THIRD DIVISION

G.R. No. 210316, November 28, 2016

THE SECURITIES AND EXCHANGE COMMISSION (SEC) CHAIRPERSON

TERESITA J. HERBOSA, COMMISSIONER MA. JUANITA E. CUETO,
COMMISIONER RAUL J. PALABRICA, COMMISSIONER MANUEL HUBERTO B.
GAITE, COMMISIONER ELADIO M. JALA, AND THE SEC ENFORCEMENT AND
PROSECUTION DEPARTMENT, Petitioners, v. CJH DEVELOPMENT
CORPORATION AND CJH SUITES CORPORATION, HEREIN REPRESENTED BY
ITS EXECUTIVE VICE-PRESIDENT AND CHIEF OPERATING OFFICER,
ALFREDO R. YÑIGUEZ III, Respondents.

DECISION

PERALTA, J.:

Before the Court is a petition for review on certiorari seeking to annul and set aside
the Decision1 and Resolution2 of the Court of Appeals (CA), dated June 7, 2013 and
November 28, 2013, respectively, in CA-G.R. SP No. 125482. The assailed CA
Decision annulled and set aside the Cease and Desist Order (CDO) issued by the
Securities and Exchange Commission (SEC) En Banc on June 7, 2012, and dismissed
SEC-CDO Case No. 05-12-006, while the CA Resolution denied petitioners' Motion for
Reconsideration.

The facts of the case are as follows: cralawlawlib rary

Herein respondent CJH Development Corporation (CJHDC) is a duly organized

domestic corporation which is engaged in the acquisition, development, sale, lease
and management of real estate and any improvements thereon or any interest and
right therein.3 Respondent CJH Suites Corporation (CJHSC), on the other hand, is a
wholly-owned subsidiary of CJHDC which was formed primarily for the purpose of
acquiring, maintaining, operating and managing hotels, inns, lodging houses,
restaurants and other allied businesses.4

On October 19, 1996, CJHDC entered into a Lease Agreement (Agreement) with the
Bases Conversion and Development Authority (BCDA) for the development into a
public tourism complex, multiple-use forest watershed and human resource
development center, of a 247-hectare property within the John Hay Special
Economic Zone in Baguio City. The fixed annual rental for the property for the first
five years was pegged at P425,001,378.00 or five percent of Gross Revenues,
whichever is higher. Thereafter, for the duration of the lease period, the fixed annual
rental shall not be more than P150,000,000.00 or five percent of Gross Revenues,
whichever is higher. Among other provisions, the Agreement authorized CJHDC to
sub-lease, develop and manage the abovementioned property for a period of fifty
(50) years, or until 2046. It was also provided that, upon expiration of the
Agreement, the leased property shall revert back to the BCDA and all the
improvements thereon shall become its property.
Subsequently, CJHDC came up with a development plan and put it into effect. Part
of such development plan was the construction of two (2) condominium-hotels
(condotels) which it named as "The Manor" and "The Suites". Subject to CJHDC's
leasehold rights under the Agreement, the residential units in these condotels were
then offered for sale to the general public by means of two schemes. The first is a
straight purchase and sale contract where the buyer pays the purchase price for the
unit bought, either in lump sum or on installment basis and, thereafter, enjoys the
benefits of full ownership, subject to payment of maintenance dues and utility fees.
The second scheme involved the sale of the unit with an added option to avail of a
"leaseback" or a "money-back" arrangement. Under this added option, the buyer
pays for the unit bought and, subsequently, surrenders its possession to the
management of CJHDC or CJHSC. These corporations would then create a pool of
these units and, in tum, will offer them for billeting under the management of the
hotel operated by the Camp John Hay Leisure, Inc. (CJHLI). This arrangement lasts
for a period of fifteen (15) years with a renewal option for the same period until
2046. The buyers who opt for the "leaseback" arrangement will receive either a
proportionate share in seventy percent (70%) of the annual income derived from the
hotel operation of the pooled rooms or a guaranteed eight percent (8%) return on
their investment. On the other hand, those who choose to avail of the "money-back"
arrangement are entitled to a return of the purchase price they paid for the units by
expiration of the Lease Agreement in 2046. The buyers are given the right to use
their units for thirty (30) days within a year and they are exempted from paying the
monthly dues and utility fees.

Sometime in May 2010, the BCDA and the CJHDC entered into an agreement for the
restructuring of the latter's rental payments and other financial obligations to the
former. Thus, pursuant to this agreement, CJHDC transferred ownership of, among
others, sixteen (16) units from "The Manor" and ten (10) units from "The Suites" to
the BCDA via dacion en pago. These units were covered by Limited Warranty Deeds
and were subject to a "leaseback" arrangement.

Subsequently, the BCDA acquired information regarding CJHDC and CJHSC's scheme
of selling "The Manor" and "The Suites" units through "leaseback" or "money-back"
terms. Hence, in a letter dated November 18, 2011, the BCDA requested the SEC to
conduct an investigation into the operations of CJHDC and CJHSC on the belief that
the "leaseback" or "money-back" arrangements they are offering to the public is, in
essence, investment contracts which are considered as securities under Republic Act
No. 8799, otherwise known as the Securities Regulation Code (SRC).

Acting on such a request, the Enforcement and Prosecution Department (EPD) of the
SEC conducted its own investigation of the operations of CJHDC and CJHSC with
respect to the sale of the subject condotel units and, thereafter, submitted a Field
Investigation Report,5 dated February 1, 2012, to the Chairperson of the SEC,
providing details of their findings during such investigation. The EPD was also able to
confer with several buyers of the condotel units who gave information with respect
to the terms of the contracts they entered into with respondents.

Subsequently, on April 23, 2012, the SEC's Corporation Finance Department (CFD)
issued a Memorandum6 indicating its opinion that the "leaseback" arrangements
offered by respondents to the public are investment contracts.

On May 16, 2012, the EPD filed a Motion for Issuance of Cease and Desist
Order7 with the SEC En Banc praying that CJHDC and CJHSC, their respective
officers, directors, representatives, salesmen, agents, and any and all persons
claiming and acting for and in their behalf be directed to immediately cease and
desist "from further engaging in activities of selling and/or offering for sale
investment contracts covering the condotel units on "leaseback" and/or "money-
back" arrangements until the requisite registration statement is duly filed with and
approved by the Commission and the corresponding permit to offer/sell securities is
issued."8 The case was docketed as SEC-CDO Case No. 05-12-006.

On June 7, 2012, the SEC En Banc issued an Order,9 disposing as follows: chanRoblesvirtual Lawli bra ry

WHEREFORE, premises considered, there being a prima facie evidence that

respondents CJH DEVELOPMENT CORPORATION and its wholly-owned subsidiary CJH
SUITES CORPORATION, are engaged in the business of selling securities without the
proper registration issued by this Commission in violation [of] Section 8 of the SRC,
the respondents, their respective officers, directors, representatives, salesmen,
agents and any and all persons claiming and acting for and in their behalf, are
hereby ordered to immediately CEASE and DESIST from further engaging in the
business of selling securities until they have complied with the requirements of law
and its implementing rules and regulations.

xxxx

SO ORDERED.10
CJHDC and CJHSC then filed a Petition for Review11 with prayer for the issuance of a
temporary restraining order and/or writ of preliminary injunction before the CA
questioning the above CDO and praying that the same be reversed and set aside.

On September 25, 2012, the CA issued a temporary restraining order which enjoins
the SEC from enforcing its questioned CDO for a period of sixty (60)
days.12 Thereafter, on November 8, 2012, the CA issued a writ of preliminary
injunction which was made effective pending the decision of the petition on the
merits.13

In its presently assailed Decision, the CA ruled in favor of CJHDC and CJHSC and
disposed as follows: chanRoblesvirtua lLaw lib rary

WHEREFORE, the instant petition is GRANTED. The Cease and Desist Order dated
June 7, 2012 issued by the SEC En Banc is [ANNULLED] and SET ASIDE, and SEC-
CDO Case No. 05-12-006 is DISMISSED. The writ of preliminary injunction per
Resolution dated November 8, 2012, enjoining respondents from enforcing the June
7, 2012 Cease and Desist Order, is MADE PERMANENT.

SO ORDERED.14
CJHDC and CJHSC filed a Motion for Reconsideration, but the CA denied it in its
Resolution15 dated November 28, 2013.

Hence, the instant petition for review on certiorari based on the following
grounds: chanRoblesvirtua lLawl ib rary

THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN NOT OUTRIGHTLY

DISMISSING THE APPEAL FILED BY RESPONDENTS AGAINST AN INTERLOCUTORY
OR PROVISIONAL ORDER OF THE SEC. chanroblesvi rtua llawli bra ry
 II

THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR AND ACTED WITH GRAVE
ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN
FAILING TO DISMISS THE PETITION FOR REVIEW CONSIDERING THAT THE SEC
HAS THE PRIMARY JURISDICTION OVER THE CASE AND RESPONDENTS FAILED TO
EXHAUST ALL THE ADMINISTRATIVE REMEDIES UNDER THE LAW TO CHALLENGE
THE PROVISIONAL ORDER. chanroble svi rtual lawlib rary

III

THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR AND ACTED WITH GRAVE
ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN
NULLIFYING THE CDO AND DISMISSING SEC-CDO CASE NO. 05-12-006.16
The petition is meritorious.

First, the Court agrees with petitioners that the challenged CDO is an interlocutory
order. The word interlocutory refers to something intervening between the
commencement and the end of the suit which decides some point or matter but is
not a final decision of the whole controversy.17 An interlocutory order merely
resolves incidental matters and leaves something more to be done to resolve the
merits of the case.18 Stated differently, an interlocutory order is one which leaves
substantial proceedings yet to be had in connection with the controversy.19 It does
not end the task of the court in adjudicating the parties' contentions and
determining their rights and liabilities as against each other.20 In this sense, it is
basically provisional in its application.21

It is a settled rule in this jurisdiction that an appeal may only be taken from a
judgment or final order that completely disposes of the case and that an
interlocutory order is not appealable until after the rendition of the judgment on the
merits for a contrary rule would delay the administration of justice and unduly
burden the courts.22

In the present case, it is clear from the dispositive portion of the CDO that its
issuance is based on the findings of the SEC that there exists prima facie evidence
that respondents are engaged in the business of selling securities without the proper
registration issued by the Commission. Prima facie means a fact presumed to be
true unless disproved by some evidence to the contrary.23 Applied to the instant
case, it means that the findings of the SEC, as contained in the assailed CDO, can
still be refuted and disproved by contrary evidence. This only means that the CDO is
not final, is just provisional, and that the prohibition thereunder is merely
temporary, subject to the determination of the parties' respective evidence in a
subsequent hearing. It is, therefore, clear that the subject CDO, being interlocutory,
may not be the subject of an appeal.

In fact, the non-appealability of a CDO issued by the SEC is provided for under the
2006 Rules of Procedure of the Commission. Thus, Section 10-8 of the Rules
provides:chanRoblesvirt ual Lawlib rary

SEC. 10-8. Prohibitions. - No pleading, motion or submission in any form that may
prevent the resolution of an application for a CDO by the Commission shall be
entertained except under Rule XII herein. A CDO when issued, shall not be the
subject of an appeal and no appeal from it will be entertained; Provided,
however, that an order by the Director of the Operating Department denying the
motion to lift a CDO may be appealed to the Commission En Banc through the
O[ffice of the] G[eneral] C[ounsel]. (Emphasis supplied)
In addition, the temporary character, thus interlocutory nature, of a CDO is
recognized under Section 10-5 of the same Rules, as it provides for the procedure
on how a CDO can be made permanent, to wit: chanRoblesvi rtual Lawli bra ry

SEC. 10-5. Failure to File Motion to Lift. - (a) If the respondent fails to file a motion
to lift CDO within the prescribed period, the Director of the C[ompliance and]
E[nforcement] D[epartment] may file with the Commission a motion to make the
CDO permanent. The Order shall contain the following: cralawlawlibra ry

i. a brief and procedural history of the case;

ii. a statement declaring the CDO as permanent;
iii. a statement ordering the respondent to appear before the Commission within
fifteen (15) days to file its Comment and to show cause why the stated penalty
should not be imposed.

(b) The Commission may conduct hearing within fifteen (15) business days from the
filing of the motion to make the CDO permanent. After the termination of the
hearing, the Commission shall resolve the motion within ten (10) business days.
Thus, pursuant to the above provision, the EPD of the SEC filed a Motion for
Issuance of Permanent Cease and Desist Order on July 9, 201224 which, however,
was subsequently overtaken by the CA's issuance of a temporary restraining order
and preliminary injunction enjoining the SEC from enforcing its assailed CDO.

Nonetheless, contrary to respondents' contention in their petition filed with the CA,
they are not left without recourse in the administrative level. Section 64.3 of the
SRC provides, thus: chanRoblesvirt ualLawlib rary

64.3 Any person against whom a cease and desist order was issued may, within five
(5) days from receipt of the order, file a formal request for a lifting thereof. Said
request shall be set for hearing by the Commission not later than fifteen (15) days
from its filing and the resolution thereof shall be made not later than ten (10) days
from the termination of the hearing. If the Commission fails to resolve the request
within the time herein prescribed, the cease and desist order shall automatically be
lifted.
In the same manner Section 10-3 of the 2006 Rules of Procedure of the SEC
states:cralawlawlibra ry

SEC. 10-3. Lifting of CDO. - A party against whom a CDO was issued may, within a
non-extendible period of five (5) business days from receipt of the order, file a
formal request or motion for the lifting thereof with the OGC. Said motion or request
shall be set for hearing by the OGC not later than fifteen (15) days from its filing
and the resolution thereof not later than ten (10) days from the termination of the
hearing.

Hence, as cited above, instead of filing an appeal with the CA, respondents should
have filed a motion to lift the assailed CDO. Since the law and the SEC Rules require
that this motion be heard by the SEC, it is during this hearing that respondents
could have presented evidence in support of their contentions. However, they chose
not to file the said motion.

Thus, the second reason for the denial of the instant petition is respondents' failure
to exhaust all administrative remedies available to them. Settled is the rule that: chanRoblesvirtual Lawlib ra ry
Under the doctrine of exhaustion of administrative remedies, before a party is
allowed to seek the intervention of the court, he or she should have availed himself
or herself of all the means of administrative processes afforded him or her. Hence, if
resort to a remedy within the administrative machinery can still be made by giving
the administrative officer concerned every opportunity to decide on a matter that
comes within his or her jurisdiction, then such remedy should be exhausted first
before the court's judicial power can be sought. The premature invocation of the
intervention of the court is fatal to one's cause of action. The doctrine of exhaustion
of administrative remedies is based on practical and legal reasons. The availment of
administrative remedy entails lesser expenses and provides for a speedier
disposition of controversies. Furthermore, the courts of justice, for reasons of comity
and convenience, will shy away from a dispute until the system of administrative
redress has been completed and complied with, so as to give the administrative
agency concerned every opportunity to correct its error and dispose of the case.25
It is true that there are exceptions to the above doctrine, to wit:
chanRoblesvirtual Lawli bra ry

(1) when there is a violation of due process; (2) when the issue involved is purely a
legal question; (3) when the administrative action is patently illegal amounting to
lack or excess of jurisdiction; (4) when there is estoppel on the part of the
administrative agency concerned; (5) when there is irreparable injury; (6) when the
respondent is a department secretary who acts as an alter ego of the President
bears the implied and assumed approval of the latter; (7) when to require
exhaustion of administrative remedies would be unreasonable; (8) when it would
amount to a nullification of a claim; (9) when the subject matter is a private land in
land case proceedings; (10) when the rule does not provide a plain, speedy and
adequate remedy, (11) when there are circumstances indicating the urgency of
judicial intervention, and unreasonable delay would greatly prejudice the
complainant; (12) where no administrative review is provided by law; (13) where
the rule of qualified political agency applies and (14) where the issue of non-
exhaustion of administrative remedies has been rendered moot.26
However, the Court does not agree with the CA in its ruling that the present case
falls under the first and second exceptions for reasons to be discussed hereunder.

Corollary to the principle of exhaustion of administrative remedies is the third reason

for denying the instant petition. The main issue, as to whether or not the sale of
"The Manor" or "The Suites" units to the general public under the "leaseback" or
"money-back" scheme is a form of investment contract or sale of securities, is not a
pure question of law. On the contrary, it involves a question of fact that falls under
the primary jurisdiction of the SEC. Under the doctrine of primary administrative
jurisdiction, courts will not determine a controversy where the issues for resolution
demand the exercise of sound administrative discretion requiring the special
knowledge, experience, and services of the administrative tribunal to determine
technical and intricate matters of fact, which under a regulatory scheme have been
placed within the special competence of such tribunal or agency.27

In other words, if a case is such that its determination requires the expertise,
specialized training, and knowledge of an administrative body, relief must first be
obtained in an administrative proceeding before resort to the court is had even if the
matter may well be within the latter's proper jurisdiction.28 The objective of the
doctrine of primary jurisdiction is to guide the court in determining whether it should
refrain from exercising its jurisdiction until after an administrative agency has
determined some question or some aspect of some question arising in the
proceeding before the court.29
In the instant case, the resolution of the issue as to whether respondents' scheme of
selling the subject condotel units is tantamount to an investment contract and/or
sale of securities, as defined under the SRC, requires the expertise and technical
knowledge of the SEC being the government agency which is tasked to enforce and
implement the provisions of the said Code as well as its implementing rules and
regulations. In fact, after the issuance of the CDO, the SEC is yet to hear from
respondents and receive evidence from them regarding this issue. Nonetheless,
respondents prematurely filed an appeal with the CA, which erroneously gave due
course to it in disregard of the doctrines of exhaustion of administrative remedies
and primary jurisdiction.

Furthermore, the present case does not fall under the exceptions to the doctrine of
exhaustion of administrative remedies as there is no violation of respondents' right
to due process. The Court does not agree with the CA in sustaining petitioners'
contention that the investigation conducted by the EPD necessitated the
participation of petitioners and that they should have been given opportunity to
explain their side prior to the issuance of the questioned CDO. In this regard,
Sections 64.1 and 64.2 of the SRC provide as follows: chanRoblesvirtual Lawlib rary

64.1. The Commission, after proper investigation or verification, motu proprio, or

upon verified complaint by any aggrieved party, may issue a cease and desist order
without the necessity of a prior hearing if in its judgment the act or practice, unless
restrained, will operate as a fraud on investors or is otherwise likely to cause grave
or irreparable injury or prejudice to the investing public.

64.2. Until the Commission issues a cease and desist order, the fact that an
investigation has been initiated or that a complaint has been filed, including the
contents of the complaint, shall be confidential. Upon issuance of a cease and desist
order, the Commission shall make public such order and a copy thereof shall
immediately be furnished to each person subject to the order.

64.3. Any person against whom a cease and desist order was issued may, within five
(5) days from receipt of the order, file a formal request for lifting thereof. Said
request shall be set for hearing by the Commission not later than fifteen (15) days
from its filing and the resolution thereof shall be made not later than ten (10) days
from the termination of the hearing. If the Commission fails to resolve the request
within the time herein prescribed, the cease and desist order shall automatically be
lifted.
Explaining the import of these provisions, this Court, in the case of Primanila Plans,
Inc. v. Securities and Exchange Commission,30 held, thus: chanRoblesvirtual Lawli bra ry

The law is clear on the point that a cease and desist order may be issued by
the SEC motu proprio, it being unnecessary that it results from a verified
complaint from an aggrieved party. A prior hearing is also not required
whenever the Commission finds it appropriate to issue a cease and desist
order that aims to curtail fraud or grave or irreparable injury to
investors. There is good reason for this provision, as any delay in the restraint of
acts that yield such results can only generate further injury to the public that the
SEC is obliged to protect.

To equally protect individuals and corporations from baseless and improvident

issuances, the authority of the SEC under this rule is nonetheless with defined limits.
A cease and desist order may only be issued by the Commission after proper
investigation or verification, and upon showing that the acts sought to be restrained
could result in injury or fraud to the investing public. Without doubt, these requisites
were duly satisfied by the SEC prior to its issuance of the subject cease and desist
order.

Records indicate the prior conduct of a proper investigation on Primanila's activities

by the Commission's CED. Investigators of the CED personally conducted an ocular
inspection of Primanila's declared office, only to confirm reports that it had closed
even without the prior approval of the SEC. Members of CED also visited the
company website of Primanila, and discovered the company's offer for sale thereon
of the pension plan product called Primasa Plan, with instructions on how interested
applicants and planholders could pay their premium payments for the plan. One of
the payment options was through bank deposit to Primanila's given Metrobank
account which, following an actual deposit made by the CED was confirmed to be
active.

As part of their investigation, the SEC also looked into records relevant to
Primanila's business. Records with the SEC's Non-Traditional Securities and
Instruments Department (NTD) disclosed Primanila's failure to renew its dealer's
license for 2008, or to apply for a secondary license as dealer or general agent for
pre-need pension plans for the same year. SEC records also confirmed Primanila's
failure to file a registration statement for Primasa Plan, to fully remit premium
collections from plan holders, and to declare truthfully its premium collections from
January to September 2007.

The SEC was not mandated to allow Primanila to participate in the

investigation conducted by the Commission prior to the cease and desist
order's issuance. Given the circumstances, it was sufficient for the satisfaction of
the demands of due process that the company was amply apprised of the results of
the SEC investigation, and then given the reasonable opportunity to present its
defense. Primanila was able to do this via its motion to reconsider and lift the cease
and desist order. After the CED filed its comment on the motion, Primanila was
further given the chance to explain its side to the SEC through the filing of its reply.
"Trite to state, a formal trial or hearing is not necessary to comply with the
requirements of due process. Its essence is simply the opportunity to explain one's
position." x x x31
In the present case, as mentioned above, the SEC through its EPD, conducted an
investigation upon request of the BCDA. The EPD dispatched a team of SEC
employees, who posed as representatives of interested buyers, to the John Hay
Special Economic Zone in Baguio City. There, the team members were able to talk to
CJHDC's Director of Sales, who, not only explained to them the straight and
leaseback agreements, but also gave the team copies of marketing material, as well
as sample contracts, indicating that respondents are indeed selling the subject units
either on a straight purchase or leaseback agreement.

Subsequently, on three different occasions, the EPD invited several buyers of the
subject condotels and met with them in separate conferences wherein these buyers
shed light on the transactions they entered into with respondents and informed the
EPD that they bought condotel units on a leaseback arrangement. These buyers
provided the EPD copies of document relating to their purchase of condotel units on
such terms.

Upon issuance of the CDO, nothing prevented respondents from filing a motion to lift
the said Order wherein they could have amply explained their position. However,
they chose not to avail of this remedy and, instead, went directly, albeit
erroneously, to the CA via a petition for review.
Lastly, the Court neither agrees with the ruling of the CA that there is nothing in the
assailed CDO which shows that the acts sought to be restrained therein operate as a
fraud on investors. The SEC arrived at a preliminary finding that respondents are
engaged in the business of selling securities without the proper registration issued
by the Commission. Based on this initial finding, respondents' act of selling
unregistered securities would necessarily operate as a fraud on investors as it
deceives the investing public by making it appear that respondents have authority to
deal on such securities. As correctly cited by the SEC, Section 8.1 of the SRC clearly
states that securities shall not be sold or offered for sale or distribution within the
Philippines without a registration statement duly filed with and approved by the SEC
and that prior to such sale, information on the securities, in such form and with such
substance as the SEC may prescribe, shall be made available to each prospective
buyer. The Court agrees with the SEC that the purpose of this provision is to afford
the public protection from investing in worthless securities.

WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals,

dated June 7, 2013, and its Resolution dated November 28, 2013, in CA-G.R. SP No.
125482 are REVERSED and SET ASIDE. The Writ of Preliminary Injunction, per CA
Resolution dated November 8, 2012, which was made permanent by its June 7,
2013 Decision, is hereby LIFTED. SEC-CDO Case No. 05-12-006 and the June 7,
2012 Cease and Desist Order of the Securities and Exchange Commission
are REINSTATED.

SO ORDERED. ChanRoblesVi rtua lawlib rary

 THIRD DIVISION

G.R. No. 191705, March 07, 2016

BASIANA MINING EXPLORATION CORPORATION, BASIANA MINERALS

DEVELOPMENT CORPORATION AND RODNEY O. BASIANA, IN HIS OWN
PERSONAL CAPACITY AS PRESIDENT AND DULY AUTHORIZED
REPRESENTATIVE OF BASIANA MINING EXPLORATION CORPORATION AND
BASIANA MINING DEVELOPMENT CORPORATION, Petitioners, v. HONORABLE
SECRETARY OF THE DEPARTMENT OF ENVIRONMENT AND NATURAL
RESOURCES, AND SR METALS INC. (SRMI), Respondents.

DECISION

REYES, J.:

In this petition for review on certiorari1 under Rule 45 of the Rules of Basiana Mining
Exploration Corporation (BMEC), Basiana Mining Development Corporation (BMDC),
and Rodney O. Basiana (Basiana) (petitioners) assail the Amended Decision2 dated
June 18, 2009 of the Court of Appeals (CA) in CA-G.R. SP No. 103033, which
granted the motions for reconsideration dated January 21, 20093 and December 23,
20084 of the Honorable Secretary of the Department of Environment and Natural
Resources (DENR) and SR Metals, Inc. (SRMI), respectively, reversed and set aside
the CA's Decision5 dated December 10, 2008 and dismissed the petition for review
filed by the petitioners, among others.

The Facts

Petitioner BMEC, headed by its President Basiana, applied on July 31, 1997 for a
Mineral Production Sharing Agreement (MPSA) with the DENR for the extraction of
nickel and other minerals covering an area of 6,642 hectares in Tubay and Jabonga,
Agusan del Norte, docketed as MPSA (XIII)-00014.6

Pending approval of its application, BMEC, on April 29, 2000, assigned to Manila
Mining Corporation (Manila Mining) all its rights and interest in MPSA (XIII)-00014,
with the latter acknowledging BMEC as the real and true owner of said
application.7 Manila Mining, in turn, assigned on October 17, 2005, its rights and
interest to SRMI.8 A day after, or on October 18, 2005, Basiana and SRMI executed
a Memorandum of Agreement where SRMI agreed, among others, to undertake
technical and geological tests, exploration and small-scale mining operations of the
site subject of MPSA (XIII)-00014.9 Necessary permits and certificates were then
issued by the DENR and the Provincial Government of Agusan del Norte to SRMI,
San R Construction Corporation (San R) and Galeo Equipment Corporation (Galeo).
Consequently, SRMI, using BMEC's application, applied for an MPSA for the
extraction of nickel, iron and cobalt on a 591-ha area in Tubay, Agusan del Norte.
The application was docketed as APSA-000014-XIII.10

On November 24, 2006, the DENR Secretary issued a cease and desist order against
the mining operations due to excess in annual production, maximum capitalization
and labor cost to equipment utilization. The Minerals Development Council, on
December 7, 2006, also advised SRMI, San R and Galeo to immediately stop all
mining activities in Tubay, which were conducted under the pretext of small-scale
mining.11

Basiana then filed a complaint before the Regional Trial Court of Butuan City on May
15, 2007 for rescission of contract, abuse of rights and damages against SRMI,
docketed as Civil Case No. 5728.12 For its part, BMEC, then already known as BMDC,
also filed a complaint for breach of trust, accounting and conveyance of proceeds,
judicial confirmation of declaration of partial nullity of contract and termination of
trust, and abuse of rights with damages against SRMI, San R, Galeo, et al. on July
13, 2007, docketed as Civil Case No. 5746.13

Subsequently, the Director of the Mines and Geosciences Bureau (MGB), on January
10, 2008, recommended the approval of APSA-000014-XIII filed by SRMI.14 Thus,
BMEC and Basiana filed with the MGB Panel of Arbitrators (MGB-POA) a petition to
deny and/or disapprove and/or declare the nullity of the application for MPSA and/or
cancellation, revocation and termination of MPSA.15 Pending resolution of the protest
before the MGB-POA, the Republic of the Philippines, represented by the DENR
Secretary entered into MPSA No. 261-2008-XIII with SRMI for the development and
commercial utilization of nickel, cobalt, iron and other associated mineral deposits in
the 572.64-ha area in Tubay, Agusan del Norte.16

Hence, the herein petitioners filed a petition for review with the CA assailing the
issuance of MPSA No. 261-2008-XIII on the grounds that (1) "there was clear
violation of due process and the entire proceedings was railroaded and suited for the
benefit of [SRMI]," and that (2) the approval of the application is a patent nullity
and/or absolutely without any factual and legal basis.17

CA Decision dated December 10, 2008

The CA initially granted the petition and declared MPSA No. 261-2008-XIII null and
void.18 According to the CA, MPSA No. 261-2008-XIII should be stricken down for
the reasons that the DENR Secretary has no authority and jurisdiction to approve
SRMI's application pending resolution by the MGB-POA of the petitioners' protest.
The CA ruled that the grounds raised by the petitioners in their protest, to wit: (a)
"the application of [SRMI] to extract mineral and dispose nickel, iron and cobalt for
commercial purposes is a falsified document;" and (b) "[SRMI] is not qualified to
undertake the exploration, development and utilization of minerals in Tubay, Agusan
del Norte," involve a dispute on rights to mining areas and fall within the jurisdiction
of the MGB-POA.19

The CA also found that the petitioners adopted the wrong mode of appeal when it
filed a petition for review before it; nevertheless, it resolved to treat the petition as
one for certiorari since it alleged grave abuse of discretion on the part of the DENR
Secretary in approving the application despite the pendency of the petitioners'
protest.20

SRMI filed a motion for reconsideration of the CA decision, which was granted by the
CA.21

CA Amended Decision dated June 18, 2009

According to the CA, the petition for review filed by the petitioners cannot be treated
as a special civil action for certiorari for lack of jurisdictional grounds.22 The CA ruled
that the approval by the DENR Secretary of SRMFs application does not involve a
quasi-judicial function since both the petitioners and SRMI are still applicants and
there was yet an adjudication of rights between them.23 The CA also ruled that the
petition for review was premature due to the absence of any decision or resolution
rendered by a competent body exercising a quasi-judicial function and the
petitioners should have exhausted all administrative remedies available before it
filed the petition for review.24 The CA also stated that even if it were to treat the
petition as a special civil action for certiorari, it failed to show any grave abuse of
discretion committed by the DENR Secretary when it entered into MPSA No. 261-
2008-XIII.25 Citing Celestial Nickel Mining Exploration Corporation v. Macroasia
Corporation,26 the CA ruled that it is the DENR Secretary that has jurisdiction to
cancel existing mining agreements.27 Finally, the CA found the petitioners to have
committed forum shopping as the petition for review was filed despite the pendency
of the protest with the MGB-POA.28

Petition before the Court

Hence, the present petition anchored on the ground that —

THE HONORABLE [CA], WITH DUE RESPECT, GRIEVOUSLY ERRED IN REVERSING
ITS OWN RESOLUTION, XXX, DECLARING THAT THE MPSA ISSUED BY THE [DENR]
AS NULL AND VOID, BY GIVING THE FOLLOWING SPECIOUS AND BASELESS LEGAL
GROUNDS, WHICH ARE NOT IN ACCORD WITH EXISTING LAWS AND
JURISPRUDENCE: X X X.29 ChanRobles Vi rtualawl ib rary

The petitioners insist that they made the proper recourse when they filed a petition
for review with the CA because the determination by the DENR Secretary as to the
propriety of the MGB Director's recommendation of approval and SRMFs qualification
to undertake development and its compliance with the law requires an exercise of its
quasi-judicial function, and that the issue of whether the petitioners failed to
exhaust its administrative remedies when it did not await the MGB-POA's resolution
of its protest involves questions of law.30

The petitioners also take exception to the CA's use of the Celestial Nickel
Mining31 case, citing alleged differences. According to the petitioners, in Celestial
Nickel Mining, the Court did not make an issue on the remedy resorted to by Blue
Ridge Mineral Corporation (Blue Ridge) and instead, delved on the merits of the case
thereby implying that the filing of a petition for certiorari resorted to by Blue Ridge
was proper. Also, Celestial Nickel Mining did not rule into the action of the DENR
Secretary in entering into the mining agreement because its issuance was not raised
before the MGB Director and the DENR Secretary and neither was it presented
before the CA. This case, on the other hand, presents sufficient grounds why the
DENR Secretary's approval was illegal and tainted with grave abuse of discretion,
that is, despite that the DENR Secretary and the MGB Director knew of the existence
of the protest before the MGB-POA, the agreement was still entered into.32

SRMI, meanwhile, argues that the DENR Secretary's signing of MPSA No. 261-2008-
XIII was within his authority and that the grounds raised by the petitioners are mere
rehash of the arguments raised in the CA.33

On the other hand, the Office of the Solicitor General, who appeared for the DENR
Secretary, maintains that the CA properly dismissed the petition on ground of forum
shopping.34
 Ruling of the Court

Without stamping approval on the validity of MPSA No. 261-2008-XIII, the Court
dismisses the petition for the simple reason that the petitioners' recourse to the CA
was erroneous.

First, the act of the DENR Secretary in approving SRMI's application and entering
into MPSA No. 261-2008-XIII is not an exercise of its quasi-judicial power; hence, it
cannot be reviewed by the CA, whether by a petition for review under Rule 43 or a
special civil action for certiorari under Rule 65 of the Rules of Court.

