You are on page 1of 23

G.R. No.

L-23004 June 30, 1965 At first glance, the answer should be in the negative, because
the law itself contemplated, and, therefore, tacitly permitted or
MAKATI STOCK EXCHANGE, INC., petitioner, tolerated at least, the operation of two or more exchanges.
vs.
SECURITIES AND EXCHANGE COMMISSION and Wherever two or more exchanges exist, the
MANILA STOCK EXCHANGE, respondents. Commission, by order, shall require and enforce
uniformity of trading regulations in and/or between
Hermenegildo B. Reyes for petitioner. said exchanges. [Emphasis Ours] (Sec. 28b-13,
Office of the Solicitor General for respondent Securities and Securities Act.)
Exchange Commission.
Norberto J. Quisumbing and Emma Quisumbing-Fernando for In fact, as admitted by respondents, there were five stock
respondent Manila Stock Exchange. exchanges in Manila, before the Pacific War (p. 10, brief),
when the Securities Act was approved or amended.
BENGZON, C.J.: (Respondent Commission even admits that dual listing was
practiced then.) So if the existence of more than one exchange
were contrary to public interest, it is strange that the Congress
This is a review of the resolution of the Securities and
having from time to time enacted legislation amending the
Exchange Commission which would deny the Makati Stock
Exchange, Inc., permission to operate a stock exchange unless Securities Act, 4 has not barred multiplicity of exchanges.
it agreed not to list for trading on its board, securities already
listed in the Manila Stock Exchange. Forgetting for the moment the monopolistic aspect of the
Commission's resolution, let us examine the authority of the
Commission to promulgate and implement the rule in
Objecting to the requirement, Makati Stock Exchange, Inc.
contends that the Commission has no power to impose it and question.
that, anyway, it is illegal, discriminatory and unjust.
It is fundamental that an administrative officer has only such
powers as are expressly granted to him by the statute, and
Under the law, no stock exchange may do business in the
those necessarily implied in the exercise thereof.
Philippines unless it is previously registered with the
Commission by filing a statement containing the information
described in Sec. 17 of the Securities Act (Commonwealth Act In its brief and its resolution now subject to review, the
83, as amended). Commission cites no provision expressly supporting its rule.
Nevertheless, it suggests that the power is "necessary for the
It is assumed that the Commission may permit registration if execution of the functions vested in it"; but it makes no
the section is complied with; if not, it may refuse. And there is explanation, perhaps relying on the reasons advanced in
support of its position that trading of the same securities in
now no question that the section has been complied with, or
two or more stock exchanges, fails to give protection to the
would be complied with, except that the Makati Stock
investors, besides contravening public interest. (Of this, we
Exchange, upon challenging this particular requirement of the
shall treat later) .
Commission (rule against double listing) may be deemed to
have shown inability or refusal to abide by its rules, and
thereby to have given ground for denying registration. [Sec. 17 On the legality of its rule, the Commission's argument is that:
(a) (1) and (d)]. (a) it was approved by the Department Head before the
War; and (b) it is not in conflict with the provisions of the
Securities Act. In our opinion, the approval of the
Such rule provides: "... nor shall a security already listed in
any securities exchange be listed anew in any other securities Department, 5 by itself, adds no weight in a judicial litigation;
exchange ... ." and the test is not whether the Act forbids the Commission
from imposing a prohibition, but whether it empowers the
Commission to prohibit. No specific portion of the statute has
The objection of Makati Stock Exchange, Inc., to this rule is been cited to uphold this power. It is not found in sec. 28 (of
understandable. There is actually only one securities exchange the Securities Act), which is entitled "Powers (of the
The Manila Stock Exchange that has been operating Commission) with Respect to Exchanges and Securities." 6
alone for the past 25 years; and all or presumably all
available or worthwhile securities for trading in the market are
According to many court precedents, the general power to
now listed there. In effect, the Commission permits the Makati
"regulate" which the Commission has (Sec. 33) does not imply
Stock Exchange, Inc., to deal only with other securities. Which
is tantamount to permitting a store to open provided it sells authority to prohibit." 7
only those goods not sold in other stores. And if there's only
one existing store, 1 the result is a monopoly. The Manila Stock Exchange, obviously the beneficiary of the
disputed rule, contends that the power may be inferred from
the express power of the Commission to suspend trading in a
It is not farfetched to assert as petitioner does 2 that for all
practical purposes, the Commission's order or resolution security, under said sec. 28 which reads partly:
would make it impossible for the Makati Stock Exchange to
operate. So, its "permission" amounted to a "prohibition." And if in its opinion, the public interest so requires,
summarily to suspend trading in any registered
security on any securities exchange ... . (Sec. 28[3],
Apparently, the Commission acted "in the public
interest." 3 Hence, it is pertinent to inquire whether the Securities Act.)
Commission may "in the public interest" prohibit (or make
impossible) the establishment of another stock exchange However, the Commission has not acted nor claimed to
(besides the Manila Stock Exchange), on the ground that the have acted in pursuance of such authority, for the simple
operation of two or more exchanges adversely affects the reason that suspension under it may only be for ten days.
public interest. Indeed, this section, if applicable, precisely argues against the
position of the Commission because the "suspension," if it is,
and as applied to Makati Stock Exchange, continues for an
Administrative Law
-cjsc- Page 1
indefinite period, if not forever; whereas this Section 28 investors are necessarily beneficial to them; but not everything
authorizes suspension for ten days only. Besides, the beneficial to them is necessary for their protection.
suspension of trading in the security should not be on one
exchange only, but on allexchanges; bearing in mind that And yet, the Commission realizes that if there were two or
suspension should be ordered "for the protection of investors" more exchanges "the same security may sell for more in one
(first par., sec. 28) in all exchanges, naturally, and if "the exchange and sell for less in the other. Variance in price of the
public interest so requires" [sec. 28(3)]. same security would be the rule ... ." Needless to add, the
brokerage rates will also differ.
This brings up the Commission's principal conclusions
underlying its determination viz.: (a) that the establishment of This, precisely, strengthens the objection to the Commission's
another exchange in the environs of Manila would be inimical ruling. Such difference in prices and rates gives the buyer of
to the public interest; and (b) that double or multiple listing of shares alternative options, with the opportunity to invest at
securities should be prohibited for the "protection of the lower expense; and the seller, to dispose at higher prices.
investors." Consequently, for the investors' benefit (protection is not the
word), quality of listing 10 should be permitted, nay,
(a) Public Interest Having already adverted to this aspect of encouraged, and other exchanges allowed to operate. The
the matter, and the emerging monopoly of the Manila Stock circumstance that some people "made a lot of money due to
Exchange, we may, at this juncture, emphasize that by the difference in prices of securities traded in the stock
restricting free competition in the marketing of stocks, and exchanges of Manila before the war" as the Commission
depriving the public of the advantages thereof the Commission noted, furnishes no sufficient reason to let one exchange
all but permits what the law punishesas monopolies as "crimes corner the market. If there was undue manipulation or unfair
against public interest." 8 advantage in exchange trading the Commission should have
other means to correct the specific abuses.
"A stock exchange is essentially monopolistic," the
Commission states in its resolution (p. 14-a, Appendix, Brief Granted that, as the Commission observes, "what the country
for Petitioner). This reveals the basic foundation of the needs is not another" market for securities already listed on the
Commission's process of reasoning. And yet, a few pages Manila Stock Exchange, but "one that would focus its
afterwards, it recalls the benefits to be derived "from the attention and energies on the listing of new securities and thus
existence of two or more exchanges," and the desirability of "a effectively help in raising capital sorely needed by our ...
healthy and fair competition in the securities market," even as unlisted industries and enterprises."
it expresses the belief that "a fair field of competition among
stock exchanges should be encouraged only to resolve, Nonetheless, we discover no legal authority for it to shore up
paradoxically enough, that Manila Stock Exchange shall, in (and stifle) free enterprise and individual liberty along
effect, continue to be the only stock exchange in Manila or in channels leading to that economic desideratum. 11
the Philippines.
The Legislature has specified the conditions under which a
"Double listing of a security," explains the Commission, stock exchange may legally obtain a permit (sec. 17, Securities
"divides the sellers and the buyers, thus destroying the essence Act); it is not for the Commission to impose others. If the
of a stock exchange as a two-way auction market for the existence of two competing exchanges jeopardizes public
securities, where all the buyers and sellers in one geographical interest which is doubtful let the Congress
area converge in one defined place, and the bidders compete speak. 12 Undoubtedly, the opinion and recommendation of the
with each other to purchase the security at the lowest possible Commission will be given weight by the Legislature, in
price and those seeking to sell it compete with each other to judging whether or not to restrict individual enterprise and
get the highest price therefor. In this sense, a stock exchange is business opportunities. But until otherwise directed by law,
essentially monopolistic." the operation of exchanges should not be so regulated as
practically to create a monopoly by preventing the
Inconclusive premises, for sure. For it is debatable establishment of other stock exchanges and thereby
whether the buyer of stock may get the lowest price where all contravening:
the sellers assemble in only one place. The price there, in one
sale, will tend to fix the price for the succeeding, sales, and he (a) the organizers' (Makati's) Constitutional right to
has no chance to get a lower price except at another stock equality before the law;
exchange. Therefore, the arrangement desired by the
Commission may, at most, be beneficial to sellers of stock
(b) their guaranteed civil liberty to pursue any lawful
not to buyers although what applies to buyers should obtain
employment or trade; and
equally as to sellers (looking for higher prices). Besides, there
is the brokerage fee which must be considered. Not to mention
the personality of the broker. (c) the investor's right to choose where to buy or to
sell, and his privilege to select the brokers in his
employment. 13
(b) Protection of investors. At any rate, supposing the
arrangement contemplated is beneficial to investors (as the
Commission says), it is to be doubted whether it is "necessary" And no extended elucidation is needed to conclude that for a
for their "protection" within the purview of the Securities Act. licensing officer to deny license solely on the basis of what he
As the purpose of the Act is to give adequate and effective believes is best for the economy of the country may amount to
protection to the investing publicagainst fraudulent regimentation or, in this instance, the exercise of undelegated
representations, or false promises and the imposition of legislative powers and discretion.
worthless ventures, 9 it is hard to see how the proposed
concentration of the market has a necessary bearing to the Thus, it has been held that where the licensing statute does not
prevention of deceptive devices or unlawful practices. For it is expressly or impliedly authorize the officer in charge, he may
not mere semantics to declare that acts for the protection of not refuse to grant a license simply on the ground that a
sufficient number of licenses to serve the needs of the public
have already been issued. (53 C.J.S. p. 636.)
Administrative Law
-cjsc- Page 2
Concerning res judicata. Calling attention to the the rule, which, additionally, results in discrimination and
Commission's order of May 27, 1963, which Makati Stock did violation of constitutional rights.
not appeal, the Manila Stock Exchange pleads the doctrine
of res judicata. 14 (The order now reviewed is dated May 7, ACCORDINGLY, the license of the petition to operate a stock
1964.) exchange is approved without such condition. Costs shall be
paid by the Manila Stock Exchange. So ordered.
It appears that when Makati Stock Exchange, Inc. presented its
articles of incorporation to the Commission, the latter, after G.R. No. L-43653 November 29, 1977
making some inquiries, issued on May 27, 1963, an order
reading as follows.
RADIO COMMUNICATIONS OF THE PHILIPPINES,
INC. (RCPI), petitioner,
Let the certificate of incorporation of the MAKATI vs.
STOCK EXCHANGE be issued, and if the BOARD OF COMMUNICATIONS and DIEGO
organizers thereof are willing to abide by the MORALES, respondents.
foregoing conditions, they may file the proper
application for the registration and licensing of the
G.R. No. L-45378 November 29, 1977
said Exchange.
RADIO COMMUNICATIONS OF THE PHILIPPINES.
In that order, the Commission advanced the opinion that "it
INC. (RCPI), petitioner,
would permit the establishment and operation of the proposed
Makati Stock Exchange, provided ... it shall not list for trading
on its board, securities already listed in the Manila Stock vs.
Exchange ... ."
BOARD OF COMMUNICATIONS and PACIFICO
Admittedly, Makati Stock Exchange, Inc. has not appealed INNOCENCIO, respondents.
from that order of May 27, 1963. Now, Manila Stock insists
on res judicata. Treas & Aligaen for petitioner.

