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Republic of the Philippines SUPREME COURT Manila THIRD DIVISION

G.R. No. 87437 May 29, 1991 JOAQUIN M. TEOTICO, petitioner, vs. DEMOCRITO O. AGDA, SR., and HON. JUDGE IGNACIO M. CAPULONG, Regional Trial Court, Branch No. 134, Makati, Metro Manila, respondents. Ramon M. Miranda for private respondent.

DAVIDE, JR., J.:p Petitioner, Administrator of the Fiber Industry Development Authority, assisted by the Office of the Solicitor General, filed this original petition for certiorari and prohibition, with a prayer for a writ of preliminary injunction and for temporary restraining order. He urges Us to annul the Orders of 16 and 29 December 1988 and 14 February 1989, and the writ of injunction dated 11 May 1988 issued by respondent Judge of Branch 134 (Makati, Metro Manila) of the Regional Trial Court, National Capital Judicial Region, in Civil Case No. 88-577; 1 to prohibit respondent Judge from hearing said case; and to order the dismissal thereof for lack of cause of action as private respondent (petitioner therein, and who shall hereafter be referred to as Agda) has not exhausted all administrative remedies available to him. In Our resolution of 12 April 1989 2 We required respondents to comment on the petition and issued a Temporary Restraining Order effective as of that date and continuing until otherwise ordered by the Court. The factual antecedents as culled from the Petition in this case and the Amended Petition of Agda in Civil Case No. 88-577 are as follows: On 2 January 1984, Honorable Cesar Lanuza, then Administrator of the Fiber Development Authority (FIDA for short), an agency attached to the Department of Agriculture, appointed Agda as CHIEF FIBER DEVELOPMENT OFFICER (Range 73) of the FIDA effective upon assumption of office. 3 This appointment does not indicate any specific station or place of assignment. Under Special Order No. 29, series of 1984, dated 2 January 1984, which was to take effect immediately and to "remain in force until revoked," Administrator Lanuza designated Agda as "Acting Regional Administrator for FIDA Regions I and II." 4 In Special Order No. 219 dated 13 November 1987, series of 1987, Administrator Lanuza "temporarily re-assigned" Agda, "in the interest of the service," at the main office of the Administrator

to perform special functions which may be assigned to him, and one Mr. Epitacio Lanuza, Jr., Assistant Fiber Regional Administrator, was designated Officer in Charge of FIDA Region I. 5 On 9 December 1987 Agda prepared for filing with the Civil Service Commission, the Secretary of the Department of Agriculture, and the Commission on Audit an Urgent Petition To Stop Implementation and Nullify Special Order No. 219, s. '87, alleging therein that the Special Order is (a) devoid of legal basis as it does not preserve and maintain a status quo before the controversy, (b) against the interest of public service considering that Epitacio Lanuza has been cited for two cases both involving dishonesty, abuse of privileges and character unbecoming a government official, (c) improper, inappropriate and devoid of moral justification, and (d) a violation of Civil Service rules and regulation considering that it violates the rule on nepotism since Epitacio Lanuza and Administrator Lanuza are cousins. 6 The copy of the Civil Service Commission was personally indorsed to it by Agda on 14 December 1987 for its "proper resolution, perusal and appropriate action." The Merit Systems Protection Board indorsed it on 21 January 1988 to the Secretary of the Department of Agriculture for comment and/or appropriate action. 7 Earlier however, or on 11 December 1987, by Special Order No. 239, series of 1987, Administrator Lanuza designated Mr. Wilfredo Seguritan, Supervising Fiber Development Officer, as Officer in Charge of FIDA Region I vice Mr. Epitacio Lanuza, Jr., who was ordered relieved as such pending the final determination of the case filed against him by the Board of Personnel Inquiry of the Department of Agriculture. 8 On 7 January 1988, herein petitioner (hereafter referred to as Teotico), as Acting Administrator of FIDA issued a Memorandum to Agda directing him to immediately submit his development programs for Region I for the years 1988 to 1993 and his proposals concerning the potentials for sericulture and the maguey industry in the Region. 9 In his 1st indorsement of 12 January 1988, Agda returned the aforesaid Memorandum to Teotico with the comment that it is in the best interest of the service that submission of the required proposals be deferred since Special Order No. 219 had re-assigned him to FIDA Central Office where "he now reports up to the present," while Wilfredo Seguritan, per Special Order No. 239, is the OIC of FIDA for the Region. He suggested, however, that if compliance is imperative, Special Order No. 219 should be reconsidered and set aside. 10 On 2 March 1988 Teotico issued a Memorandum to Agda informing him that although Special Order No. 219 instructed him to report to the Office of the Administrator, he has neither been seen nor officially heard from during the past several weeks and directing him to submit not later than 4 March 1988 an official clarification on his whereabouts and accomplishments for the past three weeks. 11 In his Reply of 9 March 1988 Agda reminded Teotico that his urgent petition to stop the Implementation of Special Order No. 219 is still unresolved; consequently, its implementation should be held in abeyance; and, as regards his whereabouts, he referred Teotico to the logbook kept by the FIDA guard and certificates of appearance "attached from the respective offices during the past three (3) weeks." 12 On 9 March 1988 FIDA Region I OIC, Mr. Seguritan, requested Teotico to require Agda to turn over to him (Seguritan) the keys of the vault in FIDA Region I "for the safekeeping of our blank cheeks, official receipts, approved checks but not yet issued to payee creditors, salaries and other vital official documents of the Region";13 in a routing slip dated 11 March 1988, Teotico referred the request to Agda with the note: "For immediate compliance pls. so as not to hamper the conduct of our operations and service in Region I." 14

On 16 March 1988 Agda indorsed the above routing slip request to the Secretary of the Department of Agriculture wherein he admits that he has the key of the safety vault, but impliedly asserts that he will not yield it to anybody alleging that his petition to stop the implementation of Special Order No. 219 and to nullify it is still unresolved and, besides, the intended re-assignment is merely temporary; hence, it would be in keeping with substantial justice if astatus quo of things be maintained. He also asks that the urgent petition be resolved and that meanwhile the directive to turn over the keys be held in abeyance. 15 On 23 March 1988 Teotico formally charged Agda for insubordination and conduct prejudical to the best interest of the service for, among others, his failure to comply with the memorandum of January 7, 1988 and with the routing slip request of 11 March 1988. 16 On 4 April 1988 Teotico placed Agda under preventive suspension pursuant to his Special Order No. 74, to wit: Pursuant to Section (sic) 41 and 42 of P.D. 807, Mr. Democrito Agda, Sr. is placed under preventive suspension for the following reasons: a) grave misconduct and gross insubordinationfor refusal to turn over the keys to the safe in Region I. With the considerable amount of cash advances being handled in the region, Mr. Agda's refusal to turn over said keys has become prejudicial to the best interests of the service; b) neglect in the performance of dutyfor his refusal to report to the office of the Administrator and his refusal to accept assignment claiming that it is a form of harassment since he still has a pending unresolved petition; and c) pending an investigation in some instances involving falsification of public documents and instances of possible malversation of funds for services and maintenance and operating expenses in Region I as per results of the recent FIDA Management Audit. In this regard, the cashier is instructed to withhold the salary of Mr. Agda.
This order takes effect upon receipt of this memorandum and shall remain in force unless earlier revoked or until the cases involving Mr. Agda are resolved. 17

On 8 April 1988 Agda asked Teotico for an extension of twenty days from 11 April 1988 within which to submit his answer to the formal charge; 18 however, in his memorandum of 11 April 1988, Teotico granted him an extension of only five days from receipt thereof. 19 Also on 11 April, Teotico issued Special Order No. 26 reconstituting the Committee on Adjudication of Cases FIDA-AC headed by Senior State Prosecutor Hipolita Ordinario of the Department of Justice. 20 On 13 April 1988 counsel for Agda, Atty. Ramon Miranda, submitted a letter requesting for an extension of fifteen days to file the answer. 21 In the letter of Senior State Prosecutor Ordinario of 14 April 1988, Agda, through his counsel, was given until 21 April 1988 within which to file the answer. 22 It likewise appears that on 13 April 1988 Agda sent a letter to the Commission on Elections 23 inquiring if Special Order No. 219, series of 1987, of Administrator Lanuza was referred

and submitted to it for approval three days before its implementation. In a letter dated 14 April 1988, Atty. Horacio SJ Apostol, Manager of the Law Department of the Commission, informed private respondent that "as of this date, records of the Department do not show that aforesaid Special Order was submitted or referred to this Commission for approval." 24 On 18 April 1988 Agda filed with the court below in Civil Case No. 88-577 his Amended Petition 25 for Certiorari, Prohibition and Injunction with preliminary injunction and restraining order against Teotico and the three (3) members of the FIDA-AC alleging, in substance, that Special Order No. 219 of 13 November 1987 issued by then Fida Administrator Lanuza is null and void for having been issued in violation of Section 48 of P.D. No. 807 (Civil Service Decree) which prohibits the detail or re-assignment of civil service personnel within three months before an election and Section 261(h) of Batas Pambansa Blg 881 (The Omnibus Election Code) which prohibits transfer or detail of officers and employees in the civil service within the election period except upon prior approval of the Commission on Elections, and that all succeeding orders or memoranda issued in connection with or by reason of such Special Order or in implementation thereof are likewise null and void. The election referred to was the January 18, 1988 local election. He further alleges therein that he "is filing" with the COMELEC criminal charges for violation of Sections 3, 261(h) and 264 of B. P. No. 881 against former Administrator Lanuza and Teotico. He prays inter alia, that the court declare null and void and set aside Special Order No. 219, Teotico's Memoranda of 7 January, 2 March, and 11 March, 1988, the Formal Charges of 23 March, the preventive suspension of 4 April, Special Order No. 86, the Memorandum of 11 April 1988, and Ordinario's letter of 14 April 1988, and the formal investigation to be conducted on the charge against him. On 18 April 1988 respondent Judge issued a restraining order directing respondents therein to refrain from enforcing Annexes "E", "I", "M", "O", "R", "S", and "Z" of the amended petition until further orders of the court and setting the hearing of the application for a writ of preliminary injunction on 26 April 1988. 26 On 2 May 1988 Teotico and his co-respondents in the court below filed, through the office of the Solicitor General, a motion to dismiss the case and opposition to the issuance of a writ of preliminary injunction 27 alleging that the petition is premature for failure to exhaust administrative remedies and patently lacks merit and is merely intended to derail the administrative investigation against Agda. Movants set the hearing thereof on 5 May 1988. On 4 May 1988 Agda filed an opposition to the motion to dismiss and memorandum in support of his application for a writ of preliminary injunction. 28 On 11 May 1988 respondent Judge issued an Order granting the application for a writ of preliminary injunction upon the filing of a bond of P50,000. 00 29 on the basis of the following findings: xxx xxx xxx After careful consideration of the pleadings and their annexes filed by the parties, this Court finds, to wit: the petitioner was appointed on June 16, 1984, as Chief, Fiber Industry Development Authority by Cesar C. Lanuza, former Administrator of FIDA and was assigned in Regions 1 and 2 with office at San Fernando, La Union; that on November 13, 1987, three months before the local elections, which was held on January 18, 1987, the petitioner was reassigned by former FIDA Administrator Lanuza to the FIDA main office and designated Epitacio E. Lanuza, Jr. as officer-incharge (OIC) of FIDA Region 1; that on December 15, 1987, petitioner requested the Civil Service Commission (CSC) to stay the implementation of Special Order No.

219; that on January 7, 1988, respondent Teotico implemented said Special Order 219, despite the fact that petitioner requested the Civil Service Commission to stay implementation of the said Special Order 219; that on January 12, 1988, petitioner requested the respondent Teotico to defer the implementation of said Special Order No. 219; that on March 2, 1988, respondent Teotico again implemented Special Order 219, requiring petitioner to submit his accomplishment report; that on March 9, 1988, petitioner requested respondent Teotico to defer the implementation of said special order, considering that the same has not yet been resolved by the Secretary of Agriculture; that on December 11, 1987, former FIDA Administrator designated Wilfredo G. Siguritan as officer-in-charge of FIDA Region 1; that on March 9, 1988, FIDA Region 1 administrator Siguritan requested the petitioner through respondent Teotico to require petitioner to turn over to him the keys of the vault in FIDA Region 1; that on March 14, 1988, respondent Teotico implemented Special Order No. 219, requiring petitioner to turn over said keys to OIC Seguritan; that on March 16, 1988, petitioner requested the Secretary of Agriculture to defer the implementation of said special order pending resolution of said office; that on March 23, 1988, respondent Teotico implemented Special Order 219 by instituting administrative charges against petitioner for insubordination prejudicial to the best interest of the service; that on April 4, 1988, respondent Teotico placed the petitioner under preventive suspension, effective April 6, 1988; that on April 8, 1988, petitioner requested respondent Teotico to give him twenty (20) days from April 11, 1988, within which to submit his explanation to the formal administrative charges. xxx xxx xxx After careful consideration of the allegations of the facts in this case, this Court believes that petitioner was denied due process of law. The fact that petitioner informed respondent Teotico to stay and/or defer the implementation of Special Order No. 219, considering that the same is still pending before the Secretary of Agriculture, despite of which, respondents, more particularly, Teotico, in grave abuse of discretion whimsical and capricious, tantamounting (sic) to the denial of due process of law to the petitioner, implemented the same and aggravated by the fact that respondents Teotico filed insubordination charges against the petitioner. This court believes, that actuations of the respondents in railroading the request of the petitioner to stay the implementation of Special Order No. 219 tantamounts to the denial of due process of law as mandated by the new (C)onstitution, which falls under one of the principle of exhaustion of administrative remedies. (New Filipino Maritime Agencies, Inc. vs. Rivera, L-5359-60, June 15, 1978) (De Lara, et al. vs. Cloribin, et al., G.R. No. L-21763, May 31, 1965). It does not appear from the records that Agda presented evidence at a hearing on the application for a writ of preliminary injunction. On the contrary, as reflected in the above-quoted order of respondent Judge, the writ was issued on the basis of his "consideration of the pleadings and their annexes filed by the parties." On 17 May 1988, respondent Judge issued a Writ of Preliminary Preventive or Prohibitory Injunction 30 restraining Teotico and his co-respondents from enforcing Annexes "E", "I", "K", "M", "O", "R", "S", and "Z" of the amended petition. On 2 June 1988 Teotico and his co-respondents below filed a motion, dated 31 May 1988, to reconsider the 11 May Order alleging therein that the bases of the findings of denial of due process are not supported by facts; they set the motion for hearing on 10 June 1988. 31

On 2 June 1988 Agda filed a motion to declare respondents below in contempt for refusing to comply with the writ .32 Then on 17 June 1988 he filed his opposition 33 to the motion for reconsideration. Teotico and his co-respondents filed on 17 June 1988 their opposition to the motion to declare them in contempt of court. 34 The motion for contempt was ultimately denied in the Order of respondent Judge of 8 September 1988. 35 On September 23, 1988 Agda filed a motion to reconsider the 8 September Order. 36 In his Order of 16 December 1988, 37 respondent Judge held that Teotico and his co-respondents cannot be held for contempt; however they were directed to comply with the Order of 11 May 1988 and Teotico was specifically ordered "to immediately reinstate the petitioner, Democrito O. Agda, Sr., from (sic) his previous position as Fiber Regional Administrator, FIDA Region I, with full back wages and allowances mandated by law." On 22 December 1988 Teotico and his co-respondents filed a motion to reconsider the above 16 December 1988 Order stating therein that it would be premature for the court to order them to comply with the 11 May Order before their motion for reconsideration is finally resolved and they pray that the motion for reconsideration dated 2 June 1988 be resolved and that further action on its 16 December Order be deferred until resolution of the motion.38 On 29 December 1988 respondent Judge issued an Order 39 denying the motion for reconsideration filed on 2 June and the motion of 22 December 1988 and directing Teotico to comply with the Order of 16 December 1988 immediately upon receipt of said Order of 29 December. On 5 January 1989 Teotico and his co-respondents filed a motion for reconsideration/clarification, alleging, inter alia, that there is no basis for ordering Teotico to reinstate Agda with full back wages and allowances since not even the Order of 11 May granting the motion for preliminary injunction ordains the same. 40 But respondent Judge also denied this motion in his Order of 14 February 1989. 41 Finding no other avenue of relief in the court below, petitioner filed this petition on 27 March 1989 submitting to Us the following grounds: I Respondent Judge acted with grave abuse of discretion when he ordered petitioner, allegedly in compliance with the writ of injunction issued, to reinstate respondent Agda to his previous position as Fiber Regional Administrator FIDA Region I with full backwages and allowances notwithstanding that such act was not mandated or even mentioned in the prohibitory injunctive writ. II Respondent Judge acted with grave abuse of discretion when he refused to dismiss respondent's petition in Civil Case No. 88-577 despite his finding that respondent has already availed of an administrative remedy which is pending resolution by the Civil Service Commission.

III Respondent Judge acted with grave abuse of discretion when he issued a writ of preliminary injunction dated May 11, 1988 without hearing on the merits. In compliance with Our resolution of 12 April 1989, herein respondents filed their Comment on 2 May 1989. As We stated in the introductory portion of this Decision, in the resolution of 29 May 1989 We gave due course to the petition and required the parties to submit their Memoranda, which they complied with. The petition is impressed with merit. Respondent Judge clearly acted with grave abuse of discretion in taking cognizance of Civil Case No. 88-577, in deliberately failing to act on the motion to dismiss, in issuing a writ of preliminary injunction, and in ordering the "reinstatement" of Agda, "as Fiber Regional Administrator, FIDA Region I, with full back wages and allowances mandated by law." Agda was not appointed as Fiber Regional Administrator, FIDA Region I, but as CHIEF FIBER DEVELOPMENT OFFICER; he was not appointed to any specific station. 42 He was merely designated as Acting Regional Administrator For FIDA Regions I and II. 43 Not having been appointed to any specific station, he could be tranferred or assigned to any other place by the head of office where in the opinion of the latter his services may be utilized more effectively. 44 In Ibaez vs. COMELEC, 45 ., We held:
Assayed upon the foregoing legal crucible the petitioner's case suffers an initial set back. The appointments upon which they respectively anchor their claim state that they were merely appointed as "Election Registrars in the Commission on Elections. . . . ." Therefore, there can be no gainsaying the fact that the petitioners were not appointed to, and consequently, not entitled to any security of tenure or permanence in, any specific station. On the general principle, they may be transferred as the exigencies of the service require. They ordinarily have no right to complain against any change of assignment. 46

In the latest case of Department of Education, Culture and Sports, et al. vs. The Honorable Court of Appeals, et al., 183 SCRA 555, 562, We held: The appointment of Navarro as principal does not refer to any particular station or school. As such, she could be assigned to any station and she is not entitled to stay permanently at any specific school. (Bongbong vs. Parado, 57 SCRA 623). When she was assigned to the Carlos Albert High School, it would not have been with the intention to let her stay in said school permanently. Otherwise, her appointment would have so stated. Consequently, she may be assigned to any station or school in Quezon City as the exigencies of public service require even without her consent. Moreover, it should be borne in mind that Special Order No. 29 of 2 January 1984 merely designated Agda asActing Regional Administrator for Regions I and II. Such being the case, the rule enunciated in Cuadra vs. Cordova etc., 103 Phil. 391, on temporary appointments or appointments in an acting capacity that they are terminable at the pleasure of the appointing authority, is applicable to Agda.

He can neither claim a vested right to the station to which he was assigned nor to security of tenure thereat. Accordingly, private respondent could be re-assigned to any place and Special Order No. 219 dated 13 November 1987 reassigning private respondent at the Office of the Administrator of the FIDA "in the interest of the service" was in order. Although denominated as "reassignment", it was in fact a mere detail in that office. The Civil Service Decree, P.D. No. 807, allows transfer, detail and re-assignment. 47 If the employee concerned believes that there is no justification therefore, he "may appeal his case to" the Civil Service Commission. Unless otherwise ordered by the Commission, the decision to detail an employee shall be executory. Agda invoked the appellate jurisdiction of the Commission when he filed his Urgent Petition To Stay Implementation and Nullify the Special Order in question with the Civil Service Commission. 48 It does not, however, appear to Us that he exerted genuine and sincere efforts to obtain an expeditious resolution thereof What appears to be clear is that he used its pendency as an excuse for his refusal to comply with the memorandum of Teotico of 7 January 1988 and the routing slip request of 11 March 1988 for the key to the safety vault. We are not persuaded by Agda's claim that the questioned detail was done in violation of Section 261(h) of Batas Pambansa Blg. 881 (Omnibus Election Code) Considering that (a) he raised this matter for the first time only in his Amended Petition, or five (5) months after the issuance of the Special Order. No evidence has been presented, or at least strongly and convincingly suggested, to prove or show that no prior approval was obtained by Administrator Lanuza from the COMELEC for such detail, or that a case for violation of Section 261(h) was in fact filed against Lanuza or Teotico. All that Agda can show are his alleged letter to the COMELEC to inquire if Special Order No. 219 had been referred to it and an alleged answer dated 14 April 1988 of Atty. Horacio SJ Apostol, Manager of the Law Department of the Commission, to the effect that the records of the Department do not show, as of that date, that the Special Order was submitted or referred to the Commission. The latter is not conclusive proof that no prior authority was in fact obtained by Administrator Lanuza for the reassignment or detail of Agda. No law requires the submission. to the COMELEC of special orders reassigning or detailing employees within the prohibited period. What is needed is "prior authority," the request for which and its approval may be in separate documents or papers. Moreover, although Agda alleges in his amended petition that: 11.20. Petitioner is filing criminal charges for violations of Secs. 3, 261(h) and 264 of B.P. 881 against former FIDA Administrator Lanuza and respondent Teotico in the COMELEC." (Emphasis supplied) none of his subsequent pleadings both before the lower court and before Us disclose that he had in fact filed such charges. Obviously, said allegation was a clever attempt to show a semblance of a valid grievance. Furthermore, even in the cases of transfer or detail within the probihited period prior to an election, an aggrieved party is provided an appropriate administrative remedy. Section 6 of Rule VI of the Civil Service Rules on Personnel Actions and Policies provides: Sec. 6. Except when the exigencies of the service require, an official or employee of the government may not be ordered detailed or reassigned during the three-month period before any local or national election, and if he believes that the order for his detail or reassignment is due to harassment, coercion, intimidation, or other personal reasons, he may appeal the order to the Commission. Until this is proven, however,

the order is presumed to be in the interest of the service and notwithstanding the appeal, the decision to detail or reassign him shall be executory, but the Commission may order deferment of suspension of the detail or reassignment ex parte." Agda made no attempt to avail of this remedy. In his Urgent Petition to Stay Implementation and Nullify Special Order No. 219, nothing is mentioned about a violation of the ban on transfer or detail. The reason seems too obvious. Until he filed the Amended Petition before the court below he did not consider his re-assignment per Special Order No. 219 as a violation of the ban on transfer or detail during the three-month period before the election. Not having yet fully exhausted the existing adequate administrative remedy which he already took advantage of, Agda cannot be permitted to abandon it at his chosen time and leisure and invoke the jurisdiction of regular courts. As aptly summarized:
Within the administrative forum the law may provide for review of decisions by higher authorities. Before a party can be allowed to invoke the jurisdiction of the courts of justice, he is expected to have exhausted all means of administrative redress afforded him. There are both legal and practical reasons for this. The administrative process is intended to provide less expensive and more speedy solutions to disputes. Where the enabling statute indicates a procedure for administrative review, and provides a system of administrative appeal, or reconsideration, the courts for reasons of law, comity and convenience, will not entertain a case unless the available administrative remedies have been resorted to and the appropriate authorities have been given opporturity to act and correct the errors committed in the administrative forum. 49

The doctrine of exhaustion of administrative remedies is well-entrenched in this jurisdiction and a host of cases has buttressed its stability. 50 There are, of course, recognized exceptions thereto, but, unfortunately, private respondent cannot seek safe refuge under their protective mantle, for in respect to the remedy provided for in Section 24(c) of P.D. No. 807, which is also the remedy provided for in Section 24(f), availment thereof is indispensable for the viability of any judicial action. As we held in Department of Education, Culture and Sports, et al. vs. The Honorable Court of Appeals, et al., supra: Finally, respondent Navarro has not exhausted administrative remedies as she did not elevate the matter of her transfer to the Civil Service Commission in accordance with Section 24(c), P.D. No. 807, otherwise known as the Civil Service Decree, which provides: xxx xxx xxx By not appealing her case to the Civil Service Commission before filing Special Civil Action No Q-37025, respondent Navarro is indubitably without cause of action. Respondent Judge, as clearly shown in his Order of 11 May 1988, was fully aware of Agda's urgent petition before the Civil Service Commission to suspend its implementation of Special Order No. 219 and to nullify the same. He had, therefore, no other business to do except to grant the motion to dismiss. He should have, forthwith, stayed his hands until the administrative processes had been completed. 51 Yet, for reasons only known to him, which We cannot divine at, he did not do so. On the contrary, he granted the application for a writ of preliminary injunction and issued the writ on 17 May 1988.

