You are on page 1of 35


BARBO, Pursuant to the said Board Resolutions, petitioners received EME, Rice
Allowance, Christmas Bonus, and Productivity Bonus from SFWD during the calendar
Petitioners, years starting 1994 until 1996.

- versus - On June 30, 1997, a Special Audit Team of COA Regional Office No. III
at San Fernando, Pampanga audited the financial accounts of SFWD for the period
COMMISSION ON AUDIT, covering January 1, 1994 to July 15, 1996. The COA Special Audit Team disallowed
the payment of the above-mentioned benefits and allowances received by petitioners
after the same were found to be excessive and contrary to Sections 228, 162 and 163
of the Government Accounting and Auditing Manual (GAAM) and to Civil Service
Commission (CSC) Resolution No. 954073[6] in relation to Section 13 of Presidential
Decree (PD) No. 198 (Provincial Water Utilities Act of 1973) as amended. Thus,
petitioners were directed to refund the benefits and allowances subject of the

Petitioners appealed to the COA Regional Director raising the following

1. That CSC Resolution No. 954073 issued in Cruz v.
Cabili cannot extend to appellants, they not having been
made parties to the case;
* On Official Leave as per Special Order No. 520
2. That it applied to appellants, said resolution will
partake the nature of an implementing rule and regulation
By this Petition for Certiorari under Rule 64 of the Rules of Court petitioners which is beyond CSCs jurisdiction to issue;
seek to annul or reverse COA Decision No. 2000-133[1] dated May 16,
3. That DBM, not CSC, is the appropriate authority to
2000 and Resolution[2] dated February 27, 2003 rendered by the Commission on rule on compensation;
Audit (COA). In the said issuances, the COA affirmed its Regional Directors
1st Indorsement [3]dated June 5, 1998, which in turn affirmed Notice of Disallowance 4. That Christmas Bonus, Productivity Bonus, Rice
No. 97-004 (94, 95, 96)[4] dated June 30, 1997 issued by the Special Audit Team Allowance, and Uniform Allowance are not compensation;
against petitioners Rebecca A. Barbo, Eleonora R. de Jesus, and Antonio B.
5. That Extraordinary and Miscellaneous Expenses are
not compensation but reimbursement of expenses; and

Petitioners are officials of the Local Water Utilities Administration (LWUA) 6. That the right of water district directors and the interim
and designated members of the Interim Board of Directors of the San Fernando general manager to receive allowances and other benefits
Water District (SFWD). is appropriately recognized by LWUA.

On December 4, 1995 and February 12 1996, the LWUA Board of Trustees The Regional Director, in his First Indorsement dated June 5, 1998, affirmed
issued Board Resolution No. 313, Series of 1995 and Board Resolution No. 39, the Special Audit Teams Notice of Disallowance No. 97-004 (94, 95, 96). The
Series of 1996 [5] respectively. These Board Resolutions authorized the Board of Regional Director declared that the COA Special Audit Team was correct in citing
Directors of SFWD to receive reimbursable allowances in the form of Representation CSC Resolution No. 954073, which resolved the case of LWUA Employees
and Transportation Allowance (RATA), Travel Allowance, and Extraordinary & Association for Progress (LEAP) v. Cabili and de Vera [7], because the said resolution
Miscellaneous Expense (EME); Christmas Bonus; Uniform Allowance; Rice applied on all fours to petitioners case. In the said resolution, the CSC held that it is
Allowance; Medical and Dental Benefits; and Productivity Incentive Bonus. illegal for any LWUA officer or employee who sits as member of the Board of
Directors of a water district to receive and collect any additional, double, or indirect BONUSES AND OTHER BENEFITS RECEIVED BY
compensation from said water district, except per diems, pursuant to Section 13 of PETITIONERS.
PD No. 198, as amended.
From the denial of their appeal by the COA Regional Director, petitioners The petition is partly meritorious.
elevated the matter to the COA via a petition for review.
Petitioners contend that the COA lacks jurisdiction to declare whether or not
In the herein challenged Decision dated May 16, 2000, the COA denied the LWUA Board Resolution Nos. 313 and 39 are consistent with Section 13 of PD No.
petition for review and affirmed the ruling of the COA Regional Director as contained 198, as amended, on matters pertaining to the compensation and other benefits of
in its First Indorsement. The COA stressed that the Directors of local water districts the Directors of the LWD. This is allegedly the function of the courts.
(LWDs) were prohibited from receiving compensation other than per diems and that
LWUA Board Resolution Nos. 313 and 39 were contrary to the law which it intended The Court has already settled this issue in a myriad of cases. [9] Particularly,
to implement, specifically, Section 13 of PD No. 198, as amended. Citing the in Rodolfo S. de Jesus [Catbalogan Water District] v. COA, [10] the Court upheld the
case Peralta v. Mathay,[8] the COA declared that the subject bonuses and allowances authority and jurisdiction of the COA to rule on the legality of the disbursement of
received by petitioners constituted additional compensation or remuneration. The government funds by a water district and declared that such power does not conflict
dispositive portion of the decision reads: with the jurisdiction of the courts, the DBM, and the LWUA. Citing Section 2,
PREMISES CONSIDERED, the instant Petition for Review Subdivision D, Article IX of the 1987 Constitution[11] the Court declared that it is the
of Mr. Simplicio Belisario, et al. [herein petitioners included], is mandate of the COA to audit all government agencies, including government-owned
hereby denied. Accordingly, the subject disallowances are affirmed and controlled corporations with original charters. Indeed, the Constitution specifically
with all officers and employees who received the bonuses and vests in the COA the authority to determine whether government entities comply with
allowances liable for their settlement together with the officers
laws and regulations in disbursing government funds, and to disallow illegal or
named in the Notice of Disallowance, namely: Mr. Dionisio Polintan,
General Manager, Ms. Merlita Garcia, Finance Officer, and Ms. irregular disbursements of government funds.[12] This independent constitutional body
Arsenia Sicat, Cashier / Property Management Supervisor. (Words is tasked to be vigilant and conscientious in safeguarding the proper use of the
in brackets ours) governments, and ultimately the peoples, property.[13]

Anent the second issue, a water district is a government-owned and

Petitioners motion for reconsideration was denied by the COA in its
controlled corporation with a special charter since it is created pursuant to a special
challenged Resolution dated February 27, 2003.
law, Presidential Decree (PD) 198. It is undeniable that PD 198 expressly prohibits
the grant of RATA, EME, and bonuses to members of the board of Water Districts.
Thus, petitioners now come to this Court, imputing grave abuse of discretion
Section 13 of PD 198, as amended, reads as follows:
amounting to lack of jurisdiction on the part of the COA in issuing COA Decision No.
2000-133 and February 27, 2003 Resolution. Specifically, petitioners raise the
following issues: Compensation. - Each director shall receive a per diem, to
be determined by the board, for each meeting of the board actually
I. WHETHER OR NOT RESPONDENT HAS THE attended by him, but no director shall receive per diems in any
JURISDICTION TO MOTU PROPRIO DECLARE LWUA given month in excess of the equivalent of the total per diems of
BOARD RESOLUTION NO. 313, SERIES OF 1995, AS four meetings in any given month. No director shall receive other
AMENDED BY RESOLUTION NO. 39, SERIES OF 1996, compensation for services to the district.
NO. 198, AS AMENDED. Any per diem in excess of P50 shall be subject to approval
of the Administration.
ENTITLEMENT TO RATA, EME, BONUSES AND OTHER In Baybay Water District v. Commission on Audit,[14] the members of the
BENEFITS AND ALLOWANCES. board of Baybay Water District also questioned the disallowance by the COA of
payment of RATA, rice allowance and excessive per diems. The Court ruled that
pursuant to PD 198, members of the board of water districts cannot receive
allowances and benefits more than those allowed by PD 198. Construing Section 13 petitioners received the additional allowances and bonuses, the
of PD 198, in Baybay, the Court declared: Court had not yet decided Baybay Water District. Petitioners had
no knowledge that such payment was without legal basis. Thus,
being in good faith, petitioners need not refund the allowances and
bonuses they received but disallowed by the COA.
xxx Under 13 of this Decree, per diem is precisely
intended to be the compensation of members of board of directors
of water districts. Indeed, words and phrases in a statute must be
given their natural, ordinary, and commonly-accepted meaning, due The foregoing disquisitions were also applied to the more recent cases of De
regard being given to the context in which the words and phrases Jesus [Metro Cariaga Water District];[17] Molen [Metro Iloilo Water District]; and
are used. By specifying the compensation which a director is Magno [Mangaldan Water District].[18] The same reasoning and conclusions of the
entitled to receive and by limiting the amount he/she is allowed to Court were reiterated in de Jesus v. CSC[19] and Cabili and de Vera v. CSC.[20] We
receive in a month, and, in the same paragraph, providing No
find no reason to depart from the rulings in these cases which essentially involve the
director shall receive other compensation than the amount provided
for per diems, the law quite clearly indicates that directors of water same issues as the instant case.
districts are authorized to receive only the per diem authorized by
law and no other compensation or allowance in whatever form.
WHEREFORE, the instant petition is hereby PARTIALLY GRANTED. COA Decision

No. 2000-133 dated May 16, 2000 and Resolution dated February 27, 2003 are
Section 13 of PD 198 is clear enough that it needs no interpretation. It
hereby AFFIRMED with the MODIFICATION that the petitioners need not refund the
expressly prohibits the grant of compensation other than the payment of per diem,
thus preempting the exercise of any discretion by water districts in paying other benefits and allowances disallowed by the COA.
allowances and bonuses.

Lastly, the petitioners claim that they are not liable to settle or refund the No costs.
disallowed payments of benefits and allowances which they have received in good
faith and as de jure officers of SFWD. SO ORDERED.

While we sustain the disallowance of the above benefits by

respondent COA, however, we find that the SFWD affected personnel who received
Republic of the Philippines
the above mentioned benefits and privileges acted in good faith under the honest SUPREME COURT
belief that Board Resolution Nos. 313 and 39 authorized such payment. In Abanilla v. Manila
Commission On Audit[15] citing Querubin v. Regional Cluster Director, Legal and
Adjudication Office, COA Regional Office VI, Pavia, Iloilo City,[16] this Court held: EN BANC
Considering, however, that all the parties here acted in good faith,
we cannot countenance the refund of subject incentive benefits for
the year 1992, which amounts the petitioners have already
received. Indeed, no indicia of bad faith can be detected under the G.R. No. 97149 March 31, 1992
attendant facts and circumstances. The officials and chiefs of
offices concerned disbursed such incentive benefits in the honest
belief that the amounts given were due to the recipients and the FIDENCIO Y. BEJA, SR., petitioner,
latter accept the same with gratitude, confident that they richly vs.
deserve such benefits. COURT OF APPEALS, HONORABLE REINERIO O. REYES, in his capacity as
Secretary of the Department of Transportation and Communications;
x x x. Petitioners here received the additional allowances and COMMODORE ROGELIO A. DAYAN, in his capacity as General Manager of the
bonuses in good faith under the honest belief that LWUA Board Philippine Ports Authority; DEPARTMENT OF TRANSPORTATION AND
Resolution No. 313 authorized such payment. At the time COMMUNICATIONS, ADMINISTRATIVE ACTION BOARD; and JUSTICE ONOFRE
A. VILLALUZ, in his capacity as Chairman of the Administrative Action Board, temporary restraining order. The case was docketed as G.R. No. 87352 captioned
DOTC, respondents. "Fidencio Y. Beja v. Hon. Reinerio 0. Reyes, etc., et al." In the en banc resolution of
March 30, 1989, this Court referred the case to the Court of Appeals for "appropriate
action." 3 G.R. No. 87352 was docketed in the Court of Appeals as CA-G.R. SP No.
Meanwhile, a decision was rendered by the AAB in Administrative Case No. PPA-
AAB-049-89. Its dispositive portion reads:
The instant petition for certiorari questions the jurisdiction of the Secretary of the
Department of Transportation and Communications (DOTC) and/or its Administrative
Action Board (AAB) over administrative cases involving personnel below the rank of WHEREFORE, judgment is hereby rendered, adjudging the
Assistant General Manager of the Philippine Ports Authority (PPA), an agency following, namely:
attached to the said Department.
a) That respondents Geronimo Beja, Jr. and Hernando Villaluz are
Petitioner Fidencio Y. Beja, Sr. was first employed by the PPA as arrastre exonerated from the charge against them;
supervisor in 1975. He became Assistant Port Operations Officer in 1976 and Port
Operations Officer in 1977. In February 1988, as a result of the reorganization of the b) That respondent Fidencio Y. Beja be dismissed from the service;
PPA, he was appointed Terminal Supervisor.
c) That his leave credits and retirement benefits are declared
On October 21, 1988, the PPA General Manager, Rogelio A. Dayan, filed forfeited;
Administrative Case No. 11-04-88 against petitioner Beja and Hernando G. Villaluz
for grave dishonesty, grave misconduct, willful violation of reasonable office rules and d) That he be disqualified from re-employment in the government
regulations and conduct prejudicial to the best interest of the service. Beja and service;
Villaluz allegedly erroneously assessed storage fees resulting in the loss of
P38,150.77 on the part of the PPA. Consequently, they were preventively suspended
for the charges. After a preliminary investigation conducted by the district attorney for e) That his eligibility is recommended to be cancelled.
Region X, Administrative Case No. 11-04-88 was "considered closed for lack of
merit." Pasig, Metro Manila, February 28, 1989.

On December 13, 1988, another charge sheet, docketed as Administrative Case No. On December 10, 1990, after appropriate proceedings, the Court of Appeals also
12-01-88, was filed against Beja by the PPA General Manager also for dishonesty, rendered a decision 4 in CA-G.R. SP No. 17270 dismissing the petition
grave misconduct, violation of reasonable office rules and regulations, conduct for certiorari for lack of merit. Hence, Beja elevated the case back to this Court
prejudicial to the best interest of the service and for being notoriously undesirable. through an "appeal by certiorari with preliminary injunction and/or temporary
The charge consisted of six (6) different specifications of administrative offenses restraining order."
including fraud against the PPA in the total amount of P218,000.00. Beja was also
placed under preventive suspension pursuant to Sec. 41 of P.D. No. 807. We find the pleadings filed in this case to be sufficient bases for arriving at a decision
and hence, the filing of memoranda has been dispensed with.
The case was redocketed as Administrative Case No. PPA-AAB-1-049-89 and
thereafter, the PPA general manager indorsed it to the AAB for "appropriate action." In his petition, Beja assails the Court of Appeals for having "decided questions of
At the scheduled hearing, Beja asked for continuance on the ground that he needed substance in a way probably not in accord with law or with the applicable decisions"
time to study the charges against him. The AAB proceeded to hear the case and gave of this Court. 5 Specifically, Beja contends that the Court of Appeals failed to declare
Beja an opportunity to present evidence. However, on February 20, 1989, Beja filed a that: (a) he was denied due process; (b) the PPA general manager has no power to
petition for certiorari with preliminary injunction before the Regional Trial Court of issue a preventive suspension order without the necessary approval of the PPA board
Misamis Oriental. 2 Two days later, he filed with the AAB a manifestation and motion of directors; (c) the PPA general manager has no power to refer the administrative
to suspend the hearing of Administrative Case No. PPA-AAB-1-049-89 on account of case filed against him to the DOTC-AAB, and (d) the DOTC Secretary, the Chairman
the pendency of the certiorari proceeding before the court. AAB denied the motion of the DOTC-AAB and DOTC-AAB itself as an adjudicatory body, have no jurisdiction
and continued with the hearing of the administrative case. to try the administrative case against him. Simply put, Beja challenges the legality of
the preventive suspension and the jurisdiction of the DOTC Secretary and/or the AAB
Thereafter, Beja moved for the dismissal of the certiorari case below and proceeded to initiate and hear administrative cases against PPA personnel below the rank of
to file before this Court a petition for certiorari with preliminary injunction and/or Assistant General Manager.
Petitioner anchors his contention that the PPA general manager cannot subject him to a court of justice a restraining order or a preliminary injunction inhibiting proceedings
a preventive suspension on the following provision of Sec. 8, Art. V of Presidential in an administrative case, the lifespan of such court order should be excluded in the
Decree No. 857 reorganizing the PPA: reckoning of the permissible period of the preventive suspension. 9

(d) the General Manager shall, subject to the approval of the With respect to the issue of whether or not the DOTC Secretary and/or the AAB may
Board, appoint and remove personnel below the rank of Assistant initiate and hear administrative cases against PPA Personnel below the rank of
General Manager. (Emphasis supplied.) Assistant General Manager, the Court qualifiedly rules in favor of petitioner.

Petitioner contends that under this provision, the PPA Board of Directors and not the The PPA was created through P.D. No. 505 dated July 11, 1974. Under that Law, the
PPA General Manager is the "proper disciplining authority. 6 corporate powers of the PPA were vested in a governing Board of Directors known as
the Philippine Port Authority Council. Sec. 5(i) of the same decree gave the Council
As correctly observed by the Solicitor General, the petitioner erroneously equates the power "to appoint, discipline and remove, and determine the composition of the
"preventive suspension" as a remedial measure with "suspension" as a penalty for technical staff of the Authority and other personnel."
administrative dereliction. The imposition of preventive suspension on a government
employee charged with an administrative offense is subject to the following provision On December 23, 1975, P.D. No. 505 was substituted by P.D. No. 857, See. 4(a)
of the Civil Service Law, P.D. No. 807: thereof created the Philippine Ports Authority which would be "attached" to the then
Department of Public Works, Transportation and Communication. When Executive
Sec. 41. Preventive Suspension. — The proper disciplining Order No. 125 dated January 30, 1987 reorganizing the Ministry of Transportation
authority may preventively suspend any subordinate officer or and Communications was issued, the PPA retained its "attached" status. 10 Even
employee under his authority pending an investigation, if the charge Executive Order No. 292 or the Administrative Code of 1987 classified the PPA as an
against such officer or employee involves dishonesty, oppression or agency "attached" to the Department of Transportation and Communications (DOTC).
grave misconduct, or neglect in the performance of duty, or if there Sec. 24 of Book IV, Title XV, Chapter 6 of the same Code provides that the agencies
are reasons to believe that the respondent is guilty of charges attached to the DOTC "shall continue to operate and function in accordance with the
which would warrant his removal from the service. respective charters or laws creating them, except when they conflict with this Code."

