CASE 1: THIRD DIVISION

[G.R. No. 142261. June 29, 2000]

GOVERNOR MANUEL M. LAPID, petitioner, vs.

HONORABLE COURT OF APPEALS, OFFICE OF THE

OMBUDSMAN, NATIONAL BUREAU OF

INVESTIGATION, FACT-FINDING INTELLIGENCE

BUREAU (FFIB) of the Office of the Ombudsman,

DEPARTMENT OF INTERIOR AND LOCAL

GOVERNMENT, respondents.

R E S O L U T I O N

GONZAGA-REYES, J.:

Before us are the Motions for Reconsideration filed by the

National Bureau of Investigation and the Department of the

Interior and Local Government, represented by the Office of

the Solicitor-General, and the Office of the Ombudsman of

our 5 April 2000 Resolution.i[1] In this resolution, we

ordered the immediate reinstatement of petitioner Manuel

Lapid to the position of Governor of Pampanga as the

respondents failed to establish the existence of a law

mandating the immediate execution of a decision of the

Office of the Ombudsman in an administrative case where

the penalty imposed is suspension for one year.

The factual antecedents are as follows:

On the basis of an unsigned letter dated July 20, 1998,

allegedly originating from the ―Mga Mamamayan ng

Lalawigan ng Pampanga,‖ addressed to the National Bureau

of Investigation, the latter initiated an ―open probe‖ on the

alleged illegal quarrying in Pampanga & exaction of

exorbitant fees purportedly perpetrated by unscrupulous

individuals with the connivance of high-ranking

government officials. The NBI Report was endorsed to the

respondent Ombudsman and was docketed as OMB-1-98-

2067.

On Oct. 26, 1998, a complaint was filed charging petitioner

Gov. Manuel M. Lapid, Vice-Governor Clayton Olalia,

Provincial Administrator Enrico Quiambao, Provincial

Treasurer Jovito Sabado, Mabalacat Municipal Mayor

Marino Morales and Senior Police Officer 4 Nestor Tadeo

with alleged ―Dishonesty, Grave Misconduct and Conduct

Prejudicial to the Best Interest of the Service‖ for allegedly

―having conspired between and among themselves in

demanding and collecting from various quarrying operators

in Pampanga a control fee, control slip, or monitoring fee of

P120.00 per truckload of sand, gravel, or other quarry

material, without a duly enacted provincial ordinance

authorizing the collection thereof and without issuing

receipts for its collection. They were also accused of giving

unwarranted benefits to Nestor Tadeo, Rodrigo ―Rudy‖

Fernandez & Conrado Pangilinan who are neither

officials/employees of the Provincial Government. Of

Pampanga nor quarry operators by allowing them to collect

the said amount which was over and above the P40.00

prescribed under the present provincial ordinance and in

allowing Tadeo, Fernandez and Pangilinan to sell and

deliver to various quarry operators booklets of official

receipts which were pre-stamped with ―SAND FEE

P40.00.‖ii[2]

The Ombudsman issued an Order dated January 13, 1999

preventively suspending petitioner Lapid, Olalia,

Quiambao, Sabado, Morales and Tadeo for a period of six

(6) months without pay pursuant to Sec. 24 of RA 6770. On

Jan. 19, 1999, the Department of the Interior and Local

Government (hereinafter the ―DILG‖) implemented the

suspension of petitioner Lapidiii[3].

On November 22, 1999 the Ombudsman rendered a

decisioniv[4] in the administrative case finding the

petitioner administratively liable for misconduct thus:

―Wherefore, premises considered, respondent Manuel M.

Lapid, Clayton A. Olalia, Jovito S. Sabado and Nestor C.

Tadeo are hereby found guilty of misconduct for which they

are meted out the penalty of one (1) year suspension without

pay pursuant to section 25 (2) of R.A. 6770 (Ombudsman

Act of 1989). Respondent Marino P. Morales is hereby

exonerated from the same administrative charge for

insufficiency of evidence. The complaint against respondent

Enrico P. Quiambao, who resigned effective June 30, 1998

was dismissed on March 12, 1999, without prejudice to the

outcome of the criminal case.‖v[5]

The copy of the said decision was received by counsel for

the petitioner on November 25, 1999 and a motion for

reconsideration was filed on November 29, 1999. The

Office of the Ombudsman, in an Ordervi[6] dated 12

January 2000, denied the motion for reconsideration.

Petitioner then filed a petition for review with the Court of

Appeals on January 18, 2000 praying for the issuance of a

temporary restraining order to enjoin the Ombudsman from

enforcing the questioned decision. The temporary

restraining order was issued by the appellate court on

January 19, 2000.vii[7]

When the 60-day lifetime of the temporary restraining order

lapsed on March 19, 2000 without the Court of Appeals

resolving the prayer for the issuance of a writ of preliminary

injunction, a petitionviii[8] for certiorari, prohibition and

mandamus was filed with this Court on March 20, 2000.

The petition asked for the issuance of a temporary

restraining order to enjoin the respondents from enforcing

the assailed decision of the Ombudsman and prayed that

―after due proceedings, judgment be rendered reversing and

setting aside the questioned decision (of the Ombudsman)

dated November 22, 1999 and the order dated January 12,

2000.‖ix[9]

On March 22, 2000 the Third Division of this Court issued

a Resolution requiring the respondents to comment on the

petition. That same day, the Court of Appeals issued a

resolutionx[10] denying the petitioner‘s prayer for

injunctive relief. The following day, or on March 23, 2000,

the DILG implemented the assailed decision of the

Ombudsman and the highest ranking Provincial Board

Member of Pampanga, Edna David, took her oath of office

as O.I.C.- Governor of the Province of Pampanga.

On March 24, 2000 a Motion for Leave to File Supplement

to the Petition for Certiorari, Prohibition and

Mandamusxi[11] and the Supplement to the Petitionxii[12]

itself were filed in view of the resolution of the Court of

Appeals denying the petitioner‘s prayer for preliminary

injunction. In addition to the arguments raised in the main

petition, the petitioner likewise raised in issue the apparent

pre-judgment of the case on the merits by the Court of

Appeals in its resolution denying the prayer for preliminary

injunction. In so doing, petitioner argued that the

respondent court exceeded the bounds of its jurisdiction.

Proceeding from the premise that the decision of the

Ombudsman had not yet become final, the petitioner argued

that the writs of prohibition and mandamus may be issued

against the respondent DILG for prematurely implementing

the assailed decision. Finally, the petitioner prayed for the

setting aside of the resolution issued by the Court of

Appeals dated March 22, 2000 and for the issuance of a new

one enjoining the respondents from enforcing the said

decision or, if it has already been implemented, to withdraw

any action already taken until the issue of whether or not the

said decision of the Ombudsman is immediately executory

has been settled.

The Solicitor-General and the Office of the Ombudsman

filed their respective commentsxiii[13]to the petition

praying for the dismissal thereof. Regarding the issue of the

immediate enforcement of the decision of the Ombudsman,

the Solicitor-General maintains that the said decision is

governed by Section 12, Rule 43 of the Rules of Court and

is therefore, immediately executory. For its part, the Office

of the Ombudsman maintains that the Ombudsman Law and

its implementing rules are silent as to the execution of

decisions rendered by the Ombudsman considering that the

portion of the said law cited by petitioner pertains to the

finality of the decision but not to its enforcement pending

appeal. The Office of the Ombudsman also stated that it has

uniformly adopted the provisions in the Local Government

Code and Administrative Code that decisions in

administrative disciplinary cases are immediately executory.

The Solicitor-General filed an additional commentxiv[14]

alleging that the petitioner did not question the executory

character of the decision of the Ombudsman and that he is

presenting this argument for the first time before the

Supreme Court. The appellate court should be given an

opportunity to review the case from this standpoint before

asking the Supreme Court to review the resolutions of the

Court of Appeals. The petitioner filed a consolidated

Replyxv[15] to the Comments of the respondents.

After oral arguments before the Third Division of this Court

on 5 April 2000, the Resolutionxvi[16] subject of the instant

Motions for Reconsideration was issued. The Resolution

provides as follows:

―From the pleadings filed by the parties and after oral

arguments held on April 5, 2000, the petitioner represented

by Atty. Augusto G. Panlilio, the respondent Ombudsman

represented by its Chief Legal Counsel, and the National

Bureau of Investigation and the Department of the Interior

and Local Government represented by the Solicitor General,

and after due deliberation, the Court finds that the

respondents failed to establish the existence of a law

mandating the immediate execution of a decision of the

Ombudsman in an administrative case where the penalty

imposed is suspension for one year. The immediate

implementation of the decision of the Ombudsman against

petitioner is thus premature.

WHEREFORE, the respondents are ordered to reinstate

effective immediately the petitioner to the position of

Governor of the Province of Pampanga. This case is hereby

remanded to the Court of Appeals for resolution of the

appeal in CA-GR. SP No. 564744 on the merits. Said court

is hereby directed to resolve the same with utmost

deliberate dispatch.

This is without prejudice to the promulgation of an

extended decision.‖

From this 5 April 2000 Resolution, the Offices of the

Solicitor-General and the Ombudsman filed the instant

motions for reconsideration.

The sole issue addressed by our 5 April 2000 Resolution is

whether or not the decision of the Office of the Ombudsman

finding herein petitioner administratively liable for

misconduct and imposing upon him a penalty of one (1)

year suspension without pay is immediately executory

pending appeal.

Petitioner was administratively charged for misconduct

under the provisions of R.A. 6770, the Ombudsman Act of

1989. Section 27 of the said Act provides as follows:

―Section 27. Effectivity and Finality of Decisions. – All

provisionary orders of the Office of the Ombudsman are

immediately effective and executory.

A motion for reconsideration of any order, directive or

decision of the Office of the Ombudsman must be filed

within five (5) days after receipt of written notice and shall

be entertained only on the following grounds:

X X X

Findings of fact of the Office of the Ombudsman when

supported by substantial evidence are conclusive. Any

order, directive or decision imposing the penalty of public

censure or reprimand, suspension of not more than one

month‘s salary shall be final and unappealable.

In all administrative disciplinary cases, orders, directives or

decisions of the Office of the Ombudsman may be appealed

to the Supreme Court by filing a petition for certiorari

within ten (10) days from receipt of the written notice of the

order, directive or decision or denial of the motion for

reconsideration in accordance with Rule 45 of the Rules of

Court.‖

The Rules of Procedure of the Office of the

Ombudsmanxvii[17] likewise contain a similar provision.

Section 7, Rule III of the said Rules provides as follows:

―Sec. 7. Finality of Decision – where the respondent is

absolved of the charge and in case of conviction where the

penalty imposed is public censure or reprimand, suspension

of not more than one month, or a fine not equivalent to one

month salary, the decision shall be final and unappealable.

In all other cases, the decision shall become final after the

expiration of ten (10) days from receipt thereof by the

respondent, unless a motion for reconsideration or petition

for certiorari, shall have been filed by him as prescribed in

Section 27 of R.A. 6770.‖

It is clear from the above provisions that the punishment

imposed upon petitioner, i.e. suspension without pay for one

year, is not among those listed as final and unappealable,

hence, immediately executory. Section 27 states that all

provisionary orders of the Office of the Ombudsman are

immediately effective and executory; and that any order,

directive or decision of the said Office imposing the penalty

of censure or reprimand or suspension of not more than one

month‘s salary is final and unappealable. As such the legal

maxim ―inclusion unius est exclusio alterus‖ finds

application. The express mention of the things included

excludes those that are not included. The clear import of

these statements taken together is that all other decisions of

the Office of the Ombudsman which impose penalties that

are not enumerated in the said section 27 are not final,

unappealable and immediately executory. An appeal timely

filed, such as the one filed in the instant case, will stay the

immediate implementation of the decision. This finds

support in the Rules of Procedure issued by the

Ombudsman itself which states that ―(I)n all other cases, the

decision shall become final after the expiration of ten (10)

days from receipt thereof by the respondent, unless a motion

for reconsideration or petition for certiorari (should now be

petition for review under Rule 43) shall have been filed by

him as prescribed in Section 27 of R.A. 6770.‖

The Office of the Solicitor General insists however that the

case of Fabian vs. Desiertoxviii[18] has voided Section 27

of R.A. 6770 and Section 7, Rule III of Administrative

Order No. 07. As such, the review of decisions of the

Ombudsman in administrative cases is now governed by

Rule 43 of the 1997 Rules of Civil Procedure which

mandates, under Section 12xix[19] thereof, the immediately

executory character of the decision or order appealed from.

The contention of the Solicitor General is not well-taken.

Our ruling in the case of Fabian vs. Desierto invalidated

Section 27 of Republic Act No. 6770 and Section 7, Rule III

of Administrative Order No.07 and any other provision of

law implementing the aforesaid Act only insofar as they

provide for appeals in administrative disciplinary cases

from the Office of the Ombudsman to the Supreme Court.

The only provision affected by the Fabian ruling is the

designation of the Court of Appeals as the proper forum and

of Rule 43 of the Rules of Court as the proper mode of

appeal. All other matters included in said section 27,

including the finality or non-finality of decisions, are not

affected and still stand.

Neither can respondents find support in Section 12, Rule 43

of the 1997 Rules of Civil Procedure which provides as

follows:

―Section 12. Effect of Appeal. The appeal shall not stay the

award, judgment, final order or resolution sought to be

reviewed unless the Court of Appeals shall direct otherwise

upon such terms as it may deem just.‖

On this point, respondents contend that considering the

silence of the Ombudsman Act on the matter of execution

pending appeal, the above-quoted provision of the Rules of

Court, which allegedly mandates the immediate execution

of all decisions rendered by administrative and quasi-

judicial agencies, should apply suppletorily to the

provisions of the Ombudsman Act. We do not agree.

A judgment becomes ―final and executory‖ by operation of

law.xx[20] Section 27 of the Ombudsman Act provides that

any order, directive or decision of the Office of the

Ombudsman imposing a penalty of public censure or

reprimand, or suspension of not more than one month‘s

salary shall be final and unappealable. In all other cases,

the respondent therein has the right to appeal to the Court of

Appeals within ten (10) days from receipt of the written

notice of the order, directive or decision. In all these other

cases therefore, the judgment imposed therein will become

final after the lapse of the reglementary period of appeal if

no appeal is perfectedxxi[21] or, an appeal therefrom

having been taken, the judgment in the appellate tribunal

becomes final. It is this final judgment which is then

correctly categorized as a ―final and executory judgment‖ in

respect to which execution shall issue as a matter of

right.xxii[22] In other words, the fact that the Ombudsman

Act gives parties the right to appeal from its decisions

should generally carry with it the stay of these decisions

pending appeal. Otherwise, the essential nature of these

judgments as being appealable would be rendered nugatory.

The general rule is that judgments by lower courts or

tribunals become executory only after it has become final

and executory,xxiii[23] execution pending appeal being an

exception to this general rule. It is the contention of

respondents however that with respect to decisions of quasi-

judicial agencies and administrative bodies, the opposite is

true. It is argued that the general rule with respect to quasi-

judicial and administrative agencies is that the decisions of

such bodies are immediately executory even pending

appeal.

The contention of respondents is misplaced. There is no

general legal principle that mandates that all decisions of

quasi-judicial agencies are immediately executory.

Decisions rendered by the Securities and Exchange

Commissionxxiv[24] and the Civil Aeronautics

Board,xxv[25] for example, are not immediately executory

and are stayed when an appeal is filed before the Court of

Appeals. On the other hand, the decisions of the Civil

Service Commission, under the Administrative

Codexxvi[26], and the Office of the President under the

Local Government Codexxvii[27], which respondents cite,

are immediately executory even pending appeal because the

pertinent laws under which the decisions were rendered

mandate them to be so. The provisions of the last two cited

laws expressly provide for the execution pending appeal of

their final orders or decisions. The Local Government

Code, under Section 68 thereof provides as follows:

―Section 68. Execution Pending Appeal. – An appeal shall

not prevent a decision from becoming final and executory.

The respondent shall be considered as having been placed

under preventive suspension during the pendency of an

appeal in the event he wins such appeal. In the event the

appeal results in an exoneration, he shall be paid his salary

and such other emoluments during the pendency of the

appeal.‖

Similarly, Book V, Title I, Subtitle A, Chapter 6, Section

47, par. (4) of the Administrative Code of 1987 provides:

―(4) An appeal 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.‖

Where the legislature has seen fit to declare that the

decision of the quasi-judicial agency is immediately final

and executory pending appeal, the law expressly so

provides.

Section 12 of Rule 43 should therefore be interpreted as

mandating that the appeal will not stay the award, judgment,

final order or resolution unless the law directs otherwise.

Petitioner was charged administratively before the

Ombudsman and accordingly the provisions of the

Ombudsman Act should apply in his case. Section 68 of the

Local Government Code only applies to administrative

decisions rendered by the Office of the President or the

appropriate Sanggunian against elective local government

officials. Similarly, the provision in the Administrative

Code of 1987 mandating execution pending review applies

specifically to administrative decisions of the Civil Service

Commission involving members of the Civil Service.

There is no basis in law for the proposition that the

provisions of the Administrative Code of 1987 and the

Local Government Code on execution pending review

should be applied suppletorily to the provisions of the

Ombudsman Act as there is nothing in the Ombudsman Act

which provides for such suppletory application. Courts may

not, in the guise of interpretation, enlarge the scope of a

statute and include therein situations not provided or

intended by the lawmakers. An omission at the time of

enactment, whether careless or calculated, cannot be

judicially supplied however later wisdom may recommend

the inclusion.xxviii[28]

And while in one respect, the Ombudsman Law, the

Administrative Code of 1987 and the Local Government

Code are in pari materia insofar as the three laws relate or

deal with public officers, the similarity ends there. It is a

principle in statutory construction that where there are two

statutes that apply to a particular case, that which was

specially designed for the said case must prevail over the

other.xxix[29] In the instant case, the acts attributed to

petitioner could have been the subject of administrative

disciplinary proceedings before the Office of the President

under the Local Government Code or before the Office of

the Ombudsman under the Ombudsman Act. Considering

however, that petitioner was charged under the Ombudsman

Act, it is this law alone which should govern his case.

Respondents, through the Office of the Solicitor General,

argue that the ruling against execution pending review of

the Ombudsman‘s decision grants a one-sided protection to

the offender found guilty of misconduct in office and

nothing at all to the government as the aggrieved party. The

offender, according to respondents, can just let the case drag

on until the expiration of his office or his reelection as by

then, the case against him shall become academic and his

offense, obliterated. As such, respondents conclude, the

government is left without further remedy and is left

helpless in its own fight against graft and corruption.

We find this argument much too speculative to warrant

serious consideration. If it perceived that the fight against

graft and corruption is hampered by the inadequacy of the

provisions of the Ombudsman Act, the remedy lies not with

this Court but by legislative amendment.

As regards the contention of the Office of the Ombudsman

that under Sec. 13(8), Article XI of the 1987 Constitution,

the Office of the Ombudsman is empowered to

―(p)romulgate its rules of procedure and exercise such other

powers or perform such functions or duties as may be

provided by law,‖ suffice it to note that the Ombudsman

rules of procedure, Administrative Order No. 07, mandate

that decisions of the Office of the Ombudsman where the

penalty imposed is other than public censure or reprimand,

suspension of not more than one month salary or fine

equivalent to one month salary are still appealable and

hence, not final and executory. Under these rules, which

were admittedly promulgated by virtue of the rule-making

power of the Office of the Ombudsman, the decision

imposing a penalty of one year suspension without pay on

petitioner Lapid is not immediately executory.

WHEREFORE, the Motions for Reconsideration filed by

the Office of the Solicitor General and the Office of the

Ombudsman are hereby DENIED for lack of merit.

SO ORDERED.

Melo, (Chairman), Vitug, Panganiban, and Purisima, JJ.,

concur.

CASE 2: Republic of the Philippines

SUPREME COURT Manila

EN BANC

G.R. No. L-19650 September 29, 1966

CALTEX (PHILIPPINES), INC., petitioner-appellee,

vs.

ENRICO PALOMAR, in his capacity as THE

POSTMASTER GENERAL, respondent-appellant.

Office of the Solicitor General for respondent and

appellant.

Ross, Selph and Carrascoso for petitioner and appellee.

CASTRO, J.:

In the year 1960 the Caltex (Philippines) Inc.

(hereinafter referred to as Caltex) conceived and laid the

groundwork for a promotional scheme calculated to drum

up patronage for its oil products. Denominated "Caltex

Hooded Pump Contest", it calls for participants therein to

estimate the actual number of liters a hooded gas pump at

each Caltex station will dispense during a specified period.

Employees of the Caltex (Philippines) Inc., its dealers and

its advertising agency, and their immediate families

excepted, participation is to be open indiscriminately to all

"motor vehicle owners and/or licensed drivers". For the

privilege to participate, no fee or consideration is required

to be paid, no purchase of Caltex products required to be

made. Entry forms are to be made available upon request at

each Caltex station where a sealed can will be provided for

the deposit of accomplished entry stubs.

A three-staged winner selection system is envisioned.

At the station level, called "Dealer Contest", the contestant

whose estimate is closest to the actual number of liters

dispensed by the hooded pump thereat is to be awarded the

first prize; the next closest, the second; and the next, the

third. Prizes at this level consist of a 3-burner kerosene

stove for first; a thermos bottle and a Ray-O-Vac hunter

lantern for second; and an Everready Magnet-lite flashlight

with batteries and a screwdriver set for third. The first-prize

winner in each station will then be qualified to join in the

"Regional Contest" in seven different regions. The winning

stubs of the qualified contestants in each region will be

deposited in a sealed can from which the first-prize, second-

prize and third-prize winners of that region will be drawn.

