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G.R. No.

129049 August 6, 1999 On May 28, 1996, petitioner filed with the National Labor Relations Commission, Sub-
Regional Arbitration Branch X, Butuan City, a complaint for illegal dismissal, damages and
BALTAZAR G. CAMPOREDONDO, petitioner, underpayment of wages against the Philippine National Red Cross and its key officials. 6
vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC), Fifth Division, Cagayan de On June 14, 1996, respondent Philippine National Red Cross filed with the Surigao del Norte
Oro City, provincial office, Department of Labor and Employment, a motion to dismiss the complaint
THE PHILIPPINE NATIONAL RED CROSS (PNRC), represented by GOVERNOR for lack of jurisdiction over the subject matter of the case because the PNRC is a
ROMEO C. ESPINO and DR. CELSO SAMSON, respondent. government corporation whose employees are members of the Government Service
Insurance System (GSIS), and embraced within the Civil Service Law and regulations. 7
At issue in this case is whether the Philippine National Red Cross (PNRC for short) is a
government owned and controlled corporation or it has been "impliedly converted to a On July 25, 1996, petitioner filed an opposition to motion to dismiss arguing that there was
private organization" subject to the jurisdiction of labor tribunals in a complaint filed by between the PNRC and its duly appointed paid staff, an employer-employee relationship,
petitioner, a former PNRC chapter administrator in Surigao del Norte, for illegal dismissal governed by the Labor Code of the Philippines.8
and damages, as he was forced to "retire" after he was required to restitute shortages and
unremitted collections in the total sum of P135,927.78. On October 11, 1996, the Labor Arbiter issued an order dismissing the complaint for lack of
jurisdiction, finding that the Philippine National Red Cross is a government corporation with
Having obviously no merit, we dismiss the petition.1wphi1.nt an original charter, having been created by Republic Act No. 95. 9

All suitors must come to court with clean hands. This is especially true of paid staff of the On November 12, 1996, the Labor Arbiter denied petitioner's motion for reconsideration
Philippine National Red Cross. Like its unpaid volunteers, they must be men of filed on October 14, 1996.10
unquestioned honesty and integrity serving in selfless manner to aid the sick and wounded
of armed forces in time of war, acting in voluntary relief in time of peace and war, On November 20, 1996, petitioner filed a notice of appeal and appeal memorandum with
maintaining a system of national and international relief in meeting emergency relief needs the National Labor Relations Commission.11
caused by typhoons, floods, fires, earthquakes, and other natural disasters, and promoting
such service in time of peace and war to improve the health, safety and welfare of the
On March 21, 1997, the National Labor Relations Commission, Fifth Division, issued a
Filipino people.1 Paid staff of the PNRC are government employees who are members of the
resolution dismissing the appeal and confirming the decision of the Labor Arbiter that
Government Service Insurance System and covered by the Civil Service Law. Unlike
dismissed petitioner's complaint for lack of jurisdiction. 12
government service in other agencies, Red Cross service demands of its paid staff
uberrima fides, the utmost good faith and dedication to work.
Hence, this recourse.
Since 1980, petitioner was employed with the PNRC, and until his early "retirement" on
December 15, 1995, he was administrator of the Surigao del Norte Chapter, Philippine On July 7, 1997, we resolved to require respondents to comment on the petition within ten
National Red Cross.2 (10) days from notice.13

In July, 1995, a field auditor of the PNRC conducted an audit of the books of account of the On August 7, 1997, respondent Philippine National Red Cross filed its comment. 14 On
Surigao del Norte Chapter headed by petitioner and found him short in the total sum of November 7, 1997, the Solicitor General filed its comments. 15
P109,000.00.3
Resolving the issue set out in the opening paragraph of this opinion, we rule that the
On November 21, 1995, Dr. Celso Samson, Secretary General of the PNRC wrote petitioner Philippine National Red Cross (PNRC) is a government owned and controlled corporation,
requiring him to restitute within seventy two (72) hours from notice, the total sum of with an original charter under Republic Act No. 95, as amended. The test to determine
P135,927.78 representing cash shortage, technical shortage and unremitted collections. 4 whether a corporation is government owned or controlled, or private in nature is simple. Is
it created by its own charter for the exercise of a public function, or by incorporation under
the general corporation law? Those with special charters are government corporations
On December 15, 1995, petitioner applied for early retirement from the service, and later
subject to its provisions, and its employees are under the jurisdiction of the Civil Service
wrote Dr. Samson requesting for a re-audit by an independent auditor of his accounts.
Commission, and are compulsory members of the Government Service Insurance System.
However, Dr. Samson denied the request.5
The PNRC was not "impliedly converted to a private corporation" simply because its charter
was amended to vest in it the authority to secure loans, be exempted from payment of all
duties, taxes, fees and other charges of all kinds on all importations and purchases for its
exclusive use, on donations for its disaster relief work and other services and in its benefits
and fund raising drives, and be alloted one lottery draw a year by the Philippine Charity
Sweepstakes Office for the support of its disaster relief operation in addition to its existing
lottery draws for blood program.

Having served in the Philippine National Red Cross for a number of years since his initial
employment, he must know that it is a government corporation with its own charter and
that he was covered by compulsory membership in the Government Service Insurance
System, which is why he could apply, as he did, for "early" retirement from the service
under Presidential Decree No. 1146 or Republic Act No. 1616. 16

WHEREFORE, the Court hereby DISMISSES the petition, and AFFIRMS the ruling of the
National Labor Relations Commission.1wphi1.nt

Double costs taxed against petitioner.

SO ORDERED.
referred to are indicated on the plan; and marked on the ground; bearings true, date of
survey, February 421, 1957.

Lot No. 4 has the following technical description:

A parcel of land (Lot 4, Plan PSU-159621, L. R. Case No. N-361 L. R. C. Record No. N-
SHIPSIDE INCORPORATED, petitioner, vs. THE HON. COURT OF APPEALS [Special 14012), situated in the Barrio of Poro, Municipality of San Fernando, La Union. Bounded on
Former Twelfth Division], HON. REGIONAL TRIAL COURT, BRANCH 26 (San the SE by the property of the Benguet Consolidated Mining Company; on the S. by property
Fernando City, La Union) & The REPUBLIC OF THE PHILIPPINES, respondents. of Pelagia Carino; and on the NW by the property of Rafael Galvez (US Military Reservation,
Camp Wallace). Beginning at a point marked 1 on plan, being S. deg. 24W. 2591. 69 m.
from B. L. L. M. 1, San Fernando, thence S. 12 deg. 45W., 73. 03 m. to point 2; N. 79 deg.
Before the Court is a petition for certiorari filed by Shipside Incorporated under Rule 65 of
59W., 13.92 m. to point 3; N. 23 deg. 26E. , 75.00 m. to the point of beginning; containing
the 1997 Rules on Civil Procedure against the resolutions of the Court of Appeals
an area of FIVE HUNDED AND EIGHT (508) SQUARE METERS, more or less. All points
promulgated on November 4, 1999 and May 23, 2000, which respectively, dismissed a
referred to are indicated in the plan and marked on the ground; bearings true, date of
petition for certiorari and prohibition and thereafter denied a motion for reconsideration.
survey, February 4-21, 1957.

The antecedent facts are undisputed:


On August 16, 1960, Mamaril, et al. sold Lots No. 1 and 4 to Lepanto Consolidated Mining
Company. The deed of sale covering the aforesaid property was inscribed as Entry No.
On October 29, 1958, Original Certificate of Title No. 0-381 was issued in favor of Rafael 9173 on TCT No. T-4304. Subsequently, Transfer Certificate No. T-4314 was issued in the
Galvez, over four parcels of land Lot 1 with 6,571 square meters; Lot 2, with 16,777 square name of Lepanto Consolidated Mining Company as owner of Lots No. 1 and 4.
meters; Lot 3 with 1,583 square meters; and Lot 4, with 508 square meters.
On February 1, 1963, unknown to Lepanto Consolidated Mining Company, the Court of First
On April 11, 1960, Lots No. 1 and 4 were conveyed by Rafael Galvez in favor of Filipina Instance of La Union, Second Judicial District, issued an Order in Land Registration Case No.
Mamaril, Cleopatra Llana, Regina Bustos, and Erlinda Balatbat in a deed of sale which was N-361 (LRC Record No. N-14012) entitled Rafael Galvez, Applicant, Eliza Bustos, et al.,
inscribed as Entry No. 9115 OCT No. 0-381 on August 10, 1960. Consequently, Transfer Parties-In-Interest; Republic of the Philippines, Movant declaring OCT No. 0-381 of the
Certificate No. T-4304 was issued in favor of the buyers covering Lots No. 1 and 4. Registry of Deeds for the Province of La Union issued in the name of Rafael Galvez, null and
void, and ordered the cancellation thereof.
Lot No. 1 is described as:
The Order pertinently provided:
A parcel of land (Lot 1, Plan PSU-159621, L. R. Case No. N-361; L. R. C. Record No. N-14012,
situated in the Barrio of Poro, Municipality of San Fernando, Province of La Union, bounded Accordingly, with the foregoing, and without prejudice on the rights of incidental parties
on the NE, by the Foreshore; on the SE, by Public Land and property of the Benguet concerned herein to institute their respective appropriate actions compatible with
Consolidated Mining Company; on the SW, by properties of Rafael Galvez (US Military whatever cause they may have, it is hereby declared and this court so holds that both
Reservation Camp Wallace) and Policarpio Munar; and on the NW, by an old Barrio Road. proceedings in Land Registration Case No. N-361 and Original Certificate No. 0-381 of the
Beginning at a point marked 1 on plan, being S. 74 deg. 11W. , 2670. 36 from B. L. L. M. 1, Registry of Deeds for the province of La Union issued in virtue thereof and registered in the
San Fernando, thence name of Rafael Galvez, are null and void; the Register of Deeds for the Province of La Union
is hereby ordered to cancel the said original certificate and / or such other certificates of
S. 66 deg. 19E., 134.95 m. to point 2; S. 14 deg. 57W., 11.79 m. to point 3; title issued subsequent thereto having reference to the same parcels of land; without
pronouncement as to costs.
S. 12 deg. 45W., 27.00 m. to point 4; S. 12 deg. 45W, 6.90 m. to point 5;
On October 28, 1963, Lepanto Consolidated Mining Company sold to herein petitioner Lots
N. 69 deg., 32W., 106.00 m. to point 6; N. 52 deg., 21W., 36. 85 m. to point 7; No. 1 and 4, with the deed being entered in TCT NO. 4314 as entry No. 12381. Transfer
Certificate of Title No. T-5710 was thus issued in favor of the petitioner which starting since
then exercised proprietary rights over Lots No. 1 and 4.
N. 21 deg. 31E., 42. 01 m. to the point of beginning; containing an area of SIX THOUSAND
FIVE HUNDRED AND SEVENTY-ONE (6,571) SQUARE METERS, more or less. All points
In the meantime, Rafael Galvez filed his motion for reconsideration against the order and administration of the Bases Conversion Development Authority (BCDA) under Republic
issued by the trial court declaring OCT No. 0-381 null and void. The motion was denied on Act No. 7227; (3) plaintiffs cause of action is barred by prescription; (4) twenty-five years
January 25, 1965. On appeal, the Court of Appeals ruled in favor of the Republic of the having lapsed since the issuance of the writ of execution, no action for revival of judgment
Philippines in a Resolution promulgated on August 14, 1973 in CA-G. R. No. 36061-R. may be instituted because under Paragraph 3 of Article 1144 of the Civil Code, such action
may be brought only within ten (10) years from the time the judgment had been rendered.
Thereafter, the Court of Appeals issued an Entry of Judgment, certifying that its decision
dated August 14, 1973 became final and executory on October 23, 1973. An opposition to the motion to dismiss was filed by the Solicitor General on August 23,
1999, alleging among others, that: (1) the real party-in-interest is the Republic of the
On April 22, 1974, the trial court in L. R. C. Case No. N-361 issued a writ of execution of the Philippines;and (2) prescription does not run against the State.
judgment which was served on the Register of Deeds, San Fernando, La Union on April 29,
1974. On August 31, 1999, the trial court denied petitioners motion to dismiss and on October
14, 1999, its motion for reconsideration was likewise turned down.
Twenty four long years thereafter, on January 14, 1999, the Office of the Solicitor General
received a letter dated January 11, 1999 from Mr. Victor G. Floresca, Vice-President, John On October 21, 1999, petitioner instituted a petition for certiorari and prohibition with the
Hay Poro Point Development Corporation, stating that the aforementioned orders and Court of Appeals, docketed therein as CA-G.R. SP No. 55535, on the ground that the orders
decision of the trial court in L. R. C. No. N-361 have not been executed by the Register of of the trial court denying its motion to dismiss and its subsequent motion for
Deeds, San Fernando, La Union despite receipt of the writ of execution. reconsideration were issued in excess of jurisdiction.

On April 21, 1999, the Office of the Solicitor General filed a complaint for revival of On November 4, 1999, the Court of Appeals dismissed the petition in CA-G.R. SP No. 55535
judgment and cancellation of titles before the Regional Trial Court of the First Judicial on the ground that the verification and certification in the petition, under the signature of
Region (Branch 26, San Fernando, La Union) docketed therein as Civil Case No. 6346 Lorenzo Balbin, Jr., was made without authority, there being no proof therein that Balbin
entitled, Republic of the Philippines, Plaintiff, versus Heirs of Rafael Galvez, represented by was authorized to institute the petition for and in behalf and of petitioner.
Teresita Tan, Reynaldo Mamaril, Elisa Bustos, Erlinda Balatbat, Regina Bustos, Shipside
Incorporated and the Register of Deeds of La Union, Defendants. On May 23, 2000, the Court of Appeals denied petitioners motion for reconsideration on
the grounds that: (1) a complaint filed on behalf of a corporation can be made only if
The evidence shows that the impleaded defendants (except the Register of Deeds of the authorized by its Board of Directors, and in the absence thereof, the petition cannot
province of La Union) are the successors-in-interest of Rafael Galvez (not Reynaldo Galvez prosper and be granted due course;and (2) petitioner was unable to show that it had
as alleged by the Solicitor General) over the property covered by OCT No. 0-381, namely: substantially complied with the rule requiring proof of authority to institute an action or
(a) Shipside Inc. which is presently the registered owner in fee simple of Lots No. 1 and 4 proceeding.
covered by TCT No. T-5710, with a total area of 7,079 square meters; (b) Elisa Bustos,
Jesusito Galvez, and Teresita Tan who are the registered owners of Lot No. 2 of OCT No. 0- Hence, the instant petition.
381;and (c) Elisa Bustos, Filipina Mamaril, Regina Bustos and Erlinda Balatbat who are the
registered owners of Lot No. 3 of OCT No. 0-381, now covered by TCT No. T-4916, with an
In support of its petition, Shipside, Inc. asseverates that:
area of 1,583 square meters.