The writ was improvidently and capriciously issued. The issuance of the writ, although addressed to the sound discretion of the court, is conditioned on the existence of a clear and positive right which should be protected. 52Considering that the amended petition should have been dismissed outright because Agda prematurely invoked the jurisdiction of the court in view of his appeal to the Civil Service Commission, it follows that, even if he had a right, no protection was available from the court below. But even if We disregard for the moment the above weakness of the amended petition and consider, as the respondent Judge did, "the pleadings and their annexes," the inescapable action that should follow would be denial of the application for the issuance of the writ. The pleadings and the annexes do not at all demonstrate a clear and positive right for Agda, for as discussed above, by the very nature of his appointment he had no security of tenure in the station to where he was assigned on 2 January 1984; besides, his designation as acting Regional Administrator for FIDA Regions I and II was terminable at any time at the pleasure of the head of office. Moreover, as could be gleaned from the annexes of the Amended Petition, Agda impliedly accepted his re-assignment to the Control Office of FIDA To Teotico's Memorandum of January 1988 addressed to Agda as "Regional Administrator" which required him to submit his development programs for Region I (19881993) and his proposals for sericulture and the maguey industry in said Region, Agda, in his indorsement of 12 January 1-988 claims and admits that "this representation was reassigned to FIDA Central Office where he now reports up to the present" and that "Mr. Wilfredo Seguritan . . . remains up to the present as the OIC of FIDA for the said Region." In this indorsement Agda wrote below his signature the following: (Detailed to Central Office). To Teotico's Memorandum of 2 March 1988 requiring him to submit an official clarification on his whereabouts and his accomplishments for the past three weeks since he had not been seen or officially heard from, Agda referred the former to the record (log book) kept by the FIDA Guard and certificates of appearance. Clearly then, as of the filing of the Amended Petition, Special Order No. 219 was a fait accompli. Acts already consummated cannot be enjoined by preliminary injunction. 53 The respondent Judge did not stop there. As complained by Teotico, on 16 December 1988 the former issued an Order wherein although he denied the motion for the reconsideration of his 8 September 1988 Order denying the motion for contempt, he ordered Teotico to immediately reinstate Agda "from (sic) his previous position as Fiber Regional Administrator, FIDA Region I, with full back wages and allowances mandated by law." This, in effect, amounted to a mandatory injunction, issued without a hearing and in violation of Section 5 of Rule 58 of the Rules of Court. There was no basis for its issuance. A mandatory injunction may only be issued upon a showing that the invasion of the right is material and substantial; the right of complainant is clear and unmistakable; and there is an urgent and permanent necessity for the writ to prevent serious damage. 54 They have not been shown to exist in this case. Even if the 16 December reinstatement order should be construed to be directed against the preventive suspension order issued by Teotico on 4 April 1988, respondent Judge clearly capriciously breached the limits of his discretion for nowhere in his amended petition has Agda attacked its validity or legality on any other ground than its being issued to implement Special Order No. 219, 55 which he claims was issued in violation of the pertinent provisions of the Omnibus Election Code and the Civil Service Decree prohibiting transfer or reassignment of civil service officials and employees within three months before the local election of January 18, 1988. He assailed the suspension order not on the ground that Teotico does not have the authority to file the formal charge and to preventively suspend him, but solely on the basis of his self-serving claim that both were issued without or in excess of jurisdiction or with grave abuse of discretion because they were meant to implement Special Order No. 219. Preventive suspension is allowed under Section 41 of P.D. No. 807 which reads: Sec. 41. Preventive Suspension. The proper disciplining authority may preventively suspend any subordinate officer or employee under his authority

pending an investigation, if the charge against such officer or employee involves dishonesty, oppression or grave misconduct, or neglect in the performance of duty, or if there are reasons to believe that the respondent is guilty of charges which would warrant his removal from the service. However, per Section 42 of the same decree, if the administrative cases against the suspended officer or employee, who is not a Presidential appointee, is not finally decided by the disciplining authority within ninety days after date of suspension, he shall be automatically reinstated in the service provided that when the delay in the disposition of the case is due to the fault, negligence or petition of the respondent, the period of delay shall not be counted in computing the period of suspension. In the instant case, by Agda's own act and the cooperation of respondent Judge, the administrative case against the former is not yet even ready for hearing. He has not filed his Answer, although he was given until 21 April 1988 within which to do so. Lastly, We hold that both the preliminary injunction and the reinstatement order issued by respondent Judge practically granted the main relief prayed for by Agda even before the hearing on the case on the merits. In Obias,et al., vs. Hon. Borja, et al., 136 SCRA 687, We ruled that respondent judge acted with grave abuse of discretion in issuing a writ of preliminary injunction which in effect practically granted the principal relief sought in theMandamus case. The reason for this is that such issuance "would, in effect, be a prejudgment of the main case and a reversal of the rule on the burden of proof since it would assume the proposition which the petitioner is inceptively bound to prove. 56 The foregoing conclusions render unnecessary a discussion on other matters raised in this case. WHEREFORE, the Petition is GRANTED. The Orders of respondent Judge of 11 May 1988, 16 December 1988, 29 December 1988 and 14 February 1989 and the Writ of Injunction issued on 17 May 1987 in Civil Case No. 88-577 entitled Democrito D. Agda, Sr., vs. Joaquin M. Teotico, et al., are SET ASIDE and said Civil Case is hereby ordered DISMISSED. With costs against private respondent. SO ORDERED. Fernan, C.J., Gutierrez, Jr., Feliciano and Bidin, JJ., concur.

Footnotes 1 Entitled Democrito Agda, Sr. vs. Joaquin M. Teotico, et al. 2 Rollo, 102. 3 Amended Petition of Agda in Civil Case No. 88-577, Annex "A"; Id., 44. 4 Id., Annex "B"; Id., 45. 5 Amended Petition of Agda in Civil Case No. 88-577, Annex "E"; Rollo, 49.

6 Id., Annex "F"; Id., 50-54. 7 Id., Annex "G" and Annex "H"; Id., 55-56. 8 Amended Petition of Agda in Civil Case No. 88-577, Annex "M" Rollo, 62. 9 Id., Annex "T" Id., 57. 10 Id., Annex "J"; Id., 58-59. 11 Amended Petition of Agda in Civil Case No. 88-577, Annex "K" Rollo, 60. 12 Id., Annex "L"; Id., 61. 13 Id., Annex "N"; Id., 63. 14 Id., Annex "O"; Id., 64. 15 Amended Position of Agda in Civil Case No. 88-577, Annex "P" Rollo. 65. 16 Id., Annex "R" Id., 67-69, 17 Amended Petition of Agda in Civil Case No. 88-577, Annex "S" Rollo; 70. 18 Id., Annex "T"; Id., 71. 19 Id., Annex "X" Id., 77. 20 Id., Annex "W" Id., 75. 21 Amended Petition of Agda in Civil Case No. 88-577, Annex "Y" Rollo, 78. 22 Id., Annex "Z" Id., 79. 23 Id., Annex "AA" Id., 80. 24 Id., Annex "BB"; Id., 81. 21 Annex "A" of Petition; Id., 30-43. 26 Annex "2" of Agda's Comment; Rollo, 140. 27 Annex "B" of Petition; Id., 82-94. 28 Annex "l" of Agda's Comment; Rollo, 117-139. 29 Annex "C" of Petition; Id., 95-97. 30 Annex "10" of Agda's Comment; Rollo, 149.

31 Id., Annex "l1"; Id., 150-166. 32 Id., Annex "13"; Id., 168-174. 33 Id., Annex "l4"; Id., 175-182. 34 Id., Annex "l5"; Id., 183-188. 35 Annex "16" of Agda's Comment; Rollo, 189. 36 Id., Annex "l7"; Id., 190-194. 37 Annex "D" of Petition; Id., 38. Annex "20" of Agda's Comment; Id., 199-201. 39 Annex "E" of Petition; Id., 99. 40 Annex "25" of Agda's Comment; Rollo, 206-210. 41 Annex "F" of Petition; Id., 100. 42 See copy of Agda's appointment, Annex "A" to Amended Petition in Civil Case No. 88-577; Rollo, 44. 43 Special Order No. 29 of then FIDA Administrator Lanuza of 2 January 1984; Id., 45. 44 Jaro vs. Valencia, et al., 8 SCRA 729; Miclat vs. Ganaden, L-14459, 30 May 1960; Brilliantes vs. Guevarra, 27 SCRA 138. 45 19 SCRA 1002. 46 This ruling was reiterated in Co vs. COMELEC, et al., 20 SCRA 757; Salazar, et al. vs. COMELEC, et al., 20 SCRA 761; and Braganza vs. COMELEC, et al., 20 SCRA 1023. 47 Section 24(c), (f) and (g), respectively. 48 Rollo, 51-54. 49 CORTES, Irene, R., Philippine Administrative Law, Cases and Materials, Revised Second Ed., 1984, p. 394. 50 Secretary of Agriculture and Natural Resources, et al. vs. de los Angeles, et al., 43 SCRA 494, and the long line of cases enumerated therein, to wit: Ang Tuan Kai vs. Import Control Commission, 91 Phil. 143; Coloso vs. Board of Accountancy, 92 Phil. 938; Miguel vs. Reyes, 93 Phil. 542; De la Paz vs. Alcaraz, 99 Phil. 130; Policarpio vs. Philippines Veterans Boards, 99 Phil. 797; Peralta vs. Salcedo, 101 Phil. 452; Montes vs. Civil Service Board of Appeals, 101 Phil. 490; Lachica vs.

Ducusin, 102 Phil. 551; Gaukeko vs. Araneta, 102 Phil. 706@ Vda. de Villanueva vs. Ortiz, 107 Phil. 875; Nebrada vs, Heirs of Alivio, 104 Phil. 126; Tan vs. Veterans Backpay Commission, 105 Phil. 377; Yap vs. Salcedo, 106 Phil. 742; Panti vs. Provincial Board, 106 Phil. 1093; Soriano vs. Galang, 107 Phil. 1026; and several other cases. 51 Madarian, et al. vs. Sinco, et al., 110 Phil. 160. 52 Valley Trading Co., Inc. vs. Court of First Instance of Isabela, et al., 171 SCRA 501, 507; Ortigas and Co., Ltd. Partnership vs. Hon. Ruiz, et al., 148 SCRA 326. 53 MORAN, Comments on the Rules of Court, Vol. III, 1980 ed., p. 83; Remonte, et al., vs. Bonto, et al., 16 SCRA 257; Aragones, et al. vs. Subido, et al., 25 SCRA 95; Romulo, et al. vs. Yiguez, et al., 141 SCRA 263. 54 Rivera, et al. vs. Hon. Florendo, et al., 144 SCRA 643. 55 Paragraphs 9, 11.1, 11.16. 56 Valley Trading Co., Inc. vs. Court of First Instance of Isabela, et al., supra. Republic of the Philippines SUPREME COURT Manila EN BANC

G.R. No. 110526 February 10, 1998 ASSOCIATION OF PHILIPPINE COCONUT DESICCATORS, petitioner, vs. PHILIPPINE COCONUT AUTHORITY, respondent.

MENDOZA, J.: At issue in this case is the validity of a resolution, dated March 24, 1993, of the Philippine Coconut Authority in which it declares that it will no longer require those wishing to engage in coconut processing to apply to it for a license or permit as a condition for engaging in such business. Petitioner Association of Philippine Coconut Desiccators (hereafter referred to as APCD) brought this suit forcertiorari and mandamus against respondent Philippine Coconut Authority (PCA) to invalidate the latter's Board Resolution No. 018-93 and the certificates of registration issued under it on the ground that the resolution in question is beyond the power of the PCA to adopt, and to compel said administrative agency to comply instead with the mandatory provisions of statutes regulating the desiccated coconut industry, in particular, and the coconut industry, in general. As disclosed by the parties' pleadings, the facts are as follows:

On November 5, 1992, seven desiccated coconut processing companies belonging to the APCD brought suit in the Regional Trial Court, National Capital Judicial Region in Makati, Metro Manila, to enjoin the PCA from issuing permits to certain applicants for the establishment of new desiccated coconut processing plants. Petitioner alleged that the issuance of licenses to the applicants would violate PCA's Administrative Order No. 02, series of 1991, as the applicants were seeking permits to operate in areas considered "congested" under the administrative order. 1 On November 6, 1992, the trial court issued a temporary restraining order and, on November 25, 1992, a writ of preliminary injunction, enjoining the PCA from processing and issuing licenses to Primex Products, Inc., Coco Manila, Superstar (Candelaria) and Superstar (Davao) upon the posting of a bond in the amount of P100,000.00.2 Subsequently and while the case was pending in the Regional Trial Court, the Governing Board of the PCA issued on March 24, 1993 Resolution No. 018-93, providing for the withdrawal of the Philippine Coconut Authority from all regulation of the coconut product processing industry. While it continues the registration of coconut product processors, the registration would be limited to the "monitoring" of their volumes of production and administration of quality standards. The full text of the resolution reads: RESOLUTION NO. 018-93 POLICY DECLARATION DEREGULATING THE ESTABLISHMENT OF NEW COCONUT PROCESSING PLANTS WHEREAS, it is the policy of the State to promote free enterprise unhampered by protective regulations and unnecessary bureaucratic red tapes; WHEREAS, the deregulation of certain sectors of the coconut industry, such as marketing of coconut oils pursuant to Presidential Decree No. 1960, the lifting of export and commodity clearances under Executive Order No. 1016, and relaxation of regulated capacity for the desiccated coconut sector pursuant to Presidential Memorandum of February 11, 1988, has become a centerpiece of the present dispensation; WHEREAS, the issuance of permits or licenses prior to business operation is a form of regulation which is not provided in the charter of nor included among the powers of the PCA; WHEREAS, the Governing Board of PCA has determined to follow and further support the deregulation policy and effort of the government to promote free enterprise; NOW THEREFORE, BE IT RESOLVED AS IT IS HEREBY RESOLVED, that, henceforth, PCA shall no longer require any coconut oil mill, coconut oil refinery, coconut desiccator, coconut product processor/factory, coconut fiber plant or any similar coconut processing plant to apply with PCA and the latter shall no longer issue any form of license or permit as condition prior to establishment or operation of such mills or plants; RESOLVED, FURTHER, that the PCA shall limit itself only to simply registering the aforementioned coconut product processors for the purpose of monitoring their volumes of production, administration of quality standards with the corresponding service fees/charges.
ADOPTED this 24th day of March 1993, at Quezon City. 3

The PCA then proceeded to issue "certificates of registration" to those wishing to operate desiccated coconut processing plants, prompting petitioner to appeal to the Office of the President of the Philippines on April 26, 1993 not to approve the resolution in question. Despite follow-up letters sent on May 25 and June 2, 1993, petitioner received no reply from the Office of the President. The "certificates of registration" issued in the meantime by the PCA has enabled a number of new coconut mills to operate. Hence this petition. Petitioner alleges: I RESPONDENT PCA'S BOARD RESOLUTION NO. 018-93 IS NULL AND VOID FOR BEING AN UNDUE EXERCISE OF LEGISLATIVE POWER BY AN ADMINISTRATIVE BODY. II ASIDE FROM BEING ULTRA-VIRES, BOARD RESOLUTION NO. 018-93 IS WITHOUT ANY BASIS, ARBITRARY, UNREASONABLE AND THEREFORE IN VIOLATION OF SUBSTANTIVE DUE PROCESS OF LAW. III IN PASSING BOARD RESOLUTION NO. 018-93, RESPONDENT PCA VIOLATED THE PROCEDURAL DUE PROCESS REQUIREMENT OF CONSULTATION PROVIDED IN PRESIDENTIAL DECREE NO. 1644, EXECUTIVE ORDER NO. 826 AND PCA ADMINISTRATIVE ORDER NO. 002, SERIES OF 1991. On the other hand, in addition to answering petitioner's arguments, respondent PCA alleges that this petition should be denied on the ground that petitioner has a pending appeal before the Office of the President. Respondent accuses petitioner of forum-shopping in filing this petition and of failing to exhaust available administrative remedies before coming to this Court. Respondent anchors its argument on the general rule that one who brings an action under Rule 65 must show that one has no appeal nor any plain, speedy, and adequate remedy in the ordinary course of law. I. 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. The exhaustion doctrine stands as a bar to an action which is not yet complete 4 and it is clear, in the case at bar, that after its promulgation the resolution of the PCA abandoning regulation of the desiccated coconut industry became effective. To be sure, the PCA is under the direct supervision of the President of the Philippines but there is nothing in P.D. No. 232, P.D. No. 961, P.D. No. 1468 and P.D. No. 1644 defining the powers and functions of the PCA which requires rules and regulations issued by it to be approved by the President before they become effective. In any event, although the APCD has appealed the resolution in question to the Office of the President, considering the fact that two months after they had sent their first letter on April 26, 1993

they still had to hear from the President's office, meanwhile respondent PCA was issuing certificates of registration indiscriminately to new coconut millers, we hold that petitioner was justified in filing this case on June 25, 1993. 5 Indeed, after writing the Office of the President on April 26, 1993 6 petitioner sent inquiries to that office not once, but twice, on May 26, 1993 7 and on June 2, 1993, 8 but petitioner did not receive any reply. II. We now turn to the merit of the present petition. The Philippine Coconut Authority was originally created by P.D. 232 on June 30, 1973, to take over the powers and functions of the Coconut Coordinating Council, the Philippine Coconut Administration and the Philippine Coconut Research Institute. On June 11, 1978, by P.D. No. 1468, it was made "an independent public corporation . . . directly reporting to, and supervised by, the President of the Philippines," 9 and charged with carrying out the State's policy "to promote the rapid integrated development and growth of the coconut and other palm oil industry in all its aspects and to ensure that the coconut farmers become direct participants in, and beneficiaries of, such development and growth." 10 through a regulatory scheme set up by law. 11 Through this scheme, the government, on August 28, 1982, temporarily prohibited the opening of new coconut processing plants and, four months later, phased out some of the existing ones in view of overproduction in the coconut industry which resulted in cut-throat competition, underselling and smuggling of poor quality products and ultimately in the decline of the export performance of coconut-based commodities. The establishment of new plants could be authorized only upon determination by the PCA of the existence of certain economic conditions and the approval of the President of the Philippines. Thus, Executive Order No. 826, dated August 28, 1982, provided: Sec. 1. Prohibition. Except as herein provided, no government agency or instrumentality shall hereafter authorize, approve or grant any permit or license for the establishment or operation of new desiccated coconut processing plants, including the importation of machinery or equipment for the purpose. In the event of a need to establish a new plant, or expand the capacity, relocate or upgrade the efficiencies of any existing desiccated plant, the Philippine Coconut Authority may, upon proper determination of such need and evaluation of the condition relating to: a. the existing market demand; b. the production capacity prevailing in the country or locality; c. the level and flow of raw materials; and d. other circumstances which may affect the growth or viability of the industry concerned, authorize or grant the application for, the establishment or expansion of capacity, relocation or upgrading of efficiencies of such desiccated coconut processing plant, subject to the approval of the President. On December 6, 1982, a phase-out of some of the existing plants was ordered by the government after finding that "a mere freeze in the present capacity of existing plants will not afford a viable solution to the problem considering that the total available limited market is not adequate to support all the existing processing plants, making it imperative to reduce the number of existing processing plants." 12 Accordingly, it was ordered: 13

Sec. 1. The Philippine Coconut Authority is hereby ordered to take such action as may be necessary to reduce the number of existing desiccated coconut processing plants to a level which will insure the survival of the remaining plants. The Authority is hereby directed to determine which of the existing processing plants should be phased out and to enter into appropriate contracts with such plants for the above purpose. It was only on October 23, 1987 when the PCA adopted Resolution No. 058-87, authorizing the establishment and operation of additional DCN plants, in view of the increased demand for desiccated coconut products in the world's markets, particularly in Germany, the Netherlands and Australia. Even then, the opening of new plants was made subject to "such implementing guidelines to be set forth by the Authority" and "subject to the final approval of the President." The guidelines promulgated by the PCA, as embodied in Administrative Order No. 002, series of 1991, inter aliaauthorized the opening of new plants in "non-congested areas only as declared by the PCA" and subject to compliance by applicants with "all procedures and requirements for registration under Administrative Order No. 003, series of 1981 and this Order." In addition, as the opening of new plants was premised on the increased global demand for desiccated coconut products, the new entrants were required to submit sworn statements of the names and addresses of prospective foreign buyers. This form of "deregulation" was approved by President Aquino in her memorandum, dated February 11, 1988, to the PCA. Affirming the regulatory scheme, the President stated in her memorandum: It appears that pursuant to Executive Order No. 826 providing measures for the protection of the Desiccated Coconut Industry, the Philippine Coconut Authority evaluated the conditions relating to: (a) the existing market demands; (b) the production capacity prevailing in the country or locality; (c) the level and flow of raw materials; and (d) other circumstances which may affect the growth or viability of the industry concerned and that the result of such evaluation favored the expansion of production and market of desiccated coconut products.
In view hereof and the favorable recommendation of the Secretary of Agriculture, the deregulation of the Desiccated Coconut Industry as recommended in Resolution No. 058-87 adopted by the PCA Governing Board on October 28, 1987 (sic) is hereby approved. 14

These measures the restriction in 1982 on entry into the field, the reduction the same year of the number of the existing coconut mills and then the lifting of the restrictions in 1987 were adopted within the framework of regulation as established by law "to promote the rapid integrated development and growth of the coconut and other palm oil industry in all its aspects and to ensure that the coconut farmers become direct participants in, and beneficiaries of, such development and growth." 15 Contrary to the assertion in the dissent, the power given to the Philippine Coconut Authority and before it to the Philippine Coconut Administration "to formulate and adopt a general program of development for the coconut and other palm oils industry" 16 is not a roving commission to adopt any program deemed necessary to promote the development of the coconut and other palm oils industry, but one to be exercised in the context of this regulatory structure. In plain disregard of this legislative purpose, the PCA adopted on March 24, 1993 the questioned resolution which allows not only the indiscriminate opening of new coconut processing plants but the virtual dismantling of the regulatory infrastructure whereby, forsaking controls theretofore placed in its keeping, the PCA limits its function to the innocuous one of "monitoring" compliance by coconut millers with quality standards and volumes of production. In effect, the PCA would simply be compiling statistical data on these matters, but in case of violations of standards there would be

nothing much it would do. The field would be left without an umpire who would retire to the bleachers to become a mere spectator. As the PCA provided in its Resolution No. 018-93: NOW, THEREFORE, BE IT RESOLVED AS IT IS HEREBY RESOLVED, that, henceforth, PCA shall no longer require any coconut oil mill, coconut oil refinery, coconut desiccator, coconut product processor/factory, coconut fiber plant or any similar coconut processing plant to apply with PCA and the latter shall no longer issue any form of license or permit as condition prior to establishment or operation of such mills or plants; RESOLVED, FURTHER, that the PCA shall limit itself only to simply registering the aforementioned coconut product processors for the purpose of monitoring their volumes of production, administration of quality standards with the corresponding service fees/charges. The issue is not whether the PCA has the power to adopt this resolution to carry out its mandate under the law "to promote the accelerated growth and development of the coconut and other palm oil industry." 17 The issue rather is whether it can renounce the power to regulate implicit in the law creating it for that is what the resolution in question actually is. Under Art. II, 3(a) of the Revised Coconut Code (P.D. No. 1468), the role of the PCA is "To formulate and adopt a general program of development for the coconut and other palm oil industry in all its aspects." By limiting the purpose of registration to merely "monitoring volumes of production [and] administration of quality standards" of coconut processing plants, the PCA in effect abdicates its role and leaves it almost completely to market forces how the coconut industry will develop. Art. II, 3 of P.D. No. 1468 further requires the PCA: (h) To regulate the marketing and the exportation of copra and its by-products by establishing standards for domestic trade and export and, thereafter, to conduct an inspection of all copra and its by-products proposed for export to determine if they conform to the standards established; Instead of determining the qualifications of market players and preventing the entry into the field of those who are unfit, the PCA now relies entirely on competition with all its wastefulness and inefficiency to do the weeding out, in its naive belief in survival of the fittest. The result can very well be a repeat of 1982 when free enterprise degenerated into a "free-for-all," resulting in cut-throat competition, underselling, the production of inferior products and the like, which badly affected the foreign trade performance of the coconut industry. Indeed, by repudiating its role in the regulatory scheme, the PCA has put at risk other statutory provisions, particularly those of P.D. No. 1644, to wit: Sec. 1. The Philippine Coconut Authority shall have full power and authority to regulate the marketing and export of copra, coconut oil and their by-products, in furtherance of the steps being taken to rationalize the coconut oil milling industry. Sec. 2. In the exercise of its powers under Section 1 hereof, the Philippine Coconut Authority may initiate and implement such measures as may be necessary to attain the rationalization of the coconut oil milling industry, including, but not limited to, the following measures: (a) Imposition of floor and/or ceiling prices for all exports of copra, coconut oil and their byproducts;

(b) Prescription of quality standards; (c) Establishment of maximum quantities for particular periods and particular markets; (d) Inspection and survey of export shipments through an independent international superintendent or surveyor. In the exercise of its powers hereunder, the Philippine Coconut Authority shall consult with, and be guided by, the recommendation of the coconut farmers, through corporations owned or controlled by them through the Coconut Industry Investment Fund and the private corporation authorized to be organized under Letter of Instructions No. 926. and the Revised Coconut Code (P.D. No. 1468), Art. II, 3, to wit: (m) Except in respect of entities owned or controlled by the Government or by the coconut farmers under Sections 9 and 10, Article III hereof, the Authority shall have full power and authority to regulate the production, distribution and utilization of all subsidized coconutbased products, and to require the submission of such reports or documents as may be deemed necessary by the Authority to ascertain whether the levy payments and/or subsidy claims are due and correct and whether the subsidized products are distributed among, and utilized by, the consumers authorized by the Authority. The dissent seems to be saying that in the same way that restrictions on entry into the field were imposed in 1982 and then relaxed in 1987, they can be totally lifted now without prejudice to reimposing them in the future should it become necessary to do so. There is really no renunciation of the power to regulate, it is claimed. Trimming down of PCA's function to registration is not an abdication of the power to regulate but is regulation itself. But how can this be done when, under Resolution No. 018-93, the PCA no longer requires a license as condition for the establishment or operation of a plant? If a number of processing firms go to areas which are already congested, the PCA cannot stop them from doing so. If there is overproduction, the PCA cannot order a cut back in their production. This is because the licensing system is the mechanism for regulation. Without it the PCA will not be able to regulate coconut plants or mills. In the first "whereas" clause of the questioned resolution as set out above, the PCA invokes a policy of free enterprise that is "unhampered by protective regulations and unnecessary bureaucratic red tape" as justification for abolishing the licensing system. There can be no quarrel with the elimination of "unnecessary red tape." That is within the power of the PCA to do and indeed it should eliminate red tape. Its success in doing so will be applauded. But free enterprise does not call for removal of "protective regulations." Our Constitutions, beginning with the 1935 document, have repudiated laissez-faire as an economic principle. 18Although the present Constitution enshrines free enterprise as a policy, 19 it nonetheless reserves to the government the power to intervene whenever necessary to promote the general welfare. This is clear from the following provisions of Art. XII of the Constitution which, so far as pertinent, state: Sec. 6. . . . Individuals and private groups, including corporations, cooperatives, and similar collective organizations, shall have the right to own, establish, and operate economic enterprises, subject to the duty of the State to promote distributive justice and to intervene when the common good so demands.