The regional first-prize winners will be entitled to make a

three-day all-expenses-paid round trip to Manila,

accompanied by their respective Caltex dealers, in order to

take part in the "National Contest". The regional second-

prize and third-prize winners will receive cash prizes of

P500 and P300, respectively. At the national level, the stubs

of the seven regional first-prize winners will be placed

inside a sealed can from which the drawing for the final

first-prize, second-prize and third-prize winners will be

made. Cash prizes in store for winners at this final stage are:

P3,000 for first; P2,000 for second; Pl,500 for third; and

P650 as consolation prize for each of the remaining four

participants.

Foreseeing the extensive use of the mails not only as

amongst the media for publicizing the contest but also for

the transmission of communications relative thereto,

representations were made by Caltex with the postal

authorities for the contest to be cleared in advance for

mailing, having in view sections 1954(a), 1982 and 1983 of

the Revised Administrative Code, the pertinent provisions

of which read as follows:

SECTION 1954. Absolutely non-mailable

matter. — No matter belonging to any of the

following classes, whether sealed as first-class

matter or not, shall be imported into the Philippines

through the mails, or to be deposited in or carried

by the mails of the Philippines, or be delivered to its

addressee by any officer or employee of the Bureau

of Posts:

Written or printed matter in any form

advertising, describing, or in any manner pertaining

to, or conveying or purporting to convey any

information concerning any lottery, gift enterprise,

or similar scheme depending in whole or in part

upon lot or chance, or any scheme, device, or

enterprise for obtaining any money or property of

any kind by means of false or fraudulent pretenses,

representations, or promises.

"SECTION 1982. Fraud orders.—Upon

satisfactory evidence that any person or company is

engaged in conducting any lottery, gift enterprise,

or scheme for the distribution of money, or of any

real or personal property by lot, chance, or drawing

of any kind, or that any person or company is

conducting any scheme, device, or enterprise for

obtaining money or property of any kind through

the mails by means of false or fraudulent pretenses,

representations, or promises, the Director of Posts

may instruct any postmaster or other officer or

employee of the Bureau to return to the person,

depositing the same in the mails, with the word

"fraudulent" plainly written or stamped upon the

outside cover thereof, any mail matter of whatever

class mailed by or addressed to such person or

company or the representative or agent of such

person or company.

SECTION 1983. Deprivation of use of money

order system and telegraphic transfer service.—

The Director of Posts may, upon evidence

satisfactory to him that any person or company is

engaged in conducting any lottery, gift enterprise or

scheme for the distribution of money, or of any real

or personal property by lot, chance, or drawing of

any kind, or that any person or company is

conducting any scheme, device, or enterprise for

obtaining money or property of any kind through

the mails by means of false or fraudulent pretenses,

representations, or promise, forbid the issue or

payment by any postmaster of any postal money

order or telegraphic transfer to said person or

company or to the agent of any such person or

company, whether such agent is acting as an

individual or as a firm, bank, corporation, or

association of any kind, and may provide by

regulation for the return to the remitters of the sums

named in money orders or telegraphic transfers

drawn in favor of such person or company or its

agent.

The overtures were later formalized in a letter to the

Postmaster General, dated October 31, 1960, in which the

Caltex, thru counsel, enclosed a copy of the contest rules

and endeavored to justify its position that the contest does

not violate the anti-lottery provisions of the Postal Law.

Unimpressed, the then Acting Postmaster General opined

that the scheme falls within the purview of the provisions

aforesaid and declined to grant the requested clearance. In

its counsel's letter of December 7, 1960, Caltex sought a

reconsideration of the foregoing stand, stressing that there

being involved no consideration in the part of any

contestant, the contest was not, under controlling

authorities, condemnable as a lottery. Relying, however, on

an opinion rendered by the Secretary of Justice on an

unrelated case seven years before (Opinion 217, Series of

1953), the Postmaster General maintained his view that the

contest involves consideration, or that, if it does not, it is

nevertheless a "gift enterprise" which is equally banned by

the Postal Law, and in his letter of December 10, 1960 not

only denied the use of the mails for purposes of the

proposed contest but as well threatened that if the contest

was conducted, "a fraud order will have to be issued against

it (Caltex) and all its representatives".

Caltex thereupon invoked judicial intervention by

filing the present petition for declaratory relief against

Postmaster General Enrico Palomar, praying "that judgment

be rendered declaring its 'Caltex Hooded Pump Contest' not

to be violative of the Postal Law, and ordering respondent

to allow petitioner the use of the mails to bring the contest

to the attention of the public". After issues were joined and

upon the respective memoranda of the parties, the trial court

rendered judgment as follows:

In view of the foregoing considerations, the

Court holds that the proposed 'Caltex Hooded Pump

Contest' announced to be conducted by the

petitioner under the rules marked as Annex B of the

petitioner does not violate the Postal Law and the

respondent has no right to bar the public

distribution of said rules by the mails.

The respondent appealed.

The parties are now before us, arrayed against each

other upon two basic issues: first, whether the petition states

a sufficient cause of action for declaratory relief; and

second, whether the proposed "Caltex Hooded Pump

Contest" violates the Postal Law. We shall take these up in

seriatim.

1. By express mandate of section 1 of Rule 66 of the

old Rules of Court, which was the applicable legal basis for

the remedy at the time it was invoked, declaratory relief is

available to any person "whose rights are affected by a

statute . . . to determine any question of construction or

validity arising under the . . . statute and for a declaration of

his rights thereunder" (now section 1, Rule 64, Revised

Rules of Court). In amplification, this Court, conformably

to established jurisprudence on the matter, laid down certain

conditions sine qua non therefor, to wit: (1) there must be a

justiciable controversy; (2) the controversy must be between

persons whose interests are adverse; (3) the party seeking

declaratory relief must have a legal interest in the

controversy; and (4) the issue involved must be ripe for

judicial determination (Tolentino vs. The Board of

Accountancy, et al., G.R. No. L-3062, September 28, 1951;

Delumen, et al. vs. Republic of the Philippines, 50 O.G.,

No. 2, pp. 576, 578-579; Edades vs. Edades, et al., G.R. No.

L-8964, July 31, 1956). The gravamen of the appellant's

stand being that the petition herein states no sufficient cause

of action for declaratory relief, our duty is to assay the

factual bases thereof upon the foregoing crucible.

As we look in retrospect at the incidents that

generated the present controversy, a number of significant

points stand out in bold relief. The appellee (Caltex), as a

business enterprise of some consequence, concededly has

the unquestioned right to exploit every legitimate means,

and to avail of all appropriate media to advertise and

stimulate increased patronage for its products. In contrast,

the appellant, as the authority charged with the enforcement

of the Postal Law, admittedly has the power and the duty to

suppress transgressions thereof — particularly thru the

issuance of fraud orders, under Sections 1982 and 1983 of

the Revised Administrative Code, against legally non-

mailable schemes. Obviously pursuing its right aforesaid,

the appellee laid out plans for the sales promotion scheme

hereinbefore detailed. To forestall possible difficulties in the

dissemination of information thereon thru the mails,

amongst other media, it was found expedient to request the

appellant for an advance clearance therefor. However,

likewise by virtue of his jurisdiction in the premises and

construing the pertinent provisions of the Postal Law, the

appellant saw a violation thereof in the proposed scheme

and accordingly declined the request. A point of difference

as to the correct construction to be given to the applicable

statute was thus reached. Communications in which the

parties expounded on their respective theories were

exchanged. The confidence with which the appellee insisted

upon its position was matched only by the obstinacy with

which the appellant stood his ground. And this impasse was

climaxed by the appellant's open warning to the appellee

that if the proposed contest was "conducted, a fraud order

will have to be issued against it and all its representatives."

Against this backdrop, the stage was indeed set for

the remedy prayed for. The appellee's insistent assertion of

its claim to the use of the mails for its proposed contest, and

the challenge thereto and consequent denial by the appellant

of the privilege demanded, undoubtedly spawned a live

controversy. The justiciability of the dispute cannot be

gainsaid. There is an active antagonistic assertion of a legal

right on one side and a denial thereof on the other,

concerning a real — not a mere theoretical — question or

issue. The contenders are as real as their interests are

substantial. To the appellee, the uncertainty occasioned by

the divergence of views on the issue of construction

hampers or disturbs its freedom to enhance its business. To

the appellant, the suppression of the appellee's proposed

contest believed to transgress a law he has sworn to uphold

and enforce is an unavoidable duty. With the appellee's bent

to hold the contest and the appellant's threat to issue a fraud

order therefor if carried out, the contenders are confronted

by the ominous shadow of an imminent and inevitable

litigation unless their differences are settled and stabilized

by a tranquilizing declaration (Pablo y Sen, et al. vs.

Republic of the Philippines, G.R. No. L-6868, April 30,

1955). And, contrary to the insinuation of the appellant, the

time is long past when it can rightly be said that merely the

appellee's "desires are thwarted by its own doubts, or by the

fears of others" — which admittedly does not confer a cause

of action. Doubt, if any there was, has ripened into a

justiciable controversy when, as in the case at bar, it was

translated into a positive claim of right which is actually

contested (III Moran, Comments on the Rules of Court,

1963 ed., pp. 132-133, citing: Woodward vs. Fox West

Coast Theaters, 36 Ariz., 251, 284 Pac. 350).

We cannot hospitably entertain the appellant's

pretense that there is here no question of construction

because the said appellant "simply applied the clear

provisions of the law to a given set of facts as embodied in

the rules of the contest", hence, there is no room for

declaratory relief. The infirmity of this pose lies in the fact

that it proceeds from the assumption that, if the

circumstances here presented, the construction of the legal

provisions can be divorced from the matter of their

application to the appellee's contest. This is not feasible.

Construction, verily, is the art or process of discovering and

expounding the meaning and intention of the authors of the

law with respect to its application to a given case, where

that intention is rendered doubtful, amongst others, by

reason of the fact that the given case is not explicitly

provided for in the law (Black, Interpretation of Laws, p. 1).

This is precisely the case here. Whether or not the scheme

proposed by the appellee is within the coverage of the

prohibitive provisions of the Postal Law inescapably

requires an inquiry into the intended meaning of the words

used therein. To our mind, this is as much a question of

construction or interpretation as any other.

Nor is it accurate to say, as the appellant intimates,

that a pronouncement on the matter at hand can amount to

nothing more than an advisory opinion the handing down of

which is anathema to a declaratory relief action. Of course,

no breach of the Postal Law has as yet been committed. Yet,

the disagreement over the construction thereof is no longer

nebulous or contingent. It has taken a fixed and final shape,

presenting clearly defined legal issues susceptible of

immediate resolution. With the battle lines drawn, in a

manner of speaking, the propriety — nay, the necessity —

of setting the dispute at rest before it accumulates the

asperity distemper, animosity, passion and violence of a

full-blown battle which looms ahead (III Moran, Comments

on the Rules of Court, 1963 ed., p. 132 and cases cited),

cannot but be conceded. Paraphrasing the language in

Zeitlin vs. Arnebergh 59 Cal., 2d., 901, 31 Cal. Rptr., 800,

383 P. 2d., 152, cited in 22 Am. Jur., 2d., p. 869, to deny

declaratory relief to the appellee in the situation into which

it has been cast, would be to force it to choose between

undesirable alternatives. If it cannot obtain a final and

definitive pronouncement as to whether the anti-lottery

provisions of the Postal Law apply to its proposed contest, it

would be faced with these choices: If it launches the contest

and uses the mails for purposes thereof, it not only incurs

the risk, but is also actually threatened with the certain

imposition, of a fraud order with its concomitant stigma

which may attach even if the appellee will eventually be

vindicated; if it abandons the contest, it becomes a self-

appointed censor, or permits the appellant to put into effect

a virtual fiat of previous censorship which is

constitutionally unwarranted. As we weigh these

considerations in one equation and in the spirit of liberality

with which the Rules of Court are to be interpreted in order

to promote their object (section 1, Rule 1, Revised Rules of

Court) — which, in the instant case, is to settle, and afford

relief from uncertainty and insecurity with respect to, rights

and duties under a law — we can see in the present case any

imposition upon our jurisdiction or any futility or

prematurity in our intervention.

The appellant, we apprehend, underrates the force and

binding effect of the ruling we hand down in this case if he

believes that it will not have the final and pacifying function

that a declaratory judgment is calculated to subserve. At the

very least, the appellant will be bound. But more than this,

he obviously overlooks that in this jurisdiction, "Judicial

decisions applying or interpreting the law shall form a part

of the legal system" (Article 8, Civil Code of the

Philippines). In effect, judicial decisions assume the same

authority as the statute itself and, until authoritatively

abandoned, necessarily become, to the extent that they are

applicable, the criteria which must control the actuations not

only of those called upon to abide thereby but also of those

in duty bound to enforce obedience thereto. Accordingly,

we entertain no misgivings that our resolution of this case

will terminate the controversy at hand.

It is not amiss to point out at this juncture that the

conclusion we have herein just reached is not without

precedent. In Liberty Calendar Co. vs. Cohen, 19 N.J., 399,

117 A. 2d., 487, where a corporation engaged in

promotional advertising was advised by the county

prosecutor that its proposed sales promotion plan had the

characteristics of a lottery, and that if such sales promotion

were conducted, the corporation would be subject to

criminal prosecution, it was held that the corporation was

entitled to maintain a declaratory relief action against the

county prosecutor to determine the legality of its sales

promotion plan. In pari materia, see also: Bunis vs.

Conway, 17 App. Div. 2d., 207, 234 N.Y.S. 2d., 435; Zeitlin

vs. Arnebergh, supra; Thrillo, Inc. vs. Scott, 15 N.J. Super.

124, 82 A. 2d., 903.

In fine, we hold that the appellee has made out a case

for declaratory relief.

2. The Postal Law, chapter 52 of the Revised

Administrative Code, using almost identical terminology in

sections 1954(a), 1982 and 1983 thereof, supra, condemns

as absolutely non-mailable, and empowers the Postmaster

General to issue fraud orders against, or otherwise deny the

use of the facilities of the postal service to, any information

concerning "any lottery, gift enterprise, or scheme for the

distribution of money, or of any real or personal property by

lot, chance, or drawing of any kind". Upon these words

hinges the resolution of the second issue posed in this

appeal.

Happily, this is not an altogether untrodden judicial

path. As early as in 1922, in "El Debate", Inc. vs. Topacio,

44 Phil., 278, 283-284, which significantly dwelt on the

power of the postal authorities under the abovementioned

provisions of the Postal Law, this Court declared that —

While countless definitions of lottery have

been attempted, the authoritative one for this

jurisdiction is that of the United States Supreme

Court, in analogous cases having to do with the

power of the United States Postmaster General, viz.:

The term "lottery" extends to all schemes for the

distribution of prizes by chance, such as policy

playing, gift exhibitions, prize concerts, raffles at

fairs, etc., and various forms of gambling. The three

essential elements of a lottery are: First,

consideration; second, prize; and third, chance.

(Horner vs. States [1892], 147 U.S. 449; Public

Clearing House vs. Coyne [1903], 194 U.S., 497;

U.S. vs. Filart and Singson [1915], 30 Phil., 80;

U.S. vs. Olsen and Marker [1917], 36 Phil., 395;

U.S. vs. Baguio [1919], 39 Phil., 962; Valhalla

Hotel Construction Company vs. Carmona, p. 233,

ante.)

Unanimity there is in all quarters, and we agree, that

the elements of prize and chance are too obvious in the

disputed scheme to be the subject of contention.

Consequently as the appellant himself concedes, the field of

inquiry is narrowed down to the existence of the element of

consideration therein. Respecting this matter, our task is

considerably lightened inasmuch as in the same case just

cited, this Court has laid down a definitive yard-stick in the

following terms —

In respect to the last element of consideration,

the law does not condemn the gratuitous

distribution of property by chance, if no

consideration is derived directly or indirectly from

the party receiving the chance, but does condemn as

criminal schemes in which a valuable consideration

of some kind is paid directly or indirectly for the

chance to draw a prize.

Reverting to the rules of the proposed contest, we are

struck by the clarity of the language in which the invitation

to participate therein is couched. Thus —

No puzzles, no rhymes? You don't need

wrappers, labels or boxtops? You don't have to buy

anything? Simply estimate the actual number of

liter the Caltex gas pump with the hood at your

favorite Caltex dealer will dispense from — to —,

and win valuable prizes . . . ." .

Nowhere in the said rules is any requirement that any

fee be paid, any merchandise be bought, any service be

rendered, or any value whatsoever be given for the privilege

to participate. A prospective contestant has but to go to a

Caltex station, request for the entry form which is available

on demand, and accomplish and submit the same for the

drawing of the winner. Viewed from all angles or turned

inside out, the contest fails to exhibit any discernible

consideration which would brand it as a lottery. Indeed,

even as we head the stern injunction, "look beyond the fair

exterior, to the substance, in order to unmask the real

element and pernicious tendencies which the law is seeking

to prevent" ("El Debate", Inc. vs. Topacio, supra, p. 291),

we find none. In our appraisal, the scheme does not only

appear to be, but actually is, a gratuitous distribution of

property by chance.

There is no point to the appellant's insistence that

non-Caltex customers who may buy Caltex products simply

to win a prize would actually be indirectly paying a

consideration for the privilege to join the contest. Perhaps

this would be tenable if the purchase of any Caltex product

or the use of any Caltex service were a pre-requisite to

participation. But it is not. A contestant, it hardly needs

reiterating, does not have to buy anything or to give

anything of value.1awphîl.nèt

Off-tangent, too, is the suggestion that the scheme,

being admittedly for sales promotion, would naturally

benefit the sponsor in the way of increased patronage by

those who will be encouraged to prefer Caltex products "if

only to get the chance to draw a prize by securing entry

blanks". The required element of consideration does not

consist of the benefit derived by the proponent of the

contest. The true test, as laid down in People vs. Cardas, 28

P. 2d., 99, 137 Cal. App. (Supp.) 788, is whether the

participant pays a valuable consideration for the chance,

and not whether those conducting the enterprise receive

something of value in return for the distribution of the prize.

Perspective properly oriented, the standpoint of the

contestant is all that matters, not that of the sponsor. The

following, culled from Corpus Juris Secundum, should set

the matter at rest:

The fact that the holder of the drawing

expects thereby to receive, or in fact does receive,

some benefit in the way of patronage or otherwise,

as a result of the drawing; does not supply the

element of consideration. Griffith Amusement Co.

vs. Morgan, Tex. Civ. App., 98 S.W., 2d., 844" (54

C.J.S., p. 849).

Thus enlightened, we join the trial court in declaring

that the "Caltex Hooded Pump Contest" proposed by the

appellee is not a lottery that may be administratively and

adversely dealt with under the Postal Law.

But it may be asked: Is it not at least a "gift

enterprise, or scheme for the distribution of money, or of

any real or personal property by lot, chance, or drawing of

any kind", which is equally prescribed? Incidentally, while

the appellant's brief appears to have concentrated on the

issue of consideration, this aspect of the case cannot be

avoided if the remedy here invoked is to achieve its

tranquilizing effect as an instrument of both curative and

preventive justice. Recalling that the appellant's action was

predicated, amongst other bases, upon Opinion 217, Series

1953, of the Secretary of Justice, which opined in effect that

a scheme, though not a lottery for want of consideration,

may nevertheless be a gift enterprise in which that element

is not essential, the determination of whether or not the

proposed contest — wanting in consideration as we have

found it to be — is a prohibited gift enterprise, cannot be

passed over sub silencio.

While an all-embracing concept of the term "gift

enterprise" is yet to be spelled out in explicit words, there

appears to be a consensus among lexicographers and

standard authorities that the term is commonly applied to a

sporting artifice of under which goods are sold for their

market value but by way of inducement each purchaser is

given a chance to win a prize (54 C.J.S., 850; 34 Am. Jur.,

654; Black, Law Dictionary, 4th ed., p. 817; Ballantine,

Law Dictionary with Pronunciations, 2nd ed., p. 55; Retail

Section of Chamber of Commerce of Plattsmouth vs. Kieck,

257 N.W., 493, 128 Neb. 13; Barker vs. State, 193 S.E.,

605, 56 Ga. App., 705; Bell vs. State, 37 Tenn. 507, 509, 5

Sneed, 507, 509). As thus conceived, the term clearly

cannot embrace the scheme at bar. As already noted, there is

no sale of anything to which the chance offered is attached

as an inducement to the purchaser. The contest is open to all

qualified contestants irrespective of whether or not they buy

the appellee's products.

Going a step farther, however, and assuming that the

appellee's contest can be encompassed within the broadest

sweep that the term "gift enterprise" is capable of being

extended, we think that the appellant's pose will gain no

added comfort. As stated in the opinion relied upon, rulings

there are indeed holding that a gift enterprise involving an

award by chance, even in default of the element of

consideration necessary to constitute a lottery, is prohibited

(E.g.: Crimes vs. States, 235 Ala 192, 178 So. 73; Russell

vs. Equitable Loan & Sec. Co., 129 Ga. 154, 58 S.E., 88;

State ex rel. Stafford vs. Fox-Great Falls Theater

Corporation, 132 P. 2d., 689, 694, 698, 114 Mont. 52). But

this is only one side of the coin. Equally impressive

authorities declare that, like a lottery, a gift enterprise

comes within the prohibitive statutes only if it exhibits the

tripartite elements of prize, chance and consideration (E.g.:

Bills vs. People, 157 P. 2d., 139, 142, 113 Colo., 326;

D'Orio vs. Jacobs, 275 P. 563, 565, 151 Wash., 297; People

vs. Psallis, 12 N.Y.S., 2d., 796; City and County of Denver

vs. Frueauff, 88 P., 389, 394, 39 Colo., 20, 7 L.R.A., N.S.,

1131, 12 Ann. Cas., 521; 54 C.J.S., 851, citing: Barker vs.