Depending on its enabling statute,35 administrative agencies possess distinct powers

and functions - administrative, quasi-legislative, and quasi-judicial. "Administrative
power is concerned with the work of applying policies and enforcing orders as
determined by proper governmental organs."36 Quasi-judicial or administrative
adjudicator/ power, on the other hand, "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."37 "A government agency performs adjudicator/
functions when it renders decisions or awards that determine the rights of
adversarial parties, which decisions or awards have the same effect as a judgment
of the court."38

In the case of the DENR Secretary, its power to approve and enter into a MPSA is
unmistakably administrative in nature as it springs from the mandate of the DENR
under the Revised Administrative Code of 1987, which provides that "[t]he [DENR]
shall x x x be in charge of carrying out the State's constitutional mandate to control
and supervise the exploration, development, utilization, and conservation of the
country's natural resources."39 Contrary to the petitioners' position, the
determination by the DENR Secretary as to (1) the propriety of the MGB Director's
recommendation of approval, and (2) the qualification of SRMI to undertake
development and its compliance with the law, does not involve the exercise of quasi-
judicial power. Note that under Section 41 of DENR Administrative Order (A.O.) No.
96-40, initial evaluation of an application for an MPSA is made by the MGB Regional
Office in the area covered by the application. Thereafter, the application will be
reviewed by the MGB Director for further evaluation.40 It is only after the MGB
Director has evaluated the application that the same will be forwarded to the DENR
Secretary for final evaluation and approval. In approving an MPSA, the DENR
Secretary does not determine the legal rights and obligations of adversarial parties,
which are necessary in adjudication. In fact, it is only after an application is
approved that the right to undertake the project accrues on the applicant's part, and
until then, no rights or obligations can be enforced by or against any party.41 Neither
does the DENR Secretary resolve conflicting claims; rather, what is involved here is
the determination whether a certain applicant complied with the conditions required
by the law, and is financially and technically capable to undertake the contract,
among others. Thus, in Republic of the Philippines v. Express Telecommunication
Co., Inc.,42 the Court stated that the powers granted to the Secretary of Agriculture
and Commerce (natural resources) by law such as granting of licenses, permits,
leases and contracts, or approving, rejecting, reinstating, or canceling applications,
are all executive and administrative in nature. It even further ruled that purely
administrative and discretionary functions may not be interfered with by the
courts.43

Jurisprudence also emphasized the administrative nature of the grant by the DENR
Secretary of license, permits, lease and contracts, reiterating the distinction made
in Pearson v. Intermediate Appellate Court44 between the different mining
claims/disputes, to wit:
chanRoble svirtual Lawlib ra ry

Decisions of the Supreme Court on mining disputes have recognized a distinction

between (1) the primary powers granted by pertinent provisions of law to
the then Secretary of Agriculture and Natural Resources (and the bureau
directors) of an executive or administrative nature, such as "granting of
license, permits, lease and contracts, or approving, rejecting, reinstating or
cancelling applications, or deciding conflicting applications," and (2)
controversies or disagreements of civil or contractual nature between litigants which
are questions of a judicial nature that may be adjudicated only by the courts of
justice.45 (Emphasis ours)
This distinction has been carried over under Republic Act No. 7942 (R.A. No. 7942)
or the Philippine Mining Act of 1995.46

Moreover, even assuming, for the sake of argument, that recourse to the courts may
be had by the petitioners, the circumstances of this case do not warrant its
intervention at this point for the following reasons:

For one, in their petition for review filed with the CA, the petitioners prayed that
MPSA No. 261-2008-XIII be set aside and its implementation enjoined.47 In effect,
the petitioners seek a cancellation of MPSA No. 261-2008-XIII. As earlier discussed,
however, the power to approve and enter into agreements or contracts rests
primarily with the DENR Secretary. Perforce, the power to cancel an MPSA likewise
lies with the DENR Secretary. Such implied power of the DENR Secretary was upheld
by the Court in Celestial Nickel Mining.

Celestial Nickel Mining involved the cancellation of several mining lease contracts in
favor of Macroasia Corporation. The pivotal issue in said case was defined by the
Court as: "who has authority and jurisdiction to cancel existing mineral agreements
under [R.A. No. 7942] in relation to [Presidential Decree No.] 463 and pertinent
rules and regulations."48 In acknowledging the DENR Secretary's power to cancel
mining agreements, the Court provided the reasons, as follows: (1) the DENR
Secretary's power to cancel mineral agreements emanates from his administrative
authority, supervision, management, and control over mineral resources under
Chapter I, Title XIV of Book IV of the Revised Administrative Code of 1987;49 (2)
R.A. No. 7942 confers to the DENR Secretary specific authority over mineral
resources, which includes the authority to enter into mineral agreements on behalf
of the Government upon the recommendation of the Director and corollarily, the
implied power to terminate mining or mineral contracts;50 (3) the power of control
and supervision of the DENR Secretary over the MGB to cancel or recommend
cancellation of mineral rights under R.A. No. 7942 demonstrates the authority of the
DENR Secretary to cancel or approve the cancellation of mineral agreements;51 and
(4) the DENR Secretary's power to cancel mining rights or agreements can be
inferred from Section 230, Chapter XXIV of DENR A.O. No. 96-40 on cancellation,
revocation, and termination of a permit/mineral agreement/Financial and Technical
Assistance Agreement.52

Given that it is the DENR Secretary that has the primary jurisdiction to approve and
cancel mining agreements and contract, it is with the DENR Secretary that the
petitioners should have sought the cancellation of MPSA No. 261-2008-XIII, and not
with the courts. The doctrine of primary jurisdiction instructs that if a case is such
that its determination requires the expertise, specialized training and knowledge of
an administrative body, relief must first be obtained in an administrative proceeding
before resort to the courts is had.53

For another, the doctrine of exhaustion of administrative remedies bars recourse to

the courts at the very first instance.
The doctrine of non-exhaustion of administrative remedies requires that resort be
first made with the administrative authorities in the resolution of a controversy
falling under their jurisdiction before the controversy may be elevated to a court of
justice for review. A premature invocation of a court's intervention renders the
complaint without cause of action and dismissible.54 (Citations omitted)
The DENR Secretary, no doubt, is under the control of the President; thus, his
decision is subject to review of the latter.55 Consequently, the petitioners should
have appealed its case to the Office of the President under A.O. No. 18, series of
1987,56 instead of directly seeking review by the court.57

WHEREFORE, the petition is DENIED. The Amended Decision dated June 18, 2009
of the Court of Appeals in CA-G.R. SP No. 103033 is AFFIRMED.

SO ORDERED. cralawlawlib rary

 SECOND DIVISION

[G.R. No. 186487 : August 15, 2011]

ROSITO BAGUNU, PETITIONER, VS. SPOUSES FRANCISCO AGGABAO &

ROSENDA ACERIT, RESPONDENTS.

RESOLUTION

BRION, J.:

We resolve the motion for reconsideration[1] filed by Rosito Bagunu (petitioner) to

reverse our April 13, 2009 Resolution[2] which denied his petition for review on
certiorari for lack of merit.

FACTUAL ANTECEDENTS

R.L.O. Claim No. 937/DENR Case No. 5177

The present controversy stemmed from a protest filed by the spouses Francisco
Aggabao and Rosenda Acerit (respondents) against the petitioner’s free patent
application over a parcel of unregistered land located in Caniogan, Sto. Tomas,
Isabela (subject land), pending before the Department of Environment and Natural
Resources, Region II, Tuguegarao City, Cagayan (DENR Regional Office).

The subject land was previously owned by Marcos Binag, who later sold it (first sale)
to Felicisimo Bautista (Bautista). In 1959, Bautista, in turn, sold the subject land
(second sale) to Atty. Samson Binag.

On December 12, 1961, Atty. Binag applied for a free patent[3] over the subject land
with the Bureau of Lands (now Lands Management Bureau).[4] On November 24,
1987, Atty. Binag sold the subject land (third sale) to the petitioner,[5] who
substituted for Atty. Binag as the free patent applicant. The parties’ deed of sale
states that the land sold to the petitioner is the same lot subject of Atty. Binag’s
pending free patent application.[6]

The deeds evidencing the successive sale of the subject land, the Bureau of
Lands’ survey,[7] and the free patent applications uniformly identified the subject
land as Lot 322. The deeds covering the second and third sale also uniformly
identified the boundaries of the subject land.[8]

On December 28, 1992, the respondents filed a protest against the petitioner’s
free patent application. The respondents asserted ownership over Lot 322 based on
the Deeds of Extrajudicial Settlement with Sale, dated June 23, 1971 and April 15,
1979, executed in their favor by the heirs of one Rafael Bautista.[9]

The Office of the Regional Executive Director of the DENR conducted an ocular
inspection and formal investigation. The DENR Regional Office found out that the
petitioner actually occupies and cultivates “the area in dispute including the area
purchased by [the respondents].―[10]

On July 10, 1998, the DENR Regional Office ruled that the petitioner wrongfully
included Lot 322 in his free patent application since this lot belongs to the
respondents. The DENR Regional Office ordered:

1. [The respondents to] file their appropriate public land application

covering Lot No. 322, Pls-541-D xxx;

2. [The petitioner’s free patent application] be amended by excluding

Lot No. 322, Pls-541-D, as included in Lot No. 258;

3. [A] relocation survey xxx to determine the exact area as indicated in

[the parties’] respective technical description of x x x Lot Nos. 258
and 322, Pls-541-D.[11]

The petitioner moved for reconsideration. The DENR Regional Office denied the
motion ruling that in determining the identity of a lot, the boundaries – and not
the lot number assigned to it - are controlling. Since the boundaries indicated in the
deed of sale in the petitioner’s favor correspond to the boundaries of Lot 258,
what the petitioner acquired was Lot 258, notwithstanding the erroneous description
of the lot sold as Lot 322.[12]

On appeal, the DENR Secretary affirmed[13] the ruling of the DENR Regional Office.
After noting the differences in the boundaries stated in the parties’ respective
Deeds of Sale, the DENR Secretary concluded that the land claimed by the petitioner
is, in fact, distinct from that claimed by the respondents. The DENR Secretary ruled
that based on the parties’ respective deeds of sale, the Subdivision Plan of the
lot sold to the petitioner and Atty. Binag’s affidavit - claiming that the
designation of Lot 322 in the Deed of Sale in the petitioner’s favor is erroneous -
what the petitioner really acquired was Lot 258 and not Lot 322.[14] The petitioner
appealed to the Court of Appeals (CA).

COURT OF APPEALS’ RULING

The CA affirmed the ruling of the DENR Secretary. Applying the doctrine of primary
jurisdiction, the CA ruled that since questions on the identity of a land require a
technical determination by the appropriate administrative body, the findings of fact
of the DENR Regional Office, as affirmed by the DENR Secretary, are entitled to
great respect, if not finality.[15] The petitioner assails this ruling before the Court.

Civil Case No. 751

In the meantime, on November 22, 1994 (or during the pendency of the
respondents’ protest), Atty. Binag filed a complaint for reformation of
instruments, covering the second and third sale, against Bautista and the petitioner
(the civil case) with the Cabagan, Isabela Regional Trial Court (RTC). Atty. Binag
alleged that while the deeds evidencing the successive sale of the subject land
correctly identified the boundaries of the land sold, the deeds, nevertheless,
erroneously identified the subject land as Lot 322, instead of Lot 258.[16]

On December 9, 1994, the petitioner and Bautista filed a motion to dismiss with the
RTC, citing the pendency of the land protest before the Bureau of Lands. The RTC
held in abeyance its resolution on the motion to dismiss.[17]

After obtaining a favorable ruling from the DENR Regional Office, the respondents
joined Atty. Binag in the civil case by filing a complaint-in-intervention against the
petitioner. The complaint-in-intervention captioned the respondents’ causes of
action as one for Quieting of Title, Reivindicacion and Damages.[18] The respondents
alleged that the petitioner’s claim over Lot 322 is a cloud on their title and
ownership of Lot 322. The respondents also alleged that they were in peaceful,
continuous, public and adverse possession of Lot 322 from the time they fully
acquired it in 1979 until sometime in August of 1992, when the petitioner, through
stealth and strategy, ejected them from Lot 322 after transferring his possession
from Lot 258.[19] The respondents asked the RTC to declare them as owners of Lot
322.

After the CA affirmed the DENR Secretary’s favorable resolution on the

respondents’ protest, the respondents asked the RTC to suspend the civil case
or, alternatively, to adopt the DENR Secretary’s ruling.[20] In their prayer, the
respondents asked the RTC to:

1. [Adopt] the findings of the DENR as affirmed by the Court of Appeals

xxx thus, the cause of action xxx for reformation of contracts be
granted;

2. [Order the petitioner] to vacate Lot 322 xxx and his [Free Patent
Application] be amended to exclude Lot 322 xxx.

3. [Set the case] for hearing to receive evidence on the claim of the
[respondents] for damages[.]

THE PETITION

The petitioner argues that the CA erred in affirming the DENR

Secretary’s jurisdiction to resolve the parties’ conflicting claims
of ownership over Lot 322, notwithstanding that the same issue is pending with the
RTC. By ruling that the petitioner bought Lot 258 (and not Lot 322) from Atty. Binag
and for adjudicating Lot 322 to the respondents, the DENR effectively reformed
contracts and determined claims of ownership over a real property – matters
beyond the DENR’s competence to determine.

The petitioner faults the CA for applying the doctrine of primary jurisdiction since the
issue of who has a better right over Lot 322 does not involve the “specialized
technical expertise― of the DENR. On the contrary, the issue involves
interpretation of contracts, appreciation of evidence and the application of the
pertinent Civil Code provisions, which are matters within the competence of the
courts.

The petitioner claims that the DENR Secretary’s factual finding, as affirmed by
the CA, is contrary to the evidence. The petitioner asserts that the Deed of Sale in
his favor clearly identified the property sold as Lot 322, which was the same land
Atty. Binag identified in his free patent application; that the area of Lot 322, as
previously determined in a survey caused by the vendor himself (Atty. Binag), tallies
with the area stated in the deed in his favor; that he has been in possession of Lot
322 since 1987, when it was sold to him; and that his present possession and
cultivation of Lot 322 were confirmed by the DENR Regional Office during its ocular
investigation.
The petitioner also invites our attention to the incredulity of the respondents’
claim of ownership over Lot 322, based on Atty. Binag’s testimony during the
hearing on the respondents’ protest. According to the petitioner, the
respondents could not have expressed interest in buying Lot 322 from Atty. Binag
had they already acquired Lot 322 from the heirs of one Rafael Bautista. The
petitioner adds that as early as 1979, the respondents were already aware of Atty.
Binag’s free patent application over Lot 322. Yet, they filed their protest to the
free patent application only in 1992 – when the petitioner had already substituted
Atty. Binag. The petitioner claims that the respondents’ inaction is inconsistent
with their claim of ownership.

Lastly, the petitioner contests the adjudication of Lot 322 in the respondents’
favor by claiming that the respondents presented no sufficient evidence to prove
their (or their predecessor-in-interest’s) title.

In our April 13, 2009 Resolution, we denied the petition for failure to sufficiently
show any reversible error in the assailed CA Decision and for raising substantially
factual issues. The petitioner moved for reconsideration, confining his arguments to
the issue of jurisdiction and the consequent applicability of the primary jurisdiction
doctrine.

THE RULING

We deny the motion for reconsideration.

Questions of fact generally barred under Rule 45

The main thrust of the petitioner’s arguments refers to the alleged error of the
DENR and the CA in identifying the parcel of land that the petitioner bought – an
error that adversely affected his right to apply for a free patent over the subject
land. In his motion for reconsideration, the petitioner apparently took a cue from our
April 13, 2009 Resolution, denying his petition, since his present motion limitedly
argues against the DENR’s jurisdiction and the CA’s application of the
doctrine of primary jurisdiction.

The petitioner correctly recognized the settled rule that questions of fact are
generally barred under a Rule 45 petition. In the present case, the identity of Lots
258 and 322 is a central factual issue. The determination of the identity of these lots
involves the task of delineating their actual boundaries in accordance with the
parties’ respective deeds of sale and survey plan, among others. While there are
instances where the Court departs from the general rule on the reviewable issues
under Rule 45, the petitioner did not even attempt to show that his case falls within
the recognized exceptions.[21] On top of this legal reality, the findings and decision of
the Director of Lands[22] on questions of fact, when approved by the DENR
Secretary, are generally conclusive on the courts,[23] and even on this Court, when
these factual findings are affirmed by the appellate court. We shall consequently
confine our discussions to the petitioner’s twin legal issues.

The determination of the identity of a

public land is within the DENR’s exclusive
jurisdiction to manage and dispose of lands
of the public domain

The petitioner insists that under the law[24] actions incapable of pecuniary
estimation, to which a suit for reformation of contracts belong, and those involving
ownership of real property fall within the exclusive jurisdiction of the Regional Trial
Court. Since these actions are already pending before the RTC, the DENR Secretary
overstepped his authority in excluding Lot 322 from the petitioner’s free patent
application and ordering the respondents to apply for a free patent over the same
lot.

In an action for reformation of contract, the court determines whether the

parties’ written agreement reflects their true intention.[25] In the present case,
this intention refers to the identity of the land covered by the second and third sale.
On the other hand, in a reivindicatory action, the court resolves the issue of
ownership of real property and the plaintiff’s entitlement to recover its full
possession. In this action, the plaintiff is required to prove not only his ownership,
but also the identity of the real property he seeks to recover.[26]

While these actions ordinarily fall within the exclusive jurisdiction of the RTC, the
court’s jurisdiction to resolve controversies involving ownership of real property
extends only to private lands. In the present case, neither party has asserted private
ownership over Lot 322. The respondents acknowledged the public character of Lot
322 by mainly relying on the administrative findings of the DENR in their complaint-
in-intervention, instead of asserting their own private ownership of the property. For
his part, the petitioner’s act of applying for a free patent with the Bureau of
Lands is an acknowledgment that the land covered by his application is a public
land[27] whose management and disposition belong to the DENR Secretary, with the
assistance of the Bureau of Lands. Section 4, Chapter 1, Title XIV of Executive Order
No. 292[28] reads:

Section 4. Powers and Functions. - The Department [of Environment and Natural
Resources] shall:

xxx

(4) Exercise supervision and control over forest lands, alienable and disposable
public lands, mineral resources and, in the process of exercising such control,
impose appropriate taxes, fees, charges, rentals and any such form of levy and
collect such revenues for the exploration, development, utilization or gathering of
such resources;

xxx

(15) Exercise exclusive jurisdiction on the management and disposition of all lands
of the public domain and serve as the sole agency responsible for classification, sub-
classification, surveying and titling of lands in consultation with appropriate
agencies[.] (Underscoring supplied.)

Under Section 14(f) of Executive Order No. 192,[29] the Director of the Lands
Management Bureau has the duty, among others, to assist the DENR Secretary in
carrying out the provisions of Commonwealth Act No. 141 (C.A. No. 141)[30] by
having direct executive control of the survey, classification, lease, sale or any other
forms of concession or disposition and management of the lands of the public
domain.

As the CA correctly pointed out, the present case stemmed from the protest filed by
the respondents against the petitioner’s free patent application. In resolving this
protest, the DENR, through the Bureau of Lands, had to resolve the issue
of identity of the lot claimed by both parties. This issue of identity of the land
requires a technical determination by the Bureau of Lands, as the administrative
agency with direct control over the disposition and management of lands of the
public domain. The DENR, on the other hand, in the exercise of its jurisdiction to
manage and dispose of public lands, must likewise determine the applicant’s
entitlement (or lack of it) to a free patent. (Incidentally, the DENR Regional Office
still has to determine the respondents’ entitlement to the issuance of a free
patent[31] in their favor since it merely ordered the exclusion of Lot 322 from the
petitioner’s own application.) Thus, it is the DENR which determines the
respective rights of rival claimants to alienable and disposable public lands; courts
have no jurisdiction to intrude on matters properly falling within the powers of the
DENR Secretary and the Director of Lands,[32] unless grave abuse of discretion
exists.

After the DENR assumed jurisdiction over Lot 322, pursuant to its mandate, the RTC
must defer the exercise of its jurisdiction on related issues on the same matter
properly within its jurisdiction,[33] such as the distinct cause of action for reformation
of contracts involving the same property. Note that the contracts refer to the same
property, identified as “Lot 322,― - which the DENR Regional Office, DENR
Secretary and the CA found to actually pertain to Lot 258. When an administrative
agency or body is conferred quasi-judicial functions, all controversies relating to the
subject matter pertaining to its specialization are deemed to be included within its
jurisdiction since the law does not sanction a split of jurisdiction[34] –

The argument that only courts of justice can adjudicate claims resoluble under the
provisions of the Civil Code is out of step with the fast-changing times. There are
hundreds of administrative bodies now performing this function by virtue of a valid
authorization from the legislature. This quasi-judicial function, as it is called, is
exercised by them as an incident of the principal power entrusted to them of
regulating certain activities falling under their particular expertise.[35]

The DENR has primary jurisdiction to

resolve conflicting claims of title over
public lands

The petitioner argues that the CA erred in applying the doctrine of primary
jurisdiction, claiming that the issue (of who has a better right over Lot 322) does not
require the “specialized technical expertise― of the DENR. He posits that the
issue, in fact, involves interpretation of contracts, appreciation of evidence and
application of the pertinent Civil Code provisions, which are all within the
competence of regular courts.

We disagree.

Under the doctrine of primary jurisdiction, courts must refrain from determining a
controversy involving a question which is within the jurisdiction of the administrative
tribunal prior to its resolution by the latter, 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[36]–

In recent years, it has been the jurisprudential trend to apply [the doctrine of
primary jurisdiction] to cases involving matters that demand the special competence
of administrative agencies[. It may occur that the Court has jurisdiction to take
cognizance of a particular case, which means that the matter involved is also judicial
in character. However, if the case is such that its determination requires the
expertise, specialized skills and knowledge of the proper administrative bodies
because technical matters or intricate questions of facts are involved, then relief
must first be obtained in an administrative proceeding before a remedy will be
supplied by the courts even though the matter is within the proper jurisdiction of a
court. This is the doctrine of primary jurisdiction.] It applies “where a 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, have
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.―[37]

The application of the doctrine of primary jurisdiction, however, does not call for the
dismissal of the case below. It need only be suspended until after the matters within
the competence of [the Lands Management Bureau] are threshed out and
determined. Thereby, the principal purpose behind the doctrine of primary
jurisdiction is salutarily served.[38] (Emphases added.)

The resolution of conflicting claims of ownership over real property is within the
regular courts’ area of competence and, concededly, this issue is judicial in
character. However, regular courts would have no power to conclusively resolve this
issue of ownership given the public character of the land, since under C.A. No. 141,
in relation to Executive Order No. 192,[39] the disposition and management of public
lands fall within the exclusive jurisdiction of the Director of Lands, subject to review
by the DENR Secretary.[40]

While the powers given to the DENR, through the Bureau of Lands, to alienate and
dispose of public land do not divest regular courts of jurisdiction
over possessory actions instituted by occupants or applicants (to protect their
respective possessions and occupations),[41] the respondents’ complaint-in-
intervention does not simply raise the issue of possession – whether de jure or de
facto – but likewise raised the issue of ownership as basis to recover possession.
Particularly, the respondents prayed for declaration of ownership of Lot 322.
Ineluctably, the RTC would have to defer its ruling on the
respondents’ reivindicatory action pending final determination by the DENR,
through the Lands Management Bureau, of the respondents’ entitlement to a
free patent, following the doctrine of primary jurisdiction.

Undoubtedly, the DENR Secretary’s exclusion of Lot 322 from the petitioner’s
free patent application and his consequent directive for the respondents to apply for
the same lot are within the DENR Secretary’s exercise of sound administrative
discretion. In the oft-cited case of Vicente Villaflor, etc. v. CA, et al,[42] which
involves the decisions of the Director of Lands and the then Minister of Natural
Resources, we stressed that the rationale underlying the doctrine of primary
jurisdiction applies to questions on the identity of the disputed public land since this
matter requires a technical determination by the Bureau of Lands. Since this issue
precludes prior judicial determination, the courts must stand aside even when they
apparently have statutory power to proceed, in recognition of the primary
jurisdiction of the administrative agency.

WHEREFORE, we hereby DENY the motion for reconsideration. No costs.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 111107 January 10, 1997

LOEONARDO A. PAAT, in his capacity as Officer-in-Charge (OIC), Regional Executive

Director (RED), Region 2 and JOVITO LAYUGAN, JR., in his capacity as Community
Environment and Natural Resources Officer (CENRO), both of the Department of
Environment and Natural Resources (DENR), petitioners,
vs.
COURT OF APPEALS, HON. RICARDO A. BACULI in his capacity as Presiding Judge of
Branch 2, Regional Trial Court at Tuguegarao, Cagayan, and SPOUSES BIENVENIDO and
VICTORIA DE GUZMAN, respondents.

TORRES, JR., J.:

Without violating the principle of exhaustion of administrative remedies, may an action

for replevin prosper to recover a movable property which is the subject matter of an
administrative forfeiture proceeding in the Department of Environment and Natural Resources
pursuant to Section 68-A of P.D. 705, as amended, entitled The Revised Forestry Code of the
Philippines?

Are the Secretary of DENR and his representatives empowered to confiscate and forfeit
conveyances used in transporting illegal forest products in favor of the government?

These are two fundamental questions presented before us for our resolution.

The controversy on hand had its incipiency on May 19, 1989 when the truck of private
respondent Victoria de Guzman while on its way to Bulacan from San Jose, Baggao, Cagayan,
was seized by the Department of Environment and Natural Resources (DENR, for brevity)
personnel in Aritao, Nueva Vizcaya because the driver could not produce the required
documents for the forest products found concealed in the truck. Petitioner Jovito Layugan, the
Community Environment and Natural Resources Officer (CENRO) in Aritao, Cagayan, issued on
May 23, 1989 an order of confiscation of the truck and gave the owner thereof fifteen (15) days
within which to submit an explanation why the truck should not be forfeited. Private respondents,
however, failed to submit the required explanation. On June 22, 1989,1 Regional Executive
Director Rogelio Baggayan of DENR sustained petitioner Layugan's action of confiscation and
ordered the forfeiture of the truck invoking Section 68-A of Presidential Decree No. 705 as
amended by Executive Order No. 277. Private respondents filed a letter of reconsideration dated
June 28, 1989 of the June 22, 1989 order of Executive Director Baggayan, which was, however,
denied in a subsequent order of July 12, 1989.2 Subsequently, the case was brought by the
petitioners to the Secretary of DENR pursuant to private respondents' statement in their letter
dated June 28, 1989 that in case their letter for reconsideration would be denied then "this letter
should be considered as an appeal to the Secretary."3 Pending resolution however of the appeal,
a suit for replevin, docketed as Civil Case 4031, was filed by the private respondents against
petitioner Layugan and Executive Director Baggayan4 with the Regional Trial Court, Branch 2 of
Cagayan,5 which issued a writ ordering the return of the truck to private respondents.6 Petitioner
Layugan and Executive Director Baggayan filed a motion to dismiss with the trial court
contending, inter alia, that private respondents had no cause of action for their failure to exhaust
administrative remedies. The trial court denied the motion to dismiss in an order dated December
28, 1989.7 Their motion for reconsideration having been likewise denied, a petition
for certiorari was filed by the petitioners with the respondent Court of Appeals which sustained
the trial court's order ruling that the question involved is purely a legal question.8 Hence, this
present petition,9 with prayer for temporary restraining order and/or preliminary injunction,
seeking to reverse the decision of the respondent Court of Appeals was filed by the petitioners
on September 9, 1993. By virtue of the Resolution dated September 27, 1993,10 the prayer for the
issuance of temporary restraining order of petitioners was granted by this Court.

Invoking the doctrine of exhaustion of administrative remedies, petitioners aver that the trial court
could not legally entertain the suit for replevin because the truck was under administrative
seizure proceedings pursuant to Section 68-A of P.D. 705, as amended by E.O. 277. Private
respondents, on the other hand, would seek to avoid the operation of this principle asserting that
the instant case falls within the exception of the doctrine upon the justification that (1) due
process was violated because they were not given the chance to be heard, and (2) the seizure
and forfeiture was unlawful on the grounds: (a) that the Secretary of DENR and his
representatives have no authority to confiscate and forfeit conveyances utilized in transporting
illegal forest products, and (b) that the truck as admitted by petitioners was not used in the
commission of the crime.

Upon a thorough and delicate scrutiny of the records and relevant jurisprudence on the matter,
we are of the opinion that the plea of petitioners for reversal is in order.

This Court in a long line of cases has consistently held that before a party is allowed to seek the
intervention of the court, it is a pre-condition that he should have availed of all the means of
administrative processes afforded him. Hence, if a remedy within the administrative machinery
can still be resorted to by giving the administrative officer concerned every opportunity to decide
on a matter that comes within his jurisdiction then such remedy should be exhausted first before
court's judicial power can be sought, The premature invocation of court's intervention is fatal to
one's cause of action.11 Accordingly, absent any finding of waiver or estoppel the case is
susceptible of dismissal for lack of cause of
action.12 This doctrine of exhaustion of administrative remedies was not without its practical and
legal reasons, for one thing, availment of administrative remedy entails lesser expenses and
provides for a speedier disposition of controversies. It is no less true to state that the courts of
justice for reasons of comity and convenience will shy away from a dispute until the system of
administrative redress has been completed and complied with so as to give the administrative
agency concerned every opportunity to correct its error and to dispose of the case. However, we
are not amiss to reiterate that the principle of exhaustion of administrative remedies as tested by
a battery of cases is not an ironclad rule. This doctrine is a relative one and its flexibility is called
upon by the peculiarity and uniqueness of the factual and circumstantial settings of a case.
Hence, it is disregarded (1) when there is a violation of due process,13 (2) when the issue
involved is purely a legal question,14 (3) when the administrative action is patently illegal
amounting to lack or excess of jurisdiction,15 (4) when there is estoppel on the part of the
administrative agency concerned,16 (5) when there is irreparable injury,17 (6) when the respondent
is a department secretary whose acts as an alter ego of the President bears the implied and
assumed approval of the latter,18 (7) when to require exhaustion of administrative remedies would
be unreasonable,19 (8) when it would amount to a nullification of a claim,20 (9) when the subject
matter is a private land in land case proceedings,21 (10) when the rule does not provide a plain,
speedy and adequate remedy, and (11) when there are circumstances indicating the urgency of
judicial intervention.22

In the case at bar, there is no question that the controversy was pending before the Secretary of
DENR when it was forwarded to him following the denial by the petitioners of the motion for
reconsideration of private respondents through the order of July 12, 1989. In their letter of
reconsideration dated June 28, 1989,23 private respondents clearly recognize the presence of an
administrative forum to which they seek to avail, as they did avail, in the resolution of their case.
The letter, reads, thus:
 xxx xxx xxx

If this motion for reconsideration does not merit your favorable action, then this
letter should be considered as an appeal to the
Secretary.24

It was easy to perceive then that the private respondents looked up to the Secretary for the
review and disposition of their case. By appealing to him, they acknowledged the existence of an
adequate and plain remedy still available and open to them in the ordinary course of the law.
Thus, they cannot now, without violating the principle of exhaustion of administrative remedies,
seek court's intervention by filing an action for replevin for the grant of their relief during the
pendency of an administrative proceedings.

Moreover, it is important to point out that the enforcement of forestry laws, rules and regulations
and the protection, development and management of forest lands fall within the primary and
special responsibilities of the Department of Environment and Natural Resources. By the very
nature of its function, the DENR should be given a free hand unperturbed by judicial intrusion to
determine a controversy which is well within its jurisdiction. The assumption by the trial court,
therefore, of the replevin suit filed by private respondents constitutes an unjustified
encroachment into the domain of the administrative agency's prerogative. The doctrine of
primary jurisdiction does not warrant a court to arrogate unto itself the authority to resolve a
controversy the jurisdiction over which is initially lodged with an administrative body of special
competence.25 In Felipe Ismael, Jr. and Co. vs. Deputy Executive Secretary,26 which was
reiterated in the recent case of Concerned Officials of MWSS vs. Vasquez,27 this Court held:

Thus, while the administration grapples with the complex and multifarious
problems caused by unbriddled exploitation of these resources, the judiciary will
stand clear. A long line of cases establish the basic rule that the courts will not
interfere in matters which are addressed to the sound discretion of government
agencies entrusted with the regulation of activities coming under the special
technical knowledge and training of such agencies.