Why should Makati have appealed? It got the certificate R. Mag. Bernardo for respondent Morales.
of incorporation which it wanted. The condition or proviso
mentioned would only apply if and when it subsequently Silvestre T. de la Cruz for respondent Innocencio.
filed the application for registration as stock exchange. It had
not yet applied. It was not the time to question the Primitivo C. Santos for respondent Board.
condition; 15 Makati was still exploring the convenience of
soliciting the permit to operate subject to that condition. And it
could have logically thought that, since the condition did not
affect its articles of incorporation, it should not appeal the
order (of May 27, 1963) which after all, granted the certificate MARTIN, J.,
of incorporation (corporate existence) it wanted at that time.
These two petitions (G.R. No. L-43653 and G.R. No. L-
And when the Makati Stock Exchange finally found that it 45378) for review by certiorari of the decisions of the Board
could not successfully operate with the condition attached, it of Communications in BC Case No. 75-01-OC, entitled
took the issue by the horns, and expressing its desire for "Diego T Morales vs. Radio Communications of the
registration and license, it requested that the condition (against Philippines, Inc. (RCPI)" and BC Case No. 75-08-OC,
double listing) be dispensed with. The order of the entitled "Pacifica Innocencio vs. Radio Communications of the
Commission denying, such request is dated May 7, 1964, and Philippines, Inc. (RCPI)," have been Consolidated as per
is now under, review. resolution of this Court dated March 21, 1977, as they involve
the same issue as to whether the Board of Communications
has jurisdiction over claims for damages allegedly suffered by
Indeed, there can be no valid objection to the discussion of
private respondents for failure to receive telegrams sent thru
this issue of double listing now, 16 because even if the Makati
the petitioner Radio Communications of the Philippines, Inc.,
Stock Exchange, Inc. may be held to have accepted the
RCPI for short.
permission to operate with the condition against double
listing (for having failed to appeal the order of May 27, 1963),
still it was not precluded from afterwards contesting 17 the In BC Case No. 75-01-OC (G.R. No. L-43653) complainant
validity of such condition or rule: respondent Diego Morales claims that while he was in Manila
his daughter sent him a telegram on October 15, 1974 from
Santiago, Isabela, informing him of the death of his wife, Mrs.
(1) An agreement (which shall not be construed as a waiver of
Diego T. Morales. The telegram sent thru the petitioner RCPI
any constitutional right or any right to contest the validity of
however never reached him. He had to be informed personally
any rule or regulation) to comply and to enforce so far as is
about the death of his wife and so to catch up with the burial
within its powers, compliance by its members, with the
of his wife, he had to take the trip by airplane to Isabela. In its
provisions of this Act, and any amendment thereto, and any
answer petitioner RCPI claims that the telegram sent by
rule or regulation made or to be made thereunder. (See. 17-a-
respondent was transmitted from Santiago, lsabela to its
1, Securities Act [Emphasis Ours].)
Message Center at Cubao, Quezon City but when it was
relayed from Cubao, the radio signal became intermittent
Surely, this petition for review has suitably been coursed. And making the copy received at Sta. Cruz, Manila unreadable and
making reasonable allowances for the presumption of unintelligible. Because of the failure of the RCPI to transmit
regularity and validity of administrative action, we feel said telegram to him, respondent allegedly suffered
constrained to reach the conclusion that the respondent inconvenience and additional expenses and prays for damages.
Commission possesses no power to impose the condition of

Administrative Law
-cjsc- Page 3
In BC Case No. 75-08-OC (G.R. No. L-45378) complainant Code. The charges however, do not necessarily involve
respondent Pacifico Innocencio claim that on July 13, 1975 petitioners failure to comply with its certificate of public
Lourdes Innocencio sent a telegram from Paniqui, Tarlac, thru convenience or any order, decision or regulation of respondent
the facilities of the petitioner RCPI to him at Barrio Lomot, Board of Communication. It is clear from the record that
Cavinti, Laguna for the Purpose of informing him about the petitioner has not been charge of any violation or failure to
death of their father. The telegram was never received by comply with the terms and condition of its certificates of
Pacifico Innocencio. Inspite of the non-receipt and/or non- public convenience or of any order, decision or regulation of
delivery of the message sent to said address, the sender the respondent Board. The charge does not relate to the
(Lourdes Innocencio has not been notified about its non- management of the facilities and system of transmission of
delivery, As a consequence Pacifica Innocencio was not able messages by petitioner in accordance with its certificate of
to attend the internment of their father at Moncada, Tarlac. public convenience. If in the two cases before Us
Because of the failure of RCPI to deliver to him said telegram complainants Diego Morales and Pacifica Innocencio
he allegedly was "shocked when he learned about the death of allegedly suffered injury due to petitioner's breach of
their father when he visited his hometown Moncada Tarlac on contractual obligation arising from negligence, the proper
August 14, 1975," and thus suffered mental anguish and forum for them to ventilate their grievances for possible
personal inconveniences. Likewise, he prays for damages. recovery of damages against petitioner should be in the courts
and not in the respondent Board of Communications. Much
After hearing. the respondent Board in both cases held that the less can it impose the disciplinary fine of P200 upon the
service rendered by petitioner was inadequate and petitioner. In Francisco Santiago vs. RCPI (G.R. No. L-29236)
unsatisfactory and imposed upon the petitioner in each case a and Constancio Langan vs. RCPI (G.R. No. L-29247), this
disciplinary fine of P200 pursuant to Section 21 of Court speaking thru Justice Enrique Fernando, ruled:
Commonwealth Act 146, as amended, by Presidential Decree
No. I and Letter of Implementation No. 1. There can be no justification then for the
Public Service Commission (now the Board
The main thrust of the argument of petitioner is that of Communications as successor in interest)
respondent Board has no jurisdiction to entertain and take imposing the fines in these two petitions.
cognizance of complaints for injury caused by breach of The law cannot be any clearer . The only
contractual obligation arising from negligence covered by power it possessed over radio companies as
Article 1170 of the Civil Code 1 and injury caused by quasi noted was to fix rates It could not take to
delict or tort liability under Article 2176 of the Civil task a radio company for an negligence or
Code 2which according to it should be ventilated in the proper misfeasance. It was not vested with such
courts of justice and not in the Board of Communications. authority. That it did then in these two
petitions lacked the impress of validity.
We agree with petitioner RCPI. In one case We have ruled
that the Public Service Commission and its successor in In the face of the provision itself, it is rather
interest, the Board of Communications, "being a creature of apparent that the Public Service
the legislature and not a court, can exercise only such Commission lacked the required power to
jurisdiction and powers as are expressly or by necessary proceed against petitioner. There is nothing
implication,. conferred upon it by statute".3 The functions of in Section 21 thereof which empowers it to
the Public Service Commission are limited and administrative impose a fine that calls for a different
in nature and it has only jurisdiction and power as are conclusion.
expressly or by necessary implication conferred upon it by
statute. 4 As successor in interest of the Public Service WHEREFORE. both decisions of respondent Board of
Commission, the Board of Communications exercises the Communications in BC Case No. 75-01 OC and BC Case No.
same powers jurisdiction and functions as that provided for in 75- 08-0C are hereby reversed, set aside, declared null and
the Public Service Act for the Public Service Commission. void for lack of jurisdiction to take cognizance of both cases.
One of these powers as provided under Section 129 of the Without costs.
Public Service Act governing the organization of the
Specialized Regulatory Board, is to issue certificate of public SO ORDERED.
convenience. But this power to issue certificate of public
convenience does not carry with it the power of supervision
G.R. No. L-45839 June 1, 1988
and control over matters not related to the issuance of
certificate of public convenience or in the performance
therewith in a manner suitable to promote public interest. But RUFINO MATIENZO, GODOFREDO ESPIRITU,
even assuming that the respondent Board of Communications DIOSCORRO FRANCO, AND LA SUERTE
has the power or jurisdiction over petitioner in the exercise of TRANSPORTATION CORPORATION, petitioners,
its supervision to insure adequate public service, petitioner vs.
cannot be subjected to payment of fine under Section 21 of the HON. LEOPOLDO M. ABELLERA, ACTING
Public Service Act, because this provision of the law subjects CHAIRMAN OF THE BOARD OF TRANSPORTATION,
to a fine every public service that violates or falls to comply HON. GODOFREDO Q. ASUNCION, MEMBER OF
with the terms and conditions of any certificate or any orders, THE BOARD OF TRANSPORTATION, ARTURO DELA
decisions or regulations of the Commission. In the two cases CRUZ, MS TRANSPORTATION CO., INC., NEW
before us petitioner is not being charged nor investigated for FAMILIA TRANSPORTATION CO., ROBERTO
violation of the terms and conditions of its certificate of public MOJARES, ET AL.,respondents.
convenience or of any order, decision or regulations of the
respondent Board of Communications. The complaint of
respondents in the two case was that they were allegedly
inconvenienced or injured by the failure of the petitioner to GUTIERREZ, JR., J.:
transmit to them telegrams informing them of the deaths of
close relatives which according to them constitute breach of This is a petition for certiorari and prohibition, with
contractual obligation through negligence under the Civil application for preliminary injunction, seeking the annulment
Administrative Law
-cjsc- Page 4
and inhibition of the grant or award of provisional permits or of Instructions No. 379, issued March 10, 1976, p. 58, Rollo);
special authority by the respondent Board of Transportation (3) Effective immediately, no provisional authorities on
(BOT) to respondent taxicab operators, for the operation and applications for certificates of public convenience shall be
legalization of "excess taxicab units" under certain provisions granted or existing provisional authorities on new applications
of Presidential Decree No. 101 "despite the lapse of the power extended to, among others, taxi denominations in Metro
to do so thereunder," and "in violation of other provisions of Manila (BOT Memorandum Circular No. 75-25 (a), August
the Decree, Letter of Instructions No. 379 and other relevant 30, 1976, p. 64, Rollo); (4) All taxis authorized to operate
rules of the BOT." within Metro Manila shall obtain new special permits from the
BOT, which permits shall be the only ones recognized within
The petitioners and private respondents are all authorized the area (par. 8, LOI No. 379, supra); and (5) No bonafide
taxicab operators in Metro Manila. The respondents, however, applicant may apply for special permit to operate, among
admittedly operate "colorum" or "kabit" taxicab units. On or others, new taxicab services, and, no application for such new
about the second week of February, 1977, private respondents service shall be accepted for filing or processed by any LTC
filed their petitions with the respondent Board for the agency or granted under these regulations by any LTC
legalization of their unauthorized "excess" taxicab units citing Regional Office until after it shall have announced its program
Presidential Decree No. 101, promulgated on January 17, of development for these types of public motor vehicles (Sec.
1973, "to eradicate the harmful and unlawful trade of 16d, BOT-LTC-HPG Joint Regulations, p. 47, Rollo).
clandestine operators, by replacing or allowing them to
become legitimate and responsible operators." Within a matter The petitioners raise the following issues:
of days, the respondent Board promulgated its orders setting
the applications for hearing and granting applicants I. WHETHER OR NOT THE BOARD OF
provisional authority to operate their "excess taxicab units" for TRANSPORTATION HAS THE POWER
which legalization was sought. Thus, the present petition. TO GRANT PROVISIONAL PERMITS
TO OPERATE DESPITE THE BAN
Opposing the applications and seeking to restrain the grant of THEREON UNDER LETTER OF
provisional permits or authority, as well as the annulment of INSTRUCTIONS NO. 379;
permits already granted under PD 101, the petitioners allege
that the BOT acted without jurisdiction in taking cognizance II. WHETHER OR NOT THE BOARD OF
of the petitions for legalization and awarding special permits TRANSPORTATION HAS THE POWER
to the private respondents. TO LEGALIZE, AT THIS TIME,
CLANDESTINE AND UNLAWFUL
Presidential Decree No. 101 vested in the Board of TAXICAB OPERATIONS UNDER
Transportation the power, among others "To grant special SECTION 1, P.D. 101; AND
permits of limited term for the operation of public utility
motor vehicles as may, in the judgment of the Board, be III. WHETHER OR NOT THE
necessary to replace or convert clandestine operators into PROCEDURE BEING FOLLOWED BY
legitimate and responsible operators." (Section 1, PD 101) THE BOARD IN THE CASES IN
QUESTION SATISFIES THE
Citing, however, Section 4 of the Decree which provides: PROCEDURAL DUE PROCESS
REQUIREMENTS. (p. 119, Rollo)
SEC. 4. Transitory Provision. Six months
after the promulgation of this Decree, the We need not pass upon the first issue raised anent the grant of
Board of Transportation, the Bureau of provisional authority to respondents. Considering that the
Transportation, The Philippine effectivity of the provisional permits issued to the respondents
Constabulary, the city and municipal forces, was expressly limited to June 30, 1977, as evidenced by the
and the provincial and city fiscals shall wage BOT orders granting the same (Annexes G, H, I and J among
a concerted and relentless drive towards the others) and Memorandum Circular No. 77-4 dated January 20,
total elimination and punishment of all 1977 (p. 151, Rollo), implementing paragraph 6 of LOI 379
clandestine and unlawful operators of public (ordering immediate cancellation of all provisional authorities
utility motor vehicles." issued to taxicab operators, supra), which provides:

the petitioners argue that neither the Board of Transportation 5. After June 30, 1977, all provisional
chairman nor any member thereof had the power, at the time authorities are deemed cancelled, even if
the petitions were filed (i.e. in 1977), to legitimize clandestine hearings on the main application have not
operations under PD 101 as such power had been limited to a been terminated.
period of six (6) months from and after the promulgation of
the Decree on January 17, 1973. They state that, thereafter, the the issue is MOOT and ACADEMIC. Only the issue on
power lapses and becomes functus officio. legalization remains under consideration.

To reinforce their stand, the petitioners refer to certain Justifying its action on private respondent's applications, the
provisions of the Rules and Regulations implementing PD 101 respondent Board emphasizes public need as the overriding
issued by respondent Board, Letter of Instructions No. 379, concern. It is argued that under PD 101, it is the fixed policy
and BOT Memorandum Circular No. 76-25 (a). In summary, of the State "to eradicate the harmful and unlawful trade of
these rules provide inter alia that (1) only applications for clandestine operators by replacing or allowing them to become
special permits for "colorum" or "kabit" operators filed before legitimate and responsible ones" (Whereas clause, PD 101). In
July 17, 1973 shall be accepted and processed (Secs. 3 and 16 view thereof, it is maintained that respondent Board may
(c), BOT-LTC-HPG Joint Regulations Implementing PD 101, continue to grant to "colorum" operators the benefits of
pp. 33 and 47, Rollo); (2) Every provisional authority given to legalization under PD 101, despite the lapse of its power, after
any taxi operator shall be cancelled immediately and no six (6) months, to do so, without taking punitive measures
provisional authority shall thereafter be issued (par. 6, Letter against the said operators.

Administrative Law
-cjsc- Page 5
Indeed, a reading of Section 1, PD 101, shows a grant of cognizance of an application for legalization is settled, the
powers to the respondent Board to issue provisional permits as Court enjoins the exercise thereof only when there is fraud,
a step towards the legalization of colorum taxicab operations abuse of discretion or error of law. Furthermore, the court
without the alleged time limitation. There is nothing in Section does not interfere, as a rule, with administrative action prior to
4, cited by the petitioners, to suggest the expiration of such its completion or finality . It is only after judicial review is no
powers six (6) months after promulgation of the Decree. longer premature that we ascertain in proper cases whether the
Rather, it merely provides for the withdrawal of the State's administrative findings are not in violation of law, whether
waiver of its right to punish said colorum operators for their they are free from fraud or imposition and whether they find
illegal acts. In other words, the cited section declares when the substantial support from the evidence.
period of moratorium suspending the relentless drive to
eliminate illegal operators shall end. Clearly, there is no Finally, with respect to the last issue raised by the petitioners
impediment to the Board's exercise of jurisdiction under its alleging the denial of due process by respondent Board in
broad powers under the Public Service Act to issue certificates granting the provisional permits to the private respondents and
of public convenience to achieve the avowed purpose of PD in taking cognizance of their applications for legalization
101 (Sec. 16a, Public Service Act, Nov. 7, 1936). without notice and hearing, suffice it to say that PD 101 does
not require such notice or hearing for the grant of temporary
It is a settled principle of law that in determining whether a authority . The provisional nature of the authority and the fact
board or commission has a certain power, the authority given that the primary application shall be given a full hearing are
should be liberally construed in the light of the purposes for the safeguards against its abuse. As to the applications for
which it was created, and that which is incidentally necessary legalization themselves, the Public Service Act does enjoin the
to a full implementation of the legislative intent should be Board to give notice and hearing before exercising any of its
upheld as being germane to the law. Necessarily, too, where powers under Sec. 16 thereof. However, the allegations that
the end is required, the appropriate means are deemed given due process has been denied are negated by the hearings set by
(Martin, Administrative Law, 1979, p. 46). Thus, as averred the Board on the applications as expressed in its orders
by the respondents: resolving the petitions for special permits (Annexes G, H, I,
pp. 80-102, Rollo).
... [A]ll things considered, the question is
what is the best for the interest of the public. The Board stated:
Whether PD 101 has lost its effectiveness or
not, will in no way prevent this Board from The grounds involved in the petition are of
resolving the question in the same candor first impression. It cannot resolve the issue
and spirit that P.D. 101 and LOI 379 were ex-parte. It needs to hear the views of other
issued to cope with the multifarious ills that parties who may have an interest, or whose
plague our transport system. ... (Emphasis interest may be affected by any decision that
supplied) (pp. 91-92, Rollo) this Board may take.