State, 193 S.E., 605, 607, 56 Ga. App., 705; 18 Words and

Phrases, perm. ed., pp. 590-594). The apparent conflict of

opinions is explained by the fact that the specific statutory

provisions relied upon are not identical. In some cases, as

pointed out in 54 C.J.S., 851, the terms "lottery" and "gift

enterprise" are used interchangeably (Bills vs. People,

supra); in others, the necessity for the element of

consideration or chance has been specifically eliminated by

statute. (54 C.J.S., 351-352, citing Barker vs. State, supra;

State ex rel. Stafford vs. Fox-Great Falls Theater

Corporation, supra). The lesson that we derive from this

state of the pertinent jurisprudence is, therefore, that every

case must be resolved upon the particular phraseology of

the applicable statutory provision.

Taking this cue, we note that in the Postal Law, the

term in question is used in association with the word

"lottery". With the meaning of lottery settled, and consonant

to the well-known principle of legal hermeneutics noscitur a

sociis — which Opinion 217 aforesaid also relied upon

although only insofar as the element of chance is concerned

— it is only logical that the term under a construction

should be accorded no other meaning than that which is

consistent with the nature of the word associated therewith.

Hence, if lottery is prohibited only if it involves a

consideration, so also must the term "gift enterprise" be so

construed. Significantly, there is not in the law the slightest

indicium of any intent to eliminate that element of

consideration from the "gift enterprise" therein included.

This conclusion firms up in the light of the mischief

sought to be remedied by the law, resort to the

determination thereof being an accepted extrinsic aid in

statutory construction. Mail fraud orders, it is axiomatic, are

designed to prevent the use of the mails as a medium for

disseminating printed matters which on grounds of public

policy are declared non-mailable. As applied to lotteries,

gift enterprises and similar schemes, justification lies in the

recognized necessity to suppress their tendency to inflame

the gambling spirit and to corrupt public morals (Com. vs.

Lund, 15 A. 2d., 839, 143 Pa. Super. 208). Since in

gambling it is inherent that something of value be hazarded

for a chance to gain a larger amount, it follows ineluctably

that where no consideration is paid by the contestant to

participate, the reason behind the law can hardly be said to

obtain. If, as it has been held —

Gratuitous distribution of property by lot or

chance does not constitute "lottery", if it is not

resorted to as a device to evade the law and no

consideration is derived, directly or indirectly, from

the party receiving the chance, gambling spirit not

being cultivated or stimulated thereby. City of

Roswell vs. Jones, 67 P. 2d., 286, 41 N.M., 258."

(25 Words and Phrases, perm. ed., p. 695, emphasis

supplied).

we find no obstacle in saying the same respecting a

gift enterprise. In the end, we are persuaded to hold that,

under the prohibitive provisions of the Postal Law which we

have heretofore examined, gift enterprises and similar

schemes therein contemplated are condemnable only if, like

lotteries, they involve the element of consideration. Finding

none in the contest here in question, we rule that the

appellee may not be denied the use of the mails for purposes

thereof.

Recapitulating, we hold that the petition herein states

a sufficient cause of action for declaratory relief, and that

the "Caltex Hooded Pump Contest" as described in the rules

submitted by the appellee does not transgress the provisions

of the Postal Law.

ACCORDINGLY, the judgment appealed from is

affirmed. No costs.

Concepcion, C.J., Reyes, J.B.L., Barrera, Dizon, Regala,

Makalintal, Bengzon, J.P., Zaldivar and Sanchez, JJ.,

concur.

CASE 3: THIRD DIVISION

[A.M. No. RTJ-00-1553. November 20, 2000]

Attys. ALFREDO BENJAMIN S. CAGUIOA and

RICARDO MA. P.G. ONGKIKO, complainants, vs.

Judge CELSO D. LAVIÑA, Regional Trial Court of

Pasig City, Branch 71, respondent.

D E C I S I O N

PANGANIBAN, J.:

A judge is presumed to act with regularity and good faith in

the performance of judicial functions. However, a blatant

disregard of the clear and unmistakable provisions of a

statute, as well as Supreme Court circulars enjoining strict

compliance therewith, upends this presumption and subjects

the magistrate to administrative sanctions. In the present

case, the Writ issued by respondent judge impeded the

implementation of a government infrastructure project and

thus constituted a palpable transgression of Presidential

Decree (PD) 1818 and Supreme Court Circular Nos. 13-93,

68-94 and 07-99.

The Case and the Facts

In a sworn letter-complaint dated July 28, 1997,[1] filed by

Attys. Alfredo Benjamin S. Caguioa and Ricardo Ma. P.G.

Ongkiko of Sycip Salazar Hernandez and Gatmaitan Law

Office, Judge Celso D. Laviña of the Regional Trial Court

of Pasig City (Branch 71) was accused of grave misconduct

for maliciously issuing several void Orders relative to Civil

Case No. 66060.

Complying with the directive of Court Administrator

Alfredo L. Benipayo, respondent filed his Comment[2] by

way of a ―2nd Indorsement‖ dated October 17, 1997,

denying liability for the acts complained of.

In a Report and Recommendation dated March 6, 2000,[3]

the court administrator related the factual antecedents that

gave rise to herein administrative Complaint, which we

quote:

"Complainants, who are partners in the law firm of Sycip

Salazar Hernandez and Gatmaitan, and counsel for Tokyu

Construction Co., Ltd. ("Tokyu" for brevity), a Japanese

corporation that is the lead member of a Consortium

currently under contract with the Philippine Government for

the construction of the new NAIA Terminal 2 building,

accuses respondent of alleged malicious issuance of several

void orders in connection with Civil Case No. 66060 x x x."

x x x x x

x x x x

"Sometime in the middle of 1994, the government, through

the Manila International Airport Authority ("MIAA")

invited prospective contractors to bid for the construction of

a new Ninoy Aquino International Airport ("NAIA")

terminal building. Four (4) private construction companies,

namely Tokyu, BF Corporation ("BF"), Oreta & Co.

("Oreta") and Mitsubishi Corporation ("Mitsubishi"),

decided to form a Consortium called the MTOB

Consortium (the "Consortium") for purposes of submitting a

bid for the Project. To this end, the four companies

executed on May 31, 1995 a Consortium Agreement (the

"Consortium Agreement") which was only couched in

general terms, the specific items of work to be done by

each of the Consortium members, as well as its pricing,

were not yet agreed upon because the Consortium had yet to

win the bid.

"The Consortium won the bid and after the contract was

awarded by MIAA to the Consortium, BF and Tokyu met

several times to agree on the specific portions of work to be

allotted to BF. However, BF and Tokyu were unable to

agree not only on the specific items of work that would be

allotted to BF, but also on BF's fees especially with respect

to the subcontract portion.

"On January 10, 1997, BF filed a complaint against Tokyu,

docketed as Civil case No. 66060, for alleged breach of the

terms of the Consortium agreement and prayed, in the

alternative, for specific performance, rescission and/or

damages, and for the issuance of a temporary restraining

order and/or writ of preliminary injunction.

"Pursuant to existing Supreme Court Circulars, the

Executive Judge of the Regional Trial Court of Pasig City

issued on that same day a 72-hour Temporary Restraining

Order ("TRO'), and ordered the immediate raffling of BF's

complaint. The case was raffled on January 13, 1997 to

Branch 71 of the Regional Trial Court of Pasig City,

presided by respondent judge who, in turn, directed the

parties to appear in Court on January 14 and 15, 1997, to

determine whether there existed sufficient grounds to

extend to twenty days the 72-hour TRO previously issued.

x x x x x

x x x x

"On the very same day the BF complaint was raffled to the

sala of respondent judge, Tokyu filed an Urgent Verified

Opposition, bringing to the attention of respondent Judge

the existence of P.D. 1818 as well as Supreme Court

Circulars Nos. 13-93 and 68-94 which prohibit the issuance

by any court of any injunction that would delay the progress

of a government infrastructure project. In spite of that

cautionary notice in the Verified Opposition, the

respondent judge on January 21, 1997, issued an order

extending the TRO without even mentioning P.D. No.

1818 or the Supreme Court Circulars Nos. 13-93 and 68-

94. (Emphasis supplied)

"On January 24, 1997, Tokyu filed with the Court of

Appeals a Petition for Certiorari and Prohibition with Very

Urgent Prayer for Issuance of a Writ of Preliminary

Injunction and/or Temporary Restraining Order and

Disqualification docketed as C.A. G.R. SP No. 43133,

praying for the issuance ex-parte of a restraining order

commanding respondent Judge not to act, or in any manner,

execute the January 21, 1997 Order, and, after appropriate

proceedings, of a writ of preliminary injunction restraining

respondent Judge from taking any further action on the case.

x x x x x

x x x x

"On February 5, 1997, the Court of Appeals issued a TRO

enjoining respondent Judge from enforcing the January 21

Order, and from proceeding with the hearing of BF's

application for a writ of preliminary injunction, until further

orders from the appellate court.

"On May 15, 1997, the Court of Appeals rendered a

decision in C.A.-G.R. Sp. No. 43133 allowing respondent

Judge to proceed with the suspended hearing on the

application for a writ of preliminary injunction in Civil Case

No. 66060, to 'be limited only and narrowed down to the

issue of whether, PENDENTE LITE, Tokyu x x x should

recognize the status of BF as a partner or member of the

Consortium x x x and, in the affirmative, the amount that

BF should be entitled to share out of the payments made

from time to time by MIAA to the Consortium...'

"On June 11, 1997, Tokyu moved for the reconsideration of

the May 15, 1997 CA decision, praying that respondent

judge be also prohibited from conducting hearing even on

the delimited issue. In the meantime, the respondent judge

had set for June 13, 1997 a hearing for the cross-

examination of a Japanese national as Tokyu's witness, and

despite Tokyu's plea to re-set the hearing due to the very

limited time available for Tokyu to plane in its witness

from Japan, the respondent Judge on June 13, 1997 denied

Tokyu's motion to postpone and ordered the affidavit-

testimony of the aforementioned witness stricken off the

records. Tokyu filed a motion for reconsideration of that

June 13, 1997 order striking out the testimony of its

Japanese witness which respondent denied in his Order of

June 30, 1997 x x x.

"On July 18, 1997, at 4:00P.M., while Tokyu was still

preparing its Memorandum which was due for filing on July

31, 1997 yet, Tokyu or its counsel received a Writ of

Preliminary Prohibitory and Mandatory Injunction

enjoining Tokyu from performing, and to perform, certain

specific acts in relation to the project subject matter of Civil

Case No. 66060. And at 4:32 P.M. of the same day, Tokyu

received through mails the respondent Judge's order dated

July 8, 1997 granting the application for preliminary

prohibition and mandatory injunction. July 18,1997 was a

Friday, and Tokyu laments that that was chosen as the day

to serve it a copy of the writ in order to prevent it (Tokyu)

from seeking immediate redress from the appellate courts

(the following two days being a Saturday and a Sunday),

what with only three (3) days given it to comply with the

writ."

As can be gleaned from the foregoing recital of facts,

complainants assailed several Orders of respondent. These

were dated January 21, 1997; June 13, 1997; June 30, 1997;

and July 8, 1997. Also questioned was the injunctive Writ

dated July 18, 1997.

In this regard, it is significant to note that, except for the

January 21, 1997 Order, the above-mentioned Orders and

Writ issued by respondent were likewise questioned in a

special civil action for certiorari filed with the Court of

Appeals (CA), in which it was docketed as CA-GR SP. No.

44729.

In a Decision dated October 20, 1997,[4] the CA Seventh

Division ruled that "the order dated July 8, 1997 granting

the writ of preliminary prohibitory mandatory injunction,

and the writ of preliminary mandatory injunction dated July

18, 1997 issued as a consequence of said order, both in

Civil Case No. 66060 of the Regional Trial Court, Pasig

City, Branch 71 were issued with grave abuse of discretion

amounting to lack or excess of jurisdiction."[5] However, it

did not make a finding on the June 13 and the June 30, 1997

Orders. The CA Decision was subsequently challenged in a

Petition for Review, docketed as GR No. 131155, which is

still pending before this Court.[6]

Complainants and respondent judge, in their respective

Manifestations dated June 13, 2000[7] and June 7, 2000[8],

submitted the case for resolution on the basis of the

pleadings and records already filed.

Recommendation of the Court Administrator

According to the court administrator, respondent‘s January

21, 1997 Order completely ignored the prohibition on the

issuance of injunctive writs as contained in PD 1818 and

Supreme Court Circular Nos. 13-93 and 68-94. The said

Order had extended the initial 72-hour Temporary

Restraining Order (TRO) to the full 20-day period despite

complainants' verified opposition. Hence, he recommended

that respondent be fined in the amount of five thousand

pesos (P5,000).

Further, he submitted that the other Orders which are

subjects of GR No. 131155 should be dealt with after said

appeal shall have been resolved with finality.

The Court's Ruling

We agree with the Office of the Court Administrator that

respondent should be fined in the amount of five thousand

pesos for the issuance of the Order dated January 21,

1997. However, in regard to the other Orders of respondent

judge, the Complaint should be dismissed for prematurity.

Preliminary Matters

The validity and the propriety of the issuance of the Orders

dated June 13, June 30 and July 8, 1997, as well as the

injunctive Writ dated July 18, 1997, should be threshed out

first in the above-mentioned case and considered as judicial

issues arising from the exercise of respondent‘s judicial

discretion. To rule on these matters in the instant

administrative case would be premature.

The established doctrine and policy is that disciplinary

proceedings and criminal actions against judges do not

complement, supplement, or substitute judicial remedies,

whether ordinary or extraordinary. An inquiry into their

civil, criminal and administrative liability may be made

only after the available remedies have been exhausted and

decided with finality.[9]

Moreover, a party litigant abuses the processes of the court

by prematurely resorting to administrative disciplinary

action or criminal prosecution of a judge even before the

judicial remedies are settled. Such prematurity occurs when

the correctness of the latter‘s orders -- upon which the

viability of the recourse depends – is still pending appellate

review.[10]

On the other hand, we deem it appropriate to rule on the

administrative liability of respondent with regard to his

January 21, 1997 Order. The appellate court, in its May 15,

1997 Decision, allowed him to continue with the injunction

proceedings. Notably, it did not make any conclusive or

categorical ruling on the legality of the Order vis-a-vis PD

1818. It merely declared:

―As previously stated MIAA is no longer a party in the RTC

x x x. As f[a]r [as] MIAA is concerned, it is thus academic

for this Court to have to refer to PD 1818/Supreme Court

Circular No. 68-94 which prohibit courts from issuing

restraining orders or preliminary injunction in cases

involving infrastructure and natural resources development

projects of, and public utilities operated by, the

Government.‖[11]

Clearly, the foregoing pronouncement demonstrates that the

CA skirted the issue of a possible violation of PD 1818

with respect to Tokyu, for it confined its discussion to the

effects of the statute on the Manila International Airport

Authority (MIAA). It should be stressed, though, that the

statute prohibits the issuance of injunctive writs not only

against government entities, but against any person or

entity involved in the execution, implementation and

operation of government infrastructure projects.

Furthermore, the CA could not have annulled or invalidated

the said Order even if it had wanted to, because by the time

it promulgated its Decision, the expiration of the twenty-day

TRO had already rendered the issue moot and

academic. Hence, it is incorrect to argue that the CA

effectively affirmed respondent‘s questioned January 21,

1997 Order.

Thus, although the said Order may no longer be reversed or

its effects abjured, respondent‘s administrative liability in

relation thereto may nonetheless subsist.

Liability of Respondent Judge

The administrative liability of respondent judge proceeds

from his failure to observe a simple, comprehensible and

unequivocal mandate of PD 1818 prohibiting the issuance

of injunctive writs relative to government infrastructure

projects. The pertinent provision of the law clearly and

categorically states:

"SECTION 1. No court in the Philippines shall have

jurisdiction to issue any restraining order, preliminary

injunction, or preliminary mandatory injunction in any case,

dispute or controversy involving an infrastructure project, or

a mining, fishery, forest or other natural resource

development project of the government, or any public utility

operated by the government, including among others public

utilities for the transport of the goods or commodities,

stevedoring and arrastre contracts, to prohibit any person or

persons, entity or government official from proceeding

with, or continuing the execution or implementation of any

such project, or the operation of such public utility, or

pursuing any lawful activity necessary for such execution,

implementation or operation."

Indeed, in Supreme Court Circulars 13-93[12] and 68-

94,[13] judges were reminded to comply strictly with the

foregoing provision.

In Garcia v. Burgos,[14] the prohibitory character of PD

1818 was reiterated by the Court in these words:

―Section 1 of PD 1818 distinctly provides that ‗[n]o court in

the Philippines shall have jurisdiction to issue any

restraining order, preliminary injunction, or preliminary

mandatory injunction in any case, dispute, or controversy

involving an infrastructure project x x x of the government,

x x x to prohibit any person or persons, entity or

government official from proceeding with, or continuing the

execution or implementation of any such project, x x x or

pursuing any lawful activity necessary for such execution ,

implementation or operation.‘ At the risk of being

repetitious, we stress that the foregoing statutory provision

expressly deprives courts of jurisdiction to issue injunctive

writs against the implementation or execution of an

infrastructure project.‖(Emphasis supplied)

Consequently, Chief Justice Hilario G. Davide Jr. issued

Administrative Circular No. 07-99 dated June 25, 1999,

reiterating earlier circulars and reminding all judges of

lower courts to exercise utmost caution, prudence and

judiciousness in the issuance of TROs and writs of

preliminary injunction. While this Circular does not

directly cover respondent‘s issuance of the January 21, 1997

Order, we cite it to show the strict and mandatory nature of

Section 1, PD 1818.

In his Comment, respondent maintains that the issuance of

the assailed Order was done in good faith and in accordance

with the rules. He further argues that there was no violation

of PD 1818 because the Order did not at all "prohibit any

person or persons, entity or government official from

proceeding with, or continuing the implementation of the

government project."

However, the directives of the previously issued 72-hour

TRO, which was extended to 20 days by the January 21,

1997 Order, contradict respondent‘s assertion. The relevant

portions of the TRO are hereunder reproduced as follows:

"In the meantime and still pursuant to the above-cited

Administrative Circular No. 20-95, a temporary order is

hereby issued for a period of 72 hours from date hereof

enjoining defendant TOKYU CORPORATION, its assigns,

agents and any and all persons claiming rights under it from

–

1. further receiving any amount from MIAA as

compensation vis-a-vis TOKYU's illegal and unjust

execution of BF's portion of the work in the Project;

2. from engaging the services of other subcontractors to do

BF's portion of the Project;

3. from further acting as lead member of the consortium in

the execution of the Project;

4. from further compelling BF to reduce its prices; and

MANILA INTERNATIONAL AIRPORT AUTHORITY

from directly paying TOKYU the collectible compensation

vis-a-vis TOKYU's illegal and unjust execution of BF's

portion of the work in the Project.

SO ORDERED."[15]

Indubitably, the foregoing belies respondent‘s seemingly

obscure, if not incoherent, explanation that PD 1818 did not

apply to his January 21, 1997 Order. Moreover,

complainants‘ verified Opposition bringing to his attention

PD 1818, as well as related Supreme Court Circulars,

should have cautioned him from arbitrarily issuing the

ostensibly unlawful Order.

PD 1818 prohibits a court from issuing an injunctive writ to

stop any person, entity or government official from

proceeding with or continuing the execution or

implementation of an infrastructure project.[16] Section 1of

the statute clearly states that an injunction may not be issued

"to prohibit any person or persons, entity or government

official" from undertaking the protected activities

enumerated therein. The prohibition applies whether the

person or entity being enjoined is public or private in

nature. Indeed, the law seeks to prevent the delay of

essential government projects.[17]

By enjoining (1) Tokyu from further receiving any amount

from MIAA as compensation for the execution of a portion

of the work in the project and from engaging the services of

subcontractors to do portions of the same; and (2) MIAA

from directly paying Tokyu the collectible compensation for

the execution of a portion of the project, the TRO effectively

interfered with, impeded and obstructed an entity directly

and primarily responsible for the execution of a government

infrastructure project.

The tenor of the directives in the TRO and the nature of the

prohibitions stated therein more than adequately evince a

net effect of delaying and disrupting the operation and the

execution of a government infrastructure project involving a

vital industry imbued with public interest. Patently absurd

and incongruous to the manifest intent of the law is the

contention that the provisions of PD 1818 do not restrain

the issuance of the questioned TRO or of the Order

extending it.

When a statute is clear and explicit, there is no need for any

extended court ratiocination on the law.[18][19] There is no

room for interpretation, vacillation or equivocation; there is

room only for application.

It appears that respondent is either feigning a

misunderstanding of the law or openly manifesting a

contumacious indifference thereto. In any case, his

disregard of the clear mandate of PD 1818, as well as of the

Supreme Court Circulars enjoining strict compliance

therewith, constitutes grave misconduct and conduct

prejudicial to the proper administration of justice. His claim

that the said statute is inapplicable to his January 21, 1997

Order extending the dubious TRO is but a contrived

subterfuge to evade administrative liability.

