EN BANC

[G.R. No. 83578. March 16, 1989.]

THE PRESIDENTIAL ANTI-DOLLAR SALTING TASK FORCE, petitioner, vs. HONORABLE
COURT OF APPEALS, HONORABLE TEOFILO L. GUADIZ, JR., Presiding Judge, REGIONAL
TRIAL COURT, Branch 147, NCR (MAKATI), and KARAMFIL IMPORT-EXPORT CO., INC.,
respondents.
K.V. Faylona & Associates for respondents.
SYLLABUS
1. REMEDIAL LAW; CIVIL PROCEDURE; APPEAL; WHERE LEGISLATION PROVIDES FOR AN
APPEAL FROM DECISIONS OF CERTAIN ADMINISTRATIVE BODIES TO THE COURT OF
APPEALS, SUCH BODIES ARE CO-EQUAL WITH THE REGIONAL TRIAL COURTS. As a
rule, where legislation provides for an appeal from decisions of certain administrative bodies to the
Court of Appeals, it means that such bodies are co-equal with the Regional Trial Courts, in terms
of rank and stature, and logically, beyond the control of the latter.
2. ADMINISTRATIVE LAW; QUASI-JUDICIAL BODY; DEFINITION. A quasi-judicial body has
been defined as "an organ of government other than a court and other than a legislature, which
affects the rights of private parties through either adjudication or rule making."
3. CONSTITUTIONAL LAW; EXECUTIVE DEPARTMENT; PRESIDENTIAL DECREE NO. 1936;
PRESIDENTIAL ANTI-DOLLAR SALTING TASK FORCE; DOES NOT HAVE POWER TO
EXERCISE QUASI-JUDICIAL FUNCTIONS BUT ONLY OF PROSECUTING "DOLLAR-SALTING"
ACTIVITIES. A perusal of the Presidential Anti-Dollar Salting Task Force's organic act,
Presidential Decree No. 1936, as amended by Presidential Decree No. 2002, convinces the Court
that the Task Force was not meant to exercise quasi-judicial functions, that is, to try and decide
claims and execute its judgments. As the President's arm called upon to combat the vice of "dollar
salting" or the blackmarketing and salting of foreign exchange, it is tasked alone by the Decree to
handle the prosecution of such activities, but nothing more.
4. ID.; ID.; ID.; DUTIES ARE TO CONDUCT AN INQUIRY PRELIMINARY TO A JUDICIAL
RECOURSE AND TO RECOMMEND ACTION "OF APPROPRIATE AUTHORITIES." The
Presidential Anti-Dollar Salting Task Force's undertaking, as we said, is simply, to determine
whether or not probable cause exists to warrant the filing of charges with the proper court,
meaning to say, to conduct an inquiry preliminary to a judicial recourse, and to recommend action
"of appropriate authorities". It is not unlike a fiscal's office that conducts a preliminary investigation
to determine whether or not prima facie evidence exists to justify haling the respondent to court,
and yet, while it makes that determination, it cannot be said to be acting as a quasi-court. For it is
the courts, ultimately, that pass judgment on the accused, not the fiscal.
5. ID.; ID.; ID.; POWERS SIMILAR TO PRESIDENTIAL COMMISSION ON GOOD
GOVERNMENT BUT BOTH ARE NOT QUASI-JUDICIAL ENTITIES. It is not unlike the
Presidential Commission on Good Government either, the executive body appointed to investigate
and prosecute cases involving "ill-gotten wealth". It had been vested with enormous powers, like
the issuance of writs of sequestration, freeze orders, and similar processes, but that did not, on
account thereof alone, make it a quasi-judicial entity as defined by recognized authorities. It cannot
pronounce judgment of the accused's culpability, the jurisdiction to do which is exclusive upon the
Sandiganbayan.
6. ID.; ID.; ID.; NOT CO-EQUAL OR COORDINATE WITH THE REGIONAL TRIAL COURT AS IT
IS NOT A QUASI-JUDICIAL BODY. If the Presidential Anti-Dollar Salting Task Force is not,
hence, a quasi-judicial body, it cannot be said to be co-equal or coordinate with the Regional Trial
Court. There is nothing in its enabling statutes that would demonstrate its standing at par with the
said court.
7. ID.; ID.; PRESIDENTIAL DECREE NO. 1936, UNCONSTITUTIONAL, REASONS. We agree
that the Presidential Anti-Dollar Salting Task Force exercises, or was meant to exercise,
prosecutorial powers, and on that ground, it cannot be said to be a neutral and detached "judge" to
determine the existence of probable cause for purposes of arrest or search. Unlike a magistrate, a

prosecutor is naturally interested in the success of his case. Although his office "is to see that
justice is done and not necessarily to secure the conviction of the person accused," he stands,
invariably, as the accused's adversary and his accuser. To permit him to issue search warrants and
indeed, warrants of arrest, is to make him both judge and jury in his own right, when he is neither.
That makes, to our mind and to that extent, Presidential Decree No. 1936 as amended by
Presidential Decree No. 2002, unconstitutional.
8. ID.; 1973 Constitution; BILL OF RIGHTS; RIGHT OF THE PEOPLE TO BE SECURE IN THEIR
PERSONS, HOUSES, PAPERS AND EFFECTS; OFFICER HIMSELF MUST BE "RESPONSIBLE;
MEANING OF "RESPONSIBILITY." It is our ruling, thus, that when the 1973 Constitution spoke
of "responsible officer" to whom the authority to issue arrest and search warrants may be
delegated by legislation, it did not furnish the legislator with the license to give that authority to
whomsoever it pleased. It is to be noted that the Charter itself makes the qualification that the
officer himself must be "responsible". We are not saying, of course, that the Presidential Anti-Dollar
Salting Task Force (or any similar prosecutor) is or has been irresponsible in discharging its duty.
Rather, we take "responsibility", as used by the Constitution, to mean not only skill and
competence but more significantly, neutrality and independence comparable to the impartiality
presumed of a judicial officer. A prosecutor can in no manner be said to be possessed of the latter
qualities.
9. ID.; ID.; ID.; ID.; EXCLUSION OF PROSECUTORS THEREUNDER DEMANDED BY
PRINCIPLE OF SEPARATION OF POWERS. According to the Court of Appeals, the implied
exclusion of prosecutors under the 1973 Constitution was founded on the requirements of due
process, notably, the assurance to the respondent of an unbiased inquiry of the charges against
him prior to the arrest of his person or seizure of his property. We add that the exclusion is also
demanded by the principle of separation of powers on which our republican structure rests.
Prosecutors exercise essentially an executive function (the petitioner itself is chaired by the
Minister, now Secretary, of Trade and Industry), since under the Constitution, the President has
pledged to execute the laws. As such, they cannot be made to issue judicial processes without
unlawfully impinging the prerogative of the courts.
DECISION
SARMIENTO, J p:
The petitioner, the Presidential Anti-Dollar Salting Task Force, the President's arm assigned to
investigate and prosecute so-called "dollar salting" activities in the country (per Presidential
Decree No. 1936 as amended by Presidential Decree No. 2002), asks the Court to hold as null
and void two Resolutions of the Court of Appeals, dated September 24, 1987 1 and May 20, 1988,
2 reversing its Decision, dated October 24, 1986. 3 The Decision set aside an Order, dated April
16, 1985, of the Regional Trial Court, 4 as well as its Order, dated August 21, 1985. The
Resolution, dated September 24, 1987 disposed of, and granted, the private respondent Karamfil
Import-Export Co., Inc.'s motion for reconsideration of the October 24, 1986 Decision; the
Resolution dated May 20, 1988, in turn, denied the petitioner's own motion for reconsideration.
LLpr
The facts are not in controversy. We quote:
On March 12, 1985, State Prosecutor Jose B. Rosales, who is assigned with the
Presidential Anti-Dollar Salting Task Force hereinafter referred to as
PADS Task Force for purposes of convenience, issued search
warrants Nos. 156, 157, 158, 159, 160 and 161 against the
petitioners Karamfil Import-Export Co., Inc., P & B Enterprises Co.,
Inc., Philippine Veterans Corporation, Philippine Veterans
Development Corporation, Philippine Construction Development
Corporation, Philippine Lauan Industries Corporation, Intertrade
Development (Alvin Aquino), Amelili U. Malaquiok Enterprises and
Jaime P. Lucman Enterprises.

The application for the issuance of said search warrants was filed by Atty. Napoleon
Gatmaytan of the Bureau of Customs who is a deputized member of
the PADS Task Force. Attached to the said application is the
affidavit of Josefin M. Castro who is an operative and investigator of
the PADS Task Force. Said Josefin M. Castro is likewise the sole
deponent in the purported deposition to support the application for
the issuance of the six (6) search warrants involved in this case.
The application filed by Atty. Gatmaytan, the affidavit and deposition
of Josefin M. Castro are all dated March 12, 1985. 5
Shortly thereafter, the private respondent (the petitioner below) went to the Regional Trial Court on
a petition to enjoin the implementation of the search warrants in question. 6 On March 13, 1985,
the trial court issued a temporary restraining order [effective "for a period of five (5) days notice" 7 ]
and set the case for hearing on March 18, 1985.
In disposing of the petition, the said court found the material issues to be:
1) Competency of this Court to act on petition filed by the petitioners;
2) Validity of the search warrants issued by respondent State Prosecutor;
3) Whether or not the petition has become moot and academic because all the
search warrants sought to be quashed had already been
implemented and executed. 8
On April 16, 1985, the lower court issued the first of its challenged Orders, and held:
WHEREFORE, in view of all the foregoing, the Court hereby declares Search
Warrant Nos. 156, 157, 158, 159, 160, and 161 to be null and void.
Accordingly, the respondents are hereby ordered to return and
surrender immediately all the personal properties and documents
seized by them from the petitioners by virtue of the aforementioned
search warrants.
SO ORDERED. 9
On August 21, 1985, the trial court denied reconsideration.
On April 4, 1986, the Presidential Anti-Dollar Salting Task Force went to the respondent Court of
Appeals to contest, on certiorari, the twin Order(s) of the lower court.
In ruling initially for the Task Force, the Appellate Court held:
Herein petitioner is a special quasi-judicial body with express powers enumerated
under PD 1936 to prosecute foreign exchange violations defined
and punished under P.D. No. 1883.
The petitioner, in exercising its quasi-judicial powers, ranks with the Regional Trial
Courts, and the latter in the case at bar had no jurisdiction to
declare the search warrants in question null and void.
Besides as correctly pointed out by the Assistant Solicitor General the decision of the
Presidential Anti-Dollar Salting Task Force is appealable to the
Office of the President. 10
On November 12, 1986, Karamfil Import-Export Co., Inc. sought a reconsideration, on the question
primarily of whether or not the Presidential Anti-Dollar Salting Task Force is "such other
responsible officer" countenanced by the 1973 Constitution to issue warrants of search and
seizure.
As we have indicated, the Court of Appeals, on Karamfil's motion, reversed itself and issued its
Resolution, dated September 1987, and subsequently, its Resolution, dated May 20, 1988,
denying the petitioner's motion for reconsideration.
In its petition to this Court, the petitioner alleges that in so issuing the Resolution(s) abovementioned, the respondent Court of Appeals "committed grave abuse of discretion and/or acted in
excess of its appellate jurisdiction," 11 specifically:

a) In deviating from the settled policy and rulings of the Supreme Court that no
Regional Trial Courts may countermand or restrain the enforcement
of lawful writs or decrees issued by a quasi-judicial body of equal
and coordinate rank, like the PADS Task Force;
b) For resorting to judicial legislation to arrive at its erroneous basis for reconsidering
its previous Decision dated October 24, 1986 (see Annex "I") and
thus promulgated the questioned Resolutions (Annexes "A" and
"B"), which violated the constitutional doctrine on separation of
powers;
c) In not resolving directly the other important issues raised by the petitioner in its
Petition in CA-G.R. No. 08622-SP despite the fact that petitioner
has demonstrated sufficiently and convincingly that respondent
RTC, in issuing the questioned Orders in Special Proceeding No.
M-624 (see Annexes "C" and "D"), committed grave abuse of
discretion and/or acted in excess of jurisdiction:
1. In ruling that (a) the description of the
things to be seized as stated in the contested search
warrant were too general which allegedly render the
search warrants null and void; (b) the applications for
the contested search warrants actually charged two
offenses in contravention of the 2nd paragraph,
Section 3, Rule 126 of the Rules of Court; and (c) this
case has not 'become moot and academic, even if the
contested search warrants had already been fully
implemented with positive results; and
2. In ruling that the petitioner PADS Task
Force has not been granted under PD 1936 "judicial or
quasi-judicial jurisdiction." 12
We find, upon the foregoing facts, that the essential questions that confront us are (i) is the
Presidential Anti-Dollar Salting Task Force a quasi-judicial body, and one co-equal in rank and
standing with the Regional Trial Court, and accordingly, beyond the latter's jurisdiction; and (ii) may
the said presidential body be said to be "such other responsible officer as may be authorized by
law" to issue search warrants under the 1973 Constitution? questions we take up seriatim. *
In submitting that it is a quasi-judicial entity, the petitioner states that it is endowed with express
powers and functions under PD No. 1936, to prosecute foreign exchange violations as defined and
punished under PD No. 1883." 13 "By the very nature of its express powers as conferred by the
laws," so it is contended, "which are decidedly quasi-judicial or discretionary function, such as to
conduct preliminary investigation on the charges of foreign exchange violations, issue search
warrants or warrants of arrest, hold-departure orders, among others, and depending upon the
evidence presented, to dismiss the charges or to file the corresponding information in court (cf,
Executive Order No. 934, PD No. 1936 and its Implementing Rules and Regulations effective
August 26, 1984), petitioner exercises quasi-judicial power or the power of adjudication." 14
The Court of Appeals, in its Resolution now assailed, 15 was of the opinion that "[t]he grant of
quasi-judicial powers to petitioner did not diminish the regular courts' judicial power of
interpretation. The right to interpret a law and, if necessary to declare one unconstitutional,
exclusively pertains to the judiciary. In assuming this function, courts do not proceed on the theory
that the judiciary is superior to the two other coordinate branches of the government, but solely on
the theory that they are required to declare the law in every case which come before them." 16
This Court finds the Appellate Court to be in error, since what the petitioner puts to question is the
Regional Trial Court's act of assuming jurisdiction over the private respondent's petition below and
its subsequent countermand of the Presidential Anti-Dollar Salting Task Force's orders of search
and seizure, for the reason that the presidential body, as an entity (allegedly) coordinate and co-

equal with the Regional Trial Court, was (is) not vested with such a jurisdiction. An examination of
the Presidential Anti-Dollar Salting Task Force's petition shows indeed its recognition of judicial
review (of the acts of Government) as a basic privilege of the courts. Its objection, precisely, is
whether it is the Regional Trial Court, or the superior courts, that may undertake such a review.
cdrep
Under the Judiciary Reorganization Act of 1980, 17 the Court of Appeals exercises:
(3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions,
orders or awards of Regional Trial Court and quasi-judicial
agencies, instrumentalities, boards or commissions, except those
falling within the appellate jurisdiction of the Supreme Court in
accordance with the Constitution, the provisions of this Act, and of
subparagraph (1) of the third paragraph and subparagraph (4) of
the fourth paragraph of Section 17 of the Judiciary Act of 1948. 18
xxx xxx xxx
Under the present Constitution, with respect to its provisions on Constitutional Commissions, it is
provided, in part that:
. . . Unless otherwise provided by this Constitution or by law, any decision, order, or
ruling of each Commission may be brought to the Supreme Court
on certiorari by the aggrieved party within thirty days from receipt of
a copy thereof. 19
On the other hand, Regional Trial Courts have exclusive original jurisdiction:
(6) In all cases not within the exclusive jurisdiction of any court, tribunal, person or
body exercising judicial or quasi-judicial functions. 20
xxx xxx xxx
Likewise:
. . .The Supreme Court may designate certain branches of the Regional Trial Court to
handle exclusively criminal cases, juvenile and domestic relations
cases, agrarian case, urban land reform cases which do not fall
under the jurisdiction of quasi-judicial bodies and agencies and/or
such other special cases as the Supreme Court may determine in
the interest of a speedy and efficient administration of justice. 21
xxx xxx xxx
Under our Resolution dated January 11, 1983: 22
. . . The appeals to the Intermediate Appellate Court [now, Court of Appeals] from
quasi-judicial bodies shall continue to be governed by the provisions
of Republic Act No. 5434 insofar as the same is not inconsistent
with the provisions of B.P. Blg. 129. 23
The pertinent provisions of Republic Act No. 5434 are as follows:
SECTION 1. Appeals from specified
agencies. Any provision of existing law or Rule of
Court to the contrary notwithstanding, parties aggrieved
by a final ruling, award, order, decision, or judgment of
the Court of Agrarian Relations; the Secretary of Labor
under Section 7 of Republic Act Numbered Six hundred
and two, also known as the "Minimum Wage Law"; the
Department of Labor under Section 23 of Republic Act
Numbered Eight hundred seventy-five, also known as the
"Industrial Peace Act"; the Land Registration
Commission; the Securities and Exchange Commission;
the Social Security Commission; the Civil Aeronautics
Board; the Patent Office and the Agricultural Inventions
Board, may appeal therefrom to the Court of Appeals,

within the period and in the manner herein provided,

whether the appeal involves questions of fact, mixed
questions of fact and law, or questions of law, or all three
kinds of questions. From final judgments or decisions of
the Court of Appeals, the aggrieved party may appeal by
certiorari to the Supreme Court as provided in Rule 45 of
the Rules of Court. 24
Because of subsequent amendments, including the abolition of various specials courts, 25
jurisdiction over quasi-judicial bodies has to be, consequently, determined by the corresponding
amendatory statutes. Under the Labor Code, decisions and awards of the National Labor
Relations Commission are final and executory, but, nevertheless, "reviewable by this Court
through a petition for certiorari and not by way of appeal." 26
Under the Property Registration Decree, decisions of the Commission of Land Registration, en
consulta, are appealable to the Court of Appeals. 27
The decisions of the Securities and Exchange Commission are likewise appealable to the
Appellate Court, 28 and so are decisions of the Social Security Commission. 29
As a rule, where legislation provides for an appeal from decisions of certain administrative bodies
to the Court of Appeals, it means that such bodies are co-equal with the Regional Trial Courts, in
terms of rank and stature, and logically, beyond the control of the latter. cdrep
As we have observed, the question is whether or not the Presidential Anti-Dollar Salting Task
Force is, in the first place, a quasi-judicial body, and one whose decisions may not be challenged
before the regular courts, other than the higher tribunals the Court of Appeals and this Court.
A quasi-judicial body has been defined as "an organ of government other than a court and other
than a legislature, which affects the rights of private parties through either adjudication or rule
making." 30 The most common types of such bodies have been listed as follows:
(1) Agencies created to function in situations wherein the government is offering
some gratuity, grant, or special privilege, like the defunct Philippine
Veterans Board, Board on Pensions for Veterans, and NARRA, and
Philippine Veterans Administration.
(2) Agencies set up to function in situations wherein the government is seeking to
carry on certain government functions, like the Bureau of
Immigration, the Bureau of Internal Revenue, the Board of Special
Inquiry and Board of Commissioners, the Civil Service Commission,
the Central Bank of the Philippines.
(3) Agencies set up to function in situations wherein the government is performing
some business service for the public, like the Bureau of Posts, the
Postal Savings Bank, Metropolitan Waterworks & Sewerage
Authority, Philippine National Railways, the Civil Aeronautics
Administration.
(4) Agencies set up to function in situations wherein the government is seeking to
regulate business affected with public interest, like the Fiber
Inspections Board, the Philippine Patent Office, Office of the
Insurance Commissioner.
(5) Agencies set up to function in situations wherein the government is seeking under
the police power to regulate private business and individuals, like
the Securities & Exchange Commission, Board of Food Inspectors,
the Board of Review for Moving Pictures, and the Professional
Regulation Commission.
(6) Agencies set up to function in situations wherein the government is seeking to
adjust individual controversies because of some strong social policy
involved, such as the National Labor Relations Commission, the