Sec. 19. The State shall regulate or prohibit monopolies when the public interest so requires. No combinations in restraint of trade or unfair competition shall be allowed. (Emphasis added). At all events, any change in policy must be made by the legislative department of the government. The regulatory system has been set up by law. It is beyond the power of an administrative agency to dismantle it. Indeed, petitioner charges the PCA of seeking to render moot a case filed by some of its members questioning the grant of licenses to certain parties by adopting the resolution in question. It is alleged that members of petitioner complained to the court that the PCA had authorized the establishment and operation of new plants in areas which were already crowded, in violation of its Administrative Order No. 002, series of 1991. In response, the Regional Trial Court issued a writ of preliminary injunction, enjoining the PCA from issuing licenses to the private respondent in that case. These allegations of petitioner have not been denied here. It would thus seem that instead of defending its decision to allow new entrants into the field against petitioner's claim that the PCA decision violated the guidelines in Administrative Order No. 002, series of 1991, the PCA adopted the resolution in question to render the case moot. In so doing, the PCA abdicated its function of regulation and left the field to untrammeled competition that is likely to resurrect the evils of cutthroat competition, underselling and overproduction which in 1982 required the temporary closing of the field to new players in order to save the industry. The PCA cannot rely on the memorandum of then President Aquino for authority to adopt the resolution in question. As already stated, what President Aquino approved in 1988 was the establishment and operation of new DCN plants subject to the guidelines to be drawn by the PCA. 20 In the first place, she could not have intended to amend the several laws already mentioned, which set up the regulatory system, by a mere memoranda to the PCA. In the second place, even if that had been her intention, her act would be without effect considering that, when she issued the memorandum in question on February 11, 1988, she was no longer vested with legislative authority. 21 WHEREFORE, the petition is GRANTED. PCA Resolution No. 018-93 and all certificates of registration issued under it are hereby declared NULL and VOID for having been issued in excess of the power of the Philippine Coconut Authority to adopt or issue. SO ORDERED. Narvasa, C.J., Regalado, Davide, Jr., Puno, Kapunan, Francisco, Panganiban and Martinez, JJ., concur.

Separate Opinions

ROMERO, J., dissenting;

The past decade, a distinct worldwide trend towards economic deregulation has been evident. Both developed and developing countries have seriously considered, and extensively adopted, various measures for this purpose. The Philippines has been no exception. To this end, the Philippine Coconut Authority (PCA) issued Board Resolution No. 018-93 (PCA-BR No 018-93) dated March 24, 1993, deregulating the coconut processing plant industry. 1 The Association of Philippine Desiccators (APCD) has filed this instant petition for prohibition and mandamus under Rule 65 of the Rules of Court seeking the annulment of said resolution. APCD questions the validity of PCA-BR No. 018-93 for being violative of the principle of nondelegability of legislative power. It contends that in issuing the resolution deregulating the coconut industry, the PCA exercised legislative discretion, which has not been delegated to it by Congress. It adds that when PCA deregulated the coconut industry, it ran counter to the very laws 2 which mandated it to regulate and rationalize the industry. We see no merit in this contention. PCA's authority to issue PCA-BR No. 018-93 is clearly provided in Section 3(a) of P.D. No. 232, reading as follows: . . . To formulate and adopt a general program of development for the coconut and other palm oil industry. Similar grants of authority were made in subsequent amendatory laws. 3 In this regard, we have ruled that legislative discretion, as to the substantive contents of a law, cannot be delegated. What may be delegated is the discretion to determine how the law is to be enforced, not what the law should be, a prerogative of the legislature which it can neither abdicate nor surrender to the delegate. 4 The principle is based on the separation and allocation of powers among the three departments of government. 5 Thus, there are two accepted tests to determine whether or not there is a valid delegation of legislative power, namely, the completeness test and the sufficient standard test. Under the first test, the law must be complete in all its terms and conditions when it leaves the legislature such that when it reaches the delegate, the only thing he will have to do is enforce it. Under the sufficient standard test, there must be adequate guidelines or limitations in the law to map out the boundaries of the delegate's authority and prevent the delegation from running amiss. 6 We have accepted as sufficient standards "interest of law and order," 7 "adequate and efficient instruction," 8"public interest," 9 "justice and equity," 10 "public convenience and welfare," 11 "simplicity, economy and efficiency,"12 "standardization and regulation of medical education," 13 and "fair and equitable employment practices." 14Consequently, the standard may be expressed or implied. In the former, the non delegation objection is easily met. The standard though does not have to be spelled out but need only be implied from the policy and purpose of the act considered as a whole. 15 It may also be found in other statutes on the same subject as that of the challenged legislation. 16 In no uncertain terms must it be stressed that the function of promulgating rules and regulations may be legitimately exercised only for the purpose of carrying out the provisions of a law. The power of administrative agencies is confined to implementing the law or putting it into effect. Corollary to this guideline is that administrative regulation cannot extend the law and amend a legislative enactment. 17 In the instant case, we believe that the PCA did not overstep the limits of its power in issuing the assailed resolution. We need not belabor the point that one of the economic goals of our country is

the increased productivity of goods and services provided by the nation for the benefit of the people, 18 since from a purely economic standpoint, the increase in agricultural productivity is of fundamental importance. 19 Considering the responsibilities and powers assigned to the PCA, as well as its underlying policy, namely, that "the economic well-being of a major part of the population depends to a large extent on the viability of the industry and its improvement in the areas of production, processing and marketing," the irresistible conclusion is that PCA-BR No. 018-93 is a valid exercise of delegated legislation by the PCA. Such resolution is in harmony with the objectives sought to be achieved by the laws regarding the coconut industry, particularly "to promote accelerated growth and development of the coconut and other palm oil industry," 20 and "rapid integrated development and growth of the coconut and other palm oil industry." 21 These are sufficient standards to guide the PCA. Thus, measures to achieve these policies are better left to the administrative agencies tasked with implementing them. It must be stressed that with increasing global trade and business and major upheavals in technology and communications, the time has come for administrative policies and regulations to adapt to ever-changing business needs rather than to accommodate traditional acts of the legislature. 22 Even the 1987 Constitution was designed to meet, not only contemporary events, but also future and unknown circumstances. 23 It is worth mentioning that the PCA, after conducting its studies, adopted the policy of deregulation to further enhance the coconut industry competition, since any continuation of the restrictive regulation in the industry would have detrimental effects. 24 This is in consonance with the constitutional mandate that the State must "adopt measures that help make them (locally produced goods) competitive." 25 Undoubtedly, an "agency, in light of changing circumstances, is free to alter interpretative and policy views reflected in regulations construing an underlying statute, so long as any changed construction of the statute is consistent with express congressional intent or embodies a permissible reading of the statute." 26 Furthermore, the Constitution is cognizant of the realities of global interdependency, as it requires the pursuit of "a trade policy that serves the general welfare and utilizes all forms and arrangements of exchanges on the basis of equality and reciprocity." 27 In sum, the policy of deregulation must be determined by the circumstances prevailing in a certain situation. 28 As we have stressed in the past, this Court is only concerned with the question of authority, not the wisdom of the measure involved which falls within the province of the Legislature. The ponencia presents the issue: whether it is within the power of the PCA to renounce the power to regulate implicit in the law creating it (P.D. No. 232). (It is to be pointed out that this issue was not included in the Assignment of Errors of Petitioner). Underlying this formulation is the assumption/admission that PCA has the power to regulate the coconut industry, as in fact the power is bestowed upon it by its organic act, P.D. No. 232, viz. "to promote the rapid integrated development and growth of the coconut and other palm oils in industry in all its aspects and to ensure that the coconut farmers become direct participants in, and beneficiaries of, such development and growth." Its broad mandate is "to formulate and adopt a general program of development for the coconut and other palm oils industry." It avers that this "legislative scheme" was disregarded when the PCA adopted on March 24, 1993 the assailed Resolution which is effect liberalized the registration and licensing requirements for the granting of permits to operate new coconut plants. But this was effected pursuant to the October 23,

1987 PCA Board Resolution laying down the policy of deregulating the industry and authorizing the creation of additional desiccated coconut plants. As with any administrative agency established to promote the growth and development of any industry, the PCA has considerable latitude to adopt policies designed to accelerate the attainment of this objective and corollarily, to lay down rules and regulations to implement the same. We can take judicial notice of the fact that during its 25 years of existence, the PCA has achieved enough experience and expertise to introduce measures which shall ensure the dominant role of the crop as a major dollar-producing industry, including the manipulation of market forces to our comparative advantage, certainly an area beyond the Court's ken. Hence, guided by guidelines already laid down, it responded to regional developments by: (1) taking cognizance of the overproduction in the industry and curtailing the expansion of coconut processing plants in 1982, within reasonable limits and with safeguards (hence the issuance of Executive Order Nos. 826 on August 28, 1982 and No. 854 on December 6, 1982); (2) five years later, responding to the demand for desiccated coconut products in the world market, liberalized its former policy by deregulating the industry and authorizing the creation of additional desiccated coconut plants in 1987; (3) complementing and supplementing (2), by easing registration and licensing requirements in 1993. It bears repeating that the above measures were not taken arbitrarily but in careful compliance with guidelines incorporated in the Executive Orders and subject to the favorable recommendation of the Secretary of Agriculture and the approval of the President. The crux of the ponencia is that, in the process of opening doors to foreign markets, the PCA "limited itself to merely monitoring their volumes of production and administration of quality standards, in effect abdicating its role and leaving it almost totally to market forces to define how the industry will develop." Actually, the relevant provisions in the disputed resolution reads: Resolved further, that the PCA shall limit itself only to simply registering the aforementioned coconut product processors for the purpose of monitoring their volumes of production, administration of quality standards with the corresponding service fees/charges. For the sake of clarity and accuracy, it is to be stressed that the PCA did not limit itself "merely to monitoring . . ." as the ponencia states, but to "registering the . . . processors for the purpose of monitoring their volumes of production and administration of quality standards. . . ." In the actual words of the Resolution, the PCA recognizes its principal function of registration so as to be able to monitor the production and administer quality standards, both objectives of which are not merely nominal or minimal, but substantial, even vital, aspects of the power to regulate. Put differently, there is no renunciation of the power to regulate, for the regulation is essentially recognized and accomplished through the registration function which enables the PCA to keep track of the volume of production and the observance of quality standards by new entrants into the industry. In sum, trimming down its functions to registration is not an abdication of the power to regulate but is regulation itself.

If the PCA, in light of the crucial developments in the regional and domestic coconut industry decides to open wide its doors, allow the free entry of other players and the interplay of competitive forces to shape the configuration of the industry, who are we to declare such policy as one characterized by "wastefulness and inefficiency . . . based on its naive faith in survival of the fittest." Is not this a blatant incursion by the Court into the economic arena which is better left to the administrative agency precisely tasked to promote the growth of the industry, through the exercise of its studied discretion? To be sure, those operators already in the field, such as the petitioner members of the Association of Philippine Coconut Desiccators, are expected to vigorously protest and work for the nullity of what they perceive as an obnoxious, life threatening policy. But instead of opposing what the PCA views as a timely, well-considered move, the healthy competition should spur them to improving their product and elevating the standards they have imposed on themselves. If, in the course of its monitoring which is a piece of the regulatory function, the PCA should detect a violation of its guidelines that would result in a lowering of the quality of the product, or unfairness to other players, surely, it is not powerless to impose sanctions, as categorically provided in P.D. 1469, P.D. 1644, Adm. Order No. 003, Series of 1981 and Adm. Order No. 002, Series of 1991. Any administrative agency is empowered to establish its implementing rules, together with sanctions guaranteed to ensure the observance of such rules, else it would be a mere "toothless" entity. The ponencia prognosticates, "The result can very well be a repeat of 1982 when free enterprise degenerated into a 'free-for-all,' resulting in cutthroat competition, underselling, the production of inferior products and the like, which badly affected the foreign trade performance of our coconut industry." Are we not encroaching on legislative domain in questioning the wisdom of the action taken by the PCA which was accorded a broad mandate by the Congress? Moreover, let us bear in mind that during those "abnormal times," forces other than merely economic, e.g. political, dominated the economy effectively supporting, even favoring, destructive capitalistic monopolies and, in the process suppressing healthy competition. Not to forget, too, that we cannot close our eyes and ignore the world-wide trend towards globalization in the economy, as in other fields, as in fact the Court recognized this economic reality in its decision in the Oil Deregulation Case. With the unrelenting march of globalization in our economy, the Philippines must find its market niches and be able to adapt to these inevitable changes, for the Asia-Pacific rim is bound to become a truly dynamic region in the economic, political and cultural arenas in the coming millennium. ACCORDINGLY, the petition should be DISMISSED. Bellosillo, Melo, Vitug, Quisumbing and Purisima, JJ., dissent.

Separate Opinions ROMERO, J., dissenting; The past decade, a distinct worldwide trend towards economic deregulation has been evident. Both developed and developing countries have seriously considered, and extensively adopted, various measures for this purpose. The Philippines has been no exception.

To this end, the Philippine Coconut Authority (PCA) issued Board Resolution No. 018-93 (PCA-BR No 018-93) dated March 24, 1993, deregulating the coconut processing plant industry. 1 The Association of Philippine Desiccators (APCD) has filed this instant petition for prohibition and mandamus under Rule 65 of the Rules of Court seeking the annulment of said resolution. APCD questions the validity of PCA-BR No. 018-93 for being violative of the principle of nondelegability of legislative power. It contends that in issuing the resolution deregulating the coconut industry, the PCA exercised legislative discretion, which has not been delegated to it by Congress. It adds that when PCA deregulated the coconut industry, it ran counter to the very laws 2 which mandated it to regulate and rationalize the industry. We see no merit in this contention. PCA's authority to issue PCA-BR No. 018-93 is clearly provided in Section 3(a) of P.D. No. 232, reading as follows: . . . To formulate and adopt a general program of development for the coconut and other palm oil industry. Similar grants of authority were made in subsequent amendatory laws. 3 In this regard, we have ruled that legislative discretion, as to the substantive contents of a law, cannot be delegated. What may be delegated is the discretion to determine how the law is to be enforced, not what the law should be, a prerogative of the legislature which it can neither abdicate nor surrender to the delegate. 4 The principle is based on the separation and allocation of powers among the three departments of government. 5 Thus, there are two accepted tests to determine whether or not there is a valid delegation of legislative power, namely, the completeness test and the sufficient standard test. Under the first test, the law must be complete in all its terms and conditions when it leaves the legislature such that when it reaches the delegate, the only thing he will have to do is enforce it. Under the sufficient standard test, there must be adequate guidelines or limitations in the law to map out the boundaries of the delegate's authority and prevent the delegation from running amiss. 6 We have accepted as sufficient standards "interest of law and order," 7 "adequate and efficient instruction," 8"public interest," 9 "justice and equity," 10 "public convenience and welfare," 11 "simplicity, economy and efficiency,"12 "standardization and regulation of medical education," 13 and "fair and equitable employment practices." 14Consequently, the standard may be expressed or implied. In the former, the non delegation objection is easily met. The standard though does not have to be spelled out but need only be implied from the policy and purpose of the act considered as a whole. 15 It may also be found in other statutes on the same subject as that of the challenged legislation. 16 In no uncertain terms must it be stressed that the function of promulgating rules and regulations may be legitimately exercised only for the purpose of carrying out the provisions of a law. The power of administrative agencies is confined to implementing the law or putting it into effect. Corollary to this guideline is that administrative regulation cannot extend the law and amend a legislative enactment. 17 In the instant case, we believe that the PCA did not overstep the limits of its power in issuing the assailed resolution. We need not belabor the point that one of the economic goals of our country is the increased productivity of goods and services provided by the nation for the benefit of the people, 18 since from a purely economic standpoint, the increase in agricultural productivity is of fundamental importance. 19

Considering the responsibilities and powers assigned to the PCA, as well as its underlying policy, namely, that "the economic well-being of a major part of the population depends to a large extent on the viability of the industry and its improvement in the areas of production, processing and marketing," the irresistible conclusion is that PCA-BR No. 018-93 is a valid exercise of delegated legislation by the PCA. Such resolution is in harmony with the objectives sought to be achieved by the laws regarding the coconut industry, particularly "to promote accelerated growth and development of the coconut and other palm oil industry," 20 and "rapid integrated development and growth of the coconut and other palm oil industry." 21 These are sufficient standards to guide the PCA. Thus, measures to achieve these policies are better left to the administrative agencies tasked with implementing them. It must be stressed that with increasing global trade and business and major upheavals in technology and communications, the time has come for administrative policies and regulations to adapt to ever-changing business needs rather than to accommodate traditional acts of the legislature. 22 Even the 1987 Constitution was designed to meet, not only contemporary events, but also future and unknown circumstances. 23 It is worth mentioning that the PCA, after conducting its studies, adopted the policy of deregulation to further enhance the coconut industry competition, since any continuation of the restrictive regulation in the industry would have detrimental effects. 24 This is in consonance with the constitutional mandate that the State must "adopt measures that help make them (locally produced goods) competitive." 25 Undoubtedly, an "agency, in light of changing circumstances, is free to alter interpretative and policy views reflected in regulations construing an underlying statute, so long as any changed construction of the statute is consistent with express congressional intent or embodies a permissible reading of the statute." 26 Furthermore, the Constitution is cognizant of the realities of global interdependency, as it requires the pursuit of "a trade policy that serves the general welfare and utilizes all forms and arrangements of exchanges on the basis of equality and reciprocity." 27 In sum, the policy of deregulation must be determined by the circumstances prevailing in a certain situation. 28 As we have stressed in the past, this Court is only concerned with the question of authority, not the wisdom of the measure involved which falls within the province of the Legislature. The ponencia presents the issue: whether it is within the power of the PCA to renounce the power to regulate implicit in the law creating it (P.D. No. 232). (It is to be pointed out that this issue was not included in the Assignment of Errors of Petitioner). Underlying this formulation is the assumption/admission that PCA has the power to regulate the coconut industry, as in fact the power is bestowed upon it by its organic act, P.D. No. 232, viz. "to promote the rapid integrated development and growth of the coconut and other palm oils in industry in all its aspects and to ensure that the coconut farmers become direct participants in, and beneficiaries of, such development and growth." Its broad mandate is "to formulate and adopt a general program of development for the coconut and other palm oils industry." It avers that this "legislative scheme" was disregarded when the PCA adopted on March 24, 1993 the assailed Resolution which is effect liberalized the registration and licensing requirements for the granting of permits to operate new coconut plants. But this was effected pursuant to the October 23, 1987 PCA Board Resolution laying down the policy of deregulating the industry and authorizing the creation of additional desiccated coconut plants.

As with any administrative agency established to promote the growth and development of any industry, the PCA has considerable latitude to adopt policies designed to accelerate the attainment of this objective and corollarily, to lay down rules and regulations to implement the same. We can take judicial notice of the fact that during its 25 years of existence, the PCA has achieved enough experience and expertise to introduce measures which shall ensure the dominant role of the crop as a major dollar-producing industry, including the manipulation of market forces to our comparative advantage, certainly an area beyond the Court's ken. Hence, guided by guidelines already laid down, it responded to regional developments by: (1) taking cognizance of the overproduction in the industry and curtailing the expansion of coconut processing plants in 1982, within reasonable limits and with safeguards (hence the issuance of Executive Order Nos. 826 on August 28, 1982 and No. 854 on December 6, 1982); (2) five years later, responding to the demand for desiccated coconut products in the world market, liberalized its former policy by deregulating the industry and authorizing the creation of additional desiccated coconut plants in 1987; (3) complementing and supplementing (2), by easing registration and licensing requirements in 1993. It bears repeating that the above measures were not taken arbitrarily but in careful compliance with guidelines incorporated in the Executive Orders and subject to the favorable recommendation of the Secretary of Agriculture and the approval of the President. The crux of the ponencia is that, in the process of opening doors to foreign markets, the PCA "limited itself to merely monitoring their volumes of production and administration of quality standards, in effect abdicating its role and leaving it almost totally to market forces to define how the industry will develop." Actually, the relevant provisions in the disputed resolution reads: Resolved further, that the PCA shall limit itself only to simply registering the aforementioned coconut product processors for the purpose of monitoring their volumes of production, administration of quality standards with the corresponding service fees/charges. For the sake of clarity and accuracy, it is to be stressed that the PCA did not limit itself "merely to monitoring . . ." as the ponencia states, but to "registering the . . . processors for the purpose of monitoring their volumes of production and administration of quality standards. . . ." In the actual words of the Resolution, the PCA recognizes its principal function of registration so as to be able to monitor the production and administer quality standards, both objectives of which are not merely nominal or minimal, but substantial, even vital, aspects of the power to regulate. Put differently, there is no renunciation of the power to regulate, for the regulation is essentially recognized and accomplished through the registration function which enables the PCA to keep track of the volume of production and the observance of quality standards by new entrants into the industry. In sum, trimming down its functions to registration is not an abdication of the power to regulate but is regulation itself. If the PCA, in light of the crucial developments in the regional and domestic coconut industry decides to open wide its doors, allow the free entry of other players and the interplay of competitive forces to

shape the configuration of the industry, who are we to declare such policy as one characterized by "wastefulness and inefficiency . . . based on its naive faith in survival of the fittest." Is not this a blatant incursion by the Court into the economic arena which is better left to the administrative agency precisely tasked to promote the growth of the industry, through the exercise of its studied discretion? To be sure, those operators already in the field, such as the petitioner members of the Association of Philippine Coconut Desiccators, are expected to vigorously protest and work for the nullity of what they perceive as an obnoxious, life threatening policy. But instead of opposing what the PCA views as a timely, well-considered move, the healthy competition should spur them to improving their product and elevating the standards they have imposed on themselves. If, in the course of its monitoring which is a piece of the regulatory function, the PCA should detect a violation of its guidelines that would result in a lowering of the quality of the product, or unfairness to other players, surely, it is not powerless to impose sanctions, as categorically provided in P.D. 1469, P.D. 1644, Adm. Order No. 003, Series of 1981 and Adm. Order No. 002, Series of 1991. Any administrative agency is empowered to establish its implementing rules, together with sanctions guaranteed to ensure the observance of such rules, else it would be a mere "toothless" entity. The ponencia prognosticates, "The result can very well be a repeat of 1982 when free enterprise degenerated into a 'free-for-all,' resulting in cutthroat competition, underselling, the production of inferior products and the like, which badly affected the foreign trade performance of our coconut industry." Are we not encroaching on legislative domain in questioning the wisdom of the action taken by the PCA which was accorded a broad mandate by the Congress? Moreover, let us bear in mind that during those "abnormal times," forces other than merely economic, e.g. political, dominated the economy effectively supporting, even favoring, destructive capitalistic monopolies and, in the process suppressing healthy competition. Not to forget, too, that we cannot close our eyes and ignore the world-wide trend towards globalization in the economy, as in other fields, as in fact the Court recognized this economic reality in its decision in the Oil Deregulation Case. With the unrelenting march of globalization in our economy, the Philippines must find its market niches and be able to adapt to these inevitable changes, for the Asia-Pacific rim is bound to become a truly dynamic region in the economic, political and cultural arenas in the coming millennium. ACCORDINGLY, the petition should be DISMISSED. Bellosillo, Melo, Vitug, Quisumbing and Purisima, JJ., dissent. Footnotes 1 A.O. No. 02, par. A(5) defines "Congested Area" as "a condition in a particular locality where the ratio of total rated capacity over the total of the nut production capacity is greater than or equal to 1. 2 Fiesta Brands, Inc. v. Philippine Coconut Authority, Civil Case No. 92-3210. 3 Rollo, pp. 41-42. 4 See generally, 3 KENNETH CULP DAVIS, TREATISE ON ADMINISTRATIVE LAW 56-57 (1958).

5 Cf. Alzate v. Aldana, 107 Phil. 298 (1960). 6 Petition, Annex O. 7 Id., Annex P. 8 Id., Annex Q. 9 Art. I, 1. 10 Art I, 2. 11 P.D. No. 1468, Art. I, 2; P.D. No. 961, Art. I, 2; P.D. No. 232, 1. 12 Executive Order No. 854, Dec. 6, 1982. 13 Id. 14 Rollo, p. 88. 15 P.D. No. 1468, Art. I, 2; P.D. No. 961, Art. I, 2; P.D. No. 232, 1. 16 P.D. No. 232, 3 (a); R.A. No. 1145, 2(a)-(c). 17 P.D. No. 232, 1; P.D. No. 961, Art. I, 2; P.D. No. 1468, Art. I, 2 and P.D. No. 1644. 18 See Antamok Goldfields Mining Co. v. CIR, 70 Phil. 340 (1940); Edu v. Ericta, 35 SCRA 481 (1970). 19 Art. II, 20. 20 Rollo, p. 88. 21 See CONST., ART. VI, 1. ROMERO, J., dissenting: 1 Annex "A," Rollo, pp. 41-42. 2 P.D. No. 931 "Coconut Industry Code," P.D. No. 1468 "Revised Coconut Industry," P.D. No. 1644 "Granting Additional Powers to the Philippine Coconut Authority," E.O. 826 "Providing Measures for the Protection of the Dessicated Coconut Authority," E.O. 854 "Providing for the Rationalization of the Dessicated Coconut Industry." 3 Section 3(a), P.D. No. 961; Section 3(a), P.D. No. 962; Section (1) and (2), P.D. No. 1644. 4 Ynot v. Intermediate Appellate Court, 148 SCRA 659 (1987).

