1

G.R. No. L-14837 June 30, 1961

JOSE COROMINAS, JR. and COROMINAS & CO.,
INC., petitioners,
vs.
LABOR STANDARDS COMMISSION; RUBEN SANTOS in his
capacity as Commissioner of the Labor Standards
Commission; REGIONAL OFFICE No. 3 UNDER
DEPARTMENT OF LABOR; SHERIFF OF THE CITY OF
MANILA and ARTURO DELANIEL, respondents.
The above-entitled cases involve the same issue of law, he
validity of Reorganization Plan No. 20-A, dated December 10,
1956. In each and everyone of them the validity of the decision
of a Regional Office of the Department of Labor, created under
the provisions of said Reorganization Plan No. 20-A, is in
question, it being contended that he grant of jurisdiction to a
regional office to decide claims for wages, back wages,
underpayment of wages, overtime and separation pay, etc. in
said Reorganization Plan No. 20-A is null and void.
In G.R. No. L-14837, respondent Arturo Delaniel brought a
complaint against petitioners Jose Corominas, Jr. and
Corominas & Co. with Regional Office No. 3 of the Department
of Labor, respondent claiming to be a driver of petitioners from
January 6, 1955 to August 31, 1956, for which services he was
not given both overtime and separation pay. He prayed for
judgment for the amount due him for overtime service
rendered and for separation pay. Judgment having been
rendered in favor of Delaniel by the hearing officer of the
regional office, appeal therefrom was prosecuted to the Labor
Standards Commission, which reduced the amount of the
judgment to P1,184.28, with legal interest and attorney's fees.
A "motion to quash the decision was denied, and, instead, the
Commissioner of Labor Standards ordered its execution.
Thereupon petitioners filed this petition for certiorari with
prohibition before us, alleging that Reorganization Plan No. 20-
A is null and void; that the Labor Standards Commission and
Regional Office No. 3 have no authority and jurisdiction to take
cognizance of the claims for overtime and separation pay of
respondent Delaniel, in view of which it is prayed that the
decision be declared null and void and the sheriff be enjoined
from executing the same.
In G.R. No. L-15483, defendant-appellant Jose Calupitan had
filed claim for underpayment and separation pay against
plaintiff-appellee Manila Central University Hospital also with
Regional Office No. 3 of the Department of Labor. The Manila
Central University Hospital moved to dismiss the complaint,
but its motion was denied, and so said Regional Office
proceeded to hear the evidence. Thereupon the Hospital filed a
petition with the Court of First Instance of Manila, alleging that
the Regional Office has no jurisdiction to try the case and that
the grant of judicial powers thereto by the Reorganization
Survey Commission is null and void, and praying, therefore,
that the officers of said Regional Office be declared to have no
power and authority to hear and decide the case. The Court of
First Instance held that Reorganization Plan No. 20-A is null
and void, and, therefore, enjoined the officers of the regional
office from enforcing the decision already rendered in the case.
Against this decision of the Court of First Instance, Jose
Calupitan and the Hearing Officers, defendants-appellants
herein, have appealed to this Court.
In G.R. No. L-13940, Wong Chun filed a complaint with the
Court of the First Instance of Manila, alleging that the decision
rendered by Regional Office No. 520, whereby Diego Carlim, a
room boy in Plaza Hotel, was awarded the sum of P2,342.60,
as separation and overtime pay, and attorney's fees, is null
and void, for the reason that said Regional Office had
arrogated unto itself the judicial power of courts of justice; and
that there is undue delegation of legislative powers to the
Reorganization Commission by Republic Act No. 997, etc. The
Court of First Instance of Manila held that, even though the
Reorganization Commission had no power or authority to
promulgate Plan No. 20-A, still petitioner Wong Chun failed to
raise the question before the Labor Standards Commission,
and cannot now raise the said question before the court. So
the court dismissed the complaint. Wong Chun has appealed
the order of dismissal to this Court.
In G.R. No. L-15015, one Fabian Caete, one of the
respondents-appellants herein, filed a complaint against
Balrodgan Co., Ltd and Mauro B. Ganzon, for recovery of
unpaid wages, underpayment wages, and overtime pay for
Sundays and legal holidays. The case was originally reffered to
the Labor Operations Section of the Department of Labor then
later formally filed with Regional Office No. 3 of said
Department. A decision having been rendered in favor of
Caete by the Hearing Officer of the Regional Office, and the
decision having been approved by the Administrator of said
Regional Office and ordered executed, petitioners herein filed a
petition for certiorari with the Court of First Instance of
Manila, praying that the respondents Caete and Officers of
the Regional Office be enjoined from proceeding with the levy
or execution of the decision against the properties of the
petitioners. Judgement was rendered by the lower court in
favor of petitioners herein, holding that Reorganization Plan
No. 20-A is null and void because the Reorganization
Commission had no jurisdiction to deprive the justice of the
peace courts and the Courts of First Instance of their
jurisdiction over money claims, and, therefore, Regional Office
No. 3 acted without authority to hear and decide the case and
enforce its decision. The case now on appeal before us is
against this decision of the Court of the First Instance of
Manila..
The provision of Reorganization Plan No. 20-A which
establishes the regional offices of the Department of Labor is
section 24 thereof, which reads as follows;.
24. There are established Regional Offices to function
as administrative and coordinative units each to be
under a Regional Administrator who shall be
responsible for all labor services and activities in his
region, subject to direct authority only from the Office
of the Secretary through a Director of Field
Operations. The Regional Administrator shall be
assisted by such staff as may be required which shall
include one or more Hearing Officers. The Regional
Administrators and such other personnel for the
Regional Offices as may be authorized shall be
appointed in accordance with existing civil service law
and rules.
The powers of this regional offices are defined in Sections 25
and 20 (a)of Plan No. 20-A, which are as follows:
25. Each Regional Office shall have original and
exclusive jurisdiction over all cases affecting all
money claims arising from all violations of labor
standards on working conditions, including but not
restrictive to: unpaid wages, underpayment, overtime,
separation pay, and maternity leave of
employees/laborers, and unpaid wages, overtime
separation pay, vacation pay, and payment for
medical services and domestic help.
26. . . . (a) Any provision of law or rules of court to the
contrary not-withstanding, money claims of
employees, laborers, and domestic help maybe filed
and heard in the Regional Office where the
respondents or any of the respondents resides or
maybe found, or where the claimant or any of the
claimants resides, at the election of the claimant.
Their decisions are reviewable by the Labor Standards
Commission (Sec. 20 [b], thus:.
20. . . . (b) A decision of a Regional Office shall
become final if no appeal is taken to the Commission
within fifteen days after the party concerned has been
notified thereof; and a decision of the Commission
shall become final within thirty days after notice to
the party concerned, unless within that period said
party gives notice to the Commission of his desire to
have the case taken to the Court, in which event the
case shall be forwarded by the Commission to the
proper Court, of First Instance as if on appeal from a
justice of the peace or a municipal court. All
proceedings thereafter shall be governed by the same
laws and rules which apply to ordinary civil cases
brought to the Court of First Instance, including
those on appeal.
In the cases now before Us, no objection is made against the
establishment in the Plan of regional offices. The objection lies
in the grant thereto of powers and duties, not heretofore
exercised by labor officials or offices, especially its original and
exclusive jurisdiction over the cases specified in the above-
quoted section 25 of the Reorganization Plan. In the four cases
under consideration, the Regional Office took cognizance of
claims for overtime and separation pay (G.R. No. L-837),

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underpayment and separation pay (G.R. No. L-15483),
separation and overtime pay (G.R. No. L-13940), and unpaid
wages, underpayment of wages and overtime pay for Sundays
and legal holidays, (G.R. No. L-15015). None of the claims is
for the payment of compensation under the Workmen's
Compensation Law each and everyone of them involves money
claims arising from violations of the Minimum Wage Law, labor
standards, working conditions, etc.
At the time of the approval of Reorganization Plan No. 20-A,
the law granting jurisdiction over such money claims is the
Minimum Wage Law (Republic Act No. 602). Sections 15 (d and
e) and 16 of which read as follows:
Sec. 15. Penalties and Recovery of Wage Due Under
This Act. . . .
(d) The Secretary may bring an action in any
competent court to recover the wages owing to an
employee under this Act, with legal interest. Any sum
thus recovered by the Secretary on behalf of an
employee pursuant to this subsection shall be held in
a special deposit account and shall be paid, on order
of the Secretary, directly to the employee or
employees affected. Any such sums not paid to an
employee because he cannot be located within a
period of three years shall be covered into the
Treasury as miscellaneous receipts.
(e) Any employer who underpays an employee in
violation of this Act shall be liable to the employee
affected in the amount of the unpaid wages with legal
interest. Action to recover such liability may be
maintained in any competent court by anyone or
more employees on behalf of himself or themselves. . .
. .
Sec. 16. Jurisdiction of the Courts. (a) The Court of
First Instance shall have jurisdiction to restrain
violations of this Act; action by the Secretary or by
the employees affected to recover underpayment may
be brought in any competent Court, which shall
render its decision on such cases within fifteen days
from the time the case has been submitted for
decision in appropriate instances, appeal from the
decisions of courts on any action under this Act shall
be in accordance with applicable law.
It will be seen from a comparison of the above-quoted
provisions of Sections 15 and 16 of the Minimum Wage Law
with those of Sections 25 of Reorganization Plan No. 20-A, also
above quoted, that whereas money claims were under Republic
Act No. 602 brought by the Secretary of Labor on behalf of a
laborer or laborers, or by the laborers themselves, before "a
competent court" before a Justice of the Peace Court if the
amount involved is not more than P5,000, or before a Court of
First Instance, if it exceeds P5,000 under Reorganization Plan
No. 20-A money claims would have to be brought before the
Regional Offices of the Department of Labor, whatever the
amount of the demand may be. But what is most striking in
Section 25 of Reorganization Plan No. 20-A is its grant of
"exclusive and original jurisdiction over money claims" of
laborers. Add to this fact, the circumstance that Section 31 of
the Reorganization Plan expressly provides that "All acts,
executive orders, and regulations or parts thereof inconsistent
with any of the provisions of this Plan are amended and/or
repealed." The consequence of the above provisions, especially
the grant of original and exclusive jurisdiction to Regional
Offices over all money claims, is to remove from courts of
justice the power to hear and decide said money claims, a
power which vested in them by law, which powers are affirmed
in the provisions of Republic Act 602. So that the question that
poses inquiry is: Is the transfer of such jurisdiction over money
claims from courts of justice to the Regional Offices, authorized
by the provisions of Republic Act 997, which created the
Government Survey and Reorganization Commission? In all
the cases at bar, the judges below have answered the question
in the negative.
The provisions of Republic Act No. 997, the Act creating the
Reorganization Commission, which define the scope of the
power and authority of the Reorganization Commission are
Sections 2, 3 and 4, which read as follows:
SEC. 2. (a) The reorganization to be carried out under
this Act shall have the following objectives:
(1) To promote the better execution of the laws, and
the more effective management of the government;
and expeditious administration of public business;
(2) To promote economy to the fullest extent
consistent with the efficient operations of the
government; and
(3) To increase the efficiency of the operations of the
government to the fullest extent possible. . . .
SEC. 3. To carry out the purposes of this Act, there is
hereby created the Government Survey and
Reorganization Commission, hereinafter known as
the 'Commission', which shall conduct a study and
investigation of the present organization and methods
of operation of all departments, offices, bureaus,
agencies, and instrumentalities of the Executive
Branch of the Government, and determine what
change or changes are necessary to accomplish the
objectives set forth in subsection (a) section two of his
Act.
x x x x x x x x x
SEC. 4. To accomplish the objectives set forth in
subsection (a), section two of this Act, the
Commission is authorized:
(1) to group, coordinate or consolidate departments,
bureaus, offices, agencies, instrumentalities and
functions of government;
(2) to abolish departments, offices, agencies or
functions which may not be necessary for the
efficiency of the government service, activities and
functions;
(3) to eliminate overlapping and duplication of
services, activities and functions of the government;
(4) to transfer functions, appropriations, equipment,
property records, and personnel from one
department, bureau, office, agency, or
instrumentality to another;
(5) to create, classify, combine, split or abolish
positions;
(6) to standardize salaries, materials and equipment;
and
(7) to do whatever is necessary and desirable to effect
economy and promote efficiency in the
government;Provided, however, That in the
reorganization to be effected by this Act, no office or
agency or function of the government shall be made
to continue beyond the period authorized by law or
beyond the time when it would have terminated if the
reorganization had not been made.
A cursory study of these provisions of Republic Act No. 997 will
show that nowhere therein is there a grant of authority to the
Government Survey and Reorganization Commission to grant
powers, duties and functions to offices or entities to be created
by it, which are not already granted to the offices or officials of
the Department of Labor. Section 4 above quoted authorizes
the elimination of overlapping services, activities and
functions, and the consolidation of agencies or
instrumentalities exercising said duties and functions. There is
no grant of power to allocate to the bodies and offices to be
created or set up functions, powers and duties not then
already vested in the various offices and officials of the
Department of Labor. Section 3 limits the powers of
reorganization by the Commission to the offices, bureaus and
instrumentalities of the Executive Branch of the Government
only. So that it was not the intention of Congress, in enacting
Republic Act No. 997, to authorize the transfer of powers and
jurisdiction granted to the courts of justice, from these to the
officials to be appointed or offices to be created by the
Reorganization Plan. Congress is well aware of the provisions

3

of the Constitution that judicial powers are vested "only in the
Supreme Court and in such courts as the law may establish."
The Commission was not authorized to create courts of justice,
or to take away from these their jurisdiction and transfer said
jurisdiction to the officials appointed or offices created under
the Reorganization Plan. The Legislature could not have
intended to grant such powers to the Reorganization
Commission, an executive body, as the Legislature may not
and cannot delegate its power to legislate or create courts of
justice to any other agency of the Government. (Chinese Flour
Importers' Assoc. vs. Price Stabilization Board, G.R. No. L-
4465, July 12, 1951; Surigao Consolidated vs. Collector of
Internal Revenue, G.R. No. L-5692, March 5, 1954; U.S. vs.
Shreveport, 287 U.S. 77, 77 L. ed. 175 and Johnson vs. San
Diego, 42 P. 249, cited in 11 Am. Jur. 921-922).
It is clear, therefore, that in vesting regional offices with the
original and exclusive jurisdiction over money claims, the
Commission overstepped the limits of its powers as conferred
by Republic Act No. 997, which is merely that of reorganizing
the departments, bureaus, and offices of the Executive Branch
of the Government.
In consequence, we are constrained to hold and declare that
the provision of Reorganization Plan No. 20-A, particularly
Section 25, which grants to the regional offices original and
exclusive jurisdiction over money claims of laborers, is null
and void, said grant having been made without authority by
Republic Act No. 997. In all of the cases at bar the respective
judges of instance have reached the same conclusion that we
have, as to the invalidity offices of exclusive and original
jurisdiction over money claims by Section 25 of Reorganization
Plan No. 20-A. But in G.R. No. L-13940, although the same
conclusion was arrived at by the judge below, he added that
since validity was not raised before the Labor Standards
Commission, to which body decision of the regional office. This
ruling is correct; the judgement of any court of the body having
no jurisdiction can be attacked at any time and in any court.
Objection to the invalidity is not waived by failure to raise it in
a court or body which had no jurisdiction. So that judge below
have granted the petition for injunction.
WHEREFORE, judgement is hereby rendered in G. R. No. L-
14837, granting the petition for certiorari, declaring the
decision declared by the Labor Standards commission
modifying that of the Regional Office No. 3, is null and void,
and enjoining the sheriff from enforcing the same; in G. R. No.
L-15483, affirming the decision of the Court of First Instance
of Manila, and declaring the decision of Regional Office No. 3,
as null and void; in G. R. No. L-13940, setting aside of the
regional Office of No. 3, in favor of Diego Carlim and the order
of the Court of First Instance dismissing the action to annul
said decision; and in G.R. No. L-15015, affirming the decision
of the Court of First Instance of Manila, declaring that Regional
Office No. 3 had no authority to take cognizance of the claims
of Fabian Caete. No finding as to costs.
G.R. No. L-23004 June 30, 1965
MAKATI STOCK EXCHANGE, INC., petitioner,
vs.
SECURITIES AND EXCHANGE COMMISSION and MANILA
STOCK EXCHANGE, respondents.
BENGZON, C.J.:
This is a review of the resolution of the Securities and
Exchange Commission which would deny the Makati Stock
Exchange, Inc., permission to operate a stock exchange unless
it agreed not to list for trading on its board, securities already
listed in the Manila Stock Exchange.
Objecting to the requirement, Makati Stock Exchange, Inc.
contends that the Commission has no power to impose it and
that, anyway, it is illegal, discriminatory and unjust.
Under the law, no stock exchange may do business in the
Philippines unless it is previously registered with the
Commission by filing a statement containing the information
described in Sec. 17 of the Securities Act (Commonwealth Act
83, as amended).
It is assumed that the Commission may permit registration if
the section is complied with; if not, it may refuse. And there is
now no question that the section has been complied with, or
would be complied with, except that the Makati Stock
Exchange, upon challenging this particular requirement of the
Commission (rule against double listing) may be deemed to
have shown inability or refusal to abide by its rules, and
thereby to have given ground for denying registration. [Sec. 17
(a) (1) and (d)].
Such rule provides: "... nor shall a security already listed in
any securities exchange be listed anew in any other securities
exchange ... ."
The objection of Makati Stock Exchange, Inc., to this rule is
understandable. There is actually only one securities exchange
The Manila Stock Exchange that has been operating
alone for the past 25 years; and all or presumably all
available or worthwhile securities for trading in the market are
now listed there. In effect, the Commission permits the Makati
Stock Exchange, Inc., to deal only with other securities. Which
is tantamount to permitting a store to open provided it sells
only those goods not sold in other stores. And if there's only
one existing store,
1
the result is a monopoly.
It is not farfetched to assert as petitioner does
2
that for all
practical purposes, the Commission's order or resolution
would make it impossible for the Makati Stock Exchange to
operate. So, its "permission" amounted to a "prohibition."
Apparently, the Commission acted "in the public
interest."
3
Hence, it is pertinent to inquire whether the
Commission may "in the public interest" prohibit (or make
impossible) the establishment of another stock exchange
(besides the Manila Stock Exchange), on the ground that the
operation of two or more exchanges adversely affects the public
interest.
At first glance, the answer should be in the negative, because
the law itself contemplated, and, therefore, tacitly permitted or
tolerated at least, the operation of two or more exchanges.
Wherever two or more exchanges exist, the
Commission, by order, shall require and enforce
uniformity of trading regulations in and/or between
said exchanges. [Emphasis Ours] (Sec. 28b-13,
Securities Act.)
In fact, as admitted by respondents, there were five stock
exchanges in Manila, before the Pacific War (p. 10, brief), when
the Securities Act was approved or amended. (Respondent
Commission even admits that dual listing was practiced then.)
So if the existence of more than one exchange were contrary to
public interest, it is strange that the Congress having from
time to time enacted legislation amending the Securities
Act,
4
has not barred multiplicity of exchanges.
Forgetting for the moment the monopolistic aspect of the
Commission's resolution, let us examine the authority of the
Commission to promulgate and implement the rule in
question.
It is fundamental that an administrative officer has only such
powers as are expressly granted to him by the statute, and
those necessarily implied in the exercise thereof.
In its brief and its resolution now subject to review, the
Commission cites no provision expressly supporting its rule.
Nevertheless, it suggests that the power is "necessary for the
execution of the functions vested in it"; but it makes no
explanation, perhaps relying on the reasons advanced in
support of its position that trading of the same securities in
two or more stock exchanges, fails to give protection to the
investors, besides contravening public interest. (Of this, we
shall treat later) .
On the legality of its rule, the Commission's argument is that:
(a) it was approved by the Department Head before the War;
and (b) it is not in conflict with the provisions of the Securities
Act. In our opinion, the approval of the Department,
5
by itself,
adds no weight in a judicial litigation; and the test is not
whether the Act forbids the Commission from imposing a
prohibition, but whether it empowers the Commission to
prohibit. No specific portion of the statute has been cited to
uphold this power. It is not found in sec. 28 (of the Securities
Act), which is entitled "Powers (of the Commission) with
Respect to Exchanges and Securities."
6


4

According to many court precedents, the general power to
"regulate" which the Commission has (Sec. 33) does not imply
authority to prohibit."
7

The Manila Stock Exchange, obviously the beneficiary of the
disputed rule, contends that the power may be inferred from
the express power of the Commission to suspend trading in a
security, under said sec. 28 which reads partly:
And if in its opinion, the public interest so requires,
summarily to suspend trading in any registered
security on any securities exchange ... . (Sec. 28[3],
Securities Act.)
However, the Commission has not acted nor claimed to have
acted in pursuance of such authority, for the simple reason
that suspension under it may only be for ten days. Indeed, this
section, if applicable, precisely argues against the position of
the Commission because the "suspension," if it is, and as
applied to Makati Stock Exchange, continues for an indefinite
period, if not forever; whereas this Section 28 authorizes
suspension for ten days only. Besides, the suspension of
trading in the security should not be on one exchange only,
but on allexchanges; bearing in mind that suspension should
be ordered "for the protection of investors" (first par., sec. 28)
in all exchanges, naturally, and if "the public interest so
requires" [sec. 28(3)].
This brings up the Commission's principal conclusions
underlying its determination viz.: (a) that the establishment of
another exchange in the environs of Manila would be inimical
to the public interest; and (b) that double or multiple listing of
securities should be prohibited for the "protection of the
investors."
(a) Public Interest Having already adverted to this aspect of
the matter, and the emerging monopoly of the Manila Stock
Exchange, we may, at this juncture, emphasize that by
restricting free competition in the marketing of stocks, and
depriving the public of the advantages thereof the Commission
all but permits what the law punishesas monopolies as "crimes
against public interest."
8

"A stock exchange is essentially monopolistic," the Commission
states in its resolution (p. 14-a, Appendix, Brief for Petitioner).
This reveals the basic foundation of the Commission's process
of reasoning. And yet, a few pages afterwards, it recalls the
benefits to be derived "from the existence of two or more
exchanges," and the desirability of "a healthy and fair
competition in the securities market," even as it expresses the
belief that "a fair field of competition among stock exchanges
should be encouraged only to resolve, paradoxically enough,
that Manila Stock Exchange shall, in effect, continue to be the
only stock exchange in Manila or in the Philippines.
"Double listing of a security," explains the Commission,
"divides the sellers and the buyers, thus destroying the
essence of a stock exchange as a two-way auction market for
the securities, where all the buyers and sellers in one
geographical area converge in one defined place, and the
bidders compete with each other to purchase the security at
the lowest possible price and those seeking to sell it compete
with each other to get the highest price therefor. In this sense,
a stock exchange is essentially monopolistic."
Inconclusive premises, for sure. For it is debatable
whether the buyer of stock may get the lowest price where all
the sellers assemble in only one place. The price there, in one
sale, will tend to fix the price for the succeeding, sales, and he
has no chance to get a lower price except at another stock
exchange. Therefore, the arrangement desired by the
Commission may, at most, be beneficial to sellers of stock
not to buyers although what applies to buyers should obtain
equally as to sellers (looking for higher prices). Besides, there
is the brokerage fee which must be considered. Not to mention
the personality of the broker.
(b) Protection of investors. At any rate, supposing the
arrangement contemplated is beneficial to investors (as the
Commission says), it is to be doubted whether it is "necessary"
for their "protection" within the purview of the Securities Act.
As the purpose of the Act is to give adequate and effective
protection to the investing publicagainst fraudulent
representations, or false promises and the imposition of
worthless ventures,
9
it is hard to see how the proposed
concentration of the market has a necessary bearing to the
prevention of deceptive devices or unlawful practices. For it is
not mere semantics to declare that acts for the protection of
investors are necessarily beneficial to them; but not everything
beneficial to them is necessary for their protection.
And yet, the Commission realizes that if there were two or
more exchanges "the same security may sell for more in one
exchange and sell for less in the other. Variance in price of the
same security would be the rule ... ." Needless to add, the
brokerage rates will also differ.
This, precisely, strengthens the objection to the Commission's
ruling. Such difference in prices and rates gives the buyer of
shares alternative options, with the opportunity to invest at
lower expense; and the seller, to dispose at higher prices.
Consequently, for the investors' benefit (protection is not the
word), quality of listing
10
should be permitted, nay,
encouraged, and other exchanges allowed to operate. The
circumstance that some people "made a lot of money due to
the difference in prices of securities traded in the stock
exchanges of Manila before the war" as the Commission noted,
furnishes no sufficient reason to let one exchange corner the
market. If there was undue manipulation or unfair advantage
in exchange trading the Commission should have other means
to correct the specific abuses.
Granted that, as the Commission observes, "what the country
needs is not another" market for securities already listed on
the Manila Stock Exchange, but "one that would focus its
attention and energies on the listing of new securities and thus
effectively help in raising capital sorely needed by our ...
unlisted industries and enterprises."
Nonetheless, we discover no legal authority for it to shore up
(and stifle) free enterprise and individual liberty along channels
leading to that economic desideratum.
11

The Legislature has specified the conditions under which a
stock exchange may legally obtain a permit (sec. 17, Securities
Act); it is not for the Commission to impose others. If the
existence of two competing exchanges jeopardizes public
interest which is doubtful let the Congress
speak.
12
Undoubtedly, the opinion and recommendation of the
Commission will be given weight by the Legislature, in judging
whether or not to restrict individual enterprise and business
opportunities. But until otherwise directed by law, the
operation of exchanges should not be so regulated as
practically to create a monopoly by preventing the
establishment of other stock exchanges and thereby
contravening:
(a) the organizers' (Makati's) Constitutional right to
equality before the law;
(b) their guaranteed civil liberty to pursue any lawful
employment or trade; and
(c) the investor's right to choose where to buy or to
sell, and his privilege to select the brokers in his
employment.
13

And no extended elucidation is needed to conclude that for a
licensing officer to deny license solely on the basis of what he
believes is best for the economy of the country may amount to
regimentation or, in this instance, the exercise of undelegated
legislative powers and discretion.
Thus, it has been held that where the licensing statute does
not expressly or impliedly authorize the officer in charge,
he may not refuse to grant a license simply on the ground that
a sufficient number of licenses to serve the needs of the public
have already been issued. (53 C.J.S. p. 636.)
Concerning res judicata. Calling attention to the
Commission's order of May 27, 1963, which Makati Stock did
not appeal, the Manila Stock Exchange pleads the doctrine
of res judicata.
14
(The order now reviewed is dated May 7,
1964.)
It appears that when Makati Stock Exchange, Inc. presented
its articles of incorporation to the Commission, the latter, after
making some inquiries, issued on May 27, 1963, an order
reading as follows.