1. The Honorable Court of Appeals gravely abused its discretion in dismissing the petition
In its complaint in Civil Case No. 6346, the Solicitor General argued that since the trial
when it made a conclusive legal presumption that Mr. Balbin had no authority to sign the
court in LRC Case No. 361 had ruled and declared OCT No. 0-381 to be null and void, which
petition despite the clarity of laws, jurisprudence and Secretarys certificate to the contrary;
ruling was subsequently affirmed by the Court of Appeals, the defendants-successors-in-
interest of Rafael Galvez have no valid title over the property covered by OCT No. 0-381,
and the subsequent Torrens titles issued in their names should be consequently cancelled. 2. The Honorable Court of Appeals abused its discretion when it dismissed the petition, in
effect affirming the grave abuse of discretion committed by the lower court when it refused
to dismiss the 1999 Complaint for Revival of a 1973 judgment, in violation of clear laws
On July 22, 1999, petitioner Shipside, Inc. filed its Motion to Dismiss, based on the following
and jurisprudence.
grounds: (1) the complaint stated no cause of action because only final and executory
judgments may be subject of an action for revival of judgment; (2) the plaintiff is not the
real party-in-interest because the real property covered by the Torrens titles sought to be Petitioner likewise adopted the arguments it raised in the petition and comment/reply it
cancelled, allegedly part of Camp Wallace (Wallace Air Station), were under the ownership filed with the Court of Appeals, attached to its petition as Exhibit L and N, respectively.
In his Comment, the Solicitor General moved for the dismissal of the instant petition based The Court has consistently held that the requirement regarding verification of a pleading is
on the following considerations: (1) Lorenzo Balbin, who signed for and in behalf of formal, not jurisdictional (Uy v. LandBank, G.R. No. 136100, July 24, 2000). Such
petitioner in the verification and certification of non-forum shopping portion of the petition, requirement is simply a condition affecting the form of the pleading, non-compliance with
failed to show proof of his authorization to institute the petition for certiorari and which does not necessarily render the pleading fatally defective. Verification is simply
prohibition with the Court of Appeals, thus the latter court acted correctly in dismissing the intended to secure an assurance that the allegations in the pleading are true and correct
same; (2) the real party-in-interest in the case at bar being the Republic of the Philippines, and not the product of the imagination or a matter of speculation, and that the pleading is
its claims are imprescriptible. filed in good faith. The court may order the correction of the pleading if verification is
lacking or act on the pleading although it is not verified, if the attending circumstances are
In order to preserve the rights of herein parties, the Court issued a temporary restraining such that strict compliance with the rules may be dispensed with in order that the ends of
order on June 26, 2000 enjoining the trial court from conducting further proceedings in Civil justice may thereby be served.
Case No. 6346.
On the other hand, the lack of certification against forum shopping is generally not curable
The issues posited in this case are: (1) whether or not an authorization from petitioners by the submission thereof after the filing of the petition. Section 5, Rule 45 of the 1997
Board of Directors is still required in order for its resident manager to institute or Rules of Civil Procedure provides that the failure of the petitioner to submit the required
commence a legal action for and in behalf of the corporation; and (2) whether or not the documents that should accompany the petition, including the certification against forum
Republic of the Philippines can maintain the action for revival of judgment herein. shopping, shall be sufficient ground for the dismissal thereof. The same rule applies to
certifications against forum shopping signed by a person on behalf of a corporation which
are unaccompanied by proof that said signatory is authorized to file a petition on behalf of
We find for petitioner.
the corporation.

Anent the first issue:


In certain exceptional circumstances, however, the Court has allowed the belated filing of
the certification. In Loyola v. Court of Appeals, et. al. (245 SCRA 477 [1995]), the Court
The Court of Appeals dismissed the petition for certiorari on the ground that Lorenzo considered the filing of the certification one day after the filing of an election protest as
Balbin, the resident manager for petitioner, who was the signatory in the verification and substantial compliance with the requirement. In Roadway Express, Inc. v. Court of Appeals,
certification on non-forum shopping, failed to show proof that he was authorized by et. al. (264 SCRA 696 [1996]), the Court allowed the filing of the certification 14 days
petitioners board of directors to file such a petition. before the dismissal of the petition. In Uy v. LandBank, supra, the Court had dismissed Uys
petition for lack of verification and certification against non-forum shopping. However, it
A corporation, such as petitioner, has no power except those expressly conferred on it by subsequently reinstated the petition after Uy submitted a motion to admit certification and
the Corporation Code and those that are implied or incidental to its existence. In turn, a non-forum shopping certification. In all these cases, there were special circumstances or
corporation exercises said powers through its board of directors and / or its duly authorized compelling reasons that justified the relaxation of the rule requiring verification and
officers and agents. Thus, it has been observed that the power of a corporation to sue and certification on non-forum shopping.
be sued in any court is lodged with the board of directors that exercises its corporate
powers (Premium Marble Resources, Inc. v. CA, 264 SCRA 11 [1996]). In turn, physical acts In the instant case, the merits of petitioners case should be considered special
of the corporation, like the signing of documents, can be performed only by natural circumstances or compelling reasons that justify tempering the requirement in regard to
persons duly authorized for the purpose by corporate by-laws or by a specific act of the the certificate of non-forum shopping. Moreover, in Loyola, Roadway, and Uy, the Court
board of directors. excused non-compliance with the requirement as to the certificate of non-forum shopping.
With more reason should we allow the instant petition since petitioner herein did submit a
It is undisputed that on October 21, 1999, the time petitioners Resident Manager Balbin certification on non-forum shopping, failing only to show proof that the signatory was
filed the petition, there was no proof attached thereto that Balbin was authorized to sign authorized to do so. That petitioner subsequently submitted a secretarys certificate
the verification and non-forum shopping certification therein, as a consequence of which attesting that Balbin was authorized to file an action on behalf of petitioner likewise
the petition was dismissed by the Court of Appeals. However, subsequent to such mitigates this oversight.
dismissal, petitioner filed a motion for reconsideration, attaching to said motion a
certificate issued by its board secretary stating that on October 11, 1999, or ten days prior
to the filing of the petition, Balbin had been authorized by petitioners board of directors to
file said petition.
It must also be kept in mind that while the requirement of the certificate of non-forum (a) To own, hold and/or administer the military reservations of John Hay Air Station,
shopping is mandatory, nonetheless the requirements must not be interpreted too literally Wallace Air Station, ODonnell Transmitter Station, San Miguel Naval Communications
and thus defeat the objective of preventing the undesirable practice of forum-shopping Station, Mt. Sta. Rita Station (Hermosa, Bataan) and those portions of Metro Manila military
(Bernardo v. NLRC, 255 SCRA 108 [1996]). Lastly, technical rules of procedure should be camps which may be transferred to it by the President;
used to promote, not frustrate justice. While the swift unclogging of court dockets is a
laudable objective, the granting of substantial justice is an even more urgent ideal. Section 2 of Proclamation No. 216, issued on July 27, 1993, also provides:

Now to the second issue: Section 2. Transfer of Wallace Air Station Areas to the Bases Conversion and Development
Authority. All areas covered by the Wallace Air Station as embraced and defined by the
The action instituted by the Solicitor General in the trial court is one for revival of judgment 1947 Military Bases Agreement between the Philippines and the United States of America,
which is governed by Article 1144(3) of the Civil Code and Section 6, Rule 39 of the 1997 as amended, excluding those covered by Presidential Proclamations and some 25-hectare
Rules on Civil Procedure. Article 1144(3) provides that an action upon a judgment must be area for the radar and communication station of the Philippine Air Force, are hereby
brought within 10 years from the time the right of action accrues." On the other hand, transferred to the Bases Conversion Development Authority
Section 6, Rule 39 provides that a final and executory judgment or order may be executed
on motion within five (5) years from the date of its entry, but that after the lapse of such With the transfer of Camp Wallace to the BCDA, the government no longer has a right or
time, and before it is barred by the statute of limitations, a judgment may be enforced by interest to protect. Consequently, the Republic is not a real party in interest and it may not
action. Taking these two provisions into consideration, it is plain that an action for revival of institute the instant action. Nor may it raise the defense of imprescriptibility, the same
judgment must be brought within ten years from the time said judgment becomes final. being applicable only in cases where the government is a party in interest. Under Section 2
of Rule 3 of the 1997 Rules of Civil Procedure, every action must be prosecuted or
From the records of this case, it is clear that the judgment sought to be revived became defended in the name of the real party in interest. To qualify a person to be a real party in
final on October 23, 1973. On the other hand, the action for revival of judgment was interest in whose name an action must be prosecuted, he must appear to be the present
instituted only in 1999, or more than twenty-five (25) years after the judgment had real owner of the right sought to enforced (Pioneer Insurance v. CA, 175 SCRA 668 [1989]).
become final. Hence, the action is barred by extinctive prescription considering that such A real party in interest is the party who stands to be benefited or injured by the judgment
an action can be instituted only within ten (10) years from the time the cause of action in the suit, or the party entitled to the avails of the suit. And by real interest is meant a
accrues. present substantial interest, as distinguished from a mere expectancy, or a future,
contingent, subordinate or consequential interest (Ibonilla v. Province of Cebu, 210 SCRA
The Solicitor General, nonetheless, argues that the States cause of action in the 526 [1992]). Being the owner of the areas covered by Camp Wallace, it is the Bases
cancellation of the land title issued to petitioners predecessor-in-interest is imprescriptible Conversion and Development Authority, not the Government, which stands to be benefited
because it is included in Camp Wallace, which belongs to the government. if the land covered by TCT No. T-5710 issued in the name of petitioner is cancelled.

The argument is misleading. Nonetheless, it has been posited that the transfer of military reservations and their
extensions to the BCDA is basically for the purpose of accelerating the sound and balanced
conversion of these military reservations into alternative productive uses and to enhance
While it is true that prescription does not run against the State, the same may not be
the benefits to be derived from such property as a measure of promoting the economic and
invoked by the government in this case since it is no longer interested in the subject
social development, particularly of Central Luzon and, in general, the countrys goal for
matter. While Camp Wallace may have belonged to the government at the time Rafael
enhancement (Section 2, Republic Act No. 7227). It is contended that the transfer of these
Galvezs title was ordered cancelled in Land Registration Case No. N-361, the same no
military reservations to the Conversion Authority does not amount to an abdication on the
longer holds true today.
part of the Republic of its interests, but simply a recognition of the need to create a body
corporate which will act as its agent for the realization of its program. It is consequently
Republic Act No. 7227, otherwise known as the Bases Conversion and Development Act of asserted that the Republic remains to be the real party in interest and the Conversion
1992, created the Bases Conversion and Development Authority. Section 4 pertinently Authority merely its agent.
provides:
We, however, must not lose sight of the fact that the BCDA is an entity invested with a
Section 4. Purposes of the Conversion Authority. The Conversion Authority shall have the personality separate and distinct from the government. Section 3 of Republic Act No. 7227
following purposes: reads:
Section 3. Creation of the Bases Conversion and Development Authority. There is hereby assist, not supplant, the Philippine Ports Authority, whose title to the disputed property it
created a body corporate to be known as the Conversion Authority which shall have the continues to recognize. We may expect then that the said rentals, once collected by the
attribute of perpetual succession and shall be vested with the powers of a corporation. Republic of the Philippines, shall be turned over by it to the Philippine Ports Authority
conformably to the purposes of P. D. No. 857.
It may not be amiss to state at this point that the functions of government have been
classified into governmental or constituent and proprietary or ministrant. While public E. B. Marcha is, however, not on all fours with the case at bar. In the former, the Court
benefit and public welfare, particularly, the promotion of the economic and social considered the Republic a proper party to sue since the claims of the Republic and the
development of Central Luzon, may be attributable to the operation of the BCDA, yet it is Philippine Ports Authority against the petitioner therein were the same. To dismiss the
certain that the functions performed by the BCDA are basically proprietary in nature. The complaint in E. B. Marcha would have brought needless delay in the settlement of the
promotion of economic and social development of Central Luzon, in particular, and the matter since the PPA would have to refile the case on the same claim already litigated
countrys goal for enhancement, in general, do not make the BCDA equivalent to the upon. Such is not the case here since to allow the government to sue herein enables it to
Government. Other corporations have been created by government to act as its agents for raise the issue of imprescriptibility, a claim which is not available to the BCDA. The rule
the realization of its programs, the SSS, GSIS, NAWASA and the NIA, to count a few, and that prescription does not run against the State does not apply to corporations or artificial
yet, the Court has ruled that these entities, although performing functions aimed at bodies created by the State for special purposes, it being said that when the title of the
promoting public interest and public welfare, are not government-function corporations Republic has been divested, its grantees, although artificial bodies of its own creation, are
invested with governmental attributes. It may thus be said that the BCDA is not a mere in the same category as ordinary persons (Kingston v. LeHigh Valley Coal Co., 241 Pa 469).
agency of the Government but a corporate body performing proprietary functions. By raising the claim of imprescriptibility, a claim which cannot be raised by the BCDA, the
Government not only assists the BCDA, as it did in E. B. Marcha, it even supplants the
Moreover, Section 5 of Republic Act No. 7227 provides: latter, a course of action proscribed by said case.