In resolving matters in litigation, judges should endeavor

assiduously to ascertain the facts and the applicable

laws.[20] Moreover, they should exhibit more than just a

cursory acquaintance with statutes and procedural

rules. Also, they are expected to keep abreast of and be

conversant with the rules and the circulars which the

Supreme Court has adopted and which affect the disposition

of cases before them.[21]

Although judges have in their favor the presumption of

regularity and good faith in the performance of their official

functions, a blatant disregard of the clear and unmistakable

terms of the law obviates this presumption and renders them

susceptible to administrative sanctions.

WHEREFORE, respondent is found GUILTY of grave

misconduct and conduct prejudicial to the administration of

justice for his violation of PD 1818 and Supreme Court

Administrative Circular Nos. 13-93 and 68-94, and is

hereby FINED in the amount of five thousand pesos

(P5,000). He is WARNED that a repetition of the same or a

similar offense will be dealt with more severely. The

Complaint in regard to his other Orders is hereby

DISMISSED for being premature.

SO ORDERED.

Melo, (Chairman), and Vitug, JJ., concur.

Gonzaga-Reyes, J., no part.

CASE 4: Republic of the Philippines

SUPREME COURT Manila

EN BANC

G.R. No. L-34964 January 31, 1973

CHINA BANKING CORPORATION and TAN KIM

LIONG, petitioners-appellants,

vs.

HON. WENCESLAO ORTEGA, as Presiding Judge of

the Court of First Instance of Manila, Branch VIII, and

VICENTE G. ACABAN, respondents-appellees.

Sy Santos, Del Rosario and Associates for petitioners-

appellants.

Tagalo, Gozar and Associates for respondents-appellees.

MAKALINTAL, J.:

The only issue in this petition for certiorari to review the

orders dated March 4, 1972 and March 27, 1972,

respectively, of the Court of First Instance of Manila in its

Civil Case No. 75138, is whether or not a banking

institution may validly refuse to comply with a court

process garnishing the bank deposit of a judgment debtor,

by invoking the provisions of Republic Act No. 1405. *

On December 17, 1968 Vicente Acaban filed a complaint in

the court a quo against Bautista Logging Co., Inc., B & B

Forest Development Corporation and Marino Bautista for

the collection of a sum of money. Upon motion of the

plaintiff the trial court declared the defendants in default for

failure to answer within the reglementary period, and

authorized the Branch Clerk of Court and/or Deputy Clerk

to receive the plaintiff's evidence. On January 20, 1970

judgment by default was rendered against the defendants.

To satisfy the judgment, the plaintiff sought the

garnishment of the bank deposit of the defendant B & B

Forest Development Corporation with the China Banking

Corporation. Accordingly, a notice of garnishment was

issued by the Deputy Sheriff of the trial court and served on

said bank through its cashier, Tan Kim Liong. In reply, the

bank' cashier invited the attention of the Deputy Sheriff to

the provisions of Republic Act No. 1405 which, it was

alleged, prohibit the disclosure of any information relative

to bank deposits. Thereupon the plaintiff filed a motion to

cite Tan Kim Liong for contempt of court.

In an order dated March 4, 1972 the trial court denied the

plaintiff's motion. However, Tan Kim Liong was ordered

"to inform the Court within five days from receipt of this

order whether or not there is a deposit in the China Banking

Corporation of defendant B & B Forest Development

Corporation, and if there is any deposit, to hold the same

intact and not allow any withdrawal until further order from

this Court." Tan Kim Liong moved to reconsider but was

turned down by order of March 27, 1972. In the same order

he was directed "to comply with the order of this Court

dated March 4, 1972 within ten (10) days from the receipt

of copy of this order, otherwise his arrest and confinement

will be ordered by the Court." Resisting the two orders, the

China Banking Corporation and Tan Kim Liong instituted

the instant petition.

The pertinent provisions of Republic Act No. 1405 relied

upon by the petitioners reads:

Sec. 2. All deposits of whatever nature with

banks or banking institutions in the

Philippines including investments in bonds

issued by the Government of the

Philippines, its political subdivisions and its

instrumentalities, are hereby considered as

of absolutely confidential nature and may

not be examined, inquired or looked into by

any person, government official, bureau or

office, except upon written permission of

the depositor, or in cases of impeachment,

or upon order of a competent court in cases

of bribery or dereliction of duty of public

officials, or in cases where the money

deposited or invested is the subject matter

of the litigation.

Sec 3. It shall be unlawful for any official

or employee of a banking institution to

disclose to any person other than those

mentioned in Section two hereof any

information concerning said deposits.

Sec. 5. Any violation of this law will

subject offender upon conviction, to an

imprisonment of not more than five years

or a fine of not more than twenty thousand

pesos or both, in the discretion of the court.

The petitioners argue that the disclosure of the information

required by the court does not fall within any of the four (4)

exceptions enumerated in Section 2, and that if the

questioned orders are complied with Tan Kim Liong may be

criminally liable under Section 5 and the bank exposed to a

possible damage suit by B & B Forest Development

Corporation. Specifically referring to this case, the position

of the petitioners is that the bank deposit of judgment debtor

B & B Forest Development Corporation cannot be subject

to garnishment to satisfy a final judgment against it in view

of the aforequoted provisions of law.

We do not view the situation in that light. The lower court

did not order an examination of or inquiry into the deposit

of B & B Forest Development Corporation, as contemplated

in the law. It merely required Tan Kim Liong to inform the

court whether or not the defendant B & B Forest

Development Corporation had a deposit in the China

Banking Corporation only for purposes of the garnishment

issued by it, so that the bank would hold the same intact and

not allow any withdrawal until further order. It will be noted

from the discussion of the conference committee report on

Senate Bill No. 351 and House Bill No. 3977, which later

became Republic Act 1405, that it was not the intention of

the lawmakers to place bank deposits beyond the reach of

execution to satisfy a final judgment. Thus:

Mr. MARCOS. Now, for purposes of the

record, I should like the Chairman of the

Committee on Ways and Means to clarify

this further. Suppose an individual has a tax

case. He is being held liable by the Bureau

of Internal Revenue for, say, P1,000.00

worth of tax liability, and because of this

the deposit of this individual is attached by

the Bureau of Internal Revenue.

Mr. RAMOS. The attachment will only

apply after the court has pronounced

sentence declaring the liability of such

person. But where the primary aim is to

determine whether he has a bank deposit in

order to bring about a proper assessment by

the Bureau of Internal Revenue, such

inquiry is not authorized by this proposed

law.

Mr. MARCOS. But under our rules of

procedure and under the Civil Code, the

attachment or garnishment of money

deposited is allowed. Let us assume, for

instance, that there is a preliminary

attachment which is for garnishment or for

holding liable all moneys deposited

belonging to a certain individual, but such

attachment or garnishment will bring out

into the open the value of such deposit. Is

that prohibited by this amendment or by

this law?

Mr. RAMOS. It is only prohibited to the

extent that the inquiry is limited, or rather,

the inquiry is made only for the purpose of

satisfying a tax liability already declared for

the protection of the right in favor of the

government; but when the object is merely

to inquire whether he has a deposit or not

for purposes of taxation, then this is fully

covered by the law.

Mr. MARCOS. And it protects the

depositor, does it not?

Mr. RAMOS. Yes, it protects the depositor.

Mr. MARCOS. The law prohibits a mere

investigation into the existence and the

amount of the deposit.

Mr. RAMOS. Into the very nature of such

deposit.

Mr. MARCOS. So I come to my original

question. Therefore, preliminary

garnishment or attachment of the deposit is

not allowed?

Mr. RAMOS. No, without judicial

authorization.

Mr. MARCOS. I am glad that is clarified.

So that the established rule of procedure as

well as the substantive law on the matter is

amended?

Mr. RAMOS. Yes. That is the effect.

Mr. MARCOS. I see. Suppose there has

been a decision, definitely establishing the

liability of an individual for taxation

purposes and this judgment is sought to be

executed ... in the execution of that

judgment, does this bill, or this proposed

law, if approved, allow the investigation or

scrutiny of the bank deposit in order to

execute the judgment?

Mr. RAMOS. To satisfy a judgment which

has become executory.

Mr. MARCOS. Yes, but, as I said before,

suppose the tax liability is P1,000,000 and

the deposit is half a million, will this bill

allow scrutiny into the deposit in order that

the judgment may be executed?

Mr. RAMOS. Merely to determine the

amount of such money to satisfy that

obligation to the Government, but not to

determine whether a deposit has been made

in evasion of taxes.

xxx xxx xxx

Mr. MACAPAGAL. But let us suppose that

in an ordinary civil action for the recovery

of a sum of money the plaintiff wishes to

attach the properties of the defendant to

insure the satisfaction of the judgment.

Once the judgment is rendered, does the

gentleman mean that the plaintiff cannot

attach the bank deposit of the defendant?

Mr. RAMOS. That was the question raised

by the gentleman from Pangasinan to which

I replied that outside the very purpose of

this law it could be reached by attachment.

Mr. MACAPAGAL. Therefore, in such

ordinary civil cases it can be attached?

Mr. RAMOS. That is so.

(Vol. II, Congressional Record, House of

Representatives, No. 12, pp. 3839-3840,

July 27, 1955).

It is sufficiently clear from the foregoing discussion of the

conference committee report of the two houses of Congress

that the prohibition against examination of or inquiry into a

bank deposit under Republic Act 1405 does not preclude its

being garnished to insure satisfaction of a judgment. Indeed

there is no real inquiry in such a case, and if the existence of

the deposit is disclosed the disclosure is purely incidental to

the execution process. It is hard to conceive that it was ever

within the intention of Congress to enable debtors to evade

payment of their just debts, even if ordered by the Court,

through the expedient of converting their assets into cash

and depositing the same in a bank.

WHEREFORE, the orders of the lower court dated March 4

and 27, 1972, respectively, are hereby affirmed, with costs

against the petitioners-appellants.

Zaldivar, Castro, Fernando, Barredo, Makasiar, Antonio

and Esguerra, JJ., concur.

Concepcion, C.J. and Teehankee, J., took no part.

CASE 5: Republic of the Philippines

SUPREME COURT Manila

EN BANC

G.R. No. L-26100 February 28, 1969

CITY OF BAGUlO, REFORESTATION

ADMINISTRATION,

FRANCISCO G. JOAQUIN, SR., FRANCISCO G.

JOAQUIN, JR., and TERESITA J. BUCHHOLZ petitioners,

vs.

HON. PIO R. MARCOS, Judge of the Court of First

Instance of Baguio,

BELONG LUTES, and the HONORABLE COURT OF

APPEALS, respondents.

1st Assistant City Fiscal Dionisio C. Claridad, Augusto

Tobias and Feria, Feria, Lugtu and La'O for petitioners.

Bernardo C. Ronquillo for respondents.

SANCHEZ, J.:

Petitioners attack the jurisdiction of the Court of First

Instance of Baguio to reopen cadastral proceedings under

Republic Act 931. Private petitioner's specifically question

the ruling of the Court of Appeals that they have no

personality to oppose reopening. The three-pronged

contentions of all the petitioners are: (1) the reopening

petition was filed outside the 40-year period next preceding

the approval of Republic Act 931; (2) said petition was not

published; and (3) private petitioners, as lessees of the

public land in question, have court standing under Republic

Act 931. The facts follow:

On April 12, 1912, the cadastral proceedings sought

to be reopened, Civil Reservation Case No. 1, GLRO

Record No. 211, Baguio Townsite, were instituted by the

Director of Lands in the Court of First Instance of Baguio. It

is not disputed that the land here involved (described in Plan

Psu-186187) was amongst those declared public lands by

final decision rendered in that case on November 13, 1922.

On July 25, 1961, respondent Belong Lutes petitioned

the cadastral court to reopen said Civil Reservation Case

No. 1 as to the parcel of land he claims. His prayer was that

the land be registered in his name upon the grounds that: (1)

he and his predecessors have been in actual, open, adverse,

peaceful and continuous possession and cultivation of the

land since Spanish times, or before July 26, 1894, paying

the taxes thereon; and (2) his predecessors were illiterate

Igorots without personal notice of the cadastral proceedings

aforestated and were not able to file their claim to the land

in question within the statutory period.

On December 18, 1961, private petitioners

Francisco G. Joaquin, Sr., Francisco G. Joaquin, Jr., and

Teresita J. Buchholz registered opposition to the reopening.

Ground: They are tree farm lessees upon agreements

executed by the Bureau of Forestry in their favor for

15,395.65 square meters on March. 16, 1959, for 12,108

square meters on July 24, 1959, and for 14,771 square

meters on July 17, 1959, respectively.

On May 5, 1962, the City of Baguio likewise opposed

reopening.

On May 8, 1962, upon Lutes' opposition, the cadastral

court denied private petitioners' right to intervene in the

case because of a final declaratory relief judgment dated

March 9, 1962 in Yaranon vs. Castrillo [Civil Case 946,

Court of First Instance of Baguio] which declared that such

tree farm leases were null and void.

On May 18, 1962, private petitioners moved to

reconsider. They averred that said declaratory relief

judgment did not bind them, for they were not parties to that

action.

On September 14, 1962, the cadastral court reversed

its own ruling of May 8, 1962, allowed petitioners to cross-

examine the witnesses of respondent Lutes.

On October 16, 1962, Lutes replied to and moved to

dismiss private petitioners' opposition to his reopening

petition. On October 25, 1962, private petitioners' rejoinder

was filed.

On August 5, 1963, the cadastral court dismissed

private petitioners' opposition to the reopening. A motion to

reconsider was rejected by the court on November 5, 1963.

On January 6, 1964, it was the turn of the City of

Baguio to lodge a motion to dismiss the petition to reopen.

This motion was adopted as its own by the Reforestation

Administration. They maintained the position that the

declaratory judgment in Civil Case 946 was not binding on

those not parties thereto. Respondent Lutes opposed on

February 24, 1964. On April 6, 1964, private petitioners

reiterated their motion to dismiss on jurisdictional grounds.

On September 17, 1964, the court denied for lack of

merit the City's motion as well as the April 6, 1964 motion

to dismiss made by private petitioners.

On November 13, 1964, all the petitioners went to the

Court of Appeals on certiorari, prohibition, and mandamus

with preliminary injunction. 1

They then questioned the

cadastral court's jurisdiction over the petition to reopen and

the latter's order of August 5, 1963 dismissing private

petitioners' opposition. The appellate court issued a writ of

preliminary injunction upon a P500-bond.

Then came the judgment of the Court of Appeals of

September 30, 1965. The court held that petitioners were

not bound by the declaratory judgment heretofore hated.

Nevertheless, the appellate court ruled that as lessees,

private petitioners had no right to oppose the reopening of

the cadastral case. Petitioners moved to reconsider. It was

thwarted on May 6, 1966.

Petitioners now seek redress from this Court. On July

6, 1966, respondents moved to dismiss the petition before

us. On August 5, 1966, petitioners opposed. On August 12,

1966, we gave due course.

1. Do private petitioners have personality to appear in

the reopening proceedings?

First, to the controlling statute, Republic Act 931,

effective June 20, 1953.

The title of the Act reads —

AN ACT TO AUTHORIZE THE FILING IN THE

PROPER COURT, UNDER CERTAIN CONDITIONS, OF

CERTAIN CLAIMS OF TITLE TO PARCELS OF LAND

THAT HAVE BEEN DECLARED PUBLIC LAND, BY

VIRTUE OF JUDICIAL DECISIONS RENDERED

WITHIN THE FORTY YEARS NEXT PRECEDING THE

APPROVAL OF THIS ACT.

Section 1 thereof provides —

SECTION 1. All persons claiming title to

parcels of land that have been the object of

cadastral proceedings, who at the time of the survey

were in actual possession of the same, but for some

justifiable reason had been unable to file their claim

in the proper court during the time limit established

by law, in case such parcels of land, on account of

their failure to file such claims, have been, or are

about to be declared land of the public domain by

virtue of judicial proceedings instituted within the

forty years next preceding the approval of this Act,

are hereby granted the right within five years 2 after

the date on which this Act shall take effect, to

petition for a reopening of the judicial proceedings

under the provisions of Act Numbered Twenty-two

hundred and fifty-nine, as amended, only with

respect to such of said parcels of land as have not

been alienated, reserved, leased, granted, or

otherwise provisionally or permanently disposed of

by the Government, and the competent Court of

First Instance, upon receiving such petition, shall

notify the Government through the Solicitor

General, and if after hearing the parties, said court

shall find that all conditions herein established have

been complied with, and that all taxes, interests and

penalties thereof have been paid from the time

when land tax should have been collected until the

day when the motion is presented, it shall order said

judicial proceedings reopened as if no action has

been taken on such parcels. 3

We concede that in Leyva vs. Jandoc, L-16965,

February 28, 1962, a land registration case where oppositors

were "foreshore lessees of public land", a principle was

hammered out that although Section 34, Land Registration

Act, 4

"apparently authorizes any person claiming any kind

of interest to file an opposition to an application for

registration, ... nevertheless ... the opposition must be based

on a right of dominion or some other real right independent

of, and not at all subordinate to, the rights of the

Government."5

The opposition, according to the Leyva

decision, "must necessarily be predicated upon the property

in question being part of the public domain." Leyva thus

pronounced that "it is incumbent upon the duly authorized

representatives of the Government to represent its interests

as well as private claims intrinsically dependent upon it."

But the Leyva case concerned an ordinary land

registration proceeding under the provisions of the Land

Registration Act. Normally and logically, lessees cannot

there present issues of ownership. The case at bar, however,

stands on a different footing. It involves a special statute

R.A. 931, which allows a petition for reopening on lands

"about to be declared" or already "declared land of the

public domain" by virtue of judicial proceedings. Such

right, however, is made to cover limited cases, i.e., "only

with respect to such of said parcels of land as have not been

alienated, reserved, leased, granted, or otherwise

provisionally or permanently disposed of by the

Government." 6

The lessee's right is thus impliedly

recognized by R.A. 931. This statutory phrase steers the

present case clear from the impact of the precept forged by

Leyva. So it is, that if the land subject of a petition to reopen

has already been leased by the government, that petition can

no longer prosper.

This was the holding in Director of Land vs. Benitez,

L-21368, March 31, 1966. The reopening petition there

filed was opposed by the Director of Lands in behalf of 62

lessees of public land holding revocable permits issued by

the government. We struck down the petition in that Case

because the public land, subject-matter of the suit, had

already been leased by the government to private persons.

Of course, the Benitez ruling came about not by

representations of the lessees alone, but through the

Director of Lands. But we may well scale the heights of

injustice or abet violations of R.A. 931 if we entertain the

view that only the Director of Lands 7

can here properly

oppose the reopening petition. Suppose the lands office fails

to do so? Will legitimate lessees be left at the mercy of

government officials? Should the cadastral court close its

eyes to the fact of lease that may be proved by the lessees

themselves, and which is enough to bar the reopening

petition? R.A. 931 could not have intended that this

situation should happen. The point is that, with the fact of

lease, no question of ownership need be inquired into

pursuant to R.A. 931. From this standpoint, lessees have

sufficient legal interest in the proceedings.

The right of private petitioners to oppose a reopening

petition here becomes the more patent when we take stock

of their averment that they have introduced improvements

on the land affected. It would seem to us that lessees insofar

as R.A. 931 is concerned, come within the purview of those

who, according to the Rules of Court, 8

may intervene in an

action. For, they are persons who have "legal interest in the

matter in litigation, or in the success of either of the

parties." 9

In the event herein private petitioners are able to

show that they are legitimate lessees, then their lease will

continue. And this because it is sufficient that it be proven

that the land is leased to withdraw it from the operation of

Republic Act 931 and place it beyond the reach of a petition

for reopening. 10

In line with the Court of Appeals' conclusion, not

disputed by respondent Lutes herein, the cadastral court

should have ruled on the validity of private petitioners 'tree

farm leases — on the merits. Because there is need for

Lutes' right to reopen and petitioners' right to continue as

lessees to be threshed out in that court.

We, accordingly, hold that private petitioners, who

aver that they are lessees, have the necessary personality to

intervene in and oppose respondent Lutes' petition for

reopening.

2. Petitioners next contend that the reopening petition

below, filed under R.A. 931, should have been published in

accordance with the Cadastral Act.

To resolve this contention, we need but refer to a very

recent decision of this Court in De Castro vs. Marcos,

supra, involving exactly the same set of facts bearing upon

the question. We there held, after a discussion of law and

jurisprudence, that: "In sum, the subject matter of the

petition for reopening — a parcel of land claimed by

respondent Akia — was already embraced in the cadastral

proceedings filed by the Director of Lands. Consequently,

the Baguio cadastral court already acquired jurisdiction over

the said property. The petition, therefore, need not be

published." We find no reason to break away from such

conclusion.

Respondent Lutes attached to the record a certified

true copy of the November 13, 1922 decision in the Baguio

Townsite Reservation case to show, amongst others, that the

land here involved was part of that case. Petitioners do not

take issue with respondent Lutes on this point of fact.

We here reiterate our ruling in De Castro, supra, that

the power of the cadastral court below over petitions to

reopen, as in this case, is not jurisdictionally tainted by want

of publication.

3. A question of transcendental importance is this:

Does the cadastral court have power to reopen the cadastral

proceedings upon the application of respondent Lutes?

The facts are: The cadastral proceedings sought to be

reopened were instituted on April 12, 1912. Final decision

was rendered on November 13, 1922. Lutes filed the

petition to reopen on July 25, 1961.