5

Let the certificate of incorporation of the MAKATI
STOCK EXCHANGE be issued, and if the organizers
thereof are willing to abide by the foregoing
conditions, they may file the proper application for
the registration and licensing of the said Exchange.
In that order, the Commission advanced the opinion that "it
would permit the establishment and operation of the proposed
Makati Stock Exchange, provided ... it shall not list for trading
on its board, securities already listed in the Manila Stock
Exchange ... ."
Admittedly, Makati Stock Exchange, Inc. has not appealed
from that order of May 27, 1963. Now, Manila Stock insists
on res judicata.
Why should Makati have appealed? It got the certificate
of incorporation which it wanted. The condition or proviso
mentioned would only apply if and when it subsequently
filed the application for registration as stock exchange. It had
not yet applied. It was not the time to question the
condition;
15
Makati was still exploring the convenience of
soliciting the permit to operate subject to that condition. And it
could have logically thought that, since the condition did not
affect its articles of incorporation, it should not appeal the
order (of May 27, 1963) which after all, granted the certificate
of incorporation (corporate existence) it wanted at that time.
And when the Makati Stock Exchange finally found that it
could not successfully operate with the condition attached, it
took the issue by the horns, and expressing its desire for
registration and license, it requested that the condition
(against double listing) be dispensed with. The order of the
Commission denying, such request is dated May 7, 1964, and
is now under, review.
Indeed, there can be no valid objection to the discussion of this
issue of double listing now,
16
because even if the Makati Stock
Exchange, Inc. may be held to have accepted the permission to
operate with the condition against double listing (for having
failed to appeal the order of May 27, 1963), still it was not
precluded from afterwards contesting
17
the validity of such
condition or rule:
(1) An agreement (which shall not be construed as a waiver of
any constitutional right or any right to contest the validity of any
rule or regulation) to comply and to enforce so far as is within
its powers, compliance by its members, with the provisions of
this Act, and any amendment thereto, and any rule or
regulation made or to be made thereunder. (See. 17-a-1,
Securities Act [Emphasis Ours].)
Surely, this petition for review has suitably been coursed. And
making reasonable allowances for the presumption of
regularity and validity of administrative action, we feel
constrained to reach the conclusion that the respondent
Commission possesses no power to impose the condition of the
rule, which, additionally, results in discrimination and
violation of constitutional rights.
ACCORDINGLY, the license of the petition to operate a stock
exchange is approved without such condition. Costs shall be
paid by the Manila Stock Exchange. So ordered.
G.R. No. L-43653 November 29, 1977
G.R. No. L-29236 August 21, 1974
RADIO COMMUNICATIONS OF THE PHILIPPINES,
INC., petitioner,
vs.
FRANCISCO SANTIAGO and ENRIQUE MEDINA, as
Commissioner, Public Service Commission,respondents.
It is a legal question of significance that was raised in these
two petitions for review, to be decided jointly. It is whether the
Public Service Commission, no longer in existence by virtue of
the Presidential Decree reorganizing the executive branch of
the national government
1
had the jurisdiction to act on
complaints by dissatisfied customers of petitioner Radio
Communications of the Phil., Inc. and thereafter to penalize it
with a fine. In Radio Communications of thePhil., Inc. v.
Francisco Santiago & Enrique Medina, as Commissioner, Public
Service Commission
2
the dispositive portion of the challenged
order insofar as pertinent reads thus: "[Wherefore], under
Section 21 of the Public Service Act as amended, the
respondent operator of Radio Communications of the
Philippines, Inc. (RCPI) is hereby ordered to pay a fine of [two
hundred pesos](P200.00) within fifteen (15) days from receipt
hereof, with the warning that failure to pay the said fine within
the aforecited period of time, will leave the Commission no
other alternative but to suspend the rates authorized for the
operation of respondent herein."
3
In Radio Communications of
the Phil., Inc. v. Constancio Jaugan & Enrique Medina,
Commissioner, Public Service Commission,
4
the dispositive
portion insofar as pertinent is worded as follows: "[For all the
foregoing considerations], under Section 21 of the Public
Service Act as amended, the respondent, operator of Radio
Communications of the Philippines, Inc. (RCPI) is hereby
ordered to pay a fine of Two Hundred Pesos (P200.00) within
fifteen (15) days from receipt hereof, with a warning that failure
to pay the said fine within the aforecited period of time, will
leave the Commission no other alternative but to suspend and
revoke the rates authorized, for the operation of respondent
herein."
5
The allegation by petitioner that it was devoid of such
competence is based on the express limitation found in the
Public Service Act
6
expressly exempting radio companies from
the jurisdiction, supervision and control of such body "except
with respect to the fixing of rates."
7
In the face of the provision
itself, it is rather apparent that the Public Service Commission
lacked the required power to proceed against petitioner. There
is nothing in Section 21 thereof which impowers it to impose a
fine that calls for a different conclusion.
8
We have to reverse.
There is no dispute as to the facts. The challenged order in
Radio Communications of the Phil., Inc. v. Santiago and
Medina stated: "It is admitted by respondent [now petitioner]
that on July 12, 1966, a telegram was filed with respondent-
company and the amount of P1.50 was paid for the
transmission of said telegram to Zamboanga City .... The
telegram, however, was never transmitted until now. The
respondent not only did not give any valid explanation, but did
not present any evidence to explain why the said telegram was
not forwarded to the addressee until now. This is, therefore, a
clear case where the respondent, taking advantage of the rates
fixed by this Commission collected the sum of P1.50 and
promised to render a service to the complainant, i.e. the
transmission of his telegram filed on July 12, 1966; but, after
receiving the sum of P1.50, respondent failed to render the
promised service,"
9
in Radio Communications of the Phil., Inc. v.
Jaugan and Medina, the order sought to be reviewed had this
to say: "The evidence presented shows that on August 1, 1967,
complainant Constancio Jaugan filed a telegram at the branch
office of respondent in Dumaguete City, ... addressed to
Commissioner Enrique Medina, PSC, Manila. The telegram was
received by an employee of the respondent, Mrs. Jesusa A.
Orge, as shown by the receipt ... dated August 1, 1967, and
the sum of P2.64 was collected in payment of said telegram.
The telegram, ... in effect, advised Commissioner Medina that
the Land Registration Case where he was cited by subpoena to
testify before the CFI of Oriental Negros on August 14 and 15,
1967, was transferred and, therefore, there was no necessity
for the said Commissioner to proceed to Negros Oriental on
those dates. It appears that the said telegram received by
Jesusa Orge at Dumaguete City on August 1, 1967, was
transmitted to Manila, on the same date, but was never
delivered to the addressee, and on August 14 and 15, when
Commissioner Medina appeared before the Dumaguete Court,
he was advised that the case was postponed since August 1
and that a telegram was sent to the said Commissioner.
Inquiries were made, why the telegram was not received by the
Commissioner in Manila; the Dumaguete Office communicated
with the Manila Office, on the same date, August 14, 1967 and
it was only on August 15, 1967 that the telegram was relayed
to the Public Service Commission and was received by one of
the employees of the Commission, in the absence of
Commissioner Medina who was then in Negros Oriental. ...
."
10
It was the manifest failure in both cases to render the
service expected of a responsible operator that led to the
imposition of the penalty. The motions for reconsideration in
both cases having proved futile, the matter was elevated to this
Court.
As noted at the outset, a reversal is called for.
1. Except for constitutional officials who can trace their
competence to act to the fundamental law itself, a public
official must locate in the statute relied upon a grant of power
before he can exercise it. It need not be express. It may be
implied from the wording of the law. Absent such a requisite,
however, no warrant exists for the assumption of authority.
The act performed, if properly challenged, cannot meet the test
of validity. It must be set aside. So it must be in these two

6

petitions. That is to defer to a principle reiterated by this Court
time and time again.
11
That doctrine goes back to a 1916
decision, Bautista v. Angeles,
12
where Chief Justice Arellano
stated the following: "It devolves upon the judicial power to
convince the private individual, the party governed, that he
has no right to do what he did in violating orders of the
administrative authorities issued by them in the exercise of
their rights. Once he is convinced, the administrative
authorities, by virtue of their own powers, impose the weight of
their authority upon him. If they, the administrative
authorities of public officials, exceed lawful limits in the
exercise of their power of execution, the law provides what
shall be done before the judicial power can step in and repair
the damage to the private interest, or apply the law by
declaring what was properly or improperly done in exercising
public power."
13
There is likewise this relevant excerpt
fromVillegas v. Subido:
14
"Nothing is better settled in the law
than that a public official exercises power, not rights. The
government itself is merely an agency through which the will of
the state is expressed and enforced. Its officers therefore are
likewise agents entrusted with the responsibility of discharging
its functions. As such there is no presumption that they are
empowered to act. There must be a delegation of such
authority, either express or implied. In the absence of a valid
grant, they are devoid of power. What they do suffers from a
fatal infirmity. That principle cannot be sufficiently stressed. In
the appropriate language of Chief Justice Hughes: 'It must be
conceded that departmental zeal may not be permitted to
outrun the authority conferred by statute.' Neither the high
dignity of the office nor the righteousness of the motive then is
an acceptable substitute. Otherwise the rule of law becomes a
myth. Such an eventuality, we must take all pains to
avoid."
15
Such a fundamental postulate applies to the
Executive itself. So it has been attested by a number of cases
involving the President of the Philippines.
16

There can be no justification then for the Public Service
Commission imposing the fines in these two petitions. The law
cannot be any clearer. The only power it possessed over radio
companies, as noted was the fix rates.
17
It could not take to
task a radio company for any negligence or misfeasance. It was
bereft of such competence. It was not vested with such
authority. What it did then in these two petitions lacked the
impress of validity.
2. The Public Service Commission having been abolished by
virtue of a Presidential Decree, as set forth at the outset, and a
new Board of Communications having been created to take its
place, nothing said in this decision has reference to whatever
powers are now lodged in the latter body. It is to be
understood, likewise, that insofar as the complainants are
concerned, this decision goes no further than to rule adversely
on the exercise of authority by the Public Service Commission
when it took disciplinary action against petitioner.
WHEREFORE, in L-29236, Radio Communications of the Phil.,
Inc. v. Francisco Santiago and Enrique Medina, the order of
former Commissioner Enrique Medina of October 13, 1967 as
affirmed by the order of the Public Service Commission en
banc of May 3, 1968, is reversed and set aside, and in L-
29247, Radio Communications of the Phil., Inc. v. Constancio
Jaugan and Enrique Medina, the order of former Commissioner
Enrique Medina of October 10, 1967 as affirmed by the order
of the Public Service Commission en banc of April 4, 1968, is
reversed and set aside. No costs.
G.R. No. 85439 January 13, 1992
KILUSANG BAYAN SA PAGLILINGKOD NG MGA
MAGTITINDA NG BAGONG PAMILIHANG BAYAN NG
MUNTINLUPA, INC. (KBMBPM), TERESITA A. FAJARDO,
NADYESDA B. PONSONES, MA. FE V. BOMBASE, LOIDA D.
LUCES, MARIO S. FRANCISCO, AMADO V. MANUEL and
ROLANDO G. GARCIA, incumbent members of the Board,
AMADO G. PEREZ and MA. FE V. BOMBASE, incumbent
General Manager and Secretary-Treasurer,
respectively, petitioners,
vs.
HON. CARLOS G. DOMINGUEZ, Secretary of Agriculture,
Regional Director of Region IV of the Department of
Agriculture ROGELIO P. MADRIAGA, RECTO CORONADO
and Municipal Mayor IGNACIO R. BUNYE, both in his
capacity as Municipal Mayor of Muntinlupa, Metro Manila
and as Presiding Officer of Sangguniang Bayan ng
Muntinglupa, and JOHN DOES, respondents.
These cases have been consolidated because they are closely
linked with each other as to factual antecedents and issues.
The first case, G.R. No. 85439 (hereinafter referred to as
the Kilusang Bayan case), questions the validity of the order of
28 October 1988 of then Secretary of Agriculture Hon. Carlos
G. Dominguez which ordered: (1) the take-over by the
Department of Agriculture of the management of the petitioner
Kilusang Bayan sa Paglilingkod Ng Mga Magtitinda ng Bagong
Pamilihang Bayan ng Muntilupa, Inc. (KBMBPM) pursuant to
the Department's regulatory and supervisory powers under
Section 8 of P.D. No. 175, as amended, and Section 4 of
Executive Order No. 13, (2) the creation of a Management
Committee which shall assume the management of KBMBPM
upon receipt of the order, (3) the disbandment of the Board of
Directors, and (4) the turn over of all assets, properties and
records of the KBMBPM the Management Committee.
The second case. G.R. No. 91927 (hereinafter referred to as
the Bunye case), seeks the nullification of the Resolution of 4
January 1990 of the Sandiganbayan admitting the Amended
Information against petitioners in Criminal Case No. 13966
and denying their motion to order or direct preliminary
investigation, and its Resolution of 1 February 1990 denying
the motion to reconsider the former.
The procedural and factual antecedents are not disputed.
On 2 September 1985, the Municipal Government of
Muntinlupa (hereinafter, Municipality), Metro Manila, thru its
then Mayor Santiago Carlos, Jr., entered into a contract with
the KILUSANG BAYAN SA PAGLILINGKOD NG MGA
MAGTITINDA SA BAGONG PAMILIHANG BAYAN NG
MUNTINLUPA, INC. (KBMBPM) represented by its General
Manager, Amado Perez, for the latter's management and
operation of the new Muntinlupa public market. The contract
provides for a twenty-five (25) year term commencing on 2
September 1985, renewable for a like period, unless sooner
terminated and/or rescinded by mutual agreement of the
parties, at a monthly consideration of Thirty-Five Thousand
Pesos (P35,000) to be paid by the KBMBPM within the first five
(5) days of each month which shall, however, be increased by
ten percent (10%) each year during the first five (5) years
only.
1

The KBMBPM is a service cooperative organized by and
composed of vendors occupying the New Muntinlupa Public
Market in Alabang, Muntinlupa, Metro Manila pursuant to
Presidential Decree No. 175 and Letter of Implementation No.
23; its articles of incorporation and by-laws were registered
with the then Office of the Bureau of Cooperatives
Development (thereafter the Bureau of Agricultural
Cooperatives Development or BACOD and now the Cooperative
Development Authority).
2

Following his assumption into office as the new mayor
succeeding Santiago Carlos, Jr., petitioner Ignacio Bunye,
claiming to be particularly scandalized by the "virtual 50-year
term of the agreement, contrary to the provision of Section
143, paragraph 3 of Batas Pambansa Blg. 337," and the
"patently inequitable rental," directed a review of the aforesaid
contract.
3
He sought opinions from both the Commission on
Audit and the Metro Manila Commission (MMC) on the validity
of the instrument. In separate letters, these agencies urged
that appropriate legal steps be taken towards its rescission.
The letter of Hon. Elfren Cruz of the MMC even granted the
Municipality authority "to take the necessary legal steps for the
cancellation/recission of the above cited contract and make
representations with KBMBPM for the immediate
transfer/takeover of the possession, management and
operation of the New Muntinlupa Market to the Municipal
Government of Muntinlupa."
4

Consequently, upon representations made by Bunye with the
Municipal Council, the latter approved on 1 August 1988
Resolution No. 45 abrogating the contract. To implement this
resolution, Bunye, together with his co-petitioners and
elements of the Capital Command of the Philippine
Constabulary, proceeded, on 19 August 1986, to the public
market and announced to the general public and the
stallholders thereat that the Municipality was taking over the
management and operation of the facility, and that the
stallholders should henceforth pay their market fees to the
Municipality, thru the Market Commission, and no longer to
the KBMBPM.
5


7

On 22 August 1988, the KBMBPM filed with Branch 13 of the
Regional Trial Court of Makati a complaint for breach of
contract, specific performance and damages with prayer for a
writ of preliminary injunction against the Municipality and its
officers, which was docketed as Civil Case No. 88-1702.
6
The
complaint was premised on the alleged illegal take-over of the
public market effected "in excess of his (Bunye's) alleged
authority" and thus "constitutes breach of contract and duty
as a public official."
The writ applied for having been denied,
7
the KBMBPM
officers resisted the attempts of Bunye and company to
complete the take-over; they continued holding office in the
KBS building, under their respective official capacities. The
matter having been elevated to this Court by way
of certiorari, 8 We remanded the same to the Court of Appeals
which docketed it as C.A.-G.R. No. L-16930.
9

On 26 August 1988, Amado Perez filed with the Office of the
Ombudsman a letter-complaint charging Bunye and his co-
petitioners with oppression, harassment, abuse of authority
and violation of the Anti-Graft and Corrupt Practices Act
10
for
taking over the management and operation of the public
market from KBMBPM.
11

In a subpoena dated 7 October 1988, prosecutor Mothalib C.
Onos of the Office of the Special Prosecutor directed Bunye
and his co-petitioners to submit within ten (10) days from
receipt thereof counter-affidavits, affidavits of their witnesses
and other supporting documents.
12
The subpoena and letter-
complaint were received on 12 October 1988.
On 20 October 1988, two (2) days before the expiration of the
period granted to file said documents, Bunye, et al. filed by
mail an urgent motion for extension of "at least fifteen (15)
days from October 22, 1988" within which to comply
13
with
the subpoena.
Thereafter, the following transpired which subsequently gave
rise to these petitions:
G.R. No. 85439
In the early morning of 29 October 1988, a Saturday,
respondent Madriaga and Coronado, allegedly accompanied by
Mayor Bunye and the latters' heavily armed men, both in
uniform and in civilian clothes, together with other civilians,
namely: Romulo Bunye II, Alfredo Bunye, Tomas Osias,
Reynaldo Camilon, Benjamin Taguibao, Benjamin Bulos and
other unidentified persons, allegedly through force, violence
and intimidation, forcibly broke open the doors of the offices of
petitioners located at the second floor of the KBS Building, new
Muntinlupa Public Market, purportedly to serve upon
petitioners the Order of respondent Secretary of Agriculture
dated 28 October 1988, and to implement the same, by taking
over and assuming the management of KBMBPM, disbanding
the then incumbent Board of Directors for that purpose and
excluding and prohibiting the General Manager and the other
officers from exercising their lawful functions as such.
14
The
Order of the Secretary reads as follows:
15

O R D E R
WHEREAS, the KILUSANG BAYAN SA PAGLILINGKOD
NG MGA MAGTITINDA NG BAGONG PAMILIHANG
BAYAN NG MUNTINLUPA, INC., (KBMBPM), Alabang,
Muntinlupa, Metro Manila is a Cooperative registered
under the provisions of Presidential Decree No. 175, as
amended;
WHEREAS, the Department of Agriculture is empowered
to regulate and supervise cooperatives registered under
the provisions of Presidential Decree No. 175, as
amended;
WHEREAS, the general membership of the KBMBPM
has petitioned the Department of Agriculture for
assistance in the removal of the members of the Board
of Directors who were not elected by the general
membership of said cooperative;
WHEREAS, the on-going financial and management
audit of the Department of Agriculture auditors show
(sic) that the management of the KBMBPM is not
operating that cooperative in accordance with PD. 175,
LOI No. 23, the Circulars issued by DA/BACOD and the
provisions of the by-laws of KBMBPM;
WHEREAS, the interest of the public so demanding it is
evident and urgently necessary that the KBMBPM
MUST BE PLACED UNDER MANAGEMENT TAKE-OVER
of the Department of Agriculture in order to preserve
the financial interest of the members of the cooperative
and to enhance the cooperative development program of
the government;
WHEREAS, it is ordered that the Department of
Agriculture in the exercise of its regulatory and
supervisory powers under Section 8 of PD 175, as
amended, and Section 4 of Executive Order No. 113,
take over the management of KBMBPM under the
following directives:
1. THAT a Management Committee is hereby
created composed of the following:
a) Reg. Dir. or OIC RD DA Region IV
b) Atty. Rogelio P. Madriaga BACOD
c) Mr. Recto Coronado KBMBPM
d) Mrs. Nadjasda Ponsones KBMBPM
e) One (1) from the Municipal Government of
Muntinlupa to be designated by the Sangguniang
Pambayan ng Muntinlupa;
2. THAT the Management Committee shall, upon
receipt of this Order, assume the management of
KBMBPM;
3. THAT the present Board of Directors is hereby
disbanded and the officers and Manager of the
KBMBPM are hereby directed to turnover all
assets, properties and records of the KBMBPM to
the Management Committee herein created;
4. THAT the Management Committee is hereby
empowered to promulgate rules of procedure to
govern its workings as a body;
5. THAT the Management Committee shall submit
to the undersigned thru the Director of BACOD
monthly reports on the operations of KBMBPM;
6. THAT the Management Committee shall call a
General Assembly of all registered members of the
KBMBPM within Ninety (90) days from date of this
Order to decide such matters affecting the
KBMBPM, including the election of a new set of
Board of Director (sic).
This Order takes effect immediately and shall
continue to be in force until the members of the
Board of Directors shall have been duly elected
and qualified.
Done this 28th day of October, 1988 at Quezon
City.
As claimed by petitioners, the Order served on them was not
written on the stationary of the Department, does not bear its
seal and is a mere xerox copy.
The so-called petition upon which the Order is based appears
to be an unverified petition dated 10 October 1988 signed,
according to Mayor Bunye,
16
by 371 members of the
KBMBPM.
On 2 November 1988, petitioners filed the petition in this case
alleging, inter alia, that:
(a) Respondent Secretary acted without or in excess of
jurisdiction in issuing the Order for he arrogated unto
himself a judicial function by determining the alleged

8

guilt of petitioners on the strength of a mere unverified
petition; the disbandment of the Board of Directors was
done without authority of law since under Letter of
Implementation No. 23, removal of officers, directors or
committee members could be done only by the majority
of the members entitled to vote at an annual or special
general assembly and only after an opportunity to be
heard at said assembly.
(b) Respondent Secretary acted in a capricious,
whimsical, arbitrary and despotic manner, so patent and
gross that it amounted to a grave abuse of discretion.
(c) The Order is a clear violation of the By-Laws of
KBMBPM and is likewise illegal and unlawful for it allows
or tolerates the violation of the penal provisions under
paragraph (c), Section 9 of P.D. No. 175.
(d) The Order is a clear violation of the constitutional
right of the individual petitioners to be heard.
17

They pray that upon the filing of the petition, respondents,
their agents, representatives or persons acting on their behalf
be ordered to refrain, cease and desist from enforcing and
implementing the questioned Order or from excluding the
individual petitioners from the exercise of their rights as such
officers and, in the event that said acts sought to be restrained
were already partially or wholly done, to immediately restore
the management and operation of the public market to
petitioners, order respondents to vacate the premises and,
thereafter, preserve the status quo; and that, finally, the
challenged Order be declared null and void.
In the Resolution of 9 October 1988,
18
We required the
respondents to Comment on the petition. Before any Comment
could be filed, petitioners filed on 2 January 1989 an
Urgent Ex-Parte Motion praying that respondent Atty. Rogelio
Madriaga, who had assumed the position of Chairman of the
Management Committee, be ordered to stop and/or cancel the
scheduled elections of the officers of the KBMBPM on 6
January 1989 and, henceforth, desist from scheduling any
election of officers or Members of the Board of Directors thereof
until further orders on the Court.
19
The elections were,
nevertheless, held and a new board of directors was elected.
So, on 19 January 1989, petitioners filed a supplemental
motion
20
praying that respondent Madriaga and the "newly
elected Board of Directors be ordered to cease and desist from
assuming, performing or exercising powers as such, and/or
from removing or replacing the counsels of petitioners as
counsels for KBMBPM and for Atty. Fernando Aquino, Jr., to
cease and desist from unduly interfering with the affairs and
business of the cooperative."
Respondent Bunye, by himself, filed his Comment on 23
January 1989.
21
He denies the factual allegations in the
petition and claims that petitioners failed to exhaust
administrative remedies. A reply thereto was filed by
petitioners on 7 February 1989.
22

Respondent Recto Coronado filed two (2) Comments. The first
was filed on 6 February 1989
23
by his counsel, Atty. Fernando
Aquino, Jr., and the second, which is for both him and Atty.
Madriaga, was filed by the latter on 10 February 1989.
24

On 20 February 1989, petitioners filed a Reply to the first
Comment of Coronado
25
and an Ex-Parte Motion for the
immediate issuance of a cease and desist order
26
praying that
the so-called new directors and officers of KBMBPM, namely:
Tomas M. Osias, Ildefonso B. Reyes, Paulino Moldez, Fortunato
M. Medina, Aurora P. del Rosario, Moises Abrenica, and
Lamberto Casalla, be ordered to immediately cease and desist
from filing notices of withdrawals or motions to dismiss cases
filed by the Cooperative now pending before the courts,
administrative offices and the Ombudsman and Tanodbayan,
and that if such motions or notices were already filed, to
immediately withdraw and desist from further pursuing the
same until further orders of this Court. The latter was
precipitated by the Resolution No. 19 of the "new" board of
directors withdrawing all cases filed by its predecessors
against Bunye, et al., and more particularly the following
cases: (a) G.R. No. 85439 (the instant petition), (b) Civil Case
No. 88-1702, (c) OSP Case No. 88-2110 before the
Ombudsman, (d) IBP Case No. 88-0119 before the
Tanodbayan, and Civil Case No. 88-118 for Mandamus.
27

On 1 March 1989, We required the Solicitor General to file his
Comment to the petition and the urgent motion for the
immediate issuance of a cease and desist order.
28

A motion to dismiss the instant petition was filed on 30 March
1989.
29
On 19 April 1989, We resolved to dismiss the case and
consider it closed and terminated.
30
Thereupon, after some
petitioners filed a motion for clarification and reconsideration,
We set aside the dismissal order and required the new
directors to comment on the Opposition to Motion to Dismiss
filed by the former.
31

The new board, on 14 June 1989, prayed that its
Manifestation of 6 June 1989 and Opposition dated 9 June
1989, earlier submitted it response to petitioners' motion for
reconsideration of the order dismissing the instant petition, be
treated as its Comment.
32
Both parties then continued their
legal fencing, serving several pleadings on each other.
In Our Resolution of 9 August 1989,
33
We gave the petition
due course and required the parties to submit their respective
Memoranda.
On 14 August 1989, petitioners filed an urgent ex-parte motion
for the immediate issuance of a cease and desist order
34
in
view of the new board's plan to enter into a new management
contract; the motion was noted by this Court on 23 August
1989. A second ex-parte motion, noted on 18 October 1989,
was filed on 19 September 1989 asking this court to consider
the "Invitation to pre-qualify and bid" for a new contract
published by respondent Bunye.
35

In a belated Comment
36
for the respondent Secretary of
Agriculture filed on 22 September 1989, the Office of the
Solicitor General asserts that individual petitioners, who were
not allegedly elected by the members or duly designated by the
BACOD Director, have no right or authority to file this case;
the assailed Order of the Secretary was issued pursuant to
P.D. No. 175, more particularly Section 8 thereof which
authorizes him "(d) to suspend the operation or cancel the
registration of any cooperative after hearing and when in its
judgment and based on findings, such cooperative is operating
in violation of this Decree, rules and regulations, existing laws
as well as the by-laws of the cooperative itself;" the Order is
reasonably necessary to correct serious flaws in the
cooperative and provide interim measures until election of
regular members to the board and officers thereof; the
elections conducted on 6 January 1989 are valid; and that the
motion to dismiss filed by the new board of directors binds the
cooperative. It prays for the dismissal of the petition.
Respondent Secretary of Agriculture manifested on 22
September 1989 that he is adopting the Comment submitted
by the Office of the Solicitor General as his
memorandum;
37
petitioners and respondents Coronado and
Madriaga filed their separate Memoranda on 6 November
1989;
38
while the new board of directors submitted its
Memorandum on 11 December 1989.
39

The new KBMBPM board submitted additional pleadings on 16
February 1990 which it deemed relevant to the issues involved
herein. Reacting, petitioners filed a motion to strike out
improper and inadmissible pleadings and annexes and sought
to have the pleaders cited for contempt. Although We required
respondents to comment, the latter did not comply.
Nevertheless, a manifestation was filed by the same board on
25 February 1991
40
informing this Court of the holding, on 9
January 1991, of its annual general assembly and election of
its board of directors for 1991. It then reiterates the prayer
that the instant petition be considered withdrawn and
dismissed. Petitioners filed a counter manifestation alleging
that the instant petition was already given due course on 9
August 1989.
41
In its traverse to the counter manifestation,
the new board insists that it "did not derive authority from the
October 28, 1988 Order, the acts of the Management
Committee, nor (sic) from the elections held in (sic) January 6,
1989," but rather from the members of the cooperative who
elected them into office during the elections.
Petitioners filed a rejoinder asserting that the election of new
directors is not a supervening event independent of the main
issue in the present petition and that to subscribe to the
argument that the issues in the instant petition became moot
with their assumption into office is to reward a wrong done.