To sustain the claim of private respondents would in effect bring the instant controversy beyond
the pale of the principle of exhaustion of administrative remedies and fall within the ambit of
excepted cases heretofore stated. However, considering the circumstances prevailing in this
case, we can not but rule out these assertions of private respondents to be without merit. First,
they argued that there was violation of due process because they did not receive the May 23,
1989 order of confiscation of petitioner Layugan. This contention has no leg to stand on. Due
process does not necessarily mean or require a hearing, but simply an opportunity or right to be
heard.28 One may be heard, not solely by verbal presentation but also, and perhaps many times
more creditably and practicable than oral argument, through pleadings.29 In administrative
proceedings moreover, technical rules of procedure and evidence are not strictly applied;
administrative process cannot be fully equated with due process in its strict judicial
sense.30 Indeed, deprivation of due process cannot be successfully invoked where a party was
given the chance to be heard on his motion for reconsideration,31 as in the instant case, when
private respondents were undisputedly given the opportunity to present their side when they filed
a letter of reconsideration dated June 28, 1989 which was, however, denied in an order of July
12, 1989 of Executive Director Baggayan, In Navarro III vs. Damasco,32 we ruled that :

The essence of due process is simply an opportunity to be heard, or as applied to

administrative proceedings, an opportunity to explain one's side or an opportunity
to seek a reconsideration of the action or ruling complained of. A formal or trial
type hearing is not at all times and in all instances essential. The requirements
are satisfied when the parties are afforded fair and reasonable opportunity to
explain their side of the controversy at hand. What is frowned upon is the
absolute lack of notice or hearing.
Second, private respondents imputed the patent illegality of seizure and forfeiture of the truck
because the administrative officers of the DENR allegedly have no power to perform these acts
under the law. They insisted that only the court is authorized to confiscate and forfeit
conveyances used in transporting illegal forest products as can be gleaned from the second
paragraph of Section 68 of P.D. 705, as amended by E.O. 277. The pertinent provision reads as
follows:

Sec. 68. . . .

xxx xxx xxx

The court shall further order the confiscation in favor of the government of
the timber or any forest products cut, gathered, collected, removed, or
possessed, as well as the machinery, equipments, implements and tools illegaly
[sic] used in the area where the timber or forest products are found. (Emphasis
ours)

A reading, however, of the law persuades us not to go along with private respondents' thinking
not only because the aforequoted provision apparently does not mention nor include
"conveyances" that can be the subject of confiscation by the courts, but to a large extent, due to
the fact that private respondents' interpretation of the subject provision unduly restricts the clear
intention of the law and inevitably reduces the other provision of Section 68-A, which is quoted
herein below:

Sec. 68-A. Administrative Authority of the Department or His Duly Authorized

Representative To Order Confiscation. In all cases of violation of this Code or
other forest laws, rules and regulations, the Department Head or his duly
authorized representative, may order the confiscation of any forest products
illegally cut, gathered, removed, or possessed or abandoned, and all
conveyances used either by land, water or air in the commission of the offense
and to dispose of the same in accordance with pertinent laws, regulations and
policies on the matter. (Emphasis ours)

It is, thus, clear from the foregoing provision that the Secretary and his duly authorized
representatives are given the authority to confiscate and forfeit any conveyances utilized in
violating the Code or other forest laws, rules and regulations. The phrase "to dispose of the
same" is broad enough to cover the act of forfeiting conveyances in favor of the government. The
only limitation is that it should be made "in accordance with pertinent laws, regulations or policies
on the matter." In the construction of statutes, it must be read in such a way as to give effect to
the purpose projected in the statute.33 Statutes should be construed in the light of the object to be
achieved and the evil or mischief to be suppressed, and they should be given such construction
as will advance the object, suppress the mischief, and secure the benefits intended.34 In this wise,
the observation of the Solicitor General is significant, thus:

But precisely because of the need to make forestry laws "more responsive to
present situations and realities" and in view of the "urgency to conserve the
remaining resources of the country," that the government opted to add Section
68-A. This amendatory provision is an administrative remedy totally separate and
distinct from criminal proceedings. More than anything else, it is intended to
supplant the inadequacies that characterize enforcement of forestry laws through
criminal actions. The preamble of EO 277-the law that added Section 68-A to PD
705-is most revealing:

"WHEREAS, there is an urgency to conserve the remaining forest

resources of the country for the benefit and welfare of the present
and future generations of Filipinos;
 WHEREAS, our forest resources may be effectively conserved
and protected through the vigilant enforcement and
implementation of our forestry laws, rules and regulations;

WHEREAS, the implementation of our forestry laws suffers from

technical difficulties, due to certain inadequacies in the penal
provisions of the Revised Forestry Code of the Philippines; and

WHEREAS, to overcome this difficulties, there is a need to

penalize certain acts more responsive to present situations and
realities;"

It is interesting to note that Section 68-A is a new provision authorizing the DENR
to confiscate, not only "conveyances," but forest products as well. On the other
hand, confiscation of forest products by the "court" in a criminal action has long
been provided for in Section 68. If as private respondents insist, the power on
confiscation cannot be exercised except only through the court under Section 68,
then Section 68-A would have no Purpose at all. Simply put, Section 68-A would
not have provided any solution to the problem perceived in EO 277, supra.35

Private respondents, likewise, contend that the seizure was illegal because the petitioners
themselves admitted in the Order dated July 12, 1989 of Executive Director Baggayan that the
truck of private respondents was not used in the commission of the crime. This order, a copy of
which was given to and received by the counsel of private respondents, reads in part, viz.:

. . . while it is true that the truck of your client was not used by her in the
commission of the crime, we uphold your claim that the truck owner is not liable
for the crime and in no case could a criminal case be filed against her as
provided under Article 309 and 310 of the Revised Penal Code. . .36

We observed that private respondents misread the content of the aforestated order and
obviously misinterpreted the intention of petitioners. What is contemplated by the petitioners
when they stated that the truck "was not used in the commission of the crime" is that it was not
used in the commission of the crime of theft, hence, in no case can a criminal action be filed
against the owner thereof for violation of Article 309 and 310 of the Revised Penal Code.
Petitioners did not eliminate the possibility that the truck was being used in the commission of
another crime, that is, the breach of Section 68 of P.D. 705 as amended by E.O. 277. In the
same order of July 12, 1989, petitioners pointed out:

. . . However, under Section 68 of P.D. 705 as amended and further amended by

Executive Order No. 277 specifically provides for the confiscation of the
conveyance used in the transport of forest products not covered by the required
legal documents. She may not have been involved in the cutting and gathering of
the product in question but the fact that she accepted the goods for a fee or fare
the same is therefor liable. . .37

Private respondents, however, contended that there is no crime defined and punishable under
Section 68 other than qualified theft, so that, when petitioners admitted in the July 12, 1989 order
that private respondents could not be charged for theft as provided for under Articles 309 and
310 of the Revised Penal Code, then necessarily private respondents could not have committed
an act constituting a crime under Section 68. We disagree. For clarity, the provision of Section 68
of P.D. 705 before its amendment by E.O. 277 and the provision of Section 1 of E.O. No. 277
amending the aforementioned Section 68 are reproduced herein, thus:

Sec. 68. Cutting, gathering and/or collecting timber or other products without
license. — Any person who shall cut, gather, collect, or remove timber or other
 forest products from any forest land, or timber from alienable and disposable
public lands, or from private lands, without any authority under a license
agreement, lease, license or permit, shall be guilty of qualified theft as defined
and punished under Articles 309 and 310 of the Revised Penal Code . . .
(Emphasis ours; Section 68, P.D. 705 before its amendment by E.O. 277)

Sec. 1. Section 68 of Presidential Decree No. 705, as amended, is hereby

amended to read as follows:

Sec. 68. Cutting, gathering and/or collecting timber or other forest

products without license. — Any person who
shall cut, gather, collect, remove timber or other forest products
from any forest land, or timber from alienable or disposable public
land, or from private land, without any authority, or possess timber
or other forest products without the legal documents as required
under existing forest laws and regulations, shall be punished with
the penalties imposed under Articles 309 and 310 of the Revised
Penal Code . . . (Emphasis ours; Section 1, E.O. No. 277
amending Section 68, P.D. 705 as amended)

With the introduction of Executive Order No. 277 amending Section 68 of P.D. 705, the act of
cutting, gathering, collecting, removing, or possessing forest products without authority
constitutes a distinct offense independent now from the crime of theft under Articles 309 and 310
of the Revised Penal Code, but the penalty to be imposed is that provided for under Article 309
and 310 of the Revised Penal Code. This is clear from the language of Executive Order No. 277
when it eliminated the phrase "shall be guilty of qualified theft as defined and punished under
Articles 309 and 310 of the Revised Penal Code" and inserted the words "shall be punished with
the penalties imposed under Article 309 and 310 of the Revised Penal Code". When the statute
is clear and explicit, there is hardly room for any extended court ratiocination or rationalization of
the law.38

From the foregoing disquisition, it is clear that a suit for replevin can not be sustained against the
petitioners for the subject truck taken and retained by them for administrative forfeiture
proceedings in pursuant to Section 68-A of the P.D. 705, as amended. Dismissal of the replevin
suit for lack of cause of action in view of the private respondents' failure to exhaust administrative
remedies should have been the proper course of action by the lower court instead of assuming
jurisdiction over the case and consequently issuing the writ ordering the return of the truck.
Exhaustion of the remedies in the administrative forum, being a condition precedent prior to
one's recourse to the courts and more importantly, being an element of private respondents' right
of action, is too significant to be waylaid by the lower court.

It is worth stressing at this point, that a suit for replevin is founded solely on the claim that the
defendant wrongfully withholds the property sought to be recovered. It lies to recover possession
of personal chattels that are unlawfully detained.39 "To detain" is defined as to mean "to hold or
keep in custody,"40 and it has been held that there is tortious taking whenever there is an unlawful
meddling with the property, or an exercise or claim of dominion over it, without any pretense of
authority or right; this, without manual seizing of the property is sufficient.41 Under the Rules of
Court, it is indispensable in replevin proceeding that the plaintiff must show by his own affidavit
that he is entitled to the possession of property, that the property is wrongfully detained by the
defendant, alleging the cause of detention, that the same has not been taken for tax assessment,
or seized under execution, or attachment, or if so seized, that it is exempt from such seizure, and
the actual value of the property.42 Private respondents miserably failed to convince this Court that
a wrongful detention of the subject truck obtains in the instant case. It should be noted that the
truck was seized by the petitioners because it was transporting forest products without the
required permit of the DENR in manifest contravention of Section 68 of P.D. 705 as amended by
E.O 277. Section 68-A of P.D. 705, as amended, unquestionably warrants the confiscation as
well as the disposition by the Secretary of DENR or his duly authorized representatives of the
conveyances used in violating the provision of forestry laws. Evidently, the continued possession
or detention of the truck by the petitioners for administrative forfeiture proceeding is legally
permissible, hence, no wrongful detention exists in the case at bar.

Moreover, the suit for replevin is never intended as a procedural tool to question the orders of
confiscation and forfeiture issued by the DENR in pursuance to the authority given under P.D.
705, as amended. Section 8 of the said law is explicit that actions taken by the Director of the
Bureau of Forest Development concerning the enforcement of the provisions of the said law are
subject to review by the Secretary of DENR and that courts may not review the decisions of the
Secretary except through a special civil action for certiorari or prohibition. It reads:

Sec. 8. REVIEW — All actions and decisions of the Director are subject to
review, motu propio or upon appeal of any person aggrieved thereby, by the
Department Head whose decision shall be final and executory after the lapse of
thirty (30) days from the receipt of the aggrieved party of said decision, unless
appealed to the President in accordance with Executive Order No. 19, Series of
1966. The Decision of the Department Head may not be reviewed by the courts
except through a special civil action for certiorari or prohibition.

WHEREFORE, the Petition is GRANTED; the Decision of the respondent Court of Appeals dated
October 16, 1991 and its Resolution dated July 14, 1992 are hereby SET ASIDE AND
REVERSED; the Restraining Order promulgated on September 27, 1993 is hereby made
permanent; and the Secretary of DENR is directed to resolve the controversy with utmost
dispatch.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. 118233 December 10, 1999

ANTONIO Z. REYES, ELISEO P. OCAMPO and EDITHA ARCIAGA-SANTOS, petitioners,

vs.
COURT OF APPEALS, HON. SECRETARY OF JUSTICE FRANKLIN DRILON and MAYOR
JINGGOY ESTRADA (JOSE EJERCITO) OF THE MUNICIPALITY OF SAN JUAN, METRO
MANILA, respondents.

RESOLUTION

QUISUMBING, J.:

For review is the decision 1 of the Court of Appeals, dated August 3, 1994 and its
resolution2 dated December 8, 1994 in CA-G.R. SP No. 32473. Said decision dismissed the
prohibition case brought by the petitioner against respondent officials of the Municipality of San
Juan to stop the enforcement of Tax Ordinance Nos. 87, 91, 95, 100 and 101.

The factual antecedents are as follows:

The Sangguniang Bayan of San Juan, Metro Manila implemented several tax ordinances as
follows:

Ordinance No. Title

87 An ordinance imposing a municipal tax

of fifty percent (50%) of one percent (1%)
of the gross receipt on business of printing
and publication

91 An ordinance imposing a transfer tax

equivalent to fifty percent (50%) of one
percent (1%) of the total consideration on
the sale, donation, barter or any other
mode of transferring ownership or title of
real property situated in San Juan, Metro
Manila, or its fair market value, whichever
is higher

95 An ordinance imposing fifty percent

(50%) of one percent (1%) for social
housing tax on the assessed value of all
real estate property in San Juan, Metro
Manila in excess of P50,000.00 value as
provided in the New Urban Land Reform
Law, also known as R.A. 7279.
 100 An ordinance imposing new rates of
business taxes of the Municipality of San
Juan Metro Manila

101 An ordinance levying an annual "Ad

Valorem" tax on real property and an
additional tax accruing to the special
education fund (SEF)

On May 21, 1993, petitioners filed an appeal with the Department of Justice assailing the
constitutionality of these tax ordinances allegedly because they were promulgated without
previous public hearings thereby constituting deprivation of property without due process of law.

On June 10, 1993, respondent Secretary of Justice dismissed the appeal for having been filed
out of time. Citing Section 187, R.A. No. 7160, he said:

It appears that the tax ordinances in question took effect on September 24, 1992,
in the case of Tax Ordinance No. 87, until October 22, 1992, in the case of Tax
Ordinance Nos. 91 and 95, and until October 29, 1992, in the case of Tax
Ordinance Nos. 100 and 101, or more than thirty (30) days from the effectivity
thereof when the appeal was filed and received by this Department on May 21,
1993 and therefore not in accordance with the requirements provided for under
Section 187 of the Local Government Code of 1991.

WHEREFORE, the instant appeal, having been filed out of time, is hereby
DISMISSED.3

Undaunted, petitioners filed with the Court of Appeals a petition for certiorari and prohibition (CA-
G.R. SP No. 32473). But respondent court affirmed the decision of the Secretary. On December
8, 1994, the motion for reconsideration filed by the petitioners was denied for lack of merit.

Hence, the present petition for review, raising the following questions:

1. Whether or not the questioned tax ordinances are violative of

the Constitution, considering the undisputed fact that no public
hearings were ever held on the ordinances before they were
passed and approved as required by the Local Government Code
of 1991, thereby constituting as they do a deprivation of property
without due process;

2. Whether or not the wording of the law under Section 187 of the
Local Government Code of 1991 that "any question on the
constitutionality . . . of tax ordinance . . . may be raised on appeal
within thirty (30) days from the effectivity thereof . . ." is a reductio
as absurdum, since if the tax ordinance is found to be
unconstitutional, it will be considered as never having become
effective at all from the very beginning, for which reason the thirty-
day appeal period cannot be reckoned and cannot be enforced;

3. Whether or not the constitutionality of a tax ordinance, or any

law for that matter, can be questioned at any time despite the
prescription of a limited period within which to question it, as in
case at bar; and

4. Whether or not the constitutionality of an ordinance or a law

may be questioned even if the question of constitutionality may
 not have been originally or initially raised, or is not the lis mota of
the case, if it appears that a determination of the question of
constitutionality is necessary to a decision of the case.4

In our view, the pertinent issues for our resolution now are:

1. Whether or not the Court of Appeals erred in affirming the

decision of the Secretary of Justice who dismissed the prohibition
suit, on the ground that it was filed out of time?

2. Whether or not lack of mandatory public hearings prior to

enacting Municipal Ordinance Nos. 87, 91, 95, 100 and 101
render them void on the ground of deprivation of property without
due process?

3. Whether or not the constitutional validity of Sec. 187 of the

Local Government Code could be raised for the first time on
appeal?

According to petitioners, respondent Secretary erred in declaring that they failed to file their
appeal on time. Also, they assail Municipal Ordinance Nos. 87, 91, 95, 100 and 101, for alleged
failure of the Municipal Council of San Juan to conduct mandatory public hearings. Because of
this, they claim the ordinances are inoperative, as through they were never passed.
Consequently, no prescriptive thirty-day period to question the validity of the ordinance could toll
to bar their appeal to the Department of Justice.

Sec. 187 of R.A. 7160, cited by respondent Secretary, provides as follows:

Sec. 187 — Procedure for Approval and Effectivity of Tax Ordinances and
Revenue Measures; Mandatory Public Hearings. — The procedure for approval
of local tax ordinances and revenue measures shall be in accordance with the
provisions of this Code: Provided, That public hearings shall be conducted for the
purpose prior to the enactment thereof: Provided further, That any question on
the constitutionality or legality of tax ordinances or revenue measures may be
raised on appeal within thirty (30) days from the effectivity thereof to the
Secretary of Justice who shall render a decision within sixty (60) days from the
date of receipt of the appeal: Provided, however, That such appeal not have the
effect of suspending the effectivity of the ordinance and the accrual and payment
of the tax, fee, or charge levied therein: Provided, finally, That within thirty (30)
days after receipt of the decision or the lapse of the sixty-day period without the
Secretary of Justice acting upon the appeal, the aggrieved party may file
appropriate proceedings with a court of competent jurisdiction.

Clearly, the law requires that the dissatisfied taxpayer who questions the validity or legality of a
tax ordinance must file his appeal to the Secretary of Justice, within 30 days from effectivity
thereof. In case the Secretary decides the appeals, a period also of 30 days is allowed for an
aggrieved party to go to court. But if the Secretary does not act thereon, after the lapse of 60
days, a party could already proceed to seek relief in court. These three separate periods are
clearly given for compliance as a prerequisite before seeking redress in a competent court. Such
statutory periods are set to prevent delays as well as enhance the orderly and speedy discharge
of judicial functions.5 For this reason the courts construct these provisions of statutes as
mandatory.6

A municipal tax ordinance empowers a local government unit to impose taxes. The power to tax
is the most effective instrument to raise needed revenues to finance and support the myriad
activities of local government units for the delivery of basic services essential to the promotion of
the general welfare and enhancement of peace, progress, and prosperity of the
people. 7 Consequently, any delay in implementing tax measures would be to the detriment of the
public. It is for this reason that protests over tax ordinances are required to be done within certain
time frames. In the instant case, it is our view that the failure of petitioners to appeal to the
Secretary of Justice within 30 days as required by Sec. 187 of R.A. 7160 is fatal to their cause.

On the second issue, petitioners allege that the Sangguniang Bayan of San Juan did not comply
with the prescribed procedure for enacting an ordinance because they failed to conduct public
hearings.

In Figurres vs. Court of Appeals,8 where the municipality failed to conduct public hearings prior to
enacting the revisions on the schedule of fair market values and assessment level of classes of
real estate properties, the Court said:

Petitioner is right in contending that public hearings are required to be conducted

prior to the enactment of an ordinance imposing real property taxes. R.A. No.
7160, Sec. 186, provides that an ordinance levying taxes, fees, or charges "shall
not be enacted without any prior public hearing conducted for the purpose."

However, it is noteworthy that part from her bare assertions, petitioner Figuerres
has not presented any evidence to show that no public hearings were conducted
prior not the enactment of the ordinances in question. On the other hand, the
Municipality of Mandaluyong claims the public hearings were indeed conducted
before the subject ordinances were adopted, although it likewise failed to submit
any evidence to establish this allegation. However, in accordance with the
presumption of validity in favor of an ordinance, their constitutionality or legality
should be upheld in the absence of evidences showing that procedure prescribed
by law was not observed in their enactment . . . .

Furthermore, the lack of a public hearings is a negative allegation essential to

petitioner's cause of action in the present case. Hence, as petitioner is the party
asserting it, she has the burden of proof. Since petitioner failed to rebut the
presumption of validity in favor of the subject ordinances and to discharge the
burden of proving that no public hearings were conducted prior to the enactment
thereof, we are constrained to uphold their constitutionality or legality.9

We find Figuerres instructive. Petitioners have not proved in the case before us that the
Sangguniang Bayan of San Juan failed to conduct the required public hearings before the
enactment of Ordinance Nos. 87, 91, 95, 100 and 101. Although the Sanggunian had the control
of records or the better means of proof regarding the facts alleged, petitioner as not relieved from
the burden of proving their averments. 10 Proof that public hearings were not held falls on
petitioner' shoulders. For failing to discharge that burden, their petition was properly dismissed.

In any event, for the purpose of securing certainty where doubt would be intolerable, it is a
general rules that the regularity of the enactment of an officially promulgated statute or ordinance
may not be impeached by parol evidence or oral testimony either of individual officers and
members, or of strangers who may be interested in nullifying legislative action. 11 This rules
supplements the presumption in favor of the regularity of official conduct which we have upheld
repeatedly, absent a clear showing to the contrary.

Finally, on the validity of Section 187 of R.A. 7160, the Local Government Code, we must stress
that the constitutionality of an act of Congress will not be passed upon by the Court unless at the
first opportunity that question is properly raised and presented in an appropriate case, and is
necessary to a determination of the case, particularly where the issue of constitutionality is the
very lis mota presented. 12 The constitutional validity of a statutory provision should not be
entertained by the Court where it was not specifically raised below, insisted upon, and
adequately argued. 13 Moreover, given the circumstances in this case, we find no genuine
necessity to dwell on the issue of constitutional invalidity of Section 187 in relation to issue of
valid enactment of the subject ordinances, as shown in the foregoing discussion. Suffice it now to
say that, having resolved the first and second issues, we find no grave abuse of discretion nor
reversible error in the decision of respondent appellate court. Further constitutional scrutiny of
Section 187 is unwarranted.

WHEREFORE, the present petition is DISMISSED for lack of merit and the assailed decision of
the Court of Appeals is AFFIRMED. No pronouncement as to costs.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. 180388 January 18, 2011

GREGORIO R. VIGILAR, SECRETARY OF THE DEPARTMENT OF PUBLIC WORKS AND

HIGHWAYS (DPWH), DPWH UNDERSECRETARIES TEODORO E. ENCARNACION AND
EDMUNDO E. ENCARNACION AND EDMUNDO V. MIR, DPWH ASSISTANT SECRETARY
JOEL L. ALTEA, DPWH REGIONAL DIRECTOR VICENTE B. LOPEZ, DPWH DISTRICT
ENGINEER ANGELITO M. TWAÑO, FELIX A. DESIERTO OF THE TECHNICAL WORKING
GROUP VALIDATION AND AUDITING TEAM, AND LEONARDO ALVARO, ROMEO N.
SUPAN, VICTORINO C. SANTOS OF THE DPWH PAMPANGA 2ND ENGINEERING
DISTRICT, Petitioners,
vs.
ARNULFO D. AQUINO, Respondent.

DECISION

SERENO, J.:

Before the Court is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Court,
assailing the Decision2 of the Court of Appeals in C.A.-G.R. CV No. 82268, dated 25 September
2006.

The antecedent facts are as follows:

On 19 June 1992, petitioner Angelito M. Twaño, then Officer-in-Charge (OIC)-District Engineer of

the Department of Public Works and Highways (DPWH) 2nd Engineering District of Pampanga
sent an Invitation to Bid to respondent Arnulfo D. Aquino, the owner of A.D. Aquino Construction
and Supplies. The bidding was for the construction of a dike by bulldozing a part of the Porac
River at Barangay Ascomo-Pulungmasle, Guagua, Pampanga.

Subsequently, on 7 July 1992, the project was awarded to respondent, and a "Contract of
Agreement" was thereafter executed between him and concerned petitioners for the amount of
PhP1,873,790.69, to cover the project cost.

By 9 July 1992, the project was duly completed by respondent, who was then issued a Certificate
of Project Completion dated 16 July 1992. The certificate was signed by Romeo M. Yumul, the
Project Engineer; as well as petitioner Romeo N. Supan, Chief of the Construction Section, and
by petitioner Twaño.

Respondent Aquino, however, claimed that PhP1,262,696.20 was still due him, but petitioners
refused to pay the amount. He thus filed a Complaint3 for the collection of sum of money with
damages before the Regional Trial Court of Guagua, Pampanga. The complaint was docketed as
Civil Case No. 3137.

Petitioners, for their part, set up the defense4 that the Complaint was a suit against the state; that
respondent failed to exhaust administrative remedies; and that the "Contract of Agreement"
covering the project was void for violating Presidential Decree No. 1445, absent the proper
appropriation and the Certificate of Availability of Funds.5

On 28 November 2003, the lower court ruled in favor of respondent, to wit:

WHEREFORE, premises considered, defendant Department of Public Works and Highways is
hereby ordered to pay the plaintiff Arnulfo D. Aquino the following:

1. PhP1,873,790.69, Philippine Currency, representing actual amount for the completion

of the project done by the plaintiff;

2. PhP50,000.00 as attorney’s fee and

3. Cost of this suit.

SO ORDERED. 6

It is to be noted that respondent was only asking for PhP1,262,696.20; the award in paragraph 1
above, however, conforms to the entire contract amount.

On appeal, the Court of Appeals reversed and set aside the Decision of the lower court and
disposed as follows:

WHEREFORE, premises considered, the appeal is GRANTED. The "CONTRACT

AGREEMENT" entered into between the plaintiff-appellee’s construction company, which he
represented, and the government, through the Department of Public Works and Highway
(DPWH) – Pampanga 2nd Engineering District, is declared null and void ab initio.

The assailed decision of the court a quo is hereby REVERSED AND SET ASIDE.

In line with the pronouncement in Department of Health vs. C.V. Canchela & Associates,
Architects,7 the Commission on Audit (COA) is hereby ordered to determine and ascertain with
dispatch, on a quantum meruit basis, the total obligation due to the plaintiff-appellee for his
undertaking in implementing the subject contract of public works, and to allow payment thereof,
subject to COA Rules and Regulations, upon the completion of the said determination.

No pronouncement as to costs.

SO ORDERED.8

Dissatisfied with the Decision of the Court of Appeals, petitioners are now before this Court,
seeking a reversal of the appellate court’s Decision and a dismissal of the Complaint in Civil
Case No. G-3137. The Petition raises the following issues:

1. WHETHER OR NOT THE COURT OF APPEALS ERRED IN HOLDING THAT THE

DOCTRINE OF NON-SUABILITY OF THE STATE HAS NO APPLICATION IN THIS CASE.

2. WHETHER OR NOT THE COURT OF APPEALS ERRED IN NOT DISMISSING THE

COMPLAINT FOR FAILURE OF RESPONDENT TO EXHAUST ALL ADMINISTRATIVE
REMEDIES.

3. WHETHER OR NOT THE COURT OF APPEALS ERRED IN ORDERING THE COA TO

ALLOW PAYMENT TO RESPONDENT ON A QUANTUM MERUIT BASIS DESPITE THE
LATTER’S FAILURE TO COMPLY WITH THE REQUIREMENTS OF PRESIDENTIAL DECREE
NO. 1445.

After a judicious review of the case, the Court finds the Petition to be without merit.

Firstly, petitioners claim that the Complaint filed by respondent before the Regional Trial Court
was done without exhausting administrative remedies. Petitioners aver that respondent should
have first filed a claim before the Commission on Audit (COA) before going to the courts.
However, it has been established that the doctrine of exhaustion of administrative remedies and
the doctrine of primary jurisdiction are not ironclad rules. In Republic of the Philippines v.
Lacap,9 this Court enumerated the numerous exceptions to these rules, namely: (a) where there
is estoppel on the part of the party invoking the doctrine; (b) where the challenged administrative
act is patently illegal, amounting to lack of jurisdiction; (c) where there is unreasonable delay or
official inaction that will irretrievably prejudice the complainant; (d) where the amount involved is
relatively so small as to make the rule impractical and oppressive; (e) where the question
involved is purely legal and will ultimately have to be decided by the courts of justice; (f) where
judicial intervention is urgent; (g) where the application of the doctrine may cause great and
irreparable damage; (h) where the controverted acts violate due process; (i) where the issue of
non-exhaustion of administrative remedies has been rendered moot; (j) where there is no other
plain, speedy and adequate remedy; (k) where strong public interest is involved; and (l) in quo
warranto proceedings. In the present case, conditions (c) and (e) are present.

The government project contracted out to respondent was completed almost two decades ago.
To delay the proceedings by remanding the case to the relevant government office or agency will
definitely prejudice respondent. More importantly, the issues in the present case involve the
validity and the enforceability of the "Contract of Agreement" entered into by the parties. These
are questions purely of law and clearly beyond the expertise of the Commission on Audit or the
DPWH. In Lacap, this Court said:

... It does not involve an examination of the probative value of the evidence presented by the
parties. There is a question of law when the doubt or difference arises as to what the law is on a
certain state of facts, and not as to the truth or the falsehood of alleged facts. Said question at
best could be resolved only tentatively by the administrative authorities. The final decision on the
matter rests not with them but with the courts of justice. Exhaustion of administrative remedies
does not apply, because nothing of an administrative nature is to be or can be done. The issue
does not require technical knowledge and experience but one that would involve the
interpretation and application of law. (Emphasis supplied.)

Secondly, in ordering the payment of the obligation due respondent on a quantum meruit basis,
the Court of Appeals correctly relied on Royal Trust Corporation v. COA,10 Eslao v.
COA,11 Melchor v. COA,12 EPG Construction Company v. Vigilar,13 and Department of Health v.
C.V. Canchela & Associates, Architects.14 All these cases involved government projects
undertaken in violation of the relevant laws, rules and regulations covering public bidding, budget
appropriations, and release of funds for the projects. Consistently in these cases, this Court has
held that the contracts were void for failing to meet the requirements mandated by law; public
interest and equity, however, dictate that the contractor should be compensated for services
rendered and work done.

Specifically, C.V. Canchela & Associates is similar to the case at bar, in that the contracts
involved in both cases failed to comply with the relevant provisions of Presidential Decree No.
1445 and the Revised Administrative Code of 1987. Nevertheless, "(t)he illegality of the subject
Agreements proceeds, it bears emphasis, from an express declaration or prohibition by law, not
from any intrinsic illegality. As such, the Agreements are not illegal per se, and the party claiming
thereunder may recover what had been paid or delivered."15

The government project involved in this case, the construction of a dike, was completed way
back on 9 July 1992. For almost two decades, the public and the government benefitted from the
work done by respondent. Thus, the Court of Appeals was correct in applying Eslao to the
present case. In Eslao, this Court stated:

...the Court finds that the contractor should be duly compensated for services rendered, which
were for the benefit of the general public. To deny the payment to the contractor of the two
buildings which are almost fully completed and presently occupied by the university would be to
allow the government to unjustly enrich itself at the expense of another. Justice and equity
demand compensation on the basis of quantum meruit. (Emphasis supplied.)

Neither can petitioners escape the obligation to compensate respondent for services rendered
and work done by invoking the state’s immunity from suit. This Court has long established in
Ministerio v. CFI of Cebu,16 and recently reiterated in Heirs of Pidacan v. ATO,17 that the doctrine
of governmental immunity from suit cannot serve as an instrument for perpetrating an injustice to
a citizen. As this Court enunciated in EPG Construction:18 1avvphi1

To our mind, it would be the apex of injustice and highly inequitable to defeat
respondent’s right to be duly compensated for actual work performed and services
rendered, where both the government and the public have for years received and
accepted benefits from the project and reaped the fruits of respondent’s honest toil and
labor.

xxx xxx xxx

Under these circumstances, respondent may not validly invoke the Royal Prerogative of
Dishonesty and conveniently hide under the State's cloak of invincibility against suit, considering
that this principle yields to certain settled exceptions. True enough, the rule, in any case, is not
absolute for it does not say that the state may not be sued under any circumstance.

xxx xxx xxx

Although the Amigable and Ministerio cases generously tackled the issue of the State's immunity
from suit vis a vis the payment of just compensation for expropriated property, this Court
nonetheless finds the doctrine enunciated in the aforementioned cases applicable to the instant
controversy, considering that the ends of justice would be subverted if we were to uphold,
in this particular instance, the State's immunity from suit.

To be sure, this Court — as the staunch guardian of the citizens' rights and welfare —
cannot sanction an injustice so patent on its face, and allow itself to be an instrument in
the perpetration thereof. Justice and equity sternly demand that the State's cloak of
invincibility against suit be shred in this particular instance, and that petitioners-
contractors be duly compensated — on the basis of quantum meruit — for construction
done on the public works housing project. (Emphasis supplied.)

WHEREFORE, in view of the foregoing, the Petition is DENIED for lack of merit. The assailed
Decision of the Court of Appeals in CA-G.R. No. 82268 dated 25 September 2006 is AFFIRMED.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 120567 March 20, 1998

PHILIPPINE AIRLINES, INC., petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, FERDINAND PINEDA and GOGFREDO
CABLING, respondents.

MARTINEZ, J.:

Can the National Labor Relations Commission (NLRC), even without a complaint for illegal
dismissal tiled before the labor arbiter, entertain an action for injunction and issue such writ
enjoining petitioner Philippine Airlines, inc. from enforcing its Orders of dismissal against private
respondents, and ordering petitioner to reinstate the private respondents to their previous
positions?

This is the pivotal issue presented before us in this petition for certiorari under Rule 65 of the
Revised Rules of Court which seeks the nullification of the injunctive writ dated April 3, 1995
issued by the NLRC and the Order denying petitioner's motion for reconsideration on the ground
that the said Orders were issued in excess of jurisdiction.

Private respondents are flight stewards of the petitioner. Both were dismissed from the service
for their alleged involvement in the April 3, 1993 currency smuggling in Hong Kong.

Aggrieved by said dismissal, private respondents filed with the NLRC a petition1 for injunction
praying that:

I. Upon filing of this Petition, a temporary restraining order be issued, prohibiting

respondents (petitioner herein) from effecting or enforcing the Decision dated
Feb. 22, 1995, or to reinstate petitioners temporarily while a hearing on the
propriety of the issuance of a writ of preliminary injunction is being undertaken;

II. After hearing, a writ of preliminary mandatory injunction be issued ordering

respondent to reinstate petitioners to their former positions pending the hearing of
this case, or, prohibiting respondent from enforcing its Decision dated February
22, 1995 while this case is pending adjudication;

III. After hearing, that the writ of preliminary injunction as to the reliefs sought for
be made permanent, that petitioners be awarded full backwages, moral damages
of PHP 500,000.00 each and exemplary damages of PHP 500,000.00 each,
attorney's fees equivalent to ten percent of whatever amount is awarded, and the
costs of suit.