This, the private respondents appreciate, as they make The Board therefore, decides to set the
reference to PD 101, merely to cite the compassion with which petition for hearing.
colorum operators were dealt with under the law. They state
that it is "in the same vein and spirit that this Honorable Board xxx xxx xxx
has extended the Decree of legalization to the operatives of the
various PUJ and PUB services along legislative methods," that
respondents pray for authorization of their colorum units in As to the required notice, it is impossible for the respondent
actual operation in Metro Manila (Petitions for Legalization, Board to give personal notice to all parties who may be
Annexes E & F, par. 7, pp. 65-79, Rollo). interested in the matter, which parties are unknown to it. Its
aforementioned order substantially complies with the
requirement. The petitioners having been able to timely
Anent the petitioners' reliance on the BOT Rules and
oppose the petitions in question, any lack of notice is deemed
Regulations Implementing PD 101 as well as its Memorandum
cured.
Circular No. 76-25(a), the BOT itself has declared:
WHEREFORE. the petition is hereby DISMISSED for lack of
In line with its duty to rationalize the
merit. The questioned orders of the then Board of
transport industry, the Board shall. from
Transportation are AFFIRMED.
time to time, re- study the public need for
public utilities in any area in the Philippines
for the purpose of re- evaluating the policies. SO ORDERED.
(p. 64, Rollo)
CELIA S. VDA. DE HERRERA,Petitioner, G.R. No. 17
Thus, the respondents correctly argue that "as the need of the Present:
public changes and oscillates with the trends of modern life, so
must the Memo Orders issued by respondent jibe with the CARPIO, J.
dynamic and flexible standards of public needs. ... Respondent - versus - NACHURA
Board is not supposed to 'tie its hands' on its issued Memo PERALTA,
Orders should public interest demand otherwise" (Answer of ABAD, and
private respondents, p. 121, Rollo). MENDOZA
EMELITA BERNARDO, EVELYN BERNARDO as Promulgate
Guardian of Erlyn, Crislyn and Crisanto Bernardo,* June 1, 20
The fate of the private respondent's petitions is initially for the Respondents.
Board to determine. From the records of the case, acceptance
x------------------------------------------
of the respondent's applications appears to be a question
--------x
correctly within the discretion of the respondent Board to
decide. As a rule, where the jurisdiction of the BOT to take

Administrative Law
-cjsc- Page 6
DECISION
Aggrieved, petitioner Celia S. Vda. de Herrera, as the

surviving spouse of Alfredo, filed a petition for certiorari with


PERALTA, J.:
the CA.[5] The CA, Twelfth Division, in its Decision dated

April 28, 2005, dismissed the petition and affirmed the


This is a petition for review on certiorari under Rule 45 of the
resolution of the COSLAP. The CA ruled that the COSLAP
Rules of Court seeking to reverse and set aside the
has exclusive jurisdiction over the present case and, even
Decision[1] and Resolution[2] of the Court of Appeals (CA) in
assuming that the COSLAP has no jurisdiction over the land
CA-G.R. SP No. 73674.
dispute of the parties herein, petitioner is already estopped

from raising the issue of jurisdiction because Alfredo failed to


The antecedents are as follows:
raise the issue of lack of jurisdiction before the COSLAP and

he actively participated in the proceedings before the said


Respondents heirs of Crisanto S. Bernardo, represented by
body. Petitioner filed a motion for reconsideration, which was
Emelita Bernardo, filed a complaint before the Commission
denied by the CA in a Resolution dated October 17, 2005.
on the Settlement of Land Problems (COSLAP) against

Alfredo Herrera (Alfredo) for interference, disturbance,


Hence, petitioner elevated the case to this Court via Petition
unlawful claim, harassment and trespassing over a portion of a
for Review on Certiorari under Rule 45 of the Rules of Court,
parcel of land situated at Barangay Dalig, Cardona, Rizal,
with the following issues:
with an area of 7,993 square meters. The complaint was

docketed as COSLAP Case No. 99-221. I


WHETHER OR NOT COSLAP
HAD JURISDICTION TO
DECIDE THE QUESTION OF
Respondents claimed that said parcel of land was originally OWNERSHIP.

owned by their predecessor-in-interest, Crisanto Bernardo,


II
and was later on acquired by Crisanto S. Bernardo. The parcel WHETHER OR NOT THE
ISSUANCE OF A TORRENS
of land was later on covered by Tax Declaration No. CD-006- TITLE IN THE NAME OF
THE PETITIONER'S
0828 under the name of the respondents.
HUSBAND IN 2002
RENDERED THE INSTANT
CONTROVERSY ON THE
Petitioner, on the other hand, alleged that the portion of the ISSUE OF OWNERSHIP
OVER THE SUBJECT
subject property consisting of about 700 square meters was PROPERTY MOOT AND
ACADEMIC.[6]
bought by Diosdado Herrera, Alfredo's father, from a certain

Domingo Villaran. Upon the death of Diosdado Herrera,


Petitioner averred that the COSLAP has no adjudicatory
Alfredo inherited the 700-square-meter lot.
powers to settle and decide the question of ownership over the

subject land. Further, the present case cannot be classified as


The COSLAP, in a Resolution[3] dated December 6, 1999,
explosive in nature as the parties never resorted to violence in
ruled that respondents have a rightful claim over the subject
resolving the controversy. Petitioner submits that it is the
property. Consequently, a motion for reconsideration and/or
Regional Trial Court which has jurisdiction over controversies
reopening of the proceedings was filed by Alfredo. The
relative to ownership of the subject property.
COSLAP, in an Order[4] dated August 21, 2002, denied the

motion and reiterated its Order dated December 6, 1999.

Administrative Law
-cjsc- Page 7
parties involved, the
Respondents, on the other hand, alleged that the COSLAP has presence or emergence of
social tension or unrest,
jurisdiction over the present case. Further, respondents argued or other similar critical
situations requiring
that petitioner is estopped from questioning the jurisdiction of immediate action:
the COSLAP by reason of laches due to Alfredo's active (a) Between
occupants/squatte
participation in the actual proceedings before the COSLAP.
rs and pasture
Respondents said that Alfredo's filing of the Motion for lease agreement
holders or timber
Reconsideration and/or Reopening of the proceedings before concessionaires;
(b) Between
the COSLAP is indicative of his conformity with the occupants/squatte
rs and
questioned resolution of the COSLAP. government
reservation
The main issue for our resolution is whether the COSLAP has grantees;
(c) Between
jurisdiction to decide the question of ownership between the occupants/squatte
rs and public land
parties. claimants or
applicants;
(d) Petitions
for classification,
The petition is meritorious. release and/or
subdivision of
lands of the
The COSLAP was created by virtue of Executive Order (E.O.) public domain;
and
No. 561, issued on September 21, 1979 by then President (e) Other
similar land
Ferdinand E. Marcos. It is an administrative body established problems of
grave urgency
as a means of providing a mechanism for the expeditious and magnitude.[7]

settlement of land problems among small settlers, landowners Administrative agencies, like the COSLAP, are tribunals of

and members of the cultural minorities to avoid social unrest. limited jurisdiction that can only wield powers which are

specifically granted to it by its enabling statute.[8] Under

Section 3 of E.O. No. 561 specifically enumerates the Section 3 of E.O. No. 561, the COSLAP has two options in

instances when the COSLAP can exercise its adjudicatory acting on a land dispute or problem lodged before it, to wit: (a)

functions: refer the matter to the agency having appropriate jurisdiction

Section 3. Powers and Functions. - for settlement/resolution; or (b) assume jurisdiction if the
The Commission shall have the following
powers and functions: matter is one of those enumerated in paragraph 2 (a) to (e) of

xxxx the law, if such case is critical and explosive in nature, taking

into account the large number of parties involved, the presence


2. Refer and
follow up for immediate or emergence of social unrest, or other similar critical
action by the agency
having appropriate situations requiring immediate action. In resolving whether to
jurisdiction any land
problem or dispute assume jurisdiction over a case or to refer the same to the
referred to the
Commission: Provided, particular agency concerned, the COSLAP has to consider the
That the Commission
may, in the following nature or classification of the land involved, the parties to the
cases, assume jurisdiction
and resolve land case, the nature of the questions raised, and the need for
problems or disputes
which are critical and immediate and urgent action thereon to prevent injuries to
explosive in nature
considering, for instance, persons and damage or destruction to property. The law does
the large number of the

Administrative Law
-cjsc- Page 8
not vest jurisdiction on the COSLAP over any land dispute or jurisdiction over that case. In the present case, there is no

problem.[9] showing that the parties have conflicting free patent

applications over the subject parcel of land that would justify

In the instant case, the COSLAP has no jurisdiction over the the exercise of the COSLAP's jurisdiction.

subject matter of respondents' complaint. The present case

does not fall under any of the cases enumerated under Section Since the COSLAP has no jurisdiction over the action, all the

3, paragraph 2 (a) to (e) of E.O. No. 561. The dispute between proceedings therein, including the decision rendered, are null

the parties is not critical and explosive in nature, nor does it and void.[14] A judgment issued by a quasi-judicial body

involve a large number of parties, nor is there a presence or without jurisdiction is void. It cannot be the source of any

emergence of social tension or unrest. It can also hardly be right or create any obligation.[15] All acts performed pursuant

characterized as involving a critical situation that requires to it and all claims emanating from it have no legal

immediate action. effect.[16] Having no legal effect, the situation is the same as it

would be as if there was no judgment at all. It leaves the

It is axiomatic that the jurisdiction of a tribunal, including a parties in the position they were before the proceedings.[17]

quasi-judicial officer or government agency, over the nature

and subject matter of a petition or complaint is determined by Respondents allegation that petitioner is estopped from

the material allegations therein and the character of the relief questioning the jurisdiction of the COSLAP by reason of

prayed for, irrespective of whether the petitioner or laches does not hold water. Petitioner is not estopped from

complainant is entitled to any or all such reliefs.[10] raising the jurisdictional issue, because it may be raised at any

stage of the proceedings, even on appeal, and is not lost by

Respondents' cause of action before the COSLAP pertains to waiver or by estoppel.[18] The fact that a person attempts to

their claim of ownership over the subject property, which is an invoke unauthorized jurisdiction of a court does not estop him

action involving title to or possession of real property, or any from thereafter challenging its jurisdiction over the subject

interest therein,[11] the jurisdiction of which is vested with the matter, since such jurisdiction must arise by law and not by

Regional Trial Courts or the Municipal Trial Courts depending mere consent of the parties.[19]

on the assessed value of the subject property.[12]

In Regalado v. Go,[20] the Court held that laches should be

The case of Banaga v. Commission on the Settlement of Land clearly present for the Sibonghanoy[21] doctrine to apply, thus:
Laches is defined as the "failure or
Problems,[13] applied by the CA and invoked by the neglect for an unreasonable and unexplained
length of time, to do that which, by
respondents, is inapplicable to the present exercising due diligence, could or should
have been done earlier, it is negligence or
case. Banagainvolved parties with conflicting free patent omission to assert a right within a
reasonable length of time, warranting a
applications over a parcel of public land and pending with the presumption that the party entitled to assert
it either has abandoned it or declined to
Bureau of Lands. Because of the Bureau of Land's inaction
assert it.
within a considerable period of time on the claims and protests
The ruling in People v.
of the parties and to conduct an investigation, the COSLAP Regalario that was based on the landmark
doctrine enunciated in Tijam v.
assumed jurisdiction and resolved the conflicting claims of the Sibonghanoy on the matter of jurisdiction by
estoppel is the exception rather than the
parties. The Court held that since the dispute involved a parcel rule.Estoppel by laches may be invoked to
bar the issue of lack of jurisdiction only in
of public land on a free patent issue, the COSLAP had cases in which the factual milieu is
Administrative Law
-cjsc- Page 9
analogous to that in the cited case. In such
controversies, laches should have been appeal before the CA. The issue on the validity of
clearly present; that is, lack of jurisdiction
must have been raised so belatedly as to title, i.e., whether or not it was fraudulently issued, can only
warrant the presumption that the party
entitled to assert it had abandoned or be raised in an action expressly instituted for that
declined to assert it.
purpose[25] and the present appeal before us, is simply not the
In Sibonghanoy, the defense of lack
direct proceeding contemplated by law.
of jurisdiction was raised for the first time in
a motion to dismiss filed by the Surety
almost 15 years after the questioned ruling
had been rendered. At several stages of the WHEREFORE, the petition is GRANTED. The Decision
proceedings, in the court a quo as well as in
the Court of Appeals, the Surety invoked the and the Resolution of the Court of Appeals, dated April 28,
jurisdiction of the said courts to obtain
affirmative relief and submitted its case for 2005 and October 17, 2005, respectively, in CA-G.R. SP No.
final adjudication on the merits. It was only
when the adverse decision was rendered by 73674 are REVERSED and SET ASIDE. The Decision and
the Court of Appeals that it finally woke up
to raise the question of jurisdiction.[22] Order of the Commission on the Settlement of Land Problems,

The factual settings attendant in Sibonghanoy are not present dated December 6, 1999 and August 21, 2002, respectively, in

in the case at bar that would justify the application of estoppel COSLAP Case No. 99-221, are declared NULL and

by laches against the petitioner. Here, petitioner assailed the VOID for having been issued without jurisdiction.

jurisdiction of the COSLAP when she appealed the case to the


SO ORDERED.
CA and at that time, no considerable period had yet elapsed

for laches to attach. Therefore, petitioner is not estopped from [G.R. No. L-2450. May 31, 1949.]

assailing the jurisdiction of the COSLAP. Additionally, no VERONICA RUPERTO, Petitioner, v. CEFERINO
FERNANDO and LUCIO M. TIANCO, Judge of
laches will even attach because the judgment is null and void Municipal Court of Rizal City, Respondents.
for want of jurisdiction.[23]
Paredes, Diaz & Poblador and Jose A. Buendia
for Petitioner.