9

G. R. NO. 91927
Petitioners claim that without ruling on their 20 October 1988
motion for an extension of at last 15 days from 22 October
1988 within which to file their counter-affidavits, which was
received by the Office of the Special Prosecutor on 3 November
1988, Special Prosecutor Onos promulgated on 11 November
1988 a Resolution finding the evidence on hand sufficient to
establish a prima facie case against respondents (herein
petitioners) and recommending the filing of the corresponding
information against them before the
Sandiganbayan.
42
Petitioners also claim that they submitted
their counter-affidavits on 9 November 1988.
43

In their motion dated 2 December 1988, petitioners move for a
reconsideration of the above Resolution,
44
which was denied
by Onos
45
in his 18 January 1989 Order. The information
against the petitioners was attached to this order.
Upon submission of the records for his approval, the
Ombudsman issued a first indorsement on 4 April 1989
referring to "Judge Gualberto J. de la Llana, Acting Director ,
IEO/RSSO, this Office, the within records of OSP Case No. 88-
02110 . . . for further preliminary investigation . . ."
46

Thereafter, on 28 April 1989, Bunye and company received a
subpoena from de la Llana requiring them to appear before the
latter on 25 April 1989,
47
submit a report and file comment.
After being granted an extension, Bunye and company
submitted their comment on 18 May 1989.
48

On 22 August 1989, de la Llana recommended the filing of an
information for violation of section 3 (e) of the Anti-Graft and
Corrupt Practices Act.
49
The case was referred to special
prosecuting officer Jose Parentela, Jr. who, in his
Memorandum
50
to the Ombudsman through the Acting
Special Prosecutor, likewise urged that an information be filed
against herein petitioners. On 3 October 1989, the
Ombudsman signed his conformity to the Memorandum and
approved the 18 January information prepared by Onos, which
was then filed with the Sandiganbayan.
Consequently, Bunye, et al. were served arrest warrants issued
by the Sandiganbayan. Detained at the NBI on 9 October
1989, they claim to have discovered only then the existence of
documents recommending and approving the filing of the
complaint and a memorandum by special prosecutor
Bernardita G. Erum proposing the dismissal of the same.
51

Arraignment was set for 18 October 1989.
52

However, on 14 October 1989, petitioners filed with the
Sandiganbayan an "Omnibus Motion to Remand to the Office
of the Ombudsman; to Defer Arraignment and to Suspend
Proceedings."
53

Subsequently, through new counsel, petitioners filed on 17
October 1989 a Consolidated Manifestation and Supplemental
Motion
54
praying, inter alia, for the quashal of the information
on the ground that they were deprived of their right to a
preliminary investigation and that the information did not
charge an offense.
The Sandiganbayan issued an order on 18 October 1989
deferring arraignment and directing the parties to submit their
respective memoranda,
55
which petitioners complied with on 2
November 1989.
56
On 16 November 1989, special Prosecutor
Berbano filed a motion to admit amended
information.
57

On 17 November 1989, the Sandiganbayan handed down a
Resolution
58
denying for lack of merit the Omnibus Motion to
Remand the Case To The Office of the Ombudsman, to Defer
Arraignment and to Suspend Proceedings. Petitioners then
filed a motion to order a preliminary investigation
59
on the
basis of the introduction by the amended information of new,
material and substantive allegations, which the special
prosecutor opposed,
60
thereby precipitating a rejoinder filed by
petitioners.
61

On 4 January 1990, the Sandiganbayan handed down a
Resolution
62
admitting the Amended Information and denying
the motion to direct preliminary investigation. Their motion to
reconsider this Resolution having been denied in the
Resolution of 1 February 1990,
63
petitioners filed the instant
petition on 12 February 1990.
Petitioners claim that respondent Sandiganbayan acted
without or in excess of jurisdiction or with manifest grave
abuse of discretion amounting to lack of jurisdiction in denying
petitioners their right to preliminary investigation and in
admitting the Amended Information.
They then pray that: (a) the 4 January and 1 February 1990
Resolutions of the Sandiganbayan, admitting the amended
information and denying the motion for reconsideration,
respectively, be annulled; (b) a writ be issued enjoining the
Sandiganbayan from proceeding further in Criminal Case No.
13966; and (c) respondents be enjoined from pursuing further
actions in the graft case.
We required the respondents to Comment on the petition.
On 21 February 1990, petitioners' counsel filed a motion to
drop Epifanio Espeleta and Rey E. Dulay as petitioners,
64
and
in the Comment they filed on 30 March 1990, in compliance
with Our Resolution of 1 March 1990, they state that they do
not interpose any objection to the motion.
On 20 March 1990, the Office of the Solicitor General moved
that it be excused from filing comment for the respondents as
it cannot subscribe to the position taken by the latter with
respect to the questions of law involved.
65
We granted this
motion in the resolution of 8 May 1990.
Respondent Berbano filed his comment on 10 September 1991
and petitioners replied on 20 December 1990; Berbano
subsequently filed a Rejoinder thereto on 11 January
1991.
66
The Sandiganbayan then filed a manifestation
proposing that it be excused from filing comment as its
position
on the matters in issue is adequately stated in the resolutions
sought to be annulled.
67
On 7 March 1991, We resolved to
note the manifestation and order the instant petition
consolidated with G.R. No. 85439.
The present dispute revolves around the validity of the
antecedent proceedings which led to the filing of the original
information on 18 January 1989 and the amended information
afterwards.
THE ISSUES AND THEIR RESOLUTION
1. G. R. No. 85439.
As adverted to in the introductory portion of this Decision, the
principal issue in G.R. No. 85439 is the validity of the 28
October 1988 Order of respondent Secretary of Agriculture.
The exordium of said Order unerringly indicates that its basis
is the alleged petition of the general membership of the
KBMBPM requesting the Department for assistance "in the
removal of the members of the Board of Directors who were not
elected by the general membership" of the cooperative and that
the "ongoing financial and management audit of the
Department of Agriculture auditors show (sic) that the
management of the KBMBPM is not operating that cooperative
in accordance with P.D. 175, LOI 23, the Circulars issued by
DA/BACOD and the provisions and by-laws of KBMBPM." It is
also professed therein that the Order was issued by the
Department "in the exercise of its regulatory and supervisory
powers under Section 8 of P.D. 175, as amended, and Section
4 of Executive Order No. 113."
Respondents challenge the personality of the petitioners to
bring this action, set up the defense of non-exhaustion of
administrative remedies, and assert that the Order was
lawfully and validly issued under the above decree and
Executive Order.
We find merit in the petition and the defenses interposed do
not persuade Us.
Petitioners have the personality to file the instant petition and
ask, in effect, for their reinstatement as Section 3, Rule 65 of
the Rules of Court, defining an action for mandamus, permits a
person who has been excluded from the use and enjoyment of
a right or office to which he is entitled, to file
suit.
68
Petitioners, as ousted directors of the KBMBPM, are

10

questioning precisely the act of respondent Secretary in
disbanding the board of directors; they then pray that this
Court restore them to their prior stations.
As to failure to exhaust administrative remedies, the rule is
well-settled that this requirement does not apply where the
respondent is a department secretary whose acts, as an alter
ego of the President, bear the implied approval of the latter,
unless actually disapproved by him.
69
This doctrine of
qualified political agency ensures speedy access to the courts
when most needed. There was no need then to appeal the
decision to the office of the President; recourse to the courts
could be had immediately. Moreover, the doctrine of
exhaustion of administrative remedies also yields to other
exceptions, such as when the question involved is purely legal,
as in the instant case,
70
or where the questioned act is
patently illegal, arbitrary or oppressive.
71
Such is the claim of
petitioners which, as hereinafter shown, is correct.
And now on the validity of the assailed Order.
Regulation 34 of Letter of Implementation No. 23
(implementing P.D. No. 175) provides the procedure for the
removal of directors or officers of cooperatives, thus:
An elected officer, director or committee member may be
removed by a vote of majority of the members entitled to
vote at an annual or special general assembly. The
person involved shall have an opportunity to be heard.
A substantially identical provision, found in Section 17, Article
III of the KBMBPM's by-laws, reads:
Sec. 17. Removal of Directors and Committee Members.
Any elected director or committee member may be
removed from office for cause by a majority vote of the
members in good standing present at the annual or
special general assembly called for the purpose after
having been given the opportunity to be heard at the
assembly.
Under the same article are found the requirements for the
holding of both the annual general assembly and a special
general assembly.
Indubitably then, there is an established procedure for the
removal of directors and officers of cooperatives. It is likewise
manifest that the right to due process is respected by the
express provision on the opportunity to be heard. But even
without said provision, petitioners cannot be deprived of that
right.
The procedure was not followed in this case. Respondent
Secretary of Agriculture arrogated unto himself the power of
the members of the KBMBPM who are authorized to vote to
remove the petitioning directors and officers. He cannot take
refuge under Section 8 of P.D. No. 175 which grants him
authority to supervise and regulate all cooperatives. This
section does not give him that right.
An administrative officer has only such powers as are
expressly granted to him and those necessarily implied in the
exercise thereof.
72
These powers should not be extended by
implication beyond what may to necessary for their just and
reasonable execution.
73

Supervision and control include only the authority to: (a) act
directly whenever a specific function is entrusted by law or
regulation to a subordinate; (b) direct the performance of duty;
restrain the commission of acts; (c) review, approve, reverse or
modify acts and decisions of subordinate officials or
units; (d) determine priorities in the execution of plans and
programs; and (e) prescribe standards, guidelines, plans and
programs. Specifically, administrative supervision is limited to
the authority of the department or its equivalent to: (1)
generally oversee the operations of such agencies and insure
that they are managed effectively, efficiently and economically
but without interference with day-to-day activities; (2) require
the submission of reports and cause the conduct of
management audit, performance evaluation and inspection to
determine compliance with policies, standards and guidelines
of the department; (3) take such action as may be necessary
for the proper performance of official functions, including
rectification of violations, abuses and other forms of mal-
administration; (4) review and pass upon budget proposals of
such agencies but may not increase or add to them.
74

The power to summarily disband the board of directors may
not be inferred from any of the foregoing as both P.D. No. 175
and the by-laws of the KBMBPM explicitly mandate the
manner by which directors and officers are to be removed. The
Secretary should have known better than to disregard these
procedures and rely on a mere petition by the general
membership of the KBMBPM and an on-going audit by
Department of Agriculture auditors in exercising a power
which he does not have, expressly or impliedly. We cannot
concede to the proposition of the Office of the Solicitor General
that the Secretary's power under paragraph (d), Section 8 of
P.D. No. 175 above quoted to suspend the operation or cancel
the registration of any cooperative includes the "milder
authority of suspending officers and calling for the election of
new officers." Firstly, neither suspension nor cancellation
includes the take-over and ouster of incumbent directors and
officers, otherwise the law itself would have expressly so
stated. Secondly, even granting that the law intended such as
postulated, there is the requirement of a hearing. None was
conducted.
Likewise, even if We grant, for the sake of argument, that said
power includes the power to disband the board of directors and
remove the officers of the KBMBPM, and that a hearing was
not expressly required in the law, still the Order can be validly
issued only after giving due process to the affected parties,
herein petitioners.
Due process is guaranteed by the Constitution
75
and extends
to administrative proceedings. In the landmark case ofAng
Tibay vs. Court of Industrial Relations,
76
this Court, through
Justice Laurel, laid down the cardinal primary requirements of
due process in administrative proceedings, foremost of which
is the right to a hearing, which includes the right to present
one's case and submit evidence in support thereof. The need
for notice and the opportunity to be heard is the heart of
procedural due process, be it in either judicial or
administrative proceedings.
77
Nevertheless, a plea of a denial
of procedural due process does not lie where a defect
consisting in an absence of notice of hearing was thereafter
cured by the aggrieved party himself as when he had the
opportunity to be heard on a subsequent motion for
reconsideration. This is consistent with the principle that what
the law prohibits is not the absence of previous notice but the
absolute absence thereof and lack of an opportunity to be
heard.
78

In the instant case, there was no notice of a hearing on the
alleged petition of the general membership of the KBMBPM;
there was, as well, not even a semblance of a hearing. The
Order was based solely on an alleged petition by the general
membership of the KBMBPM. There was then a clear denial of
due process. It is most unfortunate that it was done after
democracy was restored through the peaceful people revolt at
EDSA and the overwhelming ratification of a new Constitution
thereafter, which preserves for the generations to come the
gains of that historic struggle which earned for this Republic
universal admiration.
If there were genuine grievances against petitioners, the
affected members should have timely raise these issues in the
annual general assembly or in a special general assembly. Or,
if such a remedy would be futile for some reason or another,
judicial recourse was available.
Be that as it may, petitioners cannot, however, be restored to
their positions. Their terms expired in 1989, thereby rendering
their prayer for reinstatement moot and academic. Pursuant to
Section 13 of the by-laws, during the election at the first
annual general assembly after registration, one-half plus one
(4) of the directors obtaining the highest number of votes shall
serve for two years, and the remaining directors (3) for one
year; thereafter, all shall be elected for a term of two years.
Hence, in 1988, when the board was disbanded, there was a
number of directors whose terms would have expired the next
year (1989) and a number whose terms would have expired
two years after (1990). Reversion to the status quo preceding
29 October 1988 would not be feasible in view of this turn of
events. Besides, elections were held in 1990 and 1991.
79
The
affairs of the cooperative are presently being managed by a
new board of directors duly elected in accordance with the
cooperative's by-laws.
2. G. R. No. 91927.

11

The right of an accused to a preliminary investigation is not
among
the rights guaranteed him in the Bill of Rights. As stated
in Marcos, et al. vs. Cruz, 80 "the preliminary investigation in
criminal cases is not a creation of the Constitution; its origin is
statutory and it exists and the right thereto can be invoked
when so established and granted by law. It is so specifically
granted by procedural law. 81 If not waived, absence thereof
may amount to a denial of due process. 82 However, lack of
preliminary investigation is not a ground to quash or dismiss a
complaint or information. Much less does it affect the court's
jurisdiction. In People vs.Casiano, 83 this Court ruled:
Independently of the foregoing, the absence of such
investigation [preliminary] did not impair the validity of
the information or otherwise render it defective. Much less
did it affect the jurisdiction of the court of first instance
over the present case. Hence, had the defendant-appellee
been entitled to another preliminary investigation, and
had his plea of not guilty upon arraignment not implied a
waiver of said right, the court of first instance should
have, either conducted such preliminary investigation, or
ordered the Provincial Fiscal to make it, in pursuance of
section 1687 of the Revised Administrative Code (as
amended by Republic Act No. 732), or remanded the
record for said investigation to the justice of the peace
court, instead of dismissing the case as it did in the order
appealed from.
This doctrine was thereafter reiterated or affirmed in several
case. 84
In the instant case, even if it is to be conceded for argument's
sake that there was in fact no preliminary investigation, the
Sandiganbayan, per Doromal vs. Sandiganbayan, 85 "should
merely suspend or hold in abeyance proceedings upon the
questioned Amended Information and remand the case to the
Office of the Ombudsman for him to conduct a preliminary
investigation."
It is Our view, however, that petitioners were not denied the
right to preliminary investigation. They, nevertheless, insist
that the preliminary investigation conducted by the Office of
the Special Prosecutor existed more in form than in substance.
This is anchored on the failure by prosecutor Onos to consider
the counter-affidavits filed by petitioners. The same sin of
omission is ascribed to Acting Director de la Llana who
purportedly failed to consider the comments submitted by the
petitioners pursuant to a subpoena dated 13 April 1989. The
failure of special prosecutor Berbano to conduct a preliminary
investigation before amending the information is also
challenged.
It is finally urged that the Sandiganbayan completely
disregarded the "glaring anomaly that on its face the
Information filed by the Office of the Special Prosecutor" was
prepared and subscribed on 18 January 1989, while the
records indicate that the preliminary investigation was
concluded on 3 October 1989.
In his Comment, respondent Berbano dispassionately traces
the genesis of the criminal information filed before the
Sandiganbayan. His assessment that a preliminary
investigation sufficient in substance and manner was
conducted prior to the filing of the information reflects the view
of the Sandiganbayan, maintained in both the 17 November
1989 and 4 January 1990 resolutions, that there was
compliance with the requirements of due process.
Petitioners were provided a reasonable period within which to
submit their counter-affidavits; they did not avail of the
original period; they moved for an extension of at least fifteen
(15) days from 22 October 1988. Despite the urgency of its
nature, the motion was sent by mail. The extension prayed for
was good up to 6 November 1988. But, as admitted by them,
they filed the Counter-Affidavits only on 9 November 1988. Yet,
they blamed prosecutor Onos for promulgating the 11
November 1989 Resolution and for, allegedly, not acting on the
motion. Petitioners then should not lay the blame on Onos;
they should blame themselves for presuming that the motion
would be granted.
This notwithstanding, petitioners were able to file a Motion for
Reconsideration on 13 December 1988 requesting that the
reviewing prosecutor consider the belatedly filed
documents; 86 thus, there is the recommendation of
prosecutor Bernardita Erum calling for the dismissal of the
charges on 2 March 1989, which, however, was not sustained
upon subsequent review. The Sandiganbayan, in its 17
November 1989 Resolution, succinctly summed up the matter
when it asserted that "even granting, for the sake of argument,
that prosecutor Onos . . . failed to consider accused-movants'
counter-affidavits, such defect was cured when a "Motion for
Reconsideration" was filed, and
which . . . de la Llana took into account upon review."
It may not then be successfully asserted that the counter-
affidavits were not considered by the Ombudsman in
approving the information. Perusal of the factual antecedents
reveals that a second investigation was conducted upon the
"1st Indorsement" of the Ombudsman of 4 April 1989. As a
result, subpoenas were issued and comments were asked to be
submitted, which petitioners did, but only after a further
extension of fifteen (15) days from the expiration of the original
deadline. From this submission the matter underwent further
review.
Moreover, in the 18 January 1989 Order of prosecutor Onos,
there was an ample discussion of the defenses raised by the
petitioners in their counter-affidavits, thus negating the charge
that the issues raised by them were not considered at all. 87
It is indisputable that the respondents were not remiss in their
duty to afford the petitioners the opportunity to contest the
charges thrown their way. Due process does not require that
the accused actually file his counter-affidavits before the
preliminary investigation is deemed completed. All that is
required is that he be given the opportunity to submit such if
he is so minded. 88
In any event, petitioners did in fact, although belatedly, submit
their counter-affidavits and as a result thereof, the prosecutors
concerned considered them in subsequent reviews of the
information, particularly in the re-investigation ordered by the
Ombudsman.
And now, as to the protestation of lack of preliminary
investigation prior to the filing of the Amended Information.
The prosecution may amend the information without leave of
court before arraignment, 89 and such does not prejudice the
accused.
90
Reliance on the pronouncements in Doromal
vs. Sandiganbayan
91
is misplaced as what obtained therein
was the preparation of an entirely new information as
contrasted with mere amendments introduced in the amended
information, which also charges petitioners with violating
Section 3 (e) of the Anti-Graft Law.
In Gaspar vs. Sandiganbayan,
92
We held that there is no rule
or law requiring the Tanodbayan to conduct another
preliminary investigation of a case under review by it. On the
contrary, under P.D. No. 911, in relation to Rule 12,
Administrative Order No. VII, the Tanodbayan may, upon
review, reverse the findings of the investigator and thereafter
"where he finds a prima facie case, to cause the filing of an
information in court against the respondent, based on the
same sworn statements or evidence submitted, without the
necessity of conducting another preliminary investigation."
Respondent Sandiganbayan did not then commit any grave
abuse of discretion in respect to its Resolutions of 4 January
1990 and 1 February 1990.
The petition then must fail.
CONCLUSION
WHEREFORE, judgment is hereby rendered:
1. GRANTING the petition in G.R. No. 85439; declaring null
and void the challenged Order of 28 October 1988 of the
respondent Secretary of Agriculture; but denying, for having
become moot and academic, the prayer of petitioners that they
be restored to their positions in the KBMBPM.
2. DISMISSING, for lack of merit, the petition in G.R. No.
91927.
No pronouncement as to costs.

12

IT IS SO ORDERED.
[G.R. No. 144463. January 14, 2004]
SENATOR ROBERT S. JAWORSKI, petitioner, vs.
PHILIPPINE AMUSEMENT AND GAMING
CORPORATION and SPORTS AND GAMES
ENTERTAINMENT CORPORATION,respondents.

The instant petition for certiorari and prohibition under
Rule 65 of the Rules of Court seeks to nullify the Grant of
Authority and Agreement for the Operation of Sports Betting
and Internet Gaming, executed by respondent Philippine
Amusement and Gaming Corporation (hereinafter referred to
as PAGCOR) in favor of respondent Sports and Games and
Entertainment Corporation (also referred to as SAGE).
The facts may be summarized as follows:
PAGCOR is a government owned and controlled
corporation existing under Presidential Decree No. 1869 issued
on July 11, 1983 by then President Ferdinand
Marcos. Pertinent provisions of said enabling law read:
SECTION 1. Declaration of Policy. It is hereby declared to be
the policy of the State to centralize and integrate all games of
chance not heretofore authorized by existing franchises or
permitted by law in order to attain the following objectives:
x x x x x x x x x
b) To establish and operate clubs and casinos, for
amusement and recreation, including sports, gaming pools
(basketball, football, lotteries, etc.) and such other forms of
amusement and recreation including games of chance, which
may be allowed by law within the territorial jurisdiction of the
Philippines and which will: x x x (3) minimize, if not totally
eradicate, the evils, malpractices and corruptions that are
normally prevalent in the conduct and operation of gambling
clubs and casinos without direct government involvement.
x x x x x x x x x
TITLE IV GRANT OF FRANCHISE
Sec.10. Nature and term of franchise. Subject to the terms
and conditions established in this Decree, the Corporation is
hereby granted for a period of twenty-five (25) years, renewable
for another twenty-five (25) years, the rights, privileges and
authority to operate and maintain gambling casinos, clubs,
and other recreation or amusement places, sports, gaming
pools, i.e. basketball, football, lotteries, etc. whether on land or
sea, within the territorial jurisdiction of the Republic of the
Philippines.
On March 31, 1998, PAGCORs board of directors
approved an instrument denominated as Grant of Authority
and Agreement for the Operation of Sports Betting and Internet
Gaming, which granted SAGE the authority to operate and
maintain Sports Betting station in PAGCORs casino locations,
and Internet Gaming facilities to service local and international
bettors, provided that to the satisfaction of PAGCOR,
appropriate safeguards and procedures are established to
ensure the integrity and fairness of the games.
On September 1, 1998, PAGCOR, represented by its
Chairperson, Alicia Ll. Reyes, and SAGE, represented by its
Chairman of the Board, Henry Sy, Jr., and its President,
Antonio D. Lacdao, executed the above-named document.
Pursuant to the authority granted by PAGCOR, SAGE
commenced its operations by conducting gambling on the
Internet on a trial-run basis, making pre-paid cards and
redemption of winnings available at various Bingo Bonanza
outlets.
Petitioner, in his capacity as member of the Senate and
Chairman of the Senate Committee on Games, Amusement
and Sports, files the instant petition, praying that the grant of
authority by PAGCOR in favor of SAGE be nullified. He
maintains that PAGCOR committed grave abuse of discretion
amounting to lack or excess of jurisdiction when it authorized
SAGE to operate gambling on the internet. He contends that
PAGCOR is not authorized under its legislative franchise, P.D.
1869, to operate gambling on the internet for the simple
reason that the said decree could not have possibly
contemplated internet gambling since at the time of its
enactment on July 11, 1983 the internet was yet inexistent
and gambling activities were confined exclusively to real-
space. Further, he argues that the internet, being an
international network of computers, necessarily transcends the
territorial jurisdiction of the Philippines, and the grant to
SAGE of authority to operate internet gambling contravenes
the limitation in PAGCORs franchise, under Section 14 of P.D.
No. 1869 which provides:
Place. The Corporation [i.e., PAGCOR] shall conduct
gambling activities or games of chance on land or water within
the territorial jurisdiction of the Republic of the Philippines. x x
x
Moreover, according to petitioner, internet gambling does
not fall under any of the categories of the authorized gambling
activities enumerated under Section 10 of P.D. No. 1869 which
grants PAGCOR the right, privilege and authority to operate
and maintain gambling casinos, clubs, and other recreation or
amusement places, sports gaming pools, within the territorial
jurisdiction of the Republic of the Philippines.
[1]
He contends
that internet gambling could not have been included within the
commonly accepted definition of gambling casinos, clubs or
other recreation or amusement places as these terms refer to
a physical structure in real-space where people who intend to
bet or gamble go and play games of chance authorized by law.
The issues raised by petitioner are as follows:
I. WHETHER OR NOT RESPONDENT PAGCOR IS
AUTHORIZED UNDER P.D. NO. 1869 TO
OPERATE GAMBLING ACTIVITIES ON THE
INTERNET;
II. WHETHER RESPONDENT PAGCOR ACTED
WITHOUT OR IN EXCESS OF ITS
JURISDICTION, OR GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OR
EXCESS OF JURISDICTION, WHEN IT
AUTHORIZED RESPONDENT SAGE TO
OPERATE INTERNET GAMBLING ON THE
BASIS OF ITS RIGHT TO OPERATE AND
MAINTAIN GAMBLING CASINOS, CLUBS AND
OTHER AMUSEMENT PLACES UNDER
SECTION 10 OF P.D. 1869;
III. WHETHER RESPONDENT PAGCOR ACTED
WITHOUT OR IN EXCESS OF ITS
JURISDICTION OR WITH GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OR
EXCESS OF JURISDICTION WHEN IT
GRANTED AUTHORITY TO SAGE TO OPERATE
GAMBLING ACTIVITIES IN THE INTERNET.
The above-mentioned issues may be summarized into a
single pivotal question: Does PAGCORs legislative franchise
include the right to vest another entity, SAGE in this case,
with the authority to operate Internet gambling? Otherwise
put, does Presidential Decree No. 1869 authorize PAGCOR to
contract any part of its franchise to SAGE by authorizing the
latter to operate Internet gambling?
Before proceeding with our main discussion, let us first
try to hurdle a number of important procedural matters raised
by the respondents.
In their separate Comments, respondents PAGCOR and
SAGE insist that petitioner has no legal standing to file the
instant petition as a concerned citizen or as a member of the
Philippine Senate on the ground that he is not a real party-in-
interest entitled to the avails of the suit. In this light, they
argue that petitioner does not have the requisite personal and
substantial interest to impugn the validity of PAGCORs grant
of authority to SAGE.
Objections to the legal standing of a member of the
Senate or House of Representative to maintain a suit and
assail the constitutionality or validity of laws, acts, decisions,
rulings, or orders of various government agencies or
instrumentalities are not without precedent. Ordinarily, before
a member of Congress may properly challenge the validity of
an official act of any department of the government there must
be an unmistakable showing that the challenged official act
affects or impairs his rights and prerogatives as
legislator.
[2]
However in a number of cases,
[3]
we clarified that
where a case involves an issue of utmost importance, or one of
overreaching significance to society, the Court, in its
discretion, can brush aside procedural technicalities and take
cognizance of the petition. Considering that the instant petition
involves legal questions that may have serious implications on

