarily or with grave abuse of discretion in determining that the return of former President Marcos and his family at the present time and under present circumstances pose a threat to national interest and welfare and in prohibiting their return to the Philippines. On September 28, 1989, former President Marcos died in Honolulu, Hawaii. In a statement, President Aquino said:

In the interest of the safety of those who will take the death of Mr. Marcos in widely and passionately conflicting ways, and for the tranquility of the state and order of society, the remains of Ferdinand E. Marcos will not be allowed to be brought to our country until such time as the government, be it under this administration or the succeeding one, shall otherwise decide. [Motion for Reconsideration, p. 1; Rollo, p, 443.]

On October 2, 1989, a Motion for Reconsideration was filed by petitioners, raising the following major arguments:

1. to bar former President Marcos and his family from returning to the Philippines is to deny them not only the inherent right of citizens to return to their country of birth but also the protection of the Constitution and all of the rights guaranteed to Filipinos under the Constitution;

2. the President has no power to bar a Filipino from his own country; if she has, she had exercised it arbitrarily; and

3. there is no basis for barring the return of the family of former President Marcos. Thus, petitioners prayed that the Court reconsider its decision, order respondents to issue the necessary travel documents to enable Mrs. Imelda R. Marcos, Ferdinand R. Marcos, Jr., Irene M. Araneta, Imee M. Manotoc, Tommy Manotoc and Gregorio Araneta to return to the Philippines, and enjoin respondents from implementing President Aquino's decision to bar the return of the remains of Mr. Marcos, and the other petitioners, to the Philippines.

Commenting on the motion for reconsideration, the Solicitor General argued that the motion for reconsideration is moot and academic as to the deceased Mr. Marcos. Moreover, he asserts that "the 'formal' rights being invoked by the Marcoses under the label 'right to return', including the label 'return of Marcos' remains, is in reality or substance a 'right' to destabilize the country, a 'right' to hide the Marcoses' incessant shadowy orchestrated efforts at destabilization." [Comment, p. 29.] Thus, he prays that the Motion for Reconsideration be denied for lack of merit.

We deny the motion for reconsideration.

1. It must be emphasized that as in all motions for reconsideration, the burden is upon the movants, petitioner herein, to show that there are compelling reasons to reconsider the decision of the Court.

2. After a thorough consideration of the matters raised in the motion for reconsideration, the Court is of the view that no compelling reasons have been established by petitioners to warrant a reconsideration of the Court's decision.

The death of Mr. Marcos, although it may be viewed as a supervening event, has not changed the factual scenario under which the Court's decision was rendered. The threats to the government, to which the return of the Marcoses has been viewed to provide a catalytic effect, have not been shown to have ceased. On the contrary, instead of erasing fears as to the destabilization that will be caused by the return of the Marcoses, Mrs. Marcos reinforced the basis for the decision to bar their return when she called President Aquino "illegal," claiming that it is Mr. Marcos, not Mrs. Aquino, who is the "legal" President of the Philippines, and declared that the matter "should be brought to all the courts of the world." [Comment, p. 1; Philippine Star, October 4, 1989.]

3. Contrary to petitioners' view, it cannot be denied that the President, upon whom executive power is vested, has unstated residual powers which are implied from the grant of executive power and which are necessary for her to comply with her duties under the Constitution. The powers of the President are not limited to what are expressly enumerated in the article on the Executive Department and in scattered provisions of the Constitution. This is so, notwithstanding the avowed intent of the members of the Constitutional Commission of 1986 to limit the powers of the President as a reaction to the abuses under the regime of Mr. Marcos, for the result was a limitation of specific power of the President, particularly those relating to the


commander-in-chief clause, but not a diminution of the general grant of executive power.

That the President has powers other than those expressly stated in the Constitution is nothing new. This is recognized under the U.S. Constitution from which we have patterned the distribution of governmental powers among three (3) separate branches.

Article II, [section] 1, provides that "The Executive Power shall be vested in a President of the United States of America." In Alexander Hamilton's widely accepted view, this statement cannot be read as mere shorthand for the specific executive authorizations that follow it in [sections] 2 and 3. Hamilton stressed the difference between the sweeping language of article II, section 1, and the conditional language of article I, [section] 1: "All legislative Powers herein granted shall be vested in a Congress of the United States . . ." Hamilton submitted that "[t]he [article III enumeration [in sections 2 and 31 ought therefore to be considered, as intended merely to specify the principal articles implied in the definition of execution power; leaving the rest to flow from the general grant of that power, interpreted in confomity with other parts of the Constitution...

In Myers v. United States, the Supreme Court — accepted Hamilton's proposition, concluding that the federal executive, unlike the Congress, could exercise power from sources not enumerated, so long as not forbidden by the constitutional text: the executive power was given in general terms, strengthened by specific terms where emphasis was regarded as appropriate, and was limited by direct expressions where limitation was needed. . ." The language of Chief Justice Taft in Myers makes clear that the constitutional concept of inherent power is not a synonym for power without limit; rather, the concept suggests only that not all powers granted in the Constitution are themselves exhausted by internal enumeration, so that, within a sphere properly regarded as one of "executive' power, authority is implied unless there or elsewhere expressly limited. [TRIBE, AMERICAN CONSTITUTIONAL LAW 158-159 (1978).]

And neither can we subscribe to the view that a recognition of the President's implied or residual powers is tantamount to setting the stage for another dictatorship. Despite petitioners' strained analogy, the residual powers of the President under the Constitution should not be confused with the power of the President under the 1973 Constitution to legislate pursuant to Amendment No. 6 which provides:

Whenever in the judgment of the President (Prime Minister), there exists a grave emergency or a threat or imminence thereof, or whenever the interim Batasang Pambansa or the regular National Assembly fails or is unable to act adequately on any matter for any

reason that in his judgment requires immediate action, he may, in order to meet the exigency, issue the necessary decrees, orders, or letters of instruction, which shall form part of the law of the land,

There is no similarity between the residual powers of the President under the 1987 Constitution and the power of the President under the 1973 Constitution pursuant to Amendment No. 6. First of all, Amendment No. 6 refers to an express grant of power. It is not implied. Then, Amendment No. 6 refers to a grant to the President of thespecific power of legislation.

4. Among the duties of the President under the Constitution, in compliance with his (or her) oath of office, is to protect and promote the interest and welfare of the people. Her decision to bar the return of the Marcoses and subsequently, the remains of Mr. Marcos at the present time and under present circumstances is in compliance with this bounden duty. In the absence of a clear showing that she had acted with arbitrariness or with grave abuse of discretion in arriving at this decision, the Court will not enjoin the implementation of this decision.


January 28, 1961

G.R. No. L-17080

ROSARIO S. JUAT, ET AL., plaintiffs-appellants,

vs.

THE LAND TENURE ADMINISTRATION, ET AL., defendants-appellees.

Paredes, San Diego and Paredes for plaintiffs appellants.

Adriano D. Lomuntad and L.P. Barbosa for defendant-appellee Land Tenure

Administration.

Noli Ma. Cortes for defendant-appellee Province Rizal.

BAUTISTA ANGELO, J.:

Plaintiffs brought an action before the Court of First Instance of Rizal to annul the

deed of sale made by the Secretary of Agriculture and Natural Resources in favor of

the province of Rizal covering Lot 57-A of Block 8 of the Tambobong estate situated

in Malabon, Rizal. After trial the court dismissed the complaint without costs, having

found said sale legal and valid. The case was taken appeal to the Court of Appeals

but the latter certified t case to us on the ground that the only questions raised a

purely of law.

The lot in question, which is a fishpond, forms part Lot 57-A of Block 8 of the

Tambobong estate. This lot was formerly Lot 607 of the Capellania de Concepcion,

former owner of the Tambobong estate. Originally, Mamerta Antonio de Ignacio was

the holder of the leasehold right Lot 607 who later sold it to Alberto Santos on

November 2, 1919. Alberto Santos took possession thereof after the sale paying the

corresponding rentals to the Capellania. When Alberto Santos died on December 9,

1941, he left heirs his spouse Leoncia A. Vda. de Santos and all the relatives who

appear as plaintiffs herein. They took possession and administration of the lot in

question. When the Tambobong estate was acquired by the government, plaintiffs

continued paying the rentals of the lot to the government until 1947.

In 1954, the Bureau of Lands which was then the administration of the Tambobong

estate notified plaintiffs to enter into a contract of sale of the lot with said Bureau and

to pay the purchase price within three months. Honorato Santos, representing the

plaintiffs, inquired from said Bureau about the purchase price of the same and the

back rentals due and asked for an indefinite extension of time within which to enter

into the required contract of sale. In response to this representation the Director of

Lands under a letter dated February 20, 1954, granted plaintiffs an extension of time

within which to pay the rents due as well as to enter into the contract of sale. On

March 8, 1954, counsel for plaintiffs sent a letter to the Secretary of Agriculture and

Natural Resources asking for reconsideration of the computation of the back rentals

and of the purchase price stating therein his reasons. This letter was received on the

same date, and on March 11, 1954, the Secretary of Agriculture and Natural

Resources advised plaintiffs' counsel that his letter was referred to the Director of

Lands for appropriate action and report and that as soon as the desired report is

received, further action will be taken on the matter of which plaintiffs' counsel will be

duly notified. Since then neither plaintiffs nor their counsel has received any

communication from either the Director of Lands or the Secretary of Agriculture and

Natural Resources regarding the lot in question.

