G.R. No.

96681 December 2, 1991

HON. ISIDRO CARIO, in his capacity as Secretary of the Department of Education, Culture &
Sports, DR. ERLINDA LOLARGA, in her capacity as Superintendent of City Schools of
Manila, petitioners,
vs.
THE COMMISSION ON HUMAN RIGHTS, GRACIANO BUDOY, JULIETA BABARAN, ELSA
IBABAO, HELEN LUPO, AMPARO GONZALES, LUZ DEL CASTILLO, ELSA REYES and
APOLINARIO ESBER, respondents.

NARVASA, J.:p
The issue raised in the special civil action of certiorari and prohibition at bar, instituted by the Solicitor
General, may be formulated as follows: where the relief sought from the Commission on Human Rights
by a party in a case consists of the review and reversal or modification of a decision or order issued by
a court of justice or government agency or official exercising quasi-judicial functions, may the
Commission take cognizance of the case and grant that relief? Stated otherwise, where a particular
subject-matter is placed by law within the jurisdiction of a court or other government agency or official
for purposes of trial and adjudgment, may the Commission on Human Rights take cognizance of the
same subject-matter for the same purposes of hearing and adjudication?
The facts narrated in the petition are not denied by the respondents and are hence taken as
substantially correct for purposes of ruling on the legal questions posed in the present action. These
facts, 1 together with others involved in related cases recently resolved by this Court 2 or otherwise
undisputed on the record, are hereunder set forth.
1. On September 17, 1990, a Monday and a class day, some 800 public school teachers, among them
members of the Manila Public School Teachers Association (MPSTA) and Alliance of Concerned
Teachers (ACT) undertook what they described as "mass concerted actions" to "dramatize and
highlight" their plight resulting from the alleged failure of the public authorities to act upon grievances
that had time and again been brought to the latter's attention. According to them they had decided to
undertake said "mass concerted actions" after the protest rally staged at the DECS premises on
September 14, 1990 without disrupting classes as a last call for the government to negotiate the
granting of demands had elicited no response from the Secretary of Education. The "mass actions"
consisted in staying away from their classes, converging at the Liwasang Bonifacio, gathering in
peaceable assemblies, etc. Through their representatives, the teachers participating in the mass
actions were served with an order of the Secretary of Education to return to work in 24 hours or face
dismissal, and a memorandum directing the DECS officials concerned to initiate dismissal proceedings
against those who did not comply and to hire their replacements. Those directives notwithstanding, the
mass actions continued into the week, with more teachers joining in the days that followed. 3
Among those who took part in the "concerted mass actions" were the eight (8) private respondents
herein, teachers at the Ramon Magsaysay High School, Manila, who had agreed to support the nonpolitical demands of the MPSTA. 4
2. For failure to heed the return-to-work order, the CHR complainants (private respondents) were
administratively charged on the basis of the principal's report and given five (5) days to answer the

charges. They were also preventively suspended for ninety (90) days "pursuant to Section 41 of P.D.
807" and temporarily replaced (unmarked CHR Exhibits, Annexes F, G, H). An investigation committee
was consequently formed to hear the charges in accordance with P.D. 807. 5
3. In the administrative case docketed as Case No. DECS 90-082 in which CHR complainants
Graciano Budoy, Jr., Julieta Babaran, Luz del Castillo, Apolinario Esber were, among others, named
respondents, 6 the latter filed separate answers, opted for a formal investigation, and also moved "for
suspension of the administrative proceedings pending resolution by . . (the Supreme) Court of their
application for issuance of an injunctive writ/temporary restraining order." But when their motion for
suspension was denied by Order dated November 8, 1990 of the Investigating Committee, which later
also denied their motion for reconsideration orally made at the hearing of November 14, 1990, "the
respondents led by their counsel staged a walkout signifying their intent to boycott the entire
proceedings." 7 The case eventually resulted in a Decision of Secretary Cario dated December 17,
1990, rendered after evaluation of the evidence as well as the answers, affidavits and documents
submitted by the respondents, decreeing dismissal from the service of Apolinario Esber and the
suspension for nine (9) months of Babaran, Budoy and del Castillo. 8
4. In the meantime, the "MPSTA filed a petition for certiorari before the Regional Trial Court of Manila
against petitioner (Cario), which was dismissed (unmarked CHR Exhibit, Annex I). Later, the MPSTA
went to the Supreme Court (on certiorari, in an attempt to nullify said dismissal, grounded on the)
alleged violation of the striking teachers" right to due process and peaceable assembly docketed as
G.R. No. 95445, supra. The ACT also filed a similar petition before the Supreme Court . . . docketed as
G.R. No. 95590." 9 Both petitions in this Court were filed in behalf of the teacher associations, a few
named individuals, and "other teacher-members so numerous similarly situated" or "other similarly
situated public school teachers too numerous to be impleaded."
5. In the meantime, too, the respondent teachers submitted sworn statements dated September 27,
1990 to the Commission on Human Rights to complain that while they were participating in peaceful
mass actions, they suddenly learned of their replacements as teachers, allegedly without notice and
consequently for reasons completely unknown to them. 10
6. Their complaints and those of other teachers also "ordered suspended by the . . . (DECS)," all
numbering forty-two (42) were docketed as "Striking Teachers CHR Case No. 90775." In connection
therewith the Commission scheduled a "dialogue" on October 11, 1990, and sent a subpoena to
Secretary Cario requiring his attendance therein. 11
On the day of the "dialogue," although it said that it was "not certain whether he (Sec. Cario) received
the subpoena which was served at his office, . . . (the) Commission, with the Chairman presiding, and
Commissioners Hesiquio R. Mallilin and Narciso C. Monteiro, proceeded to hear the case;" it heard the
complainants' counsel (a) explain that his clients had been "denied due process and suspended
without formal notice, and unjustly, since they did not join the mass leave," and (b) expatiate on the
grievances which were "the cause of the mass leave of MPSTA teachers, (and) with which causes they
(CHR complainants) sympathize." 12 The Commission thereafter issued an Order 13 reciting these
facts and making the following disposition:
To be properly apprised of the real facts of the case and be accordingly guided in
its investigation and resolution of the matter, considering that these forty two
teachers are now suspended and deprived of their wages, which they need very
badly, Secretary Isidro Cario, of the Department of Education, Culture and

Sports, Dr. Erlinda Lolarga, school superintendent of Manila and the Principal of
Ramon Magsaysay High School, Manila, are hereby enjoined to appear and
enlighten the Commission en banc on October 19, 1990 at 11:00 A.M. and to bring
with them any and all documents relevant to the allegations aforestated herein to
assist the Commission in this matter. Otherwise, the Commission will resolve the
complaint on the basis of complainants' evidence.
xxx xxx xxx
7. Through the Office of the Solicitor General, Secretary Cario sought and was granted leave to file a
motion to dismiss the case. His motion to dismiss was submitted on November 14, 1990 alleging as
grounds therefor, "that the complaint states no cause of action and that the CHR has no jurisdiction
over the case." 14
8. Pending determination by the Commission of the motion to dismiss, judgments affecting the "striking
teachers" were promulgated in two (2) cases, as aforestated, viz.:

1) whether or not the striking teachers were denied due process, and just cause exists for the
imposition of administrative disciplinary sanctions on them by their superiors; and
2) whether or not the grievances which were "the cause of the mass leave of MPSTA teachers, (and)
with which causes they (CHR complainants) sympathize," justify their mass action or strike.
The Commission evidently intends to itself adjudicate, that is to say, determine with character of finality
and definiteness, the same issues which have been passed upon and decided by the Secretary of
Education, Culture & Sports, subject to appeal to the Civil Service Commission, this Court having in
fact, as aforementioned, declared that the teachers affected may take appeals to the Civil Service
Commission on said matters, if still timely.
The threshold question is whether or not the Commission on Human Rights has the power under the
Constitution to do so; whether or not, like a court of justice, 19 or even a quasi-judicial agency, 20 it
has jurisdiction or adjudicatory powers over, or the power to try and decide, or hear and determine,
certain specific type of cases, like alleged human rights violations involving civil or political rights.

a) The Decision dated December l7, 1990 of Education Secretary Cario in Case
No. DECS 90-082, decreeing dismissal from the service of Apolinario Esber and
the suspension for nine (9) months of Babaran, Budoy and del Castillo; 15 and

The Court declares the Commission on Human Rights to have no such power; and that it was not
meant by the fundamental law to be another court or quasi-judicial agency in this country, or duplicate
much less take over the functions of the latter.

b) The joint Resolution of this Court dated August 6, 1991 in G.R. Nos. 95445 and
95590 dismissing the petitions "without prejudice to any appeals, if still timely, that
the individual petitioners may take to the Civil Service Commission on the matters
complained of," 16 and inter alia "ruling that it was prima facie lawful for petitioner
Cario to issue return-to-work orders, file administrative charges against
recalcitrants, preventively suspend them, and issue decision on those
charges." 17

The most that may be conceded to the Commission in the way of adjudicative power is that it
may investigate, i.e., receive evidence and make findings of fact as regards claimed human rights
violations involving civil and political rights. But fact finding is not adjudication, and cannot be likened to
the judicial function of a court of justice, or even a quasi-judicial agency or official. The function of
receiving evidence and ascertaining therefrom the facts of a controversy is not a judicial function,
properly speaking. To be considered such, the faculty of receiving evidence and making factual
conclusions in a controversy must be accompanied by the authority of applying the law to those factual
conclusions to the end that the controversy may be decided or determined authoritatively, finally and
definitively, subject to such appeals or modes of review as may be provided by law. 21 This function, to
repeat, the Commission does not have. 22

9. In an Order dated December 28, 1990, respondent Commission denied Sec. Cario's motion to
dismiss and required him and Superintendent Lolarga "to submit their counter-affidavits within ten (10)
days . . . (after which) the Commission shall proceed to hear and resolve the case on the merits with or
without respondents counter affidavit." 18 It held that the "striking teachers" "were denied due process
of law; . . . they should not have been replaced without a chance to reply to the administrative
charges;" there had been a violation of their civil and political rights which the Commission was
empowered to investigate; and while expressing its "utmost respect to the Supreme Court . . . the facts
before . . . (it) are different from those in the case decided by the Supreme Court" (the reference being
unmistakably to this Court's joint Resolution of August 6, 1991 in G.R. Nos. 95445 and 95590, supra).

The proposition is made clear by the constitutional provisions specifying the powers of the Commission
on Human Rights.
The Commission was created by the 1987 Constitution as an independent office. 23 Upon its
constitution, it succeeded and superseded the Presidential Committee on Human Rights existing at the
time of the effectivity of the Constitution. 24 Its powers and functions are the following 25

It is to invalidate and set aside this Order of December 28, 1990 that the Solicitor General, in behalf of
petitioner Cario, has commenced the present action of certiorari and prohibition.

(1) Investigate, on its own or on complaint by any party, all forms of human rights
violations involving civil and political rights;

The Commission on Human Rights has made clear its position that it does not feel bound by this
Court's joint Resolution in G.R. Nos. 95445 and 95590, supra. It has also made plain its intention "to
hear and resolve the case (i.e., Striking Teachers HRC Case No. 90-775) on the merits." It intends, in
other words, to try and decide or hear and determine, i.e., exercise jurisdiction over the following
general issues:

(2) Adopt its operational guidelines and rules of procedure, and cite for contempt
for violations thereof in accordance with the Rules of Court;
(3) Provide appropriate legal measures for the protection of human rights of all
persons within the Philippines, as well as Filipinos residing abroad, and provide for

preventive measures and legal aid services to the underprivileged whose human
rights have been violated or need protection;
(4) Exercise visitorial powers over jails, prisons, or detention facilities;
(5) Establish a continuing program of research, education, and information to
enhance respect for the primacy of human rights;
(6) Recommend to the Congress effective measures to promote human rights and
to provide for compensation to victims of violations of human rights, or their
families;
(7) Monitor the Philippine Government's compliance with international treaty
obligations on human rights;
(8) Grant immunity from prosecution to any person whose testimony or whose
possession of documents or other evidence is necessary or convenient to
determine the truth in any investigation conducted by it or under its authority;
(9) Request the assistance of any department, bureau, office, or agency in the
performance of its functions;
(10) Appoint its officers and employees in accordance with law; and
(11) Perform such other duties and functions as may be provided by law.
As should at once be observed, only the first of the enumerated powers and functions bears any
resemblance to adjudication or adjudgment. The Constitution clearly and categorically grants to the
Commission the power toinvestigate all forms of human rights violations involving civil and political
rights. It can exercise that power on its own initiative or on complaint of any person. It may exercise
that power pursuant to such rules of procedure as it may adopt and, in cases of violations of said rules,
cite for contempt in accordance with the Rules of Court. In the course of any investigation conducted
by it or under its authority, it may grant immunity from prosecution to any person whose testimony or
whose possession of documents or other evidence is necessary or convenient to determine the truth. It
may also request the assistance of any department, bureau, office, or agency in the performance of its
functions, in the conduct of its investigation or in extending such remedy as may be required by its
findings. 26
But it cannot try and decide cases (or hear and determine causes) as courts of justice, or even quasijudicial bodies do. To investigate is not to adjudicate or adjudge. Whether in the popular or the
technical sense, these terms have well understood and quite distinct meanings.
"Investigate," commonly understood, means to examine, explore, inquire or delve or probe into,
research on, study. The dictionary definition of "investigate" is "to observe or study closely: inquire into
systematically. "to search or inquire into: . . . to subject to an official probe . . .: to conduct an official
inquiry." 27 The purpose of investigation, of course, is to discover, to find out, to learn, obtain
information. Nowhere included or intimated is the notion of settling, deciding or resolving a controversy
involved in the facts inquired into by application of the law to the facts established by the inquiry.

The legal meaning of "investigate" is essentially the same: "(t)o follow up step by step by patient
inquiry or observation. To trace or track; to search into; to examine and inquire into with care and
accuracy; to find out by careful inquisition; examination; the taking of evidence; a legal inquiry;" 28 "to
inquire; to make an investigation," "investigation" being in turn describe as "(a)n administrative
function, the exercise of which ordinarily does not require a hearing. 2 Am J2d Adm L Sec. 257; . . . an
inquiry, judicial or otherwise, for the discovery and collection of facts concerning a certain matter or
matters." 29
"Adjudicate," commonly or popularly understood, means to adjudge, arbitrate, judge, decide,
determine, resolve, rule on, settle. The dictionary defines the term as "to settle finally (the rights and
duties of the parties to a court case) on the merits of issues raised: . . . to pass judgment on: settle
judicially: . . . act as judge." 30 And "adjudge" means "to decide or rule upon as a judge or with judicial
or quasi-judicial powers: . . . to award or grant judicially in a case of controversy . . . ." 31
In the legal sense, "adjudicate" means: "To settle in the exercise of judicial authority. To determine
finally. Synonymous with adjudge in its strictest sense;" and "adjudge" means: "To pass on judicially, to
decide, settle or decree, or to sentence or condemn. . . . Implies a judicial determination of a fact, and
the entry of a judgment." 32
Hence it is that the Commission on Human Rights, having merely the power "to investigate," cannot
and should not "try and resolve on the merits" (adjudicate) the matters involved in Striking Teachers
HRC Case No. 90-775, as it has announced it means to do; and it cannot do so even if there be a
claim that in the administrative disciplinary proceedings against the teachers in question, initiated and
conducted by the DECS, their human rights, or civil or political rights had been transgressed. More
particularly, the Commission has no power to "resolve on the merits" the question of (a) whether or not
the mass concerted actions engaged in by the teachers constitute and are prohibited or otherwise
restricted by law; (b) whether or not the act of carrying on and taking part in those actions, and the
failure of the teachers to discontinue those actions, and return to their classes despite the order to this
effect by the Secretary of Education, constitute infractions of relevant rules and regulations warranting
administrative disciplinary sanctions, or are justified by the grievances complained of by them; and (c)
what where the particular acts done by each individual teacher and what sanctions, if any, may
properly be imposed for said acts or omissions.
These are matters undoubtedly and clearly within the original jurisdiction of the Secretary of Education,
being within the scope of the disciplinary powers granted to him under the Civil Service Law, and also,
within the appellate jurisdiction of the Civil Service Commission.
Indeed, the Secretary of Education has, as above narrated, already taken cognizance of the issues
and resolved them, 33 and it appears that appeals have been seasonably taken by the aggrieved
parties to the Civil Service Commission; and even this Court itself has had occasion to pass upon said
issues. 34
Now, it is quite obvious that whether or not the conclusions reached by the Secretary of Education in
disciplinary cases are correct and are adequately based on substantial evidence; whether or not the
proceedings themselves are void or defective in not having accorded the respondents due process;
and whether or not the Secretary of Education had in truth committed "human rights violations
involving civil and political rights," are matters which may be passed upon and determined through a
motion for reconsideration addressed to the Secretary Education himself, and in the event of an
adverse verdict, may be reviewed by the Civil Service Commission and eventually the Supreme Court.

The Commission on Human Rights simply has no place in this scheme of things. It has no business
intruding into the jurisdiction and functions of the Education Secretary or the Civil Service Commission.
It has no business going over the same ground traversed by the latter and making its own judgment on
the questions involved. This would accord success to what may well have been the complaining
teachers' strategy to abort, frustrate or negate the judgment of the Education Secretary in the
administrative cases against them which they anticipated would be adverse to them.

for Interior Finishing Works; and (3) Contract for Supply and Installation of Kitchen Cabinets and
Closets. The total contract price, which was initially placed at P300 Million, was later reduced to P240
Million when the items for kitchen cabinets and walk-in closets were deleted.4 The contracts also
contain a stipulation for Retention Money, which is a portion of the total contract price (usually, as in
this case, 10%) set aside by the project owner from all approved billings and retained for a certain
period to guarantee the performance by the contractor of all corrective works during the defect-liability
period which, in this case, is twelve months from the issuance of the Taking Over Certificate of Works.5

This cannot be done. It will not be permitted to be done.

The Letter of Award for Architectural Finishing Works provides that the period for commencement and
completion shall be twelve months, from August 1, 1997 to July 31, 1998. However, on February 21,
2000, representatives of both Megaworld and DSM Construction entered into an Interim
Agreement whereby they agreed on a new schedule of the turnover of units from the 26th floor to the
40th floor, which was the last of the contracted works.6The consideration agreed upon in the Interim
Agreement was P53,000,000.00. Of this amount, P3,000,000.00 was to be released immediately while
five (5) equal installments of P7,000,000.00 were to be released depending on the turn-over of units
from the 26th floor to the 40th floor. The remaining amount of P15,000,000.00 of theP53,000,000.00
consisted of half of the retention money.7

In any event, the investigation by the Commission on Human Rights would serve no useful purpose. If
its investigation should result in conclusions contrary to those reached by Secretary Cario, it would
have no power anyway to reverse the Secretary's conclusions. Reversal thereof can only by done by
the Civil Service Commission and lastly by this Court. The only thing the Commission can do, if it
concludes that Secretary Cario was in error, is to refer the matter to the appropriate Government
agency or tribunal for assistance; that would be the Civil Service Commission. 35 It cannot arrogate
unto itself the appellate jurisdiction of the Civil Service Commission.
WHEREFORE, the petition is granted; the Order of December 29, 1990 is ANNULLED and SET
ASIDE, and the respondent Commission on Human Rights and the Chairman and Members thereof
are prohibited "to hear and resolve the case (i.e., Striking Teachers HRC Case No. 90-775) on the
merits."
SO ORDERED.