It will be noted that the title of R.A. 931, heretofore

transcribed, authorizes "the filing in the proper court, under

certain conditions, of certain claims of title to parcels of

land that have been declared public land, by virtue of

judicial decisions rendered within the forty years next

preceding the approval of this Act." The body of the statute,

however, in its Section 1, speaks of parcels of land that

"have been, or are about to be declared land of the public

domain, by virtue of judicial proceedings instituted within

the forty years next preceding the approval of this Act."

There thus appears to be a seeming inconsistency between

title and body.

It must be stressed at this point that R.A. 931 is not

under siege on constitutional grounds. No charge has been

made hero or in the courts below that the statute offends the

constitutional injunction that the subject of legislation must

be expressed in the title thereof. Well-entrenched in

constitutional law is the precept that constitutional questions

will not be entertained by courts unless they are

"specifically raised, insisted upon and adequately argued." 11

At any rate it cannot be seriously disputed that the subject

of R.A. 931 is expressed in its title.

This narrows our problem down to one of legal

hermeneutics.

Many are the principles evolved in the interpretation

of laws. It is thus not difficult to stray away from the true

path of construction, unless we constantly bear in mind the

goal we seek. The office of statutory interpretation, let us

not for a moment forget, is to determine legislative intent. In

the words of a well-known authority, "[t]he true object of all

interpretation is to ascertain the meaning and will of the

law-making body, to the end that it may be enforced." 12

In

varying language, "the, purpose of all rules or maxims" in

interpretation "is to discover the true intention of the law." 13

They "are only valuable when they subserve this

purpose." 14

In fact, "the spirit or intention of a statute

prevails over the letter thereof." 15

A statute "should be

construed according to its spirit and reason, disregarding as

far as necessary, the letter of the law." 16

By this, we do not

"correct the act of the Legislature, but rather ... carry out

and give due course to" its true intent. 17

It should be certain by now that when engaged in the

task of construing an obscure expression in the law 18

or

where exact or literal rendering of the words would not

carry out the legislative intent, 19

the title thereof may be

resorted to in the ascertainment of congressional will.

Reason therefor is that the title of the law may properly be

regarded as an index of or clue or guide to legislative

intention. 20

This is especially true in this jurisdiction. For

the reason that by specific constitutional precept, "[n]o bill

which may be enacted into law shall embrace more than one

subject which shall be expressed in the title of the bill." 21

In

such case, courts "are compelled by the Constitution to

consider both the body and the title in order to arrive at the

legislative intention." 22

With the foregoing guideposts on hand, let us go back

to the situation that confronts us. We take another look at

the title of R.A. 931, viz: "AN ACT TO AUTHORIZE THE

FILING IN THE PROPER COURT, UNDER CERTAIN

CONDITIONS, OF CERTAIN CLAIMS OF TITLE TO

PARCELS OF LAND THAT HAVE BEEN DECLARED

PUBLIC LAND, BY VIRTUE OF JUDICIAL DECISIONS

RENDERED WITHIN THE FORTY YEARS NEXT

PRECEDING THE APPROVAL OF THIS ACT." Readily

to be noted is that the title is not merely composed of

catchwords. 23

It expresses in language clear the very

substance of the law itself. From this, it is easy to see that

Congress intended to give some effect to the title of R.A.

931.

To be carefully noted is that the same imperfection in

the language of R.A. 931 aforesaid — from which surfaces

a seeming inconsistency between the title and the body —

attended Commonwealth Act 276, the present statute's

predecessor. That prior law used the very same language in

the body thereof and in its title. We attach meaning to this

circumstance. Had the legislature meant to shake off any

legal effects that the title of the statute might have, it had a

chance to do so in the reenactment of the law. Congress

could have altered with great facility the wording of the title

of R.A. 931. The fact is that it did not.

It has been observed that "in modern practice the title

is adopted by the Legislature, more thoroughly read than the

act itself, and in many states is the subject of constitutional

regulation." 24

The constitutional in jurisdiction that the

subject of the statute must be expressed in the title of the

bill, breathes the spirit of command because "the

Constitution does not exact of Congress the obligation to

read during its deliberations the entire text of the bill." 25

Reliance, therefore, may be placed on the title of a bill,

which, while not an enacting part, no doubt "is in some sort

a part of the act, although only a formal part." 26

These

considerations are all the more valid here because R.A. 931

was passed without benefit of congressional debate in the

House from which it originated as House Bill 1410, 27

and in

the Senate. 28

The title now under scrutiny possesses the strength of

clarity and positiveness. It recites that it authorizes court

proceedings of claims to parcels of land declared public

land "by virtue of judicial decisions rendered within the

forty years next preceding the approval of this Act." That

title is written "in capital letters" — by Congress itself; such

kind of a title then "is not to be classed with words or titles

used by compilers of statutes" because "it is the legislature

speaking." 29

Accordingly, it is not hard to come to a

deduction that the phrase last quoted from R.A. 931 — "by

virtue of judicial decisions rendered" — was but

inadvertently omitted from the body. Parting from this

premise, there is, at bottom, no contradiction between title

and body. In line with views herein stated, the title belongs

to that type of titles which; should be regarded as part of the

rules or provisions expressed in the body. 30

At the very

least, the words "by virtue of judicial decisions rendered" in

the title of the law stand in equal importance to the phrase in

Section 1 thereof, "by virtue of judicial proceedings

instituted."

Given the fact then that there are two phrases to

consider the choice of construction we must give to the

statute does not need such reflection. We lean towards a

liberal view. And this, because of the principle long

accepted that remedial legislation should receive the

blessings of liberal construction. 31

And, there should be no

quibbling as to the fact that R.A. 931 is a piece of remedial

legislation. In essence, it provides a mode of relief to

landowners who, before the Act, had no legal means of

perfecting their titles. This is plainly evident from the

explanatory note thereof, which reads:

This bill is intended to give an opportunity to

any person or claimant who has any interest in any

parcel of land which has been declared as public

land in cadastral proceeding for failure of said

person or claimant to present his claim within the

time prescribed by law.

There are many meritorious cases wherein

claimants to certain parcels of land have not had the

opportunity to answer or appear at the hearing of

cases affecting their claims in the corresponding

cadastral proceedings for lack of sufficient notice or

for other reasons and circumstances which are

beyond their control. Under C.A. No. 276, said

persons or claimants have no more legal remedy as

the effectivity of said Act expired in 1940.

This measure seeks to remedy the lack of any

existing law within said persons or claimants with

meritorious claims or interests in parcels of land

may seek justice and protection. This bill proposes

to give said persons or claimants their day in court.

Approval of this bill is earnestly requested.

In fine, we say that lingual imperfections in the

drafting of a statute should never be permitted to hamstring

judicial search for legislative intent, which can otherwise be

discovered. Legal technicalities should not abort the

beneficent effects intended by legislation.

The sum of all the foregoing is that, as we now view

Republic Act 931, claims of title that may be filed

thereunder embrace those parcels of land that have been

declared public land "by virtue of judicial decisions

rendered within the forty years next preceding the approval

of this Act." Therefore, by that statute, the July 25, 1961

petition of respondent Belong Lutes to reopen Civil

Reservation Case No. 1, GLRO Record No. 211 of the

cadastral court of Baguio, the decision on which was

rendered on November 13, 1922, comes within the 40-year

period.lawphi1.nêt

FOR THE REASONS GIVEN, the petition for

certiorari is hereby granted; the cadastral court's orders of

August 5, 1963, November 5, 1963 and September 17, 1964

are hereby declared null and void and the cadastral court is

hereby directed to admit petitioners' oppositions and

proceed accordingly. No costs. So ordered.

Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Fernando,

Teehankee and Barredo, JJ., concur.

Concepcion, C.J., Castro and Capistrano, JJ., took no part..

CASE 6: SECOND DIVISION

[G.R. No. 137489. May 29, 2002]

COOPERATIVE DEVELOPMENT AUTHORITY,

petitioner, vs. DOLEFIL AGRARIAN REFORM

BENEFICIARIES COOPERATIVE, INC., ESMERALDO

A. DUBLIN, ALICIA SAVAREZ, EDNA URETA, ET

AL., respondents.

D E C I S I O N

DE LEON, JR. J.

At the core of the instant petition for review on certiorari of

the Decisionxxx[1] of the Court of Appeals, 13th Division,

in CA-G.R. SP. No. 47933 promulgated on September 9,

1998 and its Resolutionxxxi[2] dated February 9, 1999 is

the issue of whether or not petitioner Cooperative

Development Authority (CDA for brevity) is vested with

quasi-judicial authority to adjudicate intra-cooperative

disputes.

The record shows that sometime in the later part of 1997,

the CDA received from certain members of the Dolefil

Agrarian Reform Beneficiaries Cooperative, Inc. (DARBCI

for brevity), an agrarian reform cooperative that owns 8,860

hectares of land in Polomolok, South Cotabato, several

complaints alleging mismanagement and/or

misappropriation of funds of DARBCI by the then

incumbent officers and members of the board of directors of

the cooperative, some of whom are herein private

respondents.

Acting on the complaints docketed as CDA-CO Case No.

97-011, CDA Executive Director Candelario L. Verzosa, Jr.

issued an orderxxxii[3] dated December 8, 1997 directing

the private respondents to file their answer within ten (10)

days from receipt thereof.

Before the private respondents could file their answer,

however, CDA Administrator Alberto P. Zingapan issued

on December 15, 1997 an order,xxxiii[4] upon the motion

of the complainants in CDA-CO Case No. 97-011, freezing

the funds of DARBCI and creating a management

committee to manage the affairs of the said cooperative.

On December 18, 1991, the private respondents filed a

Petition for Certiorarixxxiv[5] with a prayer for preliminary

injunction, damages and attorney‘s fees against the CDA

and its officers namely: Candelario L. Verzosa, Jr. and

Alberto P. Zingapan, including the DOLE Philippines Inc.

before the Regional Trial Court (RTC for brevity) of

Polomolok, South Cotabato, Branch 39. The petition which

was docketed as SP Civil Case No. 25, primarily questioned

the jurisdiction of the CDA to resolve the complaints

against the private respondents, specifically with respect to

the authority of the CDA to issue the ―freeze order‖ and to

create a management committee that would run the affairs

of DARBCI.

On February 24, 1998, CDA Chairman Jose C. Medina, Jr.

issued an orderxxxv[6] in CDA-CO Case No. 97-011

placing the private respondents under preventive

suspension, hence, paving the way for the newly-created

management committeexxxvi[7] to assume office on March

10, 1998.

On March 27, 1998, the RTC of Polomolok, South

Cotabato, Branch 39, issued a temporary restraining

orderxxxvii[8] (TRO), initially for seventy-two (72) hours

and subsequently extended to twenty (20) days, in an Order

dated March 31, 1998. The temporary restraining order, in

effect, directed the parties to restore status quo ante, thereby

enabling the private respondents to reassume the

management of DARBCI.

The CDA questioned the propriety of the temporary

restraining order issued by the RTC of Polomolok, South

Cotabato on March 27, 1998 through a petition for certiorari

before the Court of Appeals, 12th Division, which was

docketed as CA-G.R. SP No. 47318.

On April 21, 1998, the Court of Appeals, 12th Division,

issued a temporary restraining orderxxxviii[9] in CA-G.R.

SP No. 47318 enjoining the RTC of Polomolok, South

Cotabato, Branch 39, from enforcing the restraining order

which the latter court issued on March 27, 1998, and

ordered that the proceedings in SP Civil Case No. 25 be

held in abeyance.

Consequently, the CDA continued with the proceedings in

CDA-CO Case No. 97-011. On May 26, 1998 CDA

Administrator Arcadio S. Lozada issued a

resolutionxxxix[10] which directed the holding of a special

general assembly of the members of DARBCI and the

creation of an ad hoc election committee to supervise the

election of officers and members of the board of directors of

DARBCI scheduled on June 14, 1998.

The said resolution of the CDA, issued on May 26, 1998

prompted the private respondents to file on June 8, 1998 a

Petition for Prohibitionxl[11] with a prayer for preliminary

mandatory injunction and temporary restraining order with

the Court of Appeals, 13th Division, which was docketed as

CA-G.R. SP No. 47933. On June 10, 1998, the appellate

court issued a resolutionxli[12] restraining the CDA and its

administrator, Arcadio S. Lozada, the three (3) members of

the ad hoc election committee or any and all persons acting

in their behalf from proceeding with the election of officers

and members of the board of directors of DARBCI

scheduled on June 14, 1998.

Incidentally, on the same date that the Court of Appeals

issued a temporary restraining order in CA-G.R. SP No.

47933 on June 10, 1998, a corporation by the name of

Investa Land Corporation (Investa for brevity) which

allegedly executed a ―Lease Agreement with Joint Venture‖

with DARBCI filed a petitionxlii[13] with the RTC of

Polomolok, South Cotabato, Branch 39, docketed as SP

Civil Case No. 28, essentially seeking the annulment of

orders and resolutions issued by the CDA in CDA-CO Case

No. 97-011 with a prayer for temporary restraining order

and preliminary injunction. On the following day, June 11,

1998, the trial court issued a temporary restraining

orderxliii[14] enjoining the respondents therein from

proceeding with the scheduled special general assembly and

the elections of officers and members of the board of

directors of DARBCI on June 14, 1998. Thereafter, it also

issued a writ of preliminary injunction.

With the issuance of the two (2) restraining orders by the

Court of Appeals, 13th Division, and the RTC of Polomolok,

South Cotabato, Branch 39, on June 10 and 11, 1998,

respectively, the scheduled special general assembly and the

election of officers and members of the board of directors of

DARBCI on June 14, 1998 did not take place.

Nevertheless, on July 12, 1998, the majority of the 7,511

members of DARBCI, on their own initiative, convened a

general assembly and held an election of the members of the

board of directors and officers of the cooperative, thereby

effectively replacing the private respondents. Hence, the

private respondents filed a Twin Motions for Contempt of

Court and to Nullify Proceedingsxliv[15] with the Court of

Appeals in CA-G.R. SP No. 47933.

On September 9, 1998 the Court of Appeals, 13th Division,

promulgated its subject appealed Decisionxlv[16] granting

the petition in CA-G.R. SP No. 47933, the dispositive

portion of which reads:

Wherefore, the foregoing considered, the Petition is hereby

GRANTED. The Orders of the respondent Cooperative

Development Authority in CDA-CO case No. 97-011 dated

08 December 1997, 15 December 1997, 26 January 1998,

24 February 1998, 03 March 1998, and the Resolution dated

26 May 1998, are hereby declared NULL AND VOID and

of no legal force and effect.

Further, the respondents are hereby ORDERED to

perpetually CEASE AND DESIST from taking any further

proceedings in CDA-CO Case No. 97-011.

Lastly, the respondent CDA is hereby ORDERED to

REINSTATE the Board of Directors of DARBCI who were

ousted by virtue of the questioned Orders, and to

RESTORE the status quo prior to the filing of CDA-CO

Case No. 97-011.

SO ORDERED.

The CDA filed a motion for reconsiderationxlvi[17] of the

Decision in CA-G.R. SP No. 47933 but it was denied by the

Court of Appeals in its assailed Resolutionxlvii[18] dated

February 9, 1999, thus:

WHEREFORE, the Motion for Reconsideration is hereby

DENIED for being patently without merit.

MOREOVER, acting on petitioners‘ Twin Motion, and in

view of the Decision in this case dated 09, September

1998, the tenor of which gives it legal effect nunc pro tunc.

We therefore hold the 12 July 1998 election of officers,

the resolutions passed during the said assembly, and the

subsequent oath-taking of the officers elected therein, and

all actions taken during the said meeting, being in blatant

defiance of a valid restraining order issued by this Court, to

be NULL AND VOID AB INITIO AND OF NO LEGAL

FORCE AND EFFECT.

FURTHERMORE, the private respondents are hereby given

thirty (30) days from receipt of this Resolution within which

to explain in writing why they should not be held in

contempt of this Court for having openly defied the

restraining order dated 10 July 1998. The Hon. Jose C.

Medina of the CDA is given a like period to explain in

writing why he should not be cited in contempt for having

administered the oath of the ―Board of Officers‖ pending

the effectivity of the restraining order. The respondent

Arcadio S. Lozada, Administrator of the CDA, is likewise

given the same period to explain why he should not be held

in contempt for issuing a resolution on 21 July 1998

validating the proceedings of the assembly, and another

resolution on 28 August 1998 confirming the election of the

officers thereof.

SO ORDERED.

Hence, the instant petitionxlviii[19] for review which raises

the following assignments of error:

I

THE HONORABLE COURT OF APPEALS, IN

NULLIFYING THE ORDERS AND RESOLUTIONS OF

THE COOPERATIVE DEVELOPMENT AUTHORITY IN

CDA CO CASE NO. 97-011, DECIDED A QUESTION

OF SUBSTANCE THAT IS NOT IN ACCORD WITH

LAW AND APPLICABLE DECISIONS OF THE

SUPREME COURT.

II

THE HONORABLE COURT OF APPEALS ERRED IN

NOT APPLYING THE RULE ON FORUM-SHOPPING.

III

THE HONORABLE COURT OF APPEALS ERRED IN

RENDERING A DECISION ON THE BASIS OF PURE

CONJECTURES AND SURMISES AND HAS

DEPARTED FROM THE ACCEPTED AND USUAL

COURSE OF JUDICIAL PROCEEDINGS WHICH CALL

FOR AN EXERCISE OF THIS HONORABLE COURT‘S

SUPERVISION.

Petitioner CDA claims that it is vested with quasi-judicial

authority to adjudicate cooperative disputes in view of its

powers, functions and responsibilities under Section 3 of

Republic Act No. 6939.xlix[20] The quasi-judicial nature of

its powers and functions was confirmed by the Department

of Justice, through the then Acting Secretary of Justice

Demetrio G. Demetria, in DOJ Opinion No. 10, Series of

1995, which was issued in response to a query of the then

Chairman Edna E. Aberina of the CDA, to wit:

Applying the foregoing, the express powers of the CDA to

cancel certificates of registration of cooperatives for non-

compliance with administrative requirements or in cases of

voluntary dissolution under Section 3(g), and to mandate

and conciliate disputes within a cooperative or between

cooperatives under Section 8 of R.A. No. 6939, may be

deemed quasi-judicial in nature.

The reason is that – in the performance of its functions such

as cancellation of certificate of registration, it is necessary

to establish non-compliance or violation of administrative

requirement. To do so, there arises an indispensable need to

hold hearings, investigate or ascertain facts that possibly

constitute non-compliance or violation and, based on the

facts investigated or ascertained, it becomes incumbent

upon the CDA to use its official discretion whether or not to

cancel a cooperative‘s certificate of registration, thus,

clearly revealing the quasi-judicial nature of the said

function. When the CDA acts as a conciliatory body

pursuant to Section 8 of R.A. No. 6939, it in effect performs

the functions of an arbitrator. Arbitrators are by the nature

of their functions act in quasi-judicial capacity xxx.

The quasi-judicial nature of the foregoing functions is

bolstered by the provisions of Sections 3(o) of R.A. No.

6939 which grants CDA on (sic) the exercise of other

functions as may be necessary to implement the provisions

of cooperative laws, the power to summarily punish for

direct contempt any person guilty of misconduct in the

presence thereof who seriously interrupts any hearing or

inquiry with a fine or imprisonment prescribed therein, a

power usually granted to make effective the exercise of

quasi-judicial functions.l[21]

Likewise, the Office of the President, through the then

Deputy Executive Secretary, Hon. Leonardo A.

Quisumbing, espoused the same view in the case of Alberto

Ang, et al. v. The Board of Directors, Metro Valenzuela

Transport Services Cooperative, Inc., O.P. Case No. 51111,

when it declared and ruled that:

Concededly, Section 3(o) of R.A. No. 6939 and Article

35(4) of R.A. 6938, may not be relied upon by the CDA as

authority to resolve internal conflicts of cooperatives, they

being general provisions. Nevertheless, this does not

preclude the CDA from resolving the instant case. The

assumption of jurisdiction by the CDA on matters which

partake of cooperative disputes is a logical, necessary and

direct consequence of its authority to register cooperatives.

Before a cooperative can acquire juridical personality,

registration thereof is a condition sine qua non, and until

and unless the CDA issues a certificate of registration under

its official seal, any cooperative for that matter cannot be

considered as having been legally constituted. To our mind,

the grant of this power impliedly carries with it the visitorial

power to entertain cooperative conflicts, a lesser power

compared to its authority to cancel registration certificates

when, in its opinion, the cooperative fails to comply with

some administrative requirements (Sec. 2(g), R.A. No.

6939). Evidently, respondents-appellants‘ claim that the

CDA is limited to conciliation and mediation proceedings is

bereft of legal basis. Simply stated, the CDA, in the

exercise of ‗such other function‘ and in keeping with the

mandate of the law, could render the decisions and/or

resolutions as long as they pertain to the internal affairs of

the public service cooperative, such as the rights and

privileges of its members, the rules and procedures for

meetings of the general assembly, Board of Directors and

committees, election and qualifications of officers, directors

and committee members, and allocation and distribution of

surpluses.li[22]

The petitioner avers that when an administrative agency is

conferred with quasi-judicial powers and functions, such as

the CDA, all controversies relating to the subject matter

pertaining to its specialization are deemed to be covered

within the jurisdiction of said administrative agency. The

courts will not interfere in matters which are addressed to

the sound discretion of government agencies entrusted with

the regulation of activities undertaken upon their special

technical knowledge and training.

The petitioner added that the decision in the case of

CANORECO v. Hon. Ruben D. Torres,lii[23] affirmed the

adjudicatory powers and functions of CDA contrary to the

view held by the Court of Appeals, when the Supreme

Court upheld therein the ruling of the CDA annulling the

election of therein respondents Norberto Ochoa, et al. as

officers of the Camarines Norte Electric Cooperative.