In the meantime, the province of Rizal has shown interest in acquiring an area of

29,100 sq. m. of Lot 57, Block 8, which is the lot in question, and to this effect its

provincial board approved Resolution No. 479, series of 1955, requesting the


Secretary of Agriculture and Natural Resources to sell it to the province for purposes

of a fishery school site. The land was finally sold to the province by the Secretary of

Agriculture and Natural Resources under a deed of sale executed on March 14, 1955

for the sum of P23,260.00. After the sale, the province began dumping stones and

gravel on the lot with the apparent intention of levelling it thereby giving notice to the

plaintiffs that the land had already been sold. Hence, plaintiff began the present

action seeking to annul the sale and enjoin defendants from filling up the land and to

pay damages. A writ of preliminary injunction was issued the court pending the

litigation.

Appellants' main theme is that under Section 1 of Co Commonwealth Act 539 they

are entitled to purchase the lot in question from the government at such reasonable

price and under such condition the latter may fix, they being its bona fide tenants

since their predecessor-in-interest died in 1941, and since the government sold the

same to the province of Rizal in utter disregard of their rights of preference the sale is

null and void, it having been made in violation of the letter and spirit of the law.

Section 1. of Commonwealth Act 539 provides:

SECTION 1. The President of the Philippines is authorized to acquire private lands or

any interest therein, through purchase or expropriation, and to subdivide the same

into home lots or small farms for resale at reasonable prices and such conditions as

he may fix to their bona fide tenants occupants or to private individuals who will work

the lands themselves and who are qualified to acquire and own lands in the

Philippines.

We have no quarrel with the view that once a private land is acquired by the

government thru purchase or expropriation by virtue of the authority granted by the

law as above-quoted, it becomes its duty to subdivide the same into small lots "for

resale at reasonable prices and such conditions as he (President of the Philippines)

ma fix to their bona fide tenants or occupants or to private individuals who will work

the lands themselves." It may also be stated that the avowed policy behind the

adoption of such measure is, as aptly observed by the Court of Appeals, "to provide

the landless elements of our population with lots upon which to build their homes and

small farms which they can cultivate and from which they can derive their livelihood

without being beholden to any man" (Pascual v. Lucas, 51 O. G. No. 5, p. 2429), such

measure having been adopted in line with the policy of social justice enshrined in our

Constitution to remedy and cure the social unrest caused by the concentration of

landed estates in the hands of a few by giving to the landless elements a piece of

land they can call their own.

But, while such is the avowed policy of the law, it should not however be overlooked

that Congress has likewise decreed that the President may sell to the provinces or

municipalities portions of the lands thus acquired of sufficient size and convenient

location "for public squares or plazas, parks, streets, markets, cemeteries, schools,

municipal or town hall, and other public buildings", without stating any qualification for

the exercise of the authority. Thus, Section 10 of the same Commonwealth Act

539provides:

SEC. 10. The President may sell to the provinces and municipalities portions of lands

required under this Act of sufficient size and convenient location for public squares or

plazas, parks, streets, markets, cemeteries, schools, municipal or town hall, and other

public buildings.

Since said section does not exclude the lots that may be sold under Section 1 from

sale under Section 10 in the sense that lots acquired under the former cannot be

http://philippinelaw.info/statutes/ca539.html





disposed of for purposes contemplated in the latter, it follows as a logical conclusion

that the choice or discretion to sell lands under either section is with the President

whose choice, once exercised, becomes final and binding upon the government. This

is what was done in the instant case. The Secretary of Agriculture and Natural

Resources deemed it proper under the circumstances to sell the land to the province

of Rizal for a school site. And it can be said that the act of the Secretary in making the

sale has the same effect as if done by the President himself by virtue of the legal

truism that the acts of a department secretary are presumed to be the acts of the

Chief Executive. (Donnelly v. Agregado, G.R. No. L-4510, May 31, 1954; Villena v.

Secretary of Interior, 67 Phil. 451.)

Neither can it be contended that by allowing the President to sell portions of the lands

acquired under Section 1 of Commonwealth Act a39 for purposes other than what is

therein provided, or to those who are not the persons therein intended, would be in

violation of the avowed policy to give land to the landless as enshrined in our

Constitution, for it cannot be denied that the authority given to him under Section 10

of the same Act is likewise for the same purpose, which is to promote public policy or

the education of our youth. It should be here emphasized that the main purpose of

giving the land to the province of Rizal is to utilize the same as a site for t proposed

vocational school dedicated primarily to courses in fishery and other related subjects,

and this is in line with the mandate of the Constitution to our government to establish

and maintain a complete and adequate system of public instruction, including

vocational efficiency (Article XIV Section 5).

Assuming arguendo that under Section 1 of Commonwealth Act 539 it is mandatory

for the President to subdivide the lands acquired thereunder into small lots for resale

to the persons therein mentioned to the exclusion of all others, it should be noted

however that said Section I requires that the recipient of the privilege be a bona

fidetenant or occupant in the sense that he should be up-to-date in the payment of his

rentals to the landowner. Here, however, this condition is not present, for plaintiffs are

not bona fide tenants of the land in controversy. The record shows that plaintiffs only

paid the rentals for the lot up to the month of December, 1947 but ceased to pay the

same since that year to the time of this litigation. In fact, they failed to present

evidence showing that they complied with the requisite condition that would entitle

them to purchase the lot within the purview of the law.

WHEREFORE, we hereby affirm the decision of the trial court, without

pronouncement as to costs.

ACCORDINGLY, the Court resolved to DENY the Motion for Reconsideration for lack of merit."


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http://philippinelaw.info/jurisprudence/gr46570-villena-v-secretary-of-the-interior.html

http://philippinelaw.info/jurisprudence/grl4510-marc-donnelly-and-associates-inc-v-agregado-balmaceda-and-paguia.html


G.R. No. L-17169 November 30, 1963

ISIDRO C. ANG-ANGCO, petitioner, vs.HON. NATALIO P. CASTILLO, ET AL., respondents.

Juan T. David for petitioner.Office of the Solicitor General for respondents.

BAUTISTA ANGELO, J.:

On October 8, 1956, the Pepsi-Cola Far East Trade Development Co., Inc. wrote a letter to the Secretary of Commerce and Industry requesting for special permit to withdraw certain commodities from the customs house which were imported without any dollar allocation or remittance of foreign exchange. Said commodities consisted of 1,188 units of pepsi-cola concentrates which were not covered by any Central Bank release certificate. On the same date, the company addressed an identical request to the Secretary of Finance who was also the Chairman of the Monetary Board of the Central Bank. Senator Pedro Sabido, in behalf of the company, likewise wrote said official urging that authority be given to withdraw the abovementioned concentrates. Not content with this step, he also wrote to Dr. Andres Castillo, Acting Governor of the Central Bank, urging, the same matter. Then Secretary Hernandez wrote another letter to Dr. Castillo stating, "Senator Sabido is taking this to you personally. Unless we have legal objection, I would like to authorize the withdrawal of the concentrates upon payment of all charges in pesos. Please expedite action."

Almost at the same time, the Import-Export Committee of the Central Bank, thru Mr. Gregorio Licaros, submitted to the Monetary Board a memorandum on the joint petition of the company and Sabido Law Office for authority to withdraw the concentrates from the customs house stating therein that it sees no objection to the proposal. The Monetary Board, however, failed to take up the matter in its meeting of October 12, 1956 for the reason that the transaction did not involve any dollar allocation or foreign exchange, and of this decision Mr. Licaros was informed.

Having failed to secure the necessary authority from the Central Bank, on October 13, 1956, the counsel of the Pepsi-Cola Far East Trade Development Co., Inc., approached Collector of Customs Isidro Ang-Angco in an attempt to secure from him the immediate release of the concentrates, but this official seeing perhaps that the importation did not carry any release certificate from the Central Bank advised the counsel to try to secure the necessary release certificate from the No-Dollar Import Office that had jurisdiction over the case. In the morning of the same day, Mr. Aquiles J. Lopez, of said Office, wrote a letter addressed to the Collector of Customs stating, among other things, that his office had no objection to the release of the 1,188 units of concentrates but that it could not take action on the request as "the same is not within the jurisdiction of the No-Dollar Import Office within the contemplation of R.A. No. 1410." The counsel already referred to above showed the letter to Collector of Customs Ang-Angco who upon perusing it still hesitated to grant the release. Instead

he suggested that the letter be amended in order to remove the ambiguity appearing therein, but Mr. Lopez refused to amend the letter stating that the same was neither a permit nor a release. Secretary of Finance Hernandez having been contacted by telephone, Collector of Customs Ang-Angco read to him the letter after which the Secretary verbally expressed his approval of the release on the basis of said certificate. Collector Ang-Angco, while still in doubt as to the propriety of the action suggested, finally authorized the release of the concentrates upon payment of the corresponding duties, customs charges, fees and taxes.

When Commissioner of Customs Manuel P. Manahan learned of the release of the concentrates in question he immediately ordered their seizure but only a negligible portion thereof remained in the warehouse. Whereupon, he filed an administrative complaint against Collector of Customs Ang-Angco charging him with having committed a grave neglect of duty and observed a conduct prejudicial to the best interest of the customs service. On the strength of this complaint President Ramon Magsaysay constituted an investigating committee to investigate Ang-Angco composed of former Solicitor General Ambrosio Padilla, as Chairman, and Atty. Arturo A. Alafriz and Lt. Col. Angel A. Salcedo, as members. Together with Collector Ang-Angco, Mr. Aquiles J. Lopez, was also investigated by the same Committee, who was also charged in a separate complaint with serious misconduct in office or conduct prejudicial to the best interest of the State. As a result, Collector Ang-Angco was suspended from office in the latter part of December, 1956.