Court of Agrarian Relations, the Regional Offices of the Ministry of

Labor, the Social Security Commission, Bureau of Labor Standards,
Women and Minors Bureau. 31
As may be seen, it is the basic function of these bodies to adjudicate claims and/or to determine
rights, and unless its decision are seasonably appealed to the proper reviewing authorities, the
same attain finality and become executory. A perusal of the Presidential Anti-Dollar Salting Task
Force's organic act, Presidential Decree No. 1936, as amended by Presidential Decree No. 2002,
convinces the Court that the Task Force was not meant to exercise quasi-judicial functions, that is,
to try and decide claims and execute its judgments. As the President's arm called upon to combat
the vice of "dollar salting" or the blackmarketing and salting of foreign exchange, 32 it is tasked
alone by the Decree to handle the prosecution of such activities, but nothing more. We quote:
LibLex
SECTION 1. Powers of the Presidential
Anti-Dollar Salting Task Force. The Presidential AntiDollar Salting Task Force, hereinafter referred to as Task
Force, shall have the following powers and authority:
a) Motu proprio or upon complaint, to
investigate and prosecute all dollar salting activities,
including the overvaluation of imports and the
undervaluation of exports;
b) To administer oaths, summon persons
or issue subpoenas requiring the attendance and
testimony of witnesses or the production of such
books, papers, contracts, records, statements of
accounts, agreements, and other as may be
necessary in the conduct of investigation;
c) To appoint or designate experts,
consultants, state prosecutors or fiscals, investigators
and hearing officers to assist the Task Force in the
discharge of its duties and responsibilities; gather
data, information or documents; conduct hearings,
receive evidence, oath oral and documentary, in all
cases involving violation of foreign exchange laws or
regulations; and submit reports containing findings
and recommendations for consideration of appropriate
authorities;
d) To punish direct and indirect
contempts with the appropriate penalties therefor
under Rule 71 of the Rules of Court; and To adopt
such measures and take such actions as may be
necessary to implement this Decree.
xxx xxx xxx
"f. After due investigation but prior to the
filing of the appropriate criminal charges with the
fiscal's office or the courts as the case may be, to
impose a fine and/or administrative sanctions as the
circumstances warrant, upon any person found
committing or to have committed acts constituting
blackmarketing or salting abroad of foreign exchange,
provided said person voluntarily admits the facts and
circumstances constituting the offense and presents

proof that the foreign exchange retained abroad has

already been brought into the country.
Thereafter, no further civil or criminal
action may be instituted against said person before
any other judicial regulatory or administrative body for
violation of Presidential Decree No. 1883.
The amount of the fine shall be
determined by the Chairman of the Presidential AntiDollar Salting Task Force and paid in Pesos taking into
consideration the amount of foreign exchange
retained abroad, the exchange rate differentials,
uncollected taxes and duties thereon, undeclared
profits, interest rates and such other relevant factors.
The fine shall be paid to the Task Force
which shall retain Twenty percent (20%) thereof. The
informer, if any, shall be entitled to Twenty percent
(20%) of the fine. Should there be no informer, the
Task Force shall be entitle to retain Forty percent
(40%) of the fine and the balance shall accrue to the
general funds of the National government. The
amount of the fine to be retained by the Task Force
shall form part of its Confidential Fund and be utilized
for the operations of the Task Force." 33
The Court sees nothing in the aforequoted provisions (except with respect to the Task Force's
powers to issue search warrants) that will reveal a legislative intendment to confer it with quasijudicial responsibilities relative to offenses punished by Presidential Decree No. 1883. Its
undertaking, as we said, is simply, to determine whether or not probable cause exists to warrant
the filing of charges with the proper court, meaning to say, to conduct an inquiry preliminary to a
judicial recourse, and to recommend action "of appropriate authorities". It is not unlike a fiscal's
office that conducts a preliminary investigation to determine whether or not prima facie evidence
exists to justify haling the respondent to court, and yet, while it makes that determination, it cannot
be said to be acting as a quasi-court. For it is the courts, ultimately, that pass judgment on the
accused, not the fiscal.
It is not unlike the Presidential Commission on Good Government either, the executive body
appointed to investigate and prosecute cases involving "ill-gotten wealth". It had been vested with
enormous powers, like the issuance of writs of sequestration, freeze orders, and similar
processes, but that did not, on account thereof alone, make it a quasi-judicial entity as defined by
recognized authorities. It cannot pronounce judgment of the accused's culpability, the jurisdiction
to do which is exclusive upon the Sandiganbayan. 34
If the Presidential Anti-Dollar Salting Task Force is not, hence, a quasi-judicial body, it cannot be
said to be co-equal or coordinate with the Regional Trial Court. There is nothing in its enabling
statutes that would demonstrate its standing at par with the said court.
In that respect, we do not find error in the respondent Court of Appeal's resolution sustaining the
assumption of jurisdiction by the court a quo.
It will not do to say that the fact that the Presidential Task Force has been empowered to issue
warrants of arrest, search, and seizure, makes it, ergo, a "semi-court". Precisely, it is the objection
interposed by the private respondent, whether or not it can under the 1973 Charter, issue such
kinds of processes. llcd
It must be observed that under the present Constitution, the powers of arrest and search are
exclusive upon judges. 35 To that extent, the case has become moot and academic. Nevertheless,
since the question has been specifically put to the Court, we find it unavoidable to resolve it as the

final arbiter of legal controversies, pursuant to the provisions of the 1973 Constitution during
whose regime the case was commenced.
Since the 1973 Constitution took force and effect and until it was so unceremoniously discarded in
1986, its provisions conferring the power to issue arrest and search warrants upon an officer, other
than a judge, by fiat of legislation have been at best controversial. In Lim v. Ponce de Leon, 36 a
1975 decision, this Court ruled that a fiscal has no authority to issue search warrants, but held in
the same vein that, by virtue of the "responsible officer" clause of the 1973 Bill of Rights, "any
lawful officer authorized by law can issue a search warrant or warrant of arrest." 37 Authorities,
however, have continued to express reservations whether or not fiscals may, by statute, be given
such a power. 38
Less than a year later, we promulgated Collector of Customs v. Villaluz, 39 in which we
categorically averred: "[U]ntil now only the judge can issue the warrant of arrest." 40 "No law or
presidential decree has been enacted or promulgated vesting the same authority in a particular
responsible officer." 41
Apparently, Villaluzhad settled the debate, but the same question persisted following this Court's
subsequent rulings upholding the President's alleged emergency arrest powers. 42 [Mr. Justice
Hugo Gutierrez would hold, however, that a Presidential Commitment Order (PCO) is (was) not a
species of "arrest" in its technical sense, and that the (deposed) Chief Executive, in issuing one,
does not do so in his capacity as a "responsible officer" under the 1973 Charter, but rather, as
Commander-in-Chief of the Armed Forces in times of emergency, or in order to carry out the
deportation of undesirable aliens. 43 In the distinguished Justice's opinion then, these are acts that
can be done without need of judicial intervention because they are not, precisely, judicial but
Presidential actions.]
In Ponsica v. Ignalaga, 44 however, we held that the mayor has been made a "responsible officer"
by the Local Government Code, 45 but had ceased to be one with the approval of the 1987
Constitution according judges sole authority to issue arrest and search warrants. But in the same
breath, we did not rule the grant under the Code unconstitutional based on the provisions of the
former Constitution. We were agreed, though, that the "responsible officer" referred to by the
fundamental law should be one capable of approximating "the cold neutrality of an impartial
judge." 46
In striking down Presidential Decree No. 1936 the respondent Court relied on American
jurisprudence, notably, Katz v. United States, 47 Johnson v. United States, 48 and Coolidge v.
New Hampshire, 49 in which the American Supreme Court ruled that prosecutors (like the
petitioner) cannot be given such powers because of their incapacity for a "detached scrutiny" 50 of
the cases before them. We affirm the Appellate Court.
We agree that the Presidential Anti-Dollar Salting Task Force exercises, or was meant to exercise,
prosecutorial powers, and on that ground, it cannot be said to be a neutral and detached "judge" to
determine the existence of probable cause for purposes of arrest or search. Unlike a magistrate, a
prosecutor is naturally interested in the success of his case. Although his office "is to see that
justice is done and not necessarily to secure the conviction of the person accused," 51 he stands,
invariably, as the accused's adversary and his accuser. To permit him to issue search warrants and
indeed, warrants of arrest, is to make him both judge and jury in his own right, when he is neither.
That makes, to our mind and to that extent, Presidential Decree No. 1936 as amended by
Presidential Decree No. 2002, unconstitutional. LibLex
It is our ruling, thus, that when the 1973 Constitution spoke of "responsible officer" to whom the
authority to issue arrest and search warrants may be delegated by legislation, it did not furnish the
legislator with the license to give that authority to whomsoever it pleased. It is to be noted that the
Charter itself makes the qualification that the officer himself must be "responsible". We are not
saying, of course, that the Presidential Anti-Dollar Salting Task Force (or any similar prosecutor) is
or has been irresponsible in discharging its duty. Rather, we take "responsibility", as used by the
Constitution, to mean not only skill and competence but more significantly, neutrality and

independence comparable to the impartiality presumed of a judicial officer. A prosecutor can in no

manner be said to be possessed of the latter qualities.
According to the Court of Appeals, the implied exclusion of prosecutors under the 1973
Constitution was founded on the requirements of due process, notably, the assurance to the
respondent of an unbiased inquiry of the charges against him prior to the arrest of his person or
seizure of his property. We add that the exclusion is also demanded by the principle of separation
of powers on which our republican structure rests. Prosecutors exercise essentially an executive
function (the petitioner itself is chaired by the Minister, now Secretary, of Trade and Industry), since
under the Constitution, the President has pledged to execute the laws. 52 As such, they cannot be
made to issue judicial processes without unlawfully impinging the prerogative of the courts.
At any rate, Ponsica v. Ignalaga should foreclose all questions on the matter, although the Court
hopes that this disposition has clarified a controversy that had generated often bitter debates and
bickerings.
The Court joins the Government in its campaign against the scourge of "dollar-salting", a
pernicious practice that has substantially drained the nation's coffers and has seriously threatened
its economy. We recognize the menace it has posed (and continues to pose) unto the very stability
of the country, the urgency for tough measures designed to contain if not eradicate it, and
foremost, the need for cooperation from the citizenry in an all-out campaign. But while we support
the State's efforts, we do so not at the expense of fundamental rights and liberties and
constitutional safeguards against arbitrary and unreasonable acts of Government. If in the event
that as a result of this ruling, we prove to be an "obstacle" to the vital endeavour of stamping out
the blackmarketing of valuable foreign exchange, we do not relish it and certainly, do not mean it.
The Constitution simply does not leave us much choice. cdll
WHEREFORE, the petition is DISMISSED. No costs.
SO ORDERED.
||| (Presidential Anti-Dollar Salting Task Force v. Court of Appeals, G.R. No. 83578, March 16,
1989)
EN BANC
[G.R. Nos. 92319-20. October 2, 1990.]
EDUARDO M. COJUANGCO, JR., petitioner, vs. PRESIDENTIAL COMMISSION ON GOOD
GOVERNMENT (PCGG) AND HON. FRANCISCO I. CHAVEZ in his capacity as Solicitor
General, and the HON. OMBUDSMAN, respondents, MARIA CLARA L. LOBREGAT and
JOSE R. ELEAZAR, JR., intervenors.
Estelito P. Mendoza and Villareal Law Offices for petitioner.
Angara, Abello, Concepcion, Regala & Cruz for intervenors.
DECISION
GANCAYCO, J p:
In these petitions the issues raised are: (1) whether or not the Presidential Commission on Good
Government (PCGG) has the power to conduct a preliminary investigation of the anti-graft and
corruption cases filed by the Solicitor General against Eduardo Cojuangco, Jr. and other
respondents for the alleged misuse of coconut levy funds; and (2) on the assumption that it has
jurisdiction to conduct such a preliminary investigation, whether or not its conduct constitutes a
violation of petitioner's rights to due process and equal protection of the law. LLpr
On November 28, 1989, President Corazon C. Aquino directed the Solicitor General to prosecute
all persons involved in the misuse of coconut levy funds. Pursuant to the above directive the
Solicitor General created a task force to conduct a thorough study of the possible involvement of
all persons in the anomalous use of coconut levy funds.
On January 12, 1990, the Solicitor General filed two criminal complaints with respondent PCGG
docketed under I.S. Nos. 74 and 75. 1
The PCGG assigned both complaints to prosecutor Cesario del Rosario for preliminary
investigation. The latter scheduled both cases for hearing.

Del Rosario prepared a subpoena dated January 16, 1990 setting the preliminary investigation on
January 29, 1990 at 2:00 o'clock in the afternoon as to respondents Maria Clara Lobregat, Jose
Eleazar, Felix Dueas, Jr., and Salvador Escudero, III, and on January 31, 1990 at 2:00 o'clock in
the afternoon as to petitioner Eduardo M. Cojuangco, Jr., Rolando de la Cuesta, and Herminigildo
Zayco.
At the scheduled preliminary investigation on January 31, 1990 petitioner appeared through
counsel. Instead of filing a counter-affidavit, as required in the subpoena, he filed two motions
addressed to the PCGG, namely: (1) a motion to disqualify/inhibit PCGG; alternatively, a motion to
dismiss; and (2) motion to have the PCGG itself hear or resolve Cojuangco's motion to
disqualify/inhibit PCGG alternatively, motion to dismiss.
Prosecutor del Rosario denied both motions and declared the proceedings closed and the cases
submitted for resolution. Thereafter, petitioner requested the PCGG to resolve directly his
aforesaid motions.
On February 27, 1990, the PCGG issued an order denying petitioner's motions and required him,
together with all the respondents in I.S. Nos. 74 and 75 to submit counter-affidavits within five (5)
days from receipt thereof. Petitioner did not submit the required counter-affidavit.
Instead, he filed in this Court on March 12, 1990 the herein petitions for prohibition with prayer for
a temporary restraining order/writ of preliminary injunction.
He alleges that the PCGG may not conduct a preliminary investigation of the complaints filed by
the Solicitor General without violating petitioner's rights to due process and equal protection of the
law, and that the PCGG has no right to conduct such preliminary investigation. It is prayed that a
temporary restraining order be issued enjoining the respondents and any or all persons acting
under their orders or in their behalf from continuing with the preliminary investigation of I.S. Nos.
74 and 75 and enjoining as well the PCGG from taking any further action on said cases; and after
hearing on the merits, to issue a writ of preliminary injunction prohibiting respondent PCGG from
conducting a preliminary investigation of said criminal complaints and to order that the records of
I.S. Nos. 74 and 75 be forwarded to the Ombudsman for such action he may consider appropriate
and to pay the costs of the suits.
In a resolution dated March 13, 1990, this Court, without giving due course to the petition, resolved
to require respondents to comment thereon within ten (10) days from notice.
On the same date, the PCGG issued an order that reads as follows:
"Considering that none of the respondents have filed their counter-affidavits and
supporting evidence, except respondent Hermenegildo Zayco, the
complaints filed against them may now be considered submitted for
resolution by this Commission.
Since the respondents, except Hermenegildo Zayco, have not submitted counteraffidavits and controverting evidence, the evidence submitted by the
complainants stands uncontradicted. And this Commission finds the
findings and conclusions of fact of the investigating prosecutor, that
a prima facie case has been established against all the
respondents, including Hermenegildo Zayco, to warrant the filing of
an information for a violation of Section 3(1) in relation to Section
3(i) thus making them liable under Section 3(a) of RA 3019, to be
well-founded.
Wherefore, let the corresponding information be filed." 2
On March 14, 1990, two informations 3 were filed by the PCGG with the Sandiganbayan against
petitioner and all other respondents named in I.S. Nos. 74 and 75 which were docketed as
Criminal Cases No. 14398 and 14399.
Meanwhile, the Solicitor General filed with the PCGG several other complaints against petitioner
and several others bearing on the misuse of the coconut levy funds. Two of these complaints were
docketed as I.S. Nos. 79 and 82. A panel of prosecutors designated by the PCGG issued a
subpoena to petitioner in order to compel him to appear in the investigation of said cases. llcd

On March 20, 1990, petitioner filed a supplemental petition informing the Court of the filing of said
informations and the additional complaints aforestated. He prays that a temporary restraining order
be issued enjoining respondents and other persons acting under their orders or in their behalf from
continuing with the preliminary investigation of as well as taking further action in I.S. Nos. 79 and
82 and similar cases filed with the PCGG. Petitioner also prays that, after hearing, the PCGG be
prohibited from continuing with the preliminary investigation of I.S. Nos. 79 and 82 and that it be
ordered to forward the records of the case to the Ombudsman for appropriate action, and to pay
the costs of the suit.
On the same date, petitioner filed a motion reiterating the petition for the issuance of a temporary
restraining order/writ of preliminary injunction and alternatively seeking that the case be set for
hearing.
On March 22, 1990, the Court admitted the supplemental pleading of the petitioner; required
respondents to comment thereon within a non-extendible period of ten (10) days from notice; and
issued a status quo order prevailing at the time this petition was filed on March 12, 1990.
On April 2, 1990, a consolidated comment was submitted by the respondents attaching as annex
thereto the letters of the Executive Secretary dated February 9, 1990 and February 21, 1990,
respectively, addressed to the Chairman, PCGG, conveying the instructions of the President of the
Philippines that the complaints involving coconut levy funds be filed with the PCGG, to conduct the
necessary investigation and if warranted to file and prosecute the cases before the
Sandiganbayan; and it confirmed the earlier instructions of the President dated November 28,
1989 to the same effect. 4
On May 4, 1990 petitioner filed a reply to the consolidated comment as required by the Court. In a
resolution dated June 5, 1990, the Solicitor General was required to file a rejoinder. On May 31,
1990, a motion for hearing of said cases was filed by petitioner and this was granted by the Court
on June 21, 1990. It was directed that the Ombudsman be impleaded as party respondent. The
Court required the Ombudsman to comment on the petition within ten (10) days from notice. The
case was set for hearing on Tuesday, July 17, 1990 at 10:00 in the morning.
The Ombudsman submitted his comment on July 3, 1990 and the Court required petitioner to file a
reply to the same.
On July 6, 1990, Maria Clara Lobregat and Jose R. Eleazar, Jr. filed a Motion for Leave to
Intervene and a Motion to Admit Petition to Intervene wherein they ask that the PCGG desist from
further proceeding with the preliminary investigation of I.S. Nos. 74, 75, 77, 79, 80, 81, 82, 83, and
84 charging the intervenors and other respondents, including petitioner, with violations of the AntiGraft and Corrupt Practices Act (Republic Act No. 3019) in connection with the coconut levy funds.
The intervenors question the authority of the PCGG to conduct a preliminary investigation of the
said cases. They maintain that even assuming that the PCGG has such authority, the same cannot
be delegated to a prosecutor or his assistants.
On July 10, 1990, the court granted the motion for leave to intervene and admitted the petition for
intervention. The PCGG was required to comment on said petition within ten (10) days from notice.
On July 13, 1990, respondents filed their rejoinder to the reply of petitioner to their consolidated
comments. The Ombudsman filed his comment to the petition for intervention, while petitioner filed
his reply to the comment of the Ombudsman on July 16, 1990.
The hearing was held as scheduled on July 17, 1990 where all the parties including the
Ombudsman appeared and/or were duly represented by counsels. After the hearing, the parties
were required to submit their simultaneous memoranda within fifteen (15) days from the date of
the hearing.
On July 21, 1990, the Solicitor General asked for an extension of time within which to file his
comment to the petition for intervention. He filed said comment within the period of extension
asked for on July 31, 1990.
The memoranda of all the parties having been submitted, the petitions were deemed submitted for
resolution.

On the first issue wherein petitioner and intervenors question the authority of the PCGG to conduct
a preliminary investigation of the criminal complaints filed against them by the Solicitor General,
the Court finds and so holds the same to be devoid of merit.
Under Section 2, Rule 112 of the 1985 Rules of Criminal Procedure the officers authorized to
conduct a preliminary investigation are the following:
"SEC. 2. Officers authorized to conduct preliminary investigation.
The following may conduct a preliminary
investigation:
(a) Provincial or city fiscals and their
assistants;
(b) Judges of the Municipal Trial Courts
and Municipal Circuit Trial Court;
(c) National and Regional state
prosecutors; and
(d) Such other officers as may be
authorized by law.
Their authority to conduct preliminary
investigation shall include all crimes cognizable by the
proper court in their respective territorial jurisdictions."
Under Section 2 likewise of Rule 112 of the Rules of Court before its present amendment, the
officers authorized to conduct preliminary investigation are as follows:
"SEC. 2. Officers authorized to conduct preliminary examination. Every justice of
the peace, municipal judge, city or provincial fiscal, shall have
authority to conduct preliminary examination or investigation in
accordance with these rules of all offenses alleged to have been
committed within his municipality, city or province, cognizable by the
Court of First Instance.
The justice of the peace of the provincial capital or of the municipality in which the
provincial jail is located when directed by an order of the Court of
First Instance, shall have authority to conduct such preliminary
examination or investigation of any offense committed anywhere
within his province at the expense of the municipality wherein the
same was committed."
Under Section 3 thereof in case of temporary absence of the justice of the peace or his auxiliary,
the municipal mayor may conduct the preliminary investigation. For complaints filed directly with
the Court of First Instance, the judge of the said court may refer the case to the justice of the
peace or he may himself conduct both the preliminary examination and investigation
simultaneously, under Section 13 of the same rule. cdrep
Upon the enactment of the Anti-Graft and Corrupt Practices Act on August 17, 1960, 5 and
Republic Act No. 1379 (covering unexplained wealth cases) on August 18, 1955, the preliminary
investigation of cases involving the Anti-Graft and Corrupt Practices Act and/or unexplained wealth
cases was vested on the aforestated officers.
However, on July 17, 1979, Presidential Decree No. 1630 was promulgated whereby the
Tanodbayan was vested with the "exclusive authority to conduct preliminary investigation of all
cases cognizable by the Sandiganbayan." 6 Under Presidential Decree No. 1486 which was
approved on June 11, 1978, the Sandiganbayan was created and vested with exclusive jurisdiction
over all offenses committed by public officers enumerated therein. This was amended by
Presidential Decree No. 1606 dated December 10, 1978 and further amended by Presidential
Decree No. 1861 issued on March 23, 1983 wherein the jurisdiction of the Sandiganbayan was
defined as follows:
"SECTION 1. Section 4 of Presidential Decree No. 1606 is hereby amended to read
as follows:

"SEC. 4. Jurisdiction The Sandiganbayan shall exercise:

"(a) Exclusive original jurisdiction in all
cases involving:
(1) Violations of
Republic Act No. 3019, as
amended, otherwise known
as the Anti-Graft and Corrupt
Practices Act, Republic Act
No. 1379, and Chapter II,
Section 2, Title VII of the
Revised Penal Code;
(2) Other
offenses or felonies
committed by public officers
and employees in relation to
their office, including those
employed in governmentowned or controlled
corporations, whether simple
or complexed with other
crimes, where the penalty
prescribed by law is higher
than prision correccional or
imprisonment for six (6) years,
or a fine of P6,000.00:
PROVIDED, HOWEVER, that
offenses or felonies
mentioned in this paragraph
where the penalty prescribed
by law does not exceed
prision correccional or
imprisonment for six (6) years
or a fine of P6,000.00 shall be
tried by the proper Regional
Trial Court, Metropolitan Trial
Court, Municipal Trial Court
and Municipal Circuit Trial
Court.
"(b) Exclusive appellate jurisdiction:
(1) On appeal,
from the final judgments,
resolutions or orders of the
Regional Trial Courts in cases
originally decided by them in
their respective territorial
jurisdiction.
(2) By petition
for review, from the final
judgments, resolutions or
orders of the Regional Trial
Courts in the exercise of their
appellate jurisdiction over

cases originally decided by

the Metropolitan Trial Courts,
Municipal Trial Courts and
Municipal Circuit Trial Courts,
in their respective jurisdiction.
The procedure prescribed in Batas
Pambansa Blg. 129, as well as the implementing rules
the Supreme Court has promulgated and may
hereinafter promulgate, relative to appeals/petitions
for review to the Intermediate Appellate Court shall
apply to appeals and petition for review filed with the
Sandiganbayan. In all cases elevated to the
Sandiganbayan, the Office of the Tanodbayan shall
represent the People of the Philippines.
In case private individuals are charged
as co-principals, accomplices or accessories with the
public officers or employees, including those
employed in government-owned or controlled
corporations, they shall be tried jointly with said public
officers and employees.
Any provision of law or the Rules of
Court to the contrary notwithstanding, the criminal
action and the corresponding civil action for the
recovery of civil liability arising from the offense
charged shall at all times be simultaneously instituted
with and jointly determined in the same proceeding by
the Sandiganbayan or the appropriate courts, the filing
of the criminal action being deemed to necessarily
carry with it the filing of the civil action, and no right to
reserve the filing of such civil action separately from
the criminal action shall be recognized: PROVIDED,
HOWEVER, that where the civil action had heretofore
been filed separately but judgment therein has not yet
been rendered, and the criminal case is hereafter filed
with the Sandiganbayan or the appropriate court, said
civil action shall be transferred to the Sandiganbayan
or the appropriate court, as the case may be, for
consolidation and joint determination with the criminal
action, otherwise the separate civil action shall be
considered abandoned."
SECTION 2. All cases pending in the Sandiganbayan or in the appropriate courts as
of the date of the effectivity of this Decree shall remain with and be
disposed of by the courts where they are pending.
SECTION 3. The provisions of this Decree notwithstanding, the office of the
Tanodbayan shall continue to have the exclusive authority to
conduct preliminary investigation, file the necessary information,
and direct and control the prosecution of all cases enumerated in
Section 4 of Presidential Decree No. 1606, whether such cases be
within the exclusive original/appellate jurisdiction of the
Sandiganbayan or the appropriate courts in accordance with the
provisions of Presidential Decree No. 1630." (Emphasis supplied.)