Imposed during the pendency of an administrative investigation, preventive Attachment of an agency to a Department is one of the three administrative
suspension is not a penalty in itself. It is merely a measure of precaution so that the relationships mentioned in Book IV, Chapter 7 of the Administrative Code of 1987, the
employee who is charged may be separated, for obvious reasons, from the scene of other two being supervision and control and administrative supervision. "Attachment"
his alleged misfeasance while the same is being investigated. 7 Thus, preventive is defined in Sec. 38 thereof as follows:
suspension is distinct from the administrative penalty of removal from office such as
the one mentioned in Sec. 8(d) of P.D. No 857. While the former may be imposed on (3) Attachment. — (a) This refers to the lateral relationship between
a respondent during the investigation of the charges against him, the latter is the the Department or its equivalent and the attached agency or
penalty which may only be meted upon him at the termination of the investigation or corporation for purposes of policy and program coordination. The
the final disposition of the case. coordination shall be accomplished by having the department
represented in the governing board of the attached agency or
The PPA general manager is the disciplining authority who may, by himself and corporation, either as chairman or as a member, with or without
without the approval of the PPA Board of Directors, subject a respondent in an voting rights, if this is permitted by the charter; having the attached
administrative case to preventive suspension. His disciplinary powers are sanctioned, corporation or agency comply with a system of periodic reporting
not only by Sec. 8 of P.D. No. 857 aforequoted, but also by Sec. 37 of P.D. No. 807 which shall reflect the progress of programs and projects; and
granting heads of agencies the "jurisdiction to investigate and decide matters having the department or its equivalent provide general policies
involving disciplinary actions against officers and employees" in the PPA. through its representative in the board, which shall serve as the
framework for the internal policies of the attached corporation or
Parenthetically, the period of preventive suspension is limited. It may be lifted even if
the disciplining authority has not finally decided the administrative case provided the
ninety-day period from the effectivity of the preventive suspension has been (b) Matters of day-to-day administration or all those pertaining to
exhausted. The employee concerned may then be reinstated. 8 However, the said internal operations shall he left to the discretion or judgment of the
ninety-day period may be interrupted. Section 42 of P.D. No. 807 also mandates that executive officer of the agency or corporation. In the event that the
any fault, negligence or petition of a suspended employee may not be considered in Secretary and the head of the board or the attached agency or
the computation of the said period. Thus, when a suspended employee obtains from corporation strongly disagree on the interpretation and application
of policies, and the Secretary is unable to resolve the
disagreement, he shall bring the matter to the President for (c) The General Manager shall, subject to the approval of the
resolution and direction; Board, determine the staffing pattern and the number of personnel
of the Authority, define their duties and responsibilities, and fix their
(c) Government-owned or controlled corporations attached to a salaries and emoluments. For professional and technical positions,
department shall submit to the Secretary concerned their audited the General Manager shall recommend salaries and emoluments
financial statements within sixty (60) days after the close of the that are comparable to those of similar positions in other
fiscal year; and government-owned corporations, the provisions of existing rules
and regulations on wage and position classification
(d) Pending submission of the required financial statements, the
corporation shall continue to operate on the basis of the preceding
year's budget until the financial statements shall have been (d) The General Manager shall, subject to the approval by the
submitted. Should any government-owned or controlled corporation Board, appoint and remove personnel below the rank of Assistant
incur an operation deficit at the close of its fiscal year, it shall be General Manager.
subject to administrative supervision of the department; and the
corporation's operating and capital budget shall be subject to the xxx xxx xxx
department's examination, review, modification and approval.
(emphasis supplied.) (emphasis supplied.)

An attached agency has a larger measure of independence from the Department to Although the foregoing section does not expressly provide for a mechanism for an
which it is attached than one which is under departmental supervision and control or administrative investigation of personnel, by vesting the power to remove erring
administrative supervision. This is borne out by the "lateral relationship" between the employees on the General Manager, with the approval of the PPA Board of Directors,
Department and the attached agency. The attachment is merely for "policy and the law impliedly grants said officials the power to investigate its personnel below the
program coordination." With respect to administrative matters, the independence of rank of Assistant Manager who may be charged with an administrative offense.
an attached agency from Departmental control and supervision is further reinforced During such investigation, the PPA General Manager, as earlier stated, may subject
by the fact that even an agency under a Department's administrative supervision is the employee concerned to preventive suspension. The investigation should be
free from Departmental interference with respect to appointments and other conducted in accordance with the procedure set out in Sec. 38 of P.D. No.
personnel actions "in accordance with the decentralization of personnel functions" 807. 13 Only after gathering sufficient facts may the PPA General Manager impose the
under the Administrative Code of 1987. 11 Moreover, the Administrative Code proper penalty in accordance with law. It is the latter action which requires the
explicitly provides that Chapter 8 of Book IV on supervision and control shall not apply approval of the PPA Board of Directors. 14
to chartered institutions attached to a Department. 12
From an adverse decision of the PPA General Manager and the Board of Directors,
Hence, the inescapable conclusion is that with respect to the management of the employee concerned may elevate the matter to the Department Head or
personnel, an attached agency is, to a certain extent, free from Departmental Secretary. Otherwise, he may appeal directly to the Civil Service Commission. The
interference and control. This is more explicitly shown by P.D. No. 857 which permissive recourse to the Department Secretary is sanctioned by the Civil Service
provides: Law (P.D. No. 807) under the following provisions:

Sec. 8. Management and Staff. — a) The President shall, upon the Sec. 37. Disciplinary Jurisdiction. — (a) The Commission shall
recommendation of the Board, appoint the General Manager and decide upon appeal all administrative disciplinary cases involving
the Assistant General Managers. the imposition of a penalty of suspension for more than thirty days,
or fine in an amount exceeding thirty days salary, demotion in rank
(b) All other officials and employees of the Authority shall be or salary or transfer, removal or dismissal from office. A complaint
selected and appointed on the basis of merit and fitness based on a may be filed directly with the Commission by a private citizen
comprehensive and progressive merit system to be established by against a government official or employee in which case it may
the Authority immediately upon its organization and consistent with hear and decide the case or it may deputize any department or
Civil Service rules and regulations. The recruitment, transfer, agency or official or group of officials to conduct the investigation.
promotion, and dismissal of all personnel of the Authority, including The results of the investigation shall be submitted to the
temporary workers, shall be governed by such merit system. Commission with recommendation as to the penalty to be imposed
or other action to be taken.
(b) The heads of departments, agencies and instrumentalities, SO ORDERED.
provinces, cities and municipalities shall have jurisdiction to
investigate and decide matters involving disciplinary action against Blaquera vs. Alcala G.R. No. 109406, September 11, 1998
officers and employees under their jurisdiction. The decisions shall
be final in case the penalty imposed is suspension for not more
than thirty days or fine in an amount not exceeding thirty days'
salary. In case the decision rendered by a bureau or office head is Facts: On Feb. 21, 1992, then Pres. Aquino issued AO 268 which granted each
appealable to the Commission, the same may be initially appealed official and employee of the government the productivity incentive benefits in a
to the department and finally to the Commission and pending maximum amount equivalent to 30% of the employee’s one month basic salary but
appeal, the same shall be executory except when the penalty is which amount not be less than P2, 000.00. Said AO provides that the productivity
removal, in which case the same shall be executory only after incentive benefits shall be granted only for the year 1991. Accordingly, all heads of
confirmation by the department head. agencies, including government boards of government-owned or controlled
corporations and financial institutions, are strictly prohibited from granting productivity
xxx xxx xxx incentive benefits for the year 1992 and future years pending the result of a
comprehensive study being undertaken by the Office of the Pres.
(Emphasis supplied.)
The petitioners, who are officials and employees of several government departments
It is, therefore, clear that the transmittal of the complaint by the PPA General and agencies, were paid incentive benefits for the year 1992. Then, on Jan. 19, 1993,
Manager to the AAB was premature. The PPA General Manager should have first then Pres. Ramos issued AO 29 authorizing the grant of productivity incentive
conducted an investigation, made the proper recommendation for the imposable
benefits for the year 1992 in the maximum amount of P1, 000.00 and reiterating the
penalty and sought its approval by the PPA Board of Directors. It was discretionary on
the part of the herein petitioner to elevate the case to the then DOTC Secretary prohibition under Sec. 7 of AO 268, enjoining the grant of productivity incentive
Reyes. Only then could the AAB take jurisdiction of the case. benefits without prior approval of the President. Sec. 4 of AO 29 directed all
departments, offices and agencies which authorized payment of productivity incentive
The AAB, which was created during the tenure of Secretary Reyes under Office Order bonus for the year 1992 in excess of P1, 000.00 to immediately cause the refund of
No. 88-318 dated July 1, 1988, was designed to act, decide and recommend to him the excess. In compliance therewith, the heads of the departments or agencies of the
"all cases of administrative malfeasance, irregularities, grafts and acts of corruption in government concerned caused the deduction from petitioners’ salaries or allowances
the Department." Composed of a Chairman and two (2) members, the AAB came into of the amounts needed to cover the alleged overpayments.
being pursuant to Administrative Order No. 25 issued by the President on May 25,
1987. 15 Its special nature as a quasi-judicial administrative body notwithstanding, the
AAB is not exempt from the observance of due process in its proceedings. 16 We are
not satisfied that it did so in this case the respondents protestation that petitioner Issue: Whether or not AO 29 and AO 268 were issued in the valid exercise of
waived his right to be heard notwithstanding. It should be observed that petitioner was presidential control over the executive departments
precisely questioning the AAB's jurisdiction when it sought judicial recourse.

WHEREFORE, the decision of the Court of Appeals is AFFIRMED insofar as it Held: The Pres. is the head of the government. Governmental power and authority
upholds the power of the PPA General Manager to subject petitioner to preventive are exercised and implemented through him. His power includes the control of
suspension and REVERSED insofar as it validates the jurisdiction of the DOTC executive departments as provided under Sec. 17, Art. VII of the Constitution.
and/or the AAB to act on Administrative Case No. PPA-AAB-1-049-89 and rules that
due process has been accorded the petitioner.
Control means the power of an officer to alter or modify or set aside what a
subordinate officer had done in the performance of his duties and to substitute the
The AAB decision in said case is hereby declared NULL and VOID and the case in
judgment of the former for that of the latter. The Pres. can, by virtue of his power of
REMANDED to the PPA whose General Manager shall conduct with dispatch its
reinvestigation. control, review, modify, alter or nullify any action or decision of his subordinate in the
executive departments, bureau or offices under him.
The preventive suspension of petitioner shall continue unless after a determination of
its duration, it is found that he had served the total of ninety (90) days in which case When the Pres. issued AO 29 limiting the amount of incentive benefits, enjoining
he shall be reinstated immediately. heads of government agencies from granting incentive benefits without approval from
him and directing the refund of the excess over the prescribed amount, the Pres. was
just exercising his power of control over executive departments. components. If the project is revoked or terminated by the Government through no
fault of RBI or by mutual agreement, the Government shall compensate RBI for its
The Pres. issued subject AOs to regulate the grant of productivity incentive benefits actual expenses incurred in the Project plus a reasonable rate of return not exceeding
and to prevent discontent, dissatisfaction and demoralization among government that stated in the feasibility study and in the contract as of the date of such revocation,
personnel by committing limited resources of government for the equal payment of cancellation, or termination on a schedule to be agreed upon by both parties.
incentives and awards. The Pres. was only exercising his power of control by
modifying the acts of the heads of the government agencies who granted incentive To summarize, the SMDRP shall consist of Phase I and Phase II. Phase I of the
benefits to their employees without appropriate clearance from the Office of the Pres., project involves clearing, levelling-off the dumpsite, and construction of temporary
thereby resulting in the uneven distribution of government resources. housing units for the current residents on the cleared and levelled site. Phase II
involves the construction of a fenced incineration area for the on-site disposal of the
The President’s duty to execute the law is of constitutional origin. So, too, is his garbage at the dumpsite.
control of executive departments.
Due to the recommendations done by the DENR after evaluations done, the JVA was
Chavez v. National Housing Authority amended and restated (now ARJVA) to accommodate the design changes and
additional work to be done to successfully implement the project. The original 3,500
Ponente: VELASCO, JR., J. units of temporary housing were decreased to 2,992. The reclaimed land as enabling
component was increased from 40 hectares to 79 hectares, which was supported by
FACTS: On August 5, 2004, former Solicitor General Francisco Chavez, filed an the issuance of Proclamation No. 465 by President Ramos. The revision also
instant petition raising constitutional issues on the JVA entered by National Housing provided for the 119-hectare land as an enabling component for Phase II of the
Authority and R-II Builders, Inc. project.

On March 1, 1988, then-President Cory Aquino issued Memorandum order No. (MO) Subsequently, the Clean Air Act was passed by the legislature which made the
161 approving and directing implementation of the Comprehensive and Integrated establishment of an incinerator illegal, making the off-site dumpsite at Smokey
Metropolitan Manila Waste Management Plan. During this time, Smokey Mountain, a Mountain necessary. On August 1, 1998, the project was suspended, to be later
wasteland in Tondo, Manila, are being made residence of many Filipinos living in a reconstituted by President Estrada in MO No. 33.
subhuman state.
On August 27, 2003, the NHA and RBI executed a Memorandum of Agreement
As presented in MO 161, NHA prepared feasibility studies to turn the dumpsite into whereby both parties agreed to terminate the JVA and subsequent
low-cost housing project, thus, Smokey Mountain Development and Reclamation agreements. During this time, NHA reported that 34 temporary housing structures
Project (SMDRP), came into place. RA 6957 (Build-Operate-Transfer Law) was and 21 permanent housing structures had been turned over by RBI.
passed on July 1990 declaring the importance of private sectors as contractors in
government projects. Thereafter, Aquino proclaimed MO 415 applying RA 6957 to ISSUES:
SMDRP, among others. The same MO also established EXECOM and TECHCOM in
the execution and evaluation of the plan, respectively, to be assisted by the Public 1. Whether respondents NHA and RBI have been granted the power and
Estates Authority (PEA). authority to reclaim lands of the public domain as this power is vested
exclusively in PEA as claimed by petitioner
Notices of public bidding to become NHA’s venture partner for SMDRP were
published in newspapers in 1992, from which R-II Builders, Inc. (RBI) won the bidding 2. Whether respondents NHA and RBI were given the power and authority by
process. Then-President Ramos authorized NHA to enter into a Joint Venture DENR to reclaim foreshore and submerged lands
Agreement with RBI.
3. Whether respondent RBI can acquire reclaimed foreshore and submerged
Under the JVA, the project involves the clearing of Smokey Mountain for eventual lands considered as alienable and outside the commerce of man
development into a low cost housing complex and industrial/commercial site. RBI is
expected to fully finance the development of Smokey Mountain and reclaim 40 4. Whether respondent RBI can acquire reclaimed lands when there was no
hectares of the land at the Manila Bay Area. The latter together with the commercial declaration that said lands are no longer needed for public use
area to be built on Smokey Mountain will be owned by RBI as enabling
5. Whether there is a law authorizing sale of reclaimed lands
6. Whether the transfer of reclaimed lands to RBI was done by public bidding 6. There is no doubt that respondent NHA conducted a public bidding of the
right to become its joint venture partner in the Smokey Mountain Project. It
7. Whether RBI, being a private corporation, is barred by the Constitution to was noted that notices were published in national newspapers. The bidding
acquire lands of public domain proper was done by the Bids and Awards Committee on May 18, 1992.

8. Whether respondents can be compelled to disclose all information related to 7. RA 6957 as amended by RA 7718 explicitly states that a contractor can be
the SMDRP paid “a portion as percentage of the reclaimed land” subject to the
constitutional requirement that only Filipino citizens or corporation with at
9. Whether the operative fact doctrine applies to the instant position least 60% Filipino equity can acquire the same. In addition, when the lands
were transferred to the NHA, these were considered Patrimonial lands of the
state, by which it has the power to sell the same to any qualified person.
1. Executive Order 525 reads that the PEA shall be primarily responsible for
8. This relief must be granted. It is the right of the Filipino people to information
integrating, directing, and coordinating all reclamation projects for and on
on matters of public concerned as stated in Article II, Sec. 28, and Article III,
behalf of the National Government. This does not mean that it shall be
Sec. 7 of the 1987 Constitution.
responsible for all. The requisites for a valid and legal reclamation project
are approval by the President (which were provided for by MOs), favourable 9. When the petitioner filed the case, the JVA had already been terminated by
recommendation of PEA (which were seen as a part of its recommendations virtue of MOA between RBI and NHA. The properties and rights in question
to the EXECOM), and undertaken either by PEA or entity under contract of after the passage of around 10 years from the start of the project’s
PEA or by the National Government Agency (NHA is a government agency implementation cannot be disturbed or questioned. The petitioner, being the
whose authority to reclaim lands under consultation with PEA is derived Solicitor General at the time SMDRP was formulated, had ample opportunity
under PD 727 and RA 7279). to question the said project, but did not do so. The moment to challenge has
2. Notwithstanding the need for DENR permission, the DENR is deemed to
have granted the authority to reclaim in the Smokey Mountain Project for the De Llana vs Alba
DENR is one of the members of the EXECOM which provides reviews for
the project. ECCs and Special Patent Orders were given by the DENR Facts: In 1981, BP 129, entitled “An Act Reorganizing the Judiciary, Appropriating
which are exercises of its power of supervision over the Funds Therefor and for Other Purposes”, was passed. De la Llana was assailing its
project. Furthermore, it was the President via the abovementioned MOs that validity because, first of all, he would be one of the judges that would be removed
originally authorized the reclamation. It must be noted that the reclamation because of the reorganization and second, he said such law would contravene the
of lands of public domain is reposed first in the Philippine President. constitutional provision which provides the security of tenure of judges of the courts,
He averred that only the SC can remove judges NOT Congress.
3. The reclaimed lands were classified alienable and disposable via MO 415
issued by President Aquino and Proclamation Nos. 39 and 465 by President Issue: Whether or not Judge De La Llana can be validly removed by the legislature by
Ramos. such statute (BP 129).