After the investigation, the committee submitted to President Magsaysay its report recommending that a suspension of 15 days, without pay, be imposed upon Ang-Angco chargeable against the period of his suspension. On April 1, 1957, Collector Ang-Angco was reinstated to his office by Secretary Hernandez, but the decision on the administrative case against him remained pending until the death of President Magsaysay. After around three years from the termination of the investigation during which period Ang-Angco had been discharging the duties of his office, Executive Secretary Natalio P. Castillo, by authority of the President, rendered a decision on the case on February 12, 1960 finding Ang-Angco "guilty of conduct prejudicial to the best interest of the service", and considering him resigned effective from the date of notice, with prejudice to reinstatement in the Bureau of Customs.

Upon learning said decision from the newspapers, Collector Ang-Angco wrote a letter to President Carlos P. Garcia calling attention to the fact that the action taken by Secretary Castillo in removing him from office had the effect of depriving him of his statutory right to have his case originally decided by the Commissioner of Civil Service, as well as of his right of appeal to the Civil Service Board of Appeals, whose decision under Republic Act No. 2260 is final, besides the fact that such decision is in violation of the guaranty vouchsafed by the Constitution to officers or employees in the civil service against removal or suspension except for cause in the manner provided by law.

In a letter dated February 16, 1960, Secretary Castillo, also by authority of the President, denied the request for reconsideration. Not satisfied with this resolution, Collector Ang-Angco sent a memorandum to President Garcia reiterating once more


the same grounds on which he predicated his request for reconsideration. Again Secretary Castillo, also by authority of the President, in letter dated July 1, 1960, denied the appeal. In this instance, Secretary Castillo asserted that the President virtue of his power of control over all executive departments, bureaus and offices, can take direct action and dispose of the administrative case in question inasmuch as the provisions of law that would seem to vest final authority in subordinate officers of the executive branch of the government over administrative matters falling under their jurisdiction cannot divest the President of his power of control nor diminish the same.

Hence, after exhausting all the administrative remedies available to him to secure his reinstatement to the office from which he was removed without any valid cause or in violation of his right to due process of law, Collector Ang-Angco filed before this Court the present petition for certiorari, prohibition and mandamus with a petition for the issuance of a preliminary mandatory injunction. The Court gave due course to the petition, but denied the request for injunction.

The main theme of petitioner is that respondent Executive Secretary Natalio P. Castillo in acting on his case by authority of the President in the sense of considering him as resigned from notice thereof, violated the guaranty vouchsafed by the Constitution to officers and employees in the classified service in that he acted in violation of Section 16 (i) of the Civil Service Act of 1959 which vests in the Commissioner of Civil Service the original and exclusive jurisdiction to decide administrative cases against officers and employees in the classified service, deprived him of his right of appeal under Section 18 (b) of the same Act to the Civil Service Board of Appeals whose decision on the matter is final, and removed him from the service without due process in violation of Section 32 of the same Act which expressly provides that the removal or suspension of any officer or employee from the civil service shall be accomplished only after due process, and of Section 4, Article XII of our Constitution which provides that "No officer or employee in the civil service shall be removed except for cause as provided for by law." Since petitioner is an officer who belongs to the classified civil service and is not a presidential appointee, but one appointed by the Secretary of Finance under the Revised Administrative Code, he cannot be removed from the service by the President in utter disregard of the provisions of the Civil Service Act of 1959.

Respondents, on their part, do not agree with this theory entertained by petitioner. They admit that if the theory is to be considered in the light of the provisions of the Civil Service Act of 1959, the same may be correct, for indeed the Civil Service Law as it now stands provides that all officers and employees who belong to the classified service come under the exclusive jurisdiction of the Commissioner of Civil Service and as such all administrative cases against them shall be indorsed to said official whose decision may be appealed to the Civil Service Board of Appeals from whose decision no further appeal can be taken. They also admit that petitioner belongs to the classified civil service. But it is their theory that the pertinent provisions of the Civil Service Law applicable to employees in the classified service do not apply to the particular case of petitioner since to hold otherwise would be to deprive the President of his power of control over the officers and employees of the executive branch of the government. In other words, respondents contend that, whether the officers or

employees concerned are presidential appointees or belong to the classified service, if they are all officers and employees in the executive department, they all come under the control of the President and, therefore, his power of removal may be exercised over them directly without distinction. Indeed, respondents contend that, if, as held in the case ofNegado v. Castro, 55 O.G., 10534, the President may modify or set aside a decision of the Civil Service Board of Appeals at the instance of the office concerned, or the respondent employee, or may even do so motu propio, there would be in the final analysis no logical difference between removing petitioner by direct action of the President and separating him from the service by ultimate action by the President should an appeal be taken from the decision of the Civil Service Board of Appeals to him, or if in his discretion he may motu proprio consider it necessary to review the Board's decision. It is contended that this ruling still holds true in spite of the new provision wrought into the law by Republic Act 2260 which eliminated the power of review given to the President because the power of control given by the Constitution to the President over officers and employees in the executive department can only be limited by the Constitution and not by Congress, for to permit Congress to do so would be to diminish the authority conferred on the President by the Constitution which is tantamount to amending the Constitution itself (Hebron v. Reyes, L- 9124, July 28, 1958). Indeed this is the argument invoked by respondent Castillo in taking direct action against petitioner instead of following the procedure outlined in the Civil Service Act of 1959 as may be seen from the following portion of his decision.

In connection with the second ground advanced in support of your petition, it is contended that in deciding the case directly, instead of transmitting it to the Commissioner of Civil Service for original decision, his Office deprived the respondent of his right to appeal to the Civil Service Board of Appeals. This contention overlooks the principle that the President may modify or set aside a decision of the Civil Service Board of Appeals at the instance of either the office concerned or the respondent employee, or may even do so motu proprio (Negado vs. Castro, 55 O.G, No. 51, p. 10534, Dec. 21, 1959). There would therefore be no difference in effect between direct action by the President and ultimate action by him should an appeal be taken from the decision of the Commissioner of Civil Service or the Civil Service Board of Appeals. The result is that the President's direct action would be the final decision that would be reached in case an appeal takes its due course.

Thus, we see that the main issue involved herein is whether the President has the power to take direct action on the case of petitioner even if he belongs to the classified service in spite of the provisions now in force in the Civil Service Act of 1959. Petitioner sustains the negative contending that the contrary view would deprive him of his office without due process of law while respondents sustain the affirmative invoking the power of control given to the President by the Constitution over all officers and employees, belonging to the executive department.

To begin with, we may state that under Section 16 (i) of the Civil Service Act of 1959 it is the Commissioner of Civil Service who has original and exclusive jurisdiction to decide administrative cases of all officers and employees in the classified service for


in said section the following is provided: "Except as otherwise provided by law, (the Commissioner shall) have final authority to pass upon the removal, separation and suspension of all permanent officers and employees in the competitive or classified service and upon all matters relating to the employees." The only limitation to this power is that the decision of the Commissioner may be appealed to the Civil Service Board of Appeals, in which case said Board shall decide the appeal within a period of 90 days after the same has been submitted for decision, whose decision in such case shall be final (Section 18, Republic Act 2260). It should be noted that the law as it now stands does not provide for any appeal to the President, nor is he given the power to review the decision motu proprio, unlike the provision of the previous law, Commonwealth Act No. 598, which was expressly repealed by the Civil Service Act of 1959 (Rep. Act 2260), which provides that the decision of the Civil Service Board of Appeals may be reversed or modified motu proprio by the President. It is, therefore, clear that under the present provision of the Civil Service Act of 1959, the case of petitioner comes under the exclusive jurisdiction of the Commissioner of Civil Service, and having been deprived of the procedure laid down therein in connection with the investigation and disposition of his case, it may be said that he has been deprived of due process as guaranteed by said law.

It must, however, be noted that the removal, separation and suspension of the officers and employees of the classified service are subject to the saving clause "Except as otherwise provided by law" (Section 16 [i], Republic Act No. 2260). The question then may be asked: Is the President empowered by any other law to remove officers and employees in the classified civil service?

The only law that we can recall on the point is Section 64 (b) of the Revised Administrative Code, the pertinent portion of which we quote:

(b) To remove officials from office conformably to law and to declare vacant the offices held by such removed officials. For disloyalty to the (United States) Republic of the Philippines, the (Governor-General) President of the Philippines may at any time remove a person from any position of trust or authority under the Government of the (Philippine Islands) Philippines.

The phrase "conformably to law" is significant. It shows that the President does not have blanket authority move any officer or employee of the government but his power must still be subject to the law that passed by the legislative body particularly with regard the procedure, cause and finality of the removal of persons who may be the subject of disciplinary action. Here, as above stated we have such law which governs action to be taken against officers and employees in classified civil service. This law is binding upon President.

Another provision that may be mentioned is Section (D) of the Revised Administrative Code, which provides:

Power to appoint and remove. — The Department Head, the recommendation of the chief of the Bureau or office concerned, shall appoint

all subordinate officers and employees appointment is not expressly vested by law in the (Governor-General) President of the Philippines, and may remove or punish them, except as especially provided otherwise, in accordance the Civil Service Law.

The phrase "in accordance with the Civil Service is also significant. So we may say that even granting for administrative purposes, the President of the Philippines is considered as the Department Head of the Civil Service Commission, his power to remove is still subject to the Civil Service Act of 1959, and we already know with regard to officers and employees who belong to classified service the finality of the action is given to the Commissioner of Civil Service or the Civil Board of Appeals.