However, this exclusive jurisdiction of the Tanodbayan to conduct preliminary investigation of said
cases was modified by EXECUTIVE ORDER NO. 1 signed by President Corazon C. Aquino on
February 28, 1986 creating the PCGG and constituting its membership to assist the President in
the recovery of ill gotten wealth accumulated by the former President, his relatives and cronies.
Therein it is provided, among others:
"SECTION 2. The Commission shall be charged with the task of assisting the
President in regard to the following matters:
(a) The recovery of all ill-gotten wealth
accumulated by former President Ferdinand E.
Marcos, his immediate family, relatives, subordinates
and close associates, whether located in the
Philippines or abroad, including the takeover or
sequestration of all business enterprises and entities
owned or controlled by them, during his
administration, directly or through nominees, by taking
undue advantage of their public office and/or using
their powers, authority, influence, connections or
relationship.
(b) The investigation of such cases of
graft and corruption as the President may assign to
the Commission from time to time.
(c) The adoption of safeguards to ensure
that the above practices shall not be repeated in any
manner under the new government, and the institution
of adequate measures to prevent the occurrence of
corruption.
SECTION 3. The Commission shall have the power and authority:
(a) To conduct investigations as may be
necessary in order to accomplish and carry out the
purposes of this order. (Emphasis supplied.)"
Under EXECUTIVE ORDER NO. 14 signed by President Aquino on May 7, 1986, it is also
provided:
"SECTION 1. Any provision of the law to the contrary notwithstanding, the
Presidential Commission on Good Government with the assistance
of the Office of the Solicitor General and other government
agencies, is hereby empowered to file and prosecute all cases
investigated by it under EXECUTIVE ORDER NO. 1, dated
February 28, 1986 and Executive Order No. 2, dated March 12,
1986, as may be warranted by its findings.
SECTION 2. The Presidential Commission on Good Government shall file all such
cases, whether civil or criminal, with the Sandiganbayan, which
shall have exclusive and original jurisdiction thereof .
SECTION 3. Civil suits for restitution, reparation of damages, or indemnification for
consequential damages, forfeiture proceedings provided for under
Republic Act No. 1379, or any other civil actions under the Civil
Code or other existing laws, in connection with EXECUTIVE
ORDER NO. 1 dated February 28, 1986 and Executive Order No. 2
dated March 12, 1986, may be filed separately from and proceed
independently of any criminal proceedings and may be proved by
preponderance of evidence. (Emphasis supplied.)"

From the foregoing provisions of law, particularly Sections 2(b) and 3(a) of EXECUTIVE ORDER
NO. 1 and Sections 1 and 2 of EXECUTIVE ORDER NO. 14, it is clear that the PCGG has the
power to investigate and prosecute such ill-gotten wealth cases of the former President, his
relatives and associates, and graft and corrupt practices cases that may be assigned by the
President to the PCGG to be filed with the Sandiganbayan. No doubt, the authority to investigate
extended to the PCGG includes the authority to conduct a preliminary investigation. 7
Thus, the Tanodbayan lost the exclusive authority to conduct the preliminary investigation of these
types of cases by the promulgation of the said Executive Order Nos. 1 and 14 whereby the PCGG
was vested concurrent jurisdiction with the Tanodbayan to conduct such preliminary investigation
and to prosecute said cases before the Sandiganbayan. 8 The power of the PCGG to conduct a
preliminary investigation of the aforementioned types of cases has been recognized by this Court
in Bataan Shipyard and Engineering Co. Inc. (BASECO) vs. PCGG. 9
Upon the adoption of the 1987 Constitution, the Office of the Ombudsman was created under
Article XI, as follows:
"SEC. 13. The Office of the Ombudsman shall have the following powers, functions,
and duties:
(1) Investigate on its own, or on
complaint by any person, any act or omission of any
public official, employee, office or agency, when such
act or omission appears to be illegal, unjust, improper,
or inefficient.
(2) Direct, upon complaint or at its own
instance, any public official or employee of the
Government, or any subdivision, agency or
instrumentality thereof, as well as of any governmentowned or controlled corporation with original charter,
to perform and expedite any act or duty required by
law, or to stop, prevent, and correct any abuse or
impropriety in the performance of duties.
(3) Direct the officer concerned to take
appropriate action against a public official or employee
at fault, and recommend his removal, suspension,
demotion, fine, censure, or prosecution, and ensure
compliance therewith.
(4) Direct the officer concerned, in any
appropriate case and subject to such limitations as
may be provided by law, to furnish it with copies of
documents relating to contracts or transactions
entered into by his office involving the disbursement or
use of public funds or properties, and report any
irregularity to the Commission on Audit for appropriate
action.
(5) Request any government agency for
assistance and information necessary in the discharge
of its responsibilities, and to examine, if necessary,
pertinent records and documents.
(6) Publicize matters covered by its
investigation when circumstances so warrant and with
due prudence.
(7) Determine the causes of inefficiency,
red tape, mis-management, fraud, and corruption in
the Government and make recommendations for their

elimination and the observance of high standards of

ethics and efficiency.(8) Promulgate its rules of
procedure and exercise such other powers or perform
such functions or duties as may be provided by law."
(Emphasis supplied)
This Court, in Zaldivar, 10 interpreting the aforesaid provision of the Constitution, particularly
Section 13(1) thereof vesting on the Ombudsman the right and the power to investigate on its own
or on complaint, any act or omission of any public official, employee, office or agency which
appears "to be illegal, unjust, improper, or inefficient", held that the general power of investigation
covers the lesser power to conduct a preliminary investigation. Thus, as the power of investigation
vested on the Ombudsman under the Constitution includes the power to conduct a preliminary
investigation, then the special prosecutor (former Tanodbayan) may no longer conduct such a
preliminary investigation unless duly authorized by the Ombudsman. 11
A reading of the foregoing provision of the Constitution does not show that the power of
investigation including preliminary investigation vested on the Ombudsman is exclusive. Hence,
the said provision of the Constitution did not repeal or remove the power to conduct an
investigation, including the authority to conduct a preliminary investigation, vested on the PCGG
by Executive Orders Nos. 1 and 14
Although under Section 26 of Article XVIII of the Constitution the authority of the PCGG to issue
sequestration or freeze orders was maintained for not more than eighteen months after the
ratification of the Constitution, it cannot be construed thereby that its power of investigation had
thereby been revoked by the failure to reiterate said power in the Constitution.
Indeed, upon the passage of Republic Act No. 6770, otherwise known as the "Ombudsman Act of
1989," it is therein specifically provided in Section 15 as follows:
"SEC. 15. Powers, Functions and Duties. The Office of the Ombudsman shall
have the following powers, functions and duties:
(1) Investigate and prosecute on its own or on complaint by any person, any act or
omission of any public officer or employee, office or agency, when
such act or omission appears to be illegal, unjust, improper or
inefficient. It has primary jurisdiction over cases cognizable by the
Sandiganbayan and, in the exercise of this primary jurisdiction, it
may take over, at any stage, from any investigatory agency of
Government, the investigation of such cases;
xxx xxx xxx
(11) Investigate and initiate the proper action for the recovery of ill-gotten and or
unexplained wealth amassed after February 25, 1986 and the
prosecution of the parties involved therein.
The Ombudsman shall give priority to complaints filed against high ranking
government officials and/or those occupying supervisory positions,
complaints involving grave offenses as well as complaints involving
large sums of money and or properties."
Under Section 15(1) of Republic Act No. 6770 aforecited, the Ombudsman has primary jurisdiction
over cases cognizable by the Sandiganbayan so that it may take over at any stage from any
investigatory agency of the government, the investigation of such cases. The authority of the
Ombudsman to investigate offenses involving public officers or employees is not exclusive but is
concurrent with other similarly authorized agencies of the government. Such investigatory
agencies referred to include the PCGG and the provincial and city prosecutors and their
assistants, the state prosecutors and the judges of the municipal trial courts and municipal circuit
trial courts. 12
In other words, the aforestated provision of the law has opened up the authority to conduct
preliminary investigation of offenses cognizable by the Sandiganbayan to all investigatory
agencies of the government duly authorized to conduct a preliminary investigation under Section

2, Rule 112 of the 1985 Rules of Criminal Procedure with the only qualification that the
Ombudsman may take over at any stage of such investigation in the exercise of his primary
jurisdiction.
It is also noted that under Section 15(11) of the aforestated Republic Act No. 6770, among the
powers vested on the Ombudsman is to investigate and to initiate the proper action for recovery of
ill-gotten wealth and/or unexplained wealth amassed after February 25, 1986 and the prosecution
of the parties involved therein. The Court agrees with the contention of the public respondent
PCGG that this provision is a tacit recognition that the authority of the PCGG to conduct
preliminary investigation of ill-gotten wealth and/or unexplained wealth amassed before February
25, 1986 is maintained. prLL
However, the Court finds and so holds that the aforesaid provision of the law cannot in any manner
dilute or diminish the primary jurisdiction of the Ombudsman over all such types of cases
committed by public officers or employees as provided in Section 13, Article XI of the Constitution.
Thus, notwithstanding the provision of Section 15 (11) of Republic Act No. 6770, the primary
jurisdiction of the Ombudsman to investigate covers ill-gotten wealth and/or unexplained wealth
cases that occurred even before February 25, 1986.
The second issue raised that the preliminary investigation by the PCGG of the aforestated
complaints violates the right of petitioner to due process and to equal protection of law is
impressed with merit.
Under Section 1, Rule 112 of the 1985 Rules on Criminal Procedure, preliminary investigation is
defined as "an inquiry or proceeding for the purpose of determining whether there is sufficient
ground to engender a well-founded belief that a crime cognizable by the Regional Trial Court has
been committed and that the respondent is probably guilty thereof, and should be held for trial."
The purpose of a preliminary investigation is to secure the innocent against hasty, malicious and
oppressive prosecution, and to protect him from an open and public accusation of a crime, from
the trouble, expense, anxiety of a public trial, and also to protect the state from useless and
expensive trials. 13
The conduct of a preliminary investigation is the initial step towards the criminal prosecution of a
person. After such preliminary investigation, if the investigating officer finds that there is sufficient
ground to engender a well-founded belief that a crime has been committed and that the
respondent is probably guilty thereof and should be held for trial, then the corresponding complaint
or information shall be filed in the competent court. It is the filing of said complaint or information
that initiates the criminal prosecution of the accused when he is brought to court for trial.
Such a preliminary investigation is required for offenses cognizable by the Regional Trial Court
and the Sandiganbayan. 14 It must be undertaken in accordance with the procedure provided in
Section 3, Rule 112 of the 1985 Rules of Criminal Procedure. This procedure is to be observed in
order to assure that a person undergoing such preliminary investigation will be afforded due
process.
As correctly pointed out by petitioner, an indispensable requisite of due process is that the person
who presides and decides over a proceeding, including a preliminary investigation, must possess
the cold neutrality of an impartial judge. 15
Although such a preliminary investigation is not a trial and is not intended to usurp the function of
the trial court, it is not a casual affair. The officer conducting the same investigates or inquires into
the facts concerning the commission of the crime with the end in view of determining whether or
not an information may be prepared against the accused. Indeed, a preliminary investigation is in
effect a realistic judicial appraisal of the merits of the case. Sufficient proof of the guilt of the
accused must be adduced so that when the case is tried, the trial court may not be bound as a
matter of law to order an acquittal. A preliminary investigation has then been called a judicial
inquiry. It is a judicial proceeding. An act becomes judicial when there is opportunity to be heard
and for, the production and weighing of evidence, and a decision is rendered thereon.

The authority of a prosecutor or investigating officer duly empowered to preside or to conduct a

preliminary investigation is no less than that of a municipal judge or even a regional trial court
judge. 16 While the investigating officer, strictly speaking is not a "judge," by the nature of his
functions he is and must be considered to be a quasi judicial officer.
Soon after the creation of the PCGG under EXECUTIVE ORDER NO. 1, the PCGG sequestered
and froze all the properties of petitioner Cojuangco in accordance with the powers vested in it by
law.
On July 31, 1987, said petitioner was sued by the PCGG before the Sandiganbayan by way of a
complaint entitled "Republic of the Philippines vs. Eduardo M. Cojuangco, Jr.," et al. docketed as
Civil Case No. 0033. Among the allegations of the complaint are as follows:
"This is a civil action against Defendants Eduardo Cojuangco, Jr., Ferdinand E.
Marcos, Imelda R. Marcos and the rest of the Defendants in the
above-entitled case to recover from them ill-gotten wealth consisting
of funds and other property which they, in unlawful concert with one
another, had acquired and accumulated in flagrant breach of trust
and of their fiduciary obligations as public officers with, grave abuse
of right and power and in brazen violation of the Constitution and
laws of the Republic of the Philippines, thus resulting in their unjust
enrichment during Defendant Ferdinand E. Marcos' 20 years of rule
from December 30, 1965 to February 25, 1986, first as President of
the Philippines under the 1935 Constitution and, thereafter, as oneman ruler under martial law and Dictator under the 1973 Marcospromulgated Constitution.
2. The wrongs committed by Defendant acting singly or collectively and in unlawful
concert with one another, include the misappropriation and theft of
public funds, plunder of the nation's wealth, extortion, blackmail,
bribery, embezzlement and other acts of corruption, betrayal of
public trust and brazen abuse of power as more fully described
below, all at the expense and to the grave and irreparable damage
of Plaintiff and the Filipino people. (Emphasis supplied.)" 17
The complaint was filed by the PCGG through its Chairman, Ramon A. Diaz, who verified the
complaint, and Solicitor General Francisco I. Chavez and Assistant Solicitor General Ramon S.
Desuasido.
Petitioner in turn filed a counterclaim against the PCGG for the sequestration of his properties and
the institution of the suit. He also questioned the acts of the PCGG in several special civil actions
before the court. 18
On November 27, 1989, the first working day after petitioner Cojuangco returned to the
Philippines, the PCGG filed with the Sandiganbayan an information against said petitioner for
violation of Republic Act No. 3019 entitled "People of the Philippines vs. Eduardo M. Cojuangco,
Jr." docketed as Criminal Case No. 14161. However, the Sandiganbayan found no probable cause
for the issuance of a warrant of arrest so a petition for certiorari was filed by the Solicitor General
in this Court docketed as G.R. No. 91741. On March 29, 1990 this Court denied the petition.
On November 28, 1989, President Aquino directed the Solicitor General to prosecute all persons
involved in the misuse of the coconut levy funds. The Solicitor General created a task force for the
purpose.
On January 12, 1990, the Solicitor General filed with the PCGG the first two criminal complaints for
violation of the Anti-Graft and Corrupt Practices Act, bearing on the anomalous use and/or misuse
of the coconut levy funds docketed as I.S. Nos. 74 and 75. Among the respondents were the
petitioner and intervenors Lobregat and Eleazar. The PCGG assigned assistant prosecutor
Cesario del Rosario to conduct the preliminary investigation.
As hereinabove related, a subpoena was issued by the said prosecutor for the preliminary
investigation on January 29, 1989 insofar as intervenors are concerned while that of petitioner, de

la Cuesta and Herminigildo Zayco was scheduled on January 31, 1990. In the same subpoena,
respondents were required to submit their counter-affidavits and other supporting documents to
controvert the complaint within ten (10) days from notice.
On the scheduled investigation dated January 29, 1990, intervenors appeared through counsel
and moved to dismiss the complaints for lack of jurisdiction of the PCGG to conduct the
preliminary investigation but this was denied by said prosecutor. They were asked by the
prosecutor if they will submit their counter-affidavits but intervenors' counsel replied that they were
not yet ready to file the same because of their pending motion. Thus, the cases were considered
closed insofar as they are concerned.
The intervenors contested the prosecutor's action before the Sandiganbayan through a petition for
certiorari and prohibition docketed as Criminal Case No. 0093. On March 13, 1990, the
Sandiganbayan promulgated its decision wherein it declared the preliminary investigation
conducted by del Rosario null and void, enjoined the PCGG from filing an information on the basis
thereof and directed the PCGG to conduct another preliminary investigation of I.S. Nos. 74 and 75
as to the intervenors and to assign another investigating prosecutor.
Earlier however, that is, on February 27, 1990, the PCGG, overruling prosecutor del Rosario's
order, gave the intervenors in I.S. Nos. 74 and 75 another period of five (5) days from notice within
which to submit their counter-affidavits and supporting evidence. Based on this action the PCGG
filed a motion for reconsideration of the aforesaid decision of the Sandiganbayan which had not
been resolved.
As to petitioner, on the day of the preliminary investigation dated January 31, 1990, his counsel
filed a motion to disqualify or inhibit the PCGG, an alternative motion to dismiss, and a motion to
have the PCGG itself hear and/or resolve the motion to disqualify or inhibit itself alternatively a
motion to dismiss. The preliminary investigation presided by prosecutor del Rosario started at 2:00
o'clock P.M. with eight other respondents duly represented by their counsel. The said motion was
denied and the preliminary investigation was adjourned.
Immediately thereafter petitioner brought the matter to Chairman Mateo A.T. Caparas of the PCGG
and in several communications sought resolution of the motion by the PCGG. On February 27,
1990, the PCGG issued an order denying petitioner's motion to dismiss for lack of jurisdiction but
did not resolve the motion to disqualify. Therein, the PCGG directed petitioner to submit his
counter-affidavits within five (5) days from receipt of notice.
On March 12, 1990, the same day this petition was filed in this Court, the petitioner, instead of
filing the counter-affidavit, filed with the PCGG an urgent motion to defer proceedings in I.S. Nos.
74 and 75 for at least until March 22, 1990 within which to seek judicial relief from the order of
February 27, 1990. Upon the filing of this petition, petitioner filed a supplemental urgent motion to
defer proceedings with the PCGG informing it of the filing of this petition.
Nevertheless, on March 14, 1990, the PCGG filed two informations corresponding to the
complaints in I.S. Nos. 74 and 75 which are docketed as Criminal Cases Nos. 14398 and 14399,
respectively, at the Sandiganbayan. The PCGG recommended bail as P100,000.00 for each case.
Meanwhile, the Solicitor General filed two other complaints against the petitioner with the PCGG
accusing the petitioner of violation of Republic Act No. 3019 and other penal laws in connection
with the coconut levy funds, namely, I.S. No. 79 which concerns an alleged arbitration award in
favor of Agricultural Investors Inc., and I.S. No. 82 which concerns the acquisition of coconut oil
mills.
Several other complaints were filed by the Solicitor General with the PCGG against petitioner for
preliminary investigation, to wit:
(a) I.S. No. 80 which concerns the acquisition of the First United Bank, now United Coconut
Planters' Bank; (b) I.S. No. 81 concerning shares of the United Coconut Oil Mills Inc.; (c) I.S. No.
83 regarding the acquisition of coconut oil mills and certain indebtedness thereof; and (d) I.S. No.
84 regarding settlement of an Anti-Graft suit in the United States. All of these complaints were for
alleged violation of Republic Act No. 3019.

The question that arises, therefore, is whether under the circumstances of this case, it would be
fair and just for the PCGG to conduct the preliminary investigation of the said complaint instead of
the Ombudsman or any other duly authorized investigating agency.
Upon the creation of the PCGG under EXECUTIVE ORDER NO. 1 issued by President Aquino,
the PCGG was charged with the task of assisting the President not only in the recovery of ill-gotten
wealth or unexplained wealth accumulated by the former President, his immediate family, relatives,
subordinates and close associates but also in the investigation of such cases of graft and
corruption as the President may assign to the Commission from time to time and to prevent a
repetition of the same in the future.
Section 3 of EXECUTIVE ORDER NO. 1 provides as follows:
"SECTION 3. The Commission shall have the power and authority:
(a) To conduct investigation as may be
necessary in order to accomplish and carry out the
purposes of this order.
(b) To sequester or place or cause to be
placed under its control or possession any building or
office wherein any ill-gotten wealth or properties may
be found, and any records pertaining thereto, in order
to prevent their destruction, concealment or
disappearance which would frustrate or hamper the
investigation or otherwise prevent the Commission
from accomplishing its task.
(c) To provisionally take over in the
public interest or to prevent its disposal or dissipation,
business enterprises and properties taken over by the
government of the Marcos administration or by entities
or persons close to former President Marcos, until the
transactions leading to such acquisition by the latter
can be disposed of by the appropriate authorities.
(d) To enjoin or restrain any actual or
threatened commission of acts by any person or entity
that may render moot and academic, or frustrate, or
otherwise make ineffectual the efforts of the
Commission to carry out its tasks under this order.
(e) To administer oaths, and issue
subpoenas requiring the attendance and testimony of
witnesses and/or the production of such books,
papers, contracts, records, statement of accounts and
other documents as may be material to the
investigation conducted by the Commission.
(f) To hold any person in direct or indirect
contempt and impose the appropriate penalties,
following the same procedures and penalties provided
in the Rules of Court.
(g) To seek and secure the assistance of
any office, agency or instrumentality of the
government.
(h) To promulgate such rules and
regulations as may be necessary to carry out the
purposes of this order."

