G.R. No. 132358 April 12, 2002 MILA YAP SUMNDAD, petitioner, vs.

JOHN WILLIAM HARRIGAN and BORACAY BEACH CLUB HOTEL, INC., (BBCHI), respondents. QUISUMBING, J.: This petition for review on certiorari seeks to annul and set aside the decision promulgated on October 1, 1997, by the Court of Appeals, affirming the decision of the Regional Trial Court of Makati, Branch 61, which ruled in favor of respondent John William Harrigan, ordering respondent Boracay Beach Club Hotel Inc. to pay P8 million plus interest, attorneys fees and costs. The facts of this case disclose that on February 6, 1995, Harrigan filed a complaint docketed as Civil Case No. 95-223 for collection of a sum of money with prayer for preliminary attachment with the RTC Makati against respondent BBCHI.1 Harrigan prayed for the issuance of a writ of preliminary attachment pending the hearing of the case, which was granted by the trial court on March 2, 1995, after he posted an attachment bond of P2 million.2 On March 6, 1995, Harrigan filed an amended complaint3 impleading the management committee of BBCHI through its acting chairman, Corazon T. Tirol. The following material facts were alleged in the complaint, as amended:4 xxx 3. Pursuant to a joint venture agreement between plaintiff and one Mila YapSumndad, a Filipino and alleged owner of a 3,000 sq. m. land in Boracay, Aklan, to establish and develop a first-class tourist resort on said land which was assigned to defendant BBCHI, plaintiff invested in, and paid P1 Million for 8,000 shares of defendant corporation corresponding to 40% of its authorized capital stock. 4. To finance the construction of new buildings and the acquisition of furniture, equipment and other facilities of said resort, called Boracay Beach Club Hotel and owned by BBCHI, plaintiff gave advances or loans to said defendant, which as of October 2, 1990, already amounted to P1,000,000.00 5. Plaintiff continued to give advances to defendant BBCHI to complete the construction of the buildings and facilities of the Boracay Beach Club Hotel resort, which advances or loans was determined to be at least P8,000,000.00. Said loans, which are demandable in character and subject to interest of 20% per annum accruing from September 1, 1990, are to be serviced and paid by defendant BBCHI. xxx 9. Considering that as of September 1994, defendant has failed to service and pay, not only its above-mentioned demandable loans but even the accrued interests thereon which, as of December 31, 1994, already amounted to P393,451.07, plaintiff through his counsel demanded from defendant, through its officer and SEC-appointed manager, for settlement of the latters said unpaid obligations. 10. Despite plaintiffs foregoing written demands for payment of its due obligations, the defendant has refused and failed to do so.5 The trial court admitted the amended complaint and issued an amended order for the issuance of writ of attachment.6 On March 29, 1995, petitioner Mila Yap Sumndad filed an "Urgent Motion for Leave to Intervene with Prayer forStatus Quo Order and/or Suspension" praying that she be allowed to intervene either as plaintiff or defendant.7The trial court granted said motion on June 8, 1995 and gave petitioner ten days to file either a complaint or an answer in intervention. 8

Instead of filing an answer, petitioner moved to dismiss the amended complaint based on the following grounds: (1) forum shopping; (2) lack of jurisdiction; (3) failure to state a cause of action; and (4) litis pendentia.9 This was denied by the RTC in its order dated October 17, 1995.10 Thereafter, Sumndad filed 6 motions for additional time to file an answer. 11 Upon motion of Harrigan, petitioner was declared in default on March 21, 1996, for failure to answer within the reglementary period and the trial court proceeded with the exparte presentation of evidence.12 On April 18, 1996, Harrigan filed a Motion for Judgment on the Pleadings. 13 On several occasions, petitioner attempted to regain her standing in court by filing numerous pleadings and motions. On October 1, 1996, the trial court resolved her motions in this wise: A scrutiny of the entire records of this case show that Intervenor MILA YAP SUMNDAD, for failure to file COMPLAINT or ANSWER IN INTERVENTION, was declared in default per Order of 21 March 1996 and received by counsel for Intervenor on 10 May 1996, and subsequent thereto Intervenor MILA YAP SUMNDAD filed the following pleadings, to wit: 1. Manifestation and Opposition to Motion for Judgment on the Pleadings filed on 20 May 1996; 2. Motion to Suspend Proceedings filed on 28 May 1996; 3. Supplement to the Opposition to Motion for Judgment on the Pleadings with Manifestation to file Motion to Lift Order of Default filed on 17 June 1996; 4. Supplement to "Motion to Suspend Proceedings" on ground of Prejudicial Question and Forum Shopping; 5. Motion to Consolidate Above-Entitled Case with Civil Case No. 4847 of the RTC, Branch 7, Kalibo, Aklan filed on 03 September 1996. The records likewise show that Intervenor MILA YAP SUMNDAD despite its Supplement to the Opposition to Motion for Judgment on the Pleadings with Manifestation to file Motion to Lift Order of Default filed on 17 July 1996 (Underscoring ours) has not, until now, filed the necessary motion to lift Order of Default, dated 21 March 1996. In view of the foregoing, and the Order of 21 March 1996 declaring Intervenor MILA YAP SUMNDAD [in default,] not having been lifted, Intervenor has no standing in court, or considered out of court, and consequently can no longer appear herein, or expect her pleadings to be acted upon. (citation omitted)14 On the same date, the trial court, acting on Harrigans motion for judgment on the pleadings, decreed: A perusal of the ANSWERS filed by the defendants in this case for a SUM OF MONEY evidently failed to tender an issue and therefore, pursuant to Section 1, Rule 19, Rules of Court, JUDGMENT ON THE PLEADINGS is hereby rendered in favor of plaintiff and as against defendant BORACAY BEACH CLUB HOTEL, INC. (BBCHI), who is hereby ordered to: 1. PAY plaintiff the sum of EIGHT MILLION (P8,000,000.00) PESOS, Philippine Currency, plus 12% interest per annum computed from 27 July 1993, until fully paid; 2. PAY attorneys fees in the amount of P200,000.00, plus appearance fee of P2,000.00 per hearing attended by the counsel; and to

3. PAY the costs.15 Not satisfied with the decision, petitioner moved for reconsideration. 16 In the meantime, Harrigan moved for the execution of judgment.17 By order dated March 11, 1997, the trial court denied petitioners motion for reconsideration and granted Harrigans motion for execution of judgment.18 Thereafter, a writ of execution was issued.19 On May 7, 1997, petitioner filed with the Court of Appeals, a petition for certiorari, prohibition and mandamus, docketed as CA-G.R. SP No. 44088.20 On October 1, 1997, the CA dismissed the petition for lack of merit.21 Petitioner again moved for reconsideration. This, too, was denied in a resolution dated January 21, 1998.22 Hence this petition for review on certiorari ascribing the following errors to the appellate court below: I THE COURT OF APPEALS, SIXTH DIVISION HAS SO FAR SANCTIONED THE ERRONEOUS EXERCISE OF JURISDICTION BY THE REGIONAL TRIAL COURT, MAKATI BRANCH 61 OVER CIVIL CASE NO. 95-223, FILED BY PRIVATE RESPONDENT JOHN HARRIGAN, AGAINST BORACAY BEACH CLUB HOTEL INC., OF WHICH HE ALLEGES TO BE A STOCKHOLDER (40%) FOR COLLECTION OF A SUM OF MONEY, BASED ON ALLEGED FRAUD, WHICH IS A SUBJECT MATTER CLEARLY WITHIN THE ORIGINAL AND EXCLUSIVE JURISDICTION OF THE SECURITIES AND EXCHANGE COMMISSION, UNDER SEC. 5 PD 902-A. FOR SUCH CLEAR ERROR OF JURISDICTION CERTIORARI NOT ORDINARY APPEAL IS THE CORRECT REMEDY.23 II THE COURT OF APPEALS HAS CAPRICIOUSLY, GROSSLY AND PATENTLY ERRED IN HOLDING THAT PETITIONERS REMEDY IS APPEAL AND NOT CERTIORARI, WHICH REMEDY WAS LOST FOR FAILURE TO APPEAL WITHIN THE REGLEMENTARY PERIOD OF APPEAL, INCONSISTENTLY CATEGORIZING THE ALLEGED ERRORS AS ONE OF JUDGEMENT AND NOT OF JURISDICTION.24 III. THE COURT OF APPEALS HAS ERRONEOUSLY RULED THAT THE PETITION FOR CERTIORARI HAS BEEN FILED BELATEDLY COUNTING THE THREE (3) MONTHS PERIOD NOT FROM APRIL 27, 1997 THE DATE OF RECEIPT OF THE DENIAL OF THE MOTION FOR RECONSIDERATION OF THE JUDGMENT ON THE PLEADINGS DATED OCTOBER 1, 1996 SUBJECT OF CERTIORARI BUT FROM MARCH 21, 1996, THE DATE OF THE DENIAL OF THE MOTION FOR RECONSIDERATION OF THE ORDER DENYING MOTION TO DISMISS.25 IV.THE COURT OF APPEALS CLEARLY AND WHIMSICALLY ERRED IN HOLDING THAT THE PETITIONER LACKS PERSONALITY TO QUESTION THE DECISION AGAINST BORACAY BEACH CLUB HOTEL INC. WHICH DECISION DOES NOT CONCERN HER ALLEGEDLY.26 The central issue raised in the petition is: Is it the regular court or the Securities and Exchange Commission (SEC) that has jurisdiction over the subject matter of the case? Petitioner insists that it is the SEC that has jurisdiction by virtue of Presidential Decree No. 902A (Reorganization of the Securities and Exchange Commission with Additional Powers) because

the complaint alludes to fraud committed by respondent corporation, and the complainant is a stockholder of the respondent corporation. Private respondent, on the other hand, maintains that jurisdiction is lodged with the regular courts, it being a simple collection case. The petition is unmeritorious. First. The rule is that jurisdiction over the subject matter of the case is conferred by law and determined by the allegations of the complaint.27 Therefore, to resolve the issue raised to us, an interpretation and application of the law on jurisdiction, must be made vis--vis the averments of the petitioners complaint. The law on jurisdiction of the SEC, Section 5 of PD 902-A, states that in addition to the regulatory and adjudicative functions of the SEC over corporations, partnerships and other forms of associations registered with it as expressly granted under the existing laws and decrees, it shall have original and exclusive jurisdiction to hear and decide cases involving devises or schemes employed by or any acts of the Board of Directors, business associates, its officers and partners, amounting to fraud and misrepresentation which may be detrimental to the interest of the public and/or to the stockholders, partners, members of associations or organizations registered with the Commission.28 Now, from the averments of the amended complaint filed with the trial court as quoted above, Harrigan seeks to collect from BBCHI his advances or loans in the amount of at least P8 million, which are demandable in character pursuant to their agreement, 29 including interest at 20% per annum accruing from September 1, 1990. The cause of action of the suit is, clearly, for the collection of a sum of money. However, petitioner interprets said collection complaint as one involving mainly the issue of fraud committed by respondent corporation, which makes the controversy fall under the ambit of PD 902-A. The particular portion of the amended complaint referred to by petitioner states: 14. In so allowing another person to have the absolute and uncontrolled possession, management, and utilization of the buildings and facilities of the Boracay Beach Club Hotel resort without any corresponding financial return or material benefit therefor, and the misappropriation by said third party of the income from the operation of the resort business therein, since July 28, 1994 and up to the present or for a period ofover seven (7) months now, defendant has, in effect, disposed of and continues to ACTUALLY DISPOSE of and/or wantonly waste/dissipate said corporate properties and funds, in fraud of its creditors, which include herein plaintiff.30 To our mind, from the totality of the complaint filed by Harrigan, the main issue is whether or not he is entitled to collect the loan and not whether or not he was defrauded by BBCHI. The mere use of the phrase "in fraud of creditors" does not, ipso facto, throw the case within SECs jurisdiction. The amended complaint filed by Harrigan does not sufficiently allege acts amounting to fraud and misrepresentation committed by respondent corporation. In Alleje vs. CA,31 "fraud" is defined as a generic term embracing all multifarious means which human ingenuity can devise, and which are resorted to by one individual to secure an advantage over another by false suggestions or by suppression of truth and includes all surprise, trick, cunning, dissembling and any unfair way by which another is cheated. Within the context of the complaint as quoted above, the phrase "in fraud of creditors" can only mean, "to the prejudice of creditors" and not to the use of devises or schemes tantamount to fraud and misrepresentation

employed by the Board of Directors, business associates or its officers and partners to divert corporate funds and assets for personal use, as contemplated in Section 5 of PD 902-A. Equally unavailing is petitioners contention that the case involves an intra-corporate controversy, or one between the corporation and its stockholder transposing it within the domain of the SEC. It should be noted that the issue has become moot and academic because with Republic Act No. 8799, Securities Regulation Code, it is now the Regional Trial Court and no longer the SEC that has jurisdiction. Under Section 5.2 of Republic Act No. 8799, 32original and exclusive jurisdiction to hear and decide cases involving intra-corporate controversies have been transferred to a court of general jurisdiction or the appropriate Regional Trial Court. 33 Foregoing given, Harrigans complaint against petitioner to recoup his financial exposure with BBCHI was properly lodged with the regular court and not with the SEC. This view is in accord with the rudimentary principle that administrative agencies, like the SEC, are tribunals of limited jurisdiction and, as such, could wield only such powers as are specifically granted to them by their enabling statutes.34 Given our disquisition that the complaint for sum of money was instituted with the proper court, petitioners remedy before the appellate court should have been a timely appeal and not certiorari. Therefore, the appellate court was correct in dismissing petitioners petition for certiorari for being time-barred. Indeed, certiorari cannot be used as a substitute for lost or lapsed remedy of appeal, especially if such loss was occasioned by ones own neglect or error in the choice of remedies.35 As long as a court acts within its jurisdiction, any alleged errors committed in the exercise of its jurisdiction will amount to nothing more than errors of judgment reviewable by timely appeal and not by a special civil action of certiorari. 36 It is now moot and academic to delve into the third assigned error raised by petitioner, i.e., that the CA erred in ruling that three month reglementary period for filing a petition for certiorari has already lapsed. Neither does petitioners last assigned error merit our consideration, as any discussion on this issue of "personality" is merely academic. As earlier stated, whether or not petitioner has the personality to question the RTC order against BBCHI is a matter that should have been properly threshed out in an appeal filed with the CA. By allowing said order to become final and executory without interposing an appeal and by having incorrectly availed of the extraordinary remedy of certiorari, we can no longer, at this late hour, deal on this issue. We hasten to add that this issue requires delving into the facts of the case. Basic is the rule that this court is not a trier of facts. WHEREFORE, the instant petition is DENIED for lack of merit and the challenged decision of the Court of Appeals of October 1, 1997 in CA-G.R. SP No. 44088 is hereby AFFIRMED. Costs against the petitioner. SO ORDERED.

On May 17, 1999, Bayantel filed an Ex-Parte Motion to Revive Case,7 citing the availability of new frequency bands for CMTS operators, as provided for under Memorandum Circular No. 3-399. On February 1, 2000, the NTC granted BayanTel's motion to revive the latter's application and set the case for hearings on February 9, 10, 15, 17 and 22, 2000.8 The NTC noted that the application was ordered archived without prejudice to its reinstatement if and when the requisite frequency shall become available. Respondent Express Telecommunication Co., Inc. (Extelcom) filed in NTC Case No. 92-486 an Opposition (With Motion to Dismiss) praying for the dismissal of Bayantel's application.9 Extelcom argued that Bayantel's motion sought the revival of an archived application filed almost eight (8) years ago. Thus, the documentary evidence and the allegations of respondent Bayantel in this application are all outdated and should no longer be used as basis of the necessity for the proposed CMTS service. Moreover, Extelcom alleged that there was no public need for the service applied for by Bayantel as the present five CMTS operators -- Extelcom, Globe Telecom, Inc., Smart Communication, Inc., Pilipino Telephone Corporation, and Isla Communication Corporation, Inc. --- more than adequately addressed the market demand, and all are in the process of enhancing and expanding their respective networks based on recent technological developments. 1wphi1.nt Extelcom likewise contended that there were no available radio frequencies that could accommodate a new CMTS operator as the frequency bands allocated in NTC Memorandum Circular No. 3-3-99 were intended for and had in fact been applied for by the existing CMTS operators. The NTC, in its Memorandum Circular No. 4-1-93, declared it its policy to defer the acceptance of any application for CMTS. All the frequency bands allocated for CMTS use under the NTC's Memorandum Circular No. 5-11-88 and Memorandum Circular No. 2-12-92 had already been allocated to the existing CMTS operators. Finally, Extelcom pointed out that Bayantel is its substantial stockholder to the extent of about 46% of its outstanding capital stock, and Bayantel's application undermines the very operations of Extelcom. On March 13, 2000, Bayantel filed a Consolidated Reply/Comment, 10 stating that the opposition was actually a motion seeking a reconsideration of the NTC Order reviving the instant application, and thus cannot dwell on the material allegations or the merits of the case. Furthermore, Extelcom cannot claim that frequencies were not available inasmuch as the allocation and assignment thereof rest solely on the discretion of the NTC. In the meantime, the NTC issued on March 9, 2000 Memorandum Circular No. 9-3-2000, reallocating the following radio frequency bands for assignment to existing CMTS operators and to public telecommunication entities which shall be authorized to install, operate and maintain CMTS networks, namely: 1745-1750MHz / 1840-1845MHz; 1750-1775MHz / 1845-1850MHz; 1765-1770MHz / 1860-1865MHz; and 1770-1775MHz / 1865-1870MHz.11 On May 3, 2000, the NTC issued an Order granting in favor of Bayantel a provisional authority to operate CMTS service.12 The Order stated in pertinent part: On the issue of legal capacity on the part of Bayantel, this Commission has already taken notice of the change in name of International Communications Corporation to Bayan Telecommunications, Inc. Thus, in the Decision entered in NTC Case No. 93284/94-200 dated 19 July 1999, it was recognized that Bayan Telecommunications, Inc., was formerly named International Communications Corp. Bayantel and ICC Telecoms, Inc. are one and the same entity, and it necessarily follows that what legal capacity ICC Telecoms has or has acquired is also the legal capacity that Bayantel possesses.

G.R. No. 147096 January 15, 2002 REPUBLIC OF THE PHILIPPINES, represented by NATIONAL TELECOMMUNICATIONS COMMISSION,petitioner, vs. EXPRESS TELECOMMUNICATION CO., INC. and BAYAN TELECOMMUNICATIONS CO., INC., respondents. x---------------------------------------------------------x G.R. No. 147210 January 15, 2002 BAYAN TELECOMMUNICATIONS (Bayantel), INC., petitioner, vs. EXPRESS TELECOMMUNICATION CO., INC. (Extelcom), respondent. YNARES-SANTIAGO, J.: On December 29, 1992, International Communications Corporation (now Bayan Telecommunications, Inc. or Bayantel) filed an application with the National Telecommunications Commission (NTC) for a Certificate of Public Convenience or Necessity (CPCN) to install, operate and maintain a digital Cellular Mobile Telephone System/Service (CMTS) with prayer for a Provisional Authority (PA). The application was docketed as NTC Case No. 92-486.1 Shortly thereafter, or on January 22, 1993, the NTC issued Memorandum Circular No. 4-1-93 directing all interested applicants for nationwide or regional CMTS to file their respective applications before the Commission on or before February 15, 1993, and deferring the acceptance of any application filed after said date until further orders.2 On May 6, 1993, and prior to the issuance of any notice of hearing by the NTC with respect to Bayantel's original application, Bayantel filed an urgent ex-parte motion to admit an amended application.3 On May 17, 1993, the notice of hearing issued by the NTC with respect to this amended application was published in the Manila Chronicle. Copies of the application as well as the notice of hearing were mailed to all affected parties. Subsequently, hearings were conducted on the amended application. But before Bayantel could complete the presentation of its evidence, the NTC issued an Order dated December 19, 1993 stating: In view of the recent grant of two (2) separate Provisional Authorities in favor of ISLACOM and GMCR, Inc., which resulted in the closing out of all available frequencies for the service being applied for by herein applicant, and in order that this case may not remain pending for an indefinite period of time, AS PRAYED FOR, let this case be, as it is, hereby ordered ARCHIVED without prejudice to its reinstatement if and when the requisite frequency becomes available. SO ORDERED.4 On June 18, 1998, the NTC issued Memorandum Circular No. 5-6-98 re-allocating five (5) megahertz (MHz) of the radio frequency spectrum for the expansion of CMTS networks. The reallocated 5 MHz were taken from the following bands: 1730-1732.5 / 1825-1827.5 MHz and 1732.5-1735 / 1827.5-1830 MHz.5 Likewise, on March 23, 1999, Memorandum Circular No. 3-3-99 was issued by the NTC reallocating an additional five (5) MHz frequencies for CMTS service, namely: 1735-1737.5 / 18301832.5 MHz; 1737.5-1740 / 1832.5-1835 MHz; 1740-1742.5 / 1835-1837.5 MHz; and 1742.51745 / 1837.5-1840 MHz.6

On the allegation that the Commission has committed an error in allowing the revival of the instant application, it appears that the Order dated 14 December 1993 archiving the same was anchored on the non-availability of frequencies for CMTS. In the same Order, it was expressly stated that the archival hereof, shall be without prejudice to its reinstatement "if and when the requisite frequency becomes available." Inherent in the said Order is the prerogative of the Commission in reviving the same, subject to prevailing conditions. The Order of 1 February 2001, cited the availability of frequencies for CMTS, and based thereon, the Commission, exercising its prerogative, revived and reinstated the instant application. The fact that the motion for revival hereof was made ex-parte by the applicant is of no moment, so long as the oppositors are given the opportunity to be later heard and present the merits of their respective oppositions in the proceedings. On the allegation that the instant application is already obsolete and overtaken by developments, the issue is whether applicant has the legal, financial and technical capacity to undertake the proposed project. The determination of such capacity lies solely within the discretion of the Commission, through its applicable rules and regulations. At any rate, the oppositors are not precluded from showing evidence disputing such capacity in the proceedings at hand. On the alleged non-availability of frequencies for the proposed service in view of the pending applications for the same, the Commission takes note that it has issued Memorandum Circular 9-3-2000, allocating additional frequencies for CMTS. The eligibility of existing operators who applied for additional frequencies shall be treated and resolved in their respective applications, and are not in issue in the case at hand. Accordingly, the Motions for Reconsideration filed by SMARTCOM and GLOBE TELECOMS/ISLACOM and the Motion to Dismiss filed by EXTELCOM are hereby DENIED for lack of merit.13 The grant of the provisional authority was anchored on the following findings: COMMENTS: 1. Due to the operational mergers between Smart Communications, Inc. and Pilipino Telephone Corporation (Piltel) and between Globe Telecom, Inc. (Globe) and Isla Communications, Inc. (Islacom), free and effective competition in the CMTS market is threatened. The fifth operator, Extelcom, cannot provide good competition in as much as it provides service using the analog AMPS. The GSM system dominates the market. 2. There are at present two applicants for the assignment of the frequencies in the 1.7 Ghz and 1.8 Ghz allocated to CMTS, namely Globe and Extelcom. Based on the number of subscribers Extelcom has, there appears to be no congestion in its network - a condition that is necessary for an applicant to be assigned additional frequencies. Globe has yet to prove that there is congestion in its network considering its operational merger with Islacom. 3. Based on the reports submitted to the Commission, 48% of the total number of cities and municipalities are still without telephone service despite the more than 3 million installed lines waiting to be subscribed. CONCLUSIONS: 1. To ensure effective competition in the CMTS market considering the operational merger of some of the CMTS operators, new CMTS operators must be allowed to provide the service. 2. The re-allocated frequencies for CMTS of 3 blocks of 5 Mhz x 2 is sufficient for the number of applicants should the applicants be qualified. 3. There is a need to provide service to some or all of the remaining cities and municipalities without telephone service.

4. The submitted documents are sufficient to determine compliance to the technical requirements. The applicant can be directed to submit details such as channeling plans, exact locations of cell sites, etc. as the project implementation progresses, actual area coverage ascertained and traffic data are made available. Applicant appears to be technically qualified to undertake the proposed project and offer the proposed service. IN VIEW OF THE FOREGOING and considering that there is prima facie evidence to show that Applicant is legally, technically and financially qualified and that the proposed service is technically feasible and economically viable, in the interest of public service, and in order to facilitate the development of telecommunications services in all areas of the country, as well as to ensure healthy competition among authorized CMTS providers, let a PROVISIONAL AUTHORITY (P.A.) be issued to Applicant BAYAN TELECOMMUNICATIONS, INC. authorizing it to construct, install, operate and maintain a Nationwide Cellular Mobile Telephone Systems (CMTS), subject to the following terms and conditions without prejudice to a final decision after completion of the hearing which shall be called within thirty (30) days from grant of authority, in accordance with Section 3, Rule 15, Part IV of the Commission's Rules of Practice and Procedure. xxx.14 Extelcom filed with the Court of Appeals a petition for certiorari and prohibition,15 docketed as CA-G.R. SP No. 58893, seeking the annulment of the Order reviving the application of Bayantel, the Order granting Bayantel a provisional authority to construct, install, operate and maintain a nationwide CMTS, and Memorandum Circular No. 9-3-2000 allocating frequency bands to new public telecommunication entities which are authorized to install, operate and maintain CMTS. On September 13, 2000, the Court of Appeals rendered the assailed Decision, 16 the dispositive portion of which reads: WHEREFORE, the writs of certiorari and prohibition prayed for are GRANTED. The Orders of public respondent dated February 1, 2000 and May 3, 2000 in NTC Case No. 92-486 are hereby ANNULLED and SET ASIDE and the Amended Application of respondent Bayantel is DISMISSED without prejudice to the filing of a new CMTS application. The writ of preliminary injunction issued under our Resolution dated August 15, 2000, restraining and enjoining the respondents from enforcing the Orders dated February 1, 2000 and May 3, 2000 in the said NTC case is hereby made permanent. The Motion for Reconsideration of respondent Bayantel dated August 28, 2000 is denied for lack of merit. SO ORDERED.17 Bayantel filed a motion for reconsideration of the above decision. 18 The NTC, represented by the Office of the Solicitor General (OSG), also filed its own motion for reconsideration.19 On the other hand, Extelcom filed a Motion for Partial Reconsideration, praying that NTC Memorandum Circular No. 9-3-2000 be also declared null and void.20 On February 9, 2001, the Court of Appeals issued the assailed Resolution denying all of the motions for reconsideration of the parties for lack of merit.21 Hence, the NTC filed the instant petition for review on certiorari, docketed as G.R. No. 147096, raising the following issues for resolution of this Court:

A. Whether or not the Order dated February 1, 2000 of the petitioner which revived the application of respondent Bayantel in NTC Case No. 92-486 violated respondent Extelcom's right to procedural due process of law; B. Whether or not the Order dated May 3, 2000 of the petitioner granting respondent Bayantel a provisional authority to operate a CMTS is in substantial compliance with NTC Rules of Practice and Procedure and Memorandum Circular No. 9-14-90 dated September 4, 1990.22 Subsequently, Bayantel also filed its petition for review, docketed as G.R. No. 147210, assigning the following errors: I. THE COURT OF APPEALS SERIOUSLY ERRED IN ITS INTERPRETATION OF THE PRINCIPLE OF "EXHAUSTION OF ADMINISTRATIVE REMEDIES" WHEN IT FAILED TO DISMISS HEREIN RESPONDENT'S PETITION FOR CERTIORARI DESPITE ITS FAILURE TO FILE A MOTION FOR RECONSIDERATION. II. THE COURT OF APPEALS SERIOUSLY ERRED IN ITS FINDING THAT THE REVIVAL OF NTC CASE NO. 92-486 ANCHORED ON A EX-PARTE MOTION TO REVIVE CASE WAS TANTAMOUNT TO GRAVE ABUSE OF DISCRETION ON THE PART OF THE NTC. III. THE COURT OF APPEALS SERIOUSLY ERRED WHEN IT DENIED THE MANDATE OF THE NTC AS THE AGENCY OF GOVERNMENT WITH THE SOLE DISCRETION REGARDING ALLOCATION OF FREQUENCY BAND TO TELECOMMUNICATIONS ENTITIES. IV. THE COURT OF APPEALS SERIOUSLY ERRED IN ITS INTERPRETATION OF THE LEGAL PRINCIPLE THAT JURISDICTION ONCE ACQUIRED CANNOT BE LOST WHEN IT DECLARED THAT THE ARCHIVED APPLICATION SHOULD BE DEEMED AS A NEW APPLICATION IN VIEW OF THE SUBSTANTIAL CHANGE IN THE CIRCUMSTANCES ALLEGED IN ITS AMENDMENT APPLICATION. V. CONTRARY TO THE FINDING OF THE COURT OF APPEALS, THE ARCHIVING OF THE BAYANTEL APPLICATION WAS A VALID ACT ON THE PART OF THE NTC EVEN IN THE ABSENCE OF A SPECIFIC RULE ON ARCHIVING OF CASES SINCE RULES OF PROCEDURE ARE, AS A MATTER OF COURSE, LIBERALLY CONSTRUED IN PROCEEDINGS BEFORE ADMINISTRATIVE BODIES AND SHOULD GIVE WAY TO THE GREATER HIERARCHY OF PUBLIC WELFARE AND PUBLIC INTEREST. VI. CONTRARY TO THE FINDING OF THE COURT OF APPEALS, THE ARCHIVING OF BAYANTEL'S APPLICATION WAS NOT VIOLATIVE OF THE SUMMARY NATURE OF THE PROCEEDINGS IN THE NTC UNDER SEC. 3, RULE 1 OF THE NTC REVISED RULES OF PROCEDURE. VII. THE COURT OF APPEALS SERIOUSLY ERRED IN ITS FINDING THAT THE ARCHIVING OF BAYANTEL'S APPLICATION WAS VIOLATIVE OF THE ALLEGED DECLARED POLICY OF THE GOVERNMENT ON THE TRANSPARENCY AND FAIRNESS OF ADMINISTRATIVE PROCESS IN THE NTC AS LAID DOWN IN SEC 4(1) OF R.A. NO. 7925.

VIII. THE COURT OF APPEALS SERIOUSLY ERRED IN ITS FINDING THAT THE NTC VIOLATED THE PROVISIONS OF THE CONSTITUTION PERTAINING TO DUE PROCESS OF LAW. IX. THE COURT OF APPEALS SERIOUSLY ERRED IN DECLARING THAT THE MAY 3, 2000 ORDER GRANTING BAYANTEL A PROVISIONAL AUTHORITY SHOULD BE SET ASIDE AND REVERSED. i. Contrary to the finding of the Court of Appeals, there was no violation of the NTC Rule that the legal, technical, financial and economic documentations in support of the prayer for provisional authority should first be submitted. ii. Contrary to the finding of the Court of Appeals, there was no violation of Sec. 3, Rule 15 of the NTC Rules of Practice and Procedure that a motion must first be filed before a provisional authority could be issued. iii. Contrary to the finding of the Court of Appeals that a plea for provisional authority necessitates a notice and hearing, the very rule cited by the petitioner (Section 5, Rule 4 of the NTC Rules of Practice and Procedure) provides otherwise. iv. Contrary to the finding of the Court of Appeals, urgent public need is not the only basis for the grant of a provisional authority to an applicant; v. Contrary to the finding of the Court of Appeals, there was no violation of the constitutional provision on the right of the public to information when the Common Carrier Authorization Department (CCAD) prepared its evaluation report. 23 Considering the identity of the matters involved, this Court resolved to consolidate the two petitions.24 At the outset, it is well to discuss the nature and functions of the NTC, and analyze its powers and authority as well as the laws, rules and regulations that govern its existence and operations. The NTC was created pursuant to Executive Order No. 546, promulgated on July 23, 1979. It assumed the functions formerly assigned to the Board of Communications and the Telecommunications Control Bureau, which were both abolished under the said Executive Order. Previously, the NTC's functions were merely those of the defunct Public Service Commission (PSC), created under Commonwealth Act No. 146, as amended, otherwise known as the Public Service Act, considering that the Board of Communications was the successor-ininterest of the PSC. Under Executive Order No. 125-A, issued in April 1987, the NTC became an attached agency of the Department of Transportation and Communications. In the regulatory telecommunications industry, the NTC has the sole authority to issue Certificates of Public Convenience and Necessity (CPCN) for the installation, operation, and maintenance of communications facilities and services, radio communications systems, telephone and telegraph systems. Such power includes the authority to determine the areas of operations of applicants for telecommunications services. Specifically, Section 16 of the Public Service Act authorizes the then PSC, upon notice and hearing, to issue Certificates of Public Convenience for the operation of public services within the Philippines "whenever the Commission finds that the operation of the public service proposed and the authorization to do business will promote the public interests in a proper and suitable manner." 25 The procedure governing the issuance of such authorizations is set forth in Section 29 of the said Act, the pertinent portion of which states:

All hearings and investigations before the Commission shall be governed by rules adopted by the Commission, and in the conduct thereof, the Commission shall not be bound by the technical rules of legal evidence. xxx. In granting Bayantel the provisional authority to operate a CMTS, the NTC applied Rule 15, Section 3 of its 1978 Rules of Practice and Procedure, which provides: Sec. 3. Provisional Relief. --- Upon the filing of an application, complaint or petition or at any stage thereafter, the Board may grant on motion of the pleader or on its own initiative, the relief prayed for, based on the pleading, together with the affidavits and supporting documents attached thereto, without prejudice to a final decision after completion of the hearing which shall be called within thirty (30) days from grant of authority asked for. (underscoring ours) Respondent Extelcom, however, contends that the NTC should have applied the Revised Rules which were filed with the Office of the National Administrative Register on February 3, 1993. These Revised Rules deleted the phrase "on its own initiative;" accordingly, a provisional authority may be issued only upon filing of the proper motion before the Commission. In answer to this argument, the NTC, through the Secretary of the Commission, issued a certification to the effect that inasmuch as the 1993 Revised Rules have not been published in a newspaper of general circulation, the NTC has been applying the 1978 Rules. The absence of publication, coupled with the certification by the Commissioner of the NTC stating that the NTC was still governed by the 1978 Rules, clearly indicate that the 1993 Revised Rules have not taken effect at the time of the grant of the provisional authority to Bayantel. The fact that the 1993 Revised Rules were filed with the UP Law Center on February 3, 1993 is of no moment. There is nothing in the Administrative Code of 1987 which implies that the filing of the rules with the UP Law Center is the operative act that gives the rules force and effect. Book VII, Chapter 2, Section 3 thereof merely states: Filing. --- (1) Every agency shall file with the University of the Philippines Law Center three (3) certified copes of every rule adopted by it. Rules in force on the date of effectivity of this Code which are not filed within three (3) months from the date shall not thereafter be the basis of any sanction against any party or persons. (2) The records officer of the agency, or his equivalent functionary, shall carry out the requirements of this section under pain or disciplinary action. (3) A permanent register of all rules shall be kept by the issuing agency and shall be open to public inspection. The National Administrative Register is merely a bulletin of codified rules and it is furnished only to the Office of the President, Congress, all appellate courts, the National Library, other public offices or agencies as the Congress may select, and to other persons at a price sufficient to cover publication and mailing or distribution costs.26 In a similar case, we held: This does not imply however, that the subject Administrative Order is a valid exercise of such quasi-legislative power. The original Administrative Order issued on August 30, 1989, under which the respondents filed their applications for importations, was not published in the Official Gazette or in a newspaper of general circulation. The questioned Administrative Order, legally, until it is published, is invalid within the context of Article 2 of Civil Code, which reads:

"Article 2. Laws shall take effect after fifteen days following the completion of their publication in the Official Gazette (or in a newspaper of general circulation in the Philippines), unless it is otherwise provided. x x x" The fact that the amendments to Administrative Order No. SOCPEC 89-08-01 were filed with, and published by the UP Law Center in the National Administrative Register, does not cure the defect related to the effectivity of the Administrative Order. This Court, in Taada vs. Tuvera (G.R. No. L-63915, December 29, 1986, 146 SCRA 446) stated, thus: "We hold therefore that all statutes, including those of local application and private laws, shall be published as a condition for their effectivity, which shall begin fifteen days after publication unless a different effectivity is fixed by the legislature. Covered by this rule are presidential decrees and executive orders promulgated by the President in the exercise of legislative power or, at present, directly conferred by the Constitution. Administrative Rules and Regulations must also be published if their purpose is to enforce or implement existing law pursuant also to a valid delegation. Interpretative regulations and those merely internal in nature, that is, regulating only the personnel of the administrative agency and not the public, need not be published. Neither is publication required of the socalled letters of instructions issued by administrative superiors concerning the rules or guidelines to be followed by their subordinates in the performance of their duties. xxx We agree that the publication must be in full or it is no publication at all since its purpose is to inform the public of the contents of the laws." The Administrative Order under consideration is one of those issuances which should be published for its effectivity, since its purpose is to enforce and implement an existing law pursuant to a valid delegation, i.e., P.D. 1071, in relation to LOI 444 and EO 133.27 Thus, publication in the Official Gazette or a newspaper of general circulation is a condition sine qua non before statutes, rules or regulations can take effect. This is explicit from Executive Order No. 200, which repealed Article 2 of the Civil Code, and which states that: Laws shall take effect after fifteen days following the completion of their publication either in the Official Gazette or in a newspaper of general circulation in the Philippines, unless it is otherwise provided.28 The Rules of Practice and Procedure of the NTC, which implements Section 29 of the Public Service Act (C.A. 146, as amended), fall squarely within the scope of these laws, as explicitly mentioned in the case Taada v. Tuvera.29

Our pronouncement in Taada vs. Tuvera is clear and categorical. Administrative rules and regulations must be published if their purpose is to enforce or implement existing law pursuant to a valid delegation. The only exceptions are interpretative regulations, those merely internal in nature, or those so-called letters of instructions issued by administrative superiors concerning the rules and guidelines to be followed by their subordinates in the performance of their duties.30 Hence, the 1993 Revised Rules should be published in the Official Gazette or in a newspaper of general circulation before it can take effect. Even the 1993 Revised Rules itself mandates that said Rules shall take effect only after their publication in a newspaper of general circulation. 31 In the absence of such publication, therefore, it is the 1978 Rules that governs. In any event, regardless of whether the 1978 Rules or the 1993 Revised Rules should apply, the records show that the amended application filed by Bayantel in fact included a motion for the issuance of a provisional authority. Hence, it cannot be said that the NTC granted the provisional authority motu proprio. The Court of Appeals, therefore, erred when it found that the NTC issued its Order of May 3, 2000 on its own initiative. This much is acknowledged in the Decision of the Court of Appeals: As prayer, ICC asked for the immediate grant of provisional authority to construct, install, maintain and operate the subject service and to charge the proposed rates and after due notice and hearing, approve the instant application and grant the corresponding certificate of public convenience and necessity. 32 The Court of Appeals also erred when it declared that the NTC's Order archiving Bayantel's application was null and void. The archiving of cases is a widely accepted measure designed to shelve cases in which no immediate action is expected but where no grounds exist for their outright dismissal, albeit without prejudice. It saves the petitioner or applicant from the added trouble and expense of re-filing a dismissed case. Under this scheme, an inactive case is kept alive but held in abeyance until the situation obtains wherein action thereon can be taken. In the case at bar, the said application was ordered archived because of lack of available frequencies at the time, and made subject to reinstatement upon availability of the requisite frequency. To be sure, there was nothing irregular in the revival of the application after the condition therefor was fulfilled. While, as held by the Court of Appeals, there are no clear provisions in the Rules of the NTC which expressly allow the archiving of any application, this recourse may be justified under Rule 1, Section 2 of the 1978 Rules, which states: Sec. 2. Scope.--- These rules govern pleadings, practice and procedure before the Board of Communications (now NTC) in all matters of hearing, investigation and proceedings within the jurisdiction of the Board. However, in the broader interest of justice and in order to best serve the public interest, the Board may, in any particular matter, except it from these rules and apply such suitable procedure to improve the service in the transaction of the public business. (underscoring ours) The Court of Appeals ruled that the NTC committed grave abuse of discretion when it revived Bayantel's application based on an ex-parte motion. In this regard, the pertinent provisions of the NTC Rules: Sec. 5. Ex-parte Motions. --- Except for motions for provisional authorization of proposed services and increase of rates, ex-parte motions shall be acted upon by the

Board only upon showing of urgent necessity therefor and the right of the opposing party is not substantially impaired.33 Thus, in cases which do not involve either an application for rate increase or an application for a provisional authority, the NTC may entertain ex-parte motions only where there is an urgent necessity to do so and no rights of the opposing parties are impaired.1wphi1.nt The Court of Appeals ruled that there was a violation of the fundamental right of Extelcom to due process when it was not afforded the opportunity to question the motion for the revival of the application. However, it must be noted that said Order referred to a simple revival of the archived application of Bayantel in NTC Case No. 92-426. At this stage, it cannot be said that Extelcom's right to procedural due process was prejudiced. It will still have the opportunity to be heard during the full-blown adversarial hearings that will follow. In fact, the records show that the NTC has scheduled several hearing dates for this purpose, at which all interested parties shall be allowed to register their opposition. We have ruled that there is no denial of due process where full-blown adversarial proceedings are conducted before an administrative body. 34 With Extelcom having fully participated in the proceedings, and indeed, given the opportunity to file its opposition to the application, there was clearly no denial of its right to due process. In Zaldivar vs. Sandiganbayan (166 SCRA 316 [1988]), we held that the right to be heard does not only refer to the right to present verbal arguments in court. A party may also be heard through his pleadings. where opportunity to be heard is accorded either through oral arguments or pleadings, there is no denial of procedural due process. As reiterated in National Semiconductor (HK) Distribution, Ltd. vs. NLRC (G.R. No. 123520, June 26, 1998), the essence of due process is simply an opportunity to be heard, or as applied to administrative proceedings, an opportunity to explain one's side. Hence, in Navarro III vs. Damaso (246 SCRA 260 [1995]), we held that a formal or trial-type hearing is not at all times and not in all instances essential. Plainly, petitioner was not denied due process.35 Extelcom had already entered its appearance as a party and filed its opposition to the application. It was neither precluded nor barred from participating in the hearings thereon. Indeed, nothing, not even the Order reviving the application, bars or prevents Extelcom and the other oppositors from participating in the hearings and adducing evidence in support of their respective oppositions. The motion to revive could not have possibly caused prejudice to Extelcom since the motion only sought the revival of the application. It was merely a preliminary step towards the resumption of the hearings on the application of Bayantel. The latter will still have to prove its capability to undertake the proposed CMTS. Indeed, in its Order dated February 1, 2000, the NTC set several hearing dates precisely intended for the presentation of evidence on Bayantel's capability and qualification. Notice of these hearings were sent to all parties concerned, including Extelcom. As regards the changes in the personal circumstances of Bayantel, the same may be ventilated at the hearings during Bayantel's presentation of evidence. In fact, Extelcom was able to raise its arguments on this matter in the Opposition (With Motion to Dismiss) anent the re-opening and re-instatement of the application of Bayantel. Extelcom was thus heard on this particular point. Likewise, the requirements of notice and publication of the application is no longer necessary inasmuch as the application is a mere revival of an application which has already been published earlier. At any rate, the records show that all of the five (5) CMTS operators in the country were duly notified and were allowed to raise their respective oppositions to Bayantel's application through the NTC's Order dated February 1, 2000.