Petitioner CDA also claims that herein private respondents

are guilty of forum-shopping by filing cases in three (3)

different fora seeking the same relief. Petitioner pointed out

that private respondents originally filed a petition with a

prayer for preliminary injunction dated December 17, 1997

before the RTC of Polomolok, South Cotabato which was

docketed as SP Civil Case No. 25. Subsequently, the same

private respondents filed another petition with a prayer for

preliminary injunction with the Court of Appeals, 13th

Division, docketed as CA-G.R. SP No. 47933. Thereafter,

Investa, also represented by the same counsel of private

respondents, Atty. Reni Dublin, filed another case with the

RTC of Polomolok, South Cotabato, docketed as SP Civil

Case No. 28, likewise praying, among others, for the

issuance of preliminary injunction and an application for a

temporary restraining order. In effect, petitioner was

confronted with three (3) TRO‘s issued in three (3) separate

actions enjoining it from enforcing its orders and resolutions

in CDA-CO Case No. 97-011.

In their Comment,liii[24] private respondents contend that

the instant petition for review on certiorari filed by CDA

Administrator Alberto Zingapan should be dismissed and

struck down as a mere scrap of paper for lack of authority to

file the same from the Office of the Solicitor General and

for having been filed without approval from the Board of

Administrators of CDA.

The private respondents also contend that, contrary to the

claim of the petitioner, the powers, functions and

responsibilities of the CDA show that it was merely granted

regulatory or supervisory powers over cooperatives in

addition to its authority to mediate and conciliate between

parties involving the settlement of cooperative disputes.

Private respondents denied that they are guilty of forum-

shopping. They clarified that the case filed with the RTC of

Polomolok, South Cotabato, Branch 39, docketed as SP

Civil Case No. 25, was a petition for certiorari. On the

other hand, the case that they filed with the Court of

Appeals, 13th Division, docketed therein as CA-G.R. SP

No. 47933, was a petition for prohibition to stop the holding

of a special general assembly and the election of a new set

of DARBCI officers on June 14, 1998 as ordered by the

petitioner CDA on May 26, 1998, which events have not yet

occurred at the time the petition for certiorari was filed by

the private respondents with the RTC of Polomolok, South

Cotabato, Branch 39.

Private respondents also denied that the filing by Investa of

the petition for the declaration of nullity of the orders and

resolutions of petitioner CDA, with a prayer for temporary

restraining order with the RTC of Polomolok, South

Cotabato, docketed therein as SP Civil Case No. 28,

constituted forum-shopping on their part. They pointed out

that Investa has a separate juridical personality from

DARBCI and that, contrary to the claim of petitioner CDA,

the former is not represented by the lawyer of the private

respondents.

By way of reply,liv[25] petitioner claims that Atty. Rogelio

P. Madriaga was properly deputized, among other lawyers,

as Special Attorney by the Office of the Solicitor General to

represent the CDA in the instant petition pursuant to the

letterlv[26] of Assistant Solicitor General Carlos N. Ortega

addressed to CDA Chairman Jose C. Medina, Jr. dated April

8, 1999. Likewise, the filing of the instant petition was an

official act of CDA Administrator Alberto P. Zingapan who

was duly appointed by the CDA Board of Administrators as

chairman of the Oversight Committee on Legal Matters per

Resolution No. 201, S-1998.lvi[27]

Meanwhile, on March 26, 1999, certain persons alleging to

be incumbent officers and members of the board of

directors of DARBCI filed a motion to intervene in the

instant petition which was granted by this Court per its

Resolution dated July 7, 1999.lvii[28] In the same

resolution, this Court required both petitioner CDA and the

private respondents in this case to file their respective

comments to the petition-in-intervention within ten (10)

days from notice, but both parties failed to comply to do so

up to the present.

We note that the instant petition for review on certiorari

suffers from a basic infirmity for lack of the requisite

imprimatur from the Office of the Solicitor General, hence,

it is dismissible on that ground. The general rule is that

only the Solicitor General can bring or defend actions on

behalf of the Republic of the Philippines and that actions

filed in the name of the Republic, or its agencies and

instrumentalities for that matter, if not initiated by the

Solicitor General, will be summarily dismissed.lviii[29]

The authority of the Office of the Solicitor General to

represent the Republic of the Philippines, its agencies and

instrumentalities, is embodied under Section 35(1), Chapter

12, Title III, Book IV of the Administrative Code of 1987

which provides that:

SEC. 35. Powers and Functions.—The Office of the

Solicitor General shall represent the Government of the

Philippines, its agencies and intrumentalities and its

officials and agents in any litigation, proceeding,

investigation or matter requiring the services of lawyers.

When authorized by the President or head of the office

concerned, it shall also represent government owned or

controlled corporations. The Office of the Solicitor General

shall constitute the law office of the Government and, as

such, shall discharge duties requiring the services of

lawyers. It shall have the following specific powers and

functions:

(1) Represent the Government in the Supreme Court

and the Court of Appeals in all criminal proceedings;

represent the Government and its officers in the Supreme

Court, Court of Appeals, and all other courts or tribunals in

all civil actions and special proceedings in which the

Government or any officer thereof in his official capacity is

a party.

The import of the above-quoted provision of the

Administrative Code of 1987 is to impose upon the Office

of the Solicitor General the duty to appear as counsel for the

Government, its agencies and instrumentalites and its

officials and agents before the Supreme Court, the Court of

Appeals, and all other courts and tribunals in any litigation,

proceeding, investigation or matter requiring the services of

a lawyer. Its mandatory character was emphasized by this

Court in the case of Gonzales v. Chavez,lix[30] thus:

It is patent that the intent of the lawmaker was to give the

designated official, the Solicitor General, in this case, the

unequivocal mandate to appear for the government in legal

proceedings. Spread out in the laws creating the office is

the discernible intent which may be gathered from the term

―shall‖, which is invariably employed, from Act No. 136

(1901) to the more recent Executive Order No. 292 (1987).

xxx xxx xxx

The decision of this Court as early as 1910 with respect to

the duties of the Attorney-General well applies to the

Solicitor General under the facts of the present case. The

Court then declared:

In this jurisdiction, it is the duty of the Attorney General ‗to

perform the duties imposed upon him by law‘ and ‗he shall

prosecute all causes, civil and criminal, to which the

Government of the Philippine Islands, or any officer

thereof, in his official capacity, is a party‘ xxx.

xxx xxx xxx

The Court is firmly convinced that considering the spirit

and the letter of the law, there can be no other logical

interpretation of Sec. 35 of the Administrative Code than

that it is, indeed, mandatory upon the OSG to ―represent the

Government of the Philippines, its agencies and

instrumentalities and its officials and agents in any

litigation, proceeding, investigation or matter requiring the

services of a lawyer.‖

As an exception to the general rule, the Solicitor General, in

providing legal representation for the government, is

empowered under Section 35(8), Chapter 12, Title III, Book

IV of the Administrative Code of 1987 to ―deputize legal

officers of government departments, bureaus, agencies and

offices to assist the Solicitor General and appear or

represent the Government in cases involving their

respective offices, brought before the courts and exercise

supervision and control over such legal officers with respect

to such cases.‖

Petitioner claims that its counsel of record, Atty. Rogelio P.

Madriaga, was deputized by the Solicitor General to

represent the CDA in the instant petition. To prove its

claim, the petitioner attached to its Reply to the Comment

dated January 31, 2000, a photocopy of the alleged

deputation letterlx[31] from the Office of the Solicitor

General signed by Hon. Carlos N. Ortega, Assistant

Solicitor General, addressed to CDA Chairman Jose C.

Medina, Jr.

A close scrutiny of the alleged deputation letter from the

Office of the Solicitor General shows, however, that said

counsel for the petitioner was only ―authorized to appear as

counsel in all civil cases in the lower courts (RTCs and

MTCs) wherein the CDA is a party-litigant‖. Likewise, the

same letter appears to be dated April 8, 1999 while the

Petition for Review on Certiorari filed by the petitioner was

dated February 26, 1999. Clearly then, when the petition

was filed with this Court on March 3, 1999, Atty. Rogelio

P. Madriaga was not yet deputized by the Office of the

Solicitor General to represent the CDA.

Even on the assumption that the alleged letter from the

Office of the Solicitor General was intended to validate or

ratify the authority of counsel to represent the petitioner in

this case, the same contains certain conditions, one of which

is that petitioner ―shall submit to the Solicitor General, for

review, approval and signature, all important pleadings and

motions, including motions to withdraw complaints or

appeals, as well as compromise agreements.‖ Significantly,

one of the major pleadings filed subsequently by the

petitioner in this case namely, the Reply to the

Respondent‘s Comment on the Petition dated January 31,

2000, does not have any indication that the same was

previously submitted to the Office of the Solicitor General

for review or approval, much less bear the requisite

signature of the Solicitor General as required in the alleged

deputation letter.

Nonetheless, in view of the novelty of the main issue raised

in this petition concerning the nature and scope of

jurisdiction of the CDA in the settlement of cooperative

disputes as well as the long standing legal battle involving

the management of DARBCI between two (2) opposing

factions that inevitably threatens the very existence of one

of the country‘s major cooperatives, this Court has decided

to act on and determine the merits of the instant petition.

Section 3 of R.A. No. 6939 enumerates the powers,

functions and responsibilities of the CDA, thus:

SEC. 3. Powers, Functions and Responsibilities.—The

Authority shall have the following powers, functions and

responsibilities:

(a) Formulate, adopt and implement integrated and

comprehensive plans and programs on cooperative

development consistent with the national policy on

cooperatives and the overall socio-economic development

plan of the Government;

(b) Develop and conduct management and training

programs upon request of cooperatives that will provide

members of cooperatives with the entrepreneurial

capabilities, managerial expertise, and technical skills

required for the efficient operation of their cooperatives and

inculcate in them the true spirit of cooperativism and

provide, when necessary, technical and professional

assistance to ensure the viability and growth of cooperatives

with special concern for agrarian reform, fishery and

economically depressed sectors;

(c) Support the voluntary organization and consensual

development of activities that promote cooperative

movements and provide assistance to wards upgrading

managerial and technical expertise upon request of the

cooperatives concerned;

(d) Coordinate the effects of the local government units

and the private sector in the promotion, organization, and

development of cooperatives;

(e) Register all cooperatives and their federations and

unions, including their division, merger, consolidation,

dissolution or liquidation. It shall also register the transfer

of all or substantially all of their assets and liabilities and

such other matters as may be required by the Authority;

(f) Require all cooperatives, their federations and

unions to submit their annual financial statements, duly

audited by certified public accountants, and general

information sheets;

(g) Order the cancellation after due notice and hearing

of the cooperative‘s certificate of registration for non-

compliance with administrative requirements and in cases

of voluntary dissolution;

(h) Assist cooperatives in arranging for financial and

other forms of assistance under such terms and conditions

as are calculated to strengthen their viability and autonomy;

(i) Establish extension offices as may be necessary and

financially viable to implement this Act. Initially, there

shall be extension offices in the Cities of Dagupan, Manila,

Naga, Iloilo, Cebu, Cagayan de Oro and Davao;

(j) Impose and collect reasonable fees and charges in

connection with the registration of cooperatives;

(k) Administer all grants and donations coursed

through the Government for cooperative development,

without prejudice to the right of cooperatives to directly

receive and administer such grants and donations upon

agreement with the grantors and donors thereof;

(l) Formulate and adopt continuing policy initiatives

consultation with the cooperative sector through public

hearing;

(m) Adopt rules and regulations for the conduct of its

internal operations;

(n) Submit an annual report to the President and

Congress on the state of the cooperative movement;

(o) Exercise such other functions as may be necessary

to implement the provisions of the cooperative laws and, in

the performance thereof, the Authority may summarily

punish for direct contempt any person guilty of misconduct

in the presence of the Authority which seriously interrupts

any hearing or inquiry with a fine of not more than five

hundred pesos (P500.00) or imprisonment of not more than

ten (10) days, or both. Acts constituting indirect contempt

as defined under Rule 71 of the Rules of Court shall be

punished in accordance with the said Rule.

It is a fundamental rule in statutory construction that when

the law speaks in clear and categorical language, there is no

room for interpretation, vacillation or equivocation – there

is only room for application.lxi[32] It can be gleaned from

the above-quoted provision of R.A. No. 6939 that the

authority of the CDA is to discharge purely administrative

functions which consist of policy-making, registration,

fiscal and technical assistance to cooperatives and

implementation of cooperative laws. Nowhere in the said

law can it be found any express grant to the CDA of

authority to adjudicate cooperative disputes. At most,

Section 8 of the same law provides that ―upon request of

either or both parties, the Authority shall mediate and

conciliate disputes with a cooperative or between

cooperatives‖ however, with a restriction ―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‖. Being an administrative

agency, the CDA has only such powers as are expressly

granted to it by law and those which are necessarily implied

in the exercise thereof.lxii[33]

Petitioner CDA, however, insists that its authority to

conduct hearings or inquiries and the express grant to it of

contempt powers under Section 3, paragraphs (g) and (o) of

R. A. No. 6939, respectively, necessarily vests upon the

CDA quasi-judicial authority to adjudicate cooperative

disputes. A review of the records of the deliberations by

both chambers of Congress prior to the enactment of R.A.

No. 6939 provides a definitive answer that the CDA is not

vested with quasi-judicial authority to adjudicate

cooperative disputes. During the house deliberations on the

then House Bill No. 10787, the following exchange

transpired:

MR. AQUINO (A.). The response of the sponsor is not

quite clear to this humble Representation. Let me just point

out other provisions under this particular section, which to

the mind of this humble Representation appear to provide

this proposed Authority with certain quasi-judicial

functions. Would I be correct in this interpretation of

paragraphs (f) and (g) under this section which state that

among the powers of the Authority are:

To administer the dissolution, disposal of assets and

settlement of liabilities of any cooperative that has been

found to be inoperable, inactive or defunct.

To make appropriate action on cooperatives found to be in

violation of any provision…

It appears to the mind of this humble Representation that

the proposed Authority may be called upon to adjudicate in

these particular instances. Is it therefore vested with quasi-

judicial authority?

MR. ROMUALDO. No, Mr. Speaker. We have to resort to

the courts, for instance, for the dissolution of cooperatives.

The Authority only administers once a cooperative is

dissolved. It is also the CDA which initiates actions against

any group of persons that may use the name of a

cooperative to its advantage, that is, if the word

―cooperative‖ is merely used by it in order to advance its

intentions, Mr. Speaker.

MR. AQUINO (A.). So, is the sponsor telling us that the

adjudication will have to be left to the courts of law?

MR. ROMUALDO. To the courts, Mr. Speaker.lxiii[34]

xxx xxx xxx

MR. ADASA. One final question, Mr. Speaker. On page 4,

line 33, it seems that one of the functions given to the

Cooperative Development Authority is to recommend the

filing of legal charges against any officer or member of a

cooperative accused of violating the provisions of this Act,

existing laws and cooperative by-laws and other rules and

regulations set forth by the government. Would this not

conflict with the function of the prosecuting fiscal?

MR. ROMUALDO. No, it will be the provincial fiscal that

will file the case. The Authority only recommends the

filing of legal charges, that is, of course, after preliminary

investigation conducted by the provincial fiscal or the

prosecuting arm of the government.

MR. ADASA. Does the Gentleman mean to say that the

Cooperative Development Authority can take the place of

the private complainant or the persons who are the offended

party if the latter would not pursue the case?

MR. ROMULDO. Yes, Mr. Speaker. The Authority can

initiate even the filing of the charges as embraced and

defined on line 33 of page 4 of this proposed bill.lxiv[35]

xxx xxx xxx

MR. CHIONGBIAN. xxx. Under the same section, line 28,

subparagraph (g) says that the Authority can take

appropriate action on cooperatives found to be violating any

provision of this Act, existing laws and cooperative by-

laws, and other rules and regulations set forth by the

government by way of withdrawal of Authority assistance,

suspension of operation or cancellation of accreditation.

My question is: If a cooperative, whose officers are liable

for wrongdoing, is found violating any of the provisions of

this Act, are we going to sacrifice the existence of that

cooperative just because some of the officers have taken

advantage of their positions and misused some of the funds?

It would be very unfair for the Authority to withdraw its

assistance at the expense of the majority. It is not clear as to

what the liabilities of the members of these cooperatives

are.

xxx xxx xxx

MR. ROMUALDO. Mr. Speaker, before this action may be

taken by the Authority, there will be due process. However,

this provision is applicable in cases where the cooperative

as a whole violated the provisions of this Act as well as

existing laws. In this case, punitive actions may be taken

against the cooperative as a body.

With respect to the officials, if they themselves should be

punished, then Section (h) of this chapter provides that legal

charges shall be filed by the Cooperative Development

Authority.lxv[36]

In like manner, the deliberations on Senate Bill No. 485,

which was the counterpart of House Bill No. 10787, yield

the same legislative intent not to grant quasi-judicial

authority to the CDA as shown by the following discussions

during the period of amendments:

SEN. ALVAREZ. On page 3, between lines 5 and 6, if I

may, insert the following as one of the powers: CONDUCT

INQUIRIES, STUDIES, HEARINGS AND

INVESTIGATIONS AND ISSUE ORDERS, DECISIONS

AND CIRCULARS AS MAY BE NECESSARY TO

IMPLEMENT ALL LAWS, RULES AND

REGULATIONS RELATING TO COOPERATIVES.

THE AGENCY MAY SUMMARILY PUNISH FOR

CONTEMPT BY A FINE OF NOT MORE THAN TWO

HUNDRED PESOS (P200.00) OR IMPRISONMENT NOT

EXCEEDING TEN (10) DAYS, OR BOTH, ANY

PERSONS GUILTY OF SUCH MISCONDUCT IN THE

PRESENCE OF THE AGENCY WHICH SERIOUSLY

INTERRUPTS ANY HEARING OR INVESTIGATION,

INCLUDING WILFULL FAILURE OR REFUSAL,

WITHOUT JUST CAUSE, COMPLY WITH A

SUMMONS, SUBPOENA, SUBPOENA DUCES TECUM,

DECISION OR ORDER, RULE OR REGULATION, OR,

BEING PRESENT AT A HEARING OR

INVESTIGATION, REFUSES TO BE SWORN IN AS A

WITNESS OR TO ANSWER QUESTIONS OR TO

FURNISH INFORMATION REQUIRED BY THE

AGENCY. THE SHERIFF AND/OR POLICE AGENCIES

OF THE PLACE WHERE THE HEARING OR

INVESTIGATION IS CONDUCTED SHALL, UPON

REQUEST OF THE AGENCY, ASSIST IT TO ENFORCE

THE PENALTY.

THE PRESIDENT. That is quite a long amendment. Does

the Gentleman have a written copy of his amendment, so

that the Members will have an opportunity to go over it and

examine its implications?

Anyway, why do we not hold in abeyance the proposed

amendment? Do we have that?

xxx xxx xxx

SEN. ALVAREZ. Mr. President, this is almost an inherent

power of a registering body. With the tremendous

responsibility that we have assigned to the Authority or the

agency—for it to be able to function and discharge its

mandate—it will need this authority.

SEN. AQUINO. Yes, Mr. President, conceptually, we do

not like the agency to have quasi-judicial powers. And, we

are afraid that if we empower the agency to conduct

inquiries, studies, hearings and investigations, it might

interfere in the autonomous character of cooperatives. So, I

am sorry Mr. President, we don‘t accept the

amendment.lxvi[37]

The decision to withhold quasi-judicial powers from the

CDA is in accordance with the policy of the government

granting autonomy to cooperatives. It was noted that in the

past 75 years cooperativism failed to flourish in the

Philippines. Of the 23,000 cooperatives organized under

P.D. No. 175, only 10 to 15 percent remained operational

while the rest became dormant. The dismal failure of

cooperativism in the Philippines was attributed mainly to

the stifling attitude of the government toward cooperatives.

While the government wished to help, it invariably wanted

to control.lxvii[38] Also, in its anxious efforts to push

cooperativism, it smothered cooperatives with so much help

that they failed to develop self-reliance. As one

cooperative expert put it, ―The strong embrace of

government ends with a kiss of death for

cooperatives.‖lxviii[39]

But then, acknowledging the role of cooperatives as

instruments of national development, the framers of the

1987 Constitution directed Congress under Article XII,

Section 15 thereof to create a centralized agency that shall

promote the viability and growth of cooperatives. Pursuant

to this constitutional mandate, the Congress approved on

March 10, 1990 Republic Act No. 6939 which is the organic

law creating the Cooperative Development Authority.

Apparently cognizant of the errors in the past, Congress

declared in an unequivocal language that the state shall

―maintain the policy of non-interference in the management

and operation of cooperatives.‖lxix[40]

After ascertaining the clear legislative intent underlying

R.A. No. 6939, effect should be given to it by the

judiciary.lxx[41] Consequently, we hold and rule that the

CDA is devoid of any quasi-judicial authority to adjudicate

intra-cooperative disputes and more particularly disputes as

regards the election of the members of the Board of

Directors and officers of cooperatives. The authority to

conduct hearings or inquiries and the power to hold any

person in contempt may be exercised by the CDA only in

the performance of its administrative functions under R.A.

No. 6939.

The petitioner‘s reliance on the case of CANORECO is

misplaced for the reason that the central issue raised therein

was whether or not the Office of the President has the

authority to supplant or reverse the resolution of an

administrative agency, specifically the CDA, that had long

became final and on which issue we ruled in the negative.