Because of the differences that arose from the billings, DSM Construction filed on August 21, 2002,
a Complaintbefore the CIAC for compulsory arbitration, claiming payment of P97,743,808.33 for the
outstanding balance of the three construction contracts, variation works, labor escalation, preliminaries
loss and expense, earned retention money, interests, and attorneys fees.8 DSM Construction alleged
that it already commenced the finishing works on the existing 12 floors on August 1, 1997, instead of
waiting for the entire 40-floor structure to be completed. At one time, DSM Construction worked with
other contractors whose work often depended on, interfered or conflicted with said contractors. Delay
by a trade contractor would start a chain reaction by delaying or putting off other works.9
Interposing mainly the defense of delay in the turn-over of units and the poor quality of work of DSM
Construction, Megaworld filed its Answer and made a counter-claim for loss of profits, liquidated
damages, costs of take-over and rectification works, administration expenses, interests, attorneys fees
and cost of arbitration in the total amount of P85,869,870.28.10

G.R. No. 153310

March 2, 2004

MEGAWORLD GLOBUS ASIA, INC., petitioner,

vs.
DSM CONSTRUCTION AND DEVELOPMENT CORPORATION and PRUDENTIAL GUARANTEE
AND ASSURANCE, INC., respondents.
DECISION
TINGA, J.:
Before this Court is a Petition for Review on Certiorari assailing the Decision dated February 14, 2002,
of the Court of Appeals in CA G.R. SP No. 67432,1 which affirmed the Decision2 of the Construction
Industry Arbitration Commission (CIAC)3 dated September 8, 2001, in CIAC Case No. 22-2000 finding
petitioner Megaworld Globus Asia, Inc., liable to DSM Construction in the amount of P62,760,558.49.
The antecedents are as follows:
Relative to the construction of a condominium project called "The Salcedo Park," located at H.V. dela
Costa St., Salcedo Village, Makati City, the project owner, Megaworld, entered into three separate
contracts with DSM Construction, namely: (1) Contract for Architectural Finishing Works; (2) Contract

Prudential Guarantee and Assurance, Inc. (PGAI), which issued a Performance Bond to guarantee
Megaworlds contractual obligation on the project, was impleaded by Megaworld as a third-party
respondent.11
On March 28, 2001, the parties signed before the members of the Arbitral Tribunal the Terms of
Reference12(TOR) where they setforth their admitted facts,13 respective documentary
evidence,14 summary of claims15 and issues to be resolved by the tribunal.16 After presenting their
evidence in the form of affidavits of witnesses,17 the parties submitted their respective memoranda/draft
decisions.18
On October 19, 2001, the Arbitral Tribunal promulgated its Decision dated September 28, 2001,
awardingP62,760,558.49 to DSM Construction and P9,473,799.46 to Megaworld.19
Megaworld filed a Petition for Review under Rule 43 of the Rules of Civil Procedure before the Court of
Appeals. It faulted the Arbitral Tribunal for finding that DSM Construction achieved a 95.56% level of
accomplishment as of February 14, 2000; for absolving DSM Corporation of the consequences of the
alleged delay in the performance of its work; and for ruling that DSM Construction had complied with
the contractual requirements for filing requests for extension. Megaworld likewise questioned the
sufficiency of evidence to justify the awards for liquidated damages; the balance of the contract price;
the balance of amounts payable on account of the Interim Agreementof February 21, 2000; the amount
of P6,596,675.55 for variation orders; the amount of P29,380,902.35 as reimbursement for
preliminaries/loss and expense; the amount of P413,041.52 for labor escalation costs; and the balance
of the retention money in the amount of P14,700,000.00 despite its award of P11,820,000.00 under the

February 21, 2000, Interim Agreement. Finally, Megaworld claimed that the Arbitral Tribunal erred in
denying its claim for liquidated damages, expenses incurred for the cost of take-over work,
administrative expenses, and its recourse against PGAI and for limiting its recovery for rectification
work to only P9,197,863.55.20
On February 14, 2002, the Court of Appeals promulgated its Decision21 affirming that of the Arbitral
Tribunal. The court pointed out that only questions of law may be raised before it on appeal from an
award of the CIAC.22 That pronouncement notwithstanding, the Court of Appeals proceeded to review
the decision of the Arbitral Tribunal and found the same to be amply supported by evidence.23
Megaworld sought reconsideration of the Court of Appeals Decision arguing, among other things, that
the appellate court ignored the ruling in Metro Construction, Inc. v. Chatham Properties24 that the
review of the CIAC award may involve either questions of fact, law, or both fact and law.
The Court of Appeals denied the motion for reconsideration in its Resolution25 dated April 25, 2002.
While acknowledging that the findings of fact of the CIAC may be questioned in line with Metro
Construction,26 the appellate court stressed that the tribunals decision is not devoid of factual or
evidentiary support.
Megaworld elevated the case to this Court through the present Petition, advancing the following
grounds, viz:
I
THE COURT OF APPEALS IN EFFECT REFUSED TO HEED THE RULE LAID DOWN BY THIS
Honorable Court in the Metro Construction, INC. vs. Chatham properties, inc. case when it dismissed
mgais petition despite the grave questions of both fact and law brought before it by the petitioner.
II
the finding of the appellate court that the decision was based on substantial evidence adduced by both
parties sans any review of the record or of attachments of dsm is fatally wrong, such finding being
merely an adoption of the tribunals decision which, as earlier pointed out, was not supported by
competent, credible and admissible evidence.
III
the court of appeals seriously erred in giving blanket approval of all the unfounded claims and
conclusions of the ciac arbitral tribunals SEPTEMBER 28, 2001 decision to the detriment of
petitioners cardinal right to due process, particularly to its right to administrative due process.
IV
the findings and conclusions made by a highly partisan ciac arbitral tribunal have no basis on the
evidence on record. hence, the exception to the rule that only questions of law may be brought to the
honorable court is applicable in the case AT bar.27
Although Megaworld, at the outset,28 intimates that the case involves grave questions of both fact and
law, a cursory reading of the Petition reveals that, except for the amorphous advertence to
administrative due process, the alleged errors fundamentally involve only questions of fact.
Megaworlds plea for the Court to pass upon the findings of facts of the Arbitral Tribunal, which were
upheld by the appellate court, must perforce fail.

To jumpstart its bid, Megaworld exploits the Court of Appeals pronouncement in the assailed decision
that only questions of law may be raised before it from an award of the CIAC. The appellate court did
so, Megaworld continues, in evident disregard of Metro Construction.29
Under Section 19 of Executive Order No. 1008,30 the CIACs arbitral award "shall be final and
inappealable except on questions of law which shall be appealable to the Supreme Court." In Metro
Construction, however, this Court held that, with the modification of E.O. No. 1008 by subsequent laws
and issuances,31 decisions of the CIAC may be appealed to the Court of Appeals not only on questions
of law but also on questions of fact and mixed questions of law and fact.
Of such subsequent laws and issuances, only Section 1,32 Rule 43 of the 1997 Rules of Civil
Procedure expressly mentions the CIAC. While an argument may be made that procedural rules
cannot modify substantive law, adding in support thereof that Section 1, Rule 43 has increased the
jurisdiction of the Court of Appeals by expanding the scope of review of CIAC awards, or that it
contravenes the rationale for arbitration, extant from the record is the fact that no party raised such
argument. Consequently, the matter need not be delved into.
In any case, the attack against the merits of the Court of Appeals Decision must fail. Although Metro
Constructionmay have been unbeknownst to the appellate court when it promulgated its Decision, the
fact remains that, as noted therein,33 it reviewed the findings of facts of the CIAC and ruled that the
findings are amply supported by the evidence.
The Court of Appeals is presumed to have reviewed the case based on the Petition and its annexes,
and weighed them against the Comment of DSM Construction and the Decision of the Arbitral Tribunal
to arrive at the conclusion that the said Decision is based on substantial evidence. In administrative or
quasi-judicial bodies like the CIAC, a fact may be established if supported by substantial evidence or
that amount of relevant evidence which a reasonable mind might accept as adequate to justify a
conclusion.34
The tenability of the assailed Decision is clear from the following discussion of the arguments raised by
Megaworld before the Court of Appeals which significantly are the same arguments it has raised before
this Court.
Issue of Accomplishment Level
Megaworld contested the finding of 95.56% level of accomplishment by the Arbitral Tribunal, alleging
that the receipts DSM Construction issued for payments under the Interim Agreement show that the
latter only achieved 90% accomplishment up to the 31st floor while the 32nd to the 34th floors were only
60% completed.35 Megaworld insisted, therefore, that the level of accomplishment was nowhere near
90%.
DSM Construction countered that Megaworld, in claiming a level of accomplishment of only 90%,
contradicted its own Project Manager, TCGI,36 which came up with a different percentage of
accomplishment that are notably higher than Megaworlds computation.37
In resolving this issue, the Arbitral Tribunal relied on the computation of Davis Langdon & Seah (DLS),
the projects independent surveyor,38 which found the level of accomplishment as of February 14, 2000,
to be 95.56%. DLSs computation is recited in Exhibit "NN",39 thus:
Architectural Finishing :40

The 24th Progress Billing evaluated

by DLS covering the period
November 15, 1999 to December
15, 1999 over the Contract Price for
Architectural Finishing Works.

coordination such that DSM Construction could not require compliance on the part of the other trade
contractors.
Php213,658,888.7741Php223,456,756.6842

=
95.62%

2.01 SITE, ACCESS & WORKS

Kitchen Cabinets & Bedroom Closets:43

The 9th Progress Billing evaluated
by DLS covering the period
December 1, 1999 to December 9,
1999 over the contract price for
Kitchen Cabinet and Bedroom
Closet.

Php26,228,091.7344Php28,556,915.1745

=
91.84%

Interior Finishing Works:46

The 13th Progress Billing evaluated
by DLS covering the period January
8, 2000 to February 7, 2000 for the
Interior Finishing Works over the
contract price for Interior Finishing
Work.

The Arbitral Tribunal decided this question by turning to Section 2.01 of the General Conditions of the
Contract, which states:

Php49,383,114.6747Php50,685,416.5548

=
95.55%

Php213,658,888.77 +

Php26,228,091.72 +

Php49,383,114.67 =

289,270,295.17=95.56%

Php223,456,756.68

Php 28,556,915.17

Php50,685,416.55

302,699,097.40

Clearly, thus, CIACs finding that the level of accomplishment of DSM Construction as of February 12,
2002, stood at 95.56% was affirmed by the Court of Appeals because it is supported by substantial
evidence.
The Court of Appeals also noted that the Arbitral Tribunal did not give due course to all of DSM
Constructions claims. Indeed, the Arbitral Tribunal rejected the construction companys demand for
payment for subsequent works done after February 12, 2000, because Exhibit "OO," on which DSM
Constructions demand was based, does not bear any mark that it had been received by Megaworld.
Thus, the Arbitral Tribunal concluded that subsequent works up to September 22, 2000, when DSM
Construction supposedly stopped working on the project, had not been established. 49
This Court observes that between the two contrasting claims of Megaworld and DSM Construction on
the percentage of work accomplishment, the Arbitral Tribunal instead accorded weight to the
assessment of DLS which is the project surveyor. Apart from being reasonable, DLSs evaluation is
impartial. Thus, as correctly pointed out by the Arbitral Tribunal, DLS rejected DSM Constructions 99%
accomplishment claim when it limited its evaluation to only 95.56%.
Issues of Delay and Liquidated Damages
Next, Megaworld attributed the delay in the completion of the construction project solely to DSM
Construction. The latter countered that among the causes of delay was the lack of coordination among
trade contractors and the absence of a general contractor.50 Although the contract purportedly contains
a provision for the coordination of trade contractors, the lack of privity among them prevented

The Contractor shall accept the Site as found on the date for possession and at their own expense
clear the site of any debris which may have been left by the preceding occupants/contractors.
The Arbitral Tribunal held that Section 2.01 presupposes that on the date of possession by DSM
Construction of the work premises, the preceding contractor had already left the same. 51 The tribunal
explained that the delay incurred by other trade contractors also resulted in the delay of the work of
DSM Construction.
It also pointed out that under Section 5.3 (1)52 of the Interim Agreement,53 Megaworld is required to
complete and turn over to DSM Construction preceding works for the latter to complete their works in
accordance with the Revised Work Schedule. Section 5.3 (1), the Arbitral Tribunal noted, even allows
DSM Construction to recover losses incurred on account of the standby time of DSMs
personnel/manpower or workers mobilized while Megaworld is not ready to turn over the preceding
works. The Arbitral Tribunal further held that, in accordance with Section 5.3 (2)54 of the Interim
Agreement, DSM Construction was entitled to an extension of time corresponding to the number of
days of delay reckoned from the time the preceding work item or area should have been turned over to
DSM Construction. Consequently, such delay, which is not exclusively imputable to DSM Construction,
negates the claim for liquidated damages by Megaworld.55
In affirming the Arbitral Tribunals disposition of the issues of delay and payment of liquidated
damages, the appellate court noted that the Arbitral Tribunal narrated the claims and defenses of both
DSM Construction and Megaworld before making an evaluation thereof and arriving at its
conclusion.56 Clearly, the evidence and arguments were carefully weighed to justify the said
disposition.
The Tribunals finding that the project had already been delayed even before DSM Construction
commenced its work is borne out by the evidence. In his letter, Exhibit X-2,57 Project Management
Consultant Eduardo C. Arrojado, conceded that the previous contractors had delayed the project, at
the same time faulting DSM Construction for incurring its own delay. Furthermore, the work of DSM
Construction pertaining as it did to the architectural and interior finishing stages as well as the supply
and installation of kitchen cabinets and closets, obviously related to the final details and completion
stage of the project. Thus, commencement of its task had to depend on the turn over of the complete
work of the prior contractors. Hence, the delay of the previous contractors resulted in the delay of DSM
Constructions work.
Issues of the Contract Price Balance and Retention Money
Megaworld also questioned the Arbitral Tribunals awards of P7,129,825.19 corresponding to the
balance of the contract price, and P11,820,000.00 pursuant to the Interim Agreement.58 Megaworld
alleged that DSM Construction was no longer entitled to the balance of the contract price and the
retention money after the latter received payments pursuant to the Interim Agreement in the amounts
of P5,444,553.18 for the 26th to the 28thfloors, another P5,444,553.18 for the 29th to the 31st floors at a
90% completion rate, and P4,161,818.18 for the 32nd to the 34th floors which were 60% completed.
Megaworld also contended that since it spent more money to complete the scope of work of DSM
Construction, the latter was no longer entitled to any of the balance.

On the other hand, DSM Construction argued that the award was justified in view of the failure of
Megaworld to controvert the amount of P7,129,825.19 included in the Account Overview of DLS. DSM
Construction also emphasized that it was not claiming the entire P53 Million under the Interim
Agreement but only the amount corresponding to the actual work done. Even based on DLSs
computation, a total of P11,820,000.00 of retention money is still unpaid out of the 50% agreed to be
released under the Interim Agreement (P15,000,000.00 lessP3,180,000.00 retention money
or P11,820,000.00 for the paid billings).59
The Arbitral Tribunal ruled that the balance claimed under the three contracts was based on what DSM
Construction had actually accomplished less the payments it had previously received. Considering that
the remaining works which were performed by another trade contractor, Deticio and Isabedra Builders,
were paid directly by Megaworld, no other cost for work accomplished in the Interim Agreement is due
DSM Construction except the retention money of P11,820,000.00.60
The Court of Appeals affirmed the award of the Arbitral Tribunal regarding the balance of the contract
price ofP7,129,825.19 and the retention money of P11,820,000.00 to DSM Construction. The Court of
Appeals noted that the Arbitral Tribunal again narrated the claims and defenses of both DSM
Construction and Megaworld before arriving at its conclusion. The appellate court further stated that
the mere fact that the tribunal did not award the whole amount claimed by DSM Construction
(P12,820,000.00) and instead awarded only P11,820,000.00 belies Megaworlds allegation that the
tribunal adopted "hook, line and sinker" DSM Constructions claims.61
This Court finds the award of the balance of the contract price of P7,129,825.20 justified in view of
DLS explanation in Exhibit MM-362 that the amount of P7,129,825.20 represented the unpaid billing for
architectural, interior and kitchen billings before Megaworld and DSM Construction drafted the Interim
Agreement.
Issue of Variation Works
Megaworld also disputed before the Court of Appeals the P6,686,675.5563 award by the Arbitral
Tribunal for variation works. Variation works consist of the addition, omission or alteration to the kind,
quality or quantity of the works.64 DSM Construction originally claimed a total of P26,208,639.00 for
variation works done but, of this claim, the Arbitral Tribunal only awarded P6,686,675.55 in line with the
evaluation of DLS.
Megaworld conceded that DSM Construction performed additional works to the extent
of P5,036,252.81. However, Megaworld claimed that since it incurred expenses when it hired another
trade contractor to take over the works left uncompleted by DSM Construction, the latter lost its right to
claim such amount especially since DSM Construction did not comply with the documentation when
claiming variation works.65
DSM Construction asserted that the Arbitral Tribunal, in fact, should have awarded P26,208,639.00
instead of limiting the award to only P6,686,675.55 because it was not even disputed that variation
works were performed. It also contended that it cannot be faulted for the lack of documentation
because the fault lay on Megaworlds project manager who failed to forward the variation orders to
DLS.66
The Arbitral Tribunal ruled in favor of DSM Construction, holding that there was enough evidence to
prove that the contractor made a request for change or variation orders. The Arbitral Tribunal also
found the testimony of Engineer Eduardo C. Arrojado convincing, factual and balanced despite
Megaworlds attempt to discredit him. However, while the amount claimed for variation works
was P26,208,639.00, the Arbitral Tribunal limited the awarded to only P6,686,675.5567 since a closer
scrutiny of the other items indicated that some works were not performed.68

The appellate court upheld the award of the Arbitral Tribunal because the award was based not only on
the documentary exhibits prepared by DLS but on the testimony of Engineer Eduardo C. Arrojado, as
well.69
This Court is convinced that payments for variation works is due. Undoubtedly, variation works were
performed by DSM Construction. This was confirmed by Engineer Eduardo C. Arrojado who testified
that he recommended the payment for substantial additional works to DSM Construction. He further
stated that since time was of the essence in the completion of the project, there were variation orders
which were performed without the prior approval of the owner. However, he explained that this was a
common construction practice. Finally, he stated that he agreed with the evaluation of DLS.70
The testimony justified the Arbitral Tribunals reliance on the evaluation made by DLS which limited the
claim for variation works to P6,596,675.55.
Issue of Preliminaries/Loss and Expense
Megaworld also disputed the award of P29,380,902.35 for preliminaries/losses and expense.
The provision for preliminaries/loss and expense in the contract assumes a direct loss and/or expense
incurred in the regular progress of work for which the contractor would not be reimbursed under any
other provision of the contract.71 DSM Constructions claim for preliminaries/loss and expense in the
amount of P36,603,192.82 covered the loss and expense incurred on payroll, equipment rental,
materials and site clearing on account of such factors as delay in the execution of the works for causes
not attributable to DSM Construction.72
Megaworld refused to recognize DSM Constructions claim because the latter allegedly failed to
comply with Clause 6.16 of the Conditions of Contract, which imposes a two-month deadline for
submission of claims for preliminaries reckoned from "the happening of the event giving rise to the loss
and expense."73 DSM Construction, however, argued that the documentary evidence shows that out of
the four claims for preliminaries, only one (Exhibit MM-5 with an evaluation of P17,552,722.47),
covering the period August 1, 1998 to April 1999, was submitted beyond the two-months
requirement.74 DSM Construction also pointed out that the two-month requirement for this claim was
waived by Megaworld through DLS when the latter recognized the validity of claims by coming up with
an evaluation of P17,552,722.47 for the period covered in Exhibit MM-5.75
The Arbitral Tribunal ruled that DSM Construction was entitled to extended preliminaries considering
that delay was not attributable to DSM Construction. The Arbitral Tribunal observed that Megaworld did
not present evidence to refute the claim for extended preliminaries which were previously evaluated by
DLS. However, after assessing the two previous evaluations by DLS, the tribunal ruled that the claims
for hauling and disposal and cleaning and clearing of debris should not be included in the extended
preliminaries. Hence, the Arbitral Tribunal reduced the amount of P44,051.62 from the claim
of P2,655,879.89 per Exhibit "MM-7," and P3,883,309.54 from the claim of P5,651,235.24 per Exhibit
"MM-8," such amounts being unnecessary.76
The appellate court affirmed the award, stressing the fact that the Arbitral Tribunal denied some of the
claims which it did not find valid.77
DSM Constructions entitlement to the payment for preliminaries was explained by Engineer Eduardo
C. Arrojado to be the necessary result of the extension of the contract between DSM Construction and
Megaworld.78 Notably, majority of the claims of DSM Construction was reduced by the Arbitral Tribunal
on the basis of Exhibit MM-479 or the Summary of Variation Order Status Report prepared by DLS.