Anent the issuance of OCT No. M-10991 in favor of Julian Florentino for Respondents.

petitioners husband Alfredo Herrerra in 2002, respondents SYLLABUS

alleged that there was fraud, misrepresentation and bad faith in PLEADING AND PRACTICE; MOTION TO DISMISS;
GROUNDS ON FACTS NOT ALLEGED IN THE
the issuance thereof. Thus, respondents are now questioning COMPLAINT. A motion to dismiss under Rule 8 of the
Rules of Court, is not like a demurrer provided for in the old
the legality of OCT No. M-10991, an issue which this Court Code of Civil Procedure that must be based only on the facts
alleged in the complaint. Except where the ground is the
cannot pass upon in this present petition. It is a rule that the complaint does state no cause of action which must be based
only on the allegations in the complaint, a motion to dismiss
validity of a Torrens title cannot be assailed may be based on facts not alleged and may even deny those
alleged in the complaint; and that is the reason why it is set for
collaterally.[24] Section 48 of Presidential Decree No. 1529 hearing for the presentation of evidence in support of and
against the contention of the defendant.
provides that:

Certificate not Subject to Collateral Attack.


DECISION
A certificate of title shall not be subject to
collateral attack. It cannot be altered,
modified, or canceled, except in a direct
FERIA, J.:
proceeding in accordance with law.

From the record before us, it appears that a complaint of


ejectment was filed by Ceferino Fernando, one of the
The issue of the validity of the Title was brought only during respondents in this case, against Veronica Ruperto, Petitioner,
with the municipal court of Rizal City, in which the following,
the proceedings before this Court as said title was issued in the among others, is alleged:jgc:chanrobles.com.ph

name of petitioner's husband only during the pendency of the "2. That the plaintiff is the exclusive and lawful lessee of a

Administrative Law
-cjsc- Page 10
store space at the Libertad Public Market, Rizal City, by virtue estimation. In the case of Torres v. Ocampo (80 Phil., 36), this
of a lease contract executed and entered into by and between Court held the following that is squarely applicable to the
Rufino F. Mateo, Mayor, Rizal City, and Ceferino Fernando, present case for the determination of the nature of plaintiffs
as lessor and lessee respectively, under date of March 6, 1948, action.
as per copy of the lease contract hereto attached as Exhibit A
and forming part of this complaint;" "The action of the plaintiff against the defendant is not an
action of forcible entry, for the simple reason that it is not an
The defendant filed a motion to dismiss on the ground (1) that action instituted by a person who was in possession of a land
the court has no jurisdiction over the case because it is not or building against a person who has deprived him of the
capable of pecuniary estimation, and (2) that the complaint possession thereof by force, intimidation, threat, strategy or
does not state a cause of action. stealth, within one year from such unlawful deprivation.
Assuming, without deciding, for the purpose of this decision
An opposition to motion to dismiss was filed by the plaintiff in that a market stall is a building or land within the meaning of
which the latter states the following:jgc:chanrobles.com.ph Rule 72, Rules of Court; whatever right the plaintiff may have
to occupy the market stall in question, originated upon the
"The question at issue is clear: Who is legally entitled to the alleged award to plaintiff by the City Health Officer of
possession of the space in the Libertad Public Market? In Manila. And not having entered into possession under that
other words: Who has a better leasehold right? The plaintiff or award or lease of the market stall in dispute, plaintiff had
the defendant? The answer is inescapable, the plaintiff has a acquired no right in the leased property in the nature of a right
better leasehold right. The defendant claims she has a better in rem, which third persons were bound to respect or not to
leasehold right based upon a contract executed by and between infringe.
the city mayor and the plaintiff. The city treasurers permit
was issued not in accordance with the prescribed rules, "The action brought by the plaintiff against the defendant was
regulations and practice of the city in awarding market stalls. not an action of illegal detainer, because according to section
It is the practice of the city to lease store space by the 1, Rule 72 this action is for the recovery of possession of any
treasurer. The court has jurisdiction, therefor. The jurisdiction land or building, instituted within one year from date of illegal
of the court in an action of forcible entry and detainer is not possession, by a person against whom the possession of any
lost even if the question of ownership or title is raised in the land or building is being unlawfully withheld by another after
answer of the defendant as held in the case of Mediran v. the right of the latter to hold possession by virtue of any
Villanueva, 37 Phil., 752. The fundamental issue, to repeat, in contract, express or implied, with the plaintiff has expired or
the instant case is that the justice of the peace court has terminated. In the present case, there was no contract
jurisdiction to adjudicate the light of possession, and the whatsoever, express or implied, between plaintiff and
defendant in an action before the justice of the peace to defendant for the possession of the market stall, and hence no
recover possession cannot deprive the court of such expiration or termination of the letters right to hold
jurisdiction by merely claiming ownership or title to the possession thereof under contract."cralaw virtua1aw library
property (Mediran v. Villanueva, 37 Phil., 752)."cralaw
virtua1aw library In view of the foregoing, it is evident that the municipal court
of Rizal City has no jurisdiction over the case, and the
The municipal court denied the motion to dismiss for lack of respondent judge is therefore ordered to desist and refrain
merit on the ground that the defendant bases his contention from further proceeding in the present case, with costs against
that the court has no jurisdiction over the case on facts not the respondent Ceferino Fernando. So ordered.
alleged in the complaint, and hence the filing of the present
civil action of certiorari, which may properly be considered as Ozaeta, Paras, Pablo, Bengzon, Montemayor and Reyes, JJ.,
of prohibition, because the principal remedy sought is to concur.
prevent the respondent judge from taking cognizance of the
case for lack of jurisdiction.
G.R. No. L-17778 November 30, 1962
The respondent judge is not correct in holding that, in a
motion to dismiss on the ground of lack of jurisdiction, the
defendant cannot "base his arguments on question of facts not IN RE CONTEMPT PROCEEDINGS AGAINST
touched in the complaint and which partakes the nature of ARMANDO RAMOS, JESUS L. CARMELO, in his
special defenses, to be proved by presentation of evidence." A capacity as Chairman of the Probe Committee, Office of
motion to dismiss under Rule 8 of the Rules of Court, is not the Mayor of Manila, petitioner-appellant,
like a demurrer provided for in the old Code of Civil vs.
Procedure that must be based only on the facts alleged in the ARMANDO RAMOS, respondent-appellee.
complaint. Except where the ground is that the complaint does
state no cause of action which must be based only on the City Fiscal Hermogenes Concepcion, Jr. for petitioner-
allegations in the complaint, a motion to dismiss may be based appellant.
on facts not alleged and may even deny those alleged in the Armando Ramos for and in his own behalf as respondent-
complaint; and that is the reason why it is set for hearing for appellee.
the presentation of evidence in support of and against the
contention of the defendant. REGALA, J.:

In the present case, although no evidence was adduced in On February 3, 1960, the Mayor of Manila issued an executive
support of the contention of the defendant, the complaint and order creating a committee "to investigate the anomalies
the opposition to the motion to dismiss clearly show that the involving the license inspectors and other personnel of the
court has no jurisdiction over the subject-matter of the action License Inspection Division of the Office of the City Treasurer
of the plaintiff, because it is neither an action of forcible entry and of the License and Permits Division of this Office (of the
nor of illegal detainer, but an action for the recognition of the Mayor)." He named Mr. Jesus L. Carmelo as chairman of said
plaintiffs preferred right to the use and occupancy of the stall committee.
in question in the Libertad Public Market against the claim of
the defendant, and therefore not capable of pecuniary
Administrative Law
-cjsc- Page 11
It appears that the committee issued subpoenas to Armando lawfully required, shall be subject to discipline as in
Ramos, a private citizen working as a bookkeeper in the Casa case of contempt of court and upon application of the
de Alba, requiring him to appear before it on June 3, 8, 9, 15 individual or body exercising the power in question
and 16 and August 4 and 11, 1960, in connection with an shall be dealt with by the judge of first instance
administrative case against Crisanta Estanislao but that having jurisdiction of the case in the manner
Ramos, on whom the subpoenas were duly served, refused to provided by law.
appear.
One who invokes this provision of the law must first show that
Claiming that Ramos' refusal tended "to impede, obstruct, or he has "authority to take testimony or evidence" before he can
degrade the administrative proceedings," petitioner filed in the apply to the courts for the punishment of hostile witnesses.
Court of First Instance of Manila a petition to declare (Francia v. Pecson, et al., 87 Phil. 100.)
Armando Ramos in contempt. After hearing, during which
petitioner was required to show a prima facie case, the trial Now, what authority to take testimony does petitioner's
court dismissed the petition. The lower court held that there is committee have from which the power to cite witnesses may
no law empowering committees created by municipal mayors be implied, pursuant to section 580?
to issue subpoenas and demand that witnesses testify under
oath. It also held that to compel Ramos to testify would be to
To be sure, there is nothing said in the executive order of the
violate his right against self-incrimination.
Mayor creating the committee about such a grant of power.
All that the order gives to this body is the power to investigate
It appears that in a statement given to investigators of the anomalies involving certain city employees.
Office of the Mayor, Ramos admitted having misappropriated
on several occasions, sums of money given to him by the
Petitioner contends that the Mayor of Manila has the implied
owner of Casa de Alba for the payment of the latter's taxes for
power to investigate city officials and employees appointed by
1956-1959 and that this fact had not been discovered earlier him to the end that the power expressly vested in him to
because Ramos used to entertain employees in the City
suspend and remove such officials of employees (Sec. 22,
Treasurer's office at Casa de Alba where Ramos was a
Republic Act No. 409) may be justly and fairly exercised. We
bookkeeper as stated above. The trial court held that to compel
agree with this proposition and We held so in the case
Ramos to confirm this statement in the administrative case
of Pagkanlungan v. De la Fuente, 48 O.G. No. 10, p. 4332.
against certain employees in the Office of the City Treasurer But We do not agree with the petitioner that a delegation of
would be to compel him to give testimony that could be used such power to investigation implies also a delegation of the
against him in a criminal case for estafa of which the owner of
power to take testimony or evidence of witnesses whose
Casa de Alba was the offended party. From that decision,
appearance may be require by the compulsory process of
petitioner appealed to this Court.
subpoena. Thus, in denying this power to an investigating
body in the Office of the Mayor of Manila, We said in Francia
The main issue in this ease is the power, if any, of committee, v. Pecson, et al., supra: "Were do not think the mayor (of
like the committee of which petitioner is the chairman, to Manila) can delegate or confer the powers to administer oaths,
subpoena witnesses to appear before it and to ask for their to take testimony, and to issue subpoenas."
punishment in case of refusal.
Furthermore, it is doubtful whether the provisions of section
The rule is that Rule 64 (Contempt)1 of the Rules of Court 580 of the Administrative Code are applicable to the City of
applies only to inferior and superior courts and does not Manila as these pertain to national bureaus or offices of the
comprehend contempt committed against administrative government.
officials or bodies like the one in this case, unless said
contempt is clearly considered and expressly defined as
Citing 50 Am. Jur. 449, petitioner contends that "the power of
contempt of court, as is done in paragraph 2 of Section 580 of the investigation committee to issue compulsory process to
the Revised Administrative Code. (People v. Mendoza; People
secure the attendance of witnesses undoubtedly exists since
v. Dizon, 49 O. G. No. 2, 541.)
only complimentary to the power of the mayor to investigate,
suspend and remove city officers and employees, supra, is the
Petitioner invokes Section 580 of the Revised Administrative recognized rule that where the statute grants a right, it also
Code which provides as follows: confers by implication every particular power necessary for
the exercise thereof." There is no merit in the argument. In the
Powers incidental to taking of testimony. When first place, the authority cited speaks of statutory, grant of
authority to take testimony or evidence is conferred power to a body. Here, We have seen that whatever power
upon an administrative officer or upon any may be claimed by petitioner's committee may only be traced
nonjudicial person, committee, or other body, such to the power of the Mayor to investigate as implied from his
authority shall be understood to comprehend the right power to suspend or remove certain city employees. There is
to administer oaths and summons witnesses and shall no statutory grant of power to investigate to petitioner's
include authority to require the production of committee.
documents under a subpoena duces tecum or
otherwise, subject in all respects to the same In the second place, even granting that the Mayor has the
restrictions and qualifications as apply in judicial implied power to require the appearance of witnesses before
proceedings of a similar character. him, the rule, as noted earlier, is that the Mayor can not
delegate this power to a body like the committee of the
Saving the provisions of section one hundred and two petitioner. (Francia v. Pecson, et al., supra.)
of this Act, any one who, without lawful excuse, fails
to appear upon summons issued under the authority Lastly, 50 Am. Jur. Sec. 428, p. 450 itself admits an exception
of the preceding paragraph or who, appearing before to the rule invoked by the petitioner. Thus, it is stated that
any individual or body exercising the power therein "where the liberty and property of persons are sought to be
defined, refuses to make oath, give testimony, or brought within the operation of a power claimed to be
produce documents for inspection, when thereunto impliedly granted by an act because necessary to its due

Administrative Law
-cjsc- Page 12
execution, the case must be clearly seen to be within those 4 of January 7, 1966.2 Purposedly, he charged the Agency
intended to be reached." Here, no less than the liberty of with the following functions and responsibilities:3
Armando Ramos is involved in the claim of the committee to
the right to cite witnesses. b. To investigate all activities involving or
affecting immoral practices, graft and
We hold, therefore, that petitioner's committee has no power corruptions, smuggling (physical or
to cite witnesses to appear before it and to ask for their technical), lawlessness, subversion, and all
punishment in case of refusal. This conclusion makes it other activities which are prejudicial to the
unnecessary for Us to pass upon the other error assigned by government and the public interests, and to
petitioner as having been allegedly committed by the trial submit proper recommendations to the
court. President of the Philippines.