In fact, this Court declared in the said case that the CDA has

no jurisdiction to adjudicate intra-cooperative disputes

thus:lxxi[42]

xxx xxx xxx

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 request

thereof, a certificate of non-resolution shall be issued by the

commission prior to the filing of appropriate action before

the proper courts.

Likewise, we do not find any merit in the allegation of

forum-shopping against the private respondents. Forum-

shopping exists where the elements of litis pendentia are

present or where a final judgment in one case will amount

to res judicata in the other.lxxii[43] The requisites for the

existence of litis pendentia, in turn, are (1) identity of

parties or at least such representing the same interest in both

actions; (2) identity of rights asserted as prayed for, the

relief being founded on the same facts; and (3) the identity

in both cases is such that the judgment that may be rendered

in the pending case, regardless of which party is successful,

would amount to res judicata to the other case.lxxiii[44]

While there may be identity of parties between SP Civil

Case No. 25 filed with the RTC of Polomolok, South

Cotabato, Branch 39, and CA-G.R. SP No. 47933 before the

Court of Appeals, 13th Division, the two (2) other requisites

are not present. The Court of Appeals correctly observed

that the case filed with the RTC of Polomolok, South

Cotabato was a petition for certiorari assailing the orders of

therein respondent CDA for having been allegedly issued

without or in excess of jurisdiction. On the other hand, the

case filed with the Court of Appeals was a petition for

prohibition seeking to restrain therein respondent from

further proceeding with the hearing of the case. Besides,

the filing of the petition for prohibition with the Court of

Appeals was necessary after the CDA issued the Order

dated May 26, 1998 which directed the holding of a special

general assembly for purposes of conducting elections of

officers and members of the board of DARBCI after the

Court of Appeals, 12th Division, in CA-G.R. SP No. 47318

issued a temporary restraining order enjoining the

proceedings in Special Civil Case No. 25 and for the parties

therein to maintain the status quo. Under the circumstances,

the private respondents could not seek immediate relief

before the trial court and hence, they had to seek recourse

before the Court of Appeals via a petition for prohibition

with a prayer for preliminary injunction to forestall the

impending damage and injury to them in view of the order

issued by the petitioner on May 26, 1998.

The filing of Special Civil Case No. 28 with the RTC of

Polomolok, South Cotabato does not also constitute forum-

shopping on the part of the private respondents. Therein

petitioner Investa, which claims to have a subsisting lease

agreement and a joint venture with DARBCI, is an entity

whose juridical personality is separate and distinct from that

of private respondent cooperative or herein individual

private respondents and that they have totally different

interests in the subject matter of the case. Moreover, it was

incorrect for the petitioner to charge the private respondents

with forum-shopping partly based on its erroneous claim

that DARBCI and Investa were both represented by the

same counsel. A charge of forum-shopping may not be

anchored simply on the fact that the counsel for different

petitioners in two (2) cases is one and the same.lxxiv[45]

Besides, a review of the records of this case shows that the

counsel of record of Investa in Special Civil Case No. 28 is

a certain Atty. Ignacio D. Debuque, Jr. and not the same

counsel representing the private respondents.lxxv[46]

Anent the petition-in-intervention, the intervenors aver that

the Resolution of the Court of Appeals dated February 9,

1999 in CA-G.R. SP No. 47933 denying the motion for

reconsideration of herein petitioner CDA also invalidated

the election of officers and members of the board of

directors of DARBCI held during the special general

assembly on July 12, 1998, thus adversely affecting their

substantial rights including their right to due process. They

claim that the object of the order issued by the appellate

court on June 10, 1998 was to restrain the holding of the

general assembly of DARBCI as directed in the order of

CDA Administrator Arcadio Lozada dated May 26, 1998.

In compliance with the said order of the Court of Appeals,

no general assembly was held on June 14, 1998. However,

due to the grave concern over the alleged tyrannical

administration and unmitigated abuses of herein private

respondents, the majority of the members of DARBCI, on

their own initiative and in the exercise of their inherent right

to assembly under the law and the 1987 Constitution,

convened a general assembly on July 12, 1998. On the said

occasion, the majority of the members of DARBCI

unanimously elected herein petitioners-in-intervention as

new officers and members of the board of directors of

DARBCI,lxxvi[47] and thereby resulting in the removal of

the private respondents from their positions in DARBCI.

Petitioners-in-intervention pointed out that the validity of

the general assembly held on July 12, 1998 was never raised

as an issue in CA-G.R. SP No. 47933. The petitioners-in-

intervention were not even ordered by the Court of Appeals

to file their comment on the ―Twin Motions For Contempt

of Court and to Nullify Proceedings‖ filed by the private

respondents on July 29, 1998.

As earlier noted, the Court of Appeals issued a temporary

restraining orderlxxvii[48] in CA-G.R. SP No. 47933 on

June 10, 1998, the pertinent portion of which reads:

Meanwhile, respondents or any and all persons acting in

their behalf and stead are temporarily restrained from

proceeding with the election of officers and members of the

board of directors of the Dolefil Agrarian Reform

Beneficiaries Cooperative, Inc. scheduled on June 14, 1998

and or any other date thereafter.

It was also noted that as a consequence of the temporary

restraining order issued by the appellate court, the general

assembly and the election of officers and members of the

board of directors of DARBCI, pursuant to the resolution

issued by CDA Administrator Arcadio S. Lozada, did not

take place as scheduled on June 14, 1998. However, on

July 12, 1998 the majority of the members of DARBCI, at

their own initiative, held a general assembly and elected a

new set of officers and members of the board of directors of

the cooperative which resulted in the ouster of the private

respondents from their posts in the said cooperative.

The incident on July 12, 1998 prompted herein private

respondents to file their Twin Motions for Contempt of

Court and to Nullify Proceedings on July 26, 1998. The

twin motions prayed, among others, that after due notice

and hearing, certain personalities, including the petitioners-

in-intervention, be cited in indirect contempt for their

participation in the subject incident and for the nullification

of the election on July 12, 1998 for being illegal, contrary to

the by-laws of the cooperative and in defiance of the

injunctive processes of the appellate court.

On September 9, 1998, the Court of Appeals, 13th Division,

rendered a Decision in CA-G.R. SP No. 47933 which

declared the CDA devoid of quasi-judicial jurisdiction to

settle the dispute in CDA-CO Case No. 97-011 without

however, taking any action on the ―Twin Motions for

Contempt of Court and to Nullify Proceedings‖ filed by the

private respondents. As it turned out, it was only in its

Resolution dated February 9, 1999 denying petitioner‘s

motion for reconsideration of the Decision in CA-G.R. SP

No. 47933 that the Court of Appeals, 13th Division, acted on

the ―Twin Motions for Contempt of Court and to Nullify

Proceedings‖ by declaring as null and void the election of

the petitioners-in-intervention on July 12, 1998 as officers

and members of the board of directors of DARBCI.

We find, however, that the action taken by the Court of

Appeals, 13th Division, on the ―Twin Motions for Contempt

of Court and to Nullify Proceedings‖ insofar as it nullified

the election of the officers and members of the Board of

Directors of DARBCI, violated the constitutional right of

the petitioners-in-intervention to due process. The

requirement of due process is satisfied if the following

conditions are present, namely: (1) there must be a court or

tribunal clothed with judicial power to hear and determine

the matter before it; (2) jurisdiction must be lawfully

acquired over the person of the defendant or over the

property which is the subject of the proceedings; (3) the

defendant must be given an opportunity to be heard; and (4)

judgment must be rendered upon lawful hearing.lxxviii[49]

The appellate court should have first required the

petitioners-in-intervention to file their comment or

opposition to the said ―Twin Motions For Contempt Of

Court And to Nullify Proceedings‖ which also refers to the

elections held during the general assembly on July 12, 1998.

It was precipitate for the appellate court to render judgment

against the petitioners-in-intervention in its Resolution

dated February 9, 1999 without due notice and opportunity

to be heard. Besides, the validity of the general assembly

held on July 12, 1998 was not raised as an issue in CA-G.R.

SP No. 47933.

WHEREFORE, judgment is hereby rendered as follows:

1. The petition for review on certiorari is hereby

DENIED for lack of merit. The orders, resolutions,

memoranda and any other acts rendered by petitioner

Cooperative Development Authority in CDA-CO Case No.

97-011 are hereby declared null and void ab initio for lack

of quasi-judicial authority of petitioner to adjudicate intra-

cooperative disputes; and the petitioner is hereby ordered to

cease and desist from taking any further proceedings

therein; and

2. In the interest of justice, the dispositive portion of

the Resolution of the Court of Appeals, dated February 9,

1999, in CA-G.R. SP No. 47933, insofar as it nullified the

elections of the members of the Board of Directors and

Officers of DARBCI held during the general assembly of

the DARBCI members on July 12, 1998, is hereby SET

ASIDE.

No pronouncement as to costs.

SO ORDERED.

CASE 7: Republic of the Philippines

SUPREME COURT Manila

EN BANC

G.R. No. L-14542 October 31, 1962

MANUEL A. CORDERO, Trial Attorney of the

Tenancy Unit, Mediation Division, Agricultural Tenancy

Commission Department of Justice and VICENTE

SALAZAR, petitioners,

vs.

HON. JOSE R. CABATUANDO, Associate Judge of the

Court of Agrarian Relations, and LEONARDO STA.

ROMANA, respondents.

Office of the Solicitor General for petitioners.

Manuel A. Cordero for and in his own behalf as petitioner.

Fausto F. Allado and Ludivico M. Ipac for respondent

Associate Judge of the Court of Agrarian Relations.

Policarpio O. Sta. Romana for respondent Leonardo Sta.

Romana.

REGALA, J.:

This is a petition for certiorari and mandamus "to declare

null and void the disputed order dated September 22, 1958

and the resolution dated October 1, 1958" of the Court of

Agrarian Relations, disqualifying petitioner Manuel A.

Cordero, Trial Attorney, Tenancy Counsel Unit, Mediation

Division, Agricultural Tenancy Commission, Department of

Justice "from appearing as counsel for petitioner tenant in

this case, or for any tenant in any other cases before this

Court," and "to compel respondent Judge to allow petitioner

trial attorney and all trial attorneys of the Mediation

Division of the Department of Justice to appear as counsel

for indigent tenants in cases pending in his sala."

The record discloses that on July 21, 1958, the Tenancy

Counsel Unit of the Agricultural Tenancy Commission of

the Department of Justice, thru its Trial Attorney the herein

petitioner Manuel A. Cordero as counsel for indigent

petitioner tenant Vicente Salazar, filed with the Second

Regional District of the Court of Agrarian Relations, CAR

Case No. 1379-NE-58 against respondent landlord

Leonardo Sta. Romana and others "for reinstatement and

reliquidation of past harvests"; that on September 1958,

respondent landlord Leonardo Sta. Romana file "Motion to

Disqualify Counsel and To Set Hearing at Cabanatuan City,

praying among others for the disqualification of petitioner

Manuel A. Cordero to act as counsel tenant Vicente Salazar;

that on September 22, 1958, respondent Judge, acting on the

aforesaid motion to qualify, issued the order in question

disqualifying petitioner Manuel A. Cordero and/or any other

attorney from the Mediation Division of the Department of

Justice from appearing as counsel for petitioner tenant

Vicente Salazar or for other tenants represented by the said

division the said court; that on September 29, 1958, an

"Urgent Motion for Reconsideration" was filed before the

court, praying for the setting aside of the order of

September 22, 1958 but the same was denied on October

1958.

In its order dated September 22, 1958, the Court Agrarian

Relations (Second Regional District) upheld respondents'

claim and held, among others:

(1) That representation by counsel of tenants who cannot

afford to pay should be done by the public defendant of the

Department of Labor as provided for in section 54 of

Republic Act No. 1199;

(2) That Circular No. 5, dated June 28, 1957, of Agricultural

Tenancy Commission, as approved by Secretary of Justice,

creating a Tenancy Unit Counsel in the Mediation Division,

is ultra vires and has no legal force; and

(3) That even the Mediation Division of the Agricultural

Tenancy Commission, which has been performing many

functions, has been in existence without the sanction of any

statute.

As a result of this order, the plaintiff filed the present

petition before this Court. As prayed for, this Court on

August 21, 1958 issued a writ of preliminary injunction

restraining the respondent judge from enforcing his order

complained of until further orders from this Court.

Meanwhile, Congress passed Republic Act No. 2263,

amending the Agricultural Tenancy Act of the Philippines

(Republic Act No. 1199) providing among others that —

In all cases wherein a tenant cannot afford to be

represented by counsel, it shall be the duty of the

trial attorney of the tenancy mediation commission

to represent him, upon proper notification by the

party concerned, or the court of competent

jurisdiction shall assign or appoint counsel de oficio

for the indigent tenant. (Section 54, Republic Act

No. 1199, as amended by Section 20 of Republic

Act No. 2263).

After the enactment of the aforementioned Republic Act

No. 2263, on August 11, 1959, petitioner filed a

MANIFESTATION contending "that the issue in the case at

bar is now moot and academic." As required by this Court,

respondent judge, thru counsel, filed on October 3, 1959 his

COMMENT to the aforementioned manifestation of

petitioner alleging that, before the enactment of Republic

Act No. 2263, there was no Tenancy Mediation Division in

existence nor was there any law creating the same and

defining its functions, and that its only basis for existence,

therefore, are sections 19 and 20 of Republic Act No. 2263

which are null and void because the Constitution provides

that "no bill which may be enacted into law shall embrace

more than one subject which shall be expressed in the title

of the bill." He contended further that nowhere in the titles

of Republic Act No. 1199 and Republic Act No. 2263 is the

creation of the Tenancy Mediation Division ever mentioned,

thereby indicating that section 19, Republic Act No. 2263

falls under the first class of prohibited bills.

The decisive issue in this case is the constitutionality of

sections 19 and 20 of Republic Act No. 2263, amending

sections 53 and 54 of Republic Act No. 1199. The

fundamental objection of respondent to the presumed

constitutionality of these sections is that section 19 of

Republic Act No. 226 authorizing the Secretary of Justice

acting through a tenancy mediation division, to carry out a

national enforcement program including the mediation of

tenancy disputes, is not expressed in the title of the bill as

required by section 21, paragraph 1, of Article VI of the

Philippine Constitution which reads:

No bill which may be enacted into law shall

embrace more than one subject which shall be

expressed in the title of the bill.

It is to be noted that the basic law, Republic Act 1199, is

called "The Agricultural Tenancy Act of the Philippines."

The constitutional requirement in question is satisfied if all

parts of the law are related, and are germane to subject

matter expressed in the title of the bill. The title of Republic

Act No. 2263 reads as follows: "AN ACT AMENDING

CERTAIN SECTIONS OF REPUBLIC ACT NUMBERED

ONE THOUSAND ONE HUNDRED NINETY-NINE,

OTHERWISE KNOWN AS THE AGRICULTURAL

TENANCY ACT OF THE PHILIPPINE." The

constitutional requirement is complied with as long the law,

as in the instant case, has a single general subject which is

the Agricultural Tenancy Act and the amendatory

provisions no matter how diverse they may be, so long as

they are not inconsistent with or foreign to the general

subject, will be regarded as valid (Sinco, Philippine Political

Law, 11th Ed., p. 225; Cooley, Constitutional Limitations,

6th Ed., p. 172; See also Public Service Commission v.

Recteweald, 290 Ill. 314, 8 A.L.R. 466.)

The provisions of sections 19 and 20 of Republic Act No.

2263 are certainly germane to, and are reasonably necessary

for the accomplishment of the one general subject,

agricultural tenancy.

In the case of Government v. Hongkong & Shanghai

Banking Corporation, 66 Phil. 483, We laid down the rule

that —

Constitutional provisions relating to the subject

matter and titles of statutes should not be so

narrowly construed as to cripple or impede the

power of legislation. The requirement that the

subject of an act shall be expressed in its title

should receive a reasonable and not a technical

construction. It is sufficient if the title be

comprehensive enough reasonably to include the

general object which a statute seeks to effect,

without expressing each and every end and means

necessary or convenient for the accomplishing of

the object. Mere details need not be set forth. The

title need not be an abstract or index of the Act.

(syllabus)

In the case of Sumulong v. Commission on Elections, 73

Phil. 288, the following doctrine was enunciated:

The Constitutional requirement that the subject of

an act shall be expressed in its title should be

reasonably construed so as not to interfere unduly

with the enactment of necessary legislation. It

should be given a practical rather than technical

construction. It should be a sufficient compliance

with such requirement if the title expresses the

general subject and all the provisions of the statute

are germane to that general subject. In the light of

the relevant provisions of the Constitution, the

challenged provision of section 5 of

Commonwealth Act 657 has a necessary and proper

connection with the reorganization of the

Commission on Elections, which is the subject

expressed in the title of the Act. . . . (syllabus)

And in the later case of People v. Carlos, 78 Phil. 535, We

again said:

The People's Court was intended to be a full and

complete scheme with its own machinery for the

indictment, trial and judgment of treason cases. The

various provisos mentioned in appellants brief are

allied and germane to the subject matter and

purposes of the People's Court Act; they are

subordinate to its end. The multitude of matters

which the legislation, by its nature, has to embrace

would make mention of all of them in the title of

the act cumbersome. It is not necessary, and the

Congress is not expected, to make the title of an

enactment a complete index of its contents.

(Government of the Philippine Islands v.

Municipality of Binalonan, 32 Phil. 634.) The

constitutional rule is satisfied if all parts of a law

relate to the subject expressed in its title.

The only amendment brought about by Republic Act No.

2263 is the transfer of the function of representing these

indigent tenants to the Department of Justice, apparently to

consolidate in the latter Department the functions relative to

the enforcement of tenancy laws. In essence, therefore,

there is no change in the set-up established by Republic Act

No. 1199 and that provided for by Republic Act No. 2263.

There is only a transfer of functions from one department of

the government to another.

One salient aspect of this case We should not lose sight of is

the fact that, shortly after the enactment of Republic Act

No. 2263 in 1959, the function of representing these

indigents before the Agrarian Court by public defenders of

the Department of Labor had been actually transferred to

the Tenancy Mediation Division of the Department of

Justice by virtue of a Memorandum Circular of the

department of Labor, dated July 15, 1959, addressed to

Regional Labor Administrators, Officers-in-Charge Local

Offices, Legal Advisers and Labor Attorneys of the

Department. The concluding paragraph of this circular

reads:

In view hereof, all legal personnel of this

department shall henceforth desist from performing

legal aid functions in tenancy cases in any manner

in their respective jurisdiction, and all such cases

which they are handling and still pending

adjudication settlement, as well as those which may

be addressed to them in the future, should be

referred and turned over to the Commissioner of the

Tenancy Mediation Commission at 758 Padilla St.,

San Miguel, Manila.

To declare sections 19 and 20 of Republic Act No. 2 null

and void would in effect upset the transfer of duty of

representing indigent tenants from the public defenders of

the Department of Labor to the trial attorney in the

Mediation Division of the Agricultural Tenancy

Commission of the Department of Justice. In other words, a

declaration of nullity of these provisions of Republic Act

No. 2263 would do harm to, and would be nugatory of,

intention of Congress to consolidate the function of

enforcing our tenancy laws in the Department of Justice.

For these reasons, We hereby declare sections 19 and 20 of

Republic Act No. 2263 valid and constitutional.

WHEREFORE, the petition is hereby granted and writ of

preliminary injunction heretofore issued, made permanent.

Bengzon, C.J., Bautista Angelo, Labrador, Concepcion,

Reyes, J.B.L., Barrera, Paredes, Dizon and Makalintal,

concur.

CASE 8: Republic of the Philippines

SUPREME COURT Manila

EN BANC

G.R. No. L-23127 April 29, 1971

FRANCISCO SERRANO DE AGBAYANI, plaintiff-

appellee,

vs.

PHILIPPINE NATIONAL BANK and THE

PROVINCIAL SHERIFF OF PANGASINAN,

defendants, PHILIPPINE NATIONAL BANK,

defendant-appellant.

Dionisio E. Moya for plaintiff-appellee.

Ramon B. de los Reyes for defendant-appellant.

FERNANDO, J.:

A correct appreciation of the controlling doctrine as to the

effect, if any, to be attached to a statute subsequently

adjudged invalid, is decisive of this appeal from a lower

court decision. Plaintiff Francisco Serrano de Agbayani,

now appellee, was able to obtain a favorable judgment in

her suit against defendant, now appellant Philippine

National Bank, permanently enjoining the other defendant,

the Provincial Sheriff of Pangasinan, from proceeding with

an extra-judicial foreclosure sale of land belonging to

plaintiff mortgaged to appellant Bank to secure a loan

declared no longer enforceable, the prescriptive period

having lapsed. There was thus a failure to sustain the

defense raised by appellant that if the moratorium under an

Executive Order and later an Act subsequently found

unconstitutional were to be counted in the computation,

then the right to foreclose the mortgage was still subsisting.

In arriving at such a conclusion, the lower court manifested

a tenacious adherence to the inflexible view that an

unconstitutional act is not a law, creating no rights and

imposing no duties, and thus as inoperative as if it had never

been. It was oblivious to the force of the principle adopted

by this Court that while a statute's repugnancy to the

fundamental law deprives it of its character as a juridical

norm, its having been operative prior to its being nullified is

a fact that is not devoid of legal consequences. As will

hereafter be explained, such a failing of the lower court

resulted in an erroneous decision. We find for appellant

Philippine National Bank, and we reverse.