4. Despite not having an explicit declaration, the lands have been deemed to Held: It is a well-known rule that valid abolition of offices is neither removal nor
be no longer needed for public use as stated in Proclamation No. 39 that separation of the incumbents. Of course, if the abolition is void, the incumbent is
these are to be “disposed to qualified beneficiaries.” Furthermore, these deemed never to have ceased to hold office. The rule that the abolition of an office
lands have already been necessarily reclassified as alienable and does not amount to an illegal removal of its incumbent is the principle that, in order to
disposable lands under the BOT law. be valid, the abolition must be made in good faith.

5. Letter I of Sec. 6 of PD 757 clearly states that the NHA can acquire property Removal is to be distinguished from termination by virtue of valid abolition of the
rights and interests and encumber or otherwise dispose of them as it may office. There can be no tenure to a non-existent office. After the abolition, there is in
deem appropriate. law no occupant. In case of removal, there is an office with an occupant who would
thereby lose his position. It is in that sense that from the standpoint of strict law, the This case is about a residential subdivisions resistance to the construction of a high-
question of any impairment of security of tenure does not arise. rise building beside it and a failure to promptly file a memorandum appeal with the
Office of the President (OP), resulting in the dismissal of the case for failure to perfect

The Facts and the Case


INC., represented by its President Petitioner Greenhills East Association, Inc. (GEA) is the homeowners association of
Greenhills East Subdivision, a residential subdivision in Barangay Wack-Wack,
JOSEFINA J. CASTILLO, Greenhills East, Mandaluyong City.

Petitioner, Present:

Carpio, J., Chairperson, For a time now, respondent E. Ganzon, Inc. (EGI) has sought to develop a 4,109-
square meter lot (the land site) at the corner of EDSA and Ortigas
- versus - Brion,
Avenue in BarangayWack-Wack (the Barangay) with its owner, the San Buena Realty
Del Castillo, and Development Corp. EGI wanted to build on the property a 77-storey mixed-used
building with an 8-storey basement for a total of 85 storeys (the project). The
Abad, and proposed SKYCITY Condominium, when built, will be the tallest building in the
Perez, JJ.

E. GANZON, INC., represented by its

Petitioner GEAs subdivision has been classified under Section 4, Article IV of the
President EULALIO GANZON, Promulgated: Metropolitan Manila Commission Ordinance 81-01 (MMZO 81-01) as an R-1 low
density residential zone. The subdivision consists of about 380 lots. It has a church
Respondent. (the Sanctuario de San Jose), a school (the La Salle Greenhills), and a private road
January 20, 2010

x --------------------------------------------------------------------------------------- x
As it happened, the land site on which the project will rise is adjacent to Greenhills
East Subdivision although MMZO 81-01 had classified that site as C-2 or a Major
Commercial Zone. It is bounded by EDSA on the east, Florida Street on the
north, Lot 11, Block 4 of the Subdivision and a narrow creek on the west, and Ortigas
Avenueon the south.

Sometime in April or May 1997, respondent EGI fenced its land site, demolished the
structures on it, and began excavation works without first getting a clearance from
the Barangay. On July 10, 1997 the Housing and Land Use Regulatory Board
(HLURB) issued to EGI a Certificate of Locational Viability and on August 11, 1997
the City of Mandaluyong issued to it an Excavation and Ground Preparation On February 10, 2003 petitioner GEA received a copy of an order from the OP dated
Permit. On September 15, 1997 the HLURB further issued to EGI a Preliminary January 28, 2003, denying its appeal on the ground of GEAs failure to perfect it on
Approval and Locational Clearance for its project. time. GEA moved for a reconsideration of the Order, but the OP denied the same.

In January 1998 petitioner GEA wrote the HLURB National Capital Region, Regional On August 13, 2003 petitioner GEA filed with the Court of Appeals (CA) a petition for
Director, opposing respondent EGIs project. Not content with its HLURB opposition, review of the OPs orders. On December 21, 2004, the CA rendered judgment,
GEA filed a separate one addressed to the Department of Public Works and denying GEAs petition. GEA filed a motion for reconsideration but this, too, was
Highways (DPWH). On June 4, 1998 the DPWH advised the Building Official of denied, hence, the present recourse to this Court.
Mandaluyong to require EGI to secure a Development Permit and a valid Locational
Clearance for its project from the HLURB. In a separate development, EGI applied The Issues Presented
with the Barangay for clearance covering its project. On July 15, 1998, however,
the Barangay denied the application.

Petitioner GEA basically presents the following issues for resolution:

On November 24, 1999 the HLURB Arbiter rendered a decision, dismissing petitioner
GEAs opposition to respondent EGIs project. On March 20, 2001 acting on GEAs
1. Whether or not the CA correctly upheld the ruling of the OP that petitioner GEA
petition for review of the Arbiters decision, the HLURB Board of Commissioners
failed to perfect on time its appeal to that office from the decision of the HLURB; and
issued a resolution, denying the petition. It also denied GEAs motion for
reconsideration on October 30, 2001.

2. Whatever be the answer, if the substantial matter need to be addressed, whether

or not the HLURB erred in finding no valid ground to restrict respondent EGIs use of
On November 20, 2001 petitioner GEA filed its Notice of Appeal with the OP,
the subject land site, which lies beside a residential subdivision, for constructing a
simultaneously paying the required appeal and legal fees. On December 12, 2001
high-rise building.
GEA received a copy of the OPs order dated November 27, 2001, requiring GEA to
file its memorandum on appeal within 15 days from notice. But before the period was
up or on December 27, 2001, GEA filed a motion for extension of 15 days within
which to submit its memorandum on appeal. On January 11, 2002 GEA filed another The Rulings of the Court
motion for extension, this time for five days or until January 16, 2002, within which to
file the required memorandum.

One. Petitioner GEA contends that it had already perfected its appeal when it filed on
November 20, 2001 a notice of appeal with the OP from the decision of the HLURB.
Petitioner GEA filed the required Memorandum on Appeal with the OP on January 16,
2002 but asked that office for an extension of two days within which to file the
required draft decision. On January 18, 2002 GEA filed still another motion for
extension, this time for one day, within which to file the required draft. GEA claims The Rules and Regulations Governing Appeals to the Office of the President of the
that it intended to file the same on January 21, 2002 but, due to a nationwide Philippines[1] requires the appellant to file, not only a notice of appeal, but also a
brownout on that day, it had to ask for five more days within which to do so. Finally, memorandum on appeal that must, among other things, state the grounds relied on
GEA filed its draft decision with the OP on January 28, 2002. for the appeal, the issues involved, and the reliefs sought. [2] The appellant must, to
perfect his appeal, comply with these requirements within 15 days from receipt of a
copy of the HLURB decision. Petitioner GEA, however, failed to submit an appeal
Still, the OP actually gave petitioner GEA a chance to comply with the omitted But MMZO 81-01 applies to a situation where an R-1 property adjoins a C-2
requirement by directing it in the Order of November 27, 2001 to submit its appeal property. This has ceased to be the case between the land site and the subdivision
memorandum and draft decision within 15 days from notice; otherwise, it would after the Mandaluyong City government enacted Ordinance 128 in 1993. That was
dismiss the case. Since GEA received the above order on December 12, 2001, it had before the present case came up. Ordinance 128 converted certain R-1 zones to C-2
until December 27, 2001 within which to comply with it. zones and these included those on the western side of respondent EGIs land site,
namely Lot 11, Block 4, and Lot 11, Block 20. Consequently, the subject land site
ceased to be adjacent to an R-1 zone and no longer suffered from height restrictions.

Petitioner GEA points out that it filed two successive motions for extension of time
within which to file the required memorandum appeal and draft decision. Since GEA
had already filed its memorandum appeal before the OP could deny those motions, it Petitioner GEA of course claims that the lots that Ordinance 128 converted into C-2
cannot be said that GEA filed the memorandum appeal out of time. zones were only the lots between Ortigas Avenue and Notre Dame Street that run
parallel to EDSA but at some depth from it. They are on the Wack-Wack side
of Ortigas Avenue. Ordinance 128 describes the newly converted C-2 zones relevant
to this case as a lot deep along Ortigas Avenue from EDSA to Notre Dame
But petitioner GEA gambled when it did not file the memorandum appeal and draft Street. Because of the mention of Notre Dame Street, which is found on only one side
decision within the extra 15 days that the OP gave it. It asked first for an extension of of Ortigas Avenue, GEA concludes that the new C-2 zones did not extend to the other
15 days and then an additional extension of five days. GEA had no right to assume, side of Ortigas Avenue where Greenhills East Subdivision and respondent EGIs land
however, that the OP would grant these extensions. The governing rules did not site are located.
provide for them. Consequently, GEA has only itself to blame when its appeal was

But, as HLURB pointed out, if the purpose of the ordinance was to limit the land
classification conversion only to the side of Ortigas Avenue where the Wack-Wack
Notably, the OP also required petitioner GEA to file, along with its memorandum Subdivision lay, it would have simply stated, using the technical language applied to
appeal, a draft decision. GEA did not. It instead filed two more motions for extension the other converted areas,[4] a lot deep along the Wack-Wack side of Ortigas Avenue
of time within which to do so. Section 5 of the Rules of that office provides that failure from EDSA to Notre Dame Street, instead of saying, a lot deep along Ortigas
to comply with its orders may warrant a dismissal of the appeal. Consequently, the Avenue. It could only mean, therefore, that the ordinance intended to convert all the
OP acted within its authority in dismissing GEAs appeal for this additional reason. lots, on both sides and margins of Ortigas Avenue up to the point where Notre Dame
Street was.
Two. With the above ruling, this decision should end here. But petitioner GEA asks
the Court to dispense with the technicalities involved and rule instead on the merits of
the case, given that GEA and its members had gone through a lot of trouble to get the
HLURB to stop the project from rising on the contested land site. To avert the The Court finds either conclusion unclear, given the essentially vague way by which
likelihood that this case would shift to another forum under the guise of some other Ordinance 128 describes the affected areas. What really clears up the issue for the
issue or issues, the Court deems it wise to resolve the substantial issue that petitioner Court is the HLURBs recourse to the Revised Zoning Map of Mandaluyong City. The
GEA presents considering that both sides have amply argued the same. color-coded map shows identical color and captions for the lots stretching at some
depth from EDSA, but running parallel to it, on both sides of Ortigas Avenue,
including Lot 11, Block 4, and Lot 11, Block 20 on the Greenhills East Subdivision
side. The map tags both sides of Ortigas Avenue with the same C-2 classification.
Petitioner GEA invokes Section 10, Article V of MMZO 81-01. This section provides
height restrictions on a C-2 property that adjoins an R-1 property without an In relying on the Mandaluyong zoning map, the HLURB took note of the standard
intervening street or permanent open space that is over six meters wide and that the procedure observed in fixing the boundaries of lands, where the preparation and
properties have adjacent front yards, or even when there are none, the intervening drafting of the illustrative maps precede the drafting of the text that describes those
street or permanent open space does not exceed three meters in width.
boundaries. Although the text of the ordinance is controlling, any doubt or vagueness the needs of the district level only and that, beyond those needs, the establishment
in the meaning of its provisions may be cleared up by a reference to the official should be in High Intensity or C-3 Zone.
map. As a quasi-judicial body, which enjoys an expertise in land zoning
classifications, the HLURB can take judicial notice of such official maps as are
generated and used in government zoning activities. The Court has no reason to
disturb its findings in this case. But such contention has no basis. MMZO 81-01 contains no provision that allows the
construction of not more than 40 or 50-storey buildings in a C-1 or C-2 zone and
restricts higher buildings to a C-3 zone. There are just no height restrictions under the
law for buildings located in C-2 zones, save probably for height clearances prescribed
Petitioner GEA argues, however, that even on the assumption that Ordinance 128 by the Air Transportation Office.
converted the lots on the Greenhills East Subdivision side of Ortigas Avenue into a C-
2 zone, such conversion affected only Lot 11, Block 20. It did not convert Lot 11,
Block 4, which was adjacent to the controversial land site, and which retained an R-1
classification. The Court cannot find fault in HLURBs assertion that the real test of whether a land
use serves the need of a district is not in the size or height of the buildings but in the
sufficiency or surplus of the business or human activities in a given district to which
they cater. Land use is affected by the intensity of such activities. Extraordinary
But, as the HLURB Board of Commissioners noted, using the sketch map submitted population density or overcrowding, brought about by competition for space in the
to it, although the land site indeed adjoins Lot 11, Block 4, it does so not in the scarce area of the district, is to be avoided. Using this test, the HLURB, which is the
manner that would properly call for the application of the zoning ordinance. Based on clearing house for efficient land use, found no clear showing that respondent EGIs
the HLURBs observation, Lot 11 of Block 4 and the land site do not have common project if finished would cause havoc in the population level of the land district where
boundaries that join them. Rather, they touch each other only at a certain point due to the project lies.
the irregular shape of the properties, following the direction of the meandering creek
that lies between them. For this reason, it cannot be said that Section 10, Article V of
MMZO 81-01, which sets height restrictions, applies to the project.
What is more, the houses of petitioner GEAs members are separated by fence and
guarded gates from the adjacent areas outside their subdivision. Their exclusiveness
amply protects their yen for greater space than the rest of the people of the
No matter how hard it tries to learn the technical intricacies of certain highly regulated metropolis outside their enclave can hope for. Respondent EGIs project offers no
human activities, the Supreme Court will always be inadequately equipped to identify threat to the subdivisions privacy. It is on the other side of the fence, wholly
the facts that matter when resolving issues involving such activities. Invariably, the unconnected to the workings within the subdivision. The new building would be in the
Court must respect the factual findings of administrative agencies which have stream of human traffic that passes EDSA and Ortigas Avenue. Consequently, it
expertise on matters that fall within their jurisdiction. [5] Here, since the HLURB has the would largely attract people whose primary activities connect to those wide
expertise in applying zonal classifications on specific properties and since petitioner avenues. It would seem unreasonable for petitioner GEA to dictate on property
GEA fails to make out a clear case that it has erred, the Court must rely on its finding owners outside their gates how they should use their lands if such use is not in
that respondent EGIs land site does not, for the purpose of applying height contravention of law.
restrictions, adjoin an R-1 zone.[6]

Petitioner GEA nonetheless contends that the proposed 77-storey building would
have mixed uses, part residential, part office, and part commercial, which would not Finally, petitioner GEA contends that the lack of approval of the project by the
be accord with the patterns of land uses suitable to C-2 zones. The buildings in C-2 homeowners association or the Barangay precludes it from proceeding. GEA invokes
zones, it suggests, should rise no higher than 40 or 50 storeys from the ground. GEA Section 14, Article V of MMZO 81-01 which provides that, where a proposed land use
invokes Article IV, Section 4, paragraph 5 of MMZO 81-01, which states that will necessarily affect the character of the residential zone, the proponent needs to
establishments in a C-2 zone should be sufficient to provide the needs of the district get such approval. It is a prerequisite for the issuance of a locational clearance and a
level.GEA infers from this that a C-2 establishment must be such that it will provide building permit.
Petitioner Iron and Steel Authority ("ISA") was created by Presidential Decree (P.D.)
No. 272 dated 9 August 1973 in order, generally, to develop and promote the iron and
But, although Section 152 (c) of the Local Government Code requires steel industry in the Philippines. The objectives of the ISA are spelled out in the
a barangay clearance for any activity within its jurisdiction, such clearance cannot be following terms:
denied when the activity is in a permissible zone. The denial would otherwise be
illegal. Here, as discussed above, the applicable ordinance of Mandaluyong City does Sec. 2. Objectives — The Authority shall have the following objectives:
not preclude the construction of the project on the land site in question over the
unreasonable objection of a nearby association of subdivision dwellers. Indeed, the (a) to strengthen the iron and steel industry of the Philippines and to expand the
city or municipality to which the barangay unit belongs may still issue the required domestic and export markets for the products of the industry;
license or building permit[7] despite the withholding of the barangay clearance as had
happened in this case. (b) to promote the consolidation, integration and rationalization of the industry in order
to increase industry capability and viability to service the domestic market and to
compete in international markets;

The Court will not dwell on the other matters raised concerning environmental (c) to rationalize the marketing and distribution of steel products in order to achieve a
requirements respecting light, ventilation, drainage, sewerage, waste disposal, and balance between demand and supply of iron and steel products for the country and to
pollution relating to the project. These matters very well fall under the competence of ensure that industry prices and profits are at levels that provide a fair balance
other government agencies. Surely, the HLURB decision does not and cannot in any between the interests of investors, consumers suppliers, and the public at large;
way confer a blanket passport for constructing a building that does not meet the
requirements of other laws. (d) to promote full utilization of the existing capacity of the industry, to discourage
investment in excess capacity, and in coordination, with appropriate government
agencies to encourage capital investment in priority areas of the industry;

ACCORDINGLY, the Court DENIES the petition for lack of merit and affirms the (e) to assist the industry in securing adequate and low-cost supplies of raw materials
decision of the Court of Appeals dated December 21, 2004 and its Resolution dated and to reduce the excessive dependence of the country on imports of iron and steel.
September 14, 2005.
The list of powers and functions of the ISA included the following:
Sec. 4. Powers and Functions. — The authority shall have the following powers and
Republic of the Philippines functions:
Manila xxx xxx xxx

THIRD DIVISION (j) to initiate expropriation of land required for basic iron and steel facilities for
subsequent resale and/or lease to the companies involved if it is shown that such use
of the State's power is necessary to implement the construction of capacity which is
needed for the attainment of the objectives of the Authority;
G.R. No. 102976 October 25, 1995
xxx xxx xxx
vs. (Emphasis supplied)
CORPORATION, respondents. P.D. No. 272 initially created petitioner ISA for a term of five (5) years counting from 9
August 1973.1 When ISA's original term expired on 10 October 1978, its term was
extended for another ten (10) years by Executive Order No. 555 dated 31 August
The National Steel Corporation ("NSC") then a wholly owned subsidiary of the may be parties in a civil case."3 The trial court also referred to non-compliance by
National Development Corporation which is itself an entity wholly owned by the petitioner ISA with the requirements of Section 16, Rule 3 of the Rules of Court. 4
National Government, embarked on an expansion program embracing, among other
things, the construction of an integrated steel mill in Iligan City. The construction of Petitioner ISA moved for reconsideration of the trial court's Order, contending that
such a steel mill was considered a priority and major industrial project of the despite the expiration of its term, its juridical existence continued until the winding up
Government. Pursuant to the expansion program of the NSC, Proclamation No. 2239 of its affairs could be completed. In the alternative, petitioner ISA urged that the
was issued by the President of the Philippines on 16 November 1982 withdrawing Republic of the Philippines, being the real party-in-interest, should be allowed to be
from sale or settlement a large tract of public land (totalling about 30.25 hectares in substituted for petitioner ISA. In this connection, ISA referred to a letter from the
area) located in Iligan City, and reserving that land for the use and immediate Office of the President dated 28 September 1988 which especially directed the
occupancy of NSC. Solicitor General to continue the expropriation case.