Let us now take up the power of control given to President by the Constitution over all officers and employees in the executive department which is now in by respondents as justification to override the specific visions of the Civil Service Act. This power of control couched in general terms for it does not set in specific manner its extent and scope. Yes, this Court in the case of Hebron v. Reyes, supra, had already occasion to interpret the extent of such power to mean "the power of an officer to alter or modify or nullify or set aside what a subordinate officer had done in the performance of his duties and to substitute the judgment of the former for that of the latter,"1 to distinguish it from the power of general supervision over municipal government, but the decision does not go to the extent of including the power to remove an officer or employee in the executive department. Apparently, the power merely applies to the exercise of control over the acts of the subordinate and not over the actor or agent himself of the act. It only means that the President may set aside the judgment or action taken by a subordinate in the performance of his duties.

That meaning is also the meaning given to the word "control" as used in administrative law. Thus, the Department Head pursuant to Section 79(C) is given direct control of all bureaus and offices under his department by virtue of which he may "repeal or modify decisions of the chiefs of said bureaus or offices", and under Section 74 of the same Code, the President's control over the executive department only refers to matters of general policy. The term "policy" means a settled or definite course or method adopted and followed by a government, body, or individual,2 and it cannot be said that the removal of an inferior officer comes within the meaning of control over a specific policy of government.

But the strongest argument against the theory of respondents is that it would entirely nullify and set at naught the beneficient purpose of the whole civil service system implanted in this jurisdiction, which is to give stability to the tenure of office of those who belong to the classified service, in derogation of the provisions of our Constitution which provides that "No officer or employee in the civil service shall be removed or suspended except for cause as provided by law" (Section 4, Article XII, Constitution).Here, we have two provisions of our Constitution which are apparently in conflict, the power of control by the President embodied in Section 10 (1), Article VII, and the protection extended to those who are in the civil service of our government embodied in Section 4, Article XII. It is our duty to reconcile and harmonize these conflicting provisions in a manner that may give to both full force and effect and the


only logical, practical and rational way is to interpret them in the manner we do it in this decision. As this Court has aptly said in the case of Lacson v. Romero:

... To hold that civil service officials hold their office at the will of the appointing power subject to removal or forced transfer at any time, would demoralize and undermine and eventually destroy the whole Civil Service System and structure. The country would then go back to the days of the old Jacksonian Spoils System under which a victorious Chief Executive, after the elections could if so minded, sweep out of office, civil service employees differing in Political color or affiliation from him, and sweep in his Political followers and adherents, especially those who have given him help, political or otherwise. (Lacson v. Romero, 84 Phil. 740, 754)

There is some point in the argument that the Power of control of the President may extend to the Power to investigate, suspend or remove officers and employees who belong to the executive department if they are presidential appointees or do not belong to the classified service for such can be justified under the principle that the power to remove is inherent in the power to appoint (Lacson V. Romero, supra), but not with regard to those officers or employees who belong to the classified service for as to them that inherent power cannot be exercised. This is in line with the provision of our Constitution which says that "the Congress may by law vest the appointment of the inferior officers, in the President alone, in the courts, or in heads of department" (Article VII, Section 10 [3], Constitution). With regard to these officers whose appointments are vested on heads of departments, Congress has provided by law for a procedure for their removal precisely in view of this constitutional authority. One such law is the Civil Service Act of 1959.

We have no doubt that when Congress, by law, vests the appointment of inferior officers in the heads of departments it may limit and restrict power of removal as it seem best for the public interest. The constitutional authority in Congress to thus vest the appointment implies authority to limit, restrict, and regulate the removal by such laws as Congress may enact in relation to the officers so appointed. The head of a department has no constitutional prerogative of appointment to officers independently of legislation of Congress, and by such legislation he must be governed, not only in making appointments but in all that is incident thereto. (U.S. v. Perkins, 116 U.S. 483)

In resume, we may conclude that the action taken by respondent Executive Secretary, even with the authority of the President, in taking direct action on the administrative case of petitioner, without submitting the same to the Commissioner of Civil Service, is contrary to law and should be set aside.

WHEREFORE, it is hereby ordered that petitioner be immediately reinstated to his office as Collector of Customs for the Port of Manila, without prejudice of submitting his case to the Commissioner of Civil Service to be dealt with in accordance with law. No costs.


G.R. No. 127249 February 27, 1998

CAMARINES NOTE ELECTRIC COOPERATIVE, INC. (CANORECO); RUBEN, N. BARRAMEDA; ELVIS L. ESPIRITU; MERARDO G. ENERO, JR.; MERCELITO B. ABAS; and REYNALDO V. ABUNDO, petitioners, vs.HON. RUBEN D. TORRES, in his capacity as Executive Secretary; REX TANTIONGCO; HONESTO DE JESUS; ANDRES IBASCO; TEODULO M. MEA; and VICENTE LUKBAN, respondents.

DAVIDE, JR., J.:

May the Office of the President validly constitute an ad hoc committee to take over and manage the affairs of an electric cooperative?

This is the key issue in this original action for certiorari and prohibition under Rule 65 of the Rules of Court wherein the petitioners seek to (a) annul and set aside Memorandum Order No. 409 of the Office of the President dated 3 December 1996 constituting an Ad Hoc Committee to take over and manage the affairs of the Camarines Norte Electric Cooperative, Inc., (hereafter CANORECO) "until such time as a general membership meeting can be called to decide the serious issues affecting the said cooperative and normalcy in operations is restored"; and (b) prohibit the respondents from performing acts or continuing proceedings pursuant to the Memorandum Order.

The factual backdrop of this case is not complicated.

Petitioner CANORECO is an electric cooperative organized under the provisions of P.D. No. 269, otherwise known as the National Electrification Administration Decree, as amended by P.D. No. 1645.

On 10 March 1990, then President Corazon C. Aquino signed into law R.A. No. 6938 and R.A. No. 6939. The former is the Cooperative Code of the Philippines, while the latter created the Cooperative Development Authority (CDA) and vested solely upon the CDA the power to register cooperatives.

Article 122 of the Cooperative Code expressly provides that electric cooperatives shall be covered by the Code. Article 128 of the said Code and Section 17 of R.A. No. 6939 similarly provide that cooperatives created under P.D. No. 269, as amended by P.D. No. 1645, shall have three years within which to qualify and register with the CDA and that after they shall have so qualified and registered, the provisions of Sections 3 and 5 of P.D.

No. 1645 shall no longer be applicable to them. These Sections 3 and 5 read as follows:

Sec. 3. Section 5(a), Chapter II of Presidential Decree No. 269 is hereby amended by adding sub-paragraph (6) to read as follows:

(6) To authorize the NEA Administrator to designate, subject to the confirmation of the Board Administrators, an Acting General Manager and/or Project Supervisor for a Cooperative where vacancies in the said positions occur and/or when the interest of the Cooperative and the program so requires, and to prescribe the functions of said Acting General Manager and/or Project Supervisor, which powers shall not be nullified, altered or diminished by any policy or resolution of the Board of Directors of the Cooperative concerned.

xxx xxx xxx

Sec. 5. Section 10, Chapter II of Presidential Decree No. 269 is hereby amended to read as follows:

Sec. 10. Enforcement Powers and Remedies. — In the exercise of its power of supervision and control over electric cooperatives and other borrower, supervised or controlled entities, the NEA is empowered to issue orders, rules and regulations and motu proprio or upon petition of third parties, to conduct investigations, referenda and other similar actions in all matters affecting said electric cooperatives and other borrower, or supervised or controlled entities.

xxx xxx xxx

Finally, the repealing clause (Article 127) of the Cooperative Code provides:

Provided, however, That nothing in this Code shall be interpreted to mean the amendment or repeal of any provision of Presidential Decree No. 269: Provided, further, That the electric cooperatives which qualify as such under this Code shall fall under the coverage thereof.

CANORECO registered with the CDA pursuant to R.A. No. 6938 and R.A. No. 6939. On 8 March 1993, the CDA issued a Certificate of Provisional Registration (T-003-93) to CANORECO effective for two years. 1 On 1 March 1995, the CDA extended this provisional registration until 4 May 1997. 2 However, on 10 July 1996, CANORECO filed with the CDA its approved amendments to its Articles of Cooperation converting itself from a


non-stock to a stock cooperative pursuant to the provisions of R.A. No. 6938 and the Omnibus Implementing Rules and Regulations on Electric Cooperatives. On the same date the CDA issued a Certificate of Registrations 3 of the amendments to CANORECO Articles of Cooperation certifying that CANORECO is "registered as a full-[f]ledged cooperative under and by virtue of R.A. 6938."