Although the Arbitral Tribunal ruled that DSM Construction was entitled to claim for preliminaries, the
award was not based on the claim of DSM Construction but on the evaluation made by DLS.
The foregoing disquisition adequately shows that the evidence on record supports the findings of facts
of the Arbitral Tribunal on which the Court of Appeals based its decision. In fact, although not all the
exhibits in the Arbitral Tribunal were presented before the Court of Appeals, the record of the appellate
court contains the operative facts and the substance of said exhibits, thus enabling the intelligent
disposition of the issues presented before it. This Court went over all the records, including the
exhibits, to ascertain whether the appellate court missed any crucial point. It did not.
The alleged undue favor accorded by the Arbitral Tribunal to DSM Construction is belied by the fact
that the Arbitral Tribunal did not grant all of DSM Constructions claims. In majority of DSM
Constructions claims, the Arbitral Tribunal awarded amounts lower than what DSM Construction
demanded. The Arbitral Tribunal also granted some of Megaworlds claims.80
Neither did the Court of Appeals merely "swallow hook, line and sinker" the award of the Arbitral
Tribunal. While the appellate court affirmed the decision of the Arbitral Tribunal, it also ruled in favor of
Megaworld when it limited DSM Constructions lien to only six units instead of all the condominium
units to which DSM was entitled under the Contract, rationalizing that the P62 Million award can be
covered by the value of the six units of the condominium project.81
Considering that the computations, as well as the propriety of the awards of the Arbitral Tribunal, are
unquestionably factual issues that have been discussed and ruled upon by Arbitral Tribunal and
affirmed by the Court of Appeals, we cannot depart from such findings. Findings of fact of
administrative agencies and quasi-judicial bodies, which have acquired expertise because their
jurisdiction is confined to specific matters, are generally accorded not only respect, but finality when
affirmed by the Court of Appeals.82
Megaworld, however, adamantly contends that the present case constitutes an exception to the above
rule because: (1) there is grave abuse of discretion in the appreciation of facts; (2) the judgment is
premised on misapprehension of facts; and, (3) the findings of fact of the Court of Appeals is premised
on the supposed absence of evidence and is contradicted by the evidence on record.83
We disagree. None of these flaws appear in this case. Grave abuse of discretion means the capricious
or whimsical exercise of judgment that is so patent and gross as to amount to an evasion of positive
duty or a virtual refusal to perform a duty enjoined by law, or to act at all in contemplation of law, as
where the power is exercised in an arbitrary and despotic manner by reason of passion or
hostility.84 No abuse of discretion was established by Megaworld. On the contrary, what is apparent is
Megaworlds effort to attribute grave abuse of discretion to the Arbitral Tribunal simply because of the
unfavorable judgment against it. Megaworlds assertion that there was misapprehension of facts and
that the evidence is insufficient to support the decision is also untenable. TheDecisions of the Arbitral
Tribunal and the Court of Appeals adequately explain the reasons therefor and are supported by
substantial evidence.
Likewise unmeritorious is Megaworlds assertion that it was deprived of administrative due process.
The Arbitral Tribunal considered the arguments and the evidence submitted by both parties. That it
accorded greater weight to DSM Constructions evidence, by itself, does not constitute a denial of due
process.
WHEREFORE, the Petition is DENIED. The Decision dated February 14, 2001, of the Court of Appeals
is AFFIRMED. The Temporary Restraining Order issued by this Court on July 12, 2002, is hereby
LIFTED. Costs against Petitioner.
SO ORDERED.

The facts culled from the Decision of the Court of Appeals are undisputed:
On April 14, 1992, NPC and FUCC entered into a contract for the construction of power
facilities (civil works) Schedule 1 1x20 MW Bacon-Manito II Modular Geothermal Power
Plant (Cawayan area) and Schedule 1A 1x20 MW Bacon-Manito II Modular Geothermal
Power Plant (Botong area) in Bacon, Sorsogon (BACMAN II). The total contract price for the
two schedules is P108,493,966.30, broken down as follows:

SCHEDULE

1 Cawayan area

P 52,081,421.00

1A Botong area

P 56,412,545.30

P 108,493,966.30

G.R. No. 148318

November 22, 2004

NATIONAL POWER CORPORATION, petitioner,

vs.
HON. ROSE MARIE ALONZO-LEGASTO, as Presiding Judge, RTC of Quezon City, Branch 99,
JOSE MARTINEZ, Deputy Sheriff, RTC of Quezon City, CARMELO V. SISON, Chairman,
Arbitration Board, and FIRST UNITED CONSTRUCTORS CORPORATION, respondents.

Appended with the Contract is the contract price schedule which was submitted by the
respondent FUCC during the bidding. The price for grading excavation was P76.00 per cubic
meter.
Construction activities commenced in August 1992. In the latter part of September 1992 and
after excavating 5.0 meters above the plant elevation, FUCC requested NPC that it be
allowed to blast to the design grade of 495 meters above sea level as its dozers and rippers
could no longer excavate. It further requested that it be paid P1,346.00 per cubic meter
similar to the rate of NPC's project in Palinpinon.
While blasting commenced on October 6, 1992, NPC and FUCC were discussing the
propriety of an extra work order and if such is in order, at what price should FUCC be paid.

DECISION
TINGA, J.:

Sometime in March 1993, NPC Vice President for Engineering Construction, Hector
Campos, created a task force to review FUCC's blasting works. The technical task force
recommended that FUCC be paid P458.07 per cubic meter as such being the price agreed
upon by FUCC.

National Power Corporation (NPC) filed the instant Petition for Review1 dated July 19, 2001, assailing
the Decision2 of the Court of Appeals dated May 28, 2001 which affirmed with modification the
Order3 and Writ of Execution4 respectively dated May 22, 2000 and June 9, 2000 issued by the
Regional Trial Court. In its assailed Decision, the appellate court declared respondent First United
Constructors Corporation (FUCC) entitled to just compensation for blasting works it undertook in
relation to a contract for the construction of power facilities it entered into with petitioner. The Court of
Appeals, however, deleted the award for attorney's fees having found no basis therefor.

The matter was further referred to the Department of Public [W]orks and Highways (DPWH),
which in a letter dated May 19, 1993, recommended the price range of P500.00 to P600.00
per cubic meter as reasonable. It further opined that the price of P983.75 per cubic meter
proposed by Lauro R. Umali, Project Manager of BACMAN II was high. A copy of the DPWH
letter is attached as Annex "C", FUCC's Exhibit EEE-Arbitration.

In a letter dated June 28, 1993, FUCC formally informed NPC that it is accepting the
proposed price of P458.07 per cubic meter. A copy of the said letter is attached as Annex
"D", FUCC's Exhibit L Arbitration.

for the issuance of a cease and [d]esist [o]rder to restrain NPC and other NPC officials
involved in the BACMAN II project from canceling and/or from taking over FUCC's contract
for civil works of said project.

In the meantime, by March 1993, the works in Botong area were in considerable delay. By
May 1993, civil works in Botong were kept at a minimum until on November 1, 1993, the
entire operation in the area completely ceased and FUCC abandoned the project.

Then on November 16, 1994, FUCC filed before the Supreme Court a Petition for Review
assailing the Decision of the Court of [A]ppeals dated October 20, 1994. In its Comment,
NPC raised the issue that FUCC resorted to forum shopping as it applied for a cease and
desist order before the National Ombudsman despite the dissolution of the injunction by the
Court of Appeals.

Several written and verbal warnings were given by NPC to FUCC. On March 14, 1994,
NPC's Board of Directors passed Resolution No. 94-63 approving the recommendation of
President Francisco L. Viray to take over the contract. President Viray's recommendation to
take over the project was compelled by the need to stave-off huge pecuniary and nonmonetary losses, namely:

Pending the petition filed by FUCC before the Supreme Court, on April 20, 1995 the NPC
and FUCC entered into a Compromise Agreement.
Under the Compromise Agreement, the parties agreed on the following:

(a) Generation loss estimated to be at P26,546,400/month;

(b) Payment of steam penalties to PNOC-EDC the amount estimated to
be at P10,206,048.00/month;
(c) Payment of liquidated damages due to the standby of
electromechanical contractor;
(d) Loss of guaranteed protection (warranties) of all delivered plant
equipment and accessories as Mitsubishi Corporation,
electromechanical contractor, will not be liable after six months of
delivery.
To prevent NPC from taking over the project, on March 28, 1994, FUCC filed an action for
Specific Performance and Damages with Preliminary Injunction and Temporary Restraining
Order before Branch 99, Regional Trial Court, Quezon City.
Under paragraph 19 of its Complaint, FUCC admitted that it agreed to pay the price of
P458.07 per cubic meter.
On April 5, 1994, Judge de Guzman issued a temporary restraining order and on April 21,
1994, the trial court resolved to grant the application for issuance of a writ of preliminary
injunction.
On July 7, 1994, NPC filed a Petition for Certiorari with Prayer for Temporary Restraining
Order and Preliminary Injunction before the First Division of the Court of Appeals asserting
that no injunction may issue against any government projects pursuant to Presidential
Decree 1818.
On July 8, 1994, the Court of Appeals through then Associate Justice Bernardo Pardo issued
a temporary restraining order and on October 20, 1994, the said court rendered a Decision
granting NPC's Petition for Certiorari and setting aside the lower court's Order dated April 21,
1994 and the Writ of Preliminary Injunction dated May 5, 1994.
However, notwithstanding the dissolution by the Court of Appeals of the said injunction, on
July 15, 1995, FUCC filed a Complaint before the Office of the Ombudsman against several
NPC employees for alleged violation of Republic Act No. 3019, otherwise known as the AntiGraft and Corrupt Practices Act. Together with the complaint was an Urgent Ex-Parte Motion

1. Defendant shall process and pay the undisputed unpaid billings of Plaintiff in
connection with the entire project fifteen (15) days after a reconciliation of
accounts by both Plaintiff and Defendant or thirty (30) days from the date of
approval of this Compromise Agreement by the Court whichever comes first. Both
parties agree to submit and include those accounts which could not be reconciled
among the issues to be arbitrated as hereunder provided;
2. Plaintiff accepts and acknowledges that Defendant shall have the right to
proceed with the works by re-bidding or negotiating the project immediately upon
the signing of herein Compromise Agreement;
3. This Compromise Agreement shall serve as the Supplemental Agreement for
payment of plaintiff's blasting works at the Botong site;
4. Upon approval of this Compromise Agreement by the Court or Plaintiff's receipt
of payment of this undisputed unpaid billings from Defendant whichever comes
first, the parties shall immediately file a Joint Manifestation and Motion for the
withdrawal of the following Plaintiff's petition from the Supreme Court, Plaintiff's
Complaint from the National Ombudsman, the Complaint and Amended Complaint
from the RTC, Br. 99 of Quezon City;
5. Upon final resolution of the Arbitration, as hereunder prescribed, the parties
shall immediately execute the proper documents mutually terminating Plaintiff's
contract for the civil works of the BACMAN II Project (Contract No. Sp90DLM-918
(I & A);
6. Such mutual termination of Plaintiff's contract shall have the following effects
and/or consequences: (a) the construction works of Plaintiff at the Kawayan and
Bolong sites, at its present stage of completion, shall be accepted and/or deemed
to have been accepted by defendant; (b) Plaintiff shall have no more obligation to
Defendant in respect of the BACMAN II Project except as provided in clause (e)
below; (c) Defendant shall release all retention moneys of plaintiff within a
maximum period of thirty (30) days from the date of final Resolution of the
Arbitration; (d) no retention money shall thenceforth be withheld by Defendant in
its payment to Plaintiff under this Compromise Agreement, and (e) Plaintiff shall
put up a one-year guaranty bond for its completed civil works at the Kawayan site,
retroactive to the date of actual use of the plant by defendant;

7. Plaintiff's blasting works claims and other unresolved claims, as well as the
claims of damages of both parties shall be settled through a two stage process to
wit:

WHEREFORE, claimant is hereby declared entitled to an award of P118,681,328.28 as just

compensation for blasting works, plus ten percent (10%) thereof for attorney's fees and
expenses of litigation.

STAGE 1

Considering that payment in the total amount of P36,550,000.00 had previously been made,
respondent is hereby ordered to pay claimant the remaining sum of P82,131,328.28 for
attorney's fees and expenses of litigation.

7.1 Plaintiff and Defendant shall execute and sign this Compromise
Agreement which they will submit for approval by this Court. Under this
Compromise Agreement both parties agree that:

Pursuant to the Compromise Agreement approved by this Honorable Court, the parties have
agreed that the decision of the Arbitration Board shall be final and executory.

xxx xxx
SO ORDERED.
STAGE 2
7.1 The parties shall submit for arbitration to settle: (a) the price of
blasting, (b) both parties' claims for damages, delays, interests, and (c)
all other unresolved claims of both parties, including the exact volume of
blasted rocks;
7.2 The arbitration shall be through a three-member commission to be
appointed by the Honorable Court. Each party shall nominate one
member. The Chairman of the Arbitration Board shall be [a] person
mutually acceptable to both parties, preferably from the academe;

On December 10, 1999 plaintiff FUCC filed a Motion for Execution while defendant NPC filed
a Motion to Vacate Award by the Arbitration Board on December 20, 1999.
On May 22, 2000 Presiding Judge Rose Marie Alonzo Legasto issued an order the
dispositive portion of which states:
"WHEREFORE, the Arbitration Award issued by the Arbitration Board is hereby APPROVED
and the Motion for Execution filed by plaintiff hereby GRANTED. The Motion to Vacate
Award filed by defendant is hereby DENIED for lack of merit.
Accordingly, let a writ of execution be issued to enforce the Arbitration Award.

7.3 The parties shall likewise agree upon the terms under which the
arbitrable issues shall be referred to the Arbitration Board. The terms of
reference shall form part of the Compromise Agreement and shall be
submitted by the parties to the Honorable Court within a period of seven
(7) days from the signing of the Compromise Agreement;
7.4 The Arbitration Board shall have a non-extendible period of three (3)
months within which to complete the arbitration process and submit its
Decision to the Honorable Court;
7.5 The parties agree that the Decision of the Arbitration Board shall be
final and executory;
7.6 By virtue of this Compromise Agreement, except as herein provided,
the parties shall mutually waive, forgo and dismiss all of their other
claims and/or counterclaim in this case. Plaintiff and defendant warrant
that after approval by the Court of this Compromise Agreement neither
party shall file Criminal or Administrative cases or suits against each
other or its Board or member of its officials on grounds arising from the
case.
The Compromise Agreement was subsequently approved by the Court on May 24, 1995.
The case was subsequently referred by the parties to the arbitration board pursuant to their
Compromise Agreement. On December 9, 1999 the Arbitration Board rendered its ruling the
dispositive portion of which states:

SO ORDERED."5 (Bracketed words supplied)

NPC went to the Court of Appeals on the lone issue of whether respondent judge acted with grave
abuse of discretion in issuing the Order dated May 22, 2000 and directing the issuance of a Writ of
Execution.
In its assailed Decision, the appellate court declared that the court a quo did not commit grave abuse
of discretion considering that the Arbitration Board acted pursuant to its powers under the Compromise
Agreement and that its award has factual and legal bases.
The Court of Appeals gave primacy to the court-approved Compromise Agreement entered into by the
parties and concluded that they intended the decision of the arbitration panel to be final and executory.
Said the court:
For one, what the price agreed to be submitted for arbitration are pure issues of fact (i.e., the
price of blasting; both parties' claims for damages, delay, interests and all other unresolved
claims of both parties, including the exact volume of blasted rocks). Also, the manner by
which the Arbitration Board was formed and the terms under which the arbitrable issues
were referred to said Board are specified in the agreement. Clearly, the parties had left to the
Arbitration Board the final adjudication of their remaining claims and waived their right to
question said Decision of the Board. Hence, they agreed in clear and unequivocal terms in
the Compromise Agreement that said Decision would be immediately final and executory.
Plaintiff relied upon this stipulation in complying with its various obligations under the
agreement. To allow defendant to now go back on its word and start questioning the
Decision would be grossly unfair considering that the latter was also a party to the
Compromise Agreement entered into part of which dealt with the creation of the Arbitration
Board.6

The appellate court likewise held that petitioner failed to present evidence to prove its claim of bias and
partiality on the part of the Chairman of the Arbitration Board, Mr. Carmelo V. Sison (Mr. Sison).
Further, the Court of Appeals found that blasting is not part of the unit price for grading and structural
excavation provided for in the contract for the BACMAN II Project, and that there was no perfected
contract between the parties for an extra work order for blasting. Nonetheless, since FUCC relied on
the representation of petitioner's officials that the extra work order would be submitted to its Board of
Directors for approval and that the blasting works would be paid, the Court of Appeals ruled that FUCC
is entitled to just compensation on grounds of equity and promissory estoppel.
Anent the issue of just compensation, the appellate court took into account the estimate prepared by a
certain Mr. Lauro R. Umali (Mr. Umali), Project Manager of the BACMAN II Project, which itemized the
various costs involved in blasting works and came up with P1,310.82 per cubic meter, consisting of the
direct cost for drilling, blasting excavation, stockpiling and hauling, and a 30% mark up for overhead,
contractor's tax and contingencies. This estimate was later changed to P983.75 per cubic meter to
which FUCC agreed. The Court of Appeals, however, held that just compensation should cover only
the direct costs plus 10% for overhead expenses. Thus, it declared that the amount of P763.007 per
cubic meter is sufficient. Since the total volume of blasted rocks as computed by Dr. Benjamin
Buensuceso, Jr.8 of the U.P. College of Engineering is 97,032.16 cubic meters, FUCC is entitled to the
amount of P74,035,503.50 as just compensation.
Although the Court of Appeals adjudged FUCC entitled to interest,9 the dispositive portion of the
assailed Decision10 did not provide for the payment of interest. Moreover, the award of attorney's fees
was deleted as there was no legal and factual ground for its imposition.
Petitioner, represented by the Office of the Solicitor General in the instant Petition, rehashes its
submissions before the Court of Appeals. It claims that the appellate court failed to pass upon the
following issues:

d. It gravely erred when it relied heavily on the purported letter of NPC Project
Manager Lauro R. Umali, when the same has not been identified nor were the
handwritten entries in Annex ii established to be made by him.
5. The Arbitration Board gravely erred in computing interest at 12% and from the time of
plaintiff's extrajudicial claim despite the fact that herein case is an action for specific
performance and not for payment of loan or forbearance of money, and despite the fact that
it has resolved that there was no perfected contract and there was no bad faith on the part of
defendant.
6. On June 25, 2000, NPC discovered the Sub-Contract Agreement of FUCC with a unit
price of only P430/per cubic meter.11 [Emphasis in the original]
Specifically, petitioner asserts that Mr. Sison exhibited bias and prejudgment when he exhorted it to
pay FUCC for the blasting works after concluding that the latter was allowed to blast. Moreover, Mr.
Sison allegedly attempted to mediate the conflict between the parties in violation of Section
20,12 paragraph 2 of Republic Act No. 876 (R.A. 876) otherwise known as the Arbitration Law.
Petitioner also questions the abrupt manner by which the decision of the Arbitration Board was
released.
Petitioner avers that FUCC's claim for blasting works was not approved by authorized officials in
accordance with Presidential Decree No. 1594 (P.D. 1594) and its implementing rules which
specifically require the approval of the extra work by authorized officials before an extra work order
may be issued in favor of the contractor. Thus, it should not be held liable for the claim. If at all, only
the erring officials should be held liable. Further, FUCC did not present evidence to prove the actual
expenses it incurred for the blasting works. What the Arbitration Board relied upon was the
memorandum of Mr. Umali which was neither identified or authenticated during the arbitration
proceedings nor marked as evidence for FUCC. Moreover, the figures indicated in Mr. Umali's
memorandum were allegedly mere estimates and were recommendatory at most.