From the foregoing provisions of law, it is clear that the PCGG has the following powers and
authority:
1. To conduct an investigation including the preliminary investigation and prosecution
of the ill-gotten wealth cases of former President
Marcos, relatives and associates, and graft and
corruption cases assigned by the President to it;
2. Issue sequestration orders in relation to property claimed to be ill-gotten;
3. Issue "freeze orders" prohibiting persons in possession of property alleged to be
ill-gotten from transferring or otherwise disposing of
the same;
4. Issue provisional takeover orders of the said property;
5. Administer oaths and issue subpoenas in the conduct of its investigation;
6. Hold any person in direct or indirect contempt and impose the appropriate
penalties as provided by the rules.
Considering that the PCGG, like the courts, is vested with the authority to grant provisional
remedies of (1) sequestration, (2) freezing assets, and (3) provisional takeover, it is indispensable
that, as in the case of attachment and receivership, there exists a prima facie factual foundation, at
least, for the sequestration order, freeze order or takeover order, an adequate and fair opportunity
to contest it and endeavor to cause its negation or nullification. Both are assured under the
foregoing executive orders and the rules and regulations promulgated by the PCGG. 19
Thus, in Baseco, this Court held, as follows:
"EXECUTIVE ORDER NO. 14 enjoins that there be 'due regard to the requirements
of fairness and due process.' Executive Order No. 2 declares that
with respect to claims on allegedly 'ill-gotten' assets and properties,
'it is the position of the new democratic government that President
Marcos . . (and other parties affected) be afforded fair opportunity to
contest these claims before appropriate Philippine authorities.'
Section 7 of the Commission's Rules and Regulations provides that
sequestration or freeze (and takeover) orders issue upon the
authority of at least two commissioners, based on the affirmation or
complaint of an interested party, or motu propio when the
Commission has reasonable grounds to believe that the issuance
thereof is warranted. A similar requirement is now found in Section
26, Art. XVIII of the 1987 Constitution, which requires that a
'sequestration or freeze order shall be issued only upon showing of
a prima facie case.'" 20
Insofar as the general power of investigation vested in the PCGG is concerned, it may be divided
into two stages. The first stage of investigation which is called the criminal investigation stage is
the fact-finding inquiring which is usually conducted by the law enforcement agents whereby they
gather evidence and interview witnesses after which they assess the evidence and if they find
sufficient basis, file the complaint for the purpose of preliminary investigation. The second stage is
the preliminary investigation stage of the said complaint. It is at this stage, as above discussed,
where it is ascertained if there is sufficient evidence to bring a person to trial.
In the petition before this Court, it is not denied that the PCGG conducted the appropriate criminal
investigation of petitioner and intervenors as a law enforcer. In the process it sequestered all the
properties of the petitioner after a prima facie finding that the same amount to ill-gotten wealth
and/or were acquired in relation to allegedly anomalous disposition or misuse of the coconut levy
funds.
The PCGG then filed on July 31, 1987 a complaint docketed as Civil Case No. 0033 against
petitioner and intervenors not only for alleged ill-gotten wealth as associates of former President
Marcos but for the unlawful concert with the former President and his wife to unjustly enrich
themselves at the expense of the Filipino people through the alleged misuse, misappropriation and

dissipation of the coconut levy funds, as enumerated in the complaint. This complaint was verified
and filed by the then Chairman of the PCGG and also signed by the Solicitor General and the
Assistant Solicitor General.
Among the allegations in the civil complaint, are the very transactions now subject of the criminal
complaints filed by the Solicitor General against petitioner to wit:
"13. Defendant Eduardo Cojuangco, Jr., taking undue advantage of his association,
influence and connection, acting in unlawful concert with
Defendants Ferdinand E. Marcos and Imelda R. Marcos, embarked
upon devices, schemes and stratagems to unjustly enrich
themselves at the expense of Plaintiff and the Filipino people, such
as, when he
13(a) manipulated, beginning the year
1975, with the active collaboration of Defendants Juan
Ponce Enrile, Maria Clara Lobregat, Danilo Ursua,
Jose R. Eleazar, Jr. and Herminigildo C . Zayco, the
purchase by Philippine Coconut Authority (PCA) of
72.2% of the outstanding capital stock of the First (sic)
(FUB) which was subsequently converted into a
universal bank named United Coconut Planters Bank
(UCPB) through the use of the Coconut Consumers
Stabilization-Fund (CCSF) levy initially in the amount
of P85,773,100.00 in a manner contrary to law and to
the specific purposes for which said coconut levy
funds were imposed and collected under P.D. 276,
and under anomalous and sinister designs and
circumstances, to wit:
xxx xxx xxx
At pp. 22 to 22-A, Expanded Complaint,
Civil Case No. 0033).
[I.S. No. 080]
(c) misappropriated, misused and
dissipated P840 million of the Coconut Industry
Development Fund (CIDF) levy funds deposited with
the National Investment Development Corporation
(NIDC) as administrator-trustee of said funds and later
with UCPB, of which Defendant Eduardo Cojuangco,
Jr. was the Chief Executive Officer in connection with
the (i) development, improvement, operation and
maintenance of the Bugsuk Island Seed Garden
("BUGSUK") by Agricultural Investors, Inc. ("All") as
developer (both Bugsuk and AII are beneficially held
and controlled by Defendant Eduardo Cojuangco, Jr.)
pursuant to a highly oppressive, anomalous and onesided memorandum agreement, dated November 20,
1974, (ii) sale by AII to PCA of the seed nuts produced
at Bugsuk Seed Garden at exorbitant prices pursuant
to a very onerous, oppressive and disadvantageous
agreement, dated August 2, 1985 and (iii) payment of
liquidated damages in the amount of P640,
856,879.67 and arbitration fee of P150,000.00
pursuant to a decision rendered by a Board of

Arbitrators against UCPB for alleged breach of

contract.;
xxx xxx xxx
(At pp. 26-27)
[I.S. No. 079]
(d) established and caused to be funded
with coconut levy funds, with the active collaboration
of Defendant Ferdinand E. Marcos through the
issuance of LOI 926, and of defendants, Juan Ponce
Enrile, Jose R. Eleazar, Jr., Maria Clara Lobregat,
Jose C. Concepcion, Inaki Mendezona, Douglas Lu
Ym, Teodoro D. Regala, Emmanuel Almeda, Eduardo
Escueta, Leo Palma, and Rolando de la Cuesta, the
United Coconut Oil Mills, Inc. (UNICOM) a corporation
beneficially held and controlled by Defendant Eduardo
Cojuangco, Jr. and bought sixteen (16) competing
and/or non-operating oil mills at exorbitant prices in
the total amount of P184,935 million, then mothballed
them in order to control the prices of copra and other
coconut products, and assumed and paid the
outstanding loan obligations of seven (7) of those
purchased oil mills in the total amount of P805,984
million with the express consent and approval of
Defendant Ferdinand E. Marcos, thereby establishing
a coconut monopoly for their own benefit and unjust
enrichment and to the grave damage of Plaintiff and
the Filipino people;(e) manipulated, with the active
collaboration of Defendants Mohammad Ali Dimaporo
and Teodoro D. Regala, the sale of the Mindanao
Coconut Oil Mills (MINCOCO) to UNICOM through the
issuance of LOI 926 by Defendant Ferdinand E.
Marcos, in violation of the Guaranty Agreement dated
July 23, 1976, which prohibited the sale, among
others, of the MINCOCO assets/properties without the
prior written consent of NIDC, under terms and
conditions grossly disadvantageous to Plaintiff and the
Filipino people;(f) drew up a scheme of payment to
settle the accounts of MINCOCO and other UNlCOMacquired mills with their respective creditors: namely,
the National Investment Development Corporation
(NIDC), Development Bank of the Philippines (DBP),
Philippine Veterans Bank (PVB), under terms grossly
disadvantageous to Plaintiff;
xxx xxx xxx
At pp. 27-28)
[I.S. Nos. 81, 82 and 83]
(g) misappropriated and dissipated the
coconut levy funds by withdrawing therefrom tens of
millions of pesos in order to pay damages adjudged
against UNICOM, headed and controlled by

Defendant Eduardo Cojuangco, Jr., in an anti-trust suit

in California, U.S.A.;
xxx xxx xxx
(At p. 29)
[I.S. No. 84]
(h) misused, dissipated and unlawfully
disbursed coconut levy funds with the active
collaboration and participation of defendants Maria
Clara Lobregat, Juan Ponce Enrile, Jose Eleazar, Jr.,
Rolando de la Cuesta and Herminigildo Zayco as
members of the PCA governing board for projects and
purposes completely alien to those for which the fund
was collected and donations made by PCA such as ..
P6 million to COCOFED; and other similar unlawful
disbursements, which all remain unaccounted for to
date;
xxx xxx xxx
(At pp., 28 to 28-A emphasis supplied)
[I.S. No. 74 and 75]"
Thereafter, as aforestated, the Solicitor General filed the first two complaints against petitioner and
intervenors among others, under I.S. Nos. 74 and 75 for alleged violation of the Anti-Graft and
Corrupt Practices Act for donations allegedly made out of coconut levy funds to the Philippine
Coconut Producers Federation (COCOFED).
Petitioner and intervenors questioned not only the authority of the PCGG to conduct the
preliminary investigation but asserted a denial of due process and equal protection of the law.
There is cogent basis for their plea.
The PCGG, as a law enforcer, gathered evidence as to the alleged ill-gotten wealth of petitioner
and intervenors and, after satisfying itself that there is a prima facie case, sequestered and issued
a freeze order for all the properties of petitioner. Based also on the said finding of a prima facie
case, the PCGG filed a civil complaint docketed as Civil Case No. 0033 against petitioner and
intervenors for alleged ill-gotten wealth including the alleged misuse, misappropriation, and
diversion of coconut levy funds.
As hereinabove discussed the criminal complaints under I.S. Nos. 74, 79, 80, 81, 82, 83 and 84
filed by the Solicitor General all for alleged violation of Republic Act No. 3019, are covered and
alleged in the aforesaid civil complaint docketed as Civil Case No. 0033.
The PCGG conducted the preliminary investigation of I.S. Nos. 74 and 75 and is poised to conduct
the preliminary investigation of the other aforementioned complaints for the same alleged
violations of law subject of the civil complaint.
The Court cannot close its eyes to the glaring fact that in earlier instances, the PCGG had already
found a prima facie case against the petitioner and intervenors when, acting like a judge, it caused
the sequestration of the properties and the issuance of the freeze order of the properties of
petitioner. Thereafter, acting as a law enforcer, in collaboration with the Solicitor General, the
PCGG gathered the evidence and upon finding cogent basis therefor filed the aforestated civil
complaint. Consequently the Solicitor General filed a series of criminal complaints.
It is difficult to imagine how in the conduct of such preliminary investigation the PCGG could even
make a turn about and take a position contradictory to its earlier findings of a prima facie case
against petitioner and intervenors. This was demonstrated in the undue haste with which I.S. Nos.
74 and 75 was investigated and the informations were filed in court even as the petitioner and
intervenors questioned its authority, invoked the denial of due process and promptly informed the
PCGG of the filing of this petition.
In our criminal justice system, the law enforcer who conducted the criminal investigation, gathered
the evidence and thereafter filed the complaint for the purpose of preliminary investigation cannot

be allowed to conduct the preliminary investigation of his own complaint. It is to say the least
arbitrary and unjust.
It is in such instances that We say one cannot be "a prosecutor and judge at the same time."
Having gathered the evidence and filed the complaint as a law enforcer, he cannot be expected to
handle with impartiality the preliminary investigation of his own complaint, this time as a public
prosecutor.
The circumstances of the instant petition are even worse. To repeat, the PCGG and the Solicitor
General finding a prima facie basis filed a civil complaint against petitioner and intervenors alleging
substantially the same illegal or criminal acts subject of the subsequent criminal complaints the
Solicitor General filed with the PCGG for preliminary investigation. While ostensibly, it is only the
Solicitor General who is the complainant in the criminal cases filed with the PCGG, in reality the
PCGG is an unidentified co-complainant.
Moreover, when the PCGG issued the sequestration and freeze orders against petitioner's
properties, it was on the basis of a prima facie finding that the same were ill-gotten and/or were
acquired in relation to the illegal disposition of coconut levy funds. Thus, the Court finds that the
PCGG cannot possibly conduct the preliminary investigation of said criminal complaints with the
"cold neutrality of an impartial judge," as it has prejudged the matter. Add to this the fact that there
are many suits filed by petitioner and the intervenors against the PCGG and vice versa.
For lesser grounds this Court had disqualified a fiscal or a judge from handling a case.
A fiscal was disqualified from conducting a preliminary investigation because he had appeared for
the prosecution when said case was pending in the municipal court. 21 In a case filed before the
Commission on Elections this Court held Commissioner Opinion should not have participated in
the case since he was the former lawyer of Arturo Pacificador. 29
There are numerous other cases wherein the judges and fiscals were disqualified on similar
grounds as those aforementioned. 30
Where the circumstances do not inspire confidence in the objectivity and impartiality of the judge,
such judge should inhibit voluntarily or if he refuses, he should be prohibited from handling the
case. A judge must not only be impartial but must also appear impartial as an assurance to the
parties that his decision will be just. 31 His actuation must inspire that belief. This is an instance
when appearance is as important as reality. 32
The same rule of thumb should apply to an investigating officer conducting a preliminary
investigation. This is the reason why under Section 1679 of the former Revised Administrative
Code, the Secretary of Justice, who has supervision over the prosecution arm of the government,
is given ample power to designate another prosecutor to handle the investigation and prosecution
of a case when the prosecutor handling the same is otherwise disqualified by personal interest, or
is unable or fails to perform his duty.
The Court finds that under the circumstances of the case, the PCGG cannot inspire belief that it
could be impartial in the conduct of the preliminary investigation of the aforesaid complaints
against petitioner and intervenors. It cannot possibly preside in the said preliminary investigation
with an even hand.
The Court holds that a just and fair administration of justice can be promoted if the PCGG would
be prohibited from conducting the preliminary investigation of the complaints subject of this petition
and the petition for intervention and that the records of the same should be forwarded to the
Ombudsman, who as an independent constitutional officer has primary jurisdiction over cases of
this nature, to conduct such preliminary investigation and take appropriate action.
All violators of the law must be brought before the bar of justice. However, they must be afforded
due process and equal protection of the law, whoever they may be.
WHEREFORE, the petitions of Eduardo M. Cojuangco, Jr. and intervenors Maria Clara Lobregat
and Jose Eleazar, Jr. are hereby GRANTED. The PCGG is directed to transmit the complaints and
records thereof under I.S. Nos. 74, 75, 79, 80, 81, 82, 83 and 84 to the Ombudsman for
appropriate action. All proceedings of the preliminary investigation conducted by the PCGG of said
complaints are hereby declared null and void including the informations which it filed in the

Sandiganbayan against petitioner and intervenors docketed as Criminal Cases Nos. 14398 and
14399. The status quo order which this Court issued on March 12, 1990 is hereby made
permanent and the PCGG is permanently prohibited from further conducting the preliminary
investigation of the aforestated complaints. The Court makes no pronouncement as to costs.
SO ORDERED
||| (Cojuangco, Jr. v. PCGG, G.R. Nos. 92319-20, October 02, 1990)

EN BANC
[G.R. No. L-25024. March 30, 1970.]
TEODORO C. SANTIAGO, JR. Minor, Represented by his Mother, Mrs. Angelita C. Santiago,
petitioner-appellant, vs. MISS JUANITA BAUTISTA, ROSALINDA ALPAS, REBECCA
MATUGAS, MILKITA INAMAC, ROMEO AGUSTIN, AIDA CAMINO, LUNA SARMAGO,
AURORA LORENA, SOLEDAD FRANCISCO and MR. FLOR MARCELO, respondentsappellees.
Teodoro M. Santiago for petitioner-appellant.
Ramon C. Carag for respondents-appellees.
SYLLABUS
I. POLITICAL LAW; JUDICIAL OR QUASI-JUDICIAL BODIES; REQUIREMENT. Before a
tribunal, board, or officer may exercise judicial or quasi-judicial acts, it is necessary that there be a
law that gives rise to some specific rights of persons or property under which adverse claims to
such rights are made, and the controversy ensuing therefrom is brought, in turn, before the
tribunal, board or officer clothed with power and authority to determine what the law is and
thereupon adjudicate the respective rights of the contending parties.
2. ID.; ID.; COMMITTEE OF TEACHERS ON THE RATING OF STUDENTS FOR HONOR IS
NEITHER JUDICIAL NOR QUASI-JUDICIAL. The committee on rating of students for honor
whose actions are questioned in this case exercised neither judicial nor quasi-judicial functions in
the performance of its assigned task. There is nothing on record about any rule of law that
provides that when teachers sit down to assess the individual merits of their pupils for purpose of
rating them for honors, such-function involves the determination of what the law is and that they
are therefore automatically vested with judicial or quasi-judicial functions.
3. ID.; ID.; THE BOARD OF JUDGES OF AN ORATORICAL CONTEST; AWARD NOT SUBJECT
TO JUDICIAL REVIEW. The issue of whether courts have authority to reverse the award of the
board of judges of an oratorical contest was resolved in the case of Felipe vs. Leuterio, etc., et al,
wherein the Court declared that the judiciary has no power to reverse the award of the board of
judges of that contest and, for that matter it would not interfere in literary contests, beauty contests
and similar competitions.
4. REMEDIAL LAW; PLEADING AND PROCEDURE; PETITION FOR CERTIORARI; FAILURE TO
ATTACH COPY OF JUDGMENT OR ORDER SOUGHT TO BE REVIEWED FATAL. We are
inclined to sustain the order of dismissal appealed from for failure on the part of appellant to
comply with the requirement of Section I of Rule 65 that "the petition shall be accompanied by a
certified true copy of the judgment or order subject thereof, together with copies of all pleadings
and documents relevant and pertinent thereto."
DECISION
BARREDO, J p:
Appeal from the order of the Court of First Instance of Cotabato dismissing, on a motion to
dismiss, its Civil Case No. 2012 for certiorari, injunction and damages on the ground that the
complaint therein states no cause of action, and from the subsequent order of the court a quo
denying the motion for the reconsideration of the said order of dismissal.

The record shows that at the time Civil Case No. 2012 was commenced in the court below,
appellant Teodoro Santiago, Jr. was a pupil in Grade Six at the public school named Sero
Elementary School in Cotabato City. As the school year 1964-1965 was then about to end, the
"Committee On The Rating Of Students For Honor" was constituted by the teachers concerned at
said school for the purpose of selecting the "honor students" of its graduating class. With the
school Principal, Mrs. Aurora Lorena, as chairman, and Juanita Bautista, Rosalinda Alpas,
Rebecca Matugas, Milkita Inamac, Romeo Agustin, Aida Camino and Luna Sarmago, as
members, the above-named committee deliberated and finally adjudged Socorro Medina, Patricia
Ligat and Teodoro C. Santiago, Jr. as first, second and third honors, respectively. The school's
graduation exercises were thereafter set for May 21, 1965; but three days before that date, the
"third placer" Teodoro Santiago, Jr., represented by his mother, and with his father as counsel,
sought the invalidation of the "ranking of honor students" thus made, by instituting the abovementioned civil case in the Court of First Instance of Cotabato, against the above-named
committee members along with the District Supervisor and the Academic Supervisor of the place.
The corresponding complaint filed alleged, inter alia: that plaintiff-petitioner Teodoro C. Santiago,
Jr. is a sixth grader at the Sero Elementary School in Cotabato City scheduled to be graduated on
May 21st, 1965 with the honor rank of third place, which is disputed; that the teachers of the
school had been made respondents as they compose the "Committee on the Rating of Students
for Honor", whose grave abuse of official discretion is the subject of suit, while the other
defendants were included as Principal, District Supervisor and Academic Supervisor of the school;
that Teodoro Santiago, Jr. had been a consistent honor pupil from Grade I to Grade V of the Sero
Elementary School, while Patricia Ligat (second placer in the disputed ranking in Grade VI) had
never been a close rival of petitioner before, except in Grade V wherein she ranked third; that
Santiago, Jr. had been prejudiced, while his closest rival had been so much benefited, by the
circumstance that the latter, Socorro Medina, was coached and tutored during the summer
vacation of 1964 by Mrs. Alpas who became the teacher of both pupils in English in Grade VI,
resulting in the far lead Medina obtained over the other pupil; that the committee referred to in this
case had been illegally constituted as the same was composed of all the Grade VI teachers only,
in violation of the Service Manual for Teachers of the Bureau of Public Schools which provides that
the committee to select the honor students should be composed of all teachers in Grades V and
VI; that there are direct and circumstantial matters, which shall be proven during the trial, wherein
respondents have exercised grave abuse of discretion and irregularities, such as the changing of
the final ratings on the grading sheets of Socorro Medina and Patricia Ligat from 80% to 85%,
and some teachers giving petitioner a starting grade of 75% in Grade VI, which proves that there
was already an intention to pull him to a much lower rank at the end of the school year; that
several district examinations outside of teachers' daily units and other than periodical tests were
given, ratings in which were heavily considered in the determination of periodical ratings, whereas
according to the Academic Supervisor and Acting Division Superintendent of schools of the place
such district examinations were not advisable; that there was a unanimous agreement and
understanding among the respondent teachers to insult and prejudice the second and third honors
by rating Socorro Medina with a perfect score, which is very unnatural; that the words "first place"
in petitioner's certificate in Grade I was erased and replaced with: the words "second place", which
is an instance of the unjust and discriminating abuses committed by the respondent teachers in
the disputed selection of honor pupils they made; that petitioner personally appealed the matter to
the School Principal, to the District Supervisor, and to the Academic Supervisor, but said officials
"passed the buck to each other" to delay his grievances, and as to appeal to higher authorities will
be too late, there is no other speedy and adequate remedy under the circumstances; and, that
petitioner and his parents suffered mental and moral damages in the amount of P10,000.00. They
prayed the court, among others, to set aside the final list of honor students in Grade VI of the Sero
Elementary School for that school year 1964-1965, and, during the pendency of the suit, to enjoin
the respondent teachers from officially and formally publishing and proclaiming the said honor
pupils in Grade VI in the graduation exercises the school was scheduled to hold on the 21st of

May of that year 1965. The injunction prayed for was denied by the lower court in its order of May
20, 1965, the said court reasoning out that the graduation exercises were then already set on the
following day, May 21, 1965. and the restraining of the same would be shocking to the school
authorities, parents. and the community who had eagerly looked forward to the coming of that
yearly happy event. As scheduled, the graduation exercises of the Sero Elementary School for the
school year 1964-1965 was held on May 21, with the same protested list of honor students.
Having been required by the above mentioned order to answer the petition within ten (10) days,
respondents moved for the dismissal of the case instead. Under date of May 24, 1965, they filed a
motion to dismiss, on the grounds (1) that the action for certiorari was improper, and (2) that even
assuming the propriety of the action, the question brought before the court had already become
academic. This was opposed by petitioner.
In an order dated June 4, 1965, the motion to dismiss of respondents was granted, the court
reasoning thus:
"The respondents now move to dismiss the petition for being improper and for being
academic. In order to resolve the motion to dismiss, the Court has
carefully examined the petition to determine the sufficiency of the
alleged cause of action constituting the special civil action of
certiorari.
"The pertinent portions of the petition alleging 'grave abuse of discretion' are found in
paragraphs 3, 4, 5, 6, 7, 8, 9 and 10. These allegations may be
substantially summarised as follows: Paragraph 3 alleges that since
grades one to six, the students closely contending for class honors
were Socorro Medina, Teodoro Santiago, Jr., Dolores Dalican and
Patricia Ligat.
"Socorro Medina obtained first honor thrice (grades I, V and VI); once second honor
(grade IV, and twice third place (grades II and III).
"Teodoro Santiago, Jr. obtained first place once (grade IV); four times second place
(grades I, II, III, and V) and once third place (grade VI).
"Dolores Dalican obtained twice first place (grades II, III); once third place (grade I).
Patricia Ligat once third place (grade V); and once second place (grade VI).
"That as now ranked in the graduation Ligat is given second place while Teodoro
Santiago, Jr., is given the third place only. This is the ranking now
disputed by petitioner, Teodoro Santiago, Jr.
"Paragraph 4 alleges that Socorro Medina was tutored in the summer of 1964 by
Mrs. Rosalinda Alpas who became her English teacher in the sixth
grade; that as such, Mrs. Alpas unjustly favored Socorro against her
rivals.
"Paragraph 5 alleges that the teachers who composed the committee on honor
students are all grade six teachers while the Service Manual For
Teachers provides that the committee shall be composed of the
teachers from the fifth and sixth grades.
"Paragraph 6 alleges that there are direct and circumstantial evidence showing the
change of ratings of Socorro Medina and Patricia Ligat from 80%
to 85% and the intention to junk petitioner to a lower rank.
"Paragraph 7 alleges that the giving of district examinations upon which ratings were
partly based were not advisable.
"Paragraph 8 alleges that the teachers rated Socorro Medina a perfect pupil which is
unnatural.
"Paragraph 9 alleges that on the first grade certificate of the petitioner the word 'First
Place' was erased and changed to 'Second Place'.