13

public interests, we rule that petitioner has the requisite legal
standing to file this petition.
Respondents likewise urge the dismissal of the petition
for certiorari and prohibition because under Section 1, Rule 65
of the 1997 Rules of Civil Procedure, these remedies should be
directed to any tribunal, board, officer or person whether
exercising judicial, quasi-judicial, or ministerial functions.
They maintain that in exercising its legally-mandated franchise
to grant authority to certain entities to operate a gambling or
gaming activity, PAGCOR is not performing a judicial or quasi-
judicial act. Neither should the act of granting licenses or
authority to operate be construed as a purely ministerial
act. According to them, in the event that this Court takes
cognizance of the instant petition, the same should be
dismissed for failure of petitioner to observe the hierarchy of
courts.
Practically the same procedural infirmities were raised
in Del Mar v. Philippine Amusement and Gaming
Corporation where an almost identical factual setting obtained.
Petitioners therein filed a petition for injunction directly before
the Court which sought to enjoin respondent from operating
the jai-alai games by itself or in joint venture with another
corporate entity allegedly in violation of law and the
Constitution. Respondents contended that the Court had no
jurisdiction to take original cognizance of a petition for
injunction because it was not one of the actions specifically
mentioned in Section 1 of Rule 56 of the 1997 Rules of Civil
Procedure. Respondents likewise took exception to the alleged
failure of petitioners to observe the doctrine on hierarchy of
courts. In brushing aside the apparent procedural lapse, we
held that x x x this Court has the discretionary power to take
cognizance of the petition at bar if compelling reasons, or the
nature and importance of the issues raised, warrant the
immediate exercise of its jurisdiction.
[4]

In the case at bar, we are not inclined to rule differently.
The petition at bar seeks to nullify, via a petition for certiorari
and prohibition filed directly before this Court, the Grant of
Authority and Agreement for the Operation of Sports Betting
and Internet Gaming by virtue of which SAGE was vested by
PAGCOR with the authority to operate on-line Internet
gambling. It is well settled that averments in the complaint,
and not the nomenclature given by the parties, determine the
nature of the action.
[5]
Although the petition alleges grave
abuse of discretion on the part of respondent PAGCOR, what it
primarily seeks to accomplish is to prevent the enforcement of
the Grant of Authority and Agreement for the Operation of
Sports Betting and Internet Gaming. Thus, the action may
properly be characterized as one for Prohibition under Section
2 of Rule 65, which incidentally, is another remedy resorted to
by petitioner.
Granting arguendo that the present action cannot be
properly treated as a petition for prohibition, the
transcendental importance of the issues involved in this case
warrants that we set aside the technical defects and take
primary jurisdiction over the petition at bar. One cannot deny
that the issues raised herein have potentially pervasive
influence on the social and moral well being of this nation,
specially the youth; hence, their proper and just determination
is an imperative need. This is in accordance with the well-
entrenched principle that rules of procedure are not inflexible
tools designed to hinder or delay, but to facilitate and promote
the administration of justice. Their strict and rigid application,
which would result in technicalities that tend to frustrate,
rather than promote substantial justice, must always be
eschewed.
[6]

Having disposed of these procedural issues, we now come
to the substance of the action.
A legislative franchise is a special privilege granted by the
state to corporations. It is a privilege of public concern which
cannot be exercised at will and pleasure, but should be
reserved for public control and administration, either by the
government directly, or by public agents, under such
conditions and regulations as the government may impose on
them in the interest of the public. It is Congress that
prescribes the conditions on which the grant of the franchise
may be made. Thus the manner of granting the franchise, to
whom it may be granted, the mode of conducting the business,
the charter and the quality of the service to be rendered and
the duty of the grantee to the public in exercising the franchise
are almost always defined in clear and unequivocal language.
[7]

After a circumspect consideration of the foregoing
discussion and the contending positions of the parties, we hold
that PAGCOR has acted beyond the limits of its authority when
it passed on or shared its franchise to SAGE.
In the Del Mar case where a similar issue was raised
when PAGCOR entered into a joint venture agreement with two
other entities in the operation and management of jai alai
games, the Court,
[8]
in an En Banc Resolution dated 24 August
2001, partially granted the motions for clarification filed by
respondents therein insofar as it prayed that PAGCOR has a
valid franchise, but only by itself (i.e. not in association with
any other person or entity), to operate, maintain and/or
manage the game of jai-alai.
In the case at bar, PAGCOR executed an agreement with
SAGE whereby the former grants the latter the authority to
operate and maintain sports betting stations and Internet
gaming operations. In essence, the grant of authority gives
SAGE the privilege to actively participate, partake and share
PAGCORs franchise to operate a gambling activity. The grant
of franchise is a special privilege that constitutes a right and a
duty to be performed by the grantee. The grantee must not
perform its activities arbitrarily and whimsically but must
abide by the limits set by its franchise and strictly adhere to its
terms and conditionalities. A corporation as a creature of the
State is presumed to exist for the common good. Hence, the
special privileges and franchises it receives are subject to the
laws of the State and the limitations of its charter. There is
therefore a reserved right of the State to inquire how these
privileges had been employed, and whether they have been
abused.
[9]

While PAGCOR is allowed under its charter to enter into
operators and/or management contracts, it is not allowed
under the same charter to relinquish or share its franchise,
much less grant a veritable franchise to another entity such as
SAGE. PAGCOR can not delegate its power in view of the legal
principle of delegata potestas delegare non potest, inasmuch as
there is nothing in the charter to show that it has been
expressly authorized to do so. In Lim v. Pacquing,
[10]
the Court
clarified that since ADC has no franchise from Congress to
operate the jai-alai, it may not so operate even if it has a
license or permit from the City Mayor to operate the jai-alai in
the City of Manila. By the same token, SAGE has to obtain a
separate legislative franchise and not ride on PAGCORs
franchise if it were to legally operate on-line Internet gambling.
WHEREFORE, in view of all the foregoing, the instant
petition is GRANTED. The Grant of Authority and Agreement
to Operate Sports Betting and Internet Gaming executed by
PAGCOR in favor of SAGE is declared NULL and VOID.
SO ORDERED.
[G.R. No. 151908. August 12, 2003]
SMART COMMUNICATIONS, INC. (SMART) and PILIPINO
TELEPHONE CORPORATION (PILTEL), petitioners,
vs. NATIONAL TELECOMMUNICATIONS
COMMISSION (NTC),respondent.
[G.R. No. 152063. August 12, 2003]
GLOBE TELECOM, INC. (GLOBE) and ISLA
COMMUNICATIONS CO., INC.
(ISLACOM), petitioners, vs. COURT OF APPEALS
(The Former 6
th
Division) and the NATIONAL
TELECOMMUNICATIONS
COMMISSION, respondents.

Pursuant to its rule-making and regulatory powers, the
National Telecommunications Commission (NTC) issued on
June 16, 2000 Memorandum Circular No. 13-6-2000,
promulgating rules and regulations on the billing of
telecommunications services. Among its pertinent provisions
are the following:
(1) The billing statements shall be received by the subscriber
of the telephone service not later than 30 days from the end of
each billing cycle. In case the statement is received beyond
this period, the subscriber shall have a specified grace period
within which to pay the bill and the public telecommunications
entity (PTEs) shall not be allowed to disconnect the service
within the grace period.
(2) There shall be no charge for calls that are diverted to a
voice mailbox, voice prompt, recorded message or similar
facility excluding the customers own equipment.
(3) PTEs shall verify the identification and address of each
purchaser of prepaid SIM cards. Prepaid call cards and SIM
cards shall be valid for at least 2 years from the date of first
use. Holders of prepaid SIM cards shall be given 45 days from
the date the prepaid SIM card is fully consumed but not

14

beyond 2 years and 45 days from date of first use to replenish
the SIM card, otherwise the SIM card shall be rendered
invalid. The validity of an invalid SIM card, however, shall be
installed upon request of the customer at no additional charge
except the presentation of a valid prepaid call card.
(4) Subscribers shall be updated of the remaining value of
their cards before the start of every call using the cards.
(5) The unit of billing for the cellular mobile telephone
service whether postpaid or prepaid shall be reduced from 1
minute per pulse to 6 seconds per pulse. The authorized rates
per minute shall thus be divided by 10.
[1]

The Memorandum Circular provided that it shall take
effect 15 days after its publication in a newspaper of general
circulation and three certified true copies thereof furnished the
UP Law Center. It was published in the newspaper, The
Philippine Star, on June 22, 2000.
[2]
Meanwhile, the
provisions of the Memorandum Circular pertaining to the sale
and use of prepaid cards and the unit of billing for cellular
mobile telephone service took effect 90 days from the effectivity
of the Memorandum Circular.
On August 30, 2000, the NTC issued a Memorandum to
all cellular mobile telephone service (CMTS) operators which
contained measures to minimize if not totally eliminate the
incidence of stealing of cellular phone units. The
Memorandum directed CMTS operators to:
a. strictly comply with Section B(1) of MC 13-6-
2000 requiring the presentation and verification
of the identity and addresses of prepaid SIM
card customers;
b. require all your respective prepaid SIM cards
dealers to comply with Section B(1) of MC 13-6-
2000;
c. deny acceptance to your respective networks
prepaid and/or postpaid customers using stolen
cellphone units or cellphone units registered to
somebody other than the applicant when
properly informed of all information relative to
the stolen cellphone units;
d. share all necessary information of stolen
cellphone units to all other CMTS operators in
order to prevent the use of stolen cellphone
units; and
e. require all your existing prepaid SIM card
customers to register and present valid
identification cards.
[3]

This was followed by another Memorandum dated
October 6, 2000 addressed to all public telecommunications
entities, which reads:
This is to remind you that the validity of all prepaid
cards sold on 07 October 2000 and beyond shall be
valid for at least two (2) years from date of first use
pursuant to MC 13-6-2000.
In addition, all CMTS operators are reminded that all
SIM packs used by subscribers of prepaid cards sold on
07 October 2000 and beyond shall be valid for at least
two (2) years from date of first use. Also, the billing unit
shall be on a six (6) seconds pulse effective 07 October
2000.
For strict compliance.
[4]

On October 20, 2000, petitioners Isla Communications
Co., Inc. and Pilipino Telephone Corporation filed against the
National Telecommunications Commission, Commissioner
Joseph A. Santiago, Deputy Commissioner Aurelio M. Umali
and Deputy Commissioner Nestor C. Dacanay, an action for
declaration of nullity of NTC Memorandum Circular No. 13-6-
2000 (the Billing Circular) and the NTC Memorandum dated
October 6, 2000, with prayer for the issuance of a writ of
preliminary injunction and temporary restraining order. The
complaint was docketed as Civil Case No. Q-00-42221 at the
Regional Trial Court of Quezon City, Branch 77.
[5]

Petitioners Islacom and Piltel alleged, inter alia, that the
NTC has no jurisdiction to regulate the sale of consumer goods
such as the prepaid call cards since such jurisdiction belongs
to the Department of Trade and Industry under the Consumer
Act of the Philippines; that the Billing Circular is oppressive,
confiscatory and violative of the constitutional prohibition
against deprivation of property without due process of law;
that the Circular will result in the impairment of the viability of
the prepaid cellular service by unduly prolonging the validity
and expiration of the prepaid SIM and call cards; and that the
requirements of identification of prepaid card buyers and call
balance announcement are unreasonable. Hence, they prayed
that the Billing Circular be declared null and void ab initio.
Soon thereafter, petitioners Globe Telecom, Inc and
Smart Communications, Inc. filed a joint Motion for Leave to
Intervene and to Admit Complaint-in-Intervention.
[6]
This was
granted by the trial court.
On October 27, 2000, the trial court issued a temporary
restraining order enjoining the NTC from implementing
Memorandum Circular No. 13-6-2000 and the Memorandum
dated October 6, 2000.
[7]

In the meantime, respondent NTC and its co-defendants
filed a motion to dismiss the case on the ground of petitioners
failure to exhaust administrative remedies.
Subsequently, after hearing petitioners application for
preliminary injunction as well as respondents motion to
dismiss, the trial court issued on November 20, 2000 an
Order, the dispositive portion of which reads:
WHEREFORE, premises considered, the defendants motion to
dismiss is hereby denied for lack of merit. The plaintiffs
application for the issuance of a writ of preliminary injunction
is hereby granted. Accordingly, the defendants are hereby
enjoined from implementing NTC Memorandum Circular 13-6-
2000 and the NTC Memorandum, dated October 6, 2000,
pending the issuance and finality of the decision in this
case. The plaintiffs and intervenors are, however, required to
file a bond in the sum of FIVE HUNDRED THOUSAND PESOS
(P500,000.00), Philippine currency.
SO ORDERED.
[8]

Defendants filed a motion for reconsideration, which was
denied in an Order dated February 1, 2001.
[9]

Respondent NTC thus filed a special civil action for
certiorari and prohibition with the Court of Appeals, which was
docketed as CA-G.R. SP. No. 64274. On October 9, 2001, a
decision was rendered, the decretal portion of which reads:
WHEREFORE, premises considered, the instant petition for
certiorari and prohibition is GRANTED, in that, the order of the
court a quo denying the petitioners motion to dismiss as well
as the order of the court a quo granting the private
respondents prayer for a writ of preliminary injunction, and
the writ of preliminary injunction issued thereby, are hereby
ANNULLED and SET ASIDE. The private respondents
complaint and complaint-in-intervention below are hereby
DISMISSED, without prejudice to the referral of the private
respondents grievances and disputes on the assailed
issuances of the NTC with the said agency.
SO ORDERED.
[10]

Petitioners motions for reconsideration were denied in a
Resolution dated January 10, 2002 for lack of merit.
[11]

Hence, the instant petition for review filed by Smart and
Piltel, which was docketed as G.R. No. 151908, anchored on
the following grounds:
A.
THE HONORABLE COURT OF APPEALS GRAVELY
ERRED IN HOLDING THAT THE NATIONAL
TELECOMMUNICATIONS COMMISSION (NTC) AND
NOT THE REGULAR COURTS HAS JURISDICTION
OVER THE CASE.
B.
THE HONORABLE COURT OF APPEALS ALSO
GRAVELY ERRED IN HOLDING THAT THE PRIVATE
RESPONDENTS FAILED TO EXHAUST AN
AVAILABLE ADMINISTRATIVE REMEDY.
C.

15

THE HONORABLE COURT OF APPEALS ERRED IN
NOT HOLDING THAT THE BILLING CIRCULAR
ISSUED BY THE RESPONDENT NTC IS
UNCONSTITUTIONAL AND CONTRARY TO LAW AND
PUBLIC POLICY.
D.
THE HONORABLE COURT OF APPEALS ERRED IN
HOLDING THAT THE PRIVATE RESPONDENTS
FAILED TO SHOW THEIR CLEAR POSITIVE RIGHT
TO WARRANT THE ISSUANCE OF A WRIT OF
PRELIMINARY INJUNCTION.
[12]

Likewise, Globe and Islacom filed a petition for review,
docketed as G.R. No. 152063, assigning the following errors:
1. THE HONORABLE COURT OF APPEALS SO
GRAVELY ERRED BECAUSE THE DOCTRINES
OF PRIMARY JURISDICTION AND
EXHAUSTION OF ADMINISTRATIVE REMEDIES
DO NOT APPLY SINCE THE INSTANT CASE IS
FOR LEGAL NULLIFICATION (BECAUSE OF
LEGAL INFIRMITIES AND VIOLATIONS OF
LAW) OF A PURELY ADMINISTRATIVE
REGULATION PROMULGATED BY AN AGENCY
IN THE EXERCISE OF ITS RULE MAKING
POWERS AND INVOLVES ONLY QUESTIONS
OF LAW.
2. THE HONORABLE COURT OF APPEALS SO
GRAVELY ERRED BECAUSE THE DOCTRINE
ON EXHAUSTION OF ADMINISTRATIVE
REMEDIES DOES NOT APPLY WHEN THE
QUESTIONS RAISED ARE PURELY LEGAL
QUESTIONS.
3. THE HONORABLE COURT OF APPEALS SO
GRAVELY ERRED BECAUSE THE DOCTRINE
OF EXHAUSTION OF ADMINISTRATIVE
REMEDIES DOES NOT APPLY WHERE THE
ADMINISTRATIVE ACTION IS COMPLETE AND
EFFECTIVE, WHEN THERE IS NO OTHER
REMEDY, AND THE PETITIONER STANDS TO
SUFFER GRAVE AND IRREPARABLE INJURY.
4. THE HONORABLE COURT OF APPEALS SO
GRAVELY ERRED BECAUSE PETITIONERS IN
FACT EXHAUSTED ALL ADMINISTRATIVE
REMEDIES AVAILABLE TO THEM.
5. THE HONORABLE COURT OF APPEALS SO
GRAVELY ERRED IN ISSUING ITS
QUESTIONED RULINGS IN THIS CASE
BECAUSE GLOBE AND ISLA HAVE A CLEAR
RIGHT TO AN INJUNCTION.
[13]

The two petitions were consolidated in a Resolution dated
February 17, 2003.
[14]

On March 24, 2003, the petitions were given due course
and the parties were required to submit their respective
memoranda.
[15]

We find merit in the petitions.
Administrative agencies possess quasi-legislative or rule-
making powers and quasi-judicial or administrative
adjudicatory powers. Quasi-legislative or rule-making power is
the power to make rules and regulations which results in
delegated legislation that is within the confines of the granting
statute and the doctrine of non-delegability and separability of
powers.
[16]

The rules and regulations that administrative agencies
promulgate, which are the product of a delegated legislative
power to create new and additional legal provisions that have
the effect of law, should be within the scope of the statutory
authority granted by the legislature to the administrative
agency. It is required that the regulation be germane to the
objects and purposes of the law, and be not in contradiction to,
but in conformity with, the standards prescribed by
law.
[17]
They must conform to and be consistent with the
provisions of the enabling statute in order for such rule or
regulation to be valid. Constitutional and statutory provisions
control with respect to what rules and regulations may be
promulgated by an administrative body, as well as with respect
to what fields are subject to regulation by it. It may not make
rules and regulations which are inconsistent with the
provisions of the Constitution or a statute, particularly the
statute it is administering or which created it, or which are in
derogation of, or defeat, the purpose of a statute. In case of
conflict between a statute and an administrative order, the
former must prevail.
[18]

Not to be confused with the quasi-legislative or rule-
making power of an administrative agency is its quasi-judicial
or administrative adjudicatory power. This is the power to
hear and determine questions of fact to which the legislative
policy is to apply and to decide in accordance with the
standards laid down by the law itself in enforcing and
administering the same law. The administrative body exercises
its quasi-judicial power when it performs in a judicial manner
an act which is essentially of an executive or administrative
nature, where the power to act in such manner is incidental to
or reasonably necessary for the performance of the executive or
administrative duty entrusted to it. In carrying out their
quasi-judicial functions, the administrative officers or bodies
are required to investigate facts or ascertain the existence of
facts, hold hearings, weigh evidence, and draw conclusions
from them as basis for their official action and exercise of
discretion in a judicial nature.
[19]

In questioning the validity or constitutionality of a rule or
regulation issued by an administrative agency, a party need
not exhaust administrative remedies before going to
court. This principle applies only where the act of the
administrative agency concerned was performed pursuant to
its quasi-judicial function, and not when the assailed act
pertained to its rule-making or quasi-legislative
power. In Association of Philippine Coconut Dessicators v.
Philippine Coconut Authority,
[20]
it was held:
The rule of requiring exhaustion of administrative remedies
before a party may seek judicial review, so strenuously urged
by the Solicitor General on behalf of respondent, has obviously
no application here. The resolution in question was issued by
the PCA in the exercise of its rule- making or legislative
power. However, only judicial review of decisions of
administrative agencies made in the exercise of their quasi-
judicial function is subject to the exhaustion doctrine.
Even assuming arguendo that the principle of exhaustion
of administrative remedies apply in this case, the records
reveal that petitioners sufficiently complied with this
requirement. Even during the drafting and deliberation stages
leading to the issuance of Memorandum Circular No. 13-6-
2000, petitioners were able to register their protests to the
proposed billing guidelines. They submitted their respective
position papers setting forth their objections and submitting
proposed schemes for the billing circular.
[21]
After the same
was issued, petitioners wrote successive letters dated July 3,
2000
[22]
and July 5, 2000,
[23]
asking for the suspension and
reconsideration of the so-called Billing Circular. These letters
were not acted upon until October 6, 2000, when respondent
NTC issued the second assailed Memorandum implementing
certain provisions of the Billing Circular. This was taken by
petitioners as a clear denial of the requests contained in their
previous letters, thus prompting them to seek judicial relief.
In like manner, the doctrine of primary jurisdiction
applies only where the administrative agency exercises its
quasi-judicial or adjudicatory function. Thus, in cases
involving specialized disputes, the practice has been to refer
the same to an administrative agency of special competence
pursuant to the doctrine of primary jurisdiction. The courts
will not determine a controversy involving a question which is
within the jurisdiction of the administrative tribunal prior to
the resolution of that question by the administrative tribunal,
where the question demands the exercise of sound
administrative discretion requiring the special knowledge,
experience and services of the administrative tribunal to
determine technical and intricate matters of fact, and a
uniformity of ruling is essential to comply with the premises of
the regulatory statute administered. The objective of the
doctrine of primary jurisdiction is to guide a court in
determining whether it should refrain from exercising its
jurisdiction until after an administrative agency has
determined some question or some aspect of some question
arising in the proceeding before the court. It applies where the
claim is originally cognizable in the courts and comes into play
whenever enforcement of the claim requires the resolution of
issues which, under a regulatory scheme, has been placed
within the special competence of an administrative body; in
such case, the judicial process is suspended pending referral
of such issues to the administrative body for its view.
[24]

However, where what is assailed is the validity or
constitutionality of a rule or regulation issued by the

16

administrative agency in the performance of its quasi-
legislative function, the regular courts have jurisdiction to pass
upon the same. The determination of whether a specific rule
or set of rules issued by an administrative agency contravenes
the law or the constitution is within the jurisdiction of the
regular courts. Indeed, the Constitution vests the power of
judicial review or the power to declare a law, treaty,
international or executive agreement, presidential decree,
order, instruction, ordinance, or regulation in the courts,
including the regional trial courts.
[25]
This is within the scope
of judicial power, which includes the authority of the courts to
determine in an appropriate action the validity of the acts of
the political departments.
[26]
Judicial power includes the duty
of the courts of justice to settle actual controversies involving
rights which are legally demandable and enforceable, and to
determine whether or not there has been a grave abuse of
discretion amounting to lack or excess of jurisdiction on the
part of any branch or instrumentality of the Government.
[27]

In the case at bar, the issuance by the NTC of
Memorandum Circular No. 13-6-2000 and its Memorandum
dated October 6, 2000 was pursuant to its quasi-legislative or
rule-making power. As such, petitioners were justified in
invoking the judicial power of the Regional Trial Court to assail
the constitutionality and validity of the said
issuances. In Drilon v. Lim,
[28]
it was held:
We stress at the outset that the lower court had jurisdiction to
consider the constitutionality of Section 187, this authority
being embraced in the general definition of the judicial power
to determine what are the valid and binding laws by the
criterion of their conformity to the fundamental
law. Specifically, B.P. 129 vests in the regional trial courts
jurisdiction over all civil cases in which the subject of the
litigation is incapable of pecuniary estimation, even as the
accused in a criminal action has the right to question in his
defense the constitutionality of a law he is charged with
violating and of the proceedings taken against him,
particularly as they contravene the Bill of Rights. Moreover,
Article X, Section 5(2), of the Constitution vests in the
Supreme Court appellate jurisdiction over final judgments and
orders of lower courts in all cases in which the
constitutionality or validity of any treaty, international or
executive agreement, law, presidential decree, proclamation,
order, instruction, ordinance, or regulation is in question.
[29]