It should be borne in mind that among the declared national policies under Republic Act No. 7925, otherwise known as the Public Telecommunications Policy Act of the Philippines, is the healthy competition among telecommunications carriers, to wit: A healthy competitive environment shall be fostered, one in which telecommunications carriers are free to make business decisions and to interact with one another in providing telecommunications services, with the end in view of encouraging their financial viability while maintaining affordable rates.36 The NTC is clothed with sufficient discretion to act on matters solely within its competence. Clearly, the need for a healthy competitive environment in telecommunications is sufficient impetus for the NTC to consider all those applicants who are willing to offer competition, develop the market and provide the environment necessary for greater public service. This was the intention that came to light with the issuance of Memorandum Circular 9-3-2000, allocating new frequency bands for use of CMTS. This memorandum circular enumerated the conditions prevailing and the reasons which necessitated its issuance as follows: - the international accounting rates are rapidly declining, threatening the subsidy to the local exchange service as mandated in EO 109 and RA 7925; - the public telecommunications entities which were obligated to install, operate and maintain local exchange network have performed their obligations in varying degrees; - after more than three (3) years from the performance of the obligations only 52% of the total number of cities and municipalities are provided with local telephone service. - there are mergers and consolidations among the existing cellular mobile telephone service (CMTS) providers threatening the efficiency of competition; there is a need to hasten the installation of local exchange lines in unserved areas;

administrative body, if given the chance to correct its mistake or error, may amend its decision on a given matter and decide it properly. Therefore, where a remedy is available within the administrative machinery, this should be resorted to before resort can be made to the courts, not only to give the administrative agency the opportunity to decide the matter by itself correctly, but also to prevent unnecessary and premature resort to courts. Clearly, Extelcom violated the rule on exhaustion of administrative remedies when it went directly to the Court of Appeals on a petition for certiorari and prohibition from the Order of the NTC dated May 3, 2000, without first filing a motion for reconsideration. It is well-settled that the filing of a motion for reconsideration is a prerequisite to the filing of a special civil action for certiorari. The general rule is that, in order to give the lower court the opportunity to correct itself, a motion for reconsideration is a prerequisite to certiorari. It also basic that petitioner must exhaust all other available remedies before resorting to certiorari. This rule, however, is subject to certain exceptions such as any of the following: (1) the issues raised are purely legal in nature, (2) public interest is involved, (3) extreme urgency is obvious or (4) special circumstances warrant immediate or more direct action.40 This case does not fall under any of the recognized exceptions to this rule. Although the Order of the NTC dated May 3, 2000 granting provisional authority to Bayantel was immediately executory, it did not preclude the filing of a motion for reconsideration. Under the NTC Rules, a party adversely affected by a decision, order, ruling or resolution may within fifteen (15) days file a motion for reconsideration. That the Order of the NTC became immediately executory does not mean that the remedy of filing a motion for reconsideration is foreclosed to the petitioner. 41 Furthermore, Extelcom does not enjoy the grant of any vested interest on the right to render a public service. The Constitution is quite emphatic that the operation of a public utility shall not be exclusive. Thus: No franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted to citizens of the Philippines or to corporations organized under the laws of the Philippines at least sixty per centum of whose capital is owned by such citizens, nor shall such franchise, certificate or authorization be exclusive in character or for a longer period than fifty years. Neither shall any such franchise or right be granted except under the condition that it shall be subject to amendment, alteraion, or repeal by the Congress when the common good so requires. xxx xxx xxx. 42 In Radio Communications of the Phils., Inc. v. National Telecommunications Commission,43 we held: It is well within the powers of the public respondent to authorize the installation by the private respondent network of radio communications systems in Catarman, Samar and San Jose, Mindoro. Under the circumstances, the mere fact that the petitioner possesses a franchise to put up and operate a radio communications system in certain areas is not an insuperable obstacle to the public respondent's issuing the proper certificate to an applicant desiring to extend the same services to those areas. The Constitution mandates that a franchise cannot be exclusive in nature nor can a franchise be granted except that it must be subject to amendment, alteration, or even repeal by the legislature when the common good so requires. (Art. XII, sec. 11 of the 1986 Constitution). There is an express provision in the petitioner's franchise which provides compliance with the above mandate (RA 2036, sec. 15).

- there are existing CMTS operators which are experiencing congestion in the network resulting to low grade of service; - the consumers/customers shall be given the freedom to choose CMTS operators from which they could get the service.37 Clearly spelled out is the need to provide enhanced competition and the requirement for more landlines and telecommunications facilities in unserved areas in the country. On both scores, therefore, there was sufficient showing that the NTC acted well within its jurisdiction and in pursuance of its avowed duties when it allowed the revival of Bayantel's application. We now come to the issue of exhaustion of administrative remedies. The rule is well-entrenched that a party must exhaust all administrative remedies before resorting to the courts. The premature invocation of the intervention of the court is fatal to one's cause of action. This rule would not only give the administrative agency an opportunity to decide the matter by itself correctly, but would also prevent the unnecessary and premature resort to courts. 38 In the case of Lopez v. City of Manila,39 we held: As a general rule, where the law provides for the remedies against the action of an administrative board, body or officer, relief to courts can be sought only after exhausting all remedies provided. The reason rests upon the presumption that the

Even in the provisional authority granted to Extelcom, it is expressly stated that such authority is not exclusive. Thus, the Court of Appeals erred when it gave due course to Extelcom's petition and ruled that it constitutes an exception to the rule on exhaustion of administrative remedies. Also, the Court of Appeals erred in annulling the Order of the NTC dated May 3, 2000, granting Bayantel a provisional authority to install, operate and maintain CMTS. The general rule is that purely administrative and discretionary functions may not be interfered with by the courts. Thus, in Lacuesta v. Herrera,44 it was held: xxx (T)he powers granted to the Secretary of Agriculture and Commerce (natural resources) by law regarding the disposition of public lands such as granting of licenses, permits, leases and contracts, or approving, rejecting, reinstating, or canceling applications, are all executive and administrative in nature. It is a well recognized principle that purely administrative and discretionary functions may not be interfered with by the courts. (Coloso vs. Board of Accountancy, G.R. No. L-5750, April 20, 1953) In general, courts have no supervising power over the proceedings and actions of the administrative departments of the government. This is generally true with respect to acts involving the exercise of judgement or discretion and findings of fact. (54 Am. Jur. 558-559) xxx. The established exception to the rule is where the issuing authority has gone beyond its statutory authority, exercised unconstitutional powers or clearly acted arbitrarily and without regard to his duty or with grave abuse of discretion.45 None of these obtains in the case at bar. Moreover, in petitions for certiorari, evidentiary matters or matters of fact raised in the court below are not proper grounds nor may such be ruled upon in the proceedings. As held in National Federation of Labor v. NLRC:46 At the outset, it should be noted that a petition for certiorari under Rule 65 of the Rules of Court will prosper only if there is a showing of grave abuse of discretion or an act without or in excess of jurisdiction on the part of the National Labor Relations Commission. It does not include an inquiry as to the correctness of the evaluation of evidence which was the basis of the labor official or officer in determining his conclusion. It is not for this Court to re-examine conflicting evidence, re-evaluate the credibility of witnesses nor substitute the findings of fact of an administrative tribunal which has gained expertise in its special field. Considering that the findings of fact of the labor arbiter and the NLRC are supported by evidence on record, the same must be accorded due respect and finality. This Court has consistently held that the courts will not interfere in matters which are addressed to the sound discretion of the government agency entrusted with the regulation of activities coming under the special and technical training and knowledge of such agency. 47 It has also been held that the exercise of administrative discretion is a policy decision and a matter that can best be discharged by the government agency concerned, and not by the courts. 48 In Villanueva v. Court of Appeals,49 it was held that findings of fact which are supported by evidence and the conclusion of experts should not be disturbed. This was reiterated in Metro Transit Organization, Inc. v. National Labor Relations Commission,50 wherein it was ruled that factual findings of quasi-judicial bodies which have acquired expertise because their jurisdiction is confined to specific matters are generally accorded not only respect but even finality and are binding even upon the Supreme Court if they are supported by substantial evidence.1wphi1.nt Administrative agencies are given a wide latitude in the evaluation of evidence and in the exercise of its adjudicative functions. This latitude includes the authority to take judicial notice of facts within its special competence.

In the case at bar, we find no reason to disturb the factual findings of the NTC which formed the basis for awarding the provisional authority to Bayantel. As found by the NTC, Bayantel has been granted several provisional and permanent authorities before to operate various telecommunications services.51 Indeed, it was established that Bayantel was the first company to comply with its obligation to install local exchange lines pursuant to E.O. 109 and R.A. 7925. In recognition of the same, the provisional authority awarded in favor of Bayantel to operate Local Exchange Services in Quezon City, Malabon, Valenzuela and the entire Bicol region was made permanent and a CPCN for the said service was granted in its favor. Prima facie evidence was likewise found showing Bayantel's legal, financial and technical capacity to undertake the proposed cellular mobile telephone service. Likewise, the May 3, 2000 Order did not violate NTC Memorandum Circular No. 9-14-90 dated September 4, 1990, contrary to the ruling of the Court of Appeals. The memorandum circular sets forth the procedure for the issuance of provisional authority thus: EFFECTIVE THIS DATE, and as part of the Commission's drive to streamline and fast track action on applications/petitions for CPCN other forms of authorizations, the Commission shall be evaluating applications/petitions for immediate issuance of provisional authorizations, pending hearing and final authorization of an application on its merit. For this purpose, it is hereby directed that all applicants/petitioners seeking for provisional authorizations, shall submit immediately to the Commission, either together with their application or in a Motion all their legal, technical, financial, economic documentations in support of their prayer for provisional authorizations for evaluation. On the basis of their completeness and their having complied with requirements, the Commission shall be issuing provisional authorizations. Clearly, a provisional authority may be issued even pending hearing and final determination of an application on its merits. Finally, this Court finds that the Manifestations of Extelcom alleging forum shopping on the part of the NTC and Bayantel are not impressed with merit. The divisions of the Supreme Court are not to be considered as separate and distinct courts. The Supreme Court remains a unit notwithstanding that it works in divisions. Although it may have three divisions, it is but a single court. Actions considered in any of these divisions and decisions rendered therein are, in effect, by the same Tribunal. The divisions of this Court are not to be considered as separate and distinct courts but as divisions of one and the same court.52 Moreover, the rules on forum shopping should not be literally interpreted. We have stated thus: It is scarcely necessary to add that Circular No. 28-91 must be so interpreted and applied as to achieve the purposes projected by the Supreme Court when it promulgated that circular. Circular No. 28-91 was designed to serve as an instrument to promote and facilitate the orderly administration of justice and should not be interpreted with such absolute literalness as to subvert its own ultimate and legitimate objection or the goal of all rules of procedure which is to achieve substantial justice as expeditiously as possible.53 Even assuming that separate actions have been filed by two different parties involving essentially the same subject matter, no forum shopping was committed as the parties did not resort to multiple judicial remedies. The Court, therefore, directed the consolidation of the two cases because they involve essentially the same issues. It would also prevent the absurd

situation wherein two different divisions of the same court would render altogether different rulings in the cases at bar. We rule, likewise, that the NTC has legal standing to file and initiate legal action in cases where it is clear that its inaction would result in an impairment of its ability to execute and perform its functions. Similarly, we have previously held in Civil Service Commission v. Dacoycoy54 that the Civil Service Commission, as an aggrieved party, may appeal the decision of the Court of Appeals to this Court. As correctly stated by the NTC, the rule invoked by Extelcom is Rule 65 of the Rules of Civil Procedure, which provides that public respondents shall not appear in or file an answer or comment to the petition or any pleading therein.55 The instant petition, on the other hand, was filed under Rule 45 where no similar proscription exists. WHEREFORE, in view of the foregoing, the consolidated petitions are GRANTED. The Court of Appeals' Decision dated September 13, 2000 and Resolution dated February 9, 2001 are REVERSED and SET ASIDE. The permanent injunction issued by the Court of Appeals is LIFTED. The Orders of the NTC dated February 1, 2000 and May 3, 2000 are REINSTATED. No pronouncement as to costs. SO ORDERED. G.R. No. 137174 July 10, 2000

of Mines and Geo-Sciences, and MMC was created to study the feasibility of various tailings disposal systems that may be appropriate for utilization by MMC and to submit its findings and recommendations thereon. Meanwhile, after the expiration of MMCs TPO No. POW-85-454-EJ on October 21, 1986, the NPCC issued to MMC a new temporary permit, TPO No. POW-86-454-EJ dated November 11, 1986, to expire on February 10, 1987, with the condition that "[t]he tailings disposal system shall be transferred to San Antonio Pond within two (2) months from the date of this permit." MMC moved for the deletion of the condition stating that it needed to develop and mine the ore deposits underneath the San Antonio pond for it to continue its mining operations. In a lettermanifestation dated February 5, 1987, MMC requested the NPCC for an extension of TPO No. POW-86-454-EJ and the indefinite suspension of the condition in said permit until such time that the NPCC shall have finally resolved the NPCC case entitled "Msgr. Rolly Oliverio, et al. vs. Marcopper Mining Corporation." In the meantime, the NPCC was abolished by Executive Order No. 192 7 dated June 10, 1987, and its powers and functions were integrated into the Environmental Management Bureau and into the Pollution Adjudication Board (PAB).8 On April 11, 1988, the Secretary of Environment and Natural Resources, in his capacity as Chairman of the PAB, issued an Order directing MMC to "cease and desist from discharging mine tailings into Calancan Bay." The order reads: The Temporary Permit to Operate issued to Marcopper Mining Corporation expired on February 10, 1987. Section 96 of the National Pollution Control Commission (NPCC) Rules and Regulations, which were adopted by the Board, provides that in no case can a permit be valid for more than one (1) year. Records show that Marcopper Mining Corporation has not filed any application for renewal of the permit. Marcopper Mining Corporation is hereby ordered to cease and desist from discharging mine tailings into Calancan Bay immediately upon receipt of this Order. SO ORDERED."9 Immediately thereafter, the DENR Undersecretary for Environment and Research issued a telegraphic order dated April 15, 1988, enjoining immediate compliance by MMC of the cease and desist order of April 11, 1988. MMC appealed the above orders of April 11, 1988 and April 15, 1988 to the Office of the President, docketed as O.P. Case No. 3802. In an Order dated May 2, 1988, the Office of the President denied MMCs requests for issuance of restraining orders against the orders of the PAB. Consequently, MMC filed an "Urgent Ex-Parte Partial Motion for Reconsideration" dated May 6, 1988, seeking the reconsideration of the above Order. In an Order dated May 13, 1988, the Office of the President granted the above partial motion for reconsideration, thus: "WHEREFORE, the instant "Urgent Ex-Parte Motion for Reconsideration" is hereby GRANTED, and the Order of this Office, dated May 2, 1988, is hereby set aside insofar as it denies respondent-appellants requests for issuance of restraining orders.

REPUBLIC OF THE PHILIPPINES, Represented by the POLLUTION ADJUDICATION BOARD (DENR),petitioner, vs. MARCOPPER MINING CORPORATION, respondent. DECISION GONZAGA-REYES, J.: In this petition for review on certiorari, petitioner REPUBLIC OF THE PHILIPPINES through the Pollution Adjudication Board of the Department of Environment and Natural Resources seeks to annul the Decision1 of the Court of Appeals2 in CA-G.R. SP No. 44656 setting aside the Order3 of the Pollution Adjudication Board4 in DENR-PAB Case No. 04-00597-96; as well as the Resolution5 denying reconsideration of said Decision. The following antecedent facts are undisputed: Respondent Marcopper Mining Corporation (MMC) was issued a temporary permit to operate a tailings6 sea disposal system under TPO No. POW-85-454-EJ for the period October 31, 1985 to October 21, 1986. Before it expired, MMC filed an application for the renewal thereof with the National Pollution Control Commission (NPCC). On September 20, 1986, MMC received a telegraphic order from the NPCC directing the former to "(i)mmediately cease and desist from discharging mine tailings into Calancan Bay." The directive was brought about through the efforts of certain religious groups which had been protesting MMCs tailings sea disposal system. MMC requested the NPCC to refrain from implementing the aforesaid directive until its adoption of an alternative tailings disposal system. The NPCC granted MMCs request and called a conference to discuss possible alternative disposal systems. Consequently, an Environmental Technical Committee, composed of representatives from the NPCC, the Bureau

Accordingly, the Pollution Adjudication Board, its agents, deputies or representatives are hereby enjoined from enforcing its cease and desist order of April 15, 1988 pending resolution by this Office of respondent-appellants appeal from said orders. It is further directed that the status quo obtaining prior to the issuance of said cease and desist order be maintained until further orders from this Office. It is understood, however, that during the efficacy of this restraining order, respondent-appellant shall immediately undertake, at a cost of not less than P30,000.00 a day, the building of artificial reefs and planting of sea grass, mangroves and vegetation on the causeway of Calancan Bay under the supervision of the Pollution Adjudication Board and subject to such guidelines as the Board may impose. SO ORDERED."10 In line with the directive from the Office of the President, the Calancan Bay Rehabilitation Project (CBRP) was created, and MMC remitted the amount of P30,000.00 a day, starting from May 13, 1988 to the Ecology Trust Fund (ETF) thereof. However, on June 30, 1991, MMC stopped discharging its tailings in the Bay, hence, it likewise ceased from making further deposits to the ETF. From the issuance of the Order on May 13, 1988 until the cessation of the tailings disposal on June 30, 1991, MMC made its contribution to the ETF in the total amount of Thirty-Two Million Nine Hundred and Seventy-Five Thousand Pesos (P32,975,000.00). Thereafter, MMC filed a Motion dated July 9, 1991 manifesting that it would discontinue its contributions/deposits to the ETF since it had stopped dumping tailings in the Bay. MMC prayed that the Order issued by the Office of the President on May 13, 1988 be lifted. On February 5, 1993, the Office of the President rendered a decision in O.P. Case No. 3802 dismissing the appeal; affirming the cease and desist Order issued by the PAB; and lifting the TRO dated May 13, 1988. The Office of the President resolved the appeal in this wise: "This brings to the fore the primordial issue of whether or not the Secretary of Environment and Natural Resources gravely erred in declaring the TPO No. POW-86-454-EJ issued to respondent-appellant MMC expired on February 10, 1987, and in ordering the latter to cease and desist from discharging mine tailings into Calancan Bay. Respondent-appellant argues that the cease and desist orders were issued by the PAB ex-parte, in violation of its procedural and substantive rights provided for under Section 7 (a) of P.D. No. 984 requiring a public hearing before any order or decision for the discontinuance of discharge of a sewage or industrial wastes into the water, air or land could be issued by the PAB. We are not persuaded. Section 7(a) of P.D. No. 984, reads in part: "Sec. 7(a) Public Hearing. Public hearing shall be conducted by the Commissioner, Deputy Commissioner or any senior official duly designated by the Commissioner prior to issuance or promulgation of any order or decision by the Commissioner requiring the discontinuance of discharge of sewage, industrial wastes and other wastes into the water, air or land resources of the Philippines as provided in the Decree: provided, that whenever the Commission finds a prima facie evidence that the discharged sewage or wastes are of immediate threat to life,

public health, safety or welfare, or to animal or plant life, or exceeds the allowable standards set by the Commission, the Commissioner may issue an ex-parte order directing the discontinuance of the same or the temporary suspension or cessation of operation of the establishment or person generating such sewage or wastes without the necessity of a prior public hearing. x x x . (underscoring supplied). Clearly then, it is self-indulgent nonsense to assume that the DENR Secretary, acting as PAB Chairman, is absolutely without authority to issue an ex-parte order requiring the discontinuance of discharge of sewage or other industrial wastes without public hearing. As can be gleaned from the afroequoted proviso, this authority to issue an ex-parte order suspending the discharge of industrial wastes is postulated upon his finding of prima-facie evidence of an imminent "threat to life, public health, safety or welfare, to animal or plant life or exceeds the allowable standards set by the Commission."11 In a letter dated January 22, 199712 , Municipal Mayor Wilfredo A. Red of Sta. Cruz, Marinduque informed the PAB that MMC stopped remitting the amount of 30,000.00 per day as of July 1, 1991 to the ETF of the CBRP. This letter-complaint of Mayor Red was docketed as DENR-PAB Case No. 04-00597-96, for violation of P.D. 98413 and its implementing Rules and Regulations. In an order dated April 23, 1997, the PAB ruled that the obligation of MMC to deposit P30,000.00 per day to the ETF of the CBRP subsists, as provided for in the Order of the Office of the President dated May 13, 1988, during the "efficacy of said order restraining the PAB from enforcing its cease and desist order against MMC". Since the Order was lifted only on February 5, 1993, the obligation of MMC to remit was likewise extinguished only on said date and not earlier as contended by MMC from the time it ceased dumping tailings into the Bay on July 1, 1991. We quote in part: "The issue before this Board is whether Marcopper Mining Corporation is still obliged to remit the amount of P30,000.00 to the CBRP. The answer by the Order from the Office of the President dated 13 May 1988, which states that the obligation on the part of Marcopper Mining to pay the amount of P30,000.00 per day for the rehabilitation of Calancan Bay is binding only during the efficacy of the said Order. The record further shows that on 05 February 1993, the Office of the President lifted its Order dated 13 May 1988. This means that as of the date of the lifting, Marcopper Mining Corporation no longer had any obligation to remit the amount of P30,000.00 to the CBRP. Thus, Marcoppers obligation only runs from 13 May 1988 to 05 February 1993. Beyond the cut-off date of 05 February 1993, Marcopper is no longer obligated to remit the amount of P30,000.00 per day to the CBRP. It does not matter whether Marcopper was no longer dumping its tail minings into the sea even before the cut-off date of 05 February 1993. The obligation of Marcopper to pay the amount of P30,000.00 to the CBRP arises from the Office of the President Order dated 13 May 1988, not from it dumping of mine tailings. WHEREFORE, Marcopper Mining Corporation is hereby ordered to pay the CBRP the amount of P30,000.00 per day, computed from the date Marcopper Mining Corporation stopped paying on 01 July 1991, up to the formal lifting of the subject Order from the Office of the President on 05 February 1993. SO ORDERED."14 MMC assailed the aforequoted Order dated April 23, 1997 of the PAB as null and void for having been issued without jurisdiction or with grave abuse of discretion in a petition for Certiorari and

Prohibition (with prayer for temporary restraining order and preliminary injunction) before the Court of Appeals which was docketed as CA-G.R. No. SP-44656. In a Resolution dated July 15, 1997, the Court of Appeals required the PAB and its members to comment on said petition. On November 19, 1997, the Office of the Solicitor General, on behalf of the PAB and its members, filed with the Court of Appeals the required comment. On September 15, 1997, for purposes of determining whether or not to grant MMCs prayer for a temporary restraining order and preliminary injunction, the Court of Appeals conducted a hearing where counsel for the parties were heard on oral arguments. In a Resolution dated September 19, 1997, the Court of Appeals issued a writ of preliminary injunction, conditioned upon the filing of a bond by MMC in the amount of P500,000.00 enjoining the PAB and its members to cease and desist from enforcing the assailed Order dated April 23, 1997, until it had made a full determination on the merits of the case. On January 7, 1998, the Court of Appeals promulgated a Decision in CA-G.R. SP No. 44656, the dispositive portion of which reads: "In view of the foregoing, the instant petition is hereby GRANTED and, accordingly, the questioned Order of respondent Pollution Adjudication Board dated 23 April 1997 is hereby SET ASIDE. Respondents are ordered to REFRAIN and DESIST from enforcing aforesaid Order. The injunctive bond filed by the petitioner in the amount of Five Hundred Thousand (P500,000.00) is hereby RELEASED." The motion for reconsideration of the above decision was denied in a Resolution dated January 13, 1999 of the Court of Appeals. Hence, the instant petition on the following grounds: I The Court of Appeals erred in ruling that Republic Act No. 7942 (otherwise known as the Philippine Mining Act of 1995) repealed the provisions of Republic Act No. 3931, as amended by Presidential Decree No. 984, (otherwise known as the National Pollution Control Decree of 1976), with respect to the power and function of petitioner Pollution Adjudication Board to issue, renew or deny permits for the discharge of the mine tailings. II Respondent Marcopper Mining Corporation bound itself to pay the amount of P30,000.00 a day for the duration of the period starting May 13, 1988 up to February 5, 1993. III Respondent Marcopper Mining Corporation was not deprived of due process of law when petitioner Pollution Adjudication Board directed it to comply with its long-existing P30,000.00 per day obligation under the Order of the Office of the President dated May 13, 1988.15

In setting aside the Order of the PAB dated April 23, 1997, requiring MMC to pay its arrears in deposits, the Court of Appeals ruled that the PAB exceeded its power and authority in issuing the subject Order for the following reasons: "The applicable and governing law in this petition is Republic Act No. 7942 otherwise known as the Philippine Mining Act of 1995 ("Mining Act", approved on March 3, 1995). Chapter XI of the Mining Act contains a series of provisions relating to safety and environmental protection on mining and quarrying operations. More specifically, Section 67 of the Mining Act in essence, grants the mines regional director the power to issue orders or to take appropriate measures to remedy any practice connected with mining or quarrying operations which is not in accordance with safety and anti-pollution laws and regulations. From a reading of that provision, it would appear therefore that prior to the passage of the Mining Act, the Pollution Adjudication Board had jurisdiction to act on pollution-related matters in the mining business. With the effectivity of the Mining Act and in congruence with its Sec. 115 (i.e., Repealing and Amending Clause), the power to impose measures against violations of environmental policies by mining operators is now vested on the mines regional director. Be that as it may, we are constrained to enunciate that the PAB had no authority to issue the challenged Order dated 23 April 1997. More so, respondent PAB as petitioner argued and We note, had remained perplexingly silent on the matter for almost six (6) years from July 1991 when MMC ceased to make its deposits up to April 1997 when respondent PAB precipitately issued the Order requiring MMC to pay its arrears in deposits to the ETF. And PAB, apparently oblivious to MMCs economic quandary had issued said Order ex-parte without hearing or notice. xxx As a general rule, the adjudication of pollution cases pertains to the Pollution Adjudication Board (PAB), except in cases where the special law, expressly or impliedly, provides for another forum, as in the instant petition. Thus under Republic Act No. 7942 and its implementing rules and regulations, the mines regional director, in consultation with the Environmental Management Bureau (italics ours), is specifically mandated to carry out and make effective the declared national policy that the State shall promote the rational exploration, development, utilization and conservation of all mineral resources in public and private lands within the territory and exclusive economic zone of the Republic of the Philippines, through the combined efforts of government and the private sector in order to enhance national growth and protect the rights of affected communities. (Sec. 2, R.A. 7942). Under this expansive authority, the Mines Regional Director, by virtue of this special law, has the primary responsibility to protect the communities surrounding a mining site from the deleterious effects of pollutants emanating from the dumping of tailing wastes from the surrounding areas. Thus, in the exercise of its express powers under this special law, the authority of the Mines Regional Director to impose appropriate protective and/or preventive measures with respect to pollution cases within mining operations is perforce, implied. Otherwise, the special law granting this authority may well be relegated to a mere paper tiger talking protection but allowing pollution. It bears mention that the Pollution Adjudication Board has the power to issue an ex-parte order when there is prima facie evidence of an establishment exceeding the allowable standards set by the anti-pollution laws of the country. (Pollution Adjudication Board v. Court of Appeals, et al., 195 SCRA 112). However, with the passage of R.A. 7942, insofar as the regulation, monitoring

and enforcement of anti-pollution laws are concerned with respect to mining establishments, the Mines Regional Director has a broad grant of power and authority. Clearly, pollution-related issues in mining operations are addressed to the Mines Regional Director, not the Pollution Adjudication Board. This being the case, the questioned Order dated 23 April 1997 requiring MMC to pay its arrears in deposits was beyond the power and authority of the Pollution Adjudication Board to issue and as such, petitioner may seek appropriate injunctive relief from the court. Thus, certiorari lies against public respondent PAB."16 The Court of Appeals likewise ruled that the obligation of MMC to contribute to the ETF of the CBRP ceased inasmuch as the latter discontinued dumping tailings into the Bay and the actual funds in the ETF are sufficient to rehabilitate the Bay. It ratiocinated thus: "In the instant case, it is of record that petitioner MMC undertakes its obligation to provide for the rehabilitation of the Bay waters. This obligation, through its monetary contribution to the ETF, is however anchored on its continuing disposal of the mines tailings waste into the Bay. Hence, since it ceased its mining operations in the affected area as of July 1991 and had not been discharging any tailings wastes since then, its consequent duty to rehabilitate the polluted waters, if any, no longer exists. xxx Be that as it may, this Court observes that out of the approximate sum of thirty-two (32) million pesos contributed by the petitioner to the ETF there is admittedly an existing estimated balance of fourteen (14) million pesos in the Fund. For its part, petitioner does not renege on its obligation to rehabilitate and in fact undertakes to continue the rehabilitation process until its completion within two (2) years time and which would only cost six (6) million pesos. Thus, as petitioner convincingly argued and which respondent unsatisfactorily rebuked, the existing fourteen (14) million pesos in the ETF is more than enough to complete the rehabilitation project. (TSN, Hearing dated 15 September 1997, at pp. 56 to 62, Rollo). xxx. Without much ado, the Court concurs with the finding that to demand a daily deposit of thirty thousand (P30, 000.00) pesos even if the root of the obligation, that is, the dumping of tailings waste, had ceased to exist, is indubitably of a herculean and onerous burden on the part of petitioner amounting to a deprivation of its property and a denial of its right to due process." 17 Unsatisfied, the OSG argues that the Philippine Mining Act of 1995 did not amend or repeal the provisions of Republic Act No. 3931, as amended by Presidential Decree No. 984 (otherwise known as the National Pollution Control Decree of 1976); that the Mines Regional Director has no power over areas outside mining installations and over areas which are not part of the mining or quarrying operations such as Calancan Bay; that the powers of the Mines Regional Director cannot be exercised to the exclusion of other government agencies; that the jurisdiction of a Mines Regional Director with respect to anti-pollution laws is limited to practices committed within the confines of a mining or quarrying installation; that the dumping of mine tailings into Calancan Bay occurred long before the effectivity of the Philippine Mining Act and that MMC cannot hide under cover of this new law. The OSG further argues that the portion of the Order of May 13, 1988, setting the period of time within which MMC shall pay P30,000.00 per day, which is during the efficacy of the restraining order was never questioned or appealed by MMC. Finally, the OSG argues that PAB did not violate MMCs right to due process by the issuance of the Order dated April 23, 1988 without notice and hearing as it was simply requiring MMC to comply with an obligation in an Order which has long become final and executory.

In the context of the established facts, the issue that actually emerges is: Has the PAB under RA 3931 as amended by PD 984 (National Pollution Control Decree of 1976) been divested of its authority to try and hear pollution cases connected with mining operations by virtue of the subsequent enactment of RA 7942 (Philippine Mining Act of 1995)? As mentioned earlier, the PAB took cognizance and ruled on the letter-complaint (for violation of PD 984 and its implementing rules and regulations) filed against MMC by Marinduque Mayor Wilfredo Red. In the subject Order dated April 23, 1997, the PAB ruled that MMC should pay its arrears in deposits to the ETF of the CBRP computed from the day it stopped dumping and paying on July 1, 1991 up to the lifting of the Order of the Office of the President dated May 13, 1988 on February 5, 1993. The answer is in the negative. We agree with the Solicitor General that the Court of Appeals committed reversible error in ruling that the PAB had no authority to issue the Order dated April 23, 1997. Republic Act No. 3931 (An Act Creating The National Water And Air Pollution Control Commission) was passed in June 18, 1964 to maintain reasonable standards of purity for the waters and air of the country with their utilization for domestic, agricultural, industrial and other legitimate purposes. Said law was revised in 1976 by Presidential Decree No. 984 (Providing For The Revision Of Republic Act No. 3931, Commonly Known As The Pollution Control Law, And For Other Purposes) to strengthen the National Pollution Control Commission to best protect the people from the growing menace of environmental pollution. Subsequently, Executive Order No. 192, s. 1987 (The Reorganization Act of the DENR) was passed. The internal structure, organization and description of the functions of the new DENR, particularly the Mines and Geosciences Bureau, reveals no provision pertaining to the resolution of cases involving violations of the pollution laws.18 The Mines and Geo-Sciences Bureau was created under the said EO 192 to absorb the functions of the abolished Bureau of Mines and Geo-Sciences, Mineral Reservations Development Board and the Gold Mining Industry Development Board to, among others, recommend policies, regulations and programs pertaining to mineral resources development; assist in the monitoring and evaluation of the Bureaus programs and projects; and to develop and promulgate standards and operating procedures on mineral resources development.19 On the other hand, the PAB was created and granted under the same EO 192 broad powers to adjudicate pollution cases in general. Thus, SEC. 19. Pollution Adjudication Board. There is hereby created a Pollution Adjudication Board under the Office of the Secretary. The Board shall be composed of the Secretary as Chairman, two (2) Undersecretaries as may be designated by the Secretary, the Director of Environmental management, and three (3) others to be designated by the Secretary as members. The Board shall assume the powers and functions of the Commission/Commissioners of the National Pollution Control Commission with respect to the adjudication of pollution cases under Republic Act 3931 and Presidential Decree 984, particularly with respect to Section 6 letters e, f, g, j, k, and p of P.D. 984. The Environmental Management Bureau shall serve as the Secretariat of the Board. These powers and functions may be delegated to the regional offices of the Department in accordance with rules and regulations to be promulgated by the Board. 20 Section 6 letters e, f, g, j, k, and p of PD 984 referred to above are quoted as follows: SEC. 6. Powers and Functions. The Commission shall have the following powers and functions: (e) Issue orders or decision to compel compliance with the provisions of this Decree and its implementing rules and regulations only after proper notice and hearing.