1. The Chairman of the Arbitration Board showed extreme bias in prejudging the case.
2. The Chairman of the Arbitration Board greatly exceeded his powers when he mediated for
settlement in the court of arbitration proceedings.
3. The Chairman of the Arbitration Board committed serious irregularity in hastily convening
the Board in two days, which thereafter released its report.
4. The Arbitration Board Committed manifest injustice prejudicial to petitioner based on the
following:
a. It rendered an award based on equity despite the mandatory provision of the
law.
b. The Board's decision to justify that equity applies herein despite the fact that
FUCC never submitted its own actual costs for blasting and PHESCO, INC., the
succeeding contractor, did not employ blasting but used ordinary excavation
method at P75.59 per cubic meter which is approximately the same unit price of
plaintiff (FUCC).
c. It gravely erred when the Board claimed that an award of just compensation
must be given to respondent FUCC for what it has actually spent and yet instead
of using as basis P458.07 which is the price agreed upon by FUCC, it chose an
estimate made by an NPC employee.

Petitioner likewise claims that its succeeding contractor, Phesco, Inc. (Phesco), was able to excavate
the same rock formation without blasting.
Finally, it asserts that the award of P763.00 per cubic meter has no factual and legal basis as the subcontract between FUCC and its blasting sub-contractor, Dynamic Blasting Specialists of the Philippines
(Dynamic), was only P430.00 per cubic meter.
In its Comment13 dated October 15, 2001, FUCC points out that petitioner's arguments are exactly the
same as the ones it raised before the Arbitration Board, the trial court and the Court of Appeals.
Moreover, in the Compromise Agreement between the parties, petitioner committed to abide by the
decision of the Arbitration Board. It should not now be allowed to question the decision.
FUCC likewise notes that Atty. Jose G. Samonte (Atty. Samonte), one of the members of the Arbitration
Board, was nominated by petitioner itself. If there was any irregularity in its proceedings such as the
bias and prejudgment petitioner imputes upon Mr. Sison, Atty. Samonte would have complained. As it
is, Atty. Samonte concurred in the decision of the Arbitration Board and dissented only as to the award
of attorney's fees.
As regards the issue of interest, FUCC claims that the case involves forbearance of money and not a
claim for damages for breach of an obligation in which case interest on the amount of damages
awarded may be imposed at the rate of six percent (6%) per annum.

Finally, FUCC asserts that its sub-contract agreement with Dynamic is not newly-discovered evidence.
Petitioner's lawyers allegedly had a copy of the sub-contract in their possession. In any event, the unit
price of P430.00 per cubic meter appearing in the sub-contract represents only a fraction of the costs
incurred by FUCC for the blasting works.
Petitioner filed a Reply14 dated March 18, 2002 reiterating its earlier submissions.
The parties in the present case mutually agreed to submit to arbitration the settlement of the price of
blasting, the parties' claims for damages, delay and interests and all other unresolved claims including
the exact volume of blasted rocks.15 They further mutually agreed that the decision of the Arbitration
Board shall be final and immediately executory.16
A stipulation submitting an ongoing dispute to arbitration is valid. As a rule, the arbitrator's award
cannot be set aside for mere errors of judgment either as to the law or as to the facts. Courts are
generally without power to amend or overrule merely because of disagreement with matters of law or
facts determined by the arbitrators. They will not review the findings of law and fact contained in an
award, and will not undertake to substitute their judgment for that of the arbitrators. A contrary rule
would make an arbitration award the commencement, not the end, of litigation. Errors of law and fact,
or an erroneous decision on matters submitted to the judgment of the arbitrators, are insufficient to
invalidate an award fairly and honestly made. Judicial review of an arbitration award is, thus, more
limited than judicial review of a trial.17
However, an arbitration award is not absolute and without exceptions. Where the conditions described
in Articles 2038, 2039 and 2040 of the Civil Code18 applicable to both compromises and arbitrations are
obtaining, the arbitrators' award may be annulled or rescinded.19 Additionally, judicial review of an
arbitration award is warranted when the complaining party has presented proof of the existence of any
of the grounds for vacating, modifying or correcting an award outlined under Sections 24 and 25 of
R.A. 876, viz:
Section 24. Grounds for vacating an award. In any of the following cases, the court must
make an order vacating the award upon the petition of any party to the controversy when
such party proves affirmatively that in the arbitration proceedings:
(a) The award was procured by corruption, fraud, or other undue means; or
(b) That there was evident partiality or corruption in the arbitrators or any of them;
or
(c) That the arbitrators were guilty of misconduct in refusing to postpone the
hearing upon sufficient cause shown, or in refusing to hear evidence pertinent and
material to the controversy; that one or more of the arbitrators was disqualified to
act as such under section nine hereof, and willfully refrained from disclosing such
disqualifications or of any other misbehavior by which the rights of any party have
been materially prejudiced; or
(d) That the arbitrators exceeded their powers, or so imperfectly executed them,
that a mutual, final and definite award upon the subject matter submitted to them
was not made.
When an award is vacated, the court, in its discretion, may direct a new hearing either before
the same arbitrators or before a new arbitrator or arbitrators to be chosen in the manner
provided in the submission or contract for the selection of the original arbitrator or arbitrators,

and any provision limiting the time in which the arbitrators may make a decision shall be
deemed applicable to the new arbitration to commence from the date of the court's order.
Where the court vacates an award, costs not exceeding fifty pesos and disbursements may
be awarded to the prevailing party and the payment thereof may be enforced in like manner
as the payment of costs upon the motion in an action.
Section 25. Grounds for modifying or correcting an award. In any one of the following
cases, the court must make an order modifying or correcting the award, upon the application
of any party to the controversy which was arbitrated:
(a) Where there was an evident miscalculation of figures, or an evident mistake in
the description of any person, thing or property referred to in the award; or
(b) Where the arbitrators have awarded upon a matter not submitted to them, not
affecting the merits of the decision upon the matter submitted; or
(c) Where the award is imperfect in a matter of form not affecting the merits of the
controversy, and if it had been a commissioner's report, the defect could have
been amended or disregarded by the court.
The order may modify and correct the award so as to effect the intent thereof and promote
justice between the parties.
In this case, petitioner does not specify which of the foregoing grounds it relies upon for judicial review.
Petitioner avers that "if and when the factual circumstances referred to in the provisions
aforementioned are present, judicial review of the award is warranted."20 From its presentation of
issues, however, it appears that the alleged evident partiality of Mr. Sison is singled out as a ground to
vacate the board's decision.
We note, however, that the Court of Appeals found that petitioner did not present any proof to back up
its claim of evident partiality on the part of Mr. Sison. Its averments to the effect that Mr. Sison was
biased and had prejudged the case do not suffice to establish evident partiality. Neither does the fact
that a party was disadvantaged by the decision of the arbitration committee prove evident partiality.21
According to the appellate court, "[p]etitioner was never deprived of the right to present evidence nor
was there any showing that the Board showed signs of any bias in favor of FUCC. As correctly found
by the trial court, this Court cannot find its way to support petitioner's contention that there was evident
partiality in the assailed Award of the Arbitrator in favor of the respondent because the conclusion of
the Board, which the Court found to be well-founded, is fully supported by substantial evidence." 22
There is no reason to depart from this conclusion.
However, we take exception to the arbitrators' determination that based on promissory estoppel per se
or alone, FUCC is entitled to just compensation for blasting works for the reasons discussed
hereunder.
Section 9 of P.D. No. 1594, entitled Prescribing Policies, Guidelines, Rules and Regulations for
Government Infrastructure Contracts, provides:
SECTION 9. Change Order and Extra Work Order.A change order or extra work order may
be issued only for works necessary for the completion of the project and, therefore, shall be

within the general scope of the contract as bid[ded] and awarded. All change orders and
extra work orders shall be subject to the approval of the Minister of Public Works,
Transportation and Communications, the Minister of Public Highways, or the Minister of
Energy, as the case may be.
The pertinent portions of the Implementing Rules and Regulations of P.D. 1594 provide:
CI - Contract Implementation:
These Provisions Refer to Activities During Project Construction, i.e., After Contract Award
Until Completion, Except as May Otherwise be Specifically Referred to Provisions Under
Section II. IB - Instructions to Bidders.
CI 1 - Variation Orders - Change Order/Extra Work Order/Supplemental Agreement
4. An Extra Work Order may be issued by the implementing official to cover the introduction
of new work items after the same has been found to strictly comply with Section CI-1-1 and
approved by the appropriate official if the amount of the Extra Work Order is within the limits
of the former's authority to approve original contracts and under the following conditions:
a. Where there are additional works needed and necessary for the completion, improvement
or protection of the project which were not included as items of work in the original contract.
b. Where there are subsurface or latent physical conditions at the site differing materially
from those indicated in the contract.
c. Where there are duly unknown physical conditions at the site of an unusual nature
differing materially from those ordinarily encountered and generally recognized as inherent in
the work or character provided for in the contract.
d. Where there are duly approved construction drawings or any instruction issued by the
implementing office/agency during the term of contract which involve extra cost.

6. A separate Supplemental Agreement may be entered into for all Change Orders and Extra
Work Orders if the aggregate amount exceeds 25% of the escalated original contract price.
All change orders/extra work orders beyond 100% of the escalated original contract cost
shall be subject to public bidding except where the works involved are inseparable from the
original scope of the project in which case negotiation with the incumbent contractor may be
allowed, subject to approval by the appropriate authorities.
7. Any Variation Order (Change Order, Extra Work Order or Supplemental Agreement) shall
be subject to the escalation formula used to adjust the original contract price less the cost of
mobilization. In claiming for any Variation Order, the contractor shall, within seven (7)
calendar days after such work has been commenced or after the circumstances leading to
such condition(s) leading to the extra cost, and within 28 calendar days deliver a written
communication giving full and detailed particulars of any extra cost in order that it may be
investigated at that time. Failure to provide either of such notices in the time stipulated shall
constitute a waiver by the contractor for any claim. The preparation and submission of
Change Orders, Extra Work Orders or Supplemental Agreements are as follows:

a. If the Project Engineer believes that a Change Order, Extra Work Order or Supplemental
Agreement should be issued, he shall prepare the proposed Order or Supplemental
Agreement accompanied with the notices submitted by the contractor, the plans therefore,
his computations as to the quantities of the additional works involved per item indicating the
specific stations where such works are needed, the date of his inspections and
investigations thereon, and the log book thereof, and a detailed estimate of the unit cost of
such items of work, together with his justifications for the need of such Change Order, Extra
Work Order or Supplemental Agreement, and shall submit the same to the Regional Director
of office/agency/corporation concerned.
b. The Regional Director concerned, upon receipt of the proposed Change Order, Extra
Work Order or Supplemental Agreement shall immediately instruct the technical staff of the
Region to conduct an on-the-spot investigation to verify the need for the work to be
prosecuted. A report of such verification shall be submitted directly to the Regional Director
concerned.
c. The Regional Director concerned after being satisfied that such Change Order, Extra Work
Order or Supplemental Agreement is justified and necessary, shall review the estimated
quantities and prices and forward the proposal with the supporting documentation to the
head of office/agency/corporation for consideration.
d. If, after review of the plans, quantities and estimated unit cost of the items of work
involved, the proper office/agency/corporation committee empowered to review and evaluate
Change Orders, Extra Work Orders or Supplemental Agreements recommends approval
thereof, the head of office/agency/corporation, believing the Change Order, Extra Work
Order or Supplemental Agreement to be in order, shall approve the same. The limits of
approving authority for any individual, and the aggregate of, Change Orders, Extra Work
Orders or Supplemental Agreements for any project of the head of office/agency/corporation
shall not be greater than those granted for an original project.
CI 3 - Conditions under which Contractor is to Start Work under Variation Orders and
Receive Payments
1. Under no circumstances shall a contractor proceed to commence work under any Change
Order, Extra Work Order or Supplemental Agreement unless it has been approved by the
Secretary or his duly authorized representative. Exceptions to the preceding rule are the
following:
a. The Regional Director, or its equivalent position in agencies/offices/corporations without
plantilla position for the same, may, subject to the availability of funds, authorize the
immediate start of work under any Change or Extra Work Order under any or all of the
following conditions:
(1) In the event of an emergency where the prosecution of the work is urgent to avoid
detriment to public service, or damage to life and/or property; and/or
(2) When time is of the essence; provided, however, that such approval is valid on work
done up to the point where the cumulative increase in value of work on the project which has
not yet been duly fully approved does not exceed five percent (5%) of the adjusted original
contract price, or P500,000 whichever is less; provided, further, that immediately after the
start of work, the corresponding Change/Extra Work Order shall be prepared and submitted
for approval in accordance with the above rules herein set. Payments for works satisfactorily
accomplished on any Change/Extra Work Order may be made only after approval of the
same by the Secretary or his duly authorized representative.

b. For a Change/Extra Work Order involving a cumulative amount exceeding five percent
(5%) of the original contract price or original adjusted contract price no work thereon may be
commenced unless said Change/Extra Work Order has been approved by the Secretary or
his duly authorized representative. [Emphasis supplied]
It is petitioner's submission, and FUCC does not deny, that the claim for payment of blasting works in
Botong alone was approximately P170,000,000.00, a figure which far exceeds the original contract
price of P80,000,000.00 for two (2) project sites. Under the foregoing implementing rules, for an extra
work order which exceeds 5% of the original contract price, no blasting work may be commenced
without the approval of the Secretary or his duly authorized representative. Moreover, the procedure
for the preparation and approval of the extra work order outlined under Contract Implementation (CI)
1(7) above should have been complied with. Accordingly, petitioner's officials should not have
authorized the commencement of blasting works nor should FUCC have proceeded with the same.
The following events, culled from the decision of the Arbitration Board and the assailed Decision, are
made the bases for the finding of promissory estoppel on the part of petitioner:
1. After claimant [respondent herein] encountered what it claimed to be massive hard rock
formation (Testimony of witness Dumaliang, TSN, 28 October 1996, pp. 41-42; Testimony of
witness Lataquin, 28 November 1996, pp. 2-3; 20-23; Exh. "JJJ" and sub-markings) and
informed respondent [petitioner herein] about it, respondent's own geologists went to the
Botong site to investigate and confirmed the rock formation and recommended blasting (Cf.
Memorandum of Mr. Petronilo E. Pana, Acting Manager of the Geoscience Services
Department and the report of the geologists who conducted the site investigation; Exhs. "F"
and "F-1").
2. Claimant asked for clearance to blast the rock formation to the design grade (Letter dated
28 September 1992; Exh. "UU"). The engineers of respondent at the project site advised
claimant to proceed with its suggested method of extraction (Order/Instruction given by Mr.
Reuel R. Declaro and Mr. Francis A. Paderna dated 29 September 1992; Exh. "C").
3. Claimant requested that the intended blasting works be confirmed as extra work order by
responsible officials of respondent directly involved in the BACMAN II Project (i.e., then
BACMAN II Project Manager, Mr. Lauro R. Umali and Mr. Angelito G. Senga, Section Chief,
Civil Engineering Design of respondent's Design Department which bidded the project).
These officials issued verbal instructions to the effect: (a) that claimant could blast the rock
formation down to the design grade of 495 masl; (b) that said blasting works would be an
extra work order; and (c) that claimant would be paid for said blasting works using the price
per cubic meter for similar blasting works at Palinpinon, or at P1,346.00 per cubic meter.
4. Claimant sent two (2) confirmatory letters to respondent, both addressed to its President,
one dated 30 September 1992, and sent through Mr. Angelito Senga, Chief Civil Design
Thermal, the other dated 02 October 1992, and sent through Mr. Lauro R. Umali, Project
ManagerBacMan II (Exhs. "D" and "E"; Testimony of witness Dumaliang, TSN, 28 October
1996, pp. 43-49). The identical letters read:
We wish to confirm your instruction for us to proceed with the blasting of the Botong Plant
site to the design grade pending issuance of the relevant variation order. This is to avoid
delay in the implementation of this critical project due to the urgent need to blast rocks on
the plant site.
We are confirming further your statement that the said blasting works is an extra work order
and that we will be paid using the price established in your Palinpinon contract with Phesco.