On April 3, 1995, the NLRC issued a temporary mandatory injunction 2 enjoining petitioner to
cease and desist from enforcing its February 22, 1995 Memorandum of dismissal. In granting the
writ, the NLRC considered the following facts, to wit:
 . . . that almost two (2) years ago, i.e. on April 15, 1993, the petitioners were
instructed to attend an investigation by respondent's "Security and Fraud
Prevention Sub-Department" regarding an April 3, 1993 incident in Hongkong at
which Joseph Abaca, respondent's Avionics Mechanic in Hongkong "was
intercepted by the Hongkong Airport Police at Gate 05 . . . the ramp area of the
Kai Tak International Airport while . . . about to exit said gate carrying a . . . bag
said to contain some 2.5 million pesos in Philippine Currencies. That at the Police
Station. Mr. Abaca claimed that he just found said plastic bag at the Skybed
Section of the arrival flight PR300/03 April 93," where petitioners served as flight
stewards of said flight PR300; . . the petitioners sought "a more detailed account
of what this HKG incident is all about"; but instead, the petitioners were
administratively charged, "a hearing" on which "did
not push through" until almost two (2) years after, i.e, "on January 20, 1995 . . .
where a confrontation between Mr. Abaca and petitioners herein was
compulsorily arranged by the respondent's disciplinary board" at which hearing,
Abaca was made to identify petitioners as co-conspirators; that despite the fact
that the procedure of identification adopted by respondent's Disciplinary Board
was anomalous "as there was no one else in the line-up (which could not be
called one) but petitioners . . . Joseph Abaca still had difficulty in identifying
petitioner Pineda as his co-conspirator, and as to petitioner Cabling, he was
implicated and pointed by Abaca only after respondent's Atty. Cabatuando
pressed the former to identify petitioner Cabling as co-conspirator"; that with the
hearing reset to January 25, 1995, "Mr. Joseph Abaca finally gave exculpating
statements to the board in that he cleared petitioners from any participation or
from being the owners of the currencies, and at which hearing Mr. Joseph Abaca
volunteered the information that the real owner of said money was one who
frequented his headquarters in Hongkong to which information, the Disciplinary
Board Chairman, Mr. Ismael Khan," opined "for the need for another hearing to
go to the bottom of the incident"; that from said statement, it appeared "that Mr.
Joseph Abaca was the courier, and had another mechanic in Manila who hid the
currency at the plane's skybed for Abaca to retrieve in Hongkong, which findings
of how the money was found was previously confirmed by Mr. Joseph Abaca
himself when he was first investigated by the Hongkong authorities"; that just as
petitioners "thought that they were already fully cleared of the charges, as they no
longer received any summons/notices on the intended "additional hearings"
mandated by the Disciplinary Board," they were surprised to receive "on February
23, 1995. . . a Memorandum dated February 22, 1995" terminating their services
for alleged violation of respondent's Code of Discipline "effective immediately";
that sometime . . . first week of March, 1995, petitioner Pineda received another
Memorandum from respondent Mr. Juan Paraiso, advising him of his termination
effective February 3, 1995, likewise for violation of respondent's Code of
Discipline; . . .

In support of the issuance of the writ of temporary injunction, the NLRC adapted the view that: (1)
private respondents cannot be validly dismissed on the strength of petitioner's Code of Discipline
which was declared illegal by this Court in the ease at PAL, Inc. vs. NLRC, (G.R. No. 85985),
promulgated August 13, 1993, for the reason that it was formulated by the petitioner without the
participation of its employees as required in R.A. 6715, amending Article 211 of the Labor Code;
(2) the whimsical, baseless and premature dismissals of private respondents which "caused
them grave and irreparable injury" is enjoinable as private respondents are left "with no speedy
and adequate remedy at law" except the issuance of a temporary mandatory injunction; (3) the
NLRC is empowered under Article 218 (e) of the Labor Code not only to restrain any actual or
threatened commission of any or all prohibited or unlawful acts but also to require the
performance of a particular act in any labor dispute, which, if not restrained or performed
forthwith, may cause grave or irreparable damage to any party; and (4) the temporary power of
the NLRC was recognized by this Court in the case of Chemo-Technische Mfg., Inc. Employees
Union, DFA, et. al. vs. Chemo-Technische Mfg., Inc. [G.R. No. 107031, January 25, 1993].
On May 4, 1995, petitioner moved for reconsideration3 arguing that the NLRC erred:

1. . . . in granting a temporary injunction order when it has no

jurisdiction to issue an injunction or restraining order since this
may be issued only under Article 218 of the Labor Code if the
case involves or arises from labor disputes;

2. . . . in granting a temporary injunction order when the

termination of private respondents have long been carried out;

3. . . . in ordering the reinstatement of private respondents on the

basis of their mere allegations, in violation of PAL's right to due
process:

4. . . . in arrogating unto itself management prerogative to

discipline its employees and divesting the labor arbiter of its
original and exclusive jurisdiction over illegal dismissal cases;

5. . . . in suspending the effects of termination when such action is

exclusively within the jurisdiction of the Secretary of Labor;

6. . . . in issuing the temporary injunction in the absence of any

irreparable or substantial injury to both private respondents.

On May 31, 1995, the NLRC denied petitioner's motion for reconsideration, ruling:

"The respondent (now petitioner), for one, cannot validly claim that we cannot
exercise our injunctive power under Article 218 (e) of the Labor Code on the
pretext that what we have here is not a labor dispute as long as it concedes that
as defined by law, a" (l) "Labor Dispute" includes any controversy or matter
concerning terms or conditions of employment." If security of tenure, which has
been breached by respondent and which, precisely, is sought to be protected by
our temporary mandatory injunction (the core of controversy in this case) is not a
"term or condition of employment", what then is?

xxx xxx xxx

Anent respondent's second argument . . . . Article 218 (e) of the Labor Code . . .
empowered the Commission not only to issue a prohibitory injunction, but a
mandatory ("to require the performance") one as well. Besides, as earlier
discussed, we already exercised (on August 23, 1991) this temporary mandatory
injunctive power in the case of "Chemo-Technische Mfg., Inc. Employees Union-
DFA et. al. vs. Chemo-Technische Mfg., Inc., et. al." (supra) and effectively
enjoined one (1) month old dismissals by Chemo-Technische and that our
aforesaid mandatory exercise of injunctive power, when questioned through a
petition for certiorari, was sustained by the Third Division of the Supreme court
per its Resolution dated January 25, 1993.

xxx xxx xxx

Respondent's fourth argument that petitioner's remedy for their dismissals is "to
file an illegal dismissal case against PAL which cases are within the original and
exclusive jurisdiction of the Labor Arbiter' is ignorant. In requiring as a condition
for the issuance of a "temporary or permanent injunction" — "(4) That
complainant has no adequate remedy at law;" Article 218 (e) of the Labor Code
 clearly envisioned adequacy, and not plain availability of a remedy at law as an
alternative bar to the issuance of an injunction. An illegal dismissal suit (which
takes, on its expeditious side, three (3) years before it can be disposed of) while
available as a remedy under Article 217 (a) of the Labor Code, is certainly not an
"adequate; remedy at law, Ergo, it cannot as an alternative remedy, bar our
exercise of that injunctive power given us by Article 218 (e) of the Code.

xxx xxx xxx

Thus, Article 218 (e), as earlier discussed [which empowers this Commission "to
require the performance of a particular act" (such as our requiring respondent "to
cease and desist from enforcing" its whimsical memoranda of dismissals and
"instead to reinstate petitioners to their respective position held prior to their
subject dismissals") in "any labor dispute which, if not . . . performed forthwith,
may cause grave and irreparable damage to any party"] stands as the sole
"adequate remedy at law" for petitioners here.

Finally, the respondent, in its sixth argument claims that even if its acts of
dismissing petitioners "may be great, still the same is capable of compensation",
and that consequently, "injunction need not be issued where adequate
compensation at law could be obtained". Actually,
what respondent PAL argues here is that we need not interfere in its whimsical
dismissals of petitioners as, after all, it can pay the latter its backwages. . . .

But just the same, we have to stress that Article 279 does not speak alone of
backwages as an obtainable relief for illegal dismissal; that reinstatement as well
is the concern of said law, enforceable when necessary, through Article 218 (e) of
the Labor Code (without need of an illegal dismissal suit under Article 217 (a) of
the Code) if such whimsical and capricious act of illegal dismissal will "cause
grave or irreparable injury to a party". . . . .4

Hence, the present recourse.

Generally, injunction is a preservative remedy for the protection of one's substantive rights or
interest. It is not a cause of action in itself but merely a provisional remedy, an adjunct to a main
suit. It is resorted to only when there is a pressing necessity to avoid injurious consequences
which cannot be remedied under any standard of compensation. The application of the injunctive
writ rests upon the existence of an emergency or of a special reason before the main case be
regularly heard. The essential conditions for granting such temporary injunctive relief are that the
complaint alleges facts which appear to be sufficient to constitute a proper basis for injunction
and that on the entire showing from the contending parties, the injunction is reasonably
necessary to protect the legal rights of the plaintiff pending the litigation.5 Injunction is also a
special equitable relief granted only in cases where there is no plain, adequate and complete
remedy at law.6

In labor cases, Article 218 of the Labor Code empowers the NLRC —

(e) To enjoin or restrain any actual or threatened commission of any or all

prohibited or unlawful acts or to require the performance of a particular act in any
labor dispute which, if not restrained or performed forthwith, may cause grave or
irreparable damage to any party or render ineffectual any decision in favor of
such party; . . ." (Emphasis Ours)

Complementing the above-quoted provision, Sec. 1, Rule XI of the New Rules of Procedure of
the NLRC, pertinently provides as follows:
 Sec. 1. Injunction in Ordinary Labor Dispute. — A preliminary injunction or a
restraining order may be granted by the Commission through its divisions
pursuant to the provisions of paragraph (e) of Article 218 of the Labor Code, as
amended, when it is established on the bases of the sworn allegations in the
petition that the acts complained of, involving or arising from any labor dispute
before the Commission, which, if not restrained or performed forthwith, may
cause grave or irreparable damage to any party or render ineffectual any decision
in favor of such party.

xxx xxx xxx

The foregoing ancillary power may be exercised by the Labor Arbiters only as an
incident to the cases pending before them in order to preserve the rights of the
parties during the pendency of the case, but excluding labor disputes involving
strikes or lockout. 7 (Emphasis Ours)

From the foregoing provisions of law, the power of the NLRC to issue an injunctive writ originates
from "any labor dispute" upon application by a party thereof, which application if not granted
"may cause grave or irreparable damage to any party or render ineffectual any decision in favor
of such party."

The term "labor dispute" is defined as "any controversy or matter concerning terms and
conditions of employment or the association or representation of persons in negotiating, fixing.
maintaining, changing, or arranging the terms and conditions of employment regardless of
whether or not the disputants stand in the proximate relation of employers and employees." 8

The term "controversy" is likewise defined as "a litigated question; adversary proceeding in a
court of law; a civil action or suit, either at law or in equity; a justiciable dispute."9

A "justiciable controversy" is "one involving an active antagonistic assertion of a legal right on

one side and a denial thereof on the other concerning a real, and not a mere theoretical question
or issue." 10

Taking into account the foregoing definitions, it is an essential requirement that there must first
be a labor dispute between the contending parties before the labor arbiter. In the present case,
there is no labor dispute between the petitioner and private respondents as there has yet been
no complaint for illegal dismissal filed with the labor arbiter by the private respondents against
the petitioner.

The petition for injunction directly filed before the NLRC is in reality an action for illegal dismissal.
This is clear from the allegations in the petition which prays for; reinstatement of private
respondents; award of full backwages, moral and exemplary damages; and attorney's fees. As
such, the petition should have been filed with the labor arbiter who has the original and exclusive
jurisdiction to hear and decide the following cases involving all workers, whether agricultural or
non-agricultural:

(1) Unfair labor practice;

(2) Termination disputes;

(3) If accompanied with a claim for reinstatement, those cases

that workers may file involving wages, rates of pay, hours of work
and other terms and conditions of employment;
 (4) Claims for actual, moral, exemplary and other forms of
damages arising from the employer-employee relations;

(5) Cases arising from any violation of Article 264 of this Code,
including questions involving the legality of strikes and lockouts;
and

(6) Except claims for employees compensation, social security,

medicare and maternity benefits, all other claims arising from
employer- employee relations, including those of persons in
domestic or household service, involving an amount exceeding
five thousand pesos (P5,000.00), whether or not accompanied
with a claim for reinstatement. 11

The jurisdiction conferred by the foregoing legal provision to the labor arbiter is
both original and exclusive, meaning, no other officer or tribunal can take cognizance of, hear
and decide any of the cases therein enumerated. The only exceptions are where the Secretary of
Labor and Employment or the NLRC exercises the power of compulsory arbitration, or the parties
agree to submit the matter to voluntary arbitration pursuant to Article 263 (g) of the Labor Code,
the pertinent portions of which reads:

(g) When, in his opinion, there exists a labor dispute causing or likely to cause a
strike or lockout in an industry indispensable to the national interest, the
Secretary of Labor and Employment may assume jurisdiction over the dispute
and decide it or certify the same to the Commission for compulsory arbitration.
Such assumption or certification shall have the effect of automatically enjoining
the intended or impending strike or lockout as specified in the assumption or
certification order. If one has already taken place at the time of assumption or
certification, all striking or locked out employees shall immediately resume
operations and readmit all workers under the same terms and conditions
prevailing before the strike or lockout. The Secretary of Labor and Employment or
the Commission may seek the assistance of law enforcement agencies to ensure
compliance with this provision as well as with such orders as he may issue to
enforce the same.

On the other hand, the NLRC shall have exclusive appellate jurisdiction over all cases decided
by labor arbiters as provided in Article 217(b) of the Labor Code. In short, the jurisdiction of the
NLRC in illegal dismissal cases is appellate in nature and, therefore, it cannot entertain the
private respondents' petition for injunction which challenges the dismissal orders of petitioner.
Article 218(e) of the Labor Code does not provide blanket authority to the NLRC or any of its
divisions to issue writs of injunction, considering that Section 1 of Rule XI of the New Rules of
Procedure of the NLRC makes injunction only an ancillary remedy in ordinary labor disputes." 12

Thus, the NLRC exceeded its jurisdiction when it issued the assailed Order granting private
respondents' petition for injunction and ordering the petitioner to reinstate private respondents.

The argument of the NLRC in its assailed Order that to file an illegal dismissal suit with the labor
arbiter is not an "adequate" remedy since it takes three (3) years before it can be disposed of, is
patently erroneous. An "adequate" remedy at law has been defined as one "that affords relief
with reference to the matter in controversy, and which is appropriate to the particular
circumstances of the case." 13 It is a remedy which is equally, beneficial, speedy and sufficient
which will promptly relieve the petitioner from the injurious effects of the acts complained of. 14

Under the Labor Code, the ordinary and proper recourse of an illegally dismissed employee is to
file a complaint for illegal dismissal with the labor arbiter. 15 In the case at bar, private
respondents disregarded this rule and directly went to the NLRC through a petition for
injunction praying that petitioner be enjoined from enforcing its dismissal orders. In Lamb
vs. Phipps, 16 we ruled that if the remedy is specifically provided by law, it is presumed to
be adequate. Moreover, the preliminary mandatory injunction prayed for by the private
respondents in their petition before the NLRC can also be entertained by the labor arbiter
who, as shown earlier, has the ancillary power to issue preliminary injunctions or
restraining orders as an incident in the cases pending before him in order to preserve the
rights of the parties during the pendency of the case. 17

Furthermore, an examination of private respondents' petition for injunction reveals that it

has no basis since there is no showing of any urgency or irreparable injury which the
private respondents might suffer. An injury is considered irreparable if it is of such
constant and frequent recurrence that no fair and reasonable redress can be had therefor
in a court of law, 18 or where there is no standard by which their amount can be measured
with reasonable accuracy, that is, it is not susceptible of mathematical computation. It is
considered irreparable injury when it cannot be adequately compensated in damages due
to the nature of the injury itself or the nature of the right or property injured or when there
exists no certain pecuniary standard for the measurement of damages. 19

In the case at bar, the alleged injury which private respondents stand to suffer by reason
of their alleged illegal dismissal can be adequately compensated and therefore, there
exists no "irreparable injury," as defined above which would necessitate the issuance of
the injunction sought for. Article 279 of the Labor Code provides that an employee who is
unjustly dismissed from employment shall be entitled to reinstatement, without loss of
seniority rights and other privileges, and to the payment of full backwages, inclusive of
allowances, and to other benefits or their monetary equivalent computed from the time his
compensation was withheld from him up to the time of his actual reinstatement.

The ruling of the NLRC that the Supreme Court upheld its power to issue temporary
mandatory injunction orders in the case of Chemo-Technische Mfg., Inc. Employees
Union-DFA, et. al. vs. Chemo-Technische Mfg., Inc. et. al., docketed as G.R. No. 107031, is
misleading. As correctly argued by the petitioner, no such pronouncement was made by
this Court in said case. On January 25, 1993, we issued a Minute Resolution in the subject
case stating as follows:

Considering the allegations contained, the issues raised and the arguments
adduced in the petition for certiorari, as well as the comments of both
public and private respondents thereon, and the reply of the petitioners to
private respondent's motion to dismiss the petition, the Court Resolved to
DENY the same for being premature.

It is clear from the above resolution that we did not in anyway sustain the action of the
NLRC in issuing such temporary mandatory injunction but rather we dismissed the
petition as the NLRC had yet to rule upon the motion for reconsideration filed by
petitioner. Thus, the minute resolution denying the petition for being prematurely filed.

Finally, an injunction, as an extraordinary remedy, is not favored in labor law considering

that it generally has not proved to be an effective means of settling labor disputes. 20 It has
been the policy of the State to encourage the parties to use the non-judicial process of
negotiation and compromise, mediation and arbitration. 21 Thus, injunctions may be issued
only in cases of extreme necessity based on legal grounds clearly established, after due
consultations or hearing and when all efforts at conciliation are exhausted which factors,
however, are clearly absent in the present case.

WHEREFORE, the petition is hereby GRANTED. The assailed Orders dated April 3, 1995
and May 31, 1995, issued by the National Labor Relations Commission (First Division), in
NLRC NCR IC No. 000563-95, are hereby REVERSED and SET ASIDE. SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 156686 July 27, 2011

NEW SUN VALLEY HOMEOWNERS' ASSOCIATION, INC., Petitioner,

vs.
SANGGUNIANG BARANGAY, Barangay Sun Valley, Parañaque City, Roberto Guevarra IN
HIS CAPACITY AS Punong Barangay and MEMBERS OF THE SANGGUNIANG
BARANGAY, Respondents.

DECISION

LEONARDO-DE CASTRO, J.:

This is a petition for review on certiorari under Rule 45 of the Rules of Court against the
Decision1 dated October 16, 2002 in CA-G.R. CV No. 65559 and the Resolution2 dated January
17, 2003, both of the Court of Appeals.

The facts are as follows:

The Sangguniang Barangay of Barangay Sun Valley (the "BSV Sangguniang Barangay") issued
BSV Resolution No. 98-0963 on October 13, 1998, entitled "Directing the New Sun Valley
Homeowners Association to Open Rosemallow and Aster Streets to Vehicular and Pedestrian
Traffic," the pertinent portions of which read as follows:

NOW, THEREFORE, be it resolved as it is hereby resolved by the Sangguniang Barangay in

session assembled that –

1. Pursuant to its power and authority under the Local Government Code of 1991 (Rep.
Act No. 7160), the New Sun Valley Homeowners Association (NSVHA) is hereby directed
to open Rosemallow and Aster Sts. to vehicular (private cars only) and pedestrian traffic
at all hours daily except from 11 p.m. to 5 a.m. at which time the said streets may be
closed for the sake of the security of the residents therein.

2. The Barangay government take steps to address the security concerns of the
residents of the area concerned, including the possible assignment of a barangay tanod
or traffic enforcer therein, within the limits of the authority and financial capability of the
Barangay.

3. This Resolution shall become executory within 72 hours upon receipt hereof by the
Association or any of its members.4

The New Sun Valley Homeowners Association, Inc. (NSVHAI), represented by its
President, Marita Cortez, filed a Petition5 for a "Writ of Preliminary Injunction/Permanent
Injunction with prayer for issuance of TRO" with the Regional Trial Court (RTC) of
Parañaque City. This was docketed as Civil Case No. 98-0420. NSVHAI claimed therein
that the implementation of BSV Resolution No. 98-096 would "cause grave injustice and
irreparable injury" as "[the] affected homeowners acquired their properties for strictly
residential purposes";6 that the subdivision is a place that the homeowners envisioned
would provide them privacy and "a peaceful neighborhood, free from the hassles of
public places";7 and that the passage of the Resolution would destroy the character of the
 subdivision. NSVHAI averred that contrary to what was stated in the BSV Resolution, the
opening of the gates of the subdivision would not in any manner ease the traffic
congestion in the area, and that there were alternative routes available. According to
NSVHAI, the opening of the proposed route to all kinds of vehicles would result in
contributing to the traffic build-up on Doña Soledad Avenue, and that instead of easing
the traffic flow, it would generate a heavier volume of vehicles in an already congested
choke point. NSVHAI went on to state that a deterioration of the peace and order
condition inside the subdivision would be inevitable; that the maintenance of peace and
order in the residential area was one of the reasons why entry and exit to the subdivision
was regulated by the Association and why the passing through of vehicles was controlled
and limited; and that criminal elements would take advantage of the opening to public
use of the roads in question.8

NSVHAI further contested the BSV Resolution by submitting the following arguments to
the RTC:

12. The road network inside the subdivision and drainage system is not designed to
withstand the entry of a heavy volume of vehicles especially delivery vans and trucks.
Thus, destruction of the roads and drainage system will result. The safety, health and
well-being of the residents will face continuous danger to their detriment and prejudice;

13. When the residents bought their residential properties, they also paid proportionately
for the roads and the park in then subdivision. They have therefore an existing equity on
these roads. To open the roads to public use is a violation of the rights and interests to a
secure, peaceful and healthful environment;

14. Aside from the availability of a better route to be opened, there are other ways to
ease traffic flow. The continuous presence of traffic enforcers on all identified traffic
choke points will prevent snarls which impede smooth travel. The strict enforcement of
traffic rules and regulations should be done;

15. There are a lot of undisciplined drivers of tricycles, jeepneys, trucks and delivery
[vans], which contribute to the traffic congestion. The barangay should require these
drivers to observe road courtesy and obedience to traffic rules[.]9

Executive Judge Helen Bautista-Ricafort of the RTC issued a Temporary Restraining

Order10 (TRO) in Civil Case No. 98-0420 on October 30, 1998. Said Order provides:

Acting on the Application for Writ of Preliminary Injunction/ Permanent Injunction with Prayer for
Issuance of a Temporary Restraining Order, filed by plaintiff and considering that there is
extreme urgency, such that unless the same is issued, plaintiff would suffer grave injustice and/or
irreparable injury, let a Temporary Restraining Order issue directing the Sangguniang Barangay
as represented by Punong Barangay Roberto Guevarra to cease and desist from the
implementation of Resolution No. 98-096 or otherwise maintain the status quo until further
Orders of this Court.

This Temporary Restraining Order shall be effective for seventy two (72) hours from issuance
hereof, unless extended by another Order of this Court.

Let this case be set for special raffle and conference on November 3, 1998 at 10:30 in the
morning.

On November 3, 1998, the RTC issued another Order11 stating that, by agreement of the parties,
the status quo shall be maintained for seventeen (17) more days, and that the case was set for
hearing on the prayer for the issuance of a writ of preliminary injunction on November 20, 1998 at
8:30 a.m.
NSVHAI submitted an Amended Petition12 on November 13, 1998, at about 11:10 a.m., wherein
it claimed that the BSV Sangguniang Barangay had no jurisdiction over the opening of
Rosemallow and Aster Streets (the "subject roads"). NSVHAI likewise attached to its Amended
Petition its Position Paper13 dated July 21, 1998, which set forth its objection to the opening of
the subject roads for public use and argued that a Barangay Resolution cannot validly cause the
opening of the subject roads because under the law, an ordinance is required to effect such an
act.14

The BSV Sangguniang Barangay filed its Motion to Dismiss15 likewise on November 13, 1998.
The copy provided by petitioner to the Court indicates the time of receipt by NSVHAI as 11:00
a.m.16

The RTC heard the case on November 20, 1998, as scheduled, and thereafter submitted the
matter for decision.17 On the same date, the RTC issued the following Order18:

Acting on the prayer for the issuance of a writ of preliminary injunction filed by petitioner, it
appearing that petitioner may suffer grave injustice or irreparable injury, let a writ of preliminary
injunction issue prohibiting the Sangguniang Barangay represented by Punong Barangay
Roberto Guevarra from implementing Resolution no. 98-096 until further orders from this Court.

Petitioner is directed to file a bond in the amount of ONE HUNDRED THOUSAND (₱100,000.00)
PESOS (sic) to answer for damages to defendants in the event the Court finds petitioner is not
entitled to said injunction.

The BSV Sangguniang Barangay filed on December 4, 1998 a Motion for Reconsideration and to
Dissolve Preliminary Injunction (with Memorandum of Authorities).19

NSVHAI then filed an Urgent Ex-Parte Motion to Expunge on December 10, 1998, moving to
declare the above motion of the BSV Sangguniang Barangay as a mere scrap of paper for being
filed out of time and for failure to serve a copy thereof to the counsel of petitioner.

The RTC subsequently dismissed the case in an Order20 dated August 17, 1999, stating as
follows:

Defendant Barangay Sun Valley moves to dismiss the instant case on the grounds that the
complaint states no cause of action and the court has no jurisdiction over the subject matter. In
summary, defendant alleges that the subject streets Aster and Rosemallow inside Sun Valley
Subdivision are owned by the local government. Such streets have long been part of the public
domain and beyond the commerce of man. In support of this, defendant cited the case of White
Plains Association, Inc. vs. Legaspi, 193 SCRA 765 wherein it was held that road lots of
subdivisions constitute a part of the mandatory open space reserved for public use; ownership of
which is automatically vested in the Republic of the Philippines although it is still registered in the
name of the developer/owner, its donation to the government is a mere formality." The power or
authority to close or open the said streets is vested in the local government units and not on
homeowner’s associations, pursuant to Section 21 of the local Government Code (RA 7160)
quoted as follows: "Section 21. Closure and Opening of Roads. (a) A local government unit may,
pursuant to an ordinance, permanently or temporarily close or open any local road, alley, park, or
square falling within its jurisdiction x x x." In view thereof, Resolution No. 98-096 was passed by
the Sangguniang Barangay. Hence there is no right whatsoever on the part of Plaintiff NSVHA
entitled to the protection of the law. Further, defendant contends that petitioner failed to exhaust
administrative remedies as ordained in Sections 32 and 57 of the Local Government Code giving
the city mayor the supervisory power, and the power of review by the Sangguniang Panlungsod,
respectively.

No opposition to the motion to dismiss was filed by the Plaintiff.

Same defendant seeks to reconsider the order granting the issuance of the writ of preliminary
injunction alleging that there is a pending motion to dismiss and Plaintiff has not been able to
establish an actually existing right.

Plaintiff has not filed an opposition thereto, instead it filed an urgent ex-parte motion to expunge
the motion for reconsideration on the ground that its counsel has not been furnished with a copy
of the motion for reconsideration, but the record shows that Maria Cortez (plaintiff’s
representative) has received a copy of said motion.

After considering the arguments of the parties in their respective pleadings, this court hereby
resolves as follows:

1. The "Motion for Reconsideration" and the "Urgent Ex-parte Motion to Expunge (motion
for reconsideration)" are Denied being devoid of merit; and

2. The "Motion to Dismiss" is hereby Granted for failure of the plaintiff to exhaust the
administrative remedies under Sections 32 and 57 of the Local Government Code.

WHEREFORE, let this case be as it is hereby ordered Dismissed. The writ of preliminary
injunction is hereby lifted.21

NSVHAI filed a Motion for Reconsideration22 of the above-quoted Order but this was denied by
the RTC for lack of merit in an Order23 dated September 21, 1999.

NSVHAI raised the matter to the Court of Appeals and the case was docketed as CA-G.R. CV
No. 65559. NSVHAI alleged that "despite the lack of the required hearing" 24 and without any
order requiring it to submit its Comment/Opposition to the BSV Sangguniang Barangay’s Motion
to Dismiss or that of submitting said Motion for resolution, Judge Bautista-Ricafort issued an
Order which, to NSVHAI’s complete surprise, granted the Motion. NSVHAI argued that the RTC
gravely erred in taking cognizance of, and thereafter ruling on, said Motion and refusing to
exercise jurisdiction over the subject matter of Civil Case No. 98-0420. Petitioner likewise argued
that the RTC committed serious errors which, if not corrected, would cause grave or irreparable
injury to petitioner and cause a violation of law.25

The BSV Sangguniang Barangay, Roberto Guevarra in his capacity as Punong Barangay, and
members of the Sangguniang Barangay (hereinafter, "respondents"), in their Appellees’ Brief,
argued as follows:

THE TRIAL COURT DID NOT ERR IN GRANTING DEFENDANTS-APPELLEES’

MOTION TO DISMISS DUE TO LACK OF CAUSE OF ACTION AND JURISPRUDENCE
OVER THE SUBJECT MATTER AND APPELLANT’S FAILURE TO EXHAUST
ADMINISTRATIVE REMEDIES. AS NOTED BY THE COURT, NO OPPOSITION TO
THE MOTION TO DISMISS WAS EVER FILED BY APPELLANT.

II

THE TRIAL COURT’S DISMISSAL OF THE ACTION ASSAILING ITS SUBJECT-

MATTER, BARANGAY RESOLUTION NO. 98-096, CONSISTING OF A DIRECTIVE OF
AN LGU TO A DEFIANT PRIVATE ORGANIZATION WITHIN ITS JURISDICTION, IS
JUDICIAL RECOGNITION OF THE SOLE COMPETENCE AND WISE DISCRETION OF
THE BARANGAY OVER A LOCAL TRAFFIC PROBLEM.

III
 THE TRIAL COURT DID NOT COMMIT ANY SERIOUS ERROR, PROCEDURAL OR
SUBSTANTIVE, AS FOUND BY THE COURT A QUO. IT IS APPELLANT THAT HAS
COMMITTED THE ERROR OF NOT EXHAUSTING ADMINISTRATIVE REMEDIES.
HENCE, NO GRAVE OR IRREPARABLE INJURY CAN BE CAUSED TO APPELLANT
FOR IT HAS NO RIGHT TO PROTECT.26

Respondents claimed that Barangay Resolution No. 98-096 was simply a directive to petitioner,
"a private aggrupation of some self-seeking homeowners,"27 and was just a measure of internal
policy among residents; that the opening of roads for traffic reasons was "within the sole
competence of the barangay to determine";28 and the Mayor could have chosen, as it was within
his power to do so, to cause the demolition of the gates, which were illegally built by petitioner
and therefore were obstructions on the road, even without a Barangay resolution. Respondents
likewise claimed that the BSV’s action could be considered a political question, which should be
essentially withdrawn from judicial cognizance, and constitutional law doctrine provides that the
courts would not interfere with political issues unless grave abuse of discretion is shown, of
which there was none on the part of the Barangay. Respondents argued that petitioner did not
have any actual legal right entitled to the protection of the law.29

Respondents attached to their Appellees’ Brief six documents, labeled as Annexes "2" to "7," all
stamped "Certified True Copy" by a certain Roman E. Loreto, Legal Officer II of Legal
Department.30 The detailed information contained in each of the documents that comprise
respondents’ Annexes "2" to "7" is copied below:

1. 1st Indorsement31 from the Office of the Mayor of Parañaque dated May 20, 1988, signed by
Luzviminda A. Concepcion, Administrative Officer II, stating as follows:

Respectfully indorsed to Atty. Antonio G. Cruz, Municipal Attorney, of this municipality the herein
attached "Original Copies of Transfer Certificate of Title for Sun Valley Open Space and Road
Lots" with TCT Nos. 133552, 119836, and 122443 for your appropriate actions.

2. Letter32 dated December 27, 1990 from Francisco B. Jose, Jr., Municipal Attorney of
Parañaque, addressed to the Municipal Council Secretary, which reads:

This has reference to your request dated December 18, 1990 relative to the letter of inquiry of the
Barangay Captain of Barangay Sun Valley dated December 13, 1990.

We wish to inform you that based on the available records of our office the open space and road
lots of Sun Valley Subdivision is already owned by the Municipal Government of Parañaque as
evidenced by TCT NOS. 133552, 119836, and 122443. Copies of which are hereto attached for
your ready reference.

Considering that the Municipality of Parañaque is the registered owner of the road lots of Sun
Valley Subdivision, we are of the opinion that the roads become public in use and ownership,
and therefore, use of the roads by persons other than residents of the Subdivision can no longer
be curtailed. However, should the Municipal Government decides to delegate its right to regulate
the use of the said roads to the Sun Valley Homeowner’s Association or Sun Valley Barangay
Council, such right may be exercise[d] by said association or council.