5 People v. Vera, 65 Phil. 56 (1937); Pelaez v. Auditor General, 15 SCRA 569 (1965). 6 Eastern Shipping Lines v. POEA, 166 SCRA 533 (1988). 7 Rubi v. Provincial Board of Mindoro, 39 Phil. 660 (1919). 8 Philippine Association of Colleges and University v. Secretary of Education, 97 Phil. 806 (1955). 9 People v. Rosenthal, 68 Phil. 328 (1939). 10 Amatok Gold Fields v. CIR, 70 Phil. 340 (1940). 11 Calalang v. Williams, 70 Phil. 726 (1940). 12 Cervantes v. Auditor General, 91 Phil 359 (1952). 13 Tablarin v. Gutierrez, 152 SCRA 731 (1987). 14 The Conference of Maritime Manning Agencies, Inc. v. Philippine Overseas Employment Administration, 243 SCRA 666 (1995). 15 Chiong Bian v. Orbos, 245 SCRA 253 (1995). 16 Rabor v. Civil Service Commission, 244 SCRA 614 (1995). 17 Land Bank of the Philippines v. Court of Appeals, 249 SCRA 149 (1995). 18 Article XII, Section 1, 1987 Constitution. 19 Crosson, P.R. CAPITAL-OUTPUT RATIOS AND DEVELOPMENT PLANNING, 1964. 20 P.D. No. 232, Section 1. 21 P.D. No. 931, Section 1; P.D. No. 1468, Section 2; P.D. No. 1644. 22 Philippine International Trading Corporation v. Judge Angeles, et al., G.R. No. 108461, October 21, 1996. 23 Tanada, et al. v. Angara, et al., G.R. No. 118295, May 2, 1997. 24 Board Resolution No. 058-87, October 23, 1987. 25 Article XII, Section 12, 1987 Constitution. 26 National Family Planning and Reproductive Health Association v. Sullivan, 298 US App DC 288.

27 Article XII, Section 13, 1987 Constitution. 28 Kilusang Mayo Uno Labor Center v. Garcia, Jr., 239 SCRA 386 (1994).

SECOND DIVISION

[G.R. No. 138842. October 18, 2000]

NATIVIDAD P. NAZARENO, MAXIMINO P. NAZARENO, JR., petitioners, vs. COURT OF APPEALS, ESTATE OF MAXIMINO A. NAZARENO, SR., ROMEO P. NAZARENO and ELIZA NAZARENO, respondents. DECISION
MENDOZA, J.:

This is a petition for review on certiorari of the decision [1] of the Court of Appeals in CA-GR CV No. 39441 dated May 29, 1998 affirming with modifications the decision of the Regional Trial Court, Branch 107, Quezon City, in an action for annulment of sale and damages. The facts are as follows: Maximino Nazareno, Sr. and Aurea Poblete were husband and wife. Aurea died on April 15, 1970, while Maximino, Sr. died on December 18, 1980. They had five children, namely, Natividad, Romeo, Jose, Pacifico, and Maximino, Jr. Natividad and Maximino, Jr. are the petitioners in this case, while the estate of Maximino, Sr., Romeo, and his wife Eliza Nazareno are the respondents. During their marriage, Maximino Nazareno, Sr. and Aurea Poblete acquired properties in Quezon City and in the Province of Cavite. It is the ownership of some of these properties that is in question in this case. It appears that after the death of Maximino, Sr., Romeo filed an intestate case in the Court of First Instance of Cavite, Branch XV, where the case was docketed as Sp. Proc. No. NC-28. Upon the reorganization of the courts in 1983, the case was transferred to the Regional Trial Court of Naic, Cavite. Romeo was appointed administrator of his fathers estate. In the course of the intestate proceedings, Romeo discovered that his parents had executed several deeds of sale conveying a number of real properties in favor of his sister, Natividad. One of the deeds involved six lots in Quezon City which were allegedly sold by Maximino, Sr., with the consent of Aurea, to Natividad on January 29, 1970 for the total amount of P47,800.00. The Deed of Absolute Sale reads as follows:

DEED OF ABSOLUTE SALE KNOW ALL MEN BY THESE PRESENTS: I, MAXIMINO A. NAZARENO, Filipino, married to Aurea Poblete-Nazareno, of legal age and a resident of the Mun. of Naic, Prov. of Cavite, Philippines, -WITNESSETHThat I am the absolute registered owner of six (6) parcels of land with the improvements thereon situated in Quezon City, Philippines, which parcels of land are herewith described and bounded as follows, to wit: TRANS. CERT. OF TITLE NO. 140946 A parcel of land (Lot 3-B of the subdivision plan Psd-47404, being a portion of Lot 3, Block D-3 described on plan Bsd-10642, G.L.R.O. Record No.) situated in the Quirino District, Quezon City. Bounded on the N., along line 1-2 by Lot 15, Block D3 of plan Bsd - 10642; along line 2-3 by Lot 4, Block D-3 of plan Bsd-10642; along line 3-4 by Aurora Boulevard (Road Lot-1, Bsd-10642); and along line 4-1 by Lot 3D of the subdivision plan. Beginning at a point marked 1 on plan, being S.29 deg. 26E., 1156.22 m. from B.L.L.M. 9, Quezon City, thence N. 79 deg. 53E., 12.50 m. to point 2; thence S. 10 deg. 07E., 40.00 m. to point 3; thence S. 79 deg. 53W., 12.50 m. to point 4; thence N. 10 deg. 07W., 40.00 m. to the point of beginning; containing an area of FIVE HUNDRED (500) SQUARE METERS. All points referred to are indicated on the plan and are marked on the ground as follows: points 1 and 4 by P.L.S. Cyl. Conc. Mons. bearings true; date of the original survey, April 8-July 15, 1920 and that of the subdivision survey, March 25, 1956. TRANS. CERT. OF TITLE NO. 132019 A parcel of land (Lot 3, Block 93 of the subdivision plan Psd-57970 being a portion of Lot 6, Pcs-4786, G.L.R.O. Rec. No. 917) situated in Quirino District Quezon City. Bounded on the NW., along line 1-2, by Lot 1, Block 93; on the NE., along line 2-3, by Road Lot 101; on the SE., along line 3-4, by Road Lot 100; on the SW., along

line 4-1, by Lot 4, Block 93; all of the subdivision plan. Beginning at point marked 1 on plan, being S. 65 deg. 40 3339.92 m. from B.L.L.M. No. 1, Marikina, Rizal; thence N. 23 deg. 28 min. E., 11.70 m. to point 2; thence S. 66 deg. 32 min. E., 18.00 m. to point 3; thence S. 23 deg. 28 min. W., 11.70 m. to point 4; thence N. 66 deg. 32. min. W., 18.00 m. to the point of beginning; containing an area of TWO HUNDRED TEN SQUARE METERS AND SIXTY SQUARE DECIMETERS (210.60). All points referred to are indicated on the plan and are marked on the ground by B.L. Cyl. Conc. Mons. 15 x 60 cm.; bearings true; date of the original survey, Nov. 10, 1920 and Jan. 31-March 31, 1924 and that of the subdivision survey, February 1 to September 30, 1954. Date approved March 9, 1962. TRANS. CERT. OF TITLE NO. 118885 A parcel of land (Lot No. 10, of the consolidation and subdivision plan Pcs-988, being a portion of the consolidated Lot No. 26, Block No. 6, Psd-127, and Lots Nos. 27-A and 27-B, Psd-14901, G.L.R.O. Record No. 917), situated in the District of Cubao, Quezon City, Island of Luzon. Bounded on the NE., by Lot No. 4 of the consolidation and subdivision plan; on the SE., by Lot No. 11 of the consolidation and subdivision plan; on the SW., by Lot No. 3 of the consolidation and subdivision plan; and on the NW., by Lot No. 9 of the consolidation and subdivision plan. Beginning at a point marked 1 on the plan, being S. 7 deg. 26W., 4269.90 m. more or less from B.L.L.M. No. 1, Mp. of Mariquina; thence S. 25 deg. 00E., 12.00 m. to point 2; thence S. 64 deg. 59W., 29.99 m. to point 3; thence N. 25 deg. 00W., 12.00 m to point 4; thence N. 64 deg. 59E., 29.99 m. to the point of beginning; containing an area of THREE HUNDRED SIXTY SQUARE METERS (360), more or less. All points referred to are indicated on the plan and on the ground are marked by P.L.S. Conc. Mons. 15 x 60 cm.; bearings true; declination 0 deg.

50E., date of the original survey, April 8 to July 15, 1920, and that of the consolidation and subdivision survey, April 24 to 26, 1941. TRANS. CERT. OF TITLE NO. 118886 A parcel of land (Lot No. 11, of the consolidation and subdivision plan Pcs-988, being a portion of the consolidated Lot No. 26, Block No. 6, Psd-127, and Lots Nos. 27-A and 27-B, Psd-14901, G.L.R.O. Record No. 917), situated in the District of Cubao, Quezon City, Island of Luzon. Bounded on the NE., by Lot No. 4 of the consolidation and subdivision plan; on the SE., by Lot No. 12 of the consolidation and subdivision plan; on the SW., by Lot No. 3 of the consolidation and subdivision plan; on the NW., by Lot No. 10 of the consolidation and subdivision plan. Beginning at a point marked 1 on plan, being S. 79 deg. 07W., 4264.00 m. more or less from B.L.L.M. No. 1, Mp. of Mariquina; thence S. 64 deg. 59W., 29.99 m. to point 2; thence N. 25 deg. 00W., 12.00 m. to point 3; thence N. 64 deg. 59E., 29.99 m. to point 4; thence S. 26 deg. 00E., 12.00 m. to the point of beginning; containing an area of THREE HUNDRED SIXTY SQUARE METERS (360), more or less. All points referred to are indicated on the plan and on the ground, are marked by P.L.S. Conc. Mons. 15 x 60 cm.; bearings true; declination 0 deg. 50E.; date of the original survey, April 8 to July 15, 1920, and that of the consolidation and subdivision survey, April 24 to 26, 1941. A parcel of land (Lot No. 13 of the consolidation and subdivision plan Pcs-988, being a portion of the consolidated Lot No. 26, Block No. 6, Psd-127, and LotsNos. 27-A and 27-B, Psd-14901, G.L.R.O. Record No. 917), situated in the District of Cubao, Quezon City, Island of Luzon. Bounded on the NE., by Lot No. 4 of the consolidation and subdivision plan; on the SE., by Lot No. 14, of the consolidation; and subdivision plan; on the SW., by Lot No. 3 of the consolidation and subdivision plan; and on the NW., by Lot No. 12, of the consolidation and subdivision plan. Beginning at the point marked 1 on plan, being S.78 deg. 48W., 4258.20 m. more or less from B.L.L.M. No. 1, Mp. of Mariquina; thence S. 64 deg. 58W., 30.00 m. to point 2; thence N. 25 deg. 00W., 12.00 m. to point 3;

thence N. 64 deg. 59E., 29.99 m. to point 4; thence S.25 deg. 00E., 12.00 m. to point of beginning; containing an area of THREE HUNDRED SIXTY SQUARE METERS (360, more or less. All points referred to are indicated on the plan and on the ground are marked by P.L.S. Conc. Mons. 15 x 60 cm.; bearings true; declination 0 deg. 50E., date of the original survey, April 8 to July 15, 1920, and that of the consolidation and subdivision survey, April 24 to 26, 1941. A parcel of land (Lot No. 14, of the consolidation and subdivision plan Pcs-988, being a portion of the consolidated Lot No. 26, Block No. 6, Psd-127, and Lots Nos. 27-A and 27-B, Psd-14901, G.L.R.O. Record No. 917), situated in the District of Cubao, Quezon City, Island of Luzon. Bounded on the NE., by Lot No. 4 of the consolidation and subdivision plan; on the SE., by Lot No. 15, of the consolidation and subdivision plan; on the SW., by Lot No. 3 of the consolidation and subdivision plan; and on the NW., by Lot No. 13 of the consolidation and subdivision plan. Beginning at the point marked 1 on plan, being S.78 deg. 48W., 4258.20 m. more or less from B.L.L.M. No. 1, Mp. of Mariquina; thence S. 25 deg. 00E., 12.00 m. to point 2; thence S. 65 deg. 00W., 30.00 m. to point 3; thence S. 65 deg. 00W., 12.00 m. to point 4; thence N.64 deg. 58E., 30.00 m. to the point of beginning; containing an area of THREE HUNDRED SIXTY SQUARE METERS (360), more or less. All points referred to are indicated on the plan and on the ground are marked by P.L.S. Conc. Mons. 15 x 60 cm.; bearings true; declination 0 deg. 50E., date of the original survey, April 8 to July 15, 1920, and that of the consolidation and subdivision survey, April 24 to 26, 1941. That for and in consideration of the sum of FORTY THREE THOUSAND PESOS (P43,000.00) PHILIPPINE CURRENCY, to me in hand paid by NATIVIDAD P. NAZARENO, Filipino, single, of legal age and a resident of the Mun. of Naic, Prov. of Cavite, Philippines, the receipt whereof is acknowledged to my entire satisfaction, I do hereby CEDE, SELL, TRANSFER, CONVEY and ASSIGN unto the said Natividad P. Nazareno, her heirs, administrators and assigns, all my title, rights, interests and participations to the abovedescribed parcels of land with the

improvements thereon, with the exception of LOT NO. 11 COVERED BY T.C.T. NO. 118886, free of any and all liens and encumbrances; and That for and in consideration of the sum of FOUR THOUSAND EIGHT HUNDRED PESOS (P4,800.00) PHILIPPINE CURRENCY, to me in hand paid by NATIVIDAD P. NAZARENO, Filipino, single, of legal age and a resident of the Mun. of Naic, Prov. of Cavite, Philippines, the receipt whereof is acknowledged to my entire satisfaction, I do hereby CEDE, SELL, TRANSFER, CONVEY and ASSIGN unto the said Natividad P. Nazareno, her heirs, administrators and assigns, all my title, rights, interests and participations in and to Lot No. 11 covered by T.C.T. No. 118886 above-described, free of any and all liens and encumbrances, with the understanding that the title to be issued in relation hereto shall be separate and distinct from the title to be issued in connection with Lots Nos. 13 and 14, although covered by the same title. IN WITNESS WHEREOF, I have hereunto signed this deed of absolute sale in the City of Manila, Philippines, this 29th day of January, 1970.[2]
By virtue of this deed, transfer certificates of title were issued to Natividad, to wit: TCT No. 162738 (Lot 3-B),[3] TCT No. 162739 (Lot 3),[4]TCT No. 162735 (Lot 10),[5] TCT No. 162736 (Lot 11),[6] and TCT No. 162737 (Lots 13 and 14),[7] all of the Register of Deeds of Quezon City. Among the lots covered by the above Deed of Sale is Lot 3-B which is registered under TCT No. 140946. This lot had been occupied by Romeo, his wife Eliza, and by Maximino, Jr. since 1969. Unknown to Romeo, Natividad sold Lot 3-B on July 31, 1982 to Maximino, Jr.,[8] for which reason the latter was issued TCT No. 293701 by the Register of Deeds of Quezon City.[9] When Romeo found out about the sale to Maximino, Jr., he and his wife Eliza locked Maximino, Jr. out of the house. On August 4, 1983, Maximino, Jr. brought an action for recovery of possession and damages with prayer for writs of preliminary injunction and mandatory injunction with the Regional Trial Court of Quezon City. On December 12, 1986, the trial court ruled in favor of Maximino, Jr. In CA-G.R. CV No. 12932, the Court of Appeals affirmed the decision of the trial court.[10] On June 15, 1988, Romeo in turn filed, on behalf of the estate of Maximino, Sr., the present case for annulment of sale with damages against Natividad and Maximino, Jr. The case was filed in the Regional Trial Court of Quezon City, where it was docketed as Civil Case No. 88-58.[11]Romeo sought the declaration of nullity of the sale made on January 29, 1970 to Natividad and that made on July 31, 1982 to Maximino, Jr. on the ground that both sales were void for lack of consideration. On March 1, 1990, Natividad and Maximino, Jr. filed a third-party complaint against the spouses Romeo and Eliza.[12] They alleged that Lot 3, which was included in the Deed of Absolute Sale of January 29, 1970 to Natividad, had been surreptitiously

appropriated by Romeo by securing for himself a new title (TCT No. 277968) in his name.[13] They alleged that Lot 3 is being leased by the spouses Romeo and Eliza to third persons. They therefore sought the annulment of the transfer to Romeo and the cancellation of his title, the eviction of Romeo and his wife Eliza and all persons claiming rights from Lot 3, and the payment of damages. The issues having been joined, the case was set for trial. Romeo presented evidence to show that Maximino and Aurea Nazareno never intended to sell the six lots to Natividad and that Natividad was only to hold the said lots in trust for her siblings. He presented the Deed of Partition and Distribution dated June 28, 1962 executed by Maximino Sr. and Aurea and duly signed by all of their children, except Jose, who was then abroad and was represented by their mother, Aurea. By virtue of this deed, the nine lots subject of this Deed of Partition were assigned by raffle as follows: 1. Romeo - Lot 25-L (642 m2) 2. Natividad - Lots 23 (312 m2) and 24 (379 m2) 3. Maximino, Jr. - Lots 6 (338 m2) and 7 (338 m2) 4. Pacifico - Lots 13 (360 m2) and 14 (360 m2) 5. Jose - Lots 10 (360 m2) and 11 (360 m2) Romeo received the title to Lot 25-L under his name,[14] while Maximino, Jr. received Lots 6 and 7 through a Deed of Sale dated August 16, 1966 for the amount of P9,500.00.[15] Pacifico and Joses shares were allegedly given to Natividad, who agreed to give Lots 10 and 11 to Jose, in the event the latter came back from abroad. Natividads share, on the other hand, was sold to third persons[16] because she allegedly did not like the location of the two lots. But, Romeo said, the money realized from the sale was given to Natividad. Romeo also testified that Lot 3-B was bought for him by his father, while Lot 3 was sold to him for P7,000.00 by his parents on July 4, 1969. [17] However, he admitted that a document was executed by his parents transferring six properties in Quezon City, i.e., Lots 3, 3-B, 10, 11, 13, and 14, to Natividad. Romeo further testified that, although the deeds of sale executed by his parents in their favor stated that the sale was for a consideration, they never really paid any amount for the supposed sale. The transfer was made in this manner in order to avoid the payment of inheritance taxes.[18] Romeo denied stealing Lot 3 from his sister but instead claimed that the title to said lot was given to him by Natividad in 1981 after their father died. Natividad and Maximino, Jr. claimed that the Deed of Partition and Distribution executed in 1962 was not really carried out. Instead, in December of 1969, their parents offered to sell to them the six lots in Quezon City, i.e., Lots 3, 3-B, 10, 11, 13 and 14. However, it was only Natividad who bought the six properties because she was the only one financially able to do so. Natividad said she sold Lots 13 and 14 to Ros-Alva Marketing Corp.[19] and Lot 3-B to Maximino, Jr. for P175,000.00.[20] Natividad admitted that Romeo and the latters wife were occupying Lot 3-B at that time and that she did not tell the latter about the sale she had made to Maximino, Jr.

Natividad said that she had the title to Lot 3 but it somehow got lost. She could not get an original copy of the said title because the records of the Registrar of Deeds had been destroyed by fire. She claimed she was surprised to learn that Romeo was able to obtain a title to Lot 3 in his name. Natividad insisted that she paid the amount stated in the Deed of Absolute Sale dated January 29, 1970. She alleged that their parents had sold these properties to their children instead of merely giving the same to them in order to impose on them the value of hardwork. Natividad accused Romeo of filing this case to harass her after Romeo lost in the action for recovery of possession (Civil Case No. Q-39018) which had been brought against him by Maximino, Jr. It appears that before the case filed by Romeo could be decided, the Court of Appeals rendered a decision in CA-GR CV No. 12932 affirming the trial courts decision in favor of Maximino, Jr. On August 10, 1992, the trial court rendered a decision, the dispositive portion of which states:

WHEREFORE, judgment is hereby rendered declaring the nullity of the Deed of Sale dated January 29, 1970. Except as to Lots 3, 3-B, 13 and 14 which had passed on to third persons, the defendant Natividad shall hold the rest in trust for Jose Nazareno to whom the same had been adjudicated. The Register of Deeds of Quezon City is directed to annotate this judgment on Transfer Certificate of Titles Nos. 162735 and 162736 as a lien in the titles of Natividad P. Nazareno. The defendants counterclaim is dismissed. Likewise, the third-party complaint is dismissed. The defendants are hereby directed to pay to the plaintiff jointly and severally the sum of P30,000 as and for attorneys fees. Likewise, the third-party plaintiff is directed to pay the third-party defendants attorneys fees of P20,000. All other claims by one party against the other are dismissed. SO ORDERED.[21]
Natividad and Maximino, Jr. filed a motion for reconsideration. As a result, on October 14, 1992 the trial court modified its decision as follows:

WHEREFORE, the plaintiffs Partial Motion for Reconsideration is hereby granted. The judgment dated August 10, 1992 is hereby amended, such that the first paragraph of its dispositive portion is correspondingly modified to read as follows: WHEREFORE, judgment is hereby rendered declaring the nullity of the Deeds of Sale dated January 29, 1970 and July 31, 1982.

Except as to Lots 3, 13 and 14 which had passed on to third person, the defendant Natividad shall hold the rest OF THE PROPERTIES COVERED BY THE DEED OF SALE DATED JANUARY 29, 1970 (LOTS 10 and 11) in trust for Jose Nazareno to whom the same had been adjudicated. The Register of Deeds of Quezon City is directed to annotate this judgment on Transfer Certificates of Title No. 162735 and 162736 as a lien on the titles of Natividad P. Nazareno. LIKEWISE, THE SAID REGISTER OF DEEDS IS DIRECTED TO CANCEL TCT NO. 293701 (formerly 162705) OVER LOT 3-B AND RESTORE TCT NO. 140946 IN THE NAME OF MAXIMINO NAZARENO SR. AND AUREA POBLETE.[22]
On appeal to the Court of Appeals, the decision of the trial court was modified in the sense that titles to Lot 3 (in the name of Romeo Nazareno) and Lot 3-B (in the name of Maximino Nazareno, Jr.), as well as to Lots 10 and 11 were cancelled and ordered restored to the estate of Maximino Nazareno, Sr. The dispositive portion of the decision dated May 29, 1998 reads:

WHEREFORE, the appeal is GRANTED. The decision and the order in question are modified as follows: 1. The Deed of Absolute Sale dated 29 January 1970 and the Deed of Absolute Sale dated 31 July 1982 are hereby declared null and void; 2. Except as to Lots 13 and 14 ownership of which has passed on to third persons, it is hereby declared that Lots 3, 3-B, 10 and 11 shall form part of the estate of the deceased Maximino Nazareno, Sr.; 3. The Register of Deeds of Quezon City is hereby ordered to restore TCT No. 140946 (covering Lot 3-B), TCT No. 132019 (covering Lot 3), TCT No. 118885 (covering Lot 10), and TCT No. 118886 (covering Lot 11).[23]
Petitioners filed a motion for reconsideration but it was denied in a resolution dated May 27, 1999. Hence this petition. Petitioners raise the following issues:
1. WHETHER OR NOT THE UNCORROBORATED TESTIMONY OF PRIVATE RESPONDENT ROMEO P. NAZARENO CAN DESTROY THE FULL FAITH AND CREDIT ACCORDED TO NOTARIZED DOCUMENTS LIKE THE DEED OF ABSOLUTE SALE DATED JANUARY 29, 1970 (EXH. 1) EXECUTED BY THE DECEASED SPOUSES MAXIMINO A. NAZARENO, SR. AND AUREA POBLETE IN FAVOR OF PETITIONER NATIVIDAD P. NAZARENO.

2. WHETHER OR NOT THE RESPONDENT COURT GROSSLY MISAPPRECIATED THE FACTS OF THE CASE WITH RESPECT TO THE VALIDITY OF THE SAID DEED OF ABSOLUTE SALE DATED JANUARY 29, 1970 (EXH. 1) IN THE LIGHT OF THE FOLLOWING: A) THE DOCUMENTARY EVIDENCE, ALL OF WHICH ARE NOTARIZED, EXECUTED BY THE DECEASED SPOUSES DURING THEIR LIFETIME INVOLVING SOME OF THEIR CONJUGAL PROPERTIES. B) THE EXECUTION OF AN EXTRA-JUDICIAL PARTITION WITH WAIVER OF RIGHTS AND CONFIRMATION OF SALE DATED MAY 24, 1975 (EXH. 14A) OF THE ESTATE OF AUREA POBLETE BY THE DECEASED MAXIMINO A. NAZARENO, SR. AND THEIR CHILDREN INVOLVING THE ONLY REMAINING ESTATE OF AUREA POBLETE THUS IMPLIEDLY ADMITTING THE VALIDITY OF PREVIOUS DISPOSITIONS MADE BY SAID DECEASED SPOUSES ON THEIR CONJUGAL PROPERTIES, HALF OF WHICH WOULD HAVE BECOME A PART OF AUREA POBLETES ESTATE UPON HER DEMISE. C) THE ADMISSION MADE BY MAXIMINO A. NAZARENO, SR. IN HIS TESTIMONY IN OPEN COURT ON AUGUST 13, 1980 DURING HIS LIFETIME IN CIVIL CASE NO. NC-712 (EXH. 81, 81B) THAT HE HAD SOLD CERTAIN PROPERTIES IN FAVOR OF NATIVIDAD P. NAZARENO THUS BELYING THE CLAIM OF ROMEO P. NAZARENO THAT THE DEED OF ABSOLUTE SALE DATED JANUARY 29, 1970 IS ONE AMONG THE DOCUMENTS EXECUTED BY THE DECEASED SPOUSES TO BE WITHOUT CONSIDERATION. D) THE ADMISSIONS MADE BY ROMEO P. NAZARENO HIMSELF CONTAINED IN A FINAL DECISION OF THE RESPONDENT COURT IN CA-GR CV NO. 12932 DATED AUGUST 31, 1992 AND AN ANNEX APPEARING IN HIS ANSWER TO THE COMPLAINT IN CIVIL CASE NO. Q-39018 (EXH. 11-B) INVOLVING LOT 3B, ONE OF THE PROPERTIES IN QUESTION THAT THE SAID PROPERTY IS OWNED BY PETITIONER NATIVIDAD P. NAZARENO. E) THE PARTIAL PROJECT OF PARTITION DATED MAY 24, 1995 WHICH WAS APPROVED BY THE INTESTATE COURT IN SP. PROC. NO. NC-28 AND EXECUTED IN ACCORDANCE WITH THE LATTER COURTS FINAL ORDER DATED JULY 9, 1991 DETERMINING WHICH WERE THE REMAINING PROPERTIES OF THE ESTATE. 3. WHETHER OR NOT THE DEED OF ABSOLUTE SALE DATED JANUARY 29, 1970 EXECUTED BY THE DECEASED SPOUSES MAXIMINO A. NAZARENO, SR. AND AUREA POBLETE DURING THEIR LIFETIME INVOLVING THEIR CONJUGAL PROPERTIES IS AN INDIVISIBLE CONTRACT? AND IF SO WHETHER OR NOT UPON THEIR DEATH, THE ESTATE OF MAXIMINO A. NAZARENO, SR. ALONE CAN SEEK THE ANNULMENT OF SAID SALE? 4. WHETHER OR NOT THE SALE OF LOT 3 UNDER THE DEED OF ABSOLUTE SALE DATED JANUARY 29, 1970 IN FAVOR OF PETITIONER NATIVIDAD P. NAZARENO, IS VALID CONSIDERING THAT AS PER THE ORDER OF THE LOWER COURT DATED NOVEMBER 21, 1990. ROMEO NAZARENO ADMITTED THAT HE DID NOT PAY THE CONSIDERATION STATED IN THE DEED OF ABSOLUTE SALE DATED JULY 4, 1969 EXECUTED BY THE DECEASED SPOUSES IN HIS FAVOR (EXH. M-2).