Thank you for your timely action and we look forward to the immediate issuance of the extra
work order.
We are now mobilizing equipment and manpower for the said work and hope to start blasting
next week.
5. Respondent received the letters but did not reply thereto nor countermand the earlier
instructions given to claimant to proceed with the blasting works. The due execution and
authenticity of these letters (Exhs. "D-1" and "E-1") and the fact of receipt (Exhs. "D-2" and
"E-2") were duly proved by claimant (Testimony of witness Dumaliang, TSN, 28 October
1996, 43-49).
6. In mid-October 1992, three (3) Vice-Presidents of respondent visited the project site and
were informed of claimant's blasting activities. While respondent claims that one of the VicePresidents, Mr. Rodrigo Falcon, raised objections to claimant's blasting works as an extra
work order, they instructed claimant to speed up the works because of the power crisis then
hounding the country. Stipulation no. 24 of the Joint Stipulation of Facts of the parties which
reads: "24. In mid-October 1992, three (3) Vice-Presidents of respondent, namely: Mr.
Hector N. Campos, Sr., of Engineering Construction, Mr. C.A. Pastoral of Engineering
Design, and Mr. Rodrigo P. Falcon, visited the project site and were likewise apprised of
claimant's blasting activities. They never complained about the blasting works, much less
ordered its cessation. In fact, no official of respondent ever ordered that the blasting works
be stopped."
7. After visiting Botong, Mr. Hector N. Campos, Sr., then Vice President of Engineering
Construction, instructed Mr. Fernando A. Magallanes then Manager of the Luzon
Engineering Projects Department, to evaluate claimant's blasting works and to submit his
recommendations on the proper price therefor. In a memorandum dated 17 November 1992
(Exh. "G" and sub-markings), Mr. Magallanes confirmed that claimant's blasting works was
an extra work order and recommended that it be paid at the price for similar blasting works
at Palinpinon, or at P1,346.00 per cubic meter. Mr. Campos concurred with the findings and
recommendations of Mr. Magallanes and instructed Mr. Lauro R. Umali, then Project
Manager of BacMan II, to implement the same as shown by his instructions scribbled on the
memorandum.
8. Mr. Umali and the project team prepared proposed Extra Work Order No. 2 Blasting
(Exh. "DDD" Memorandum of Mr. Umali to Mr. Campos dated 20 January 1993 forwarding
proposed Extra Work Order No. 2), recommending a price of P983.75 per cubic meter for
claimant's blasting works. Claimant agreed to this price (Testimony of witness Dumaliang, 7
November 1996, p. 48).
9. On 19 February 1993, claimant brought the matter of its unpaid blasting works to the
attention of the then NPC Chairman [also Secretary of the Department of Energy then] Delfin
L. Lazaro during a meeting with the multi-sectoral task force monitoring the implementation
of power plant projects, who asked then NPC President Pablo B. Malixi what he was doing
about the problem. President Malixi thereafter convened respondent's vice-presidents and
ordered them to quickly document the variation order and pay claimant. The vice-president,
and specifically Mr. Campos, pledged that the variation order for claimant's blasting works
would be submitted for the approval of the NPC Board during the first week of March 1993.
Claimant thereafter sent respondent a letter dated 22 February 1993 (Ex. "K") to confirm this
pledge (Testimony of witness Dumaliang, 7 November 1996, pp. 28-30).
10. Mr. Campos created a task force (i.e., the Technical Task Force on the Study and Review
of Extra Work Order No. 2; Exh. "FFF") to review claimant's blasting works. After several

meetings with the task force, claimant agreed to the lower price of P458.07 per cubic meter,
in exchange for quick payment (Testimony of witness Dumaliang, 7 November 1996, p. 30).

corporate entity performing proprietary functions. It has its own assets and liabilities and exercises
corporate powers, including the power to enter into all contracts, through its Board of Directors.

11. However, no variation order was issued and no payment came, although it appears from
two (2) radiograms sent by Mr. Campos to Mr. Paderna at the project site that the variation
order was being processed and that payment to claimant was forthcoming (Exhs. "AAA" and
"BBB").

In this case, petitioner's officials exceeded the scope of their authority when they authorized FUCC to
commence blasting works without an extra work order properly approved in accordance with P.D.
1594. Their acts cannot bind petitioner unless it has ratified such acts or is estopped from disclaiming
them.26

12. Respondent asked the Department of Public Works and Highways (DPWH) about the
standard prices for blasting in the projects of the DPWH. The DPWH officially replied to
respondent's query in a letter dated 19 May 1993 but the task force still failed to seek Board
approval for claimant's variation order. The task force eventually recommended that the
issue of grading excavation and structural excavation and the unit prices therefor be brought
into voluntary arbitration (Testimony of witness Dumaliang, 7 November 1996, pp. 30-57).

However, the Compromise Agreement entered into by the parties, petitioner being represented by its
President, Mr. Guido Alfredo A. Delgado, acting pursuant to its Board Resolution No. 95-54 dated April
3, 1995, is a confirmatory act signifying petitioner's ratification of all the prior acts of its officers.
Significantly, the parties agreed that "[t]his Compromise Agreement shall serve as the Supplemental
Agreement for the payment of plaintiff's blasting works at the Botong site"27 in accordance with CI 1(6)
afore-quoted. In other words, it is primarily by the force of this Compromise Agreement that the Court is
constrained to declare FUCC entitled to payment for the blasting works it undertook.

13. Claimant thereafter saw Mr. Francisco L. Viray, the new NPC President, who proposed
that claimant accept the price of P458.07 per cubic meter for its blasting works with the
balance of its claim to be the subject of arbitration. Claimant accepted the offer and sent the
letter dated 28 September 1993 (Exh. "O") to formalize said acceptance. However, no
variation order was issued and the promised payment never came. (Testimony of witness
Dumaliang, 7 November 1996, p. 58).

Moreover, since the blasting works were already rendered by FUCC and accepted by petitioner and in
the absence of proof that the blasting was done gratuitously, it is but equitable that petitioner should
make compensation therefor, pursuant to the principle that no one should be permitted to enrich
himself at the expense of another.28
This brings us to the issue of just compensation.

14. After some time, claimant met Mr. Viray on 19 October 1993 at the project site, and with
some NPC officers in attendance, particularly Mr. Gilberto A. Pastoral, Vice-President for
Engineering Design, who was instructed by Mr. Viray to prepare the necessary
memorandum (i.e., that claimant would be paid P458.07 per cubic meter with the balance of
its claim to be the subject of arbitration) for the approval of the NPC Board. Claimant
formalized what transpired during this meeting in its letter to Mr. Pastoral dated 22 October
1993 (Exhibit "R"). But no action was taken by Mr. Pastoral and no variation order was
issued by respondent (Testimony of witness Dumaliang, 7 November 1996, pp. 5758).23 [Emphasis supplied and bracketed words]
Promissory estoppel "may arise from the making of a promise, even though without consideration, if it
was intended that the promise should be relied upon and in fact it was relied upon, and if a refusal to
enforce it would be virtually to sanction the perpetration of fraud or would result in other
injustice."24 Promissory estoppel presupposes the existence of a promise on the part of one against
whom estoppel is claimed. The promise must be plain and unambiguous and sufficiently specific so
that the court can understand the obligation assumed and enforce the promise according to its terms.25
In the present case, the foregoing events clearly evince that the promise that the blasting works would
be paid was predicated on the approval of the extra work order by petitioner's Board. Even FUCC
acknowledged that the blasting works should be an extra work order and requested that the extra work
order be confirmed as such and approved by the appropriate officials. Notably, even as the extra work
order allegedly promised to it was not yet forthcoming, FUCC commenced blasting.
The alleged promise to pay was therefore conditional and up to this point, promissory estoppel cannot
be established as the basis of petitioner's liability especially in light of P.D. 1594 and its implementing
rules of which both parties are presumed to have knowledge. In Mendoza v. Court of Appeals, supra,
we ruled that "[a] cause of action for promissory estoppel does not lie where an alleged oral promise
was conditional, so that reliance upon it was not reasonable. It does not operate to create liability
where it does not otherwise exist."
Petitioner's argument that it is not bound by the acts of its officials who acted beyond the scope of their
authority in allowing the blasting works is correct. Petitioner is a government agency with a juridical
personality separate and distinct from the government. It is not a mere agency of the government but a

The parties proposed in the terms of reference jointly submitted to the Arbitration Board that should
FUCC be adjudged entitled to just compensation for its blasting works, the price therefor should be
determined based on the payment for blasting works in similar projects of FUCC and the amount it
paid to its blasting subcontractor.29They agreed further that "the price of the blasting at the Botong site .
. . shall range from Defendant's position of P76.00 per cubic meter as per contract to a maximum of
P1,144.00"30
Petitioner contends that the Arbitration Board, trial court and the appellate court unduly relied on the
memorandum of Mr. Umali which was allegedly not marked as an exhibit. We note, however, that this
memorandum actually forms part of the record of the case as Exhibit "DDD."31 Moreover, both the
Arbitration Board and the Court of Appeals found that Mr. Umali's proposal is the best evidence on
record as it is supported by detailed cost estimates that will serve as basis to determine just
compensation.
While the Arbitration Board found that FUCC did not present evidence showing the amount it paid to its
blasting sub-contractor, it did present testimony to the effect that it incurred other costs and expenses
on top of the actual blasting cost. Hence, the amount of P430.00 per cubic meter indicated in FUCC's
Contract of Agreement with Dynamic is not controlling.
Moreover, FUCC presented evidence showing that in two (2) other projects where blasting works were
undertaken, petitioner paid the contractors P1,346 per cubic meter for blasting and disposal of solid
rocks in the Palinpinon project and P1,144.51 per cubic meter for rock excavation in the Hermosa
Balintawak project. Besides, while petitioner claims that in a contract with Wilper Construction for the
construction of the Tayabas sub-station, the price agreed for blasting was only P96.13, petitioner itself
did not present evidence in support of this claim.32
Parenthetically, the point raised by petitioner that its subsequent contractor, Phesco, did not undertake
blasting works in excavating the same rock formation is extraneous and irrelevant. The fact is that
petitioner allowed FUCC to blast and undertook to pay for the blasting works.

At this point, we hearken to the rule that the findings of the Arbitration Board, affirmed by the trial court
and the Court of Appeals and supported as they are by substantial evidence, should be accorded not
only respect but finality.33 Accordingly, the amount of P763.00 per cubic meter fixed by the Arbitration
Board and affirmed by the appellate court as just compensation should stand.
As regards the issue of interest, while the appellate court declared in the body of its Decision "that
interest which would represent the cost of the money spent be imposed on the money actually spent
by claimant for the blasting works,"34 there is no pronouncement as to the payment of interest in the
dispositive portion of the Decision even as it specifically deleted the award of attorney's fees.
Despite its knowledge of the appellate court's omission, FUCC did not file a motion for reconsideration
or appeal from its Decision. In failing to do so, FUCC allowed the Decision to become final as to it.
In Edwards v. Arce,35 we ruled that in a case decided by a court, the true judgment of legal effect is that
entered by the clerk of said court pursuant to the dispositive part of its decision. The only portion of the
decision that may be the subject of execution is that which is ordained or decreed in the dispositive
portion. Whatever may be found in the body of the decision can only be considered as part of the
reasons or conclusions of the court and serve only as guides to determine the ratio decidendi.36
Even so, the Court allows a judgment which had become final and executory to be clarified when there
is an ambiguity caused by an omission or mistake in the dispositive portion of the decision.37 In
Reinsurance Company of the Orient, Inc. v. Court of Appeals,38 we held:
In Republic Surety and Insurance Company, Inc. v. Intermediate Appellate Court, the Court
applying the above doctrine said:
"xxx We clarify, in other words, what we did affirm. What is involved here is not what is
ordinarily regarded as a clerical error in the dispositive part of the decision of the Court of
First Instance, which type of error is perhaps best typified by an error in arithmetical
computation. At the same time, what is involved here is not a correction of an erroneous
judgment or dispositive portion of a judgment. What we believe is involved here is in the
nature of an inadvertent omission on the part of the Court of First Instance (which should
have been noticed by private respondent's counsel who had prepared the complaint), of
what might be described as a logical follow-through of something set forth both in the body
of the decision and in the dispositive portion thereof: the inevitable follow-through, or
translation into, operational or behavioral terms, of the annulment of the Deed of Sale with
Assumption of Mortgage, from which petitioners' title or claim of title embodied in TCT
133153 flows." (Italics supplied)39
In this case, the omission of the award of interest was obviously inadvertent. Correction is therefore in
order. However, we do not agree with the Arbitration Board that the interest should be computed at
12%. Since the case does not involve a loan or forbearance of money, goods or credit and court
judgments thereon, the interest due shall be computed at 6% per annum computed from the time the
claim was made in 1992 as determined by the Arbitration Board and in accordance with Articles 2209
and 1169 of the Civil Code. The actual base for the computation of legal interest shall be on the
amount finally adjudged.40 Further, when the judgment awarding a sum of money becomes final and
executory, the rate of legal interest shall be 12% per annum from such finality until its satisfaction, this
interim period being deemed to be by then an equivalent to a forbearance of credit.41
WHEREFORE, the petition is GRANTED in part. The appealed decision is MODIFIED in that the
amount of P74,035,503.50 shall earn legal interest of six percent (6%) from 1992. A twelve percent
(12%) interest, in lieu of six percent (6%), shall be imposed on such amount upon finality of this
decision until the payment thereof.

SO ORDERED.

GANCAYCO, J.:
Is the Regional Trial Court of the same category as the Professional Regulation Commission so that it
cannot pass upon the validity of the administrative acts of the latter? Can this Commission lawfully
prohibit the examiness from attending review classes, receiving handout materials, tips, or the like
three (3) days before the date of the examination? Theses are the issues presented to the court by this
petition for certiorari to review the decision of the Court of Appeals promulagated on January 13, 1987,
in CA-G.R. SP No. 10598, * declaring null and void the other dated Ocober 21, 1986 issued by the
Regional Trial Court of Manila, Branch 32 in Civil Case No. 86-37950 entitled " Lupo L. Lupangco, et
al. vs. Professional Regulation Commission."
The records shows the following undisputed facts:
On or about October 6, 1986, herein respondent Professional Regulation Commission (PRC) issued
Resolution No. 105 as parts of its "Additional Instructions to Examiness," to all those applying for
admission to take the licensure examinations in accountancy. The resolution embodied the following
pertinent provisions:
No examinee shall attend any review class, briefing, conference or the like
conducted by, or shall receive any hand-out, review material, or any tip from any
school, college or university, or any review center or the like or any reviewer,
lecturer, instructor official or employee of any of the aforementioned or similars
institutions during the three days immediately proceeding every examination day
including examination day.
Any examinee violating this instruction shall be subject to the sanctions prescribed
by Sec. 8, Art. III of the Rules and Regulations of the Commission. 1
On October 16, 1986, herein petitioners, all reviewees preparing to take the licensure examinations in
accountancy schedule on October 25 and November 2 of the same year, filed on their own behalf of all
others similarly situated like them, with the Regional Trial Court of Manila, Branch XXXII, a complaint
for injuction with a prayer with the issuance of a writ of a preliminary injunction against respondent
PRC to restrain the latter from enforcing the above-mentioned resolution and to declare the same
unconstitution.

G.R. No. 77372 April 29, 1988

LUPO L. LUPANGCO, RAYMOND S. MANGKAL, NORMAN A. MESINA, ALEXANDER R.
REGUYAL, JOCELYN P. CATAPANG, ENRICO V. REGALADO, JEROME O. ARCEGA, ERNESTOC.
BLAS, JR., ELPEDIO M. ALMAZAN, KARL CAESAR R. RIMANDO, petitioner,
vs.
COURT OF APPEALS and PROFESSIONAL REGULATION COMMISSION, respondent.
Balgos & Perez Law Offices for petitioners.
The Solicitor General for respondents.

Respondent PRC filed a motion to dismiss on October 21, 1987 on the ground that the lower court had
no jurisdiction to review and to enjoin the enforcement of its resolution. In an Order of October 21,
1987, the lower court declared that it had jurisdiction to try the case and enjoined the respondent
commission from enforcing and giving effect to Resolution No. 105 which it found to be
unconstitutional.
Not satisfied therewith, respondent PRC, on November 10, 1986, filed with the Court of Appeals a
petition for the nullification of the above Order of the lower court. Said petiton was granted in the
Decision of the Court of Appeals promulagated on January 13, 1987, to wit:
WHEREFORE, finding the petition meritorious the same is hereby GRANTED and
the other dated October 21, 1986 issued by respondent court is declared null and
void. The respondent court is further directed to dismiss with prejudice Civil Case

No. 86-37950 for want of jurisdiction over the subject matter thereof. No cost in
this instance.
SO ORDERED. 2
Hence, this petition.
The Court of Appeals, in deciding that the Regional Trial Court of Manila had no jurisdiction to entertain
the case and to enjoin the enforcement of the Resolution No. 105, stated as its basis its conclusion
that the Professional Regulation Commission and the Regional Trial Court are co-equal bodies. Thus it
held
That the petitioner Professional Regulatory Commission is at least a co-equal
body with the Regional Trial Court is beyond question, and co-equal bodies have
no power to control each other or interfere with each other's acts. 3
To strenghten its position, the Court of Appeals relied heavily on National Electrification Administration
vs. Mendoza, 4 which cites Pineda vs. Lantin 5 and Philippine Pacific Fishing, Inc. vs. Luna, 6 where this
Court held that a Court of First Instance cannot interfere with the orders of the Securities and
Exchange Commission, the two being co-equal bodies.
After a close scrutiny of the facts and the record of this case,
We rule in favor of the petitioner.
The cases cited by respondent court are not in point. It is glaringly apparent that the reason why this
Court ruled that the Court of First Instance could not interfere with the orders of the Securities and
Exchange Commission was that this was so provided for by the law. In Pineda vs. Lantin, We
explained that whenever a party is aggrieved by or disagree with an order or ruling of the Securities
and Exchange Commission, he cannot seek relief from courts of general jurisdiction since under the
Rules of Court and Commonwealth Act No. 83, as amended by Republic Act No. 635, creating and
setting forth the powers and functions of the old Securities and Exchange Commission, his remedy is
to go the Supreme Court on a petition for review. Likewise, in Philippine Pacific Fishing Co., Inc. vs.
Luna, it was stressed that if an order of the Securities and Exchange Commission is erroneous, the
appropriate remedy take is first, within the Commission itself, then, to the Supreme Court as mandated
in Presidential Decree No. 902-A, the law creating the new Securities and Exchange Commission.
Nowhere in the said cases was it held that a Court of First Instance has no jurisdiction over all other
government agencies. On the contrary, the ruling was specifically limited to the Securities and
Exchange Commission.
The respondent court erred when it place the Securities and Exchange Commission and the
Professional Regulation Commsision in the same category. As alraedy mentioned, with respect to the
Securities and Exchange Commission, the laws cited explicitly provide with the procedure that need be
taken when one is aggrieved by its order or ruling. Upon the other hand, there is no law providing for
the next course of action for a party who wants to question a ruling or order of the Professional
Regulation Commission. Unlike Commonwealth Act No. 83 and Presidential Decree No. 902-A, there
is no provision in Presidential Decree No. 223, creating the Professional Regulation Commission, that
orders or resolutions of the Commission are appealable either to the Court of Appeals or to

theSupreme Court. Consequently, Civil Case No. 86-37950, which was filed in order to enjoin the
enforcement of a resolution of the respondent Professional Regulation Commission alleged to be
unconstitutional, should fall within the general jurisdiction of the Court of First Instance, now the
Regional Trial Court. 7
What is clear from Presidential Decree No. 223 is that the Professional Regulation Commission is
attached to the Office of the President for general direction and coordination. 8 Well settled in our
jurisprudence is the view that even acts of the Office of the President may be reviewed by the Court of
First Instance (now the Regional Trial Court). In Medalla vs. Sayo, 9 this rule was thoroughly
propounded on, to wit:
In so far as jurisdiction of the Court below to review by certiorari decisions and/or resolutions
of the Civil Service Commission and of the residential Executive Asssistant is concerned,
there should be no question but that the power of judicial review should be upheld. The
following rulings buttress this conclusion:
The objection to a judicial review of a Presidential act arises from a failure to
recognize the most important principle in our system of government, i.e., the
separation of powers into three co-equal departments, the executives, the
legislative and the judicial, each supreme within its own assigned powers and
duties. When a presidential act is challenged before the courts of justice, it is
not to be implied therefrom that the Executive is being made subject and
subordinate to the courts. The legality of his acts are under judicial review,
not because the Executive is inferior to the courts, but because the law is
above the Chief Executive himself, and the courts seek only to interpret,
apply or implement it (the law). A judicial review of the President's decision on
a case of an employee decided by the Civil Service Board of Appeals should
be viewed in this light and the bringing of the case to the Courts should be
governed by the same principles as govern the jucucial review of all
administrative acts of all administrative officers. 10
Republic vs. Presiding Judge, CFI of Lanao del Norte, Br. II, 11 is another case in point. Here, "the
Executive Office"' of the Department of Education and Culture issued Memorandum Order No. 93
under the authority of then Secretary of Education Juan Manuel. As in this case, a complaint for
injunction was filed with the Court of First Instance of Lanao del Norte because, allegedly, the
enforcement of the circular would impair some contracts already entered into by public school
teachers. It was the contention of petitioner therein that "the Court of First Instance is not empowered
to amend, reverse and modify what is otherwise the clear and explicit provision of the memorandum
circular issued by the Executive Office which has the force and effect of law." In resolving the issue,
We held:
... We definitely state that respondent Court lawfully acquired jurisdiction in Civil Case No. II240 (8) because the plaintiff therein asked the lower court for relief, in the form of injunction, in
defense of a legal right (freedom to enter into contracts) . . . . .
Hence there is a clear infringement of private respondent's constitutional right to enter into
agreements not contrary to law, which might run the risk of being violated by the threatened
implementation of Executive Office Memorandum Circular No. 93, dated February 5, 1968,
which prohibits, with certain exceptions, cashiers and disbursing officers from honoring

special powers of attorney executed by the payee employees. The respondent Court is not
only right but duty bound to take cognizance of cases of this nature wherein a constitutional
and statutory right is allegedly infringed by the administrative action of a government office.
Courts of first Instance have original jurisdiction over all civil actions in which the subject of
the litigation is not capable of pecuniary estimation (Sec. 44, Republic Act 296, as
amended). 12 (Emphasis supplied.)