3. Certification33 dated October 8, 1990 issued by Francisco B. Jose, Jr. under the letterhead of
the Office of the Municipal Attorney of Parañaque, which reads:

This is to certify that based on the available records of this Office, the open space and road lots
of Sun Valley Subdivision has been donated and now owned by the Municipality of Paranaque,
as evidenced by TCT Nos. 133552, 119836, and 122443 copies of which are hereto attached.
This certification is being issued upon the request of Mr. Mario Cortez, President of Sun Valley
Homeowners Association.

4. Certification34 dated June 13, 1994, again signed by Francisco B. Jose, Jr., of the Office of the
Municipal Attorney, providing as follows:

This is to certify that based on the available records of this Office, the only road lots in Sun Valley
Subdivision titled in the name of the Municipality of Parañaque are those covered by Transfer
Certificates of Title Nos. 133552 and 122443.

This certification is being issued upon the request of Coun. Manuel T. De Guia.

5. Certification35 dated March 2, 1995 issued by Rodolfo O. Alora, OIC, Asst. Municipal Legal
Officer, which reads:

This is to certify that based on the available records of this Office, the open space within Sun
Valley Subdivision has already been donated to the Municipality as evidenced by Transfer
Certificate of Title No. 119836, copy of which is hereto attached.

This certification is being issued upon the request of Atty. Rex G. Rico.

6. Certification36 dated October 26, 1998 issued by Ma. Riza Pureza Manalese, Legal
Researcher, Office of the Municipal Attorney, Parañaque City, which reads:

This is to certify that based on the available records of this Office, road lots of Sun Valley
Subdivision have already been donated to the Municipality of Paranaque as evidenced by TCT
NO. 133552, 119836, and 122443.

This certification is being issued upon the request of MR. WILLIAM UY.

The Court of Appeals issued a Decision dated October 16, 2002 denying the appeal and
affirming the Orders of the RTC dated August 17, 1999 and September 21, 1999. The Court of
Appeals likewise denied NSVHAI’s Motion for Partial Reconsideration in its Resolution
promulgated on January 17, 2003, stating that after a thorough study of the Motion for
Reconsideration, it found no sufficient reason to deviate from its findings and conclusion reached
in its decision.

Thus, NSVHAI (hereinafter, "petitioner") went to this Court.

Arguments of Petitioner

Petitioner alleges that the decision of the Court of Appeals was based on "facts that [were]
outside of the original Petition and Amended Petition and on supposed findings of facts that are
not even evidence offered before the court a quo."37 Petitioner likewise alleges that the facts
used by the Court of Appeals in dismissing the case were contrary to the records of Civil Case
No. 98-0420.

Petitioner lists the following as its Questions of Law:

In sustaining the dismissal of Civil Case No. 98-0420, the Honorable Court of Appeals
sanctioned the departure of the Regional Trial Court from the accepted and usual course of
judicial proceedings
 B

Whether or not the issuance of the Resolution promulgated January 17, 2003 and the Decision
promulgated October 16, 2002 by the Former 4th Division and the 4th Division of the Court of
Appeals sustaining the validity of dismissal of Civil Case No. 98-0420 is not in accord with law or
with the applicable decisions of this Honorable Supreme Court

Whether or not the Honorable Court of Appeals, with due respect, departed from the accepted
and usual course of judicial proceedings by making findings of fact not supported by evidence of
record38

Petitioner avers that the hearing for the respondents’ Motion to Dismiss was set on November
20, 1998, without indication as to time and that during the hearing on such date, counsel for
respondents moved that their Motion to Dismiss be heard over the objection of counsel for
petitioner, who explained that there was an urgency in ruling on the prayer for the issuance of a
writ of preliminary injunction in view of the expiration of the temporary restraining order (TRO).39

Petitioner quotes the transcript of stenographic notes (TSN) from the November 20, 1998 hearing
before the RTC in the following manner:

Atty. Herrera:

Then, Your Honor, I files [sic] a motion petitioning to dismiss this instant case, which should be
resolved first before hearing this case.

Atty. Nuñez:

Your Honor, please, with due respect to the opposing counsel, the hearing today is supposed to
be on the presentation of petitioner’s evidence in support of its prayer for preliminary injunction.
In connection with the amended complaint, I guess it is a matter of right to amend its pleading.
What happened here, the amended petition was filed before this Honorable Court on November
13 at 11:10 a.m. but I think the motion to dismiss was filed by the respondent on November 13 at
11:20 a.m.. Therefore, it is the right of the petitioner insofar as the case is concerned.

And therefore, this Court should proceed with the hearing on the preliminary injunction instead of
entertaining this matter. The temporary restraining order will expire today and we have the right
to be heard.

Court:

We will proceed first with the hearing (referring to the scheduled hearing of the prayer for the
issuance of the writ of preliminary injunction). (Transcript of Stenographic Notes, November 20,
1998) (Underscoring and explanation petitioner’s.)40

Petitioner claims that the RTC proceeded to hear the prayer for the issuance of a preliminary
injunction and no hearing was conducted on the Motion to Dismiss. Petitioner reiterates its earlier
claim that it did not receive an order requiring it to submit its Comment/Opposition to the Motion
to Dismiss or informing it that said Motion had been submitted for resolution.41

Petitioner alleges that the dismissal of Civil Case No. 98-0420 arose from the grant of
respondents’ Motion to Dismiss. Petitioner claims that it filed its Amended Petition on November
13, 1998 at 11:10 a.m., or before respondents served any responsive pleading, or before they
had filed their Motion to Dismiss on the same date at about 11:20 a.m.42 Petitioner avers that the
filing of said Amended Petition was a matter of right under Section 2, Rule 10 of the 1997 Rules
of Civil Procedure, and had the effect of superseding the original petition dated October 28,
1998. Petitioner concludes that the Motion to Dismiss was therefore directed against a non-
existing Petition.43

Petitioner argues that the RTC’s ruling on the Motion to Dismiss is contrary to procedural law
because no hearing was conducted on said Motion to Dismiss; that said motion violated Section
5, Rule 10 of the 1997 Rules of Civil Procedure for failing to set the time of hearing thereof; and
that instead of being resolved, said motion should have been declared as a mere scrap of
worthless paper.44

Petitioner claims that during the proceedings before the RTC on November 20, 1998, both
parties manifested that the Motion to Dismiss was never set for hearing, and that when Judge
Bautista-Ricafort said, "We will proceed first with the hearing,"45 she was referring to the
scheduled hearing of the prayer for the issuance of the writ of preliminary injunction. Petitioner
claims that it is crystal clear that it was deprived due process when a ruling was had on the
Motion to Dismiss despite the clear absence of a hearing. Petitioner concludes that the Court of
Appeals was manifestly mistaken when it ruled that due process was observed in the issuance of
the assailed Orders of Judge Bautista-Ricafort, despite the lack of opportunity to submit a
comment or opposition to the Motion to Dismiss and the lack of issuance of an order submitting
said motion for resolution. Petitioner alleges that the Court of Appeals sanctioned the ruling of
the RTC that violated both substantial and procedural law. 46

Moreover, petitioner avers that contrary to the ruling of the Court of Appeals, the RTC had
jurisdiction to hear and decide the Amended Petition, and the doctrine of exhaustion of
administrative remedies was not applicable. This is because, according to petitioner, such
doctrine "requires that were a remedy before an administrative agency is provided, relief must
first be sought from the administrative agencies prior to bringing an action before courts of
justice."47 Petitioner claims that when it filed Civil Case No. 98-08420, it did not have the luxury of
time to elevate the matter to the higher authorities under Sections 32 and 57 of the Local
Government Code. Petitioner alleges that the tenor of BSV Resolution No. 98-096 necessitated
the immediate filing of the injunction case on October 29, 1998, to forestall the prejudicial effect
of said resolution that was to take effect two days later. Thus, petitioner claims that it had no
other plain, speedy, and adequate remedy except to file the case.48

Anent the question of whether the Sangguniang Barangay should have passed an ordinance
instead of a resolution to open the subject roads, petitioner alleges that the Court of Appeals
should not have relied on respondents’ claim of ownership, as this led to the erroneous
conclusion that there was no need to pass an ordinance. Petitioner insists that the supposed
titles to the subject roads were never submitted to the RTC, and the respondents merely
attached certifications that the ownership of the subject roads was already vested in the City
Government of Parañaque City as Annexes to their Appellees’ Brief before the Court of Appeals.
Those annexes, according to petitioner, were not formally offered as evidence.49

Petitioner avers that the records of Civil Case No. 98-0420 clearly show that there was no proof
or evidence on record to support the findings of the Court of Appeals. This is because, allegedly,
the dismissal of said case was due to the grant of a motion to dismiss, and the case did not go to
trial to receive evidence.50 Petitioner avers that a motion to dismiss hypothetically admits the truth
of the facts alleged in the complaint.51 In adopting the annexes as basis for its findings of fact, the
Court of Appeals allegedly disregarded the rules on Evidence.

Petitioner raises the following grounds for the issuance by this Court of a temporary restraining
order and/or writ of preliminary injunction:
Sangguniang Barangay Resolution No. 98-096 is repugnant to the proprietary rights of the
affected homeowners who are members of petitioner NSVHAI, such rights undoubtedly protected
by the Constitution.

As there is no proof otherwise (except the baseless findings of fact by the Honorable Court of
Appeals) that the streets encompassed by the concerned subdivision, Sun Valley Subdivision,
are all private properties. As such, the residents of Sun Valley Subdivision have all the right to
regulate the roads and open spaces within their territorial jurisdiction.

This Honorable Supreme Court can take judicial knowledge that criminal activities such as
robbery and kidnappings are becoming daily fares in Philippine society. Residents have invested
their lifetime’s savings in private subdivision since subdivision living afford them privacy,
exclusivity and foremost of all, safety. Living in a subdivision has a premium and such premium
translates into a comparatively more expensive lot because of the safety, among others, that
subdivision lifestyle offers.

But, with the enactment and intended implementation of Sangguniang Barangay Resolution No.
98-096 to open Rosemallow and Aster Streets for public use, it is indubitable that, instead of
promoting the safety of resident of Sun Valley Subdivision, respondents are endangering the life
and property of the residents of the said subdivision as they will now be exposed to criminal and
lawless elements.

It is respectfully submitted that Sangguniang Barangay Resolution No. 98-096 has a place only in
an authoritarian government where proprietary rights and privacy are alien concepts. Lest it be
forgotten, ours is a democratic society and therefore, it should not be ruled in a manner befitting
of a despotic government.

Petitioner NSVHAI, in protection of the rights and interest of the residents of Sun Valley
Subdivision and in order to ensure that public officials will not abuse governmental powers and
use them in an oppressive and arbitrary manner, invokes the judicial power of this Honorable
Supreme Court and pray that a writ of preliminary injunction be issued and, after hearing, be
declared permanent. 52

A perusal of the documents attached by petitioner as Annexes revealed to the Court the
following, which were not discussed in the body of the petition:

1. A letter53 dated January 25, 2003 signed by Sonia G. Sison, President of NSVHAI, to Mayor
Joey P. Marquez, the pertinent portions of which provide:

We admit that we erred in not going to you directly because at that time, the NSVHA received the
letter-order of Brgy. Capt. Guevara two days before the effectivity of the order. Aside from this,
there was a long holiday (long weekend prior to November 1). Thus, the Board of Governors had
no other recourse but to seek a TRO and thereafter a permanent injunction.

We now would like to seek your assistance concerning this urgent problem. For your information
there are already two (2) gates in and out of Sun Valley Subdivision.

Under P.D. 957, the Homeowners Association is mandated to protect the interest of the
homeowners and residents especially in so far as it affects the security, comfort and the general
welfare of the homeowners.

Thank you and because of the urgency of the matter, we anticipate your prompt and favorable
action. (Emphasis ours.)
2. A letter54 signed by Parañaque City Mayor Joey Marquez dated January 27, 2003, addressed
to Mr. Roberto Guevara, Office of the Barangay Captain, Barangay Sun Valley, which reads in
part:

This refers to your intended implementation of Barangay Sun Valley Resolution No. 98-096
entitled, "A RESOLUTION DIRECTING THE NEW SUN VALLEY HOMEOWNERS
ASSOCIATION TO OPEN ROSEMALLOW AND ASTER STREETS TO VEHICULAR AND
PEDESTRIAN TRAFFIC."

In this regard and pursuant to the provisions of Sec. 32 of the Local Government Code of 1991
which vests upon the city mayor the right to exercise general supervision over component
barangays, to ensure that said barangays act within the scope of their prescribed powers and
functions, you are hereby directed to defer your implementation of the subject ordinance based
on the following grounds:

1. The roads subject of your resolution is a municipal road and not a barangay road;

2. The opening or closure of any local road may be undertaken by a local government
unit pursuant to an ordinance and not through a mere resolution as provided under Sec.
21 of the Local Government Code of 1991;

3. There is no more need to order the opening of the aforementioned roads in view of the
fact that Gelia and State Ave., have already been opened by the subdivision to the
general public to accommodate vehicular and pedestrian traffic in the area;

4. There is a need to conduct public hearings, as in fact we shall be conducting public

hearings, on the matter to enable us to arrive at an intelligent resolution of the issues
involved.

3. A letter55 dated January 31, 2003 addressed to Mayor Joey Marquez, signed by
counsel for respondents, wherein the latter wrote:

We regret to observe that all the reasons that you have cited in your letter as grounds for your
order of non-implementation of the Barangay Resolution have been passed upon and decided by
the Court of Appeals, which lately denied the NSVHA Motion for Reconsideration x x x.

xxxx

The Decision of the Court of Appeals is now the subject of an appeal taken by the NSVHA to the
Supreme Court. In deference to the high Court, you would do well to reconsider your order to the
Barangay and not pre-empt the high Court on its decision. x x x.

Arguments of Respondents

Respondents filed their Comment56 on July 17, 2003. They manifest that the petition is
substantially a reproduction of petitioner’s brief filed with the Court of Appeals, and consists of
almost identical issues which have already been ventilated and decided upon by the said court.

Respondents claim that the hearing held on November 20, 1998, as found by the Court of
Appeals, covered both the injunction and dismissal incidents, and that the motion to dismiss on
issues of jurisdiction was a prejudicial matter. Respondents confirm that the RTC said it will
proceed first with the hearing, but the lower court did not specify if the hearing was going to take
up the prayer for the issuance of preliminary injunction or the motion to dismiss. Respondents
further claim that by the end of the hearing, after Atty. Florencio R. Herrera’s manifestation on the
donated public roads, counsels for both parties were asked by the court if they were submitting,
and both of them answered in the affirmative. 57 Respondents aver that petitioner’s reply to its
charge of misleading the Court was an admission that counsel had tampered without authority
with the TSN, and that the phrase "referring to the scheduled hearing of the prayer for the
issuance of the writ of preliminary injunction"58 was said counsel’s own mere footnote.

Respondents allege that the issuance of the titles in favor of Parañaque over all the roads in Sun
Valley Subdivision was an official act by the land registration office of the City of Parañaque, and
was perfectly within the judicial notice of the Courts, pursuant to Rule 129, Section 1 of the Rules
of Court.59 Respondents likewise allege that the gates were earlier built illegally on the roads by
the Association, and while petitioner may lend a helping hand to the barangay, it cannot control
the latter’s discretion as to the wisdom of its traffic policies within the barangay. They maintain
that petitioner had no business putting up road blocks in the first place; that this matter is purely a
local government determination; and that it is even doubtful if courts would encroach upon this
autonomous determination for local constituents of the Barangay in deference to the doctrine of
separation of powers.

Respondents claim that since the subject matter of the case is a directive of the Barangay to the
petitioner, the requirement for an ordinance would not be necessary, as there was no legislative
determination in the Barangay resolution regarding what class of roads to open or what to close
by way of general policy. 60

Respondents contend that the Barangay Resolution was internal and temporary, passed to solve
a traffic problem. They propose a reason why petitioner allegedly wants to control the subject
roads, as follows:

The directive of the Barangay is certainly a declaration of an intention expressed by resolution on

complaints of residents for a convenient outlet of cars and pedestrians during certain hours of the
[day] or night. This need not be the subject of an ordinance. It is addressed to a special group of
residents, and not to the general community. It refers to particular roads and at certain hours
only, not to all the roads and at all hours.

Hence, the Barangay Resolutions (sic) is but temporary in character, being a solution to a
momentary traffic problem then visualized by the Barangay and encouraged by the MMDA.
There is no legal question involved that is of any concern to the NSVHA. The prevailing reason
why the NSVHA desires to control the roads is the monetary consideration it gains by its
unilateral requirement of car stickers and of substantial fees exacted from delivery vans and
trucks for bringing in cargo into the subdivision. And yet, the residents who, never gave their
consent to this activities (sic), are busy people and have merely tolerated this for a long time
now. This tolerance did not of course give legality to the illegal act. x x x.61

As regards petitioner’s argument that the BSV Sangguniang Barangay should have passed an
ordinance instead of a resolution, respondents present their counter-argument as follows:

Hence, even assuming for the sake of argument that a legal question exists on whether it be a
resolution or ordinance that should contain the Barangay directive, such an issue is of no
moment as plaintiff-appellant failed to exhaust the necessary administrative remedies before
resorting to court action, as found by the trial court and the Court of Appeals. Section 32, R.A.
7160 (Local Government Code of 1991) provides for a remedy from Barangay actions to the
Mayor under the latter’s power of general supervision.62

With regard to the Mayor’s involvement in this case, respondents have this to say:

The Mayor’s act of interfering in Barangay Sun Valley affairs stemmed out of a long-standing
political feud of the Mayor with the Punong Barangay. Its general supervision did not extend to
pure Barangay matters, which the Barangay would be x x x in a better position to determine.
Furthermore, the general supervision of the Mayor is limited to the overseeing authority that the
Barangays act within the scope of their prescribed powers and functions. Sadly, there is nothing
in this Mayor’s letter x x x that would as much as show a deviation by the Barangay Sun Valley
from any prescribed powers or function. The Mayor’s directive to the Barangay is of doubtful
legality.

It was mainly the mounting traffic problem progressively experienced through the years that
prompted the Barangay to resolve to open Rosemallow and Aster Streets in accordance with its
power under Section 21 of R.A. 7160 to "temporarily open or close any local road falling within its
jurisdiction". This Resolution x x x was decided upon after the Barangay Council made the
necessary investigation and conducted hearings in consultation with affected residents. In order
to maintain some kind of cordial relationship with the NSVHA, the Barangay by its resolution,
opted to give the NSVHA the chance to open the roads, which it earlier closed by means of
arbitrarily putting up steel gates without any apparent authority.63

Furthermore, respondents aver that the trial court and the appellate court have ruled that only a
local government unit (LGU), in this case the Barangay, can open or close roads, whether they
be public or private, in accordance with Section 21 of the Local Government Code. Respondents
contend that Metropolitan Manila Development Authority v. Bel-Air Village Association,
Inc.,64 wherein the Court discussed the power of LGUs to open and close roads, is substantially
in point.65

After the submission of the parties’ respective memoranda,66 this case was submitted for
decision.

The issues before us are:

1. Whether or not petitioner has a right to the protection of the law that would entitle it to
injunctive relief against the implementation of BSV Resolution No. 98-096; and

2. Whether or not petitioner failed to exhaust administrative remedies.

The Ruling of the Court

The Court of Appeals passed upon petitioner’s claims as to the validity of the dismissal in this
wise:

We do not agree. Although the Motion to Dismiss was filed on the same day, but after, the
Amended Petition was filed, the same cannot be considered as directed merely against the
original petition which Appellant already considers as non-existing. The records will show that
Appellant’s Amended Petition contained no material amendments to the original petition. Both
allege the same factual circumstances or events that constitute the Appellant’s cause of action
anent the Appellee’s alleged violation of Appellant’s propriety rights over the subdivision roads in
question. Corollarily, the allegations in Appellees’ Motion to Dismiss, as well as the grounds
therefore predicated on lack of cause of action and jurisdiction, could very well be considered as
likewise addressed to Appellant’s Amended Petition.

xxxx

It bears stressing that due process simply means giving every contending party the opportunity to
be heard and the court to consider every piece of evidence presented in their favor (Batangas
Laguna Tayabas Bus Company versus Benjamin Bitanga, G.R. Nos. 137934 & 137936[)]. In the
instant case, Appellant cannot be said to have been denied of due process. As borne by the
records, while Appellees’ Motion to Dismiss did not set the time for the hearing of the motion, the
day set therefore was the same date set for the hearing of Appellant’s prayer for the issuance of
a writ of preliminary injunction – that is, November 20, 1998, with the precise purpose of
presenting evidence in support of the motion to dismiss on the same said scheduled hearing date
and time when Appellant and its counsel would be present. Moreover, Appellant’s predication of
lack of due hearing is belied by the fact that the hearing held on November 20, 1999 took up not
only the matter of whether or not to grant the injunction, but also tackled the jurisdictional issue
raised in Appellees’ Motion to Dismiss, which issues were intertwined in both incidents. 67

We see no reason to depart from these findings by the Court of Appeals. Petitioner’s recourse in
questioning BSV Resolution No. 98-096 should have been with the Mayor of Parañaque City, as
clearly stated in Section 32 of the Local Government Code, which provides:

Section 32. City and Municipal Supervision over Their Respective Barangays. - The city or
municipality, through the city or municipal mayor concerned, shall exercise general supervision
over component barangays to ensure that said barangays act within the scope of their prescribed
powers and functions.

We do not see how petitioner’s act could qualify as an exception to the doctrine of exhaustion of
administrative remedies. We have emphasized the importance of applying this doctrine in a
recent case, wherein we held:

The doctrine of exhaustion of administrative remedies is a cornerstone of our judicial system.

The thrust of the rule is that courts must allow administrative agencies to carry out their functions
and discharge their responsibilities within the specialized areas of their respective competence.
The rationale for this doctrine is obvious. It entails lesser expenses and provides for the speedier
resolution of controversies. Comity and convenience also impel courts of justice to shy away
from a dispute until the system of administrative redress has been completed.68

It is the Mayor who can best review the Sangguniang Barangay’s actions to see if it acted within
the scope of its prescribed powers and functions. Indeed, this is a local problem to be resolved
within the local government. Thus, the Court of Appeals correctly found that the trial court
committed no reversible error in dismissing the case for petitioner’s failure to exhaust
administrative remedies, as the requirement under the Local Government Code that the closure
and opening of roads be made pursuant to an ordinance, instead of a resolution, is not applicable
in this case because the subject roads belong to the City Government of Parañaque.

Moreover, being the party asking for injunctive relief, the burden of proof was on petitioner to
show ownership over the subject roads. This, petitioner failed to do.

In civil cases, it is a basic rule that the party making allegations has the burden of proving them
by a preponderance of evidence. Parties must rely on the strength of their own evidence and not
upon the weakness of the defense offered by their opponent.69

Petitioner dared to question the barangay’s ownership over the subject roads when it should
have been the one to adduce evidence to support its broad claims of exclusivity and privacy.
Petitioner did not submit an iota of proof to support its acts of ownership, which, as pointed out
by respondents, consisted of closing the subject roads that belonged to the then Municipality of
Parañaque and were already being used by the public, limiting their use exclusively to the
subdivision’s homeowners, and collecting fees from delivery vans that would pass through the
gates that they themselves had built. It is petitioner’s authority to put up the road blocks in the
first place that becomes highly questionable absent any proof of ownership.

On the other hand, the local government unit’s power to close and open roads within its
jurisdiction is clear under the Local Government Code, Section 21 of which provides:

Section 21. Closure and Opening of Roads. – (a) A local government unit may, pursuant to an
ordinance, permanently or temporarily close or open any local road, alley, park, or square falling
within its jurisdiction: Provided, however, That in case of permanent closure, such ordinance
must be approved by at least two-thirds (2/3) of all the members of the sanggunian, and when
necessary, an adequate substitute for the public facility that is subject to closure is provided.

We quote with approval the ruling of the Court of Appeals in this regard, as follows:

Contrary, however, to Appellant’s position, the above-quoted provision, which requires the
passage of an ordinance by a local government unit to effect the opening of a local road, can
have no applicability to the instant case since the subdivision road lots sought to be opened to
decongest traffic in the area - namely Rosemallow and Aster Streets – have already been
donated by the Sun Valley Subdivision to, and the titles thereto already issued in the name of,
the City Government of Parañaque since the year 1964 (Annexes "2" to "7" of Appellees’ Brief).
This fact has not even been denied by the Appellant in the proceedings below nor in the present
recourse. Having been already donated or turned over to the City Government of Parañaque, the
road lots in question have since then taken the nature of public roads which are withdrawn from
the commerce of man, and hence placed beyond the private rights or claims of herein Appellant.
Accordingly, the Appellant was not in the lawful exercise of its predicated rights when it built
obstructing structures closing the road lots in question to vehicular traffic for the use of the
general Public. Consequently, Appellees’ act of passing the disputed barangay resolution, the
implementation of which is sought to be restrained by Appellant, had for its purpose not the
opening of a private road but may be considered merely as a directive or reminder to the
Appellant to cause the opening of a public road which should rightfully be open for use to the
general public.70

Petitioner wants this Court to recognize the rights and interests of the residents of Sun Valley
Subdivision but it miserably failed to establish the legal basis, such as its ownership of the
subject roads, which entitles petitioner to the remedy prayed for. It even wants this Court to take
"judicial knowledge that criminal activities such as robbery and kidnappings are becoming daily
fares in Philippine society."71 This is absurd. The Rules of Court provide which matters constitute
judicial notice, to wit:

Rule 129
WHAT NEED NOT BE PROVED

SECTION 1. Judicial notice, when mandatory.—A court shall take judicial notice, without the
introduction of evidence, of the existence and territorial extent of states, their political history,
forms of government and symbols of nationality, the law of nations, the admiralty and maritime
courts of the world and their seals, the political constitution and history of the Philippines, the
official acts of the legislative, executive and judicial departments of the Philippines, the laws of
nature, the measure of time, and the geographical divisions.(1a) 1avv phi 1

The activities claimed by petitioner to be part of judicial knowledge are not found in the rule
quoted above and do not support its petition for injunctive relief in any way.

As petitioner has failed to establish that it has any right entitled to the protection of the law, and it
also failed to exhaust administrative remedies by applying for injunctive relief instead of going to
the Mayor as provided by the Local Government Code, the petition must be denied.

WHEREFORE, premises considered, the petition is hereby DENIED. The Court of Appeals’
DECISION dated October 16, 2002 and its RESOLUTION dated January 17, 2003 in CA-G.R.
CV No. 65559 are both AFFIRMED.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 169042 October 5, 2011

ERDITO QUARTO, Petitioner,

vs.
THE HONORABLE OMBUDSMAN SIMEON MARCELO, CHIEF SPECIAL PROSECUTOR
DENNIS VILLA IGNACIO, LUISITO M. TABLAN, RAUL B. BORILLO, and LUIS A.
GAYYA, Respondents.

DECISION

BRION, J.:

Before the Court is a petition for certiorari and mandamus1 filed by Erdito Quarto (petitioner)
assailing the Ombudsman’s January 7, 20042 and November 4, 20043 resolutions which granted
Luisito M. Tablan, Raul B. Borillo, and Luis A. Gayya (collectively, respondents) immunity from
prosecution, resulting in the respondents’ exclusion from the criminal informations filed before the
Sandiganbayan. The petitioner seeks to nullify the immunity granted to the respondents, and to
compel the Ombudsman to include them as accused in the informations for estafa through
falsification of public documents4 and for violation of Section 3(e), Republic Act (RA) No. 3019.5

FACTUAL ANTECEDENTS

The petitioner is the Chief of the Central Equipment and Spare Parts Division (CESPD),6 Bureau
of Equipment (BOE), Department of Public Works and Highways (DPWH), Port Area, Manila. As
CESPD Chief, he is also the Head of the Special Inspectorate Team (SIT) of the DPWH.7 The
respondents are members of the SIT.8

On January 9, 2002, DPWH Secretary Simeon Datumanong created a committee to investigate

alleged anomalous transactions involving the repairs and/or purchase of spare parts of DPWH
service vehicles in 2001.9 On January 17, 2002, the committee designated the DPWH Internal
Audit Service (IAS) as its Technical Working Group to conduct the actual investigation.10

In the course of its investigation, the DPWH-IAS11 learned that the emergency repairs and/or
purchase of spare parts of DPWH service vehicles basically undergo the following documentary
process:

I. Determination of repairs and/or spare parts needed

a. The end-user requesting repair brings the service vehicle to the Motorpool Section,
CESPD for initial inspection and preparation of Job Order; and

b. Based on the Job Order, the SIT conducts a pre-repair inspection (to determine the
necessity of repair and whether the repair is emergency in nature) and prepares a Pre-
Repair Inspection Report, with a recommendation for its approval by the CESPD Chief.

II. Preparation and Approval of Requisition for Supplies and/or Equipment with accompanying
documents (Job Order and Pre-Inspection Report)
 a. The Procurement Section, Administrative Manpower Management Service (AMMS)
prepares the Requisition for Supplies and Equipment (RSE), the Canvass Quotation of
three Suppliers, the Certificate of Emergency Purchase, and the Certificate of Fair Wear
and Tear;

b. The end-user signs the RSE with the recommending approval of the concerned head
of office; and

c. The AMMS Director approves the RSE.

III. Repair of Vehicles

a. The end-user selects the repair shop/auto supply from accredited establishments;

b. The selected repair shop/auto supply repairs the service vehicle and issues the
corresponding sales invoice and/or official receipt;

c. The end-user accepts the repair and executes a Certificate of Acceptance;

d. The SIT conducts a post-repair inspection (to check if the vehicle was repaired and
whether the repair conformed to specifications) and prepares a Post-Repair Inspection
Report, with a recommendation for its approval by the CESPD Chief. The Motorpool and
the end-user would prepare the Report of Waste Materials also for the signature of the
CESPD Chief; and

e. The Assets and Supply Management and Control Division recommends payment of
the expense/s incurred.

The processing of the payment of claims for reimbursement follows the above process.

Based on this procedure, the DPWH-IAS discovered that from March to December 2001, several
emergency repairs and/or purchase of spare parts of hundreds of DPWH service vehicles, which
were approved and paid by the government, did not actually take place, resulting in government
losses of approximately ₱143 million for this ten-month period alone.12

Thus, Atty. Irene D. Ofilada of the DPWH-IAS filed before the Office of the Ombudsman13 a
Complaint-Affidavit14 and a Supplemental Complaint-Affidavit15 charging several high-ranking
DPWH officials and employees – including the petitioner, the respondents, and other private
individuals who purportedly benefited from the anomalous transactions – with Plunder, Money
Laundering, Malversation, and violations of RA No. 3019 and the Administrative Code.16

Atty. Ofilada imputed the following acts to the petitioner:

With dishonesty and grave misconduct, [the petitioner] x x x approved four (4) job orders for [the]
repairs [and/or] purchase of spare parts of [the vehicle assigned to Atty. Ofilada,] noted the
certificate of urgency of said repairs [and/or] purchase[,] concurred with both the pre-repair and
post repair inspection reports thereon, participated in the accomplishment of the supporting
Requisition for Supplies and Equipment (RSE) x x x[,] and participated in the approval of the
disbursement voucher authorizing payment of said repairs as necessary and lawful [even if said
vehicle was never referred to the Motorpool Section, CESPD for repair].

The documents relating to [this vehicle] were filed within a period of one month (between
September to October 2001) [and] were used to authorize the payment of said non existent ghost
repairs to the damage and prejudice of the [DPWH.]17 (emphases ours)
On the other hand, Atty. Ofilada charged the respondents with the following:

With dishonesty and grave misconduct, [respondents] as members of the [SIT] xxx accomplished
and signed Pre-Repair Inspection and Post Repair Inspection Reports in support of the four job
orders [and made] it appear that the vehicle was inspected prior and after the alleged repair
[although they knew that the vehicle was never turned over for inspection]. The accomplishment
of the Pre-Repair and Post-Repair Inspection Report[s] led to the preparation of the Request for
Supplies and Equipment which was the basis of the preparation of the disbursement vouchers
ultimately authorizing the payment of the said repairs thru reimbursement scheme to the damage
and prejudice of the DPWH.

x x x the [P]re-[R]epair and [P]ost-[R]epair [I]nspection [R]eports of the [SIT] xxx are fictitious and
falsified as no actual inspection could have transpired[.]18 (emphasis ours)

The petitioner denied the allegations against him, claiming that he merely relied on his
subordinates when he signed the job orders and the inspection reports.19 In contrast, the
respondents admitted the existence of irregularities in the repairs and/or purchase of spare parts
of DPWH service vehicles, and offered to testify and to provide evidence against the DPWH
officials and employees involved in the anomaly in exchange for their immunity from prosecution.
The respondents submitted:

5.2 x x x since we assumed our duties as members of the SIT xxx, we observed that [the] DPWH
vehicles were being sent to the repair shop in violation of the prescribed guidelines governing the
emergency repair of a service vehicle. In most instances, service vehicles are immediately
brought to a car repair shop of the end-user’s choice without bringing it first to the [Motorpool
Section, CESPD, BOE] for the preparation of the required job order by [Gayya] of the Motorpool
Section and the pre-repair inspection to be conducted by the SIT. After the purported repairs are
done, SIT members are made to sign a post-repair inspection report which already includes a
typed-in recommendation for the payment of repairs, and the signature of the Head of the [SIT]
indicating his alleged concurrence with the findings of the SIT despite the absence of an actual
inspection. The post-repair inspection report is accompanied by the following attachments, to wit:
a) a falsified job order signed by the head of the [SIT] and the Chief of the Motorpool Section x x
x [and] e) an empty or falsified [p]re-repair inspection report[.]