5. WHETHER OR NOT AS A CONSEQUENCE, THE TITLE ISSUED IN THE NAME OF ROMEO P. NAZARENO, TCT NO. 277968 (EXH. M) SHOULD BE CANCELLED AND DECLARED NULL AND VOID AND A NEW ONE ISSUED IN FAVOR OF NATIVIDAD P. NAZARENO PURSUANT TO THE DEED OF ABSOLUTE SALE EXECUTED IN THE LATTERS FAVOR ON JANUARY 29, 1970 BY THE DECEASED SPOUSES.[24]

We find the petition to be without merit. First. Petitioners argue that the lone testimony of Romeo is insufficient to overcome the presumption of validity accorded to a notarized document. To begin with, the findings of fact of the Court of Appeals are conclusive on the parties and carry even more weight when these coincide with the factual findings of the trial court. This Court will not weigh the evidence all over again unless there is a showing that the findings of the lower court are totally devoid of support or are clearly erroneous so as to constitute serious abuse of discretion. [25] The lone testimony of a witness, if credible, is sufficient. In this case, the testimony of Romeo that no consideration was ever paid for the sale of the six lots to Natividad was found to be credible both by the trial court and by the Court of Appeals and it has not been successfully rebutted by petitioners. We, therefore, have no reason to overturn the findings by the two courts giving credence to his testimony. The fact that the deed of sale was notarized is not a guarantee of the validity of its contents. As held in Suntay v. Court of Appeals:[26]

Though the notarization of the deed of sale in question vests in its favor the presumption of regularity, it is not the intention nor the function of the notary public to validate and make binding an instrument never, in the first place, intended to have any binding legal effect upon the parties thereto. The intention of the parties still and always is the primary consideration in determining the true nature of a contract.
Second. Petitioners make capital of the fact that in C.A.-G.R. CV No. 12932, which was declared final by this Court in G.R. No. 107684, the Court of Appeals upheld the right of Maximino, Jr. to recover possession of Lot 3-B. In that case, the Court of Appeals held:

As shown in the preceding disquisition, Natividad P. Nazareno acquired the property in dispute by purchase in 1970. She was issued Transfer Certificate of Title No. 162738 of the Registry of Deeds of Quezon City. When her parents died, her mother Aurea Poblete-Nazareno in 1970 and her father Maximino A. Nazareno, Sr. in 1980, Natividad P. Nazareno had long been the exclusive owner of the property in question. There was no way therefore that the aforesaid property could belong to the estate of the spouses Maximino Nazareno, Sr. and Aurea Poblete. The mere fact that Romeo P. Nazareno included the same property in an inventory of the properties of the deceased Maximino A. Nazareno, Sr. will not adversely affect the ownership of the said realty. Appellant Romeo P. Nazarenos suspicion that his parents had

entrusted all their assets under the care and in the name of Natividad P. Nazareno, their eldest living sister who was still single, to be divided upon their demise to all the compulsory heirs, has not progressed beyond mere speculation. His barefaced allegation on the point not only is without any corroboration but is even belied by documentary evidence. The deed of absolute sale (Exhibit B), being a public document (Rule 132, Secs. 19 and 23, Revised Rules on Evidence), is entitled to great weight; to contradict the same, there must be evidence that is clear, convincing and more than merely preponderant (Yturralde vs. Aganon, 28 SCRA 407; Favor vs. Court of Appeals, 194 SCRA 308). Defendants-appellants own conduct disproves their claim of co-ownership over the property in question. Being themselves the owner of a ten-unit apartment building along Stanford St., Cubao Quezon City, defendants-appellants, in a letter of demand to vacate addressed to their tenants (Exhibits P, P-1 and P-2) in said apartment, admitted that the house and lot located at No. 979 Aurora Blvd., Quezon City where they were residing did not belong to them. Also, when they applied for a permit to repair the subject property in 1977, they stated that the property belonged to and was registered in the name of Natividad P. Nazareno. Among the documents submitted to support their application for a building permit was a copy of TCT No. 162738 of the Registry of Deeds of Quezon City in the name of Natividad Nazareno (Exhibit O and submarkings; tsn March 15, 1985, pp. 4-5).[27]
To be sure, that case was for recovery of possession based on ownership of Lot 3B. The parties in that case were Maximino, Jr., as plaintiff, and the spouses Romeo and Eliza, as defendants. On the other hand, the parties in the present case for annulment of sale are the estate of Maximino, Sr., as plaintiff, and Natividad and Maximino, Jr., as defendants. Romeo and Eliza were named third-party defendants after a third-party complaint was filed by Natividad and Maximino, Jr. As already stated, however, this third-party complaint concerned Lot 3, and not Lot 3-B. The estate of a deceased person is a juridical entity that has a personality of its own.[28] Though Romeo represented at one time the estate of Maximino, Sr., the latter has a separate and distinct personality from the former. Hence, the judgment in CA-GR CV No. 12932 regarding the ownership of Maximino, Jr. over Lot 3-B binds Romeo and Eliza only, and not the estate of Maximino, Sr., which also has a right to recover properties which were wrongfully disposed. Furthermore, Natividads title was clearly not an issue in the first case. In other words, the title to the other five lots subject of the present deed of sale was not in issue in that case. If the first case resolved anything, it was the ownership of Maximino, Jr. over Lot 3-B alone. Third. Petitioners allege that, as shown by several deeds of sale executed by Maximino, Sr. and Aurea during their lifetime, the intention to dispose of their real properties is clear. Consequently, they argue that the Deed of Sale of January 29, 1970 should also be deemed valid.

This is a non-sequitur. The fact that other properties had allegedly been sold by the spouses Maximino, Sr. and Aurea does not necessarily show that the Deed of Sale made on January 29, 1970 is valid. Romeo does not dispute that their parents had executed deeds of sale. The question, however, is whether these sales were made for a consideration. The trial court and the Court of Appeals found that the Nazareno spouses transferred their properties to their children by fictitious sales in order to avoid the payment of inheritance taxes. Indeed, it was found both by the trial court and by the Court of Appeals that Natividad had no means to pay for the six lots subject of the Deed of Sale.

All these convince the Court that Natividad had no means to pay for all the lots she purportedly purchased from her parents. What is more, Romeos admission that he did not pay for the transfer to him of lots 3 and 25-L despite the considerations stated in the deed of sale is a declaration against interest and must ring with resounding truth. The question is, why should Natividad be treated any differently, i.e., with consideration for the sale to her, when she is admittedly the closest to her parents and the one staying with them and managing their affairs? It just seems without reason. Anyway, the Court is convinced that the questioned Deed of Sale dated January 29, 1970 (Exh. A or 1) is simulated for lack of consideration, and therefore ineffective and void.[29]
In affirming this ruling, the Court of Appeals said:

Facts and circumstances indicate badges of a simulated sale which make the Deed of Absolute Sale dated 29 January 1970 void and of no effect. In the case of Suntay vs. Court of Appeals (251 SCRA 430 [1995]), the Supreme Court held that badges of simulation make a deed of sale null and void since parties thereto enter into a transaction to which they did not intend to be legally bound. It appears that it was the practice in the Nazareno family to make simulated transfers of ownership of real properties to their children in order to avoid the payment of inheritance taxes. Per the testimony of Romeo, he acquired Lot 25-L from his parents through a fictitious or simulated sale wherein no consideration was paid by him.He even truthfully admitted that the sale of Lot 3 to him on 04 July 1969 (Deed of Absolute Sale, Records, Vol. II, p. 453) likewise had no consideration. This document was signed by the spouses Max, Sr. and Aurea as vendors while defendant-appellant Natividad signed as witness.[30]
Fourth. Petitioners argue further:

The Deed of Absolute Sale dated January 29, 1970 is an indivisible contract founded on an indivisible obligation. As such, it being indivisible, it can not be annulled by

only one of them. And since this suit was filed only by the estate of Maximino A. Nazareno, Sr. without including the estate of Aurea Poblete, the present suit must fail. The estate of Maximino A. Nazareno, Sr. can not cause its annulment while its validity is sustained by the estate of Aurea Poblete.[31]
An obligation is indivisible when it cannot be validly performed in parts, whatever may be the nature of the thing which is the object thereof.The indivisibility refers to the prestation and not to the object thereof.[32] In the present case, the Deed of Sale of January 29, 1970 supposedly conveyed the six lots to Natividad. The obligation is clearly indivisible because the performance of the contract cannot be done in parts, otherwise the value of what is transferred is diminished. Petitioners are therefore mistaken in basing the indivisibility of a contract on the number of obligors. In any case, if petitioners only point is that the estate of Maximino, Sr. alone cannot contest the validity of the Deed of Sale because the estate of Aurea has not yet been settled, the argument would nonetheless be without merit. The validity of the contract can be questioned by anyone affected by it. [33] A void contract is inexistent from the beginning. Hence, even if the estate of Maximino, Sr. alone contests the validity of the sale, the outcome of the suit will bind the estate of Aurea as if no sale took place at all. Fifth. As to the third-party complaint concerning Lot 3, we find that this has been passed upon by the trial court and the Court of Appeals. As Romeo admitted, no consideration was paid by him to his parents for the Deed of Sale. Therefore, the sale was void for having been simulated.Natividad never acquired ownership over the property because the Deed of Sale in her favor is also void for being without consideration and title to Lot 3 cannot be issued in her name. Nonetheless, it cannot be denied that Maximino, Sr. intended to give the six Quezon City lots to Natividad. As Romeo testified, their parents executed the Deed of Sale in favor of Natividad because the latter was the only female and the only unmarried member of the family.[34] She was thus entrusted with the real properties in behalf of her siblings. As she herself admitted, she intended to convey Lots 10 and 11 to Jose in the event the latter returned from abroad. There was thus an implied trust constituted in her favor. Art. 1449 of the Civil Code states:

There is also an implied trust when a donation is made to a person but it appears that although the legal estate is transmitted to the donee, he nevertheless is either to have no beneficial interest or only a part thereof.
There being an implied trust, the lots in question are therefore subject to collation in accordance with Art. 1061 which states:

Every compulsory heir, who succeeds with other compulsory heirs, must bring into the mass of the estate any property or right which he may have received from the decedent, during the lifetime of the latter, by way of donation, or any other gratuitous

title, in order that it may be computed in the determination of the legitime of each heir, and in the account of the partition.
As held by the trial court, the sale of Lots 13 and 14 to Ros-Alva Marketing, Corp. on April 20, 1979[35] will have to be upheld for Ros-Alva Marketing is an innocent purchaser for value which relied on the title of Natividad. The rule is settled that every person dealing with registered land may safely rely on the correctness of the certificate of title issued therefor and the law will in no way oblige him to go behind the certificate to determine the condition of the property.[36] WHEREFORE, the decision of the Court of Appeals is AFFIRMED.
SO ORDERED. Bellosillo, (Chairman), Quisumbing, and De Leon, Jr., JJ., concur. Buena, J., no part.

[1]

Per Justice Buenaventura J. Guerrero and concurred in by Justice Arturo B. Buena (now Associate Justice of the Supreme Court) and Justice Portia Alio-Hormachuelos. [2] Rollo, pp. 170-173. [3] Records, p. 567. [4] This was alleged by Natividad Nazareno in her third-party complaint. No copy of the TCT was presented in court; Rollo, p. 55. [5] Records, p. 563. [6] Id., p. 564. [7] Id., p. 565. [8] Id., pp. 11-12. [9] Id., p. 568. [10] Rollo, p. 72. [11] Id., p. 49. [12] Id., p. 55. [13] Records, p. 450. [14] Id., p. 446. [15] Rollo, pp. 165-166. [16] Records, pp. 579-580. [17] See Records, p. 453. [18] TSN, pp. 31-32, April 10, 1991. [19] Rollo, pp. 242-243. [20] Records, pp. 11-12. [21] Rollo, p. 104. [22] Id., pp. 107-108. [23] CA Decision, p. 17; Rollo, p. 142. [24] Rollo, pp. 28-30. [25] Fortune Motors (Phils.) Corp. v. Court of Appeals, 267 SCRA 653, 669 (1997). [26] 251 SCRA 430, 452 (1995). [27] Rollo, pp. 82-83. [28] Limjoco v. Intestate Estate of Fragante, 80 Phil. 776 (1948). [29] Rollo, p. 103. [30] Id., p. 140. [31] Id., p. 44. [32] 4 A. TOLENTINO, CIVIL CODE OF THE PHILIPPINES, 254 (1991). [33] Id., p. 632.

[34] [35]

Rollo, p. 94. Records, pp. 658-659. [36] Cruz v. Court of Appeals, 281 SCRA 491, 496 (1997).

Republic of the Philippines SUPREME COURT Manila EN BANC

G.R. No. 117577 December 1, 1995 ALEJANDRO B. TY AND MVR PICTURE TUBE, INC., petitioners, vs. THE HON. AURELIO C. TRAMPE, in his capacity as Judge of the Regional Trial Court of Pasig, Metro Manila, THE HON. SECRETARY OF FINANCE, THE MUNICIPAL ASSESSOR OF PASIG AND THE MUNICIPAL TREASURER OF PASIG, respondents.

PANGANIBAN, J.: ARE THE INCREASED REAL ESTATE TAXES imposed by and being collected in the Municipality (now City) of Pasig, effective from the year 1994, valid an legal? This is the question brought before this Court for resolution. The Parties Petitioner Alejandro B. Ty is a resident of and registered owner of lands and buildings in the Municipality (now City) of Pasig, while petitioner MVR Picture Tube, Inc. is a corporation duly organized and existing under Philippine laws and is likewise a registered owner of lands and buildings in said Municipality 1 . Respondent Aurelio C. Trampe is being sued in his capacity as presiding judge of Branch 163. Regional Trial Court of the National Capital Judicial Region, sitting in Pasig, whose Decision dated 14 July 1994 and Order dated 30 September 1994 in Special Civil Action No. 629 (entitled "Alejandro B. Ty and MVR Picture Tube, Inc. vs. The Hon. Secretary of Finance. et al.") are sought to be set aside. Respondent Secretary of Finance is impleaded as the government officer who approved the Schedule of Market Values used as basis for the new tax assessments being enforced by respondents Municipal Assessor and Municipal Treasurer of Pasig and the legality of which is being questioned in this petition 2 . The Antecedent Facts On 06 January 1994, respondent Assessor sent a notice of assessment respecting certain real properties of petitioners located in Pasig, Metro Manila. In a letter dated 18 March 1994, petitioners through counsel "request(ed) the Municipal Assessor to reconsider the subject assessments" 3 .

Not satisfied, petitioners on 29 March 1994 filed with the Regional Trial Court of the National Capital Judicial Region, Branch 163, presided over by respondent Judge, a Petition for Prohibition with prayer for a restraining order and/or writ of preliminary injunction to declare null and void the new tax assessments and to enjoin the collection of real estate taxes based on said assessments. In a Decision 4 dated 14 July 1994, respondent Judge denied the petition "for lack of merit" in the following disposition. WHEREFORE, foregoing premises considered, petitioners' prayer to declare unconstitutional the schedule of market values as prepared by the Municipal Assessor of Pasig, Metro Manila, and to enjoin permanently the Municipal Treasurer of Pasig, Metro Manila, from collecting the real property taxes based thereof (sic) is hereby DENIED for lack of merit. Cost (sic) de oficio. Subsequently, petitioners' Motion for Reconsideration was also denied by respondent Judge in an Order 5 dated 30 September 1994. Rebuffed by said Decision and Order, petitioners filed this present Petition for Review directly before this Court, raising pure questions of law and assigning the following errors: The Court a quo gravely erred in holding that Presidential Decree No. 921 was expressly repealed by R.A. 7160 and that said presidential decree including its Implementing Rules (P.D. 464) went down to the statutes' graveyard together with the other decision(s) of the Supreme Court affecting the same. The Court a quo while holding that the new tax assessments have tremendously increased ranging from 418.8% to 570%, gravely erred in blaming petitioners for their failure to exhaust administrative remedies provided for by law.
The Court a quo blatantly erred in not declaring the confiscatory and oppressive nature of the assessments as illegal. void ab initio and unconstitutional constituting a deprivation of property without due process of law. 6

In a resolution dated 21 November 1994, this Court, without giving due course to the petition, required respondents to comment thereon. Respondents Municipal Treasurer and Municipal Assessor, through counsel, filed their Comment on 19 December 1994, and respondent Secretary of Finance, through the Solicitor General, submitted his on 11 May 1995. Petitioners filed their Reply to the Comment of respondent Assessor and Treasurer 06 January 1995, and their Reply to that of the respondent Secretary on 18 May 1995. After careful deliberation on the above pleadings, the Court resolved to give due course to the petition, and, inasmuch as the issues are relatively simple, the Court dispensed with requiring the parties to submit further memoranda and instead decided to consider the respondents' respective Comments as their answers and memoranda. Thus the case is now considered submitted for resolution. The Issues The issues brought by the parties for decision by this Court are: 1. Whether Republic Act No. 7160, otherwise known as the Local Government Code of 1991, repealed the provisions of Presidential Decree No. 921; 2. Whether petitioners are required to exhaust administrative remedies prior to seeking judicial relief; and

3. Whether the new tax assessments are oppressive and confiscatory, and therefore unconstitutional. In disposing of the above issues against petitioners, the court a quo ruled that the schedule of market values and the assessments based thereon prepared solely by respondent assessor are valid and legal, they having been prepared in accordance with the provisions of the Local Government Code of 1991 (R.A. 7160). It held also that said Code had effectively repealed the previous law on the matter, P.D. 921, which required, in the preparation of said schedule, joint action by all the city and municipal assessors in the Metropolitan Manila area. The lower court also faulted petitioners with failure to exhaust administrative remedies provided under Sections 226 and 252 of R.A. 7160. Finally, it found the questioned assessments consistent with the "tremendously increased . . . price of real estate anywhere in the country." 7 Stated the court: This Court is inclined to agree with the view of defendants that R.A. 7160 in its repealing clause provide (sic) that Presidential Decree Nos. . . . 464 . . . are hereby repealed and rendered of no force and effect. Hence said presidential decrees including their implementing rules went down to the statutes' graveyard together with the decisions of the Supreme Court on cases effecting (sic) the same. This Court is also in accord with respondents (sic) view that petitioners failed to avail of either Section 226 of R.A. 7160, that is by appealing the assessment of their properties to the Board of Assessment Appeal within sixty 160) days from the date of receipt of the written Notice of Assessment, and if it is true that petitioner (sic) as alleged in their pleadings was not afforded the opportunity to appeal to the board of assessment appeal, then they could have availed of the provisions of Section 252, of the same R.A. 7160 by paying the real estate tax under protest. Because of petitioners (sic) failure to avail of either Sections 226 or 252 of R.A. 7160, they failed to exhaust administratives (sic) remedies provided for by law before bringing the case to Court. (Buayan Cattle Co., Inc. vs. Quintillan, 128 SCRA 276). Therefore the filing of this case before this Court is premature, the same not falling under the exception because the issue involved is not a question of law but of fact (Valmonte vs. Belmonte, Jr., 170 SCRA 256).
Petitioners also alleged that the New Tax Assessments are not only oppressive and confiscatory but also destructive in view of the tremendous increase in its valuation, from P855,360.00 to P4,121,280.00 a marked increase of 418.8% of one of its properties, while the other, from P857,600.00 to P4,374,410.00, an increased (sic) of 510%. This Court agree (sic) with petitioners (sic) observation, but the reality (sic) the price of real property anywhere in the country tremendously increased. This is shown in the Real Estate Monitor of Economic Incorporated (copy attached with the memorandum of respondents). For example real properties in Pasig in 1991 located at the Ortigas Commercial Complex command (sic) a price of P42,000.00 per square meter which price is supported by a case filed before this Court (civil case no. 64506, Jesus Fajardo, et al. vs. Ortigas and Co.) for Recovery (sic) of agents (sic) commission. The property subject of the sale which was also located at the Ortigas Commercial Complex at Pasig, Metro Manila was sold to a Taiwanese at P42,000.00 per square meter. It is therefore not surprising that the assessment of real properties in Pasig has increased tremendously. Had petitioners first exhausted administrative remedies they would have realized the fact that prices of real estate has (sic) tremendously increased and would have known the reason/reasons why.8

In its Order dated 30 September 1994 denying the Motion for Reconsideration, the court a quo ruled:
This Court despite petitioners' exhaustive and thorough research and discussion of the point in issue, is still inclined to sustain the view that P.D. 921 was impliedly repealed by R.A. 7160. P.D. 921 to the mind of this Court is an implementing law of P.D. 464, Sections 3, 6, 9, 12 and 13 of said P.D. provide how certain provisions of P.D. 464 shall be implemented. Since P.D. 464 was expressly repealed by R.A. 7160. P.D. 921 must necessarily be considered repealed, otherwise, what should Sections 3, 6, 9, 12 and 13 of P.D. 921 implement? And, had the law makers intended to have said P.D. 921 remain valid and enforceable they would have provided so in R.A. 7160. Since there is none, P.D. 921 must be considered repealed. 9

Re: The First Issue: Repeal of P.D. 921? To resolve the first issue, it is necessary to revisit the following provisions of law: 1. Section 15 of P.D. No. 464, promulgated on 20 May 1974, otherwise known as the Peal Property Tax Code: Sec. 15. Preparation of Schedule of Values. Before any general revision of property assessments is made, as provided in this Code, there shall be prepared for the province or city a Schedule of Market Value for the different classes of real property therein situated in such form and detail as shall be prescribed by the Secretary of Finance. Said schedule, together with an abstract of the data (on) which it is based, shall be submitted to the Secretary of Finance for review not later than the thirty-first day of December immediately preceding the calendar year the general revision of assessments shall be undertaken. The Secretary of Finance shall have ninety days from the date of receipt within which to review said schedule to determine whether it conforms with the provisions of this Code. 2. Subsequently, on 12 April 1976, P.D. 921 was promulgated, which in Section 9 thereof, states: Sec. 9. Preparation of Schedule of Values for Real Property within the Metropolitan Area. The Schedule of Values that will serve as the basis for the appraisal and assessment for taxation purposes of real properties located within the Metropolitan Area shall be prepared jointly by the City Assessors of the Districts created under Section one hereof, with the City Assessor of Manila acting as Chairman, in accordance with the pertinent provisions of Presidential Decree No. 464, as amended, otherwise known as the Real Property Tax Code, and the implementing rules and regulations thereof issued by the Secretary of Finance. 3. Section One of P.D. 921, referred to above, provides: Sec. 1. Division of Metropolitan Manila into Local Treasury and Assessment Districts. For purposes of effective fiscal management, Metropolitan Manila is hereby divided into the following Local Treasury and Assessment Districts: First District Manila

Second District Quezon City, Pasig, Marikina, Mandaluyong and San Juan Third District Caloocan City, Malabon, Navotas and Valenzuela Fourth District Pasay City, Makati, Paranaque, Muntinlupa, Las Pias, Pateros and Taguig Manila, Quezon City, Caloocan City and Pasay City shall be the respective Centers of the aforesaid Treasury and Assessment Districts. 4. On 01 January 1992, Republic Act No. 7160, otherwise known as the Local Government Code of 1991, took effect. Section 212 of said law is quoted as follows: Sec. 212. Preparation of Schedule of Fair Market Values. Before any general revision of property assessment is made pursuant to the provisions of this Title, there shall be prepared a schedule of fair market values by the provincial, city and the municipal assessors of the municipalities within the Metropolitan Manila Area for the different classes of real property situated in their respective local government units for enactment by ordinance of the sanggunian concerned. The schedule of fair market values shall be published in a newspaper of general circulation in the province, city or municipality concerned, or in the absence thereof, shall be posted in the provincial capitol, city or municipal hall and in two other conspicuous public place therein. 5. The repealing clause of R.A. 7160 found in the Section 534 thereof is hereby reproduced as follows: Sec. 534. Repealing Clause. (a) . . . (b) . . . (c) . . . ; and Presidential Decree Nos. 381, 436, 464, 477, 626, 632, 752, and 1136 are hereby repealed and rendered of no force and effect. xxx xxx xxx (f) All general and special laws, acts, city charter, decrees, executive orders, proclamations and administrative regulations, or part or parts thereof which are inconsistent with any of the provisions of this Code are hereby repealed or modified accordingly. (emphasis supplied) It is obvious from the above provisions of R.A 7160, specifically Sec. 534, that P.D. 921 was NOT EXPRESSLY repealed by said statute. Thus, the question is: Was P.D. 921 IMPLIEDLY repealed by R.A. 7160?