final awards, judgments, decisions or orders of the Commission on Elections fall within the exclusive
jurisdiction of the Supreme Court by way of certiorari. Hence, it has been consistently held that "it is the
Supreme Court, not the Court of First Instance, which has exclusive jurisdiction to review on certiorari
final decisions, orders, or rulings of the Commission on Elections relative to the conduct of elections
and the enforcement of election laws."16
As to whether or not the Court of First Instance had jurisdiction in saidcase, We said:

In San Miguel Corporation vs. Avelino, 13 We ruled that a judge of the Court of First Instance has the
authority to decide on the validity of a city tax ordinance even after its validity had been contested
before the Secretary of Justice and an opinion thereon had been rendered.
In view of the foregoing, We find no cogent reason why Resolution No. 105, issued by the respondent
Professional Regulation Commission, should be exempted from the general jurisdiction of the Regional
Trial Court.
Respondent PRC, on the other hand, contends that under Section 9, paragraph 3 of B.P. Blg. 129, it is
the Court of Appeals which has jurisdiction over the case. The said law provides:
SEC. 9. Jurisdiction. The Intermediate Appellate Court shall exercise:
xxx xxx xxx
(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 contention is devoid of merit.
In order to invoke the exclusive appellate jurisdiction of the Court of Appeals as provided for in Section
9, paragraph 3 of B.P. Blg. 129, there has to be a final order or ruling which resulted from proceedings
wherein the administrative body involved exercised its quasi-judicial functions. In Black's Law
Dictionary, quasi-judicial is defined as a term applied to the action, discretion, etc., of public
administrative officers or bodies required to investigate facts, or ascertain the existence of facts, hold
hearings, and draw conclusions from them, as a basis for their official action, and to exercise discretion
of a judicial nature. To expound thereon, quasi-judicialadjudication would mean a determination of
rights, privileges and duties resulting in a decision or order which applies to a specific situation . 14 This
does not cover rules and regulations of general applicability issued by the administrative body to
implement its purely administrative policies and functions like Resolution No. 105 which was adopted
by the respondent PRC as a measure to preserve the integrity of licensure examinations.
The above rule was adhered to in Filipinas Engineering and Machine Shop vs. Ferrer. 15 In this case,
the issue presented was whether or not the Court of First Instance had jurisdiction over a case
involving an order of the Commission on Elections awarding a contract to a private party which
originated from an invitation to bid. The said issue came about because under the laws then in force,

We are however, far from convinced that an order of the COMELEC awarding a contract to a
private party, as a result of its choice among various proposals submitted in response to its
invitation to bid comes within the purview of a "final order" which is exclusively and directly
appealable to this court on certiorari. What is contemplated by the term "final orders, rulings
and decisions, of the COMELEC reviewable by certiorari by the Supreme Court as provided
by law are those rendered in actions or proceedings before the COMELEC and taken
cognizance of by the said body in the exercise of its adjudicatory or quasi-judicial powers.
We agree with petitioner's contention that the order of the Commission granting the award to
a bidder is not an order rendered in a legal controversy before it wherein the parties filed
their respective pleadings and presented evidence after which the questioned order was
issued; and that this order of the commission was issued pursuant to its authority to enter
into contracts in relation to election purposes. In short, the COMELEC resolution awarding
the contract in favor of Acme was not issued pursuant to its quasi-judicial functions but
merely as an incident of its inherent administrative functions over the conduct of elections,
and hence, the said resolution may not be deemed as a "final order reviewable by certiorari
by the Supreme Court. Being non-judicial in character, no contempt order may be imposed
by the COMELEC from said order, and no direct and exclusive appeal by certiorari to this
Tribunal lie from such order. Any question arising from said order may be well taken in an
ordinary civil action before the trial courts. (Emphasis supplied.) 17
One other case that should be mentioned in this regard is Salud vs. Central Bank of the
Philippines. 18 Here, petitioner Central Bank, like respondent in this case, argued that under Section 9,
paragraph 3 of B.P. Blg. 129, orders of the Monetary Board are appealable only to the Intermediate
Appellate Court. Thus:
The Central Bank and its Liquidator also postulate, for the very first time, that the Monetary
Board is among the "quasi-judicial ... boards" whose judgments are within the exclusive
appellate jurisdiction of the IAC; hence, it is only said Court, "to the exclusion of the
Regional Trial Courts," that may review the Monetary Board's resolutions. 19
Anent the posture of the Central Bank, We made the following pronouncement:
The contention is utterly devoid of merit. The IAC has no appellate jurisdiction over
resolution or orders of the Monetary Board. No law prescribes any mode of appeal from the
Monetary Board to the IAC. 20
In view of the foregoing, We hold that the Regional Trial Court has jurisdiction to entertain Civil Case
No. 86-37950 and enjoin the respondent PRC from enforcing its resolution.

Although We have finally settled the issue of jurisdiction, We find it imperative to decide once and for
all the validity of Resolution No. 105 so as to provide the much awaited relief to those who are and will
be affected by it.
Of course, We realize that the questioned resolution was adopted for a commendable purpose which is
"to preserve the integrity and purity of the licensure examinations." However, its good aim cannot be a
cloak to conceal its constitutional infirmities. On its face, it can be readily seen that it is unreasonable in
that an examinee cannot even attend any review class, briefing, conference or the like, or receive any
hand-out, review material, or any tip from any school, collge or university, or any review center or the
like or any reviewer, lecturer, instructor, official or employee of any of the aforementioned or similar
institutions . ... 21
The unreasonableness is more obvious in that one who is caught committing the prohibited acts even
without any ill motives will be barred from taking future examinations conducted by the respondent
PRC. Furthermore, it is inconceivable how the Commission can manage to have a watchful eye on
each and every examinee during the three days before the examination period.
It is an aixiom in administrative law that administrative authorities should not act arbitrarily and
capriciously in the issuance of rules and regulations. To be valid, such rules and regulations must be
reasonable and fairly adapted to the end in view. If shown to bear no reasonable relation to the
purposes for which they are authorized to be issued, then they must be held to be invalid. 22

This constitutional provision is not to be construed in a niggardly manner or in a grudging

fashion.
Needless to say, the enforcement of Resolution No. 105 is not a guarantee that the alleged leakages in
the licensure examinations will be eradicated or at least minimized. Making the examinees suffer by
depriving them of legitimate means of review or preparation on those last three precious days-when
they should be refreshing themselves with all that they have learned in the review classes and
preparing their mental and psychological make-up for the examination day itself-would be like
uprooting the tree to get ride of a rotten branch. What is needed to be done by the respondent is to find
out the source of such leakages and stop it right there. If corrupt officials or personnel should be
terminated from their loss, then so be it. Fixers or swindlers should be flushed out. Strict guidelines to
be observed by examiners should be set up and if violations are committed, then licenses should be
suspended or revoked. These are all within the powers of the respondent commission as provided for
in Presidential Decree No. 223. But by all means the right and freedom of the examinees to avail of all
legitimate means to prepare for the examinations should not be curtailed.
In the light of the above, We hereby REVERSE and SET ASIDE, the decision of the Court of Appeals
in CA-G.R. SP No. 10591 and another judgment is hereby rendered declaring Resolution No. 105 null
and void and of no force and effect for being unconstitutional. This decision is immediately executory.
No costs. SO ORDERED.
G.R. No. 116033 February 26, 1997

Resolution No. 105 is not only unreasonable and arbitrary, it also infringes on the examinees' right to
liberty guaranteed by the Constitution. Respondent PRC has no authority to dictate on the reviewees
as to how they should prepare themselves for the licensure examinations. They cannot be restrained
from taking all the lawful steps needed to assure the fulfillment of their ambition to become public
accountants. They have every right to make use of their faculties in attaining success in their
endeavors. They should be allowed to enjoy their freedom to acquire useful knowledge that will
promote their personal growth. As defined in a decision of the United States Supreme Court:
The term "liberty" means more than mere freedom from physical restraint or the bounds of
a prison. It means freedom to go where one may choose and to act in such a manner not
inconsistent with the equal rights of others, as his judgment may dictate for the promotion
of his happiness, to pursue such callings and vocations as may be most suitable to develop
his capacities, and giv to them their highest enjoyment. 23
Another evident objection to Resolution No. 105 is that it violates the academic freedom of the schools
concerned. Respondent PRC cannot interfere with the conduct of review that review schools and
centers believe would best enable their enrolees to meet the standards required before becoming a full
fledged public accountant. Unless the means or methods of instruction are clearly found to be
inefficient, impractical, or riddled with corruption, review schools and centers may not be stopped from
helping out their students. At this juncture, We call attention to Our pronouncement in Garcia vs. The
Faculty Admission Committee, Loyola School of Theology, 24 regarding academic freedom to wit:
... It would follow then that the school or college itself is possessed of such a right. It
decides for itself its aims and objectives and how best to attain them. It is free from outside
coercion or interference save possibly when the overriding public welfare calls for some
restraint. It has a wide sphere of autonomy certainly extending to the choice of students.

ALFREDO L. AZARCON, petitioner,

vs.
SANDIGANBAYAN, PEOPLE OF THE PHILIPPINES and JOSE C. BATAUSA, respondents.

PANGANIBAN, J.:
Does the Sandiganbayan have jurisdiction over a private individual who is charged with malversation
of public funds as a principal after the said individual had been designated by the Bureau of Internal
Revenue as a custodian of distrained property? Did such accused become a public officer and
therefore subject to the graft court's jurisdiction as a consequence of such designation by the BIR?
These are the main questions in the instant petition for review of Respondent Sandiganbayan's
Decision 1 in Criminal Case No. 14260 promulgated on March 8, 1994, convicting petitioner of
malversation of public funds and property, and Resolution 2 dated June 20, 1994, denying his motion
for new trial or reconsideration thereof.
The Facts
Petitioner Alfredo Azarcon owned and operated an earth-moving business, hauling "dirt and ore." 3 His
services were contracted by the Paper Industries Corporation of the Philippines (PICOP) at its
concession in Mangagoy, Surigao del Sur. Occasionally, he engaged the services of sub-contractors
like Jaime Ancla whose trucks were left at the former's premises. 4 From this set of circumstances
arose the present controversy.

. . . It appears that on May 25, 1983, a Warrant of Distraint of Personal Property

was issued by the Main Office of the Bureau of Internal Revenue (BIR) addressed
to the Regional Director (Jose Batausa) or his authorized representative of
Revenue Region 10, Butuan City commanding the latter to distraint the goods,
chattels or effects and other personal property of Jaime Ancla, a sub-contractor of
accused Azarcon and, a delinquent taxpayer. The Warrant of Garnishment was
issued to accused Alfredo Azarcon ordering him to transfer, surrender, transmit
and/or remit to BIR the property in his possession owned by taxpayer Ancla. The
Warrant of Garnishment was received by accused Azarcon on June 17, 1985. 5
Petitioner Azarcon, in signing the "Receipt for Goods, Articles, and Things Seized Under Authority of
the National Internal Revenue," assumed the undertakings specified in the receipt the contents of
which are reproduced as follows:
(I), the undersigned, hereby acknowledge to have received from Amadeo V. San
Diego, an Internal Revenue Officer, Bureau of Internal Revenue of the Philippines,
the following described goods, articles, and things:
Kind of property Isuzu dump truck
Motor number E120-229598
Chassis No. SPZU50-1772440
Number of CXL 6
Color Blue
Owned By Mr. Jaime Ancla
the same having been this day seized and left in (my) possession pending
investigation by the Commissioner of Internal Revenue or his duly authorized
representative. (I) further promise that (I) will faithfully keep, preserve, and, to the
best of (my) ability, protect said goods, articles, and things seized from
defacement, demarcation, leakage, loss, or destruction in any manner; that (I) will
neither alter nor remove, nor permit others to alter or remove or dispose of the
same in any manner without the express authority of the Commissioner of Internal
Revenue; and that (I) will produce and deliver all of said goods, articles, and things
upon the order of any court of the Philippines, or upon demand of the
Commissioner of Internal Revenue or any authorized officer or agent of the
Bureau of Internal Revenue. 6
Subsequently, Alfredo Azarcon wrote a letter dated November 21, 1985 to the BIR's Regional Director
for Revenue Region 10 B, Butuan City stating that
. . . while I have made representations to retain possession of the property and
signed a receipt of the same, it appears now that Mr. Jaime Ancla intends to cease
his operations with us. This is evidenced by the fact that sometime in August, 1985
he surreptitiously withdrew his equipment from my custody. . . . In this connection,
may I therefore formally inform you that it is my desire to immediately relinquish
whatever responsibilities I have over the above-mentioned property by virtue of
the receipt I have signed. This cancellation shall take effect immediately. . . . 7

Incidentally, the petitioner reported the taking of the truck to the security manager of PICOP,
Mr. Delfin Panelo, and requested him to prevent this truck from being taken out of the PICOP
concession. By the time the order to bar the truck's exit was given, however, it was too late. 8
Regional Director Batausa responded in a letter dated May 27, 1986, to wit:
An analysis of the documents executed by you reveals that while you are (sic) in
possession of the dump truck owned by JAIME ANCLA, you voluntarily assumed
the liabilities of safekeeping and preserving the unit in behalf of the Bureau of
Internal Revenue. This is clearly indicated in the provisions of the Warrant of
Garnishment which you have signed, obliged and committed to surrender and
transfer to this office. Your failure therefore, to observe said provisions does not
relieve you of your responsibility. 9
Thereafter, the Sandiganbayan found that
On 11 June 1986, Mrs. Marilyn T. Calo, Revenue Document Processor of Revenue
Region 10 B, Butuan City, sent a progress report to the Chief of the Collection
Branch of the surreptitious taking of the dump truck and that Ancla was renting out
the truck to a certain contractor by the name of Oscar Cueva at PICOP (Paper
Industries Corporation of the Philippines, the same company which engaged
petitioner's earth moving services), Mangagoy, Surigao del Sur. She also
suggested that if the report were true, a warrant of garnishment be reissued
against Mr. Cueva for whatever amount of rental is due from Ancla until such time
as the latter's tax liabilities shall be deemed satisfied. . . However, instead of doing
so, Director Batausa filed a letter-complaint against the (herein Petitioner) and
Ancla on 22 January 1988, or after more than one year had elapsed from the time
of Mrs. Calo's report. 10
Provincial Fiscal Pretextato Montenegro "forwarded the records of the complaint . . . to the Office of the
Tanodbayan" on May 18, 1988. He was deputized Tanodbayan prosecutor and granted authority to
conduct preliminary investigation on August 22, 1988, in a letter by Special Prosecutor Raul Gonzales
approved by Ombudsman (Tanodbayan) Conrado Vasquez. 11
Along with his co-accused Jaime Ancla, Petitioner Azarcon was charged before the Sandiganbayan
with the crime of malversation of public funds or property under Article 217 in relation to Article 222 of
the Revised Penal Code (RPC) in the following Information 12 filed on January 12, 1990, by Special
Prosecution Officer Victor Pascual:
That on or about June 17, 1985, in the Municipality of Bislig, Province of Surigao
del Sur, Philippines, and within the jurisdiction of this Honorable Court, accused
Alfredo L. Azarcon, a private individual but who, in his capacity as
depository/administrator of property seized or deposited by the Bureau of Internal
Revenue, having voluntarily offered himself to act as custodian of one Isuzu
Dumptruck (sic) with Motor No. E120-22958, Chasis No. SPZU 50-1772440, and
number CXL-6 and was authorized to be such under the authority of the Bureau of
Internal Revenue, has become a responsible and accountable officer and said
motor vehicle having been seized from Jaime C. Ancla in satisfaction of his tax
liability in the total sum of EIGHTY THOUSAND EIGHT HUNDRED THIRTY ONE

PESOS and 59/100 (P80,831.59) became a public property and the value thereof
as public fund, with grave abuse of confidence and conspiring and confederating
with said Jaime C. Ancla, likewise, a private individual, did then and there wilfully,
(sic) unlawfully and feloniously misappropriate, misapply and convert to his
personal use and benefit the aforementioned motor vehicle or the value thereof in
the aforestated amount, by then and there allowing accused Jaime C. Ancla to
remove, retrieve, withdraw and tow away the said Isuzu Dumptruck (sic) with the
authority, consent and knowledge of the Bureau of Internal Revenue, Butuan City,
to the damage and prejudice of the government in the amount of P80,831.59 in a
form of unsatisfied tax liability.

Petitioner, through new counsel, 22 filed a motion for new trial or reconsideration on March 23, 1994,
which was denied by the Sandiganbayan in its Resolution 23 dated December 2, 1994.
Hence, this petition.
The Issues
The petitioner submits the following reasons for the reversal of the Sandiganbayan's assailed Decision
and Resolution:

CONTRARY TO LAW.
The petitioner filed a motion for reinvestigation before the Sandiganbayan on May 14, 1991, alleging
that: (1) the petitioner never appeared in the preliminary investigation; and (2) the petitioner was not a
public officer, hence a doubt exists as to why he was being charged with malversation under Article
217 of the Revised Penal Code. 13The Sandiganbayan granted the motion for reinvestigation on May
22, 1991. 14 After the reinvestigation, Special Prosecution Officer Roger Berbano, Sr., recommended
the "withdrawal of the information" 15 but was "overruled by the Ombudsman." 16
A motion to dismiss was filed by petitioner on March 25, 1992 on the ground that the Sandiganbayan
did not have jurisdiction over the person of the petitioner since he was not a public officer. 17 On May
18, 1992; the Sandiganbayan denied the motion. 18
When the prosecution finished presenting its evidence, the petitioner then filed a motion for leave to file
demurrer to evidence which was denied on November 16, 1992, "for being without merit." 19 The
petitioner then commenced and finished presenting his evidence on February 15, 1993.
The Respondent Court's Decision
On March 8, 1994, Respondent Sandiganbayan
which reads:

SO ORDERED.