(f) Make, alter or modify orders requiring the discontinuance of pollution specifying the conditions and the time within which such discontinuance must be accomplished. (g) Issue, renew, or deny permits, under such conditions as it may determine to be reasonable, for the prevention and abatement of pollution, for the discharge of sewage, industrial waste, or for the installation or operation of sewage works and industrial disposal system or parts thereof: Provided, however, That the Commission, by rules and regulations, may require subdivisions, condominium, hospitals, public buildings and other similar human settlements to put up appropriate central sewerage system and sewage treatment works, except that no permits shall be required to any sewage works or changes to or extensions of existing works that discharge only domestic or sanitary wastes from a singles residential building provided with septic tanks or their equivalent. The Commission may impose reasonable fees and charges for the issuance or renewal of all permits required herein. (h) (i) (j) Serve as arbitrator for the determination of reparations, or restitution of the damages and losses resulting from pollution. (k) Deputize in writing or request assistance of appropriate government agencies or instrumentalities for the purpose of enforcing this Decree and its implementing rules and regulations and the orders and decisions of the Commission. (l) (m) (n) (o) (p) Exercise such powers and perform such other functions as may be necessary to carry out its duties and responsibilities under this Decree. Section 7(a) of P.D. No. 984 further provides in part: "Sec. 7(a) Public Hearing. Public hearing shall be conducted by the Commissioner, Deputy Commissioner or any senior official duly designated by the Commissioner prior to issuance or promulgation of any order or decision by the Commissioner requiring the discontinuance of discharge of sewage, industrial wastes and other wastes into the water, air or land resources of the Philippines as provided in the Decree: provided, that whenever the Commission finds a prima facie evidence that the discharged sewage or wastes are of immediate threat to life, public health, safety or Welfare, or to animal or plant life, or exceeds the allowable standards set by the Commission, the Commissioner may issue and ex-parte order directing the discontinuance of the same or the temporary suspension or cessation of operation of the establishment or person generating such sewage or wastes without the necessity of a prior public hearing. x x x . (underscoring supplied).

The ruling of the Court of Appeals that the PAB has been divested of authority to act on pollution-related matters in mining operations is anchored on the following provisions of RA 7942 (Philippine Mining Act of 1995): SEC. 67. Power to Issue Orders. The mines regional director shall, in consultation with the Environmental Management Bureau, forthwith or within such time as specified in his order, require the contractor to remedy any practice connected with mining or quarrying operations, which is not in accordance with safety and anti-pollution laws and regulations. In case of imminent danger to life or property, the mines regional director may summarily suspend the mining or quarrying operations until the danger is removed, or appropriate measures are taken by the contractor or permittee. And SEC. 115. Repealing and Amending Clause. All laws, executive orders, presidential decrees, rules and regulations, or parts thereof which are inconsistent with any of the provisions of this Act are hereby repealed or amended accordingly. The other provisions in Chapter XI on Safety and Environmental Protection found in RA 7942 promote the safe and sanitary upkeep of mining areas to achieve waste-free and efficient mine development with particular concern for the physical and social rehabilitation of areas and communities affected by mining activities21 , without however, arrogating unto the mines regional director any adjudicative responsibility. From a careful reading of the foregoing provisions of law, we hold that the provisions of RA 7942 do not necessarily repeal RA 3931, as amended by PD 984 and EO 192. RA 7942 does not contain any provision which categorically and expressly repeals the provisions of the Pollution Control Law. Neither could there be an implied repeal. It is well-settled that repeals of laws by implication are not favored and that courts must generally assume their congruent application. Thus, it has been held: "The two laws must be absolutely incompatible, and a clear finding thereof must surface, before the inference of implied repeal may be drawn. The rule is expressed in the maxim, interpretare et concordare leqibus est optimus interpretendi, i.e., every statute must be so interpreted and brought into accord with other laws aas to form a uniform system of jurisprudence. The fundament is that the legislature should be presumed to have known the existing laws on the subject and not have enacted conflicting statutes. Hence, all doubts must be resolved against any implied repeal, and all efforts should be exerted in order to harmonize and give effect to all laws on the subject."22 There is no irreconcilable conflict between the two laws. Section 19 of EO 192 vested the PAB with the specific power to adjudicate pollution cases in general. Sec. 2, par. (a) of PD 984 defines the term "pollution" as referring to any alteration of the physical, chemical and biological properties of any water, air and/or land resources of the Philippines , or any discharge thereto of any liquid, gaseous or solid wastes as will or is likely to create or to render such water, air and land resources harmful, detrimental or injurious to public health, safety or welfare or which will adversely affect their utilization for domestic, commercial, industrial, agricultural, recreational or other legitimate purposes. On the other hand, the authority of the mines regional director is complementary to that of the PAB. Section 66 of RA 7942 gives the mines regional director exclusive jurisdiction over the safety inspection of all installations, surface or underground in mining operations. Section 67 thereof vests upon the regional director power to issue orders requiring a contractor to remedy any practice connected with mining or quarrying operations which is not in accordance with

safety and anti-pollution laws and regulations; and to summarily suspend mining or quarrying operations in case of imminent danger to life or property. The law likewise requires every contractor to undertake an environmental protection and enhancement program which shall be incorporated in the work program which the contractor shall submit as an accompanying document to the application for a mineral agreement or permit. In addition, an environmental clearance certificate is required based on an environment impact assessment. The law also requires contractors and permittees to rehabilitate the mined-out areas, and set up a mine rehabilitation fund. Significantly, the law allows and encourages peoples organizations and nongovernmental organizations to participate in ensuring that contractors/permittees shall observe all the requirements of environmental protection. From the foregoing, it readily appears that the power of the mines regional director does not foreclose PABs authority to determine and act on complaints filed before it. The power granted to the mines regional director to issue orders requiring the contractor to remedy any practice connected with mining or quarrying operations or to summarily suspend the same in cases of violation of pollution laws is for purposes of effectively regulating and monitoring activities within mining operations and installations pursuant to the environmental protection and enhancement program undertaken by contractors and permittees in procuring their mining permit. While the mines regional director has express administrative and regulatory powers over mining operations and installations, it has no adjudicative powers over complaints for violation of pollution control statutes and regulations. True, in Laguna Lake Development Authority vs. Court of Appeals,23 this Court held that adjudication of pollution cases generally pertains to the Pollution Adjudication Board (PAB) except where the special law provides for another forum. However, contrary to the ruling of the Court of Appeals, RA 7942 does not provide for another forum inasmuch as RA 7942 does not vest quasi-judicial powers in the Mines Regional Director. The authority is vested and remains with the PAB. Neither was such authority conferred upon the Panel of Arbitrators and the Mines Adjudication Board which were created by the said law. The provisions creating the Panel of Arbitrators for the settlement of conflicts refers to disputes involving rights to mining areas, mineral agreements or permits and those involving surface owners, occupants and claimholders/concessionaires.24 The scope of authority of the Panel of Arbitrators and the Mines Adjudication Board conferred by RA 7942 clearly exclude adjudicative responsibility over pollution cases. Nowhere is there vested any authority to adjudicate cases involving violations of pollution laws and regulations in general. Thus, there is no genuine conflict between RA 7942 and RA 3931 as amended by PD 984 that precludes their co-existence. Moreover, it has to be conceded that there was no intent on the part of the legislature to repeal the said law. There is nothing in the sponsorship speech 25 of the laws proponent, Representative Renato Yap, and the deliberations that followed thereafter, to indicate a legislative intent to repeal the pollution law. Instead, it appears that the legislature intended to maximize the exploration, development and utilization of the countrys mineral resources to contribute to the achievement of national economic and social development with due regard to the social and environmental cost implications relative thereto. The law intends to increase the productivity of the countrys mineral resources while at the same time assuring its sustainability through judicious use and systematic rehabilitation. Henceforth, the Department of Environment and Natural Resources as the primary government agency responsible for the conservation, management, development, and proper use of the States mineral resources, through its Secretary, has the authority to enter into mineral agreements on behalf of the Government upon the recommendation of the Director, and to promulgate such rules and regulations as may be necessary to carry out the provisions of RA 7942.26 The PAB and the Mines Regional Director, with their complementary functions and through their combined efforts, serve to accomplish the mandate of RA 3931 (National Pollution Control Decree of 1976) as amended by PD 984 and EO 192 and that of RA 7942 (Philippine Mining Act of 1995).

That matter settled, we now go to the issue of whether the appellate court erred in ruling that there is no basis for further payments by MMC to the Ecology Trust Fund of the Calancan Bay Rehabilitation Project considering that MMC "convincingly argued and which respondent unsatisfactorily rebuked, the existing fourteen (14) million pesos in the ETF is more than enough to complete the rehabilitation project." Indeed, the records reveal that witness for PAB, Mr. Edel Genato, who is the Technical Resource person of the PAB for the project admitted that the funds in the ETF amounting to about Fourteen Million Pesos are more than sufficient to cover the costs of rehabilitation. Hereunder are excerpts from the transcript of stenographic notes taken during the hearing held on September 15, 1997: ATTY. HERNANDEZ:27 I would like your Honor, if the court will allow, our witness from the EBRB Your Honor would attest to that . . . JUSTICE JACINTO: Is it not being taken from the 14 million? ATTY. HERNANDEZ: Yes, Your Honor. JUSTICE RASUL: What is his role? ATTY. HERNANDEZ: He is our Technical Resource person Your Honor, of the project. JUSTICE RASUL: In other words, he has participated in the . . (inaudible)? ATTY. HERNANDEZ: Yes, Your Honor. JUSTICE RASUL: Do you agree with him? MR. EDEL GENATO: Yes, Your Honor, that the Calancan rehabilitation program is being funded by Marcopper through the Ecology Trust Fund.

JUSTICE RASUL: Will the construction be finished in two years time? MR. EDEL GENATO: Presently, under the Steering Committee of the Calancan Bay Rehabilitation, there is another phase that is being proposed. Actually the two years time will definitely cover the other phase of the . . (inaudible) JUSTICE RASUL: Never mind that. Will the amount be sufficient to the end of the construction?

ATTY. HERNANDEZ: Your Honor . . . MR. EDEL GENATO: No, no Your Honor. . . JUSTICE RASUL: My question is, do you agree with him that the 14 million fund will be enough to sustain the construction up to the end? MR. EDEL GENATO:

MR. EDEL GENATO: Two years? Yes, Sir. JUSTICE RASUL: JUSTICE RASUL: Yes. Enough? MR. EDEL GENATO: MR. EDEL GENATO: Your Honor. . . Yes, Sir. JUSTICE AMIN: JUSTICE RASUL: Categorical answer. There is no more need for collecting the 30 thousand a day? . . . Do not . . . I will hold you for contempt . . . ATTY. HERNANDEZ: Im sorry Your Honor. JUSTICE RASUL: Again. MR. EDEL GENATO: Well Your Honor, I cannot comment on the amount Your Honor. JUSTICE RASUL: You have already made your comment, but you received some signal from your lawyer. JUSTICE RASUL: You just answer, is it enough, in your own honest way, on your honor? MR. EDEL GENATO: I think so Your Honor.28 We must sustain the appellate court on this point on account of the testimony of Mr. Edel Genato.1wphi1 Further, we note that the Office of the President never objected nor ruled on the manifestation dated July 9, 1991 filed by MMC that it would stop paying since it already ceased dumping mine tailings into the bay. Still further, the order of the OP directing MMC to rehabilitate at a cost of P30,000.00 a day "during the efficacy of the restraining order" had become functus officio since MMC voluntarily stopped dumping mine tailings into the bay. To sum up, PAB has jurisdiction to act and rule on the letter-complaint of Mayor Wilfredo Red of Marinduque for violation of PD 984 and its implementing rules and regulations which jurisdiction was not lost upon the passage of RA 7942 (the Philippine Mining Act of 1995). Nevertheless,

MMC must be declared not to have arrears in deposits as admittedly, the ETF already has more than sufficient funds to undertake the rehabilitation of Calancan Bay. WHEREFORE, the petition is hereby partially GRANTED. The assailed Decision is REVERSED insofar as the jurisdiction of the PAB to act on the complaint is concerned; but AFFIRMED insofar as Marcopper Mining Corporation has no arrears in deposits with the Ecology Trust Fund of the Calancan Bay Rehabilitation Project. SO ORDERED. G.R. No. 160703 September 23, 2005 GMA NETWORK, INC., Petitioners, vs. ABS-CBN BROADCASTING CORPORATION, CENTRAL CATV, INC., PILIPINO CABLE CORPORATION and PHILIPPINE HOME CABLE HOLDINGS, INC., Respondent. DECISION YNARES-SANTIAGO, J.: Petitioner GMA Network, Inc. ("GMA") filed on May 6, 2003 before the Regional Trial Court of Quezon City a complaint for damages1 against respondents ABS-CBN Broadcasting Corporation ("ABS-CBN"), Central CATV, Inc. ("SkyCable"), Philippine Home Cable Holdings, Inc. ("Home Cable") and Pilipino Cable Corporation ("Sun Cable"), which was raffled to Branch 97 2 and docketed as Civil Case No. Q03-49500. In its complaint, GMA alleged that respondents engaged in unfair competition when the cable companies arbitrarily re-channeled petitioners cable television broadcast on February 1, 2003, in order to arrest and destroy its upswing performance in the television industry. GMA argued that respondents were able to perpetrate such unfair business practice through a common ownership and interlocking businesses. SkyCable and Sun Cable are wholly-owned subsidiaries of Sky Vision Corporation ("Sky Vision") which is allegedly controlled by Lopez, Inc. On the other hand, Home Cable is a wholly-owned subsidiary of Unilink Communications Corporation ("Unilink"), which is owned by Mediaquest Holdings, Inc., a company controlled by the Pension Trust Fund of the PLDT Employees ("PLDT Group"). Pursuant to a Master Consolidation Agreement, the ownership, rights and interests in Sky Vision and Unilink were purportedly placed under a holding company known as "Beyond Cable", 66.5 % of which is owned by the Benpres Group, composed of Lopez Inc., Benpres Holdings and ABS-CBN, while 33.5% thereof is owned by the PLDT Group. As a result of this business combination, respondents have cornered at least 71% of the total cable television market in Mega Manila. They are thus able to dictate the signal transmission, channel position, and the airing of shows, programs, and broadcast of non-cable companies like ABS-CBN and GMA, which the law requires them to carry. GMA alleged that the re-channeling of its cable television broadcast resulted in damage to its business operations, thus: ...

17. Following their arbitrary act of re-channeling the cable position of plaintiff GMA from "Channel 12" to "Channel 14", the defendants "SkyCable" and Pilipino Cable (or "Sun Cable") deliberately failed to transmit the signal of plaintiff GMA to their channels in clear audio transmission resulting in noticeable dropouts and spillover of extraneous sound and in clear visual transmission resulting in distorted and/or degraded visual presentation; 18. Soon thereafter, numerous complaints of distortions, degradations and disorders of GMAs shows on the cable channels were received by plaintiff GMA from subscribers of the defendant cable companies "SkyCable", "Home Cable" and "Sun Cable", such as "snowy reception", "no signal", and "no audio". These complaints escalated to alarming proportions when plaintiff GMA made public the audio and visual distortions of its TV shows on the cable channels; 19. The audio disorder and the visual distortion and/or degradation of plaintiff GMAs signal transmission happened mostly during the showing of plaintiff GMAs top rating programs; 19.1. These distortions did not occur in the cable TV shows of defendant ABS-CBN on the channels of the co-defendant cable companies; 20. It is a matter of common knowledge, and defendants are fully aware, that the quality of signal and audio transmission and established channel position in cable TV of a non-cable television network, like plaintiff GMA, are crucial factors in arriving at the ratings of the network and its programs and which ratings are, in turn, determinative of the business judgment of commercial advertisers, producers and blocktimers to sign broadcast contracts with the network, which contracts are the lifeblood of TV networks and stations like plaintiff GMA; 20.1. Defendants are also aware that 50% of so-called "people meter" which is a device used by the ratings suppliers (AGB Philippines and AC Nielsen) to determine the ratings and audience shares of TV programs are placed in cable TV. 20.2. These unjust, high-handed and unlawful acts of the defendants adversely affected the viewership, quality of the programs, and ratings of plaintiff GMA for which defendants are liable; ... 22. As a result of defendants acts of unfair competition, corporate combinations and manipulations as well as unjust, oppressive, high-handed and unlawful business practices, plaintiff suffered business interruptions and injury in its operations for which it should be compensated in the amount of P10Million by way of actual and compensatory damages[.]3 On July 15, 2003, SkyCable and Sun Cable moved for dismissal of the complaint on the grounds of litis pendentia and forum-shopping since there was a similar case pending before the National Telecommunications Commission (NTC) entitled "GMA Network, Inc. v. Central CATV, Inc., Philippine Home Cable Holdings, Inc., and Pilipino Cable Corporation". The case, docketed as NTC ADM Case No. 2003-085, allegedly involved the same cause of action and the same parties, except for ABS-CBN. SkyCable and Sun Cable also asserted that it is the NTC that has primary jurisdiction over the issues raised in the complaint. Moreover, GMA had no cause of action against the two entities and failed to exhaust administrative remedies.4 On July 17, 2003, Home Cable filed an Answer with Compulsory Counterclaims5 pleading, as affirmative defenses, the same matters alleged in the motion to dismiss of SkyCable and Sun Cable. ABS-CBN also filed an Answer with Compulsory Counterclaims6 contending that GMA had no cause of action against it and that the complaint failed to state any.

GMA opposed the motion to dismiss7 and filed a Reply to the answer of Home Cable8 and ABSCBN.9 A preliminary hearing was held on the motion to dismiss as well as the affirmative defenses. In due course, the trial court issued the assailed resolution 10 dismissing the complaint. The trial court held that the resolution of the legal issues raised in the complaint required the determination of highly technical, factual issues over which the NTC had primary jurisdiction. Additionally, it held that GMA had no cause of action against ABS-CBN because: ... It is evident that plaintiffs cause of action is against the cable companies and not against ABS-CBN since it does not establish that defendant ABS-CBN had a hand in the re-channeling of plaintiffs cable transmission because essentially defendant ABS-CBN is similarly situated as plaintiff. The mere fact that the people behind ABS-CBN is allegedly the same people who are at the helm of these cable companies, and thus were "engaged in unfair competition and/or unfair trade practices" is a conclusion of law and does not satisfy the requirement that the plaintiff state "ultimate facts" in asserting its cause of action. 11 Hence, this petition filed by GMA under Section 2(c), Rule 41 in relation to Rule 45 of the Rules of Court, asserting that: A THE TRIAL COURT ERRED IN RULING THAT THE NTC HAS PRIMARY JURISDICTION OVER PETITIONERS COMPLAINT FOR DAMAGES AND IN DISMISSING THE CASE FOR LACK OF JURISDICTION. B THE TRIAL COURT ERRED IN RULING THAT PETITIONERS COMPLAINT STATES NO CAUSE OF ACTION AGAINST RESPONDENT ABS-CBN.12 GMA asserts that the resolution of the issues raised in the complaint does not entail highly technical matters requiring the expertise of the NTC. Petitioner insists that the subject matter of the complaint merely involves respondents wrongful acts of unfair competition and/or unfair trade practices resulting to damages, jurisdiction over which lies with the regular courts and not the NTC. We disagree. GMAs complaint for damages is based on the alleged arbitrary re-channeling of its broadcast over the cable companies television systems, thereby resulting in the distortion and degradation of its video and audio signals. The re-channeling was allegedly made possible through the common ownership and interlocking businesses of respondent corporations and was designed to thwart petitioners upswing performance in the television ratings game. In other words, the wrongful acts complained of and upon which the damages prayed for are based, have to do with the operations and ownership of the cable companies. These factual matters undoubtedly pertain to the NTC and not the regular courts. That the matters complained of by GMA are within the NTCs exclusive domain can be discerned from the statutes governing the broadcasting and cable television industry. Section 15 of Executive Order No. 546,13 by which the NTC was created, provides for its general functions as follows:

a. Issue Certificate of Public Convenience for the operation of communications utilities and services, radio communications systems, wire or wireless telephone or telegraph system, radio and television broadcasting system and other similar public utilities; b. Establish, prescribe and regulate areas of operation of particular operators of public service communications; and determine and prescribe charges or rates pertinent to the operation of such public utility facilities and services except in cases where charges or rates are established by international bodies or associations of which the Philippines is a participating member or by bodies recognized by the Philippine Government as the proper arbiter of such charges or rates; ... g. Promulgate such rules and regulations, as public safety and interest may require, to encourage a larger and more effective use of communications, radio and television broadcasting facilities, and to maintain effective competition among private entities in these activities whenever the Commission finds it reasonably feasible[.] In 1987, Executive Order No. 20514 was issued which empowers the NTC to grant certificates of authority for the operation of cable antenna television system subject to the limitation that the authority to operate shall not infringe on the television and broadcast markets. Executive Order No. 43615 issued in 1997, specifically vests the NTC with the sole power of regulation and supervision over the cable television industry. In Batangas CATV, Inc. v. Court of Appeals,16 we held that the NTCs regulatory power over the broadcasting and cable television industry extends to matters which are peculiarly within its competence. These include the: (1) determination of rates, (2) issuance of certificates of authority, (3) establishment of areas of operation, (4) examination and assessment of the legal, technical and financial qualifications of applicant operators, (5) granting of permits for the use of frequencies, (6) regulation of ownership and operation, (7) adjudication of issues arising from its functions, and (8) other similar matters.17 With respect to the foregoing, therefore, the NTC exercises exclusive, original and primary jurisdiction to the exclusion of the regular courts. In the case at bar, before the trial court can resolve the issue of whether GMA is entitled to an award of damages, it would have to initially ascertain whether there was arbitrary re-channeling which distorted and downgraded GMAs signal. The ascertainment of these facts, which relate to the operations of the cable companies, would require the application of technical standards imposed by the NTC as well as determination of signal quality "within the limitations imposed by the technical state of the art".18 These factual questions would necessarily entail specialized knowledge in the fields of communications technology and engineering which the courts do not possess. It is the NTC which has the expertise and skills to deal with such matters. The regulation of ownership of television and cable television companies is likewise within the exclusive concern of the NTC, pursuant to its broader regulatory power of ensuring and promoting a "larger and more effective use of communications, radio and television broadcasting facilities" in order that the public interest may well be served. The NTC is mandated to maintain effective competition among private entities engaged in the operation of public service communications. It is also the agency tasked to grant certificates of authority to cable television operators, provided that the same "does not infringe on the television and broadcast markets." As such, GMAs allegations of unlawful business combination and unjust business practices also properly pertain to the NTC. It is in the best position to judge matters relating to the broadcasting industry as it is presumed to have an unparalleled understanding of its market and commercial conditions. Moreover, it is the NTC that has the information, statistics and data peculiar to the

television broadcasting industry. It is thus the body that is ideally suited to act on petitioners allegations of market control and manipulation. In Industrial Enterprises, Inc. v. Court of Appeals,19 the Court held that: It may occur that the Court has jurisdiction to take cognizance of a particular case, which means that the matter involved is also judicial in character. However, if the case is such that its determination requires the expertise, specialized skills and knowledge of the proper administrative bodies because technical matters or intricate questions of facts are involved, then relief must first be obtained in an administrative proceeding before a remedy will be supplied by the courts even though the matter is within the proper jurisdiction of a court. This is the doctrine of primary jurisdiction. It applies "where a claim is originally cognizable in the courts, and comes into play whenever enforcement of the claim requires the resolution of issues which, under a regulatory scheme, have been placed within the special competence of an administrative body; in such case the judicial process is suspended pending referral of such issues to the administrative body for its view[.]20 Consequently, while it is true that the regular courts are possessed of general jurisdiction over actions for damages, it would nonetheless be proper for the courts to yield its jurisdiction in favor of an administrative body when the determination of underlying factual issues requires the special competence or knowledge of the latter. In this era of clogged court dockets, administrative boards or commissions with special knowledge, experience and capability to promptly hear and determine disputes on technical matters or intricate questions of facts, subject to judicial review in case of grave abuse of discretion, are well nigh indispensable. Between the power lodged in an administrative body and a court, therefore, the unmistakable trend is to refer it to the former.21 In this regard, we note that there is a pending case before the NTC in which the factual issues raised in petitioners complaint have also been pleaded. Although petitioner prays in the NTC case for the administrative remedy of cancellation of the cable companies certificates of authority, licenses and permits, it is inevitable that, in granting or denying this prayer, the NTC would have to pass upon the same factual issues posed in petitioners complaint before the trial court. The latter was thus correct in applying the doctrine of primary jurisdiction if only to avoid conflicting factual findings between the court and the NTC. Finally, the complaint failed to state a cause of action against ABS-CBN and the other respondents, considering that the ultimate facts upon which the complaint for damages depends fall within the technical competence of an administrative body. Otherwise stated, pending determination by the NTC of the factual questions involved in the case, petitioners complaint, which is founded upon such factual issues, would be premature. WHEREFORE, the petition is DENIED. The assailed resolution dated October 30, 2003 of the Regional Trial Court of Quezon City, Branch 97, is AFFIRMED. SO ORDERED. G.R. No. 133250 July 9, 2002 I. and AMARI COASTAL CHAVEZ, petitioner, BAY DEVELOPMENT

CARPIO, J.: This is an original Petition for Mandamus with prayer for a writ of preliminary injunction and a temporary restraining order. The petition seeks to compel the Public Estates Authority ("PEA" for brevity) to disclose all facts on PEA's then on-going renegotiations with Amari Coastal Bay and Development Corporation ("AMARI" for brevity) to reclaim portions of Manila Bay. The petition further seeks to enjoin PEA from signing a new agreement with AMARI involving such reclamation. The Facts On November 20, 1973, the government, through the Commissioner of Public Highways, signed a contract with the Construction and Development Corporation of the Philippines ("CDCP" for brevity) to reclaim certain foreshore and offshore areas of Manila Bay. The contract also included the construction of Phases I and II of the Manila-Cavite Coastal Road. CDCP obligated itself to carry out all the works in consideration of fifty percent of the total reclaimed land. On February 4, 1977, then President Ferdinand E. Marcos issued Presidential Decree No. 1084 creating PEA. PD No. 1084 tasked PEA "to reclaim land, including foreshore and submerged areas," and "to develop, improve, acquire, x x x lease and sell any and all kinds of lands." 1 On the same date, then President Marcos issued Presidential Decree No. 1085 transferring to PEA the "lands reclaimed in the foreshore and offshore of the Manila Bay" 2 under the Manila-Cavite Coastal Road and Reclamation Project (MCCRRP). On December 29, 1981, then President Marcos issued a memorandum directing PEA to amend its contract with CDCP, so that "[A]ll future works in MCCRRP x x x shall be funded and owned by PEA." Accordingly, PEA and CDCP executed a Memorandum of Agreement dated December 29, 1981, which stated: "(i) CDCP shall undertake all reclamation, construction, and such other works in the MCCRRP as may be agreed upon by the parties, to be paid according to progress of works on a unit price/lump sum basis for items of work to be agreed upon, subject to price escalation, retention and other terms and conditions provided for in Presidential Decree No. 1594. All the financing required for such works shall be provided by PEA. xxx (iii) x x x CDCP shall give up all its development rights and hereby agrees to cede and transfer in favor of PEA, all of the rights, title, interest and participation of CDCP in and to all the areas of land reclaimed by CDCP in the MCCRRP as of December 30, 1981 which have not yet been sold, transferred or otherwise disposed of by CDCP as of said date, which areas consist of approximately Ninety-Nine Thousand Four Hundred Seventy Three (99,473) square meters in the Financial Center Area covered by land pledge No. 5 and approximately Three Million Three Hundred Eighty Two Thousand Eight Hundred Eighty Eight (3,382,888) square meters of reclaimed areas at varying elevations above Mean Low Water Level located outside the Financial Center Area and the First Neighborhood Unit."3 On January 19, 1988, then President Corazon C. Aquino issued Special Patent No. 3517, granting and transferring to PEA "the parcels of land so reclaimed under the Manila-Cavite Coastal Road and Reclamation Project (MCCRRP) containing a total area of one million nine hundred fifteen thousand eight hundred ninety four (1,915,894) square meters." Subsequently, on April 9, 1988, the Register of Deeds of the Municipality of Paraaque issued Transfer Certificates of Title Nos. 7309, 7311, and 7312, in the name of PEA, covering the three

FRANCISCO vs. PUBLIC ESTATES AUTHORITY CORPORATION, respondents.

reclaimed islands known as the "Freedom Islands" located at the southern portion of the ManilaCavite Coastal Road, Paraaque City. The Freedom Islands have a total land area of One Million Five Hundred Seventy Eight Thousand Four Hundred and Forty One (1,578,441) square meters or 157.841 hectares. On April 25, 1995, PEA entered into a Joint Venture Agreement ("JVA" for brevity) with AMARI, a private corporation, to develop the Freedom Islands. The JVA also required the reclamation of an additional 250 hectares of submerged areas surrounding these islands to complete the configuration in the Master Development Plan of the Southern Reclamation Project-MCCRRP. PEA and AMARI entered into the JVA through negotiation without public bidding. 4 On April 28, 1995, the Board of Directors of PEA, in its Resolution No. 1245, confirmed the JVA.5 On June 8, 1995, then President Fidel V. Ramos, through then Executive Secretary Ruben Torres, approved the JVA.6 On November 29, 1996, then Senate President Ernesto Maceda delivered a privilege speech in the Senate and denounced the JVA as the "grandmother of all scams." As a result, the Senate Committee on Government Corporations and Public Enterprises, and the Committee on Accountability of Public Officers and Investigations, conducted a joint investigation. The Senate Committees reported the results of their investigation in Senate Committee Report No. 560 dated September 16, 1997.7 Among the conclusions of their report are: (1) the reclaimed lands PEA seeks to transfer to AMARI under the JVA are lands of the public domain which the government has not classified as alienable lands and therefore PEA cannot alienate these lands; (2) the certificates of title covering the Freedom Islands are thus void, and (3) the JVA itself is illegal. On December 5, 1997, then President Fidel V. Ramos issued Presidential Administrative Order No. 365 creating a Legal Task Force to conduct a study on the legality of the JVA in view of Senate Committee Report No. 560. The members of the Legal Task Force were the Secretary of Justice,8 the Chief Presidential Legal Counsel,9and the Government Corporate Counsel.10 The Legal Task Force upheld the legality of the JVA, contrary to the conclusions reached by the Senate Committees.11 On April 4 and 5, 1998, the Philippine Daily Inquirer and Today published reports that there were on-going renegotiations between PEA and AMARI under an order issued by then President Fidel V. Ramos. According to these reports, PEA Director Nestor Kalaw, PEA Chairman Arsenio Yulo and retired Navy Officer Sergio Cruz composed the negotiating panel of PEA. On April 13, 1998, Antonio M. Zulueta filed before the Court a Petition for Prohibition with Application for the Issuance of a Temporary Restraining Order and Preliminary Injunction docketed as G.R. No. 132994 seeking to nullify the JVA. The Court dismissed the petition "for unwarranted disregard of judicial hierarchy, without prejudice to the refiling of the case before the proper court."12 On April 27, 1998, petitioner Frank I. Chavez ("Petitioner" for brevity) as a taxpayer, filed the instant Petition for Mandamus with Prayer for the Issuance of a Writ of Preliminary Injunction and Temporary Restraining Order. Petitioner contends the government stands to lose billions of pesos in the sale by PEA of the reclaimed lands to AMARI. Petitioner prays that PEA publicly disclose the terms of any renegotiation of the JVA, invoking Section 28, Article II, and Section 7, Article III, of the 1987 Constitution on the right of the people to information on matters of public concern. Petitioner assails the sale to AMARI of lands of the public domain as a blatant violation of Section 3, Article XII of the 1987 Constitution prohibiting the sale of alienable lands of the public domain to private corporations. Finally, petitioner asserts that he seeks to enjoin the loss of billions of pesos in properties of the State that are of public dominion.

After several motions for extension of time, 13 PEA and AMARI filed their Comments on October 19, 1998 and June 25, 1998, respectively. Meanwhile, on December 28, 1998, petitioner filed an Omnibus Motion: (a) to require PEA to submit the terms of the renegotiated PEA-AMARI contract; (b) for issuance of a temporary restraining order; and (c) to set the case for hearing on oral argument. Petitioner filed a Reiterative Motion for Issuance of a TRO dated May 26, 1999, which the Court denied in a Resolution dated June 22, 1999. In a Resolution dated March 23, 1999, the Court gave due course to the petition and required the parties to file their respective memoranda. On March 30, 1999, PEA and AMARI signed the Amended Joint Venture Agreement ("Amended JVA," for brevity). On May 28, 1999, the Office of the President under the administration of then President Joseph E. Estrada approved the Amended JVA. Due to the approval of the Amended JVA by the Office of the President, petitioner now prays that on "constitutional and statutory grounds the renegotiated contract be declared null and void."14 The Issues The issues raised by petitioner, PEA15 and AMARI16 are as follows: I. WHETHER THE PRINCIPAL RELIEFS PRAYED FOR IN THE PETITION ARE MOOT AND ACADEMIC BECAUSE OF SUBSEQUENT EVENTS; II. WHETHER THE PETITION MERITS DISMISSAL FOR FAILING TO OBSERVE THE PRINCIPLE GOVERNING THE HIERARCHY OF COURTS; III. WHETHER THE PETITION MERITS DISMISSAL FOR NON-EXHAUSTION OF ADMINISTRATIVE REMEDIES; IV. WHETHER PETITIONER HAS LOCUS STANDI TO BRING THIS SUIT; V. WHETHER THE CONSTITUTIONAL RIGHT TO INFORMATION INCLUDES OFFICIAL INFORMATION ON ON-GOING NEGOTIATIONS BEFORE A FINAL AGREEMENT; VI. WHETHER THE STIPULATIONS IN THE AMENDED JOINT VENTURE AGREEMENT FOR THE TRANSFER TO AMARI OF CERTAIN LANDS, RECLAIMED AND STILL TO BE RECLAIMED, VIOLATE THE 1987 CONSTITUTION; AND VII. WHETHER THE COURT IS THE PROPER FORUM FOR RAISING THE ISSUE OF WHETHER THE AMENDED JOINT VENTURE AGREEMENT IS GROSSLY DISADVANTAGEOUS TO THE GOVERNMENT. The Court's Ruling First issue: whether the principal reliefs prayed for in the petition are moot and academic because of subsequent events.