Section 5. Powers of the Conversion Authority. To carry out its objectives under this Act, the Moreover, to recognize the Government as a proper party to sue in this case would set a
Conversion Authority is hereby vested with the following powers: bad precedent as it would allow the Republic to prosecute, on behalf of government-owned
or controlled corporations, causes of action which have already prescribed, on the pretext
that the Government is the real party in interest against whom prescription does not run,
(a) To succeed in its corporate name, to sue and be sued in such corporate name and
said corporations having been created merely as agents for the realization of government
to adopt, alter and use a corporate seal which shall be judicially noticed;
programs.

Having the capacity to sue or be sued, it should thus be the BCDA which may file an action
Parenthetically, petitioner was not a party to the original suit for cancellation of title
to cancel petitioners title, not the Republic, the former being the real party in interest. One
commenced by the Republic twenty-seven years for which it is now being made to answer,
having no right or interest to protect cannot invoke the jurisdiction of the court as a party
nay, being made to suffer financial losses.
plaintiff in an action (Ralla v. Ralla, 199 SCRA 495 [1991]). A suit may be dismissed if the
plaintiff or the defendant is not a real party in interest. If the suit is not brought in the
name of the real party in interest, a motion to dismiss may be filed, as was done by It should also be noted that petitioner is unquestionably a buyer in good faith and for
petitioner in this case, on the ground that the complaint states no cause of action value, having acquired the property in 1963, or 5 years after the issuance of the original
(Tanpingco v. IAC, 207 SCRA 652 [1992]). certificate of title, as a third transferee. If only not to do violence and to give some
measure of respect to the Torrens System, petitioner must be afforded some measure of
protection.
However, E. B. Marcha Transport Co. , Inc. v. IAC (147 SCRA 276 [1987]) is cited as
authority that the Republic is the proper party to sue for the recovery of possession of
property which at the time of the institution of the suit was no longer held by the national One more point.
government but by the Philippine Ports Authority. In E. B. Marcha, the Court ruled:
Since the portion in dispute now forms part of the property owned and administered by the
It can be said that in suing for the recovery of the rentals, the Republic of the Philippines, Bases Conversion and Development Authority, it is alienable and registerable real property.
acted as principal of the Philippine Ports Authority, directly exercising the commission it
had earlier conferred on the latter as its agent. We may presume that, by doing so, the We find it unnecessary to rule on the other matters raised by the herein parties.
Republic of the Philippines did not intend to retain the said rentals for its own use,
considering that by its voluntary act it had transferred the land in question to the Philippine WHEREFORE, the petition is hereby granted and the orders dated August 31, 1999 and
Ports Authority effective July 11, 1974. The Republic of the Philippines had simply sought to October 4, 1999 of the Regional Trial Court of the First National Judicial Region (Branch 26,
San Fernando, La Union) in Civil Case No. 6346 entitled Republic of the Philippines, Plaintiff,
versus Heirs of Rafael Galvez, et. al., Defendants as well as the resolutions promulgated on
November 4, 1999 and May 23, 2000 by the Court of Appeals (Twelfth Division) in CA-G. R.
SP No. 55535 entitled Shipside, Inc., Petitioner versus Hon. Alfredo Cajigal, as Judge, RTC,
San Fernando, La Union, Branch 26, and the Republic of the Philippines, Respondents are
hereby reversed and set aside. The complaint in Civil Case No. 6346, Regional Trial Court,
Branch 26, San Fernando City, La Union entitled Republic of the Philippines, Plaintiff, versus
Heirs of Rafael Galvez, et al." is ordered dismissed, without prejudice to the filing of an
appropriate action by the Bases Development and Conversion Authority.

SO ORDERED.

G.R. No. 147096 January 15, 2002

REPUBLIC OF THE PHILIPPINES, represented by NATIONAL


TELECOMMUNICATIONS COMMISSION, petitioner,
vs.
EXPRESS TELECOMMUNICATION CO., INC. and BAYAN TELECOMMUNICATIONS CO.,
INC., respondents.

x---------------------------------------------------------x

G.R. No. 147210 January 15, 2002

BAYAN TELECOMMUNICATIONS (Bayantel), INC., petitioner,


vs.
EXPRESS TELECOMMUNICATION CO., INC. (Extelcom), respondent.

On December 29, 1992, International Communications Corporation (now Bayan


Telecommunications, Inc. or Bayantel) filed an application with the National
Telecommunications Commission (NTC) for a Certificate of Public Convenience or Necessity
(CPCN) to install, operate and maintain a digital Cellular Mobile Telephone System/Service
(CMTS) with prayer for a Provisional Authority (PA). The application was docketed as NTC
Case No. 92-486.1

Shortly thereafter, or on January 22, 1993, the NTC issued Memorandum Circular No. 4-1-
93 directing all interested applicants for nationwide or regional CMTS to file their
respective applications before the Commission on or before February 15, 1993, and
deferring the acceptance of any application filed after said date until further orders. 2

On May 6, 1993, and prior to the issuance of any notice of hearing by the NTC with respect
to Bayantel's original application, Bayantel filed an urgent ex-parte motion to admit an
amended application.3 On May 17, 1993, the notice of hearing issued by the NTC with
respect to this amended application was published in the Manila Chronicle. Copies of the
application as well as the notice of hearing were mailed to all affected parties.
Subsequently, hearings were conducted on the amended application. But before Bayantel Circular No. 3-3-99 were intended for and had in fact been applied for by the existing CMTS
could complete the presentation of its evidence, the NTC issued an Order dated December operators. The NTC, in its Memorandum Circular No. 4-1-93, declared it its policy to defer
19, 1993 stating: the acceptance of any application for CMTS. All the frequency bands allocated for CMTS
use under the NTC's Memorandum Circular No. 5-11-88 and Memorandum Circular No. 2-
In view of the recent grant of two (2) separate Provisional Authorities in favor of 12-92 had already been allocated to the existing CMTS operators. Finally, Extelcom pointed
ISLACOM and GMCR, Inc., which resulted in the closing out of all available out that Bayantel is its substantial stockholder to the extent of about 46% of its
frequencies for the service being applied for by herein applicant, and in order that outstanding capital stock, and Bayantel's application undermines the very operations of
this case may not remain pending for an indefinite period of time, AS PRAYED FOR, Extelcom.
let this case be, as it is, hereby ordered ARCHIVED without prejudice to its
reinstatement if and when the requisite frequency becomes available. On March 13, 2000, Bayantel filed a Consolidated Reply/Comment, 10 stating that the
opposition was actually a motion seeking a reconsideration of the NTC Order reviving the
SO ORDERED.4 instant application, and thus cannot dwell on the material allegations or the merits of the
case. Furthermore, Extelcom cannot claim that frequencies were not available inasmuch as
the allocation and assignment thereof rest solely on the discretion of the NTC.
On June 18, 1998, the NTC issued Memorandum Circular No. 5-6-98 re-allocating five (5)
megahertz (MHz) of the radio frequency spectrum for the expansion of CMTS networks. The
re-allocated 5 MHz were taken from the following bands: 1730-1732.5 / 1825-1827.5 MHz In the meantime, the NTC issued on March 9, 2000 Memorandum Circular No. 9-3-2000, re-
and 1732.5-1735 / 1827.5-1830 MHz.5 allocating the following radio frequency bands for assignment to existing CMTS operators
and to public telecommunication entities which shall be authorized to install, operate and
maintain CMTS networks, namely: 1745-1750MHz / 1840-1845MHz; 1750-1775MHz / 1845-
Likewise, on March 23, 1999, Memorandum Circular No. 3-3-99 was issued by the NTC re-
1850MHz; 1765-1770MHz / 1860-1865MHz; and 1770-1775MHz / 1865-1870MHz. 11
allocating an additional five (5) MHz frequencies for CMTS service, namely: 1735-1737.5 /
1830-1832.5 MHz; 1737.5-1740 / 1832.5-1835 MHz; 1740-1742.5 / 1835-1837.5 MHz; and
1742.5-1745 / 1837.5-1840 MHz.6 On May 3, 2000, the NTC issued an Order granting in favor of Bayantel a provisional
authority to operate CMTS service.12 The Order stated in pertinent part:
On May 17, 1999, Bayantel filed an Ex-Parte Motion to Revive Case, 7 citing the availability
of new frequency bands for CMTS operators, as provided for under Memorandum Circular On the issue of legal capacity on the part of Bayantel, this Commission has already
No. 3-3-99. taken notice of the change in name of International Communications Corporation
to Bayan Telecommunications, Inc. Thus, in the Decision entered in NTC Case No.
93-284/94-200 dated 19 July 1999, it was recognized that Bayan
On February 1, 2000, the NTC granted BayanTel's motion to revive the latter's application
Telecommunications, Inc., was formerly named International Communications Corp.
and set the case for hearings on February 9, 10, 15, 17 and 22, 2000. 8 The NTC noted that
Bayantel and ICC Telecoms, Inc. are one and the same entity, and it necessarily
the application was ordered archived without prejudice to its reinstatement if and when the
follows that what legal capacity ICC Telecoms has or has acquired is also the legal
requisite frequency shall become available.
capacity that Bayantel possesses.

Respondent Express Telecommunication Co., Inc. (Extelcom) filed in NTC Case No. 92-486
On the allegation that the Commission has committed an error in allowing the
an Opposition (With Motion to Dismiss) praying for the dismissal of Bayantel's application. 9
revival of the instant application, it appears that the Order dated 14 December
Extelcom argued that Bayantel's motion sought the revival of an archived application filed
1993 archiving the same was anchored on the non-availability of frequencies for
almost eight (8) years ago. Thus, the documentary evidence and the allegations of
CMTS. In the same Order, it was expressly stated that the archival hereof, shall be
respondent Bayantel in this application are all outdated and should no longer be used as
without prejudice to its reinstatement "if and when the requisite frequency
basis of the necessity for the proposed CMTS service. Moreover, Extelcom alleged that
becomes available." Inherent in the said Order is the prerogative of the
there was no public need for the service applied for by Bayantel as the present five CMTS
Commission in reviving the same, subject to prevailing conditions. The Order of 1
operators --- Extelcom, Globe Telecom, Inc., Smart Communication, Inc., Pilipino Telephone
February 2001, cited the availability of frequencies for CMTS, and based thereon,
Corporation, and Isla Communication Corporation, Inc. --- more than adequately addressed
the Commission, exercising its prerogative, revived and reinstated the instant
the market demand, and all are in the process of enhancing and expanding their respective
application. The fact that the motion for revival hereof was made ex-parte by the
networks based on recent technological developments. 1wphi1.nt
applicant is of no moment, so long as the oppositors are given the opportunity to
be later heard and present the merits of their respective oppositions in the
Extelcom likewise contended that there were no available radio frequencies that could proceedings.
accommodate a new CMTS operator as the frequency bands allocated in NTC Memorandum
On the allegation that the instant application is already obsolete and overtaken by 3. There is a need to provide service to some or all of the remaining cities and
developments, the issue is whether applicant has the legal, financial and technical municipalities without telephone service.
capacity to undertake the proposed project. The determination of such capacity
lies solely within the discretion of the Commission, through its applicable rules and 4. The submitted documents are sufficient to determine compliance to the
regulations. At any rate, the oppositors are not precluded from showing evidence technical requirements. The applicant can be directed to submit details such as
disputing such capacity in the proceedings at hand. On the alleged non-availability channeling plans, exact locations of cell sites, etc. as the project implementation
of frequencies for the proposed service in view of the pending applications for the progresses, actual area coverage ascertained and traffic data are made available.
same, the Commission takes note that it has issued Memorandum Circular 9-3- Applicant appears to be technically qualified to undertake the proposed project and
2000, allocating additional frequencies for CMTS. The eligibility of existing offer the proposed service.
operators who applied for additional frequencies shall be treated and resolved in
their respective applications, and are not in issue in the case at hand.
IN VIEW OF THE FOREGOING and considering that there is prima facie evidence
to show that Applicant is legally, technically and financially qualified and that the
Accordingly, the Motions for Reconsideration filed by SMARTCOM and GLOBE proposed service is technically feasible and economically viable, in the interest of
TELECOMS/ISLACOM and the Motion to Dismiss filed by EXTELCOM are hereby public service, and in order to facilitate the development of telecommunications
DENIED for lack of merit.13 services in all areas of the country, as well as to ensure healthy competition among
authorized CMTS providers, let a PROVISIONAL AUTHORITY (P.A.) be issued to
The grant of the provisional authority was anchored on the following findings: Applicant BAYAN TELECOMMUNICATIONS, INC. authorizing it to construct,
install, operate and maintain a Nationwide Cellular Mobile Telephone
COMMENTS: Systems (CMTS), subject to the following terms and conditions without prejudice
to a final decision after completion of the hearing which shall be called within thirty
(30) days from grant of authority, in accordance with Section 3, Rule 15, Part IV of
1. Due to the operational mergers between Smart Communications, Inc. and
the Commission's Rules of Practice and Procedure. xxx. 14
Pilipino Telephone Corporation (Piltel) and between Globe Telecom, Inc. (Globe) and
Isla Communications, Inc. (Islacom), free and effective competition in the CMTS
market is threatened. The fifth operator, Extelcom, cannot provide good Extelcom filed with the Court of Appeals a petition for certiorari and prohibition, 15 docketed
competition in as much as it provides service using the analog AMPS. The GSM as CA-G.R. SP No. 58893, seeking the annulment of the Order reviving the application of
system dominates the market. Bayantel, the Order granting Bayantel a provisional authority to construct, install, operate
and maintain a nationwide CMTS, and Memorandum Circular No. 9-3-2000 allocating
frequency bands to new public telecommunication entities which are authorized to install,
2. There are at present two applicants for the assignment of the frequencies in the
operate and maintain CMTS.
1.7 Ghz and 1.8 Ghz allocated to CMTS, namely Globe and Extelcom. Based on the
number of subscribers Extelcom has, there appears to be no congestion in its
network - a condition that is necessary for an applicant to be assigned additional On September 13, 2000, the Court of Appeals rendered the assailed Decision, 16 the
frequencies. Globe has yet to prove that there is congestion in its network dispositive portion of which reads:
considering its operational merger with Islacom.
WHEREFORE, the writs of certiorari and prohibition prayed for are GRANTED. The
3. Based on the reports submitted to the Commission, 48% of the total number of Orders of public respondent dated February 1, 2000 and May 3, 2000 in NTC Case
cities and municipalities are still without telephone service despite the more than 3 No. 92-486 are hereby ANNULLED and SET ASIDE and the Amended Application
million installed lines waiting to be subscribed. of respondent Bayantel is DISMISSED without prejudice to the filing of a new
CMTS application. The writ of preliminary injunction issued under our Resolution
dated August 15, 2000, restraining and enjoining the respondents from enforcing
CONCLUSIONS:
the Orders dated February 1, 2000 and May 3, 2000 in the said NTC case is hereby
made permanent. The Motion for Reconsideration of respondent Bayantel dated
1. To ensure effective competition in the CMTS market considering the operational August 28, 2000 is denied for lack of merit.
merger of some of the CMTS operators, new CMTS operators must be allowed to
provide the service.
SO ORDERED.17

2. The re-allocated frequencies for CMTS of 3 blocks of 5 Mhz x 2 is sufficient for


the number of applicants should the applicants be qualified.
Bayantel filed a motion for reconsideration of the above decision. 18 The NTC, represented ABSENCE OF A SPECIFIC RULE ON ARCHIVING OF CASES SINCE RULES OF
by the Office of the Solicitor General (OSG), also filed its own motion for reconsideration. 19 PROCEDURE ARE, AS A MATTER OF COURSE, LIBERALLY CONSTRUED IN
On the other hand, Extelcom filed a Motion for Partial Reconsideration, praying that NTC PROCEEDINGS BEFORE ADMINISTRATIVE BODIES AND SHOULD GIVE WAY TO THE
Memorandum Circular No. 9-3-2000 be also declared null and void. 20 GREATER HIERARCHY OF PUBLIC WELFARE AND PUBLIC INTEREST.