Previously, on 11 March 1995, the Board of Directors of CANORECO 4 approved Resolution No. 22 appointing petitioner Reynaldo V. Abundo as permanent General Manager. The Board was composed of

Ruben N. Barrameda — President

Elvis L. Espiritu — Vice president

Merardo G. Enero, Jr. — Secretary

Marcelito B. Abas — Treasurer

Antonio R. Obias — Director

Luis A. Pascua — Director

Norberto Z. Ochoa — Director

Leonida Z. Manalo — OIC GM/Ex-Officio

On 28 May 1995, Antonio Obias, Norberto Ochoa, Luis Pascua, and Felicito Ilan held a special meeting of the Board of Directors of CANORECO. The minutes of the meeting 5 showed that President Ruben Barrameda, Vice-President Elvis Espiritu, and Treasurer Marcelito Abas were absent; that Obias acted as temporary chairman; that the latter informed those present that it was the responsibility of the Board after the annual meeting to meet and elect the new set of officers, but that despite the fact that he had called the attention of President Barrameda and Directors Abas and Espiritu for the holding thereof, the three chose not to appear; and that those present in the special meeting declared all positions in the board vacant and thereafter proceeded to hold elections by secret balloting with all the directors present considered candidates for the positions. The following won and were declared as the newly elected officers of the CANORECO:

President Norberto Ochoa

Vice President Antonio Obias

Secretary Felicito Ilan

Treasurer Luis Pascua

Thereupon, these newly elected officers approved the following resolutions:

1) Resolution No. 27, c.s. — confirming the election of the new set of officers of the Board of Directors of CANORECO

2) Resolution No. 28, c.s. — recalling Resolution No. 22, c.s. appointing Mr. Reynaldo V. Abundo as permanent General Manager in view of the fact that such appointment was in violation of the provisions of R.A. 6713; declaring the position of General Manager as vacant; and designating Mr. Oscar Acobera as Officer-in-Charge

3) Resolution No. 29, c.s. — authorizing the Board President, or in his absence, the Vice-President, countersigned by the Treasurer, or in his absence, the Secretary, to be the only officers who can transfer funds from savings to current accounts; and authorizing the Officer-in-Charge, Mr. Acobera, to issue checks without countersignature in an amount not to exceed P3,000.00 and in excess thereof, to be countersigned by the President and/or the Treasurer

4) Resolution No. 30, c.s. — hiring the services of Atty. Juanito Subia as retainer-lawyer for CANORECO. 6

The petitioners challenged the above resolutions and the election of officers by filing with the CDA a Petition for Declaration of Nullity of Board Resolutions and Election of Officers with Prayer for Issuance of Injunction/Temporary Restraining Order, which the CDA docketed CDA-CO Case No. 95-010.

In its Resolution of 15 February 1996, 7 the CDA resolved the petition in favor of the petitioners and decreed as follows:

WHEREFORE, premises considered, the Board Meeting of May 28, 1995, participated by the respondents, and all the Resolutions issued on such occasion, are hereby declared NULL AND VOIDAB INITIO.

Likewise, the election of respondents Norberto Ochoa, Antonio Obias, Felicito Ilan, and Luis Pascua, as President, Vice-President, Secretary, and Treasurer, respectively, of CANORECO is hereby declared NULL AND VOID AB INITIO.


Hence, respondents Norberto Ochoa, Antonio Obias, Felicito Ilan, and Luis Pascua are hereby ordered to refrain from representing themselves as President, Vice-President, Secretary, and Treasurer, respectively, of CANORECO. The same respondents are further ordered to refrain from acting as authorized signatories to the bank accounts of CANORECO.

Further respondent Felicito Ilan is hereby ordered to refrain from exercising the duties and functions of a member of the Board of CANORECO until the election protest is resolved with finality by the proper forum. In the meantime, the incumbency of petitioner Merardo Enero, Jr. as Director of the CANORECO Board is hereby recognized.

A status quo is hereby ordered as regards the position of General Manager, being held by Mr. Reynaldo Abundo, considering that the recall of his appointment was done under a void Resolution, and that the designation of Mr. Oscar Acodera as Officer-in-Charge, under the same void Resolution, has no force and effect.

Finally, respondents Antonio Obias, Norberto Ochoa, Luisito Pascua, and petitioners Ruben Barrameda, Elvis Espiritu, Marcelito Abas and Merardo Enero, Jr. are hereby ordered to work together, as Board of Directors, for the common good of CANORECO and its consumer-members, and to maintain an atmosphere of sincere cooperation among the officers and members of CANORECO.

On 28 June 1996, in defiance of the abovementioned Resolution of the CDA and with the active participation of some officials of the National Electrification Administration (NEA), the group of Norberto Ochoa, Antonio Obias, Felicito Ilan, and Luis Pascua forcibly took possession of the offices of CANORECO and assumed the duties as officers thereof. 8

On 26 September 1996, pursuant to the writ of execution and order to vacate issued by the CDA, the petitioners were able to reassume control of the CANORECO and to perform their respective functions. 9

On 3 December 1996, the President of the Philippines issued Memorandum Order No. 409 10 constituting an Ad HocCommittee to temporarily take over and manage the affairs of CANORECO. It reads as follows:

To efficiently and effectively address the worsening problem of the Camarines Norte Electric Cooperative, Inc. (CANORECO) and in order not to prejudice and endanger the interest of the people who rely on the said cooperative for their supply of electricity, an AD HOC Committee is hereby constituted to take over and manage the affairs of CANORECO until such time as a general membership

meeting can be called to decide the serious issues affecting the said cooperative and normalcy in operations is restored. Further, if and when warranted, the present Board of Directors may be called upon by the Committee for advisory services without prejudice to the receipt of their per diems as may be authorized by existing rules and regulations.

The AD HOC Committee shall be composed of the following:

REX TANTIONGCO — Chairman

Presidential Assistant on Energy Affairs

HONESTO DE JESUS — Member

Cooperative Development Authority Nominee

ANDRES IBASCO — Member

Cooperative Development Authority Nominee

TEODULO M. MEA — Member

National Electrification Administration Nominee

VICENTE LUKBAN — Member

National Electrification Administration Nominee

The said Committee shall have the following functions:

1. Designate the following upon the recommendation of the Chairman:

1.1 an Acting General Manager who shall handle the day-to-day operations of the Cooperative. In the meantime, the General Manager shall be deemed to be on leave without prejudice to the payment of his salaries legally due him; and

1.2 a Comptroller who shall handle the financial affairs of the Cooperative.


2. Ensure that:

xxx xxx xxx

The AD HOC Committee shall submit a written report to the President, through the Office of the Executive Secretary, every two (2) weeks from the effectivity of this Order.

A General Membership Meeting shall be called by the AD HOC Committee to determine whether or not there is a need to change the composition of the membership of the Cooperative's Board of Directors. If the need exists, the AD HOC Committee shall call for elections. Once composition of the Board of Directors is finally settled, it shall decide on the appointment of a General Manager in accordance with prescribed laws, rules and regulations. Upon the appointment of a General Manager, the Committee shall become functus officio.

This Memorandum Order shall take effect immediately.

On 11 December 1996, the petitioners filed this petition wherein they claim that

I. THE PRESIDENT HAS NO POWER TO TAKE OVER AND MANAGE OR TO ORDER THE TAKE-OVER OR MANAGEMENT OF CANORECO.

II. [THE] TAKE-OVER OF CANORECO BY THE AD HOC COMMITTEE IS UNLAWFUL DESPITE DESIGNATION OF CANORECO CONSUMERS AS MEMBERS OF AD HOC COMMITTEE.

III. [THE] RELEGATION OF PETITIONERS AS MERE ADVISERS TO THE AD HOC COMMITTEE AMOUNTS TO REMOVAL FROM OFFICE WHICH THE PRESIDENT HAS NO POWER TO DO. MOREOVER, PETITIONERS' REMOVAL VIOLATES PETITIONERS' RIGHT TO DUE PROCESS OF LAW.

IV. THE PRESIDENT IS LIKEWISE WITHOUT POWER TO DESIGNATE OR ORDER THE DESIGNATION OF AN ACTING GENERAL MANAGER FOR CANORECO AND TO CONSIDER THE INCUMBENT REYNALDO V. ABUNDO TO BE ON LEAVE.

The petitioners assert that there is no provision in the Constitution or in a statute expressly, or even impliedly, authorizing the President or his representatives to lake over or order the take-over of electric cooperatives.

Although conceding that while the State, through its police power, has the right to interfere with private business or commerce, they maintain that the exercise thereof is generally limited to the regulation of the business or commerce and that the power to regulate does not include the power to take over, control, manage, or direct the operation of the business. Accordingly, the creation of the Ad HocCommittee for the purpose of take-over was illegal and void.

The petitioners further claim that Memorandum Order No. 409 removed them from their positions as members of the Board of Directors of CANORECO. The President does not have the authority to appoint, much less to remove, members of the board of directors of a private enterprise including electric cooperatives. He cannot rely on his power of supervision over the NEA to justify the designation of an acting general manager for CANORECO under P.D. No. 269 as amended by P.D. No. 1645, for CANORECO had already registered with the CDA pursuant to R.A. 6938 and R.A. No. 6939; hence, the latter laws now govern the internal affairs of CANORECO

On 3 January 1997, the petitioners filed an Urgent Motion for Issuance of a Temporary Restraining Order.

On 9 January 1997, the petitioners filed a Manifestation and Motion informing the Court that on 8 January 1997 respondent Rex Tantiongco notified the petitioners that the Ad Hoc Committee was taking over the affairs and management of CANORECO effective as of that date. 11 They reiterated their plea for the issuance of a temporary restraining order because the Ad Hoc Committee has taken control of CANORECO and usurped the functions of the individual petitioners.

In the Resolution dated 13 January 1997, we required respondents to comment on the petition.

Despite four extensions granted it, the Office of the Solicitor General (OSG) failed to file its Comment. Hence, in the resolution of 16 July 1997 we deemed the OSG to have waived the filing of its Comment and declared this case submitted for decision. The OSG's motion to admit its Comment, as well as the attached Comment, belatedly filed on 24 July 1997 was merely noted without action in the resolution of 13 August 1997. We also subsequently denied for lack of merit its motion for reconsideration.

We find the instant petition impressed with merit.

Having registered itself with the CDA pursuant to Section 128 of R.A. No. 6938 and Section 17 of R.A. No. 6939, CANORECO was brought under the coverage of said laws. Article 38 of R.A. No. 6938 vests upon the board of directors the conduct and management of the affairs of cooperatives, and


Article 39 provides for the powers of the board of directors. These sections read:

Art. 38. Composition of the Board of Directors. — The conduct and management of the affairs of a cooperative shall be vested in a board of directors which shall be composed of not less than five (5) nor more than fifteen (15) members elected by the general assembly for a term fixed in the by-laws but not exceeding a term of two (2) years and shall hold office until their successors are duly elected and qualified, or until duly removed. However, no director shall serve of more than three (3) consecutive terms.