The petition prays that PEA publicly disclose the "terms and conditions of the on-going negotiations for a new agreement." The petition also prays that the Court enjoin PEA from "privately entering into, perfecting and/or executing any new agreement with AMARI." PEA and AMARI claim the petition is now moot and academic because AMARI furnished petitioner on June 21, 1999 a copy of the signed Amended JVA containing the terms and conditions agreed upon in the renegotiations. Thus, PEA has satisfied petitioner's prayer for a public disclosure of the renegotiations. Likewise, petitioner's prayer to enjoin the signing of the Amended JVA is now moot because PEA and AMARI have already signed the Amended JVA on March 30, 1999. Moreover, the Office of the President has approved the Amended JVA on May 28, 1999. Petitioner counters that PEA and AMARI cannot avoid the constitutional issue by simply fasttracking the signing and approval of the Amended JVA before the Court could act on the issue. Presidential approval does not resolve the constitutional issue or remove it from the ambit of judicial review. We rule that the signing of the Amended JVA by PEA and AMARI and its approval by the President cannot operate to moot the petition and divest the Court of its jurisdiction. PEA and AMARI have still to implement the Amended JVA. The prayer to enjoin the signing of the Amended JVA on constitutional grounds necessarily includes preventing its implementation if in the meantime PEA and AMARI have signed one in violation of the Constitution. Petitioner's principal basis in assailing the renegotiation of the JVA is its violation of Section 3, Article XII of the Constitution, which prohibits the government from alienating lands of the public domain to private corporations. If the Amended JVA indeed violates the Constitution, it is the duty of the Court to enjoin its implementation, and if already implemented, to annul the effects of such unconstitutional contract. The Amended JVA is not an ordinary commercial contract but one which seeks to transfer title and ownership to 367.5 hectares of reclaimed lands and submerged areas of Manila Bay to a single private corporation. It now becomes more compelling for the Court to resolve the issue to insure the government itself does not violate a provision of the Constitution intended to safeguard the national patrimony. Supervening events, whether intended or accidental, cannot prevent the Court from rendering a decision if there is a grave violation of the Constitution. In the instant case, if the Amended JVA runs counter to the Constitution, the Court can still prevent the transfer of title and ownership of alienable lands of the public domain in the name of AMARI. Even in cases where supervening events had made the cases moot, the Court did not hesitate to resolve the legal or constitutional issues raised to formulate controlling principles to guide the bench, bar, and the public.17 Also, the instant petition is a case of first impression. All previous decisions of the Court involving Section 3, Article XII of the 1987 Constitution, or its counterpart provision in the 1973 Constitution,18 covered agricultural lands sold to private corporations which acquired the lands from private parties. The transferors of the private corporations claimed or could claim the right to judicial confirmation of their imperfect titles19 under Title IIof Commonwealth Act. 141 ("CA No. 141" for brevity). In the instant case, AMARI seeks to acquire from PEA, a public corporation, reclaimed lands and submerged areas for non-agricultural purposes by purchase under PD No. 1084 (charter of PEA) and Title III of CA No. 141. Certain undertakings by AMARI under the Amended JVA constitute the consideration for the purchase. Neither AMARI nor PEA can claim judicial confirmation of their titles because the lands covered by the Amended JVA are newly reclaimed or still to be reclaimed. Judicial confirmation of imperfect title requires open, continuous, exclusive and notorious occupation of agricultural lands of the public domain for at least thirty years since June 12, 1945 or earlier. Besides, the deadline for filing applications for judicial confirmation of imperfect title expired on December 31, 1987.20

Lastly, there is a need to resolve immediately the constitutional issue raised in this petition because of the possible transfer at any time by PEA to AMARI of title and ownership to portions of the reclaimed lands. Under the Amended JVA, PEA is obligated to transfer to AMARI the latter's seventy percent proportionate share in the reclaimed areas as the reclamation progresses. The Amended JVA even allows AMARI to mortgage at any time the entire reclaimed area to raise financing for the reclamation project.21 Second issue: whether the petition merits dismissal for failing to observe the principle governing the hierarchy of courts. PEA and AMARI claim petitioner ignored the judicial hierarchy by seeking relief directly from the Court. The principle of hierarchy of courts applies generally to cases involving factual questions. As it is not a trier of facts, the Court cannot entertain cases involving factual issues. The instant case, however, raises constitutional issues of transcendental importance to the public. 22 The Court can resolve this case without determining any factual issue related to the case. Also, the instant case is a petition for mandamus which falls under the original jurisdiction of the Court under Section 5, Article VIII of the Constitution. We resolve to exercise primary jurisdiction over the instant case. Third issue: whether the petition merits dismissal for non-exhaustion of administrative remedies. PEA faults petitioner for seeking judicial intervention in compelling PEA to disclose publicly certain information without first asking PEA the needed information. PEA claims petitioner's direct resort to the Court violates the principle of exhaustion of administrative remedies. It also violates the rule that mandamus may issue only if there is no other plain, speedy and adequate remedy in the ordinary course of law. PEA distinguishes the instant case from Taada v. Tuvera23 where the Court granted the petition for mandamus even if the petitioners there did not initially demand from the Office of the President the publication of the presidential decrees. PEA points out that in Taada, the Executive Department had an affirmative statutoryduty under Article 2 of the Civil Code24 and Section 1 of Commonwealth Act No. 63825 to publish the presidential decrees. There was, therefore, no need for the petitioners in Taada to make an initial demand from the Office of the President. In the instant case, PEA claims it has no affirmative statutory duty to disclose publicly information about its renegotiation of the JVA. Thus, PEA asserts that the Court must apply the principle of exhaustion of administrative remedies to the instant case in view of the failure of petitioner here to demand initially from PEA the needed information. The original JVA sought to dispose to AMARI public lands held by PEA, a government corporation. Under Section 79 of the Government Auditing Code,26 the disposition of government lands to private parties requires public bidding. PEA was under a positive legal duty to disclose to the public the terms and conditions for the sale of its lands. The law obligated PEA to make this public disclosure even without demand from petitioner or from anyone. PEA failed to make this public disclosure because the original JVA, like the Amended JVA, was the result of a negotiated contract, not of a public bidding. Considering that PEA had an affirmative statutory duty to make the public disclosure, and was even in breach of this legal duty, petitioner had the right to seek direct judicial intervention. Moreover, and this alone is determinative of this issue, the principle of exhaustion of administrative remedies does not apply when the issue involved is a purely legal or constitutional question.27 The principal issue in the instant case is the capacity of AMARI to acquire lands held by PEA in view of the constitutional ban prohibiting the alienation of lands of the public domain to private corporations. We rule that the principle of exhaustion of administrative remedies does not apply in the instant case.

Fourth issue: whether petitioner has locus standi to bring this suit PEA argues that petitioner has no standing to institute mandamus proceedings to enforce his constitutional right to information without a showing that PEA refused to perform an affirmative duty imposed on PEA by the Constitution. PEA also claims that petitioner has not shown that he will suffer any concrete injury because of the signing or implementation of the Amended JVA. Thus, there is no actual controversy requiring the exercise of the power of judicial review. The petitioner has standing to bring this taxpayer's suit because the petition seeks to compel PEA to comply with its constitutional duties. There are two constitutional issues involved here. First is the right of citizens to information on matters of public concern. Second is the application of a constitutional provision intended to insure the equitable distribution of alienable lands of the public domain among Filipino citizens. The thrust of the first issue is to compel PEA to disclose publicly information on the sale of government lands worth billions of pesos, information which the Constitution and statutory law mandate PEA to disclose. The thrust of the second issue is to prevent PEA from alienating hundreds of hectares of alienable lands of the public domain in violation of the Constitution, compelling PEA to comply with a constitutional duty to the nation. Moreover, the petition raises matters of transcendental importance to the public. In Chavez v. PCGG,28 the Court upheld the right of a citizen to bring a taxpayer's suit on matters of transcendental importance to the public, thus "Besides, petitioner emphasizes, the matter of recovering the ill-gotten wealth of the Marcoses is an issue of 'transcendental importance to the public.' He asserts that ordinary taxpayers have a right to initiate and prosecute actions questioning the validity of acts or orders of government agencies or instrumentalities, if the issues raised are of 'paramount public interest,' and if they 'immediately affect the social, economic and moral well being of the people.' Moreover, the mere fact that he is a citizen satisfies the requirement of personal interest, when the proceeding involves the assertion of a public right, such as in this case. He invokes several decisions of this Court which have set aside the procedural matter of locus standi, when the subject of the case involved public interest. xxx In Taada v. Tuvera, the Court asserted that when the issue concerns a public right and the object of mandamus is to obtain the enforcement of a public duty, the people are regarded as the real parties in interest; and because it is sufficient that petitioner is a citizen and as such is interested in the execution of the laws, he need not show that he has any legal or special interest in the result of the action. In the aforesaid case, the petitioners sought to enforce their right to be informed on matters of public concern, a right then recognized in Section 6, Article IV of the 1973 Constitution, in connection with the rule that laws in order to be valid and enforceable must be published in the Official Gazette or otherwise effectively promulgated. In ruling for the petitioners' legal standing, the Court declared that the right they sought to be enforced 'is a public right recognized by no less than the fundamental law of the land.' Legaspi v. Civil Service Commission, while reiterating Taada, further declared that 'when a mandamus proceeding involves the assertion of a public right, the requirement of personal interest is satisfied by the mere fact that petitioner is a citizen and, therefore, part of the general 'public' which possesses the right.'

Further, in Albano v. Reyes, we said that while expenditure of public funds may not have been involved under the questioned contract for the development, management and operation of the Manila International Container Terminal, 'public interest [was] definitely involved considering the important role [of the subject contract] . . . in the economic development of the country and the magnitude of the financial consideration involved.' We concluded that, as a consequence, the disclosure provision in the Constitution would constitute sufficient authority for upholding the petitioner's standing. Similarly, the instant petition is anchored on the right of the people to information and access to official records, documents and papers a right guaranteed under Section 7, Article III of the 1987 Constitution. Petitioner, a former solicitor general, is a Filipino citizen. Because of the satisfaction of the two basic requisites laid down by decisional law to sustain petitioner's legal standing, i.e. (1) the enforcement of a public right (2) espoused by a Filipino citizen, we rule that the petition at bar should be allowed." We rule that since the instant petition, brought by a citizen, involves the enforcement of constitutional rights - to information and to the equitable diffusion of natural resources - matters of transcendental public importance, the petitioner has the requisite locus standi. Fifth issue: whether the constitutional right to information includes official information on on-going negotiations before a final agreement. Section 7, Article III of the Constitution explains the people's right to information on matters of public concern in this manner: "Sec. 7. The right of the people to information on matters of public concern shall be recognized. Access to official records, and to documents, and papers pertaining to official acts, transactions, or decisions, as well as to government research data used as basis for policy development, shall be afforded the citizen, subject to such limitations as may be provided by law." (Emphasis supplied) The State policy of full transparency in all transactions involving public interest reinforces the people's right to information on matters of public concern. This State policy is expressed in Section 28, Article II of the Constitution, thus: "Sec. 28. Subject to reasonable conditions prescribed by law, the State adopts and implements a policy of full public disclosure of all its transactions involving public interest." (Emphasis supplied) These twin provisions of the Constitution seek to promote transparency in policy-making and in the operations of the government, as well as provide the people sufficient information to exercise effectively other constitutional rights. These twin provisions are essential to the exercise of freedom of expression. If the government does not disclose its official acts, transactions and decisions to citizens, whatever citizens say, even if expressed without any restraint, will be speculative and amount to nothing. These twin provisions are also essential to hold public officials "at all times x x x accountable to the people,"29 for unless citizens have the proper information, they cannot hold public officials accountable for anything. Armed with the right information, citizens can participate in public discussions leading to the formulation of government policies and their effective implementation. An informed citizenry is essential to the existence and proper functioning of any democracy. As explained by the Court in Valmonte v. Belmonte, Jr.30 "An essential element of these freedoms is to keep open a continuing dialogue or process of communication between the government and the people. It is in the interest

of the State that the channels for free political discussion be maintained to the end that the government may perceive and be responsive to the people's will. Yet, this open dialogue can be effective only to the extent that the citizenry is informed and thus able to formulate its will intelligently. Only when the participants in the discussion are aware of the issues and have access to information relating thereto can such bear fruit." PEA asserts, citing Chavez v. PCGG, that in cases of on-going negotiations the right to information is limited to "definite propositions of the government." PEA maintains the right does not include access to "intra-agency or inter-agency recommendations or communications during the stage when common assertions are still in the process of being formulated or are in the 'exploratory stage'." Also, AMARI contends that petitioner cannot invoke the right at the pre-decisional stage or before the closing of the transaction. To support its contention, AMARI cites the following discussion in the 1986 Constitutional Commission: "Mr. Suarez. And when we say 'transactions' which should be distinguished from contracts, agreements, or treaties or whatever, does the Gentleman refer to the steps leading to the consummation of the contract, or does he refer to the contract itself? Mr. Ople: The 'transactions' used here, I suppose is generic and therefore, it can cover both steps leading to a contract and already a consummated contract, Mr. Presiding Officer. Mr. Suarez: This contemplates inclusion of negotiations leading to the consummation of the transaction. Mr. Ople: Yes, subject only to reasonable safeguards on the national interest. Mr. Suarez: Thank you."32 (Emphasis supplied) AMARI argues there must first be a consummated contract before petitioner can invoke the right. Requiring government officials to reveal their deliberations at the pre-decisional stage will degrade the quality of decision-making in government agencies. Government officials will hesitate to express their real sentiments during deliberations if there is immediate public dissemination of their discussions, putting them under all kinds of pressure before they decide. We must first distinguish between information the law on public bidding requires PEA to disclose publicly, and information the constitutional right to information requires PEA to release to the public. Before the consummation of the contract, PEA must, on its own and without demand from anyone, disclose to the public matters relating to the disposition of its property. These include the size, location, technical description and nature of the property being disposed of, the terms and conditions of the disposition, the parties qualified to bid, the minimum price and similar information. PEA must prepare all these data and disclose them to the public at the start of the disposition process, long before the consummation of the contract, because the Government Auditing Code requires public bidding. If PEA fails to make this disclosure, any citizen can demand from PEA this information at any time during the bidding process. Information, however, on on-going evaluation or review of bids or proposals being undertaken by the bidding or review committee is not immediately accessible under the right to information. While the evaluation or review is still on-going, there are no "official acts, transactions, or decisions" on the bids or proposals. However, once the committee makes its official recommendation, there arises a "definite proposition" on the part of the government. From
31

this moment, the public's right to information attaches, and any citizen can access all the nonproprietary information leading to such definite proposition. In Chavez v. PCGG,33 the Court ruled as follows: "Considering the intent of the framers of the Constitution, we believe that it is incumbent upon the PCGG and its officers, as well as other government representatives, to disclose sufficient public information on any proposed settlement they have decided to take up with the ostensible owners and holders of ill-gotten wealth. Such information, though, must pertain to definite propositions of the government, not necessarily to intra-agency or inter-agency recommendations or communications during the stage when common assertions are still in the process of being formulated or are in the "exploratory" stage. There is need, of course, to observe the same restrictions on disclosure of information in general, as discussed earlier such as on matters involving national security, diplomatic or foreign relations, intelligence and other classified information." (Emphasis supplied) Contrary to AMARI's contention, the commissioners of the 1986 Constitutional Commission understood that the right to information "contemplates inclusion of negotiations leading to the consummation of the transaction." Certainly, a consummated contract is not a requirement for the exercise of the right to information. Otherwise, the people can never exercise the right if no contract is consummated, and if one is consummated, it may be too late for the public to expose its defects.1wphi1.nt Requiring a consummated contract will keep the public in the dark until the contract, which may be grossly disadvantageous to the government or even illegal, becomes a fait accompli. This negates the State policy of full transparency on matters of public concern, a situation which the framers of the Constitution could not have intended. Such a requirement will prevent the citizenry from participating in the public discussion of anyproposed contract, effectively truncating a basic right enshrined in the Bill of Rights. We can allow neither an emasculation of a constitutional right, nor a retreat by the State of its avowed "policy of full disclosure of all its transactions involving public interest." The right covers three categories of information which are "matters of public concern," namely: (1) official records; (2) documents and papers pertaining to official acts, transactions and decisions; and (3) government research data used in formulating policies. The first category refers to any document that is part of the public records in the custody of government agencies or officials. The second category refers to documents and papers recording, evidencing, establishing, confirming, supporting, justifying or explaining official acts, transactions or decisions of government agencies or officials. The third category refers to research data, whether raw, collated or processed, owned by the government and used in formulating government policies. The information that petitioner may access on the renegotiation of the JVA includes evaluation reports, recommendations, legal and expert opinions, minutes of meetings, terms of reference and other documents attached to such reports or minutes, all relating to the JVA. However, the right to information does not compel PEA to prepare lists, abstracts, summaries and the like relating to the renegotiation of the JVA.34 The right only affords access to records, documents and papers, which means the opportunity to inspect and copy them. One who exercises the right must copy the records, documents and papers at his expense. The exercise of the right is also subject to reasonable regulations to protect the integrity of the public records and to minimize disruption to government operations, like rules specifying when and how to conduct the inspection and copying.35 The right to information, however, does not extend to matters recognized as privileged information under the separation of powers.36 The right does not also apply to information on

military and diplomatic secrets, information affecting national security, and information on investigations of crimes by law enforcement agencies before the prosecution of the accused, which courts have long recognized as confidential.37 The right may also be subject to other limitations that Congress may impose by law. There is no claim by PEA that the information demanded by petitioner is privileged information rooted in the separation of powers. The information does not cover Presidential conversations, correspondences, or discussions during closed-door Cabinet meetings which, like internal deliberations of the Supreme Court and other collegiate courts, or executive sessions of either house of Congress,38 are recognized as confidential. This kind of information cannot be pried open by a co-equal branch of government. A frank exchange of exploratory ideas and assessments, free from the glare of publicity and pressure by interested parties, is essential to protect the independence of decision-making of those tasked to exercise Presidential, Legislative and Judicial power.39 This is not the situation in the instant case. We rule, therefore, that the constitutional right to information includes official information on ongoing negotiations before a final contract. The information, however, must constitute definite propositions by the government and should not cover recognized exceptions like privileged information, military and diplomatic secrets and similar matters affecting national security and public order.40 Congress has also prescribed other limitations on the right to information in several legislations.41 Sixth issue: whether stipulations in the Amended JVA for the transfer to AMARI of lands, reclaimed or to be reclaimed, violate the Constitution. The Regalian Doctrine The ownership of lands reclaimed from foreshore and submerged areas is rooted in the Regalian doctrine which holds that the State owns all lands and waters of the public domain. Upon the Spanish conquest of the Philippines, ownership of all "lands, territories and possessions" in the Philippines passed to the Spanish Crown. 42 The King, as the sovereign ruler and representative of the people, acquired and owned all lands and territories in the Philippines except those he disposed of by grant or sale to private individuals. The 1935, 1973 and 1987 Constitutions adopted the Regalian doctrine substituting, however, the State, in lieu of the King, as the owner of all lands and waters of the public domain. The Regalian doctrine is the foundation of the time-honored principle of land ownership that "all lands that were not acquired from the Government, either by purchase or by grant, belong to the public domain."43 Article 339 of the Civil Code of 1889, which is now Article 420 of the Civil Code of 1950, incorporated the Regalian doctrine. Ownership and Disposition of Reclaimed Lands The Spanish Law of Waters of 1866 was the first statutory law governing the ownership and disposition of reclaimed lands in the Philippines. On May 18, 1907, the Philippine Commission enacted Act No. 1654 which provided for the lease, but not the sale, of reclaimed lands of the government to corporations and individuals. Later, on November 29, 1919, the Philippine Legislature approved Act No. 2874, the Public Land Act, which authorized the lease, but not the sale, of reclaimed lands of the government to corporations and individuals. On November 7, 1936, the National Assembly passed Commonwealth Act No. 141, also known as the Public Land Act, which authorized the lease, but not the sale, of reclaimed lands of the government to corporations and individuals. CA No. 141 continues to this day as the general law governing the classification and disposition of lands of the public domain.

The Spanish Law of Waters of 1866 and the Civil Code of 1889 Under the Spanish Law of Waters of 1866, the shores, bays, coves, inlets and all waters within the maritime zone of the Spanish territory belonged to the public domain for public use. 44 The Spanish Law of Waters of 1866 allowed the reclamation of the sea under Article 5, which provided as follows: "Article 5. Lands reclaimed from the sea in consequence of works constructed by the State, or by the provinces, pueblos or private persons, with proper permission, shall become the property of the party constructing such works, unless otherwise provided by the terms of the grant of authority." Under the Spanish Law of Waters, land reclaimed from the sea belonged to the party undertaking the reclamation, provided the government issued the necessary permit and did not reserve ownership of the reclaimed land to the State. Article 339 of the Civil Code of 1889 defined property of public dominion as follows: "Art. 339. Property of public dominion is 1. That devoted to public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State, riverbanks, shores, roadsteads, and that of a similar character; 2. That belonging exclusively to the State which, without being of general public use, is employed in some public service, or in the development of the national wealth, such as walls, fortresses, and other works for the defense of the territory, and mines, until granted to private individuals." Property devoted to public use referred to property open for use by the public. In contrast, property devoted to public service referred to property used for some specific public service and open only to those authorized to use the property. Property of public dominion referred not only to property devoted to public use, but also to property not so used but employed to develop the national wealth. This class of property constituted property of public dominion although employed for some economic or commercial activity to increase the national wealth. Article 341 of the Civil Code of 1889 governed the re-classification of property of public dominion into private property, to wit: "Art. 341. Property of public dominion, when no longer devoted to public use or to the defense of the territory, shall become a part of the private property of the State." This provision, however, was not self-executing. The legislature, or the executive department pursuant to law, must declare the property no longer needed for public use or territorial defense before the government could lease or alienate the property to private parties. 45 Act No. 1654 of the Philippine Commission

On May 8, 1907, the Philippine Commission enacted Act No. 1654 which regulated the lease of reclaimed and foreshore lands. The salient provisions of this law were as follows: "Section 1. The control and disposition of the foreshore as defined in existing law, and the title to all Government or public lands made or reclaimed by the Government by dredging or filling or otherwise throughout the Philippine Islands, shall be retained by the Government without prejudice to vested rights and without prejudice to rights conceded to the City of Manila in the Luneta Extension. Section 2. (a) The Secretary of the Interior shall cause all Government or public lands made or reclaimed by the Government by dredging or filling or otherwise to be divided into lots or blocks, with the necessary streets and alleyways located thereon, and shall cause plats and plans of such surveys to be prepared and filed with the Bureau of Lands. (b) Upon completion of such plats and plans the Governor-General shall give notice to the public that such parts of the lands so made or reclaimed as are not needed for public purposes will be leased for commercial and business purposes, x x x. xxx (e) The leases above provided for shall be disposed of to the highest and best bidder therefore, subject to such regulations and safeguards as the Governor-General may by executive order prescribe." (Emphasis supplied) Act No. 1654 mandated that the government should retain title to all lands reclaimed by the government. The Act also vested in the government control and disposition of foreshore lands. Private parties could lease lands reclaimed by the government only if these lands were no longer needed for public purpose. Act No. 1654 mandated public bidding in the lease of government reclaimed lands. Act No. 1654 made government reclaimed lands sui generis in that unlike other public lands which the government could sell to private parties, these reclaimed lands were available only for lease to private parties. Act No. 1654, however, did not repeal Section 5 of the Spanish Law of Waters of 1866. Act No. 1654 did not prohibit private parties from reclaiming parts of the sea under Section 5 of the Spanish Law of Waters. Lands reclaimed from the sea by private parties with government permission remained private lands. Act No. 2874 of the Philippine Legislature On November 29, 1919, the Philippine Legislature enacted Act No. 2874, the Public Land Act.46 The salient provisions of Act No. 2874, on reclaimed lands, were as follows: "Sec. 6. The Governor-General, upon the recommendation of the Secretary of Agriculture and Natural Resources, shall from time to time classify the lands of the public domain into (a) Alienable or disposable, (b) Timber, and

(c) Mineral lands, x x x. Sec. 7. For the purposes of the government and disposition of alienable or disposable public lands, the Governor-General, upon recommendation by the Secretary of Agriculture and Natural Resources, shall from time to time declare what lands are open to disposition or concession under this Act." Sec. 8. Only those lands shall be declared open to disposition or concession which have been officially delimited or classified x x x. xxx Sec. 55. Any tract of land of the public domain which, being neither timber nor mineral land, shall be classified as suitable for residential purposes or for commercial, industrial, or other productive purposes other than agricultural purposes, and shall be open to disposition or concession, shall be disposed of under the provisions of this chapter, and not otherwise. Sec. 56. The lands disposable under this title shall be classified as follows: (a) Lands reclaimed by the Government by dredging, filling, or other means; (b) Foreshore; (c) Marshy lands or lands covered with water bordering upon the shores or banks of navigable lakes or rivers; (d) Lands not included in any of the foregoing classes. x x x. Sec. 58. The lands comprised in classes (a), (b), and (c) of section fifty-six shall be disposed of to private parties by lease only and not otherwise, as soon as the Governor-General, upon recommendation by the Secretary of Agriculture and Natural Resources, shall declare that the same are not necessary for the public service and are open to disposition under this chapter. The lands included in class (d) may be disposed of by sale or lease under the provisions of this Act." (Emphasis supplied) Section 6 of Act No. 2874 authorized the Governor-General to "classify lands of the public domain into x x x alienable or disposable"47 lands. Section 7 of the Act empowered the Governor-General to "declare what lands are open to disposition or concession." Section 8 of the Act limited alienable or disposable lands only to those lands which have been "officially delimited and classified." Section 56 of Act No. 2874 stated that lands "disposable under this title 48 shall be classified" as government reclaimed, foreshore and marshy lands, as well as other lands. All these lands, however, must be suitable for residential, commercial, industrial or other productive nonagricultural purposes. These provisions vested upon the Governor-General the power to classify inalienable lands of the public domain into disposable lands of the public domain. These

provisions also empowered the Governor-General to classify further such disposable lands of the public domain into government reclaimed, foreshore or marshy lands of the public domain, as well as other non-agricultural lands. Section 58 of Act No. 2874 categorically mandated that disposable lands of the public domain classified as government reclaimed, foreshore and marshy lands "shall be disposed of to private parties by lease only and not otherwise." The Governor-General, before allowing the lease of these lands to private parties, must formally declare that the lands were "not necessary for the public service." Act No. 2874 reiterated the State policy to lease and not to sell government reclaimed, foreshore and marshy lands of the public domain, a policy first enunciated in 1907 in Act No. 1654. Government reclaimed, foreshore and marshy lands remained sui generis, as the only alienable or disposable lands of the public domain that the government could not sell to private parties. The rationale behind this State policy is obvious. Government reclaimed, foreshore and marshy public lands for non-agricultural purposes retain their inherent potential as areas for public service. This is the reason the government prohibited the sale, and only allowed the lease, of these lands to private parties. The State always reserved these lands for some future public service. Act No. 2874 did not authorize the reclassification of government reclaimed, foreshore and marshy lands into other non-agricultural lands under Section 56 (d). Lands falling under Section 56 (d) were the only lands for non-agricultural purposes the government could sell to private parties. Thus, under Act No. 2874, the government could not sell government reclaimed, foreshore and marshy lands to private parties, unless the legislature passed a law allowing their sale.49 Act No. 2874 did not prohibit private parties from reclaiming parts of the sea pursuant to Section 5 of the Spanish Law of Waters of 1866. Lands reclaimed from the sea by private parties with government permission remained private lands. Dispositions under the 1935 Constitution On May 14, 1935, the 1935 Constitution took effect upon its ratification by the Filipino people. The 1935 Constitution, in adopting the Regalian doctrine, declared in Section 1, Article XIII, that "Section 1. All agricultural, timber, and mineral lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy and other natural resources of the Philippines belong to the State, and their disposition, exploitation, development, or utilization shall be limited to citizens of the Philippines or to corporations or associations at least sixty per centum of the capital of which is owned by such citizens, subject to any existing right, grant, lease, or concession at the time of the inauguration of the Government established under this Constitution. Natural resources, with the exception of public agricultural land, shall not be alienated, and no license, concession, or lease for the exploitation, development, or utilization of any of the natural resources shall be granted for a period exceeding twenty-five years, renewable for another twenty-five years, except as to water rights for irrigation, water supply, fisheries, or industrial uses other than the development of water power, in which cases beneficial use may be the measure and limit of the grant." (Emphasis supplied) The 1935 Constitution barred the alienation of all natural resources except public agricultural lands, which were the only natural resources the State could alienate. Thus, foreshore lands,

considered part of the State's natural resources, became inalienable by constitutional fiat, available only for lease for 25 years, renewable for another 25 years. The government could alienate foreshore lands only after these lands were reclaimed and classified as alienable agricultural lands of the public domain. Government reclaimed and marshy lands of the public domain, being neither timber nor mineral lands, fell under the classification of public agricultural lands.50 However, government reclaimed and marshy lands, although subject to classification as disposable public agricultural lands, could only be leased and not sold to private parties because of Act No. 2874. The prohibition on private parties from acquiring ownership of government reclaimed and marshy lands of the public domain was only a statutory prohibition and the legislature could therefore remove such prohibition. The 1935 Constitution did not prohibit individuals and corporations from acquiring government reclaimed and marshy lands of the public domain that were classified as agricultural lands under existing public land laws. Section 2, Article XIII of the 1935 Constitution provided as follows: "Section 2. No private corporation or association may acquire, lease, or hold public agricultural lands in excess of one thousand and twenty four hectares, nor may any individual acquire such lands by purchase in excess of one hundred and forty hectares, or by lease in excess of one thousand and twentyfour hectares, or by homestead in excess of twenty-four hectares. Lands adapted to grazing, not exceeding two thousand hectares, may be leased to an individual, private corporation, or association." (Emphasis supplied) Still, after the effectivity of the 1935 Constitution, the legislature did not repeal Section 58 of Act No. 2874 to open for sale to private parties government reclaimed and marshy lands of the public domain. On the contrary, the legislature continued the long established State policy of retaining for the government title and ownership of government reclaimed and marshy lands of the public domain. Commonwealth Act No. 141 of the Philippine National Assembly On November 7, 1936, the National Assembly approved Commonwealth Act No. 141, also known as the Public Land Act, which compiled the then existing laws on lands of the public domain. CA No. 141, as amended, remains to this day the existing general law governing the classification and disposition of lands of the public domain other than timber and mineral lands. 51 Section 6 of CA No. 141 empowers the President to classify lands of the public domain into "alienable or disposable"52 lands of the public domain, which prior to such classification are inalienable and outside the commerce of man. Section 7 of CA No. 141 authorizes the President to "declare what lands are open to disposition or concession." Section 8 of CA No. 141 states that the government can declare open for disposition or concession only lands that are "officially delimited and classified." Sections 6, 7 and 8 of CA No. 141 read as follows: "Sec. 6. The President, upon the recommendation of the Secretary of Agriculture and Commerce, shall from time to time classify the lands of the public domain into (a) Alienable or disposable, (b) Timber, and (c) Mineral lands,

and may at any time and in like manner transfer such lands from one class to another,53 for the purpose of their administration and disposition. Sec. 7. For the purposes of the administration and disposition of alienable or disposable public lands, the President, upon recommendation by the Secretary of Agriculture and Commerce, shall from time to time declare what lands are open to disposition or concession under this Act. Sec. 8. Only those lands shall be declared open to disposition or concession which have been officially delimited and classified and, when practicable, surveyed, and which have not been reserved for public or quasi-public uses, nor appropriated by the Government, nor in any manner become private property, nor those on which a private right authorized and recognized by this Act or any other valid law may be claimed, or which, having been reserved or appropriated, have ceased to be so. x x x." Thus, before the government could alienate or dispose of lands of the public domain, the President must first officially classify these lands as alienable or disposable, and then declare them open to disposition or concession. There must be no law reserving these lands for public or quasi-public uses. The salient provisions of CA No. 141, on government reclaimed, foreshore and marshy lands of the public domain, are as follows: "Sec. 58. Any tract of land of the public domain which, being neither timber nor mineral land, is intended to be used for residential purposes or for commercial, industrial, or other productive purposes other than agricultural, and is open to disposition or concession, shall be disposed of under the provisions of this chapter and not otherwise. Sec. 59. The lands disposable under this title shall be classified as follows: (a) Lands reclaimed by the Government by dredging, filling, or other means; (b) Foreshore; (c) Marshy lands or lands covered with water bordering upon the shores or banks of navigable lakes or rivers; (d) Lands not included in any of the foregoing classes. Sec. 60. Any tract of land comprised under this title may be leased or sold, as the case may be, to any person, corporation, or association authorized to purchase or lease public lands for agricultural purposes. x x x. Sec. 61. The lands comprised in classes (a), (b), and (c) of section fifty-nine shall be disposed of to private parties by lease only and not otherwise, as soon as the President, upon recommendation by the Secretary of Agriculture, shall declare that the same are not necessary for the public service and are open to disposition under this chapter. The lands included in class (d) may be disposed of by sale or lease under the provisions of this Act." (Emphasis supplied)

Section 61 of CA No. 141 readopted, after the effectivity of the 1935 Constitution, Section 58 of Act No. 2874 prohibiting the sale of government reclaimed, foreshore and marshy disposable lands of the public domain. All these lands are intended for residential, commercial, industrial or other non-agricultural purposes. As before, Section 61 allowed only the lease of such lands to private parties. The government could sell to private parties only lands falling under Section 59 (d) of CA No. 141, or those lands for non-agricultural purposes not classified as government reclaimed, foreshore and marshy disposable lands of the public domain. Foreshore lands, however, became inalienable under the 1935 Constitution which only allowed the lease of these lands to qualified private parties. Section 58 of CA No. 141 expressly states that disposable lands of the public domain intended for residential, commercial, industrial or other productive purposes other than agricultural "shall be disposed of under the provisions of this chapter and not otherwise." Under Section 10 of CA No. 141, the term "disposition" includes lease of the land. Any disposition of government reclaimed, foreshore and marshy disposable lands for non-agricultural purposes must comply with Chapter IX, Title III of CA No. 141, 54 unless a subsequent law amended or repealed these provisions. In his concurring opinion in the landmark case of Republic Real Estate Corporation v. Court of Appeals,55Justice Reynato S. Puno summarized succinctly the law on this matter, as follows: "Foreshore lands are lands of public dominion intended for public use. So too are lands reclaimed by the government by dredging, filling, or other means. Act 1654 mandated that the control and disposition of the foreshore and lands under water remained in the national government. Said law allowed only the 'leasing' of reclaimed land. The Public Land Acts of 1919 and 1936 also declared that the foreshore and lands reclaimed by the government were to be "disposed of to private parties by lease only and not otherwise." Before leasing, however, the Governor-General, upon recommendation of the Secretary of Agriculture and Natural Resources, had first to determine that the land reclaimed was not necessary for the public service. This requisite must have been met before the land could be disposed of. But even then, the foreshore and lands under water were not to be alienated and sold to private parties. The disposition of the reclaimed land was only by lease. The land remained property of the State." (Emphasis supplied) As observed by Justice Puno in his concurring opinion, "Commonwealth Act No. 141 has remained in effect at present." The State policy prohibiting the sale to private parties of government reclaimed, foreshore and marshy alienable lands of the public domain, first implemented in 1907 was thus reaffirmed in CA No. 141 after the 1935 Constitution took effect. The prohibition on the sale of foreshore lands, however, became a constitutional edict under the 1935 Constitution. Foreshore lands became inalienable as natural resources of the State, unless reclaimed by the government and classified as agricultural lands of the public domain, in which case they would fall under the classification of government reclaimed lands. After the effectivity of the 1935 Constitution, government reclaimed and marshy disposable lands of the public domain continued to be only leased and not sold to private parties.56 These lands remained sui generis, as the only alienable or disposable lands of the public domain the government could not sell to private parties. Since then and until now, the only way the government can sell to private parties government reclaimed and marshy disposable lands of the public domain is for the legislature to pass a law authorizing such sale. CA No. 141 does not authorize the President to reclassify government reclaimed and marshy lands into other non-agricultural lands under Section 59 (d). Lands

classified under Section 59 (d) are the only alienable or disposable lands for non-agricultural purposes that the government could sell to private parties. Moreover, Section 60 of CA No. 141 expressly requires congressional authority before lands under Section 59 that the government previously transferred to government units or entities could be sold to private parties. Section 60 of CA No. 141 declares that "Sec. 60. x x x The area so leased or sold shall be such as shall, in the judgment of the Secretary of Agriculture and Natural Resources, be reasonably necessary for the purposes for which such sale or lease is requested, and shall not exceed one hundred and forty-four hectares: Provided, however, That this limitation shall not apply to grants, donations, or transfers made to a province, municipality or branch or subdivision of the Government for the purposes deemed by said entities conducive to the public interest;but the land so granted, donated, or transferred to a province, municipality or branch or subdivision of the Government shall not be alienated, encumbered, or otherwise disposed of in a manner affecting its title, except when authorized by Congress: x x x." (Emphasis supplied) The congressional authority required in Section 60 of CA No. 141 mirrors the legislative authority required in Section 56 of Act No. 2874. One reason for the congressional authority is that Section 60 of CA No. 141 exempted government units and entities from the maximum area of public lands that could be acquired from the State. These government units and entities should not just turn around and sell these lands to private parties in violation of constitutional or statutory limitations. Otherwise, the transfer of lands for non-agricultural purposes to government units and entities could be used to circumvent constitutional limitations on ownership of alienable or disposable lands of the public domain. In the same manner, such transfers could also be used to evade the statutory prohibition in CA No. 141 on the sale of government reclaimed and marshy lands of the public domain to private parties. Section 60 of CA No. 141 constitutes by operation of law a lien on these lands.57 In case of sale or lease of disposable lands of the public domain falling under Section 59 of CA No. 141, Sections 63 and 67 require a public bidding. Sections 63 and 67 of CA No. 141 provide as follows: "Sec. 63. Whenever it is decided that lands covered by this chapter are not needed for public purposes, the Director of Lands shall ask the Secretary of Agriculture and Commerce (now the Secretary of Natural Resources) for authority to dispose of the same. Upon receipt of such authority, the Director of Lands shall give notice by public advertisement in the same manner as in the case of leases or sales of agricultural public land, x x x. Sec. 67. The lease or sale shall be made by oral bidding; and adjudication shall be made to the highest bidder. x x x." (Emphasis supplied) Thus, CA No. 141 mandates the Government to put to public auction all leases or sales of alienable or disposable lands of the public domain.58 Like Act No. 1654 and Act No. 2874 before it, CA No. 141 did not repeal Section 5 of the Spanish Law of Waters of 1866. Private parties could still reclaim portions of the sea with government permission. However, thereclaimed land could become private land only if classified as alienable agricultural land of the public domain open to disposition under CA

No. 141. The 1935 Constitution prohibited the alienation of all natural resources except public agricultural lands. The Civil Code of 1950 The Civil Code of 1950 readopted substantially the definition of property of public dominion found in the Civil Code of 1889. Articles 420 and 422 of the Civil Code of 1950 state that "Art. 420. The following things are property of public dominion: (1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State, banks, shores, roadsteads, and others of similar character; (2) Those which belong to the State, without being for public use, and are intended for some public service or for the development of the national wealth. x x x. Art. 422. Property of public dominion, when no longer intended for public use or for public service, shall form part of the patrimonial property of the State." Again, the government must formally declare that the property of public dominion is no longer needed for public use or public service, before the same could be classified as patrimonial property of the State.59 In the case of government reclaimed and marshy lands of the public domain, the declaration of their being disposable, as well as the manner of their disposition, is governed by the applicable provisions of CA No. 141. Like the Civil Code of 1889, the Civil Code of 1950 included as property of public dominion those properties of the State which, without being for public use, are intended for public service or the "development of the national wealth." Thus, government reclaimed and marshy lands of the State, even if not employed for public use or public service, if developed to enhance the national wealth, are classified as property of public dominion. Dispositions under the 1973 Constitution The 1973 Constitution, which took effect on January 17, 1973, likewise adopted the Regalian doctrine. Section 8, Article XIV of the 1973 Constitution stated that "Sec. 8. All lands of the public domain, waters, minerals, coal, petroleum and other mineral oils, all forces of potential energy, fisheries, wildlife, and other natural resources of the Philippines belong to the State.With the exception of agricultural, industrial or commercial, residential, and resettlement lands of the public domain, natural resources shall not be alienated, and no license, concession, or lease for the exploration, development, exploitation, or utilization of any of the natural resources shall be granted for a period exceeding twenty-five years, renewable for not more than twenty-five years, except as to water rights for irrigation, water supply, fisheries, or industrial uses other than the development of water power, in which cases, beneficial use may be the measure and the limit of the grant." (Emphasis supplied)

The 1973 Constitution prohibited the alienation of all natural resources with the exception of "agricultural, industrial or commercial, residential, and resettlement lands of the public domain." In contrast, the 1935 Constitution barred the alienation of all natural resources except "public agricultural lands." However, the term "public agricultural lands" in the 1935 Constitution encompassed industrial, commercial, residential and resettlement lands of the public domain. 60 If the land of public domain were neither timber nor mineral land, it would fall under the classification of agricultural land of the public domain. Both the 1935 and 1973 Constitutions, therefore, prohibited the alienation of all natural resources except agricultural lands of the public domain. The 1973 Constitution, however, limited the alienation of lands of the public domain to individuals who were citizens of the Philippines. Private corporations, even if wholly owned by Philippine citizens, were no longer allowed to acquire alienable lands of the public domain unlike in the 1935 Constitution. Section 11, Article XIV of the 1973 Constitution declared that "Sec. 11. The Batasang Pambansa, taking into account conservation, ecological, and development requirements of the natural resources, shall determine by law the size of land of the public domain which may be developed, held or acquired by, or leased to, any qualified individual, corporation, or association, and the conditions therefor. No private corporation or association may hold alienable lands of the public domain except by lease not to exceed one thousand hectares in area nor may any citizen hold such lands by lease in excess of five hundred hectares or acquire by purchase, homestead or grant, in excess of twenty-four hectares. No private corporation or association may hold by lease, concession, license or permit, timber or forest lands and other timber or forest resources in excess of one hundred thousand hectares. However, such area may be increased by the Batasang Pambansa upon recommendation of the National Economic and Development Authority." (Emphasis supplied) Thus, under the 1973 Constitution, private corporations could hold alienable lands of the public domain only through lease. Only individuals could now acquire alienable lands of the public domain, and private corporations became absolutely barred from acquiring any kind of alienable land of the public domain. The constitutional ban extended to all kinds of alienable lands of the public domain, while the statutory ban under CA No. 141 applied only to government reclaimed, foreshore and marshy alienable lands of the public domain. PD No. 1084 Creating the Public Estates Authority On February 4, 1977, then President Ferdinand Marcos issued Presidential Decree No. 1084 creating PEA, a wholly government owned and controlled corporation with a special charter. Sections 4 and 8 of PD No. 1084, vests PEA with the following purposes and powers: "Sec. 4. Purpose. The Authority is hereby created for the following purposes: (a) To reclaim land, including foreshore and submerged areas, by dredging, filling or other means, or to acquire reclaimed land; (b) To develop, improve, acquire, administer, deal in, subdivide, dispose, lease and sell any and all kinds of lands, buildings, estates and other forms of real property, owned, managed, controlled and/or operated by the government; (c) To provide for, operate or administer such service as may be necessary for the efficient, economical and beneficial utilization of the above properties.