On February 9, 2001, the Court of Appeals issued the assailed Resolution denying all of the VI. CONTRARY TO THE FINDING OF THE COURT OF APPEALS, THE ARCHIVING OF
motions for reconsideration of the parties for lack of merit. 21 BAYANTEL'S APPLICATION WAS NOT VIOLATIVE OF THE SUMMARY NATURE OF THE
PROCEEDINGS IN THE NTC UNDER SEC. 3, RULE 1 OF THE NTC REVISED RULES OF
Hence, the NTC filed the instant petition for review on certiorari, docketed as G.R. No. PROCEDURE.
147096, raising the following issues for resolution of this Court:
VII. THE COURT OF APPEALS SERIOUSLY ERRED IN ITS FINDING THAT THE
A. Whether or not the Order dated February 1, 2000 of the petitioner which revived ARCHIVING OF BAYANTEL'S APPLICATION WAS VIOLATIVE OF THE ALLEGED
the application of respondent Bayantel in NTC Case No. 92-486 violated respondent DECLARED POLICY OF THE GOVERNMENT ON THE TRANSPARENCY AND FAIRNESS
Extelcom's right to procedural due process of law; OF ADMINISTRATIVE PROCESS IN THE NTC AS LAID DOWN IN SEC 4(1) OF R.A. NO.
7925.
B. Whether or not the Order dated May 3, 2000 of the petitioner granting
respondent Bayantel a provisional authority to operate a CMTS is in substantial VIII. THE COURT OF APPEALS SERIOUSLY ERRED IN ITS FINDING THAT THE NTC
compliance with NTC Rules of Practice and Procedure and Memorandum Circular VIOLATED THE PROVISIONS OF THE CONSTITUTION PERTAINING TO DUE PROCESS
No. 9-14-90 dated September 4, 1990.22 OF LAW.

Subsequently, Bayantel also filed its petition for review, docketed as G.R. No. 147210, IX. THE COURT OF APPEALS SERIOUSLY ERRED IN DECLARING THAT THE MAY 3,
assigning the following errors: 2000 ORDER GRANTING BAYANTEL A PROVISIONAL AUTHORITY SHOULD BE SET
ASIDE AND REVERSED.
I. THE COURT OF APPEALS SERIOUSLY ERRED IN ITS INTERPRETATION OF THE
PRINCIPLE OF "EXHAUSTION OF ADMINISTRATIVE REMEDIES" WHEN IT FAILED TO i. Contrary to the finding of the Court of Appeals, there was no violation of the NTC
DISMISS HEREIN RESPONDENT'S PETITION FOR CERTIORARI DESPITE ITS FAILURE Rule that the legal, technical, financial and economic documentations in support of
TO FILE A MOTION FOR RECONSIDERATION. the prayer for provisional authority should first be submitted.

II. THE COURT OF APPEALS SERIOUSLY ERRED IN ITS FINDING THAT THE REVIVAL OF ii. Contrary to the finding of the Court of Appeals, there was no violation of Sec. 3,
NTC CASE NO. 92-486 ANCHORED ON A EX-PARTE MOTION TO REVIVE CASE WAS Rule 15 of the NTC Rules of Practice and Procedure that a motion must first be filed
TANTAMOUNT TO GRAVE ABUSE OF DISCRETION ON THE PART OF THE NTC. before a provisional authority could be issued.

III. THE COURT OF APPEALS SERIOUSLY ERRED WHEN IT DENIED THE MANDATE OF iii. Contrary to the finding of the Court of Appeals that a plea for provisional
THE NTC AS THE AGENCY OF GOVERNMENT WITH THE SOLE DISCRETION authority necessitates a notice and hearing, the very rule cited by the petitioner
REGARDING ALLOCATION OF FREQUENCY BAND TO TELECOMMUNICATIONS (Section 5, Rule 4 of the NTC Rules of Practice and Procedure) provides otherwise.
ENTITIES.
iv. Contrary to the finding of the Court of Appeals, urgent public need is not the
IV. THE COURT OF APPEALS SERIOUSLY ERRED IN ITS INTERPRETATION OF THE only basis for the grant of a provisional authority to an applicant;
LEGAL PRINCIPLE THAT JURISDICTION ONCE ACQUIRED CANNOT BE LOST WHEN IT
DECLARED THAT THE ARCHIVED APPLICATION SHOULD BE DEEMED AS A NEW v. Contrary to the finding of the Court of Appeals, there was no violation of the
APPLICATION IN VIEW OF THE SUBSTANTIAL CHANGE IN THE CIRCUMSTANCES constitutional provision on the right of the public to information when the Common
ALLEGED IN ITS AMENDMENT APPLICATION. Carrier Authorization Department (CCAD) prepared its evaluation report. 23

V. CONTRARY TO THE FINDING OF THE COURT OF APPEALS, THE ARCHIVING OF THE Considering the identity of the matters involved, this Court resolved to consolidate the two
BAYANTEL APPLICATION WAS A VALID ACT ON THE PART OF THE NTC EVEN IN THE petitions.24
At the outset, it is well to discuss the nature and functions of the NTC, and analyze its In answer to this argument, the NTC, through the Secretary of the Commission, issued a
powers and authority as well as the laws, rules and regulations that govern its existence certification to the effect that inasmuch as the 1993 Revised Rules have not been
and operations. published in a newspaper of general circulation, the NTC has been applying the 1978 Rules.

The NTC was created pursuant to Executive Order No. 546, promulgated on July 23, 1979. The absence of publication, coupled with the certification by the Commissioner of the NTC
It assumed the functions formerly assigned to the Board of Communications and the stating that the NTC was still governed by the 1978 Rules, clearly indicate that the 1993
Telecommunications Control Bureau, which were both abolished under the said Executive Revised Rules have not taken effect at the time of the grant of the provisional authority to
Order. Previously, the NTC's functions were merely those of the defunct Public Service Bayantel. The fact that the 1993 Revised Rules were filed with the UP Law Center on
Commission (PSC), created under Commonwealth Act No. 146, as amended, otherwise February 3, 1993 is of no moment. There is nothing in the Administrative Code of 1987
known as the Public Service Act, considering that the Board of Communications was the which implies that the filing of the rules with the UP Law Center is the operative act that
successor-in-interest of the PSC. Under Executive Order No. 125-A, issued in April 1987, the gives the rules force and effect. Book VII, Chapter 2, Section 3 thereof merely states:
NTC became an attached agency of the Department of Transportation and
Communications. Filing. --- (1) Every agency shall file with the University of the Philippines Law
Center three (3) certified copes of every rule adopted by it. Rules in force on the
In the regulatory telecommunications industry, the NTC has the sole authority to issue date of effectivity of this Code which are not filed within three (3) months from the
Certificates of Public Convenience and Necessity (CPCN) for the installation, operation, and date shall not thereafter be the basis of any sanction against any party or persons.
maintenance of communications facilities and services, radio communications systems,
telephone and telegraph systems. Such power includes the authority to determine the (2) The records officer of the agency, or his equivalent functionary, shall carry out
areas of operations of applicants for telecommunications services. Specifically, Section 16 the requirements of this section under pain or disciplinary action.
of the Public Service Act authorizes the then PSC, upon notice and hearing, to issue
Certificates of Public Convenience for the operation of public services within the Philippines
(3) A permanent register of all rules shall be kept by the issuing agency and shall
"whenever the Commission finds that the operation of the public service proposed and the
be open to public inspection.
authorization to do business will promote the public interests in a proper and suitable
manner."25 The procedure governing the issuance of such authorizations is set forth in
Section 29 of the said Act, the pertinent portion of which states: The National Administrative Register is merely a bulletin of codified rules and it is furnished
only to the Office of the President, Congress, all appellate courts, the National Library,
other public offices or agencies as the Congress may select, and to other persons at a price
All hearings and investigations before the Commission shall be governed by rules
sufficient to cover publication and mailing or distribution costs. 26 In a similar case, we held:
adopted by the Commission, and in the conduct thereof, the Commission shall not
be bound by the technical rules of legal evidence. xxx.
This does not imply however, that the subject Administrative Order is a valid
exercise of such quasi-legislative power. The original Administrative Order issued
In granting Bayantel the provisional authority to operate a CMTS, the NTC applied Rule 15,
on August 30, 1989, under which the respondents filed their applications for
Section 3 of its 1978 Rules of Practice and Procedure, which provides:
importations, was not published in the Official Gazette or in a newspaper of general
circulation. The questioned Administrative Order, legally, until it is published, is
Sec. 3. Provisional Relief. --- Upon the filing of an application, complaint or petition invalid within the context of Article 2 of Civil Code, which reads:
or at any stage thereafter, the Board may grant on motion of the pleader or on its
own initiative, the relief prayed for, based on the pleading, together with the
"Article 2. Laws shall take effect after fifteen days following the completion
affidavits and supporting documents attached thereto, without prejudice to a final
of their publication in the Official Gazette (or in a newspaper of general
decision after completion of the hearing which shall be called within thirty (30)
circulation in the Philippines), unless it is otherwise provided. x x x"
days from grant of authority asked for. (underscoring ours)

The fact that the amendments to Administrative Order No. SOCPEC 89-08-01 were
Respondent Extelcom, however, contends that the NTC should have applied the Revised
filed with, and published by the UP Law Center in the National Administrative
Rules which were filed with the Office of the National Administrative Register on February
Register, does not cure the defect related to the effectivity of the Administrative
3, 1993. These Revised Rules deleted the phrase "on its own initiative;" accordingly, a
Order.
provisional authority may be issued only upon filing of the proper motion before the
Commission.
This Court, in Taada vs. Tuvera (G.R. No. L-63915, December 29, 1986, 146 SCRA
446) stated, thus:
"We hold therefore that all statutes, including those of local application and Hence, the 1993 Revised Rules should be published in the Official Gazette or in a
private laws, shall be published as a condition for their effectivity, which newspaper of general circulation before it can take effect. Even the 1993 Revised Rules
shall begin fifteen days after publication unless a different effectivity is itself mandates that said Rules shall take effect only after their publication in a newspaper
fixed by the legislature. of general circulation.31 In the absence of such publication, therefore, it is the 1978 Rules
that governs.
Covered by this rule are presidential decrees and executive orders
promulgated by the President in the exercise of legislative power or, at In any event, regardless of whether the 1978 Rules or the 1993 Revised Rules should
present, directly conferred by the Constitution. Administrative Rules and apply, the records show that the amended application filed by Bayantel in fact included a
Regulations must also be published if their purpose is to enforce or motion for the issuance of a provisional authority. Hence, it cannot be said that the NTC
implement existing law pursuant also to a valid delegation. granted the provisional authority motu proprio. The Court of Appeals, therefore, erred
when it found that the NTC issued its Order of May 3, 2000 on its own initiative. This much
Interpretative regulations and those merely internal in nature, that is, is acknowledged in the Decision of the Court of Appeals:
regulating only the personnel of the administrative agency and not the
public, need not be published. Neither is publication required of the so- As prayer, ICC asked for the immediate grant of provisional authority to construct,
called letters of instructions issued by administrative superiors concerning install, maintain and operate the subject service and to charge the proposed rates
the rules or guidelines to be followed by their subordinates in the and after due notice and hearing, approve the instant application and grant the
performance of their duties. corresponding certificate of public convenience and necessity. 32