Petitioners contend that, contrary to the aforequoted Decision of the lower court, "whether the assessment is made before or after the effectivity of R.A. 7160, the observance of, and compliance with, the explicit requirement of P.D. 921 is strict and mandatory either" because P.D. 921 was not impliedly repealed by R.A. 7160 and is therefore still the applicable statute, or because the Supreme Court, in three related cases 10 promulgated on 16 December 1993 after the Local Government Code of 1991 already took effect ruled that a schedule of market values and the corresponding assessments based thereon "prepared solely by the city assessor . . . failed to comply with the explicit requirement (of collegial and joint action by all the assessors in the Metropolitan Manila area under P.D. 921) . . . and are on that account illegal and void." On the other hand, respondents aver that Section 9 of P.D. 921 and Section 212 of R.A. 7160 are clearly and unequivocally incompatible because they dwell on the same subject matter, namely, the preparation of a schedule of values for real property within the Metropolitan Manila Area. Under P.D. 921, the schedule shall be preparedjointly by the city assessors of the District, while, under R.A. 7160, such schedule shall be prepared "by the provincial, city and municipal assessors of the municipalities within the Metropolitan Manila area . . . ". Furthermore, they claim that "Section 9 (of P.D. 921) merely supplement(ed) Section 15 of P.D. 464 in so far as the preparation of the schedule of values in Metro Manila (is concerned)." Thus, "with the express repeal of P.D. 464 . . . P.D. 921 . . .can not therefore exist independently on its own." They also argue that although the aforecited Supreme Court decision was promulgated after R.A. 7160 took effect, "the assessment of the Municipal Assessors in those three (3) cited cases were assessed in 1990 prior to the effectivity of the Code." Hence, the doctrine in said cases cannot be applied to those prepared in 1994 under R.A. 7160. We rule for petitioners. R.A. 7160 has a repealing provision (Section 534) and, if the intention of the legislature was to abrogate P.D. 921, it would have included it in such repealing clause, as it did in expressly rendering of no force and effect several other presidential decrees. Hence, any repeal or modification of P.D. 921 can only be possible under par. (f) of said Section 534, as follows: (f) All general and special laws, acts, city charter, decrees, executive orders, proclamations and administrative regulations, part or parts thereof which are inconsistent with any of the provisions of the Code are hereby repealed or modified accordingly. The foregoing partakes of the nature of a general repealing provision. It is a basic rule of statutory construction that repeals by implication are not favored. An implied repeal will not be allowed unless it is convincingly and unambiguously demonstrated that the two laws are so clearly repugnant and patently inconsistent that they cannot co-exist. This is based on the rationale that the will of the legislature cannot be overturned by the judicial function of construction and interpretation. Courts cannot take the place of Congress in repealing statutes. Their function is to try to harmonize, as much as possible, seeming conflicts in the laws and resolve doubts in favor of their validity and coexistence. In Villegas v. Subido, 11 the issue raised before the Court was whether the Decentralization Act had the effect of repealing what was specifically ordained in the Charter of the City of Manila. Under the Charter, it was provided in its Section 22 that "The President of the Philippines with the consent of the Commission on Appointments shall appoint . . . the City Treasurer and his Assistant." Under the Decentralization Act, it was provided that "All other employees, except teachers paid out of provincial, city or municipal general funds and other local funds shall . . . be appointed by the provincial governor, city or municipal mayor upon recommendation of the head of office concerned."

The Court, in holding that there was no implied repeal in this case 12 , said: . . . It has been the constant holding of this Court that repeals by implication are not favored and will not be so declared unless it be manifest that the legislature so intended. Such a doctrine goes as far back as United States v. Reyes, a 1908 decision (10 Phil. 423, Cf. U.S. v. Academia, 10 Phil. 431 [1908]). It is necessary then before such a repeal is deemed to exist that it be shown that the statutes or statutory provisions deal with the same subject matter and that the latter be inconsistent with the former. (Cf. Calderon v. Provincia del Santisimo Rosario, 28 Phil. 164 [1914]). There must be a showing of repugnancy clear and convincing in character. The language used in the latter statute must be such as to render it irreconcilable with what has been formerly enacted. An inconsistency that falls short of that standard does not suffice. What is needed is a manifest indication of the legislative purpose to repeal. [Citing numerous cases] More specifically, a subsequent statute, general in character as to its terms and application, is not to be construed as repealing a special or specific enactment, unless the legislative purpose to do so is manifest. This is so even if the provisions of the latter are sufficiently comprehensive to include what was set forth in the special act. This principle has likewise been consistently applied in decisions of the Court from Manila Railroad Co. v. Rafferty (40 Phil 224), decided as far back as 1919. A citation from an opinion of Justice Tuason is illuminating. Thus: "From another angle the presumption against repeal is stronger. A special law is not regarded as having been amended or repealed by a general law unless the intent to repeal or alter is manifest. Generalia specialibus non derogant. An this is true although the terms of the general act are broad enough to include the matter in the special statute. . . . At any rate, in the event harmony between provisions of this type in the same law or in two laws is impossible, the specific provision controls unless the statute, considered in its entirety, indicates a contrary intention upon the part of the legislature. . . . A general law is one which embraces a class of subjects or places and does not omit any subject or place naturally belonging to such class, while a special act is one which relates to particular persons or things of a class." (citing Valera v. Tuason, 80 Phil. 823, 827-828 [1948].) In the relatively recent case of Mecano vs. Commission on Audit 13 , the Court en banc had occasion to reiterate and to reinforce the rule against implied repeals, as follows: Repeal by implication proceeds on the premise that where a statute of later date clearly reveals an intention on the part of the legislature to abrogate a prior act on the subject, that intention must be given effect. Hence, before there can be a repeal, there must be a clear showing on the part of the law maker that the intent in enacting the new law was to abrogate the old one. The intention to repeal must be clear and manifest; otherwise, at least, as a general rule, the later act is to be construed as a continuation of, and not a substitute for, the first act and will continue so far as the two acts are the same from the time of the first enactment. There are two categories of repeal by implication. The first is where provisions in the two acts on the same subject matter are in an irreconcilable conflict, the later act to the extent of the conflict constitutes an implied repeal of the earlier one. The second is if the later act covers the whole subject of the earlier one and is clearly intended as a substitute, it will operate to repeal the earlier law.

Implied repeal by irreconcilable inconsistency take place when the two statutes cover the same subject matter; they are so clearly inconsistent and incompatible with each other that they cannot be reconciled or harmonized; and both cannot be given effect, that is that one law cannot be enforced without nullifying the other. In the same vein, but in different words, this Court ruled in Gordon vs. Veridiano 14 : Courts of justice, when confronted with apparently conflicting statutes, should endeavor to reconcile the same instead of declaring outright the invalidity of one as against the other. Such alacrity should be avoided. The wise policy is for the judge to harmonize them if this is possible, bearing in mind that they are equally the handiwork of the same legislature, and so give effect to both while at the same time also according due respect to a coordinate department of the government. It is this policy the Court will apply in arriving at the interpretation of the laws above-cited and the conclusions that should follow therefrom. In the instant case, and using the Courts' standard for implied repeal in Mecano, we compared the two laws. Presidential Decree No. 921 was promulgated on 12 April 1976, with the aim of, inter alia, evolving "a progressive revenue raising program that will not unduly burden the tax payers . . . " 15 in Metropolitan Manila. Hence, it provided for the "administration of local financial services in Metropolitan Manila" only, and for this purpose, divided the area into four Local Treasury and Assessment Districts, regulated the duties and functions of the treasurers and assessors in the cities and municipalities in said area and spelled out the process of assessing, imposing and distributing the proceeds of real estate taxes therein. Upon the other hand, Republic Act No. 7160, otherwise "known and cited as the Local 'Government Code of 1991'" 16 took effect on 01 January 1992 17. It declared "genuine and meaningful local autonomy" as a policy of the state. Such policy was meant to decentralize government "powers, authority, responsibilities and resources" from the national government to the local government units "to enable them to attain their fullest development as self-reliant communities and make them more effective partners in the attainment of national goals." 18 In the formulation and implementation of policies and measures on local autonomy, ''(l)ocal government units may group themselves, consolidate or coordinate their efforts, services and resources for purposes commonly beneficial to them." 19 From the above, it is clear that the two laws are not co-extensive and mutually inclusive in their scope and purpose. While R.A. 7160 covers almost all governmental functions delegated to local government units all over the country, P.D. 921 embraces only the Metropolitan Manila area and is limited to the administration of financial services therein, especially the assessment and collection of real estate (and some other local) taxes. Coming down to specifics, Sec. 9 of P.D. 921 requires that the schedule of values of real properties in the Metropolitan Manila area shall be prepared jointly by the city assessors in the districts created therein: while Sec. 212 of R.A. 7160 states that the schedule shall be prepared "by the provincial, city and municipal assessors of the municipalities within the Metropolitan Manila Area for the different classes of real property situated in their respective local government units for enactment by ordinance of the sanggunian concerned. . . ."

It is obvious that harmony in these provisions is not only possible, but in fact desirable, necessary and consistent with the legislative intent and policy. By reading together and harmonizing these two provisions, we arrive at the following steps in the preparation of the said schedule, as follows: 1. The assessor in each municipality or city in the Metropolitan Manila area shall prepare his/her proposed schedule of values, in accordance with Sec. 212, R.A. 7160. 2. Then, the Local Treasury and Assessment District shall meet, per Sec. 9, P.D. 921. In the instant case, that district shall be composed of the assessors in Quezon City, Pasig, Marikina, Mandaluyong and San Juan, pursuant to Sec. 1 of said P.D. In this meeting, the different assessors shall compare their individual assessments, discuss and thereafter jointly agree and produce a schedule of values for their district, taking into account the preamble of said P.D. that they should evolve "a progressive revenue raising program that will not unduly burden the taxpayers". 3. The schedule jointly agreed upon by the assessors shall then be published in a newspaper of general circulation and submitted to the sanggunian concerned for enactment by ordinance, per Sec. 212, R.A. 7160. By this harmonization, both the preamble of P.D. 921 decreeing that the real estate taxes shall "not unduly burden the taxpayer" and the "operative principle of decentralization" provided under Sec. 3, R.A. 7160 encouraging local government units to "consolidate or coordinate their efforts, services and resources" shall be fulfilled. Indeed the essence of joint local action for common good so cherished in the Local Government Code finds concrete expression in this harmonization. How about respondents' claim that, with the express repeal of P.D. 464, P.D. 921 being merely a "supplement" of said P.D. cannot "exist independently on its own"? Quite the contrary is true. By harmonizing P.D. 921 with R.A. 7160, we have just demonstrated that it can exist outside of P.D. 464, as a support, supplement and extension of R.A. 7160, which for this purpose, has replaced P.D. 464. Since it is now clear that P.D. 921 is still good law, it is equally clear that this Court's ruling in the Mathay/Javier/Puyat-Reyes cases (supra) is still the prevailing and applicable doctrine. And, applying the said ruling in the present case, it is likewise clear that the schedule of values prepared solely by the respondent municipal assessor is illegal and void. Re: The Second Issue: Exhaustion of Administrative Remedies We now come to the second issue. The provisions of Sections 226 and 252 of R.A. 7160 being material to this issue, are set forth below: Sec. 226. Local Board of Assessment Appeals. Any owner or person having legal interest in the property who is not satisfied with the action of the provincial, city or municipal assessor in the assessment of his property may, within sixty (60) days from the date of receipt of the written notice of assessment, appeal to the Board of Assessment Appeals of the province or city by filing a petition under oath in the form prescribed for the purpose, together with copies of the tax declarations and such affidavits or documents submitted in support of the appeal.

Sec. 252. Payment under Protest. (a) No protest shall be entertained unless the taxpayer first pays the tax. There shall be annotated on the tax receipts the words "paid under protest". The protest in writing must be filed within thirty (30) days from payment of the tax to the provincial, city treasurer or municipal treasurer, in the case of a municipality within Metropolitan Manila Area, who shall decide the protest within sixty (60) days from receipt. (b) The tax or a portion thereof paid under protest shall be held in trust by the treasurer concerned. (c) In the event that the protest is finally decided in favor of the taxpayer, the amount or portion of the tax protested shall be refunded to the protestant, or applied as tax credit against his existing or future tax liability. (d) In the event that the protest is denied or upon the lapse of the sixty-day period prescribed in subparagraph (a), the taxpayer may avail of the remedies as provided for in Chapter 3, Title Two, Book II of this Code. Respondents argue that this case is premature because petitioners neither appealed the questioned assessments on their properties to the Board of Assessment Appeal, pursuant to Sec. 226, nor paid the taxes under protest, per Sec. 252. We do not agree. Although as a rule, administrative remedies must first be exhausted before resort to judicial action can prosper, there is a well-settled exception in cases where the controversy does not involve questions of fact but only of law. 20 In the present case, the parties, even during the proceedings in the lower court on 11 April 1994, already agreed "that the issues in the petition are legal" 21 , and thus, no evidence was presented in said court. In laying down the powers of the Local Board of Assessment Appeals, R.A. 7160 provides in Sec. 229 (b) that "(t)he proceedings of the Board shall be conducted solely for the purpose of ascertaining the facts . . . ." It follows that appeals to this Board may be fruitful only where questions of fact are involved. Again, the protest contemplated under Sec. 252 of R.A. 7160 is needed where there is a question as to the reasonableness of the amount assessed. Hence, if a taxpayer disputes the reasonableness of an increase in a real estate tax assessment, he is required to "first pay the tax" under protest. Otherwise, the city or municipal treasurer will not act on his protest. In the case at bench however, the petitioners are questioning the very authority and power of the assessor, acting solely and independently, to impose the assessment and of the treasurer to collect the tax. These are not questions merely of amounts of the increase in the tax but attacks on the very validity of any increase. Finally, it will be noted that in the consolidated cases of Mathay/Javier/Puyat-Reyes cited earlier, the Supreme Court referred the petitions (which similarly questioned the schedules of market values prepared solely by the respective assessors in the local government units concerned) to the Board of Assessment Appeal, not for the latter, to exercise its appellate jurisdiction, but rather to act only as a fact-finding commission. Said the Court 22 thru Chief Justice Andres R. Narvasa: On November 5, 1991, the Court issued a Resolution clarifying its earlier one of May 16, 1991. It pointed out that the authority of the Central Board of Assessment Appeals "to take cognizance of the factual issues raised in these two cases by virtue of the referral by this Court in the exercise of its extraordinary or certiorari jurisdiction should not be confused with its appellate jurisdiction over appealed assessment

cases under Section 36 of P.D. 464 otherwise known as the Real Property Tax Code. The Board is not acting in its appellate jurisdiction in the instant cases but rather, it is acting as a Court-appointed fact-finding commission to assist the Court in resolving the factual issues raised in G.R. Nos. 97618 and 97760." In other words, the Court gave due course to the petitions therein in spite of the fact that the petitioners had not, apriori, exhausted administrative remedies by filing an appeal before said Board. Because there were factual issues raised in the Mathay, et al. cases, the Supreme Court constituted the Central Board of Assessment Appeals as a fact-finding body to assist the Court in resolving said factual issues. But in the instant proceedings, there are no such factual issues. Therefore, there is no reason to require petitioners to exhaust the administrative remedies provided in R.A. 7160, nor to mandate a referral by this Court to said Board. Re: The Third Issue: Constitutionality of the Assessments Having already definitively disposed of the case through the resolution of the foregoing two issues, we find no more need to pass upon the third. It is axiomatic that the constitutionality of a law, regulation, ordinance or act will not be resolved by courts if the controversy can be, as in this case it has been, settled on other grounds. In the recent case of Macasiano vs. National Housing Authority 23 , this Court declared: It is a rule firmly entrenched in our jurisprudence that the constitutionality of an act of the legislature will not be determined by the courts unless that question is properly raised and presented in appropriate cases and is necessary to a determination of the case, i.e., the issue of constitutionality must be the very lis mota presented. To reiterate, the essential requisites for a successful judicial inquiry into the constitutionality of a law are: (a) the existence of an actual case or controversy involving a conflict of legal rights susceptible of judicial determination, (b) the constitutional question must be raised by a proper party, (c) the constitutional question must be raised at the earliest opportunity, and (d) the resolution of the constitutional question must be necessary to the decision of the case. (emphasis supplied) The aforequoted decision in Macasiano merely reiterated the ruling in Laurel vs. Garcia 24, where this Court held:
The Court does not ordinarily pass upon constitutional questions unless these questions are properly raised in appropriate cases and their resolution is necessary for the determination of the case (People v. Vera, 65 Phil. 56 [1937]). The Court will not pass upon a constitutional question although properly presented by the record if the case can be disposed of on some other ground such as the application of a statute or general law (Siler v. Louisville and Nashville R. Co., 213 U.S. 175, [1909], Railroad Commission v. Pullman Co., 312 U.S. 496 [1941]). 25 (emphasis supplied)

In view of the foregoing ruling, the question may be asked: what happens to real estate tax payments already made prior to its promulgation and finality? Under the law 26 , "the taxpayer may file a written claim for refund or credit for taxes and interests . . . ." Finally, this Tribunal would be remiss in its duty as guardian of the judicial branch if we let pass unnoticed the ease by which the respondent Judge consigned "to the statutes' graveyard" a

legislative enactment "together with the (three) decisions of the Supreme Court" promulgated jointly and unanimously en banc. An elementary regard for the sacredness of laws and the stability of judicial doctrines laid down by superior authority should have constrained him to be more circumspect in rendering his decision and to spell out carefully and precisely the reasons for his decision to invalidate such acts, instead of imperiously decreeing an implied repeal. He knows or should have known the legal precedents against implied repeals. Respondent Judge, in his decision, did not even make an attempt to try to reconcile or harmonize the laws involved. Instead, he just unceremoniously swept them and this Court's decisions into the dustbin of "judicial history." In his future acts and decisions, he is admonished to be more judicious in setting aside established laws, doctrines and precedents. WHEREFORE, judgment is hereby rendered REVERSING and SETTING ASIDE the questioned Decision and Order of respondent Judge, DECLARING as null and void the questioned Schedule of Market Values for properties in Pasig City prepared by respondent Assessor, as well as the corresponding assessments and real estate tax increases based thereon; and ENJOINING the respondent Treasurer from collecting the real estate tax increases made on the basis of said Schedule and assessments. No costs. SO ORDERED. Narvasa, C.J., Feliciano, Padilla, Regalado, Davide, Jr., Romero, Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza, Francisco and Hermosisima, Jr., JJ., concur. Footnotes 1 Pars. 1.1 and 1.2, Petition; rollo, p. 15. 2 Pars. 1.3 and 1.4, Petition; rollo, pp. 15-16. 3 Annex "A", Petition; rollo, pp. 49-53. 4 Rollo, pp. 68-76. 5 Rollo, pp. 77-80. 6 Rollo, p. 18. 7 In their Comment, however, respondent Assessor and Treasurer admitted that the "new assessments sent to petitioners on January 26, 1994 seemed to be excessive" even as they justified the same by saying that "no assessments were made since 1983" (rollo, p. 224). Indeed, the undisputed percentages of increases ranging as high as 833% (rollo, p. 26) may appear to be exorbitant. 8 Rollo, pp. 75-76. 9 Rollo, p. 79. 10 Ismael A. Mathay, Jr. vs. Victor Macalincag, et al., G.R. No. 97618; Rufino S. Javier vs. Victor Macalincag, et al., G.R. No. 97760, and Consuelo Puyat-Reyes vs. Secretary of Finance, et al., G.R. No. 102319, 16 December 1993, 228 SCRA 519.

11 41 SCRA 190 [1971]. 12 Id., at pp. 196-198. 13 216 SCRA 500 (11 December 1992) at 505-506. 14 167 SCRA 51 (November 8, 1988) at 58-59. See also, among others, Bocobo vs. Estanislao, 72 SCRA 520 [1916]; Lechoco vs. Civil Aeronautics Board, 43 SCRA 670 [1972]; Valera vs. Tuason, 80 Phil. 823 [1948]. 15 See second "Whereas" clause in the Preamble, P.D. 921. 16 Sec. 1, R.A. 7160. 17 Sec. 536, R.A. 7160. 18 Sec. 2, R.A. 7160. 19 Sec, 3(f), R.A. 7160. 20 Cf. Bagatsing vs. Ramirez, 74 SCRA 306 [1976]; Brett vs. IAC, 191 SCRA 687, 27 November 1990; Sunville Timber Products, Inc. vs. Alfonso G. Abad, 206 SCRA 482 [1992]; Corona vs. CA, 214 SCRA 378 [1992], citing Quisumbing vs. Gumban, 193 SCRA 520 [1991]; Carino, et al., vs. Agricultural Credit and Cooperative Financing Administration, et al., 18 SCRA 183 [1996]; Rocamora vs. RTC Cebu (Branch VIII), 167 SCRA 615 [1988]; Caltex Phils., Inc. vs. Palomar, L-19650, 29 September 1966, 18 SCRA 247. 21 Decision; p. 5; rollo, p. 72. 22 Supra, at p. 523. 23 224 SCRA 236 [1993], at p. 242. 24 187 SCRA 797 [1990], at p. 813. 25 See also Dumlao vs. COMELEC, 95 SCRA 392 [1980]; National Economic Protectionism Association vs. Ongpin, 171 SCRA 657 [1989]; Association of Small Landowners in the Philippines, Inc. vs. Secretary of Agrarian Reform, 175 SCRA 343 [1989]; Garcia vs. Executive Secretary, 204 SCRA 516 [1991]. 26 "Sec. 253. Repayment of Excessive Collections. When an assessment of basic real property tax, or any other tax levied under this Title, is found to be illegal or erroneous and the tax is accordingly reduced or adjusted, the taxpayer may file a written claim for refund or credit for taxes and interests with the provincial or city treasurer within two (2) years from the date the taxpayer is entitled to such reduction or adjustment." (R.A. 7160) Republic of the Philippines SUPREME COURT Manila

EN BANC G.R. No. 78946 April 15, 1988 DR. NENITA PALMA-FERNANDEZ, petitioner, vs. DR. ADRIANO DE LA PAZ, DR. SOSEPATRO AGUILA, and THE SECRETARY OF HEALTH, respondents. Oscar C. Fernandez for petitioner. The Solicitor General for respondents.

MELENCIO-HERRERA, J.: This is a Petition for Quo Warranto filed by petitioner, Dr. Nenita Palma-Fernandez, claiming entitlement to the position of Assistant Director for Professional Services at the East Avenue Medical Center (formerly Hospital ng Bagong Lipunan) alleged to be unlawfully held by private respondent, Dr. Sosepatro Aguila. The background facts follow: On 1 May 1985, petitioner was extended a permanent appointment to the position of Chief of Clinics at the Hospital ng Bagong Lipunan (now East Avenue Medical Center) by then Minister of Health and Chairman of the Board of Governors of the Center, Jesus C. Azurin. Previous to this appointment, petitioner, a career physician, occupied the positions of Medical Specialist I in 1978, Medical Specialist II from October 1982 to April 1985, until her appointment as Chief of Clinics on 1 May 1985. Even during her incumbency as Medical Specialist II, petitioner was already designated as Acting Chief of Clinics since September 1983 up to her permanent appointment to said position. As Chief of Clinics, petitioner exercised direct control and supervision over all heads of departments in the Medical Center In 1986, the new organizational structure of the Center retitled the position of Chief of Clinics to Assistant Director for Professional Services. In partial implementation of this new set-up, respondent Dr. Adriano de la Paz, as Medical Center Chief, issued Hospital Order No. 30, Series of 1986, on 8 August 1986, designating petitioner as Assistant Director of Professional Services (Annex 3, Comment, p. 48, Rollo). As such, she continued to exercise direct control and supervision over all heads of departments in the Medical Center. On 30 January 1987, Executive Order No. 119 known as the "Reorganization Act of the Ministry of Health" was promulgated. On 29 May 1987, respondent De la Paz, as Medical Center Chief, designated respondent Dr. Aguila, who was then Medical Specialist I, as Assistant Director for Professional Services "vice Dr. Nenita Palma-Fernandez, who will be transferred to the Research Office." (Hospital Order No. 21, series of 1987, Annex B, Petition). Said order was purportedly issued "in the interest of the hospital service."

On the same date, Hospital Order No. 22, series of 1987, (Annex C, Petition), was issued by respondent De la Paz, whereby petitioner was relieved "of her present duties and responsibilities as Chief of Clinic and hereby transferred to the Research Office. This order being issued in the interest of the hospital service. Upon receipt of Hospital Order No. 22, petitioner filed on 1 June 1987 a letter-protest with respondent Secretary of Health, furnishing copies to respondents De la Paz and Aguila, as well as to the Commissioner of Civil Service and the Chairman of the Government Reorganization Commission. Failing to secure any action on her protest within a month's time, petitioner filed on 8 July 1987 the instant Petition for Quo Warranto with Preliminary Injunction against respondents Dr. de la Paz, Dr. Aguila, and the Secretary of Health. On 14 July 1987, this Court issued a Temporary Restraining Order enjoining the implementation of Hospital Orders Nos. 21 and 22, series of 1987. After considering and deliberating on all Comments, the Reply, and the Rejoinder of the Solicitor General to said Reply, the Court, on 17 March 1988, Resolved to give due course to the Petition, and dispensing with memoranda, declared the case submitted for resolution. The Solicitor General has aptly framed the issues for resolution as follows: 1. Whether or not respondent De la Paz has the power or authority to issue the two Hospital Orders in question; 2. Whether or not petitioner has a valid cause of action; and 3. Whether or not the rule on exhaustion of administrative remedies precludes the filing of the instant Petition. The Solicitor General, on behalf of the Secretary of Health, makes common cause with petitioner and answers the first and third issues in the negative, and the second in the affirmative. For their part, Respondents De la Paz and Aguila uphold the opposite views. We rule for petitioner. 1. Since the East Avenue Medical Center is one of the National Health Facilities attached to the Department of Health, the power to appoint and remove subordinate officers and employees, like petitioner, is vested in the Secretary of Health, not the Medical Center Chief. The latter's function is confined to recommendation. Thus, Section 79 (D). of the Revised Administrative Code provides: Section 79 (D). Power to appoint and remove. The Department Head, upon the recommendation of the Chief of the bureau or office concerned, shall appoint all subordinate officers and employees whose appointment is not expressly vested by law in the President of the Philippines, and may remove or punish them, except as especially provided otherwise, in accordance with the Civil Service Law... The Department Head also may, from time to time, in the interest of the service, change the distribution among the several bureaus and offices of his Department of the employees or subordinates authorized by law.