20

rendered a Decision, 21 the dispositive portion of

WHEREFORE, the Court finds accused Alfredo Azarcon y Leva GUILTY beyond
reasonable doubt as principal of Malversation of Public Funds defined and
penalized under Article 217 in relation to Article 222 of the Revised Penal Code
and, applying the Indeterminate Sentence Law, and in view of the mitigating
circumstance of voluntary surrender, the Court hereby sentences the accused to
suffer the penalty of imprisonment ranging from TEN (10) YEARS and ONE (1)
DAY of prision mayor in its maximum period to SEVENTEEN (17) YEARS, FOUR
(4) MONTHS and ONE (1) DAY of Reclusion Temporal. To indemnify the Bureau
of Internal Revenue the amount of P80,831.59; to pay a fine in the same amount
without subsidiary imprisonment in case of insolvency; to suffer special perpetual
disqualification; and, to pay the costs.
Considering that accused Jaime Ancla has not yet been brought within the
jurisdiction of this Court up to this date, let this case be archived as against him
without prejudice to its revival in the event of his arrest or voluntary submission to
the jurisdiction of this Court.

I. The Sandiganbayan does not have jurisdiction over crimes

committed solely by private individuals.
II. In any event, even assuming arguendo that the
appointment of a private individual as a custodian or a
depositary of distrained property is sufficient to convert such
individual into a public officer, the petitioner cannot still be
considered a public officer because:
[A]
There is no provision in the National Internal Revenue Code
which authorizes the Bureau of Internal Revenue to constitute
private individuals as depositaries of distrained properties.
[B]
His appointment as a depositary was not by virtue of a direct
provision of law, or by election or by appointment by a
competent authority.
III. No proof was presented during trial to prove that the
distrained vehicle was actually owned by the accused Jaime
Ancla; consequently, the government's right to the subject
property has not been established.
IV. The procedure provided for in the National Internal
Revenue Code concerning the disposition of distrained
property was not followed by the B.I.R., hence the distraint of
personal property belonging to Jaime C. Ancla and found
allegedly to be in the possession of the petitioner is therefore
invalid.
V. The B.I.R. has only itself to blame for not promptly selling
the distrained property of accused Jaime C. Ancla in order to

realize the amount of back taxes owed by Jaime C. Ancla to

the Bureau. 24

In case private individuals are charged as co-principals, accomplices or

accessories with the public officers or employees, including those employed in
government-owned or controlled corporations, they shall be tried jointly with said
public officers and employees.

In fine, the fundamental issue is whether the Sandiganbayan had jurisdiction over the subject matter of
the controversy. Corollary to this is the question of whether petitioner can be considered a public officer
by reason of his being designated by the Bureau of Internal Revenue as a depositary of distrained
property.
The Court's Ruling
The petition is meritorious.

xxx xxx xxx

The foregoing provisions unequivocally specify the only instances when the Sandiganbayan will have
jurisdiction over a private individual, i.e. when the complaint charges the private individual either as a
co-principal, accomplice or accessory of a public officer or employee who has been charged with a
crime within its jurisdiction.
Azarcon: A Public Officer or A Private Individual?

Jurisdiction of the Sandiganbayan

It is hornbook doctrine that in order "(to) ascertain whether a court has jurisdiction or not, the provisions
of the law should be inquired into." 25 Furthermore, "the jurisdiction of the court must appear clearly
from the statute law or it will not be held to exist. It cannot be presumed or implied." 26 And for this
purpose in criminal cases, "the jurisdiction of a court is determined by the law at the time of
commencement of the action." 27

The Information does not charge petitioner Azarcon of being a co-principal, accomplice or accessory to
a public officer committing an offense under the Sandiganbayan's jurisdiction. Thus, unless petitioner
be proven a public officer, the Sandiganbayan will have no jurisdiction over the crime charged. Article
203 of the RPC determines who are public officers:
Who are public officers. For the purpose of applying the provisions of this and
the preceding titles of the book, any person who, by direct provision of the law,
popular election, popular election or appointment by competent authority, shall
take part in the performance of public functions in the Government of the
Philippine Islands, or shall perform in said Government or in any of its branches
public duties as an employee, agent, or subordinate official, of any rank or
classes, shall be deemed to be a public officer.

In this case, the action was instituted with the filing of this information on January 12, 1990; hence, the
applicable statutory provisions are those of P.D. No. 1606, as amended by P.D. No. 1861 on March 23,
1983, but prior to their amendment by R.A. No. 7975 on May 16, 1995. At that time, Section 4 of P.D.
No. 1606 provided that:
Sec. 4. Jurisdiction. The Sandiganbayan shall exercise:
(a) Exclusive original jurisdiction in all cases involving:
(1) Violations of Republic Act No. 3019, as amended,
otherwise known as the Anti-Graft and Corrupt Practices Act,
Republic Act No. 1379, and Chapter II, Section 2, Title VII of
the Revised Penal Code;
(2) Other offenses or felonies committed by public officers and
employees in relation to their office, including those employed
in government-owned or controlled corporations, whether
simple or complexed with other crimes, where the penalty
prescribed by law is higher than prision correccional or
imprisonment for six (6) years, or a fine of P6,000.00:
PROVIDED, HOWEVER, that offenses or felonies mentioned
in this paragraph where the penalty prescribed by law does
not exceed prision correccional or imprisonment for six (6)
years or a fine of P6,000.00 shall be tried by the proper
Regional Trial Court, Metropolitan Trial Court, Municipal Trial
Court and Municipal Circuit Trial Court.
xxx xxx xxx

Thus,
(to) be a public officer, one must be
(1) Taking part in the performance of public functions in the government, or
Performing in said Government or any of its branches public duties as
an employee, agent, or subordinate official, of any rank or class; and
(2) That his authority to take part in the performance of public functions or to
perform public duties must be
a. by direct provision of the law, or
b. by popular election, or
c. by appointment by competent authority. 28
Granting arguendo that the petitioner, in signing the receipt for the truck constructively distrained by the
BIR, commenced to take part in an activity constituting public functions, he obviously may not be

deemed authorized by popular election. The next logical query is whether petitioner's designation by
the BIR as a custodian of distrained property qualifies as appointment by direct provision of law, or by
competent authority. 29 We answer in the negative.
The Solicitor General contends that the BIR, in effecting constructive distraint over the truck allegedly
owned by Jaime Ancla, and in requiring Petitioner Alfredo Azarcon who was in possession thereof to
sign a pro formareceipt for it, effectively "designated" petitioner a depositary and, hence,
citing U.S. vs. Rastrollo, 30 a public officer.31 This is based on the theory that

However, we find no provision in the NIRC constituting such person a public officer by reason of such
requirement. The BIR's power authorizing a private individual to act as a depositary cannot be
stretched to include the power to appoint him as a public officer. The prosecution argues that "Article
222 of the Revised Penal Code . . . defines the individuals covered by the term 'officers' under Article
217 39 . . ." of the same Code. 40 And accordingly, since Azarcon became "a depository of the truck
seized by the BIR" he also became a public officer who can be prosecuted under Article 217 . . . ." 41
The Court is not persuaded. Article 222 of the RPC reads:

(t)he power to designate a private person who has actual possession of a

distrained property as a depository of distrained property is necessarily implied in
the BIR's power to place the property of a delinquent tax payer (sic) in distraint as
provided for under Sections 206, 207 and 208 (formerly Sections 303, 304 and
305) of the National Internal Revenue Code, (NIRC) . . . . 32

Officers included in the preceding provisions. The provisions of this chapter

shall apply to private individuals who, in any capacity whatever, have charge of
any insular, provincial or municipal funds, revenues, or property and to any
administrator or depository of funds or property attached, seized or deposited by
public authority, even if such property belongs to a private individual.

We disagree. The case of U.S. vs. Rastrollo is not applicable to the case before us simply because the
facts therein are not identical, similar or analogous to those obtaining here. While the cited case
involved a judicialdeposit of the proceeds of the sale of attached property in the hands of the debtor,
the case at bench dealt with the BIR's administrative act of effecting constructive distraint over alleged
property of taxpayer Ancla in relation to his back taxes, property which was received by Petitioner
Azarcon. In the cited case, it was clearly within the scope of that court's jurisdiction and judicial power
to constitute the judicial deposit and give "the depositary a character equivalent to that of a public
official." 33 However, in the instant case, while the BIR had authority to require Petitioner Azarcon to
sign a receipt for the distrained truck, the NIRC did not grant it power to appoint Azarcon a public
officer.

"Legislative intent is determined principally from the language of a statute. Where the language of a
statute is clear and unambiguous, the law is applied according to its express terms, and interpretation
would be resorted to only where a literal interpretation would be either impossible or absurd or would
lead to an injustice." 42 This is particularly observed in the interpretation of penal statutes which "must
be construed with such strictness as to carefully safeguard the rights of the defendant . . . ." 43 The
language of the foregoing provision is clear. A private individual who has in his charge any of the public
funds or property enumerated therein and commits any of the acts defined in any of the provisions of
Chapter Four, Title Seven of the RPC, should likewise be penalized with the same penalty meted to
erring public officers. Nowhere in this provision is it expressed or implied that a private individual falling
under said Article 222 is to be deemed a public officer.

It is axiomatic in our constitutional framework, which mandates a limited government, that its branches
and administrative agencies exercise only that power delegated to them as "defined either in the
Constitution or in legislation or in both." 34 Thus, although the "appointing power is the exclusive
prerogative of the President, . . ." 35 the quantum of powers possessed by an administrative agency
forming part of the executive branch will still be limited to that "conferred expressly or by necessary or
fair implication" in its enabling act. Hence, "(a)n administrative officer, it has been held, has only such
powers as are expressly granted to him and those necessarily implied in the exercise
thereof." 36Corollarily, implied powers "are those which are necessarily included in, and are therefore of
lesser degree than the power granted. It cannot extend to other matters not embraced therein, nor are
not incidental thereto." 37 For to so extend the statutory grant of power "would be an encroachment on
powers expressly lodged in Congress by our Constitution." 38 It is true that Sec. 206 of the NIRC, as
pointed out by the prosecution, authorizes the BIR to effect a constructive distraint by requiring "any
person" to preserve a distrained property, thus:

After a thorough review of the case at bench, the Court thus finds Petitioner Alfredo Azarcon and his
co-accused Jaime Ancla to be both private individuals erroneously charged before and convicted by
Respondent Sandiganbayan which had no jurisdiction over them. The Sandiganbayan's taking
cognizance of this case is of no moment since "(j)urisdiction cannot be conferred by . . . erroneous
belief of the court that it had jurisdiction." 44 As aptly and correctly stated by the petitioner in his
memorandum:
From the foregoing discussion, it is evident that the petitioner did not cease to be a
private individual when he agreed to act as depositary of the garnished dump
truck. Therefore, when the information charged him and Jaime Ancla before the
Sandiganbayan for malversation of public funds or property, the prosecution was
in fact charging two private individuals without any public officer being similarly
charged as a co-conspirator. Consequently, the Sandiganbayan had no jurisdiction
over the controversy and therefore all the proceedings taken below as well as the
Decision rendered by Respondent Sandiganbayan, are null and void for lack of
jurisdiction. 45

xxx xxx xxx

The constructive distraint of personal property shall be effected by requiring the
taxpayer or any person having possession or control of such property to sign a
receipt covering the property distrained and obligate himself to preserve the same
intact and unaltered and not to dispose of the same in any manner whatever
without the express authority of the Commissioner.
xxx xxx xxx

WHEREFORE, the questioned Resolution and Decision of the Sandiganbayan are hereby SET ASIDE
and declared NULL and VOID for lack of jurisdiction. No costs.
SO ORDERED.

G.R. No. L-25133

September 28, 1968

S/SGT. JOSE SANTIAGO, petitioner-appellant,

vs.
LT. COL. CELSO ALIKPALA, ET AL., respondents-appellees.
Floro A. Sarmiento and Noe Maines for petitioner-appellant.
Cuadrato Palma and the Office of the Solicitor General for respondents-appellees.

FERNANDO, J.:
The validity of a court-martial proceeding was challenged in the lower court on due process grounds to
show lack of jurisdiction. Petitioner, a sergeant in the Philippine Army and the accused in a courtmartial proceeding, through a writ of certiorari and prohibition, filed on April 17, 1963, with the lower
court, sought to restrain respondents, the officers, constituting the court-martial, that was then in the
process of trying petitioner for alleged violation of two provisions of the Articles of War, from continuing
with the proceedings on the ground of its being without jurisdiction. There was likewise a plea for a
restraining order, during the pendency of his petition, but it was unsuccessful.
No response, either way, was deemed necessary by the then Presiding Judge of the lower court, now
Justice Nicasio Yatco of the Court of Appeals, as petitioner had, in the meanwhile, been convicted by
the court-martial. The lower court verdict, rendered on September 16, 1963, was one of dismissal, as
in its opinion, "this case had already become moot and academic ... ."
An appeal was taken to us, the same due process objections being raised. We think that the question
before us is of such import and significance that an easy avoidance through the technicality of the
"moot and academic" approach hardly recommends itself. For reasons to be more fully set forth, we
find that such court-martial was not lawfully convened, and, consequently, devoid of jurisdiction.
Accordingly, we reverse the lower court.
There was a stipulation of facts submitted to the lower court on July 10, 1963, to the following effect:
"That the arraignment of the petitioner on December 17, 1962 was for the purpose of avoiding
prescription pursuant to Article of War 38 of one of the offenses with which the accused is charged
since, as charged, same was allegedly committed on or about December 18, 1960; That prior to the
said arraignment, no written summons or subpoena was issued addressed to the petitioner or his
counsel, informing them of said arraignment; That instead of said written summons or subpoena Col.
Eladio Samson, Constabulary Staff Judge Advocate called up First Sergeant Manuel Soriano at the
Headquarters II Philippine Constabulary Zone, Camp Vicente Lim, Canlubang, Laguna on December
16, 1962 by telephone with instructions to send the petitioner to HPC, Camp Crame, Quezon City,
under escort, for arraignment and only for arraignment; That upon arrival in HPC, the petitioner was
directed to proceed to the PC Officer's Clubhouse, where a General Court-Martial composed of the
respondents, created to try the case of 'People vs. Capt. Egmidio Jose, for violation of Articles of War
96 and 97', pursuant to paragraph 10, Special Order No. 14, Headquarters Philippine Constabulary,

dated 18 July 1962, ..., was to resume, as scheduled, the trial of 'People vs. Pfc. Numeriano Ohagan,
for violation of Articles of War 64, 85, and 97'; That it was only at the time (December 17, 1962) that
petitioner learned that he will be arraigned for alleged violation of Articles of War 85 and 97, after being
informed by one of the respondents, Capt. Cuadrato Palma as Trial Judge Advocate why he was there;
That prior to that arraignment on December 17, 1962 there was no special order published by the
Headquarters Philippine Constabulary creating or directing the General Court-Martial composed of the
respondents to arraign and try the case against the petitioner, there however was already an existing
court trying another case; That the respondents relied on the first indorsement of the Acting Adjutant
General, HPC, Camp Crame, Quezon City, dated December 14, 1962 and addressed to the Trial
Judge Advocate of the General Court-martial ... directing the said Trial Judge Advocate to refer the
case against petitioner to the above-mentioned court, ...; That the above paragraph 10, Special Order
No. 14 dated 18 July 1962, does not contain the phrase 'and such other cases which may be referred
to it,' but however said orders were amended only on 8 January 1963, to include such phrase, ... ." 1
It was further stipulated that petitioner's counsel did object to his arraignment asserting that a general
court-martial then convened was without jurisdiction, as there was no special order designating
respondents to compose a general court-martial for the purpose of trying petitioner, as petitioner was
not furnished a copy of the charge sheet prior to his arraignment as required in the Manual for CourtMartial, except on the very day thereof, and as there was no written summons or subpoena served on
either the petitioner, as accused, or the counsel. Respondents, acting as the general court-martial,
overruled the above objections, and the Trial Judge Advocate was then ordered to proceed to read the
charges and specifications against petitioner over the vigorous objections of counsel. It was shown,
likewise, in the stipulation of facts, that the case, having been postponed to February 21, 1963,
petitioner's counsel had in the meanwhile complained to the Chief of Constabulary against the
proceedings on the ground of its nullity, and sought to have respondents restrained from continuing
with the trial of petitioner due to such lack of jurisdiction but the Chief of Constabulary ruled that he
could not act on such complaint until the records of the trial were forwarded to him for review. With
such a ruling, and with the denial of two other motions by petitioner upon the court-martial being
convened anew on February 21, 1963, one to invalidate his arraignment on December 17, 1962, and
the other to quash the complaint based on the denial of due process and lack of jurisdiction, the
present petition for certiorari and prohibition was filed with the lower court. 2
As above noted, the lower court dismissed the petition due to its belief that, petitioner having been
convicted in the meanwhile, there being no restraining order, the matter had become moot and
academic. As was set forth earlier, we differ, the alleged lack of jurisdiction being too serious a matter
to be thus summarily ignored.
The firm insistence on the part of petitioner that the general court-martial lacks jurisdiction on due
process grounds, cannot escape notice. The basic objection was the absence of a special order
"designating respondents to compose a general court-martial to convene and try the case of petitioner;
... ." It was expressly stipulated that the respondents were convened to try the case of a certain Capt.
Egmidio Jose and not that filed against petitioner. As a matter of fact, the opening paragraph of the
stipulation of facts made clear that he was arraigned on December 17, 1962 by respondents as a
general court-martial appointed precisely to try the above Capt. Jose solely "for the purpose of
avoiding prescription pursuant to Article of War 38 of one of the offenses with which the accused is
charged ... ."
Is such a departure from what the law and regulations 3 prescribe offensive to the due process clause?
If it were, then petitioner should be sustained in his plea for a writ of certiorari and prohibition, as
clearly the denial of the constitutional right would oust respondents of jurisdiction, even on the

assumption that they were vested with it originally. Our decisions to that effect are impressive for their
unanimity.

judges the act of officialdom of whatever branch 'in the light of reason drawn from considerations of
fairness that reflect [democratic] traditions of legal and political thought.'"