xxx The Court of Appeals also erred when it declared that the NTC's Order archiving Bayantel's
application was null and void. The archiving of cases is a widely accepted measure
We agree that the publication must be in full or it is no publication at all designed to shelve cases in which no immediate action is expected but where no grounds
since its purpose is to inform the public of the contents of the laws." exist for their outright dismissal, albeit without prejudice. It saves the petitioner or
applicant from the added trouble and expense of re-filing a dismissed case. Under this
scheme, an inactive case is kept alive but held in abeyance until the situation obtains
The Administrative Order under consideration is one of those issuances which
wherein action thereon can be taken.
should be published for its effectivity, since its purpose is to enforce and
implement an existing law pursuant to a valid delegation, i.e., P.D. 1071, in relation
to LOI 444 and EO 133.27 In the case at bar, the said application was ordered archived because of lack of available
frequencies at the time, and made subject to reinstatement upon availability of the
requisite frequency. To be sure, there was nothing irregular in the revival of the application
Thus, publication in the Official Gazette or a newspaper of general circulation is a condition
after the condition therefor was fulfilled.
sine qua non before statutes, rules or regulations can take effect. This is explicit from
Executive Order No. 200, which repealed Article 2 of the Civil Code, and which states that:
While, as held by the Court of Appeals, there are no clear provisions in the Rules of the NTC
which expressly allow the archiving of any application, this recourse may be justified under
Laws shall take effect after fifteen days following the completion of their
Rule 1, Section 2 of the 1978 Rules, which states:
publication either in the Official Gazette or in a newspaper of general circulation in
the Philippines, unless it is otherwise provided. 28
Sec. 2. Scope.--- These rules govern pleadings, practice and procedure before the
Board of Communications (now NTC) in all matters of hearing, investigation and
The Rules of Practice and Procedure of the NTC, which implements Section 29 of the Public
proceedings within the jurisdiction of the Board. However, in the broader interest of
Service Act (C.A. 146, as amended), fall squarely within the scope of these laws, as
justice and in order to best serve the public interest, the Board may, in any
explicitly mentioned in the case Taada v. Tuvera.29
particular matter, except it from these rules and apply such suitable procedure to
improve the service in the transaction of the public business. (underscoring ours)
Our pronouncement in Taada vs. Tuvera is clear and categorical. Administrative
rules and regulations must be published if their purpose is to enforce or implement
The Court of Appeals ruled that the NTC committed grave abuse of discretion when it
existing law pursuant to a valid delegation. The only exceptions are interpretative
revived Bayantel's application based on an ex-parte motion. In this regard, the pertinent
regulations, those merely internal in nature, or those so-called letters of
provisions of the NTC Rules:
instructions issued by administrative superiors concerning the rules and guidelines
to be followed by their subordinates in the performance of their duties. 30
Sec. 5. Ex-parte Motions. --- Except for motions for provisional authorization of was able to raise its arguments on this matter in the Opposition (With Motion to Dismiss)
proposed services and increase of rates, ex-parte motions shall be acted upon by anent the re-opening and re-instatement of the application of Bayantel. Extelcom was thus
the Board only upon showing of urgent necessity therefor and the right of the heard on this particular point.
opposing party is not substantially impaired.33
Likewise, the requirements of notice and publication of the application is no longer
Thus, in cases which do not involve either an application for rate increase or an application necessary inasmuch as the application is a mere revival of an application which has
for a provisional authority, the NTC may entertain ex-parte motions only where there is an already been published earlier. At any rate, the records show that all of the five (5) CMTS
urgent necessity to do so and no rights of the opposing parties are impaired.1wphi1.nt operators in the country were duly notified and were allowed to raise their respective
oppositions to Bayantel's application through the NTC's Order dated February 1, 2000.
The Court of Appeals ruled that there was a violation of the fundamental right of Extelcom
to due process when it was not afforded the opportunity to question the motion for the It should be borne in mind that among the declared national policies under Republic Act
revival of the application. However, it must be noted that said Order referred to a simple No. 7925, otherwise known as the Public Telecommunications Policy Act of the Philippines,
revival of the archived application of Bayantel in NTC Case No. 92-426. At this stage, it is the healthy competition among telecommunications carriers, to wit:
cannot be said that Extelcom's right to procedural due process was prejudiced. It will still
have the opportunity to be heard during the full-blown adversarial hearings that will follow. A healthy competitive environment shall be fostered, one in which
In fact, the records show that the NTC has scheduled several hearing dates for this telecommunications carriers are free to make business decisions and to interact
purpose, at which all interested parties shall be allowed to register their opposition. We with one another in providing telecommunications services, with the end in view of
have ruled that there is no denial of due process where full-blown adversarial proceedings encouraging their financial viability while maintaining affordable rates. 36
are conducted before an administrative body.34 With Extelcom having fully participated in
the proceedings, and indeed, given the opportunity to file its opposition to the application,
The NTC is clothed with sufficient discretion to act on matters solely within its competence.
there was clearly no denial of its right to due process.
Clearly, the need for a healthy competitive environment in telecommunications is sufficient
impetus for the NTC to consider all those applicants who are willing to offer competition,
In Zaldivar vs. Sandiganbayan (166 SCRA 316 [1988]), we held that the right to be develop the market and provide the environment necessary for greater public service. This
heard does not only refer to the right to present verbal arguments in court. A party was the intention that came to light with the issuance of Memorandum Circular 9-3-2000,
may also be heard through his pleadings. where opportunity to be heard is allocating new frequency bands for use of CMTS. This memorandum circular enumerated
accorded either through oral arguments or pleadings, there is no denial of the conditions prevailing and the reasons which necessitated its issuance as follows:
procedural due process. As reiterated in National Semiconductor (HK) Distribution,
Ltd. vs. NLRC (G.R. No. 123520, June 26, 1998), the essence of due process is
- the international accounting rates are rapidly declining, threatening the subsidy
simply an opportunity to be heard, or as applied to administrative proceedings, an
to the local exchange service as mandated in EO 109 and RA 7925;
opportunity to explain one's side. Hence, in Navarro III vs. Damaso (246 SCRA 260
[1995]), we held that a formal or trial-type hearing is not at all times and not in all
instances essential. Plainly, petitioner was not denied due process. 35 - the public telecommunications entities which were obligated to install, operate
and maintain local exchange network have performed their obligations in varying
degrees;
Extelcom had already entered its appearance as a party and filed its opposition to the
application. It was neither precluded nor barred from participating in the hearings thereon.
Indeed, nothing, not even the Order reviving the application, bars or prevents Extelcom - after more than three (3) years from the performance of the obligations only
and the other oppositors from participating in the hearings and adducing evidence in 52% of the total number of cities and municipalities are provided with local
support of their respective oppositions. The motion to revive could not have possibly telephone service.
caused prejudice to Extelcom since the motion only sought the revival of the application. It
was merely a preliminary step towards the resumption of the hearings on the application of - there are mergers and consolidations among the existing cellular mobile
Bayantel. The latter will still have to prove its capability to undertake the proposed CMTS. telephone service (CMTS) providers threatening the efficiency of competition;
Indeed, in its Order dated February 1, 2000, the NTC set several hearing dates precisely
intended for the presentation of evidence on Bayantel's capability and qualification. Notice - there is a need to hasten the installation of local exchange lines in unserved
of these hearings were sent to all parties concerned, including Extelcom. areas;

As regards the changes in the personal circumstances of Bayantel, the same may be
ventilated at the hearings during Bayantel's presentation of evidence. In fact, Extelcom
- there are existing CMTS operators which are experiencing congestion in the the NTC Rules, a party adversely affected by a decision, order, ruling or resolution may
network resulting to low grade of service; within fifteen (15) days file a motion for reconsideration. That the Order of the NTC became
immediately executory does not mean that the remedy of filing a motion for
- the consumers/customers shall be given the freedom to choose CMTS operators reconsideration is foreclosed to the petitioner.41
from which they could get the service. 37
Furthermore, Extelcom does not enjoy the grant of any vested interest on the right to
Clearly spelled out is the need to provide enhanced competition and the requirement for render a public service. The Constitution is quite emphatic that the operation of a public
more landlines and telecommunications facilities in unserved areas in the country. On both utility shall not be exclusive. Thus:
scores, therefore, there was sufficient showing that the NTC acted well within its
jurisdiction and in pursuance of its avowed duties when it allowed the revival of Bayantel's No franchise, certificate, or any other form of authorization for the operation of a
application. public utility shall be granted to citizens of the Philippines or to corporations
organized under the laws of the Philippines at least sixty per centum of whose
We now come to the issue of exhaustion of administrative remedies. The rule is well- capital is owned by such citizens, nor shall such franchise, certificate or
entrenched that a party must exhaust all administrative remedies before resorting to the authorization be exclusive in character or for a longer period than fifty years.
courts. The premature invocation of the intervention of the court is fatal to one's cause of Neither shall any such franchise or right be granted except under the condition
action. This rule would not only give the administrative agency an opportunity to decide that it shall be subject to amendment, alteraion, or repeal by the Congress when
the matter by itself correctly, but would also prevent the unnecessary and premature the common good so requires. xxx xxx xxx.42
resort to courts.38 In the case of Lopez v. City of Manila,39 we held:
In Radio Communications of the Phils., Inc. v. National Telecommunications Commission, 43
As a general rule, where the law provides for the remedies against the action of an we held:
administrative board, body or officer, relief to courts can be sought only after
exhausting all remedies provided. The reason rests upon the presumption that the It is well within the powers of the public respondent to authorize the installation by
administrative body, if given the chance to correct its mistake or error, may amend the private respondent network of radio communications systems in Catarman,
its decision on a given matter and decide it properly. Therefore, where a remedy is Samar and San Jose, Mindoro. Under the circumstances, the mere fact that the
available within the administrative machinery, this should be resorted to before petitioner possesses a franchise to put up and operate a radio communications
resort can be made to the courts, not only to give the administrative agency the system in certain areas is not an insuperable obstacle to the public respondent's
opportunity to decide the matter by itself correctly, but also to prevent issuing the proper certificate to an applicant desiring to extend the same services
unnecessary and premature resort to courts. to those areas. The Constitution mandates that a franchise cannot be exclusive in
nature nor can a franchise be granted except that it must be subject to
Clearly, Extelcom violated the rule on exhaustion of administrative remedies when it went amendment, alteration, or even repeal by the legislature when the common good
directly to the Court of Appeals on a petition for certiorari and prohibition from the Order of so requires. (Art. XII, sec. 11 of the 1986 Constitution). There is an express
the NTC dated May 3, 2000, without first filing a motion for reconsideration. It is well- provision in the petitioner's franchise which provides compliance with the above
settled that the filing of a motion for reconsideration is a prerequisite to the filing of a mandate (RA 2036, sec. 15).
special civil action for certiorari.
Even in the provisional authority granted to Extelcom, it is expressly stated that such
The general rule is that, in order to give the lower court the opportunity to correct authority is not exclusive. Thus, the Court of Appeals erred when it gave due course to
itself, a motion for reconsideration is a prerequisite to certiorari. It also basic that Extelcom's petition and ruled that it constitutes an exception to the rule on exhaustion of
petitioner must exhaust all other available remedies before resorting to certiorari. administrative remedies.
This rule, however, is subject to certain exceptions such as any of the following: (1)
the issues raised are purely legal in nature, (2) public interest is involved, (3) Also, the Court of Appeals erred in annulling the Order of the NTC dated May 3, 2000,
extreme urgency is obvious or (4) special circumstances warrant immediate or granting Bayantel a provisional authority to install, operate and maintain CMTS. The
more direct action.40 general rule is that purely administrative and discretionary functions may not be interfered
with by the courts. Thus, in Lacuesta v. Herrera,44 it was held:
This case does not fall under any of the recognized exceptions to this rule. Although the
Order of the NTC dated May 3, 2000 granting provisional authority to Bayantel was xxx (T)he powers granted to the Secretary of Agriculture and Commerce (natural
immediately executory, it did not preclude the filing of a motion for reconsideration. Under resources) by law regarding the disposition of public lands such as granting of
licenses, permits, leases and contracts, or approving, rejecting, reinstating, or In the case at bar, we find no reason to disturb the factual findings of the NTC which
canceling applications, are all executive and administrative in nature. It is a well formed the basis for awarding the provisional authority to Bayantel. As found by the NTC,
recognized principle that purely administrative and discretionary functions may not Bayantel has been granted several provisional and permanent authorities before to
be interfered with by the courts. (Coloso vs. Board of Accountancy, G.R. No. L- operate various telecommunications services.51 Indeed, it was established that Bayantel
5750, April 20, 1953) In general, courts have no supervising power over the was the first company to comply with its obligation to install local exchange lines pursuant
proceedings and actions of the administrative departments of the government. to E.O. 109 and R.A. 7925. In recognition of the same, the provisional authority awarded in
This is generally true with respect to acts involving the exercise of judgement or favor of Bayantel to operate Local Exchange Services in Quezon City, Malabon, Valenzuela
discretion and findings of fact. (54 Am. Jur. 558-559) xxx. and the entire Bicol region was made permanent and a CPCN for the said service was
granted in its favor. Prima facie evidence was likewise found showing Bayantel's legal,
The established exception to the rule is where the issuing authority has gone beyond its financial and technical capacity to undertake the proposed cellular mobile telephone
statutory authority, exercised unconstitutional powers or clearly acted arbitrarily and service.
without regard to his duty or with grave abuse of discretion. 45 None of these obtains in the
case at bar. Likewise, the May 3, 2000 Order did not violate NTC Memorandum Circular No. 9-14-90
dated September 4, 1990, contrary to the ruling of the Court of Appeals. The memorandum
Moreover, in petitions for certiorari, evidentiary matters or matters of fact raised in the circular sets forth the procedure for the issuance of provisional authority thus:
court below are not proper grounds nor may such be ruled upon in the proceedings. As
held in National Federation of Labor v. NLRC:46 EFFECTIVE THIS DATE, and as part of the Commission's drive to streamline and fast
track action on applications/petitions for CPCN other forms of authorizations, the
At the outset, it should be noted that a petition for certiorari under Rule 65 of the Commission shall be evaluating applications/petitions for immediate issuance of
Rules of Court will prosper only if there is a showing of grave abuse of discretion or provisional authorizations, pending hearing and final authorization of an
an act without or in excess of jurisdiction on the part of the National Labor application on its merit.
Relations Commission. It does not include an inquiry as to the correctness of the
evaluation of evidence which was the basis of the labor official or officer in For this purpose, it is hereby directed that all applicants/petitioners seeking for
determining his conclusion. It is not for this Court to re-examine conflicting provisional authorizations, shall submit immediately to the Commission, either
evidence, re-evaluate the credibility of witnesses nor substitute the findings of fact together with their application or in a Motion all their legal, technical, financial,
of an administrative tribunal which has gained expertise in its special field. economic documentations in support of their prayer for provisional authorizations
Considering that the findings of fact of the labor arbiter and the NLRC are for evaluation. On the basis of their completeness and their having complied with
supported by evidence on record, the same must be accorded due respect and requirements, the Commission shall be issuing provisional authorizations.
finality.
Clearly, a provisional authority may be issued even pending hearing and final
This Court has consistently held that the courts will not interfere in matters which are determination of an application on its merits.
addressed to the sound discretion of the government agency entrusted with the regulation
of activities coming under the special and technical training and knowledge of such Finally, this Court finds that the Manifestations of Extelcom alleging forum shopping on the
agency.47 It has also been held that the exercise of administrative discretion is a policy part of the NTC and Bayantel are not impressed with merit. The divisions of the Supreme
decision and a matter that can best be discharged by the government agency concerned, Court are not to be considered as separate and distinct courts. The Supreme Court remains
and not by the courts.48 In Villanueva v. Court of Appeals,49 it was held that findings of fact a unit notwithstanding that it works in divisions. Although it may have three divisions, it is
which are supported by evidence and the conclusion of experts should not be disturbed. but a single court. Actions considered in any of these divisions and decisions rendered
This was reiterated in Metro Transit Organization, Inc. v. National Labor Relations therein are, in effect, by the same Tribunal. The divisions of this Court are not to be
Commission,50 wherein it was ruled that factual findings of quasi-judicial bodies which have considered as separate and distinct courts but as divisions of one and the same court. 52
acquired expertise because their jurisdiction is confined to specific matters are generally
accorded not only respect but even finality and are binding even upon the Supreme Court
Moreover, the rules on forum shopping should not be literally interpreted. We have stated
if they are supported by substantial evidence.1wphi1.nt
thus:

Administrative agencies are given a wide latitude in the evaluation of evidence and in the
It is scarcely necessary to add that Circular No. 28-91 must be so interpreted and
exercise of its adjudicative functions. This latitude includes the authority to take judicial
applied as to achieve the purposes projected by the Supreme Court when it
notice of facts within its special competence.
promulgated that circular. Circular No. 28-91 was designed to serve as an
instrument to promote and facilitate the orderly administration of justice and G.R. No. 103144 April 4, 2001
should not be interpreted with such absolute literalness as to subvert its own
ultimate and legitimate objection or the goal of all rules of procedure which is to PHILSA INTERNATIONAL PLACEMENT and SERVICES CORPORATION, petitioner,
achieve substantial justice as expeditiously as possible. 53 vs.
THE HON. SECRETARY OF LABOR AND EMPLOYMENT, VIVENCIO DE MESA,
Even assuming that separate actions have been filed by two different parties involving RODRIGO MIKIN and CEDRIC LEYSON, respondents.
essentially the same subject matter, no forum shopping was committed as the parties did
not resort to multiple judicial remedies. The Court, therefore, directed the consolidation of This is a petition for certiorari from the Order dated November 25, 1991 issued by public
the two cases because they involve essentially the same issues. It would also prevent the respondent Secretary of Labor and Employment. The November 25, 1991 Order affirmed in
absurd situation wherein two different divisions of the same court would render altogether toto the August 29, 1988 Order of the Philippine Overseas Employment Administration
different rulings in the cases at bar. (hereinafter the "POEA") which found petitioner liable for three (3) counts of illegal
exaction, two (2) counts of contract substitution and one count of withholding or unlawful
We rule, likewise, that the NTC has legal standing to file and initiate legal action in cases deduction from salaries of workers in POEA Case No. (L) 85-05-0370.
where it is clear that its inaction would result in an impairment of its ability to execute and
perform its functions. Similarly, we have previously held in Civil Service Commission v. Petitioner Philsa International Placement and Services Corporation (hereinafter referred to
Dacoycoy54 that the Civil Service Commission, as an aggrieved party, may appeal the as "Philsa") is a domestic corporation engaged in the recruitment of workers for overseas
decision of the Court of Appeals to this Court. employment. Sometime in January 1985, private respondents, who were recruited by
petitioner for employment in Saudi Arabia, were required to pay placement fees in the
As correctly stated by the NTC, the rule invoked by Extelcom is Rule 65 of the Rules of Civil amount of P5,000.00 for private respondent Rodrigo L. Mikin and P6,500.00 each for
Procedure, which provides that public respondents shall not appear in or file an answer or private respondents Vivencio A. de Mesa and Cedric P. Leyson. 1
comment to the petition or any pleading therein.55 The instant petition, on the other hand,
was filed under Rule 45 where no similar proscription exists. After the execution of their respective work contracts, private respondents left for Saudi
Arabia on January 29, 1985. They then began work for Al-Hejailan Consultants A/E, the
WHEREFORE, in view of the foregoing, the consolidated petitions are GRANTED. The foreign principal of petitioner.
Court of Appeals' Decision dated September 13, 2000 and Resolution dated February 9,
2001 are REVERSED and SET ASIDE. The permanent injunction issued by the Court of While in Saudi Arabia, private respondents were allegedly made to sign a second contract
Appeals is LIFTED. The Orders of the NTC dated February 1, 2000 and May 3, 2000 are on February 4, 1985 which changed some of the provisions of their original contract
REINSTATED. No pronouncement as to costs. resulting in the reduction of some of their benefits and privileges. 2 On April 1, 1985, their
foreign employer allegedly forced them to sign a third contract which increased their work
SO ORDERED. hours from 48 hours to 60 hours a week without any corresponding increase in their basic
monthly salary. When they refused to sign this third contract, the services of private
respondents were terminated by Al-Hejailan and they were repatriated to the Philippines. 3

Upon their arrival in the Philippines, private respondents demanded from petitioner Philsa
the return of their placement fees and for the payment of their salaries for the unexpired
portion of their contract. When petitioner refused, they filed a case before the POEA
against petitioner Philsa and its foreign principal, Al-Hejailan., with the following causes of
action:

1. Illegal dismissal;

2. Payment of salary differentials;

3. Illegal deduction/withholding of salaries;


4. Illegal exactions/refund of placement fees; and 3. TWO THOUSAND SAUDI RIYALS (SR2,000.00) each for R.I. Mikin and C.A.P.
Leyson only, representing their differential pay for the months of February and
5. Contract substitution. 4 March, 1985; and

The case was docketed as POEA Case No. (L) 85-05 0370. 4. Five percent (5%) of the total awards as and by way of attorney's fees.

Under the rules of the POEA dated May 21, 1985, complaints involving employer-employee All payments of the abovestated awards shall be made in Philippine Currency
relations arising out of or by virtue of any law or contract involving Filipino workers for equivalent to the prevailing exchange rate according to the Central Bank at the
overseas employment, including money claims, are adjudicated by the Workers' Assistance time of payment.
and Adjudication Office (hereinafter the "WAAO") thru the POEA Hearing Officers. 5 On the
other hand, complaints involving recruitment violations warranting suspension or All other claims of complainants as well as the counterclaims of respondent are
cancellation of the license of recruiting agencies are cognizable by the POEA thru its dismissed for lack of merit.
Licensing and Recruitment Office (hereinafter the "LRO"). 6 In cases where a complaint
partakes of the nature of both an employer-employee relationship case and a recruitment SO ORDERED." 10

regulation case, the POEA Hearing Officer shall act as representative of both the WAAO and
the LRO and both cases shall be heard simultaneously. In such cases, the Hearing Officer
Under the Rules and Regulations of the POEA, the decision of the POEA-Adjudication Office
shall submit two separate recommendations for the two aspects of the case. 7
on matters involving money claims arising from the employer-employee relationship of
overseas Filipino workers may be appealed to the National Labor Relations Commission
In the case at bench, the first two causes of action were in the nature of money claims (hereinafter the "NLRC)11 . Thus, as both felt aggrieved by the said POEA Decision,
arising from the employer-employee relations and were properly cognizable by the WAAO. petitioner and private respondents filed separate appeals from the August 31, 1988 POEA
The last two causes of action were in the nature of recruitment violations and may be Decision to the NLRC.
investigated by the LRO. The third cause of action, illegal deduction/withholding of salary,
is both a money claim and a violation of recruitment regulations and is thus under the
In a decision dated July 26, 1989 12 , the NLRC modified the appealed decision of the POEA
investigatory jurisdiction of both the WAAO and the LRO.
Adjudication Office by deleting the award of salary deductions and differentials. These
awards to private respondents were deleted by the NLRC considering that these were not
Several hearings were conducted before the POEA Hearing Officer on the two aspects of raised in the complaint filed by private respondents. The NLRC likewise stated that there
private respondents' complaint. During these hearings, private respondents supported was nothing in the text of the decision which would justify the award.
their complaint with the presentation of both documentary and testimonial evidence. When
it was its turn to present its evidence, petitioner failed to do so and consequently, private
Private respondents filed a Motion for Reconsideration but the same was denied by the
respondents filed a motion to decide the case on the basis of the evidence on record. 8
NLRC in a Resolution dated October 25; 1989.

On the aspects of the case involving money claims arising from the employer-employee
Private respondents then elevated the July 26, 1989 decision of the NLRC to the Supreme
relations and illegal dismissal, the POEA rendered a decision dated August 31, 1988 9 , the
Court in a petition for review for certiorari where it was docketed as G.R. No. 89089.
dispositive portion of which reads:
However, in a Resolution dated October 25, 1989, the petition was dismissed outright for
"insufficiency in form and substance, having failed to comply with the Rules of Court and
"CONFORMABLY TO THE FOREGOING, judgment is hereby rendered ordering Circular No. 1-88 requiring submission of a certified true copy of the questioned resolution
respondent PHILSA INTERNATIONAL PLACEMENT AND SERVICE CORPORATION to dated August 23, 1989." 13
pay complainants, jointly and severally with its principal Al-Hejailan, the following
amounts, to wit:
Almost simultaneous with the promulgation of the August 31, 1988 decision of the POEA on
private respondents' money claims, the POEA issued a separate Order dated August 29,
1. TWO THOUSAND TWO HUNDRED TWENTY FIVE SAUDI RIYALS (SR2,225.00) to 1988 14 resolving the recruitment violations aspect of private respondents' complaint. In
each complainant, representing the refund of their unpaid separation pay; this Order, the POEA found petitioner guilty of illegal exaction, contract substitution, and
unlawful deduction. The dispositive portion of this August 29, 1988 POEA Order reads:
2. ONE THOUSAND SAUDI RIYALS (SR1,000.00) for V.A. de Mesa alone, representing
the salary deduction from his March salary;
"WHEREFORE, premises considered, this Office finds herein respondent PHILSA CONTRACT SUBSTITUTION. IN THE PREMISES, THE CONTRACT SUBSTITUTION IS
International Placement and Services Corporation liable for three (3) counts of VALID AS IT IMPROVED THE TERMS AND CONDITIONS OF PRIVATE RESPONDENTS'
illegal exaction, two (2) counts of contract substitution and one count of EMPLOYMENT.
withholding or unlawful deduction from salaries of workers.
III.
Accordingly, respondent is hereby ordered to refund the placement fees in the
amount of P2,500.00 to Rodrigo L. Mikin, P4,000.00, each, to Vivencio A. de Mesa THE PUBLIC RESPONDENT HAS ACTED WITHOUT OR IN EXCESS OF JURISDICTION,
and Cedric A.P. Leyson plus restitution of the salaries withheld in the amount of OR WITH GRAVE ABUSE OF DISCRETION IN HOLDING PETITIONER LIABLE FOR
SR1,000.00 to Vivencio A. de Mesa. ILLEGAL DEDUCTIONS/WITHHOLDING OF SALARIES FOR THE SUPREME COURT
ITSELF HAS ALREADY ABSOLVED PETITIONER FROM THIS CHARGE.
Moreover, respondent's license is hereby suspended for eight (8) months to take
effect immediately and to remain as such until full refund and restitution of the With respect to the first ground, petitioner would want us to overturn the findings of the
above-stated amounts have been effected or in lieu thereof, it is fined the amount POEA, subsequently affirmed by the Secretary of the Department of Labor and
of SIXTY THOUSAND (P60,000.00) PESOS plus restitution. Employment, that it is guilty of illegal exaction committed by collecting placement fees in
excess of the amounts allowed by law. This issue, however, is a question of fact which
SO ORDERED." cannot be raised in a petition for certiorari under Rule 65. 17 As we have previously held:

In line with this August 29, 1988 Order, petitioner deposited the check equivalent to the "It should be noted, in the first place, that the instant petition is a special civil
claims of private respondents and paid the corresponding fine under protest. From the said action for certiorari under Rule 65 of the Revised Rules of Court. An extraordinary
Order, petitioner filed a Motion for Reconsideration which was subsequently denied in an remedy, its use is available only and restrictively in truly exceptional cases wherein
Order dated October 10, 1989. the action of an inferior court, board or officer performing judicial or quasi-judicial
acts is challenged for being wholly void on grounds of jurisdiction. The sole office of
Under the POEA Rules and Regulations, the decision of the POEA thru the LRO suspending the writ of certiorari is the correction of errors of jurisdiction including the
or canceling a license or authority to act as a recruitment agency may be appealed to the commission of grave abuse of discretion amounting to lack or excess of
Ministry (now Department) of Labor and Employment. 15 Accordingly, after the denial of its jurisdiction. It does not include correction of public respondent NLRC's evaluation of
motion for reconsideration, petitioner appealed the August 21, 1988 Order to the Secretary the evidence and factual findings based thereon, which are generally accorded not
of Labor and Employment. However, in an Order dated September 13, 1991, 16 public only great respect but even finality." 18
respondent Secretary of Labor and Employment affirmed in toto the assailed Order.
Petitioner filed a Motion for Reconsideration but this was likewise denied in an Order dated The question of whether or not petitioner charged private respondents placement fees in
November 25, 1991. excess of that allowed by law is clearly a question of fact which is for public respondent
POEA, as a trier of facts, to determine. As stated above, the settled rule is that the factual
Hence, the instant Petition for Certiorari where petitioner raises the following grounds for findings of quasi-judicial agencies like the POEA, which have acquired expertise because
the reversal of the questioned Orders: their jurisdiction is confined to specific matters, are generally accorded not only respect,
but at times even finality if such findings are supported by substantial evidence. 19
I
On this point, we have carefully examined the records of the case and it is clear that the
ruling of public respondent POEA that petitioner is guilty of illegal exaction is supported by
THE PUBLIC RESPONDENT HAS ACTED WITHOUT OR IN EXCESS OF JURISDICTION
substantial evidence. Aside from the testimonial evidence offered by private respondents,
OR WITH GRAVE ABUSE OF DISCRETION IN HOLDING PETITIONER GUILTY OF
they also presented documentary evidence consisting of receipts issued by a duly
ILLEGAL EXACTIONS. THE FINDING IS NOT SUPPORTED BY EVIDENCE AND IN ANY
authorized representative of petitioner which show the payment of amounts in excess of
EVENT, THE LAW ON WHICH THE CONVICTION IS BASED IS VOID.
those allowed by the POEA. In contrast, petitioner did not present any evidence
whatsoever to rebut the claims of private respondents despite the many opportunities for
II them to do so.