"Paragraph 10 alleges that petitioner personally appealed to the school authorities

but they only 'passed the buck to each other'.
"SECOND PARAGRAPH VIOLATED
"Rule 65, Section 1 of the Rules of Court provides:
'Section 1. Petition for certiorari.
When any tribunal, board, or officer exercising judicial
functions, has acted without or in excess of its or his
jurisdiction, or with grave abuse of discretion and
there is no appeal, nor any plain, speedy, and
adequate remedy in the ordinary course of law, a
person aggrieved thereby may file a verified petition in
the proper court alleging the facts with certainty and
praying that judgment be rendered annulling or
modifying the proceedings, as the law requires, of
such tribunal, board or officer.'
'The petition shall be accompanied by a
certified true copy of the judgment or order subject
thereof, together with copies of all pleadings and
documents relevant and pertinent thereto.'
It is striking, indeed, that this petition has not been accompanied by a certified true
copy of the judgment or order complained of, together with all
pleadings and documents which are relevant thereto, as required by
the second paragraph of the aforequoted rule. This violation renders
the petition extremely indefinite and uncertain. There is no written
formal judgment or order of respondents that is submitted for
revision or correction of this Court. This violation is fatal to the
petition.
"ADMINISTRATIVE REMEDIES NEGLECTED
"All that the petition alleges is that the petitioner personally appealed to the school
authorities who only 'passed the buck to each other'. This allegation
does not show that petitioner formally availed of and exhausted the
administrative remedies of the Department of Education. The
petition implies that this is the first formal complaint of petitioner
against his teachers. The administrative agencies of the
Department of Education could have investigated the grievances of
the petitioner with dispatch and give effective remedies, but
petitioner negligently abandoned them. Petitioner cannot now claim
that he lacked any plain, speedy and adequate remedy.
"NO GRAVE ABUSE OF DISCRETION
"Allegations relating to the alleged 'grave abuse of discretion' on the part of teachers
refer to errors, mistakes, or irregularities rather than to real grave
abuse of discretion that would amount to lack of jurisdiction. Mere
commission of errors in the exercise of jurisdiction may not be
corrected by means of certiorari.
"In view of the foregoing, the Court is of the opinion, and so holds, that the petition
states no cause of action and should be, as it is hereby dismissed."
Upon receipt of a copy of the above-quoted order, the petitioner moved for the reconsideration
thereof, but the same proved to be futile, hence, this appeal.
Appellant here assails the holding of the lower court that his petition states no cause of action on
the grounds discussed by the court a quo in the appealed order abovequoted (1) that the
petition does not comply with the second paragraph of Sec. 1 of Rule 65 because it has not been
accompanied by a certified true copy of the judgment or order subject thereof, together with copies

of all pleadings and documents relevant and pertinent thereto; (2) that administrative remedies
were not first exhausted; and (3) that there was no grave abuse of discretion on the part of the
teachers who constituted the committee referred to. On the other hand, appellees maintain that the
court below did not err in dismissing the case on said grounds. Further, they argue in favor of the
questioned order of dismissal upon the additional ground that the "committee on the ratings of
students for honor" whose actions are here condemned by appellant is not the "tribunal, board or
officer exercising judicial functions" against which an action for certiorari may lie under Section 1 of
Rule 65.
The last point raised by appellees deserves first consideration, for if really the said committee of
teachers does not fall within the category of the tribunal board, or officer exercising judicial
functions contemplated by Rule 65, further discussion of the issues raised by appellant may no
longer be necessary. To resolve this problem the following tests may be employed:
"In this jurisdiction certiorari is a special civil action instituted against 'any tribunal,
board, or officer exercising judicial functions.' (Section 1, Rule 67.) A
judicial function is an act performed by virtue of judicial powers; the
exercise of a judicial function is the doing of something in the nature
of the action of the court (34 C.J. 1182). In order that a special civil
action of certiorari may be invoked in this jurisdiction the following
circumstances must exist: (1) that there must be a specific
controversy involving rights of persons or property and said
controversy is brought before a tribunal, board or officer for hearing
and determination of their respective rights and obligations.
'Judicial action is an adjudication upon
the rights of parties who in general appear or are
brought before the tribunal by notice or process, and
upon whose claims some decision or judgment is
rendered. It implies impartiality, disinterestedness, a
weighing of adverse claims, and is inconsistent with
discretion on the one hand for the tribunal must
decide according to law and the rights of the parties
or with dictation on the other; for in the first instance it
must exercise its own judgment under the laws and
not act under a mandate from another power . . . The
character of its action in a given case must decide
whether that action is judicial, ministerial, or
legislative, or whether it be simply that of a public
agent of the country or State, as in its varied
jurisdictions it may by turns be each.' (In Re Saline
County Subscription, 100 Am. Dec. 337, 338, cited in
Southeastern Greyhound Lines v. Georgia Public
Service Commission, 181 S. E. 836-837.)
'It may be said generally that the
exercise of judicial function is to determine what the
law is, and what the legal rights of parties are, with
respect to a matter in controversy; and whenever an
officer is clothed with that authority, and undertakes to
determine those questions, he acts judicially.' (State
ex rel. Board of Commissioners of St. Louis County, et
al. v. Dunn, 90 N. W. 772-773.)
(2) the tribunal, board or officer before whom the controversy is brought must have
the power and authority to pronounce judgment and render a

decision on the controversy construing and applying the laws to that

end.
'The phrase "judicial power" is not
capable of a precise definition which would be
applicable to all cases. The term has been variously
defined as the authority to determine the rights of
persons or property by arbitrating between
adversaries in specific controversies at the instance of
a party thereto; the authority exercised by that
department of government which is charged with the
declaration of what the law is and its construction so
far as it is written law; the authority or power vested in
the judges or in the courts; the authority vested in
some court, officer, or persons to hear and determine
when the rights of persons or property or the propriety
of doing an act is the subject matter of adjudication;
the power belonging to or emanating from a judge as
such; the power conferred upon a public officer,
involving the exercise of judgment and discretion in
the determination of questions of right in specific
cases affecting the interest of persons or property, as
distinguished from ministerial power or authority to
carry out the mandates of judicial power or the law;
the power exercised by courts in hearing and
determining cases before them, or some matter
incidental thereto, and of which they have jurisdiction;
the power of a court to decide and pronounce a
judgment; the power which adjudicates upon and
protects the right and interests of individual citizens,
and to that end construes and applies the law.
"Judicial power" implies the construction of laws and
the adjudication of legal rights. It includes the power to
hear and determine but not everyone who may hear
and determine has judicial power. The term "judicial
power" does not necessarily include the power to hear
and determine a matter that is not in the nature of a
suit or action between the parties.' (34 C.J. 11831184.)
(3) the tribunal, board or officer must pertain to that branch of the sovereign power
which belongs to the judiciary, or at least, which does not belong to
the legislative or executive department.
". . . the distinction between legislative or
ministerial functions and judicial functions is difficult to
point out What is a judicial function does not depend
solely upon the mental operation by which it is
performed or the importance of the act. In solving this
question, due regard must be had to the organic law
of the state and the division of power of government.
In the discharge of executive and legislative duties,
the exercise of discretion and judgment of the highest
order is necessary, and matters of the greatest weight
and importance are dealt with. It is not enough to

make a function judicial that it requires discretion,

deliberation, thought, and judgment. It must be the
exercise of discretion and judgment within the
subdivision of the sovereign power which belongs to
the judiciary, or, at least, which does not belong to the
legislative or executive department. If the matter, in
respect to which it is exercised, belongs to either of
the two last-named departments of government, it is
not judicial. As to what is judicial and what is not
seems to be better indicated by the nature of a thing,
than its definition.' (Whealing & Elm Grove Railroad
Co. Appt. v. Town of Philadelphia, et al., 4 L.R.A. (N.
S.), pp. 321, 328-329.) [Emphasis supplied] 1
" 'WHAT ARE JUDICIAL OR QUASI JUDICIAL ACTS. It is difficult, if not impossible,
precisely to define what are judicial or quasi judicial acts, and there
is considerable conflict in the decisions in regard thereto, in
connection with the law as to the right to a writ of certiorari. It is
clear, however, that it is the nature of the act to be performed,
rather than of the office, board, or body which performs it, that
determines whether or not it is the discharge of a judicial or quasijudicial function. It is not essential that the proceedings should be
strictly and technically judicial, in the sense in which that word is
used when applied to courts of justice, but it is sufficient if they are
quasi judicial. It is enough if the officers act judicially in making their
decision, whatever may be their public character . . .'
"In State ex rel. Board of Commrs. vs. Dunn (86 Minn. 301, 304), the following
statements were made:
'The precise line of demarcation
between what are judicial and what are administrative
or ministerial functions is often difficult to determine.
The exercise of judicial functions may involve the
performance of legislative or administrative duties,
and the performance of administrative or ministerial
duties, may, in a measure, involve the exercise of
judicial functions. It may be said generally that the
exercise of judicial functions is to determine what the
law is, and what the legal rights of parties are, with
respect to a matter in controversy; and whenever an
officer is clothed with that authority, and undertakes to
determine those questions, he acts judicially.' " 2
It is evident, upon the foregoing authorities, that the so called committee on the rating of students
for honor whose actions are questioned in this case exercised neither judicial nor quasi judicial
functions in the performance of its assigned task. From the above-quoted portions of the decisions
cited, it will be gleaned that before a tribunal board, or officer may exercise judicial or quasi judicial
acts, it is necessary that there be a law that gives rise to some specific rights of persons or
property under which adverse claims to such rights are made, and the controversy ensuing
therefrom is brought, in turn, before the tribunal, board or officer clothed With power and authority
to determine what that law is and thereupon adjudicate the respective rights of the contending
parties. As pointed out by appellees, 3 however, there is nothing on record about any rule of law
that provides that when teachers sit down to assess the individual merits of their pupils for
purposes of rating them for honors, such function involves the determination of what the law is and

that they are therefore automatically vested with judicial or quasi judicial functions. Worse still, this
Court has not even been appraised by appellant of the pertinent provisions of the Service Manual
of Teachers for Public Schools appellees allegedly violated in the composition of the committee
they constituted thereunder, and, in the performance of that committee's duties.
At any rate, the situation brought before Us in this case, the seemingly one of first impression, is
not with out substantial parallel. In the case of Felipe vs. Leuterio, etc., et al., 4 the issue
presented for determination was whether or not the courts have the authority to reverse the award
of the board of judges of an oratorical contest, and this Court declared that the judiciary has no
power to reverse the award of the board of judges of that contest and, for that matter, it would not
interfere in literary contests, beauty contests and similar competitions. It was reasoned out thus:
"For more than thirty years oratorical tilts have been held periodically by schools and
colleges in this islands. Intercollegiate oratorical competitions are of
more recent origin. Members of this court have taken part in them
either as contestants in their school days (In the College of Law,
U.P. annual oratorical contest, first prize was awarded to Justice
Montemayor in 1914 and to Justice Labrador in 1916), or as
members of the board of judges afterwards. They know some few
verdicts did not reflect the audience's preference and that errors
have sometimes been ascribed to the award of the judges. Yet no
party ever presumed to invoke judicial intervention; for it is unwritten
law in such contests that the board's decision is final and
unappealable.
"Like the ancient tournaments of the Sword, these tournaments of the Word apply
the highest tenets of sportsmanship: finality of referee's verdict. No
alibis, no murmurs of protest. The participants are supposed to join
the competition to contribute to its success by striving their utmost:
the prizes are secondary.
"No rights to the prizes may be asserted by the contestants, because theirs was
merely the privilege to compete for the prize, and that privilege did
not ripen into a demandable right unless and until they were
proclaimed winners of the competition by the appointed arbiters or
referees or judges.
"Incidentally, these school activities have been imported from the United States. We
found in American jurisprudence no litigation questioning the
determination of the board of judges.
"Now, the fact that a particular action has had no precedent during a long period
affords some reason for doubting the existence of the right sought
to be enforced, especially where occasion for its assertion must
have often arisen; and courts are cautious before allowing it, being
loath to establish a new legal principle not in harmony with the
generally accepted views thereon. (See C.J.S. Vol. 1, p. 1012.)
"We observe that in assuming jurisdiction over the matter, the respondent judge
reasoned out that where there is a wrong there is a remedy and that
courts of first instance are courts of general jurisdiction.
"The flaw in his reasoning lies in the assumption that Imperial suffered some wrong
at the hands of the board of judges. If at all, there was error on the
part of one judge, at most. Error and wrong do net mean the same
thing. 'Wrong' as used in the aforesaid principle is the deprivation or
violation of a right. As stated before, a contestant has no right to the
prize unless and until he or she is declared winner by the board of
referees or judges.

"Granting that Imperial suffered some loss or injury, yet in law there are instances of
'damnum absque injuria'. This is one of them. If fraud or malice had
been proven, it would be a different proposition. But then her action
should be directed against the individual judge or judges who
fraudulently or maliciously injured her. Not against the other judges."
But even were We to assume for .the moment, as the court below apparently did, that judicial
intervention might be sought in cases of this nature, still, We are inclined to sustain the order of
dismissal appealed from for failure on the part of appellant to comply with the requirements of
Section 1 of Rule 65. To be sure, the lower court's holding that appellant's failure to accompany his
petition with a copy of the judgment or order subject thereof together with copies of all pleadings
and documents relevant and pertinent thereto "is fatal to his cause" is supported not only by the
provision of that Rule but by precedents as well. In the case of Alajar, et al. vs. Court of Industrial
Relations, 5 where it was claimed by therein petitioners that the respondent court had acted with
grave abuse of discretion in estimating certain rice harvests involved in the case in terms of
cavans instead of cans, allegedly in complete disregard of the decision of the Court of First
Instance of Batangas in Expropriation Proceedings No. 84 and of this Court in G.R. No. L-6191, 6
and in ordering thereafter the division of the said rice harvests on the ratio of 70-30 in favor of the
tenants, this Court denied the petition for certiorari on the ground, among others, of failure on the
part of said petitioners to attach to their petition copies of the decisions allegedly violated.
Speaking thru Mr. Justice J.B.L. Reyes then, this Court held:
"The petition is patently without merit. In the first place, it is not even sufficient in form
and substance to justify the issuance of the writ of certiorari prayed
for. It charges that the Court of Industrial Relations abused its
discretion in disregarding the decision of the Court of First Instance
of Batangas in Expropriation Proceedings No. 84 and of this Court
in G. R. No L-6191; yet it does not attach to the petition the
decisions allegedly violated by the Court below and point out which
particular portion or portions thereof have been disregarded by the
respondent Court."
The same principle was applied in the more recent case of NAWASA vs. Municipality of Libmanan,
et al., 7 wherein this Court dismissed (by Resolution) the petition for certiorari and mandamus filed
by the National Waterworks and Sewerage Authority against the Court of First Instance of
Camarines Sur, and the municipality of Libmanan. In the following language, this Court
emphasized the importance of complying with the said requirement of Rule 65:
"While paragraph 3 of the petition speaks of the complaint filed by the respondent
municipality with the respondent court for recovery of property with
damages (Civil Case No. L-161) no copy thereof is attached to the
petition.
"Similarly, paragraph 4 of the petition mentions the decision rendered by the
respondent court on December 10, 1965, but no copy thereof is
attached to the petition.
"Again, paragraph 5 of the petition speaks of the order of default entered by the
respondent court and of the motion for reconsideration filed by
petitioner in the case above-mentioned, but no copy of the order of
default is attached to the petition.
"Bearing in mind that the petition under consideration was filed for the purpose of
enjoining the respondent court from executing the decision
rendered in Civil Case No. L-161, the importance of the missing
pleadings is obvious.
"Moreover, the petition is also for the purpose of securing an order commanding the
respondent court to approve either the original or the amended

record on appeal filed by petitioner, but no copy of either is attached

to its petition.
"In view of the foregoing, the petition under consideration is dismissed."
It might be true, as pointed out by appellant, that he received a copy of the programme of the
graduation exercises held by the Sero Elementary School in the morning of the very day of that
graduation exercises, implying that he could not have attached then a copy thereof (to show the
decision of the committee of teachers in the ranking of students complained of) to his petition. The
stubborn fact remains, however, that appellant had known of such decision of the said committee
of teachers much earlier, as shown by the circumstance that according to him, even before the
filing of his petition with the lower court on the 19th of May, 1965, he had personally appealed the
said committee's decision with various higher authorities of the above-named school, who merely
passed the buck to each other. Moreover, appellant mentions in his petition various other
documents or papers as the Service Manual for Teachers allegedly violated by appellees in the
constitution of their committee; altered grading sheets; and erasures in his Grade I certificate
which appellant never bothered to attach to his petition. There could be no doubt then that he
miserably failed to comply with the requirement of Rule 65 above-mentioned. With this conclusion,
it is no longer necessary to pass upon the other two errors assigned by appellant.
FOR THE FOREGOING CONSIDERATIONS, the judgment appealed from is affirmed, with costs
against appellant.
Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Castro, Fernando, Teehankee and
Villamor. JJ., concur.
||| (Santiago, Jr. v. Bautista, G.R. No. L-25024, March 30, 1970)