5.3 Initially[,] we tried to curb the above anomalous practices being perpetrated by suppliers and
officials of the DPWH x x x [by making] known [our] objections to the questionable job orders for
the proposed repairs of DPWH service vehicles[,] thus:

a. On July, 9, 1999, [Tablan] wrote the Head of the SIT a memorandum x x x stating that
the job orders for [several identified vehicles] x x x violated the prohibition against
splitting of job orders x x x. [Tablan recommended for public bidding the proposed repairs
for the said vehicles].

b. In connection with the job orders involving [several identified vehicles] x x x Tablan and
Borillo wrote the Head of the SIT a Memorandum x x x recommending that the
whereabouts of the end-user be verified, and the service vehicle be re-inspected and/or
disposed of.

c. Since the July 9, 1999 Memorandum was returned to x x x Tablan without any action
being undertaken by the SIT Chief, [Tablan and Borillo] reiterated the recommendation
for the public bidding of the proposed repairs described therein[.]

6. In our attempts to perform our sworn duties, however, we incurred the displeasure of
the suppliers, the head of [SIT] and other officials of the DPWH who threatened various
administrative sanctions against us if we should not accede to their wishes. x x x
 7. In addition to the foregoing, there are other factors which conspired to prevent us from
properly performing our duties. For one, the DPWH processes an average of 3,000
repairs per calendar year. Given the staggering number and extent of repairs, including
the volume of paperwork, it was practically impossible for [us] to implement the rules
which proved too tedious under the circumstance. As such, a "short-cut" of the rules was
necessary to accommodate the demands of the end-user, the suppliers, our superiors,
and other executives of the DPWH. x x x

8. The anomalous practices of the DPWH executives and suppliers in the purported
repair of DPWH service vehicles were indeed more widespread and rampant in the year
2001. As a precautionary measure, we took the initiative of photocopying these sets of
falsified documents as they were presented to us before we affixed our respective
signatures thereon. We grouped these documents into Sets A and B[.]

xxxx

11. x x x That the service vehicle x x x has not been actually inspected by [Tablan and
Borillo] is attested to by the pre and post repair inspection reports initially bearing the
signature of the head of the SIT as concurring official without the required signatures of
Borillo and Tablan. More importantly, these DPWH officials did not bother, in a majority of
cases, to "cover their tracks" when they prepared and signed the pre and post repair
inspection reports on the same dates. Based on proper procedure, a post repair
inspection report is to be accomplished only after the preparation and approval of the Job
Order, pre-repair inspection report, RSE, Cash Invoice and Acceptance by the end-user.
In this case, the RSE, Cash Invoice and Certificate of Acceptance are dated much later
than the post-repair inspection report. Since xxx there was no actual pre-repair and post-
repair inspection conducted, the foregoing sample instances paved the way for the "ghost
repairs" of DPWH service vehicles, to the detriment and prejudice of the government.

12. Because of the anomalous transactions, the joke circulating around the DPWH is that
we are actually the directors of the DPWH since we are the "last to sign," so to speak.
That the signature[s] of the [respondent] SIT members are merely pro forma is all the
more pronounced in a sample set consisting of a number of pre-repair inspection reports
for a particular month in 2001. The pre-repair inspection reports of the service vehicles
indicated therein are empty of any findings and bear the signature of the head of the SIT
as concurring official. All the foregoing documents above detailed negate the convenient
excuse proffered by DPWH executives that they sign the documents only after the SIT
had inspected the service vehicle and prepared the pre and post repair inspection
reports.

xxxx

14.1 xxx the above examples are only a representative sampling of the extent of the
anomalous transactions involving DPWH service vehicles which can be considered
"ghost repairs." There are more instances wherein [we] are willing to testify to in
exchange for immunity from prosecution.20 (emphases ours)

After conducting preliminary investigation, the Ombudsman filed with the

Sandiganbayan21 several informations charging a number of DPWH officials and employees with
plunder,22 estafa through falsification of official/commercial documents and violation of Section
3(e), RA No. 3019. On the other hand, the Ombudsman granted the respondents’ request for
immunity in exchange for their testimonies and cooperation in the prosecution of the cases filed.

The petitioner initially filed a certiorari petition with the Sandiganbayan, questioning the
Ombudsman’s grant of immunity in the respondents’ favor. The Sandiganbayan, however,
dismissed the petition for lack of jurisdiction and advised the petitioner to instead question the
Ombudsman’s actions before this Court.23 Hence, this present petition.

THE PETITION

The petitioner argues that the Ombudsman should have included the respondents in the
informations since it was their inspection reports that actually paved the way for the commission
of the alleged irregularities.24 The petitioner asserts that the respondents’ criminal complicity
clearly appears since "no repair could have started" and "no payment for repairs, ghost or not,"
could have been made without the respondents’ pre-repair and post-repair inspection reports. By
excluding the respondents in the informations, the Ombudsman is engaged in "selective
prosecution" which is a clear case of grave abuse of discretion.

The petitioner claims that before the Ombudsman may avail of the respondents as state
witnesses, they must be included first in the informations filed with the court. Thereafter, the
Ombudsman can ask the court for their discharge so that they can be utilized as state witnesses
under the conditions laid down in Section 17, Rule 119 of the Rules of Court since the court has
the "sole province" to determine whether these conditions exist.

These conditions require, inter alia, that there should be "absolute necessity" for the testimony of
the proposed witness and that he/she should not appear to be the "most guilty." The petitioner
claims that the respondents failed to comply with these conditions as the Ombudsman’s
"evidence," which became the basis of the informations subsequently filed, shows that the
respondents’ testimony is not absolutely necessary; in fact, the manner of the respondents’
participation proves that they are the "most guilty" in the premises.

THE COMMENTS OF THE OMBUDSMAN AND THE RESPONDENTS

The Ombudsman counters that RA No. 6770 (the Ombudsman Act of 1989) expressly grants him
the power to grant immunity from prosecution to witnesses. Given this power, the Ombudsman
asserts that Section 17, Rule 119 of the Rules of Court, which presupposes that the witness is
originally included in the information, is inapplicable to the present case since the decision on
whom to prosecute is an executive, not a judicial, prerogative.25

The Ombudsman invokes this Court’s policy of non-interference in the Ombudsman’s exercise of
his discretion in matters involving his investigatory and prosecutorial powers.26 The petitioner’s
claim that the respondents are the "most guilty" is a matter of defense which the petitioner may
raise not in this proceeding, but in the trial proper.27

On the other hand, the respondents submit that the Ombudsman has ample discretion in
determining who should be included in the information on the basis of his finding of probable
cause. The courts can only interfere in the Ombudsman’s exercise of his discretion in case of a
clear showing of grave abuse of discretion, which the petitioner failed to establish.28

THE PETITIONER’S REPLY29

While conceding that the Ombudsman has the power and the discretion to grant immunity to the
respondents, the petitioner asserts that this power must be exercised within the confines of
Section 17, Rule 119 of the Rules of Court which requires, inter alia, that the proposed witness
must not appear to be the "most guilty." By ignoring this provision and extending immunity to the
respondents whose false reports ultimately led to the payment for supposed repairs, and who
are, thus, the "real culprits,"30 the Ombudsman gravely abused his discretion – a fatal defect
correctible by certiorari.
Amplifying on the respondents’ "guilt," the petitioner cites the DPWH’s decision in an
administrative case which the Civil Service Commission affirmed, finding the respondents guilty
of dishonesty and grave misconduct involving the same set of facts.31

OUR RULING

We dismiss the petition on two grounds: first, the petitioner did not avail of the remedies available
to him before filing this present petition; and, second, within the context of the Court’s policy of
non-interference with the Ombudsman’s exercise of his investigatory and prosecutory powers,
the petitioner failed to establish that the grant of immunity to the respondents was attended by
grave abuse of discretion.

I. The petitioner did not exhaust remedies available in the ordinary course of law

As extraordinary writs, both Sections 1 (certiorari) and 3 (mandamus), Rule 65 of the Rules of
Court require, as a pre-condition for these remedies, that there be no other plain, speedy and
adequate remedy in the ordinary course of law. In the present case, the petitioner has not shown
that he moved for a reconsideration of the assailed resolutions based substantially on the same
grounds stated in this present petition.32 Neither did the petitioner file a motion for the inclusion of
the respondents in the informations before filing the present petition.33 These are adequate
remedies that the petitioner chose to forego; he bypassed these remedies and proceeded to
seek recourse through the present petition.34

Similarly, the petitioner has not shown that he filed the present petition with this Court within the
sixty-day reglementary period35 from notice of the assailed Ombudsman’s resolutions. He did not
do so, of course, since he initially and erroneously filed a certiorari petition with the
Sandiganbayan. We remind the petitioner that the remedy from the Ombudsman’s orders or
resolutions in criminal cases is to file a petition for certiorari under Rule 6536 with this Court.37

The petition likewise fails even on the merits.

II. The respondents’ exclusion in the informations is grounded on the Ombudsman’s grant of
immunity

Mandamus is the proper remedy to compel the performance of a ministerial duty imposed by law
upon the respondent.38 In matters involving the exercise of judgment and discretion, mandamus
may only be resorted to, to compel the respondent to take action; it cannot be used to direct the
manner or the particular way discretion is to be exercised.39

In the exercise of his investigatory and prosecutorial powers, the Ombudsman is generally no
different from an ordinary prosecutor in determining who must be charged.40 He also enjoys the
same latitude of discretion in determining what constitutes sufficient evidence to support a finding
of probable cause (that must be established for the filing of an information in court)41 and the
degree of participation of those involved or the lack thereof. His findings and conclusions on
these matters are not ordinarily subject to review by the courts except when he gravely abuses
his discretion,42 i.e., when his action amounts to an evasion of a positive duty or a virtual refusal
to perform a duty enjoined by law, or when he acts outside the contemplation of law.43

If, on the basis of the same evidence, the Ombudsman arbitrarily excludes from an indictment
some individuals while impleading all others, the remedy of mandamus lies44 since he is duty-
bound, as a rule, to include in the information all persons who appear responsible for the offense
involved.45

Citing the cases of Guiao v. Figueroa46 and Castro, Jr., et al. v. Castañeda and Liceralde,47 the
petitioner argues for the inclusion of the respondents in the criminal informations, pointing out
that the respondents accomplished the inspection reports that allegedly set in motion the
documentary process in the repair of the DPWH vehicles; these reports led to the payment by
the government and the consequent losses.

In Guiao and Castro, we ruled that mandamus lies to compel a prosecutor who refuses (i) to
include in the information certain persons, whose participation in the commission of a crime
clearly appears, and (ii) to follow the proper procedure for the discharge of these persons in
order that they may be utilized as prosecution witnesses.

These cited cases, however, did not take place in the same setting as the present case as they
were actions by the public prosecutor, not by the Ombudsman. In the present case, the
Ombudsman granted the respondents immunity from prosecution pursuant to RA No. 6770 which
specifically empowers the Ombudsman to grant immunity "in any hearing, inquiry or proceeding
being conducted by the Ombudsman or under its authority, in the performance or in the
furtherance of its constitutional functions and statutory objectives." The pertinent provision –
Section 17 of this law – provides:

Sec. 17. Immunities. – x x x.

Under such terms and conditions as it may determine, taking into account the pertinent
provisions of the Rules of Court, the Ombudsman may grant immunity from criminal
prosecution to any person whose testimony or whose possession and production of documents
or other evidence may be necessary to determine the truth in any hearing, inquiry or proceeding
being conducted by the Ombudsman or under its authority, in the performance or in the
furtherance of its constitutional functions and statutory objectives. The immunity granted under
this and the immediately preceding paragraph shall not exempt the witness from criminal
prosecution for perjury or false testimony nor shall he be exempt from demotion or removal from
office. [emphasis ours]

To briefly outline the rationale for this provision, among the most important powers of the State is
the power to compel testimony from its residents; this power enables the government to secure
vital information necessary to carry out its myriad functions.48 This power though is not absolute.
The constitutionally-enshrined right against compulsory self-incrimination is a leading exception.
The state’s power to compel testimony and the production of a person’s private books and
papers run against a solid constitutional wall when the person under compulsion is himself
sought to be penalized. In balancing between state interests and individual rights in this situation,
the principles of free government favor the individual to whom the state must yield.49 1avvphi 1

A state response to the constitutional exception to its vast powers, especially in the field of
ordinary criminal prosecution and in law enforcement and administration, is the use of an
immunity statute.50 Immunity statutes seek a rational accommodation between the imperatives of
an individual’s constitutional right against self-incrimination51 (considered the fount from which all
statutes granting immunity emanate52) and the legitimate governmental interest in securing
testimony.53 By voluntarily offering to give information on the commission of a crime and to testify
against the culprits, a person opens himself to investigation and prosecution if he himself had
participated in the criminal act. To secure his testimony without exposing him to the risk of
prosecution, the law recognizes that the witness can be given immunity from prosecution.54 In
this manner, the state interest is satisfied while respecting the individual’s constitutional right
against self-incrimination.

III. Nature of the power to grant immunity

The power to grant immunity from prosecution is essentially a legislative prerogative.55 The
exclusive power of Congress to define crimes and their nature and to provide for their
punishment concomitantly carries the power to immunize certain persons from prosecution to
facilitate the attainment of state interests, among them, the solution and prosecution of crimes
with high political, social and economic impact.56 In the exercise of this power, Congress
possesses broad discretion and can lay down the conditions and the extent of the immunity to be
granted.57

Early on, legislations granting immunity from prosecution were few.58 However, their number
escalated with the increase of the need to secure vital information in the course and for purposes
of prosecution. These statutes59 considered not only the importance of the testimony sought, but
also the unique character of some offenses and of some situations where the criminal
participants themselves are in the best position to give useful testimony.60 RA No. 6770 or the
Ombudsman Act of 1989 was formulated along these lines and reasoning with the vision of
making the Ombudsman the protector of the people against inept, abusive and corrupt
government officers and employees.61 Congress saw it fit to grant the Ombudsman the power to
directly confer immunity to enable his office to effectively carry out its constitutional and statutory
mandate of ensuring effective accountability in the public service.62

IV. Considerations in the grant of immunity

While the legislature is the source of the power to grant immunity, the authority to implement is
lodged elsewhere. The authority to choose the individual to whom immunity would be granted is
a constituent part of the process and is essentially an executive function. Mapa, Jr. v.
Sandiganbayan63 is instructive on this point:

The decision to grant immunity from prosecution forms a constituent part of the prosecution
process. It is essentially a tactical decision to forego prosecution of a person for government to
achieve a higher objective. It is a deliberate renunciation of the right of the State to prosecute all
who appear to be guilty of having committed a crime. Its justification lies in the particular need of
the State to obtain the conviction of the more guilty criminals who, otherwise, will probably elude
the long arm of the law. Whether or not the delicate power should be exercised, who should be
extended the privilege, the timing of its grant, are questions addressed solely to the sound
judgment of the prosecution. The power to prosecute includes the right to determine who shall be
prosecuted and the corollary right to decide whom not to prosecute. In reviewing the exercise of
prosecutorial discretion in these areas, the jurisdiction of the respondent court is limited. For the
business of a court of justice is to be an impartial tribunal, and not to get involved with the
success or failure of the prosecution to prosecute. Every now and then, the prosecution may err
in the selection of its strategies, but such errors are not for neutral courts to rectify, any more
than courts should correct the blunders of the defense. [emphasis ours]

RA No. 6770 fully recognizes this prosecutory prerogative by empowering the Ombudsman to
grant immunity, subject to "such terms and conditions" as he may determine. The only textual
limitation imposed by law on this authority is the need to take "into account the pertinent
provisions of the Rules of Court," – i.e., Section 17, Rule 119 of the Rules of Court.64 This
provision requires that:

(a) There is absolute necessity for the testimony of the accused whose discharge is
requested;

(b) There is no other direct evidence available for the proper prosecution of the offense
committed, except the testimony of said accused;

(c) The testimony of said accused can be substantially corroborated in its material points;

(d) Said accused does not appear to be the most guilty; and

(e) Said accused has not at any time been convicted of any offense involving moral
turpitude.
This Rule is itself unique as, without detracting from the executive nature of the power to
prosecute and the power to grant immunity, it clarifies that in cases already filed with the
courts,65 the prosecution merely makes a proposal and initiates the process of granting immunity
to an accused-witness in order to utilize him as a witness against his co-accused.66 As we
explained in Webb v. De Leon67 in the context of the Witness Protection, Security and Benefit
Act:

The right to prosecute vests the prosecutor with a wide range of discretion — the discretion of
whether, what and whom to charge, the exercise of which depends on a smorgasbord of factors
which are best appreciated by prosecutors. We thus hold that it is not constitutionally
impermissible for Congress to enact R.A. No. 6981 vesting in the Department of Justice the
power to determine who can qualify as a witness in the program and who shall be granted
immunity from prosecution. Section 9 of Rule 119 does not support the proposition that the
power to choose who shall be a state witness is an inherent judicial prerogative. Under this
provision, the court is given the power to discharge a state witness only because it has already
acquired jurisdiction over the crime and the accused. The discharge of an accused is part of the
exercise of jurisdiction but is not a recognition of an inherent judicial function. [emphasis ours]

Thus, it is the trial court that determines whether the prosecution’s preliminary assessment of the
accused-witness’ qualifications to be a state witness satisfies the procedural norms.68 This
relationship is in reality a symbiotic one as the trial court, by the very nature of its role in the
administration of justice,69 largely exercises its prerogative based on the prosecutor’s findings
and evaluation. On this point, the Court’s pronouncement in the 1918 case of United States v.
Abanzado70 is still very much relevant:

A trial judge cannot be expected or required to inform himself with absolute certainty at the very
outset of the trial as to everything which may be developed in the course of the trial in regard to
the guilty participation of the accused in the commission of the crime charged in the complaint. If
that were practicable or possible there would be little need for the formality of a trial. He must rely
in large part upon the suggestions and the information furnished by the prosecuting officer in
coming to his conclusions as to the "necessity for the testimony of the accused whose discharge
is requested"; as to the availability or nonavailability of other direct or corroborative evidence; as
to which of the accused is "most guilty," and the like.

Notably, this cited case also observes that the Rules-provided guidelines are mere express
declarations of the conditions which the courts ought to have in mind in exercising their sound
discretion in granting the prosecution’s motion for the discharge of an accused.71 In other words,
these guidelines are necessarily implied in the discretion granted to the courts.

RA No. 6770 recognizes that these same principles should apply when the Ombudsman directly
grants immunity to a witness. The same consideration – to achieve the greater and higher
purpose of securing the conviction of the most guilty and the greatest number among the
accused72 – is involved whether the grant is secured by the public prosecutor with active court
intervention, or by the Ombudsman. If there is any distinction at all between the public prosecutor
and the Ombudsman in this endeavor, it is in the specificity of and the higher priority given by law
to the Ombudsman’s purpose and objective – to focus on offenses committed by public officers
and employees to ensure accountability in the public service. This accounts for the
Ombudsman’s unique power to grant immunity by itself and even prior to the filing of information
in court, a power that the public prosecutor himself generally does not enjoy.73

V. Extent of judicial review of a bestowed immunity

An immunity statute does not, and cannot, rule out a review by this Court of the Ombudsman’s
exercise of discretion. Like all other officials under our constitutional scheme of government, all
their acts must adhere to the Constitution.74 The parameters of our review, however, are narrow.
In the first place, what we review are executive acts of a constitutionally independent
Ombudsman.75 Also, we undertake the review given the underlying reality that this Court is not a
trier of facts. Since the determination of the requirements under Section 17, Rule 119 of the
Rules of Court is highly factual in nature, the Court must, thus, generally defer to the judgment of
the Ombudsman who is in a better position (than the Sandiganbayan or the defense) to know the
relative strength and/or weakness of the evidence presently in his possession and the kind, tenor
and source of testimony he needs to enable him to prove his case.76 It should not be forgotten,
too, that the grant of immunity effectively but conditionally results in the extinction of the criminal
liability the accused-witnesses might have incurred, as defined in the terms of the grant.77 This
point is no less important as the grant directly affects the individual and enforces his right against
self-incrimination. These dynamics should constantly remind us that we must tread softly, but not
any less critically, in our review of the Ombudsman’s grant of immunity.

From the point of view of the Court’s own operations, we are circumscribed by the nature of the
review powers granted to us under the Constitution and the Rules of Court. We rule on the basis
of a petition for certiorari under Rule 65 and address mainly the Ombudsman’s exercise of
discretion. Our room for intervention only occurs when a clear and grave abuse of the exercise of
discretion is shown. Necessarily, this limitation similarly reflects on the petitioner who comes to
us on the allegation of grave abuse of discretion; the petitioner himself is bound to clearly and
convincingly establish that the Ombudsman gravely abused his discretion in granting immunity in
order to fully establish his case.78

As a last observation, we note the unique wording of the grant of the power of immunity to the
Ombudsman. It is not without significance that the law encompassed (and appears to have
pointedly not separated) the consideration of Section 17, Rule 119 of the Rules of
Court within the broader context of "such terms and conditions as the Ombudsman may
determine." This deliberate statutory wording, to our mind, indicates the intent to define the role
of Section 17, Rule 119 in the Ombudsman’s exercise of discretion. It suggests a broad grant of
discretion that allows the Ombudsman’s consideration of factors other than those outlined under
Section 17, Rule 119; the wording creates the opening for the invocation, when proper, of the
constitutional and statutory intents behind the establishment of the Ombudsman.

Based on these considerations, we shall now proceed to determine whether the petitioner has
clearly and convincingly shown that the Ombudsman gravely abused his discretion in granting
immunity to the respondents.

Va. Absolute necessity for testimony of the respondents

Under the factual and legal situation before us, we find that the petitioner miserably failed to
clearly and convincingly establish that the Ombudsman gravely abused his discretion in granting
immunity to the respondents. While he claims that both conditions (a) and (d) of Section 17, Rule
119 of the Rules of Court are absent, we observe his utter lack of argument addressing the
"absolute necessity" of the respondents’ testimony. In fact, the petitioner simply concluded that
the requirement of "absolute necessity" does not exist based on the Ombudsman’s "evidence,"
without even attempting to explain how he arrived at this conclusion.

We note in this regard that the respondents’ proposed testimony tends to counteract the
petitioner’s personal defense of good faith (i.e., that he had no actual participation and merely
relied on his subordinates) in approving the job orders and in his concurrence with the inspection
reports. In their Joint Counter-Affidavit, the respondents narrated the accused DPWH
officials/employees’ flagrant disregard of the proper procedure and the guidelines in the repair of
DPWH service vehicles which culminated in losses to the government. Particularly telling is the
respondents’ statement that a number of pre-repair inspection reports for a particular month in
2001 bear the petitioner’s signature despite the fact that these reports are not supported by
findings from the respondents as SIT members.79 This kind of statement cannot but impact on
how the Ombudsman viewed the question of "absolute necessity" of the respondents’ testimony
since this testimony meets the defense of good faith head-on to prove the prosecution’s
allegations. Under these circumstances, we cannot preempt, foreclose, nor replace with our own
the Ombudsman’s position on this point as it is clearly not without basis.

Vb. The respondents do not appear to be the "most guilty"

Similarly, far from concluding that the respondents are the "most guilty," we find that the
circumstances surrounding the preparation of the inspection reports can significantly lessen the
degree of the respondents’ criminal complicity in defrauding the government. Again, this is a
matter that the Ombudsman, in the exercise of his discretion, could not have avoided when he
considered the grant of immunity to the respondents.

We note, too, that while the petitioner incessantly harped on the respondents’ role in the
preparation of the inspection reports, yet, as head of the SIT, he was eerily silent on the
circumstances surrounding this preparation, particularly on the respondents’ explanation that
they tried "to curb the anomalous practices"80 in the DPWH. We are aware, of course, that the
present petition merely questions the immunity granted to the respondents and their consequent
exclusion from the informations; it does not assail the finding of probable cause against the
petitioner himself. This current reality may explain the petitioner’s silence on the respondents’
assertions; the respondents’ allegations, too, still have to be proven during the trial. However,
these considerations are not sufficient to save the petitioner from the necessity of controverting
the respondents’ allegations, even for the limited purpose of the present petition, since his
counter-assertion on this basic ground (that the respondents bear the most guilt) is essential and
critical to the viability of his petition.

In considering the respondents’ possible degree of guilt, we are keenly aware of their admission
that they resorted to a "short-cut"81 in the procedure to be observed in the repairs and/or
purchase of emergency parts of DPWH service vehicles. To our mind, however, this admission
does not necessarily result in making the respondents the "most guilty" in the premises; not even
a semblance of being the "most guilty" can be deduced therefrom.

In sum, the character of the respondents’ involvement vis-à-vis the crimes filed against the
DPWH officials/employees, coupled with the substance of the respondents’ disclosures, compels
this Court to take a dim view of the position that the Ombudsman gravely abused his discretion in
granting immunity to the respondents. The better view is that the Ombudsman simply saw the
higher value of utilizing the respondents themselves as witnesses instead of prosecuting them in
order to fully establish and strengthen its case against those mainly responsible for the criminal
act, as indicated by the available evidence. 1avvphi1

VI. The respondents’ administrative liability has no bearing at all on the immunity granted to the
respondents

The fact that the respondents had previously been found administratively liable, based on the
same set of facts, does not necessarily make them the "most guilty." An administrative case is
altogether different from a criminal case, such that the disposition in the former does not
necessarily result in the same disposition for the latter, although both may arise from the same
set of facts.82 The most that we can read from the finding of liability is that the respondents have
been found to be administratively guilty by substantial evidence – the quantum of proof required
in an administrative proceeding. The requirement of the Revised Rules of Criminal Procedure
(which RA No. 6770 adopted by reference) that the proposed witness should not appear to be
the "most guilty" is obviously in line with the character83 and purpose84 of a criminal proceeding,
and the much stricter standards85 observed in these cases. They are standards entirely different
from those applicable in administrative proceedings.

VII. The policy of non-interference with the Ombudsman’s investigatory and prosecutory powers
cautions a stay of judicial hand
The Constitution and RA No. 6770 have endowed the Office of the Ombudsman with a wide
latitude of investigatory and prosecutory powers, freed, to the extent possible within our
governmental system and structure, from legislative, executive, or judicial intervention, and
insulated from outside pressure and improper influence.86 Consistent with this purpose and
subject to the command of paragraph 2, Section 1, Article VIII of the 1987 Constitution,87 the
Court reiterates its policy of non-interference with the Ombudsman’s exercise of his investigatory
and prosecutory powers (among them, the power to grant immunity to witnesses88), and respects
the initiative and independence inherent in the Ombudsman who, "beholden to no one, acts as
the champion of the people and the preserver of the integrity of the public service."89 Ocampo IV
v. Ombudsman90 best explains the reason behind this policy:

The rule is based not only upon respect for the investigatory and prosecutory powers granted by
the Constitution to the Office of the Ombudsman but upon practicality as well. Otherwise, the
functions of the courts will be grievously hampered by innumerable petitions assailing the
dismissal of investigatory proceedings conducted by the Office of the Ombudsman with regard to
complaints filed before it, in much the same way that the courts would be extremely swamped if
they could be compelled to review the exercise of discretion on the part of the fiscals or
prosecuting attorneys each time they decide to file an information in court or dismiss a complaint
by a private complainant.

Following this policy, we deem it neither appropriate nor advisable to interfere with the
Ombudsman’s grant of immunity to the respondents, particularly in this case, where the petitioner
has not clearly and convincingly shown the grave abuse of discretion that would call for our
intervention.

WHEREFORE, the petition is hereby DISMISSED. Costs against the petitioner.

SO ORDERED.
 SECOND DIVISION

August 1, 2018

G.R. No. 229288

SHERWIN T. GATCHALIAN, Petitioner

vs.
OFFICE OF THE OMBUDSMAN and FIELD INVESTIGATION OFFICE OF THE
OMBUDSMAN, Respondents

DECISION

CAGUIOA, J.:

Before the Court is a Petition for Review on Certiorari1 under Rule 45 assailing the Resolutions
dated September 13, 20162 and January 13, 20173 issued by the Special Thirteenth Division of
the Court of Appeals (CA) in CA-G.R. SP No. 145852.

The Facts

Six different criminal complaints were filed by the Field Investigation Office (FIO) of the Office of
the Ombudsman (Ombudsman),4 Cesar V. Purisima,5 and Rustico Tutol6 against several
individuals, including petitioner Sherwin T. Gatchalian (Gatchalian). Specifically, Gatchalian was
one of the respondents in OMB-C-C-13-0212, a complaint accusing the respondents therein of
(a) violation of Section 3(e) and (g) of Republic Act No. 3019 (R.A. 3019); (b) Malversation under
Article 217 of the Revised Penal Code (RPC); and (c) violation of Section X126.2 (c) (1), (2) and
(3) of the Manual of Regulations for Banks (MORB) in relation to Sections 36 and 37 of Republic
Act No. 7653 (R.A. 7653). The said complaint arose from the sale of shares in Express Savings
Bank, Inc. (ESBI), in which Gatchalian was a stockholder, in 2009, to Local Water Utilities
Administration (LWUA), a government-owned and controlled corporation (GOCC).7

In a Joint Resolution dated March 16, 2015 (Joint Resolution),8 the Ombudsman found probable
cause to indict Gatchalian of the following: (a) one count of violation of Section 3(e) of R.A. 3019,
(b) one count of malversation of public funds, and (c) one count of violation of Section Xl26.2(C)
(1) and (2) of MORB in relation to Sections 36 and 37 of R.A. 7653. While it was the other
respondents - members of the Board of Trustees of LWUA (LWUA Board) - who were directly
responsible for the damage caused to the government by the acquisition by L WUA of ESBI's
shares, the Ombudsman found that the latter's stockholders who sold their shares, including
Gatchalian, profited from the transaction. The Ombudsman held that in view of ESBI's precarious
financial standing at the time of the transaction, the windfall received by Gatchalian and the other
stockholders must be deemed an unwarranted benefit, advantage, or preference within the ambit
of R.A. 3019.

The Ombudsman also found that there was conspiracy among the officers of LWUA and ESBI,
and the stockholders of ESBI, for the latter authorized the former to push through with the
transaction. The Ombudsman found that the officers and the stockholders acted in concert
towards attaining a common goal, and that is to ensure that L WUA acquires 60% stake in ESBI
in clear contravention of requirements and procedures prescribed by then existing banking laws
and regulations.9 With regard to the violation of Section X126.2(C) (1) and (2) of MORB in
relation to Sections 36 and 37 of R.A. 7653, the Ombudsman held that the stockholders of ESBI
were likewise liable because the MORB specifically requires both the transferors and the
transferees to secure the prior approval of the Monetary Board before consummating the sale.

The respondents in the Ombudsman cases, including Gatchalian, filed separate motions for
reconsideration of the Joint Resolution. However, on April 4, 2016, the Ombudsman issued a
Joint Order10 denying the motions for reconsideration.

Aggrieved, Gatchalian filed with the CA a Petition for Certiorari11 under Rule 65 of the Rules of
Court, and sought to annul the Joint Resolution and the Joint Order of the Ombudsman for
having been issued with grave abuse of discretion. He argued that the Ombudsman made a
general conclusion without specifying a "series of acts" done by him that would "clearly manifest
a concurrence of wills, a common intent or design to commit a crime."12 Furthermore, he argued
that he was neither a director nor an officer of ESBI, such that he never negotiated nor was he
personally involved with the t.ransaction in question. Ultimately, Gatchalian claimed that there
was no probable cause to indict him of the crimes charged. Procedurally, he explained that he
filed the Petition for Certiorari with the CA,13 and not with this Court, because of the ruling
in Morales v. Court of Appeals.14

On September 19, 2016, the Ombudsman, through the Office of the Solicitor General (OSG),
filed a Comment15 on the Petition for Certiorari. The OSG argued that the CA had no jurisdiction
to take cognizance of the case, as the decisions of the Ombudsman in criminal cases were
unappealable and may thus be assailed only through a petition for certiorari under Rule 65 filed
with the Supreme Court. On the merits, it maintained that the Joint Resolution and the Joint
Order were based on evidence, and were thus issued without grave abuse of discretion.

Before the filing of the OSG's Comment, however, the CA had already issued a
Resolution16 dated September 13, 2016 wherein it held that it had no jurisdiction over the case.
The CA opined that the Morales ruling should be understood in its proper context, i.e., that what
was assailed therein was the preventive suspension order arising from an administrative case
filed against a public official.17

On October 7, 2016, Gatchalian sought reconsideration of the CA's Resolution dismissing the
Petition for Certiorari.18 He reiterated his arguments in the petition, and maintained that the CA
has jurisdiction over the case by virtue of the ruling in Morales. The OSG filed its Comment on
Gatchalian's motion for reconsideration and argued that there was no cogent reason for the CA
to reconsider its decision. On December 7, 2016, Gatchalian filed a Reply.19

On January 13, 2017, the CA issued another Resolution20 where it upheld its earlier Resolution. It
held that the points raised in Gatchalian's motion for reconsideration were a mere rehash of the
arguments which had already been passed upon by the CA in the earlier decision.

Gatchalian thus appealed to this Court.21 He maintains that the import of the decision
in Morales is that the remedy for parties aggrieved by decisions of the Ombudsman is to file with
the CA a petition for review under Rule 43 for administrative cases, and a petition
for certiorari under Rule 65 for criminal cases.

On December 19, 2017, the OSG filed its Comment.22 According to the OSG, jurisprudence is
well-settled that the CA has no jurisdiction to review the decisions of the Ombudsman in criminal
cases. It reiterated that the Morales decision should be understood to apply only in administrative
cases. Gatchalian thereafter filed a Reply on April 4, 2018.23

Issue
The sole issue to be resolved in this case is whether the CA erred in dismissing Gatchalian's
Petition for Certiorari under Rule 65 for its alleged lack of jurisdiction over the said case.