Executive Order No. 119, or the Reorganization Act of the Ministry of Health, likewise states: SEC. 26. New Structure and Pattern... The new position structure and staffing pattern of the Ministry shag be prescribed by the Minister within one hundred twenty (120) days from the approval of this executive order subject to approval by the Office of Compensation and Classification and the authorized positions created thereunder shall be filled thereafter with regular appointments by him or the President, as the case may be as herein provided... Respondent Medical Center Chiefs argument that petitioner was not appointed but was merely transferred in the interest of the public service to the Research Office pursuant to Section 24 (c) of Presidential Decree No. 807, or the Civil Service Decree of the Philippines 1 will not alter the situation. Even a transfer requires an appointment, which is beyond the authority of respondent Medical Center Chief to extend, supra. Besides, the transfer was without petitioner's consent, was tantamount to removal without valid cause, and as such is invalid and without any legal effect (Garcia, et al. vs. Lejano, et al., 109 Phil. 116). A removal without cause is violative of the Constitutional guarantee that "no officer or employee of the civil service shall be removed or suspended except for cause provided by law" (Article IX, B, Section 2(3),1987 Constitution). Petitioner's "designation" as Assistant Director for Professional Services on 8 August 1986 in accordance with the organizational structure of the Department of Health under Hospital Order No. 30, Series of 1986, issued by respondent Medical Center Chief did not make her occupancy of that position temporary in character. It bears stressing that the positions of Chief of Clinics and Assistant Director for Professional Services are basically one and the same except for the change in nomenclature. Petitioner's permanent appointment on 1 May 1985 to the position of Chief of Clinics, therefore, remained effective. Neither can respondent Medical Center Chief rely on Section 2, Article III of the Freedom Constitution and its Implementing Rules and Regulations embodied in Executive Order No. 17, Series of 1986. The relevant provision was effective only "within a period of one year from February 25, 1 986." 2 The Hospital Orders in question were issued only on 29 May, 1987. Executive Order No. 119, or the 'Reorganization Act of the Ministry of Health" promulgated on 30 January 1987, neither justifies petitioner's removal. The pertinent provision thereof reads: Sec. 26. New Structure and Pattern. Upon approval of this Executive Order, the officers and employees of the Ministry shall, in a holdover capacity, continue to perform their respective duties and responsibilities and receive the corresponding salaries and benefits unless in the meantime they are separated from government service pursuant to Executive Order No. 17 (1986) or Article III of the Freedom Constitution. The argument that, on the basis of this provision, petitioner's term of office ended on 30 January 1987 and that she continued in the performance of her duties merely in a hold over capacity and could be transferred to another position without violating any of her legal rights, is untenable. The occupancy of a position in a hold over capacity was conceived to facilitate reorganization and would have lapsed on 25 February 1987 (under the Provisional Constitution), but advanced to 2 February 1987 when the 1987 Constitution became effective (De Leon, et al. vs. Hon. Benjamin B. Esquerra, et al., G.R. No. 78059, 31 August 1987). After the said date the provisions of the latter on security of tenure govern.

And while it may be that the designation of respondent Aguila as Assistant Director for Professional Services and the relief of petitioner from the said position were not disapproved by respondent Secretary of Health, it by no means implies that the questioned acts of respondent Medical Center Chief were approved by the former official. 2. It follows from the foregoing disquisition that petitioner has a valid cause of action. Where there is usurpation or intrusion into an office, quo warranto is the proper remedy. (Lota vs. Court of Appeals, No. L-14803, June 30, 1961, 2 SCRA 715). 3. The doctrine on exhaustion of administrative remedies does not preclude petitioner from seeking judicial relief This rule is not a hard and fast one but admits of exceptions among which are that (1) the question in dispute is "purely a legal one" and (2) the controverted act is 'patently illegal" (Carino vs. ACCFA, No. L-19808, September 29,1966,18 SCRA 183). The questions involved here are purely legal. The subject Hospital Orders violated petitioner's constitutional right to security of in tenure and were, therefore, "patently illegal." Judicial intervention was called for to enjoin the implementation of the controverted acts. There was substantial compliance by petitioner with the requirement of exhaustion of administrative remedies since she had filed a letter-protest With the respondent Secretary of Health, with copies furnished the Commissioner of Civil Service, and the Chairman of the Government Reorganization Commission, but the same remained unacted upon and proved an inadequate remedy. Besides, an action for quo warranto must be filed within one year after the cause of action accrues (Sec. 16, Rule 66, Rules of Court), and the pendency of administrative remedies does not operate to suspend the running of the one-year period (Cornejo vs. Secretary of Justice L-32818, June 24, 1974, 57 SCRA 663). WHEREFORE, the Writ of Quo Warranto is granted and petitioner, Dr. Nenita Palma-Fernandez, is hereby held entitled to the position of Assistant Director of Professional Services of the East Avenue Medical Center up to the expiration of her term. The Temporary Restraining Order heretofore issued enjoining the implementation of Hospital Orders Nos. 21 and 22, both dated 29 May 1987, is hereby made permanent. SO ORDERED. Teehankee, Yap, Fernan, Narvasa, Gutierrez, Jr., Cruz, Paras, Feliciano, Gancayco, Padilla, Bidin, Sarmiento, Cortes and Aquino, JJ., concur.

Footnotes 1 SEC. 24. Personnel Actions.... (c) Transfer. A transfer is a movement from one position to another which is of equivalent rank, level, or salary without break in service involving the issuance of an appointment. It shall not be considered disciplinary when made in the interest of public service, in which case, the employee concerned shall be informed of the reasons therefor. If the employee believes that there

is no justification for the transfer, he may appeal his case to the Commission. xxx xxx xxx 2 Article III, Sec. 2. All elective and appointive officials and employees under the 1973 Constitution shall continue in office until otherwise provided by proclamation or executive order or upon the designation or appointment and qualification of their successors, if such is made within a period of one year from February 25, 1986.

SECOND DIVISION

[G.R. No. 139302. October 28, 2002]

EDUARDO P. CORSIGA, Former Deputy Administrator, National Irrigation Administration, petitioner, vs. HON. QUIRICO G. DEFENSOR, Presiding Judge, Regional Trial Court, Branch 36, Iloilo City, and ROMEO P. ORTIZO, respondents. DECISION
QUISUMBING, J.:

Before us is a petition for review seeking the reversal of the decision [1] of the Court of Appeals dated June 30, 1999 in CA-G.R. SP No. 44123, dismissing the petition for review filed by petitioner. The petition assailed the orders dated January 8, 1996 and January 13, 1997 of the Regional Trial Court of Iloilo City, Branch 36, which respectively denied petitioners motion to dismiss Civil Case No. 22462 and his motion for reconsideration. The facts are undisputed. Private respondent Romeo P. Ortizo was the Senior Engineer B in the National Irrigation Administration (NIA), Jalaur-Suague River Irrigation System, Region VI,[2] tasked with the duty of assisting the Irrigation Superintendent in the said station.[3] Sometime in June, 1995, petitioner Eduardo P. Corsiga, then Regional Irrigation Manager of the NIA, Region VI, issued Regional Office Memorandum (ROM) No. 52, reassigning private respondent to Aganan-Sta. Barbara River Irrigation System, likewise to assist the Irrigation Superintendent thereat.[4] Aggrieved, private respondent wrote petitioner Corsiga requesting exemption and citing Memorandum Circular No. 47, Series of 1987 issued by the NIA Administrator, which states that the policy of rotation applies only to Department Managers, Irrigation Superintendents, Provincial Engineers and Division Manager of Field Offices. Petitioner denied the request. On July 31, 1995, private respondent filed with the Regional Trial Court of Iloilo City a complaint for

prohibition and injunction, with prayer for issuance of Temporary Restraining Order and/or Writ of Preliminary Injunction. Petitioner moved to dismiss the petition for lack of jurisdiction and non-exhaustion of administrative remedies, but the motion was denied on January 8, 1996. The Regional Trial Court likewise denied the motion for reconsideration on January 13, 1997. Alleging that these two orders were issued without jurisdiction, petitioner elevated the controversy to the Court of Appeals via a petition for certiorari. On June 30, 1999, the appellate court rendered a decision [5] finding no merit in the petition and dismissing it. It affirmed the trial courts jurisdiction over Civil Case No. 22462 saying that the doctrine of exhaustion of administrative remedies does not apply where the controverted act is patently illegal, arbitrary, and oppressive. Regional Office Memorandum No. 52, according to the court, was illegal since it violated private respondents constitutional right to security of tenure. Private respondents original appointment as Senior Engineer B in the NIA Jalaur River Irrigation System, Region VI is a permanent one; thus, it entitled him to a security of tenure. He cannot, therefore, be reassigned to another position that involves a reduction in rank without his consent. Concluded the appellate court:

WHEREFORE, IN VIEW OF THE FOREGOING, this petition for certiorari is DENIED DUE COURSE and is hereby DISMISSED. No pronouncement as to costs.

[6]

Hence, this petition where petitioner avers that the Court of Appeals erred in not holding that:
I

THE COURT A QUO [Regional Trial Court] HAS NO JURISDICTION OVER THE NATURE AND SUBJECT MATTER OF THE CASE PURSUANT TO SECTION 13, RULE VII OF THE OMNIBUS RULES IMPLEMENTING BOOK V OF EXECUTIVE ORDER NO. 292.
II

RESPONDENT HAS NO VALID CAUSE OF ACTION AGAINST PETITIONER FOR FAILURE TO EXHAUST ADMINISTRATIVE REMEDIES.

[7]

The issues for our resolution are (a) whether the Regional Trial Court has jurisdiction over Civil Case No. 22462, and (b) whether private respondent has a cause of action despite his failure to exhaust administrative remedies. On the first issue, petitioner avers that law and jurisprudence are clear and incontrovertible on the exclusive jurisdiction of the Civil Service Commission on all cases involving personnel actions including reassignment. Petitioner cites Section 13, Rule VII of the Omnibus Rules Implementing Book V[8] of E.O. 292. He stresses our ruling in Mantala vs. Salvador[9] that disciplinary cases and cases involving personnel

actions affecting employees in the civil service including appointment through certification, promotion, transfer, reinstatement, reemployment, detail, reassignment, demotion and separation, and employment status and qualification standardsare within the exclusive jurisdiction of the Civil Service Commission. Likewise cited is our holding in Dario vs. Mison[10] that no fundamental difference exists between the Commission on Elections and the Civil Service Commission (or the Commission on Audit, for that matter) as to the constitutional intent to leave the constitutional bodies alone in the enforcement of laws relative to elections, with respect to the former, and the civil service, with respect to the latter (or the audit of government accounts, with respect to the Commission on Audit). As the poll body is the sole judge of all election cases, so is the Civil Service Commission the single arbiter of all controversies pertaining to the civil service. Petitioner also avers that private respondents allegation that the remedy under the Civil Service Rule is neither speedy nor adequate as well as his allegation that he will inevitably and doubtlessly be subjected to administrative charges in case of noncompliance with the memorandum, is pure speculation and conjecture. Private respondents fears of administrative charges do not, by mere allegation, ipso facto divest the Civil Service Commission of its exclusive jurisdiction on all controversies pertaining to civil service. In his comment, private respondent maintains that as a civil service appointee to a position with a specification of a particular station, he cannot be validly and legally transferred or assigned to any other unit in the same agency without his consent. To do so is a violation of his constitutional right to security of tenure. For this reason, Regional Office Memorandum No. 52 reassigning him to a station different from that specified in his appointment papers was invalid. Yet, in spite of the patent illegality of the contemplated action, petitioner was adamant in implementing it. This, according to private respondent, left him with no other plain, speedy and adequate remedy but to go to court via a petition for prohibition and injunction, with prayer for the issuance of a temporary restraining order and/or writ of preliminary injunction. We shall now resolve the issues raised in this petition. (1) Does the Regional Trial Court have jurisdiction over Civil Case No. 22462? The Civil Service Commission has jurisdiction over all employees of Government branches, subdivisions, instrumentalities, and agencies, including government-owned or controlled corporations with original charters.[11] As such, it is the sole arbiter of controversies relating to the civil service.[12] The National Irrigation Administration, created under Presidential Decree No. 1702, is a government-owned and controlled corporation with original charter. Thus, being an employee of the NIA, private respondent is covered by the Civil Service Commission. Section 13 Rule VII of the Rules Implementing Book V of Executive Order No. 292 (the Adm. Code of 1987) provides how appeal can be taken from a decision of a department or agency head. It states that such decision shall be brought to the Merit System Protection Board (now the CSC En Banc per CSC Resolution No. 93-2387 dated June 29, 1993). It is the intent of the Civil Service Law, in requiring the

establishment of a grievance procedure in Rule XII, Section 6 of the same rules, that decisions of lower level officials be appealed to the agency head, [13] then to the Civil Service Commission.[14] Decisions of the Civil Service Commission, in turn, may be elevated to the Court of Appeals. Under this set up, the trial court does not have jurisdiction over personnel actions and, thus, committed an error in taking jurisdiction over Civil Case No. 22462. The trial court should have dismissed the case on motion of petitioner and let private respondent question ROM No. 52 before the NIA Administrator, and then the Civil Service Commission. As held in Mantala vs. Salvador,[15] cases involving personnel actions, reassignment included, affecting civil service employees, are within the exclusive jurisdiction of the Civil Service Commission. (2) Does private respondent have a cause of action [16] although his complaint was filed in the trial court without first exhausting all available administrative remedies? Being an NIA employee covered by the Civil Service Law, in our view, private respondent should have first complained to the NIA Administrator, and if necessary, then appeal to the Civil Service Commission.[17] As ruled in Abe-Abe vs. Manta, 90 SCRA 524 (1979), if a litigant goes to court without first pursuing his administrative remedies, his action is premature, and he has no cause of action to ventilate in court. Hence, petitioner asserts that private respondents case is not ripe for judicial determination. Private respondent contends, however, that the principle of exhaustion of administrative remedies is not an absolute rule. It has exceptions, namely, (1) where the issue involved is one of law and cannot be resolved administratively, (2) where the controverted act is patently illegal, arbitrary, and oppressive, (3) where irreparable injury exists, (4) where there is no plain, speedy, and adequate remedy, (5) or where urgent circumstances require judicial intervention. According to private respondent, the circumstances of the case required him to urgently act on his reassignment since he might be administratively charged if he resisted petitioners order, yet, at the same time he could be in estopped to question the order had he yielded to it without protest. According to private respondent, petitioner was guilty of bad faith; his real objective was to assign someone close to him to replace private respondent. Petitioners action was capricious, whimsical, arbitrary, and discriminatory, said private respondent since he was the only one, from among the officials or employees of the same rank, who was reassigned. This discrimination constituted a grave and patent abuse of discretion amounting to lack of jurisdiction, against which private respondent said he had no plain, speedy and adequate remedy in law except to institute an action before the regional trial court. However, private respondent failed to reckon with the fact that the issue in Civil Case No. 22462 was not purely a question of law. Certain facts needed to be resolved first. Did private respondents reassignment involve a reduction in rank? Private respondent claimed his transfer to a new station violated the rule on reassignment for he was allegedly transferred to a lower position.[18] But petitioner had refuted this contention, adding that his order reassigning private respondent was a lawful exercise of management prerogatives.[19] Also, was private respondent the only one, among the employees of his rank, who was reassigned? Private respondent alleged he was

singled out, but he did not present any evidence to prove it. Moreover, there is no convincing evidence of grave abuse of discretion on petitioners part. Private respondent speculated that petitioners real intent in reassigning him was to create a vacancy in his position so that petitioner could appoint someone close to him. This is a mere allegation which private respondent failed to substantiate. Official functions are presumed to be regular unless proven otherwise.[20] Lastly, private respondent claimed urgency in that he had no other recourse but to go to court, or he would be charged administratively. However, under Omnibus Rules Implementing the Civil Service Law, a recourse is available to him by way of appeal which could be brought to the agency head, with further recourse, if needed, to the Civil Service Commission. Worth noting, the possibility of an administrative charge was only speculative on the part of private respondent, who could avail of administrative remedies already cited. In sum, Civil Case No. 22462 is not an exception to the general rule on exhaustion of administrative remedies. The Court of Appeals, in our view, committed reversible error in finding that the trial court did not err nor gravely abused its discretion for taking jurisdiction over Civil Case No. 22462. WHEREFORE, the petition is GRANTED, and the decision of the Court of Appeals in CA-G.R. SP No. 44123 is REVERSED. The orders dated January 8, 1996 and January 13, 1997 of the Regional Trial Court of Iloilo City, Branch 36, denying petitioners motion to dismiss and the motion for reconsideration, respectively, are ANNULLED and SET ASIDE. Civil Case No. 22462 ought to be and is hereby ordered DISMISSED. Costs against private respondent. SO ORDERED. Bellosillo, Acting Chief Justice, (Chairman), Mendoza, and Callejo, Sr., JJ., concur. Austria-Martinez, J., on leave.

[1]

Rollo, pp. 35-40. CA Rollo, p. 18. Id. at 21.

[2]

[3]

[4]

To: All Division Chiefs Chiefs of Field Offices and All Others Concerned This Region In view of the approval of rotation of NIA Region VI Officials as authorized under MC No. 47, Series of 1987, per communications dated January 27, 1995, March 1, 1995, May 6, 1995 and May 23, 1995; and the creation of a Regional Managers Staff to further enhance the operational capability of NIA, Reg. VI, You are hereby informed of the changes of assignment of the following NIA Officials effective August 1, 1995. 1. xxx

2. xxx 3. xxx 4. xxx 5. xxx 6. Romeo Ortizo - to assist the Irrigation Superintendent of Aganan Sta. Barbara River Irrigation System. (Rollo, pp. 36-37)
[5]

Rollo, pp. 35-40. Id. at 40. Id. at 23-24. Sec. 13. Appeals in connection with personnel actions shall be governed by the following: A decision, ruling, order or action of any department or agency, ; may be appealed within fifteen (15) days from receipt of such decision, ruling, order and in the following manner: (1) x x x (2) x x x (3) Decision of department/agency is appealable to MSPB. (Now to the Commission En Banc effective 1 July 1993 per CSC Resolution No. 93-2387 dated 29 June 1993.)

[6]

[7]

[8]

(a)

x x x.
[9]

206 SCRA 264, 267 (1992). 176 SCRA 84, 111-112 (1989). Article IX-B, Section 2 (1), 1987 Constitution; Title I, Subtitle A, Chapter 2, Section 6 (1) of Book V of Executive Order No. 292. Rimonte vs. Civil Service Commission, 244 SCRA 498, 502 (1995). Sec. 6. The grievance procedure to be established by both management/employer and employees/ Recognized Negotiating Unit shall include the following: (a) Oral discussion. A complaint shall be presented orally in the first instance to the employees immediate supervisor who shall within three (3) days from the date of presentation inform the employee orally of his decision. (b) Grievance in writing. If the employee is not satisfied with the decision of the immediate supervisor he may submit his grievance in writing through his immediate supervisor, to the next higher officer or official who shall within five days from the date of receipt of the written grievance inform in writing the employee through the immediate supervisor of his decision. (c) Appeal to the agency head. If the employee is not satisfied with prior decisions relative to his grievance, he may submit, through channels, his grievance in writing to his department or agency head, who may refer it to a grievance committee constituted for the purpose.

[10]

[11]

[12]

[13]

Any party dissatisfied with the decision/resolution of his case after undergoing the grievance procedure may bring the same on appeal to the Merit Systems Protection Board or Public Sector Labor Management Council through the Office for Personnel Relations, as the case may be.
[14]

Par. 1 of CSC Resolution No. 93-2387: Decisions in administrative cases involving officials and employees of the civil service appealable to the Commission pursuant to Sec. 47 of Book V of the Code including personnel actions such as contested appointments shall now be appealed directly to the Commission and not to the MSPB.

[15]

Supra note 9. Rule 16, Section 1, Rules of Court: Motion to Dismiss, Grounds. Within the time for but before filing the answer to the complaint or pleading asserting a claim, a motion to dismiss may be made on any of the following grounds: x x x g) That the pleading asserting the claim states no cause of action. Section 13, Rule VII of the Omnibus Rules Implementing Book V of Executive Order No. 292, as amended by CSC Resolution No. 93-2387 dated June 29, 1993. Section 26 (7), Chapter 5, Book V of Executive Order No. 292: Reassignment - An employee may be reassigned from one organizational unit to another in the same agency: Provided, That such reassignment shall not involve a reduction in rank, status or salary. Rollo, p. 115. Rule 131 Section 3, Rules of Court: Disputable presumptions.- The following presumptions are satisfactory if uncontradicted, but may be contradicted and overcome by other evidence: x x x (m) That official duty has been regularly performed.

[16]

[17]

[18]

[19]

[20]

SECOND DIVISION NESTLE PHILIPPINES, INC. G.R. No. 174674 and NESTLE WATERS PHILIPPINES, INC. (formerly HIDDEN SPRINGS & Present: PERRIER, INC.), Petitioners, CARPIO, J., Chairperson, NACHURA, LEONARDO-DE CASTRO,* PERALTA, and VILLARAMA, JR.,** JJ.

- versus -

UNIWIDE SALES, INC., UNIWIDE HOLDINGS, INC., NAIC RESOURCES AND DEVELOPMENT CORPORATION, UNIWIDE SALES REALTY AND RESOURCES CLUB, INC., FIRST PARAGON CORPORATION, and UNIWIDE SALES WAREHOUSE CLUB, INC., Respondents.

Promulgated: October 20, 2010

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x RESOLUTION

CARPIO, J.: The Case This is a petition for review[1] of the 10 January 2006 Decision[2] and the 13 September 2006 Resolution[3] of the Court of Appeals in CA-G.R. SP No. 82184. The 10 January 2006 Decision denied for lack of merit the petition for review filed by petitioners. The 13 September 2006 Resolution denied petitioners' motion for reconsideration and referred to the Securities and Exchange Commission petitioners' supplemental motion for reconsideration.

The Facts The petitioners in this case are Nestle Philippines, Inc. and Nestle Waters Philippines, Inc., formerly Hidden Springs & Perrier Inc. The respondents are Uniwide Sales, Inc., Uniwide Holdings, Inc., Naic Resources and Development Corporation, Uniwide Sales Realty and Resources Club, Inc., First Paragon Corporation, and Uniwide Sales Warehouse Club, Inc. On 25 June 1999, respondents filed in the Securities and Exchange Commission (SEC) a petition for declaration of suspension of payment, formation and appointment of rehabilitation receiver, and approval of rehabilitation plan. The petition was docketed as SEC Case No. 06-99-6340.[4] The SEC approved the petition on 29 June 1999. On 18 October 1999, the newly appointed Interim Receivership Committee filed a rehabilitation plan in the SEC. The plan was anchored on return to core business of retailing; debt reduction via cash settlement and dacion en pago; loan

restructuring; waiver of penalties and charges; freezing of interest payments; and restructuring of credit of suppliers, contractors, and private lenders.

On 14 February 2000, the Interim Receivership Committee filed in the SEC an Amended Rehabilitation Plan (ARP). The ARP took into account the planned entry of Casino Guichard Perrachon, envisioned to infuse P3.57 billion in fresh capital. On 11 April 2001, the SEC approved the ARP. On 11 October 2001, the Interim Receivership Committee filed in the SEC a Second Amendment to the Rehabilitation Plan (SARP) in view of Casino Guichard Perrachon's withdrawal. In its Order dated 23 December 2002, the SEC approved the SARP. Petitioners, as unsecured creditors of respondents, appealed to the SEC praying that the 23 December 2002 Order approving the SARP be set aside and a new one be issued directing the Interim Receivership Committee, in consultation with all the unsecured creditors, to improve the terms and conditions of the SARP.

The Ruling of the SEC In its 13 January 2004 Order, the SEC denied petitioners' appeal for lack of merit. Petitioners then filed in the Court of Appeals a petition for review of the 13 January 2004 Order of the SEC. The Ruling of the Court of Appeals In its assailed 10 January 2006 Decision, the Court of Appeals denied for lack of merit the petition for review filed by petitioners, thus:
In reviewing administrative decisions, the findings of fact made therein must be respected as long as they are supported by substantial evidence, even if

not overwhelming or preponderant; that it is not for the reviewing court to weigh the conflicting evidence, determine the credibility of the witnesses, or otherwise substitute its own judgment for that of the administrative agency on the sufficiency of the evidence; that the administrative decision in matters within the executive jurisdiction can only be set aside on proof of grave abuse of discretion, fraud, or error of law. WHEREFORE, the petition for review is DENIED for lack of merit. SO ORDERED.[5]

Petitioners moved for reconsideration. They also filed a supplemental motion for reconsideration alleging that they received a letter on 25 January 2006, from the president of the Uniwide Sales Group of Companies, informing them of the decision to transfer, by way of full concession, the operation of respondents' supermarkets to Suy Sing Commercial Corporation starting 1 March 2006. In its questioned 13 September 2006 Resolution, the Court of Appeals denied for lack of merit petitioners' motion for reconsideration and referred to the SEC petitioners' supplemental motion for reconsideration. Dissatisfied, petitioners filed in this Court on 3 November 2006 the present petition for review. The Issue Before us, petitioners raise the issue of whether the SARP should be revoked and the rehabilitation proceedings terminated. The Court's Ruling The petition lacks merit. Petitioners contend that the transfer of respondents' supermarket operations to Suy Sing Commercial Corporation has made the SARP incapable of implementation. Petitioners point out that since the SARP may no longer be implemented, the rehabilitation case should be terminated pursuant to Section 426, Rule IV of the SEC Rules of Procedure on Corporate Recovery. Petitioners claim that the terms and conditions of the SARP are unreasonable, biased in favor

of respondents, prejudicial to the interests of petitioners, and incapable of a determination of feasibility. Respondents maintain that the SARP is feasible and that the SEC Hearing Panel did not violate any rule or law in approving it. Respondents stress that the lack of majority objection to the SARP bolsters the SEC's findings that the SARP is feasible. Respondents insist that the terms and conditions of the SARP are in accord with the Constitution and the law. The Court takes judicial notice of the fact that from the time of the filing in this Court of the instant petition, supervening events have unfolded substantially changing the factual backdrop of this rehabilitation case. As found by the SEC, several factors prevented the realization of the desired goals of the SARP, to wit: (1) unexpected refusal of some creditors to comply with all the terms of the SARP; (2) unexpected closure of Uniwide EDSA due to the renovation of EDSA Central Mall; (3) closure of Uniwide Cabuyao and Uniwide Baclaran; (4) lack of supplier support for supermarket operations; and (5) increased expenses.[6] On 11 July 2007, the rehabilitation receiver filed in the SEC a Third Amendment to the Rehabilitation Plan (TARP). But before the SEC could act on the TARP, the rehabilitation receiver filed on 29 September 2008 a Revised Third Amendment to the Rehabilitation Plan (revised TARP). A majority of the secured creditors strongly opposed the revised TARP, which focused on the immediate settlement of all the obligations accruing to the unsecured creditors through a dacion of part of respondents' Metro Mall property.[7] Since some creditors claimed that the value of the Metro Mall property had gone down since 1999, the Hearing Panel issued its 30 July 2009 Order directing the reappraisal of the Metro Mall property.[8] In its 17 September 2009 Order, the Hearing Panel directed respondents to show cause why the rehabilitation case should not be terminated considering that the rehabilitation plan had undergone several revisions. The Hearing Panel also directed the creditors to manifest whether they still wanted the rehabilitation proceedings to continue.