FIRST DIVISION
[G.R. No. 151908. August 12, 2003.]
SMART COMMUNICATIONS, INC. (SMART) and PILIPINO TELEPHONE CORPORATION
(PILTEL), petitioners, vs. NATIONAL TELECOMMUNICATIONS COMMISSION (NTC),
respondent.
[G.R. No. 152063. August 12, 2003.]
GLOBE TELECOM, INC. (GLOBE) and ISLA COMMUNICATIONS CO., INC. (ISLACOM),
petitioners, vs. COURT OF APPEALS (The Former 6th Division) and the NATIONAL
TELECOMMUNICATIONS COMMISSION, respondents.
Quevedo Espaol Ibay Syquia-Santos & Plaza-Cortes and Ian R.A. Pangalangan for petitioners in
G.R. No. 151908.
Salalima and Gonzales for Globe Telecoms, Inc.
Latina and Carelo for Isla Communications Co., Inc.
SYNOPSIS
Pursuant to its rule-making and regulatory powers, the National Telecommunications Commission
(NTC) promulgated rules and regulations on the billing of telecommunications services.
Petitioners-communications companies filed an action for declaration of nullity of the billing
circulars, alleging, among others: that NTC contravened the Civil Code provisions on sales in
regulating the sale of prepaid call cards; and that the billing circular violated the constitutional
prohibition against the deprivation of property without due process of law. The NTC moved to
dismiss the case for failure of petitioners to exhaust administrative remedies. The trial court denied
the motion to dismiss and enjoined the NTC from implementing the questioned circulars. The CA,
however, dismissed the case on appeal without prejudice to the referral of the petitioners'
grievances and disputes on the assailed issuances with the NTC.
On appeal, the Supreme Court held that the trial court has jurisdiction to hear and decide the civil
case. Judicial power includes the authority of the courts to determine the validity of the acts of
administrative agencies. In questioning the validity or constitutionality of a rule or regulation issued

by an administrative agency, a party need not exhaust administrative remedies before going to
court. This principle applies only where the act of the administrative agency concerned was
performed pursuant to its quasi-judicial function, and not when the assailed act pertained to its
rule-making or quasi-legislative power. In like manner, the doctrine of primary jurisdiction applies
only where the administrative agency exercises its quasi judicial or adjudicatory function.
SYLLABUS
1. POLITICAL LAW; ADMINISTRATIVE LAW; ADMINISTRATIVE AGENCIES; POSSESS QUASILEGISLATIVE AND QUASI-JUDICIAL FUNCTIONS; DISTINCTIONS. Administrative agencies
possess quasi-legislative or rule-making powers and quasi judicial or administrative adjudicatory
powers. Quasi-legislative or rule-making power is the power to make rules and regulations which
results in delegated legislation that is within the confines of the granting statute and the doctrine of
non-delegability and separability of powers. The rules and regulations that administrative agencies
promulgate, which are the product of a delegated legislative power to create new and additional
legal provisions that have the effect of law, should be within the scope of the statutory authority
granted by the legislature to the administrative agency. It is required that the regulation be
germane to the objects and purposes of the law, and be not in contradiction to, but in conformity
with, the standards prescribed by law. They must conform to and be consistent with the provisions
of the enabling statute in order for such rule or regulation to be valid. Not to be confused with the
quasi-legislative or rule-making power of an administrative agency is its quasi-judicial or
administrative adjudicatory power. This is the power to hear and determine questions of fact to
which the legislative policy is to apply and to decide in accordance with the standards laid down by
the law itself in enforcing and administering the same law. The administrative body exercises its
quasi judicial power when it performs in a judicial manner an act which is essentially of an
executive or administrative nature, where the power to act in such manner is incidental to or
reasonably necessary for the performance of the executive or administrative duty entrusted to it. In
carrying out their quasi-judicial functions, the administrative officers or bodies are required to
investigate facts or ascertain the existence of facts, hold hearings, weigh evidence, and draw
conclusions from them as basis for their official action and exercise of discretion in a judicial
nature.
2. ID.; ID.; ID.; ID.; EXHAUSTION DOCTRINE; APPLIES ONLY TO JUDICIAL REVIEW OF
DECISIONS OF ADMINISTRATIVE AGENCIES; CASE AT BAR. In questioning the validity or
constitutionality of a rule or regulation issued by an administrative agency, a party need not
exhaust administrative remedies before going to court. This principle applies only where the act of
the administrative agency concerned was performed pursuant to its quasi-judicial function, and not
when the assailed act pertained to its rule-making or quasi-legislative power. Even assuming
arguendo that the principle of exhaustion of administrative remedies apply in this case, the records
reveal that petitioners sufficiently complied with this requirement. Even during the drafting and
deliberation stages leading to the issuance of Memorandum Circular No. 13-6-2000, petitioners
were able to register their protests to the proposed billing guidelines. They submitted their
respective position papers setting forth their objections and submitting proposed schemes for the
billing circular. After the same was issued, petitioners wrote successive letters dated July 3, 2000
and July 5, 2000, asking for the suspension and reconsideration of the so-called Billing Circular.
These letters were not acted upon until October 6, 2000, when respondent NTC issued the second
assailed Memorandum implementing certain provisions of the Billing Circular. This was taken by
petitioners as a clear denial of the requests contained in their previous letters, thus prompting
them to seek judicial relief.
3. ID.; ID.; ID.; ID.; DOCTRINE OF PRIMARY JURISDICTION; APPLIES WHERE
ADMINISTRATIVE AGENCY EXERCISES ITS QUASI-JUDICIAL OR ADJUDICATORY
FUNCTION. In like manner, the doctrine of primary jurisdiction applies only where the
administrative agency exercises its quasi-judicial or adjudicatory function. Thus, in cases involving
specialized disputes, the practice has been to refer the same to an administrative agency of
special competence pursuant to the doctrine of primary jurisdiction. The courts will not determine a

controversy involving a question which is within the jurisdiction of the administrative tribunal prior
to the resolution of that question by the administrative tribunal, where the question demands the
exercise of sound administrative discretion requiring the special knowledge, experience and
services of the administrative tribunal to determine technical and intricate matters of fact, and a
uniformity of ruling is essential to comply with the premises of the regulatory statute administered.
4. ID.; JUDICIAL POWER; POWER OF JUDICIAL REVIEW; JURISDICTION OF REGULAR
COURTS TO PASS UPON VALIDITY OR CONSTITUTIONALITY OF ADMINISTRATIVE RULES
OR REGULATIONS. Where what is assailed is the validity or constitutionality of a rule or
regulation issued by the administrative agency in the performance of its quasi-legislative function,
the regular courts have jurisdiction to pass upon the same. The determination of whether a specific
rule or set of rules issued by an administrative agency contravenes the law or the constitution is
within the jurisdiction of the regular courts. Indeed, the Constitution vests the power of judicial
review or the power to declare a law, treaty, international or executive agreement, presidential
decree, order, instruction, ordinance, or regulation in the courts, including the regional trial courts.
This is within the scope of judicial power, which includes the authority of the courts to determine in
an appropriate action the validity of the acts of the political departments. Judicial power includes
the duty of the courts of justice to settle actual controversies involving rights which are legally
demandable and enforceable, and to determine whether or not there has been a grave abuse of
discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of
the Government.
5. ID.; ID.; ID.; ID.; CASE AT BAR. In the case at bar, the issuance by the NTC of Memorandum
Circular No. 13-6-2000 and its Memorandum dated October 6, 2000 was pursuant to its quasilegislative or rule-making power. As such, petitioners were justified in invoking the judicial power of
the Regional Trial Court to assail the constitutionality and validity of the said issuances. . . In their
complaint before the Regional Trial Court, petitioners averred that the Circular contravened Civil
Code provisions on sales and violated the constitutional prohibition against the deprivation of
property without due process of law. These are within the competence of the trial judge. Contrary
to the finding of the Court of Appeals, the issues raised in the complaint do not entail highly
technical matters. Rather, what is required of the judge who will resolve this issue is a basic
familiarity with the workings of the cellular telephone service, including prepaid SIM and call cards
and this is judicially known to be within the knowledge of a good percentage of our population
and expertise in fundamental principles of civil law and the Constitution. Hence, the Regional
Trial Court has jurisdiction to hear and decide Civil Case No. Q-00-42221. The Court of Appeals
erred in setting aside the orders of the trial court and in dismissing the case.
DECISION
YNARES-SANTIAGO, J p:
Pursuant to its rule-making and regulatory powers, the National Telecommunications Commission
(NTC) issued on June 16, 2000 Memorandum Circular No. 13-6-2000, promulgating rules and
regulations on the billing of telecommunications services. Among its pertinent provisions are the
following:
(1) The billing statements shall be received by the subscriber of the telephone
service not later than 30 days from the end of each billing cycle. In
case the statement is received beyond this period, the subscriber
shall have a specified grace period within which to pay the bill and
the public telecommunications entity (PTEs) shall not be allowed to
disconnect the service within the grace period.
(2) There shall be no charge for calls that are diverted to a voice mailbox, voice
prompt, recorded message or similar facility excluding the
customer's own equipment.
(3) PTEs shall verify the identification and address of each purchaser of prepaid SIM
cards. Prepaid call cards and SIM cards shall be valid for at least 2

years from the date of first use. Holders of prepaid SIM cards shall
be given 45 days from the date the prepaid SIM card is fully
consumed but not beyond 2 years and 45 days from date of first
use to replenish the SIM card, otherwise the SIM card shall be
rendered invalid. The validity of an invalid SIM card, however, shall
be installed upon request of the customer at no additional charge
except the presentation of a valid prepaid call card.
(4) Subscribers shall be updated of the remaining value of their cards before the start
of every call using the cards.
(5) The unit of billing for the cellular mobile telephone service whether postpaid or
prepaid shall be reduced from 1 minute per pulse to 6 seconds per
pulse. The authorized rates per minute shall thus be divided by 10.
1
The Memorandum Circular provided that it shall take effect 15 days after its publication in a
newspaper of general circulation and three certified true copies thereof furnished the UP Law
Center. It was published in the newspaper, The Philippine Star, on June 22, 2000. 2 Meanwhile,
the provisions of the Memorandum Circular pertaining to the sale and use of prepaid cards and the
unit of billing for cellular mobile telephone service took effect 90 days from the effectivity of the
Memorandum Circular.
On August 30, 2000, the NTC issued a Memorandum to all cellular mobile telephone service
(CMTS) operators which contained measures to minimize if not totally eliminate the incidence of
stealing of cellular phone units. The Memorandum directed CMTS operators to:
a. strictly comply with Section B(1) of MC 13-6-2000 requiring the presentation and
verification of the identity and addresses of prepaid
SIM card customers;
b. require all your respective prepaid SIM cards dealers to comply with Section B(1)
of MC 13-6-2000;
c. deny acceptance to your respective networks prepaid and/or postpaid customers
using stolen cellphone units or cellphone units
registered to somebody other than the applicant when
properly informed of all information relative to the
stolen cellphone units;
d. share all necessary information of stolen cellphone units to all other CMTS
operators in order to prevent the use of stolen
cellphone units; and
e. require all your existing prepaid SIM card customers to register and present valid
identification cards. 3
This was followed by another Memorandum dated October 6, 2000 addressed to all public
telecommunications entities, which reads:
This is to remind you that the validity of all prepaid cards sold on 07 October 2000
and beyond shall be valid for at least two (2) years from date of first
use pursuant to MC 13-6-2000.
In addition, all CMTS operators are reminded that all SIM packs used by subscribers
of prepaid cards sold on 07 October 2000 and beyond shall be valid
for at least two (2) years from date of first use. Also, the billing unit
shall be on a six (6) seconds pulse effective 07 October 2000.
For strict compliance. 4
On October 20, 2000, petitioners Isla Communications Co., Inc. and Pilipino Telephone
Corporation filed against the National Telecommunications Commission, Commissioner Joseph A.
Santiago, Deputy Commissioner Aurelio M. Umali and Deputy Commissioner Nestor C. Dacanay,
an action for declaration of nullity of NTC Memorandum Circular No. 13-6-2000 (the Billing
Circular) and the NTC Memorandum dated October 6, 2000, with prayer for the issuance of a writ

of preliminary injunction and temporary restraining order. The complaint was docketed as Civil
Case No. Q-00-42221 at the Regional Trial Court of Quezon City, Branch 77. 5
Petitioners Islacom and Piltel alleged, inter alia, that the NTC has no jurisdiction to regulate the
sale of consumer goods such as the prepaid call cards since such jurisdiction belongs to the
Department of Trade and Industry under the Consumer Act of the Philippines; that the Billing
Circular is oppressive, confiscatory and violative of the constitutional prohibition against
deprivation of property without due process of law; that the Circular will result in the impairment of
the viability of the prepaid cellular service by unduly prolonging the validity and expiration of the
prepaid SIM and call cards; and that the requirements of identification of prepaid card buyers and
call balance announcement are unreasonable. Hence, they prayed that the Billing Circular be
declared null and void ab initio.
Soon thereafter, petitioners Globe Telecom, Inc. and Smart Communications, Inc. filed a joint
Motion for Leave to Intervene and to Admit Complaint-in-Intervention. 6 This was granted by the
trial court.
On October 27, 2000, the trial court issued a temporary restraining order enjoining the NTC from
implementing Memorandum Circular No. 13-6-2000 and the Memorandum dated October 6, 2000.
7
In the meantime, respondent NTC and its co-defendants filed a motion to dismiss the case on the
ground of petitioners' failure to exhaust administrative remedies.
Subsequently, after hearing petitioners' application for preliminary injunction as well as
respondent's motion to dismiss, the trial court issued on November 20, 2000 an Order, the
dispositive portion of which reads:
WHEREFORE, premises considered, the defendants' motion to dismiss is hereby
denied for lack of merit. The plaintiffs' application for the issuance of
a writ of preliminary injunction is hereby granted. Accordingly, the
defendants are hereby enjoined from implementing NTC
Memorandum Circular 13-6-2000 and the NTC Memorandum,
dated October 6, 2000, pending the issuance and finality of the
decision in this case. The plaintiffs and intervenors are, however,
required to file a bond in the sum of FIVE HUNDRED THOUSAND
PESOS (P500,000.00), Philippine currency.
SO ORDERED. 8
Defendants filed a motion for reconsideration, which was denied in an Order dated February 1,
2001. 9
Respondent NTC thus filed a special civil action for certiorari and prohibition with the Court of
Appeals, which was docketed as CA-G.R. SP. No. 64274. On October 9, 2001, a decision was
rendered, the decretal portion of which reads:
WHEREFORE, premises considered, the instant petition for certiorari and prohibition
is GRANTED, in that, the order of the court a quo denying the
petitioner's motion to dismiss as well as the order of the court a quo
granting the private respondents' prayer for a writ of preliminary
injunction, and the writ of preliminary injunction issued thereby, are
hereby ANNULLED and SET ASIDE. The private respondents'
complaint and complaint-in-intervention below are hereby
DISMISSED, without prejudice to the referral of the private
respondents' grievances and disputes on the assailed issuances of
the NTC with the said agency. TSDHCc
SO ORDERED. 10
Petitioners' motions for reconsideration were denied in a Resolution dated January 10, 2002 for
lack of merit. 11
Hence, the instant petition for review filed by Smart and Piltel, which was docketed as G.R. No.
151908, anchored on the following grounds:

A.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT
THE NATIONAL TELECOMMUNICATIONS COMMISSION (NTC)
AND NOT THE REGULAR COURTS HAS JURISDICTION OVER
THE CASE.
B.
THE HONORABLE COURT OF APPEALS ALSO GRAVELY ERRED IN HOLDING
THAT THE PRIVATE RESPONDENTS FAILED TO EXHAUST AN
AVAILABLE ADMINISTRATIVE REMEDY.
C.
THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE
BILLING CIRCULAR ISSUED BY THE RESPONDENT NTC IS
UNCONSTITUTIONAL AND CONTRARY TO LAW AND PUBLIC
POLICY.
D.
THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE
PRIVATE RESPONDENTS FAILED TO SHOW THEIR CLEAR
POSITIVE RIGHT TO WARRANT THE ISSUANCE OF A WRIT OF
PRELIMINARY INJUNCTION. 12
Likewise, Globe and Islacom filed a petition for review, docketed as G.R. No. 152063, assigning
the following errors:
1. THE HONORABLE COURT OF APPEALS SO GRAVELY ERRED BECAUSE THE
DOCTRINES OF PRIMARY JURISDICTION AND
EXHAUSTION OF ADMINISTRATIVE REMEDIES DO
NOT APPLY SINCE THE INSTANT CASE IS FOR
LEGAL NULLIFICATION (BECAUSE OF LEGAL
INFIRMITIES AND VIOLATIONS OF LAW) OF A
PURELY ADMINISTRATIVE REGULATION
PROMULGATED BY AN AGENCY IN THE EXERCISE
OF ITS RULE MAKING POWERS AND INVOLVES
ONLY QUESTIONS OF LAW.
2. THE HONORABLE COURT OF APPEALS SO GRAVELY ERRED BECAUSE THE
DOCTRINE ON EXHAUSTION OF ADMINISTRATIVE
REMEDIES DOES NOT APPLY WHEN THE
QUESTIONS RAISED ARE PURELY LEGAL
QUESTIONS.
3. THE HONORABLE COURT OF APPEALS SO GRAVELY ERRED BECAUSE THE
DOCTRINE OF EXHAUSTION OF ADMINISTRATIVE
REMEDIES DOES NOT APPLY WHERE THE
ADMINISTRATIVE ACTION IS COMPLETE AND
EFFECTIVE, WHEN THERE IS NO OTHER
REMEDY, AND THE PETITIONER STANDS TO
SUFFER GRAVE AND IRREPARABLE INJURY.
4. THE HONORABLE COURT OF APPEALS SO GRAVELY ERRED BECAUSE
PETITIONERS IN FACT EXHAUSTED ALL
ADMINISTRATIVE REMEDIES AVAILABLE TO
THEM.
5. THE HONORABLE COURT OF APPEALS SO GRAVELY ERRED IN ISSUING
ITS QUESTIONED RULINGS IN THIS CASE
BECAUSE GLOBE AND ISLA HAVE A CLEAR RIGHT
TO AN INJUNCTION. 13
The two petitions were consolidated in a Resolution dated February 17, 2003. 14

On March 24, 2003, the petitions were given due course and the parties were required to submit
their respective memoranda. 15
We find merit in the petitions.
Administrative agencies possess quasi-legislative or rule-making powers and quasi-judicial or
administrative adjudicatory powers. Quasi-legislative or rule-making power is the power to make
rules and regulations which results in delegated legislation that is within the confines of the
granting statute and the doctrine of non-delegability and separability of powers. 16
The rules and regulations that administrative agencies promulgate, which are the product of a
delegated legislative power to create new and additional legal provisions that have the effect of
law, should be within the scope of the statutory authority granted by the legislature to the
administrative agency. It is required that the regulation be germane to the objects and purposes of
the law, and be not in contradiction to, but in conformity with, the standards prescribed by law. 17
They must conform to and be consistent with the provisions of the enabling statute in order for
such rule or regulation to be valid. Constitutional and statutory provisions control with respect to
what rules and regulations may be promulgated by an administrative body, as well as with respect
to what fields are subject to regulation by it. It may not make rules and regulations which are
inconsistent with the provisions of the Constitution or a statute, particularly the statute it is
administering or which created it, or which are in derogation of, or defeat, the purpose of a statute.
In case of conflict between a statute and an administrative order, the former must prevail. 18
Not to be confused with the quasi-legislative or rule-making power of an administrative agency is
its quasi-judicial or administrative adjudicatory power. This is the power to hear and determine
questions of fact to which the legislative policy is to apply and to decide in accordance with the
standards laid down by the law itself in enforcing and administering the same law. The
administrative body exercises its quasi-judicial power when it performs in a judicial manner an act
which is essentially of an executive or administrative nature, where the power to act in such
manner is incidental to or reasonably necessary for the performance of the executive or
administrative duty entrusted to it. In carrying out their quasi-judicial functions, the administrative
officers or bodies are required to investigate facts or ascertain the existence of facts, hold
hearings, weigh evidence, and draw conclusions from them as basis for their official action and
exercise of discretion in a judicial nature. 19
In questioning the validity or constitutionality of a rule or regulation issued by an administrative
agency, a party need not exhaust administrative remedies before going to court. This principle
applies only where the act of the administrative agency concerned was performed pursuant to its
quasi-judicial function, and not when the assailed act pertained to its rule-making or quasilegislative power. In Association of Philippine Coconut Desiccators v. Philippine Coconut Authority,
20 it was held:
The rule of requiring exhaustion of administrative remedies before a party may seek
judicial review, so strenuously urged by the Solicitor General on
behalf of respondent, has obviously no application here. The
resolution in question was issued by the PCA in the exercise of its
rule-making or legislative power. However, only judicial review of
decisions of administrative agencies made in the exercise of their
quasi-judicial function is subject to the exhaustion doctrine.
Even assuming arguendo that the principle of exhaustion of administrative remedies apply in this
case, the records reveal that petitioners sufficiently complied with this requirement. Even during
the drafting and deliberation stages leading to the issuance of Memorandum Circular No. 13-62000, petitioners were able to register their protests to the proposed billing guidelines. They
submitted their respective position papers setting forth their objections and submitting proposed
schemes for the billing circular. 21 After the same was issued, petitioners wrote successive letters
dated July 3, 2000 22 and July 5, 2000, 23 asking for the suspension and reconsideration of the
so-called Billing Circular. These letters were not acted upon until October 6, 2000, when

respondent NTC issued the second assailed Memorandum implementing certain provisions of the
Billing Circular. This was taken by petitioners as a clear denial of the requests contained in their
previous letters, thus prompting them to seek judicial relief.
In like manner, the doctrine of primary jurisdiction applies only where the administrative agency
exercises its quasi-judicial or adjudicatory function. Thus, in cases involving specialized disputes,
the practice has been to refer the same to an administrative agency of special competence
pursuant to the doctrine of primary jurisdiction. The courts will not determine a controversy
involving a question which is within the jurisdiction of the administrative tribunal prior to the
resolution of that question by the administrative tribunal, where the question demands the exercise
of sound administrative discretion requiring the special knowledge, experience and services of the
administrative tribunal to determine technical and intricate matters of fact, and a uniformity of ruling
is essential to comply with the premises of the regulatory statute administered. The objective of the
doctrine of primary jurisdiction is to guide a court in determining whether it should refrain from
exercising its jurisdiction until after an administrative agency has determined some question or
some aspect of some question arising in the proceeding before the court. It applies where the
claim is originally cognizable in the courts and comes into play whenever enforcement of the claim
requires the resolution of issues which, under a regulatory scheme, has been placed within the
special competence of an administrative body; in such case, the judicial process is suspended
pending referral of such issues to the administrative body for its view. 24
However, where what is assailed is the validity or constitutionality of a rule or regulation issued by
the administrative agency in the performance of its quasi-legislative function, the regular courts
have jurisdiction to pass upon the same. The determination of whether a specific rule or set of
rules issued by an administrative agency contravenes the law or the constitution is within the
jurisdiction of the regular courts. Indeed, the Constitution vests the power of judicial review or the
power to declare a law, treaty, international or executive agreement, presidential decree, order,
instruction, ordinance, or regulation in the courts, including the regional trial courts. 25 This is
within the scope of judicial power, which includes the authority of the courts to determine in an
appropriate action the validity of the acts of the political departments. 26 Judicial power includes
the duty of the courts of justice to settle actual controversies involving rights which are legally
demandable and enforceable, and to determine whether or not there has been a grave abuse of
discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of
the Government. 27
In the case at bar, the issuance by the NTC of Memorandum Circular No. 13-6-2000 and its
Memorandum dated October 6, 2000 was pursuant to its quasi-legislative or rule-making power.
As such, petitioners were justified in invoking the judicial power of the Regional Trial Court to
assail the constitutionality and validity of the said issuances. In Drilon v. Lim, 28 it was held:
We stress at the outset that the lower court had jurisdiction to consider the
constitutionality of Section 187, this authority being embraced in the
general definition of the judicial power to determine what are the
valid and binding laws by the criterion of their conformity to the
fundamental law. Specifically, B.P. 129 vests in the regional trial
courts jurisdiction over all civil cases in which the subject of the
litigation is incapable of pecuniary estimation, even as the accused
in a criminal action has the right to question in his defense the
constitutionality of a law he is charged with violating and of the
proceedings taken against him, particularly as they contravene the
Bill of Rights. Moreover, Article X, Section 5(2), of the Constitution
vests in the Supreme Court appellate jurisdiction over final
judgments and orders of lower courts in all cases in which the
constitutionality or validity of any treaty, international or executive
agreement, law, presidential decree, proclamation, order,
instruction, ordinance, or regulation is in question. 29