Art. 39. Powers of the Board of Directors. — The board of directors shall direct and supervise the business, manage the property of the cooperative and may, by resolution, exercise all such powers of the cooperative as are not reserved for the general assembly under this Code and the by-laws.

As to the officers of cooperatives, Article 43 of the Code provides:

Art. 43. Officers of the Cooperative. — The board of directors shall elect from among themselves only the chairman and vice-chairman, and elect or appoint other officers of the cooperative from outside of the board in accordance with their by-laws. All officers shall serve during good behavior and shall not be removed except for cause and after due hearing. Loss of confidence shall not be a valid ground for removal unless evidenced by acts or omissions causing loss of confidence in the honesty and integrity of such officer. No two (2) or more persons with relationship up to the third degree of consanguinity or affinity shall serve as elective or appointive officers in the same board. 12

Under Article 34 of the Code, the general assembly of cooperatives has the exclusive power, which cannot be delegated, to elect or appoint the members of the board of directors and to remove them for cause. Article 51 thereof provides for removal of directors and officers as follows:

Art. 51. Removal. — An elective officer, director, or committee member may be removed by a vote of two-thirds (2/3) of the voting members present and constituting a quorum, in a regular or special general assembly meeting called for the purpose. The person involved shall be given an opportunity to be heard at said assembly.

Memorandum Order No. 409 clearly removed from the Board of Directors of CANORECO the power to manage the affairs of CANORECO and transferred such power to the Ad Hoc Committee, albeit temporarily.

Considering that (1) the take-over will be "until such time that a general membership meeting can be called to decide the serious issues affecting the said cooperative and normalcy in operations is restored, and (2) the date such meeting shall be called and the determination of whether there is a need to change the composition of the membership of CANORECO's Board of Directors are exclusively left to theAd Hoc Committee, it necessarily follows that the incumbent directors were, for all intents and purposes, suspended at the least, and removed, at the most, from their office. The said Memorandum did no less to the lawfully appointed General Manager by directing that upon the settlement of the issue concerning the composition of the board of directors the Committee shall decide on the appointment of a general manager. In the meantime, it authorized the Committee to designate upon the recommendation of the Chairman an Acting Manager, with the lawfully appointed Manager considered on leave, but who is, however, entitled to the payment of his salaries.

Nothing in law supported the take-over of the management of the affairs of CANORECO, and the "suspension," if not "removal," of the Board of Directors and the officers thereof.

It must be pointed out that the controversy which resulted in the issuance of the Memorandum Order stemmed from a struggle between two groups vying for control of the management of CANORECO. One faction was led by the group of Norberto Ochoa, while the other was petitioners' group whose members were, at that time, the incumbent directors and officers. It was the action of Ochoa and his cohorts in holding a special meeting on 28 May 1995 and then declaring vacant the positions of cooperative officers and thereafter electing themselves to the positions of president, vice-president, treasurer, and secretary of CANORECO which compelled the petitioners to file a petition with the CDA. The CDA thereafter came out with a decision favorable to the petitioners.

Obviously there was a clear case of intra-cooperative dispute. Article 121 of the Cooperative Code is explicit on how the dispute should be resolved; thus:

Art. 121. Settlement of Disputes. — Disputes among members, officers, directors, and committee members, and intra-cooperative disputes shall, as far as practicable, be settled amicably in accordance with the conciliation or mediation mechanisms embodied in the by-laws of the cooperative, and in applicable laws.

Should such a conciliation/mediation proceeding fail, the matter shall be settled in a court of competent jurisdiction.

Complementing this Article is Section 8 of R.A. No. 6939, which provides:


Sec. 8. Mediation and Conciliation. — Upon request of either or both or both parties, the [CDA] shall mediate and conciliate disputes with the cooperative or between cooperatives: Provided, That if no mediation or conciliation succeeds within three (3) months from request thereof, a certificate of non-resolution shall be issued by the commission prior to the filing of appropriate action before the proper courts.

Even granting for the sake of argument that the party aggrieved by a decision of the CDA could pursue an administrative appeal to the Office of the President on the theory that the CDA is an agency under its direct supervision and control, still the Office of the President could not in this case, motu proprio or upon request of a party, supplant or overturn the decision of the CDA. The record does not disclose that the group of Norberto Ochoa appealed from the decision of the CDA in CDA-CO Case No. 95-010 to the Office of the President as the head of the Executive Department exercising supervision and control over said agency. In fact the CDA had already issued a Cease and Desist Order dated 14 August 1996 ordering Antonio Obias, Norberto Ochoa, Luis Pascua, Felicito Ilan and their followers "to cease and desist from acting as the Board of Directors and Officers of Camarines Norte Electric Cooperative (CANORECO) and to refrain from implementing their Resolution calling for the District V Election on August 17 and 24, 1996." 13 Consequently, the said decision of the CDA had long become final and executory when Memorandum Order No. 409 was issued on 3 December 1996. That Memorandum cannot then be considered as one reversing the decision of the CDA which had attained finality.

Under Section 15, Chapter III of Book VII of the Administrative Code of 1987 (Executive Order No. 292), decisions of administrative agencies become final and executory fifteen days after receipt of a copy thereof by the party adversely affected unless within that period an administrative appeal or judicial review, if proper, has been perfected. One motion for reconsideration is allowed. A final resolution or decision of an administrative agency also binds the Office of the President even if such agency is under the administrative supervision and control of the latter.

We have stated before, and reiterate it now, that administrative decisions must end sometime, as fully as public policy demands that finality be written on judicial controversies. Public interest requires that proceedings already terminated should not be altered at every step, for the rule of non quieta movereprescribes that what had already been terminated should not be disturbed. A disregard of this principle does not commend itself to sound public policy. 14

Neither can police power be invoked to clothe with validity the assailed Memorandum Order No. 409. Police power is the power inherent in a government to enact laws, within constitutional limits, to promote the order, safety, health, morals, and general welfare of society. 15 It is lodged primarily

in the legislature. By virtue of a valid delegation of legislative power, it may also be exercised by the President and administrative boards, as well as the lawmaking bodies on all municipal levels, including the barangay. 16 Delegation of legislative powers to the President is permitted in Sections 23(2) and 28(2) of Article VI of the Constitution. 17 The pertinent laws on cooperatives, namely, R.A. No. 6938, R.A. No. 6939, and P.D. No. 269 as amended by P.D. No. 1645 do not provide for the President or any other administrative body to take over the internal management of a cooperative. Article 98 of R.A. 6938 instead provides:

Art. 98. Regulation of Public Service Cooperatives. — (1) The internal affairs of public service cooperatives such as the rights and privileges of members, the rules and procedures for meetings of the general assembly, board of directors and committees; for the election and qualification of officers, directors, and committee members; allocation and distribution of surpluses, and all other matters relating to their internal affairs shall be governed by this Code.

xxx xxx xxx

We do not then hesitate to rule that Memorandum Order No. 409 has no constitutional and statutory basis. It violates the basic underlying principle enshrined in Article 4(2) of R.A. No. 6938 that cooperatives are democratic organizations and that their affairs shall be administered by persons elected or appointed in a manner agreed upon by the members. Likewise, it runs counter to the policy set forth in Section 1 of R.A. No. 6939 that the State shall, except as provided in said Act, maintain a policy of non-interference in the management and operation of cooperatives.

WHEREFORE, the instant petition is GRANTED and Memorandum Order No. 409 of the President is hereby declared INVALID.

SO ORDERED.


G.R. No. 90336 August 12, 1991

RUPERTO TAULE, petitioner, vs.SECRETARY LUIS T. SANTOS and GOVERNOR LEANDRO VERCELES, respondents.

Balgos & Perez and Bugaring, Tugonon & Associates Law Offices for petitioner.

Juan G. Atencia for private respondent.

GANCAYCO, J.:p

The extent of authority of the Secretary of Local Government over the katipunan ng mga barangay or the barangay councils is brought to the fore in this case.

On June 18,1989, the Federation of Associations of Barangay Councils (FABC) of Catanduanes, composed of eleven (11) members, in their capacities as Presidents of the Association of Barangay Councils in their respective municipalities, convened in Virac, Catanduanes with six members in attendance for the purpose of holding the election of its officers.

Present were petitioner Ruperto Taule of San Miguel, Allan Aquino of Viga, Vicente Avila of Virac, Fidel Jacob of Panganiban, Leo Sales of Caramoran and Manuel Torres of Baras. The Board of Election Supervisors/Consultants was composed of Provincial Government Operation Officer (PGOO) Alberto P. Molina, Jr. as Chairman with Provincial Treasurer Luis A. Manlapaz, Jr. and Provincial Election Supervisor Arnold Soquerata as members.

When the group decided to hold the election despite the absence of five (5) of its members, the Provincial Treasurer and the Provincial Election Supervisor walked out.

The election nevertheless proceeded with PGOO Alberto P. Molina, Jr. as presiding officer. Chosen as members of the Board of Directors were Taule, Aquino, Avila, Jacob and Sales.