Respondents moved for reconsideration of the 30 July 2009 and the 17 September 2009 Orders. The Hearing Panel, in its 6 November 2009 Order, denied the motion for reconsideration for being a prohibited pleading. Respondents then filed in the SEC a petition for certiorari assailing the 30 July 2009, the 17 September 2009, and the 6 November 2009 Orders of the Hearing Panel. The petition was docketed as SEC En Banc Case No. 12-09-183. Meanwhile, in its 13 January 2010 Resolution, the Hearing Panel disapproved the revised TARP and terminated the rehabilitation case as a consequence. The dispositive portion of the Resolution reads:
WHEREFORE, premises considered: 1. Petitioners' Motion to Approve Revised Third Amendment to the Group Rehabilitation Plan (Revised TARP) is DENIED. 2. The motions to declare petitioners' rehabilitation plan not feasible are GRANTED. Consequently, the instant rehabilitation case is TERMINATED and the stay order is lifted and dissolved. This case is deemed finally disposed of pursuant to Section 5.2 of Republic Act No. 8799.[9]

On 22 January 2010, respondents filed another petition appealing the Hearing Panel's 13 January 2010 Resolution. The petition was docketed as SEC En Banc Case No. 01-10-193. In order to preserve the parties' rights during the pendency of the appeal, the SEC en banc in its Order dated 18 March 2010 directed the parties to observe the status quo prevailing before the issuance of the 13 January 2010 Resolution of the Hearing Panel. Meanwhile, on 27 April 2010, the SEC en banc issued an Order directing the rehabilitation receiver, Atty. Julio C. Elamparo, to submit a comprehensive report on the progress of the implementation of the SARP. Finally, in its 30 September 2010 Order, the SEC consolidated SEC En Banc Case No. 01-10-193 with SEC En Banc Case No. 12-09-183, the parties

being identical and the issues in both petitions being in reference to the same rehabilitation case. Considering the pendency of SEC En Banc Case No. 12-09-183 and SEC En Banc Case No. 01-10-193, recently filed in the SEC, involving the very same rehabilitation case subject of this petition, the present petition has been rendered premature. SEC En Banc Case No. 12-09-183 deals with the Order of the Hearing Panel directing respondents to show cause why the rehabilitation case should not be terminated and the creditors to manifest whether they still want the rehabilitation proceedings to continue. On the other hand, SEC En Banc Case No. 01-10-193 is an appeal of the Hearing Panel's Resolution disapproving the revised TARP and terminating the rehabilitation proceedings. In light of supervening events that have emerged from the time the SEC approved the SARP on 23 December 2002 and from the time the present petition was filed on 3 November 2006, any determination by this Court as to whether the SARP should be revoked and the rehabilitation proceedings terminated, would be premature. Undeniably, supervening events have substantially changed the factual backdrop of this case. The Court thus defers to the competence and expertise of the SEC to determine whether, given the supervening events in this case, the SARP is no longer capable of implementation and whether the rehabilitation case should be terminated as a consequence. Under the doctrine of primary administrative jurisdiction, courts will not determine a controversy where the issues for resolution demand 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.[10] In other words, if a case is such that its determination requires the expertise, specialized training, and knowledge of an administrative body, relief must first be obtained in an administrative proceeding before resort to the court is had even if the matter may well be within the latter's proper jurisdiction.[11]

The objective of the doctrine of primary jurisdiction is to guide the 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.[12] It is not for this Court to intrude, at this stage of the rehabilitation proceedings, into the primary administrative jurisdiction of the SEC on a matter requiring its technical expertise. Pending a decision of the SEC on SEC En Banc Case No. 12-09-183 and SECEn Banc Case No. 01-10-193, which both seek to resolve the issue of whether the rehabilitation proceedings in this case should be terminated, we are constrained to dismiss this petition for prematurity. WHEREFORE, we DISMISS the instant petition for having been rendered premature pending a decision of the Securities and Exchange Commission (SEC) in SEC En Banc Case No. 12-09-183 and SEC En Banc Case No. 01-10-193. No pronouncement as to costs. SO ORDERED.

ANTONIO T. CARPIO Associate Justice

WE CONCUR:

ANTONIO EDUARDO B. NACHURA Associate Justice

TERESITA PERALTA

J.

LEONARDO-DE

CASTRO

DIOSDADO

M.

Associate Justice

Associate Justice

MARTIN S. VILLARAMA, JR. Associate Justice

ATTESTATION
I attest that the conclusions in the above Resolution had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

ANTONIO T. CARPIO Associate Justice Chairperson

CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons Attestation, I certify that the conclusions in the above Resolution had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

RENATO C. CORONA Chief Justice

* **

Designated additional member per Special Order No. 905 dated 5 October 2010. Designated additional member per Raffle dated 20 October 2010.

[1] [2]

Under Rule 45 of the Rules of Court. Rollo, pp. 73-83. Penned by Associate Justice Marina L. Buzon, with Associate Justices Aurora Santiago-Lagman and Arcangelita Romilla-Lontok, concurring. [3] Id. at 84-88. [4] Id. at 74. [5] Id. at 82. [6] SEC Order in SEC En Banc Case Nos. 12-09-183 and 01-10-193, dated 30 September 2010. [7] Id. [8] Id. [9] RA No. 8799 Sec. 5.2 The Commission's jurisdiction over all cases enumerated under Section 5 of Presidential Decree No. 902A is hereby transferred to the Courts of general jurisdiction or the appropriate Regional Trial Court: Provided, That the Supreme Court in the exercise of its authority may designate the Regional Trial Court branches that shall exercise jurisdiction over these cases. The Commission shall retain jurisdiction over pending cases involving intra-corporate disputes submitted for final resolution which should be resolved within one (1) year from the enactment of this Code. The Commission shall retain jurisdiction over pending suspension of payments/rehabilitation cases filed as of 30 June 2000 until finally disposed. (Emphasis supplied) [10] Maria Luisa Park Association, Inc. v. Almendras, G.R. No. 171763, 5 June 2009, 588 SCRA 663. [11] Ferrer, Jr. v. Roco, G.R. No. 174129, 5 July 2010. [12] Fabia v. Court of Appeals, 437 Phil. 389 (2002).

Republic of the Philippines SUPREME COURT Manila EN BANC

G.R. No. 91551 August 16, 1991 U.P. BOARD OF REGENTS, DR. JOSE V. ABUEVA, in his capacity as U.P. President, DR. ERNESTO O. DOMINGO, in his capacity as Chancellor of U.P. Manila, and the Nomination Committee for the Director of the U.P.-P.G.H. Medical Center, petitioners, vs. HON. JAINAL D. RASUL, in his capacity as Presiding Judge, Branch 69 of the Regional Trial Court, Pasig, Metro Manila, and DR. FELIPE A. ESTRELLA, JR., respondents. Ledesma, Saludo & Associates for private respondent.

GANCAYCO, J.:p The principal issue in this case is whether or not respondent Dr. Felipe A. Estrella who holds the position of Director of the Philippine General Hospital (PGH) can invoke security of tenure during his term of office notwithstanding the abolition of the said position by the University of the Philippines Board of Regents. Petitioners seek to annul and set aside the decision dated August 28, 1989 and the order dated October 23, 1989 issued and rendered by respondent Judge, Honorable Jainal D. Rasul of the

Regional Trial Court, Branch 69, Pasig, Metro Manila. The dispositive portion of the decision in question reads as follows: WHEREFORE, in view of the foregoing and by virtue of preponderance of evidence, this Court hereby renders judgment in favor of the plaintiff and against the defendants. 1. Permanently enjoining the Defendants Dr. Jose V. Abueva, in his capacity as UP President; Dr. Ernesto Domingo, in his capacity as Chancellor of UP-Manila; the Nomination Committee for the Director of the UP-PGH Medical Center and the UP Board of Regents, from proceeding with the nomination of a Medical Director, until the expiration of the term of office of the plaintiff, Dr. Felipe A. Estrella, Jr., in his capacity as Director of the PGH or unless sooner removed, for cause provided by law; 2. Permanently enjoining the UP Board of Regents from implementing the so-called Reorganization Plan of UP-PGH, unless there is a prior legislative enactment of enabling law authorizing it and finally, 3. Ordering the defendants to pay attorney's fees and litigation expenses for P50,000.00 and the costs of this suit.
SO ORDERED. 1

In an order dated October 23, 1989, the respondent Judge denied petitioners' motion for reconsideration of the decision above-mentioned. Assailing the above-mentioned rulings, petitioners allege as errors the following: REASONS FOR THE ALLOWANCE OF THE WRIT I RESPONDENT JUDGE COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN HOLDING THAT RESPONDENT ESTRELLA IS ENTITLED TO THE PROTECTIVE MANTLE OF THE CONSTITUTIONAL GUARANTEE OF SECURITY OF TENURE II RESPONDENT JUDGE COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN HOLDING THAT THE REORGANIZATION OF U.P. MANILA INCLUDING THE PGH, WAS DONE IN BAD FAITH III RESPONDENT JUDGE COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN HOLDING THAT RESPONDENT ESTRELLA NEED NOT EXHAUST ADMINISTRATIVE REMEDIES BEFORE HE CAN BRING SUIT AGAINST THE U.P. BOARD OF REGENTS, ET AL.

IV RESPONDENT JUDGE COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN HOLDING THAT THE REORGANIZATION PLAN FOR THE U.P. PGH MEDICAL CENTER CANNOT YET BE IMPLEMENTED V RESPONDENT JUDGE COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN HOLDING THAT THE U.P. BOARD OF REGENTS HAS NO AUTHORITY TO REORGANIZE VI RESPONDENT JUDGE COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN HOLDING THAT HE CAN SUBSTITUTE HIS OWN JUDGMENT FOR THAT OF THE U.P. BOARD REGENTS. VII
RESPONDENT JUDGE COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN HOLDING THAT NON-IMPLEMENTATION OF THE REORGANIZATION PLAN WILL NOT CAUSE CONSIDERABLE DAMAGE TO U.P. IN GENERAL AND TO PGH IN PARTICULAR. 2

The petition is devoid of merit. The facts and background of the case as narrated by the trial court are as follows That on June 26, 1986, plaintiff Dr. Felipe A. Estrella, Jr., was appointed by the defendant Board of Regents BOR as Director of the Philippine General Hospital, to take effect "1 September 1986 until 30 April 1992"(Exh. "A-14");that the defendant U.P. Board of Regents speaking thru its then University Secretary Professor Martin Gregorio intended to have the plaintiff serve his full term, as Director, since any other arrangement would impede the hospital's development, not to mention the continuity of its service operations (Exh. "A"); that the duties and responsibilities, under Chapter 29, of the Revised Administrative Code, as PGH Director, inter alia, to direct and manage various activities within the hospital; formulate and implement regulations; develop institutional plans and policies; approve/recommend budget proposals of the hospital; execute contracts; represent the hospital in proper functions; approve and sign warrants, checks, vouchers and recommend or endorse appointments of personnel to higher authorities (Exh. "M"). On September 16, 1987, barely two (2) weeks after assuming the presidency of the University of the Philippines defendant Jose V. Abueva submitted a memorandum to the Board of Regents to reorganize the U.P. Manila including the Philippine General Hospital with a draft resolution for approval of the Board of Regents, recommending that certain key positions of UP Manila including that of plaintiff be declared vacant (Exhs. "C" to "C-3"): that on March 20, 1988, the defendant Board of Regent upon recommendation of defendants Abueva and Domingo approved the so-called reorganization plan for the Philippine General Hospital.

On April 29, 1988, defendant Dr. Ernesto Domingo acting on instruction of defendant Dr. Jose v. Abueva, U.P. President, issued a memorandum creating the Nomination Committee for the UP-PGH Medical Center Director; that on May 10, 1988, defendant-members of the Nomination Committee thus created, are scheduled to nominate plaintiff s replacement as Director; that consequently on May 2, 1988, plaintiff filed with this Court, his complaint for Injunction with Preliminary Injunction of temporary restraining Order, seeking to enjoin defendants Abueva, Domingo, the Nomination Committee and the ITP Board of Regents from proceeding with the nomination of UP-PGH medical Center Director, in order to forestall the consequent removal/dismissal of the plaintiff Dr. Felipe A. Estrella, Jr., incumbent PGH Director, even before the expiration of his term of office on April 30, 1992 without any cause provided by law.
On May 2, this Court issued the Restraining Order and on May 30, After due hearing this Court, thru its then Presiding Judge Hon. Julio Logarta issued the Writ of Preliminary Injunction, enjoining defendants from implementing the reorganization plan for the UPPGH medical Center (Exh. "A" Affidavit of plaintiff Dr. Felipe A. Estrella, Jr.; Exh. "10" Affidavit of defendant Dr. Ernesto O. Domingo; TSN pp. 1-23, June 1, 1989, TSN pp. 1106, June 1, 1989; TSN pp.1-52, June 1, 1989). 3

Respondent Judge, based on the evidence presented, concluded that the reorganization of PGH was done in bad faith. Accordingly, the lower court ruled that respondent Dr. Estrella cannot be removed from office as a result of such defective abolition of the position to which he was appointed. Significant in this regard is the following pronouncement of the lower court: Going over the organizational structure of present set-up of the PGH and proposed reorganizational structure, it appears that there are other minor differences aside from changes of designations and enlargement of functions and powers, namely: (1) The positions of Assistant Director for Administration and Assistant Director for Fiscal matters in the present set-up are combined into only one position of Assistant Director for Administrative and Fiscal Matters in the reorganization plan; (2) The position of Assistant Director for Health Operation in the present set-up was changed to position of Director of Health Services, directly under the UP-PGH Medical Center Director with one Assistant Director for Allied Medical Services, under it, in the reorganization plan and (3) The five (5) Departments of Oncology, Out-Patient Department, Emergency Room, Charity Ward and Pay Ward under the present setup were converted into Institute of Oncology, Out-Patient Hospital, Emergency Hospital, Charity Hospital and Non-Charity Hospital under the reorganization plan.
In other words, these five (5) units were merely enlarged, expanded and called hospitals headed each by a Director. The Director of the PGH under the present set-up became Director of UP-PGH Medical Center. Aside from the three changes above and change of designations and transfers of duties, the structure remains substantially the same. The leadership element which the defendant Abueva wants to impress upon this Court, encourages reorganization and justifies abolition of positions. But the whole reorganization set-up under our law cannot or should not have the effect of abolishing the position of the plaintiff unless legal requirements are complied with.(Brallo vs. Enage, 94 Phil. 732) If the reorganization plan results in abolishing the position of the plaintiff and in putting in his place another one, with substantially the same duties, not to say qualifications, in the name of leadership, it will surely be considered a device to unseat the incumbent and to circumvent the constitutional and statutory prohibition of removal from office of a civil service officer even without cause provided by law. Plaintiffs position should not therefore be deemed abolished by mere implication. (Cuneta vs. CA, 1 SCRA 663, 111 Phil. 249) If the abolition of office is made to circumvent the constitutional

security of tenure of civil service employees, our Supreme Court, has ruled that such abolition is null and void. (Gutierrez vs. CA, 1-25972, 2 /26 / 68, 26 SCRA 32) 4

Respondent Dr. Estrella was appointed Director of PGH on June 26, 1986 by the LTP Board of Regents. His appointment was to be effective September 1, 1986 until April 30, 1992 or unless sooner terminated. Appointees of the LTP Board of Regents enjoy security of tenure during their term of office. In Tapales v. President of the University of the Philippines, 5 We held that Director Tapales who was appointed by the UP Board of Regents as Director of the Conservatory of Music for a term of five (5) years is entitled to security of tenure during his term of office. Likewise, in Sta. Maria v. President Salvador P. Lopez, et. al., 6 We rejected the removal of Professor Sta. Maria as dean of the College of Education. In that case, Professor Sta. Maria was appointed by the UP Board of Regents as dean of the College of Education effective May 16,1967 until May 17,1972 or unless sooner terminated. Before the expiration of his term of office, President Salvador P. Lopez removed him as dean of the College of Education and tranferred him to the office of the UP President. Upholding the right of Professor Sta. Maria to security of tenure, We explained out that "... a college dean holding an appointment with a fixed term ... cannot, without his consent, be terminated before the end of his term. He cannot be asked to give up his post. Nor may he be appointed as dean of another college. Much less can he be transferred to another position even if it be dignified with a dean's rank." Petitioners argue, however, that the abolition of the position of respondent Dr. Estrella Jr. negates his claim to security of tenure. The argument is devoid of merit. It is clear from the record that the PGH itself was not abolished in the reorganization plan approved by the UP Board of Regents. The PGH was merely renamed "UP-PGH Medical Center" and some of it functions and objectives were expanded or consolidated. There is no substantial distinction, in terms of functions, between PGH and the proposed UP-PGH Medical Center. While PGH itself was not abolished, the position of PGH Director was abolished and in its place, the position of UP-PGH Medical Center Director was created. After abolishing said position, it was proposed to be reclassified as Director, Charity hospital, one of the five (5) hospital director positions proposed to be created in the reorganized PGH. The UP Board of Regents acted within the scope and limitations of its charter, Act No. 1870, as amended when it approved the reorganization plan renaming the PGH and expanding and consolidating some of its functions and objectives. The UP Board of Regents did not and could not have abolished PGH. And rightly so. The PGH and one of its component units, the Cancer Institute, are creations of special laws, the old Administrative, Code (Chapter 29, Secs. 706-707) and Commonwealth Act No. 398, respectively. The authority of the UP under Act No. 1870 as amended, to combine two or more colleges in the interest of economy and efficiency does not empower UP to abolish offices created by special laws. Section 6(b) of Act No. 1870, al amended, reads as follows: (b) To provide for the establishment of one or more Colleges of Liberal Arts; a College of Law; a College of Social and Political Science; a College of Medicine and Surgery; a College of Pharmacy; a College of Dentistry; a College of Veterinary Science; a College of Engineering; a College of Mines; a College of Agriculture; a College of Education; a School of Fine Arts; a School of Forestry; a Conservatory of Music, and such other colleges and schools as the Board of Regents may deem necessary: Provided, That the Board of Regents may establish these colleges, or any of them, in Manila or in any other place in the Archipelago, as soon as in its judgment conditions shall favor their opening and finds shall be available for their maintenance: And provided further, That the Board of Regents shall have the power

to combine two or more of the colleges authorized by this Act, in the interests of economy and efficiency And provided finally, That the Philippine Medical School as established by Act Numbered Fourteen Hundred and Fifteen as amended, shall become the College of Medicine and Surgery of the Philippine University as soon as two or more colleges of the University of the Philippines shall have been established and in actual operation. It is therefore clear that the authority of the UP is limited to what is expressly provided in Act No. 1870 as amended, that is, to combine or merge colleges. that is all the law speaks of in such instance. On the other hand, the power to create and abolish offices carries with it the power to fix the number of positions, salaries, emoluments, and to provide funds for the operation of the office created. 7 This power is inherently legislative in character. The UP Board of Regents does not have such power. Hence, the abolition of the position of respondent Dr. Estrella is not valid. It is true that a valid and bona fide abolition of an office denies to the incumbent the right to security of tenure. 8However, in this case, the renaming and restructuring of the PGH and its component units cannot give rise to a valid and bona fide abolition of the position of PGH Director. This is because where the abolished office and the offices created in its place have similar functions, the abolition lacks good faith. 9 We hereby apply the principle enunciated in Cesar Z. Dalio vs. Hon. Salvador M. Mison 10 that abolition which merely changes the nomenclature of positions is invalid and does not result in the removal of the incumbent. The above notwithstanding, and assuming that the abolition of the position of the PGH Director and the creation of a UP-PGH Medical Center Director are valid the removal of the incumbent is still not justified for the reason that the duties and functions of the two positions are basically the same. The UP-PGH Medical Center is essentially the same PGH hence, the Medical Center Director will be performing duties very similar to the present PGH Director. It cannot be invoked to sustain the argument that respondent is not entitled to security of tenure. In Palma-Fernandez v. de la Paz, 11 the abolition of the position of "Chief of Clinic" and the creation of the position of "Assistant Director, Professional Services" were set aside for the reason that the two positions are basically one and the same except for the change of nomenclature. The proposal to establish five hospitals within the UP-PGH Medical Center, and with it, the proposal to create five hospital director positions militate against the propriety of giving due course to this petition. As presently organized, there is only one hospital director position in the plantilla of positions of the PGH, the PGH Director. In the proposed reorganization, such number will be increased to six, one UP-PGH Medical Center Director and five directors for each of the five hospitals proposed to be established namely, the Out-Patient Hospital, Emergency Hospital, Charity Hospital, Non-Charity Hospital and Institute of Oncology. In Guerrero vs. Arizabal, 12 We held that the creation of additional management positions in a proposed reorganization is evidence of bad faith and is in violation of Republic Act No. 6656. We hold that the same applies to the PGH reorganization. Finally, the admission by petitioner Dr. Jose V. Abueva that the staffing pattern for the reorganized PGH has not been prepared is fatal to petitioners' cause. In Dario v. Mison, 13 We made the observation that no reorganization of the Bureau of Customs actually took place since a staffing pattern which could have been the basis for hiring and g was lacking. In this case, petitioners were poised to nominate and appoint a UP-PGH Medical Center Director inspite of the absence of a staffing pattern. The absence of such an important element in the reorganization plan contradicts the

petitioners' claim of good faith and only proves that petitioners were unreasonably in a hurry to remove respondent Estrella from his office. Anent the issue regarding respondent Estrella's failure to exhaust all administrative remedies, We hold that this case has special circumstances that made it fall under the jurisprudentially accepted exceptions to the rule. As the facts show, respondent Dr. Estrella was about to be replaced by the Nomination Committee. He must have believed that airing his protest with the Board of Regents would only be fruitless and that unless he goes to the courts, irreparable damage or injury on his part will be caused by the implementation of the proposed reorganization. Respondent Judge did not commit any reversible error much less grave abuse of discretion. The facts as supported by evidence established may no longer be disturbed. WHEREFORE, the petition is DENIED for lack of merit. The Decision dated August 28, 1989 and Order dated October 23, 1989 of the respondent Judge are hereby AFFIRMED in toto. No costs. SO ORDERED. Narvasa, Gutierrez, Jr., Cruz, Paras, Padilla, Bidin, Grio-Aquino, Medialdea and Regalado, JJ., concur. Sarmiento, J., is on leave. Davide, Jr., J., concur in the result.

Separate Opinions

MELENCIO-HERRERA, J., concurring and dissenting: I concur in so far as the security of tenure issue is concerned. However, in line with my dissent in Dario v. Mison(176 SCRA 84), I disagree with the sweeping conclusion that the reorganization of U.P. Manila, including the PGH, was done in bad faith. There was a genuine reorganization involved with the end in view of improving and streamlining the U.P.-PGH system and to bring about a medical center worthy of the name. A novel organizational set-up was contemplated. It is just unfortunate that the declaration of vacancy of the position of the PGH Director, and the call for the nomination of a new Medical Center Director to replace the incumbent Director, clashed with the security of Tenure enjoyed by the latter. Fernan, C.J., concurs. FELICIANO, J., dissenting:

I dissent on the grounds set out in Mme. Justice Herrera's dissenting opinion in Dario v. Mison, 176 SCRA 84.

Separate Opinions MELENCIO-HERRERA, J., concurring and dissenting: I concur in so far as the security of tenure issue is concerned. However, in line with my dissent in Dario v. Mison(176 SCRA 84), I disagree with the sweeping conclusion that the reorganization of U.P. Manila, including the PGH, was done in bad faith. There was a genuine reorganization involved with the end in view of improving and streamlining the U.P.-PGH system and to bring about a medical center worthy of the name. A novel organizational set-up was contemplated. It is just unfortunate that the declaration of vacancy of the position of the PGH Director, and the call for the nomination of a new Medical Center Director to replace the incumbent Director, clashed with the security of Tenure enjoyed by the latter. Fernan, C.J., concurs. FELICIANO, J., dissenting: I dissent on the grounds set out in Mme. Justice Herrera's dissenting opinion in Dario v. Mison, 176 SCRA 84. Footnotes 1 p. 320, Rollo. 2 pp. 16-17. Rollo. 3 pp. 310-311, Rollo. 4 p. 318, Rollo. 5 7 SCRA 553 (1963). 6 31 SCRA 637 (1970). 7 Castillo v. Pajo 103 Phil. 515 (1958); Llanto v. Dimaporo et. al., 16 SCRA 599 (1966 ). 8 De la Llana N Alba, 112 SCRA 294 (1982).

9 Jose L. Guerrero v. Hon. Antonio V. Arizabal G.R. No. 81928. June 4, 1990.186 SCRA 108 (1990). 10 176 SCRA 84 (1989). 11 160 SCRA 751 (1988). 12 Supra, note 9. 13 Supra, note 10.