THE PUBLIC RESPONDENT HAS ACTED WITHOUT OR IN EXCESS OF JURISDICTION


OR WITH GRAVE ABUSE OF DISCRETION IN PENALIZING PETITIONER WITH
Petitioner insists, however, that it cannot be held liable for illegal exaction as POEA Filipino overseas workers is P2,500.00. The said circular was apparently issued in
Memorandum Circular No. 11, Series of 1983, which enumerated the allowable fees which compliance with the provisions of Article 32 of the Labor Code which provides, as follows:
may be collected from applicants, is void for lack of publication.
"ARTICLE 32. Fees to be paid by workers. Any person applying with a private fee-
There is merit in the argument. charging employment agency for employment assistance shall not be charged any
fee until he has obtained employment through its efforts or has actually
In Taada vs. Tuvera 20
, the Court held, as follows: commenced employment. Such fee shall be always covered with the approved
receipt clearly showing the amount paid. The Secretary of Labor shall promulgate
a schedule of allowable fees." (italic supplied)
"We hold therefore that all statutes, including those of local application and private
laws, shall be published as a condition for their effectivity, which shall begin fifteen
days after publication unless a different effectivity date is fixed by the legislature. It is thus clear that the administrative circular under consideration is one of those
issuances which should be published for its effectivity, since its purpose is to enforce and
implement an existing law pursuant to a valid delegation. 27 Considering that POEA
Covered by this rule are presidential decrees and executive orders promulgated by
Administrative Circular No. 2, Series of 1983 has not as yet been published or filed with the
the President in the exercise of legislative powers whenever the same are validly
National Administrative Register, the same is ineffective and may not be enforced.
delegated by the legislature or, at present, directly conferred by the Constitution:
Administrative rules and regulations must also be published if their purpose is to
enforce or implement existing law pursuant to a valid delegation. The Office of the Solicitor General argues however that the imposition of administrative
sanctions on petitioner was based not on the questioned administrative circular but on
Article 32 and Article 34 (a) 28 of the Labor Code.
Interpretative regulations and those merely internal in nature, that is, regulating
only the personnel of the administrative agency and the public, need not be
published. Neither is publication required of the so-called letter of instructions The argument is not meritorious. The said articles of the Labor Code were never cited,
issued by the administrative superiors concerning the rules or guidelines to be much less discussed, in the body of the questioned Orders of the POEA and Secretary of
followed by their subordinates in the performance of their duties." Labor and Employment. In fact, the said Orders were consistent in mentioning that
petitioner's violation of Administrative Circular No. 2, Series of 1983 was the basis for the
imposition of administrative sanctions against petitioner. Furthermore, even assuming that
Applying this doctrine, we have previously declared as having no force and effect the
petitioner was held liable under the said provisions of the Labor Code, Articles 32 and 34
following administrative issuances: a) Rules and Regulations issued by the Joint Ministry of
(a) of the Labor Code presupposes the promulgation of a valid schedule of fees by the
Health-Ministry of Labor and Employment Accreditation Committee regarding the
Department of Labor and Employment. Considering that, as, previously discussed,
accreditation of hospitals, medical clinics and laboratories; 21 b) Letter of Instruction No.
Administrative Circular No. 2, Series of 1983 embodying such a schedule of fees never took
416 ordering the suspension of payments due and payable by distressed copper mining
effect, there is thus no basis for the imposition of the administrative sanctions against
companies to the national government; 22 c) Memorandum Circulars issued by the POEA
petitioner. Moreover, under Book VI, Chapter II, Section 3 of the Administrative Code of
regulating the recruitment of domestic helpers to Hong Kong; 23 d) Administrative Order No.
1987, "(r)ules in force on the date of the effectivity of this Code which are not filed within
SOCPEC 89-08-01 issued by the Philippine International Trading Corporation regulating
three (3) months from that date shall not thereafter be the basis of any sanction against
applications for importation from the People's Republic of China; 24 and e) Corporate
any party or persons." Considering that POEA Administrative Circular No. 2 was never filed
Compensation Circular No. 10 issued by the Department of Budget and Management
with the National Administrative Register, the same cannot be used as basis for the
discontinuing the payment of other allowances and fringe benefits to government officials
imposition of administrative sanctions against petitioner.
and employees. 25 In all these cited cases, the administrative issuances questioned therein
were uniformly struck down as they were not published or filed with the National
Administrative Register as required by the Administrative Code of 1987. 26 The Office of the Solicitor General likewise argues that the questioned administrative
circular is not among those requiring publication contemplated by Taada vs. Tuvera as it
is addressed only to a specific group of persons and not to the general public.
POEA Memorandum Circular No. 2, Series of 1983 must likewise be declared ineffective as
the same was never published or filed with the National Administrative Register.
Again, there is no merit in this argument.
POEA Memorandum Order No. 2, Series of 1983 provides for the applicable schedule of
placement and documentation fees for private employment agencies or authority holders. The fact that the said circular is addressed only to a specified group, namely private
Under the said Order, the maximum amount which may be collected from prospective employment agencies or authority holders, does not take it away from the ambit of our
ruling in Taada vs. Tuvera. In the case of Phil. Association of Service Exporters vs. Torres, 29
the administrative circulars questioned therein were addressed to an even smaller group, should not be left unpunished. It is the duty of this Office to repress such acts by
namely Philippine and Hong Kong agencies engaged in the recruitment of workers for Hong teaching agencies a lesson to avoid repetition of the same violation." 31
Kong, and still the Court ruled therein that, for lack of proper publication, the said circulars
may not be enforced or implemented. With respect to the third ground, petitioner argues that the public respondent committed
grave abuse of discretion in holding petitioner liable for illegal deductions/withholding of
Our pronouncement in Taada vs. Tuvera is clear and categorical. Administrative rules and salaries considering that the Supreme Court itself has already absolved petitioner from this
regulations must be published if their purpose is to enforce or implement existing law charge. Petitioner premises its argument on the fact that the July 26, 1989 Decision of the
pursuant to a valid delegation., The only exceptions are interpretative regulations, those NLRC absolving it from private respondent de Mesa's claim for salary deduction has already
merely internal in nature, or those so-called letters of instructions issued by administrative attained finality by reason of the dismissal of private respondents' petition for certiorari of
superiors concerning the rules and guidelines to be followed by their subordinates in the the said NLRC decision by the Supreme Court.
performance of their duties. Administrative Circular No. 2, Series of 1983 has not been
shown to fall under any of these exceptions. Petitioner is correct in stating that the July 26, 1989 Decision of the NLRC has attained
finality by reason of the dismissal of the petition for certiorari assailing the same. However,
In this regard, the Solicitor General's reliance on the case of Yaokasin vs. Commissioner of the said NLRC Decision dealt only with the money claims of private respondents arising
Customs 30 is misplaced. In the said case, the validity of certain Customs Memorandum from employer-employee relations and illegal dismissal and as such, it is only for the
Orders were upheld despite their lack of publication as they were addressed to a particular payment of the said money claims that petitioner is absolved. The administrative
class of persons, the customs collectors, who were also the subordinates of the sanctions, which are distinct and separate from the money claims of private respondents,
Commissioner of the Bureau of Customs. As such, the said Memorandum Orders clearly fall may still be properly imposed by the POEA. In fact, in the August 31, 1988 Decision of the
under one of the exceptions to the publication requirement, namely those dealing with POEA dealing with the money claims of private respondents, the POEA Adjudication Office
instructions from an administrative superior to a subordinate regarding the performance of precisely declared that "respondent's liability for said money claims is without prejudice to
their duties, a circumstance which does not obtain in the case at bench. and independent of its liabilities for the recruitment violations aspect of the case which is
the subject of a separate Order." 32
With respect to the second ground, petitioner would want us to review the findings of fact
of the POEA regarding the two counts of alleged contract substitution. Again, this is a The NLRC Decision absolving petitioner from paying private respondent de Mesa's claim for
question of fact which may not be disturbed if the same is supported by substantial salary deduction based its ruling on a finding that the said money claim was not raised in
evidence. A reading of the August 29, 1988 Order of the POEA shows that, indeed, the the complaint. 33 While there may be questions regarding such finding of the NLRC, the
ruling that petitioner is guilty of two (2) counts of prohibited contract substitution is finality of the said NLRC Decision prevents us from modifying or reviewing the same. But
supported by substantial evidence. Thus: the fact that the claim for salary deduction was not raised by private respondents in their
complaint will not bar the POEA from holding petitioner liable for illegal deduction or
"2. As admitted by respondent, there was definitely a contract of substitution in the withholding of salaries as a ground for the suspension or cancellation of petitioner's
first count. The first contract was duly approved by the Administration and, license.
therefore, the parties are bound by the terms and condition thereof until its
expiration. The mere intention of respondents to increase the number of hours of Under the POEA Rules and Regulations, the POEA, on its own initiative, may conduct the
work, even if there was a corresponding increase in wage is clear violation of the necessary proceeding for the suspension or cancellation of the license of any private
contract as approved by the Administration, and notwithstanding the same, the placement agency on any of the grounds mentioned therein. 34 As such, even without a
amendment is evidently contrary to law, morals, good customs and public policy written complaint from an aggrieved party, the POEA can initiate proceedings against an
and hence, must be shunned (Art. 1306, Civil Code of the Philippines, Book III, Title erring private placement agency and, if the result of its investigation so warrants, impose
I, Chapter 1, Article 83, Labor Code of the Philippines, as amended). Moreover, it the corresponding administrative sanction thereof. Moreover, the POEA, in an investigation
would appear that the proposed salary increase corresponding to the increase in of an employer-employee relationship case, may still hold a respondent liable for
number of work bonus may just have been a ploy as complainant were (sic) administrative sanctions if, in the course of its investigation, violations of recruitment
thereafter not paid at the increased rate. regulations are uncovered. 35 It is thus clear that even if recruitment violations were not
included in a complaint for money claims initiated by a private complainant, the POEA,
As to contract substitution in the second part, a third contract was emphatically under its rules, may still take cognizance of the same and impose administrative sanctions
intended by respondent to be signed by complainants which, however, was not if the evidence so warrants.
consummated due to the adamant refusal of complainants to sign thereon. Mere
intention of the respondent to commit contract substitution for a second time As such, the fact that petitioner has been absolved by final judgment for the payment of
the money claim to private respondent de Mesa does not mean that it is likewise absolved
from the administrative sanctions which may be imposed as a result of the unlawful
deduction or withholding of private respondents' salary. The POEA thus committed no
grave abuse of discretion in finding petitioner administratively liable of one count of
unlawful deduction/withholding of salary.

To summarize, petitioner should be absolved from the three (3) counts of illegal exaction as
POEA Administrative Circular No. 2, Series of 1983 could not be the basis of administrative
sanctions against petitioner for lack of publication. However, we affirm the ruling of the
POEA and the Secretary of Labor and Employment that petitioner should be held
administratively liable for two (2) counts of contract substitution and one (1) count of
withholding or unlawful deduction of salary.

Under the applicable schedule of penalties imposed by the POEA, the penalty for each
count of contract substitution is suspension of license for two (2) months or a fine of
P10,000.00 while the penalty for withholding or unlawful deduction of salaries is
suspension of license for two (2) months or fine equal to the salary withheld but not less
than P10,000.00 plus restitution of the amount in both instances. 36 Applying the said
schedule on the instant case, the license of petitioner should be suspended for six (6)
months or, in lieu thereof, it should be ordered to pay fine in the amount of P30,000.00.
Petitioner should likewise pay the amount of SR1,000.00 to private respondent Vivencio A.
de Mesa as restitution for the amount withheld from his salary.

WHEREFORE, premises considered, the September 13, 1991 and November 25, 1991
Orders of public respondent Secretary of Labor and Employment are hereby MODIFIED. As
modified, the license of private respondent Philsa International Placement and Services
Corporation is hereby suspended for six (6) months or, in lieu thereof, it is hereby ordered
to pay the amount of P30,000.00 as fine. Petitioner is likewise ordered to pay the amount
of SR1,000.00 to private respondent Vivencio A. de Mesa. All other monetary awards are
deleted. SO ORDERED.
G.R. No. 111953 December 12, 1997 Secretary Jesus B. Garcia that "the matter of reviewing, recalling or annulling PPA's
administrative issuances lies exclusively with its Board of Directors as its governing body."
HON. RENATO C. CORONA, in his capacity as Assistant Secretary for Legal
Affairs, HON. JESUS B. GARCIA, in his capacity as Acting Secretary, Department Meanwhile, on August 31, 1992, the PPA issued Memorandum Order No. 08-92 8 which laid
of Transportation and Communications, and ROGELIO A. DAYAN, in his capacity down the criteria or factors to be considered in the reappointment of harbor pilot, viz.: (1)
as General Manager of Philippine Ports Authority, petitioners, Qualifying Factors: 9 safety record and physical/mental medical exam report and (2) Criteria
vs. for Evaluation: 10 promptness in servicing vessels, compliance with PPA Pilotage Guidelines,
UNITED HARBOR PILOTS ASSOCIATION OF THE PHILIPPINES and MANILA PILOTS number of years as a harbor pilot, average GRT of vessels serviced as pilot,
ASSOCIATION, respondents. awards/commendations as harbor pilot, and age.