WHEREFORE, the decision of the Court of First Instance of c. To investigate cases of graft and
Manila is hereby affirmed, without pronouncement as to costs. corruption and violations of Republic Acts
Nos. 1379 and 3019, and gather necessary
G.R. No. L-29274 November 27, 1975 evidence to establish prima facie, acts of
graft and acquisition of unlawfully amassed
wealth ... .
SEC. QUIRICO P. EVANGELISTA, in his capacity as
Secretary of the Presidential Agency on Reforms and
Government Operations, and the PRESIDENTIAL h. To receive and evaluate, and to conduct
AGENCY ON REFORMS AND GOVERNMENT fact-finding investigations of sworn
OPERATIONS (PARGO), petitioner, complaints against the acts, conduct or
vs. behavior of any public official or employee
HON. HILARION U. JARENCIO, as Presiding Judge, and to file and prosecute the proper charges
Court of First Instance of Manila, Branch XXIII, and with the appropriate agency.
FERNANDO MANALASTAS, Assistant City Public
Service Officer of Manila, and ALL OTHER CITY For a realistic performance of these functions, the President
OFFICIALS AND EMPLOYEES SIMILARLY vested in the Agency all the powers of an investigating
SITUATED, respondents. committee under Sections 71 and 580 of the Revised
Administrative Code, including the power to summon
Office of the Solicitor General Antonio P. Barredo, Ist. witnesses by subpoena or subpoena duces tecum, administer
Assistant Solicitor General Esmeraldo Umali and Solicitor oaths, take testimony or evidence relevant to the
Bernardo P. Pardo for petitioners. investigation.4

Gregorio A. Ejercito and Felix C. Chavez for respondents. Whereupon, on June 7, 1968, petitioner Quirico Evangelista,
as Undersecretary of the Agency, issued to respondent
Fernando Manalastas, then Acting City Public Service Officer
of Manila, a subpoena ad testificandumcommanding him "to
be and appear as witness at the Office of the PRESIDENTIAL
MARTIN, J.: AGENCY ON REFORMS AND GOVERNMENT
OPERATIONS ... then and there to declare and testify in a
This is an original action for certiorari and prohibition with certain investigation pending therein."
preliminary injunction, under Rule 65 of the Rules of Court,
seeking to annul and set aside the order of respondent Judge, Instead of obeying the subpoena, respondent Fernando
the Honorable Hilarion J. Jarencio, Presiding Judge of the Manalastas filed on June 25, 1968 with the Court of First
Court of First Instance of Manila, dated July 1, 1968, in Civil Instance of Manila an Amended Petition for
Case No. 73305, entitled "Fernando Manalastas vs. Sec. prohibition, certiorari and/or injunction with preliminary
Ramon D. Bagatsing, etc.", which reads as follows: injunction and/or restraining order docketed as Civil Case No.
73305 and assailed its legality.
IT IS ORDERED that, upon the filing of a
bond in the amount of P5,000.00, let the writ On July 1, 1968, respondent Judge issued the aforementioned
of preliminary injunction prayed for by the Order:
petitioner [private respondent] be issued
restraining the respondents [petitioners],
IT IS ORDERED that, upon the filing of a
their agents, representatives, attorneys
bond in the amount of P5,000.00, let the writ
and/or other persons acting in their behalf
of preliminary injunction prayed for by the
from further issuing subpoenas in
petitioner [private respondent] be issued
connection with the fact-
finding investigations to the petitioner restraining the respondents [petitioners],
[private respondent] and from instituting their agents, representatives, attorneys
and/or other persons acting in their behalf
contempt proceedings against the petitioner
from further issuing subpoenas in
[private respondent] under Section 580 of
connection with the fact-
the Revised Administrative Code. (Stress
finding investigations to the petitioner
supplied).
[private respondent] and from instituting
contempt proceedings against the petitioner
Pursuant to his special powers and duties under Section 64 of [private respondent] under Section 530 of
the Revised Administrative Code,1 the President of the the Revised Administrative Code. (Stress
Philippines created the Presidential Agency on Reforms and supplied).
Government Operations (PARGO) under Executive Order No.

Administrative Law
-cjsc- Page 13
Because of this, petitioners 5 elevated the matter direct to Us what the Rules speaks of is a judicial subpoena, one
without a motion for reconsideration first filed on the procurable from and issuable by a competent court, and not an
fundamental submission that the Order is a patent nullity.6 administrative subpoena. To an extent, therefore, the
"restrictions and qualifications" referred to in Section 580 of
As unfurled, the dominant issue in this case is whether the the Revised Administrative Code could mean the restraints
Agency, acting thru its officials, enjoys the authority to issue against infringement of constitutional rights or when the
subpoenas in its conduct of fact-finding investigations. subpoena is unreasonable or oppressive and when the
relevancy of the books, documents or things does not
It has been essayed that the life blood of the administrative appear. 15
process is the flow of fact, the gathering, the organization and
the analysis of evidence.7 Investigations are useful for all Rightly, administrative agencies may enforce subpoenas
administrative functions, not only for rule making, issued in the course of investigations, whether or not
adjudication, and licensing, but also for prosecuting, for adjudication is involved, and whether or not probable cause is
supervising and directing, for determining general policy, for shown 16 and even before the issuance of a complaint. 17 It is
recommending, legislation, and for purposes no more specific not necessary, as in the case of a warrant, that a specific
than illuminating obscure areas to find out what if anything charge or complaint of violation of law be pending or that the
should be done.8 An administrative agency may be authorized order be made pursuant to one. It is enough that the
to make investigations, not only in proceedings of a legislative investigation be for a lawfully authorized purpose. 18 The
or judicial nature, but also in proceedings whose sole purpose purpose of the subpoena is to discover evidence, not to prove a
is to obtain information upon which future action of a pending charge, but upon which to make one if the discovered
legislative or judicial nature may be taken 9 and may require evidence so justifies. 19 Its obligation cannot rest on a trial of
the attendance of witnesses in proceedings of a purely the value of testimony sought; it is enough that the proposed
investigatory nature. It may conduct general inquiries into investigation be for a lawfully authorized purpose, and that the
evils calling for correction, and to report findings to proposed witness be claimed to have information that might
appropriate bodies and make recommendations for actions. 10 shed some helpful light. 20 Because judicial power is reluctant
if not unable to summon evidence until it is shown to be
relevant to issues on litigations it does not follow that an
We recognize that in the case before Us, petitioner Agency
administrative agency charged with seeing that the laws are
draws its subpoena power from Executive Order No. 4, para. 5
enforced may not have and exercise powers of original
which, in an effectuating mood, empowered it to "summon
witness, administer oaths, and take testimony relevant to the inquiry. The administrative agency has the power of
investigation" 11 with the authority "to require the production inquisition which is not dependent upon a case or controversy
in order to get evidence, but can investigate merely on
of documents under a subpoena duces tecum or otherwise,
suspicion that the law is being violated or even just because it
subject in all respects to the same restrictions and
wants assurance that it is not. When investigative and
qualifications as apply in judicial proceedings of a similar
accusatory duties are delegated by statute to an administrative
character." 12 Such subpoena power operates in extenso to all
the functions of the Agency as laid out in the aforequoted sub- body, it, too may take steps to inform itself as to whether there
paragraphs (b),(e), and (h). It is not bordered by nor is it is probable violation of the law.21 In sum, it may be stated that
a subpoena meets the requirements for enforcement if the
merely exercisable, as respondents would have it, in quasi-
inquiry is (1) within the authority of the agency; (2) the
judicial or adjudicatory function under sub-paragraph (b). The
demand is not too indefinite; and (3) the information is
functions enumerated in all these sub-paragraphs (b), (e), and
reasonably relevant. 22
(h) interlink or intertwine with one another with the principal
aim of meeting the very purpose of the creation of the Agency,
which is to forestall and erode nefarious activities and There is no doubt that the fact-finding investigations being
anomalies in the civil service. To hold that the subpoena conducted by the Agency upon sworn statements implicating
power of the Agency is confined to mere quasi-judicial or certain public officials of the City Government of Manila in
adjudicatory functions would therefore imperil or inactiviate anomalous transactions 23 fall within the Agency's sphere of
the Agency in its investigatory functions under authority and that the information sought to be elicited from
sub-paragraphs (e) and (h). More than that, the enabling respondent Fernando Manalastas, of which he is claimed to be
authority itself (Executive Order No. 4, para. 5) fixes no in possession, 24 is reasonably relevant to the investigations.
distinction when and in what function should the subpoena
power be exercised. Similarly, We see no reason to depart We are mindful that the privilege against self-incrimination
from the established rule that forbids differentiation when the extends in administrative investigations, generally, in scope
law itself makes none. similar to adversary proceedings. 25 In Cabal v. Kapunan,
Jr., 26 the Court ruled that since the administrative charge of
Nor could We impress upon this subpoena power the alleged unexplained wealth against the respondent therein may result
strictures of a subpoena issued under the Rules of Court 13 to in the forfeiture of the property under the Anti-Graft and
abridge its application. The seeming proviso in Section 580 of Corrupt Practices Act, a proceeding criminal or penal in
the Revised Administrative Code that the right to summon nature, the complainant cannot call the respondent to the
witnesses and the authority to require the production of witness stand without encroaching upon his constitutional
documents under a subpoena duces tecum or otherwise shall privilege against self-incrimination. Later, in Pascual, Jr. v.
be "subject in all respects to the same restrictions and Board of Medical Examiners, 27 the same approach was
qualifications as apply in judicial proceedings of a similar followed in the administrative proceedings against a medical
character" cannot be validly seized upon to require, in practitioner that could possibly result in the loss of his
respondents' formulation, that, as in a subpoena under the privilege to practice the medical profession. Nevertheless, in
Rules, a specific case must be pending before a court for the present case, We find that respondent Fernando
hearing or trial and that the hearing or trial must be in Manalastas is not facing any administrative charge. 28 He is
connection with the exercise of the court's judicial or merely cited as a witness in connection with the fact-finding
adjudicatory functions 14 before a non-judicial subpoena can investigation of anomalies and irregularities in the City
be issued by an administrative agency like petitioner Agency. Government of Manila with the object of submitting the
It must be emphasized, however, that an administrative assembled facts to the President of the Philippines or to file
subpoena differs in essence from a judicial subpoena. Clearly, the corresponding charges. 29 Since the only purpose of

Administrative Law
-cjsc- Page 14
investigation is to discover facts as a basis of future action, find himself in the position of a respondent. It is worthwhile to
any unnecessary extension of the privilege would thus be my mind that there be a reference, even if far from detailed, to
unwise. 30Anyway, by all means, respondent Fernando such an aspect. Hence this separate opinion.
Manalastas may contest any attempt in the investigation that
tends to disregard his privilege against self-incrimination. 1. The right to be protected against unreasonable search and
seizure should not fall by the wayside. 6 The broad sweep of
A question of constitutional dimension is raised by the administrative power of investigation cannot, consistently
respondents on the inherent power of the President of the with the Constitution, go so far as to render it meaningless. It
Philippines to issue subpoena. 31 More tersely stated, is with such a reading in mind that I view the pronouncement
respondents would now challenge, in a collateral way, the in United States v. Morton Salt
validity of the basic authority, Executive Order No. 4, as Co.,7 on which reliance is placed in the opinion of Justice
amended in part by Executive Order No. 88. Unfortunately, Martin. The doctrine formulated in such American case by
for reasons of public policy, the constitutionality of executive Justice Jackson reads thus: "Of course a governmental
orders, which are commonly said to have the force and effect investigation into corporate matters may be of such a
of statutes 32 cannot be collaterally impeached. 33 Much more sweeping nature and so unrelated to the matter properly under
when the issue was not duly pleaded in the court below as to inquiry as to exceed the investigatory power.Federal Trade
be acceptable for adjudication now. 34 The settled rule is that Comm. v. American Tobacco Co., ... . But it is sufficient if the
the Court will not anticipate a question of constitutional law in inquiry is within the authority of the agency, the demand is not
advance of the necessity of deciding it. 35 too indefinite and the information sought is reasonably
relevant. "The gist of the protection is in the requirement,
Nothing then appears conclusive than that the disputed expressed in terms, that the disclosure sought shall not be
subpoena issued by petitioner Quirico Evangelista to unreasonable.""8 It has been given approval in an impressive
respondent Fernando Manalastas is well within the legal number of subsequent adjudications. 9 It suffices, however, to
competence of the Agency to issue. call attention to the words of Justice Jackson in the two
paragraphs preceding the excerpts cited to remove any doubt
as to its lending itself to the construction that an inroad into
WHEREFORE, the aforequoted order of respondent Judge,
the right of search and seizure is now permissible: "The
dated July 1, 1968, is hereby set aside and declared of no force
Commission's order is criticized upon grounds that the order
and effect.
transgresses the Fourth Amendment's proscription of
unreasonable searches and seizures and the Fifth Amendment's
Without pronouncement as to costs. due process of law clause. It is unnecessary here to examine
the question of whether a corporation is entitled to the
SO ORDERED. protection of the Fourth Amendment. ... Although the "right to
be let alone the most comprehensive of rights and the right
Castro, Antonio, Esguerra, Muoz Palma and Aquino, JJ., most valued by civilized men," ... is not confined literally to
concur. searches and seizures as such, but extends as well to the
orderly taking under compulsion of process, ... neither
Makalintal, C.J., concurs in the result. incorporated nor unincorporated associations can plead an
unqualified right to conduct their affairs in secret. ... While
they may and should have protection from unlawful demands
Barredo, Makasiar, and Concepcion, Jr., JJ, took no part.
made in the name of public investigation, ... corporations can
claim no equality with individuals in the enjoyment of a right
to privacy . ... They are endowed with public attributes. They
have a collective impact upon society, from which they derive
the privilege of acting as artificial entities. The Federal
Government allows them the privilege of engaging in
interstate commerce. Favors from government often carry with
them an enhanced measure of regulation. ... Even if one were
Separate Opinions to regard the request for information in this case as caused by
nothing more than official curiosity, nevertheless law-
enforcing agencies have a legitimate right to satisfy
themselves that corporate behavior is consistent with the law
and the public interest." 10 Thus is rendered clear that the
FERNANDO, J., concurring: landmark Boyd decision which warned against the use of the
subpoena power to trench upon this guarantee still speaks
The opinion of the Court, ably penned by Justice Martin, is authoritatively. This Court has spoken to the same effect,
both learned and comprehensive. It reflects the current state of Boyd having been cited in a number of cases. 11I would,
doctrinal pronouncements in American Administrative Law, therefore, read the opinion of my brethren as not departing
which up to now possesses worth in this jurisdiction. It is in from but precisely adhering to its command. Whatever
accordance with the views expressed in two authoritative relaxation of its compelling force may be allowable in case of
American treatises that of corporations should not apply where an individual is
Davis1 and that of Jaffe.2 The compact but highly useful text concerned. That should reassure respondent Manalastas that if
of Parker yields the same conclusion.3 A similar approach may he could demonstrate a failure to abide by the constitutional
be discerned in the casebooks of Katz,4 and McFarland and mandate on search and seizure, he is not without a remedy.
Vanderbelt.5 A concurrence is thus called for. That for me
does not conclude matters though. The constitutional rights of 2. Nor can I fully reconcile myself to the implications lurking
a person who may be involved in such administrative in this observation in the opinion of the Court: "Since the only
investigation, call for respect. A recognition of the expanded purpose of investigation is to discover facts as a basis of future
reach of the administrative process in order to assure that the action, any unnecessary extension of the privilege would thus
objectives of a regulatory statute be attained cannot obscure be unwise." 12 The right not to incriminate oneself 13 is equally
the protection that the Constitution affords a person who may deserving of the utmost deference and respect. What is more,