In their complaint before the Regional Trial Court,
petitioners averred that the Circular contravened Civil Code
provisions on sales and violated the constitutional prohibition
against the deprivation of property without due process of
law. These are within the competence of the trial
judge. Contrary to the finding of the Court of Appeals, the
issues raised in the complaint do not entail highly technical
matters. Rather, what is required of the judge who will resolve
this issue is a basic familiarity with the workings of the cellular
telephone service, including prepaid SIM and call cards and
this is judicially known to be within the knowledge of a good
percentage of our population and expertise in fundamental
principles of civil law and the Constitution.
Hence, the Regional Trial Court has jurisdiction to hear
and decide Civil Case No. Q-00-42221. The Court of Appeals
erred in setting aside the orders of the trial court and in
dismissing the case.
WHEREFORE, in view of the foregoing, the consolidated
petitions are GRANTED. The decision of the Court of Appeals
in CA-G.R. SP No. 64274 dated October 9, 2001 and its
Resolution dated January 10, 2002 are REVERSED and SET
ASIDE. The Order dated November 20, 2000 of the Regional
Trial Court of Quezon City, Branch 77, in Civil Case No. Q-00-
42221 is REINSTATED. This case is REMANDED to the
court a quo for continuation of the proceedings.
SO ORDERED.
G.R. No. 93237 November 6, 1992
RADIO COMMUNICATIONS OF THE PHILIPPINES, INC.
(RCPI), petitioner,
vs.
NATIONAL TELECOMMUNICATIONS COMMISSION (NTC)
and JUAN A. ALEGRE, respondents.
Private respondent Juan A. Alegre's wife, Dr. Jimena Alegre,
sent two (2) RUSH telegrams through petitioner RCPI's
facilities in Taft Ave., Manila at 9:00 in the morning of 17
March 1989 to his sister and brother-in-law in Valencia, Bohol
and another sister-in-law in Espiritu, Ilocos Norte, with the
following identical texts:
MANONG POLING DIED INTERMENT
TUESDAY
1

Both telegrams did not reach their destinations on the
expected dates. Private respondent filed a letter-complaint
against the RCPI with the National Telecommunications
Commission (NTC) for poor service, with a request for the
imposition of the appropriate punitive sanction against the
company.
Taking cognizance of the complaint, NTC directed RCPI to
answer the complaint and set the initial hearing of the case to
2 May 1989. After two (2) resettings, RCPI moved to dismiss
the case on the following grounds:
1. Juan Alegre is not the real party in
interest;
2. NTC has no jurisdiction over the case;
3. the continued hearing of the case violates
its constitutional right to due process of
law.
2

RCPI likewise moved for deferment of scheduled hearings until
final determination of its motion to dismiss.
On 15 June 1989, NTC proceeded with the hearing and
received evidence for private respondent Juan Alegre. On 3
October 1989, RCPI's motion to dismiss was denied, thus:
The herein complainant is the husband of the sender of
the "rush" telegram that respondent allegedly failed to
deliver in a manner respondent bound itself to
undertake, so his legal interest in this administrative
case cannot be seriously called in question. As regards
the issue of jurisdiction, the authority of the Commission
to hear and decide this case stems from its power of
control and supervision over the operation of public
communication utilities as conferred upon it by law.
Besides, the filing of a motion to dismiss is not allowed
by the rules (Section 1, Rule 12, Rules of Practice and
Procedures). Following, however, the liberal construction
of the rules, respondent (sic) motion shall be treated as
its answer or be passed upon after the conclusion of the
hearing on the merits. . . .
3

Hearings resumed in the absence of petitioner RCPI which
was, however, duly notified thereof. On 27 November 1989,
NTC disposed of the controversy in the following manner:
WHEREFORE, in view of all the foregoing, the
Commission finds respondent administratively liable for
deficient and inadequate service defined under Section
19(a) of C.A. 146 and hereby imposes the penalty of
FINE payable within thirty (30) days from receipt hereof
in the aggregate amount of ONE THOUSAND PESOS
(P1,000.00) for:
1. Rush Telegram sent to Valencia, Bohol on March 17,
1989 and received on March 21, 1989
3 days x P200.00 per day = P600.00
2. Rush Telegram sent to Espiritu, Ilocos Norte on
March 17, 1989 and received on March 20, 1989
2 days x P200.00 per day = P400.00
Total = P1,000.00
ENTERED. November 27, 1989.
4

A motion for reconsideration by RCPI reiterating averments in
its earlier motion to dismiss was denied for lack of
merit;
5
hence, this petition for review invoking C.A. 146 Sec.
19(a) which limits the jurisdiction of the Public Service

17

Commission (precursor of the NTC) to the fixing of rates. RCPI
submits that its position finds support in two (2) decided
cases
6
identical with the present one. Then Justice (later Chief
Justice) Fernando writing for the Court stated:
. . . There can be no justification then for the Public
Service Commission imposing the fines for these two
petitions. The law cannot be any clearer. The only
power it possessed over radio companies, as noted
was the (sic ) fix rates. It could not take to task a
radio company for negligence or misfeasance. It was
bereft of such competence. It was not vested within
such authority. . . .
The Public Service Commission having been
abolished by virtue of a Presidential Decree, as set
forth at the outset, and a new Board of
Communications having been created to take its
place, nothing said in its decision has reference to
whatever powers are now lodged in the latter body. . .
. . . . (Footnotes omitted)
Two (2) later cases,
7
adhering to the above tenet ruled:
Even assuming that the respondent Board of
Communications has the power of jurisdiction over
petitioner in the exercise of its supervision to insure
adequate public service, petitioner cannot be
subjected to payment of fine under sec. 21 of the
Public Service Act, because this provision of the law
subjects to a fine every public service that violates or
falls (sic) to comply with the terms and conditions of
any certificate or any orders, decisions and
regulations of the Commission. . . . .
The Office of the Solicitor General now claims that the cited
cases are no longer applicable, that the power and authority of
the NTC to impose fines is incidental to its power to regulate
public service utilities and to supervise telecommunications
facilities, which are now clearly defined in Section 15,
Executive Order No. 546 dated 23 July 1979: thus:
Functions of the Commission. The
Commission shall exercise the following
functions:
xxx xxx xxx
b. Establish, prescribe and regulate the
areas of operation of particular operators of
the public service communications;
xxx xxx xxx
h. Supervise and inspect the operation of
radio stations and telecommunications
facilities.
Regulatory administrative agencies necessarily impose
sanctions, adds the Office of the Solicitor General. RCPI was
fined based on the finding of the NTC that it failed to
undertake adequate service in delivering two (2) rush
telegrams. NTC takes the view that its power of supervision
was broadened by E. O. No. 546, and that this development
superseded the ruling in RCPI vs. Francisco Santiago and
companion cases.
The issues of due process and real parties in interest do not
have to be discussed in this case. This decision will dwell on
the primary question of jurisdiction of the NTC to
administratively impose fines on a telegraph company which
fails to render adequate service to a consumer.
E. O. 546, it will be observed, is couched in general terms. The
NTC stepped "into the shoes" of the Board of Communications
which exercised powers pursuant to the Public Service Act.
The power to impose fines should therefore be read in the light
of the Francisco Santiago case because subsequent legislation
did not grant additional powers to the Board of
Communications. The Board in other words, did not possess
the power to impose administrative fines on public services
rendering deficient service to customers, ergo its successor
cannot arrogate unto itself such power, in the absence of
legislation. It is true that the decision in RCPI vs. Board of
Communications seems to have modified the Santiago ruling in
that the later case held that the Board of Communications can
impose fines if the public service entity violates or fails to
comply with the terms and conditions of any certificate or any
order, decision or regulation of the Commission. But can
private respondent's complaint be similarly treated when the
complaint seeks redress of a grievance against the
company? 8 NTC has no jurisdiction to impose a fine. Globe
Wireless Ltd. vs. Public Service Commission (G. R. No. L-27250,
21 January 1987, 147 SCRA 269) says so categorically.
Verily, Section 13 of Commonwealth Act No. 146, as
amended, otherwise known as the Public Service Act,
vested in the Public Service Commission jurisdiction,
supervision and control over all public services and
their franchises, equipment and other properties.
xxx xxx xxx
The act complained of consisted in petitioner having
allegedly failed to deliver the telegraphic message of
private respondent to the addressee in Madrid, Spain.
Obviously, such imputed negligence has nothing
whatsoever to do with the subject matter of the very
limited jurisdiction of the Commission over petitioner.
Moreover, under Section 21 of C. A. 146, as amended,
the Commission was empowered to impose an
administrative fine in cases of violation of or failure by a
public service to comply with the terms and conditions
of any certificate or any orders, decisions or regulations
of the Commission. Petitioner operated under a
legislative franchise, so there were no terms nor
conditions of any certificate issued by the Commission
to violate. Neither was there any order, decision or
regulation from the Commission applicable to petitioner
that the latter had allegedly violated, disobeyed, defied
or disregarded.
No substantial change has been brought about by Executive
Order No. 546 invoked by the Solicitor General's Office to
bolster NTC's jurisdiction. The Executive Order is not an
explicit grant of power to impose administrative fines on public
service utilities, including telegraphic agencies, which have
failed to render adequate service to consumers. Neither has it
expanded the coverage of the supervisory and regulatory power
of the agency. There appears to be no alternative but to
reiterate the settled doctrine in administrative law that:
Too basic in administrative law to need
citation of jurisprudence is the rule that
jurisdiction and powers of administrative
agencies, like respondent Commission, are
limited to those expressly granted or
necessarily implied from those granted in
the legislation creating such body; and any
order without or beyond such jurisdiction is
void and ineffective . . . (Globe Wireless
case, supra).
WHEREFORE, the decision appealed from is REVERSED and
SET ASIDE for lack of jurisdiction of the NTC to render it. The
temporary restraining order issued on 18 June 1990 is made
PERMANENT without prejudice, however, to the filing by the
party aggrieved by the conduct of RCPI, of the proper action in
the proper forum. No costs.
SO ORDERED.
G.R. NO. 135992 January 31, 2006
EASTERN TELECOMMUNICATIONS PHILIPPINES, INC. and
TELECOMMUNICATIONS TECHNOLOGIES, INC.,petitioners,
vs.
INTERNATIONAL COMMUNICATION
CORPORATION, Respondent.
AMENDED DECISION
On July 23, 2004, the Court promulgated its Decision in the
above-captioned case with the following dispositive portion:

18

WHEREFORE, the petition for review on certiorari is
PARTIALLY GRANTED. The Order of the National
Telecommunications Commissions dated November 10, 1997
in NTC Case No. 96-195 is AFFIRMED with the following
modifications:
Respondent International Communication Corporation, in
accordance with Section 27 of NTC MC No. 11-9-93, is
required to:
(1) Deposit in escrow in a reputable bank 20% of the
investment required for the first two years of the
implementation of the proposed project; and
(2) Post a performance bond equivalent to 10% of the
investment required for the first two years of the
approved project but not to exceed P500 Million.
within such period to be determined by the National
Telecommunications Commission.
No pronouncement as to costs.
SO ORDERED.
1

Respondent now seeks a partial reconsideration of the portion
of the Courts decision requiring it to make a 20% escrow
deposit and to post a 10% performance bond. Respondent
claims that Section 27 of NTC MC No. 11-9-93, which required
the foregoing amounts, pertains only to applications filed
under Executive Order No. 109 (E.O. No. 109) and not to
applications voluntarily filed. In its Manifestation in support of
the motion for partial reconsideration, respondent attached a
letter from Deputy Commissioner and Officer-in-Charge (OIC),
Kathleen G. Heceta, of the National Telecommunications
Commission (NTC), stating thus:
x x x
Please be informed that the escrow deposit and performance
bond were required to public telecommunications entities to
ensure that the mandated installation of local exchange lines
are installed within three (3) years pursuant to EO 109 and RA
7925. Since your company has already complied with its
obligation by the installation of more than 300,000 lines in
Quezon City, Malabon City and Valenzuela City in the National
Capital Region and Region V in early 1997, the escrow deposit
and performance bond were not required in your subsequent
authorizations.
2

In a Resolution dated October 4, 2004, the Court required
petitioners and the NTC to file their respective comments on
the motion.
3

Subsequently, in its Manifestation/Comment filed on January
11, 2005, the Office of the Solicitor General (OSG), in behalf of
the NTC, likewise referred to the same letter of OIC Heceta and
declared that it fully agrees with respondent that the escrow
deposit and performance bond are not required in subsequent
authorizations for additional/new areas outside its original
roll-out obligation under the Service Area Scheme of E.O. No.
109.
Petitioners did not file any comment and it was only after the
Court issued a show cause and compliance Resolution on
October 19, 2005 that petitioners manifested in their Entry of
Special Appearance, Manifestation and Compliance dated
November 25, 2005 that they have no further comments on
respondents motion for partial reconsideration.
4

The Court has observed in its Decision that Section 27 of NTC
MC No. 11-9-93 is silent as to whether the posting of an
escrow deposit and performance bond is a condition sine qua
non for the grant of a provisional authority. The NTC, through
the OSG, explicitly clarified, which was not disputed by
petitioners, that the escrow deposit and performance bond are
not required in subsequent authorizations for additional/new
areas outside its original roll-out obligation under E.O. No.
109. The OSG agreed with respondents stance that since the
provisional authority in this case involves a voluntary
application not covered by the original service areas created by
the NTC under E.O. No. 109, then it is not subject to the
posting of an escrow deposit and performance bond as
required by E.O. No. 109, but only to the conditions provided
in the provisional authority. Further, the OSG adapted the
ratiocination of the Court of Appeals on this matter, i.e.,
respondent was not subjected to the foregoing escrow deposit
and performance bond requirement because the landline
obligation is already outside its original roll-out commitment
under E.O. No. 109.
5

The NTC, being the government agency entrusted with the
regulation of activities coming under its special and technical
forte, and possessing the necessary rule-making power to
implement its objectives,
6
is in the best position to interpret its
own rules, regulations and guidelines. The Court has
consistently yielded and accorded great respect to the
interpretation by administrative agencies of their own rules
unless there is an error of law, abuse of power, lack of
jurisdiction or grave abuse of discretion clearly conflicting with
the letter and spirit of the law.
7

In City Government of Makati vs. Civil Service
Commission,
8
the Court cited cases where the interpretation of
a particular administrative agency of a certain rule was
adhered to, viz.:
As properly noted, CSC was only interpreting its own rules on
leave of absence and not a statutory provision in coming up
with this uniform rule. Undoubtedly, the CSC like any other
agency has the power to interpret its own rules and any
phrase contained in them with its interpretation
significantly becoming part of the rules themselves. As
observed in West Texas Compress & Warehouse Co. v.
Panhandle & S.F. Railing Co.
x x x
This principle is not new to us. In Geukeko v. Araneta this
Court upheld the interpretation of the Department of
Agriculture and Commerce of its own rules of procedure in
suspending the period of appeal even if such action was
nowhere stated therein. We said -
x x x
x x x It must be remembered that Lands Administrative Order
No. 6 is in the nature of procedural rules promulgated by the
Secretary of Agriculture and Natural Resources pursuant to
the power bestowed on said administrative agency to
promulgate rules and regulations necessary for the proper
discharge and management of the functions imposed by law
upon said office. x x x x Recognizing the existence of such rule-
making authority, what is the weight of an interpretation given
by an administrative agency to its own rules or
regulations? Authorities sustain the doctrine that the
interpretation given to a rule or regulation by those
charged with its execution is entitled to the greatest
weight by the Court construing such rule or regulation,
and such interpretation will be followed unless it appears
to be clearly unreasonable or arbitrary (42 Am. Jur. 431). It
has also been said that:
x x x
The same precept was enunciated in Bagatsing v. Committee on
Privatization

where we upheld the action of the Commission on
Audit (COA) in validating the sale of Petron Corporation to
Aramco Overseas Corporation on the basis of COA's
interpretation of its own circular that set bidding and audit
guidelines on the disposal of government assets
The COA itself, the agency that adopted the rules on bidding
procedure to be followed by government offices and
corporations, had upheld the validity and legality of the
questioned bidding. The interpretation of an agency of its
own rules should be given more weight than the
interpretation by that agency of the law it is merely tasked
to administer (underscoring supplied).
Given the greater weight accorded to an agency's interpretation
of its own rules than to its understanding of the statute it
seeks to implement, we simply cannot set aside the former on
the same grounds as we would overturn the latter. More
specifically, in cases where the dispute concerns the
interpretation by an agency of its own rules, we should apply
only these standards: "Whether the delegation of power was

19

valid; whether the regulation was within that delegation; and if
so, whether it was a reasonable regulation under a due process
test." An affirmative answer in each of these questions should
caution us from discarding the agency's interpretation of its
own rules. (Emphasis supplied)
Thus, the Court holds that the interpretation of the NTC that
Section 27 of NTC MC No. 11-9-93 regarding the escrow
deposit and performance bond shall pertain only to a local
exchange operators original roll-out obligation under E.O. No.
109, and not to roll-out obligations made under subsequent or
voluntary applications outside E.O. No. 109, should be
sustained.
IN VIEW THEREOF, respondents Motion for Partial
Reconsideration is GRANTED. The Courts Decision dated July
23, 2004 is AMENDED, the dispositive portion of which should
read as follows:
WHEREFORE, the petition for review on certiorari is DENIED.
The Order of the National Telecommunications Commission
dated November 10, 1997 in NTC Case No. 96-195 is
AFFIRMED.
thereby deleting the order requiring respondent to make a 20%
escrow deposit and to post a 10% performance bond.
SO ORDERED.
G.R. No. L-45839 June 1, 1988
RUFINO MATIENZO, GODOFREDO ESPIRITU, DIOSCORRO
FRANCO, AND LA SUERTE TRANSPORTATION
CORPORATION, petitioners,
vs.
HON. LEOPOLDO M. ABELLERA, ACTING CHAIRMAN OF
THE BOARD OF TRANSPORTATION, HON. GODOFREDO Q.
ASUNCION, MEMBER OF THE BOARD OF
TRANSPORTATION, ARTURO DELA CRUZ, MS
TRANSPORTATION CO., INC., NEW FAMILIA
TRANSPORTATION CO., ROBERTO MOJARES, ET
AL.,respondents.
This is a petition for certiorari and prohibition, with
application for preliminary injunction, seeking the annulment
and inhibition of the grant or award of provisional permits or
special authority by the respondent Board of Transportation
(BOT) to respondent taxicab operators, for the operation and
legalization of "excess taxicab units" under certain provisions
of Presidential Decree No. 101 "despite the lapse of the power
to do so thereunder," and "in violation of other provisions of
the Decree, Letter of Instructions No. 379 and other relevant
rules of the BOT."
The petitioners and private respondents are all authorized
taxicab operators in Metro Manila. The respondents, however,
admittedly operate "colorum" or "kabit" taxicab units. On or
about the second week of February, 1977, private respondents
filed their petitions with the respondent Board for the
legalization of their unauthorized "excess" taxicab units citing
Presidential Decree No. 101, promulgated on January 17,
1973, "to eradicate the harmful and unlawful trade of
clandestine operators, by replacing or allowing them to become
legitimate and responsible operators." Within a matter of days,
the respondent Board promulgated its orders setting the
applications for hearing and granting applicants provisional
authority to operate their "excess taxicab units" for which
legalization was sought. Thus, the present petition.
Opposing the applications and seeking to restrain the grant of
provisional permits or authority, as well as the annulment of
permits already granted under PD 101, the petitioners allege
that the BOT acted without jurisdiction in taking cognizance of
the petitions for legalization and awarding special permits to
the private respondents.
Presidential Decree No. 101 vested in the Board of
Transportation the power, among others "To grant special
permits of limited term for the operation of public utility motor
vehicles as may, in the judgment of the Board, be necessary to
replace or convert clandestine operators into legitimate and
responsible operators." (Section 1, PD 101)
Citing, however, Section 4 of the Decree which provides:
SEC. 4. Transitory Provision. Six months after the
promulgation of this Decree, the Board of
Transportation, the Bureau of Transportation, The
Philippine Constabulary, the city and municipal forces,
and the provincial and city fiscals shall wage a
concerted and relentless drive towards the total
elimination and punishment of all clandestine and
unlawful operators of public utility motor vehicles."
the petitioners argue that neither the Board of Transportation
chairman nor any member thereof had the power, at the time
the petitions were filed (i.e. in 1977), to legitimize clandestine
operations under PD 101 as such power had been limited to a
period of six (6) months from and after the promulgation of the
Decree on January 17, 1973. They state that, thereafter, the
power lapses and becomes functus officio.
To reinforce their stand, the petitioners refer to certain
provisions of the Rules and Regulations implementing PD 101
issued by respondent Board, Letter of Instructions No. 379,
and BOT Memorandum Circular No. 76-25 (a). In summary,
these rules provide inter alia that (1) only applications for
special permits for "colorum" or "kabit" operators filed before
July 17, 1973 shall be accepted and processed (Secs. 3 and 16
(c), BOT-LTC-HPG Joint Regulations Implementing PD 101, pp.
33 and 47, Rollo); (2) Every provisional authority given to any
taxi operator shall be cancelled immediately and no provisional
authority shall thereafter be issued (par. 6, Letter of
Instructions No. 379, issued March 10, 1976, p. 58, Rollo); (3)
Effective immediately, no provisional authorities on
applications for certificates of public convenience shall be
granted or existing provisional authorities on new applications
extended to, among others, taxi denominations in Metro
Manila (BOT Memorandum Circular No. 75-25 (a), August 30,
1976, p. 64, Rollo); (4) All taxis authorized to operate within
Metro Manila shall obtain new special permits from the BOT,
which permits shall be the only ones recognized within the
area (par. 8, LOI No. 379, supra); and (5) No bonafide applicant
may apply for special permit to operate, among others, new
taxicab services, and, no application for such new service shall
be accepted for filing or processed by any LTC agency or
granted under these regulations by any LTC Regional Office
until after it shall have announced its program of development
for these types of public motor vehicles (Sec. 16d, BOT-LTC-
HPG Joint Regulations, p. 47, Rollo).
The petitioners raise the following issues:
I. WHETHER OR NOT THE BOARD OF
TRANSPORTATION HAS THE POWER TO GRANT
PROVISIONAL PERMITS TO OPERATE DESPITE THE
BAN THEREON UNDER LETTER OF INSTRUCTIONS
NO. 379;
II. WHETHER OR NOT THE BOARD OF
TRANSPORTATION HAS THE POWER TO LEGALIZE,
AT THIS TIME, CLANDESTINE AND UNLAWFUL
TAXICAB OPERATIONS UNDER SECTION 1, P.D. 101;
AND
III. WHETHER OR NOT THE PROCEDURE BEING
FOLLOWED BY THE BOARD IN THE CASES IN
QUESTION SATISFIES THE PROCEDURAL DUE
PROCESS REQUIREMENTS. (p. 119, Rollo)
We need not pass upon the first issue raised anent the grant of
provisional authority to respondents. Considering that the
effectivity of the provisional permits issued to the respondents
was expressly limited to June 30, 1977, as evidenced by the
BOT orders granting the same (Annexes G, H, I and J among
others) and Memorandum Circular No. 77-4 dated January 20,
1977 (p. 151, Rollo), implementing paragraph 6 of LOI 379
(ordering immediate cancellation of all provisional authorities
issued to taxicab operators, supra), which provides:
5. After June 30, 1977, all provisional
authorities are deemed cancelled, even if
hearings on the main application have not
been terminated.
the issue is MOOT and ACADEMIC. Only the issue on
legalization remains under consideration.

20

Justifying its action on private respondent's applications, the
respondent Board emphasizes public need as the overriding
concern. It is argued that under PD 101, it is the fixed policy of
the State "to eradicate the harmful and unlawful trade of
clandestine operators by replacing or allowing them to become
legitimate and responsible ones" (Whereas clause, PD 101). In
view thereof, it is maintained that respondent Board may
continue to grant to "colorum" operators the benefits of
legalization under PD 101, despite the lapse of its power, after
six (6) months, to do so, without taking punitive measures
against the said operators.
Indeed, a reading of Section 1, PD 101, shows a grant of
powers to the respondent Board to issue provisional permits as
a step towards the legalization of colorum taxicab operations
without the alleged time limitation. There is nothing in Section
4, cited by the petitioners, to suggest the expiration of such
powers six (6) months after promulgation of the Decree.
Rather, it merely provides for the withdrawal of the State's
waiver of its right to punish said colorum operators for their
illegal acts. In other words, the cited section declares when the
period of moratorium suspending the relentless drive to
eliminate illegal operators shall end. Clearly, there is no
impediment to the Board's exercise of jurisdiction under its
broad powers under the Public Service Act to issue certificates
of public convenience to achieve the avowed purpose of PD 101
(Sec. 16a, Public Service Act, Nov. 7, 1936).
It is a settled principle of law that in determining whether a
board or commission has a certain power, the authority given
should be liberally construed in the light of the purposes for
which it was created, and that which is incidentally necessary
to a full implementation of the legislative intent should be
upheld as being germane to the law. Necessarily, too, where
the end is required, the appropriate means are deemed given
(Martin, Administrative Law, 1979, p. 46). Thus, as averred by
the respondents:
... [A]ll things considered, the question is
what is the best for the interest of the
public. Whether PD 101 has lost its
effectiveness or not, will in no way prevent
this Board from resolving the question in the
same candor and spirit that P.D. 101 and
LOI 379 were issued to cope with the
multifarious ills that plague our transport
system. ... (Emphasis supplied) (pp. 91-92,
Rollo)
This, the private respondents appreciate, as they make
reference to PD 101, merely to cite the compassion with which
colorum operators were dealt with under the law. They state
that it is "in the same vein and spirit that this Honorable Board
has extended the Decree of legalization to the operatives of the
various PUJ and PUB services along legislative methods," that
respondents pray for authorization of their colorum units in
actual operation in Metro Manila (Petitions for Legalization,
Annexes E & F, par. 7, pp. 65-79, Rollo).
Anent the petitioners' reliance on the BOT Rules and
Regulations Implementing PD 101 as well as its Memorandum
Circular No. 76-25(a), the BOT itself has declared:
In line with its duty to rationalize the
transport industry, the Board shall. from
time to time, re- study the public need for
public utilities in any area in the Philippines
for the purpose of re- evaluating the policies.
(p. 64, Rollo)
Thus, the respondents correctly argue that "as the need of the
public changes and oscillates with the trends of modern life, so
must the Memo Orders issued by respondent jibe with the
dynamic and flexible standards of public needs. ... Respondent
Board is not supposed to 'tie its hands' on its issued Memo
Orders should public interest demand otherwise" (Answer of
private respondents, p. 121, Rollo).
The fate of the private respondent's petitions is initially for the
Board to determine. From the records of the case, acceptance
of the respondent's applications appears to be a question
correctly within the discretion of the respondent Board to
decide. As a rule, where the jurisdiction of the BOT to take
cognizance of an application for legalization is settled, the
Court enjoins the exercise thereof only when there is fraud,
abuse of discretion or error of law. Furthermore, the court does
not interfere, as a rule, with administrative action prior to its
completion or finality . It is only after judicial review is no
longer premature that we ascertain in proper cases whether
the administrative findings are not in violation of law, whether
they are free from fraud or imposition and whether they find
substantial support from the evidence.
Finally, with respect to the last issue raised by the petitioners
alleging the denial of due process by respondent Board in
granting the provisional permits to the private respondents
and in taking cognizance of their applications for legalization
without notice and hearing, suffice it to say that PD 101 does
not require such notice or hearing for the grant of temporary
authority . The provisional nature of the authority and the fact
that the primary application shall be given a full hearing are
the safeguards against its abuse. As to the applications for
legalization themselves, the Public Service Act does enjoin the
Board to give notice and hearing before exercising any of its
powers under Sec. 16 thereof. However, the allegations that
due process has been denied are negated by the hearings set
by the Board on the applications as expressed in its orders
resolving the petitions for special permits (Annexes G, H, I, pp.
80-102, Rollo).
The Board stated:
The grounds involved in the petition are of first
impression. It cannot resolve the issue ex-parte. It
needs to hear the views of other parties who may have
an interest, or whose interest may be affected by any
decision that this Board may take.
The Board therefore, decides to set the petition for
hearing.
xxx xxx xxx
As to the required notice, it is impossible for the respondent
Board to give personal notice to all parties who may be
interested in the matter, which parties are unknown to it. Its
aforementioned order substantially complies with the
requirement. The petitioners having been able to timely oppose
the petitions in question, any lack of notice is deemed cured.
WHEREFORE. the petition is hereby DISMISSED for lack of
merit. The questioned orders of the then Board of
Transportation are AFFIRMED.
SO ORDERED.
[G.R. No. 137489. May 29, 2002]
COOPERATIVE DEVELOPMENT AUTHORITY, petitioner,
vs. DOLEFIL AGRARIAN REFORM BENEFICIARIES
COOPERATIVE, INC., ESMERALDO A. DUBLIN,
ALICIA SAVAREZ, EDNA URETA, ET
AL., respondents.