Thereafter, the following were elected officers of the FABC:

President — Ruperto Taule

Vice-President — Allan Aquino

Secretary — Vicente Avila

Treasurer — Fidel Jacob

Auditor — Leo Sales 1

On June 19, 1989, respondent Leandro I. Verceles, Governor of Catanduanes, sent a letter to respondent Luis T. Santos, the Secretary of Local Government,* protesting the election of the officers of the FABC and seeking its nullification in view of several flagrant irregularities in the manner it was conducted. 2

In compliance with the order of respondent Secretary, petitioner Ruperto Taule as President of the FABC, filed his comment on the letter-protest of respondent Governor denying the alleged irregularities and denouncing said respondent Governor for meddling or intervening in the election of FABC officers which is a purely non-partisan affair and at the same time requesting for his appointment as a member of the Sangguniang Panlalawigan of the province being the duly elected President of the FABC in Catanduanes. 3

On August 4, 1989, respondent Secretary issued a resolution nullifying the election of the officers of the FABC in Catanduanes held on June 18, 1989 and ordering a new one to be conducted as early as possible to be presided by the Regional Director of Region V of the Department of Local Government. 4

Petitioner filed a motion for reconsideration of the resolution of August 4, 1989 but it was denied by respondent Secretary in his resolution of September 5, 1989. 5

In the petition for certiorari before Us, petitioner seeks the reversal of the resolutions of respondent Secretary dated August 4, 1989 and September 5, 1989 for being null and void.

Petitioner raises the following issues:

1) Whether or not the respondent Secretary has jurisdiction to entertain an election protest involving the election of the officers of the Federation of Association of Barangay Councils;

2) Whether or not the respondent Governor has the legal personality to file an election protest;

3) Assuming that the respondent Secretary has jurisdiction over the election protest, whether or not he committed grave abuse of discretion amounting to lack of jurisdiction in nullifying the election;


The Katipunan ng mga Barangay is the organization of all sangguniang barangays in the following levels: in municipalities to be known as katipunang bayan; in cities, katipunang panlungsod; in provinces, katipunang panlalawigan; in regions, katipunang pampook; and on the national level, katipunan ng mga barangay. 6

The Local Government Code provides for the manner in which the katipunan ng mga barangay at all levels shall be organized:

Sec. 110. Organization. — (1) The katipunan at all levels shall be organized in the following manner:

(a) The katipunan in each level shall elect a board of directors and a set of officers. The president of each level shall represent the katipunan concerned in the next higher level of organization.

(b) The katipunan ng mga barangay shall be composed of the katipunang pampook, which shall in turn be composed of the presidents of the katipunang panlalawigan and the katipunang panlungsod. The presidents of the katipunang bayan in each province shall constitute the katipunang panlalawigan. The katipunang panlungsod and the katipunang bayan shall be composed of the punong barangays of cities and municipalities, respectively.

xxx xxx xxx

The respondent Secretary, acting in accordance with the provision of the Local Government Code empowering him to "promulgate in detail the implementing circulars and the rules and regulations to carry out the various administrative actions required for the initial implementation of this Code in such a manner as will ensure the least disruption of on-going programs and projects 7 issued Department of Local Government Circular No. 89-09 on April 7, 1989, 8 to provide the guidelines for the conduct of the elections of officers of the Katipunan ng mga Barangay at the municipal, city, provincial, regional and national levels.

It is now the contention of petitioner that neither the constitution nor the law grants jurisdiction upon the respondent Secretary over election contests involving the election of officers of the FABC, the katipunan ng mga barangay at the provincial level. It is petitioner's theory that under Article IX, C, Section 2 of the 1987 Constitution, it is the Commission on Elections which has jurisdiction over all contests involving elective barangay officials.

On the other hand, it is the opinion of the respondent Secretary that any violation of the guidelines as set forth in said circular would be a ground for filing a protest and

would vest upon the Department jurisdiction to resolve any protest that may be filed in relation thereto.

Under Article IX, C, Section 2(2) of the 1987 Constitution, the Commission on Elections shall exercise "exclusive original jurisdiction over all contests relating to the elections, returns, and qualifications of all elective regional, provincial, and city officials, and appellate jurisdiction over all contests involving elective municipal officials decided by trial courts of general jurisdiction, or involving elective barangay officials decided by trial courts of limited jurisdiction." The 1987 Constitution expanded the jurisdiction of the COMELEC by granting it appellate jurisdiction over all contests involving elective municipal officials decided by trial courts of general jurisdiction or elective barangay officials decided by trial courts of limited jurisdiction. 9

The jurisdiction of the COMELEC over contests involving elective barangay officials is limited to appellate jurisdiction from decisions of the trial courts. Under the law, 10 the sworn petition contesting the election of a barangay officer shall be filed with the proper Municipal or Metropolitan Trial Court by any candidate who has duly filed a certificate of candidacy and has been voted for the same office within 10 days after the proclamation of the results. A voter may also contest the election of any barangay officer on the ground of ineligibility or of disloyalty to the Republic of the Philippines by filing a sworn petition for quo warranto with the Metropolitan or Municipal Trial Court within 10 days after the proclamation of the results of the election. 11 Only appeals from decisions of inferior courts on election matters as aforestated may be decided by the COMELEC.

The Court agrees with the Solicitor General that the jurisdiction of the COMELEC is over popular elections, the elected officials of which are determined through the will of the electorate. An election is the embodiment of the popular will, the expression of the sovereign power of the people. 12 It involves the choice or selection of candidates to public office by popular vote. 13 Specifically, the term "election," in the context of the Constitution, may refer to the conduct of the polls, including the listing of voters, the holding of the electoral campaign, and the casting and counting of the votes 14 which do not characterize the election of officers in the Katipunan ng mga barangay. "Election contests" would refer to adversary proceedings by which matters involving the title or claim of title to an elective office, made before or after proclamation of the winner, is settled whether or not the contestant is claiming the office in dispute 15 and in the case of elections of barangay officials, it is restricted to proceedings after the proclamation of the winners as no pre-proclamation controversies are allowed. 16

The jurisdiction of the COMELEC does not cover protests over the organizational set-up of the katipunan ng mga barangay composed of popularly elected punong barangays as prescribed by law whose officers are voted upon by their respective members. The COMELEC exercises only appellate jurisdiction over election contests involving elective barangay officials decided by the Metropolitan or Municipal Trial Courts which likewise have limited jurisdiction. The authority of the COMELEC over the katipunan ng mga barangay is limited by law to supervision of the election of the representative of the katipunan concerned to the sanggunian in a particular level conducted by their own respective organization. 17


However, the Secretary of Local Government is not vested with jurisdiction to entertain any protest involving the election of officers of the FABC.

There is no question that he is vested with the power to promulgate rules and regulations as set forth in Section 222 of the Local Government Code.

Likewise, under Book IV, Title XII, Chapter 1, See. 3(2) of the Administrative Code of 1987, ** the respondent Secretary has the power to "establish and prescribe rules, regulations and other issuances and implementing laws on the general supervision of local government units and on the promotion of local autonomy and monitor compliance thereof by said units."

Also, the respondent Secretary's rule making power is provided in See. 7, Chapter II, Book IV of the Administrative Code, to wit:

(3) Promulgate rules and regulations necessary to carry out department objectives, policies, functions, plans, programs and projects;

Thus, DLG Circular No. 89-09 was issued by respondent Secretary in pursuance of his rule-making power conferred by law and which now has the force and effect of law. 18

Now the question that arises is whether or not a violation of said circular vests jurisdiction upon the respondent Secretary, as claimed by him, to hear a protest filed in relation thereto and consequently declare an election null and void.

It is a well-settled principle of administrative law that unless expressly empowered, administrative agencies are bereft of quasi- judicial powers. 19 The jurisdiction of administrative authorities is dependent entirely upon the provisions of the statutes reposing power in them; they cannot confer it upon themselves. 20 Such jurisdiction is essential to give validity to their determinations. 21

There is neither a statutory nor constitutional provision expressly or even by necessary implication conferring upon the Secretary of Local Government the power to assume jurisdiction over an election protect involving officers of the katipunan ng mga barangay. An understanding of the extent of authority of the Secretary over local governments is therefore necessary if We are to resolve the issue at hand.

Presidential power over local governments is limited by the Constitution to the exercise of general supervision 22"to ensure that local affairs are administered according to law." 23 The general supervision is exercised by the President through the Secretary of Local Government. 24

In administrative law, supervision means overseeing or the power or authority of an officer to see that the subordinate officers perform their duties. If the latter fails or

neglects to fulfill them the former may take such action or step as prescribed by law to make them perform their duties. Control, on the other hand, means the power of an officer to alter or modify or nullify or set aside what a subordinate officer had done in the performance of his duties and to substitute the judgment of the former for that of the latter. The fundamental law permits the Chief Executive to wield no more authority than that of checking whether said local government or the officers thereof perform their duties as provided by statutory enactments. Hence, the President cannot interfere with local governments so long as the same or its officers act within the scope of their authority. 25 Supervisory power, when contrasted with control, is the power of mere oversight over an inferior body; it does not include any restraining authority over such body. 26

Construing the constitutional limitation on the power of general supervision of the President over local governments, We hold that respondent Secretary has no authority to pass upon the validity or regularity of the election of the officers of the katipunan. To allow respondent Secretary to do so will give him more power than the law or the Constitution grants. It will in effect give him control over local government officials for it will permit him to interfere in a purely democratic and non-partisan activity aimed at strengthening the barangay as the basic component of local governments so that the ultimate goal of fullest autonomy may be achieved. In fact, his order that the new elections to be conducted be presided by the Regional Director is a clear and direct interference by the Department with the political affairs of the barangays which is not permitted by the limitation of presidential power to general supervision over local governments. 27

Indeed, it is the policy of the state to ensure the autonomy of local governments. 28 This state policy is echoed in the Local Government Code wherein it is declared that "the State shall guarantee and promote the autonomy of local government units to ensure their fullest development as self-reliant communities and make them more effective partners in the pursuit of national development and social progress." 29 To deny the Secretary of Local Government the power to review the regularity of the elections of officers of the katipunan would be to enhance the avowed state policy of promoting the autonomy of local governments.