In their complaint before the Regional Trial Court, petitioners averred that the Circular contravened
Civil Code provisions on sales and violated the constitutional prohibition against the deprivation of
property without due process of law. These are within the competence of the trial judge. Contrary
to the finding of the Court of Appeals, the issues raised in the complaint do not entail highly
technical matters. Rather, what is required of the judge who will resolve this issue is a basic
familiarity with the workings of the cellular telephone service, including prepaid SIM and call cards
and this is judicially known to be within the knowledge of a good percentage of our population
and expertise in fundamental principles of civil law and the Constitution.
Hence, the Regional Trial Court has jurisdiction to hear and decide Civil Case No. Q-00-42221.
The Court of Appeals erred in setting aside the orders of the trial court and in dismissing the case.
WHEREFORE, in view of the foregoing, the consolidated petitions are GRANTED. The decision of
the Court of Appeals in CA-G.R. SP No. 64274 dated October 9, 2001 and its Resolution dated
January 10, 2002 are REVERSED and SET ASIDE. The Order dated November 20, 2000 of the
Regional Trial Court of Quezon City, Branch 77, in Civil Case No. Q-00-42221 is REINSTATED.
This case is REMANDED to the court a quo for continuation of the proceedings. HcSCED
SO ORDERED.
||| (Smart Communications, Inc. v. NTC, G.R. No. 151908, 152063, August 12, 2003)
THIRD DIVISION
[G.R. No. 77707. August 8, 1988.]
PEDRO W. GUERZON, petitioner, vs. COURT OF APPEALS, BUREAU OF ENERGY
UTILIZATION, F. C. CAASI, JR., and PILIPINAS SHELL PETROLEUM CORPORATION,
respondents.
Llego, Llego & Collera for petitioner.
Florentino G. Dumlao, Jr. for respondent Pilipinas Shell Petroleum Corporation.
SYLLABUS
1.POLITICAL LAW; ADMINISTRATIVE LAW; ADMINISTRATIVE AGENCIES; POWERS
THEREOF LIMITED BY LAW. It is a fundamental rule that an administrative agency has only
such powers as are expressly granted to it by law and those that are necessarily implied in the
exercise thereof [Makati Stock Exchange, Inc. v. Securities and Exchange Commission, G.R. No.
L-23004, June 30, 1965, 14 SCRA 620; Sy v. Central Bank, G.R. No. L-41480, April 30, 1976, 70
SCRA 570.]
2.ID.; ID.; ID.; ID.; BUREAU OF ENERGY UTILIZATION; POWERS UNDER SEC. 7 OF P.D. No.
1206. The Bureau of Energy Utilization is the agency charged with regulating the operations
and trade practices of the petroleum industry. Section 7 of P.D. No. 1206, as amended, is very
clear as to the courses of action that the Bureau of Energy Utilization may take in case of a
violation or non-compliance with any term or condition of any certificate, license or permit issued
by the Bureau or any of its orders, decisions, rules or regulations. The Bureau after due hearing
and notices may: (1) impose a fine not exceeding P1,000.00; and (2) in case of failure to pay the
fine imposed or to cease and discontinue the violation or non-compliance, order the suspension,
closure or stoppage of operations of the establishment of the guilty party. Its authority is limited to
these two (2) options.
3.ID.; ID.; ID.; ID.; ID.; BUREAU OF ENERGY UTILIZATION CANNOT ORDER SERVICE
STATION LESSEE TO VACATE PREMISES UPON EXPIRATION OF AGREEMENT WITH OIL
COMPANY LESSOR. The Bureau of Energy Utilization does not have the power to order a
service station operator-lessee to vacate the service station and to turn over its possession to the
oil company-lessor upon the expiration of the dealership and lease agreements. Jurisdiction to
order a lessee to vacate the leased premises is vested in the civil courts in an appropriate case for
unlawful detainer or accion publiciana (Secs. 19 (2), B.P. Blg. 129, as amended.) There is nothing

in P.D. No. 1206, as amended, that would suggest that the same or similar jurisdiction has been
granted to the Bureau of Energy Utilization.
4.ID.; ID.; ID.; ID.; ID.; ID.; CASE AT BAR. Shell leased its service station, facilities and
equipment to the petitioner for five years under a "Service Station Lease" and executed with
petitioner a "Dealer's Sales Contract" for the sale by petitioner of Shell's petroleum and other
products. It was stipulated in the "Service Station Lease" that the cancellation or termination of the
"Dealer's Sales Contract" shall automatically cancel the lease. When the "Dealer's Sales Contract"
was about to end Shell notified petitioner that it was not renewing the contract and reminded the
latter to hand over the Station with all its facilities on the appropriate date. When the contract
ended, Shell demanded the surrender of the station premises. Thereafter, the Officer-In-Charge of
the Mindanao Division Office of the Bureau of Energy Utilization issued an order directing
petitioner to vacate the service station for the reason that the continued occupation of the station
"is not only considered a violation of B.E.U. laws, rules and regulations but is also detrimental to
the interests of the parties concerned and the public." Shell was able to secure possession of the
premises pursuant to the order. HELD: It is not within the jurisdiction of the B.E.U. to issue the
order to vacate.
5.CRIMINAL LAW; OFFENSES PUNISHABLE UNDER SPECIAL LAWS; ILLEGAL TRADING IN
PETROLEUM PRODUCTS (B.P. Blg. 33); NO VIOLATION OF LAW IN CASE AT BAR. It is
readily apparent that the order of the B.E.U. is premised on petitioner's refusal to vacate the
service station in spite of the expiration and non-renewal of his dealership and lease agreements
with respondent Shell. Nowhere in the order is it stated that petitioner had engaged in illegal
trading in petroleum products or had committed any other violation of B.P. Blg. 33, which penalizes
a person guilty of illegal trading in petroleum products with a fine of not less than P2,000.00 but
not more than P10,000.00, or imprisonment of at least 2 months but not more than 1 year, or both,
in the discretion of the court. The order merely makes a vague reference to a "violation of BEU
laws, rules and regulations," without stating the specific provision violated. That petitioner had
engaged in illegal trading in petroleum products cannot even be implied from the wording of the
assailed order.
6.ID.; ID.; ID.; PRIVATE PARTY, TO CLAIM RELIEF, MUST SHOW PREJUDICE RESULTING
FROM CRIMINAL ACT. Even if petitioner was indeed engaged in illegal trading in petroleum
products, there was no basis under B.P. Blg. 33 to order him to vacate the service station and to
turn it over to respondent Shell. Illegal trading in petroleum products is a criminal act wherein the
injured party is the State. Respondent Shell is not even alleged by the Solicitor General as a
private party prejudiced and, therefore, it can claim no relief if a criminal case is instituted.
7.REMEDIAL LAW; WRIT OF MANDATORY INJUNCTION; PETITIONER NOT ENTITLED TO
WRIT IN CASE AT BAR. While the order dated April 15, 1986 is null and void, the Court,
however, finds itself unable to issue the writ of mandatory injunction prayed for ordering
respondent Shell to restore possession of the service station and the equipment and facilities
therein to petitioner. Petitioner himself had admitted in his petition that his dealership and lease
agreements with respondent Shell had already expired. Recognized the validity of the termination
of the agreements, he requested for their renewal. However, this request was denied. [Rollo, p. 9]
Undeniably, after April 12, 1986, any right petitioner had to possess the service station and the
equipment and facilities therein had been extinguished. No basis for an affirmative relief therefore
exists.
DECISION
CORTES, J p:
Raised by petitioner to this Court is the issue of whether or not the Bureau of Energy Utilization,
the agency charged with regulating the operations and trade practices of the petroleum industry,
has the power to order a service station operator-lessee to vacate the service station and to turn
over its possession to the oil company-lessor upon the expiration of the dealership and lease
agreements. cdll
The facts, as found by the Court of Appeals, are as follows:

Basic antecedent facts show that on

January 9, 1981 petitioner Pedro Guerzon executed
with Basic Landoil Energy Corporation, which was later
acquired by respondent Pilipinas Shell Petroleum
Corporation, a contract denominated as "Service
Station Lease" for the use and operation of respondent
SHELL's properties, facilities and equipment, which
included four (4) pieces of fuel dispensing pumps and
one (1) piece air compressor, for a period of five (5)
years from January 15, 1981 and ending on January
14, 1986. On January 7, 1981 petitioner likewise
executed with the same Corporation a "Dealer's Sales
Contract" for the sale by petitioner of respondent
SHELL's petroleum and other products in the leased
service station which contract expired April 12, 1986.
On April 13, 1981, respondent Bureau of Energy
Utilization (BEU) approved the Dealer's Sales Contract
pursuant to which petitioner was appointed dealer of
SHELL's gasoline and other petroleum products which
he was to sell at the gasoline station located at
Cagayan de Oro City. On the same day, respondent
BEU issued a certificate of authority in petitioner's favor,
which had a 5-year period of validity, in line with the
terms of the contract.
Paragraph 9 of the Service Station Lease Contract provides:
The cancellation or termination of the Dealer's Sales Contract executed between the
COMPANY and the LESSEE on January 7, 1981 shall automatically
cancel this lease.
As early as January 2, 1986 respondent SHELL through its District Manager
Reseller Mindanao wrote to petitioner informing him that the
Company was not renewing the Dealer's Sales Contract which was
to expire on April 12, 1986 together with the service station lease
and reminding him to take appropriate steps to wind up his business
activities at the station and, on the appropriate date to hand over
the station with all its facilities and equipment to the representative
of respondent. A copy of this letter was furnished respondent BEU,
through the latter's Mindanao Division Office. On April 12, 1986,
respondent SHELL wrote petitioner reiterating the decision not to
extend the Dealer's Sales Contract, demanding the surrender of the
station premises and all company owned equipment to the
respondent's representative.
On April 15, 1986 respondent BEU, through respondent Caasi, Jr., officer-in-charge
of its Mindanao Division Office, issued the assailed order directing
the petitioner as follows:
(1)immediately vacate the service station
abovementioned and turn it over to Pilipinas Shell
Petroleum Corporation; and
(2)show cause in writing, under oath
within ten (10) days from receipt hereof why no
administrative and/or criminal proceedings shall be
instituted against you for the aforesaid violation.

The order directed that a copy of the same be furnished the PC-INP Commander of
Cagayan de Oro City, requesting prompt and effective enforcement
of the directive and submitting to the BEU of the result of the action
taken thereon.
On April 22, 1986, pursuant to the order of April 15, 1986, respondent SHELL,
accompanied by law enforcement officers, was able to secure
possession of the gasoline station in question together with the
requisite equipments and accessories, and turned them over to the
control of the personnel of respondent SHELL who accompanied
them.
On May 9, 1986, petitioner filed with the Regional Trial Court of Misamis Oriental a
complaint for certiorari, injunction and damages with preliminary
mandatory injunction (Civil Case No. 10619) to annul the disputed
order dated April 15, 1986 of respondent F.C. Caasi, Jr., but on
September 18, 1986 this complaint was dismissed for lack of
jurisdiction to annul the order of a quasi-judicial body of equivalent
category as the Regional Trial Court. [Rollo, pp. 37-39.]
Thus, petitioner filed in the Court of Appeals a petition for certiorari with a prayer for preliminary
mandatory injunction against Pilipinas Shell Petroleum Corporation, F.C. Caasi, Jr. and the Bureau
of Energy Utilization seeking the annulment of respondent Caasi, Jr.'s order dated April 15, 1986
and the restoration to petitioner of possession of the service station and the equipment removed
therefrom.
In a decision promulgated on February 10, 1987, the Court of Appeals denied due course and
dismissed the petition after holding the disputed order valid and the proceedings undertaken to
implement the same sanctioned by Presidential Decree No. 1206, as amended. cdphil
Hence, petitioner's recourse to this Court.
In his petition for review, petitioner ascribed the following errors to the Court of Appeals:
I
THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT
RESPONDENT BUREAU OF ENERGY UTILIZATION HAS
JURISDICTION TO EJECT THE PETITIONER FROM THE
GASOLINE SERVICE STATION LEASED.
II
THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THERE IS
NO NECESSITY OF ANY NOTICE AND HEARING PRIOR TO THE
ISSUANCE OF THE DISPUTED ORDER ISSUED BY
RESPONDENT BUREAU OF ENERGY UTILIZATION ORDERING
THE PETITIONER TO VACATE THE LEASED PREMISES. [Rollo,
p. 13]
The controversy revolves around the assailed order issued by respondent F.C. Caasi, Jr., Officerin-Charge of the Mindanao Division Office of the Bureau of Energy Utilization, which reads:
15 April 1986
Mr. Pedro W. GuerzonCorner Velez-Recto StreetsCagayan de Oro City
Sir:
We were officially informed by Pilipinas Shell Petroleum Corporation that you refused to vacate its
company-owned service station at the above address despite the fact that you were advised by
Shell in its letter of January 02, 1986 that it will not renew the Dealer's Sales Contract between
yourself and the company upon its expiration on April 12, 1986.
Your continued occupancy of the service station is not only considered a violation of BEU laws,
rules and regulations but is also detrimental to the interests of the parties concerned and the
public.

In view thereof, you are hereby directed to:

(1)immediately vacate the service station abovementioned and turn it over to Pilipinas Shell
Petroleum Corporation; and
(2)show cause in writing, under oath within ten (10) days from receipt hereof why no
administrative and/or criminal proceedings shall be instituted
against you for the aforesaid violation.
Let a copy of this directive be furnished the PC-INP Commander of Cagayan de Oro
City, who is hereby requested to cause the prompt and effective
enforcement hereof and to submit to this Bureau the result/s of the
action/s taken thereon.
Very truly yours,
(Sgd.) F.C. CAASI, JR.
Officer-in-Charge
cc:PC/INP CommanderCagayan de Oro CityPilipinas Shell Petroleum Corporation
Sasa, Davao City/Cagayan de Oro CityBEU-Manila
[Rollo, p. 122; Emphasis supplied.]
As stated at the outset, whether or not it is within the jurisdiction of the Bureau of Energy Utilization
to issue the above order is the primary issue to be resolved.
The Solicitor General contends that since petitioner's license to sell petroleum products expired on
April 12, 1986, when his dealership and lease contracts expired, as of the following day, April 13,
1986 he was engaged in illegal trading in petroleum products in violation of Batas Pambansa Blg.
33 [Rollo, pp. 100-101.] The pertinent provisions of B.P. No. 33 state:
Sec. 2.Prohibited Acts. The following acts are prohibited and penalized:
(a)Illegal trading in petroleum and/or petroleum products;
xxx xxx xxx
Sec. 3.Definition of terms. For the purposes of this Act, the following terms shall
be understood to mean:
Illegal trading in petroleum and/or petroleum products the sale or distribution of
petroleum products for profit without license or authority from the
Government; non-issuance of receipts by licensed traders;
misrepresentation as to quality and/or quantity; and sale by oil
companies, distributors and/or dealers violative of government rules
and regulations.
xxx xxx xxx
Thus, concludes the Solicitor General, the Bureau of Energy Utilization had the power to issue,
and was justified in issuing, the order to vacate pursuant to Presidential Decree No. 1206, as
amended, the pertinent portion of which provides:
Sec. 7.Bureau of Energy Utilization. There is created in the Department a Bureau
of Energy Utilization, hereafter referred to in this Section as the
Bureau, which shall have the following powers and functions,
among others:
xxx xxx xxx
e.After due notice and hearing, impose and collect a fine not exceeding One
Thousand Pesos, for every violation or non-compliance with any
term or condition of any certificate, license, or permit issued by the
Bureau or of any of its orders, decisions, rules and regulations.
The fine so imposed shall be paid to the Bureau, and failure to pay the fine within the
time specified in the order or decision of the Bureau or failure to
cease and discontinue the violation or non-compliance shall be
deemed good and sufficient reason for the suspension, closure or
stoppage of operations of the establishment of the person guilty of
the violation or non-compliance. In case the violation or default is

committed by a corporation or association, the manager or person

who has charge of the management of the corporation or
association and the officers or directors thereof who have ordered
or authorized the violation or default shall be solidarily liable for the
payment of the fine.
The Bureau shall have the power and authority to issue corresponding writs of
execution directing the City Sheriff or provincial Sheriff or other
peace officers whom it may appoint to enforce the fine or the order
of closure, suspension or stoppage of operations. Payment may
also be enforced by appropriate action brought in a court of
competent jurisdiction. The remedy provided herein shall not be a
bar to or affect any other remedy under existing laws, but shall be
cumulative and additional to such remedies;
xxx xxx xxx
However, the Solicitor General's line of reasoning is fatally flawed by the failure of the facts to
support it. From a cursory reading of the assailed order, it is readily apparent that the order is
premised on petitioner's refusal to vacate the service station in spite of the expiration and nonrenewal of his dealership and lease agreements with respondent Shell. Nowhere in the order is it
stated that petitioner had engaged in illegal trading in petroleum products or had committed any
other violation of B.P. Blg. 33. The order merely makes a vague reference to a "violation of BEU
laws, rules and regulations," without stating the specific provision violated. That petitioner had
engaged in illegal trading in petroleum products cannot even be implied from the wording of the
assailed order.
But then, even if petitioner was indeed engaged in illegal trading in petroleum products, there was
no basis under B.P. Blg. 33 to order him to vacate the service station and to turn it over to
respondent Shell. Illegal trading in petroleum products is a criminal act wherein the injured party is
the State. Respondent Shell is not even alleged by the Solicitor General as a private party
prejudiced and, therefore, it can claim no relief if a criminal case is instituted. *
Even on the assumption that petitioner's continued occupancy and operation of the service station
constituted a violation of a law or regulation, still the Court has no recourse but to rule against the
legality of the order, the Bureau of Energy Utilization not being empowered to issue it. Section 7 of
P.D. No. 1206, as amended, is very clear as to the courses of action that the Bureau of Energy
Utilization may take in case of a violation or non-compliance with any term or condition of any
certificate, license or permit issued by the Bureau or any of its orders, decisions, rules or
regulations. The Bureau may: (1) impose a fine not exceeding P1,000.00; and (2) in case of failure
to pay the fine imposed or to cease and discontinue the violation or non-compliance, order the
suspension, closure or stoppage of operations of the establishment of the guilty party. Its authority
is limited to these two (2) options. It can do no more, as there is nothing in P.D. No. 1206, as
amended, which empowers the Bureau to issue an order to vacate in case of a violation.
As it is, jurisdiction to order a lessee to vacate the leased premises is vested in the civil courts in
an appropriate case for unlawful detainer or accion publiciana [Secs. 19(2) and 33(2), B.P. Blg.
129, as amended.] There is nothing in P.D. No. 1206, as amended, that would suggest that the
same or similar jurisdiction has been granted to the Bureau of Energy Utilization. It is a
fundamental rule that an administrative agency has only such powers as are expressly granted to
it by law and those that are necessarily implied in the exercise thereof [Makati Stock Exchange,
Inc. v. Securities and Exchange Commission, G.R. No. L-23004, June 30, 1965, 14 SCRA 620; Sy
v. Central Bank, G.R. No. L-41480, April 30, 1976, 70 SCRA 570.] That issuing the order to vacate
was the most effective way of stopping any illegal trading in petroleum products is no excuse for a
deviation from this rule. Otherwise, adherence to the rule of law would be rendered meaningless.
cdphil

Moreover, contrary to the Solicitor General's theory, the text of the assailed order leaves no room
for doubt that it was issued in connection with an adjudication of the contractual dispute between
respondent Shell and petitioner. But then the Bureau of Energy Utilization, like its predecessor, the
defunct Oil Industry Commission, has no power to decide contractual disputes between gasoline
dealers and oil companies, in the absence of an express provision of law granting to it such power
[see Pilipinas Shell Petroleum Corp. v. Oil Industry Commission, G.R. No. L-41315, November 13,
1986, 145 SCRA 433.] As explicitly stated in the law, in connection with the exercise of quasijudicial powers, the Bureau's jurisdiction is limited to cases involving violation or non-compliance
with any term or condition of any certificate, license or permit issued by it or of any of its orders,
decisions, rules or regulations.
Viewed from any angle, respondent F.C. Caasi, Jr., in issuing the assailed order, acted beyond his
authority and overstepped the powers granted by P.D. No. 1206, as amended. The assailed order
was, therefore, null and void.
Even if the issuance of the order to vacate was within the authority of respondent Caasi, Jr., still its
nullity is apparent because of the failure to comply with the requirement of notice and hearing.
That P.D. No. 1206, as amended, requires notice and hearing before any administrative penalty
provided in Sec. 7(e) may be imposed is patent. Sec. 7(e) provides for a gradation of penalties of
which the imposition of a fine in an amount not exceeding P1,000.00 is the least severe, and
requires that even before a fine is imposed notice and an opportunity to be heard be given to the
offender.
While the order dated April 15, 1986 is null and void, the Court, however, finds itself unable to
issue the writ of mandatory injunction prayed for ordering respondent Shell to restore possession
of the service station and the equipment and facilities therein to petitioner. Petitioner himself had
admitted in his petition that his dealership and lease agreements with respondent Shell had
already expired. Recognized the validity of the termination of the agreements, he requested for
their renewal. However, this request was denied. [Rollo, p. 9] Undeniably, after April 12, 1986, any
right petitioner had to possess the service station and the equipment and facilities therein had
been extinguished. No basis for an affirmative relief therefore exists. LLphil
WHEREFORE, in view of the foregoing, the Decision of the Court of Appeals dated February 10,
1987 is REVERSED and the Order dated April 15, 1986 issued by respondent Caasi, Jr. of the
Bureau of Energy Utilization is ANNULLED and SET ASIDE.
However, the right of petitioner to the possession of the service station and the equipment and
facilities having been extinguished, the prayer for the issuance of a writ of mandatory injunction is
DENIED.
SO ORDERED.
Gutierrez, Jr., Feliciano and Bidin, JJ., concur.
Fernan, C.J., no part was counsel for Pilipinas Shell Petroleum Corporation (Cebu Office).
||| (Guerzon v. Court of Appeals, G.R. No. 77707, August 08, 1988)
EN BANC
[G.R. No. L-50444. August 31, 1987.]
ANTIPOLO REALTY CORPORATION, petitioner, vs. THE NATIONAL HOUSING
AUTHORITY, HON. G.V. TOBIAS, in his capacity as General
Manager of the National Housing Authority, THE HON. JACOBO
C. CLAVE, in his capacity as Presidential Executive Assistant
and VIRGILIO A. YUSON, respondents.
SYLLABUS
1. ADMINISTRATIVE LAW; ADMINISTRATIVE AGENCIES EXERCISE AND PERFORM
ADJUDICATORY POWERS AND FUNCTION. It is by now commonplace learning that many
administrative agencies exercise and perform adjudicatory powers and functions, though to a
limited extent only. Limited delegation of judicial or quasi-judicial authority to administrative
agencies (e.g., the Securities and Exchange Commission and the National Labor Relations