Since certain portions of the public land subject matter Proclamation No. 2239 were The trial court denied the motion for reconsideration, stating, among other things that:
occupied by a non-operational chemical fertilizer plant and related facilities owned by
private respondent Maria Cristina Fertilizer Corporation ("MCFC"), Letter of The property to be expropriated is not for public use or benefit [__] but for the use and
Instruction (LOI), No. 1277, also dated 16 November 1982, was issued directing the benefit [__] of NSC, a government controlled private corporation engaged in private
NSC to "negotiate with the owners of MCFC, for and on behalf of the Government, for business and for profit, specially now that the government, according to newspaper
the compensation of MCFC's present occupancy rights on the subject land." LOI No. reports, is offering for sale to the public its [shares of stock] in the National Steel
1277 also directed that should NSC and private respondent MCFC fail to reach an Corporation in line with the pronounced policy of the present administration to
agreement within a period of sixty (60) days from the date of LOI No. 1277, petitioner disengage the government from its private business ventures.5 (Brackets supplied)
ISA was to exercise its power of eminent domain under P.D. No. 272 and to initiate
Petitioner went on appeal to the Court of Appeals. In a Decision dated 8 October
expropriation proceedings in respect of occupancy rights of private respondent MCFC
1991, the Court of Appeals affirmed the order of dismissal of the trial court. The Court
relating to the subject public land as well as the plant itself and related facilities and to
of Appeals held that petitioner ISA, "a government regulatory agency exercising
cede the same to the NSC.2
sovereign functions," did not have the same rights as an ordinary corporation and that
Negotiations between NSC and private respondent MCFC did fail. Accordingly, on 18 the ISA, unlike corporations organized under the Corporation Code, was not entitled
August 1983, petitioner ISA commenced eminent domain proceedings against private to a period for winding up its affairs after expiration of its legally mandated term, with
respondent MCFC in the Regional Trial Court, Branch 1, of Iligan City, praying that it the result that upon expiration of its term on 11 August 1987, ISA was "abolished and
(ISA) be places in possession of the property involved upon depositing in court the [had] no more legal authority to perform governmental functions." The Court of
amount of P1,760,789.69 representing ten percent (10%) of the declared market Appeals went on to say that the action for expropriation could not prosper because
values of that property. The Philippine National Bank, as mortgagee of the plant the basis for the proceedings, the ISA's exercise of its delegated authority to
facilities and improvements involved in the expropriation proceedings, was also expropriate, had become ineffective as a result of the delegate's dissolution, and
impleaded as party-defendant. could not be continued in the name of Republic of the Philippines, represented by the
Solicitor General:
On 17 September 1983, a writ of possession was issued by the trial court in favor of
ISA. ISA in turn placed NSC in possession and control of the land occupied by It is our considered opinion that under the law, the complaint cannot prosper, and
MCFC's fertilizer plant installation. therefore, has to be dismissed without prejudice to the refiling of a new complaint for
expropriation if the Congress sees it fit." (Emphases supplied)
The case proceeded to trial. While the trial was ongoing, however, the statutory
existence of petitioner ISA expired on 11 August 1988. MCFC then filed a motion to At the same time, however, the Court of Appeals held that it was premature for the
dismiss, contending that no valid judgment could be rendered against ISA which had trial court to have ruled that the expropriation suit was not for a public purpose,
ceased to be a juridical person. Petitioner ISA filed its opposition to this motion. considering that the parties had not yet rested their respective cases.

In an Order dated 9 November 1988, the trial court granted MCFC's motion to dismiss In this Petition for Review, the Solicitor General argues that since ISA initiated and
and did dismiss the case. The dismissal was anchored on the provision of the Rules prosecuted the action for expropriation in its capacity as agent of the Republic of the
of Court stating that "only natural or juridical persons or entities authorized by law Philippines, the Republic, as principal of ISA, is entitled to be substituted and to be
made a party-plaintiff after the agent ISA's term had expired.
Private respondent MCFC, upon the other hand, argues that the failure of Congress It should also be noted that the enabling statute of ISA expressly authorized it to enter
to enact a law further extending the term of ISA after 11 August 1988 evinced a "clear into certain kinds of contracts "for and in behalf of the Government" in the following
legislative intent to terminate the juridical existence of ISA," and that the authorization terms:
issued by the Office of the President to the Solicitor General for continued
prosecution of the expropriation suit could not prevail over such negative intent. It is xxx xxx xxx
also contended that the exercise of the eminent domain by ISA or the Republic is
improper, since that power would be exercised "not on behalf of the National (i) to negotiate, and when necessary, to enter into contracts for and in behalf of the
Government but for the benefit of NSC." government, for the bulk purchase of materials, supplies or services for any sectors in
the industry, and to maintain inventories of such materials in order to insure a
The principal issue which we must address in this case is whether or not the Republic continuous and adequate supply thereof and thereby reduce operating costs of such
of the Philippines is entitled to be substituted for ISA in view of the expiration of ISA's sector;
term. As will be made clear below, this is really the only issue which we must resolve
at this time. xxx xxx xxx

Rule 3, Section 1 of the Rules of Court specifies who may be parties to a civil action: (Emphasis supplied)

Sec. 1. Who May Be Parties. — Only natural or juridical persons or entities authorized Clearly, ISA was vested with some of the powers or attributes normally associated
by law may be parties in a civil action. with juridical personality. There is, however, no provision in P.D. No. 272 recognizing
ISA as possessing general or comprehensive juridical personality separate and
Under the above quoted provision, it will be seen that those who can be parties to a distinct from that of the Government. The ISA in fact appears to the Court to be
civil action may be broadly categorized into two (2) groups: a non-incorporated agency or instrumentality of the Republic of the Philippines, or
more precisely of the Government of the Republic of the Philippines. It is common
(a) those who are recognized as persons under the law whether natural, i.e., knowledge that other agencies or instrumentalities of the Government of the Republic
biological persons, on the one hand, or juridical person such as corporations, on the are cast in corporate form, that is to say, are incorporated
other hand; and agencies or instrumentalities, sometimes with and at other times without capital stock,
and accordingly vested with a juridical personality distinct from the personality of the
(b) entities authorized by law to institute actions. Republic. Among such incorporated agencies or instrumentalities are: National Power
Corporation;6 Philippine Ports Authority;7 National Housing Authority;8 Philippine
Examination of the statute which created petitioner ISA shows that ISA falls under National Oil Company;9 Philippine National Railways; 10 Public Estates
category (b) above. P.D. No. 272, as already noted, contains express authorization to Authority; Philippine Virginia Tobacco Administration, 12 and so forth. It is worth
ISA to commence expropriation proceedings like those here involved: noting that the term "Authority" has been used to designate both incorporated and
non-incorporated agencies or instrumentalities of the Government.
Sec. 4. Powers and Functions. — The Authority shall have the following powers and
functions: We consider that the ISA is properly regarded as an agent or delegate of the Republic
of the Philippines. The Republic itself is a body corporate and juridical person vested
xxx xxx xxx
with the full panoply of powers and attributes which are compendiously described as
(j) to initiate expropriation of land required for basic iron and steel facilities for "legal personality." The relevant definitions are found in the Administrative Code of
subsequent resale and/or lease to the companies involved if it is shown that such use 1987:
of the State's power is necessary to implement the construction of capacity which is
Sec. 2. General Terms Defined. — Unless the specific words of the text, or the
needed for the attainment of the objectives of the Authority;
context as a whole, or a particular statute, require a different meaning:
xxx xxx xxx
(1) Government of the Republic of the Philippines refers to the corporate
(Emphasis supplied) governmental entity through which the functions of government are exercised
throughout the Philippines, including, save as the contrary appears from the context,
the various arms through which political authority is made effective in the Philippines,
whether pertaining to the autonomous regions, the provincial, city, municipal or Sec. 3. Representative Parties. — A trustee of an expressed trust, a guardian, an
barangay subdivisions or other forms of local government. executor or administrator, or a party authorized by statute may sue or be sued without
joining the party for whose benefit the action is presented or defended; but the court
xxx xxx xxx may, at any stage of the proceedings, order such beneficiary to be made a party. . . . .
(Emphasis supplied)
(4) Agency of the Government refers to any of the various units of the Government,
including a department, bureau, office, instrumentality, or government-owned or In the instant case, ISA instituted the expropriation proceedings in its capacity as an
controlled corporation, or a local government or a distinct unit therein. agent or delegate or representative of the Republic of the Philippines pursuant to its
authority under P.D. No. 272. The present expropriation suit was brought on behalf of
xxx xxx xxx and for the benefit of the Republic as the principal of ISA. Paragraph 7 of the
complaint stated:
(10) Instrumentality refers to any agency of the National Government, not integrated
within the department framework, vested with special functions or jurisdiction by 7. The Government, thru the plaintiff ISA, urgently needs the subject parcels of land
law, endowed with some if not all corporate powers, administering special funds, and for the construction and installation of iron and steel manufacturing facilities that are
enjoying operational autonomy, usually through a charter. This term includes indispensable to the integration of the iron and steel making industry which is vital to
regulatory agencies, chartered institutions and government-owned or controlled the promotion of public interest and welfare. (Emphasis supplied)
The principal or the real party in interest is thus the Republic of the Philippines and
xxx xxx xxx not the National Steel Corporation, even though the latter may be an ultimate user of
the properties involved should the condemnation suit be eventually successful.
(Emphases supplied)
From the foregoing premises, it follows that the Republic of the Philippines is entitled
When the statutory term of a non-incorporated agency expires, the powers, duties
to be substituted in the expropriation proceedings as party-plaintiff in lieu of ISA, the
and functions as well as the assets and liabilities of that agency revert back to, and
statutory term of ISA having expired. Put a little differently, the expiration of ISA's
are re-assumed by, the Republic of the Philippines, in the absence of special
statutory term did not by itself require or justify the dismissal of the eminent domain
provisions of law specifying some other disposition thereof such as, e.g., devolution
or transmission of such powers, duties, functions, etc. to some other identified
successor agency or instrumentality of the Republic of the Philippines. When the It is also relevant to note that the non-joinder of the Republic which occurred upon the
expiring agency is an incorporated one, the consequences of such expiry must be expiration of ISA's statutory term, was not a ground for dismissal of such proceedings
looked for, in the first instance, in the charter of that agency and, by way of since a party may be dropped or added by order of the court, on motion of any
supplementation, in the provisions of the Corporation Code. Since, in the instant party or on the court's own initiative at any stage of the action and on such terms as
case, ISA is a non-incorporated agency or instrumentality of the Republic, its powers, are just. 13 In the instant case, the Republic has precisely moved to take over the
duties, functions, assets and liabilities are properly regarded as folded back into the proceedings as party-plaintiff.
Government of the Republic of the Philippines and hence assumed once again by the
Republic, no special statutory provision having been shown to have mandated In E.B. Marcha Transport Company, Inc. v. Intermediate Appellate Court, 14 the Court
succession thereto by some other entity or agency of the Republic. recognized that the Republic may initiate or participate in actions involving its agents.
There the Republic of the Philippines was held to be a proper party to sue for
The procedural implications of the relationship between an agent or delegate of the recovery of possession of property although the "real" or registered owner of the
Republic of the Philippines and the Republic itself are, at least in part, spelled out in property was the Philippine Ports Authority, a government agency vested with a
the Rules of Court. The general rule is, of course, that an action must be prosecuted separate juridical personality. The Court said:
and defended in the name of the real party in interest. (Rule 3, Section 2) Petitioner
ISA was, at the commencement of the expropriation proceedings, a real party in It can be said that in suing for the recovery of the rentals, the Republic of the
interest, having been explicitly authorized by its enabling statute to institute Philippines acted as principal of the Philippine Ports Authority, directly exercising the
expropriation proceedings. The Rules of Court at the same time expressly recognize commission it had earlier conferred on the latter as its agent. . . .15 (Emphasis
the role of representative parties: supplied)
In E.B. Marcha, the Court also stressed that to require the Republic to commence all condemnation proceedings to be begun in the court having proper jurisdiction.
over again another proceeding, as the trial court and Court of Appeals had required, (Emphasis supplied)
was to generate unwarranted delay and create needless repetition of proceedings:
The Revised Administrative Code of 1987 currently in force has substantially
More importantly, as we see it, dismissing the complaint on the ground that the reproduced the foregoing provision in the following terms:
Republic of the Philippines is not the proper party would result in needless delay in
the settlement of this matter and also in derogation of the policy against multiplicity of Sec. 12. Power of eminent domain. — The President shall determine when it is
suits. Such a decision would require the Philippine Ports Authority to refile the very necessary or advantageous to exercise the power of eminent domain in behalf of the
same complaint already proved by the Republic of the Philippines and bring back as it National Government, and direct the Solicitor General, whenever he deems the action
were to square one.16 (Emphasis supplied) advisable, to institute expopriation proceedings in the proper court. (Emphasis
As noted earlier, the Court of Appeals declined to permit the substitution of the
Republic of the Philippines for the ISA upon the ground that the action for In the present case, the President, exercising the power duly delegated under both
expropriation could not prosper because the basis for the proceedings, the ISA's the 1917 and 1987 Revised Administrative Codes in effect made a determination that
exercise of its delegated authority to expropriate, had become legally ineffective by it was necessary and advantageous to exercise the power of eminent domain in
reason of the expiration of the statutory term of the agent or delegated i.e., ISA. behalf of the Government of the Republic and accordingly directed the Solicitor
Since, as we have held above, the powers and functions of ISA have reverted to the General to proceed with the suit. 17
Republic of the Philippines upon the termination of the statutory term of ISA, the
question should be addressed whether fresh legislative authority is necessary before It is argued by private respondent MCFC that, because Congress after becoming
the Republic of the Philippines may continue the expropriation proceedings initiated once more the depository of primary legislative power, had not enacted a statute
by its own delegate or agent. extending the term of ISA, such non-enactment must be deemed a manifestation of a
legislative design to discontinue or abort the present expropriation suit. We find this
While the power of eminent domain is, in principle, vested primarily in the legislative argument much too speculative; it rests too much upon simple silence on the part of
department of the government, we believe and so hold that no new legislative act is Congress and casually disregards the existence of Section 12 of the 1987
necessary should the Republic decide, upon being substituted for ISA, in fact to Administrative Code already quoted above.
continue to prosecute the expropriation proceedings. For the legislative authority, a
long time ago, enacted a continuing or standing delegation of authority to the Other contentions are made by private respondent MCFC, such as, that the
President of the Philippines to exercise, or cause the exercise of, the power of constitutional requirement of "public use" or "public purpose" is not present in the
eminent domain on behalf of the Government of the Republic of the Philippines. The instant case, and that the indispensable element of just compensation is also absent.
1917 Revised Administrative Code, which was in effect at the time of the We agree with the Court of Appeals in this connection that these contentions, which
commencement of the present expropriation proceedings before the Iligan Regional were adopted and set out by the Regional Trial Court in its order of dismissal, are
Trial Court, provided that: premature and are appropriately addressed in the proceedings before the trial court.
Those proceedings have yet to produce a decision on the merits, since trial was still
Sec. 64. Particular powers and duties of the President of the Philippines. — In on going at the time the Regional Trial Court precipitously dismissed the expropriation
addition to his general supervisory authority, the President of the Philippines shall proceedings. Moreover, as a pragmatic matter, the Republic is, by such substitution
have such other specific powers and duties as are expressly conferred or imposed on as party-plaintiff, accorded an opportunity to determine whether or not, or to what
him by law, and also, in particular, the powers and duties set forth in this Chapter. extent, the proceedings should be continued in view of all the subsequent
developments in the iron and steel sector of the country including, though not limited
Among such special powers and duties shall be: to, the partial privatization of the NSC.