At the core of the instant petition for review
on certiorari of the Decision
[1]
of the Court of Appeals,
13
th
Division, in CA-G.R. SP. No. 47933 promulgated on
September 9, 1998 and its Resolution
[2]
dated February 9,
1999 is the issue of whether or not petitioner Cooperative
Development Authority (CDA for brevity) is vested with quasi-
judicial authority to adjudicate intra-cooperative disputes.
The record shows that sometime in the later part of 1997,
the CDA received from certain members of the Dolefil Agrarian
Reform Beneficiaries Cooperative, Inc. (DARBCI for brevity), an
agrarian reform cooperative that owns 8,860 hectares of land
in Polomolok, South Cotabato, several complaints alleging
mismanagement and/or misappropriation of funds of DARBCI
by the then incumbent officers and members of the board of
directors of the cooperative, some of whom are herein private
respondents.
Acting on the complaints docketed as CDA-CO Case No.
97-011, CDA Executive Director Candelario L. Verzosa, Jr.
issued an order
[3]
dated December 8, 1997 directing the private
respondents to file their answer within ten (10) days from
receipt thereof.
Before the private respondents could file their answer,
however, CDA Administrator Alberto P. Zingapan issued on
December 15, 1997 an order,
[4]
upon the motion of the
complainants in CDA-CO Case No. 97-011, freezing the funds

21

of DARBCI and creating a management committee to manage
the affairs of the said cooperative.
On December 18, 1991, the private respondents filed a
Petition for Certiorari
[5]
with a prayer for preliminary
injunction, damages and attorneys fees against the CDA and
its officers namely: Candelario L. Verzosa, Jr. and Alberto P.
Zingapan, including the DOLE Philippines Inc. before the
Regional Trial Court (RTC for brevity) of Polomolok, South
Cotabato, Branch 39. The petition which was docketed as SP
Civil Case No. 25, primarily questioned the jurisdiction of the
CDA to resolve the complaints against the private respondents,
specifically with respect to the authority of the CDA to issue
the freeze order and to create a management committee that
would run the affairs of DARBCI.
On February 24, 1998, CDA Chairman Jose C. Medina,
Jr. issued an order
[6]
in CDA-CO Case No. 97-011 placing the
private respondents under preventive suspension, hence,
paving the way for the newly-created management
committee
[7]
to assume office on March 10, 1998.
On March 27, 1998, the RTC of Polomolok, South
Cotabato, Branch 39, issued a temporary restraining
order
[8]
(TRO), initially for seventy-two (72) hours and
subsequently extended to twenty (20) days, in an Order dated
March 31, 1998. The temporary restraining order, in effect,
directed the parties to restore status quo ante, thereby
enabling the private respondents to reassume the management
of DARBCI.
The CDA questioned the propriety of the temporary
restraining order issued by the RTC of Polomolok, South
Cotabato on March 27, 1998 through a petition for certiorari
before the Court of Appeals, 12
th
Division, which was docketed
as CA-G.R. SP No. 47318.
On April 21, 1998, the Court of Appeals, 12
th
Division,
issued a temporary restraining order
[9]
in CA-G.R. SP No.
47318 enjoining the RTC of Polomolok, South Cotabato,
Branch 39, from enforcing the restraining order which the
latter court issued on March 27, 1998, and ordered that the
proceedings in SP Civil Case No. 25 be held in abeyance.
Consequently, the CDA continued with the proceedings
in CDA-CO Case No. 97-011. On May 26, 1998 CDA
Administrator Arcadio S. Lozada issued a resolution
[10]
which
directed the holding of a special general assembly of the
members of DARBCI and the creation of an ad hoc election
committee to supervise the election of officers and members of
the board of directors of DARBCI scheduled on June 14, 1998.
The said resolution of the CDA, issued on May 26, 1998
prompted the private respondents to file on June 8, 1998 a
Petition for Prohibition
[11]
with a prayer for preliminary
mandatory injunction and temporary restraining order with
the Court of Appeals, 13
th
Division, which was docketed as CA-
G.R. SP No. 47933. On June 10, 1998, the appellate court
issued a resolution
[12]
restraining the CDA and its
administrator, Arcadio S. Lozada, the three (3) members of
the ad hoc election committee or any and all persons acting in
their behalf from proceeding with the election of officers and
members of the board of directors of DARBCI scheduled on
June 14, 1998.
Incidentally, on the same date that the Court of Appeals
issued a temporary restraining order in CA-G.R. SP No. 47933
on June 10, 1998, a corporation by the name of Investa Land
Corporation (Investa for brevity) which allegedly executed a
Lease Agreement with Joint Venture with DARBCI filed a
petition
[13]
with the RTC of Polomolok, South Cotabato, Branch
39, docketed as SP Civil Case No. 28, essentially seeking the
annulment of orders and resolutions issued by the CDA in
CDA-CO Case No. 97-011 with a prayer for temporary
restraining order and preliminary injunction. On the following
day, June 11, 1998, the trial court issued a temporary
restraining order
[14]
enjoining the respondents therein from
proceeding with the scheduled special general assembly and
the elections of officers and members of the board of directors
of DARBCI on June 14, 1998. Thereafter, it also issued a writ
of preliminary injunction.
With the issuance of the two (2) restraining orders by the
Court of Appeals, 13
th
Division, and the RTC of Polomolok,
South Cotabato, Branch 39, on June 10 and 11, 1998,
respectively, the scheduled special general assembly and the
election of officers and members of the board of directors of
DARBCI on June 14, 1998 did not take place.
Nevertheless, on July 12, 1998, the majority of the 7,511
members of DARBCI, on their own initiative, convened a
general assembly and held an election of the members of the
board of directors and officers of the cooperative, thereby
effectively replacing the private respondents. Hence, the
private respondents filed a Twin Motions for Contempt of Court
and to Nullify Proceedings
[15]
with the Court of Appeals in CA-
G.R. SP No. 47933.
On September 9, 1998 the Court of Appeals,
13
th
Division, promulgated its subject appealed
Decision
[16]
granting the petition in CA-G.R. SP No. 47933, the
dispositive portion of which reads:
Wherefore, the foregoing considered, the Petition is hereby
GRANTED. The Orders of the respondent Cooperative
Development Authority in CDA-CO case No. 97-011 dated 08
December 1997, 15 December 1997, 26 January 1998, 24
February 1998, 03 March 1998, and the Resolution dated 26
May 1998, are hereby declared NULL AND VOID and of no
legal force and effect.
Further, the respondents are hereby ORDERED to perpetually
CEASE AND DESIST from taking any further proceedings in
CDA-CO Case No. 97-011.
Lastly, the respondent CDA is hereby ORDERED to
REINSTATE the Board of Directors of DARBCI who were ousted
by virtue of the questioned Orders, and to RESTORE the status
quo prior to the filing of CDA-CO Case No. 97-011.
SO ORDERED.
The CDA filed a motion for reconsideration
[17]
of the
Decision in CA-G.R. SP No. 47933 but it was denied by the
Court of Appeals in its assailed Resolution
[18]
dated February 9,
1999, thus:
WHEREFORE, the Motion for Reconsideration is hereby
DENIED for being patently without merit.
MOREOVER, acting on petitioners Twin Motion, and in view of
the Decision in this case dated 09, September 1998, the
tenor of which gives it legal effect nunc pro tunc. We therefore
hold the 12 July 1998
election of officers, the resolutions passed during the said
assembly, and the subsequent oath-taking of the officers
elected therein, and all actions taken during the said meeting,
being in blatant defiance of a valid restraining order issued by
this Court, to be NULL AND VOID AB INITIO AND OF NO
LEGAL FORCE AND EFFECT.
FURTHERMORE, the private respondents are hereby given
thirty (30) days from receipt of this Resolution within which to
explain in writing why they should not be held in contempt of
this Court for having openly defied the restraining order dated
10 July 1998. The Hon. Jose C. Medina of the CDA is given a
like period to explain in writing why he should not be cited in
contempt for having administered the oath of the Board of
Officers pending the effectivity of the restraining order. The
respondent Arcadio S. Lozada, Administrator of the CDA, is
likewise given the same period to explain why he should not be
held in contempt for issuing a resolution on 21 July 1998
validating the proceedings of the assembly, and another
resolution on 28 August 1998 confirming the election of the
officers thereof.
SO ORDERED.
Hence, the instant petition
[19]
for review which raises the
following assignments of error:
I
THE HONORABLE COURT OF APPEALS, IN NULLIFYING THE
ORDERS AND RESOLUTIONS OF THE COOPERATIVE
DEVELOPMENT AUTHORITY IN CDA CO CASE NO. 97-011,
DECIDED A QUESTION OF SUBSTANCE THAT IS NOT IN
ACCORD WITH LAW AND APPLICABLE DECISIONS OF THE
SUPREME COURT.
II
THE HONORABLE COURT OF APPEALS ERRED IN NOT
APPLYING THE RULE ON FORUM-SHOPPING.
III

22

THE HONORABLE COURT OF APPEALS ERRED IN
RENDERING A DECISION ON THE BASIS OF PURE
CONJECTURES AND SURMISES AND HAS DEPARTED FROM
THE ACCEPTED AND USUAL COURSE OF JUDICIAL
PROCEEDINGS WHICH CALL FOR AN EXERCISE OF THIS
HONORABLE COURTS SUPERVISION.
Petitioner CDA claims that it is vested with quasi-judicial
authority to adjudicate cooperative disputes in view of its
powers, functions and responsibilities under Section 3 of
Republic Act No. 6939.
[20]
The quasi-judicial nature of its
powers and functions was confirmed by the Department of
Justice, through the then Acting Secretary of Justice Demetrio
G. Demetria, in DOJ Opinion No. 10, Series of 1995, which
was issued in response to a query of the then Chairman Edna
E. Aberina of the CDA, to wit:
Applying the foregoing, the express powers of the CDA to
cancel certificates of registration of cooperatives for non-
compliance with administrative requirements or in cases of
voluntary dissolution under Section 3(g), and to mandate and
conciliate disputes within a cooperative or between
cooperatives under Section 8 of R.A. No. 6939, may be deemed
quasi-judicial in nature.
The reason is that in the performance of its functions such
as cancellation of certificate of registration, it is necessary to
establish non-compliance or violation of administrative
requirement. To do so, there arises an indispensable need to
hold hearings, investigate or ascertain facts that possibly
constitute non-compliance or violation and, based on the facts
investigated or ascertained, it becomes incumbent upon the
CDA to use its official discretion whether or not to cancel a
cooperatives certificate of registration, thus, clearly revealing
the quasi-judicial nature of the said function. When the CDA
acts as a conciliatory body pursuant to Section 8 of R.A. No.
6939, it in effect performs the functions of an
arbitrator. Arbitrators are by the nature of their functions act
in quasi-judicial capacity xxx.
The quasi-judicial nature of the foregoing functions is
bolstered by the provisions of Sections 3(o) of R.A. No. 6939
which grants CDA on (sic) the exercise of other functions as
may be necessary to implement the provisions of cooperative
laws, the power to summarily punish for direct contempt any
person guilty of misconduct in the presence thereof who
seriously interrupts any hearing or inquiry with a fine or
imprisonment prescribed therein, a power usually granted to
make effective the exercise of quasi-judicial functions.
[21]

Likewise, the Office of the President, through the then
Deputy Executive Secretary, Hon. Leonardo A. Quisumbing,
espoused the same view in the case of Alberto Ang, et al. v. The
Board of Directors, Metro Valenzuela Transport Services
Cooperative, Inc., O.P. Case No. 51111, when it declared and
ruled that:
Concededly, Section 3(o) of R.A. No. 6939 and Article 35(4) of
R.A. 6938, may not be relied upon by the CDA as authority to
resolve internal conflicts of cooperatives, they being general
provisions. Nevertheless, this does not preclude the CDA from
resolving the instant case. The assumption of jurisdiction by
the CDA on matters which partake of cooperative disputes is a
logical, necessary and direct consequence of its authority to
register cooperatives. Before a cooperative can acquire juridical
personality, registration thereof is a condition sine qua non,
and until and unless the CDA issues a certificate of
registration under its official seal, any cooperative for that
matter cannot be considered as having been legally
constituted. To our mind, the grant of this power impliedly
carries with it the visitorial power to entertain cooperative
conflicts, a lesser power compared to its authority to cancel
registration certificates when, in its opinion, the cooperative
fails to comply with some administrative requirements (Sec.
2(g), R.A. No. 6939). Evidently, respondents-appellants claim
that the CDA is limited to conciliation and mediation
proceedings is bereft of legal basis. Simply stated, the CDA, in
the exercise of such other function and in keeping with the
mandate of the law, could render the decisions and/or
resolutions as long as they pertain to the internal affairs of the
public service cooperative, such as the rights and privileges of
its members, the rules and procedures for meetings of the
general assembly, Board of Directors and committees, election
and qualifications of officers, directors and committee
members, and allocation and distribution of surpluses.
[22]

The petitioner avers that when an administrative agency
is conferred with quasi-judicial powers and functions, such as
the CDA, all controversies relating to the subject matter
pertaining to its specialization are deemed to be covered within
the jurisdiction of said administrative agency. The courts will
not interfere in matters which are addressed to the sound
discretion of government agencies entrusted with the
regulation of activities undertaken upon their special technical
knowledge and training.
The petitioner added that the decision in the case
of CANORECO v. Hon. Ruben D. Torres,
[23]
affirmed the
adjudicatory powers and functions of CDA contrary to the view
held by the Court of Appeals, when the Supreme Court upheld
therein the ruling of the CDA annulling the election of therein
respondents Norberto Ochoa, et al. as officers of the
Camarines Norte Electric Cooperative.
Petitioner CDA also claims that herein private
respondents are guilty of forum-shopping by filing cases in
three (3) different fora seeking the same relief. Petitioner
pointed out that private respondents originally filed a petition
with a prayer for preliminary injunction dated December 17,
1997 before the RTC of Polomolok, South Cotabato which was
docketed as SP Civil Case No. 25. Subsequently, the same
private respondents filed another petition with a prayer for
preliminary injunction with the Court of Appeals, 13
th
Division,
docketed as CA-G.R. SP No. 47933. Thereafter, Investa, also
represented by the same counsel of private respondents, Atty.
Reni Dublin, filed another case with the RTC of Polomolok,
South Cotabato, docketed as SP Civil Case No. 28, likewise
praying, among others, for the issuance of preliminary
injunction and an application for a temporary restraining
order. In effect, petitioner was confronted with three (3) TROs
issued in three (3) separate actions enjoining it from enforcing
its orders and resolutions in CDA-CO Case No. 97-011.
In their Comment,
[24]
private respondents contend that
the instant petition for review on certiorari filed by CDA
Administrator Alberto Zingapan should be dismissed and
struck down as a mere scrap of paper for lack of authority to
file the same from the Office of the Solicitor General and for
having been filed without approval from the Board of
Administrators of CDA.
The private respondents also contend that, contrary to
the claim of the petitioner, the powers, functions and
responsibilities of the CDA show that it was merely granted
regulatory or supervisory powers over cooperatives in addition
to its authority to mediate and conciliate between parties
involving the settlement of cooperative disputes.
Private respondents denied that they are guilty of forum-
shopping. They clarified that the case filed with the RTC of
Polomolok, South Cotabato, Branch 39, docketed as SP Civil
Case No. 25, was a petition for certiorari. On the other hand,
the case that they filed with the Court of Appeals, 13th
Division, docketed therein as CA-G.R. SP No. 47933, was a
petition for prohibition to stop the holding of a special general
assembly and the election of a new set of DARBCI officers on
June 14, 1998 as ordered by the petitioner CDA on May 26,
1998, which events have not yet occurred at the time the
petition for certiorari was filed by the private respondents with
the RTC of Polomolok, South Cotabato, Branch 39.
Private respondents also denied that the filing by Investa
of the petition for the declaration of nullity of the orders and
resolutions of petitioner CDA, with a prayer for temporary
restraining order with the RTC of Polomolok, South Cotabato,
docketed therein as SP Civil Case No. 28, constituted forum-
shopping on their part. They pointed out that Investa has a
separate juridical personality from DARBCI and that, contrary
to the claim of petitioner CDA, the former is not represented by
the lawyer of the private respondents.
By way of reply,
[25]
petitioner claims that Atty. Rogelio P.
Madriaga was properly deputized, among other lawyers, as
Special Attorney by the Office of the Solicitor General to
represent the CDA in the instant petition pursuant to the
letter
[26]
of Assistant Solicitor General Carlos N. Ortega
addressed to CDA Chairman Jose C. Medina, Jr. dated April 8,
1999. Likewise, the filing of the instant petition was an official
act of CDA Administrator Alberto P. Zingapan who was duly
appointed by the CDA Board of Administrators as chairman of
the Oversight Committee on Legal Matters per Resolution No.
201, S-1998.
[27]

Meanwhile, on March 26, 1999, certain persons alleging
to be incumbent officers and members of the board of directors
of DARBCI filed a motion to intervene in the instant petition
which was granted by this Court per its Resolution dated July
7, 1999.
[28]
In the same resolution, this Court required both

23

petitioner CDA and the private respondents in this case to file
their respective comments to the petition-in-intervention
within ten (10) days from notice, but both parties failed to
comply to do so up to the present.
We note that the instant petition for review
on certiorari suffers from a basic infirmity for lack of the
requisite imprimatur from the Office of the Solicitor General,
hence, it is dismissible on that ground. The general rule is
that only the Solicitor General can bring or defend actions on
behalf of the Republic of the Philippines and that actions filed
in the name of the Republic, or its agencies and
instrumentalities for that matter, if not initiated by the
Solicitor General, will be summarily dismissed.
[29]

The authority of the Office of the Solicitor General to
represent the Republic of the Philippines, its agencies and
instrumentalities, is embodied under Section 35(1), Chapter
12, Title III, Book IV of the Administrative Code of 1987 which
provides that:
SEC. 35. Powers and Functions.The Office of the Solicitor
General shall represent the Government of the Philippines, its
agencies and intrumentalities and its officials and agents in
any litigation, proceeding, investigation or matter requiring the
services of lawyers. When authorized by the President or head
of the office concerned, it shall also represent government
owned or controlled corporations. The Office of the Solicitor
General shall constitute the law office of the Government and,
as such, shall discharge duties requiring the services of
lawyers. It shall have the following specific powers and
functions:
(1) Represent the Government in the Supreme Court and
the Court of Appeals in all criminal proceedings; represent the
Government and its officers in the Supreme Court, Court of
Appeals, and all other courts or tribunals in all civil actions
and special proceedings in which the Government or any
officer thereof in his official capacity is a party.
The import of the above-quoted provision of the
Administrative Code of 1987 is to impose upon the Office of the
Solicitor General the duty to appear as counsel for the
Government, its agencies and instrumentalites and its officials
and agents before the Supreme Court, the Court of Appeals,
and all other courts and tribunals in any litigation, proceeding,
investigation or matter requiring the services of a lawyer. Its
mandatory character was emphasized by this Court in the case
of Gonzales v. Chavez,
[30]
thus:
It is patent that the intent of the lawmaker was to give the
designated official, the Solicitor General, in this case, the
unequivocal mandate to appear for the government in legal
proceedings. Spread out in the laws creating the office is the
discernible intent which may be gathered from the term
shall, which is invariably employed, from Act No. 136 (1901)
to the more recent Executive Order No. 292 (1987).
xxx xxx xxx
The decision of this Court as early as 1910 with respect to the
duties of the Attorney-General well applies to the Solicitor
General under the facts of the present case. The Court then
declared:
In this jurisdiction, it is the duty of the Attorney General to
perform the duties imposed upon him by law and he shall
prosecute all causes, civil and criminal, to which the
Government of the Philippine Islands, or any officer thereof, in
his official capacity, is a party xxx.
xxx xxx xxx
The Court is firmly convinced that considering the spirit and
the letter of the law, there can be no other logical
interpretation of Sec. 35 of the Administrative Code than that
it is, indeed, mandatory upon the OSG to represent the
Government of the Philippines, its agencies and
instrumentalities and its officials and agents in any litigation,
proceeding, investigation or matter requiring the services of a
lawyer.
As an exception to the general rule, the Solicitor General,
in providing legal representation for the government, is
empowered under Section 35(8), Chapter 12, Title III, Book IV
of the Administrative Code of 1987 to deputize legal officers of
government departments, bureaus, agencies and offices to
assist the Solicitor General and appear or represent the
Government in cases involving their respective offices, brought
before the courts and exercise supervision and control over
such legal officers with respect to such cases.
Petitioner claims that its counsel of record, Atty. Rogelio
P. Madriaga, was deputized by the Solicitor General to
represent the CDA in the instant petition. To prove its claim,
the petitioner attached to its Reply to the Comment dated
January 31, 2000, a photocopy of the alleged deputation
letter
[31]
from the Office of the Solicitor General signed by Hon.
Carlos N. Ortega, Assistant Solicitor General, addressed to
CDA Chairman Jose C. Medina, Jr.
A close scrutiny of the alleged deputation letter from the
Office of the Solicitor General shows, however, that said
counsel for the petitioner was only authorized to appear as
counsel in all civil cases in the lower courts (RTCs and MTCs)
wherein the CDA is a party-litigant. Likewise, the same letter
appears to be dated April 8, 1999 while the Petition for Review
on Certiorari filed by the petitioner was dated February 26,
1999. Clearly then, when the petition was filed with this Court
on March 3, 1999, Atty. Rogelio P. Madriaga was not yet
deputized by the Office of the Solicitor General to represent the
CDA.
Even on the assumption that the alleged letter from the
Office of the Solicitor General was intended to validate or ratify
the authority of counsel to represent the petitioner in this case,
the same contains certain conditions, one of which is that
petitioner shall submit to the Solicitor General,
for review, approval and signature, all important pleadings and
motions, including motions to withdraw complaints or appeals,
as well as compromise agreements. Significantly, one of the
major pleadings filed subsequently by the petitioner in this
case namely, the Reply to the Respondents Comment on the
Petition dated January 31, 2000, does not have any indication
that the same was previously submitted to the Office of the
Solicitor General for review or approval, much less bear the
requisite signature of the Solicitor General as required in the
alleged deputation letter.
Nonetheless, in view of the novelty of the main issue
raised in this petition concerning the nature and scope of
jurisdiction of the CDA in the settlement of cooperative
disputes as well as the long standing legal battle involving the
management of DARBCI between two (2) opposing factions that
inevitably threatens the very existence of one of the countrys
major cooperatives, this Court has decided to act on and
determine the merits of the instant petition.
Section 3 of R.A. No. 6939 enumerates the powers,
functions and responsibilities of the CDA, thus:
SEC. 3. Powers, Functions and Responsibilities.The
Authority shall have the following powers, functions and
responsibilities:
(a) Formulate, adopt and implement integrated and
comprehensive plans and programs on
cooperative development consistent with the
national policy on cooperatives and the overall
socio-economic development plan of the
Government;
(b) Develop and conduct management and training
programs upon request of cooperatives that will
provide members of cooperatives with the
entrepreneurial capabilities, managerial
expertise, and technical skills required for the
efficient operation of their cooperatives and
inculcate in them the true spirit of
cooperativism and provide, when necessary,
technical and professional assistance to ensure
the viability and growth of cooperatives with
special concern for agrarian reform, fishery and
economically depressed sectors;
(c) Support the voluntary organization and
consensual development of activities that
promote cooperative movements and provide
assistance to wards upgrading managerial and
technical expertise upon request of the
cooperatives concerned;
(d) Coordinate the effects of the local government
units and the private sector in the promotion,
organization, and development of cooperatives;

24

(e) Register all cooperatives and their federations
and unions, including their division, merger,
consolidation, dissolution or liquidation. It shall
also register the transfer of all or substantially
all of their assets and liabilities and such other
matters as may be required by the Authority;
(f) Require all cooperatives, their federations and
unions to submit their annual financial
statements, duly audited by certified public
accountants, and general information sheets;
(g) Order the cancellation after due notice and
hearing of the cooperatives certificate of
registration for non-compliance with
administrative requirements and in cases of
voluntary dissolution;
(h) Assist cooperatives in arranging for financial and
other forms of assistance under such terms and
conditions as are calculated to strengthen their
viability and autonomy;
(i) Establish extension offices as may be necessary
and financially viable to implement this
Act. Initially, there shall be extension offices in
the Cities of Dagupan, Manila, Naga, Iloilo,
Cebu, Cagayan de Oro and Davao;
(j) Impose and collect reasonable fees and charges
in connection with the registration of
cooperatives;
(k) Administer all grants and donations coursed
through the Government for cooperative
development, without prejudice to the right of
cooperatives to directly receive and administer
such grants and donations upon agreement
with the grantors and donors thereof;
(l) Formulate and adopt continuing policy
initiatives consultation with the cooperative
sector through public hearing;
(m) Adopt rules and regulations for the conduct of
its internal operations;
(n) Submit an annual report to the President and
Congress on the state of the cooperative
movement;
(o) Exercise such other functions as may be
necessary to implement the provisions of the
cooperative laws and, in the performance
thereof, the Authority may summarily punish
for direct contempt any person guilty of
misconduct in the presence of the Authority
which seriously interrupts any hearing or
inquiry with a fine of not more than five
hundred pesos (P500.00) or imprisonment of
not more than ten (10) days, or both. Acts
constituting indirect contempt as defined under
Rule 71 of the Rules of Court shall be punished
in accordance with the said Rule.
It is a fundamental rule in statutory construction that
when the law speaks in clear and categorical language, there is
no room for interpretation, vacillation or equivocation there is
only room for application.
[32]
It can be gleaned from the above-
quoted provision of R.A. No. 6939 that the authority of the
CDA is to discharge purely administrative functions which
consist of policy-making, registration, fiscal and technical
assistance to cooperatives and implementation of cooperative
laws. Nowhere in the said law can it be found any express
grant to the CDA of authority to adjudicate cooperative
disputes. At most, Section 8 of the same law provides that
upon request of either or both parties, the Authority shall
mediate and conciliate disputes with a cooperative or between
cooperatives however, with a restriction that if no mediation
or conciliation succeeds within three (3) months from request
thereof, a certificate of non-resolution shall be issued by the
commission prior to the filing of appropriate action before the
proper courts. Being an administrative agency, the CDA has
only such powers as are expressly granted to it by law and
those which are necessarily implied in the exercise thereof.
[33]