Commission) is well recognized in our jurisdiction, basically because the need for special
competence and experience has been recognized as essential in the resolution of questions of
complex or specialized character and because of a companion recognition that the dockets of our
regular courts have remained crowded and clogged. (See Spouses Jose Abejo and Aurora Abejo,
et al. vs. Hon. Rafael dela Cruz, etc., et al., G.R. No. 63558, May 19, 1987).
2. ID.; ID.; QUANTUM OF JUDICIAL OR QUASI-JUDICIAL POWERS DEFINED IN ITS
ENABLING ACT. In general, the quantum of judicial or quasi-judicial powers which an
administrative agency may exercise is defined in the enabling act of such agency. In other words,
the extent to which an administrative entity may exercise such powers depends largely, if not
wholly, on the provisions of the statute creating or empowering such agency.
3. ID.; ID.; ID.; NATIONAL HOUSING AUTHORITY. The extent to which the NHA has been
vested with quasi-judicial authority must be determined by referring to the terms of Presidential
Decree No. 957, known as "The Subdivision and Condominium Buyers' Decree." Section 3 of this
statute provides as follows: "National Housing Authority. The National Housing Authority shall
have exclusive jurisdiction to regulate the real estate trade and business in accordance with the
provisions of this decree." (Emphasis supplied)
4. CIVIL LAW; OBLIGATIONS AND CONTRACTS; POWER TO RESCIND AVAILABLE ONLY TO
INJURED PARTY; CASE AT BAR. Having failed to comply with its contractual obligation to
complete certain specified improvements in the subdivision within the specified period of two years
from the date of the execution of the Contract to Sell, petitioner was not entitled to exercise its
options under Clause 7 of the Contract. Hence, petitioner could neither rescind the Contract to Sell
nor treat the installment payments made by the private respondent as forfeited in its favor. Indeed,
under the general Civil Law, in view of petitioner's breach of its contract with private respondent, it
is the latter who is vested with the option either to rescind the contract and receive reimbursement
of all installment payments (with legal interest) made for the purchase of the subdivision lot in
question, or to suspend payment of further purchase installments until such time as the petitioner
had fulfilled its obligations to the buyer. The NHA was therefore correct in holding that private
respondent's prior installment payments could not be forfeited in favor of petitioner.
5. REMEDIAL LAW; MOTIONS; DUE PROCESS; PRINCIPLE NOT VIOLATED WHERE PARTY
WAS GIVEN AMPLE OPPORTUNITY TO PRESENT ITS SIDE AND TO BE HEARD. We turn to
petitioner's assertion that it had been denied the right to due process. This assertion lacks
substance. The record shows that a copy of the order denying the Motion to Dismiss and
scheduling the hearing of the complaint for the morning of 6 March 1978, was duly served on
counsel for petitioner, as evidenced by the annotation appearing at the bottom of said copy
indicating that such service had been effected. But even if it be assumed, arguendo, that such
notice had not been served on the petitioner, nevertheless the latter was not deprived of due
process, for what the fundamental law abhors is not the absence of previous notice but rather the
absolute lack of opportunity to be heard. In the instant case, petitioner was given ample
opportunity to present its side and to be heard on a motion for reconsideration as well, and not just
on a motion to dismiss; the claim of denial of due process must hence sound even more hollow.
6. ADMINISTRATIVE LAW; SUBDIVISION AND CONDOMINIUM BUYERS' DECREE (PD 957);
SALE OF LOTS IN INSTALLMENT BASIS; ORIGINAL PERIOD OF PAYMENT DEEMED
EXTENDED. To permit Antipolo Realty to collect the disputed amount in a lump sum after it had
defaulted on its obligations to its lot buyers, would tend to defeat the purpose of the authorization
to lot buyers to suspend installment payments. As the NHA resolution pointed out, "[s]uch must be
the case, otherwise, there is no sense in suspending payments." Upon the other hand, to condone
the entire amount that would have become due would be an excessively harsh penalty upon the
petitioner and would result in the unjust enrichment of the private respondent at the expense of the
petitioner.
DECISION
FELICIANO, J p:

By virtue of a Contract to Sell dated 18 August 1970, Jose Hernando acquired prospective and
beneficial ownership over Lot. No. 15, Block IV of the Ponderosa Heights Subdivision in Antipolo,
Rizal, from the petitioner Antipolo Realty Corporation.
On 28 August 1974, Mr. Hernando transferred his rights over Lot No. 15 to private respondent
Virgilio Yuson. The transfer was embodied in a Deed of Assignment and Substitution of Obligor
(Delegacion), executed with the consent of Antipolo Realty, in which Mr. Yuson assumed the
performance of the vendee's obligations under the original contract, including payment of his
predecessor's installments in arrears. However, for failure of Antipolo Realty to develop the
subdivision project in accordance with its undertaking under Clause 17 of the Contract to Sell, Mr.
Yuson paid only the arrearages pertaining to the period up to, and including, the month of August
1972 and stopped all monthly installment payments falling due thereafter Clause 17 reads: cdll
"Clause 17. SUBDIVISION BEAUTIFICATION. To insure the beauty of the
subdivision in line with the modern trend of urban development, the
SELLER hereby obligates itself to provide the subdivision with:
a) Concrete curbs and gutters
b) Underground drainage system
c) Asphalt paved roads
d) Independent water system
e) Electrical installation with concrete posts.
f) Landscaping and concrete sidewalks
g) Developed park or amphitheatre
h) 24-hour security guard service.
These improvements shall be complete within a period of two (2) years from date of
this contract. Failure by the SELLER shall permit the BUYER to
suspend his monthly installments without any penalties or interest
charges until such time that such improvements shall have been
completed." 1
On 14 October 1976, the president of Antipolo Realty sent a notice to private respondent Yuson
advising that the required improvements in the subdivision had already been completed, and
requesting resumption of payment of the monthly installments on Lot No. 15. For his part, Mr.
Yuson replied that he would conform with the request as soon as he was able to verify the truth of
the representation in the notice.
In a second letter dated 27 November 1976, Antipolo Realty reiterated its request that Mr. Yuson
resume payment of his monthly installments, citing the decision rendered by the National Housing
Authority (NHA) on 25 October 1976 in Case No. 252 (entitled "Jose B. Viado Jr., complainant vs.
Conrado S. Reyes, respondent") declaring Antipolo Realty to have "substantially complied with its
commitment to the lot buyers pursuant to the Contract to Sell, executed by and between the lot
buyers and the respondent." In addition, a formal demand was made for full and immediate
payment of the amount of P16,994.73, representing installments which, Antipolo Realty alleged,
had accrued during the period while the improvements were being completed i.e., between
September 1972 and October 1976. LLjur
Mr. Yuson refused to pay the September 1972 - October 1976 monthly installments but agreed to
pay the post October 1976 installments. Antipolo Realty responded by rescinding the Contract to
Sell, and claiming the forfeiture of all installment payments previously made by Mr. Yuson.
Aggrieved by the rescission of the Contract to Sell, Mr. Yuson brought his dispute with Antipolo
Realty before public respondent NHA through a letter-complaint dated 10 May 1977 which
complaint was docketed in NHA as Case No. 2123.
Antipolo Realty filed a Motion to Dismiss which was heard on 2 September 1977. Antipolo Realty,
without presenting any evidence, moved for the consolidation of Case No. 2123 with several other
cases filed against it by other subdivision lot buyers, then pending before the NHA. In an Order
issued on 7 February 1978, the NHA denied the motion to dismiss and scheduled Case No. 2123
for hearing.

After hearing, the NHA rendered a decision on 9 March 1978 ordering the reinstatement of the
Contract to Sell under the following conditions:
"1) Antipolo Realty Corporation shall sent [sic] to Virgilio Yuzon a statement of
account for the monthly amortizations from November 1976 to the
present;
2) No penalty interest shall be charged for the period from November 1976 to the
date of the statement of account; and
3) Virgilio Yuzon shall be given sixty (60) days to pay the arrears shown in the
statement of account." 2
Antipolo Realty filed a Motion for Reconsideration asserting: (a) that it had been denied due
process of law since it had not been served with notice of the scheduled hearing; and (b) that the
jurisdiction to hear and decide Mr. Yuson's complaint was lodged in the regular courts, not in the
NHA, since that complaint involved the interpretation and application of the Contract to Sell.
The motion for reconsideration was denied on 28 June 1978 by respondent NHA General Manager
G.V. Tobias, who sustained the jurisdiction of the NHA to hear and decide the Yuson complaint. He
also found that Antipolo Realty had in fact been served with notice of the date of the hearing, but
that its counsel had failed to attend the hearing. 3 The case was submitted for decision, and
eventually decided, solely on the evidence presented by the complainant.
On 2 October 1978, Antipolo Realty came to this Court with a Petition for Certiorari and Prohibition
with Writ of Preliminary Injunction, which was docketed as G.R. No. L-49051. Once more, the
jurisdiction of the NHA was assailed. Petitioner further asserted that, under Clause 7 of the
Contract to Sell, it could validly terminate its agreement with Mr. Yuson and, as a consequence
thereof, retain all the prior installment payments made by the latter. 4
This Court denied certiorari in a minute resolution issued on 11 December 1978, "without prejudice
to petitioner's pursuing the administrative remedy." 5 A motion for reconsideration was denied on
29 January 1979.
Thereafter, petitioner interposed an appeal from the NHA decision with the Office of the President
which, on 9 March 1979, dismissed the same through public respondent Presidential Executive
Assistant Jacobo C. Clave. 6
In the present petition, Antipolo Realty again asserts that, in hearing the complaint of private
respondent Yuson and in ordering the reinstatement of the Contract to Sell between the parties,
the NHA had not only acted on a matter beyond its competence, but had also, in effect, assumed
the performance of judicial or quasi-judicial functions which the NHA was not authorized to
perform. Cdpr
We find the petitioner's arguments lacking in merit.
It is by now commonplace learning that many administrative agencies exercise and perform
adjudicatory powers and functions, though to a limited extent only. Limited delegation of judicial or
quasi-judicial authority to administrative agencies (e.g., the Securities and Exchange Commission
and the National Labor Relations Commission) is well recognized in our jurisdiction, 7 basically
because the need for special competence and experience has been recognized as essential in the
resolution of questions of complex or specialized character and because of a companion
recognition that the dockets of our regular courts have remained crowded and clogged. In
Spouses Jose Abejo and Aurora Abejo, et al. vs. Hon. Rafael dela Cruz, etc., et al., 8 the Court,
through Mr. Chief Justice Teehankee, said:
"In the fifties, the Court taking cognizance of the move to vest jurisdiction in
administrative commissions and boards the power to resolve
specialized disputes in the field of labor (as in corporations, public
transportation and public utilities) ruled that Congress in requiring
the Industrial Court's intervention in the resolution of labormanagement controversies likely to cause strikes or lockouts meant
such jurisdiction to be exclusive, although it did not so expressly

state in the law. The Court held that under the 'sense-making and
expeditious doctrine of primary jurisdiction . . . the courts cannot or
will not determine a controversy involving a question which is within
the jurisdiction of an administrative tribunal, where the question
demands the exercise of sound administrative discretion requiring
the special knowledge, experience, and services of the
administrative tribunal to determine technical and intricate matters
of fact, and a uniformity of ruling is essential to comply with the
purposes of the regulatory statute administered' (Pambujan Sur
United Mine Workers v. Samar Mining Co., Inc., 94 Phil. 932, 941
[1954]).
In this era of clogged court dockets, the need for specialized administrative boards or
commissions with the special knowledge, experience and capability
to hear and determine promptly disputes on technical matters or
essentially factual matters, subject to judicial review in case of
grave abuse of discretion, has become well nigh indispensable.
Thus, in 1984, the Court noted that 'between the power lodged in an
administrative body and a court, the unmistakable trend has been to
refer it to the former. "Increasingly, this Court has been committed to
the view that unless the law speaks clearly and unequivocably, the
choice should fall on [an administrative agency]" ' (NFL v. Eisma,
127 SCRA 419, 428, citing precedents). The Court in the earlier
case of Ebon vs. De Guzman (113 SCRA 52, 56 [1982]), noted that
the lawmaking authority, in restoring to the labor arbiters and the
NLRC their jurisdiction to award all kinds of damages in labor
cases, as against the previous P.D. amendment splitting their
jurisdiction with the regular courts, 'evidently, . . . had second
thoughts about depriving the Labor Arbiters and the NLRC of the
jurisdiction to award damages in labor cases because that setup
would mean duplicity of suits, splitting the cause of action and
possible conflicting findings and conclusions by two tribunals on one
and the same claim.'"
In an even more recent case, Tropical Homes, Inc. vs. National Housing Authority, et al., 9 Mr.
Justice Gutierrez, speaking for the Court, observed that:
"There is no question that a statute may vest exclusive original jurisdiction in an
administrative agency over certain disputes and controversies
falling within the agency's special expertise. The very definition of
an administrative agency includes its being vested with quasijudicial powers. The ever increasing variety of powers and functions
given to administrative agencies recognizes the need for the active
intervention of administrative agencies in matters calling for
technical knowledge and speed in countless controversies which
cannot possibly be handled by regular courts."
In general, the quantum of judicial or quasi-judicial powers which an administrative agency may
exercise is defined in the enabling act of such agency. In other words, the extent to which an
administrative entity may exercise such powers depends largely, if not wholly, on the provisions of
the statute creating or empowering such agency. 10 In the exercise of such powers, the agency
concerned must commonly interpret and apply contracts and determine the rights of private parties
under such contracts. One thrust of the multiplication of administrative agencies is that the
interpretation of contracts and the determination of private rights thereunder is no longer a
uniquely judicial function, exercisable only by our regular courts. prcd

Thus, the extent to which the NHA has been vested with quasi-judicial authority must be
determined by referring to the terms of Presidential Decree No. 957, known as "The Subdivision
and Condominium Buyers' Decree." 11 Section 3 of this statute provides as follows:
"National Housing Authority. The National Housing Authority shall have exclusive
jurisdiction to regulate the real estate trade and business in
accordance with the provisions of this decree." (Emphasis supplied)
The need for and therefore the scope of the regulatory authority thus lodged in the NHA are
indicated in the second and third preambular paragraphs of the statute which provide:
"WHEREAS, numerous reports reveal that many real estate subdivision owners,
developers, operators, and/or sellers have reneged on their
representations and obligations to provide and maintain properly
subdivision roads, drainage, sewerage, water systems, lighting
systems and other similar basic requirements, thus endangering the
health and safety of home and lot buyers;
WHEREAS, reports of alarming magnitude also show cases of swindling and
fraudulent manipulations perpetrated by unscrupulous subdivision
and condominium sellers and operators, such as failure to deliver
titles to the buyers or titles free from liens and encumbrances, and
to pay real estate taxes, and fraudulent sales of the same
subdivision lots to different innocent purchasers for value ."
(Emphasis supplied)
Presidential Decree No. 1344 12 clarified and spelled out the quasi-judicial dimensions of the grant
of regulatory authority to the NHA in the following quite specific terms:
"SECTION 1. In the exercise of its functions to regulate the real estate trade and
business and in addition to its powers provided for in Presidential
Decree No. 957, the National Housing Authority shall have
exclusive jurisdiction to hear and decide cases of the following
nature:
A. Unsound real estate business practices:
B. Claims involving refund and any other claims filed by subdivision lot or
condominium unit buyer against the project owner, developer,
dealer, broker or salesman;, and
C. Cases involving specific performance of contractual and statutory obligations filed
by buyers of subdivision lots or condominium units against the
owner, developer, dealer, broker or salesman." (Emphasis
supplied.)
The substantive provisions being applied and enforced by the NHA in the
instant case are found in Section 23 of Presidential Decree No. 957 which reads:
"Sec. 23. Non-Forfeiture of Payments. No installment payment made by a buyer in
a subdivision or condominium project for the lot or unit he
contracted to buy shall be forfeited in favor of the owner or
developer when the buyer, after due notice to the owner or
developer, desists from further payment due to the failure of the
owner or developer to develop the subdivision or condominium
project according to the approved plans and within the time limit for
complying with the same. Such buyer may, at his option, be
reimbursed the total amount paid including amortization and
interests but excluding delinquency interests, with interest thereon
at the legal rate." (Emphasis supplied.)
Having failed to comply with its contractual obligation to complete certain specified
improvements in the subdivision within the specified period of two years from the date of the
execution of the Contract to Sell, petitioner was not entitled to exercise its options under

Clause 7 of the Contract. Hence, petitioner could neither rescind the Contract to Sell nor
treat the installment payments made by the private respondent as forfeited in its favor.
Indeed, under the general Civil Law, 13 in view of petitioner's breach of its contract with
private respondent, it is the latter who is vested with the option either to rescind the contract
and receive reimbursement of all installment payments (with legal interest) made for the
purchase of the subdivision lot in question, or to suspend payment of further purchase
installments until such time as the petitioner had fulfilled its obligations to the buyer. The
NHA was therefore correct in holding that private respondent's prior installment payments
could not be forfeited in favor of petitioner. cdrep
Neither did the NHA commit any abuse, let alone a grave abuse of discretion or act in excess of its
jurisdiction when it ordered the reinstatement of the Contract to Sell between the parties. Such
reinstatement is no more than a logical consequence of the NHA's correct ruling, just noted, that
the petitioner was not entitled to rescind the Contract to Sell. There is, in any case, no question
that under Presidential Decree No. 957, the NHA was legally empowered to determine and protect
the rights of contracting parties under the law administered by it and under the respective
agreements, as well as to ensure that their obligations thereunder are faithfully performed.
We turn to petitioner's assertion that it had been denied the right to due process. This assertion
lacks substance. The record shows that a copy of the order denying the Motion to Dismiss and
scheduling the hearing of the complaint for the morning of 6 March 1978, was duly served on
counsel for petitioner, as evidenced by the annotation appearing at the bottom of said copy
indicating that such service had been effected. 14 But even if it be assumed, arguendo, that such
notice had not been served on the petitioner, nevertheless the latter was not deprived of due
process, for what the fundamental law abhors is not the absence of previous notice but rather the
absolute lack of opportunity to be heard. 15 In the instant case, petitioner was given ample
opportunity to present its side and to be heard on a motion for reconsideration as well, and not just
on a motion to dismiss; the claim of denial of due process must hence sound even more hollow. 16
We turn finally to the question of the amount of P16,994.73 which petitioner insists had accrued
during the period from September 1972 to October 1976, when private respondent had suspended
payment of his monthly installments on his chosen subdivision lot. The NHA in its 9 March 1978
resolution ruled that the regular monthly installments under the Contract to Sell did not accrue
during the September 1972 October 1976 period:
"[R]espondent allowed the complainant to suspend payment of his monthly
installments until the improvements in the subdivision shall have
been completed. Respondent informed complainant on November
1976 that the improvement 6 have been completed. Monthly
installments during the period of suspension of payment did not
become due and demandable. Neither did they accrue. Such must
be the case, otherwise, there is no sense in suspending payments.
If the suspension is lifted the debtor shall resume payments but
never did he incur any arrears.
Such being the case, the demand of respondent for complainant to pay the arrears
due during the period of suspension of payment is null and void.
Consequently, the notice of cancellation based on the refusal to pay
the arrears that were not due and demandable is also null and
void." 17
The NHA resolution is probably too terse and in need of clarification and amplification. The NHA
correctly held that no installment payments should be considered as having accrued during the
period of suspension of payments. Clearly, the critical issue is what happens to the installment
payments which would have accrued and fallen due during the period of suspension had no
default on the part of the petitioner intervened. To our mind, the NHA resolution is most
appropriately read as directing that the original period of payment in the Contract to Sell must be

deemed extended by a period of time equal to the period of suspension (i.e., by four (4) years and
two (2) months) during which extended time (tacked on to the original contract period) private
respondent buyer must continue to pay the monthly installment payments until the entire original
contract price shall have been paid. We think that such is the intent of the NHA resolution which
directed that "[i]f the suspension is lifted, the debtor shall resume payments" and that such is the
most equitable and just reading that may be given to the NHA resolution. To permit Antipolo Realty
to collect the disputed amount in a lump sum after it had defaulted on its obligations to its lot
buyers, would tend to defeat the purpose of the authorization (under Sec. 23 of Presidential
Decree No. 957, supra) to lot buyers to suspend installment payments. As the NHA resolution
pointed out, "[s]uch must be the case, otherwise, there is no sense in suspending payments."
Upon the other hand, to condone the entire amount that would have become due would be an
excessively harsh penalty upon the petitioner and would result in the unjust enrichment of the
private respondent at the expense of the petitioner. It should be recalled that the latter had already
fulfilled, albeit tardily, its obligations to its lot buyers under their Contracts to Sell. At the same time,
the lot buyer should not be regarded as delinquent and as such charged penalty interest. The
suspension of installment payments was attributable to the petitioner, not the private respondent.
The tacking on of the period of suspension to the end of the original period precisely prevents
default on the part of the lot buyer. In the words of the NHA resolution, "never would [the buyer]
incur any arrears."
WHEREFORE, the Petition for Certiorari is DISMISSED. The NHA decision appealed from is
hereby AFFIRMED and clarified as providing for the lengthening of the original contract period for
payment of installments under the Contract to Sell by four (4) years and two (2) months, during
which extended time private respondent shall continue to pay the regular monthly installment
payments until the entire original contract price shall have been paid. No pronouncement as to
costs.
SO ORDERED.
||| (Antipolo Realty Corp. v. NHA, G.R. No. L-50444, August 31, 1987)