xxx xxx xxx WHEREFORE, for all the foregoing, the Decision of the Court of Appeals dated 8
October 1991 to the extent that it affirmed the trial court's order dismissing the
(h) To determine when it is necessary or advantageous to exercise the right of expropriation proceedings, is hereby REVERSED and SET ASIDE and the case is
eminent domain in behalf of the Government of the Philippines; and to direct the REMANDED to the court a quo which shall allow the substitution of the Republic of
Secretary of Justice, where such act is deemed advisable, to cause the the Philippines for petitioner Iron and Steel Authority and for further proceedings
consistent with this Decision. No pronouncement as to costs.
SO ORDERED. On 30 January 1998 public respondent dismissed the complaint based on its finding
The case is a simple case of breach of contract with damages which should have
[G.R. No. 134990. April 27, 2000] been filed in the regular court. This Office has no jurisdiction to determine the legality
or validity of the termination of the contract entered into by CIIF and ITTC. Besides
MANUEL M. LEYSON JR., petitioner, vs. OFFICE OF THE OMBUDSMAN, TIRSO the entities involved are private corporations (over) which this Office has no
ANTIPORDA, Chairman, UCPB and CIIF Oil Mills, and OSCAR A. TORRALBA, jurisdiction.[2]
President, CIIF Oil Mills, respondents. ALEX
On 4 June 1998 reconsideration of the dismissal of the complaint was denied. The
DECISION Ombudsman was unswayed in his finding that the present controversy involved
breach of contract as he also took into account the circumstance that petitioner had
already filed a collection case before the Regional Trial Court of Manila-Br. 15,
On 7 February 1996 International Towage and Transport Corporation (ITTC), a docketed as Civil Case No. 97-83354. Moreover, the Ombudsman found that the filing
domestic corporation engaged in the lighterage or shipping business, entered into a of the motion for reconsideration on 31 March 1998 was beyond the inextendible
one (1)-year contract with Legaspi Oil Company, Inc. (LEGASPI OIL), Granexport period of five (5) days from notice of the assailed resolution on 19 March 1998. [3] miso
Manufacturing Corporation (GRANEXPORT) and United Coconut Chemicals, Inc.
Petitioner now imputes grave abuse of discretion on public respondent in dismissing
(UNITED COCONUT), comprising the Coconut Industry Investment Fund (CIIF)
his complaint. He submits that inasmuch as Philippine Coconut Producers
companies, for the transport of coconut oil in bulk through MT Transasia. The majority
Federation, Inc. (COCOFED) v. PCGG[4] and Republic v. Sandiganbayan[5] have
shareholdings of these CIIF companies are owned by the United Coconut Planters
declared that the coconut levy funds are public funds then, conformably with Quimpo
Bank (UCPB) as administrator of the CIIF. Under the terms of the contract, either
v. Tanodbayan,[6] corporations formed and organized from those funds or whose
party could terminate the agreement provided a three (3)-month advance notice was
controlling stocks are from those funds should be regarded as government owned
given to the other party. However, in August 1996, or prior to the expiration of the
and/or controlled corporations. As in the present case, since the funding or controlling
contract, the CIIF companies with their new President, respondent Oscar A. Torralba,
interest of the companies being headed by private respondents was given or owned
terminated the contract without the requisite advance notice. The CIIF companies
by the CIIF as shown in the certification of their Corporate Secretary, [7] it follows that
engaged the services of another vessel, MT Marilag, operated by Southwest Maritime
they are government owned and/or controlled corporations. Corollarily, petitioner
Corporation. miso
asserts that respondents Antiporda and Torralba are public officers subject to the
On 11 March 1997 petitioner Manuel M. Leyson Jr., Executive Vice President of jurisdiction of the Ombudsman. Sdaadsc
ITTC, filed with public respondent Office of the Ombudsman a grievance case against
Petitioner alleges next that public respondent's conclusion that his complaint refers to
respondent Oscar A. Torralba. The following is a summary of the irregularities and
a breach of contract is whimsical, capricious and irresponsible amounting to a total
corrupt practices allegedly committed by respondent Torralba: (a) breach of contract -
disregard of its main point, i. e., whether private respondents violated The Anti-Graft
unilateral cancellation of valid and existing contract; (b) bad faith - falsification of
and Corrupt Practices Act when they entered into a contract with Southwest Maritime
documents and reports to stop the operation of MT Transasia; (c) manipulation -
Corporation which was grossly disadvantageous to the government in general and to
influenced their insurance to disqualify MT Transasia; (d) unreasonable denial of
the CIIF in particular. Petitioner admits that his motion for reconsideration was filed
requirement imposed; (e) double standards and inconsistent in favor of MT
out of time. Nonetheless, he advances that public respondent should have relaxed its
Marilag; (f) engaged and entered into a contract with Southwest Maritime Corp. which
rules in the paramount interest of justice; after all, the delay was just a matter of days
is not the owner of MT Marilag, where liabilities were waived and whose paid-up
and he, a layman not aware of technicalities, personally filed the complaint. Rtcspped
capital is only P250,000.00; and, (g) overpricing in the freight rate causing losses of
millions of pesos to Cocochem.[1] Private respondents counter that the CIIF companies were duly organized and are
existing by virtue of the Corporation Code. Their stockholders are private individuals
On 2 January 1998 petitioner charged respondent Tirso Antiporda, Chairman of
and entities. In addition, private respondents contend that they are not public officers
UCPB and CIIF Oil Mills, and respondent Oscar A. Torralba with violation of The Anti-
as defined under The Anti-Graft and Corrupt Practices Act but are private executives
Graft and Corrupt Practices Act also before the Ombudsman anchored on the
appointed by the Boards of Directors of the CIIF companies. They asseverate that
aforementioned alleged irregularities and corrupt practices. spped
petitioner's motion for reconsideration was filed through the expert assistance of a
learned counsel. They then charge petitioner with forum shopping since he had assist the latter in selling and distributing oil and petroleum products to assure and
similarly filed a case for collection of a sum of money plus damages before the trial maintain an adequate and stable domestic supply. Korte
But these jurisprudential rules invoked by petitioner in support of his claim that the
The Office of the Solicitor General maintains that the Ombudsman approved the CIIF companies are government owned and/or controlled corporations are incomplete
recommendation of the investigating officer to dismiss the complaint because he without resorting to the definition of "government owned or controlled corporation"
sincerely believed there was no sufficient basis for the criminal indictment of private contained in par. (13), Sec. 2, Introductory Provisions of the Administrative Code of
respondents. spped 1987, i. e., any agency organized as a stock or non-stock corporation vested with
functions relating to public needs whether governmental or proprietary in nature, and
We find no grave abuse of discretion committed by the Ombudsman. COCOFED v. owned by the Government directly or through its instrumentalities either wholly, or,
PCGG referred to in Republic v. Sandiganbayan reviewed the history of the coconut where applicable as in the case of stock corporations, to the extent of at least fifty-one
levy funds. I These funds actually have four (4) general classes: (a) the Coconut (51) percent of its capital stock. The definition mentions three (3) requisites, namely,
Investment Fund created under R. A. No. 6260;[8] (b) the Coconut Consumers first, any agency organized as a stock or non-stock corporation; second, vested with
Stabilization Fund created under P. D. No. 276;[9] (c) the Coconut Industry functions relating to public needs whether governmental or proprietary in nature; and,
Development Fund created under P. D. No. 582;[10] and, (d) the Coconut Industry third, owned by the Government directly or through its instrumentalities either wholly,
Stabilization Fund created under P. D. No. 1841.[11] or, where applicable as in the case of stock corporations, to the extent of at least fifty-
one (51) percent of its capital stock. Sclaw
The various laws relating to the coconut industry were codified in 1976. On 21
October of that year, P. D. No. 961[12] was promulgated. On 11 June 1978 it was In the present case, all three (3) corporations comprising the CIIF companies were
amended by P. D. No. 1468[13] by inserting a new provision authorizing the use of the organized as stock corporations. The UCPB-CIIF owns 44.10% of the shares of
balance of the Coconut Industry Development Fund for the acquisition of "shares of LEGASPI OIL, 91.24% of the shares of GRANEXPORT, and 92.85% of the shares of
stocks in corporations organized for the purpose of engaging in the establishment and UNITED COCONUT.[15] Obviously, the below 51% shares of stock in LEGASPI OIL
operation of industries x x x commercial activities and other allied business removes this firm from the definition of a government owned or controlled corporation.
undertakings relating to coconut and other palm oil indust(ries)." [14] From this fund Our concern has thus been limited to GRANEXPORT and UNITED COCONUT as we
thus created, or the CIIF, shares of stock in what have come to be known as the "CIIF go back to the second requisite. Unfortunately, it is in this regard that petitioner failed
companies" were purchased. miso to substantiate his contentions. There is no showing that GRANEXPORT and/ or
UNITED COCONUT was vested with functions relating to public needs whether
We then stated in COCOFED that the coconut levy funds were raised by the State's governmental or proprietary in nature unlike PETROPHIL in Quimpo. The Court thus
police and taxing powers such that the utilization and proper management thereof concludes that the CIIF companies are, as found by public respondent, private
were certainly the concern of the Government. These funds have a public character corporations not within the scope of its jurisdiction. Sclex
and are clearly affected with public interest.
With the foregoing conclusion, we find it unnecessary to resolve the other issues
Quimpo v. Tanodbayan involved the issue as to whether PETROPHIL was a raised by petitioner.
government owned or controlled corporation the employees of which fell within the
jurisdictional purview of the Tanodbayan for purposes of The Anti-Graft and Corrupt A brief note on private respondents' charge of forum shopping. Executive Secretary v.
Practices Act. We upheld the jurisdiction of the Tanodbayan on the ratiocination that - Gordon[16] is instructive that forum shopping consists of filing multiple suits involving
the same parties for the same cause of action, either simultaneously or successively,
While it may be that PETROPHIL was not originally "created" as a government- for the purpose of obtaining a favorable judgment. It is readily apparent that the
owned or controlled corporation, after it was acquired by PNOC, which is a present charge will not prosper because the cause of action herein, i. e., violation
government-owned or controlled corporation, PETROPHIL became a subsidiary of of The Anti-Graft and Corrupt Practices Act, is different from the cause of action in the
PNOC and thus shed-off its private status. It is now funded and owned by the case pending before the trial court which is collection of a sum of money plus
government as, in fact, it was acquired to perform functions related to government damages. miso
programs and policies on oil, a vital commodity in the economic life of the nation. It
was acquired not temporarily but as a permanent adjunct to perform essential WHEREFORE, the petition is DISMISSED. The Resolution of public respondent
government or government-related functions, as the marketing arm of the PNOC to Office of the Ombudsman of 30 January 1998 which dismissed the complaint of
petitioner Manuel M. Leyson Jr., as well as its Order of 4 June 1998 denying his RULING: The 1987 Administrative Code defines a government instrumentality as
motion for reconsideration, is AFFIRMED. Costs against petitioner. follows:
Instrumentality refers to any agency of the National Government, not integrated within
SO ORDERED. the department framework, vested with special functions or jurisdiction by law,
endowed with some if not all corporate powers, administering special funds, and
Ma. Elena Malaga, et. al. vs. Manuel R. Penachos, Jr., enjoying operational autonomy, usually through a charter. This term includes
regulatory agencies, chartered institutions, and government-owned or controlled
Chartered Institution and GOCC, defined.
corporations. (Sec. 2 (5) Introductory Provisions).
FACTS: The Iloilo State College of Fisheries (ISCOF) through its Pre-qualifications,
Bids and Awards Committee (PBAC) caused the publication in the November 25, 26 The same Code describes a chartered institution thus:
and 28, 1988 issues of the Western Visayas Daily an Invitation to Bid for the Chartered institution - refers to any agency organized or operating under a special
construction of a Micro Laboratory Building at ISCOF. The notice announced that the charter, and vested by law with functions relating to specific constitutional policies or
last day for the submission of pre-qualification requirements was on December 2, objectives. This term includes the state universities and colleges, and the monetary
1988, and that the bids would be received and opened on December 12, 1988 at 3 authority of the state. (Sec. 2 (12) Introductory Provisions).
o'clock in the afternoon.
It is clear from the above definitions that ISCOF is a chartered institution and is
Petitioners Malaga and Najarro, doing business under the name of BE Construction therefore covered by P.D. 1818.
and Best Built Construction, respectively, submitted their pre-qualification documents
at two o'clock in the afternoon of December 2, 1988. Petitioner Occeana submitted There are also indications in its charter that ISCOF is a government instrumentality.
his own PRE-C1 on December 5, 1988. All three of them were not allowed to First, it was created in pursuance of the integrated fisheries development policy of the
participate in the bidding as their documents were considered late. State, a priority program of the government to effect the socio-economic life of the
nation. Second, the Treasurer of the Republic of the Philippines shall also be the ex-
On December 12, 1988, the petitioners filed a complaint with the Iloilo RTC against officio Treasurer of the state college with its accounts and expenses to be audited by
the officers of PBAC for their refusal without just cause to accept them resulting to the Commission on Audit or its duly authorized representative. Third, heads of
their non-inclusion in the list of pre-qualified bidders. They sought to the resetting of bureaus and offices of the National Government are authorized to loan or transfer to
the December 12, 1988 bidding and the acceptance of their documents. They also it, upon request of the president of the state college, such apparatus, equipment, or
asked that if the bidding had already been conducted, the defendants be directed not supplies and even the services of such employees as can be spared without serious
to award the project pending resolution of their complaint. detriment to public service. Lastly, an additional amount of P1.5M had been
appropriated out of the funds of the National Treasury and it was also decreed in its
On the same date, Judge Lebaquin issued a restraining order prohibiting PBAC from charter that the funds and maintenance of the state college would henceforth be
conducting the bidding and award the project. The defendants filed a motion to lift the included in the General Appropriations Law.
restraining order on the ground that the court is prohibited from issuing such order,
preliminary injunction and preliminary mandatory injunction in government Nevertheless, it does not automatically follow that ISCOF is covered by the prohibition
infrastructure project under Sec. 1 of P.D. 1818. They also contended that the in the said decree as there are irregularities present surrounding the transaction that
preliminary injunction had become moot and academic as it was served after the justified the injunction issued as regards to the bidding and the award of the project
bidding had been awarded and closed. (citing the case of Datiles vs. Sucaldito).

On January 2, 1989, the trial court lifted the restraining order and denied the petition Republic of the Philippines
for preliminary injunction. It declared that the building sought to be constructed at the
ISCOF was an infrastructure project of the government falling within the coverage of SUPREME COURT
the subject law.
ISSUE: Whether or not ISCOF is a government instrumentality subject to the
provisions of PD 1818?
FIRST DIVISION The antecedents as culled by the CA from the records are:

Petitioner Philippine Amusement and Gaming Corporation (PAGCOR) is a

government owned and controlled corporation created under Presidential Decree
(PD) No. 1869 to enable the Government to regulate and centralize all games of
chance authorized by existing franchise or permitted by law. Section 10 thereof
conferred on PAGCOR a franchise of twenty-five (25) years or until July 11, 2008,
renewable for another twenty-five (25) years. Under Section 9 thereof, it was given
regulatory powers over persons and/or entities with contract or franchise with it, viz:
CORPORATION (PAGCOR), represented by ATTY.
CARLOS R. BAUTISTA, JR., SECTION 9. Regulatory Power.The Corporation shall maintain a Registry of the
affiliated entities, and shall exercise all the powers, authority and the responsibilities
vested in the Securities and Exchange Commission over such affiliated entities
Present: mentioned under the preceding section, including but not limited to amendments of
Articles of Incorporation and By-Laws, changes in corporate term, structure,
CORONA, CJ., Chairperson, capitalization and other matters concerning the operation of the affiliating entities, the
provisions of the Corporation Code of the Philippines to the contrary notwithstanding,
VELASCO, JR., except only with respect to original incorporation.

- versus - LEONARDO-DE CASTRO, On March 13, 1992, Republic Act No. 7227 was enacted to provide for the conversion
and development of existing military reservations, including former United
DEL CASTILLO, and States military bases in the Philippines, into Special Economic Zones (SEZ). The law
also provides for the creation of the Subic Bay Metropolitan Authority (SBMA).
On April 3, 1993, then President Fidel V. Ramos issued Executive Order (EO) No.
80. Under Section 5 thereof, the Clark Special Economic Zone (CSEZ) was given all
the applicable incentives granted to Subic Bay Special Economic Zone (SSEZ), viz:
SECTION 5. Investments Climate in the CSEZ.Pursuant to Section 5(m) and Section
15 of RA 7227, the BCDA shall promulgate all necessary policies, rules and
June 29, 2010 regulations governing the CSEZ, including investment incentives, in consultation with
the local government units and pertinent government departments for implementation
x-----------------------------------------------------------------------------------------x by the CDC.

DECISION Among others, the CSEZ shall have all the applicable incentives in the Subic Special
Economic and Free Port Zone under RA 7227 and those applicable incentives
VELASCO, JR., J.: granted in the Export Processing Zones, the Omnibus Investments Code of 1987, the
Foreign Investments Act of 1991 and new investments laws which may hereinafter be
In this petition for review under Rule 45, the May 19, 2009 Decision of the Court of enacted.
Appeals (CA) in CA-G.R. SP No. 107247 is questioned for not nullifying the
November 18, 2008 Order of the Regional Trial Court (RTC) in Manila in Civil Case The CSEZ Main Zone covering the Clark Air Base proper shall have all the aforecited
No. 08-120338 that issued a temporary restraining order (TRO) against petitioner investment incentives, while the CSEZ Sub-Zone covering the rest of the CSEZ shall
Philippine Amusement and Gaming Corporation (PAGCOR), barring PAGCOR from have limited incentives. The full incentives in the Clark SEZ Main Zone and the limited
committing acts that allegedly violate the rights of respondent Fontana Development incentives in the Clark SEZ Sub-Zone shall be determined by the BCDA.
Corporation (FDC) under a December 23, 1999 Memorandum of Agreement (MOA).
On December 23, 1999, PAGCOR granted private respondent Fontana Development consent of the local government unit that has territorial jurisdiction over the area
Corporation (FDC) (formerly RN Development Corporation) the authority to operate chosen as the site for any of its operations.
and maintain a casino inside the CSEZ under a Memorandum of Agreement (MOA),
stating inter alia: xxxx

xxxx On July 18, 2008, PAGCOR informed FDC that it was extending the MOA on a
month-to-month basis until the finalization of the renewal of the contract. FDC
1. RNDC Improvements protested, claiming that the extension of PAGCORs franchise had automatically
extended the MOA: that the SC decisions, including RA Nos. 9400 and 9399, had no
xxxx effect on the authority of CDC to allow the establishment of a casino inside the CSEZ;
and that in Coconut Oil Refiners Association, Inc., the SC did not declare void the
4. Non-exclusivity, PAGCOR and RNDC agree that the license granted to RNDC to entire EO No. 80 but only Section 5 thereof.
engage in gaming and amusement operations within CSEZ shall be non-
exclusive and co-terminus with the Charter of PAGCOR, or any extension On October 6, 2008, after a series of dialogues and exchange of position papers,
thereof, and shall be for the period hereinabove defined. (Emphasis supplied.) PAGCOR notified FDC that its [new] standard Authority to Operate shall now govern
and regulate FDCs casino operations in place of the previous MOA. FDC moved for
xxxx the reconsideration of the said decision but the same was denied. On November 5,
2008, PAGCOR instructed FDC to remit its franchise fees in accordance with the
On April 12, 2000, Clark Development Corporation (CDC) issued Certificate of
Authority to Operate.
Registration No. 2000-24. Pursuant to Article VII-11 thereof, the MOA was amended
on July 28, 2000, September 6, 2000, December 6, 2001, June 3, 2002, October 13,
2003 and March 31, 2004.
On the same date of November 5, 2008, FDC filed before the RTC of Manila the
Sometime in 2005, the Coconut Oil Refiners Association challenged before the instant complaint for Injunction against PAGCOR, contending that it could not be
Supreme Court the constitutionality, among others, of EO No. 80 on the ground that covered by a month-to-month extension nor by the standard Authority to Operate
the incentives granted to SSEZ under RA No. 7227 was exclusive and cannot be since the MOA was automatically renewed and extended up to 2033; that the MOA
made applicable to CSEZ by a mere executive order. The case was decided in favor clearly provided that the same was co-terminus with PAGCORs franchise including
of Coconut Oil Refiners Association and Section 5 aforequoted was declared of no any extension thereof; that it had faithfully complied with the conditions under the
legal force and effect. MOA; that pursuant to the MOA, it had built a hotel-casino complex and put up other
investments equivalent to P1 Billion; that it had adopted a marketing strategy to
On June 20, 2007, RA No. 9487 was enacted, extending PAGCORs franchise up to
attract high roller casino players from Asia and had scrupulously met all its obligations
July 10, 2033 renewable for another twenty-five (25) years, viz:
to PAGCOR and other government agencies; and that the provisions invalidated
SECTION 1. The Philippine Amusement and Gaming Corporation (PAGCOR) in Coconut Oil Refiners Association, Inc., principally pertained to tax and customs
franchise granted under Presidential Decree No. 1869, otherwise known as the duty, privileges or incentives which was thereafter restored by the enactment of RA
PAGCOR Charter, is hereby further amended to read as follows: No. 9400. The complaint was docketed as the herein Civil Case No. 08-120338 and
raffled to Branch 7.
(1) Section 10, Nature and Term of Franchise, is hereby amended to read as follows:

SEC. 10. Nature and Term of Franchise.Subject to the terms and conditions
established in this Decree, the Corporation is hereby granted from the expiration of its The RTC summoned PAGCOR and set the hearing on the application for TRO. On
original term on July 11, 2008, another period of twenty-five (25) years, the rights, November 13, 2008, PAGCOR filed its Special Appearance (for Dismissal of the
privileges and authority to operate and license gambling casinos, gaming clubs and Petition and the Opposition to the Prayer for a Temporary Restraining Order and/or
other similar recreation or amusement places, gaming pools, i.e., basketball, football, Writ of Preliminary Injunction), praying that the complaint be dismissed for lack of
bingo, etc. except jai-alai, whether on land or sea, within the territorial jurisdiction of jurisdiction. PAGCOR contended that its decision to replace the MOA with the
the Republic of the Philippines: Provided, That the corporation shall obtain the Authority to Operate was pursuant to its regulatory powers under Sections 8 and 9 of
PD No. 1869; that under the said provisions, it was given all the powers, authority and
responsibilities of the Securities and Exchange Commission (SEC) over corporations Meanwhile, on January 30, 2009, the RTC issued an order, which reconsidered its
engaged in gambling; that consequently, being the SEC of said corporations, the December 8, 2008 Order and granted the writ of preliminary injunction in favor of
appeal or review of its decision should have been made directly to the SC under PD FDC. The trial court held that since public interest is not prejudiced, the license issued
No. 1869 in relation to the last paragraph of Section 6, PD No. 902-A; PAGCOR may not be revoked or rescinded by mere executive action. The fallo reads:
argued that administrative agencies are co-equal with RTCs; that application or
operation of presidential decrees are appealable to the SC under Article VIII, Section WHEREFORE, having sufficiently established a prima facie proof of violation of its
4(2) of the 1987 Constitution; and that there was no basis for the issuance of right as a casino licensee under the MOA, FDCs application for the issuance of a
TRO/Writ of Preliminary Injunction since the franchise or license granted to FDC was writ of preliminary injunction is GRANTED.
not a property right but was merely a privilege and not a contract.
This reconsiders the Order dated December 8, 2008 insofar as it denied the issuance
of a writ of preliminary injunction.

On November 18, 2008, the RTC issued the first assailed Order denying PAGCORs Let a writ of preliminary injunction therefore ISSUE to become effective only upon
motion to dismiss and granting FDCs application for a TRO. The RTC held that the posting of ONE HUNDRED MILLION PESOS (P100,000,000.00).
SC had no exclusive jurisdiction over cases involving PAGCOR; that the cases of Del
Mar vs. PAGCOR, Sandoval II vs. PAGCOR, Jaworski vs. PAGCOR were decided by SO ORDERED.
the SC in the exercise of its discretionary power to take cognizance of cases; that it
The Writ of Preliminary Injunction[2] was issued on February 25, 2009.
had jurisdiction over the instant complaint under Section 21(1) of Batas Pambansa
(BP) No. 129 in relation to Article VIII, Section 5(1) of the 1987 Constitution and the On February 17, 2009, PAGCOR filed its Motion for Reconsideration and to Dissolve
rule on hierarchy of courts; that although PAGCOR was granted regulatory powers, it the Preliminary Injunction for Insufficiency of Bond and Irreparable Injury to the
was not extended quasi-judicial functions; and that PAGCOR is not an administrative Government, which was opposed by FDC. By Order issued on March 31, 2009, the
agency but a government owned and controlled corporation. Upon the posting by RTC denied PAGCORs motion for reconsideration of its Order dated January 30,
FDC of the required bond of P500,000.00, the RTC issued on November 19, 2008 the 2009 that granted a writ of preliminary injunction in favor of FDC.
second assailed Order, a TRO enjoining the implementation of the Standard Authority
to Operate within a period of twenty (20) days. PAGCORs motion for reconsideration On May 19, 2009, the CA rejected the petition in CA-G.R. SP No. 107247 for lack of
was denied in the third assailed Order. merit.

On December 8, 2008, the RTC issued an Order likewise denying FDCs application In dismissing PAGCORs petition, the CA threw out PAGCORs postulation that the
for the issuance of a Writ of Preliminary Injunction. The RTC ruled that FDC failed to RTC had no jurisdiction over the case and that the proper remedy is an original action
present a clear legal right to justify its issuance; that PAGCOR was granted with before this Court, as the corporation is a body equal to the Securities and Exchange
legislative right to franchise to other entities the operation of gambling casinos; and Commission (SEC). The appellate court reasoned that nowhere in Presidential
that since what was granted was a license to operate and not a contract, no vested Decree No. (PD) 1869 and Republic Act No. (RA) 9487 does it state that the instant
property right was at stake. petition can only be filed with this Court. Moreover, under RA 8799, the quasi-judicial
powers earlier granted to the SEC under PD 902-A were transferred to the RTC,
Both PAGCOR and Fontana moved for the reconsideration of the aforesaid while the powers retained by the Commission are now subject to appeal to the CA.
Order. Fontana maintained that it was entitled to a Writ of Preliminary Injunction while
PAGCOR wanted deleted the finding that it had the authority to issue casino license
to FDC under PD No. 1869.[1]
An examination of the allegations of the complaint further revealed that it was an
On February 5, 2009, PAGCOR filed a petition for certiorari and prohibition before the original action for injunction, and under Batas Pampansa Blg. (BP) 129, the RTC shall
CA docketed as CA-G.R. SP No. 107247 entitled PAGCOR represented by Atty. exercise original jurisdiction over writs of injunction. Lastly, the CA stressed that the
Carlos R. Bautista, Jr. v. Hon. Ma. Theresa Dolores Estoesta and Fontana case has been rendered moot and academic, as the TRO issued by Judge Estoesta
Development Corporation, questioning the November 18, 2008 Order, the November lapsed on December 9, 2008 and its issuance has ceased to be a justiciable
19, 2008 Order and the December 4, 2008 Order of respondent judge. controversy. On the other hand, PAGCOR did not assail the writ of preliminary
injunction issued by Judge Estoesta on February 25, 2009 after the CA petition was
In the instant petition, PAGCOR puts forward the following issues for the Commission, and Sec. 6 of PD 902-A which provides for a petition for review to this
consideration of the Court, to wit: Court from SECs decisions.

The Court a quo and the trial court decided the question of substance (i.e. What is the
proper remedy available to a party claiming to be aggrieved by PAGCOR in the
exercise of its authority to operate games of chance/gambling and to license and We are not convinced.
regulate others to operate games of chance/gambling?) not theretofore determined by
the Supreme Court. Jurisdiction of a court over the subject matter of the action is a matter of law and is
conferred only by the Constitution or by statute.[3] It is settled that jurisdiction is
The trial courts TRO and later a Writ of Preliminary Injunction in favor of the private determined by the allegations of the complaint or the petition irrespective of whether
respondent prevented herein Petitioner from implementing the standard Authority to plaintiff is entitled to all or some of the claims or reliefs asserted. [4]
Operate. In issuing such processes the trial court has so far departed from the
accepted and usual course of judicial proceedings, as to call for an exercise of the A perusal of FDCs complaint in Civil Case No. 08-120338 easily reveals that it is an
power of supervision. action for injunction based on an alleged violation of contractthe MOA between the
partieswhich granted FDC the right to operate a casino inside the Clark Special
The trial courts TRO and later a Writ of Preliminary Injunction in favor of private Economic Zone (CSEZ). As such, the Manila RTC has jurisdiction over FDCs
respondent prevented herein Petitioner from collecting Government revenues in the complaint anchored on Sec. 19, Chapter II of BP 129, which grants the RTCs original
form of the new license fee from private respondent under the standard Authority to exclusive jurisdiction over all civil actions in which the subject of the litigation is
Operate. In issuing such processes the trial court has so far departed from the incapable of pecuniary estimation. Evidently, a complaint for injunction or breach of
accepted and usual course of judicial proceedings, as to call for an exercise of the contract is incapable of pecuniary estimation. Moreover, the RTCs shall exercise
power of supervision. original jurisdiction in the issuance of writs of certiorari, prohibition, mandamus, quo
warranto, habeas corpus and injunction which may be enforced in any part of their
The Court a quo in declaring moot and academic the question of the TRO issued by respective regions under Sec. 21 of BP 129.
the trial court had sanctioned the trial courts departure from the accepted and usual
course of judicial proceedings, as to call for an exercise of the power of supervision. PAGCORs claim of jurisdiction of this Court over the complaint in question heavily
leans on Sec. 9 of PD 1869, PAGCORs Charter, which provides:
The trial court in declaring that herein Petitioner issued the license (MOA) to herein
private respondent under the authority of PD 1869 and not under E.O. 80, Section 5 Section 9. Regulatory Power.The Corporation shall maintain a Registry of the
decided such question of substance in a way not in accord with law or with the affiliated entities and shall exercise all the powers, authority and responsibilities
applicable decisions of the Supreme Court. vested in the Securities and Exchange Commission over such affiliated entities x x x.

We synthesize petitioners issues to two core issues: In view of the vestment to PAGCOR by PD 1869 of the powers, authority, and
responsibilities of the SEC, PAGCOR concludes that any decision or ruling it renders
(1) Whether the Manila RTC or this Court has jurisdiction over FDCs complaint for has to be brought to this Court via a petition for review based on Sec. 6 of SECs
injunction and specific performance; and Charter, PD 902-A, which reads:

(2) Did PAGCOR issue the license (MOA) under PD 1869 or under Executive Order
No. (EO) 80, Section 5?
The aggrieved party may appeal the order, decision or ruling of the Commission
On the threshold issue of jurisdiction, PAGCOR insists lack of jurisdiction of the trial sitting en banc to the Supreme Court by petition for review in accordance with the
court over the complaint of FDC and, hence, all the processes and writs issued by pertinent provisions of the Rules of Court.
said court are null and void. It posits that the proper legal remedy of FDC is not
through an injunction complaint before the trial court, but a petition for review on
purely questions of law before this Court or an appeal to the Office of the President. It
heavily relies on Sec. 9 of PD 1869, which states that PAGCOR shall exercise all the
powers, authority and responsibilities vested in the Securities and Exchange
This reasoning is flawed. A scrutiny of PD 1869 demonstrates that it has no are better devoted to those matters within its exclusive jurisdiction, and to prevent
procedure for the appeal or review of PAGCORs decisions or orders. Neither does it further over-crowding of the Courts docket.[9]
make any express reference to an exclusive remedy that can be brought before this
Court. Even a review of PD 1869s predecessor lawsPD 1067-A, 1067-B, 1067-C, While it is the trial court that has original jurisdiction over FDCs complaint, PAGCOR
1399, and 1632, as well as its amendatory law, RA 9487do not confer original nevertheless prays that this Court suspend the Rules and directly decide the entire
jurisdiction to this Court to review PAGCORs actions and decisions. controversy in this proceeding instead of remanding the same to the trial court. [10]

PAGCOR, however, insists that this Court has jurisdiction over an action contesting
its exercise of licensing and regulatory powers, i.e., the revocation of FDCs license to
operate a casino in CSEZ and that FDCs complaint is a case of first impression. In the exercise of its broad discretionary power, we will resolve FDCs complaint on
the merits, instead of remanding it to the trial court for further proceedings.Moreover,
PAGCORs argument is bereft of merit. the dispute between the parties involves a purely question of lawwhether the license
or MOA was issued pursuant to PD 1869 or Sec. 5, EO 80, in relation to RA 7227,
A similar factual setting was presented by PAGCOR in PAGCOR v. Viola,[5] which which does not necessitate a full blown trial. Demands of substantial justice and
involves the controversy between PAGCOR and the Mimosa Regency Casino that equity require the relaxation of procedural rules. [11] In Lianga Bay v. Court of
operated inside the CSEZ. Mimosa filed a case for injunction and prayed for the Appeals,[12] the Court held:
issuance of a TRO before the Pampanga RTC when PAGCOR decided to close down
the casino. In this case, PAGCOR likewise assailed the jurisdiction of the trial court by Remand of case to the lower court for further reception of evidence is not necessary
claiming that an original action before the CA is the proper remedy. where the court is in a position to resolve the dispute based on the records before
it. On many occasions, the Court, in the public interest and the expeditious
In PAGCOR v. Viola, we ruled that PAGCOR, in the exercise of its licensing and administration of justice, has resolved actions on the merits instead of remanding
regulatory powers, has no quasi-judicial functions, as Secs. 8 and 9 of PD 1869 do them to the trial court for further proceedings, such as where the ends of justice would
not grant quasi-judicial powers to PAGCOR. As such, direct resort to this Court is not not be subserved by the remand of the case or when public interest demands an
allowed. While we allowed said recourse in Del Mar v. PAGCOR[6] and Jaworski v. early disposition of the case or where the trial court had already received all the
PAGCOR,[7] that is an exception to the principle of hierarchy of courts on the grounds evidence of the parties.
of expediency and the importance of the issues involved. More importantly, we
categorically ruled in PAGCOR v. Viola that cases involving revocation of a license The core issue to be resolved is whether the trial court erred in declaring that
falls within the original jurisdiction of the RTC, thus: PAGCOR issued the license (MOA) to FDC under the authority of PD 1869 and not
under EO 80, Sec. 5.
Having settled that PAGCORs revocation of MONDRAGONs authority to operate a
casino was not an exercise of quasi-judicial powers then it follows that the case PAGCOR maintains that the license it issued to the FDC was based on Sec. 5 of EO
was properly filed before the Regional Trial Court. Hence, as the Regional Trial 80 and that its charter PD 1869 should be read together with said EO. When Sec. 5
Court had jurisdiction to take cognizance of the case, petitioners contention that the was nullified in Coconut Oil Refiners Association, Inc. v. Torres,[13] the MOA it entered
temporary restraining order and the preliminary injunction by the trial court are void into with FDC was consequently voided.
must fail.[8]
Such postulation must fail.
Moreover, it is settled that the normal rule is to strictly follow the hierarchy of courts,
thus: Sec. 5 of EO 80 provides:

The Supreme Court is a court of last resort, and must so remain if it is to satisfactorily SECTION 5. Investments Climate in the CSEZ.Pursuant to Section 5(m) and Section
perform the functions assigned to it by the fundamental charter and immemorial 15 of RA 7227, the BCDA shall promulgate all necessary policies, rules and
tradition. A direct invocation of this Courts original jurisdiction to issue said writs regulations governing the CSEZ, including investment incentives, in consultation with
should be allowed only when there are special and important reasons therefor, clearly the local government units and pertinent government departments for implementation
and specifically set out in the petition. This is established policya policy that is by the CDC.
necessary to prevent inordinate demands upon the Courts time and attention which
Among others, the CSEZ shall have all the applicable incentives in the Subic Special
Economic and Free Port Zone under RA 7227 and those applicable incentives
granted in the Export Processing Zones, the Omnibus Investments Code of 1987, the proved, regulating and centralizing gambling operations in one corporate entity the
Foreign Investments Act of 1991 and new investments laws which may hereinafter be PAGCOR, was beneficial not just to the Government but to society in general. It is a
enacted. reliable source of much needed revenue for the cash strapped Government. It
provided funds for social impact projects and subjected gambling to close scrutiny,
On the other hand, we quote Sec. 13 of RA 7227 in relation to Sec. 5 of EO 80: regulation, supervision and control of the Government (4th Whereas Clause, PD
Sec. 13. The Subic Bay Metropolitan Authority.
Lastly, only PD 1869, particularly Secs. 8 and 9 and not any other law, requires
(a) Creation of the Subic Bay Metropolitan Authority.A body corporate to be known as registration and affiliation of all persons primarily engaged in gambling with
the Subic Bay Metropolitan Authority is hereby created as an operating and PAGCOR.We quote Secs. 8 and 9:
implementing arm of the Conversion Authority.

Section 8. Registration.All persons primarily engaged in gambling, together with their

(b) Powers and functions of the Subic Bay Metropolitan Authority.The Subic Bay allied business, with contract or franchise from the Corporation, shall register and
Metropolitan Authority, otherwise known as the Subic Authority, shall have the affiliate their businesses with the Corporation. The Corporation shall issue the
following powers and function: corresponding certificates of affiliation upon compliance by the registering entity with
the promulgated rules and regulations.
Section 9. Regulatory Power.The Corporation shall maintain a Registry of the
7) To operate directly or indirectly or license tourism related activities subject to
affiliated entities, and shall exercise all the powers, authority and the responsibilities
priorities and standards set by the Subic Authority including games and amusements,
vested in the Securities and Exchange Commission over such affiliated entities
except horse racing, dog racing and casino gambling which shall continue to be
mentioned under the preceding section, including but not limited to amendments of
licensed by the Philippine Amusement and Gaming Corporation
Articles of Incorporation and By-Laws, changes in corporate term, structure,
(PAGCOR) upon recommendation of the Conversion Authority; to maintain and
capitalization and other matters concerning the operation of the affiliating entities, the
preserve the forested areas as a national park.
provisions of the Corporation Code of the Philippines to the contrary notwithstanding,
except only with respect to original incorporation.