In issuing Administrative Order No. 04-92 (PPA-AO No. 04-92), limiting the term of Respondents reiterated their request for the suspension of the implementation of PPA-AO
appointment of harbor pilots to one year subject to yearly renewal or cancellation, did the No. 04-92, but Secretary Garcia insisted on his position that the matter was within the
Philippine Ports Authority (PPA) violate respondents' right to exercise their profession and jurisdiction of the Board of Directors of the PPA. Compas appealed this ruling to the Office
their right to due process of law? of the President (OP), reiterating his arguments before the DOTC.

The PPA was created on July 11, 1974, by virtue of Presidential Decree No. 505. On On December 23, 1992, the OP issued an order directing the PPA to hold in abeyance the
December 23, 1975, Presidential Decree No. 857 was issued revising the PPA's charter. implementation of PPA-AO No. 04-92. In its answer, the PPA countered that said
Pursuant to its power of control, regulation, and supervision of pilots and the pilotage administrative order was issued in the exercise of its administrative control and supervision
profession, 1 the PPA promulgated PPA-AO-03-85 2 on March 21, 1985, which embodied the over harbor pilots under Section 6-a (viii), Article IV of P.D. No. 857, as amended, and it,
"Rules and Regulations Governing Pilotage Services, the Conduct of Pilots and Pilotage Fees along with its implementing guidelines, was intended to restore order in the ports and to
in Philippine Ports." These rules mandate, inter alia, that aspiring pilots must be holders of improve the quality of port services.
pilot licenses 3 and must train as probationary pilots in outports for three months and in the
Port of Manila for four months. It is only after they have achieved satisfactory performance On March 17, 1993, the OP, through then Assistant Executive Secretary for Legal Affairs
4
that they are given permanent and regular appointments by the PPA itself 5 to exercise Renato C. Corona, dismissed the appeal/petition and lifted the restraining order issued
harbor pilotage until they reach the age of 70, unless sooner removed by reason of mental earlier. 11 He concluded that PPA-AO No. 04-92 applied to all harbor pilots and, for all
or physical unfitness by the PPA General Manager. 6 Harbor pilots in every harbor district intents and purposes, was not the act of Dayan, but of the PPA, which was merely
are further required to organize themselves into pilot associations which would make implementing Section 6 of P.D. No. 857, mandating it "to control, regulate and supervise
available such equipment as may be required by the PPA for effective pilotage services. In pilotage and conduct of pilots in any port district."
view of this mandate, pilot associations invested in floating, communications, and office
equipment. In fact, every new pilot appointed by the PPA automatically becomes a member
On the alleged unconstitutionality and illegality of PPA-AO No. 04-92 and its implementing
of a pilot association and is required to pay a proportionate equivalent equity or capital
memoranda and circulars, Secretary Corona opined that:
before being allowed to assume his duties, as reimbursement to the association concerned
of the amount it paid to his predecessor.
The exercise of one's profession falls within the constitutional guarantee against
wrongful deprivation of, or interference with, property rights without due process.
Subsequently, then PPA General Manager Rogelio A. Dayan issued PPA-AO No. 04-92 7 on
In the limited context of this case. PPA-AO 04-92 does not constitute a wrongful
July 15, 1992, whose avowed policy was to "instill effective discipline and thereby afford
interference with, let alone a wrongful deprivation of, the property rights of those
better protection to the port users through the improvement of pilotage services." This was
affected thereby. As may be noted, the issuance aims no more than to improve
implemented by providing therein that "all existing regular appointments which have been
pilotage services by limiting the appointment to harbor pilot positions to one year,
previously issued either by the Bureau of Customs or the PPA shall remain valid up to 31
subject to renewal or cancellation after a rigid evaluation of the appointee's
December 1992 only" and that "all appointments to harbor pilot positions in all pilotage
performance.
districts shall, henceforth, be only for a term of one (1) year from date of effectivity subject
to yearly renewal or cancellation by the Authority after conduct of a rigid evaluation of
performance." PPA-AO 04-92 does not forbid, but merely regulates, the exercise by harbor pilots
of their profession in PPA's jurisdictional area. (Emphasis supplied)
On August 12, 1992, respondents United Harbor Pilots Association and the Manila Pilots
Association, through Capt. Alberto C. Compas, questioned PPA-AO No. 04-92 before the Finally, as regards the alleged "absence of ample prior consultation" before the issuance of
Department of Transportation and Communication, but they were informed by then DOTC the administrative order, Secretary Corona cited Section 26 of P.D. No. 857, which merely
requires the PPA to consult with "relevant Government agencies." Since the PPA Board of Section 1 of the Bill of Rights lays down what is known as the "due process clause" of the
Directors is composed of the Secretaries of the DOTC, the Department of Public Works and Constitution, viz.:
Highways, the Department of Finance, and the Department of Environment and Natural
Resources, as well as the Director-General of the National Economic Development Agency, Sec. 1. No person shall be deprived of life, liberty, or property without due process
the Administrator of the Maritime Industry Authority (MARINA), and the private sector of law, . . .
representative who, due to his knowledge and expertise, was appointed by the President to
the Board, he concluded that the law has been sufficiently complied with by the PPA in
In order to fall within the aegis of this provision, two conditions must concur, namely, that
issuing the assailed administrative order.
there is a deprivation and that such deprivation is done without proper observance of due
process. When one speaks of due process of law, however, a distinction must be made
Consequently, respondents filed a petition for certiorari, prohibition and injunction with between matters of procedure and matters of substance. In essence, procedural due
prayer for the issuance of a temporary restraining order and damages, before Branch 6 of process "refers to the method or manner by which the law is enforced," while substantive
the Regional Trial Court of Manila, which was docketed as Civil Case No. 93-65673. On due process "requires that the law itself, not merely the procedures by which the law would
September 6, 1993, the trial court rendered the following judgment: 12 be enforced, is fair, reasonable, and just." 14 PPA-AO No. 04-92 must be examined in light of
this distinction.
WHEREFORE, for all the foregoing, this Court hereby rules that:
Respondents argue that due process was not observed in the adoption of PPA-AO No. 04-92
1. Respondents (herein petitioners) have acted excess jurisdiction and with grave allegedly because no hearing was conducted whereby "relevant government agencies" and
abuse of discretion and in a capricious, whimsical and arbitrary manner in the pilots themselves could ventilate their views. They are obviously referring to the
promulgating PPA Administrative Order 04-92 including all its implementing procedural aspect of the enactment. Fortunately, the Court has maintained a clear position
Memoranda, Circulars and Orders; in this regard, a stance it has stressed in the recent case of Lumiqued v. Hon. Exevea, 15
where it declared that "(a)s long as a party was given the opportunity to defend his
2. PPA Administrative Order 04-92 and its implementing Circulars and Orders are interests in due course, he cannot be said to have been denied due process of law, for this
declared null and void; opportunity to be heard is the very essence of due process. Moreover, this constitutional
mandate is deemed satisfied if a person is granted an opportunity to seek reconsideration
of the action or ruling complained of."
3. The respondents are permanently enjoined from implementing PPA
Administrative Order 04-92 and its implementing Memoranda, Circulars and
Orders. In the case at bar, respondents questioned PPA-AO No. 04-92 no less than four times 16
before the matter was finally elevated to this Tribunal. Their arguments on this score,
however, fail to persuade. While respondents emphasize that the Philippine Coast Guard,
No costs.
"which issues the licenses of pilots after administering the pilots' examinations," was not
consulted, 17 the facts show that the MARINA, which took over the licensing function of the
SO ORDERED. Philippine Coast Guard, was duly represented in the Board of Directors of the PPA. Thus,
petitioners correctly argued that, there being no matters of naval defense involved in the
The court a quo pointed out that the Bureau of Customs, the precursor of the PPA, issuance of the administrative order, the Philippine Coast Guard need not be consulted. 18
recognized pilotage as a profession and, therefore, a property right under Callanta v.
Carnation Philippines, Inc. 13 Thus, abbreviating the term within which that privilege may be Neither does the fact that the pilots themselves were not consulted in any way taint the
exercised would be an interference with the property rights of the harbor pilots. validity of the administrative order. As a general rule, notice and hearing, as the
Consequently, any "withdrawal or alteration" of such property right must be strictly made fundamental requirements of procedural due process, are essential only when an
in accordance with the constitutional mandate of due process of law. This was apparently administrative body exercises its quasi-judicial function. In the performance of its executive
not followed by the PPA when it did not conduct public hearings prior to the issuance of or legislative functions, such as issuing rules and regulations, an administrative body need
PPA-AO No. 04-92; respondents allegedly learned about it only after its publication in the not comply with the requirements of notice and hearing. 19
newspapers. From this decision, petitioners elevated their case to this Court on certiorari.
Upon the other hand, it is also contended that the sole and exclusive right to the exercise
After carefully examining the records and deliberating on the arguments of the parties, the of harbor pilotage by pilots is a settled issue. Respondents aver that said right has become
Court is convinced that PPA-AO No. 04-92 was issued in stark disregard of respondents' vested and can only be "withdrawn or shortened" by observing the constitutional mandate
right against deprivation of property without due process of law. Consequently, the instant of due process of law. Their argument has thus shifted from the procedural to one of
petition must be denied.
substance. It is here where PPA-AO No. 04-92 fails to meet the condition set by the organic It is readily apparent that PPA-AO No. 04-92 unduly restricts the right of harbor pilots to
law. enjoy their profession before their compulsory retirement. In the past, they enjoyed a
measure of security knowing that after passing five examinations and undergoing years of
There is no dispute that pilotage as a profession has taken on the nature of a property on-the-job training, they would have a license which they could use until their retirement,
right. Even petitioner Corona recognized this when he stated in his March 17, 1993, unless sooner revoked by the PPA for mental or physical unfitness. Under the new
decision that "(t)he exercise of one's profession falls within the constitutional guarantee issuance, they have to contend with an annual cancellation of their license which can be
against wrongful deprivation of, or interference with, property rights without due process." temporary or permanent depending on the outcome of their performance evaluation.
20
He merely expressed the opinion the "(i)n the limited context of this case, PPA-AO 04-92 Veteran pilots and neophytes alike are suddenly confronted with one-year terms which ipso
does not constitute a wrongful interference with, let alone a wrongful deprivation of, the facto expire at the end of that period. Renewal of their license is now dependent on a "rigid
property rights of those affected thereby, and that "PPA-AO 04-95 does not forbid, but evaluation of performance" which is conducted only after the license has already been
merely regulates, the exercise by harbor pilots of their profession." As will be presently cancelled. Hence, the use of the term "renewal." It is this pre-evaluation cancellation which
demonstrated, such supposition is gravely erroneous and tends to perpetuate an primarily makes PPA-AO No. 04-92 unreasonable and constitutionally infirm. In a real sense,
administrative order which is not only unreasonable but also superfluous. it is a deprivation of property without due process of law.

Pilotage, just like other professions, may be practiced only by duly licensed individuals. The Court notes that PPA-AO No. 04-92 and PPA-MO No. 08-92 are already covered by PPA-
Licensure is "the granting of license especially to practice a profession." It is also "the AO No. 03-85, which is still operational. Respondents are correct in pointing out that PPA-
system of granting licenses (as for professional practice) in accordance with establishment AO No. 04-92 is a "surplusage" 23 and, therefore, an unnecessary enactment. PPA-AO 03-85
standards." 21 A license is a right or permission granted by some competent authority to is a comprehensive order setting forth the "Rules and Regulations Governing Pilotage
carry on a business or do an act which, without such license, would be illegal. 22 Services, the Conduct of Pilots and Pilotage Fees in Philippine Ports." It provides, inter alia,
for the qualification, appointment, performance evaluation, disciplining and removal of
harbor pilots matters which are duplicated in PPA-AO No. 04-92 and its implementing
Before harbor pilots can earn a license to practice their profession, they literally have to
memorandum order. Since it adds nothing new or substantial, PPA-AO No. 04-92 must be
pass through the proverbial eye of a needle by taking, not one but five examinations, each
struck down.
followed by actual training and practice. Thus, the court a quo observed:

Finally, respondents' insinuation that then PPA General Manager Dayan was responsible for
Petitioners (herein respondents) contend, and the respondents (herein petitioners)
the issuance of the questioned administrative order may have some factual basis; after all,
do not deny, the here (sic) in this jurisdiction, before a person can be a harbor
power and authority were vested in his office to propose rules and regulations. The trial
pilot, he must pass five (5) government professional examinations, namely, (1) For
court's finding of animosity between him and private respondents might likewise have a
Third Mate and after which he must work, train and practice on board a vessel for
grain of truth. Yet the number of cases filed in court between private respondents and
at least a year; (2) For Second Mate and after which he must work, train and
Dayan, including cases which have reached this Court, cannot certainly be considered the
practice for at least a year; (3) For Chief Mate and after which he must work, train
primordial reason for the issuance of PPA-AO No. 04-92. In the absence of proof to the
and practice for at least a year; (4) For a Master Mariner and after which he must
contrary, Dayan should be presumed to have acted in accordance with law and the best of
work as Captain of vessel for at least two (2) years to qualify for an examination to
professional motives. In any event, his actions are certainly always subject to scrutiny by
be a pilot; and finally, of course, that given for pilots.
higher administrative authorities.

Their license is granted in the form of an appointment which allows them to engage in
WHEREFORE, the instant petition is hereby DISMISSED and the assailed decision of the
pilotage until they retire at the age 70 years. This is a vested right. Under the terms of PPA-
court a quo dated September 6, 1993, in Civil Case No. 93-65673 is AFFIRMED. No
AO No. 04-92, "(a)ll existing regular appointments which have been previously issued by
pronouncement as to costs.
the Bureau of Customs or the PPA shall remain valid up to 31 December 1992 only," and
"(a)ll appointments to harbor pilot positions in all pilotage districts shall, henceforth, be
only for a term of one (1) year from date of effectivity subject to renewal or cancellation by SO ORDERED.
the Authority after conduct of a rigid evaluation of performance."