Administrative Law
-cjsc- Page 15
the present Constitution by the adoption of the Miranda indeed not merely witnesses but in reality respondents (subject
doctrine has vitalized it even further. 14 There is, happily, the to administrative and criminal charges.)
last sentence of such paragraph: "Anyway, by all means,
respondent Fernando Manalastas may contest any attempt in Respondent has therefore correctly invoked Cabal vs.
the investigation that tends to disregard his privilege against Kapunan,6 wherein the Court through then Chief Justice
self- Roberto Concepcion held that therein petitioner rightfully
incrimination." 15 When read in connection with the earlier refused to take the witness stand as against the order of the
reference to the fact that the respondent is called as a witness Presidential Committee investigating the complaint against
not as the party proceeded against, it cannot be said, in the him for alleged unexplained wealth (since such proceedings
light of the ruling in Planas v. Gil, 16 that it offends against were in substance and effect a criminal one and his position
this constitutional guarantee. As of now then, with the was virtually that of an accused on trial and he therefore had
question of any modification of the Planas doctrine not being the right to remain silent and invoke the privilege against self-
properly before us, I can yield my concurrence. Candor incrimination in support of ablanket refusal to answer any and
compels the statement, however, that for me a reexamination all questions) and ordered the dismissal of the criminal
of such a pronouncement is desirable. A distinction between a contempt charge against him.
witness and a respondent may be too tenuous if the realities of
the situation be fully considered. I am bothered by the thought
Pascual Jr. vs. Bd. of Examiners7 is equally in point, wherein
that the force of the Cabal 17 and the Pascual, Jr.
the Court sustained the lower court's writ of injunction against
decisions 18 may be eroded if the prospective respondent is
the respondent board's order compelling therein petitioner to
first called as a witness and is thus compelled to testify. For take the witness stand in a malpractice case (wherein he was
the present, it may suffice if I express my misgivings. At any respondent) in view of the penal nature of the proceedings and
rate, concurrence is not ruled out in view of the
the right of the accused to refuse "not only to answer
aforementioned caveat in the able opinion of Justice Martin.
incriminatory questions, but also to take the witness
stand."8 The Court therein stressed that "the constitutional
TEEHANKEE, J., dissenting: guarantee, along with other rights granted an accused, stands
for a belief that while crime should not go unpunished and that
I am constrained to dissent from the main opinion of Mr. the truth must be revealed, such desirable
Justice Martin which grants the petition and sets aside objectives should not be accomplished according to means or
respondent court's order and writ of preliminary injunction of methods offensive to the high sense of respect accorded the
July 1, 1968 and would therefore require respondent Fernando human personality. More and more in line with the democratic
Manalastas as assistant city public service officer of Manila creed, the deference accorded an individual even those
(and all other city officials similarly situated) to comply with suspected of the most heinous crimes is given due weight. To
the PARGO subpoena "to testify to matters relevant to the quote from Chief Justice Warren, "the constitutional
investigation of anomalies and sworn statements involving or foundation underlying the privilege is the respect a
implicating certain City officials or other public officers." 1 government ... must accord to the dignity and integrity of its
citizens."" and that "while earlier decisions stressed the
While the subpoena commands respondent Manalastas to principle of humanity on which this right is predicated,
appear as witness before the PARGO,2 on the basis whereof precluding as it does all resort to force or compulsion, whether
the main opinion finds that said respondent "is not facing any physical or mental, current judicial opinion places equal
administrative charge" and that "he is merely cited as witness emphasis on its identification with the right to privacy. Thus
in connection with the fact-finding investigation of anomalies according to Justice Douglas: "The Fifth Amendment in its
and irregularities in the City Government of Manila with the Self-Incrimination clause enables the citizen to create a zone
object of submitting the assembled facts to the President of the of privacy which government may not force to surrender to his
Philippines or to file the corresponding charges",3 it is a fact detriment."
shown by the very petition at bar itself and its Annexes B and
B-1 that respondent Manalastas is in fact and for all intents That petitioner's investigation and subpoena against
and purposes subpoenaed as a respondent or one directly respondent Manalastas were in substance and effect criminal
implicated with alleged bribery and graft in the said sworn in nature against him as a respondent (and not merely as
statements that concededly as per the petition itself initiated witness) as indicated above, is borne out by the fact of record
the PARGO's alleged "fact-finding investigation."4 in Sugay vs. Pamaran 9 (of which the Court can well take
judicial notice) that on July 22, 1971 respondent Manalastas as
Thus Annex B of the petition which is a sworn statement of well as Carlos Montaez the trader (affiant in Annex B-1,
one Edilberto Arguelles, investigated by the PARGO on the petition, supra, 10) and a number of other city officials were
overpricing of eight steam cleaners sold through him as charged by the city fiscal in the Circuit Criminal Court of
commission agent to the City of Manila, sets forth the detailed Manila for violations of Republic Act 3019 (Anti-Graft Law)
allegations of said declarant that respondent Manalastas and a in connection with the alleged gross overpricing of the same
number of other city officials named and unnamed got the equipment (steam cleaners and air compressor) purchased for
lion's share of the overpricing. Annex B-1 of the petition is the the City.
sworn statement of one Carlos Montaez with reference to
some overpriced equipment sold by him to the City of Manila The main opinion's justification for upholding the
wherein he likewise narrated in detail the modus operandi and subpoena, viz, that "since the only purpose of investigation is
specifically named respondent Manalastas and five other to discover facts as a basis of future action, any unnecessary
officials to whom he allegedly gave: "due monetary extension of the privilege (against self-incrimination)would
consideration." thus be unnecessary" 11 thus appears to be flawed in fact and
in law: respondent was in factbeing investigated as
All claims of PARGO to the contrary notwithstanding, the respondent-suspect and without submitting to the investigation
very petition and said annexed sworn statements (which were was actually criminally charged in court; as a pure matter
not shown to respondent judge in spite of his expressly asking of legal principle, the 1973 Constitution has recognized the
for them during the course of the hearing 5) show that necessity of strengthening (and extending) the privilege
respondent Manalastas (and others similarly situated) are against self-incrimination by expressly providing as a
constitutional mandate in the Bill of Rights that "Any person

Administrative Law
-cjsc- Page 16
under investigation for the commission of an offense shall
have the right to remain silent and to counsel, and to be
informed of such right" (Article IV, section 20) and outlawing FERNANDO, J.:
the use of any confession obtained in violation of said section
by declaring its inadmissibility in evidence.
It is a novel question that presents itself before this Court in
this petition for the review of a resolution of respondent Court
Respondent Manalastas was therefore justified in invoking the of Industrial Relations. Specifically, it is whether respondent
privilege against self-incrimination and in securing the Court, in the exercise of its power of investigation to assure
respondent court's injunction against enforcement of compliance with the internal labor organization procedures
petitioner's subpoena. Respondent was unquestionably a party under Section 17 of the Industrial Peace Act,1 can require a
respondent who under the doctrine labor organization's "books of accounts, bank accounts, pass
of Cabal and Pascual, supra, had the right to remain silent and books, union funds, receipts, vouchers and other documents
invoke the privilege against self-incrimination and refuse to related to [its] finances" be delivered and deposited with it at
take the witness stand. This legal and constitutional right may the hearing to conduct such investigation in accordance with a
not be defeated by the transparent expedient of citing complaint duly filed without the officials of such labor
respondent as a supposed witness in what was avowed to be a organization, therein named as respondents and petitioners
general fact-finding investigation but obviously was a fishing before us, being heard prior to the issuance of such order. The
expedition to ensnare respondent as a prime suspect, as borne respondent Court, first acting through Associate Judge Joaquin
out by the sworn statements withheld from respondent court M. Salvador and thereafter en banc, upheld its power to do so.
and now annexed to the very petition at bar and petitioner's The challenge to such competence sought to be fortified by the
contention that "In effect, the injunction issued by the lower allegation of the absence of procedural due process was
court is one to restrain criminal prosecutions." This contention rejected. After a careful study of the matter, we cannot say that
has of course been proven baseless by the events already cited thereby respondents Court was in error. We have no reason to
above that such criminal prosecutions were in fact filed in reverse.
court against respondent and others without the need of
petitioner's "fact-finding investigation" and subpoenas.
As set forth in the brief for the petitioners, Pablo Catura and
Luz Salvador, the President and Treasurer, respectively, of the
The thrust of all this is that the State with its overwhelming Philippine Virginia Tobacco Administration Employees
and vast powers and resources can and must ferret out and Association, a legitimate labor organization duly registered,
investigate wrongdoing, graft and corruption and at the same there was, on December 27, 1966, a complaint against them
time respect the constitutional guarantees of the individual's under Section 17 filed by the prosecution division of the
right to privacy, silence and due process and against self- respondent Court, the principal complainants being now
incrimination and unreasonable search and seizure. This respondent Celestino Tabaniag as well as other employees
means that leads and charges must be investigated and constituting more than ten percent of the entire membership of
followed up through the assistance of the corresponding police such labor organization. In the complaint, it was charged that
and law enforcement agencies as provided in the petitioner's during the tenure of office of petitioners before us as such
executive charter 12 and the evidence secured by proper President and Treasurer, they were responsible for
applications for search warrants, and as conceded in the "unauthorized disbursement of union funds" with
petition itself, after the corresponding report to the President complainants on various occasions during the latter part of
"to file the corresponding charges against the persons who 1966 demanding from them "a full and detailed report of all
may appear responsible or merely refer them to other financial transaction of the union and to make the book of
appropriate offices such as the Fiscal's office, like what was accounts and other records of the financial activities of the
done in other cases." 13 union open to inspection by the members," only to be met with
a refusal on their part to comply. It was further asserted that
There appears to be validity in respondent's contention that the the executive board of such labor organization passed a
subpoena power granted petitioner in its executive charter resolution calling for a general membership meeting so that
does not apply to general fact-finding investigations conducted petitioners could be confronted about the status of union
by it. 14 I find no need, however, of going further into this funds, but then, Pablo Catura, as President, cancelled such
issue, since this dissent is based directly on the fundamental meeting.lwph1.t There was thereafter a general
tenet that respondent Manalastas was unquestionably being membership resolution reiterating previous demands "for a
investigated by petitioner as respondent and a prime suspect full and detailed report of all financial transactions of the
(and not as a mere witness) and accordingly, under settled union," but again there was no response, thus compelling the
doctrine, he had every right to remain silent and to invoke his members to refer the matter to the Department of Labor which
right against self-incrimination and to refuse to take the duly issued subpoenas for the presentation of such book of
witness stand. accounts to petitioners without any success. After setting forth
that complainants had exhausted all remedies provided in the
I therefore vote for upholding respondent court's injunction union's constitution and by-laws, which were all unavailing,
against enforcement of petitioner's subpoena. the complaint sought, after due hearing and judgement, to
declare present petitioners, as respondents, guilty of unfair
labor practice under the above provision of the Industrial
G.R. No. L-27392 January 30, 1971
Peace Act, for them to cease and desist from further
committing such unfair labor practice complained of, and to
PABLO CATURA and LUZ SALVADOR, petitioners, render a full and detailed report of all financial transactions of
vs. the union as well as to make the book of accounts and other
THE COURT OF INDUSTRIAL RELATIONS and records of these financial activities open to inspection by the
CELESTINO TABANIAG, et al., respondents. members.2

Joselito J. de la Rosa for petitioners. Thereafter, on December 28, 1966, respondent Celestino
Tabaniag and the other members, as petitioners in the above
Ernesto Estrella for respondents. complaint before respondents Court, sought an injunction to
prevent now petitioners Pablo Catura who, it turned out, was