A reading of the aforequoted provisions does not point to any authority granted to In the light of the foregoing provisions, it is unequivocal that PAGCOR draws its
PAGCOR to license casinos within Subic, Clark, or any other economic zone. As a authority and power to operate and regulate casinos from PD 1869, and neither from
matter of fact, Sec. 13 of RA 7227 simply shows that SBMA has no power to license Sec. 5 of EO 80 nor from RA 7227. Hence, since PD 1869 remains unaffected by the
or operate casinos. Rather, said casinos shall continue to be licensed by unconstitutionality of Sec. 5 of EO 80, then PAGCOR has no legal basis for nullifying
PAGCOR.Hence, the source of PAGCORs authority lies in its basic charter, PD 1869, or recalling the MOA with FDC and replacing it with its new Standard Authority to
as amended, and neither in RA 7227 nor its extension, EO 80, for the latter merely Operate (SAO). There is no infirmity in the MOA, as it was validly entered by
recognizes PAGCORs power to license casinos. Indeed, PD 1869 empowers PAGCOR under PD 1869 and remains valid until legally terminated in accordance
PAGCOR to regulate and control all games of chance within the Philippines, and with the MOA.
clearly, RA 7227 or EO 80 cannot be the source of its powers, but its basic charter,
PD 1869.
The reliance of PAGCOR on Coconut Oil Refiners Association, Inc.[15] to buttress its
Basco v. PAGCOR[14] points to PD 1869 as the source of authority for PAGCOR to
position that the MOA with FDC can be validly supplanted with the 10-year SAO is
regulate and centralize all games of chance authorized by existing franchise or law,
clearly misplaced. That case cannot be a precedent to the instant case, as it dealt
solely with the void grant of tax and duty-free incentives inside CSEZ. The Court ruled
P.D. 1869 was enacted pursuant to the policy of the government to regulate and in Coconut Oil Refiners Association, Inc. that the tax incentives within the CSEZ were
centralize thru an appropriate institution all games of chance authorized by existing an invalid exercise of quasi-legislative powers, thus:
franchise or permitted by law (1st Whereas Clause, PD 1869). As was subsequently
In the present case, while Section 12 of Republic Act No. 7227 expressly provides for c. RNDC has become bankrupt;
the grant of incentives to the SSEZ, it fails to make any similar grant in favor of other
economic zones, including the CSEZ. Tax and duty-free incentives being in the d. After the RNDC casino shall have formally commenced gaming and amusement
nature of tax exemptions, the basis thereof should be categorically and unmistakably operations within the CSEZ, RNDCs continuous cumulative non-operation of the
expressed from the language of the statute. Consequently, in the absence of any casino for a period of one (1) month except upon lawful order of the Court or force
express grant of tax and duty-free privileges to the CSEZ in Republic Act No. majeure, provided that upon the cessation of such cause or causes, RNDC shall
7227, there would be no legal basis to uphold the questioned portions of two immediately continue its casino operations, otherwise, such continuous non-operation
issuances: Section 5 of Executive Order No. 80 and Section 4 of BCDA Board for the period provided above shall be sufficient ground for revocation or suspension;
Resolution No. 93-05-034, which both pertain to the CSEZ. (Emphasis supplied.)

Lastly, the Court has to point out that the issuance of the 10-year SAO by PAGCOR
in lieu of the MOA with FDC is a breach of the MOA. The MOA in question was validly e. Failure of RNDC to comply with and observe any pertinent law, rule, regulation
entered into by PAGCOR and FDC on December 23, 1999. It embodied the license and/or ordinance promulgated by a competent authority, including PAGCOR, relative
and authority to operate a casino, the nature and extent of PAGCORs regulatory to the operation of the casino;
powers over the casino, and the rights and obligations of FDC. Thus, the MOA is a
f. Such other situations analogous to the above.[17]
valid contract with all the essential elements required under the Civil Code. The
parties are then bound by the stipulations of the MOA subject to the regulatory Central to the present controversy is the term or period of effectivity of the MOA, as
powers of PAGCOR. Well-settled is the rule that a contract voluntarily entered into by provided under the definition of terms in Title I and Title II, No. 4, which, for clarity, we
the parties is the law between them and all issues or controversies shall be resolved reiterate in full:
mainly by the provisions thereof.[16]
Period refers to the period of time co-terminus with that of the franchise granted
On the revocation, termination, or suspension of the license or grant of authority to to PAGCOR in accordance with Section 10 of Presidential Decree No. 1869
operate a casino, PAGCOR agreed to the following stipulations on the revocation or including any extension thereof;[18]
termination of the MOA, viz:

1. This grant of authority may be revoked or suspended at any time at the sole option
of PAGCOR by giving written notice to RNDC [FDC] of such revocation or suspension 4. Non-exclusivity. PAGCOR and RNDC agree that the license granted to RNDC to
stating therein the reason(s) for such revocation or suspension, on any of engage in gaming and amusement operations within the CSEZ shall be non-exclusive
the following grounds: and co-terminus with the Charter of PAGCOR, or any extension thereof, and
shall be for the period hereinabove defined.[19] (Emphasis supplied.)
a. RNDC makes any default which PAGCOR considers material in the due and
punctual performance or observance of any of the obligations or undertakings As parties to the MOA, FDC and PAGCOR bound themselves to all its
contained in the Agreement, and RNDC shall fail to remedy such default, within provisions. After all, the terms of a contract have the force of law between the parties,
fifteen (15) working days after notice specifying the default. Should the default consist and courts have no choice but to enforce such contract so long as they are not
in the non-remittance of the consideration as hereinabove specified, PAGCOR shall, contrary to law, morals, good customs, or public policy. [20] A stipulation for the term or
in addition have the right to proceed against the Surety Bond, unless RNDC was able period for the effectivity of the MOA to be co-terminus with term of the franchise
to cure the default so specified by PAGCOR within seventy-two (72) hours after of PAGCOR including any extension is not contrary to law, morals, good customs,
notice specifying the default. RNDC shall be liable for interest at the prevailing or public policy.
commercial rates on all or portion of the amounts due.
It is beyond doubt that PAGCOR did not revoke or terminate the MOA based on any
b. There shall be any failure on the part of RNDC which PAGCOR considers material of the grounds enumerated in No. 1 of Title VI, nor did it terminate it based on the
to comply with any provision of the Agreement and RNDC fails to remedy the same period of effectivity of the MOA specified in Title I and Title II, No. 4 of the
within fifteen (15) working days after notice specifying the default; MOA. Without explicitly terminating the MOA, PAGCOR simply informed FDC on July
18, 2008 that it is giving the latter an extension of the MOA on a month-to-month
basis in gross contravention of the MOA. Worse, PAGCOR informed FDC only on dated October 24, 1986. 3 The Decision set aside an Order, dated April 16, 1985, of
October 6, 2008 that the MOA is deemed expired on July 11, 2008 without an the Regional Trial Court, 4 as well as its Order, dated August 21, 1985. The
automatic renewal and is replaced with a 10-year SAO. Clearly it is in breach of the Resolution, dated September 24, 1987 disposed of, and granted, the private
MOAs stipulated effectivity period which is co-terminus with that of the franchise respondent Karamfil Import-Export Co., Inc.'s motion for reconsideration of the
granted to PAGCOR in accordance with Sec. 10 of PD 1869 including any October 24, 1986 Decision; the Resolution dated May 20, 1988, in turn, denied the
extension. Hence, PAGCORs disregard of the MOA is without legal basis and must petitioner's own motion for reconsideration.
be nullified. PAGCOR has to respect the December 23, 1999 MOA it entered into with
FDC, especially considering the huge investment poured into the project by the latter The facts are not in controversy. We quote:
in reliance and pursuant to the MOA in question.
On March 12, 1985, State Prosecutor Jose B. Rosales, who is assigned with the
WHEREFORE, the petition is hereby DENIED for lack of merit. The Decision dated Presidential Anti-Dollar Salting Task Force hereinafter referred to as PADS Task
May 19, 2009 of the CA in CA-G.R. SP No. 107247 affirming the Orders dated Force for purposes of convenience, issued search warrants Nos. 156, 157, 158, 159,
November 18, 2008 and December 4, 2008 of the RTC, Branch 7 in Manila is 160 and 161 against the petitioners Karamfil Import-Export Co., Inc., P & B
hereby AFFIRMED. The writ of injunction issued on February 25, 2009 by the trial Enterprises Co., Inc., Philippine Veterans Corporation, Philippine Veterans
court pursuant to the January 30, 2009 Order in Civil Case No. 08-120338 is hereby Development Corporation, Philippine Construction Development Corporation,
made PERMANENT. PAGCOR is ordered to honor and comply with the stipulations Philippine Lauan Industries Corporation, Inter-trade Development (Alvin Aquino),
of the MOA dated December 23, 1999, as amended, that it executed with FDC. Amelili U. Malaquiok Enterprises and Jaime P. Lucman Enterprises.

SO ORDERED. The application for the issuance of said search warrants was filed by Atty. Napoleon
Gatmaytan of the Bureau of Customs who is a deputized member of the PADS Task
Force. Attached to the said application is the affidavit of Josefin M. Castro who is an
operative and investigator of the PADS Task Force. Said Josefin M. Castro is likewise
Republic of the Philippines the sole deponent in the purported deposition to support the application for the
SUPREME COURT issuance of the six (6) search warrants involved in this case. The application filed by
Manila Atty. Gatmaytan, the affidavit and deposition of Josefin M. Castro are all dated March
12, 1985. 5
Shortly thereafter, the private respondent (the petitioner below) went to the Regional
G.R. No. 83578 March 16, 1989 Trial Court on a petition to enjoin the implementation of the search warrants in
question. 6 On March 13, 1985, the trial court issued a temporary restraining order
[effective "for a period of five (5) days notice " 7 ] and set the case for hearing on
March 18, 1985.
JR.,Presiding Judge, REGIONAL TRIAL COURT, Branch 147: NCR (MAKATI), In disposing of the petition, the said court found the material issues to be:
and KARAMFIL IMPORT-EXPORT CO., INC., respondents.
1) Competency of this Court to act on petition filed by the petitioners;
K. V. Faylona & Associates for respondents.
2) Validity of the search warrants issued by respondent State Prosecutor;

3) Whether or not the petition has become moot and academic because all the search
SARMIENTO, J.: warrants sought to be quashed had already been implemented and executed. 8

The petitioner, the Presidential Anti-Dollar Salting Task Force, the President's arm On April 16, 1985, the lower court issued the first of its challenged Orders, and held:
assigned to investigate and prosecute so-called "dollar salting" activities in the
country (per Presidential Decree No. 1936 as amended by Presidential Decree No. WHEREFORE, in view of all the foregoing, the Court hereby declares Search Warrant
2002), asks the Court to hold as null and void two Resolutions of the Court of Nos. 156, 157, 158, 159, 160, and 161 to be null and void. Accordingly, the
Appeals, dated September 24, 1987 1 and May 20, 1988, 2 reversing its Decision, respondents are hereby ordered to return and surrender immediately all the personal
properties and documents seized by them from the petitioners by virtue of the c) In not resolving directly the other important issues raised by the petitioner in its
aforementioned search warrants. Petition in CA-G.R. No. 08622-SP despite the fact that petitioner has demonstrated
sufficiently and convincingly that respondent RTC, in issuing the questioned Orders in
SO ORDERED. 9 Special Proceeding No. M-624 (see Annexes "C" and 'D"), committed grave abuse of
discretion and/or acted in excess of jurisdiction:
On August 21, 1985, the trial court denied reconsideration.
1. In ruling that (a) the description of the things to be seized as stated in the contested
On April 4, 1986, the Presidential Anti-Dollar Salting Task Force went to the search warrant were too general which allegedly render the search warrants null and
respondent Court of Appeals to contest, on certiorari, the twin Order(s) of the lower void; (b) the applications for the contested search warrants actually charged two
court. offenses in contravention of the 2nd paragraph, Section 3, Rule 126 of the Rules of
Court; and (c) this case has not become moot and academic, even if the contested
In ruling initially for the Task Force, the Appellate Court held:
search warrants had already been fully implemented with positive results; and
Herein petitioner is a special quasi-judicial body with express powers enumerated
2. In ruling that the petitioner PADS Task Force has not been granted under PD 1936
under PD 1936 to prosecute foreign exchange violations defined and punished under
'judicial or quasi-judicial jurisdiction. 12
P.D. No. 1883.
We find, upon the foregoing facts, that the essential questions that confront us are- (i)
The petitioner, in exercising its quasi-judicial powers, ranks with the Regional Trial
is the Presidential Anti-Dollar Salting Task Force a quasi-judicial body, and one co-
Courts, and the latter in the case at bar had no jurisdiction to declare the search
equal in rank and standing with the Regional Trial Court, and accordingly, beyond the
warrants in question null and void.
latter's jurisdiction; and (ii) may the said presidential body be said to be "such other
Besides as correctly pointed out by the Assistant Solicitor General the decision of the responsible officer as may be authorized by law" to issue search warrants under the
1973 Constitution questions we take up seriatim.**
Presidential Anti-Dollar Salting Task Force is appealable to the Office of the
In submitting that it is a quasi-judicial entity, the petitioner states that it is endowed
On November 12, 1986, Karamfil Import-Export Co., Inc. sought a reconsideration, on with "express powers and functions under PD No. 1936, to prosecute foreign
exchange violations as defined and punished under PD No. 1883." 13 "By the very
the question primarily of whether or not the Presidential Anti-Dollar Salting Task
Force is "such other responsible officer' countenanced by the 1973 Constitution to nature of its express powers as conferred by the laws," so it is contended, "which are
issue warrants of search and seizure. decidedly quasi-judicial or discretionary function, such as to conduct preliminary
investigation on the charges of foreign exchange violations, issue search warrants or
As we have indicated, the Court of Appeals, on Karamfil's motion, reversed itself and warrants of arrest, hold departure orders, among others, and depending upon the
issued its Resolution, dated September 1987, and subsequently, its Resolution, dated evidence presented, to dismiss the charges or to file the corresponding information in
May 20, 1988, denying the petitioner's motion for reconsideration. court of Executive Order No. 934, PD No. 1936 and its Implementing Rules and
Regulations effective August 26, 1984), petitioner exercises quasi-judicial power or
In its petition to this Court, the petitioner alleges that in so issuing the Resolution(s) the power of adjudication ." 14
above-mentioned, the respondent Court of Appeals "committed grave abuse of
discretion and/or acted in excess of its appellate jurisdiction," 11 specifically: The Court of Appeals, in its Resolution now assailed, 15 was of the opinion that "[t]he
grant of quasi-judicial powers to petitioner did not diminish the regular courts' judicial
a) In deviating from the settled policy and rulings of the Supreme Court that no power of interpretation. The right to interpret a law and, if necessary to declare one
Regional Trial Courts may countermand or restrain the enforcement of lawful writs or unconstitutional, exclusively pertains to the judiciary. In assuming this function, courts
decrees issued by a quasi-judicial body of equal and coordinate rank, like the PADS do not proceed on the theory that the judiciary is superior to the two other coordinate
Task Force; branches of the government, but solely on the theory that they are required to declare
the law in every case which come before them." 16
b) For resorting to judicial legislation to arrive at its erroneous basis for reconsidering
its previous Decision dated October 24, 1986 (see Annex "I") and thus promulgated This Court finds the Appellate Court to be in error, since what the petitioner puts to
the questioned Resolutions (Annexes "A" and "B"), which violated the constitutional question is the Regional Trial Court's act of assuming jurisdiction over the private
doctrine on separation of powers; respondent's petition below and its subsequent countermand of the Presidential Anti-
Dollar Salting Task Force's orders of search and seizure, for the reason that the No. 5434 insofar as the same is not inconsistent with the provisions of B.P. Blg.
presidential body, as an entity (allegedly) coordinate and co-equal with the Regional 129. 23
Trial Court, was (is) not vested with such a jurisdiction. An examination of the
Presidential Anti-Dollar Salting Task Force's petition shows indeed its recognition of The pertinent provisions of Republic Act No. 5434 are as follows:
judicial review (of the acts of Government) as a basic privilege of the courts. Its
objection, precisely, is whether it is the Regional Trial Court, or the superior courts, SECTION 1. Appeals from specified agencies.— Any provision of existing law or Rule
that may undertake such a review. of Court to the contrary notwithstanding, parties aggrieved by a final ruling, award,
order, decision, or judgment of the Court of Agrarian Relations; the Secretary of Labor
Under the Judiciary Reorganization Act of 1980, 17 the Court of Appeals exercises: under Section 7 of Republic Act Numbered Six hundred and two, also known as the
"Minimum Wage Law"; the Department of Labor under Section 23 of Republic Act
(3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, Numbered Eight hundred seventy-five, also known as the "Industrial Peace Act"; the
orders or awards of Regional Trial Court and quasi-judicial agencies, Land Registration Commission; the Securities and Exchange Commission; the Social
instrumentalities, boards or commissions, except those falling within the appellate Security Commission; the Civil Aeronautics Board; the Patent Office and the
jurisdiction of the Supreme Court in accordance with the Constitution, the provisions Agricultural Inventions Board, may appeal therefrom to the Court of Appeals, within
of this Act, and of subparagraph (1) of the third paragraph and subparagraph (4) of the period and in the manner herein provided, whether the appeal involves questions
the fourth paragraph of Section 17 of the Judiciary Act of 1948. 18 of fact, mixed questions of fact and law, or questions of law, or all three kinds of
questions. From final judgments or decisions of the Court of Appeals, the aggrieved
xxx xxx xxx party may appeal by certiorari to the Supreme Court as provided in Rule 45 of the
Rules of Court. 24
Under the present Constitution, with respect to its provisions on Constitutional
Commissions, it is provided, in part that: Because of subsequent amendments, including the abolition of various special
courts, 25 jurisdiction over quasi-judicial bodies has to be, consequently, determined
... Unless otherwise provided by this Constitution or by law, any decision, order, or by the corresponding amendatory statutes. Under the Labor Code, decisions and
ruling of each Commission may be brought to the Supreme Court on certiorari by the awards of the National Labor Relations Commission are final and executory, but,
aggrieved party within thirty days from receipt of a copy thereof. 19 nevertheless, 'reviewable by this Court through a petition for certiorari and not by way
of appeal." 26
On the other hand, Regional Trial Courts have exclusive original jurisdiction:
Under the Property Registration Decree, decisions of the Commission of Land
(6) In all cases not within the exclusive jurisdiction of any court, tribunal, person or
Registration, en consults, are appealable to the Court of Appeals. 27
body exercising judicial or quasi-judicial functions. 20
The decisions of the Securities and Exchange Commission are likewise appealable to
xxx xxx xxx
the Appellate Court, 28 and so are decisions of the Social Security Commission.29
As a rule, where legislation provides for an appeal from decisions of certain
... The Supreme Court may designate certain branches of the Regional Trial Court to administrative bodies to the Court of Appeals, it means that such bodies are co-equal
handle exclusively criminal cases, juvenile and domestic relations cases, agrarian with the Regional Trial Courts, in terms of rank and stature, and logically, beyond the
case, urban land reform cases which do not fall under the jurisdiction of quasi- judicial control of the latter.
bodies and agencies and/or such other special cases as the Supreme Court may
As we have observed, the question is whether or not the Presidential Anti-Dollar
determine in the interest of a speedy and efficient administration of justice. 21
Salting Task Force is, in the first place, a quasi-judicial body, and one whose
xxx xxx xxx decisions may not be challenged before the regular courts, other than the higher
tribunals the Court of Appeals and this Court.
Under our Resolution dated January 11, 1983: 22
A quasi-judicial body has been defined as "an organ of government other than a court
... The appeals to the Intermediate Appellate Court [now, Court of Appeals] from and other than a legislature, which affects the rights of private parties through either
quasi-judicial bodies shall continue to be governed by the provisions of Republic Act
adjudication or rule making." 30 The most common types of such bodies have been SECTION 1. Powers of the Presidential Anti-Dollar Salting Task Force.-The
listed as follows: Presidential Anti-Dollar Salting Task Force, hereinafter referred to as Task Force,
shall have the following powers and authority:
(1) Agencies created to function in situations wherein the government is offering
some gratuity, grant, or special privilege, like the defunct Philippine Veterans Board, a) Motu proprio or upon complaint, to investigate and prosecute all dollar salting
Board on Pensions for Veterans, and NARRA, and Philippine Veterans activities, including the overvaluation of imports and the undervaluation of exports;
b) To administer oaths, summon persons or issue subpoenas requiring the
(2) Agencies set up to function in situations wherein the government is seeking to attendance and testimony of witnesses or the production of such books, papers,
carry on certain government functions, like the Bureau of Immigration, the Bureau of contracts, records, statements of accounts, agreements, and other as may be
Internal Revenue, the Board of Special Inquiry and Board of Commissioners, the Civil necessary in the conduct of investigation;
Service Commission, the Central Bank of the Philippines.
c) To appoint or designate experts, consultants, state prosecutors or fiscals,
(3) Agencies set up to function in situations wherein the government is performing investigators and hearing officers to assist the Task Force in the discharge of its
some business service for the public, like the Bureau of Posts, the Postal Savings duties and responsibilities; gather data, information or documents; conduct hearings,
Bank, Metropolitan Waterworks & Sewerage Authority, Philippine National Railways, receive evidence, both oral and documentary, in all cases involving violation of
the Civil Aeronautics Administration. foreign exchange laws or regulations; and submit reports containing findings and
recommendations for consideration of appropriate authorities;
(4) Agencies set up to function in situations wherein the government is seeking to
regulate business affected with public interest, like the Fiber Inspections Board, the d) To punish direct and indirect contempts with the appropriate penalties therefor
Philippine Patent Office, Office of the Insurance Commissioner. under Rule 71 of the Rules of Court; and to adopt such measures and take such
actions as may be necessary to implement this Decree.
(5) Agencies set up to function in situations wherein the government is seeking under
the police power to regulate private business and individuals, like the Securities & xxx xxx xxx
Exchange Commission, Board of Food Inspectors, the Board of Review for Moving
Pictures, and the Professional Regulation Commission. f. After due investigation but prior to the filing of the appropriate criminal charges with
the fiscal's office or the courts as the case may be, to impose a fine and/or
(6) Agencies set up to function in situations wherein the government is seeking to administrative sanctions as the circumstances warrant, upon any person found
adjust individual controversies because of some strong social policy involved, such as committing or to have committed acts constituting blackmarketing or salting abroad of
the National Labor Relations Commission, the Court of Agrarian Relations, the foreign exchange, provided said person voluntarily admits the facts and
Regional Offices of the Ministry of Labor, the Social Security Commission, Bureau of circumstances constituting the offense and presents proof that the foreign exchange
Labor Standards, Women and Minors Bureau. 31 retained abroad has already been brought into the country.