In Harden v. The Director of Prisons, 4 Justice Tuason, speaking for the Court, explicitly announced that
"deprivation of any fundamental or constitutional rights" justify a proceeding for habeas corpus on the
ground of lack of jurisdiction. Abriol v. Homeres 5 is even more categorical. In that case, the action of a
lower court, denying the accused the opportunity to present proof for his defense, his motion for
dismissal failing, was held by this Court as a deprivation of his right to due process. As was made clear
by the opinion of Justice Ozaeta: "No court of justice under our system of government has the power to
deprive him of that right. If the accused does not waive his right to be heard but on the contrary as
in the instant case invokes the right, and the court denies it to him, that court no longer has
jurisdiction to proceed; it has no power to sentence the accused without hearing him in his defense;
and the sentence thus pronounced is void and may be collaterally attacked in a habeas
corpus proceeding." 6

Nor is such a reliance on the broad reach of due process the sole ground on which the lack of
jurisdiction of the court-martial convened in this case could be predicated. Recently, stress was laid
anew by us on the first requirement of procedural due process, namely, the existence of the court or
tribunal clothed with judicial, or quasi-judicial, power to hear and determine the matter before it. 10 This
is a requirement that goes back to Banco Espaol-Filipino v. Palanca, a decision rendered half a
century ago. 11

A recent decision rendered barely a month ago, in Chavez v. Court of Appeals, 7 is even more in point.
Here, again, habeas corpus was relied upon by petitioner whose constitutional rights were not
respected, but, in addition, the special civil actions of certiorari and mandamus were likewise availed
of, in view of such consequent lack of jurisdiction. The stress though in the opinion of Justice Sanchez
was on habeas corpus. Thus: "The course which petitioner takes is correct. Habeas corpus is a high
prerogative writ. It is traditionally considered as an exceptional remedy to release a person whose
liberty is illegally restrained such as when the accused's constitutional rights are disregarded. Such
defect results in the absence or loss of jurisdiction and therefore invalidates the trial and the
consequent conviction of the accused whose fundamental right was violated. That void judgment of
conviction may be challenged by collateral attack, which precisely is the function of habeas corpus.
This writ may issue even if another remedy which is less effective may be availed of by the defendant."
The due process concept rightfully referred to as "a vital and living force in our jurisprudence" calls for
respect and deference, otherwise the governmental action taken suffers from a fatal infirmity. As was
so aptly expressed by the then Justice, now Chief Justice, Concepcion: "... acts of Congress, as well
as those of the Executive, can deny due process only under pain of nullity, and judicial proceedings
suffering from the same flaw are subject to the same sanction, any statutory provision to the contrary
notwithstanding." 8
The crucial question, then, is whether such failure to comply with the dictates of the applicable law
insofar as convening a valid court martial is concerned, amounts to a denial of due process. We hold
that it does. There is such a denial not only under the broad standard which delimits the scope and
reach of the due process requirement, but also under one of the specific elements of procedural due
process.
It is to be admitted that there is no controlling and precise definition of due process which, at the most
furnishes a standard to which governmental action should conform in order to impress with the stamp
of validity any deprivation of life, liberty or property. A recent decision of this Court, in Ermita-Malate
Hotel v. Mayor of Manila 9treated the matter thus: "It is responsiveness to the supremacy of reason,
obedience to the dictates of justice. Negatively put, arbitrariness is ruled out and unfairness avoided.
To satisfy the due process requirement, official action, to paraphrase Cardozo, must not outrun the
bounds of reason and result in sheer oppression. Due process is thus hostile to any official action
marred by lack of reasonableness. Correctly has it been identified as freedom from arbitrariness. It is
the embodiment of the sporting idea of fair play. It exacts fealty 'to those strivings for justice' and

There is the express admission in the statement of facts that respondents, as a court-martial, were not
convened to try petitioner but someone else, the action taken against petitioner being induced solely
by a desire to avoid the effects of prescription; it would follow then that the absence of a competent
court or tribunal is most marked and undeniable. Such a denial of due process is therefore fatal to its
assumed authority to try petitioner. The writ ofcertiorari and prohibition should have been granted and
the lower court, to repeat, ought not to have dismissed his petition summarily.
The significance of such insistence on a faithful compliance with the regular procedure of convening
court-martials in accordance with law cannot be over-emphasized. As was pointed out by Justice
Tuason in Ruffy v. The Chief of Staff, Philippine Army: 12 "Courts-martial are agencies of executive
character, and one of the authorities for the ordering of courts-martial has been held to be attached to
the constitutional functions of the President as Commander-in-Chief, independently of legislation.
(Winthrop's Military Law and Precedents, 2d Edition, p. 49.) Unlike courts of law, they are not a portion
of the judiciary." Further on, his opinion continues: "Not belonging to the judicial branch of the
government, it follows that courts-martial must pertain to the executive department; and they are in fact
simply instrumentalities of the executive power, provided by Congress for the President as
Commander-in-Chief, to aid him in properly commanding the army and navy and enforcing discipline
therein, and utilized under his orders or those of his authorized military representatives." 13
It is even more indispensable, therefore, that such quasi-judicial agencies, clothed with the solemn
responsibility of depriving members of the Armed Forces of their liberties, even of their lives, as a
matter of fact, should be held all the more strictly bound to manifest fidelity to the fundamental concept
of fairness and the avoidance of arbitrariness for which due process stands as a living vital principle. If
it were otherwise, then, abuses, even if not intended, might creep in, and the safeguards so carefully
thrown about the freedom of an individual, ignored or disregarded. Against such an eventuality, the
vigilance of the judiciary furnishes a shield. That is one of its grave responsibilities. Such a trust must
be lived up to; such a task cannot be left undone.
WHEREFORE, the order of respondent Court of September 6, 1963, dismissing the petition
for certiorari and prohibition is reversed, and the writ of certiorari and prohibition granted, annulling the
proceedings as well as the decision rendered by respondents as a court-martial and perpetually
restraining them from taking any further action on the matter. Without pronouncement as to costs.
Concepcion, C.J., Reyes, J.B.L., Makalintal, Sanchez, Angeles and Capistrano, JJ., concur.
Dizon and Zaldivar, JJ., are on leave.
Separate Opinions
CASTRO, J., concurring:

My concurrence in the decision of this Court in the able pen of Mr. Justice Fernando is unqualified.
Nonetheless, I feel compelled to express my views on certain disturbing facets of this case which to my
mind not merely indicate a censurabe denial of due process, but as well pointedly exposes, from the
perspective of military law, tradition and usage, the intrinsic nullity of the proceedings had by the
general court-martial in question.
The history and development of courts-martial as tribunals for the enforcement of discipline in bodies
of military character 1 underscore several time-honored tenets: a court-martial is an instrumentality of
the executive power, to aid the President as commander-in-chief in properly commanding and
controlling the armed forces and enforcing discipline therein; it has only such powers as are expressly
vested in it by statute or as may be derived from military usage; it is a creature of orders; as a purely
executive agency designed for military uses, it is brought into being by a military order; it is transient in
its duration; it has no fixed place of session, nor permanent office or clerk, no inherent power to issue a
judicial mandate; its judgment is in quintessence simply a recommendation until approved by the
proper revisory commander; its competency cannot be expanded by implication; and no intendment in
favor of its acts can be made where their legality does not indubitably appear. 2
The original concept of a court-martial in British Law, even with American and Philippine statutory
accretions, remains fundamentally the same today, with few modifications of consequence.
Why a court-martial is essentially transient in nature, and is as a rule appointed to try a single case, is
not difficult to comprehend.
Firstly, in a military organization, every officer thereof belongs to a particular branch of services and is
for that reason assigned to a position which calls for the discharge, in a continuing manner and for a
period which is denominated tour of duty, of duties pertaining to his specialization or branch of service.
Thus an ordnance officer is assigned to ordnance work, a field artillery officer to field artillery duties, a
finance officer to duties involving money and finances, a quartermaster officer to duties involving
supplies and other aspects of logistics, and so forth. Although generic military duty perforce embraces
occasional membership in courts-martial, it does not envision such membership as a continuing
assignment of long duration.
Secondly, the court-martial, as its history and development demonstrate, is a blend of the jury system
and the one-judge (non-jury) judicial system. In common law jurisdictions, an accused is tried by his
peers. In one-judge (non-jury) jurisdictions, the accused is tried by a lone judicial arbiter. In a courtmartial trial, the entire panel of officers who constitute the court-martial is judge and jury.1awphl.nt
Thirdly, by virtue of military law, tradition and usage, a court-martial is constituted to try a particular
case (or several cases involving the same accused). After completion of the trial and resolution of
necessary post-trial incidents, the court is dissolved, and the members thereof return to and resume
their respective normal assignments. Even the law member of a court-martial (who rules on questions
of law and admissibility of evidence and advises the other members on court procedure and the legal
intricacies of trial), rejoins his regular office or unit (although he may thereafter again be appointed law
member of a subsequent general court-martial, or an ordinary member of another general courtmartial, or even president of still another general court-martial).
In sum, a court-martial is not a continuing permanent tribunal.

Thus it is that, in the Armed Forces of the Philippines, the general rule has commanded undiminished
respect that a court-martial is appointed to try only a single case, or several cases pertaining to a
single individual. There is of course no legal impediment to empowering a court-martial, in the same
order creating it, to try more than one case, but such creations are the exception and quite infrequent.
And even if "roving" or "semi-permanent" courts-martial were the rule in our Armed Forces, which I do
not concede, the general court-martial in the case at bar was not one such.
It is undisputed as in fact it is stipulated by the parties that the general court-martial in question
was constituted to try Captain Egmidio Jose. Nothing in the phraseology of the order that created it
authorized it to try the petitioner staff-sergeant Santiago. It could not therefore proceed in any manner,
which we can view as properly coming within the periphery of its limited powers, with respect to the
charge against Santiago.When it arraigned Santiago on December 17, 1962, it was absolutely without
legal power to do so, and the arraignment was a futile ceremony, as meaningless as it was
inefficacious.
Undeniably the record shows that the order creating the court-martial to try Captain Egmidio Jose was
belatedly amended on January 8, 1963 by the addition of the phrase, "and such other cases that may
be referred to it." But this afterthought could not, in law, serve to invest with validity an act that was ab
initio a nullity. And it is of no moment that petitioner was thereafter arraigned anew,
assuming arguendo that he was. The proceedings would have been palpably objectionable on the
patent ground that the offense imputed to the petitioner which was committed on December 18, 1960
was already time-barred on December 18, 1962, pursuant to the provisions of Article of War 38 of
Commonwealth Act 408, as amended.
As I see it, the arraignment of the petitioner by the general court-martial constituted to try Captain
Egmidio Jose was a desperate measure resorted to remedy a desperate situation solely to interrupt
the running of the prescriptive period provided by Article of War 38. This action was not only completely
devoid of any semblance of legality; it likewise conclusively evinces gross negligence on the part of the
military. Why nothing was done toward the creation of a court-martial to try Santiago within the two
years following the commission of the crime is not explained by the record, and I venture the opinion
that there can be no satisfactory explanation therefor. The military authorities allowed that long period
to lapse without any assiduous effort at bringing the petitioner to the forum of a duly constituted
general court-martial. This should never come to pass in the Armed Forces where disciplinary
measures of whatever specie or character, by law and tradition and usage, should be swiftly
administered. For, the officer of average military learning knows or should be cognizant of the
proliferation in the Articles of War of provisions designed to insure speedy trial of accused
persons.1awphl.nt
Because an accused charged with a serious offense such as that in the case at bar unlawful
disposition of ten carbines belonging to the Government is ordinarily placed in arrest and is not
entitled to bail, time is of the essence as undue delay would obviously be prejudicial to the accused.
The Articles of War (Commonwealth Act 408 as amended by Rep. Act 242) and implementing military
manuals and regulations explicitly enjoin that the report of investigation, if practicable, be completed
within 48 hours, that the investigator forthwith make the proper recommendation as to the disposition
of the case, and that the officer exercising general court-martial jurisdiction over the accused act on the
report of the investigator with deliberate speed. As a matter of fact, Article of War 71 explicitly
commands that when a person subject to military law is placed in arrest or confinement immediate
steps be taken to try him or to dismiss the charge; that when a person is held for trial by general courtmartial his commanding officer, within eight days after the accused is arrested or confined, forward the
charges to the officer exercising general court-martial jurisdiction and furnish the accused a copy of

such charges; and that if the same be not practicable, he report to superior authority the reasons for
the delay. The same Article of War poises the threat of punishment (as a court-martial may direct) over
any officer responsible for unnecessary delay "in investigating or carrying the case to final conclusion."
The record propels me to the conclusion that everything that the military authorities did or neglected to
do with respect to the case of the petitioner was contrary to all the imperatives of military law, tradition
and usage.
In fine, it is my considered view that at the time the petitioner was arraigned, there was no court-martial
validly in existence that could legally take cognizance of the charge against him. At best, the general
court-martial in question, vis-a-vis the petitioner, was disembodied if not innominate, with neither shape
nor substance.

consisting of one RCA Victor TV set 21" in violation of Section 2521 of the Tariff and Customs Code.
Inserted in said notice is a note of the following tenor: "The above article was being carried away by Dr.
Basilio de Leon y Mendez, official doctor of M/S "Doa Nati" who readily admitted ownership of the
same." C.F. Sharp & Company was given 48 hours to show cause why no administrative fine should be
imposed upon it for said violation.
C.F. Sharp & Company, not being the agent or operator of the vessel, referred the notice to A. V.
Rocha, the agent and operator thereof, who on August 8, 1960, answered the notice stating, among
other things, that the television set referred to therein was not a cargo of the vessel and, therefore, was
not required by law to be manifested. Rocha stated further: "If this explanation is not sufficient, we
request that this case be set for investigation and hearing in order to enable the vessel to be informed
of the evidence against it to sustain the charge and to present evidence in its defense."
The Collector of Customs replied to Rocha on August 9, 1960 stating that the television set in question
was a cargo on board the vessel and that he does not find his explanation satisfactory enough to
exempt the vessel from liability for violating Section 2521 of the Tariff and Customs Code. In said letter,
the collector imposed a fine of P5,000.00 on the vessel and ordered payment thereof within 48 hours
with a threat that he will deny clearance to said vessel and will issue a warrant of seizure and detention
against it if the fine is not paid.
And considering that the Collector of Customs has exceeded his jurisdiction or committed a grave
abuse of discretion in imposing the fine of P5,000.00 on the vessel without the benefit of an
investigation or hearing as requested by A. V. Rocha, the National Development Company, as owner of
the vessel, as well as A. V. Rocha as agent and operator thereof, filed the instant special civil action of
certiorari with preliminary injunction before the Court of First Instance of Manila against the official
abovementioned. The court, finding the petition for injunction sufficient in form and substance,
issued ex parte the writ prayed for upon the filing of a bond in the amount of P5,00.00.

G.R. No. L-19180

October 31, 1963

NATIONAL DEVELOPMENT COMPANY, ET AL., petitioners-appellees,

vs.
THE COLLECTOR OF CUSTOMS OF MANILA, respondent-appellant.
Ross, Selph and Carrascoso for petitioners-appellees.
Office of the Solicitor General for respondent-appellant.
BAUTISTA ANGELO, J.:
The National Development Company which is engaged in the shipping business under the name of
"Philippine National Lines" is the owner of steamship "S.S. Doa Nati" whose local agent in Manila is
A. V. Rocha. On August 4, 1960, the Collector of Customs sent a notice to C.F. Sharp & Company as
alleged operator of the vessel informing it that said vessel was apprehended and found to have
committed a violation of the customs laws and regulations in that it carried an unmanifested cargo

Respondent set up the following special defenses: (1) the court a quo has no jurisdiction to act on
matters arising from violations of the Customs Law, but the Court of Tax Appeals; (2) assuming that it
has, petitioners have not exhausted all available administrative remedies, one of which is to appeal to
the Commissioner of Customs; (3) the requirements of administrative due process have already been
complied with in that the written notice given by respondent to petitioner Rocha clearly specified the
nature of the violation complained of and that the defense set up by Rocha constitute merely a legal
issue which does not require further investigation; and (4) the investigation conducted by the customs
authorities showed that the television set in question was unloaded by the ship's doctor without going
thru the custom house as required by law and was not declared either in the ship's manifest or in the
crew declaration list.
On the basis of the stipulation of facts submitted by the parties, the court a quo rendered decision
setting aside the ruling of respondent which imposes a fine of P5,000.00 on the vessel Doa Nati
payable within 48 hours from receipt thereof. The court stated that said ruling appears to be unjust and
arbitrary because the party affected has not been accorded the investigation it requested from the
Collector of Customs.
Respondent interposed the present appeal.
When the customs authorities found that the vessel Doa Nati carried on board an unmanifested cargo
consisting of one RCA Victor TV set 21" in violation of Section 2521 of the Tariff and Customs Code,

respondent sent a written notice to C. F. Sharp & Company, believing it to be the operator or agent of
the vessel, and when the latter referred the notice to A. V. Rocha, the real operator of the vessel, for
such step as he may deem necessary to be taken the latter answered the letter stating that the
television set was not cargo and so was not required by law to be manifested, and he added to his
answer the following: "If this explanation is not sufficient, we request that this case be set for
investigation and hearing in order to enable the vessel to be informed of the evidence against it to
sustain the charge and to present evidence in its defense. "Respondent, however, replied to this letter
saying that said television was a cargo within the meaning of the law and so he does not find his
explanation satisfactory and then and there imposed on the vessel a fine of P5,00.00. Respondent
even went further. He ordered that said fine be paid within 48 hours from receipt with a threat that the
vessel would be denied clearance and a warrant of seizure would be issued if the fine will not be paid.
Considering this to be a grave abuse of discretion, petitioners commenced the present action for
certiorari before the court a quo.
We find this action proper for it really appears that petitioner Rocha was not given an opportunity to
prove that the television set complained of is not a cargo that needs to be manifested as required by
Section 2521 of the Tariff and Customs Code. Under said section, in order that an imported article or
merchandise may be considered a cargo that should be manifested it is first necessary that it be so
established for the reason that there are other effects that a vessel may carry that are excluded from
the requirement of the law, among which are the personal effects of the members of the crew. The fact
that the set in question was claimed by the customs authorities not to be within the exception does not
automatically make the vessel liable. It is still necessary that the vessel, its owner or operator, be given
a chance to show otherwise. This is precisely what petitioner Rocha has requested in his letter. Not
only was he denied this chance, but respondent collector immediately imposed upon the vessel the
huge fine of P5,000.00. This is a denial of the elementary rule of due process.
True it is that the proceedings before the Collector of Customs insofar as the determination of any act
or irregularity that may involve a violation of any customs law or regulation is concerned, or of any act
arising under the Tariff and Customs Code, are not judicial in character, but merely administrative,
where the rules of procedure are generally disregarded, but even in the administrative proceedings
due process should be observed because that is a right enshrined in our Constitution. The right to due
process is not merely statutory. It is a constitutional right. Indeed, our Constitution provides that "No
person shall be deprived of life, liberty, or property without due process of law", which clause epitomize
the principle of justice which hears before it condemns, which proceeds upon inquiry and renders
judgment only after trial. That this principle applies with equal force to administrative proceedings was
well elaborated upon by this Court in the Ang Tibay case as follows:
... The fact, however, that the Court of Industrial Relations may be said to be free from the
rigidity of certain procedural requirements does not mean that it can, in justiciable case
coming before it, entirely ignore or disregard the fundamental and essential requirements of
due process in trials and investigations of an administrative character.
... There are cardinal primary rights which must be respected even in proceedings of this
character. The first of these rights is the right to a hearing, which includes the right of the
party interested or affected to present his own case and submit evidence in support thereof.
Not only must the party be given an opportunity to present his case and to adduce evidence
tending to establish the rights which he asserts but the tribunal must consider the evidence
presented. While the duty to deliberate does not impose the obligation to decide right, it does
imply a necessity which cannot be disregarded, namely, that of having something to support
its decision. No only must there be some evidence to support a finding or conclusion, but the

evidence must be substantial. The decision must be rendered on the evidence presented at
the hearing, or at least contained in the record and disclosed to the parties affected. The
Court of Industrial Relations or any of its judges, therefore, must act on its or his own
independent consideration of the law and facts of the controversy, and not simply accept the
views of a subordinate in arriving at a decision. The Court of Industrial Relations should, in
all controversial questions, render its decision in such a manner that the parties to the
proceeding can know the various issues involved, and the reason for the decision rendered.
The performance of this duty is inseparable from the authority conferred upon it. (Ang Tibay,
et al. v. The Court of Industrial Relations, et al., 40 O.G., No. 11, Supp. p. 29).
There is, therefore, no point in the contention that the court a quo has no jurisdiction over the present
case because what is here involved is not whether the imposition of the fine by the Collector of
Customs on the operator of the ship is correct or not but whether he acted properly in imposing said
fine without first giving the operator an opportunity to be heard. Here we said that he acted
improvidently and so the action taken against him is in accordance with Rule 67 of our Rules of Court.
Another point raised is that petitioners have brought this action prematurely for they have not yet
exhausted all the administrative remedies available to them, one of which is to appeal the ruling to the
Commissioner of Customs. This may be true, but such step we do not consider a plain, speedy or
adequate remedy in the ordinary course of law as would prevent petitioners from taking the present
action, for it is undisputed that respondent collector has acted in utter disregard of the principle of due
process.
WHEREFORE, the decision appealed from is affirmed. No costs.