Sec. 5. Powers and functions of the Authority. The Authority shall, in carrying out the purposes for which it is created, have the following powers and functions: (a)To prescribe its by-laws. xxx (i) To hold lands of the public domain in excess of the area permitted to private corporations by statute. (j) To reclaim lands and to construct work across, or otherwise, any stream, watercourse, canal, ditch, flume x x x. xxx (o) To perform such acts and exercise such functions as may be necessary for the attainment of the purposes and objectives herein specified." (Emphasis supplied) PD No. 1084 authorizes PEA to reclaim both foreshore and submerged areas of the public domain. Foreshore areas are those covered and uncovered by the ebb and flow of the tide.61 Submerged areas are those permanently under water regardless of the ebb and flow of the tide.62 Foreshore and submerged areas indisputably belong to the public domain 63 and are inalienable unless reclaimed, classified as alienable lands open to disposition, and further declared no longer needed for public service. The ban in the 1973 Constitution on private corporations from acquiring alienable lands of the public domain did not apply to PEA since it was then, and until today, a fully owned government corporation. The constitutional ban applied then, as it still applies now, only to "private corporations and associations." PD No. 1084 expressly empowers PEA "to hold lands of the public domain" even "in excess of the area permitted to private corporations by statute." Thus, PEA can hold title to private lands, as well as title to lands of the public domain. In order for PEA to sell its reclaimed foreshore and submerged alienable lands of the public domain, there must be legislative authority empowering PEA to sell these lands. This legislative authority is necessary in view of Section 60 of CA No.141, which states "Sec. 60. x x x; but the land so granted, donated or transferred to a province, municipality, or branch or subdivision of the Government shall not be alienated, encumbered or otherwise disposed of in a manner affecting its title, except when authorized by Congress; x x x." (Emphasis supplied) Without such legislative authority, PEA could not sell but only lease its reclaimed foreshore and submerged alienable lands of the public domain. Nevertheless, any legislative authority granted to PEA to sell its reclaimed alienable lands of the public domain would be subject to the constitutional ban on private corporations from acquiring alienable lands of the public domain. Hence, such legislative authority could only benefit private individuals. Dispositions under the 1987 Constitution The 1987 Constitution, like the 1935 and 1973 Constitutions before it, has adopted the Regalian doctrine. The 1987 Constitution declares that all natural resources are "owned by the State,"

and except for alienable agricultural lands of the public domain, natural resources cannot be alienated. Sections 2 and 3, Article XII of the 1987 Constitution state that "Section 2. All lands of the public domain, waters, minerals, coal, petroleum and other mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are owned by the State. With the exception of agricultural lands, all other natural resources shall not be alienated. The exploration, development, and utilization of natural resources shall be under the full control and supervision of the State. x x x. Section 3. Lands of the public domain are classified into agricultural, forest or timber, mineral lands, and national parks. Agricultural lands of the public domain may be further classified by law according to the uses which they may be devoted. Alienable lands of the public domain shall be limited to agricultural lands. Private corporations or associations may not hold such alienable lands of the public domain except by lease, for a period not exceeding twenty-five years, renewable for not more than twenty-five years, and not to exceed one thousand hectares in area. Citizens of the Philippines may lease not more than five hundred hectares, or acquire not more than twelve hectares thereof by purchase, homestead, or grant. Taking into account the requirements of conservation, ecology, and development, and subject to the requirements of agrarian reform, the Congress shall determine, by law, the size of lands of the public domain which may be acquired, developed, held, or leased and the conditions therefor." (Emphasis supplied) The 1987 Constitution continues the State policy in the 1973 Constitution banning private corporations fromacquiring any kind of alienable land of the public domain. Like the 1973 Constitution, the 1987 Constitution allows private corporations to hold alienable lands of the public domain only through lease. As in the 1935 and 1973 Constitutions, the general law governing the lease to private corporations of reclaimed, foreshore and marshy alienable lands of the public domain is still CA No. 141. The Rationale behind the Constitutional Ban The rationale behind the constitutional ban on corporations from acquiring, except through lease, alienable lands of the public domain is not well understood. During the deliberations of the 1986 Constitutional Commission, the commissioners probed the rationale behind this ban, thus: "FR. BERNAS: Mr. Vice-President, my questions have reference to page 3, line 5 which says: `No private corporation or association may hold alienable lands of the public domain except by lease, not to exceed one thousand hectares in area.' If we recall, this provision did not exist under the 1935 Constitution, but this was introduced in the 1973 Constitution. In effect, it prohibits private corporations from acquiring alienable public lands. But it has not been very clear in jurisprudence what the reason for this is. In some of the cases decided in 1982 and 1983, it was indicated that the purpose of this is to prevent large landholdings. Is that the intent of this provision? MR. VILLEGAS: I think that is the spirit of the provision.

FR. BERNAS: In existing decisions involving the Iglesia ni Cristo, there were instances where the Iglesia ni Cristo was not allowed to acquire a mere 313-square meter land where a chapel stood because the Supreme Court said it would be in violation of this." (Emphasis supplied) In Ayog v. Cusi,64 the Court explained the rationale behind this constitutional ban in this way: "Indeed, one purpose of the constitutional prohibition against purchases of public agricultural lands by private corporations is to equitably diffuse land ownership or to encourage 'owner-cultivatorship and the economic family-size farm' and to prevent a recurrence of cases like the instant case. Huge landholdings by corporations or private persons had spawned social unrest." However, if the constitutional intent is to prevent huge landholdings, the Constitution could have simply limited the size of alienable lands of the public domain that corporations could acquire. The Constitution could have followed the limitations on individuals, who could acquire not more than 24 hectares of alienable lands of the public domain under the 1973 Constitution, and not more than 12 hectares under the 1987 Constitution. If the constitutional intent is to encourage economic family-size farms, placing the land in the name of a corporation would be more effective in preventing the break-up of farmlands. If the farmland is registered in the name of a corporation, upon the death of the owner, his heirs would inherit shares in the corporation instead of subdivided parcels of the farmland. This would prevent the continuing break-up of farmlands into smaller and smaller plots from one generation to the next. In actual practice, the constitutional ban strengthens the constitutional limitation on individuals from acquiring more than the allowed area of alienable lands of the public domain. Without the constitutional ban, individuals who already acquired the maximum area of alienable lands of the public domain could easily set up corporations to acquire more alienable public lands. An individual could own as many corporations as his means would allow him. An individual could even hide his ownership of a corporation by putting his nominees as stockholders of the corporation. The corporation is a convenient vehicle to circumvent the constitutional limitation on acquisition by individuals of alienable lands of the public domain. The constitutional intent, under the 1973 and 1987 Constitutions, is to transfer ownership of only a limited area of alienable land of the public domain to a qualified individual. This constitutional intent is safeguarded by the provision prohibiting corporations from acquiring alienable lands of the public domain, since the vehicle to circumvent the constitutional intent is removed. The available alienable public lands are gradually decreasing in the face of an ever-growing population. The most effective way to insure faithful adherence to this constitutional intent is to grant or sell alienable lands of the public domain only to individuals. This, it would seem, is the practical benefit arising from the constitutional ban. The Amended Joint Venture Agreement The subject matter of the Amended JVA, as stated in its second Whereas clause, consists of three properties, namely: 1. "[T]hree partially reclaimed and substantially eroded islands along Emilio Aguinaldo Boulevard in Paranaque and Las Pinas, Metro Manila, with a combined titled area of 1,578,441 square meters;"

2. "[A]nother area of 2,421,559 square meters contiguous to the three islands;" and 3. "[A]t AMARI's option as approved by PEA, an additional 350 hectares more or less to regularize the configuration of the reclaimed area."65 PEA confirms that the Amended JVA involves "the development of the Freedom Islands and further reclamation of about 250 hectares x x x," plus an option "granted to AMARI to subsequently reclaim another 350 hectares x x x."66 In short, the Amended JVA covers a reclamation area of 750 hectares. Only 157.84 hectares of the 750-hectare reclamation project have been reclaimed, and the rest of the 592.15 hectares are still submerged areas forming part of Manila Bay. Under the Amended JVA, AMARI will reimburse PEA the sum of P1,894,129,200.00 for PEA's "actual cost" in partially reclaiming the Freedom Islands. AMARI will also complete, at its own expense, the reclamation of the Freedom Islands. AMARI will further shoulder all the reclamation costs of all the other areas, totaling 592.15 hectares, still to be reclaimed. AMARI and PEA will share, in the proportion of 70 percent and 30 percent, respectively, the total net usable area which is defined in the Amended JVA as the total reclaimed area less 30 percent earmarked for common areas. Title to AMARI's share in the net usable area, totaling 367.5 hectares, will be issued in the name of AMARI. Section 5.2 (c) of the Amended JVA provides that "x x x, PEA shall have the duty to execute without delay the necessary deed of transfer or conveyance of the title pertaining to AMARI's Land share based on the Land Allocation Plan. PEA, when requested in writing by AMARI, shall then cause the issuance and delivery of the proper certificates of title covering AMARI's Land Share in the name of AMARI, x x x; provided, that if more than seventy percent (70%) of the titled area at any given time pertains to AMARI, PEA shall deliver to AMARI only seventy percent (70%) of the titles pertaining to AMARI, until such time when a corresponding proportionate area of additional land pertaining to PEA has been titled." (Emphasis supplied) Indisputably, under the Amended JVA AMARI will acquire and own a maximum of 367.5 hectares of reclaimed land which will be titled in its name. To implement the Amended JVA, PEA delegated to the unincorporated PEA-AMARI joint venture PEA's statutory authority, rights and privileges to reclaim foreshore and submerged areas in Manila Bay. Section 3.2.a of the Amended JVA states that "PEA hereby contributes to the joint venture its rights and privileges to perform Rawland Reclamation and Horizontal Development as well as own the Reclamation Area, thereby granting the Joint Venture the full and exclusive right, authority and privilege to undertake the Project in accordance with the Master Development Plan." The Amended JVA is the product of a renegotiation of the original JVA dated April 25, 1995 and its supplemental agreement dated August 9, 1995. The Threshold Issue The threshold issue is whether AMARI, a private corporation, can acquire and own under the Amended JVA 367.5 hectares of reclaimed foreshore and submerged areas in Manila Bay in view of Sections 2 and 3, Article XII of the 1987 Constitution which state that:

"Section 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are owned by the State. With the exception of agricultural lands, all other natural resources shall not be alienated. x x x. xxx Section 3. x x x Alienable lands of the public domain shall be limited to agricultural lands. Private corporations or associations may not hold such alienable lands of the public domain except by lease, x x x."(Emphasis supplied) Classification of Reclaimed Foreshore and Submerged Areas PEA readily concedes that lands reclaimed from foreshore or submerged areas of Manila Bay are alienable or disposable lands of the public domain. In its Memorandum, 67 PEA admits that "Under the Public Land Act (CA 141, as amended), reclaimed lands are classified as alienable and disposable lands of the public domain: 'Sec. 59. The lands disposable under this title shall be classified as follows: (a) Lands reclaimed by the government by dredging, filling, or other means; x x x.'" (Emphasis supplied) Likewise, the Legal Task Force68 constituted under Presidential Administrative Order No. 365 admitted in its Report and Recommendation to then President Fidel V. Ramos, "[R]eclaimed lands are classified as alienable and disposable lands of the public domain."69 The Legal Task Force concluded that "D. Conclusion Reclaimed lands are lands of the public domain. However, by statutory authority, the rights of ownership and disposition over reclaimed lands have been transferred to PEA, by virtue of which PEA, as owner, may validly convey the same to any qualified person without violating the Constitution or any statute. The constitutional provision prohibiting private corporations from holding public land, except by lease (Sec. 3, Art. XVII,70 1987 Constitution), does not apply to reclaimed lands whose ownership has passed on to PEA by statutory grant." Under Section 2, Article XII of the 1987 Constitution, the foreshore and submerged areas of Manila Bay are part of the "lands of the public domain, waters x x x and other natural resources" and consequently "owned by the State." As such, foreshore and submerged areas "shall not be alienated," unless they are classified as "agricultural lands" of the public domain. The mere reclamation of these areas by PEA does not convert these inalienable natural resources of the State into alienable or disposable lands of the public domain. There must be a law or presidential proclamation officially classifying these reclaimed lands as alienable or disposable and open to disposition or concession. Moreover, these reclaimed lands cannot be classified as alienable or disposable if the law has reserved them for some public or quasi-public use.71

Section 8 of CA No. 141 provides that "only those lands shall be declared open to disposition or concession which have been officially delimited and classified."72 The President has the authority to classify inalienable lands of the public domain into alienable or disposable lands of the public domain, pursuant to Section 6 of CA No. 141. In Laurel vs. Garcia, 73 the Executive Department attempted to sell the Roppongi property in Tokyo, Japan, which was acquired by the Philippine Government for use as the Chancery of the Philippine Embassy. Although the Chancery had transferred to another location thirteen years earlier, the Court still ruled that, under Article 42274 of the Civil Code, a property of public dominion retains such character until formally declared otherwise. The Court ruled that "The fact that the Roppongi site has not been used for a long time for actual Embassy service does not automatically convert it to patrimonial property. Any such conversion happens only if the property is withdrawn from public use (Cebu Oxygen and Acetylene Co. v. Bercilles, 66 SCRA 481 [1975]. A property continues to be part of the public domain, not available for private appropriation or ownership 'until there is a formal declaration on the part of the government to withdraw it from being such' (Ignacio v. Director of Lands, 108 Phil. 335 [1960]." (Emphasis supplied) PD No. 1085, issued on February 4, 1977, authorized the issuance of special land patents for lands reclaimed by PEA from the foreshore or submerged areas of Manila Bay. On January 19, 1988 then President Corazon C. Aquino issued Special Patent No. 3517 in the name of PEA for the 157.84 hectares comprising the partially reclaimed Freedom Islands. Subsequently, on April 9, 1999 the Register of Deeds of the Municipality of Paranaque issued TCT Nos. 7309, 7311 and 7312 in the name of PEA pursuant to Section 103 of PD No. 1529 authorizing the issuance of certificates of title corresponding to land patents. To this day, these certificates of title are still in the name of PEA. PD No. 1085, coupled with President Aquino's actual issuance of a special patent covering the Freedom Islands, is equivalent to an official proclamation classifying the Freedom Islands as alienable or disposable lands of the public domain. PD No. 1085 and President Aquino's issuance of a land patent also constitute a declaration that the Freedom Islands are no longer needed for public service. The Freedom Islands are thus alienable or disposable lands of the public domain, open to disposition or concession to qualified parties. At the time then President Aquino issued Special Patent No. 3517, PEA had already reclaimed the Freedom Islands although subsequently there were partial erosions on some areas. The government had also completed the necessary surveys on these islands. Thus, the Freedom Islands were no longer part of Manila Bay but part of the land mass. Section 3, Article XII of the 1987 Constitution classifies lands of the public domain into "agricultural, forest or timber, mineral lands, and national parks." Being neither timber, mineral, nor national park lands, the reclaimed Freedom Islands necessarily fall under the classification of agricultural lands of the public domain. Under the 1987 Constitution, agricultural lands of the public domain are the only natural resources that the State may alienate to qualified private parties. All other natural resources, such as the seas or bays, are "waters x x x owned by the State" forming part of the public domain, and are inalienable pursuant to Section 2, Article XII of the 1987 Constitution. AMARI claims that the Freedom Islands are private lands because CDCP, then a private corporation, reclaimed the islands under a contract dated November 20, 1973 with the Commissioner of Public Highways. AMARI, citing Article 5 of the Spanish Law of Waters of 1866, argues that "if the ownership of reclaimed lands may be given to the party constructing the works, then it cannot be said that reclaimed lands are lands of the public domain which the State may not alienate."75 Article 5 of the Spanish Law of Waters reads as follows: "Article 5. Lands reclaimed from the sea in consequence of works constructed by the State, or by the provinces, pueblos or private persons, with proper permission, shall

become the property of the party constructing such works, unless otherwise provided by the terms of the grant of authority." (Emphasis supplied) Under Article 5 of the Spanish Law of Waters of 1866, private parties could reclaim from the sea only with "proper permission" from the State. Private parties could own the reclaimed land only if not "otherwise provided by the terms of the grant of authority." This clearly meant that no one could reclaim from the sea without permission from the State because the sea is property of public dominion. It also meant that the State could grant or withhold ownership of the reclaimed land because any reclaimed land, like the sea from which it emerged, belonged to the State. Thus, a private person reclaiming from the sea without permission from the State could not acquire ownership of the reclaimed land which would remain property of public dominion like the sea it replaced.76 Article 5 of the Spanish Law of Waters of 1866 adopted the time-honored principle of land ownership that "all lands that were not acquired from the government, either by purchase or by grant, belong to the public domain."77 Article 5 of the Spanish Law of Waters must be read together with laws subsequently enacted on the disposition of public lands. In particular, CA No. 141 requires that lands of the public domain must first be classified as alienable or disposable before the government can alienate them. These lands must not be reserved for public or quasi-public purposes.78 Moreover, the contract between CDCP and the government was executed after the effectivity of the 1973 Constitution which barred private corporations from acquiring any kind of alienable land of the public domain. This contract could not have converted the Freedom Islands into private lands of a private corporation. Presidential Decree No. 3-A, issued on January 11, 1973, revoked all laws authorizing the reclamation of areas under water and revested solely in the National Government the power to reclaim lands. Section 1 of PD No. 3-A declared that "The provisions of any law to the contrary notwithstanding, the reclamation of areas under water, whether foreshore or inland, shall be limited to the National Government or any person authorized by it under a proper contract. (Emphasis supplied) x x x." PD No. 3-A repealed Section 5 of the Spanish Law of Waters of 1866 because reclamation of areas under water could now be undertaken only by the National Government or by a person contracted by the National Government. Private parties may reclaim from the sea only under a contract with the National Government, and no longer by grant or permission as provided in Section 5 of the Spanish Law of Waters of 1866. Executive Order No. 525, issued on February 14, 1979, designated PEA as the National Government's implementing arm to undertake "all reclamation projects of the government," which "shall be undertaken by the PEA or through a proper contract executed by it with any person or entity." Under such contract, a private party receives compensation for reclamation services rendered to PEA. Payment to the contractor may be in cash, or in kind consisting of portions of the reclaimed land, subject to the constitutional ban on private corporations from acquiring alienable lands of the public domain. The reclaimed land can be used as payment in kind only if the reclaimed land is first classified as alienable or disposable land open to disposition, and then declared no longer needed for public service. The Amended JVA covers not only the Freedom Islands, but also an additional 592.15 hectares which are still submerged and forming part of Manila Bay. There is no legislative or Presidential act classifying these submerged areas as alienable or disposable lands of

the public domain open to disposition. These submerged areas are not covered by any patent or certificate of title. There can be no dispute that these submerged areas form part of the public domain, and in their present state are inalienable and outside the commerce of man. Until reclaimed from the sea, these submerged areas are, under the Constitution, "waters x x x owned by the State," forming part of the public domain and consequently inalienable. Only when actually reclaimed from the sea can these submerged areas be classified as public agricultural lands, which under the Constitution are the only natural resources that the State may alienate. Once reclaimed and transformed into public agricultural lands, the government may then officially classify these lands as alienable or disposable lands open to disposition. Thereafter, the government may declare these lands no longer needed for public service. Only then can these reclaimed lands be considered alienable or disposable lands of the public domain and within the commerce of man. The classification of PEA's reclaimed foreshore and submerged lands into alienable or disposable lands open to disposition is necessary because PEA is tasked under its charter to undertake public services that require the use of lands of the public domain. Under Section 5 of PD No. 1084, the functions of PEA include the following: "[T]o own or operate railroads, tramways and other kinds of land transportation, x x x; [T]o construct, maintain and operate such systems of sanitary sewers as may be necessary; [T]o construct, maintain and operate such storm drains as may be necessary." PEA is empowered to issue "rules and regulations as may be necessary for the proper use by private parties of any or all of the highways, roads, utilities, buildings and/or any of its properties and to impose or collect fees or tolls for their use." Thus, part of the reclaimed foreshore and submerged lands held by the PEA would actually be needed for public use or service since many of the functions imposed on PEA by its charter constitute essential public services. Moreover, Section 1 of Executive Order No. 525 provides that PEA "shall be primarily responsible for integrating, directing, and coordinating all reclamation projects for and on behalf of the National Government." The same section also states that "[A]ll reclamation projects shall be approved by the President upon recommendation of the PEA, and shall be undertaken by the PEA or through a proper contract executed by it with any person or entity; x x x." Thus, under EO No. 525, in relation to PD No. 3-A and PD No.1084, PEA became the primary implementing agency of the National Government to reclaim foreshore and submerged lands of the public domain. EO No. 525 recognized PEA as the government entity "to undertake the reclamation of lands and ensure their maximum utilization in promoting public welfare and interests."79 Since large portions of these reclaimed lands would obviously be needed for public service, there must be a formal declaration segregating reclaimed lands no longer needed for public service from those still needed for public service.1wphi1.nt Section 3 of EO No. 525, by declaring that all lands reclaimed by PEA "shall belong to or be owned by the PEA," could not automatically operate to classify inalienable lands into alienable or disposable lands of the public domain. Otherwise, reclaimed foreshore and submerged lands of the public domain would automatically become alienable once reclaimed by PEA, whether or not classified as alienable or disposable. The Revised Administrative Code of 1987, a later law than either PD No. 1084 or EO No. 525, vests in the Department of Environment and Natural Resources ("DENR" for brevity) the following powers and functions: "Sec. 4. Powers and Functions. The Department shall: (1) x x x xxx

(4) Exercise supervision and control over forest lands, alienable and disposable public lands, mineral resources and, in the process of exercising such control, impose appropriate taxes, fees, charges, rentals and any such form of levy and collect such revenues for the exploration, development, utilization or gathering of such resources; xxx (14) Promulgate rules, regulations and guidelines on the issuance of licenses, permits, concessions, lease agreements and such other privileges concerning the development, exploration and utilization of the country's marine, freshwater, and brackish water and over all aquatic resources of the country and shall continue to oversee, supervise and police our natural resources; cancel or cause to cancel such privileges upon failure, non-compliance or violations of any regulation, order, and for all other causes which are in furtherance of the conservation of natural resources and supportive of the national interest; (15) Exercise exclusive jurisdiction on the management and disposition of all lands of the public domain and serve as the sole agency responsible for classification, sub-classification, surveying and titling of lands in consultation with appropriate agencies."80 (Emphasis supplied) As manager, conservator and overseer of the natural resources of the State, DENR exercises "supervision and control over alienable and disposable public lands." DENR also exercises "exclusive jurisdiction on the management and disposition of all lands of the public domain." Thus, DENR decides whether areas under water, like foreshore or submerged areas of Manila Bay, should be reclaimed or not. This means that PEA needs authorization from DENR before PEA can undertake reclamation projects in Manila Bay, or in any part of the country. DENR also exercises exclusive jurisdiction over the disposition of all lands of the public domain. Hence, DENR decides whether reclaimed lands of PEA should be classified as alienable under Sections 681 and 782 of CA No. 141. Once DENR decides that the reclaimed lands should be so classified, it then recommends to the President the issuance of a proclamation classifying the lands as alienable or disposable lands of the public domain open to disposition. We note that then DENR Secretary Fulgencio S. Factoran, Jr. countersigned Special Patent No. 3517 in compliance with the Revised Administrative Code and Sections 6 and 7 of CA No. 141. In short, DENR is vested with the power to authorize the reclamation of areas under water, while PEA is vested with the power to undertake the physical reclamation of areas under water, whether directly or through private contractors. DENR is also empowered to classify lands of the public domain into alienable or disposable lands subject to the approval of the President. On the other hand, PEA is tasked to develop, sell or lease the reclaimed alienable lands of the public domain. Clearly, the mere physical act of reclamation by PEA of foreshore or submerged areas does not make the reclaimed lands alienable or disposable lands of the public domain, much less patrimonial lands of PEA. Likewise, the mere transfer by the National Government of lands of the public domain to PEA does not make the lands alienable or disposable lands of the public domain, much less patrimonial lands of PEA. Absent two official acts a classification that these lands are alienable or disposable and open to disposition and a declaration that these lands are not needed for public service, lands reclaimed by PEA remain inalienable lands of the public domain. Only such an official classification and formal declaration can convert reclaimed lands into alienable or disposable

lands of the public domain, open to disposition under the Constitution, Title I and Title III83 of CA No. 141 and other applicable laws.84 PEA's Authority to Sell Reclaimed Lands PEA, like the Legal Task Force, argues that as alienable or disposable lands of the public domain, the reclaimed lands shall be disposed of in accordance with CA No. 141, the Public Land Act. PEA, citing Section 60 of CA No. 141, admits that reclaimed lands transferred to a branch or subdivision of the government "shall not be alienated, encumbered, or otherwise disposed of in a manner affecting its title, except when authorized by Congress: x x x."85 (Emphasis by PEA) In Laurel vs. Garcia, the Court cited Section 48 of the Revised Administrative Code of 1987, which states that "Sec. 48. Official Authorized to Convey Real Property. Whenever real property of the Government is authorized by law to be conveyed, the deed of conveyance shall be executed in behalf of the government by the following: x x x." Thus, the Court concluded that a law is needed to convey any real property belonging to the Government. The Court declared that "It is not for the President to convey real property of the government on his or her own sole will. Any such conveyance must be authorized and approved by a law enacted by the Congress. It requires executive and legislative concurrence." (Emphasis supplied) PEA contends that PD No. 1085 and EO No. 525 constitute the legislative authority allowing PEA to sell its reclaimed lands. PD No. 1085, issued on February 4, 1977, provides that "The land reclaimed in the foreshore and offshore area of Manila Bay pursuant to the contract for the reclamation and construction of the Manila-Cavite Coastal Road Project between the Republic of the Philippines and the Construction and Development Corporation of the Philippines dated November 20, 1973 and/or any other contract or reclamation covering the same area is hereby transferred, conveyed and assigned to the ownership and administration of the Public Estates Authority established pursuant to PD No. 1084; Provided, however, That the rights and interests of the Construction and Development Corporation of the Philippines pursuant to the aforesaid contract shall be recognized and respected. Henceforth, the Public Estates Authority shall exercise the rights and assume the obligations of the Republic of the Philippines (Department of Public Highways) arising from, or incident to, the aforesaid contract between the Republic of the Philippines and the Construction and Development Corporation of the Philippines. In consideration of the foregoing transfer and assignment, the Public Estates Authority shall issue in favor of the Republic of the Philippines the corresponding shares of stock in said entity with an issued value of said shares of stock (which) shall be deemed fully paid and non-assessable. The Secretary of Public Highways and the General Manager of the Public Estates Authority shall execute such contracts or agreements, including appropriate
86

agreements with the Construction and Development Corporation of the Philippines, as may be necessary to implement the above. Special land patent/patents shall be issued by the Secretary of Natural Resources in favor of the Public Estates Authority without prejudice to the subsequent transfer to the contractor or his assignees of such portion or portions of the land reclaimed or to be reclaimed as provided for in the abovementioned contract. On the basis of such patents, the Land Registration Commission shall issue the corresponding certificate of title." (Emphasis supplied) On the other hand, Section 3 of EO No. 525, issued on February 14, 1979, provides that "Sec. 3. All lands reclaimed by PEA shall belong to or be owned by the PEA which shall be responsible for its administration, development, utilization or disposition in accordance with the provisions of Presidential Decree No. 1084. Any and all income that the PEA may derive from the sale, lease or use of reclaimed lands shall be used in accordance with the provisions of Presidential Decree No. 1084." There is no express authority under either PD No. 1085 or EO No. 525 for PEA to sell its reclaimed lands. PD No. 1085 merely transferred "ownership and administration" of lands reclaimed from Manila Bay to PEA, while EO No. 525 declared that lands reclaimed by PEA "shall belong to or be owned by PEA." EO No. 525 expressly states that PEA should dispose of its reclaimed lands "in accordance with the provisions of Presidential Decree No. 1084," the charter of PEA. PEA's charter, however, expressly tasks PEA "to develop, improve, acquire, administer, deal in, subdivide, dispose, lease and sell any and all kinds of lands x x x owned, managed, controlled and/or operated by the government."87 (Emphasis supplied) There is, therefore, legislative authority granted to PEA to sell its lands, whether patrimonial or alienable lands of the public domain. PEA may sell to private parties itspatrimonial properties in accordance with the PEA charter free from constitutional limitations. The constitutional ban on private corporations from acquiring alienable lands of the public domain does not apply to the sale of PEA's patrimonial lands. PEA may also sell its alienable or disposable lands of the public domain to private individuals since, with the legislative authority, there is no longer any statutory prohibition against such sales and the constitutional ban does not apply to individuals. PEA, however, cannot sell any of its alienable or disposable lands of the public domain to private corporations since Section 3, Article XII of the 1987 Constitution expressly prohibits such sales. The legislative authority benefits only individuals. Private corporations remain barred from acquiring any kind of alienable land of the public domain, including government reclaimed lands. The provision in PD No. 1085 stating that portions of the reclaimed lands could be transferred by PEA to the "contractor or his assignees" (Emphasis supplied) would not apply to private corporations but only to individuals because of the constitutional ban. Otherwise, the provisions of PD No. 1085 would violate both the 1973 and 1987 Constitutions. The requirement of public auction in the sale of reclaimed lands Assuming the reclaimed lands of PEA are classified as alienable or disposable lands open to disposition, and further declared no longer needed for public service, PEA would have to conduct a public bidding in selling or leasing these lands. PEA must observe the provisions of Sections 63 and 67 of CA No. 141 requiring public auction, in the absence of a law exempting

PEA from holding a public auction.88 Special Patent No. 3517 expressly states that the patent is issued by authority of the Constitution and PD No. 1084, "supplemented by Commonwealth Act No. 141, as amended." This is an acknowledgment that the provisions of CA No. 141 apply to the disposition of reclaimed alienable lands of the public domain unless otherwise provided by law. Executive Order No. 654,89 which authorizes PEA "to determine the kind and manner of payment for the transfer" of its assets and properties, does not exempt PEA from the requirement of public auction. EO No. 654 merely authorizes PEA to decide the mode of payment, whether in kind and in installment, but does not authorize PEA to dispense with public auction. Moreover, under Section 79 of PD No. 1445, otherwise known as the Government Auditing Code, the government is required to sell valuable government property through public bidding. Section 79 of PD No. 1445 mandates that "Section 79. When government property has become unserviceable for any cause, or is no longer needed, it shall, upon application of the officer accountable therefor, be inspected by the head of the agency or his duly authorized representative in the presence of the auditor concerned and, if found to be valueless or unsaleable, it may be destroyed in their presence. If found to be valuable, it may be sold at public auction to the highest bidder under the supervision of the proper committee on award or similar body in the presence of the auditor concerned or other authorized representative of the Commission, after advertising by printed notice in the Official Gazette, or for not less than three consecutive days in any newspaper of general circulation, or where the value of the property does not warrant the expense of publication, by notices posted for a like period in at least three public places in the locality where the property is to be sold. In the event that the public auction fails, the property may be sold at a private sale at such price as may be fixed by the same committee or body concerned and approved by the Commission." It is only when the public auction fails that a negotiated sale is allowed, in which case the Commission on Audit must approve the selling price.90 The Commission on Audit implements Section 79 of the Government Auditing Code through Circular No. 89-29691 dated January 27, 1989. This circular emphasizes that government assets must be disposed of only through public auction, and a negotiated sale can be resorted to only in case of "failure of public auction." At the public auction sale, only Philippine citizens are qualified to bid for PEA's reclaimed foreshore and submerged alienable lands of the public domain. Private corporations are barred from bidding at the auction sale of any kind of alienable land of the public domain. PEA originally scheduled a public bidding for the Freedom Islands on December 10, 1991. PEA imposed a condition that the winning bidder should reclaim another 250 hectares of submerged areas to regularize the shape of the Freedom Islands, under a 60-40 sharing of the additional reclaimed areas in favor of the winning bidder.92 No one, however, submitted a bid. On December 23, 1994, the Government Corporate Counsel advised PEA it could sell the Freedom Islands through negotiation, without need of another public bidding, because of the failure of the public bidding on December 10, 1991.93 However, the original JVA dated April 25, 1995 covered not only the Freedom Islands and the additional 250 hectares still to be reclaimed, it also granted an option to AMARI to reclaim another 350 hectares. The original JVA, a negotiated contract, enlarged the reclamation area to 750 hectares.94 The failure of public bidding on December 10, 1991, involving only 407.84 hectares,95 is not a valid justification for a negotiated sale of 750 hectares, almost double the area publicly auctioned. Besides, the failure of public bidding happened on December 10, 1991, more than three years before the signing of the original JVA on April 25, 1995. The economic situation in the country had greatly improved during the intervening period.