The Court's Ruling

The petition is unmeritorious.

The first case on the matter was the 1998 case of Fabian vs. Desierto,24 where the Court held
that Section 27 of Republic Act No. 6770 (R.A. 6770), which provides that all "orders, directives,
or decisions [in administrative cases] of the Office of the Ombudsman may be appealed to the
Supreme Court by filing a petition for certiorari within ten (10) days from receipt of the written
notice of the order, directive or decision or denial of the motion for reconsideration in accordance
with Rule 45 of the Rules of Court," was unconstitutional for it increased the appellate jurisdiction
of the Supreme Court without its advice and concurrence. The Court thus held that "appeals from
decisions of the Office of the Ombudsman in administrative disciplinary cases should be taken to
the Court of Appeals under the provisions of Rule 43."25

Subsequently, in Kuizon v. Desierto,26 the Court stressed that the ruling in Fabian was limited
only to administrative cases, and added that it is the Supreme Court which has jurisdiction when
the assailed decision, resolution, or order was an incident of a criminal action. Thus:

In dismissing petitioners' petition for lack of jurisdiction, the Court of Appeals cited .the case
of Fabian vs. Desierto. The appellate court correctly ruled that its jurisdiction extends only
to decisions of the Office of the Ombudsman in administrative cases. In the Fabian case,
we ruled that appeals from decisions of the Office of the Ombudsman in administrative
disciplinary cases should be taken to the Court of Appeals under Rule 43 of the 1997 Rules of
Civil Procedure. It bears stressing that when we declared Section 27 of Republic Act No. 6770 as
unconstitutional, we categorically stated that said provision is involved only whenever an appeal
by certiorari under Rule 45 is taken from a decision in an administrative disciplinary action. It
cannot be taken into account where an original action for certiorari under Rule 65 is
resorted to as a remedy for judicial review, such as from an incident in a criminal
action. In fine, we hold that the present petition should have been filed with this
Court.27 (Emphasis supplied)

In Golangco vs. Fung,28 the Court voided a decision of the CA which directed the Ombudsman to
withdraw an Information already filed by it with a Regional Trial Court (RTC). The Court
in Golangco reasoned that "[t]he Court of Appeals has jurisdiction over orders, directives and
decisions of the Office of the Ombudsman in administrative disciplinary cases only. It cannot,
therefore, review the orders, directives or decisions of the Office of the Ombudsman in criminal
or non-administrative cases."29

With regard to orders, directives, or decisions of the Ombudsman in criminal or non-

administrative cases, the Court, in Tirol, Jr. v. Del Rosario,30 held that the remedy for the same is
to file a petition for certiorari under Rule 65 of the Rules of Court. The Court explained:

True, the law is silent on the remedy of an aggrieved party in case the Ombudsman found
sufficient cause to indict him in criminal or non-administrative cases. We cannot supply such
deficiency if none has been provided in the law. We have held that the right to appeal is a mere
statutory privilege and may be exercised only in the manner prescribed by, and in accordance
with, the provisions of law. Hence, there must be a law expressly granting such privilege. The
Ombudsman Act specifically deals with the remedy of an aggrieved party from orders, directives
and decisions of the Ombudsman in administrative disciplinary cases. As we ruled in Fabian, the
aggrieved party is given the right to appeal to the Court of Appeals. Such right of appeal is not
granted to parties aggrieved by orders and decisions of the Ombudsman in criminal cases, like
finding probable cause to indict accused persons.
However, an aggrieved party is not without recourse where the finding of the Ombudsman
as to the existence of probable cause is tainted with grave abuse of discretion,
amounting. to lack or excess of jurisdiction. An aggrieved party may file a petition
for certiorari under Rule 65 of the 1997 Rules of Civil Procedure.[[31]] (Emphasis supplied)

The Court in Tirol, Jr., however, was unable to specify the court - whether it be the RTC, the CA,
or the Supreme Court - to which the petition for certiorari under Rule 65 should be filed given the
concurrent jurisdictions of the aforementioned courts over petitions for certiorari.

Five years after, the Court clarified in Estrada v. Desierto32 that a petition for certiorari under Rule
65 of the Rules of Court questioning the finding of the existence of probable cause - or the lack
thereof - by the Ombudsman should be filed with the Supreme Court. The Court elucidated:

But in which court should this special civil action be filed?

Petitioner contends that certiorari under Rule 65 should first be flied with the Court of
Appeals as the doctrine of hierarchy of courts precludes the immediate invocation of this
Court's jurisdiction. Unfortunately for petitioner, he is flogging a dead horse as this argument
has already been shot down in Kuizon v. Ombudsman where we decreed -

In dismissing petitioners' petition for lack of jurisdiction, the Court of Appeals cited the case
of Fabian vs. Desierto. The appellate court correctly ruled that its jurisdiction extends only to
decisions of the Office of the Ombudsman in administrative cases. In the Fabian case, we ruled
1a\^/phi 1

that appeals from decisions of the Office of the Ombudsman in administrative disciplinary cases
should be taken to the Court of Appeals under Rule 43 of the 1997 Rules of Civil Procedure. It
bears· stressing that when we declared Section 27 of Republic Act No. 6770 as unconstitutional,
we categorically stated that said provision is involved only whenever an appeal
by certiorari under Rule 45 is taken from a decision in an administrative disciplinary action. It
cannot be taken into account where an original action for certiorari under Rule 65 is resorted to
as a remedy for judicial review, such as from an incident in a criminal action. In fine, we hold that
the present petition should have been filed with this Court.

Kuizon and the subsequent case of Mendoza-Arce v. Office of the Ombudsman

(Visayas) drove home the point that the remedy of aggrieved parties from resolutions of
the Office of the Ombudsman finding probable cause in criminal cases or non-
administrative cases, when tainted with grave abuse of discretion, is to file an original
action for certiorari with this Court and not with the Court of Appeals. In cases when the
aggrieved party is questioning the Office of the Ombudsman's finding of lack of probable cause,
as in this case, there is likewise the remedy of certiorari under Rule 65 to be filed with this Court
and not with the Court of Appeals following our ruling in Perez v. Office of the
Ombudsman.33 (Emphasis supplied)

In the 2009 case of Ombudsman v. Heirs of Margarita Vda. De Ventura,34 the Court
reiterated Kuizon, Golangco, and Estrada, and ruled that the CA did not have jurisdiction over
orders and decisions of the Ombudsman in non-administrative cases, and that the remedy of
aggrieved parties was to file a petition for certiorari under Rule 65 with this Court. The foregoing
principles were repeatedly upheld in other cases, such as in Soriano v. Cabais35 and Duyon v.
Court of Appeals.36

In this petition, Gatchalian argues that the decision of the Court En Banc in Morales v. Court of
Appeals37 abandoned the principles enunciated in the aforementioned line of cases.

The Court disagrees.

In the Morales case, what was involved was the preventive suspension order issued by the
Ombudsman against Jejomar Binay, Jr. (Binay) in an administrative case filed against the latter.
The preventive suspension order was questioned by Binay in the CA via a petition
for certiorari under Rule 65 with a prayer for the issuance of a temporary restraining order (TRO).
The CA then granted Binay's prayer for a TRO, which the Ombudsman thereafter questioned in
this Court for being in violation of Section 14 of R.A. 6770, which provides:

SECTION 14. Restrictions. -No writ of injunction shall be issued by any court to delay an
investigation being conducted by the Ombudsman under this Act, unless there is a prima
facie evidence that the subject matter of the investigation is outside the jurisdiction of the Office
of the Ombudsman.

No court shall hear any appeal or application for remedy against the decision or findings of the
Ombudsman, except the Supreme Court, on pure question of law.

Relying on the second paragraph of the abovequoted provision, the Ombudsman also
questioned the CA's subject matter jurisdiction over the petition for certiorari filed by Binay.

The Court in Morales applied the same rationale used in Fabian, and held that the second
paragraph of Section 14 is unconstitutional:

Since the second paragraph of Section 14, RA 6770 limits the remedy against "decision or
findings" of the Ombudsman to a Rule 45 appeal and thus - similar to the fourth paragraph of
Section 27, RA 6770 - attempts to effectively increase the Supreme Court's appellate jurisdiction
without its advice and concurrence, it is therefore concluded that the former provision is also
unconstitutional and perforce, invalid. Contrary to the Ombudsman's posturing, Fabian should
squarely apply since the above-stated Ombudsman Act provisions are in pari materia in that they
"cover the same specific or particular subject matter," that is, the manner of judicial review over
issuances of the Ombudsman.

xxxx

Thus, with the unconstitutionality of the second paragraph of Section 14, RA 6770, the Court,
consistent with existing jurisprudence, concludes that the CA has subject matter jurisdiction over
the main CAG. R. SP No. 139453 petition.38

Gatchalian argues that the consequence of the foregoing is that all orders, directives, and
decisions of the Ombudsman - whether it be an incident of an administrative or criminal case -
are now reviewable by the CA.

The contention is untenable.

The Court agrees with the CA that the Morales decision should be read and viewed in its proper
context. The Court in Morales held that the CA had subject matter jurisdiction over the petition
for certiorari under Rule 65 filed therein because what was assailed in the said petition was a
preventive suspension order, which was an interlocutory order and thus unappealable, issued by
the Ombudsman. Consistent with the rationale of Estrada, the Court held that a petition
for certiorari under Rule 65 was proper as R.A. 6770 did not provide for an appeal procedure for
interlocutory orders issued by the Ombudsman. The Court also held that it was correctly filed
with the CA because the preventive suspension order was an incident of an administrative
case. The Court in Morales was thus applying only what was already well-established in
jurisprudence.

It must likewise be pointed out that the Court, in arriving at the decision in Morales, cited and was
guided by the case of Office of the Ombudsman v. Capulong.39 In Capulong, a preventive
suspension order issued by the Ombudsman was questioned through a petition
for certiorari under Rule 65 filed with the CA. The Court in Capulong held that:
[t]he preventive suspension order is interlocutory in character and not a final order on the merits
of the case. The aggrieved party may then seek redress from the courts through a petition
for certiorari under Section 1, Rule 65 of the 1997 Rules of Court. x x x There being a finding of
grave abuse of discretion on the part of the Ombudsman, it was certainly imperative for the CA to
grant incidental reliefs, as sanctioned by Section 1 of Rule 65.40

Also, as aptly pointed out by the CA in its assailed Resolution, "the Supreme Court never
mentioned the proper remedy to be taken from the Ombudsman's orders in non-administrative
cases or criminal cases, such as the finding of probable cause. In fact, this matter was not even
alluded to in the Morales decision."41

A thorough reading of the Morales decision, therefore, would reveal that it was limited in its
application - that it was meant to cover only decisions or orders of the Ombudsman in
administrative cases. The Court never intimated, much less categorically stated, that it was
abandoning its rulings in Kuizon and Estrada and the distinction made therein between the
appellate recourse for decisions or orders of the Ombudsman in administrative and non-
administrative cases. Bearing in mind that Morales dealt with an interlocutory order in an
administrative case, it cannot thus be read to apply to decisions or orders of the Ombudsman in
non-administrative or criminal cases.

As a final point, it must be pointed out that subsequent to the Morales decision, the Court -
likewise sitting En Banc -- decided the case of Information Technology Foundation of the
Philippines, et al. v. Commission on Elections,42 where it again upheld the difference of appellate
procedure between orders or decisions of the Ombudsman in administrative and non-
administrative cases. Thus:

As a preliminary procedural matter, we observe that while the petition asks this Court to set aside
the Supplemental Resolution, which dismissed both administrative and criminal complaints, it is
clear from the allegations therein that what petitioners are questioning is the criminal aspect of
the assailed resolution, i.e., the Ombudsman's finding that there is no probable cause to indict.
the respondents in the Ombudsman cases. Movants in G.R. No. 159139 similarly question this
conclusion by the Ombudsman and accordingly pray that the Ombudsman be directed to file an
information with the Sandiganbayan against the responsible COMELEC officials and conspiring
private individuals.

In Kuizon v. Desierto and Mendoza-Arce v. Office of the Ombudsman, we held that this
Court has jurisdiction over petitions for certiorari questioning resolutions or orders of the
Ombudsman in criminal cases. For administrative cases, however, we declared in the
case of Dagan v. Office of the Ombudsman(Visayas) that the petition should be filed with
the Court of Appeals in observance of the doctrine of hierarchy of courts.
The Dagan ruling homogenized the procedural rule with respect to administrative cases
falling within the jurisdiction of the Ombudsman - first enunciated in Fabian v. Desierto -
that is, all remedies involving the orders, directives, or decisions of the Ombudsman in
administrative cases, whether by an appeal under Rule 43 or a petition for certiorari under
Rule 65, must be filed with the Court of Appeals.

xxxx

The Ombudsman's determination of probable cause may only be assailed

through certiorari proceedings before this Court on the ground that such determination is
tainted with grave abuse of discretion. Not every error in the proceedings or every erroneous
conclusion of law or fact, however, constitutes grave abuse of discretion. It has been stated that
the Ombudsman may err or even abuse the discretion lodged in her by law, but such error or
abuse alone does not render her act amenable to correction and annulment by the extraordinary
remedy of certiorari. To justify judicial intrusion into what is fundamentally the domain of another
constitutional body, the petitioner must clearly show that the Ombudsman committed grave
abuse of discretion amounting to lack or excess of jurisdiction in making her determination and in
arriving at the conclusion she reached. For there to be a finding of grave abuse of discretion, it
must be shown that the discretionary power was exercised in an arbitrary or despotic manner by
reason of passion or personal hostility, and the abuse of discretion must be so patent and gross
as to amount to ·an evasion of a positive duty or to a virtual refusal to perform the duty enjoined
or to act in contemplation of law.43 (Emphasis supplied)

It is thus clear that the Morales decision never intended to disturb the well-established distinction
between the appellate remedies for orders, directives, and decisions arising from administrative
cases and those arising from non-administrative or criminal cases. 1âw phi 1

Gatchalian's contention that the unconstitutionality of Section 14 of R.A. 6770 declared

in Morales equally applies to both administrative and criminal cases - and thus the CA from then
on had jurisdiction to entertain petitions for certiorari under Rule 65 to question orders and
decisions arising from criminal cases - is simply misplaced. Section 14 of R.A. 6770 was
declared unconstitutional because it trampled on the rule-making powers of the Court by 1)
prescribing the mode of appeal, which was by Rule 45 of the Rules of Court, for all cases
whether final or not; and 2) rendering nugatory the certiorari jurisdiction of the CA over incidents
arising from administrative cases.

The unconstitutionality of Section 14 of R.A. 6770, therefore, did not necessarily have an effect
over the appellate procedure for orders and decisions arising from criminal cases precisely
because the ·said procedure was not prescribed by the aforementioned section. To recall, the
rule that decisions or orders of the Ombudsman finding the existence of probable cause (or the
lack thereof) should be questioned through a petition for certiorari under Rule 65 filed with the
Supreme Court was laid down by the Court itself in the cases of Kuizon, Tirol Jr., Mendoza-
Arce v. Ombudsman,44 Estrada, and subsequent cases affirming the said rule. The rule was,
therefore, not anchored on Section 14 of R.A. 6770, but was instead a rule prescribed by the
Court in the exercise of its rule-making powers. The declaration of unconstitutionality of Section
14 of R.A. 6770 was therefore immaterial insofar as the appellate procedure for orders and
decisions by the Ombudsman in criminal cases is concerned.

The argument therefore that the promulgation of the Morales decision - a case which involved an
interlocutory order arising from an administrative case, and which did not categorically abandon
the cases of Kuizon, Tirol, Jr., Mendoza-Arce, and Estrada - gave the CA certiorari jurisdiction
over final orders and decisions arising from non-administrative or criminal cases is clearly
untenable.

To stress, it is the better practice that when a court has laid down a principle of law as applicable
to a certain state of facts, it will adhere to that principle and apply it to all future cases where the
facts are substantially the same.45 Following the principle of stare decisis et non quieta movere -
or follow past precedents and do not disturb what has been settled - the Court therefore upholds
the abovementioned established rules on appellate procedure, and so holds that the CA did not
err in dismissing the case filed by petitioner Gatchalian for lack of jurisdiction.

WHEREFORE, premises considered, the Petition for Review on Certiorari is

hereby DENIED. The Resolutions dated September 13, 2016 and January 13, 2017 issued by
the Special Thirteenth Division of the Court of Appeals in CA-G.R. SP No. 145852
are AFFIRMED.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. 130866 September 16, 1998

ST. MARTIN FUNERAL HOME, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION and BIENVENIDO ARICAYOS, respondents.

REGALADO, J.:

The present petition for certiorari stemmed from a complaint for illegal dismissal filed by herein
private respondent before the National Labor Relations Commission (NLRC), Regional
Arbitration Branch No. III, in San Fernando, Pampanga. Private respondent alleges that he
started working as Operations Manager of petitioner St. Martin Funeral Home on February 6,
1995. However, there was no contract of employment executed between him and petitioner nor
was his name included in the semi-monthly payroll. On January 22, 1996, he was dismissed from
his employment for allegedly misappropriating P38,000.00 which was intended for payment by
petitioner of its value added tax (VAT) to the Bureau of Internal Revenue (BIR). 1

Petitioner on the other hand claims that private respondent was not its employee but only the
uncle of Amelita Malabed, the owner of petitioner St. Martin's Funeral Home. Sometime in 1995,
private respondent, who was formerly working as an overseas contract worker, asked for
financial assistance from the mother of Amelita. Since then, as an indication of gratitude, private
respondent voluntarily helped the mother of Amelita in overseeing the business.

In January 1996, the mother of Amelita passed away, so the latter then took over the
management of the business. She then discovered that there were arrears in the payment of
taxes and other government fees, although the records purported to show that the same were
already paid. Amelita then made some changes in the business operation and private
respondent and his wife were no longer allowed to participate in the management thereof. As a
consequence, the latter filed a complaint charging that petitioner had illegally terminated his
employment.2

Based on the position papers of the parties, the labor arbiter rendered a decision in favor of
petitioner on October 25, 1996 declaring that no employer-employee relationship existed
between the parties and, therefore, his office had no jurisdiction over the case. 3

Not satisfied with the said decision, private respondent appealed to the NLRC contending that
the labor arbiter erred (1) in not giving credence to the evidence submitted by him; (2) in holding
that he worked as a "volunteer" and not as an employee of St. Martin Funeral Home from
February 6, 1995 to January 23, 1996, or a period of about one year; and (3) in ruling that there
was no employer-employee relationship between him and petitioner.4

On June 13, 1997, the NLRC rendered a resolution setting aside the questioned decision and
remanding the case to the labor arbiter for immediate appropriate proceedings.5 Petitioner then
filed a motion for reconsideration which was denied by the NLRC in its resolution dated August
18, 1997 for lack of merit,6 hence the present petition alleging that the NLRC committed grave
abuse of discretion.7

Before proceeding further into the merits of the case at bar, the Court feels that it is now exigent
and opportune to reexamine the functional validity and systemic practicability of the mode of
judicial review it has long adopted and still follows with respect to decisions of the NLRC. The
increasing number of labor disputes that find their way to this Court and the legislative changes
introduced over the years into the provisions of Presidential Decree (P.D.) No. 442 (The Labor
Code of the Philippines and Batas Pambansa Blg. (B.P. No.) 129 (The Judiciary Reorganization
Act of 1980) now stridently call for and warrant a reassessment of that procedural aspect.

We prefatorily delve into the legal history of the NLRC. It was first established in the Department
of Labor by P.D. No. 21 on October 14, 1972, and its decisions were expressly declared to be
appealable to the Secretary of Labor and, ultimately, to the President of the Philippines.

On May 1, 1974, P.D. No. 442 enacted the Labor Code of the Philippines, the same to take effect
six months after its promulgation. 8 Created and regulated therein is the present NLRC which was
attached to the Department of Labor and Employment for program and policy coordination
only.9 Initially, Article 302 (now, Article 223) thereof also granted an aggrieved party the remedy
of appeal from the decision of the NLRC to the Secretary of Labor, but P.D. No. 1391
subsequently amended said provision and abolished such appeals. No appellate review has
since then been provided for.

Thus, to repeat, under the present state of the law, there is no provision for appeals from the
decision of the NLRC. 10 The present Section 223, as last amended by Section 12 of R.A. No.
6715, instead merely provides that the Commission shall decide all cases within twenty days
from receipt of the answer of the appellee, and that such decision shall be final and executory
after ten calendar days from receipt thereof by the parties.

When the issue was raised in an early case on the argument that this Court has no jurisdiction to
review the decisions of the NLRC, and formerly of the Secretary of Labor, since there is no legal
provision for appellate review thereof, the Court nevertheless rejected that thesis. It held that
there is an underlying power of the courts to scrutinize the acts of such agencies on questions of
law and jurisdiction even though no right of review is given by statute; that the purpose of judicial
review is to keep the administrative agency within its jurisdiction and protect the substantial rights
of the parties; and that it is that part of the checks and balances which restricts the separation of
powers and forestalls arbitrary and unjust adjudications. 11

Pursuant to such ruling, and as sanctioned by subsequent decisions of this Court, the remedy of
the aggrieved party is to timely file a motion for reconsideration as a precondition for any further
or subsequent remedy, 12 and then seasonably avail of the special civil action of certiorari under
Rule 65, 13 for which said Rule has now fixed the reglementary period of sixty days from notice of
the decision. Curiously, although the 10-day period for finality of the decision of the NLRC may
already have lapsed as contemplated in Section 223 of the Labor Code, it has been held that this
Court may still take cognizance of the petition for certiorari on jurisdictional and due process
considerations if filed within the reglementary period under Rule 65. 14

Turning now to the matter of judicial review of NLRC decisions, B.P. No. 129 originally provided
as follows:

Sec. 9. Jurisdiction. — The Intermediate Appellate Court shall exercise:

(1) Original jurisdiction to issue writs of mandamus, prohibition, certiorari, habeas

corpus, and quo warranto, and auxiliary writs or processes, whether or not in aid
of its appellate jurisdiction;
 (2) Exclusive original jurisdiction over actions for annulment of judgments of
Regional Trial Courts; and

(3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions,
orders, or awards of Regional Trial Courts 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.

The Intermediate Appellate Court shall have the power to try cases and conduct
hearings, receive evidence and perform any and all acts necessary to resolve
factual issues raised in cases falling within its original and appellate jurisdiction,
including the power to grant and conduct new trials or further proceedings.

These provisions shall not apply to decisions and interlocutory orders issued
under the Labor Code of the Philippines and by the Central Board of Assessment
Appeals. 15

Subsequently, and as it presently reads, this provision was amended by R.A. No. 7902 effective
March 18, 1995, to wit:

Sec. 9. Jurisdiction. — The Court of Appeals shall exercise:

(1) Original jurisdiction to issue writs of mandamus, prohibition, certiorari, habeas

corpus, and quo warranto, and auxiliary writs or processes, whether or not in aid
of its appellate jurisdiction;

(2) Exclusive original jurisdiction over actions for annulment of judgments of

Regional Trial Courts; and

(3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions,
orders or awards of Regional Trial Courts and quasi-judicial agencies,
instrumentalities, boards or commissions, including the Securities and Exchange
Commission, the Social Security Commission, the Employees Compensation
Commission and the Civil Service Commission, except those falling within the
appellate jurisdiction of the Supreme Court in accordance with the Constitution,
the Labor Code of the Philippines under Presidential Decree No. 442, as
amended, 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.

The Court of Appeals shall have the power to try cases and conduct hearings,
receive evidence and perform any and all acts necessary to resolve factual
issues raised in cases falling within its original and appellate jurisdiction, including
the power to grant and conduct new trials or further proceedings. Trials or
hearings in the Court of Appeals must be continuous and must be completed
within, three (3) months, unless extended by the Chief Justice.

It will readily be observed that, aside from the change in the name of the lower appellate
court, 16 the following amendments of the original provisions of Section 9 of B.P. No. 129 were
effected by R.A. No. 7902, viz.:
1. The last paragraph which excluded its application to the Labor Code of the Philippines and the
Central Board of Assessment Appeals was deleted and replaced by a new paragraph granting
the Court of Appeals limited powers to conduct trials and hearings in cases within its jurisdiction.

2. The reference to the Labor Code in that last paragraph was transposed to paragraph (3) of the
section, such that the original exclusionary clause therein now provides "except those falling
within the appellate jurisdiction of the Supreme Court in accordance with the Constitution, the
Labor Code of the Philippines under Presidential Decree No. 442, as amended, 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." (Emphasis supplied).

3. Contrarily, however, specifically added to and included among the quasi-judicial agencies over
which the Court of Appeals shall have exclusive appellate jurisdiction are the Securities and
Exchange Commission, the Social Security Commission, the Employees Compensation
Commission and the Civil Service Commission.

This, then, brings us to a somewhat perplexing impassè, both in point of purpose and
terminology. As earlier explained, our mode of judicial review over decisions of the NLRC has for
some time now been understood to be by a petition for certiorari under Rule 65 of the Rules of
Court. This is, of course, a special original action limited to the resolution of jurisdictional issues,
that is, lack or excess of jurisdiction and, in almost all cases that have been brought to us, grave
abuse of discretion amounting to lack of jurisdiction.

It will, however, be noted that paragraph (3), Section 9 of B.P. No. 129 now grants
exclusive appellate jurisdiction to the Court of Appeals over all final adjudications of the Regional
Trial Courts and the quasi-judicial agencies generally or specifically referred to therein except,
among others, "those falling within the appellate jurisdiction of the Supreme Court in accordance
with . . . the Labor Code of the Philippines under Presidential Decree No. 442, as amended, . . .
." This would necessarily contradict what has been ruled and said all along that appeal does not
lie from decisions of the NLRC. 17 Yet, under such excepting clause literally construed, the appeal
from the NLRC cannot be brought to the Court of Appeals, but to this Court by necessary
implication.

The same exceptive clause further confuses the situation by declaring that the Court of Appeals
has no appellate jurisdiction over decisions falling within the appellate jurisdiction of the Supreme
Court in accordance with the Constitution, the provisions of B.P. No. 129, and those specified
cases in Section 17 of the Judiciary Act of 1948. These cases can, of course, be properly
excluded from the exclusive appellate jurisdiction of the Court of Appeals. However, because of
the aforementioned amendment by transposition, also supposedly excluded are cases falling
within the appellate jurisdiction of the Supreme Court in accordance with the Labor Code. This is
illogical and impracticable, and Congress could not have intended that procedural gaffe, since
there are no cases in the Labor Code the decisions, resolutions, orders or awards wherein are
within the appellate jurisdiction of the Supreme Court or of any other court for that matter.

A review of the legislative records on the antecedents of R.A. No. 7902 persuades us that there
may have been an oversight in the course of the deliberations on the said Act or an imprecision
in the terminology used therein. In fine, Congress did intend to provide for judicial review of the
adjudications of the NLRC in labor cases by the Supreme Court, but there was an inaccuracy in
the term used for the intended mode of review. This conclusion which we have reluctantly but
prudently arrived at has been drawn from the considerations extant in the records of Congress,
more particularly on Senate Bill No. 1495 and the Reference Committee Report on S. No.
1495/H. No. 10452. 18

In sponsoring Senate Bill No. 1495, Senator Raul S. Roco delivered his sponsorship
speech 19 from which we reproduce the following excerpts:
The Judiciary Reorganization Act, Mr. President, Batas Pambansa Blg. 129,
reorganized the Court of Appeals and at the same time expanded its jurisdiction
and powers. Among others, its appellate jurisdiction was expanded to cover not
only final judgment of Regional Trial Courts, but also all final judgment(s),
decisions, resolutions, orders or awards of quasi-judicial agencies,
instrumentalities, boards and commissions, except those falling within the
appellate jurisdiction of the Supreme Court in accordance with the Constitution,
the provisions of BP Blg. 129 and of subparagraph 1 of the third paragraph and
subparagraph 4 of Section 17 of the Judiciary Act of 1948.

Mr. President, the purpose of the law is to ease the workload of the Supreme
Court by the transfer of some of its burden of review of factual issues to the Court
of Appeals. However, whatever benefits that can be derived from the expansion
of the appellate jurisdiction of the Court of Appeals was cut short by the last
paragraph of Section 9 of Batas Pambansa Blg. 129 which excludes from its
coverage the "decisions and interlocutory orders issued under the Labor Code of
the Philippines and by the Central Board of Assessment Appeals.

Among the highest number of cases that are brought up to the Supreme Court
are labor cases. Hence, Senate Bill No. 1495 seeks to eliminate the exceptions
enumerated in Section 9 and, additionally, extends the coverage of appellate
review of the Court of Appeals in the decision(s) of the Securities and Exchange
Commission, the Social Security Commission, and the Employees Compensation
Commission to reduce the number of cases elevated to the Supreme Court.
(Emphases and corrections ours)

xxx xxx xxx

Senate Bill No. 1495 authored by our distinguished Colleague from Laguna
provides the ideal situation of drastically reducing the workload of the Supreme
Court without depriving the litigants of the privilege of review by an appellate
tribunal.

In closing, allow me to quote the observations of former Chief Justice Teehankee

in 1986 in the Annual Report of the Supreme Court:

. . . Amendatory legislation is suggested so as to relieve the

Supreme Court of the burden of reviewing these cases which
present no important issues involved beyond the particular fact
and the parties involved, so that the Supreme Court may wholly
devote its time to cases of public interest in the discharge of its
mandated task as the guardian of the Constitution and the
guarantor of the people's basic rights and additional task
expressly vested on it now "to determine whether or not there has
been a grave abuse of discretion amounting to lack of jurisdiction
on the part of any branch or instrumentality of the Government.

We used to have 500,000 cases pending all over the land, Mr. President. It has
been cut down to 300,000 cases some five years ago. I understand we are now
back to 400,000 cases. Unless we distribute the work of the appellate courts, we
shall continue to mount and add to the number of cases pending.

In view of the foregoing, Mr. President, and by virtue of all the reasons we have
submitted, the Committee on Justice and Human Rights requests the support and
collegial approval of our Chamber.
 xxx xxx xxx

Surprisingly, however, in a subsequent session, the following Committee Amendment was

introduced by the said sponsor and the following proceedings transpired: 20

Senator Roco. On page 2, line 5, after the line "Supreme Court in accordance
with the Constitution," add the phrase "THE LABOR CODE OF THE
PHILIPPINES UNDER P.D. 442, AS AMENDED." So that it becomes clear, Mr.
President, that issues arising from the Labor Code will still be appealable to the
Supreme Court.

The President. Is there any objection? (Silence) Hearing none, the amendment is
approved.

Senator Roco. On the same page, we move that lines 25 to 30 be deleted. This
was also discussed with our Colleagues in the House of Representatives and as
we understand it, as approved in the House, this was also deleted, Mr. President.

The President. Is there any objection? (Silence) Hearing none, the amendment is
approved.

Senator Roco. There are no further Committee amendments, Mr. President.

Senator Romulo. Mr. President, I move that we close the period of Committee
amendments.

The President. Is there any objection? (Silence) Hearing none, the amendment is
approved. (Emphasis supplied).

xxx xxx xxx

Thereafter, since there were no individual amendments, Senate Bill No. 1495 was passed on
second reading and being a certified bill, its unanimous approval on third reading followed. 21 The
Conference Committee Report on Senate Bill No. 1495 and House Bill No. 10452, having
theretofore been approved by the House of Representatives, the same was likewise approved by
the Senate on February 20, 1995, 22 inclusive of the dubious formulation on appeals to the
Supreme Court earlier discussed.

The Court is, therefore, of the considered opinion that ever since appeals from the NLRC to the
Supreme Court were eliminated, the legislative intendment was that the special civil action
of certiorari was and still is the proper vehicle for judicial review of decisions of the NLRC. The
use of the word "appeal" in relation thereto and in the instances we have noted could have been
a lapsus plumae because appeals by certiorari and the original action for certiorari are both
modes of judicial review addressed to the appellate courts. The important distinction between
them, however, and with which the Court is particularly concerned here is that the special civil
action of certiorari is within the concurrent original jurisdiction of this Court and the Court of
Appeals; 23 whereas to indulge in the assumption that appeals by certiorari to the Supreme Court
are allowed would not subserve, but would subvert, the intention of Congress as expressed in
the sponsorship speech on Senate Bill No. 1495.

Incidentally, it was noted by the sponsor therein that some quarters were of the opinion that
recourse from the NLRC to the Court of Appeals as an initial step in the process of judicial review
would be circuitous and would prolong the proceedings. On the contrary, as he commendably
and realistically emphasized, that procedure would be advantageous to the aggrieved party on
this reasoning:
 On the other hand, Mr. President, to allow these cases to be appealed to the
Court of Appeals would give litigants the advantage to have all the evidence on
record be reexamined and reweighed after which the findings of facts and
conclusions of said bodies are correspondingly affirmed, modified or reversed.

Under such guarantee, the Supreme Court can then apply strictly the axiom that
factual findings of the Court of Appeals are final and may not be reversed on
appeal to the Supreme Court. A perusal of the records will reveal appeals which
are factual in nature and may, therefore, be dismissed outright by minute
resolutions. 24

While we do not wish to intrude into the Congressional sphere on the matter of the wisdom of a
law, on this score we add the further observations that there is a growing number of labor cases
being elevated to this Court which, not being a trier of fact, has at times been constrained to
remand the case to the NLRC for resolution of unclear or ambiguous factual findings; that the
Court of Appeals is procedurally equipped for that purpose, aside from the increased number of
its component divisions; and that there is undeniably an imperative need for expeditious action
on labor cases as a major aspect of constitutional protection to labor.