Administrative Law
-cjsc- Page 17
again elected as President in an election on November 15, serious enough by the prosecutor of respondent Court to call
1966, from taking his oath of office in view of his alleged for the exercise of the statutory power of investigation to
persistence in the abuse of his authority in the disbursement of substantiate the alleged violation so as to assure that the rights
union funds as well as his refusal to make a full and detailed and conditions of membership in a labor organization as
report of all financial transactions of the union. 3 specifically set forth in Section 17 be respected. All that the
challenged order did was to require petitioners, as President
Then came the order of December 29, 1966, by Associate and Treasurer of the labor organization, to "deliver and
Judge Joaquin M. Salvador which, instead of granting the deposit" with respondent Court all of its book of accounts,
injunction sought, limited itself to requiring and directing bank accounts, pass books, union funds, receipts, vouchers
"personally the respondents Pablo Catura and Luz Salvador, and other documents related to its finances at the hearing of
president and treasurer, respectively, of the Philippine Virginia the petition before it on January 3, 1967.
Tobacco Administration Employees' Association, to deliver
and deposit to this Court all the said Association's book of On its face, it cannot be said that such a requirement is beyond
accounts, bank accounts, pass books, union funds, receipts, the statutory power conferred. If it were otherwise, the specific
vouchers and other documents related to the finances of the provisions of law allegedly violated may not be effectively
said labor union at the hearing of this petition on January 3, complied with. The authority to investigate might be rendered
1967 at 9:00 o'clock in the morning. Said respondents are futile if respondent Court could be held as having acted
hereby required to comply strictly with this Order." 4 There contrary to law. To paraphrase Justice Laurel, the power to
was a motion for reconsideration on January 2, 1967 by now investigate, to be conscientious and rational at the very least,
petitioners Pablo Catura and Luz Salvador on the ground that requires an inquiry into existing facts and conditions. The
they were not heard before such order was issued, which documents required to be produced constitutes evidence of the
moreover in their opinion was beyond the power of respondent most solid character as to whether or not there was a failure to
Court. With Associate Judge Ansberto P. Paredes dissenting, comply with the mandates of the law. It is not for this Court to
the order was sustained in a resolution by the Court en whittle down the authority conferred on administrative
banc on February 28, 1967. Hence the present petition filed on agencies to assure the effective administration of a statute, in
April 3, 1967. this case intended to protect the rights of union members
against its officers. The matter was properly within its
The petition was given due course by this Court in a resolution cognizance and the means necessary to give it force and
of April 13, 1967 with a preliminary injunction issued upon effectiveness should be deemed implied unless the power
petitioners' posting a bond of P2,000.00. Respondents did not sought to be exercised is so arbitrary as to trench upon private
take the trouble of filing an answer within the period expired rights of petitioners entitled to priority. No such showing has
on June 17, 1967 and petitioners were required to submit their been made; no such showing can be made. To repeat, there
brief within thirty days under this Court's resolution of July should be no question about the correctness of the order herein
14, 1967. Such a brief was duly filed on September 19 of that challenged.
year. There was no brief for respondents. The case was thus
deemed submitted for decision on October 4, 1968. 2. Nor is the validity of the order in question to be impugned
by the allegation that there was a denial of procedural due
In the light of the interpretation to be accorded the applicable process. If the books and records sought to be delivered and
legal provisions and after a careful consideration of the deposited in court for examination were the private property of
contention that such a power to issue the challenged order petitioners, perhaps the allegation of the absence of due
cannot be deemed as possessed by respondent Court which process would not be entirely lacking in plausibility. Such is
moreover did not accord petitioners procedural due process, not the case however. The pertinent section of the Industrial
we have reached the conclusion, as set forth at the opening of Peace Act makes clear that such books of accounts and other
this opinion, that petitioners cannot prevail. The order as records of the financial activities are open to inspection by any
issued first by Associate Judge Joaquin M. Salvador and member of a labor organization. For the court to require their
thereafter by respondent Court en banc must be sustained. submission at the hearing of the petition is, as above noted,
beyond question, and no useful purpose would be served by
first hearing petitioners before an order to that effect can be
1. The controlling provisions of law to the specific situation
issued. Moreover, since as was shown in the very brief of
before this Court concerning the power of investigation of
petitioners, there was a motion for reconsideration, the
respondent Court to assure compliance with internal labor
absence of any hearing, even if on the assumption purely for
organization procedures with the corresponding authority to
investigate to substantiate alleged violations may be found in argument's sake that there was such a requirement, has no
paragraphs (b), (h), and (l) of the aforecited Section 17 of the cured. So it was held by this Court in a recent decision. Thus:
"As far back as 1935, it has already been a settled doctrine that
Industrial Peace Act. Thus: "The members shall be entitled to
a plea of denial of procedural due process does not lie where a
full and detailed reports from their officers and representatives
defect consisting of an absence of notice of hearing was
of all financial transactions as provided in the constitution and
thereafter cured by the alleged aggrieved party having had the
by-laws of the organization."5 ... "The funds of the
organization shall not be applied for any purpose or object opportunity to be heard on a motion for reconsideration. 'What
other than those expressly stated in its constitution or by-laws the law prohibits is not the absence of previousnotice, but the
absolute absence thereof and lack of opportunity to be heard.'
or those expressly authorized by a resolution of the majority of
There is then no occasion to impute deprivation of property
the member."6... "The books of accounts and other records of
without due process where the adverse party was heard on a
the financial activities of a legitimate labor organization shall
motion for reconsideration constituting as it does 'sufficient
be open to inspection by any officer or member thereof." 7
opportunity' for him to inform the Tribunal concerned of his
side of the controversy. As was stated in a recent decision,
To repeat, the complaint before respondent Court against what 'due process contemplates is freedom from arbitrariness
petitioners as President and Treasurer of the union, and what it requires is fairness or justice, the substance rather
specifically recited an unauthorized disbursement of union than the form being paramount,' the conclusion being that the
funds as well as the failure to make a full and detailed report hearing on a motion for reconsideration meets the strict
of financial transactions of the union and to make the book of requirement of due process."8
accounts and other records of its financial activities open to
inspection by the members. Clearly, the matter was deemed
Administrative Law
-cjsc- Page 18
WHEREFORE, the petition for certiorari is denied. The writ administrative body. When an administrative agency
of preliminary injunction issued under the resolution of April promulgates rules and regulations, it "makes" a new law with
13, 1967 is dissolved and declared to be without any further the force and effect of a valid law, while when it renders an
force or effect. opinion or gives a statement of policy, it merely interprets a
pre-existing law (Parker, Administrative Law, p. 197; Davis,
G.R. No. L-16704 March 17, 1962 Administrative Law, p. 194). Rules and regulations when
promulgated in pursuance of the procedure or authority
VICTORIAS MILLING COMPANY, INC., petitioner- conferred upon the administrative agency by law, partake of
appellant, the nature of a statute, and compliance therewith may be
enforced by a penal sanction provided in the law. This is so
vs.
because statutes are usually couched in general terms, after
SOCIAL SECURITY COMMISSION, respondent-appellee.
expressing the policy, purposes, objectives, remedies and
sanctions intended by the legislature. The details and the
Ross, Selph and Carrascoso for petitioner-appellant. manner of carrying out the law are often times left to the
Office of the Solicitor General and Ernesto T. Duran for administrative agency entrusted with its enforcement. In this
respondent-appellee. sense, it has been said that rules and regulations are the
product of a delegated power to create new or additional legal
BARRERA, J.: provisions that have the effect of law. (Davis,op. cit., p. 194.) .

On October 15, 1958, the Social Security Commission issued A rule is binding on the courts so long as the procedure fixed
its Circular No. 22 of the following tenor: . for its promulgation is followed and its scope is within the
statutory authority granted by the legislature, even if the courts
Effective November 1, 1958, all Employers in are not in agreement with the policy stated therein or its innate
computing the premiums due the System, will take wisdom (Davis, op. cit., 195-197). On the other hand,
into consideration and include in the Employee's administrative interpretation of the law is at best merely
remuneration all bonuses and overtime pay, as well advisory, for it is the courts that finally determine what the
as the cash value of other media of remuneration. All law means.
these will comprise the Employee's remuneration or
earnings, upon which the 3-1/2% and 2-1/2% Circular No. 22 in question was issued by the Social Security
contributions will be based, up to a maximum of Commission, in view of the amendment of the provisions of
P500 for any one month. the Social Security Law defining the term "compensation"
contained in Section 8 (f) of Republic Act No. 1161 which,
Upon receipt of a copy thereof, petitioner Victorias Milling before its amendment, reads as follows: .
Company, Inc., through counsel, wrote the Social Security
Commission in effect protesting against the circular as (f) Compensation All remuneration for
contradictory to a previous Circular No. 7, dated October 7, employment include the cash value of any
1957 expressly excluding overtime pay and bonus in the remuneration paid in any medium other than cash
computation of the employers' and employees' respective except (1) that part of the remuneration in excess of
monthly premium contributions, and submitting, "In order to P500 received during the month; (2) bonuses,
assist your System in arriving at a properinterpretation of the allowances or overtime pay; and (3) dismissal and all
term 'compensation' for the purposes of" such computation, other payments which the employer may make,
their observations on Republic Act 1161 and its amendment although not legally required to do so.
and on the general interpretation of the words "compensation",
"remuneration" and "wages". Counsel further questioned the Republic Act No. 1792 changed the definition of
validity of the circular for lack of authority on the part of the "compensation" to:
Social Security Commission to promulgate it without the
approval of the President and for lack of publication in the
(f) Compensation All remuneration for
Official Gazette.
employment include the cash value of any
remuneration paid in any medium other than cash
Overruling these objections, the Social Security Commission except that part of the remuneration in excess of
ruled that Circular No. 22 is not a rule or regulation that P500.00 received during the month.
needed the approval of the President and publication in the
Official Gazette to be effective, but a mere administrative
It will thus be seen that whereas prior to the amendment,
interpretation of the statute, a mere statement of general policy
or opinion as to how the law should be construed. bonuses, allowances, and overtime pay given in addition to the
regular or base pay were expressly excluded, or exempted
from the definition of the term "compensation", such
Not satisfied with this ruling, petitioner comes to this Court on exemption or exclusion was deleted by the amendatory law. It
appeal. thus became necessary for the Social Security Commission to
interpret the effect of such deletion or elimination. Circular
The single issue involved in this appeal is whether or not No. 22 was, therefore, issued to apprise those concerned of the
Circular No. 22 is a rule or regulation, as contemplated in interpretation or understanding of the Commission, of the law
Section 4(a) of Republic Act 1161 empowering the Social as amended, which it was its duty to enforce. It did not add
Security Commission "to adopt, amend and repeal subject to any duty or detail that was not already in the law as amended.
the approval of the President such rules and regulations as It merely stated and circularized the opinion of the
may be necessary to carry out the provisions and purposes of Commission as to how the law should be
this Act." construed. 1wph1.t

There can be no doubt that there is a distinction between an The case of People v. Jolliffe (G.R. No. L-9553, promulgated
administrative rule or regulation and an administrative on May 30, 1959) cited by appellant, does not support its
interpretation of a law whose enforcement is entrusted to an contention that the circular in question is a rule or regulation.

Administrative Law
-cjsc- Page 19
What was there said was merely that a regulation may be Office of the Solicitor-General Ozaeta and Assistant Attorney
incorporated in the form of a circular. Such statement simply Barcelona for the Court of Industrial Relations.
meant that the substance and not the form of a regulation is Antonio D. Paguia for National Labor Unon.
decisive in determining its nature. It does not lay down a Claro M. Recto for petitioner "Ang Tibay".
general proposition of law that any circular, regardless of its Jose M. Casal for National Workers' Brotherhood.
substance and even if it is only interpretative, constitutes a rule
or regulation which must be published in the Official Gazette LAUREL, J.:
before it could take effect.
The Solicitor-General in behalf of the respondent Court of
The case of People v. Que Po Lay (50 O.G. 2850) also cited Industrial Relations in the above-entitled case has filed a
by appellant is not applicable to the present case, because the motion for reconsideration and moves that, for the reasons
penalty that may be incurred by employers and employees if stated in his motion, we reconsider the following legal
they refuse to pay the corresponding premiums on bonus, conclusions of the majority opinion of this Court:
overtime pay, etc. which the employer pays to his employees,
is not by reason of non-compliance with Circular No. 22, but
1. Que un contrato de trabajo, asi individual como
for violation of the specific legal provisions contained in
colectivo, sin termino fijo de duracion o que no sea
Section 27(c) and (f) of Republic Act No. 1161.
para una determinada, termina o bien por voluntad de
cualquiera de las partes o cada vez que ilega el plazo
We find, therefore, that Circular No. 22 purports merely to fijado para el pago de los salarios segun costumbre en
advise employers-members of the System of what, in the light la localidad o cunado se termine la obra;
of the amendment of the law, they should include in
determining the monthly compensation of their employees
2. Que los obreros de una empresa fabril, que han
upon which the social security contributions should be based,
celebrado contrato, ya individual ya colectivamente,
and that such circular did not require presidential approval and con ell, sin tiempo fijo, y que se han visto obligados a
publication in the Official Gazette for its effectivity.
cesar en sus tarbajos por haberse declarando paro
forzoso en la fabrica en la cual tarbajan, dejan de ser
It hardly need be said that the Commission's interpretation of empleados u obreros de la misma;
the amendment embodied in its Circular No. 22, is correct.
The express elimination among the exemptions excluded in 3. Que un patrono o sociedad que ha celebrado un
the old law, of all bonuses, allowances and overtime pay in the
contrato colectivo de trabajo con sus osbreros sin
determination of the "compensation" paid to employees makes
tiempo fijo de duracion y sin ser para una obra
it imperative that such bonuses and overtime pay must now be
determiminada y que se niega a readmitir a dichos
included in the employee's remuneration in pursuance of the
obreros que cesaron como consecuencia de un paro
amendatory law. It is true that in previous cases, this Court has forzoso, no es culpable de practica injusta in incurre
held that bonus is not demandable because it is not part of the en la sancion penal del articulo 5 de la Ley No. 213
wage, salary, or compensation of the employee. But the
del Commonwealth, aunque su negativa a readmitir
question in the instant case is not whether bonus is
se deba a que dichos obreros pertenecen a un
demandable or not as part of compensation, but whether, after
determinado organismo obrero, puesto que tales ya
the employer does, in fact, give or pay bonus to his
han dejado deser empleados suyos por terminacion
employees, such bonuses shall be considered compensation del contrato en virtud del paro.
under the Social Security Act after they have been received by
the employees. While it is true that terms or words are to be
interpreted in accordance with their well-accepted meaning in The respondent National Labor Union, Inc., on the other hand,
law, nevertheless, when such term or word is specifically prays for the vacation of the judgement rendered by the
defined in a particular law, such interpretation must be majority of this Court and the remanding of the case to the
adopted in enforcing that particular law, for it can not be Court of Industrial Relations for a new trial, and avers:
gainsaid that a particular phrase or term may have one
meaning for one purpose and another meaning for some other 1. That Toribio Teodoro's claim that on September
purpose. Such is the case that is now before us. Republic Act 26, 1938, there was shortage of leather soles in ANG
1161 specifically defined what "compensation" should mean TIBAY making it necessary for him to temporarily
"For the purposes of this Act". Republic Act 1792 amended lay off the members of the National Labor Union
such definition by deleting same exemptions authorized in the Inc., is entirely false and unsupported by the records
original Act. By virtue of this express substantial change in the of the Bureau of Customs and the Books of Accounts
phraseology of the law, whatever prior executive or judicial of native dealers in leather.
construction may have been given to the phrase in question
should give way to the clear mandate of the new law. 2. That the supposed lack of leather materials claimed
by Toribio Teodoro was but a scheme to
IN VIEW OF THE FOREGOING, the Resolution appealed systematically prevent the forfeiture of this bond
from is hereby affirmed, with costs against appellant. So despite the breach of his CONTRACT with the
ordered. Philippine Army.