Petitioner CDA, however, insists that its authority to
conduct hearings or inquiries and the express grant to it of
contempt powers under Section 3, paragraphs (g) and (o) of R.
A. No. 6939, respectively, necessarily vests upon the CDA
quasi-judicial authority to adjudicate cooperative disputes. A
review of the records of the deliberations by both chambers of
Congress prior to the enactment of R.A. No. 6939 provides a
definitive answer that the CDA is not vested with quasi-judicial
authority to adjudicate cooperative disputes. During the
house deliberations on the then House Bill No. 10787, the
following exchange transpired:
MR. AQUINO (A.). The response of the sponsor is not quite
clear to this humble Representation. Let me just point out
other provisions under this particular section, which to the
mind of this humble Representation appear to provide this
proposed Authority with certain quasi-judicial
functions. Would I be correct in this interpretation of
paragraphs (f) and (g) under this section which state that
among the powers of the Authority are:
To administer the dissolution, disposal of assets and
settlement of liabilities of any cooperative that has been found
to be inoperable, inactive or defunct.
To make appropriate action on cooperatives found to be in
violation of any provision
It appears to the mind of this humble Representation that the
proposed Authority may be called upon to adjudicate in these
particular instances. Is it therefore vested with quasi-judicial
authority?
MR. ROMUALDO. No, Mr. Speaker. We have to resort to the
courts, for instance, for the dissolution of cooperatives. The
Authority only administers once a cooperative is dissolved. It
is also the CDA which initiates actions against any group of
persons that may use the name of a cooperative to its
advantage, that is, if the word cooperative is merely used by
it in order to advance its intentions, Mr. Speaker.
MR. AQUINO (A.). So, is the sponsor telling us that the
adjudication will have to be left to the courts of law?
MR. ROMUALDO. To the courts, Mr. Speaker.
[34]

xxx xxx xxx
MR. ADASA. One final question, Mr. Speaker. On page 4, line
33, it seems that one of the functions given to the Cooperative
Development Authority is to recommend the filing of legal
charges against any officer or member of a cooperative accused
of violating the provisions of this Act, existing laws and
cooperative by-laws and other rules and regulations set forth
by the government. Would this not conflict with the function
of the prosecuting fiscal?
MR. ROMUALDO. No, it will be the provincial fiscal that will
file the case. The Authority only recommends the filing of legal
charges, that is, of course, after preliminary investigation
conducted by the provincial fiscal or the prosecuting arm of
the government.
MR. ADASA. Does the Gentleman mean to say that the
Cooperative Development Authority can take the place of the
private complainant or the persons who are the offended party
if the latter would not pursue the case?
MR. ROMULDO. Yes, Mr. Speaker. The Authority can initiate
even the filing of the charges as embraced and defined on line
33 of page 4 of this proposed bill.
[35]

xxx xxx xxx
MR. CHIONGBIAN. xxx. Under the same section, line 28,
subparagraph (g) says that the Authority can take appropriate
action on cooperatives found to be violating any provision of
this Act, existing laws and cooperative by-laws, and other rules
and regulations set forth by the government by way of
withdrawal of Authority assistance, suspension of operation or
cancellation of accreditation.
My question is: If a cooperative, whose officers are liable for
wrongdoing, is found violating any of the provisions of this Act,
are we going to sacrifice the existence of that cooperative just
because some of the officers have taken advantage of their
positions and misused some of the funds? It would be very
unfair for the Authority to withdraw its assistance at the

25

expense of the majority. It is not clear as to what the liabilities
of the members of these cooperatives are.
xxx xxx xxx
MR. ROMUALDO. Mr. Speaker, before this action may be
taken by the Authority, there will be due process. However,
this provision is applicable in cases where the cooperative as a
whole violated the provisions of this Act as well as existing
laws. In this case, punitive actions may be taken against the
cooperative as a body.
With respect to the officials, if they themselves should be
punished, then Section (h) of this chapter provides that legal
charges shall be filed by the Cooperative Development
Authority.
[36]

In like manner, the deliberations on Senate Bill No. 485,
which was the counterpart of House Bill No. 10787, yield the
same legislative intent not to grant quasi-judicial authority to
the CDA as shown by the following discussions during the
period of amendments:
SEN. ALVAREZ. On page 3, between lines 5 and 6, if I may,
insert the following as one of the powers: CONDUCT
INQUIRIES, STUDIES, HEARINGS AND INVESTIGATIONS AND
ISSUE ORDERS, DECISIONS AND CIRCULARS AS MAY BE
NECESSARY TO IMPLEMENT ALL LAWS, RULES AND
REGULATIONS RELATING TO COOPERATIVES. THE AGENCY
MAY SUMMARILY PUNISH FOR CONTEMPT BY A FINE OF
NOT MORE THAN TWO HUNDRED PESOS (P200.00) OR
IMPRISONMENT NOT EXCEEDING TEN (10) DAYS, OR BOTH,
ANY PERSONS GUILTY OF SUCH MISCONDUCT IN THE
PRESENCE OF THE AGENCY WHICH SERIOUSLY
INTERRUPTS ANY HEARING OR INVESTIGATION, INCLUDING
WILFULL FAILURE OR REFUSAL, WITHOUT JUST CAUSE,
COMPLY WITH A SUMMONS, SUBPOENA, SUBPOENA DUCES
TECUM, DECISION OR ORDER, RULE OR REGULATION, OR,
BEING PRESENT AT A HEARING OR INVESTIGATION,
REFUSES TO BE SWORN IN AS A WITNESS OR TO ANSWER
QUESTIONS OR TO FURNISH INFORMATION REQUIRED BY
THE AGENCY. THE SHERIFF AND/OR POLICE AGENCIES OF
THE PLACE WHERE THE HEARING OR INVESTIGATION IS
CONDUCTED SHALL, UPON REQUEST OF THE AGENCY,
ASSIST IT TO ENFORCE THE PENALTY.
THE PRESIDENT. That is quite a long amendment. Does the
Gentleman have a written copy of his amendment, so that the
Members will have an opportunity to go over it and examine its
implications?
Anyway, why do we not hold in abeyance the proposed
amendment? Do we have that?
xxx xxx xxx
SEN. ALVAREZ. Mr. President, this is almost an inherent
power of a registering body. With the tremendous
responsibility that we have assigned to the Authority or the
agencyfor it to be able to function and discharge its
mandateit will need this authority.
SEN. AQUINO. Yes, Mr. President, conceptually, we do not like
the agency to have quasi-judicial powers. And, we are afraid
that if we empower the agency to conduct inquiries, studies,
hearings and investigations, it might interfere in the
autonomous character of cooperatives. So, I am sorry Mr.
President, we dont accept the amendment.
[37]

The decision to withhold quasi-judicial powers from the
CDA is in accordance with the policy of the government
granting autonomy to cooperatives. It was noted that in the
past 75 years cooperativism failed to flourish in the
Philippines. Of the 23,000 cooperatives organized under P.D.
No. 175, only 10 to 15 percent remained operational while the
rest became dormant. The dismal failure of cooperativism in
the Philippines was attributed mainly to the stifling attitude of
the government toward cooperatives. While the government
wished to help, it invariably wanted to control.
[38]
Also, in its
anxious efforts to push cooperativism, it smothered
cooperatives with so much help that they failed to develop self-
reliance. As one cooperative expert put it, The strong embrace
of government ends with a kiss of death for cooperatives.
[39]

But then, acknowledging the role of cooperatives as
instruments of national development, the framers of the 1987
Constitution directed Congress under Article XII, Section 15
thereof to create a centralized agency that shall promote the
viability and growth of cooperatives. Pursuant to this
constitutional mandate, the Congress approved on March 10,
1990 Republic Act No. 6939 which is the organic law creating
the Cooperative Development Authority. Apparently cognizant
of the errors in the past, Congress declared in an unequivocal
language that the state shall maintain the policy of non-
interference in the management and operation of
cooperatives.
[40]

After ascertaining the clear legislative intent underlying
R.A. No. 6939, effect should be given to it by the
judiciary.
[41]
Consequently, we hold and rule that the CDA is
devoid of any quasi-judicial authority to adjudicate intra-
cooperative disputes and more particularly disputes as regards
the election of the members of the Board of Directors and
officers of cooperatives. The authority to conduct hearings or
inquiries and the power to hold any person in contempt may
be exercised by the CDA only in the performance of its
administrative functions under R.A. No. 6939.
The petitioners reliance on the case of CANORECO is
misplaced for the reason that the central issue raised therein
was whether or not the Office of the President has the
authority to supplant or reverse the resolution of an
administrative agency, specifically the CDA, that had long
became final and on which issue we ruled in the negative. In
fact, this Court declared in the said case that the CDA has no
jurisdiction to adjudicate intra-cooperative disputes thus:
[42]

xxx xxx xxx
Obviously there was a clear case of intra-cooperative
dispute. Article 121 of the Cooperative Code is explicit on how
the dispute should be resolved; thus:
ART. 121. Settlement of Disputes. Disputes among members,
officers, directors, and committee members, and intra-
cooperative disputes shall, as far as practicable, be settled
amicably in accordance with the conciliation or mediation
mechanisms embodied in the by-laws of the cooperative, and
in applicable laws.
Should such a conciliation/mediation proceeding fail, the
matter shall be settled in a court of competent jurisdiction.
Complementing this Article is Section 8 of R.A. No. 6939,
which provides:
SEC. 8. Mediation and Conciliation. Upon request of either or
both or both parties, the [CDA] shall mediate and conciliate
disputes with the cooperative or between
cooperatives: Provided, That if no mediation or conciliation
succeeds within three (3) months from request thereof, a
certificate of non-resolution shall be issued by the request
thereof, a certificate of non-resolution shall be issued by the
commission prior to the filing of appropriate action before the
proper courts.
Likewise, we do not find any merit in the allegation of
forum-shopping against the private respondents. Forum-
shopping exists where the elements of litis pendentia are
present or where a final judgment in one case will amount
tores judicata in the other.
[43]
The requisites for the existence
of litis pendentia, in turn, are (1) identity of parties or at least
such representing the same interest in both actions; (2)
identity of rights asserted as prayed for, the relief being
founded on the same facts; and (3) the identity in both cases is
such that the judgment that may be rendered in the pending
case, regardless of which party is successful, would amount
to res judicata to the other case.
[44]

While there may be identity of parties between SP Civil
Case No. 25 filed with the RTC of Polomolok, South Cotabato,
Branch 39, and CA-G.R. SP No. 47933 before the Court of
Appeals, 13
th
Division, the two (2) other requisites are not
present. The Court of Appeals correctly observed that the case
filed with the RTC of Polomolok, South Cotabato was a petition
for certiorari assailing the orders of therein respondent CDA
for having been allegedly issued without or in excess of
jurisdiction. On the other hand, the case filed with the Court
of Appeals was a petition for prohibition seeking to restrain
therein respondent from further proceeding with the hearing of
the case. Besides, the filing of the petition for prohibition with
the Court of Appeals was necessary after the CDA issued the
Order dated May 26, 1998 which directed the holding of a
special general assembly for purposes of conducting elections

26

of officers and members of the board of DARBCI after the Court
of Appeals, 12
th
Division, in CA-G.R. SP No. 47318 issued a
temporary restraining order enjoining the proceedings in
Special Civil Case No. 25 and for the parties therein to
maintain the status quo. Under the circumstances, the private
respondents could not seek immediate relief before the trial
court and hence, they had to seek recourse before the Court of
Appeals via a petition for prohibition with a prayer for
preliminary injunction to forestall the impending damage and
injury to them in view of the order issued by the petitioner on
May 26, 1998.
The filing of Special Civil Case No. 28 with the RTC of
Polomolok, South Cotabato does not also constitute forum-
shopping on the part of the private respondents. Therein
petitioner Investa, which claims to have a subsisting lease
agreement and a joint venture with DARBCI, is an entity whose
juridical personality is separate and distinct from that of
private respondent cooperative or herein individual private
respondents and that they have totally different interests in the
subject matter of the case. Moreover, it was incorrect for the
petitioner to charge the private respondents with forum-
shopping partly based on its erroneous claim that DARBCI and
Investa were both represented by the same counsel. A charge
of forum-shopping may not be anchored simply on the fact
that the counsel for different petitioners in two (2) cases is one
and the same.
[45]
Besides, a review of the records of this case
shows that the counsel of record of Investa in Special Civil
Case No. 28 is a certain Atty. Ignacio D. Debuque, Jr. and not
the same counsel representing the private respondents.
[46]

Anent the petition-in-intervention, the intervenors aver
that the Resolution of the Court of Appeals dated February 9,
1999 in CA-G.R. SP No. 47933 denying the motion for
reconsideration of herein petitioner CDA also invalidated the
election of officers and members of the board of directors of
DARBCI held during the special general assembly on July 12,
1998, thus adversely affecting their substantial rights
including their right to due process. They claim that the object
of the order issued by the appellate court on June 10, 1998
was to restrain the holding of the general assembly of DARBCI
as directed in the order of CDA Administrator Arcadio Lozada
dated May 26, 1998. In compliance with the said order of the
Court of Appeals, no general assembly was held on June 14,
1998. However, due to the grave concern over the alleged
tyrannical administration and unmitigated abuses of herein
private respondents, the majority of the members of DARBCI,
on their own initiative and in the exercise of their inherent
right to assembly under the law and the 1987 Constitution,
convened a general assembly on July 12, 1998. On the said
occasion, the majority of the members of DARBCI unanimously
elected herein petitioners-in-intervention as new officers and
members of the board of directors of DARBCI,
[47]
and thereby
resulting in the removal of the private respondents from their
positions in DARBCI.
Petitioners-in-intervention pointed out that the validity of
the general assembly held on July 12, 1998 was never raised
as an issue in CA-G.R. SP No. 47933. The petitioners-in-
intervention were not even ordered by the Court of Appeals to
file their comment on the Twin Motions For Contempt of Court
and to Nullify Proceedings filed by the private respondents on
July 29, 1998.
As earlier noted, the Court of Appeals issued a temporary
restraining order
[48]
in CA-G.R. SP No. 47933 on June 10,
1998, the pertinent portion of which reads:
Meanwhile, respondents or any and all persons acting in their
behalf and stead are temporarily restrained from proceeding
with the election of officers and members of the board of
directors of the Dolefil Agrarian Reform Beneficiaries
Cooperative, Inc. scheduled on June 14, 1998 and or any other
date thereafter.
It was also noted that as a consequence of the temporary
restraining order issued by the appellate court, the general
assembly and the election of officers and members of the board
of directors of DARBCI, pursuant to the resolution issued by
CDA Administrator Arcadio S. Lozada, did not take place as
scheduled on June 14, 1998. However, on July 12, 1998 the
majority of the members of DARBCI, at their own initiative,
held a general assembly and elected a new set of officers and
members of the board of directors of the cooperative which
resulted in the ouster of the private respondents from their
posts in the said cooperative.
The incident on July 12, 1998 prompted herein private
respondents to file their Twin Motions for Contempt of Court
and to Nullify Proceedings on July 26, 1998. The twin motions
prayed, among others, that after due notice and hearing,
certain personalities, including the petitioners-in-intervention,
be cited in indirect contempt for their participation in the
subject incident and for the nullification of the election on July
12, 1998 for being illegal, contrary to the by-laws of the
cooperative and in defiance of the injunctive processes
of the appellate court.
On September 9, 1998, the Court of Appeals,
13
th
Division, rendered a Decision in CA-G.R. SP No. 47933
which declared the CDA devoid of quasi-judicial jurisdiction to
settle the dispute in CDA-CO Case No. 97-011 without
however, taking any action on the Twin Motions for Contempt
of Court and to Nullify Proceedings filed by the private
respondents. As it turned out, it was only in its Resolution
dated February 9, 1999 denying petitioners motion for
reconsideration of the Decision in CA-G.R. SP No. 47933 that
the Court of Appeals, 13
th
Division, acted on the Twin Motions
for Contempt of Court and to Nullify Proceedings by declaring
as null and void the election of the petitioners-in-intervention
on July 12, 1998 as officers and members of the board of
directors of DARBCI.
We find, however, that the action taken by the Court of
Appeals, 13
th
Division, on the Twin Motions for Contempt of
Court and to Nullify Proceedings insofar as it nullified the
election of the officers and members of the Board of Directors
of DARBCI, violated the constitutional right of the petitioners-
in-intervention to due process. The requirement of due
process is satisfied if the following conditions are present,
namely: (1) there must be a court or tribunal clothed with
judicial power to hear and determine the matter before it; (2)
jurisdiction must be lawfully acquired over the person of the
defendant or over the property which is the subject of the
proceedings; (3) the defendant must be given an opportunity to
be heard; and (4) judgment must be rendered upon lawful
hearing.
[49]
The appellate court should have first required the
petitioners-in-intervention to file their comment or opposition
to the said Twin Motions For Contempt Of Court And to
Nullify Proceedings which also refers to the elections held
during the general assembly on July 12, 1998. It was
precipitate for the appellate court to render judgment against
the petitioners-in-intervention in its Resolution dated February
9, 1999 without due notice and opportunity to be
heard. Besides, the validity of the general assembly held on
July 12, 1998 was not raised as an issue in CA-G.R. SP No.
47933.
WHEREFORE, judgment is hereby rendered as follows:
1. The petition for review on certiorari is hereby DENIED
for lack of merit. The orders, resolutions, memoranda and any
other acts rendered by petitioner Cooperative Development
Authority in CDA-CO Case No. 97-011 are hereby declared null
and void ab initio for lack of quasi-judicial authority of
petitioner to adjudicate intra-cooperative disputes; and the
petitioner is hereby ordered to cease and desist from taking
any further proceedings therein; and
2. In the interest of justice, the dispositive portion of the
Resolution of the Court of Appeals, dated February 9, 1999, in
CA-G.R. SP No. 47933, insofar as it nullified the elections of
the members of the Board of Directors and Officers of DARBCI
held during the general assembly of the DARBCI members on
July 12, 1998, is hereby SET ASIDE.
No pronouncement as to costs.
SO ORDERED.
G.R. No. 109216 October 27, 1994
PACITA TING, petitioner,
vs.
HON. COURT OF APPEALS, AURORA TANALEON EPIFANIA
GOMILLA, ELIZA SUBALDO, and ROBERTO/SHIRLEY
YEBRA, respondents.
Sometime in 1965, the spouses Jose and Pacita Ting
purchased a house standing on a 212-square meter lot known
as Lot 10, Block 17 of the West Crame ZIP (Zonal Improvement
Program. The lot was bought by the government under
Presidential Decree No. 1517, otherwise known as the "Urban
Land Reform Act," for disposition to qualified beneficiaries.
These beneficiaries were determined in the 1978 census
conducted by the Municipality of San Juan. Jose Ting was
listed as a structure owner and was given Tag No. 80-0417-01.
Pacita Ting allegedly allowed the private respondents herein to

27

occupy portions of the lot in question after their house was
razed in a fire which gutted the entire neighborhood on
February 8, 1981.
On June 17, 1986, the private respondents applied for
individual lot allocations with the NHA. The Awards and
Arbitration Committee (AAC) of West Crame, to whom the
request was forwarded by the NHA, denied the applications
because the parties were disqualified for a lot award. Upon
appeal to the NHA, this decision was reversed and the private
respondents
were awarded the lots occupied by their respective structures
inside Lot 10, Block 17.
Pacita Ting twice moved for a reconsideration of the award, but
the NHA upheld its decision on both occasions, denying her
second motion with finality in an order dated May 29, 1989.
She then appealed to the Office of the President (OP), which
rendered a decision on August 15, 1990, affirming the NHA's
ruling, with the following observations:
The appealed order, it bears stressing, is primarily
assayed on the factual and unrebutted findings of the
office a quo anent the extent of and actual occupancy by
appellant and appellees of their respective areas.
Consequently, appellant's contention that she alone is
entitled to the award of the entire Lot 10, Block 17, with
an area of 212 square meters, on the strength of her
allegation that the other claimants are not qualified
project beneficiaries, is untenable.
That subject lot had been earlier awarded by the ZIP
project's Arbitration and Adjudication Committee (AAC)
to appellant adds nothing in the way of conclusiveness
to the legality of her claim to the whole area, much more
confers upon her a vested right thereto, to the exclusion
of appellees who, as shown by the evidence, are as
much as qualified to be lot awardees of the NHA. For, in
the first place, no formal award of the controverted lot
has been made by the NHA to appellant for lack of
Notice of Award issued by the NHA General Manager,
and, more importantly, no Conditional Contract to Sell
of said lot was even executed between appellant and the
NHA. And, in the second place, the decision of the AAC
is merely recommendatory and subject to the final
approval of the NHA, thru its General Manager. Hence,
the disapproval of appellee's applications for lot award
and their subsequent elevation of the case to the NHA
by way of appeal is but in accord with the NHA rule of
proceedings, the AAC's award to appellant not having
yet acquired the character of finality.
Appellant's lot allocation cannot, and should not,
extend to portions of the lot where appellees' structures
had been constructed. Otherwise, appellant would be
the virtual owner of the structures put up by appellees
on the portions of subject lot which the former had
leased to the latter without the required prior approval
by the NHA. And worst, such arrangements would
constitute a palpable violation of NHA policy against
multiple ownership of structures in its ZIP projects, as
defined under Section V, Paragraph 5 of NHA Circular
No. 13, dated February 19, 1982.
Were this Office to rule that appellant is entitled to the
award of the entire Lot 10, Block 17 whereon several
other structures have been constructed, the net result
thereof would be a stultification, if not complete
evisceration, of the NHA policy of "one structure, one
lot," which eventuality this Office cannot legally
countenance.
Appellant's claim that the NHA proceedings was
punctuated with bias and partiality is a mere play on
emotion that cannot defeat the overriding
considerations of justice and fair play. In so ruling for
herein appellees, the NHA simply fittingly supplied its
long standing policy of awarding NHA lots to the actual
occupants thereof and within the permissible limits.
What is more, appellant had failed to overthrow the
presumption of regularity that the courts attach to acts
of administrative bodies/officers.
Finally, considering that the NHA is tasked with the
determination of the technical aspects of mass housing,
which includes the feasibility of subdividing lots for
multiple allocations, the award of the contested lot to all
the contending parties in the manner heretofore
adjudged, on the basis of their actual occupancy, is but
in consonance with the government's declared policy
under Section 3 of PD 757, "[t]o provide and maintain
adequate housing for the greatest possible number of
people."