Moreover, although the Department is given the power to prescribe rules, regulations and other issuances, the Administrative Code limits its authority to merely "monitoring compliance" by local government units of such issuances. 30 To monitor means "to watch, observe or check. 31 This is compatible with the power of supervision of the Secretary over local governments which as earlier discussed is limited to checking whether the local government unit concerned or the officers thereof perform their duties as provided by statutory enactments. Even the Local Government Code which grants the Secretary power to issue implementing circulars, rules and regulations is silent as to how these issuances should be enforced. Since the respondent Secretary exercises only supervision and not control over local governments, it is truly doubtful if he could enforce compliance with the DLG Circular. 32 Any doubt therefore as to the power of the Secretary to interfere with local affairs should be resolved in favor of the greater autonomy of the local government.


Thus, the Court holds that in assuming jurisdiction over the election protest filed by respondent Governor and declaring the election of the officers of the FABC on June 18, 1989 as null and void, the respondent Secretary acted in excess of his jurisdiction. The respondent Secretary not having the jurisdiction to hear an election protest involving officers of the FABC, the recourse of the parties is to the ordinary courts. The Regional Trial Courts have the exclusive original jurisdiction to hear the protest. 33

The provision in DLG Circular No. 89-15 amending DLG Circular No. 89-09 which states that "whenever the guidelines are not substantially complied with, the election shall be declared null and void by the Department of Local Government and an election shall conduct and being invoked by the Solicitor General cannot be applied. DLG Circular No. 89-15 was issued on July 3, 1989 after the June 18, 1989 elections of the FABC officers and it is the rule in statutory construction that laws, including circulars and regulations 34 cannot be applied retrospectively.35 Moreover, such provision is null and void for having been issued in excess of the respondent Secretary's jurisdiction, inasmuch as an administrative authority cannot confer jurisdiction upon itself.

As regards the second issue raised by petitioner, the Court finds that respondent Governor has the personality to file the protest. Under Section 205 of the Local Government Code, the membership of the sangguniang panlalawigan consists of the governor, the vice-governor, elective members of the said sanggunian and the presidents of the katipunang panlalawigan and the kabataang barangay provincial federation. The governor acts as the presiding officer of the sangguniang panlalawigan. 36

As presiding officer of the sagguniang panlalawigan, the respondent governor has an interest in the election of the officers of the FABC since its elected president becomes a member of the assembly. If the president of the FABC assumes his presidency under questionable circumstances and is allowed to sit in the sangguniang panlalawigan the official actions of the sanggunian may be vulnerable to attacks as to their validity or legality. Hence, respondent governor is a proper party to question the regularity of the elections of the officers of the FABC.

As to the third issue raised by petitioner, the Court has already ruled that the respondent Secretary has no jurisdiction to hear the protest and nullify the elections.

Nevertheless, the Court holds that the issue of the validity of the elections should now be resolved in order to prevent any unnecessary delay that may result from the commencement of an appropriate action by the parties.

The elections were declared null and void primarily for failure to comply with Section 2.4 of DLG Circular No. 89-09 which provides that "the incumbent FABC President or the Vice-President shall preside over the reorganizational meeting, there being a quorum." The rule specifically provides that it is the incumbent FABC President or Vice-President who shall preside over the meeting. The word "shall" should be taken

in its ordinary signification, i.e., it must be imperative or mandatory and not merely permissive, 37 as the rule is explicit and requires no other interpretation. If it had been intended that any other official should preside, the rules would have provided so, as it did in the elections at the town and city levels 38 as well as the regional level.. 39

It is admitted that neither the incumbent FABC President nor the Vice-President presided over the meeting and elections but Alberto P. Molina, Jr., the Chairman of the Board of Election Supervisors/Consultants. Thus, there was a clear violation of the aforesaid mandatory provision. On this ground, the elections should be nullified.

Under Sec. 2.3.2.7 of the same circular it is provided that a Board of Election Supervisors/Consultants shall be constituted to oversee and/or witness the canvassing of votes and proclamation of winners. The rules confine the role of the Board of Election Supervisors/Consultants to merely overseeing and witnessing the conduct of elections. This is consistent with the provision in the Local Government Code limiting the authority of the COMELEC to the supervision of the election. 40

In case at bar, PGOO Molina, the Chairman of the Board, presided over the elections. There was direct participation by the Chairman of the Board in the elections contrary to what is dictated by the rules. Worse, there was no Board of Election Supervisors to oversee the elections in view of the walk out staged by its two other members, the Provincial COMELEC Supervisor and the Provincial Treasurer. The objective of keeping the election free and honest was therefore compromised.

The Court therefore finds that the election of officers of the FABC held on June 18, 1989 is null and void for failure to comply with the provisions of DLG Circular No. 89-09.

Meanwhile, pending resolution of this petition, petitioner filed a supplemental petition alleging that public respondent Local Government Secretary, in his memorandum dated June 7, 1990, designated Augusto Antonio as temporary representative of the Federation to the sangguniang panlalawigan of Catanduanes. 41 By virtue of this memorandum, respondent governor swore into said office Augusto Antonio on June 14, 1990. 42

The Solicitor General filed his comment on the supplemental petition 43 as required by the resolution of the Court dated September 13,1990.

In his comment, the Solicitor General dismissed the supervening event alleged by petitioner as something immaterial to the petition. He argues that Antonio's appointment was merely temporary "until such time that the provincial FABC president in that province has been elected, appointed and qualified." 44 He stresses that Antonio's appointment was only a remedial measure designed to cope with the problems brought about by the absence of a representative of the FABC to the "sanggunian ang panlalawigan."


Sec. 205 (2) of the Local Government Code (B.P. Blg. 337) provides-

(2) The sangguniang panlalawigan shall be composed of the governor, the vice-governor, elective members of the said sanggunian and the presidents of the katipunang panlalawigan and the kabataang barangay provincial federation who shall be appointed by the President of the Philippines. (Emphasis supplied.)

Batas Pambansa Blg. 51, under Sec. 2 likewise states:

xxx xxx xxx

The sangguniang panlalawigan of each province shall be composed of the governor as chairman and presiding officer, the vice-governor as presiding officer pro tempore, the elective sangguniang panlalawigan members, and the appointive members consisting of the president of the provincial association of barangay councils, and the president of the provincial federation of the kabataang barangay. (Emphasis supplied.)

In Ignacio vs. Banate Jr. 45 the Court, interpreting similarly worded provisions of Batas Pambansa Blg. 337 and Batas Pambansa Blg. 51 on the composition of the sangguniang panlungsod, 46 declared as null and void the appointment of private respondent Leoncio Banate Jr. as member of the Sangguniang Panlungsod of the City of Roxas representing thekatipunang panlungsod ng mga barangay for he lacked the elegibility and qualification required by law, not being a barangay captain and for not having been elected president of the association of barangay councils. The Court held that an unqualified person cannot be appointed a member of the sanggunian, even in an acting capacity. In Reyes vs. Ferrer, 47 the appointment of Nemesio L. Rasgo Jr. as representative of the youth sector to the sangguniang panlungsod of Davao City was declared invalid since he was never the president of the kabataang barangay city federation as required by Sec. 173, Batas Pambansa Blg. 337.

In the present controversy involving the sangguniang panlalawigan, the law is likewise explicit. To be appointed by the President of the Philippines to sit in the sangguniang panlalawigan is the president of the katipunang panlalawigan. The appointee must meet the qualifications set by law. 48 The appointing power is bound by law to comply with the requirements as to the basic qualifications of the appointee to the sangguniang panlalawigan. The President of the Philippines or his alter ego, the Secretary of Local Government, has no authority to appoint anyone who does not meet the minimum qualification to be the president of the federation of barangay councils.

Augusto Antonio is not the president of the federation. He is a member of the federation but he was not even present during the elections despite notice. The argument that Antonio was appointed as a remedial measure in the exigency of the service cannot be sustained. Since Antonio does not meet the basic qualification of

being president of the federation, his appointment to the sangguniang panlalawigan is not justified notwithstanding that such appointment is merely in a temporary capacity. If the intention of the respondent Secretary was to protect the interest of the federation in the sanggunian, he should have appointed the incumbent FABC President in a hold-over capacity. For even under the guidelines, the term of office of officers of the katipunan at all levels shall be from the date of their election until their successors shall have been duly elected and qualified, without prejudice to the terms of their appointments as members of the sanggunian to which they may be correspondingly appointed. 49 Since the election is still under protest such that no successor of the incumbent has as yet qualified, the respondent Secretary has no choice but to have the incumbent FABC President sit as member of the sanggunian. He could even have appointed petitioner since he was elected the president of the federation but not Antonio. The appointment of Antonio, allegedly the protege of respondent Governor, gives credence to petitioner's charge of political interference by respondent Governor in the organization. This should not be allowed. The barangays should be insulated from any partisan activity or political intervention if only to give true meaning to local autonomy.

WHEREFORE, the petition is GRANTED in that the resolution of respondent Secretary dated August 4, 1989 is hereby SET ASIDE for having been issued in excess of jurisdiction.

The election of the officials of the ABC Federation held on June 18, 1989 is hereby annulled. A new election of officers of the federation is hereby ordered to be conducted immediately in accordance with the governing rules and regulations.

The Supplemental petition is hereby GRANTED. The appointment of Augusto Antonio as representative to theSangguniang Panlalawigan in a temporary capacity is declared null and void.

No costs.

SO ORDERED.

Documents

Admin Session 1