G.R. No. L-46496 February 27, 1940 3. That Toribio Teodoro's letter to the Philippine
Army dated September 29, 1938, (re supposed delay
ANG TIBAY, represented by TORIBIO TEODORO, of leather soles from the States) was but a scheme to
manager and propietor, and systematically prevent the forfeiture of this bond
NATIONAL WORKERS BROTHERHOOD, petitioners, despite the breach of his CONTRACT with the
vs. Philippine Army.
THE COURT OF INDUSTRIAL RELATIONS and
NATIONAL LABOR UNION, INC., respondents. 4. That the National Worker's Brotherhood of ANG
TIBAY is a company or employer union dominated
by Toribio Teodoro, the existence and functions of
Administrative Law
-cjsc- Page 20
which are illegal. (281 U.S., 548, petitioner's printed determination of disputes between employers and employees
memorandum, p. 25.) but its functions in the determination of disputes between
employers and employees but its functions are far more
5. That in the exercise by the laborers of their rights comprehensive and expensive. It has jurisdiction over the
to collective bargaining, majority rule and elective entire Philippines, to consider, investigate, decide, and settle
representation are highly essential and indispensable. any question, matter controversy or dispute arising between,
(Sections 2 and 5, Commonwealth Act No. 213.) and/or affecting employers and employees or laborers, and
regulate the relations between them, subject to, and in
6. That the century provisions of the Civil Code accordance with, the provisions of Commonwealth Act No.
103 (section 1). It shall take cognizance or purposes of
which had been (the) principal source of dissensions
prevention, arbitration, decision and settlement, of any
and continuous civil war in Spain cannot and should
industrial or agricultural dispute causing or likely to cause a
not be made applicable in interpreting and applying
strike or lockout, arising from differences as regards wages,
the salutary provisions of a modern labor legislation
of American origin where the industrial peace has shares or compensation, hours of labor or conditions of
always been the rule. tenancy or employment, between landlords and tenants or
farm-laborers, provided that the number of employees,
laborers or tenants of farm-laborers involved exceeds thirty,
7. That the employer Toribio Teodoro was guilty of and such industrial or agricultural dispute is submitted to the
unfair labor practice for discriminating against the Court by the Secretary of Labor or by any or both of the
National Labor Union, Inc., and unjustly favoring the parties to the controversy and certified by the Secretary of
National Workers' Brotherhood. labor as existing and proper to be by the Secretary of Labor as
existing and proper to be dealth with by the Court for the sake
8. That the exhibits hereto attached are so of public interest. (Section 4, ibid.) It shall, before hearing the
inaccessible to the respondents that even with the dispute and in the course of such hearing, endeavor to
exercise of due diligence they could not be expected reconcile the parties and induce them to settle the dispute by
to have obtained them and offered as evidence in the amicable agreement. (Paragraph 2, section 4, ibid.) When
Court of Industrial Relations. directed by the President of the Philippines, it shall investigate
and study all industries established in a designated locality,
9. That the attached documents and exhibits are of with a view to determinating the necessity and fairness of
such far-reaching importance and effect that their fixing and adopting for such industry or locality a minimum
admission would necessarily mean the modification wage or share of laborers or tenants, or a maximum "canon" or
and reversal of the judgment rendered herein. rental to be paid by the "inquilinos" or tenants or less to
landowners. (Section 5, ibid.) In fine, it may appeal to
The petitioner, Ang Tibay, has filed an opposition both to the voluntary arbitration in the settlement of industrial disputes;
motion for reconsideration of the respondent National Labor may employ mediation or conciliation for that purpose, or
Union, Inc. recur to the more effective system of official investigation and
compulsory arbitration in order to determine specific
controversies between labor and capital industry and in
In view of the conclusion reached by us and to be herein after
agriculture. There is in reality here a mingling of executive
stead with reference to the motion for a new trial of the
and judicial functions, which is a departure from the rigid
respondent National Labor Union, Inc., we are of the opinion
doctrine of the separation of governmental powers.
that it is not necessary to pass upon the motion for
reconsideration of the Solicitor-General. We shall proceed to
dispose of the motion for new trial of the respondent labor In the case of Goseco vs. Court of Industrial Relations et al.,
union. Before doing this, however, we deem it necessary, in G.R. No. 46673, promulgated September 13, 1939, we had
the interest of orderly procedure in cases of this nature, in occasion to joint out that the Court of Industrial Relations et
interest of orderly procedure in cases of this nature, to make al., G. R. No. 46673, promulgated September 13, 1939, we
several observations regarding the nature of the powers of the had occasion to point out that the Court of Industrial Relations
Court of Industrial Relations and emphasize certain guiding is not narrowly constrained by technical rules of procedure,
principles which should be observed in the trial of cases and the Act requires it to "act according to justice and equity
brought before it. We have re-examined the entire record of and substantial merits of the case, without regard to
the proceedings had before the Court of Industrial Relations in technicalities or legal forms and shall not be bound by any
this case, and we have found no substantial evidence that the technicalities or legal forms and shall not be bound by any
exclusion of the 89 laborers here was due to their union technical rules of legal evidence but may inform its mind in
affiliation or activity. The whole transcript taken contains such manner as it may deem just and equitable." (Section 20,
what transpired during the hearing and is more of a record of Commonwealth Act No. 103.) It shall not be restricted to the
contradictory and conflicting statements of opposing counsel, specific relief claimed or demands made by the parties to the
with sporadic conclusion drawn to suit their own views. It is industrial or agricultural dispute, but may include in the
evident that these statements and expressions of views of award, order or decision any matter or determination which
counsel have no evidentiary value. may be deemed necessary or expedient for the purpose of
settling the dispute or of preventing further industrial or
agricultural disputes. (section 13, ibid.) And in the light of this
The Court of Industrial Relations is a special court whose
legislative policy, appeals to this Court have been especially
functions are specifically stated in the law of its creation
regulated by the rules recently promulgated by the rules
(Commonwealth Act No. 103). It is more an administrative
recently promulgated by this Court to carry into the effect the
than a part of the integrated judicial system of the nation. It is
avowed legislative purpose. The fact, however, that the Court
not intended to be a mere receptive organ of the Government.
of Industrial Relations may be said to be free from the rigidity
Unlike a court of justice which is essentially passive, acting
of certain procedural requirements does not mean that it can,
only when its jurisdiction is invoked and deciding only cases
in justifiable cases before it, entirely ignore or disregard the
that are presented to it by the parties litigant, the function of
fundamental and essential requirements of due process in trials
the Court of Industrial Relations, as will appear from perusal
and investigations of an administrative character. There are
of its organic law, is more active, affirmative and dynamic. It
primary rights which must be respected even in proceedings of
not only exercises judicial or quasi-judicial functions in the
this character:
Administrative Law
-cjsc- Page 21
(1) The first of these rights is the right to a hearing, Co., 227 U.S. 88, 33 S. Ct. 185, 57 Law. ed. 431.)
which includes the right of the party interested or Only by confining the administrative tribunal to the
affected to present his own case and submit evidence evidence disclosed to the parties, can the latter be
in support thereof. In the language of Chief Hughes, protected in their right to know and meet the case
in Morgan v. U.S., 304 U.S. 1, 58 S. Ct. 773, 999, 82 against them. It should not, however, detract from
Law. ed. 1129, "the liberty and property of the citizen their duty actively to see that the law is enforced, and
shall be protected by the rudimentary requirements of for that purpose, to use the authorized legal methods
fair play. of securing evidence and informing itself of facts
material and relevant to the controversy. Boards of
(2) Not only must the party be given an opportunity inquiry may be appointed for the purpose of
to present his case and to adduce evidence tending to investigating and determining the facts in any given
establish the rights which he asserts but the case, but their report and decision are only advisory.
tribunal must consider the evidence presented. (Chief (Section 9, Commonwealth Act No. 103.) The Court
Justice Hughes in Morgan v. U.S. 298 U.S. 468, 56 S. of Industrial Relations may refer any industrial or
Ct. 906, 80 law. ed. 1288.) In the language of this agricultural dispute or any matter under its
court inEdwards vs. McCoy, 22 Phil., 598, "the right consideration or advisement to a local board of
to adduce evidence, without the corresponding duty inquiry, a provincial fiscal. a justice of the peace or
on the part of the board to consider it, is vain. Such any public official in any part of the Philippines for
right is conspicuously futile if the person or persons investigation, report and recommendation, and may
to whom the evidence is presented can thrust it aside delegate to such board or public official such powers
without notice or consideration." and functions as the said Court of Industrial Relations
may deem necessary, but such delegation shall not
affect the exercise of the Court itself of any of its
(3) "While the duty to deliberate does not impose the
powers. (Section 10, ibid.)
obligation to decide right, it does imply a necessity
which cannot be disregarded, namely, that of having
something to support it is a nullity, a place when (6) The Court of Industrial Relations or any of its
directly attached." (Edwards vs. McCoy, supra.) This judges, therefore, must act on its or his own
principle emanates from the more fundamental is independent consideration of the law and facts of the
contrary to the vesting of unlimited power anywhere. controversy, and not simply accept the views of a
Law is both a grant and a limitation upon power. subordinate in arriving at a decision. It may be that
the volume of work is such that it is literally
Relations personally to decide all controversies
(4) Not only must there be some evidence to support
coming before them. In the United States the
a finding or conclusion (City of Manila vs. Agustin,
difficulty is solved with the enactment of statutory
G.R. No. 45844, promulgated November 29, 1937,
authority authorizing examiners or other subordinates
XXXVI O. G. 1335), but the evidence must be
"substantial." (Washington, Virginia and Maryland to render final decision, with the right to appeal to
Coach Co. v. national labor Relations Board, 301 board or commission, but in our case there is no such
statutory authority.
U.S. 142, 147, 57 S. Ct. 648, 650, 81 Law. ed. 965.)
It means such relevant evidence as a reasonable mind
accept as adequate to support a conclusion." (7) The Court of Industrial Relations should, in all
(Appalachian Electric Power v. National Labor controversial questions, render its decision in such a
Relations Board, 4 Cir., 93 F. 2d 985, 989; National manner that the parties to the proceeding can know
Labor Relations Board v. Thompson Products, 6 Cir., the various issues involved, and the reasons for the
97 F. 2d 13, 15; Ballston-Stillwater Knitting Co. v. decision rendered. The performance of this duty is
National Labor Relations Board, 2 Cir., 98 F. 2d 758, inseparable from the authority conferred upon it.
760.) . . . The statute provides that "the rules of
evidence prevailing in courts of law and equity shall In the right of the foregoing fundamental principles, it is
not be controlling.' The obvious purpose of this and sufficient to observe here that, except as to the alleged
similar provisions is to free administrative boards agreement between the Ang Tibay and the National Worker's
from the compulsion of technical rules so that the Brotherhood (appendix A), the record is barren and does not
mere admission of matter which would be deemed satisfy the thirst for a factual basis upon which to predicate, in
incompetent inn judicial proceedings would not a national way, a conclusion of law.
invalidate the administrative order. (Interstate
Commerce Commission v. Baird, 194 U.S. 25, 44, 24 This result, however, does not now preclude the concession of
S. Ct. 563, 568, 48 Law. ed. 860; Interstate a new trial prayed for the by respondent National Labor
Commerce Commission v. Louisville and Nashville Union, Inc., it is alleged that "the supposed lack of material
R. Co., 227 U.S. 88, 93 33 S. Ct. 185, 187, 57 Law. claimed by Toribio Teodoro was but a scheme adopted to
ed. 431; United States v. Abilene and Southern Ry. systematically discharged all the members of the National
Co. S. Ct. 220, 225, 74 Law. ed. 624.) But this Labor Union Inc., from work" and this avernment is desired to
assurance of a desirable flexibility in administrative be proved by the petitioner with the "records of the Bureau of
procedure does not go far as to justify orders without Customs and the Books of Accounts of native dealers in
a basis in evidence having rational probative force. leather"; that "the National Workers Brotherhood Union of
Mere uncorroborated hearsay or rumor does not Ang Tibay is a company or employer union dominated by
constitute substantial evidence. (Consolidated Edison Toribio Teodoro, the existence and functions of which are
Co. v. National Labor Relations Board, 59 S. Ct. 206, illegal." Petitioner further alleges under oath that the exhibits
83 Law. ed. No. 4, Adv. Op., p. 131.)" attached to the petition to prove his substantial avernments"
are so inaccessible to the respondents that even within the
(5) The decision must be rendered on the evidence exercise of due diligence they could not be expected to have
presented at the hearing, or at least contained in the obtained them and offered as evidence in the Court of
record and disclosed to the parties affected. Industrial Relations", and that the documents attached to the
(Interstate Commence Commission vs. L. & N. R. petition "are of such far reaching importance and effect that

Administrative Law
-cjsc- Page 22
their admission would necessarily mean the modification and
reversal of the judgment rendered herein." We have
considered the reply of Ang Tibay and its arguments against
the petition. By and large, after considerable discussions, we
have come to the conclusion that the interest of justice would
be better served if the movant is given opportunity to present
at the hearing the documents referred to in his motion and
such other evidence as may be relevant to the main issue
involved. The legislation which created the Court of Industrial
Relations and under which it acts is new. The failure to grasp
the fundamental issue involved is not entirely attributable to
the parties adversely affected by the result. Accordingly, the
motion for a new trial should be and the same is hereby
granted, and the entire record of this case shall be remanded to
the Court of Industrial Relations, with instruction that it
reopen the case, receive all such evidence as may be relevant
and otherwise proceed in accordance with the requirements set
forth hereinabove. So ordered.

Administrative Law
-cjsc- Page 23