As may be seen, it is the basic function of these bodies to adjudicate claims and/or to Thereafter, no further civil or criminal action may be instituted against said person
determine rights, and unless its decision are seasonably appealed to the proper before any other judicial regulatory or administrative body for violation of Presidential
reviewing authorities, the same attain finality and become executory. A perusal of the Decree No. 1883.
Presidential Anti-Dollar Salting Task Force's organic act, Presidential Decree No.
1936, as amended by Presidential Decree No. 2002, convinces the Court that the The amount of the fine shall be determined by the Chairman of the Presidential Anti-
Task Force was not meant to exercise quasi-judicial functions, that is, to try and Dollar Salting Task Force and paid in Pesos taking into consideration the amount of
decide claims and execute its judgments. As the President's arm called upon to foreign exchange retained abroad, the exchange rate differentials, uncollected taxes
combat the vice of "dollar salting" or the blackmarketing and salting of foreign and duties thereon, undeclared profits, interest rates and such other relevant factors.
exchange, 32 it is tasked alone by the Decree to handle the prosecution of such
activities, but nothing more. We quote: The fine shall be paid to the Task Force which shall retain Twenty percent (20 %)
thereof. The informer, if any, shall be entitled to Twenty percent (20 %) of the fine.
Should there be no informer, the Task Force shall be entitle to retain Forty percent
(40 %) of the fine and the balance shall accrue to the general funds of the National
government. The amount of the fine to be retained by the Task Force shall form part controversial. In Lim v. Ponce de Leon, 36 a 1975 decision, this Court ruled that a
of its Confidential Fund and be utilized for the operations of the Task Force . 33 fiscal has no authority to issue search warrants, but held in the same vein that, by
virtue of the responsible officer" clause of the 1973 Bill of Rights, "any lawful officer
The Court sees nothing in the aforequoted provisions (except with respect to the Task authorized by law can issue a search warrant or warrant of arrest.37 Authorities,
Force's powers to issue search warrants) that will reveal a legislative intendment to however, have continued to express reservations whether or not fiscals may, by
confer it with quasi-judicial responsibilities relative to offenses punished by statute, be given such a power. 38
Presidential Decree No. 1883. Its undertaking, as we said, is simply, to determine
whether or not probable cause exists to warrant the filing of charges with the proper Less than a year later, we promulgated Collector of Customs v. Villaluz, 39 in which
court, meaning to say, to conduct an inquiry preliminary to a judicial recourse, and to we categorically averred: Until now only the judge can issue the warrant of
recommend action "of appropriate authorities". It is not unlike a fiscal's office that arrest." 40 "No law or presidential decree has been enacted or promulgated vesting
conducts a preliminary investigation to determine whether or not prima facie evidence the same authority in a particular responsible officer ." 41
exists to justify haling the respondent to court, and yet, while it makes that
determination, it cannot be said to be acting as a quasi-court. For it is the courts, Apparently, Villaluz had settled the debate, but the same question persisted following
ultimately, that pass judgment on the accused, not the fiscal. this Courts subsequent rulings upholding the President's alleged emergency arrest
powers .42 [Mr. Justice Hugo Gutierrez would hold, however, that a Presidential
It is not unlike the Presidential Commission on Good Government either, the Commitment Order (PCO) is (was) not a species of "arrest" in its technical sense, and
executive body appointed to investigate and prosecute cases involving "ill-gotten that the (deposed) Chief Executive, in issuing one, does not do so in his capacity as a
wealth". It had been vested with enormous powers, like the issuance of writs of "responsible officer" under the 1973 Charter, but rather, as Commander-in-Chief of
sequestration, freeze orders, and similar processes, but that did not, on account the Armed Forces in times of emergency, or in order to carry out the deportation of
thereof alone, make it a quasi-judicial entity as defined by recognized authorities. It undesirable aliens.43 In the distinguished Justice's opinion then, these are acts that
cannot pronounce judgement of the accused's culpability, the jurisdiction to do which can be done without need of judicial intervention because they are not, precisely,
is exclusive upon the Sandiganbayan. 34 judicial but Presidential actions.]

If the Presidential Anti-Dollar Salting Task Force is not, hence, a quasi-judicial body, it In Ponsica v. Ignalaga,44 however, we held that the mayor has been made a
cannot be said to be co-equal or coordinate with the Regional Trial Court. There is "responsible officer' by the Local Government Code, 45 but had ceased to be one
nothing in its enabling statutes that would demonstrate its standing at par with the with the approval of the 1987 Constitution according judges sole authority to issue
said court. arrest and search warrants. But in the same breath, we did not rule the grant under
the Code unconstitutional based on the provisions of the former Constitution. We
In that respect, we do not find error in the respondent Court of Appeal's resolution were agreed, though, that the "responsible officer" referred to by the fundamental law
sustaining the assumption of jurisdiction by the court a quo. should be one capable of approximating "the cold neutrality of an impartial judge." 46

It will not do to say that the fact that the Presidential Task Force has been In striking down Presidential Decree No. 1936 the respondent Court relied on
empowered to issue warrants of arrest, search, and seizure, makes it, ergo, a "semi- American jurisprudence, notably, Katz v. United States, 47 Johnson v. United
court". Precisely, it is the objection interposed by the private respondent, whether or States, 48 and Coolidge v. New Hampshire 49 in which the American Supreme Court
not it can under the 1973 Charter, issue such kinds of processes. ruled that prosecutors (like the petitioner) cannot be given such powers because of
their incapacity for a "detached scrutiny" 50 of the cases before them. We affirm the
It must be observed that under the present Constitution, the powers of arrest and Appellate Court.
search are exclusive upon judges. 35 To that extent, the case has become moot and
academic. Nevertheless, since the question has been specifically put to the Court, we We agree that the Presidential Anti-Dollar Salting Task Force exercises, or was
find it unavoidable to resolve it as the final arbiter of legal controversies, pursuant to meant to exercise, prosecutorial powers, and on that ground, it cannot be said to be a
the provisions of the 1973 Constitution during whose regime the case was neutral and detached "judge" to determine the existence of probable cause for
commenced. purposes of arrest or search. Unlike a magistrate, a prosecutor is naturally interested
in the success of his case. Although his office "is to see that justice is done and not
Since the 1973 Constitution took force and effect and until it was so unceremoniously necessarily to secure the conviction of the person accused," 51 he stands, invariably,
discarded in 1986, its provisions conferring the power to issue arrest and search as the accused's adversary and his accuser. To permit him to issue search warrants
warrants upon an officer, other than a judge, by fiat of legislation have been at best and indeed, warrants of arrest, is to make him both judge and jury in his own right,
when he is neither. That makes, to our mind and to that extent, Presidential Decree TOPIC: AN EXECUTIVE AGENCY IS NOT A COURT.
No. 1936 as amended by Presidential Decree No. 2002, unconstitutional.
FACTS: Dominican Hills, formerly registered as Diplomat Hills in Baguio City, was
It is our ruling, thus, that when the 1973 Constitution spoke of "responsible officer" to mortgaged to the United Coconut Planters Bank (UCPB). It was eventually
whom the authority to issue arrest and search warrants may be delegated by foreclosed and acquired later on by the said bank as the highest bidder. On 11 April
legislation, it did not furnish the legislator with the license to give that authority to 1983, through its President Eduardo Cojuangco Jr., the subject property was donated
whomsoever it pleased. It is to be noted that the Charter itself makes the qualification to the Republic of the Philippines. The deed of donation stipulated that Dominican
that the officer himself must be "responsible". We are not saying, of course, that the Hills would be utilized for the "priority programs, projects, activities in human
Presidential Anti-Dollar Salting Task Force (or any similar prosecutor) is or has been settlements and economic development and governmental purposes" of the Ministry
irresponsible in discharging its duty. Rather, we take "responsibility", as used by the of Human Settlements.
Constitution, to mean not only skill and competence but more significantly, neutrality
and independence comparable to the impartiality presumed of a judicial officer. A On December 12, 1986, then President Corazon Aquino issued EO 85 abolishing the
prosecutor can in no manner be said to be possessed of the latter qualities. Ministry of Human Settlements. All agencies under the its supervision as well as all its
assets, programs and projects, were transferred to the Presidential Management Staff
According to the Court of Appeals, the implied exclusion of prosecutors under the (PMS).
1973 Constitution was founded on the requirements of due process, notably, the
assurance to the respondent of an unbiased inquiry of the charges against him prior On 18 October 1988, United (Dominican Hills) submitted its application before the
to the arrest of his person or seizure of his property. We add that the exclusion is also PMS to acquire a portion of the Dominican Hills property. In a MOA, PMS and United
demanded by the principle of separation of powers on which our republican structure agreed that the latter may purchase a portion of the said property from HOME
rests. Prosecutors exercise essentially an executive function (the petitioner itself is INSURANCE GUARANTY CORPORATIO, acting as originator, on a selling price of
chaired by the Minister, now Secretary, of Trade and Industry), since under the P75.00 per square meter.
Constitution, the President has pledged to execute the laws. 52 As such, they cannot
be made to issue judicial processes without unlawfully impinging the prerogative of Thus, on June 12, 1991, HIGC sold 2.48 hectares of the property to UNITED. The
the courts. deed of conditional sale provided that ten (10) per cent of the purchase price would
be paid upon signing, with the balance to be amortized within one year from its date
At any rate, Ponsica v. Ignalaga should foreclose all questions on the matter, of execution. After UNITED made its final payment on January 31, 1992, HIGC
although the Court hopes that this disposition has clarified a controversy that had executed a Deed of Absolute Sale dated July 1, 1992.
generated often bitter debates and bickerings.
Petitioner alleges that sometime in 1993, private respondents entered the Dominican
The Court joins the Government in its campaign against the scourge of "dollar- Hills property allocated to UNITED and constructed houses thereon. Petitioner was
salting", a pernicious practice that has substantially drained the nation's coffers and able to secure a demolition order from the city mayor. Unable to stop the razing of
has seriously threatened its economy. We recognize the menace it has posed (and their houses, private respondents, under the name DOMINICAN HILL BAGUIO
continues to pose) unto the very stability of the country, the urgency for tough RESIDENTS HOMELESS ASSOCIATION (ASSOCIATION, for brevity) filed an
measures designed to contain if not eradicate it, and foremost, the need for actionfor injunction before RTC Baguio City. Private respondents were able to obtain
cooperation from the citizenry in an all-out campaign. But while we support the State's a temporary restraining order but their prayer for a writ of preliminary injunction was
efforts, we do so not at the expense of fundamental rights and liberties and later denied.
constitutional safeguards against arbitrary and unreasonable acts of Government. If in
the event that as a result of this ruling, we prove to be an "obstacle" to the vital The ASSOCIATION filed a separate civil case for damages, injunction and annulment
endeavour of stamping out the blackmarketing of valuable foreign exchange, we do of the said MOA. It was later on dismissed upon motion of United. The said Order of
not relish it and certainly, do not mean it. The Constitution simply does not leave us dismissal is currently on appeal with the Court of Appeals.
much choice.
The demolition order was subsequently implemented by the Office of the City Mayor
WHEREFORE, the petition is DISMISSED. No costs. SO ORDERED. and the City Engineer's Office of Baguio City. However, petitioner avers that private
respondents returned and reconstructed the demolished structures.
To forestall the re-implementation of the demolition order, private respondents filed a
petition for annulment of contracts with prayer for a temporary restraining order before
the Commission on the Settlement of Land Problems (COSLAP) against petitioner,
HIGC, PMS, the City Engineer's Office, the City Mayor, as well as the Register of
Deeds of Baguio City. On the very same day, public respondent COSLAP issued the
contested order requiring the parties to maintain the status quo. Without filing a
motion for reconsideration from the aforesaid status quo order, petitioner filed the
instant petition questioning the jurisdiction of the COSLAP.

ISSUE: W/O COSLAP is empowered to hear and try a petition for annulment of
contracts with prayer for a TRO and to issue a status quo order and conduct a
hearing thereof?

RULING: COSLAP is not justified in assuming jurisdiction over the controversy. It

discharges quasi-judicial functions:

"Quasi-judicial function" is a term which applies to the actions, discretion, etc. of

public administrative officers or bodies, who are required to investigate facts, or
ascertain the existence of facts, hold hearings, and draw conclusions from them, as a
basis for their official action and to exercise discretion of a judicial nature.

However, it does not depart from its basic nature as an administrative agency, albeit
one that exercises quasi-judicial functions. Still, administrative agencies are not
considered courts; they are neither part of the judicial system nor are they deemed
judicial tribunals. The doctrine of separation of powers observed in our system of
government reposes the three (3) great powers into its three (3) branches — the
legislative, the executive, and the judiciary — each department being co-equal and
coordinate, and supreme in its own sphere. Accordingly, the executive department
may not, by its own fiat, impose the judgment of one of its own agencies, upon the
judiciary. Indeed, under the expanded jurisdiction of the Supreme Court, it is
empowered "to determine whether or not there has been grave abuse of discretion
amounting to lack of or excess of jurisdiction on the part of any branch or
instrumentality of the Government."