There is no dispute as to the facts. Plaintiff obtained the

loan in the amount of P450.00 from defendant Bank dated

July 19, 1939, maturing on July 19, 1944, secured by real

estate mortgage duly registered covering property described

in T.C.T. No. 11275 of the province of Pangasinan. As of

November 27, 1959, the balance due on said loan was in the

amount of P1,294.00. As early as July 13 of the same year,

defendant instituted extra-judicial foreclosure proceedings

in the office of defendant Provincial Sheriff of Pangasinan

for the recovery of the balance of the loan remaining

unpaid. Plaintiff countered with his suit against both

defendants on August 10, 1959, her main allegation being

that the mortgage sought to be foreclosed had long

prescribed, fifteen years having elapsed from the date of

maturity, July 19, 1944. She sought and was able to obtain a

writ of preliminary injunction against defendant Provincial

Sheriff, which was made permanent in the decision now on

appeal. Defendant Bank in its answer prayed for the

dismissal of the suit as even on plaintiff's own theory the

defense of prescription would not be available if the period

from March 10, 1945, when Executive Order No. 32 1

was

issued, to July 26, 1948, when the subsequent legislative act

2 extending the period of moratorium was declared invalid,

were to be deducted from the computation of the time

during which the bank took no legal steps for the recovery

of the loan. As noted, the lower court did not find such

contention persuasive and decided the suit in favor of

plaintiff.

Hence this appeal, which, as made clear at the outset,

possesses merit, there being a failure on the part of the

lower court to adhere to the applicable constitutional

doctrine as to the effect to be given to a statute subsequently

declared invalid.

1. The decision now on appeal reflects the orthodox view

that an unconstitutional act, for that matter an executive

order or a municipal ordinance likewise suffering from that

infirmity, cannot be the source of any legal rights or duties.

Nor can it justify any official act taken under it. Its

repugnancy to the fundamental law once judicially declared

results in its being to all intents and purposes a mere scrap

of paper. As the new Civil Code puts it: "When the courts

declare a law to be inconsistent with the Constitution, the

former shall be void and the latter shall govern.

Administrative or executive acts, orders and regulations

shall be valid only when they are not contrary to the laws of

the Constitution. 3

It is understandable why it should be so,

the Constitution being supreme and paramount. Any

legislative or executive act contrary to its terms cannot

survive.

Such a view has support in logic and possesses the merit of

simplicity. It may not however be sufficiently realistic. It

does not admit of doubt that prior to the declaration of

nullity such challenged legislative or executive act must

have been in force and had to be complied with. This is so

as until after the judiciary, in an appropriate case, declares

its invalidity, it is entitled to obedience and respect. Parties

may have acted under it and may have changed their

positions. What could be more fitting than that in a

subsequent litigation regard be had to what has been done

while such legislative or executive act was in operation and

presumed to be valid in all respects. It is now accepted as a

doctrine that prior to its being nullified, its existence as a

fact must be reckoned with. This is merely to reflect

awareness that precisely because the judiciary is the

governmental organ which has the final say on whether or

not a legislative or executive measure is valid, a period of

time may have elapsed before it can exercise the power of

judicial review that may lead to a declaration of nullity. It

would be to deprive the law of its quality of fairness and

justice then, if there be no recognition of what had

transpired prior to such adjudication.

In the language of an American Supreme Court decision:

"The actual existence of a statute, prior to such a

determination [of unconstitutionality], is an operative fact

and may have consequences which cannot justly be ignored.

The past cannot always be erased by a new judicial

declaration. The effect of the subsequent ruling as to

invalidity may have to be considered in various aspects,

with respect to particular relations, individual and corporate,

and particular conduct, private and official." 4 This language

has been quoted with approval in a resolution in Araneta v.

Hill 5

and the decision in Manila Motor Co., Inc. v. Flores. 6

An even more recent instance is the opinion of Justice

Zaldivar speaking for the Court in Fernandez v. Cuerva and

Co. 7

2. Such an approach all the more commends itself whenever

police power legislation intended to promote public welfare

but adversely affecting property rights is involved. While

subject to be assailed on due process, equal protection and

non-impairment grounds, all that is required to avoid the

corrosion of invalidity is that the rational basis or

reasonableness test is satisfied. The legislature on the whole

is not likely to allow an enactment suffering, to paraphrase

Cardozo, from the infirmity of out running the bounds of

reason and resulting in sheer oppression. It may be of

course that if challenged, an adverse judgment could be the

result, as its running counter to the Constitution could still

be shown. In the meanwhile though, in the normal course of

things, it has been acted upon by the public and accepted as

valid. To ignore such a fact would indeed be the fruitful

parent of injustice. Moreover, as its constitutionality is

conditioned on its being fair or reasonable, which in turn is

dependent on the actual situation, never static but subject to

change, a measure valid when enacted may subsequently,

due to altered circumstances, be stricken down.

That is precisely what happened in connection with

Republic Act No. 342, the moratorium legislation, which

continued Executive Order No. 32, issued by the then

President Osmeña, suspending the enforcement of payment

of all debts and other monetary obligations payable by war

sufferers. So it was explicitly held in Rutter v. Esteban 8

where such enactment was considered in 1953

"unreasonable and oppressive, and should not be prolonged

a minute longer, and, therefore, the same should be declared

null and void and without effect." 9

At the time of the

issuance of the above Executive Order in 1945 and of the

passage of such Act in 1948, there was a factual

justification for the moratorium. The Philippines was

confronted with an emergency of impressive magnitude at

the time of her liberation from the Japanese military forces

in 1945. Business was at a standstill. Her economy lay

prostrate. Measures, radical measures, were then devised to

tide her over until some semblance of normalcy could be

restored and an improvement in her economy noted. No

wonder then that the suspension of enforcement of payment

of the obligations then existing was declared first by

executive order and then by legislation. The Supreme Court

was right therefore in rejecting the contention that on its

face, the Moratorium Law was unconstitutional, amounting

as it did to the impairment of the obligation of contracts.

Considering the circumstances confronting the legitimate

government upon its return to the Philippines, some such

remedial device was needed and badly so. An unyielding

insistence then on the rights to property on the part of the

creditors was not likely to meet with judicial sympathy.

Time passed however, and conditions did change.

When the legislation was before this Court in 1953, the

question before it was its satisfying the rational basis test,

not as of the time of its enactment but as of such date.

Clearly, if then it were found unreasonable, the right to non-

impairment of contractual obligations must prevail over the

assertion of community power to remedy an existing evil.

The Supreme Court was convinced that such indeed was the

case. As stated in the opinion of Justice Bautista Angelo:

"But we should not lose sight of the fact that these

obligations had been pending since 1945 as a result of the

issuance of Executive Orders Nos. 25 and 32 and at present

their enforcement is still inhibited because of the enactment

of Republic Act No. 342 and would continue to be

unenforceable during the eight-year period granted to

prewar debtors to afford them an opportunity to rehabilitate

themselves, which in plain language means that the

creditors would have to observe a vigil of at least twelve

(12) years before they could affect a liquidation of their

investment dating as far back as 1941. This period seems to

us unreasonable, if not oppressive. While the purpose of

Congress is plausible, and should be commended, the relief

accorded works injustice to creditors who are practically left

at the mercy of the debtors. Their hope to effect collection

becomes extremely remote, more so if the credits are

unsecured. And the injustice is more patent when, under the

law the debtor is not even required to pay interest during the

operation of the relief, unlike similar statutes in the United

States. 10

The conclusion to which the foregoing

considerations inevitably led was that as of the time of

adjudication, it was apparent that Republic Act No. 342

could not survive the test of validity. Executive Order No.

32 should likewise be nullified. That before the decision

they were not constitutionally infirm was admitted

expressly. There is all the more reason then to yield assent

to the now prevailing principle that the existence of a statute

or executive order prior to its being adjudged void is an

operative fact to which legal consequences are attached.

3. Precisely though because of the judicial recognition that

moratorium was a valid governmental response to the plight

of the debtors who were war sufferers, this Court has made

clear its view in a series of cases impressive in their number

and unanimity that during the eight-year period that

Executive Order No. 32 and Republic Act No. 342 were in

force, prescription did not run. So it has been held from Day

v. Court of First

Instance, 11

decided in 1954, to Republic v. Hernaez, 12

handed down only last year. What is deplorable is that as of

the time of the lower court decision on January 27, 1960, at

least eight decisions had left no doubt as to the prescriptive

period being tolled in the meanwhile prior to such

adjudication of invalidity. 13

Speaking of the opposite view

entertained by the lower court, the present Chief Justice, in

Liboro v. Finance and Mining Investments Corp. 14

has

categorized it as having been "explicitly and consistently

rejected by this Court." 15

The error of the lower court in sustaining plaintiff's suit is

thus manifest. From July 19, 1944, when her loan matured,

to July 13, 1959, when extra-judicial foreclosure

proceedings were started by appellant Bank, the time

consumed is six days short of fifteen years. The prescriptive

period was tolled however, from March 10, 1945, the

effectivity of Executive Order No. 32, to May 18, 1953,

when the decision of Rutter v. Esteban was promulgated,

covering eight years, two months and eight days. Obviously

then, when resort was had extra-judicially to the foreclosure

of the mortgage obligation, there was time to spare before

prescription could be availed of as a defense.

WHEREFORE, the decision of January 27, 1960 is reversed

and the suit of plaintiff filed August 10, 1959 dismissed. No

costs.

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal,

Zaldivar, Castro, Teehankee, Barredo, Villamor, and

Makasiar, JJ., concur.

CASE 9: Republic of the Philippines

SUPREME COURT Manila

EN BANC

G.R. No. 112497 August 4, 1994

HON. FRANKLIN M. DRILON, in his capacity as

SECRETARY OF JUSTICE, petitioner,

vs.

MAYOR ALFREDO S. LIM, VICE-MAYOR JOSE L.

ATIENZA, CITY TREASURER ANTHONY

ACEVEDO, SANGGUNIANG PANGLUNSOD AND

THE CITY OF MANILA, respondents.

The City Legal Officer for petitioner.

Angara, Abello, Concepcion, Regala & Cruz for Caltex

(Phils.).

Joseph Lopez for Sangguniang Panglunsod of Manila.

L.A. Maglaya for Petron Corporation.

CRUZ, J.:

The principal issue in this case is the constitutionality of

Section 187 of the Local Government Code reading as

follows:

Procedure For Approval And Effectivity Of

Tax Ordinances And Revenue Measures;

Mandatory Public Hearings. — The

procedure for approval of local tax

ordinances and revenue measures shall be

in accordance with the provisions of this

Code: Provided, That public hearings shall

be conducted for the purpose prior to the

enactment thereof; Provided, further, That

any question on the constitutionality or

legality of tax ordinances or revenue

measures may be raised on appeal within

thirty (30) days from the effectivity thereof

to the Secretary of Justice who shall render

a decision within sixty (60) days from the

date of receipt of the appeal: Provided,

however, That such appeal shall not have

the effect of suspending the effectivity of

the ordinance and the accrual and payment

of the tax, fee, or charge levied therein:

Provided, finally, That within thirty (30)

days after receipt of the decision or the

lapse of the sixty-day period without the

Secretary of Justice acting upon the appeal,

the aggrieved party may file appropriate

proceedings with a court of competent

jurisdiction.

Pursuant thereto, the Secretary of Justice had, on appeal to

him of four oil companies and a taxpayer, declared

Ordinance No. 7794, otherwise known as the Manila

Revenue Code, null and void for non-compliance with the

prescribed procedure in the enactment of tax ordinances and

for containing certain provisions contrary to law and public

policy. 1

In a petition for certiorari filed by the City of Manila, the

Regional Trial Court of Manila revoked the Secretary's

resolution and sustained the ordinance, holding inter alia

that the procedural requirements had been observed. More

importantly, it declared Section 187 of the Local

Government Code as unconstitutional because of its vesture

in the Secretary of Justice of the power of control over local

governments in violation of the policy of local autonomy

mandated in the Constitution and of the specific provision

therein conferring on the President of the Philippines only

the power of supervision over local governments. 2

The present petition would have us reverse that decision.

The Secretary argues that the annulled Section 187 is

constitutional and that the procedural requirements for the

enactment of tax ordinances as specified in the Local

Government Code had indeed not been observed.

Parenthetically, this petition was originally dismissed by the

Court for non-compliance with Circular 1-88, the Solicitor

General having failed to submit a certified true copy of the

challenged decision. 3

However, on motion for

reconsideration with the required certified true copy of the

decision attached, the petition was reinstated in view of the

importance of the issues raised therein.

We stress at the outset that the lower court had jurisdiction

to consider the constitutionality of Section 187, this

authority being embraced in the general definition of the

judicial power to determine what are the valid and binding

laws by the criterion of their conformity to the fundamental

law. Specifically, BP 129 vests in the regional trial courts

jurisdiction over all civil cases in which the subject of the

litigation is incapable of pecuniary estimation, 4

even as the

accused in a criminal action has the right to question in his

defense the constitutionality of a law he is charged with

violating and of the proceedings taken against him,

particularly as they contravene the Bill of Rights. Moreover,

Article X, Section 5(2), of the Constitution vests in the

Supreme Court appellate jurisdiction over final judgments

and orders of lower courts in all cases in which the

constitutionality or validity of any treaty, international or

executive agreement, law, presidential decree,

proclamation, order, instruction, ordinance, or regulation is

in question.

In the exercise of this jurisdiction, lower courts are advised

to act with the utmost circumspection, bearing in mind the

consequences of a declaration of unconstitutionality upon

the stability of laws, no less than on the doctrine of

separation of powers. As the questioned act is usually the

handiwork of the legislative or the executive departments,

or both, it will be prudent for such courts, if only out of a

becoming modesty, to defer to the higher judgment of this

Court in the consideration of its validity, which is better

determined after a thorough deliberation by a collegiate

body and with the concurrence of the majority of those who

participated in its discussion. 5

It is also emphasized that every court, including this Court,

is charged with the duty of a purposeful hesitation before

declaring a law unconstitutional, on the theory that the

measure was first carefully studied by the executive and the

legislative departments and determined by them to be in

accordance with the fundamental law before it was finally

approved. To doubt is to sustain. The presumption of

constitutionality can be overcome only by the clearest

showing that there was indeed an infraction of the

Constitution, and only when such a conclusion is reached by

the required majority may the Court pronounce, in the

discharge of the duty it cannot escape, that the challenged

act must be struck down.

In the case before us, Judge Rodolfo C. Palattao declared

Section 187 of the Local Government Code unconstitutional

insofar as it empowered the Secretary of Justice to review

tax ordinances and, inferentially, to annul them. He cited the

familiar distinction between control and supervision, the

first being "the power of an officer to alter or modify or set

aside what a subordinate officer had done in the

performance of his duties and to substitute the judgment of

the former for the latter," while the second is "the power of

a superior officer to see to it that lower officers perform

their functions in accordance with law." 6

His conclusion

was that the challenged section gave to the Secretary the

power of control and not of supervision only as vested by

the Constitution in the President of the Philippines. This

was, in his view, a violation not only of Article X,

specifically Section 4 thereof, 7 and of Section 5 on the

taxing powers of local governments, 8

and the policy of

local autonomy in general.

We do not share that view. The lower court was rather hasty

in invalidating the provision.

Section 187 authorizes the Secretary of Justice to review

only the constitutionality or legality of the tax ordinance

and, if warranted, to revoke it on either or both of these

grounds. When he alters or modifies or sets aside a tax

ordinance, he is not also permitted to substitute his own

judgment for the judgment of the local government that

enacted the measure. Secretary Drilon did set aside the

Manila Revenue Code, but he did not replace it with his

own version of what the Code should be. He did not

pronounce the ordinance unwise or unreasonable as a basis

for its annulment. He did not say that in his judgment it was

a bad law. What he found only was that it was illegal. All he

did in reviewing the said measure was determine if the

petitioners were performing their functions in accordance

with law, that is, with the prescribed procedure for the

enactment of tax ordinances and the grant of powers to the

city government under the Local Government Code. As we

see it, that was an act not of control but of mere supervision.

An officer in control lays down the rules in the doing of an

act. If they are not followed, he may, in his discretion, order

the act undone or re-done by his subordinate or he may even

decide to do it himself. Supervision does not cover such

authority. The supervisor or superintendent merely sees to it

that the rules are followed, but he himself does not lay down

such rules, nor does he have the discretion to modify or

replace them. If the rules are not observed, he may order the

work done or re-done but only to conform to the prescribed

rules. He may not prescribe his own manner for the doing of

the act. He has no judgment on this matter except to see to it

that the rules are followed. In the opinion of the Court,

Secretary Drilon did precisely this, and no more nor less

than this, and so performed an act not of control but of mere

supervision.

The case of Taule v. Santos 9 cited in the decision has no

application here because the jurisdiction claimed by the

Secretary of Local Governments over election contests in

the Katipunan ng Mga Barangay was held to belong to the

Commission on Elections by constitutional provision. The

conflict was over jurisdiction, not supervision or control.

Significantly, a rule similar to Section 187 appeared in the

Local Autonomy Act, which provided in its Section 2 as

follows:

A tax ordinance shall go into effect on the

fifteenth day after its passage, unless the

ordinance shall provide otherwise:

Provided, however, That the Secretary of

Finance shall have authority to suspend the

effectivity of any ordinance within one

hundred and twenty days after receipt by

him of a copy thereof, if, in his opinion, the

tax or fee therein levied or imposed is

unjust, excessive, oppressive, or

confiscatory, or when it is contrary to

declared national economy policy, and

when the said Secretary exercises this

authority the effectivity of such ordinance

shall be suspended, either in part or as a

whole, for a period of thirty days within

which period the local legislative body may

either modify the tax ordinance to meet the

objections thereto, or file an appeal with a

court of competent jurisdiction; otherwise,

the tax ordinance or the part or parts thereof

declared suspended, shall be considered as

revoked. Thereafter, the local legislative

body may not reimpose the same tax or fee

until such time as the grounds for the

suspension thereof shall have ceased to

exist.

That section allowed the Secretary of Finance to suspend

the effectivity of a tax ordinance if, in his opinion, the tax or

fee levied was unjust, excessive, oppressive or confiscatory.

Determination of these flaws would involve the exercise of

judgment or discretion and not merely an examination of

whether or not the requirements or limitations of the law

had been observed; hence, it would smack of control rather

than mere supervision. That power was never questioned

before this Court but, at any rate, the Secretary of Justice is

not given the same latitude under Section 187. All he is

permitted to do is ascertain the constitutionality or legality

of the tax measure, without the right to declare that, in his

opinion, it is unjust, excessive, oppressive or confiscatory.

He has no discretion on this matter. In fact, Secretary Drilon

set aside the Manila Revenue Code only on two grounds, to

with, the inclusion therein of certain ultra vires provisions

and non-compliance with the prescribed procedure in its

enactment. These grounds affected the legality, not the

wisdom or reasonableness, of the tax measure.

The issue of non-compliance with the prescribed procedure

in the enactment of the Manila Revenue Code is another

matter.

In his resolution, Secretary Drilon declared that there were

no written notices of public hearings on the proposed

Manila Revenue Code that were sent to interested parties as

required by Art. 276(b) of the Implementing Rules of the

Local Government Code nor were copies of the proposed

ordinance published in three successive issues of a

newspaper of general circulation pursuant to Art. 276(a). No

minutes were submitted to show that the obligatory public

hearings had been held. Neither were copies of the measure

as approved posted in prominent places in the city in

accordance with Sec. 511(a) of the Local Government

Code. Finally, the Manila Revenue Code was not translated

into Pilipino or Tagalog and disseminated among the people

for their information and guidance, conformably to Sec.

59(b) of the Code.

Judge Palattao found otherwise. He declared that all the

procedural requirements had been observed in the

enactment of the Manila Revenue Code and that the City of

Manila had not been able to prove such compliance before

the Secretary only because he had given it only five days

within which to gather and present to him all the evidence

(consisting of 25 exhibits) later submitted to the trial court.

To get to the bottom of this question, the Court acceded to

the motion of the respondents and called for the elevation to

it of the said exhibits. We have carefully examined every

one of these exhibits and agree with the trial court that the

procedural requirements have indeed been observed.

Notices of the public hearings were sent to interested parties

as evidenced by Exhibits G-1 to 17. The minutes of the

hearings are found in Exhibits M, M-1, M-2, and M-3.

Exhibits B and C show that the proposed ordinances were

published in the Balita and the Manila Standard on April 21

and 25, 1993, respectively, and the approved ordinance was

published in the July 3, 4, 5, 1993 issues of the Manila

Standard and in the July 6, 1993 issue of Balita, as shown

by Exhibits Q, Q-1, Q-2, and Q-3.

The only exceptions are the posting of the ordinance as

approved but this omission does not affect its validity,

considering that its publication in three successive issues of

a newspaper of general circulation will satisfy due process.

It has also not been shown that the text of the ordinance has

been translated and disseminated, but this requirement

applies to the approval of local development plans and

public investment programs of the local government unit

and not to tax ordinances.

We make no ruling on the substantive provisions of the

Manila Revenue Code as their validity has not been raised

in issue in the present petition.

WHEREFORE, the judgment is hereby rendered

REVERSING the challenged decision of the Regional Trial

Court insofar as it declared Section 187 of the Local

Government Code unconstitutional but AFFIRMING its

finding that the procedural requirements in the enactment of

the Manila Revenue Code have been observed. No

pronouncement as to costs.

SO ORDERED.

Narvasa, C.J., Feliciano, Padilla, Bidin, Regalado,

Davide, Jr., Romero, Bellosillo, Melo, Quiason,

Puno, Vitug, Kapunan and Mendoza, JJ., concur.