Reclamation under the BOT Law and the Local Government Code The constitutional prohibition in Section 3, Article XII of the 1987 Constitution is absolute and clear: "Private corporations or associations may not hold such alienable lands of the public domain except by lease, x x x." Even Republic Act No. 6957 ("BOT Law," for brevity), cited by PEA and AMARI as legislative authority to sell reclaimed lands to private parties, recognizes the constitutional ban. Section 6 of RA No. 6957 states "Sec. 6. Repayment Scheme. - For the financing, construction, operation and maintenance of any infrastructure projects undertaken through the build-operate-andtransfer arrangement or any of its variations pursuant to the provisions of this Act, the project proponent x x x may likewise be repaid in the form of a share in the revenue of the project or other non-monetary payments, such as, but not limited to, the grant of a portion or percentage of the reclaimed land, subject to the constitutional requirements with respect to the ownership of the land: x x x." (Emphasis supplied) A private corporation, even one that undertakes the physical reclamation of a government BOT project, cannot acquire reclaimed alienable lands of the public domain in view of the constitutional ban. Section 302 of the Local Government Code, also mentioned by PEA and AMARI, authorizes local governments in land reclamation projects to pay the contractor or developer in kind consisting of a percentage of the reclaimed land, to wit: "Section 302. Financing, Construction, Maintenance, Operation, and Management of Infrastructure Projects by the Private Sector. x x x xxx In case of land reclamation or construction of industrial estates, the repayment plan may consist of the grant of a portion or percentage of the reclaimed land or the industrial estate constructed." Although Section 302 of the Local Government Code does not contain a proviso similar to that of the BOT Law, the constitutional restrictions on land ownership automatically apply even though not expressly mentioned in the Local Government Code. Thus, under either the BOT Law or the Local Government Code, the contractor or developer, if a corporate entity, can only be paid with leaseholds on portions of the reclaimed land. If the contractor or developer is an individual, portions of the reclaimed land, not exceeding 12 hectares96 of non-agricultural lands, may be conveyed to him in ownership in view of the legislative authority allowing such conveyance. This is the only way these provisions of the BOT Law and the Local Government Code can avoid a direct collision with Section 3, Article XII of the 1987 Constitution. Registration of lands of the public domain Finally, PEA theorizes that the "act of conveying the ownership of the reclaimed lands to public respondent PEA transformed such lands of the public domain to private lands." This theory is echoed by AMARI which maintains that the "issuance of the special patent leading to the eventual issuance of title takes the subject land away from the land of public domain and

converts the property into patrimonial or private property." In short, PEA and AMARI contend that with the issuance of Special Patent No. 3517 and the corresponding certificates of titles, the 157.84 hectares comprising the Freedom Islands have become private lands of PEA. In support of their theory, PEA and AMARI cite the following rulings of the Court: 1. Sumail v. Judge of CFI of Cotabato,97 where the Court held "Once the patent was granted and the corresponding certificate of title was issued, the land ceased to be part of the public domain and became private property over which the Director of Lands has neither control nor jurisdiction." 2. Lee Hong Hok v. David,98 where the Court declared "After the registration and issuance of the certificate and duplicate certificate of title based on a public land patent, the land covered thereby automatically comes under the operation of Republic Act 496 subject to all the safeguards provided therein."3. Heirs of Gregorio Tengco v. Heirs of Jose Aliwalas,99where the Court ruled "While the Director of Lands has the power to review homestead patents, he may do so only so long as the land remains part of the public domain and continues to be under his exclusive control; but once the patent is registered and a certificate of title is issued, the land ceases to be part of the public domain and becomes private property over which the Director of Lands has neither control nor jurisdiction." 4. Manalo v. Intermediate Appellate Court,100 where the Court held "When the lots in dispute were certified as disposable on May 19, 1971, and free patents were issued covering the same in favor of the private respondents, the said lots ceased to be part of the public domain and, therefore, the Director of Lands lost jurisdiction over the same." 5.Republic v. Court of Appeals,101 where the Court stated "Proclamation No. 350, dated October 9, 1956, of President Magsaysay legally effected a land grant to the Mindanao Medical Center, Bureau of Medical Services, Department of Health, of the whole lot, validly sufficient for initial registration under the Land Registration Act. Such land grant is constitutive of a 'fee simple' title or absolute title in favor of petitioner Mindanao Medical Center. Thus, Section 122 of the Act, which governs the registration of grants or patents involving public lands, provides that 'Whenever public lands in the Philippine Islands belonging to the Government of the United States or to the Government of the Philippines are alienated, granted or conveyed to persons or to public or private corporations, the same shall be brought forthwith under the operation of this Act (Land Registration Act, Act 496) and shall become registered lands.'" The first four cases cited involve petitions to cancel the land patents and the corresponding certificates of titlesissued to private parties. These four cases uniformly hold that the Director of Lands has no jurisdiction over private lands or that upon issuance of the certificate of title the land automatically comes under the Torrens System. The fifth case cited involves the registration under the Torrens System of a 12.8-hectare public land granted by the National Government to Mindanao Medical Center, a government unit under the Department of Health. The National Government transferred the 12.8-hectare public land to serve as the site for the

hospital buildings and other facilities of Mindanao Medical Center, which performed a public service. The Court affirmed the registration of the 12.8-hectare public land in the name of Mindanao Medical Center under Section 122 of Act No. 496. This fifth case is an example of a public land being registered under Act No. 496 without the land losing its character as a property of public dominion. In the instant case, the only patent and certificates of title issued are those in the name of PEA, a wholly government owned corporation performing public as well as proprietary functions. No patent or certificate of title has been issued to any private party. No one is asking the Director of Lands to cancel PEA's patent or certificates of title. In fact, the thrust of the instant petition is that PEA's certificates of title should remain with PEA, and the land covered by these certificates, being alienable lands of the public domain, should not be sold to a private corporation. Registration of land under Act No. 496 or PD No. 1529 does not vest in the registrant private or public ownership of the land. Registration is not a mode of acquiring ownership but is merely evidence of ownership previously conferred by any of the recognized modes of acquiring ownership. Registration does not give the registrant a better right than what the registrant had prior to the registration.102 The registration of lands of the public domain under the Torrens system, by itself, cannot convert public lands into private lands.103 Jurisprudence holding that upon the grant of the patent or issuance of the certificate of title the alienable land of the public domain automatically becomes private land cannot apply to government units and entities like PEA. The transfer of the Freedom Islands to PEA was made subject to the provisions of CA No. 141 as expressly stated in Special Patent No. 3517 issued by then President Aquino, to wit: "NOW, THEREFORE, KNOW YE, that by authority of the Constitution of the Philippines and in conformity with the provisions of Presidential Decree No. 1084, supplemented by Commonwealth Act No. 141, as amended, there are hereby granted and conveyed unto the Public Estates Authority the aforesaid tracts of land containing a total area of one million nine hundred fifteen thousand eight hundred ninety four (1,915,894) square meters; the technical description of which are hereto attached and made an integral part hereof." (Emphasis supplied) Thus, the provisions of CA No. 141 apply to the Freedom Islands on matters not covered by PD No. 1084. Section 60 of CA No. 141 prohibits, "except when authorized by Congress," the sale of alienable lands of the public domain that are transferred to government units or entities. Section 60 of CA No. 141 constitutes, under Section 44 of PD No. 1529, a "statutory lien affecting title" of the registered land even if not annotated on the certificate of title. 104 Alienable lands of the public domain held by government entities under Section 60 of CA No. 141 remain public lands because they cannot be alienated or encumbered unless Congress passes a law authorizing their disposition. Congress, however, cannot authorize the sale to private corporations of reclaimed alienable lands of the public domain because of the constitutional ban. Only individuals can benefit from such law. The grant of legislative authority to sell public lands in accordance with Section 60 of CA No. 141 does not automatically convert alienable lands of the public domain into private or patrimonial lands. The alienable lands of the public domain must be transferred to qualified private parties, or to government entities not tasked to dispose of public lands, before these lands can become private or patrimonial lands. Otherwise, the constitutional ban will become illusory if Congress can declare lands of the public domain as private or patrimonial lands in the hands of a government agency tasked to dispose of public lands. This will allow private corporations to acquire directly from government agencies limitless areas of lands which, prior to such law, are concededly public lands.

Under EO No. 525, PEA became the central implementing agency of the National Government to reclaim foreshore and submerged areas of the public domain. Thus, EO No. 525 declares that "EXECUTIVE ORDER NO. 525 Designating the Public Estates Authority as the Agency Primarily Responsible for all Reclamation Projects Whereas, there are several reclamation projects which are ongoing or being proposed to be undertaken in various parts of the country which need to be evaluated for consistency with national programs; Whereas, there is a need to give further institutional support to the Government's declared policy to provide for a coordinated, economical and efficient reclamation of lands; Whereas, Presidential Decree No. 3-A requires that all reclamation of areas shall be limited to the National Government or any person authorized by it under proper contract; Whereas, a central authority is needed to act on behalf of the National Government which shall ensure a coordinated and integrated approach in the reclamation of lands; Whereas, Presidential Decree No. 1084 creates the Public Estates Authority as a government corporation to undertake reclamation of lands and ensure their maximum utilization in promoting public welfare and interests; and Whereas, Presidential Decree No. 1416 provides the President with continuing authority to reorganize the national government including the transfer, abolition, or merger of functions and offices. NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers vested in me by the Constitution and pursuant to Presidential Decree No. 1416, do hereby order and direct the following: Section 1. The Public Estates Authority (PEA) shall be primarily responsible for integrating, directing, and coordinating all reclamation projects for and on behalf of the National Government. All reclamation projects shall be approved by the President upon recommendation of the PEA, and shall be undertaken by the PEA or through a proper contract executed by it with any person or entity; Provided, that, reclamation projects of any national government agency or entity authorized under its charter shall be undertaken in consultation with the PEA upon approval of the President. x x x ." As the central implementing agency tasked to undertake reclamation projects nationwide, with authority to sell reclaimed lands, PEA took the place of DENR as the government agency charged with leasing or selling reclaimed lands of the public domain. The reclaimed lands being leased or sold by PEA are not private lands, in the same manner that DENR, when it disposes of

other alienable lands, does not dispose of private lands but alienable lands of the public domain. Only when qualified private parties acquire these lands will the lands become private lands. In the hands of the government agency tasked and authorized to dispose of alienable of disposable lands of the public domain, these lands are still public, not private lands. Furthermore, PEA's charter expressly states that PEA "shall hold lands of the public domain" as well as "any and all kinds of lands." PEA can hold both lands of the public domain and private lands. Thus, the mere fact that alienable lands of the public domain like the Freedom Islands are transferred to PEA and issued land patents or certificates of title in PEA's name does not automatically make such lands private. To allow vast areas of reclaimed lands of the public domain to be transferred to PEA as private lands will sanction a gross violation of the constitutional ban on private corporations from acquiring any kind of alienable land of the public domain. PEA will simply turn around, as PEA has now done under the Amended JVA, and transfer several hundreds of hectares of these reclaimed and still to be reclaimed lands to a single private corporation in only one transaction. This scheme will effectively nullify the constitutional ban in Section 3, Article XII of the 1987 Constitution which was intended to diffuse equitably the ownership of alienable lands of the public domain among Filipinos, now numbering over 80 million strong. This scheme, if allowed, can even be applied to alienable agricultural lands of the public domain since PEA can "acquire x x x any and all kinds of lands." This will open the floodgates to corporations and even individuals acquiring hundreds of hectares of alienable lands of the public domain under the guise that in the hands of PEA these lands are private lands. This will result in corporations amassing huge landholdings never before seen in this country - creating the very evil that the constitutional ban was designed to prevent. This will completely reverse the clear direction of constitutional development in this country. The 1935 Constitution allowed private corporations to acquire not more than 1,024 hectares of public lands. 105 The 1973 Constitution prohibited private corporations from acquiring any kind of public land, and the 1987 Constitution has unequivocally reiterated this prohibition. The contention of PEA and AMARI that public lands, once registered under Act No. 496 or PD No. 1529, automatically become private lands is contrary to existing laws. Several laws authorize lands of the public domain to be registered under the Torrens System or Act No. 496, now PD No. 1529, without losing their character as public lands. Section 122 of Act No. 496, and Section 103 of PD No. 1529, respectively, provide as follows: Act No. 496 "Sec. 122. Whenever public lands in the Philippine Islands belonging to the x x x Government of the Philippine Islands are alienated, granted, or conveyed to persons or the public or private corporations, the same shall be brought forthwith under the operation of this Act and shall become registered lands." PD No. 1529 "Sec. 103. Certificate of Title to Patents. Whenever public land is by the Government alienated, granted or conveyed to any person, the same shall be brought forthwith under the operation of this Decree." (Emphasis supplied) Based on its legislative history, the phrase "conveyed to any person" in Section 103 of PD No. 1529 includes conveyances of public lands to public corporations.

Alienable lands of the public domain "granted, donated, or transferred to a province, municipality, or branch or subdivision of the Government," as provided in Section 60 of CA No. 141, may be registered under the Torrens System pursuant to Section 103 of PD No. 1529. Such registration, however, is expressly subject to the condition in Section 60 of CA No. 141 that the land "shall not be alienated, encumbered or otherwise disposedof in a manner affecting its title, except when authorized by Congress." This provision refers to government reclaimed, foreshore and marshy lands of the public domain that have been titled but still cannot be alienated or encumbered unless expressly authorized by Congress. The need for legislative authority prevents the registered land of the public domain from becoming private land that can be disposed of to qualified private parties. The Revised Administrative Code of 1987 also recognizes that lands of the public domain may be registered under the Torrens System. Section 48, Chapter 12, Book I of the Code states "Sec. 48. Official Authorized to Convey Real Property. Whenever real property of the Government is authorized by law to be conveyed, the deed of conveyance shall be executed in behalf of the government by the following: (1) x x x (2) For property belonging to the Republic of the Philippines, but titled in the name of any political subdivision or of any corporate agency or instrumentality, by the executive head of the agency or instrumentality." (Emphasis supplied) Thus, private property purchased by the National Government for expansion of a public wharf may be titled in the name of a government corporation regulating port operations in the country. Private property purchased by the National Government for expansion of an airport may also be titled in the name of the government agency tasked to administer the airport. Private property donated to a municipality for use as a town plaza or public school site may likewise be titled in the name of the municipality.106 All these properties become properties of the public domain, and if already registered under Act No. 496 or PD No. 1529, remain registered land. There is no requirement or provision in any existing law for the de-registration of land from the Torrens System. Private lands taken by the Government for public use under its power of eminent domain become unquestionably part of the public domain. Nevertheless, Section 85 of PD No. 1529 authorizes the Register of Deeds to issue in the name of the National Government new certificates of title covering such expropriated lands. Section 85 of PD No. 1529 states "Sec. 85. Land taken by eminent domain. Whenever any registered land, or interest therein, is expropriated or taken by eminent domain, the National Government, province, city or municipality, or any other agency or instrumentality exercising such right shall file for registration in the proper Registry a certified copy of the judgment which shall state definitely by an adequate description, the particular property or interest expropriated, the number of the certificate of title, and the nature of the public use. A memorandum of the right or interest taken shall be made on each certificate of title by the Register of Deeds, and where the fee simple is taken, a new certificate shall be issued in favor of the National Government, province, city, municipality, or any other agency or instrumentality exercising such right for the land so taken. The legal expenses incident to the memorandum of registration or issuance of a new certificate of title shall be for the account of the authority taking the land or interest therein." (Emphasis supplied)

Consequently, lands registered under Act No. 496 or PD No. 1529 are not exclusively private or patrimonial lands. Lands of the public domain may also be registered pursuant to existing laws. AMARI makes a parting shot that the Amended JVA is not a sale to AMARI of the Freedom Islands or of the lands to be reclaimed from submerged areas of Manila Bay. In the words of AMARI, the Amended JVA "is not a sale but a joint venture with a stipulation for reimbursement of the original cost incurred by PEA for the earlier reclamation and construction works performed by the CDCP under its 1973 contract with the Republic." Whether the Amended JVA is a sale or a joint venture, the fact remains that the Amended JVA requires PEA to "cause the issuance and delivery of the certificates of title conveying AMARI's Land Share in the name of AMARI." 107 This stipulation still contravenes Section 3, Article XII of the 1987 Constitution which provides that private corporations "shall not hold such alienable lands of the public domain except by lease." The transfer of title and ownership to AMARI clearly means that AMARI will "hold" the reclaimed lands other than by lease. The transfer of title and ownership is a "disposition" of the reclaimed lands, a transaction considered a sale or alienation under CA No. 141,108 the Government Auditing Code,109 and Section 3, Article XII of the 1987 Constitution. The Regalian doctrine is deeply implanted in our legal system. Foreshore and submerged areas form part of the public domain and are inalienable. Lands reclaimed from foreshore and submerged areas also form part of the public domain and are also inalienable, unless converted pursuant to law into alienable or disposable lands of the public domain. Historically, lands reclaimed by the government are sui generis, not available for sale to private parties unlike other alienable public lands. Reclaimed lands retain their inherent potential as areas for public use or public service. Alienable lands of the public domain, increasingly becoming scarce natural resources, are to be distributed equitably among our ever-growing population. To insure such equitable distribution, the 1973 and 1987 Constitutions have barred private corporations from acquiring any kind of alienable land of the public domain. Those who attempt to dispose of inalienable natural resources of the State, or seek to circumvent the constitutional ban on alienation of lands of the public domain to private corporations, do so at their own risk. We can now summarize our conclusions as follows: 1. The 157.84 hectares of reclaimed lands comprising the Freedom Islands, now covered by certificates of title in the name of PEA, are alienable lands of the public domain. PEA may lease these lands to private corporations but may not sell or transfer ownership of these lands to private corporations. PEA may only sell these lands to Philippine citizens, subject to the ownership limitations in the 1987 Constitution and existing laws. 2. The 592.15 hectares of submerged areas of Manila Bay remain inalienable natural resources of the public domain until classified as alienable or disposable lands open to disposition and declared no longer needed for public service. The government can make such classification and declaration only after PEA has reclaimed these submerged areas. Only then can these lands qualify as agricultural lands of the public domain, which are the only natural resources the government can alienate. In their present state, the 592.15 hectares of submerged areas are inalienable and outside the commerce of man. 3. Since the Amended JVA seeks to transfer to AMARI, a private corporation, ownership of 77.34 hectares110 of the Freedom Islands, such transfer is void for being contrary to Section 3, Article XII of the 1987 Constitution which prohibits private corporations from acquiring any kind of alienable land of the public domain.

4. Since the Amended JVA also seeks to transfer to AMARI ownership of 290.156 hectares111 of still submerged areas of Manila Bay, such transfer is void for being contrary to Section 2, Article XII of the 1987 Constitution which prohibits the alienation of natural resources other than agricultural lands of the public domain. PEA may reclaim these submerged areas. Thereafter, the government can classify the reclaimed lands as alienable or disposable, and further declare them no longer needed for public service. Still, the transfer of such reclaimed alienable lands of the public domain to AMARI will be void in view of Section 3, Article XII of the 1987 Constitution which prohibits private corporations from acquiring any kind of alienable land of the public domain. Clearly, the Amended JVA violates glaringly Sections 2 and 3, Article XII of the 1987 Constitution. Under Article 1409112 of the Civil Code, contracts whose "object or purpose is contrary to law," or whose "object is outside the commerce of men," are "inexistent and void from the beginning." The Court must perform its duty to defend and uphold the Constitution, and therefore declares the Amended JVA null and void ab initio. Seventh issue: whether the Court is the proper forum to raise the issue of whether the Amended JVA is grossly disadvantageous to the government. Considering that the Amended JVA is null and void ab initio, there is no necessity to rule on this last issue. Besides, the Court is not a trier of facts, and this last issue involves a determination of factual matters. WHEREFORE, the petition is GRANTED. The Public Estates Authority and Amari Coastal Bay Development Corporation are PERMANENTLY ENJOINED from implementing the Amended Joint Venture Agreement which is hereby declared NULL and VOID ab initio. SO ORDERED. G.R. No. 138081 March 30, 2000

On December 10, 1998, respondent Mark Montelibano, the consignee of the sacks of rice, and his buyer, respondent Elson Ogario, filed a complaint for injunction (Civil Case No. CEB-23077) in the Regional Trial Court of Cebu City, alleging: 4.) That upon arrival of the herein-mentioned sacks of rice at the PIER 5 of Cebu City, Philippines on the 7th day of December 1998 all of the defendants rushed to the port with long arms commanding the plaintiff's laborer[s] to stopped [sic] the unloading of the same from the vessel named M/V Alberto. The defendants alleged that the hereinmentioned rice were [sic] smuggled from abroad without even proof that the same were [sic] purchased from a particularly country. 5.) By the mere suspicion of the defendants that the goods were smuggled from abroad, they immediately put on hold the release of the goods from the ship and at the same time they jointly barred unloading and loading activities of the plaintiffs' laborers of the herein-mentioned rice. 6.) The plaintiffs then presented all the pertinent and necessary documents to all of the defendants but the latter refused to believe that the same is from Palawan because their minds are closed due to some reason or another Civil [while] the plaintiffs believed that the same is merely an act of harassment. The documents are as follows: A.) Certification from the National Food Authority that the same is from Palawan. This is hereto attached Annex A. B) Bill of Lading issued by ANMA PHILIPPINES Shipping Company. This is hereto attached as Annex B. 7.) The acts of the defendants in stopping he loading and unloading activities of the plaintiff's laborers [have] no basis in law and in fact; thus, unlawful and illegal. A mere suspicious which is not coupled with any proof or evidence to that effect is [a] matter which the law prohibits. 8.) That for more than three days and despite the repeated plea of the plaintiffs that their goods should be released to them and the defendants should stop from barring the unloading and loading activities, the latter blindly refused [to] heed the same. 9.) That the acts of all of the defendants which are greatly unlawful and erroneous would caused [sic] irreparable damage, injury, and grave injustices to the plaintiffs. 10.) That by way of example or correction for the public good and to deter the defendants from doing the same acts to other businessmen, defendants should be held liable for exemplary damages in amount of not less than One Hundred Thousand Pesos (P100,000.00). 11.) That the plaintiffs are entitled to the relief prayed in this complaint and the whole or part of such reliefs consists in restraining perpetually the defendants from holding the herein-mentioned twenty-five thousand sacks of rice. That defendants should be restrained perpetually from barring the unloading and loading activities of the plaintiffs' laborers.

THE BUREAU OF CUSTOMS (BOC) and THE ECONOMIC INTELLIGENCE AND INVESTIGATION BUREAU (EIIB), petitioners, vs. NELSON OGARIO and MARK MONTELIBANO, respondents. MENDOZA, J.: The question for decision in this case is whether the Regional Trial Court has jurisdiction to enjoin forfeiture proceedings in the Bureau of Customs. In accordance with what is now settled law, we hold it does not. The facts are as follows: On December 9, 1998, Felipe A. Bartolome, District Collector of Customs of Cebu, issued a Warrant of Seizure and Detention1 of 25,000 bags of rice, bearing the name of SNOWMAN, Milled in Palawan" shipped on board the M/V "Alberto", which was then docketed at Pier 6 in Cebu City. The warrant was issued on the basis of the report of the Economic Intelligence and Investigation Bureau (EIIB), Region VII that the rice had been illegally imported. The report stated that the rice was landed in Palawan by a foreign vessel and then placed in sacks marked "SNOWMAN," Milled in Palawan." It was then shipped to Cebu City on board the vessel M/V "Alberto." Forfeiture proceedings were started in the customs office in Cebu, docketed as Cebu Seizure Identification Case No. 17-98.

12.) That allowing the defendants to continue their unlawful acts would work grave injustice to theplaintiffs. Unless a preliminary injunction be granted ex-parte, grave and irreparable injury and damage would result to the plaintiffs before the latter can be heard on notice. 13.) That if the defendants be not restrained perpetually from their unlawful acts, the herein-mentioned rice will deteriorate and turn into dusts [sic] if not properly disposed.1wphi1.nt 14.) That a Warrant of Seizure and detention issued by the Collector of Custom[s] dated December 9, 1998 be quashed because the defendants' act of seizing and detaining the herein-mentioned sacks of rice are illegal. The continuing act of detaining the herein-mentioned sacks of rice will led to the deterioration of the same. That no public auction sale of the same should be conducted by the Bureau of Custom[s] or any government agenc[y]. 15.) That plaintiffs are ready and willing to file a bond executed to the defendants in an amount to be fixed by this Honorable Court to the effect that plaintiffs will pay to the defendants all damages which they may sustain by reason of the injunction if this Honorable Court should finally decide that the plaintiffs are not entitled thereto. PRAYER WHEREFORE, Premised on the foregoing, it is most respectfully prayed before this Honorable Court that a restraining order or temporary injunction be immediately issued prohibiting the defendants from holding plaintiffs' above-mentioned goods. That it is further prayed that a restraining order or temporary injunction be issued prohibiting the defendants from barring the unloading and loading activities of the plaintiffs' laborers. Further, the plaintiffs prayed that the warrant of seizure and detention issued by the Collector of Custom[s] dated December 9, 1998 be quashed and no public auction sale of the same should be conducted by any government agency or authority. It is further prayed that after due hearing, judgment be rendered: 1.) Making the restraining order and/or preliminary injunction permanent. 2.) Ordering the defendants jointly to pay exemplary or corrective damages to the plaintiff[s] in the amount of One Hundred Thousand Pesos (P100,000.00) Such other relief which are just and demandable under the circumstances are also prayed for. 2 In separate motions, petitioners Bureau of Customs (BOC), Port of Cebu 3 and the EIIB, as well as the Philippine Navy and Coast Guard, sought the dismissal of the complaint on the ground that the RTC had no jurisdiction, but their motions were denied. In its resolution, dated January 11, 1999, the RTC said: The Warrant of Seizure and Detention issued by the Bureau of Customs cannot divest this court of jurisdiction since its issuance is without legal basis as it was anchored merely on suspicion that the items in question were imported or smuggled. It is very clear that the defendants are bereft of any evidence to prove that the goods were indeed imported or smuggled, that is why the plaintiffs have very vigorously protested against the seizure of cargoes by the defendants. In fact, as revealed by defendants'

counsel, the Warrant of Seizure and Detention was issued merely to shift the burden of proof to the shippers or owners of the goods to prove that the bags of rice were not imported or smuggled. However, the court feels this is unfair because the settled rule is that he who alleges must prove the same. Besides, at this time when our economy is not good, it would be a [dis]service to the nation to use the strong arm of the law to make things hard or difficult for the businessmen.4 The 25,000 bags of rice were ordered returned to respondents upon the posting by them of an P8,000,000.00 bond. Petitioners BOC and EIIB moved for a reconsideration, but their motion was denied by the RTC in its order dated January 25, 1999.5 In the same order, the RTC also increased the amount of respondents' bond to P22,500,000.00. On certiorari to the Court of Appeals, the resolution and order of the RTC were sustained.6 Accordingly, on April 26, 1999, upon motion of respondents, the RTC ordered the sheriff to place in respondents' possession the 25,000 bags of rice. Meanwhile, in the forfeiture proceedings before the Collector of Customs of Cebu (Cebu Seizure Identification Case No. 17-98), a decision was rendered, the dispositive portion of which reads: WHEREFORE, by virtue of the authority vested in me by law, it is hereby ordered and decreed that the vessel M/V "Alberto"; the 25,000 bags of rice brand "Snowman"; and the two (2) trucks bearing Plate Nos. GCC 844 and GHZ 388 are all FORFEITED in favor of the government to be disposed of in the manner prescribed by law while the seven (7) trucks bearing Plate Nos. GFX 557; GFX 247; TPV 726; GBY 874; GVE 989; and GDF 548 are RELEASED in favor of their respective owners upon proper identification and compliance with pertinent laws, rules and regulations. Since this decision involves the release of some of the articles subject matter of herein case which is considered adverse to the government, the same is hereby elevated to the Commissioner of Customs for automatic review pursuant to Republic Act 7651. 7 The District Collector of Customs found "strong reliable, and convincing evidence" that the 25,000 bags of rice were smuggled. Said evidence consisted of certifications by the Philippine Coast Guard, the Philippine Ports Authority, and the Arrastre Stevedoring Office in Palawan that M/V "Alberto" had never docked in Palawan since November, 1998; a certification by Officer-inCharge Elenita Ganelo of the National Food Authority (NFA) Palawan that her signature in NFA Grains Permit Control No. 00986, attesting that the 25,000 bags of rice originated from Palawan, was forged; and the result of the laboratory analysis of a sample of the subject rice by the International Rice Research Institute (IRRI) stating that the sample "does not compare with any of our IRRI released varieties." Respondent Montelibano did not take part in the proceedings before the District Collector of Customs despite due notice sent to his counsel because he refused to recognize the validity of the forfeiture proceedings.8 On April 30, 1999, petitioners filed the present petition for review on certiorari of the decision of the Court of Appeals, dated April 15, 1999, upholding the resolution of the RTC denying petitioners' motions to dismiss. They contend that: I. SINCE THE REGIONAL TRIAL COURT OF CEBU CITY DOES NOT HAVE JURISDICTION OVER THE SUBJECT MATTER OF THE INSTANT

CONTROVERSY, AND THE BUREAU OF CUSTOMS HAD ALREADY EXERCISED EXCLUSIVE ORIGINAL JURISDICTION OVER THE SAME, THE COURT OF APPEALS SERIOUSLY ERRED IN SUSTAINING THE EXERCISE BY THE TRIAL JUDGE OF JURISDICTION OVER THE CASE BELOW AND IN AFFIRMING THE TRIAL JUDGE'S RESOLUTION DATED JANUARY 11, 1999 AND ORDER DATED JANUARY 25, 1999 IN CIVIL CASE NO. CEB-23077. II. SINCE RESPONDENTS HAVE NOT EXHAUSTED ALL THE ADMINISTRATIVE REMEDIES PROVIDED FOR BY LAW, THE COURT OF APPEALS SERIOUSLY ERRED IN UPHOLDING THE TRIAL JUDGE'S DENIALS OF PETITIONERS' SEPARATE MOTIONS TO DISMISS AND MOTIONS FOR RECONSIDERATION.9 In Jao v. Court of Appeals, 10 this Court, reiterating its ruling in a long line of cases, said: There is no question that Regional Trial Courts are devoid of any competence to pass upon the validity or regularity of seizure and forfeiture proceedings conducted by the Bureau of Customs and to enjoin or otherwise interfere with these proceedings. The Collector of Customs sitting in seizure and forfeiture proceedings has exclusive jurisdiction to hear and determine all questions touching on the seizure and forfeiture of dutiable goods. The Regional Trial Courts are precluded from assuming cognizance over such matters even through petitions of certiorari, prohibition or mandamus. It is likewise well-settled that the provisions of the Tariff and Customs Code and that of Republic Act No. 1125, as amended, otherwise known as "An Act Creating the Court of Tax Appeals," specify the proper fora and procedure for the ventilation of any legal objections or issues raised concerning these proceedings. Thus, actions of the Collector of Customs are appealable to the Commissioner of Customs, whose decision, in turn, is subject to the exclusive appellate jurisdiction of the Court of Tax Appeals and from there to the Court of Appeals. The rule that Regional Trial Courts have no review powers over such proceedings is anchored upon the policy of placing no unnecessary hindrance on the government's drive, not only to prevent smuggling and other frauds upon Customs, but more importantly, to render effective and efficient the collection of import and export duties due the State, which enables the government to carry out the functions it has been instituted to perform. Even if the seizure by the Collector of Customs were illegal, which has yet to be proven, we have said that such act does not deprive the Bureau of Customs of jurisdiction thereon. Respondents cite the statement of the Court of Appeals that regular courts still retain jurisdiction "where, as in this case, for lack of probable cause, there is serious doubt as to the propriety of placing the articles under Customs jurisdiction through seizure/forfeiture proceedings" 11 They overlook the fact, however, that under the law, the question of whether probable cause exists for the seizure of the subject sacks of rice is not for the Regional Trial Court to determine. The customs authorities do not have to prove to the satisfaction of the court that the articles on board a vessel were imported from abroad or are intended to be shipped abroad before they may exercise the power to effect customs' searches, seizures, or arrests provided by law and continue with the administrative hearings. 12 As the Court held in Ponce Enrile v. Vinuya: 13 The governmental agency concerned, the Bureau of Customs, is vested with exclusive authority.1wphi1 Even if it be assumed that in the exercise of such exclusive competence a taint of illegality may be correctly imputed, the most that can be said is

that under certain circumstances the grave abuse of discretion conferred may oust it of such jurisdiction. It does not mean however that correspondingly a court of first instance is vested with competence when clearly in the light of the above decisions the law has not seen fit to do so. The proceeding before the Collector of Customs is not final. An appeal lies to the Commissioner of Customs and thereafter to the Court of Tax Appeals. It may even reach this Court through the appropriate petition for review. The proper ventilation of the legal issues raised is thus indicated. Certainly a court of first instance is not therein included. It is devoid of jurisdiction. It is noteworthy that because of the indiscriminate issuance of writs of injunction, the Supreme Court issued on June 25, 1999 Administrative Circular No. 07-99 to all judges of lower courts entitled EXERCISE OF UTMOST CAUTION, PRUDENCE, AND JUDICIOUSNESS IN ISSUANCE OF TEMPORARY RESTRAINING ORDERS AND WRITS OF PRELIMINARY INJUNCTION. The circular states in part: Finally, judges should never forget what the Court categorically declared in Mison v. Natividad (213 SCRA 734, 742 [1992]) that "[b]y express provision of law, amply supported by well-settled jurisprudence, the Collector of Customs has exclusive jurisdiction over seizure and forfeiture proceedings, and regular courts cannot interfere with his exercise thereof or stifle or put it to naught. The Office of the Court Administrator shall see to it that this circular is immediately disseminated and shall monitor implementation thereof.1wphi1.nt STRICT OBSERVANCE AND COMPLIANCE of this Circular is hereby enjoined. WHEREFORE, the temporary restraining order issued on May 17, 1999 is hereby made permanent. The decision, dated April 15, 1999, of the Court of Appeals is REVERSED and Civil Case No. CEB-23077 in the Regional Trial Court, Branch 5, Cebu City is DISMISSED. SO ORDERED. G.R. No. 158364 November 28, 2007 AUTHORITY Petitioner,

NATIONAL HOUSING vs. SOLEDAD C. PASCUAL, Respondent. DECISION YNARES-SANTIAGO, J.:

This petition assails the November 21, 2002 Decision1 and May 8, 2003 Resolution2 of the Court of Appeals in CA-G.R. CV No. 45015 reversing the Decision of the Regional Trial Court of Quezon City, Branch 80 in Civil Case No. Q-89-3780 dismissing respondents complaint for declaration of nullity, reconveyance, and damages. The antecedent facts are as follows: On August 3, 1959, Republic Act (R.A.) No. 2616 was enacted providing for the expropriation of the Tatalon Estate and the sale of the lots to present bonafide occupants. Thereafter, the

National Housing Authority (NHA) was designated as administrator of the Tatalon Estate Housing Project by virtue of Presidential Decree (P.D.) No. 1261. Pursuant thereto, petitioner NHA awarded in 1983 Lot 3, Block 12 of the Tatalon Estate Urban Bliss Project (TEUBP), containing an area of 65 square meters, to Dolores Maranan, since she was included in the 1958 Araneta Census List of Occupants. On May 25, 1983, a Transfer Notice was given to Maranan and a Deed of Sale with Mortgage was executed on May 31, 1983. 3 On August 18, 1983, the Register of Deeds of Quezon City issued TCT No. 303230 in favor of Maranan who executed in December 1984 a Special Power of Attorney 4 in favor of Perlita Canedo with respect to the property and thereafter left the Philippines. 5 On December 9, 1985, full payment was given by Perlita Canedo hence, NHA executed on October 22, 1986, a Deed of Cancellation and Release of Real Estate Mortgage and released TCT No. 303230. Later on, Maranan sold the lot to Perlita Canedo for which TCT No. 127373 was issued. 6 Respondent Pascual however, assailed the award of the subject lot to Maranan by filing a lettercomplaint7 on February 14, 1983 before the General Manager of NHA, alleging that she is the rightful beneficiary of the said lot being the actual occupant thereof and for having resided in the Tatalon Estate since 1968. Pascual averred that after marrying Aurelio Pascual in 1975, they used the subject lot for their domicile and operated a motor shop as well and were included in the 1976 Census. However, sometime in 1983, their house was demolished and relocated to an inner lot. On June 20, 1983, the Inspector General of NHA recommended to the General Manager that the subject lot be awarded to Pascual considering that she was included in the 1976 Census and her house structure appeared in the aerial photo.8 On the other hand, the Project Manager recommended to award the lot to Maranan and to transfer respondent to an inner lot. 9 On October 3, 1983, the General Manager sustained the position of the Project Manager to award the lot to Maranan and to relocate respondent to an inner lot and dismissed respondents complaint for lack of merit.10 On December 4, 1984, respondent appealed to the Office of the President. 11 In its 1st Indorsement dated December 14, 1984, NHA maintained the propriety of the award of the lot to Maranan.12 On August 4, 1986, the Presidential Staff Director of the Malacaang Public Assistance Center wrote a letter to the General Manager of NHA to reconsider the case of respondent in view of the allegations that Maranan was an absentee awardee. It stated that an inquiry from the United States Department of Justice Immigration and Naturalization Service reveals that Maranan became a lawful resident of Honolulu, Hawaii on September 6, 1979. Hence, it appears that the subject lot which was originally occupied by respondent was awarded to Dolores Maranan under fraudulent circumstances.13 Thereafter, a series of conferences for a possible swapping of homelots was conducted by the NHA. On February 5, 1987, Pascual signed a Conditional Contract to Sell Lot 2, Block 2 of TEUBP previously allocated to her upon petitioners prodding that she would lose all her rights to be awarded a lot in the Tatalon Estate. On September 29, 1987, the Public Complaints Assistance and Action Center reviewed the case and recommended that respondent be awarded another front lot to settle the matter; that the award of the inner lot where she was relocated will be cancelled and payments made shall be applied to the new lot and should there be any disparity in price, a refund or additional payment will be made accordingly.14 However, if respondent insists on her claim on the subject lot, then she must substantiate her claim. Further conferences were made but no settlement was reached

between the parties and no ruling was made as to the disqualification of Maranan as an absentee awardee. Hence respondent brought the matter before the courts for redress. On October 19, 1989, Pascual filed a Complaint for declaration of nullity, reconveyance, and damages before the Quezon City Regional Trial Court against petitioner NHA, Maranan, Canedo, and the Register of Deeds of Quezon City. She prayed for the declaration of nullity of the award of the subject lot to Maranan; declaration of nullity of the issuance of TCT No. 303230 in the name of Maranan; reconveyance of the subject lot; and for payment of damages. 15 On June 15, 1993, the trial court rendered a Decision16 in favor of petitioner, the dispositive portion of which reads: WHEREFORE, under cool reflection and prescinding from the foregoing, judgment is rendered in favor of defendants Dolores Sabella Maranan and Perlita Canedo, adverse as against the plaintiff. 1. The complaint is dismissed with costs against the plaintiff; 2. Defendant Dolores Sabella Maranan is declared the absolute owner in fee simple title of the land in suit identified as Lot 3, Block 12, of the Tatalon Estate, Quezon City, with an area of sixty five (65) square meters, together with all the improvements thereon, as evidenced by TCT No. 303230 (Exh. "13," pp. 508-509, Record), issued in her name by the Register of Deeds of Quezon City on August 18, 1983, entitled as such with all the dominical rights blossoming forth from her right of ownership thereof, including but not limited to her right to dispose of or sell the same to whoever is interested in the subject property; 3. Plaintiff, her heirs and assigns and all persons claiming rights under her, are ordered to respect and not to molest the peaceful possession and ownership of defendant Dolores Sabella Maranan, her heirs and assigns and representatives over the land in suit. 4. Plaintiff is declared the actual possessor and lawful applicant occupant of that interior lot of the subject Tatalon Estate, where she presently resides, as allotted to her, by way of accommodation or relocation done by defendant National Housing Authority, with right to perfect her ownership thereof, for the eventual issuance of the corresponding title in her name, upon completion of all the requirements and prescribed fees therefor; 5. Plaintiff to pay defendants Maranan and Canedo the amount of P10,000.00 by way of reasonable attorneys fees; 6. Defendants claim for moral and exemplary damages are dismissed for insufficiency of evidence. IT IS SO ORDERED.17 Respondents motion for reconsideration was denied hence, she appealed the case to the Court of Appeals which was docketed as CA-G.R. CV No. 45015. Pending resolution of the appeal, Lot 2, Block 2 of the TEUBP was fully paid by respondent in October 1998 and a Deed of Sale was executed by NHA in her favor on September 28, 1999.18