Petitioner's motion for reconsideration of this decision was
likewise denied.
Not satisfied with these pronouncements, petitioner appealed
to the Court of Appeals raising, as one of the issues, the lack of
jurisdiction of the NHA to entertain the appeal of the private
respondents from the decision of the AAC.
The appellate court dismissed the petition in its decision dated
December 29, 1992, and denied petitioner's motion for
reconsideration on March 3, 1993.
Hence, petitioner filed this petition for review with the following
assigned errors:
I
THE FINDINGS AND CONCLUSIONS OF THE
NATIONAL HOUSING AUTHORITY, THAT PRIVATE
RESPONDENTS SEASONABLY FILED THE NOTICE OF
APPEAL WITH THE NATIONAL HOUSING AUTHORITY
FROM THE DECISION OF THE AWARD AND
ARBITRATION COMMITTEE IS NOT SUPPORTED WITH
EVIDENCE.
II
ASSUMING WITHOUT CONCEDING THAT PRIVATE
RESPONDENTS INTERPOSED THE APPEAL FROM THE
DECISION OF THE AWARD AND ARBITRATION
COMMITTEE STILL, THE NATIONAL HOUSING
AUTHORITY HAS NO JURISDICTION TO ENTERTAIN
THE APPEAL, HAVING BEEN FILED OUT OF TIME.
III
THE DECISION OF THE NATIONAL HOUSING
AUTHORITY WHICH WAS AFFIRMED BY THE OFFICE
OF THE PRESIDENT AND THE HONORABLE
RESPONDENT COURT OF APPEALS IS TAINTED WITH
UNFAIRNESS AND ARBITRARINESS AMOUNTING TO
ABUSE OF DISCRETION.
IV
THE CONSTRUCTION AND INTERPRETATION GIVEN
BY THE NATIONAL HOUSING AUTHORITY UPON SEC.
3 OF P.D. 757 IS IN VIOLATION OF NHA CIRCULAR
NO. 13 KNOWN AS THE CODE OF POLICY,
PARTICULARLY SEC. V, PAR. 3, THEREOF.
V
THE NATIONAL HOUSING AUTHORITY GRAVELY
ERRED IN AWARDING LOTS TO PRIVATE
RESPONDENTS WHO WERE ADMITTEDLY
UNCENSUSED HOUSEHOLD OWNERS IN ZIP WEST
CRAME BECAUSE THEY (sic) FOUR ARE ALL
DISQUALIFIED.
VI
THE PRIVATE RESPONDENTS ARE DEEMED TO HAVE
ADMITTED PETITIONER'S ALLEGATION IN THE
PETITION FILED WITH THE COURT OF APPEALS FOR
FAILURE TO FILE THEIR COMMENT/ANSWER TO IT
AS REQUIRED BY THE COURT.
It must be noted at this juncture that this petition is actually a
special civil action for certiorari filed under Rule 65. A perusal
of the errors cited above instantly reveals that the basis of this
petition is grave abuse of discretion amounting to lack of

28

jurisdiction allegedly committed, not by the respondent Court
of Appeals, but by the NHA and the Office of the President. It
even prays for the reinstatement of the AAC's decision.
Henceforth, we shall treat this petition as one
for certiorari under Rule 65.
Petitioner claims that the NHA has no jurisdiction to reverse
the AAC's decision and award the lot to the private
respondents because the latter's appeal was filed out of time. It
is also claimed, in the alternative, that there is no proof as to
the existence of said appeal by the respondents. How then can
petitioner allege the late filing of an appeal which she claims
does not even exist? Her argument simply defies logic and
must consequently be stricken out.
The issue of lack of jurisdiction was first raised before the
Court of Appeals. It appears however, that whereas in the
proceedings below, petitioner claimed that the NHA lacked
jurisdiction to entertain the appeal from AAC's decision, the
basis of the same allegation of lack of jurisdiction raised in the
instant petition is the NHA'sentertainment of the appeal in spite
of having been filed late.
This may be a desperate effort on the part of the petitioner to
overturn the unanimous decisions of the appellate court and
the administrative bodies concerned, considering that the
Court of Appeals has sufficiently and correctly rejected the
claim of lack of jurisdiction of the NHA to entertain the appeal.
Under paragraph V(7) of NHA Circular No. 13, dated February
19, 1982 upon which the petitioner also relies, "All decisions of
the AAC shall be subject to review and approval of the General
Manager of the Authority, the local Mayors, and finally the
Governor of the Metropolitan Manila Commission."
It is clear from this provision that the NHA was acting within
its statutory authority when it reversed the decision of the AAC
and awarded the lot to the respondents. While it is true that
NHA Circular No. 13 does not provide for
any period within which to appeal, the 15-day period applied to
appeals from quasi-judicial bodies to the Court of Appeals
cannot apply to an appeal from the AAC's decision to the NHA
which is an intra-agency recourse. Anyhow, the decision of the
NHA in this case was reached "after a judicious review and
evaluation of the records and the documentary evidence
submitted." and "in consonance with the mandate of the
Authority to provide and maintain adequate housing for the
greatest number of people."
The petitioner also claims that the "construction given by the
National Housing Authority over Sec. 3 of P.D. 757 is in
violation of NHA Circular
No. 13," and that the NHA "gravely erred in awarding (the) lot
to private respondents who were admittedly uncensused
household owner(s) in ZIP West Crame."
This argument is untenable.
In the first place, the "construction given to a statute by an
administrative agency charged with the interpretation and
application of that statute is entitled to great respect and
should be accorded great weight by the courts, unless such
construction is clearly shown to be in sharp conflict with the
governing statute or the Constitution and other laws. . . . The
Courts give much weight to contemporaneous construction
because of the respect due the government agency or officials
charged with the implementation of the law, their competence,
expertness, experience and informed judgment, and the fact
that they frequently are the drafters of the law they interpret."
1

In the second place, these are factual issues already touched
upon and decided by the Court of Appeals which may not be
assailed in this petition, there being nothing on record that
would justify a relaxation of the rule that the appellate court's
findings of fact are conclusive upon the Court, which may only
review and correct errors of law.
2

On the issue that the challenged NHA decision is "tainted with
unfairness and arbitrariness amounting to lack of jurisdiction,"
suffice it to say that the Court has consistently declared that
findings or conclusions of administrative bodies which have
gained expertise in their fields because their jurisdiction is
confined to specific matters, supported as they are by
substantial evidence, are generally respected and even given
finality, in the absence of a showing of unfairness or
arbitrariness on the part of the administrative body amounting
to abuse of discretion or lack of jurisdiction.
3
Hence, the
decision of the NHA, as well as that of the Office of the
President, should not be disturbed on appeal.
Finally, petitioner alleges that the "private respondents are
deemed to have admitted petitioner's allegation in the petition
with the Court of Appeals for their failure to file their
comment/answer as required by the Court of Appeals."
The non-filing of the comment/answer by the private
respondents cannot be interpreted as an admission of the
allegations in the petition. Under Section 8, Rule 65 (which
applies in this case instead of Section 1, Rule 9, stating that
allegations not specifically denied are deemed admitted), upon
the expiration of the period to file an answer, "the court may
order the proceedings complained of to be forthwith certified
up for review and shall hear the case, and if after such hearing
the court finds that the allegations of the petition are true, it
shall render judgment for such of the relief prayed for as the
petitioner is entitled to . . . ." Conversely, if the court finds the
allegations to be false, then it is not duty bound to grant any of
the reliefs sought, and may dismiss the petition outright.
WHEREFORE, in view of the foregoing, the instant petition for
review (properly certiorari) is hereby DISMISSED for lack of
merit.
SO ORDERED.
G.R. No. 110120 March 16, 1994
LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner,
vs.
COURT OF APPEALS, HON. MANUEL JN. SERAPIO,
Presiding Judge RTC, Branch 127, Caloocan City, HON.
MACARIO A. ASISTIO, JR., City Mayor of Caloocan and/or
THE CITY GOVERNMENT OF CALOOCAN,respondents.
The clash between the responsibility of the City Government of
Caloocan to dispose off the 350 tons of garbage it collects daily
and the growing concern and sensitivity to a pollution-free
environment of the residents of Barangay Camarin, Tala
Estate, Caloocan City where these tons of garbage are dumped
everyday is the hub of this controversy elevated by the
protagonists to the Laguna Lake Development Authority (LLDA)
for adjudication.
The instant case stemmed from an earlier petition filed with
this Court by Laguna Lake Development Authority (LLDA for
short) docketed as G.R.
No. 107542 against the City Government of Caloocan, et al. In
the Resolution of November 10, 1992, this Court referred G.R.
No. 107542 to the Court of Appeals for appropriate disposition.
Docketed therein as CA-G.R. SP
No. 29449, the Court of Appeals, in a decision
1
promulgated
on January 29, 1993 ruled that the LLDA has no power and
authority to issue a cease and desist order enjoining the
dumping of garbage in Barangay Camarin, Tala Estate,
Caloocan City. The LLDA now seeks, in this petition, a review
of the decision of the Court of Appeals.
The facts, as disclosed in the records, are undisputed.
On March 8, 1991, the Task Force Camarin Dumpsite of Our
Lady of Lourdes Parish, Barangay Camarin, Caloocan City,
filed a letter-complaint
2
with the Laguna Lake Development
Authority seeking to stop the operation of the 8.6-hectare open
garbage dumpsite in Tala Estate, Barangay Camarin, Caloocan
City due to its harmful effects on the health of the residents
and the possibility of pollution of the water content of the
surrounding area.
On November 15, 1991, the LLDA conducted an on-site
investigation, monitoring and test sampling of the
leachate
3
that seeps from said dumpsite to the nearby creek
which is a tributary of the Marilao River. The LLDA Legal and
Technical personnel found that the City Government of
Caloocan was maintaining an open dumpsite at the Camarin
area without first securing an Environmental Compliance
Certificate (ECC) from the Environmental Management Bureau
(EMB) of the Department of Environment and Natural
Resources, as required under Presidential Decree No.
1586,
4
and clearance from LLDA as required under Republic
Act No. 4850,
5
as amended by Presidential Decree No. 813 and
Executive Order No. 927, series of 1983.
6


29

After a public hearing conducted on December 4, 1991, the
LLDA, acting on the complaint of Task Force Camarin
Dumpsite, found that the water collected from the leachate
and the receiving streams could considerably affect the quality,
in turn, of the receiving waters since it indicates the presence
of bacteria, other than coliform, which may have contaminated
the sample during collection or handling.
7
On December 5,
1991, the LLDA issued a Cease and Desist Order
8
ordering the
City Government of Caloocan, Metropolitan Manila Authority,
their contractors, and other entities, to completely halt, stop
and desist from dumping any form or kind of garbage and
other waste matter at the Camarin dumpsite.
The dumping operation was forthwith stopped by the City
Government of Caloocan. However, sometime in August 1992
the dumping operation was resumed after a meeting held in
July 1992 among the City Government of Caloocan, the
representatives of Task Force Camarin Dumpsite and LLDA at
the Office of Environmental Management Bureau Director
Rodrigo U. Fuentes failed to settle the problem.
After an investigation by its team of legal and technical
personnel on August 14, 1992, the LLDA issued another order
reiterating the December 5, 1991, order and issued an Alias
Cease and Desist Order enjoining the City Government of
Caloocan from continuing its dumping operations at the
Camarin area.
On September 25, 1992, the LLDA, with the assistance of the
Philippine National Police, enforced its Alias Cease and Desist
Order by prohibiting the entry of all garbage dump trucks into
the Tala Estate, Camarin area being utilized as a dumpsite.
Pending resolution of its motion for reconsideration earlier filed
on September 17, 1992 with the LLDA, the City Government of
Caloocan filed with the Regional Trial Court of Caloocan City
an action for the declaration of nullity of the cease and desist
order with prayer for the issuance of writ of injunction,
docketed as Civil Case No. C-15598. In its complaint, the City
Government of Caloocan sought to be declared as the sole
authority empowered to promote the health and safety and
enhance the right of the people in Caloocan City to a balanced
ecology within its territorial jurisdiction.
9

On September 25, 1992, the Executive Judge of the Regional
Trial Court of Caloocan City issued a temporary restraining
order enjoining the LLDA from enforcing its cease and desist
order. Subsequently, the case was raffled to the Regional Trial
Court, Branch 126 of Caloocan which, at the time, was
presided over by Judge Manuel Jn. Serapio of the Regional
Trial Court, Branch 127, the pairing judge of the recently-
retired presiding judge.
The LLDA, for its part, filed on October 2, 1992 a motion to
dismiss on the ground, among others, that under Republic Act
No. 3931, as amended by Presidential Decree No. 984,
otherwise known as the Pollution Control Law, the cease and
desist order issued by it which is the subject matter of the
complaint is reviewable both upon the law and the facts of the
case by the Court of Appeals and not by the Regional Trial
Court.
10

On October 12, 1992 Judge Manuel Jn. Serapio issued an
order consolidating Civil Case No. C-15598 with Civil Case No.
C-15580, an earlier case filed by the Task Force Camarin
Dumpsite entitled "Fr. John Moran, et al. vs. Hon. Macario
Asistio." The LLDA, however, maintained during the trial that
the foregoing cases, being independent of each other, should
have been treated separately.
On October 16, 1992, Judge Manuel Jn. Serapio, after hearing
the motion to dismiss, issued in the consolidated cases an
order
11
denying LLDA's motion to dismiss and granting the
issuance of a writ of preliminary injunction enjoining the
LLDA, its agent and all persons acting for and on its behalf,
from enforcing or implementing its cease and desist order
which prevents plaintiff City of Caloocan from dumping
garbage at the Camarin dumpsite during the pendency of this
case and/or until further orders of the court.
On November 5, 1992, the LLDA filed a petition for certiorari,
prohibition and injunction with prayer for restraining order
with the Supreme Court, docketed as G.R. No. 107542, seeking
to nullify the aforesaid order dated October 16, 1992 issued by
the Regional Trial Court, Branch 127 of Caloocan City denying
its motion to dismiss.
The Court, acting on the petition, issued a Resolution
12
on
November 10, 1992 referring the case to the Court of Appeals
for proper disposition and at the same time, without giving due
course to the petition, required the respondents to comment
on the petition and file the same with the Court of Appeals
within ten (10) days from notice. In the meantime, the Court
issued a temporary restraining order, effective immediately and
continuing until further orders from it, ordering the
respondents: (1) Judge Manuel Jn. Serapio, Presiding Judge,
Regional Trial Court, Branch 127, Caloocan City to cease and
desist from exercising jurisdiction over the case for declaration
of nullity of the cease and desist order issued by the Laguna
Lake Development Authority (LLDA); and (2) City Mayor of
Caloocan and/or the City Government of Caloocan to cease
and desist from dumping its garbage at the Tala Estate,
Barangay Camarin, Caloocan City.
Respondents City Government of Caloocan and Mayor Macario
A. Asistio, Jr. filed on November 12, 1992 a motion for
reconsideration and/or to quash/recall the temporary
restraining order and an urgent motion for reconsideration
alleging that ". . . in view of the calamitous situation that
would arise if the respondent city government fails to collect
350 tons of garbage daily for lack of dumpsite (i)t is therefore,
imperative that the issue be resolved with dispatch or with
sufficient leeway to allow the respondents to find alternative
solutions to this garbage problem."
On November 17, 1992, the Court issued a
Resolution
13
directing the Court of Appeals to immediately set
the case for hearing for the purpose of determining whether or
not the temporary restraining order issued by the Court should
be lifted and what conditions, if any, may be required if it is to
be so lifted or whether the restraining order should be
maintained or converted into a preliminary injunction.
The Court of Appeals set the case for hearing on November 27,
1992, at 10:00 in the morning at the Hearing Room, 3rd Floor,
New Building, Court of Appeals.
14
After the oral argument, a
conference was set on December 8, 1992 at 10:00 o'clock in
the morning where the Mayor of Caloocan City, the General
Manager of LLDA, the Secretary of DENR or his duly
authorized representative and the Secretary of DILG or his
duly authorized representative were required to appear.
It was agreed at the conference that the LLDA had until
December 15, 1992 to finish its study and review of
respondent's technical plan with respect to the dumping of its
garbage and in the event of a rejection of respondent's
technical plan or a failure of settlement, the parties will submit
within 10 days from notice their respective memoranda on the
merits of the case, after which the petition shall be deemed
submitted for resolution.
15
Notwithstanding such efforts, the
parties failed to settle the dispute.
On April 30, 1993, the Court of Appeals promulgated its
decision holding that: (1) the Regional Trial Court has no
jurisdiction on appeal to try, hear and decide the action for
annulment of LLDA's cease and desist order, including the
issuance of a temporary restraining order and preliminary
injunction in relation thereto, since appeal therefrom is within
the exclusive and appellate jurisdiction of the Court of Appeals
under Section 9, par. (3), of Batas Pambansa Blg. 129; and (2)
the Laguna Lake Development Authority has no power and
authority to issue a cease and desist order under its enabling
law, Republic Act No. 4850, as amended by P.D. No. 813 and
Executive Order
No. 927, series of 1983.
The Court of Appeals thus dismissed Civil Case No. 15598 and
the preliminary injunction issued in the said case was set
aside; the cease and desist order of LLDA was likewise set
aside and the temporary restraining order enjoining the City
Mayor of Caloocan and/or the City Government of Caloocan to
cease and desist from dumping its garbage at the Tala Estate,
Barangay Camarin, Caloocan City was lifted, subject, however,
to the condition that any future dumping of garbage in said
area, shall be in conformity with the procedure and protective
works contained in the proposal attached to the records of this
case and found on pages 152-160 of the Rollo, which was
thereby adopted by reference and made an integral part of the
decision, until the corresponding restraining and/or injunctive
relief is granted by the proper Court upon LLDA's institution of
the necessary legal proceedings.

30

Hence, the Laguna Lake Development Authority filed the
instant petition for review on certiorari, now docketed as G.R.
No. 110120, with prayer that the temporary restraining order
lifted by the Court of Appeals be re-issued until after final
determination by this Court of the issue on the proper
interpretation of the powers and authority of the LLDA under
its enabling law.
On July, 19, 1993, the Court issued a temporary restraining
order
16
enjoining the City Mayor of Caloocan and/or the City
Government of Caloocan to cease and desist from dumping its
garbage at the Tala Estate, Barangay Camarin, Caloocan City,
effective as of this date and containing until otherwise ordered
by the Court.
It is significant to note that while both parties in this case
agree on the need to protect the environment and to maintain
the ecological balance of the surrounding areas of the Camarin
open dumpsite, the question as to which agency can lawfully
exercise jurisdiction over the matter remains highly open to
question.
The City Government of Caloocan claims that it is within its
power, as a local government unit, pursuant to the general
welfare provision of the Local Government Code,
17
to
determine the effects of the operation of the dumpsite on the
ecological balance and to see that such balance is maintained.
On the basis of said contention, it questioned, from the
inception of the dispute before the Regional Trial Court of
Caloocan City, the power and authority of the LLDA to issue a
cease and desist order enjoining the dumping of garbage in the
Barangay Camarin over which the City Government of
Caloocan has territorial jurisdiction.
The Court of Appeals sustained the position of the City of
Caloocan on the theory that Section 7 of Presidential Decree
No. 984, otherwise known as the Pollution Control law,
authorizing the defunct National Pollution Control Commission
to issue an ex-parte cease and desist order was not
incorporated in Presidential Decree No. 813 nor in Executive
Order No. 927, series of
1983. The Court of Appeals ruled that under Section 4, par.
(d), of Republic Act No. 4850, as amended, the LLDA is instead
required "to institute the necessary legal proceeding against
any person who shall commence to implement or continue
implementation of any project, plan or program within the
Laguna de Bay region without previous clearance from the
Authority."
The LLDA now assails, in this partition for review, the
abovementioned ruling of the Court of Appeals, contending
that, as an administrative agency which was granted
regulatory and adjudicatory powers and functions by Republic
Act No. 4850 and its amendatory laws, Presidential Decree No.
813 and Executive Order No. 927, series of 1983, it is invested
with the power and authority to issue a cease and desist order
pursuant to Section 4 par. (c), (d), (e), (f) and (g) of Executive
Order No. 927 series of 1983 which provides, thus:
Sec. 4. Additional Powers and Functions. The authority
shall have the following powers and functions:
xxx xxx xxx
(c) Issue orders or decisions to compel compliance with
the provisions of this Executive Order and its
implementing rules and regulations only after proper
notice and hearing.
(d) Make, alter or modify orders requiring the
discontinuance of pollution specifying the conditions
and the time within which such discontinuance must be
accomplished.
(e) Issue, renew, or deny permits, under such conditions
as it may determine to be reasonable, for the prevention
and abatement of pollution, for the discharge of sewage,
industrial waste, or for the installation or operation of
sewage works and industrial disposal system or parts
thereof.
(f) After due notice and hearing, the Authority may also
revoke, suspend or modify any permit issued under this
Order whenever the same is necessary to prevent or
abate pollution.
(g) Deputize in writing or request assistance of
appropriate government agencies or instrumentalities
for the purpose of enforcing this Executive Order and its
implementing rules and regulations and the orders and
decisions of the Authority.
The LLDA claims that the appellate court deliberately
suppressed and totally disregarded the above provisions of
Executive Order No. 927, series of 1983, which granted
administrative quasi-judicial functions to LLDA on pollution
abatement cases.
In light of the relevant environmental protection laws cited
which are applicable in this case, and the corresponding
overlapping jurisdiction of government agencies implementing
these laws, the resolution of the issue of whether or not the
LLDA has the authority and power to issue an order which, in
its nature and effect was injunctive, necessarily requires a
determination of the threshold question: Does the Laguna Lake
Development Authority, under its Charter and its amendatory
laws, have the authority to entertain the complaint against the
dumping of garbage in the open dumpsite in Barangay
Camarin authorized by the City Government of Caloocan which
is allegedly endangering the health, safety, and welfare of the
residents therein and the sanitation and quality of the water in
the area brought about by exposure to pollution caused by
such open garbage dumpsite?
The matter of determining whether there is such pollution of
the environment that requires control, if not prohibition, of the
operation of a business establishment is essentially addressed
to the Environmental Management Bureau (EMB) of the DENR
which, by virtue of Section 16 of Executive Order No. 192,
series of 1987,
18
has assumed the powers and functions of the
defunct National Pollution Control Commission created under
Republic Act No. 3931. Under said Executive Order, a Pollution
Adjudication Board (PAB) under the Office of the DENR
Secretary now assumes the powers and functions of the
National Pollution Control Commission with respect to
adjudication of pollution cases.
19

As a general rule, the adjudication of pollution cases generally
pertains to the Pollution Adjudication Board (PAB), except in
cases where the special law provides for another forum. It
must be recognized in this regard that the LLDA, as a
specialized administrative agency, is specifically mandated
under Republic Act No. 4850 and its amendatory laws to carry
out and make effective the declared national policy
20
of
promoting and accelerating the development and balanced
growth of the Laguna Lake area and the surrounding provinces
of Rizal and Laguna and the cities of San Pablo, Manila, Pasay,
Quezon and Caloocan
21
with due regard and adequate
provisions for environmental management and control,
preservation of the quality of human life and ecological systems,
and the prevention of undue ecological disturbances,
deterioration and pollution. Under such a broad grant and
power and authority, the LLDA, by virtue of its special charter,
obviously has the responsibility to protect the inhabitants of
the Laguna Lake region from the deleterious effects of
pollutants emanating from the discharge of wastes from the
surrounding areas. In carrying out the aforementioned
declared policy, the LLDA is mandated, among others, to pass
upon and approve or disapprove all plans, programs, and
projects proposed by local government offices/agencies within
the region, public corporations, and private persons or
enterprises where such plans, programs and/or projects are
related to those of the LLDA for the development of the
region.
22

In the instant case, when the complainant Task Force Camarin
Dumpsite of Our Lady of Lourdes Parish, Barangay Camarin,
Caloocan City, filed its letter-complaint before the LLDA, the
latter's jurisdiction under its charter was validly invoked by
complainant on the basis of its allegation that the open
dumpsite project of the City Government of Caloocan in
Barangay Camarin was undertaken without a clearance from
the LLDA, as required under Section 4, par. (d), of Republic
Act. No. 4850, as amended by P.D. No. 813 and Executive
Order No. 927. While there is also an allegation that the said
project was without an Environmental Compliance Certificate
from the Environmental Management Bureau (EMB) of the
DENR, the primary jurisdiction of the LLDA over this case was
recognized by the Environmental Management Bureau of the

31

DENR when the latter acted as intermediary at the meeting
among the representatives of the City Government of Caloocan,
Task Force Camarin Dumpsite and LLDA sometime in July
1992 to discuss the possibility of
re-opening the open dumpsite.
Having thus resolved the threshold question, the inquiry then
narrows down to the following issue: Does the LLDA have the
power and authority to issue a "cease and desist" order under
Republic Act No. 4850 and its amendatory laws, on the basis
of the facts presented in this case, enjoining the dumping of
garbage in Tala Estate, Barangay Camarin, Caloocan City.
The irresistible answer is in the affirmative.
The cease and desist order issued by the LLDA requiring the
City Government of Caloocan to stop dumping its garbage in
the Camarin open dumpsite found by the LLDA to have been
done in violation of Republic Act No. 4850, as amended, and
other relevant environment laws,
23
cannot be stamped as an
unauthorized exercise by the LLDA of injunctive powers. By its
express terms, Republic Act No. 4850, as amended by P.D. No.
813 and Executive Order No. 927, series of 1983, authorizes
the LLDA to "make, alter or modify order requiring the
discontinuance or pollution."
24
(Emphasis supplied) Section 4,
par. (d) explicitly authorizes the LLDA to make whatever order
may be necessary in the exercise of its jurisdiction.
To be sure, the LLDA was not expressly conferred the power "to
issue and ex-parte cease and desist order" in a language, as
suggested by the City Government of Caloocan, similar to the
express grant to the defunct National Pollution Control
Commission under Section 7 of P.D. No. 984 which, admittedly
was not reproduced in P.D. No. 813 and E.O. No. 927, series of
1983. However, it would be a mistake to draw therefrom the
conclusion that there is a denial of the power to issue the order
in question when the power "to make, alter or modify orders
requiring the discontinuance of pollution" is expressly and
clearly bestowed upon the LLDA by Executive Order No. 927,
series of 1983.
Assuming arguendo that the authority to issue a "cease and
desist order" were not expressly conferred by law, there is
jurisprudence enough to the effect that the rule granting such
authority need not necessarily be express.
25
While it is a
fundamental rule that an administrative agency has only such
powers as are expressly granted to it by law, it is likewise a
settled rule that an administrative agency has also such
powers as are necessarily implied in the exercise of its express
powers.
26
In the exercise, therefore, of its express powers
under its charter as a regulatory and quasi-judicial body with
respect to pollution cases in the Laguna Lake region, the
authority of the LLDA to issue a "cease and desist order" is,
perforce, implied. Otherwise, it may well be reduced to a
"toothless" paper agency.
In this connection, it must be noted that in Pollution
Adjudication Board v. Court of Appeals, et al.,
27
the Court ruled
that the Pollution Adjudication Board (PAB) has the power to
issue an ex-parte cease and desist order when there is prima
facie evidence of an establishment exceeding the allowable
standards set by the anti-pollution laws of the country.
Theponente, Associate Justice Florentino P. Feliciano,
declared:
Ex parte cease and desist orders are permitted by law
and regulations in situations like that here presented
precisely because stopping the continuous discharge of
pollutive and untreated effluents into the rivers and
other inland waters of the Philippines cannot be made
to wait until protracted litigation over the ultimate
correctness or propriety of such orders has run its full
course, including multiple and sequential appeals such
as those which Solar has taken, which of course may
take several years. The relevant pollution control statute
and implementing regulations were enacted and
promulgated in the exercise of that pervasive, sovereign
power to protect the safety, health, and general welfare
and comfort of the public, as well as the protection of
plant and animal life, commonly designated as the
police power. It is a constitutional commonplace that
the ordinary requirements of procedural due process
yield to the necessities of protecting vital public
interests like those here involved, through the exercise
of police power. . . .
The immediate response to the demands of "the necessities of
protecting vital public interests" gives vitality to the statement
on ecology embodied in the Declaration of Principles and State
Policies or the 1987 Constitution. Article II, Section 16 which
provides:
The State shall protect and advance the
right of the people to a balanced and
healthful ecology in accord with the rhythm
and harmony of nature.
As a constitutionally guaranteed right of every person, it
carries the correlative duty of non-impairment. This is but in
consonance with the declared policy of the state "to protect and
promote the right to health of the people and instill health
consciousness among them."
28
It is to be borne in mind that
the Philippines is party to the Universal Declaration of Human
Rights and the Alma Conference Declaration of 1978 which
recognize health as a fundamental human right.
29

The issuance, therefore, of the cease and desist order by the
LLDA, as a practical matter of procedure under the
circumstances of the case, is a proper exercise of its power and
authority under its charter and its amendatory laws. Had the
cease and desist order issued by the LLDA been complied with
by the City Government of Caloocan as it did in the first
instance, no further legal steps would have been necessary.
The charter of LLDA, Republic Act No. 4850, as amended,
instead of conferring upon the LLDA the means of directly
enforcing such orders, has provided under its Section 4 (d) the
power to institute "necessary legal proceeding against any
person who shall commence to implement or continue
implementation of any project, plan or program within the
Laguna de Bay region without previous clearance from the
LLDA."
Clearly, said provision was designed to invest the LLDA with
sufficiently broad powers in the regulation of all projects
initiated in the Laguna Lake region, whether by the
government or the private sector, insofar as the
implementation of these projects is concerned. It was meant to
deal with cases which might possibly arise where decisions or
orders issued pursuant to the exercise of such broad powers
may not be obeyed, resulting in the thwarting of its laudabe
objective. To meet such contingencies, then the writs
of mandamus and injunction which are beyond the power of
the LLDA to issue, may be sought from the proper courts.
Insofar as the implementation of relevant anti-pollution laws in
the Laguna Lake region and its surrounding provinces, cities
and towns are concerned, the Court will not dwell further on
the related issues raised which are more appropriately
addressed to an administrative agency with the special
knowledge and expertise of the LLDA.
WHEREFORE, the petition is GRANTED. The temporary
restraining order issued by the Court on July 19, 1993
enjoining the City Mayor of Caloocan and/or the City
Government of Caloocan from dumping their garbage at the
Tala Estate, Barangay Camarin, Caloocan City is hereby made
permanent.
SO ORDERED.