Therefore, all references in the amended Section 9 of B.P. No. 129 to supposed appeals from
the NLRC to the Supreme Court are interpreted and hereby declared to mean and refer to
petitions for certiorari under Rule 65. Consequently, all such petitions should hence forth be
initially filed in the Court of Appeals in strict observance of the doctrine on the hierarchy of courts
as the appropriate forum for the relief desired.

Apropos to this directive that resort to the higher courts should be made in accordance with their
hierarchical order, this pronouncement in Santiago vs. Vasquez, et al. 25 should be taken into
account:

One final observation. We discern in the proceedings in this case a propensity on

the part of petitioner, and, for that matter, the same may be said of a number of
litigants who initiate recourses before us, to disregard the hierarchy of courts in
our judicial system by seeking relief directly from this Court despite the fact that
the same is available in the lower courts in the exercise of their original or
concurrent jurisdiction, or is even mandated by law to be sought therein. This
practice must be stopped, not only because of the imposition upon the precious
time of this Court but also because of the inevitable and resultant delay, intended
or otherwise, in the adjudication of the case which often has to be remanded or
referred to the lower court as the proper forum under the rules of procedure, or as
better equipped to resolve the issues since this Court is not a trier of facts. We,
therefore, reiterate the judicial policy that this Court will not entertain direct resort
to it unless the redress desired cannot be obtained in the appropriate courts or
where exceptional and compelling circumstances justify availment of a remedy
within and calling for the exercise of our primary jurisdiction.

WHEREFORE, under the foregoing premises, the instant petition for certiorari is hereby
REMANDED, and all pertinent records thereof ordered to be FORWARDED, to the Court of
Appeals for appropriate action and disposition consistent with the views and ruling herein set
forth, without pronouncement as to costs.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 161596 February 20, 2013

ROBERTO BORDOMEO, JAYME SARMIENTO and GREGORIO BARREDO, Petitioners,

vs.
COURT OF APPEALS, HON. SECRETARY OF LABOR, and INTERNATIONAL
PHARMACEUTICALS, INC., Respondents.

DECISION

BERSAMIN, J.:

As an extraordinary remedy, certiorari cannot replace or supplant an adequate remedy in the

ordinary course of law, like an appeal in due course. It is the inadequacy of a remedy in the
ordinary course of law that determines whether certiorari can be a proper alternative remedy.

The Case

The petitioners implore the Court to reverse and set aside the Decision1 of the Court of Appeals
(CA) promulgated on May 30, 2003 in C.A.-G.R. SP No. 65970 entitled Roberto Bordomeo,
Anecito Cupta, Jaime Sarmiento and Virgilio Saragena v. Honorable Secretary of Labor and
Employment and International Pharmaceuticals, Inc., dismissing their petition for certiorari by
which they had assailed the Order2 issued on July 4, 2001 by Secretary Patricia A. Sto. Tomas of
the Department of Labor and Employment (DOLE), to wit:

WHEREFORE, the Order of this Office dated March 27, 1998 STANDS and having become final
and having been fully executed, completely CLOSED and TERMINATED this case.

No further motion shall be entertained.

SO ORDERED.3

and the CA’s resolution promulgated on October 30, 2003, denying their motion for
reconsideration.

In effect, the Court is being called upon again to review the March 27, 1998 order issued by the
DOLE Secretary in response to the petitioners’ demand for the execution in full of the final orders
of the DOLE issued on December 26, 1990 and December 5, 1991 arising from the labor dispute
in International Pharmaceuticals, Inc. (IPI).

Antecedents

In 1989, the IPI Employees Union-Associated Labor Union (Union), representing the workers,
had a bargaining deadlock with the IPI management. This deadlock resulted in the Union staging
a strike and IPI ordering a lockout.

On December 26, 1990, after assuming jurisdiction over the dispute, DOLE Secretary Ruben D.
Torres rendered the following Decision,4 to wit:

WHEREFORE, PREMISES CONSIDERED, decision is hereby rendered as follows:

 1. finding the IPI Employees Union-ALU as the exclusive bargaining agent of all rank and
file employees of ALU including sales personnel;

2. dismissing, for lack of merit, the charges of contempt filed by the Union against the IPI
officials and reiterating our strict directive for a restoration of the status quo ante the
strike as hereinbefore discussed;

3. dismissing the Union’s complaint against the Company for unfair labor practice through
refusal to bargain;

4. dismissing the IPI petition to declare the strike of the Union as illegal; and

5. directing the IPI Employees Union-ALU and the International Pharmaceuticals, Inc. to
enter into their new CBA, incorporating therein the dispositions hereinbefore stated. All
other provisions in the old CBA not otherwise touched upon in these proceedings are,
likewise, to be incorporated in the new CBA.

SO ORDERED.5

Resolving the parties’ ensuing respective motions for reconsideration or clarification,6 Secretary
Torres rendered on December 5, 1991 another ruling,7 disposing thus:

WHEREFORE, in the light of the forgoing considerations, judgment is hereby rendered:

1. Dismissing the motions for reconsideration filed by the International Pharmaceutical,

Inc. and the Workers Trade Alliance Unions (WATU) for lack of merit;

2. Ordering the International Pharmaceutical Inc. to reinstate to their former positions with
full backwages reckoned from 8 December 1989 until actually reinstated without loss of
seniority rights and other benefits the "affected workers" herein-below listed:

1. Reynaldo C. Menor

2. Geronimo S. Banquirino

3. Rogelio Saberon

4. Estefanio G. Maderazo

5. Herbert G. Veloso

6. Rogelio G. Enricoso

7. Colito Virtudazo

8. Gilbert Encontro

9. Bebiano Pancho

10. Merlina Gomez

11. Lourdes Mergal

12. Anecito Cupta

13. Prescillano O. Naquines

14. Alejandro O. Rodriguez

15. Godofredo Delposo

16. Jovito Jayme

17. Emma L. Lana

18. Koannia M. Tangub

19. Violeta Pancho

20. Roberto Bordomeo

21. Mancera Vevincio

22. Caesar Sigfredo

23. Trazona Roldan

24. Carmelita Ygot

25. Gregorio Barredo

26. Dario Abella

27. Artemio Pepito

28. Anselmo Tareman

29. Merope Lozada

30. Agapito Mayorga

31. Narciso M. Leyson

32. Ananias Dinolan

33. Cristy L. Caybot

34. Johnnelito S. Corilla

35. Noli Silo

36. Danilo Palioto

37. Winnie dela Cruz

38. Edgar Montecillo

39. Pompio Senador

 40. Ernesto Palomar

41. Reynante Germininano

42. Pelagio Arnaiz

43. Ireneo Russiana

44. Benjamin Gellangco, Jr.

45. Nestor Ouano (listed in paragraphs 1 & 9 of the IPI Employees Union- ALU’s
Supplemental Memorandum dated 6 March 1991)

3. Ordering the International Pharmaceutical Inc. to reinstate to their former positions the
following employees, namely:

a. Alexander Aboganda

b. Pacifico Pestano

c. Carlito Torregano

d. Clemencia Pestano

e. Elisea Cabatingan

(listed in paragraph 3 of the IPI Employees Union-ALU’s Supplemental Memorandum dated 6

March 1991).

No further motions of the same nature shall be entertained.8

IPI assailed the issuances of Secretary Torres directly in this Court through a petition
for certiorari (G.R. No. 103330), but the Court dismissed its petition on October 14, 1992 on the
ground that no grave abuse of discretion had attended the issuance of the assailed
decisions.9 Considering that IPI did not seek the reconsideration of the dismissal of its petition,
the entry of judgment issued in due course on January 19, 1994.10

With the finality of the December 26, 1990 and December 5, 1991 orders of the DOLE Secretary,
the Union, represented by the Seno, Mendoza and Associates Law Office, moved in the National
Conciliation and Mediation Board in DOLE, Region VII on June 8, 1994 for their execution.11

On November 21, 1994, one Atty. Audie C. Arnado, who had meanwhile entered his appearance
on October 4, 1994 as the counsel of 15 out of the 50 employees named in the December 5,
1991 judgment of Secretary Torres, likewise filed a so-called Urgent Motion for Execution.12

After conducting conferences and requiring the parties to submit their position papers, Regional
Director Alan M. Macaraya of DOLE Region VII issued a Notice of Computation/Execution on
April 12, 1995,13 the relevant portion of which stated:

To speed-up the settlement of the issue, the undersigned on 7 February 1995 issued an order
directing the parties to submit within ten (10) calendar days from receipt of the Order, their
respective Computations. To date, only the computation from complainants including those that
were not specifically mentioned in the Supreme Court decision were submitted and received by
this office.
Upon verification of the Computation available at hand, management is hereby directed to pay
the employees including those that were not specifically mentioned in the decision but are
similarly situated, the aggregate amount of FORTY-THREE MILLION SIX HUNDRED FIFTY
THOUSAND NINE HUNDRED FIVE AND 87/100 PESOS (₱43,650,905.87) involving NINE
HUNDRED SIXTY-TWO (962) employees, in the manner shown in the attached Computation
forming part of this Order. This is without prejudice to the final Order of the Court to reinstate
those covered employees. 1âw phi1

This Order is to take effect immediately and failure to comply as instructed will cause the
issuance of a WRIT OF EXECUTION.14

In effect, Regional Director Macaraya increased the number of the workers to be benefitted to
962 employees – classified into six groups – and allocated to each group a share in the
₱43,650,905.87 award,15 as follows:

GROUP NO. OF TOTAL CLAIM

EMPLOYEES
Those represented by Atty. Arnado 15 ₱4,162,361.50
Salesman 9 ₱6,241,535.44
For Union Members 179 ₱6,671,208.86
For Non-Union Members 33 ₱1,228,321.09
Employees who ratified the CBA 642 ₱23,982,340.14
Separated Employees 84 ₱1,365,136.84
TOTAL 962 ₱43,650,905.87

On May 24, 1995, Assistant Regional Director Jalilo dela Torre of DOLE Region VII issued a writ
of execution for the amount of ₱4,162,361.50 (which covered monetary claims corresponding to
the period from January 1, 1989 to March 15, 1995) in favor of the 15 employees represented by
Atty. Arnado,16 to be distributed thusly:17

1. Barredo, Gregorio ₱278,700.10

2. Bordomeo, Roberto ₱278,700.10

3. Cupta, Anecito ₱278,700.10

4. Delposo, Godofredo ₱278,700.10

5. Dinolan, Ananias ₱278,700.10

6. Jayme, Jovito ₱278,700.10

7. Lozada, Merope ₱278,700.10

8. Mayorga, Agapito ₱278,700.10

9. Mergal, Lourdes ₱278,700.10

10. Pancho, Bebiano ₱278,700.10

 11. Pancho, Violeta ₱278,700.10

12. Rodriguez, Alejandro ₱278,700.10

13. Russiana, Ireneo ₱263,685.10

14. Tangub, Joannis ₱278,700.10

15. Trazona, Rolsan ₱275,575.10

TOTAL ₱4,162,361.50

On June 5, 1995, Assistant Regional Director dela Torre issued another Writ of Execution for the
amount of ₱1,200,378.92 in favor of the second group of employees. Objecting to the reduced
computation for them, however, the second group of employees filed a Motion Declaring the Writ
of Execution dated June 5, 1995 null and void.

On July 11, 1995, IPI challenged the May 24, 1995 writ of execution issued in favor of the 15
employees by filing its Appeal and Prohibition with Prayer for Temporary Restraining Order in the
Office of then DOLE Undersecretary Cresenciano Trajano.18

On December 22, 1995,19 Acting DOLE Secretary Jose Brillantes, acting on IPI’s appeal, recalled
and quashed the May 24, 1995 writ of execution, and declared and considered the case closed
and terminated.20

Aggrieved, the 15 employees sought the reconsideration of the December 22, 1995 Order of
Acting DOLE Secretary Brillantes.

On August 27, 1996, DOLE Secretary Leonardo A. Quisumbing granted the Motion for
Reconsideration,21 and reinstated the May 24, 1995 writ of execution, subject to the deduction of
the sum of ₱745,959.39 already paid pursuant to quitclaims from the award of
₱4,162,361.50.22 Secretary Quisumbing declared the quitclaims executed by the employees on
December 2, 3, and 17, 1993 without the assistance of the proper office of the DOLE
unconscionable for having been entered into under circumstances showing vitiation of consent;
and ruled that the execution of the quitclaims should not prevent the employees from recovering
their monetary claims under the final and executory decisions dated December 26, 1990 and
December 5, 1991, less the amounts received under the quitclaims.

Aggrieved by the reinstatement of the May 24, 1995 writ of execution, IPI moved for a
reconsideration.23

On September 3, 1996, and pending resolution of IPI’s motion for reconsideration, Regional
Director Macaraya issued a writ of execution in favor of the 15 employees represented by Atty.
Arnado to recover ₱3,416,402.10 pursuant to the order dated August 27, 1996 of Secretary
Quisumbing.24 Thereafter, the sheriff garnished the amount of ₱3,416,402.10 out of the funds of
IPI with China Banking Corporation, which released the amount.25 Hence, on September 11,
1996, the 15 employees represented by Atty. Arnado executed a Satisfaction of Judgment and
Quitclaim/Release upon receipt of their respective portions of the award, subject to the
reservation of their right to claim "unsatisfied amounts of separation pay as well as backwages
reckoned from the date after 15 March 1995 and up to the present, or until separation pay is fully
paid."26

Notwithstanding the execution of the satisfaction of judgment and quitclaim/release, Atty. Arnado
still filed an omnibus motion not only in behalf of the 15 employees but also in behalf of other
employees named in the notice of computation/execution, with the exception of the second
group, seeking another writ of execution to recover the further sum of ₱58,546,767.83.27

Atty. Arnado filed a supplemental omnibus motion for the denial of IPI’s Motion for
Reconsideration on the ground of mootness.28

In the meanwhile, the employees belonging to the second group reiterated their Motion Declaring
the Writ of Execution dated June 5, 1995 null and void, and filed on May 15, 1996 a Motion for
Issuance of Writ, praying for another writ of execution based on the computation by Regional
Director Macaraya.

On December 24, 1997,29 Secretary Quisumbing, affirming his August 27, 1996 order, denied
IPI’s Motion for Reconsideration for being rendered moot and academic by the full satisfaction of
the May 24, 1995 writ of execution. He also denied Atty. Arnado’s omnibus motion for lack of
merit; and dealt with the issue involving the June 5, 1995 writ of execution issued in favor of the
second group of employees, which the Court eventually resolved in the decision promulgated in
G.R. No. 164633.30

The employees represented by Atty. Arnado moved for the partial reconsideration of the
December 24, 1997 order of Secretary Quisumbing. Resolving this motion on March 27, 1998,
Acting DOLE Secretary Jose M. Español, Jr. held as follow:31

WHEREFORE, Our Order dated December 24, 1997, is hereby AFFIRMED.

The Motion for Reconsideration/Amend/Clarificatory and Reiteration of Motion for Issuance of

Writ of Execution dated January 12, 1998, filed by six (6) salesmen, namely, Geronimo S.
Banquirigo, Reynaldo C. Menor, Rogelio Enricoso, Danilo Palioto, Herbert Veloso and Colito
Virtudazo as well as the Motion for Reconsideration and/or Clarification filed by Salesman Noli G.
Silo, are hereby DISMISSED, for lack of merit. The June 5, 1995 Writ of Execution is now
considered fully executed and satisfied.

The Motion for Partial Reconsideration filed by Roberto Bordomeo and 231 others, is likewise
DENIED, for lack of merit

SO ORDERED.32

Records reveal, however, that Virgilio Saragena, et al. brought to this Court a petition
for certiorari to assail the December 24, 1997 and March 27, 1998 Orders of the Secretary of
Labor (G.R. No. 134118). As stated at the start, the Court dismissed the petition of Saragena, et
al. on September 9, 1998 for having been filed out of time and for the petitioners’ failure to
comply with the requirements under Rule 13 and Rule 45 of the Rules of Court. 33 The entry of
judgment was issued on December 7, 1998.

In the meanwhile, on July 27, 1998, Atty. Arnado filed a Motion for Execution with the DOLE
Regional Office,34 demanding the following amounts from IPI, to wit:

For Roberto Bordomeo and 14 others ₱4,990,401.00

The rest of complainants 33,824,820.41

Total P 38,815,221.41

Again, on September 22, 1998, Atty. Arnado filed a Motion for Execution with the Regional
Office.35 This time, no monetary claims were demanded but the rest of the complainants sought
to collect from IPI the reduced amount of ₱6,268,818.47.
Another Motion for Execution was filed by Atty. Arnado on July 6, 1999,36 seeking the execution
of the December 26, 1990 order issued by Secretary Torres and of the April 12, 1995 notice of
computation/execution issued by Regional Director Macaraya.

Ultimately, on July 4, 2001, DOLE Secretary Patricia Sto. Tomas issued her Order37 affirming the
order issued on March 27, 1998, and declaring that the full execution of the order of March 27,
1998 "completely CLOSED and TERMINATED this case."

Only herein petitioners Roberto Bordomeo, Anecito Cupta, Jaime Sarmiento and Virgilio
Saragena assailed the July 4, 2001 order of Secretary Sto. Tomas by petition for certiorari in the
CA (C.A.-G.R. SP No. 65970).38

On May 30, 2003, the CA rendered its decision in C.A.-G.R. SP No. 65970,39 to wit:

It is worthy to note that all the decisions and incidents concerning the case between petitioners
and private respondent IPI have long attained finality. The records show that petitioners have
already been granted a writ of execution. In fact, the decision has been executed. Thus, there is
nothing for this Court to modify. The granting of the instant petition calls for the amendment of
the Court of a decision which has been executed. In this light, it is worthy to note the rule that
final and executory decisions, more so with those already executed, may no longer be amended
except only to correct errors which are clerical in nature. Amendments or alterations which
substantially affect such judgments as well as the entire proceedings held for that purpose are
null and void for lack of jurisdiction. (Pio Barreto Realty Development Corporation v. Court of
Appeals, 360 SCRA 127).

This Court in the case of CA GR No. 54041 dated February 28, 2001, has ruled that the Orders
of the Secretary of Labor and Employment dated December 24, 1997 and March 27, 1998 have
become final and executory. It may be noted that the said orders affirmed the earlier orders of
the Secretary of Labor and Employment dated December 22, 1995 and August 27, 1996 granting
the execution of the decision in the case between petitioners and IPI.

xxxx

WHEREFORE, based on the foregoing, the instant petition is hereby DENIED DUE
COURSE and is DISMISSED for lack of merit.

SO ORDERED.40

The petitioners filed a Motion for Reconsideration,41 but the CA denied the motion on October 30,
2003.42

Hence, they commenced this special civil action for certiorari.

The petitioners hereby contend that:

THE COURT OF APPEALS RULED CONTRARY TO SUPREME COURT DECISIONS AND

GRAVELY ABUSED ITS DISCRETION AMOUNTING TO LACK OR EXCESS OF
JURISDICTION WHEN IT:

A. HELD THAT GRANTING THE PETITION FOR MANDAMUS (WHICH

MERELY SEEKS FULL EXECUTION OF DOLE FINAL JUDGMENTS 26
DECEMBER 1990 AND 5 DECEMBER 1991 WOULD AMEND SAID FINAL AND
EXECUTORY JUDGMENTS.
 B. FAILED TO IMPLEMENT THE SUPREME COURT DOCTRINE SET IN PDCP
VS. GENILO, G.R. NO. 106705, THAT SIMILARLY SITUATED EMPLOYEES
HAS THE RIGHT TO PROVE THEIR ENTITLEMENT TO THE BENEFITS
AWARDED UNDER FINAL JUDGMENTS.

C. HELD THAT THE QUESTIONED JUDGMENTS HAD BEEN EXECUTED

WHEN THE RESPONDENTS THEMSELVES ADMIT THE CONTRARY.

D. HELD THAT DOLE SECRETARY DID NOT COMMIT GRAVE ABUSE OF

DISCRETION WHEN SHE REFUSED TO FULLY EXECUTE THE 1990 AND
1991 DOLE FINAL JUDGMENTS AND ISSUE CORRESPONDING WRITS OF
EXECUTION.

The petitioners submit that of the six groups of employees classified under the April 12, 1995
notice of computation/execution issued by Regional Director Macaraya, only the first two
groups, that is, the 15 employees initially represented by Atty. Arnado; and the nine salesmen led
by Geronimo S. Banquirigo, had been granted a writ of execution. They further submit that the
May 24, 1995 writ of execution issued in favor of the first group of employees, including
themselves, had only been partially satisfied because no backwages or separation pay from
March 16, 1995 onwards had yet been paid to them; that the reduced award granted to the
second group of employees was in violation of the April 12, 1995 notice of
computation/execution; that no writ of execution had been issued in favor of the other groups of
employees; and that DOLE Secretary Sto. Tomas thus committed grave abuse of discretion in
refusing to fully execute the December 26, 1990 and December 5, 1991 orders.

In its comment, IPI counters that the petition for certiorari should be dismissed for being an
improper remedy, the more appropriate remedy being a petition for review on certiorari; that a
petition for review on certiorari should have been filed within 15 days from receipt of the denial of
the motion for reconsideration, as provided in Section 1 and Section 2 of Rule 45; and that the
petition must also be outrightly dismissed for being filed out of time.

IPI contends that the finality of the December 24, 1997 and March 27, 1998 orders of the DOLE
Secretary rendered them unalterable; that Atty. Arnado had already brought the December 24,
1997 and March 27, 1998 orders to this Court for review (G.R. No. 134118); and that the Court
had dismissed the petition for having been filed out of time and for the petitioners’ failure to
comply with Rule 13 and Rule 45 of the Rules of Court.

Ruling

We dismiss the petition for certiorari.

Firstly, an appeal by petition for review on certiorari under Rule 45 of the Rules of Court, to be
taken to this Court within 15 days from notice of the judgment or final order raising only questions
of law, was the proper remedy available to the petitioners. Hence, their filing of the petition
for certiorari on January 9, 2004 to assail the CA’s May 30, 2003 decision and October 30, 2003
resolution in C.A.-G.R. SP No. 65970 upon their allegation of grave abuse of discretion
committed by the CA was improper. The averment therein that the CA gravely abused its
discretion did not warrant the filing of the petition for certiorari, unless the petition further showed
how an appeal in due course under Rule 45 was not an adequate remedy for them. By virtue of
its being an extraordinary remedy, certiorari cannot replace or substitute an adequate remedy in
the ordinary course of law, like an appeal in due course.43

We remind them that an appeal may also avail to review and correct any grave abuse of
discretion committed by an inferior court, provided it will be adequate for that purpose.
It is the adequacy of a remedy in the ordinary course of law that determines whether a special
civil action for certiorari can be a proper alternative remedy. We reiterate what the Court has
discoursed thereon in Heirs of Spouses Teofilo M. Reterta and Elisa Reterta v. Spouses Lorenzo
Mores and Virginia Lopez,44 viz:

Specifically, the Court has held that the availability of appeal as a remedy does not constitute
sufficient ground to prevent or preclude a party from making use of certiorari if appeal is not an
adequate remedy, or an equally beneficial, or speedy remedy. It is inadequacy, not the mere
absence of all other legal remedies and the danger of failure of justice without the writ,
that must usually determine the propriety of certiorari. A remedy is plain, speedy and
adequate if it will promptly relieve the petitioner from the injurious effects of the
judgment, order, or resolution of the lower court or agency. It is understood, then, that a
litigant need not mark time by resorting to the less speedy remedy of appeal in order to
have an order annulled and set aside for being patently void for failure of the trial court to
comply with the Rules of Court.

Nor should the petitioner be denied the recourse despite certiorari not being available as a
proper remedy against an assailed order, because it is better on balance to look beyond
procedural requirements and to overcome the ordinary disinclination to exercise supervisory
powers in order that a void order of a lower court may be controlled to make it conformable to law
and justice. Verily, the instances in which certiorari will issue cannot be defined, because to do
so is to destroy the comprehensiveness and usefulness of the extraordinary writ. The wide
breadth and range of the discretion of the court are such that authority is not wanting to show
that certiorari is more discretionary than either prohibition or mandamus, and that in the exercise
of superintending control over inferior courts, a superior court is to be guided by all the
circumstances of each particular case "as the ends of justice may require." Thus, the writ will be
granted whenever necessary to prevent a substantial wrong or to do substantial
justice.45 (Emphasis supplied)

Even so, Rule 65 of the Rules of Court still requires the petition for certiorari to comply with the
following requisites, namely: (1) the writ of certiorari is directed against a tribunal, a board, or an
officer exercising judicial or quasi-judicial functions; (2) such tribunal, board, or officer has acted
without or in excess of jurisdiction, or with grave abuse of discretion amounting to lack or excess
of jurisdiction; and (3) there is no appeal or any plain, speedy, and adequate remedy in the
ordinary course of law.46

Jurisprudence recognizes certain situations when the extraordinary remedy of certiorari may be
deemed proper, such as: (a) when it is necessary to prevent irreparable damages and injury to a
party; (b) where the trial judge capriciously and whimsically exercised his judgment; (c) where
there may be danger of a failure of justice; (d) where an appeal would be slow, inadequate, and
insufficient; (e) where the issue raised is one purely of law; (f) where public interest is involved;
and (g) in case of urgency.47 Yet, a reading of the petition for certiorari and its annexes reveals
that the petition does not come under any of the situations. Specifically, the petitioners have not
shown that the grant of the writ of certiorari will be necessary to prevent a substantial wrong or to
do substantial justice to them.

In dismissing the petitioners’ petition for certiorari, the CA in effect upheld the Secretary of
Labor’s declaration in her assailed July 4, 2001 decision that the full satisfaction of the writs of
execution had completely closed and terminated the labor dispute.

Yet, the petitioners have ascribed grave abuse of discretion to the CA for doing so.

We do not agree. We find no just cause to now issue the writ of certiorari in order to set aside the
CA’s assailed May 30, 2003 decision. Indeed, the following well stated justifications for the
dismissal of the petition show that the CA was correct, viz:
 xxxx

It is worthy to note that all the decisions and incidents concerning the case between petitioners
and private respondent IPI have long attained finality. The records show that petitioners have
already been granted a writ of execution. In fact, the decision has been executed. Thus, there is
nothing for this Court to modify. The granting of the instant petition calls for the amendment of
the Court of a decision which has been executed. In this light, it is worthy to note the rule that
final and executory decisions, more so with those already executed, may no longer be amended
except only to correct errors which are clerical in nature. Amendments or alterations which
substantially affect such judgments as well as the entire proceedings held for that purpose are
null and void for lack of jurisdiction (Pio Barretto Realty Development Corporation v. Court of
Appeals, 360 SCRA 127).

This Court in the case of CA GR No. 54041 dated February 28, 2001, has ruled that the Orders
of the Secretary of Labor and Employment dated December 24, 1997 and March 27, 1998 have
become final and executory. It may be noted that the said orders affirmed the earlier orders of
the Secretary of Labor and Employment dated December 22, 1995 and August 27, 1996 granting
the execution of the decision in the case between petitioners and IPI.

There is nothing on the records to support the allegation of petitioners that the Secretary of Labor
and Employment abused her discretion. The pertinent portion of the assailed order reads:

"Given that this office had already ruled on all incidents of the case in its March 27, 1998 order
and the Writ of Execution dated June 5, 1995 had already attained finality and had in fact been
completely satisfied through the deposit with the Regional Office of the amount covered by the
Writ, the subsequent Motions filed by Atty. Arnado can no longer be entertained, much less
granted by this Office. Thus, at this point, there is nothing more to grant nor to execute."48

xxxx

In a special civil action for certiorari brought against a court with jurisdiction over a case, the
petitioner carries the burden to prove that the respondent tribunal committed not a merely
reversible error but a grave abuse of discretion amounting to lack or excess of jurisdiction in
issuing the impugned order.49 Showing mere abuse of discretion is not enough, for the abuse
must be shown to be grave. Grave abuse of discretion means either that the judicial or quasi-
judicial power was exercised in an arbitrary or despotic manner by reason of passion or personal
hostility, or that the respondent judge, tribunal or board evaded a positive duty, or virtually
refused to perform the duty enjoined or to act in contemplation of law, such as when such judge,
tribunal or board exercising judicial or quasi-judicial powers acted in a capricious or whimsical
manner as to be equivalent to lack of jurisdiction.50 Under the circumstances, the CA committed
no abuse of discretion, least of all grave, because its justifications were supported by the history
of the dispute and borne out by the applicable laws and jurisprudence.

And, secondly, the records contradict the petitioners’ insistence that the two writs of execution to
enforce the December 26, 1990 and December 5, 1991 orders of the DOLE Secretary were only
partially satisfied. To recall, the two writs of execution issued were the one for ₱4,162,361.50,
later reduced to ₱3,416,402.10, in favor of the 15 employees represented by Atty. Arnado, and
that for ₱1,200,378.92 in favor of the second group of employees led by Banquerigo.

There is no question that the 15 employees represented by Atty. Arnado, inclusive of the
petitioners, received their portion of the award covered by the September 3, 1996 writ of
execution for the amount of ₱3,416,402.10 through the release of the garnished deposit of IPI at
China Banking Corporation. That was why they then executed the satisfaction of judgment and
quitclaim/release, the basis for the DOLE Secretary to expressly declare in her July 4, 2001
decision that the full satisfaction of the writ of execution "completely CLOSED and TERMINATED
this case."51
Still, the 15 employees demand payment of their separation pay and backwages from March 16,
1995 onwards pursuant to their reservation reflected in the satisfaction of judgment and
quitclaim/release they executed on September 11, 1996.

The demand lacked legal basis. Although the decision of the DOLE Secretary dated December
5, 1991 had required IPI to reinstate the affected workers to their former positions with full
backwages reckoned from December 8, 1989 until actually reinstated without loss of seniority
rights and other benefits, the reinstatement thus decreed was no longer possible. Hence,
separation pay was instead paid to them. This alternative was sustained in law and
jurisprudence, for "separation pay may avail in lieu of reinstatement if reinstatement is no longer
practical or in the best interest of the parties. Separation pay in lieu of reinstatement may likewise
be awarded if the employee decides not to be reinstated."52

Under the circumstances, the employment of the 15 employees or the possibility of their
reinstatement terminated by March 15, 1995. Thereafter, their claim for separation pay and
backwages beyond March 15, 1995 would be unwarranted. The computation of separation pay
and backwages due to illegally dismissed employees should not go beyond the date when they
were deemed to have been actually separated from their employment, or beyond the date when
their reinstatement was rendered impossible. Anent this, the Court has observed in Golden Ace
Builders v. Talde:53

The basis for the payment of backwages is different from that for the award of separation pay.
Separation pay is granted where reinstatement is no longer advisable because of strained
relations between the employee and the employer. Backwages represent compensation that
should have been earned but were not collected because of the unjust dismissal. The basis for
computing backwages is usually the length of the employee’s service while that for separation
pay is the actual period when the employee was unlawfully prevented from working.

As to how both awards should be computed, Macasero v. Southern Industrial Gases

Philippines instructs:

[T]he award of separation pay is inconsistent with a finding that there was no illegal dismissal, for
under Article 279 of the Labor Code and as held in a catena of cases, an employee who is
dismissed without just cause and without due process is entitled to
backwages and reinstatement or payment of separation pay in lieu thereof:

Thus, an illegally dismissed employee is entitled to two reliefs: backwages and reinstatement.
The two reliefs provided are separate and distinct. In instances where reinstatement is no longer
feasible because of strained relations between the employee and the employer, separation pay is
granted. In effect, an illegally dismissed employee is entitled to either reinstatement, if viable, or
separation pay if reinstatement is no longer viable, and backwages.

The normal consequences of respondents’ illegal dismissal, then, are reinstatement

without loss of seniority rights, and payment of backwages computed from the time
compensation was withheld up to the date of actual reinstatement. Where reinstatement is
no longer viable as an option, separation pay equivalent to one (1) month salary for every
year of service should be awarded as an alternative. The payment of separation pay is in
addition to payment of backwages. (emphasis, italics and underscoring supplied)

xxxx

Clearly then, respondent is entitled to backwages and separation pay as his reinstatement has
been rendered impossible due to strained relations. As correctly held by the appellate court, the
backwages due respondent must be computed from the time he was unjustly dismissed until his
actual reinstatement, or from February 1999 until June 30, 2005 when his reinstatement was
rendered impossible without fault on his part.
The Court, however, does not find the appellate court's computation of separation pay in order.
The appellate court considered respondent to have served petitioner company for only eight
years. Petitioner was hired in 1990, however, and he must be considered to have been in the
service not only until 1999, when he was unjustly dismissed, but until June 30, 2005, the day he
is deemed to have been actually separated (his reinstatement having been rendered impossible)
from petitioner company or for a total of 15 years. 54

As for the portions of the award pertaining to the rest of the employees listed in the April 12, 1995
notice of execution/computation (i.e., those allegedly similarly situated as the employees listed in
the December 5, 1991 order of the DOLE Secretary) still remaining unsatisfied, the petitioners
are definitely not the proper parties to ventilate such concern in this or any other forum. At any
rate, the concern has already been addressed and resolved by the Court in G.R. No. 164633.55

WHEREFORE, the Court DISMISSES the petition for certiorari for its lack of merit; AFFIRMS the
decision promulgated on May 30, 2003; and ORDERS the petitioners to pay the costs of suit.

SO ORDERED.