On November 21, 2002, the Court of Appeals issued the assailed Decision setting aside the Decision of the trial court, the dispositive portion of which reads: WHEREFORE, foregoing premises considered and pursuant to applicable law and jurisprudence on the matter and evidence on hand, judgment is hereby rendered granting the instant appeal. Resultantly, the decision of the trial court is REVERSED and SET ASIDE and a new one entered: (a) declaring the award of the lot subject matter of this case to Dolores Sabella Maranan as null and void; as a consequence thereof; (b) declaring as null and void Transfer Certificate of Title No. 303230 issued in the name of Dolores Sabella Maranan and the same is ordered cancelled; (c) ordering defendant-appellee National Housing Authority to reconvey the subject lot to plaintiff-appellant Soledad Pascual. No costs. SO ORDERED.19 The NHA filed a motion for reconsideration which was denied by the Court of Appeals in its Resolution20 dated May 8, 2003. Hence, the instant petition for review on certiorari, raising the following issues: a) The Court of Appeals erred in holding that Dolores Maranan is not qualified to acquire the lot in question; b) The Court of Appeals erred in ordering the NHA to reconvey the subject lot to Private Respondent; c) The Court of Appeals erred in not holding that Private Respondent is estopped to lay claim on the subject lot as she in fact voluntarily and freely executed a conditional contract to sell and later, a deed of sale, over another lot in TEUBP; d) The Court of Appeals erred in not holding that the award of the subject lot is res judicata.21 The principal issue raised by petitioner is whether the award of the subject lot to Dolores Maranan can still be nullified and set aside by the courts. It maintains that the court has no power to do so since the award has attained finality and that the Complaint filed by respondent before the lower court is not the proper remedy to contest the same citing Raymundo v. Peoples Homesite and Housing Corporation.22 Petitioners claim that respondent failed to seasonably contest the award has no leg to stand on.23 A careful perusal of the records reveal that respondent has effectively appealed the case to the Office of the President through a letter-complaint. NHA transmitted its 1st Indorsement dated December 14, 1983 to the Presidential Executive Assistant which stated its position on the matter. The Office of the President thereafter gave due course to the complaint and on August 4, 1986, the Presidential Staff Director of the Malacaang Public Assistance Center wrote a letter to the General Manager of NHA to reconsider the case of respondent in view of the allegations

that Maranan was an absentee awardee and that the award of the lot to Maranan was made under fraudulent circumstances.24 Respondents letter-complaint substantially complied with the requirements of the law regarding administrative appeals. In the exercise of its discretion, the Office of the President gave due course to the appeal. It is well-established in our jurisprudence that the decisions and orders of administrative agencies, rendered pursuant to their quasi-judicial authority, have upon their finality, the force and binding effect of a final judgment within the purview of the doctrine of res judicata.25 In the case at bar, since petitioners decision was seasonably appealed by respondent, the same has not attained finality and the principle of res judicata does not apply. Consequently, the ruling of the trial court dismissing respondents complaint on the ground of non-exhaustion of administrative remedies must be reversed. Respondent correctly resorted to the remedy of appeal to the Office of the President and obtained a favorable decision therefrom. Nevertheless, petitioner failed to reconsider and review, as directed by the Office of the President, the qualification and/or disqualification of respondent and Dolores Maranan. The record is bereft of any evidence that petitioner reviewed the qualification of Maranan and issued a ruling thereon. Instead of correcting its own lapse or mistake by reviewing the case, particularly on the qualifications of the intended beneficiaries, it sustained its decision by conducting several conferences and hearings for a possible swapping of homelots between the parties. As to the propriety of the filing of the Complaint before the trial court, the Court agrees with petitioner that it has the sole power to dispose of lands under its administration. The ruling of this Court in Raymundo v. Peoples Homesite and Housing Corporation26 still stands that: 3. The power to dispose of the lands placed under the administration of the Philippine Homesite and Housing Corporation (now National Housing Authority) is lodged in said body. There is no provision of law authorizing courts to review decisions of respondent PHHC and to take cognizance of actions to annul awards of sale of any other action made by it pursuant to the authority granted it by law. If the courts are to take cognizance of cases involving errors or abuse of power exercised by the respondent PHHC, the remedy would be by means of an action for certiorari or prohibition to set aside the orders or decisions of the respondent, and not a direct action for specific performance as the one instituted in this case. But this special civil action would not lie unless there is an allegation of abuse of discretion for lack of jurisdiction. 27 However, the Raymundo case is not applicable in the case at bar since the Complaint filed primarily sought the nullification of the title issued in the name of Dolores Maranan and not merely the nullification of the award made by petitioner. It should be noted that Transfer Certificate of Title No. 303230 was issued in the name of Maranan a few months after the subject lot was awarded to her despite the objections interposed by respondent. In seeking the cancellation of the title, the Complaint prayed for the declaration of nullity of the award which was the basis for the issuance of the title. In a number of cases decided by this Court, we have sustained the propriety of the action for annulment of title and the consequent nullification of awards granted by the government in favor of wrongful grantees who obtained said grants in violation of public policy or through fraudulent means. In Swan v. Court of Appeals,28 this Court set aside the ruling of the Court of Appeals dismissing the complaint for annulment and cancellation of title which also prayed for the annulment of the award by the NHA of the disputed lot. In sustaining the stand of petitioner therein, the Court held:

x x x Their action in the court below x x x being one for annulment of title of the private respondents, the Regional Trial Courts have original jurisdiction to entertain the same. What Raymundo prohibits is the cognizance by the courts of actions to annul NHA awards of sale of its lots. Actually, the next step for annulling an NHA award of sale is an appeal to the Office of the President within 33 days from receipt of the NHA decision awarding the lot to another party. After which step, the aggrieved party can go to the Courts via Rule 65. 29 In an earlier case, Teves v. Peoples Homesite and Housing Corporation,30 this Court also allowed the Complaint for annulment of title and the deed of sale between PHHC and its grantee on the allegation that the deed of sale was executed contrary to public policy and that fraud was exercised by defendants. In remanding the case to the trial court, the High Court ruled that the plaintiff is entitled to the relief prayed for if the allegations in the Complaint are supported by evidence. The same case likewise allowed one who is not a party to a contract to ask for its annulment if he is prejudiced in his rights with respect to one of the contracting parties, and can show the detriment which would positively result to him. 31 In the case at bar, due to the execution of the deed of sale between petitioner and Maranan, respondent was directly prejudiced such that her house was demolished and relocated to an inner lot thus foreclosing her right to acquire the subject lot as present occupant and censused resident. 32 Thus, the Court of Appeals was well within its jurisdiction when it took cognizance of the appeal filed by respondent. Moreover, we find the factual findings to have been duly supported by evidence. We agree with the Court of Appeals that the NHA has the sole authority to identify qualified beneficiaries of the Tatalon Estate but that this discretion must be exercised properly.33 Despite evidence that Maranan was an absentee grantee in view of her being a resident of the United States, yet, petitioner still awarded the lot to Maranan, in grave abuse of its discretion. The appellate court committed no reversible error when it ruled that the grant of the homelot to Dolores Maranan was void because she is an absentee awardee, which fact remains undisputed. Section 3 of P.D. No. 1261 provides for the order of priority in awarding the lots in the Tatalon Estate as follows: 1. Present occupants who were listed in the 1958 Araneta Census List of Occupants; 2. Present occupants as determined by the Authority in its 1976 Census Surveys; and 3. Squatter families in the Tatalon Estate after the 1976 Census Survey. Pursuant to this mandate, NHA promulgated the Code of Policies of Tatalon Estate Development Project,34 Part 2.01 of which provides that "(a) censused household who vacates a duly tagged structure continuously for six months" is disqualified from the benefits offered by the development project. Hence, according to its own rules, it is not enough that an awardee is listed in the 1958 and 1976 Census Surveys; she must also continuously reside in the Tatalon Estate. Said requirement was not met by Maranan who became a lawful permanent resident of Honolulu, Hawaii in 1979 and who, after the issuance of title in her name, has left the country. She did not even participate in any of the proceedings to protect and defend her right, if any. Although respondent has the personality to ask for the annulment of title, however, reconveyance is not proper in the case at bar and it was error for the Court of Appeals to order petitioner to reconvey the lot to respondent. The essence of an action for reconveyance is that the decree of registration is respected as incontrovertible but what is sought instead is the transfer of the property which has been wrongfully or erroneously registered in another persons name, to its rightful owner or to one with a better right. Considering that the land subject of the action originated from a grant by the government, its cancellation is a matter between the

grantor and the grantee.35The ruling nullifying the award of NHA in favor of Maranan has the effect of nullifying the deed of sale executed between her and petitioner and consequently, the issuance of the certificate of title in her name must be canceled. However, this will lead to the reversion of the title back in the name petitioner and not to respondent who has not yet acquired title over the property prior to the issuance of Maranans title. Thus, having affirmed the disqualification of Maranan as a lot awardee and consequently canceling her title over the lot in question, the Court of Appeals should have instead ordered petitioner to award the lot to respondent and to proceed with the execution of proper instruments to transfer said property in the name of petitioner in accordance with its rules and regulations.36 Finally, this Court sustains the ruling of the Court of Appeals that respondent is a qualified beneficiary of the Tatalon Estate Development Project. Respondents acceptance of another lot and the execution of the Conditional Deed of Sale over the lot where her house was transferred by petitioner over her objection cannot be taken as a ground to disqualify her from acquiring the lot in litigation as it appears that such acceptance was made with the condition that her right to substantiate her claim over the subject lot will not be forfeited. There was no indication that respondent abandoned her claim over the subject lot. Even after the execution of the deed of sale, further negotiations were conducted between the parties. The September 29, 1987 proposal of the Public Complaints Assistance and Action Center to award respondent with another front lot or to allow her to substantiate her claim over the subject lot also supports this position as it stated that the award of the present lot will be cancelled and payments made shall be applied to the new lot she will choose and should there be any disparity in price, a refund or additional payment will be made accordingly. We agree with respondent that being a 1976 Census beneficiary is not a ground for disqualification but is merely a matter for prioritization pursuant to Section 3 of P.D. No. 1261. As to the allegation that respondent is not a censused resident, it should be noted that in pleadings filed by petitioner, allegations were made that respondents name appears in the manual list of residents and the October 3, 1983 Resolution37 of the NHA General Manager even recognized that she is a 1976 Census beneficiary and as such belong to the second priority of beneficiary in the allocation/awarding of lots in the project area.38 There is nothing objectionable in the application by the Court of Appeals of the "as is, where is" policy of the NHA. Part 1.06 of the Code of Policies of the Tatalon Estate Development Project provides that the NHA shall strictly enforce its existing policies, rules and regulations without prejudice to the formulation and enforcement of future policies, rules and regulations whether new, amendatory or supplementary in character.39 Thus, the Court of Appeals was correct in finding that respondent is a qualified beneficiary. The award in favor of Maranan being null and void, the Transfer Certificate of Title issued in her name should be cancelled. Respondent is a qualified beneficiary and entitled to be awarded the subject lot as it appears that she is the only person who pursued the claim against the wrongful grantee. Otherwise, it will be the height of injustice should the subject lot be granted to some other applicants who did not pursue a claim over the subject lot. WHEREFORE, in view of the foregoing, the Petition is DENIED. The Decision and Resolution of the Court Appeals dated November 21, 2002 and May 8, 2003, respectively, in CA-G.R. CV No. 45015 are AFFIRMED with MODIFICATION that petitioner is ordered to award Lot 3, Block 12 of the Tatalon Estate Urban Bliss Project to respondent and cancel the award to respondent of Lot 2, Block 2 in accordance with its rules and regulations. SO ORDERED.

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.

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

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 quasijudicial 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 non-political 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

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.: 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 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 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). 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. 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: 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. 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. 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 ofapplying 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. 21This function, to repeat, the Commission does not have. 22 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 (1) Investigate, on its own or on complaint by any party, all forms of human rights violations involving civil and political rights; (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 quasi-judicial 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. This cannot be done. It will not be permitted to be done.

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. 90775) on the merits." SO ORDERED. G.R. No. 84818 December 18, 1989 PHILIPPINE COMMUNICATIONS SATELLITE CORPORATION, petitioner, vs. JOSE LUIS A. ALCUAZ, as NTC Commissioner, and NATIONAL TELECOMMUNICATIONS COMMISSION,respondents. Rilloraza, Africa, De Ocampo & Africa for petitioner. Victor de la Serna for respondent Alcuaz.

Pursuant to said franchise, petitioner puts on record that it undertook the following activities and established the following installations: 1. In 1967, PHILCOMSAT established its provisional earth station in Pinugay, Rizal. 2. In 1968, earth station standard "A" antenna (Pinugay I) was established. Pinugay I provided direct satellite communication links with the Pacific Ocean Region (the United States, Australia, Canada, Hawaii, Guam, Korea, Thailand, China [PROC], New Zealand and Brunei) thru the Pacific Ocean INTELSAT satellite. 3. In 1971, a second earth station standard "A" antenna(Pinugay III) was established. Pinugay II provided links with the Indian Ocean Region (major cities in Europe, Middle East, Africa, and other Asia Pacific countries operating within the region) thru the Indian Ocean INTELSAT satellite. 4. In 1983, a third earth station standard "B" antenna (Pinugay III) was established to temporarily assume the functions of Pinugay I and then Pinugay II while they were being refurbished. Pinugay III now serves as spare or reserved antenna for possible contingencies. 5. In 1983, PHILCOMSAT constructed and installed a standard "B" antenna at Clark Air Field, Pampanga as a television receive-only earth station which provides the U.S. Military bases with a 24-hour television service. 6. In 1989, petitioner completed the installation of a third standard "A" earth station (Pinugay IV) to take over the links in Pinugay I due to obsolescence. 3

REGALADO, J.: This case is posed as one of first impression in the sense that it involves the public utility services of the petitioner Philippine Communications Satellite Corporation (PHILCOMSAT, for short) which is the only one rendering such services in the Philippines. The petition before us seeks to annul and set aside an Order 1 issued by respondent Commissioner Jose Luis Alcuaz of the National Telecommunications Commission (hereafter, NTC), dated September 2, 1988, which directs the provisional reduction of the rates which may be charged by petitioner for certain specified lines of its services by fifteen percent (15%) with the reservation to make further reductions later, for being violative of the constitutional prohibition against undue delegation of legislative power and a denial of procedural, as well as substantive, due process of law. The antecedental facts as summarized by petitioner 2 are not in dispute. By virtue of Republic Act No. 5514, PHILCOMSAT was granted "a franchise to establish, construct, maintain and operate in the Philippines, at such places as the grantee may select, station or stations and associated equipment and facilities for international satellite communications." Under this franchise, it was likewise granted the authority to "construct and operate such ground facilities as needed to deliver telecommunications services from the communications satellite system and ground terminal or terminals."

By designation of the Republic of the Philippines, the petitioner is also the sole signatory for the Philippines in the Agreement and the Operating Agreement relating to the International Telecommunications Satellite Organization (INTELSAT) of 115 member nations, as well as in the Convention and the Operating Agreement of the International Maritime Satellite Organization (INMARSAT) of 53 member nations, which two global commercial telecommunications satellite corporations were collectively established by various states in line with the principles set forth in Resolution 1721 (XVI) of the General Assembly of the United Nations. Since 1968, the petitioner has been leasing its satellite circuits to: 1. Philippine Long Distance Telephone Company; 2. Philippine Global Communications, Inc.; 3. Eastern Telecommunications Phils., Inc.; 4. Globe Mackay Cable and Radio Corp. ITT; and 5. Capitol Wireless, Inc.

or their predecessors-in-interest. The satellite services thus provided by petitioner enable said international carriers to serve the public with indispensable communication services, such as overseas telephone, telex, facsimile, telegrams, high speed data, live television in full color, and television standard conversion from European to American or vice versa. Under Section 5 of Republic Act No. 5514, petitioner was exempt from the jurisdiction of the then Public Service Commission, now respondent NTC. However, pursuant to Executive Order No. 196 issued on June 17, 1987, petitioner was placed under the jurisdiction, control and regulation of respondent NTC, including all its facilities and services and the fixing of rates. Implementing said Executive Order No. 196, respondents required petitioner to apply for the requisite certificate of public convenience and necessity covering its facilities and the services it renders, as well as the corresponding authority to charge rates therefor. Consequently, under date of September 9, 1987, petitioner filed with respondent NTC an application 4 for authority to continue operating and maintaining the same facilities it has been continuously operating and maintaining since 1967, to continue providing the international satellite communications services it has likewise been providing since 1967, and to charge the current rates applied for in rendering such services. Pending hearing, it also applied for a provisional authority so that it can continue to operate and maintain the above mentioned facilities, provide the services and charge therefor the aforesaid rates therein applied for. On September 16, 1987, petitioner was granted a provisional authority to continue operating its existing facilities, to render the services it was then offering, and to charge the rates it was then charging. This authority was valid for six (6) months from the date of said order. 5 When said provisional authority expired on March 17, 1988, it was extended for another six (6) months, or up to September 16, 1988. The NTC order now in controversy had further extended the provisional authority of the petitioner for another six (6) months, counted from September 16, 1988, but it directed the petitioner to charge modified reduced rates through a reduction of fifteen percent (15%) on the present authorized rates. Respondent Commissioner ordered said reduction on the following ground: The Commission in its on-going review of present service rates takes note that after an initial evaluation by the Rates Regulation Division of the Common Carriers Authorization Department of the financial statements of applicant, there is merit in a REDUCTION in some of applicant's rates, subject to further reductions, should the Commission finds (sic) in its further evaluation that more reduction should be effected either on the basis of a provisional authorization or in the final consideration of the case. 6 PHILCOMSAT assails the above-quoted order for the following reasons: 1. The enabling act (Executive Order No. 546) of respondent NTC empowering it to fix rates for public service communications does not provide the necessary standards constitutionally required, hence there is an undue delegation of legislative power, particularly the adjudicatory powers of NTC; 2. Assuming arguendo that the rate-fixing power was properly and constitutionally conferred, the same was exercised in an unconstitutional manner, hence it is ultra vires, in that (a) the questioned order violates procedural due process for having been issued without prior notice and hearing; and (b) the rate reduction it imposes is unjust, unreasonable and confiscatory, thus constitutive of a violation of substantive due process.

I. Petitioner asseverates that nowhere in the provisions of Executive Order No. 546, providing for the creation of respondent NTC and granting its rate-fixing powers, nor of Executive Order No. 196, placing petitioner under the jurisdiction of respondent NTC, can it be inferred that respondent NTC is guided by any standard in the exercise of its rate-fixing and adjudicatory powers. While petitioner in its petition-in-chief raised the issue of undue delegation of legislative power, it subsequently clarified its said submission to mean that the order mandating a reduction of certain rates is undue delegation not of legislative but of quasi-judicial power to respondent NTC, the exercise of which allegedly requires an express conferment by the legislative body. Whichever way it is presented, petitioner is in effect questioning the constitutionality of Executive Orders Nos. 546 and 196 on the ground that the same do not fix a standard for the exercise of the power therein conferred. We hold otherwise. Fundamental is the rule that delegation of legislative power may be sustained only upon the ground that some standard for its exercise is provided and that the legislature in making the delegation has prescribed the manner of the exercise of the delegated power. Therefore, when the administrative agency concerned, respondent NTC in this case, establishes a rate, its act must both be non- confiscatory and must have been established in the manner prescribed by the legislature; otherwise, in the absence of a fixed standard, the delegation of power becomes unconstitutional. In case of a delegation of rate-fixing power, the only standard which the legislature is required to prescribe for the guidance of the administrative authority is that the rate be reasonable and just. However, it has been held that even in the absence of an express requirement as to reasonableness, this standard may be implied. 7 It becomes important then to ascertain the nature of the power delegated to respondent NTC and the manner required by the statute for the lawful exercise thereof. Pursuant to Executive Orders Nos. 546 and 196, respondent NTC is empowered, among others, to determine and prescribe rates pertinent to the operation of public service communications which necessarily include the power to promulgate rules and regulations in connection therewith. And, under Section 15(g) of Executive Order No. 546, respondent NTC should be guided by the requirements of public safety, public interest and reasonable feasibility of maintaining effective competition of private entities in communications and broadcasting facilities. Likewise, in Section 6(d) thereof, which provides for the creation of the Ministry of Transportation and Communications with control and supervision over respondent NTC, it is specifically provided that the national economic viability of the entire network or components of the communications systems contemplated therein should be maintained at reasonable rates. We need not go into an in-depth analysis of the pertinent provisions of the law in order to conclude that respondent NTC, in the exercise of its rate-fixing power, is limited by the requirements of public safety, public interest, reasonable feasibility and reasonable rates, which conjointly more than satisfy the requirements of a valid delegation of legislative power. II. On another tack, petitioner submits that the questioned order violates procedural due process because it was issued motu proprio, without notice to petitioner and without the benefit of a hearing. Petitioner laments that said order was based merely on an "initial evaluation," which is a unilateral evaluation, but had petitioner been given an opportunity to present its side before the order in question was issued, the confiscatory nature of the rate reduction and the consequent deterioration of the public service could have been shown and demonstrated to respondents. Petitioner argues that the function involved in the rate fixing-power of NTC is adjudicatory and hence quasi-judicial, not quasi- legislative; thus, notice and hearing are necessary and the absence thereof results in a violation of due process.

Respondents admit that the application of a policy like the fixing of rates as exercised by administrative bodies is quasi-judicial rather than quasi-legislative: that where the function of the administrative agency is legislative, notice and hearing are not required, but where an order applies to a named person, as in the instant case, the function involved is adjudicatory. 8 Nonetheless, they insist that under the facts obtaining the order in question need not be preceded by a hearing, not because it was issued pursuant to respondent NTC's legislative function but because the assailed order is merely interlocutory, it being an incident in the ongoing proceedings on petitioner's application for a certificate of public convenience; and that petitioner is not the only primary source of data or information since respondent is currently engaged in a continuing review of the rates charged. We find merit in petitioner's contention. In Vigan Electric Light Co., Inc. vs. Public Service Commission, 9 we made a categorical classification as to when the rate-filing power of administrative bodies is quasi-judicial and when it is legislative, thus: Moreover, although the rule-making power and even the power to fix rateswhen such rules and/or rates are meant to apply to all enterprises of a given kind throughout the Philippines-may partake of a legislative character, such is not the nature of the order complained of. Indeed, the same applies exclusively to petitioner herein. What is more, it is predicated upon the finding of fact-based upon a report submitted by the General Auditing Office-that petitioner is making a profit of more than 12% of its invested capital, which is denied by petitioner. Obviously, the latter is entitled to cross-examine the maker of said report, and to introduce evidence to disprove the contents thereof and/or explain or complement the same, as well as to refute the conclusion drawn therefrom by the respondent. In other words, in making said finding of fact, respondent performed a function partaking of a quasi-judicial character, the valid exercise of which demands previous notice and hearing. This rule was further explained in the subsequent case of The Central Bank of the Philippines vs. Cloribel, et al.10 to wit: It is also clear from the authorities that where the function of the administrative body is legislative, notice of hearing is not required by due process of law (See Oppenheimer, Administrative Law, 2 Md. L.R. 185, 204, supra, where it is said: 'If the nature of the administrative agency is essentially legislative, the requirements of notice and hearing are not necessary. The validity of a rule of future action which affects a group, if vested rights of liberty or property are not involved, is not determined according to the same rules which apply in the case of the direct application of a policy to a specific individual) ... It is said in 73 C.J.S. Public Administrative Bodies and Procedure, sec. 130, pages 452 and 453: 'Aside from statute, the necessity of notice and hearing in an administrative proceeding depends on the character of the proceeding and the circumstances involved. In so far as generalization is possible in view of the great variety of administrative proceedings, it may be stated as a general rule that notice and hearing are not essential to the validity of administrative action where the administrative body acts in the exercise of executive, administrative, or legislative functions; but where a public administrative body acts in a judicial or quasi-judicial matter, and its acts are particular and immediate rather than general and prospective, the person whose rights or property may be affected by the action is entitled to notice and hearing. 11

The order in question which was issued by respondent Alcuaz no doubt contains all the attributes of a quasi-judicial adjudication. Foremost is the fact that said order pertains exclusively to petitioner and to no other. Further, it is premised on a finding of fact, although patently superficial, that there is merit in a reduction of some of the rates charged- based on an initial evaluation of petitioner's financial statements-without affording petitioner the benefit of an explanation as to what particular aspect or aspects of the financial statements warranted a corresponding rate reduction. No rationalization was offered nor were the attending contingencies, if any, discussed, which prompted respondents to impose as much as a fifteen percent (15%) rate reduction. It is not far-fetched to assume that petitioner could be in a better position to rationalize its rates vis-a-vis the viability of its business requirements. The rates it charges result from an exhaustive and detailed study it conducts of the multi-faceted intricacies attendant to a public service undertaking of such nature and magnitude. We are, therefore, inclined to lend greater credence to petitioner's ratiocination that an immediate reduction in its rates would adversely affect its operations and the quality of its service to the public considering the maintenance requirements, the projects it still has to undertake and the financial outlay involved. Notably, petitioner was not even afforded the opportunity to cross-examine the inspector who issued the report on which respondent NTC based its questioned order. At any rate, there remains the categorical admission made by respondent NTC that the questioned order was issued pursuant to its quasi-judicial functions. It, however, insists that notice and hearing are not necessary since the assailed order is merely incidental to the entire proceedings and, therefore, temporary in nature. This postulate is bereft of merit. While respondents may fix a temporary rate pending final determination of the application of petitioner, such rate-fixing order, temporary though it may be, is not exempt from the statutory procedural requirements of notice and hearing, as well as the requirement of reasonableness. Assuming that such power is vested in NTC, it may not exercise the same in an arbitrary and confiscatory manner. Categorizing such an order as temporary in nature does not perforce entail the applicability of a different rule of statutory procedure than would otherwise be applied to any other order on the same matter unless otherwise provided by the applicable law. In the case at bar, the applicable statutory provision is Section 16(c) of the Public Service Act which provides: Section 16. Proceedings of the Commission, upon notice and hearing the Commission shall have power, upon proper notice and hearing in accordance with the rules and provisions of this Act, subject to the limitations and exceptions mentioned and saving provisions to the contrary: xxx xxx xxx (c) To fix and determine individual or joint rates, ... which shall be imposed, observed and followed thereafter by any public service; ... There is no reason to assume that the aforesaid provision does not apply to respondent NTC, there being no limiting, excepting, or saving provisions to the contrary in Executive Orders Nos. 546 and 196. It is thus clear that with regard to rate-fixing, respondent has no authority to make such order without first giving petitioner a hearing, whether the order be temporary or permanent, and it is immaterial whether the same is made upon a complaint, a summary investigation, or upon the commission's own motion as in the present case. That such a hearing is required is evident in respondents' order of September 16, 1987 in NTC Case No. 87-94 which granted PHILCOMSAT a provisional authority "to continue operating its existing facilities, to render the services it presently offers, and to charge the rates as reduced by them "under the condition that "(s)ubject to hearing and the final consideration of the merit of this application, the Commission may modify, revise or amend the rates ..." 12

While it may be true that for purposes of rate-fixing respondents may have other sources of information or data, still, since a hearing is essential, respondent NTC should act solely on the basis of the evidence before it and not on knowledge or information otherwise acquired by it but which is not offered in evidence or, even if so adduced, petitioner was given no opportunity to controvert. Again, the order requires the new reduced rates to be made effective on a specified date. It becomes a final legislative act as to the period during which it has to remain in force pending the final determination of the case.13 An order of respondent NTC prescribing reduced rates, even for a temporary period, could be unjust, unreasonable or even confiscatory, especially if the rates are unreasonably low, since the utility permanently loses its just revenue during the prescribed period. In fact, such order is in effect final insofar as the revenue during the period covered by the order is concerned. Upon a showing, therefore, that the order requiring a reduced rate is confiscatory, and will unduly deprive petitioner of a reasonable return upon its property, a declaration of its nullity becomes inductible, which brings us to the issue on substantive due process. III. Petitioner contends that the rate reduction is confiscatory in that its implementation would virtually result in a cessation of its operations and eventual closure of business. On the other hand, respondents assert that since petitioner is operating its communications satellite facilities through a legislative franchise, as such grantee it has no vested right therein. What it has is merely a privilege or license which may be revoked at will by the State at any time without necessarily violating any vested property right of herein petitioner. While petitioner concedes this thesis of respondent, it counters that the withdrawal of such privilege should nevertheless be neither whimsical nor arbitrary, but it must be fair and reasonable. There is no question that petitioner is a mere grantee of a legislative franchise which is subject to amendment, alteration, or repeal by Congress when the common good so requires. 14 Apparently, therefore, such grant cannot be unilaterally revoked absent a showing that the termination of the operation of said utility is required by the common good. The rule is that the power of the State to regulate the conduct and business of public utilities is limited by the consideration that it is not the owner of the property of the utility, or clothed with the general power of management incident to ownership, since the private right of ownership to such property remains and is not to be destroyed by the regulatory power. The power to regulate is not the power to destroy useful and harmless enterprises, but is the power to protect, foster, promote, preserve, and control with due regard for the interest, first and foremost, of the public, then of the utility and of its patrons. Any regulation, therefore, which operates as an effective confiscation of private property or constitutes an arbitrary or unreasonable infringement of property rights is void, because it is repugnant to the constitutional guaranties of due process and equal protection of the laws. 15 Hence, the inherent power and authority of the State, or its authorized agent, to regulate the rates charged by public utilities should be subject always to the requirement that the rates so fixed shall be reasonable and just. A commission has no power to fix rates which are unreasonable or to regulate them arbitrarily. This basic requirement of reasonableness comprehends such rates which must not be so low as to be confiscatory, or too high as to be oppressive. 16 What is a just and reasonable rate is not a question of formula but of sound business judgment based upon the evidence 17 it is a question of fact calling for the exercise of discretion, good sense, and a fair, enlightened and independent judgment. 18 In determining whether a rate is confiscatory, it is essential also to consider the given situation, requirements and opportunities of the utility. A method often employed in determining reasonableness is the fair return upon the value of the property to the public utility. Competition is also a very important factor in

determining the reasonableness of rates since a carrier is allowed to make such rates as are necessary to meet competition. 19 A cursory perusal of the assailed order reveals that the rate reduction is solely and primarily based on the initial evaluation made on the financial statements of petitioner, contrary to respondent NTC's allegation that it has several other sources of information without, however, divulging such sources. Furthermore, it did not as much as make an attempt to elaborate on how it arrived at the prescribed rates. It just perfunctorily declared that based on the financial statements, there is merit for a rate reduction without any elucidation on what implications and conclusions were necessarily inferred by it from said statements. Nor did it deign to explain how the data reflected in the financial statements influenced its decision to impose a rate reduction. On the other hand, petitioner may likely suffer a severe drawback, with the consequent detriment to the public service, should the order of respondent NTC turn out to be unreasonable and improvident. The business in which petitioner is engaged is unique in that its machinery and equipment have always to be taken in relation to the equipment on the other end of the transmission arrangement. Any lack, aging, acquisition, rehabilitation, or refurbishment of machinery and equipment necessarily entails a major adjustment or innovation on the business of petitioner. As pointed out by petitioner, any change in the sending end abroad has to be matched with the corresponding change in the receiving end in the Philippines. Conversely, any in the receiving end abroad has to be matched with the corresponding change in the sending end in the Philippines. An inability on the part of petitioner to meet the variegations demanded be technology could result in a deterioration or total failure of the service of satellite communications. At present, petitioner is engaged in several projects aimed at refurbishing, rehabilitating, and renewing its machinery and equipment in order to keep up with the continuing charges of the times and to maintain its facilities at a competitive level with the technological advances abroad. There projected undertakings were formulated on the premise that rates are maintained at their present or at reasonable levels. Hence, an undue reduction thereof may practically lead to a cessation of its business. While we concede the primacy of the public interest in an adequate and efficient service, the same is not necessarily to be equated with reduced rates. Reasonableness in the rates assumes that the same is fair to both the public utility and the consumer. Consequently, we hold that the challenged order, particularly on the issue of rates provided therein, being violative of the due process clause is void and should be nullified. Respondents should now proceed, as they should heretofore have done, with the hearing and determination of petitioner's pending application for a certificate of public convenience and necessity and in which proceeding the subject of rates involved in the present controversy, as well as other matter involved in said application, be duly adjudicated with reasonable dispatch and with due observance of our pronouncements herein. WHEREFORE, the writ prayed for is GRANTED and the order of respondents, dated September 2, 1988, in NTC Case No. 87-94 is hereby SET ASIDE. The temporary restraining order issued under our resolution of September 13, 1988, as specifically directed against the aforesaid order of respondents on the matter of existing rates on petitioner's present authorized services, is hereby made permanent. SO ORDERED. G.R. No. L-19850 January 30, 1964

VIGAN ELECTRIC LIGHT vs. THE PUBLIC SERVICE COMMISSION, respondent. Raymundo A. Armovit Federico S. Arlos and P. H. del Pilar for respondent. CONCEPCION, J.:

COMPANY,

INC., petitioner,

Minimum Charge: P6.00 per month for connection of 200 watts or less; plus P0.01 per watt per month for connection in excess of 200 watts.

for

petitioner. TEMPORARY RATE P0.01 per watt per night. On May 22, 1957, petitioner, acting with respondent's approval, entered into a contract for the purchase of electric power and energy from the National Power Corporation, for resale, in the course of the business of said petitioner, to its customers, to whom, in fact, petitioner resold said electric power and energy, in accordance with the above schedule of rates. About five (5) years later, or on January 16, 1962, respondent advised petitioner of a conference to be held on February 12, 1962 for the purpose of revising its authorized rates. Soon thereafter, petitioner received a letter of respondent informing the former of an alleged letter-petition of "Congressman Floro Crisologo and 107 alleged residents of Vigan Ilocos Sur", charging the following: We also denounce the sale of TWO THOUSAND (2,000) ELECTRIC METERS in blackmarket by the Vigan Electric Light Company to Avegon Co., as anomalous and illegal. Said electric meters were imported from Japan by the Vigan Electric Light Company in behalf of the consumers of electric current from said electric company. The Vigan Electric Light Company has commercialized these privilege which property belong to the people. We also report that the electric meters in Vigan used by the consumers had been installed in bad faith and they register excessive rates much more than the actual consumption.1wph1.t and directing the petitioner to comment on these charges. In reply to said communications, petitioner's counsel wrote to respondent, on February 1, 1962, a letter asking that the conference scheduled for February 12 be postponed to March 12, and another letter stating inter alia: In connection therewith, please be informed that my client, the Vigan Electric Light Co., Inc., has not had any dealing with the Avegon Co., Inc., relative to the 2,000 electric meter mentioned in the petition. Attached hereto as Annex "1" and made an integral part thereof is a certification to that effect by Avegon Co., Inc. Furthermore, as counsel for Vigan Electric Light Co., Inc., I wish to inform this Honorable Commission that the charge that said company installed the electric meters in bad faith and that said meters registered excessive rates could have no valid basis because all of these meters have been inspected checked, tested and sealed by your office. P0.40 .30 .25 .20 On March 15, 1962, petitioner received a communication form the General Auditing Office notifying him that one Mr. Cesar A. Damole had "been instructed to make an audit and examination of the books and other records of account" of said petitioner, "under the provisions of Commonwealth Act No. 325 and in accordance with the request of the Public Service Commission contained in its letter dated March 12, 1962", and directing petitioner to cooperate with said Mr. Damole "for the successful accomplishment of his work". Subsequently, respondent issued a subpoena duces tecum requiring petitioner to produce before the former,

This is an original action for certiorari to annul an order of respondent Public Service Commission. Upon the filing of the petition and the submission and approval of the corresponding bond, we issued a writ of injunction restraining said respondent from enforcing the order complained of Republic Act No. 316, approved on June 19, 1948, granted petitioner Vigan Electric Light Company, Inc., a franchise to construct, maintain and operate an electric light, heat and/or power plant for the purpose of generating and distributing light, heat and/or power, for sale within the limits of several municipalities of the province of Ilocos Sur. Accordingly, petitioner secured from respondent on May 31, 1950, a certificate of public convenience to render electric light, heat and/or power services in said municipalities and to charge its customers and/or consumers the following rates: FLAT RATE 1 20 watt bulb per month ............................................................ 1 25 watt bulb per month ............................................................ 1 40 watt bulb per month ............................................................ 1 50 watt bulb per month ............................................................ 1 60 watt bulb per month ............................................................ 1 75 watt bulb per month ............................................................ 1 80 watt bulb per month ............................................................ 1 100 watt bulb per month ............................................................ 1 150 watt bulb per month ............................................................ 1 200 watt bulb per month ............................................................

P2.30 3.00 4.50 5.50 6.50 7.50 8.00 9.00 13.00 17.00

METER RATE

For the first 15 For the first 15 Kw. hrs. ............................................................ For the next 35 Kw. hrs. ............................................................ For the next 50 Kw. hrs. ............................................................ For all over 100 Kw. hrs. ............................................................

during a conference scheduled for April 10, 1962, certain books of account and financial statements specified in said process. On the date last mentioned petitioner moved to quash the subpoena duces tecum. The motion was not acted upon in said conference of April 10, 1962. However, it was then decided that the next conference be held on April 30, 1962, which was later postponed to May 21, 1962. When petitioner's representatives appeared before respondent, on the date last mentioned, they were advised by the latter that the scheduled conference had been cancelled, that the petition to quash the subpoena duces tecum had been granted, and that, on May 17, 1962, respondent had issued an order, from which we quote: We now have the audit report of the General Auditing Office dated May 4, 1962, covering the operation of the Vigan Electric Light Co., Inc. in Vigan, Bantay and Cagayan, Ilocos Sur, for the period from January 1 to December 31, 1961. We find from the report that the total invested capital of the utility as of December 31, 1961, entitled to return amounted to P118,132.55, and its net operating income for rate purposes of P53,692.34 represents 45.45% of its invested capital; that in order to earn 12% per annum, the utility should have a computed revenue by rates of P182,012.78; and that since it realized an actual revenue by rates of P221,529.17, it had an excess revenue by rates of P39,516.39, which is 17.84% of the actual revenue by rates and 33.45% of the invested capital. In other words, the present rates of the Vigan Electric Light Co., Inc. may be reduced by 17.84%, or in round figure, by 18%. Upon consideration of the foregoing, and finding that the Vigan Electric Light Co., Inc. is making a net operating profit in excess of the allowable return of 12% on its invested capital, we believe that it is in the public interest and in consonance with Section 3 of Republic Act No. 3043 that reduction of its rates to the extent of its excess revenue be put into effect immediately. WHEREFORE, Vigan Electric Light Co., Inc. is hereby ordered to reduce the present meter rates for its electric service effective upon the billing for the month of June, 1962, to wit: METER RATE 24-HOUR SERVICE For the first 15 kwh per month at P0.328 per kwh For the next 35 kwh per month at P0.246 per kwh For the next 50 kwh per month at P0.205 per kwh For all over 100 kwh per month at P0.164 per kwh Minimum Charge: P4.90 per month for connection of 200 was or less plus P0.01 per watt per month for connection in excess of 200 watts. TEMPORARY LIGHTING P0.01 per Minimum Charge: P1.00 watt per night.

Soon later, or on June 25, 1962, petitioner herein instituted the present action for certiorari to annul said order of May 17, 1962, upon the ground that, since its Corporate inception in 1948, petitioner it "never was able to give and never made a single dividend declaration in favor of its stockholders" because its operation from 1949 to 1961 had resulted in an aggregate loss of P113,351.523; that in the conference above mentioned petitioner had called the attention of respondent to the fact that the latter had not furnished the former a "copy of the alleged letterpetition of Congressman Crisologo and others"; that respondent then expressed the view that there was no necessity of serving copy of said letter to petitioner, because respondent was merely holding informal conferences to ascertain whether petitioner would consent to the reduction of its rates; that petitioner objected to said reduction without a hearing, alleging that its rates could be reduced only if proven by evidence validly adduced to be excessive; that petitioner offered to introduce evidence to show the reasonableness of its aforementioned rates, and even the fairness of its increase; that petitioner was then assured that it would be furnished a copy of the aforementioned letter-petition and that a hearing would be held, if a reduction of its rates could not be agreed upon; that petitioner had not even been served a copy of the auditor's report upon which the order complained of is based; that such order had been issued without notice and hearing; and that, accordingly, petitioner had been denied due process. In its answer respondent admitted some allegations of the complaint and denied other allegations thereof, particularly the conclusions drawn by petitioner. Likewise, respondent alleged that it granted petitioner's motion to quash the aforementioned subpoena duces tecum because the documents therein referred to had already been audited and examined by the General Auditing Office, the report on which was on file with said respondent; that the latter had directed that petitioner be served a copy of said report; and that, although this has not, as yet, been actually done, petitioner could have seen and examined said report had it really wanted to do so. By way of special defenses, respondent, moreover, alleged that the disputed order had been issued under its delegated legislative authority, the exercise of which does not require previous notice and hearing; and that petitioner had not sought a reconsideration of said order, and had, accordingly, failed to exhaust all administrative remedies. In support of its first special defense respondent maintains that rate-fixing is a legislative function; that legislative or rule-making powers may constitutionally be exercised without previous notice of hearing; and that the decision in Ang Tibay vs. Court of Industrial Relations (69 Phil., 635) in which we held that such notice and hearing are essential to the validity of a decision of the Public Service Commission is not in point because, unlike the order complained of which respondent claims to be legislative in nature the Ang Tibay case referred to a proceeding involving the exercise of judicial functions. At the outset, it should be noted, however, that, consistently with the principle of separation of powers, which underlies our constitutional system, legislative powers may not be delegated except to local governments, and only to matters purely of local concern (Rubi vs. Provincia Board, 39 Phil., 660; U.S. vs. Heinszen, 206 U.S. 370). However, Congress may delegate to administrative agencies of the government the power to supply the details in the execution or enforcement of a policy laid down by a which is complete in itself (Calalang vs. Williams, 70 Phil. 726; Pangasinan Trans. Co. vs. Public Service Commission, 70 Phil., 221; People vs. Rosenthal, 68 Phil., 328; People vs. Vera, 65 Phil., 56; Cruz vs. Youngberg, 56 Phil. 234; Alegre vs. Collector of Customs, 53 Phil., 394; U.S. vs. Ang Tang Ho 43 Phil., 1; Schechter vs. U.S., 295 U.S., 495 Mulford vs. Smith, 307 U.S., 38; Bowles vs. Willingham, 321 U.S., 503). Such law is not deemed complete unless it lays down a standard or pattern sufficiently fixed or determinate, or, at least, determinable without requiring another legislation, to guide the administrative body concerned in the performance of its duty to implement or enforce said Policy (People vs. Lim Ho, L-12091, January 28, 1960; Araneta vs. Gatmaitan, L-8895, April 30, 1957; Cervantes vs. Auditor General, L-4043, May 26, 1952; Philippine Association of Colleges vs. Secretary of Education, 51 Off. Gaz., 6230; People vs. Arnault, 48 Off. Gaz., 4805; Antamok Gold Fields vs. Court of Industrial Relations, 68 Phil., 340; U.S. vs. Barrias, 11 Phil., 327; Yakus vs. White, 321 U.S., 414; Ammann vs. Mallonce, 332 U.S., 245; U.S. vs. Rock Royal Corp. 307 U.S., 533; Mutual Film Corp. vs. Industrial Commission, 276 U.S., 230). Otherwise, there would

Billings to customers shall be made to the nearest multiple of five centavos. The above rates may be revised, modified or altered at anytime for any just cause and/or in the public service.

be no reasonable means to ascertain whether or not said body has acted within the scope of its authority, and, as a consequence, the power of legislation would eventually be exercised by a branch of the Government other than that in which it is lodged by the Constitution, in violation, not only of the allocation of powers therein made, but, also, of the principle of separation of powers. Hence, Congress his not delegated, and cannot delegate legislative powers to the Public Service Commission. Moreover, although the rule-making power and even the power to fix rates when such rules and/or rates are meant to apply to all enterprises of a given kind throughout the Philippines may partake of a legislative character, such is not the nature of the order complained of. Indeed, the same applies exclusively to petitioner herein. What is more, it is predicated upon the finding of fact based upon a report submitted by the General Auditing Office that petitioner is making a profit of more than 12% of its invested capital, which is denied by petitioner. Obviously, the latter is entitled to cross-examine the maker of said report, and to introduce evidence to disprove the contents thereof and/or explain or complement the same, as well as to refute the conclusion drawn therefrom by the respondent. In other words, in making said finding of fact, respondent performed a function partaking of a quasi-judicial character the valid exercise of which demands previous notice and hearing. Indeed, sections 16(c) and 20 (a) of Commonwealth Act No. 146, explicitly require notice Indeed hearing. The pertinent parts thereof provide: SEC. 16. The Commission shall have the power, upon proper notice and hearing in accordance with the rules and provision of this Act, subject to the limitations and exception mentioned and saving provisions to the contrary: xxx xxx xxx

considering that the factual basis of the action taken by respondent is assailed by petitioner. The rule applicable is set forth in the American Jurisprudence the following language: Whether notice and a hearing in proceedings before a public service commission are necessary depends chiefly upon statutory or constitutional provisions applicable to such proceedings, which make notice and hearing, prerequisite to action by the commission, and upon the nature and object of such proceedings, that is, whether the proceedings, are, on the one hand, legislative and rule-making in character, or are, on the other hand, determinative and judicial or quasi-judicial, affecting the rights an property of private or specific persons. As a general rule, a public utility must be afforded some opportunity to be heard as to the propriety and reasonableness of rates fixed for its services by a public service commission.(43 Am. Jur. 716; Emphasis supplied.) Wherefore, we hold that the determination of the issue involved in the order complained of partakes of the nature of a quasi-judicial function and that having been issued without previous notice and hearing said order is clearly violative of the due process clause, and, hence, null and void, so that a motion for reconsideration thereof is not an absolute prerequisite to the institution of the present action for certiorari (Ayson vs. Republic. 50 Off. Gaz., 5810). For this reason considering that said order was being made effective on June 1, 1962, or almost immediately after its issuance (on May 17, 1962), we find that petitioner was justified in commencing this proceedings without first filing said motion (Guerrero vs. Carbonell, L-7180, March 15, 1955). WHEREFORE, the writ prayed for is granted and the preliminary injunction issued by this Court hereby made permanent. It is so ordered. G.R. No. 115381 December 23, 1994 KILUSANG MAYO UNO LABOR CENTER, petitioner, vs. HON. JESUS B. GARCIA, JR., the LAND TRANSPORTATION FRANCHISING AND REGULATORY BOARD, and the PROVINCIAL BUS OPERATORS ASSOCIATION OF THE PHILIPPINES, respondents. Potenciano A. Flores for petitioner. Robert Anthony C. Sison, Cesar B. Brillantes and Jose Z. Galsim for private respondent. Jose F. Miravite for movants.

(c) To fix and determine individual or joint rates, tolls charges, classifications, or schedules thereof, as well as commutation, mileage kilometrage, and other special rates which shall be imposed, observed, and followed thereafter by any public service: Provided, That the Commission may in its discretion approve rates proposed by public services provisionally and without necessity of any hearing; but it shall call a hearing thereof within thirty days thereafter, upon publication and notice to the concerns operating in the territory affected: Provided, further, That in case the public service equipment of an operator is use principally or secondarily for the promotion of a private business the net profits of said private business shall be considered in relation with the public service of such operator for the purpose of fixing the rates. SEC. 20. Acts requiring the approval of the Commission. Subject to established limitations and exception and saving provisions to the contrary, it shall be unlawful for any public service or for the owner, lessee or operator thereof, without the approval and authorization of the Commission previously had (a) To adopt, establish, fix, impose, maintain, collect or carry into effect any individual or joint rates, commutation mileage or other special rate, toll, fare, charge, classification or itinerary. The Commission shall approve only those that are just and reasonable and not any that are unjustly discriminatory or unduly preferential, only upon reasonable notice to the public services and other parties concerned, giving them reasonable opportunity to be heard, ... . (Emphasis supplied.) Since compliance with law must be presumed, it should be assumed that petitioner's current rates were fixed by respondent after proper notice and hearing. Hence, modification of such rates cannot be made, over petitioner's objection, without such notice and hearing, particularly

KAPUNAN, J.: Public utilities are privately owned and operated businesses whose service are essential to the general public. They are enterprises which specially cater to the needs of the public and conduce to their comfort and convenience. As such, public utility services are impressed with public interest and concern. The same is true with respect to the business of common carrier which holds such a peculiar relation to the public interest that there is superinduced upon it the right of public regulation when private properties are affected with public interest, hence, they cease to be juris privati only. When, therefore, one devotes his property to a use in which the

public has an interest, he, in effect grants to the public an interest in that use, and must submit to the control by the public for the common good, to the extent of the interest he has thus created. 1 An abdication of the licensing and regulatory government agencies of their functions as the instant petition seeks to show, is indeed lamentable. Not only is it an unsound administrative policy but it is inimical to public trust and public interest as well. The instant petition for certiorari assails the constitutionality and validity of certain memoranda, circulars and/or orders of the Department of Transportation and Communications (DOTC) and the Land Transportation Franchising and Regulatory Board LTFRB) 2 which, among others, (a) authorize provincial bus and jeepney operators to increase or decrease the prescribed transportation fares without application therefor with the LTFRB and without hearing and approval thereof by said agency in violation of Sec. 16(c) of Commonwealth Act No. 146, as amended, otherwise known as the Public Service Act, and in derogation of LTFRB's duty to fix and determine just and reasonable fares by delegating that function to bus operators, and (b) establish a presumption of public need in favor of applicants for certificates of public convenience (CPC) and place on the oppositor the burden of proving that there is no need for the proposed service, in patent violation not only of Sec. 16(c) of CA 146, as amended, but also of Sec. 20(a) of the same Act mandating that fares should be "just and reasonable." It is, likewise, violative of the Rules of Court which places upon each party the burden to prove his own affirmative allegations. 3 The offending provisions contained in the questioned issuances pointed out by petitioner, have resulted in the introduction into our highways and thoroughfares thousands of old and smoke-belching buses, many of which are right-hand driven, and have exposed our consumers to the burden of spiraling costs of public transportation without hearing and due process. The following memoranda, circulars and/or orders are sought to be nullified by the instant petition, viz: (a) DOTC Memorandum Order 90-395, dated June 26, 1990 relative to the implementation of a fare range scheme for provincial bus services in the country; (b) DOTC Department Order No. 92-587, dated March 30, 1992, defining the policy framework on the regulation of transport services; (c) DOTC Memorandum dated October 8, 1992, laying down rules and procedures to implement Department Order No. 92-587; (d) LTFRB Memorandum Circular No. 92-009, providing implementing guidelines on the DOTC Department Order No. 92-587; and (e) LTFRB Order dated March 24, 1994 in Case No. 94-3112. The relevant antecedents are as follows: On June 26, 1990; then Secretary of DOTC, Oscar M. Orbos, issued Memorandum Circular No. 90-395 to then LTFRB Chairman, Remedios A.S. Fernando allowing provincial bus operators to charge passengers rates within a range of 15% above and 15% below the LTFRB official rate for a period of one (1) year. The text of the memorandum order reads in full: One of the policy reforms and measures that is in line with the thrusts and the priorities set out in the Medium-Term Philippine Development Plan (MTPDP) 1987 1992) is the liberalization of regulations in the transport sector. Along this line, the Government intends to move away gradually from regulatory policies and make progress towards greater reliance on free market forces. Based on several surveys and observations, bus companies are already charging passenger rates above and below the official fare declared by LTFRB on many provincial routes. It is in this context that some form of liberalization on public transport fares is to be tested on a pilot basis.

In view thereof, the LTFRB is hereby directed to immediately publicize a fare range scheme for all provincial bus routes in country (except those operating within Metro Manila). Transport Operators shall be allowed to charge passengers within a range of fifteen percent (15%) above and fifteen percent (15%) below the LTFRB official rate for a period of one year. Guidelines and procedures for the said scheme shall be prepared by LTFRB in coordination with the DOTC Planning Service. The implementation of the said fare range scheme shall start on 6 August 1990. For compliance. (Emphasis ours.) Finding the implementation of the fare range scheme "not legally feasible," Remedios A.S. Fernando submitted the following memorandum to Oscar M. Orbos on July 24, 1990, to wit: With reference to DOTC Memorandum Order No. 90-395 dated 26 June 1990 which the LTFRB received on 19 July 1990, directing the Board "to immediately publicize a fare range scheme for all provincial bus routes in the country (except those operating within Metro Manila)" that will allow operators "to charge passengers within a range of fifteen percent (15%) above and fifteen percent (15%) below the LTFRB official rate for a period of one year" the undersigned is respectfully adverting the Secretary's attention to the following for his consideration: 1. Section 16(c) of the Public Service Act prescribes the following for the fixing and determination of rates (a) the rates to be approved should be proposed by public service operators; (b) there should be a publication and notice to concerned or affected parties in the territory affected; (c) a public hearing should be held for the fixing of the rates; hence, implementation of the proposed fare range scheme on August 6 without complying with the requirements of the Public Service Act may not be legally feasible. 2. To allow bus operators in the country to charge fares fifteen (15%) above the present LTFRB fares in the wake of the devastation, death and suffering caused by the July 16 earthquake will not be socially warranted and will be politically unsound; most likely public criticism against the DOTC and the LTFRB will be triggered by the untimelymotu propio implementation of the proposal by the mere expedient of publicizing the fare range scheme without calling a public hearing, which scheme many as early as during the Secretary's predecessor know through newspaper reports and columnists' comments to be Asian Development Bank and World Bank inspired. 3. More than inducing a reduction in bus fares by fifteen percent (15%) the implementation of the proposal will instead trigger an upward adjustment in bus fares by

fifteen percent (15%) at a time when hundreds of thousands of people in Central and Northern Luzon, particularly in Central Pangasinan, La Union, Baguio City, Nueva Ecija, and the Cagayan Valley are suffering from the devastation and havoc caused by the recent earthquake. 4. In lieu of the said proposal, the DOTC with its agencies involved in public transportation can consider measures and reforms in the industry that will be socially uplifting, especially for the people in the areas devastated by the recent earthquake. In view of the foregoing considerations, the undersigned respectfully suggests that the implementation of the proposed fare range scheme this year be further studied and evaluated. On December 5, 1990, private respondent Provincial Bus Operators Association of the Philippines, Inc. (PBOAP) filed an application for fare rate increase. An across-the-board increase of eight and a half centavos (P0.085) per kilometer for all types of provincial buses with a minimum-maximum fare range of fifteen (15%) percent over and below the proposed basic per kilometer fare rate, with the said minimum-maximum fare range applying only to ordinary, first class and premium class buses and a fifty-centavo (P0.50) minimum per kilometer fare for aircon buses, was sought. On December 6, 1990, private respondent PBOAP reduced its applied proposed fare to an across-the-board increase of six and a half (P0.065) centavos per kilometer for ordinary buses. The decrease was due to the drop in the expected price of diesel. The application was opposed by the Philippine Consumers Foundation, Inc. and Perla C. Bautista alleging that the proposed rates were exorbitant and unreasonable and that the application contained no allegation on the rate of return of the proposed increase in rates. On December 14, 1990, public respondent LTFRB rendered a decision granting the fare rate increase in accordance with the following schedule of fares on a straight computation method, viz: AUTHORIZED FARES LUZON MIN. OF 5 KMS. SUCCEEDING KM. REGULAR STUDENT P1.15 P0.28 VISAYAS/MINDANAO REGULAR STUDENT FIRST LUZON VISAYAS/ P1.60 P1.20 CLASS (PER P0.375 P0.285 KM.) P0.385 P1.50 P0.37

MINDANAO PREMIERE LUZON VISAYAS/ MINDANAO P0.405

CLASS

(PER

P0.395 KM.) P0.395

AIRCON (PER KM.) P0.415. 4 On March 30, 1992, then Secretary of the Department of Transportation and Communications Pete Nicomedes Prado issued Department Order No. 92-587 defining the policy framework on the regulation of transport services. The full text of the said order is reproduced below in view of the importance of the provisions contained therein: WHEREAS, Executive Order No. 125 as amended, designates the Department of Transportation and Communications (DOTC) as the primary policy, planning, regulating and implementing agency on transportation; WHEREAS, to achieve the objective of a viable, efficient, and dependable transportation system, the transportation regulatory agencies under or attached to the DOTC have to harmonize their decisions and adopt a common philosophy and direction; WHEREAS, the government proposes to build on the successful liberalization measures pursued over the last five years and bring the transport sector nearer to a balanced longer term regulatory framework; NOW, THEREFORE, pursuant to the powers granted by laws to the DOTC, the following policies and principles in the economic regulation of land, air, and water transportation services are hereby adopted: 1. Entry into and exit out of the industry. Following the Constitutional dictum against monopoly, no franchise holder shall be permitted to maintain a monopoly on any route. A minimum of two franchise holders shall be permitted to operate on any route. The requirements to grant a certificate to operate, or certificate of public convenience, shall be: proof of Filipino citizenship, financial capability, public need, and sufficient insurance cover to protect the riding public. In determining public need, the presumption of need for a service shall be deemed in favor of the applicant. The burden of proving that there is no need for a proposed service shall be with the oppositor(s). In the interest of providing efficient public transport services, the use of the "prior operator" and the "priority of filing" rules shall be discontinued. The route measured capacity test or other similar tests of demand for vehicle/vessel fleet on any route shall be used only as a guide in weighing the merits of each franchise application and not as a limit to the services offered.

Where there are limitations in facilities, such as congested road space in urban areas, or at airports and ports, the use of demand management measures in conformity with market principles may be considered. The right of an operator to leave the industry is recognized as a business decision, subject only to the filing of appropriate notice and following a phase-out period, to inform the public and to minimize disruption of services. 2. Rate and Fare Setting. Freight rates shall be freed gradually from government controls.Passenger fares shall also be deregulated, except for the lowest class of passenger service (normally third class passenger transport) for which the government will fix indicative or reference fares. Operators of particular services may fix their own fares within a range 15% above and below the indicative or reference rate. Where there is lack of effective competition for services, or on specific routes, or for the transport of particular commodities, maximum mandatory freight rates or passenger fares shall be set temporarily by the government pending actions to increase the level of competition. For unserved or single operator routes, the government shall contract such services in the most advantageous terms to the public and the government, following public bids for the services. The advisability of bidding out the services or using other kinds of incentives on such routes shall be studied by the government. 3. Special Incentives and Financing for Fleet Acquisition. As a matter of policy, the government shall not engage in special financing and incentive programs, including direct subsidies for fleet acquisition and expansion. Only when the market situation warrants government intervention shall programs of this type be considered. Existing programs shall be phased out gradually. The Land Transportation Franchising and Regulatory Board, the Civil Aeronautics Board, the Maritime Industry Authority are hereby directed to submit to the Office of the Secretary, within forty-five (45) days of this Order, the detailed rules and procedures for the Implementation of the policies herein set forth. In the formulation of such rules, the concerned agencies shall be guided by the most recent studies on the subjects, such as the Provincial Road Passenger Transport Study, the Civil Aviation Master Plan, the Presidential Task Force on the Inter-island Shipping Industry, and the Inter-island Liner Shipping Rate Rationalization Study. For the compliance of all concerned. (Emphasis ours) On October 8, 1992, public respondent Secretary of the Department of Transportation and Communications Jesus B. Garcia, Jr. issued a memorandum to the Acting Chairman of the LTFRB suggesting swift action on the adoption of rules and procedures to implement abovequoted Department Order No. 92-587 that laid down deregulation and other liberalization policies for the transport sector. Attached to the said memorandum was a revised draft of the required rules and procedures covering (i) Entry Into and Exit Out of the Industry and (ii) Rate and Fare Setting, with comments and suggestions from the World Bank incorporated therein. Likewise, resplendent from the said memorandum is the statement of the DOTC Secretary that

the adoption of the rules and procedures is a pre-requisite to the approval of the Economic Integration Loan from the World Bank. 5 On February 17, 1993, the LTFRB issued Memorandum Circular No. 92-009 promulgating the guidelines for the implementation of DOTC Department Order No. 92-587. The Circular provides, among others, the following challenged portions: xxx xxx xxx IV. Policy Guidelines on the Issuance of Certificate of Public Convenience. The issuance of a Certificate of Public Convenience is determined by public need. The presumption of public need for a service shall be deemed in favor of the applicant, while burden of proving that there is no need for the proposed service shall be the oppositor'(s). xxx xxx xxx V. Rate and Fare Setting The control in pricing shall be liberalized to introduce price competition complementary with the quality of service, subject to prior notice and public hearing. Fares shall not be provisionally authorized without public hearing. A. On the General Structure of Rates 1. The existing authorized fare range system of plus or minus 15 per cent for provincial buses and jeepneys shall be widened to 20% and -25% limit in 1994 with the authorized fare to be replaced by an indicative or reference rate as the basis for the expanded fare range. 2. Fare systems for aircon buses are liberalized to cover first class and premier services. xxx xxx xxx (Emphasis ours). Sometime in March, 1994, private respondent PBOAP, availing itself of the deregulation policy of the DOTC allowing provincial bus operators to collect plus 20% and minus 25% of the prescribed fare without first having filed a petition for the purpose and without the benefit of a public hearing, announced a fare increase of twenty (20%) percent of the existing fares. Said increased fares were to be made effective on March 16, 1994. On March 16, 1994, petitioner KMU filed a petition before the LTFRB opposing the upward adjustment of bus fares. On March 24, 1994, the LTFRB issued one of the assailed orders dismissing the petition for lack of merit. The dispositive portion reads:

PREMISES CONSIDERED, this Board after considering the arguments of the parties, hereby DISMISSES FOR LACK OF MERIT the petition filed in the above-entitled case. This petition in this case was resolved with dispatch at the request of petitioner to enable it to immediately avail of the legal remedies or options it is entitled under existing laws. SO ORDERED. 6 Hence, the instant petition for certiorari with an urgent prayer for issuance of a temporary restraining order. The Court, on June 20, 1994, issued a temporary restraining order enjoining, prohibiting and preventing respondents from implementing the bus fare rate increase as well as the questioned orders and memorandum circulars. This meant that provincial bus fares were rolled back to the levels duly authorized by the LTFRB prior to March 16, 1994. A moratorium was likewise enforced on the issuance of franchises for the operation of buses, jeepneys, and taxicabs. Petitioner KMU anchors its claim on two (2) grounds. First, the authority given by respondent LTFRB to provincial bus operators to set a fare range of plus or minus fifteen (15%) percent, later increased to plus twenty (20%) and minus twenty-five (-25%) percent, over and above the existing authorized fare without having to file a petition for the purpose, is unconstitutional, invalid and illegal. Second, the establishment of a presumption of public need in favor of an applicant for a proposed transport service without having to prove public necessity, is illegal for being violative of the Public Service Act and the Rules of Court. In its Comment, private respondent PBOAP, while not actually touching upon the issues raised by the petitioner, questions the wisdom and the manner by which the instant petition was filed. It asserts that the petitioner has no legal standing to sue or has no real interest in the case at bench and in obtaining the reliefs prayed for. In their Comment filed by the Office of the Solicitor General, public respondents DOTC Secretary Jesus B. Garcia, Jr. and the LTFRB asseverate that the petitioner does not have the standing to maintain the instant suit. They further claim that it is within DOTC and LTFRB's authority to set a fare range scheme and establish a presumption of public need in applications for certificates of public convenience. We find the instant petition impressed with merit. At the outset, the threshold issue of locus standi must be struck. Petitioner KMU has the standing to sue. The requirement of locus standi inheres from the definition of judicial power. Section 1 of Article VIII of the Constitution provides: xxx xxx xxx Judicial power includes the duty of the courts of justice to settle actual controversies involving rights which are legally demandable and enforceable, and to determine whether or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the Government.

In Lamb v. Phipps, 7 we ruled that judicial power is the power to hear and decide causes pending between parties who have the right to sue in the courts of law and equity. Corollary to this provision is the principle oflocus standi of a party litigant. One who is directly affected by and whose interest is immediate and substantial in the controversy has the standing to sue. The rule therefore requires that a party must show a personal stake in the outcome of the case or an injury to himself that can be redressed by a favorable decision so as to warrant an invocation of the court's jurisdiction and to justify the exercise of the court's remedial powers in his behalf. 8 In the case at bench, petitioner, whose members had suffered and continue to suffer grave and irreparable injury and damage from the implementation of the questioned memoranda, circulars and/or orders, has shown that it has a clear legal right that was violated and continues to be violated with the enforcement of the challenged memoranda, circulars and/or orders. KMU members, who avail of the use of buses, trains and jeepneys everyday, are directly affected by the burdensome cost of arbitrary increase in passenger fares. They are part of the millions of commuters who comprise the riding public. Certainly, their rights must be protected, not neglected nor ignored. Assuming arguendo that petitioner is not possessed of the standing to sue, this court is ready to brush aside this barren procedural infirmity and recognize the legal standing of the petitioner in view of the transcendental importance of the issues raised. And this act of liberality is not without judicial precedent. As early as theEmergency Powers Cases, this Court had exercised its discretion and waived the requirement of proper party. In the recent case of Kilosbayan, Inc., et al. v. Teofisto Guingona, Jr., et al., 9 we ruled in the same lines and enumerated some of the cases where the same policy was adopted, viz: . . . A party's standing before this Court is a procedural technicality which it may, in the exercise of its discretion, set aside in view of the importance of the issues raised. In the landmark Emergency Powers Cases, [G.R. No. L2044 (Araneta v. Dinglasan); G.R. No. L-2756 (Araneta v. Angeles); G.R. No. L-3054 (Rodriguez v. Tesorero de Filipinas); G.R. No. L-3055 (Guerrero v. Commissioner of Customs); and G.R. No. L-3056 (Barredo v. Commission on Elections), 84 Phil. 368 (1949)], this Court brushed aside this technicality because "the transcendental importance to the public of these cases demands that they be settled promptly and definitely, brushing aside, if we must, technicalities of procedure. (Avelino vs. Cuenco, G.R. No. L-2621)." Insofar as taxpayers' suits are concerned, this Court had declared that it "is not devoid of discretion as to whether or not it should be entertained," (Tan v. Macapagal, 43 SCRA 677, 680 [1972]) or that it "enjoys an open discretion to entertain the same or not." [Sanidad v. COMELEC, 73 SCRA 333 (1976)]. xxx xxx xxx In line with the liberal policy of this Court on locus standi, ordinary taxpayers, members of Congress, and even association of planters, and non-profit civic organizations were allowed to initiate and prosecute actions before this court to question the constitutionality or validity of laws, acts, decisions, rulings, or orders of various government agencies or instrumentalities. Among such cases were those assailing the constitutionality of (a) R.A. No. 3836 insofar as it allows retirement gratuity and commutation of vacation and sick leave to Senators and Representatives and to elective officials of both Houses of Congress (Philippine Constitution Association, Inc. v. Gimenez, 15 SCRA 479 [1965]); (b) Executive Order No. 284, issued by President Corazon C. Aquino on 25 July 1987, which allowed members of the cabinet, their undersecretaries, and assistant secretaries to hold other government offices or positions (Civil

Liberties Union v. Executive Secretary, 194 SCRA 317 [1991]); (c) the automatic appropriation for debt service in the General Appropriations Act (Guingona v. Carague, 196 SCRA 221 [1991]; (d) R.A. No. 7056 on the holding of desynchronized elections (Osmea v. Commission on Elections, 199 SCRA 750 [1991]); (e) P.D. No. 1869 (the charter of the Philippine Amusement and Gaming Corporation) on the ground that it is contrary to morals, public policy, and order (Basco v. Philippine Amusement and Gaming Corp., 197 SCRA 52 [1991]); and (f) R.A. No. 6975, establishing the Philippine National Police. (Carpio v. Executive Secretary, 206 SCRA 290 [1992]). Other cases where we have followed a liberal policy regarding locus standi include those attacking the validity or legality of (a) an order allowing the importation of rice in the light of the prohibition imposed by R.A. No. 3452 (Iloilo Palay and Corn Planters Association, Inc. v. Feliciano, 13 SCRA 377 [1965]; (b) P.D. Nos. 991 and 1033 insofar as they proposed amendments to the Constitution and P.D. No. 1031 insofar as it directed the COMELEC to supervise, control, hold, and conduct the referendumplebiscite on 16 October 1976 (Sanidad v. Commission on Elections, supra); (c) the bidding for the sale of the 3,179 square meters of land at Roppongi, Minato-ku, Tokyo, Japan (Laurel v. Garcia, 187 SCRA 797 [1990]); (d) the approval without hearing by the Board of Investments of the amended application of the Bataan Petrochemical Corporation to transfer the site of its plant from Bataan to Batangas and the validity of such transfer and the shift of feedstock from naphtha only to naphtha and/or liquefied petroleum gas (Garcia v. Board of Investments, 177 SCRA 374 [1989]; Garcia v. Board of Investments, 191 SCRA 288 [1990]); (e) the decisions, orders, rulings, and resolutions of the Executive Secretary, Secretary of Finance, Commissioner of Internal Revenue, Commissioner of Customs, and the Fiscal Incentives Review Board exempting the National Power Corporation from indirect tax and duties (Maceda v. Macaraig, 197 SCRA 771 [1991]); (f) the orders of the Energy Regulatory Board of 5 and 6 December 1990 on the ground that the hearings conducted on the second provisional increase in oil prices did not allow the petitioner substantial cross-examination; (Maceda v. Energy Regulatory Board, 199 SCRA 454 [1991]); (g) Executive Order No. 478 which levied a special duty of P0.95 per liter of imported oil products (Garcia v. Executive Secretary, 211 SCRA 219 [1992]); (h) resolutions of the Commission on Elections concerning the apportionment, by district, of the number of elective members of Sanggunians (De Guia vs. Commission on Elections, 208 SCRA 420 [1992]); and (i) memorandum orders issued by a Mayor affecting the Chief of Police of Pasay City (Pasay Law and Conscience Union, Inc. v. Cuneta, 101 SCRA 662 [1980]). In the 1975 case of Aquino v. Commission on Elections (62 SCRA 275 [1975]), this Court, despite its unequivocal ruling that the petitioners therein had no personality to file the petition, resolved nevertheless to pass upon the issues raised because of the far-reaching implications of the petition. We did no less in De Guia v. COMELEC (Supra) where, although we declared that De Guia "does not appear to have locus standi, a standing in law, a personal or substantial interest," we brushed aside the procedural infirmity "considering the importance of the issue involved, concerning as it does the political exercise of qualified voters affected by the apportionment, and petitioner alleging abuse of discretion and violation of the Constitution by respondent." Now on the merits of the case.

On the fare range scheme. Section 16(c) of the Public Service Act, as amended, reads: Sec. 16. Proceedings of the Commission, upon notice and hearing. The Commission shall have power, upon proper notice and hearing in accordance with the rules and provisions of this Act, subject to the limitations and exceptions mentioned and saving provisions to the contrary: xxx xxx xxx (c) To fix and determine individual or joint rates, tolls, charges, classifications, or schedules thereof, as well as commutation, mileage kilometrage, and other special rates which shall be imposed, observed, and followed thereafter by any public service: Provided, That the Commission may, in its discretion, approve rates proposed by public services provisionally and without necessity of any hearing; but it shall call a hearing thereon within thirty days thereafter, upon publication and notice to the concerns operating in the territory affected: Provided, further, That in case the public service equipment of an operator is used principally or secondarily for the promotion of a private business, the net profits of said private business shall be considered in relation with the public service of such operator for the purpose of fixing the rates. (Emphasis ours). xxx xxx xxx Under the foregoing provision, the Legislature delegated to the defunct Public Service Commission the power of fixing the rates of public services. Respondent LTFRB, the existing regulatory body today, is likewise vested with the same under Executive Order No. 202 dated June 19, 1987. Section 5(c) of the said executive order authorizes LTFRB "to determine, prescribe, approve and periodically review and adjust, reasonable fares, rates and other related charges, relative to the operation of public land transportation services provided by motorized vehicles." Such delegation of legislative power to an administrative agency is permitted in order to adapt to the increasing complexity of modern life. As subjects for governmental regulation multiply, so does the difficulty of administering the laws. Hence, specialization even in legislation has become necessary. Given the task of determining sensitive and delicate matters as route-fixing and rate-making for the transport sector, the responsible regulatory body is entrusted with the power of subordinate legislation. With this authority, an administrative body and in this case, the LTFRB, may implement broad policies laid down in a statute by "filling in" the details which the Legislature may neither have time or competence to provide. However, nowhere under the aforesaid provisions of law are the regulatory bodies, the PSC and LTFRB alike, authorized to delegate that power to a common carrier, a transport operator, or other public service. In the case at bench, the authority given by the LTFRB to the provincial bus operators to set a fare range over and above the authorized existing fare, is illegal and invalid as it is tantamount to an undue delegation of legislative authority. Potestas delegata non delegari potest. What has been delegated cannot be delegated. This doctrine is based on the ethical principle that such a delegated power constitutes not only a right but a duty to be performed by the delegate through the instrumentality of his own judgment and not through the intervening mind of another. 10 A further delegation of such power would indeed constitute a negation of the duty in violation of the trust reposed in the delegate mandated to discharge it directly. 11 The policy of allowing the

provincial bus operators to change and increase their fares at will would result not only to a chaotic situation but to an anarchic state of affairs. This would leave the riding public at the mercy of transport operators who may increase fares every hour, every day, every month or every year, whenever it pleases them or whenever they deem it "necessary" to do so. In Panay Autobus Co. v. Philippine Railway Co., 12 where respondent Philippine Railway Co. was granted by the Public Service Commission the authority to change its freight rates at will, this Court categorically declared that: In our opinion, the Public Service Commission was not authorized by law to delegate to the Philippine Railway Co. the power of altering its freight rates whenever it should find it necessary to do so in order to meet the competition of road trucks and autobuses, or to change its freight rates at will, or to regard its present rates as maximum rates, and to fix lower rates whenever in the opinion of the Philippine Railway Co. it would be to its advantage to do so. The mere recital of the language of the application of the Philippine Railway Co. is enough to show that it is untenable. The Legislature has delegated to the Public Service Commission the power of fixing the rates of public services, but it has not authorized the Public Service Commission to delegate that power to a common carrier or other public service. The rates of public services like the Philippine Railway Co. have been approved or fixed by the Public Service Commission, and any change in such rates must be authorized or approved by the Public Service Commission after they have been shown to be just and reasonable. The public service may, of course, propose new rates, as the Philippine Railway Co. did in case No. 31827, but it cannot lawfully make said new rates effective without the approval of the Public Service Commission, and the Public Service Commission itself cannot authorize a public service to enforce new rates without the prior approval of said rates by the commission. The commission must approve new rates when they are submitted to it, if the evidence shows them to be just and reasonable, otherwise it must disapprove them. Clearly, the commission cannot determine in advance whether or not the new rates of the Philippine Railway Co. will be just and reasonable, because it does not know what those rates will be. In the present case the Philippine Railway Co. in effect asked for permission to change its freight rates at will. It may change them every day or every hour, whenever it deems it necessary to do so in order to meet competition or whenever in its opinion it would be to its advantage. Such a procedure would create a most unsatisfactory state of affairs and largely defeat the purposes of the public service law. 13 (Emphasis ours). One veritable consequence of the deregulation of transport fares is a compounded fare. If transport operators will be authorized to impose and collect an additional amount equivalent to 20% over and above the authorized fare over a period of time, this will unduly prejudice a commuter who will be made to pay a fare that has been computed in a manner similar to those of compounded bank interest rates. Picture this situation. On December 14, 1990, the LTFRB authorized provincial bus operators to collect a thirty-seven (P0.37) centavo per kilometer fare for ordinary buses. At the same time, they were allowed to impose and collect a fare range of plus or minus 15% over the authorized rate. Thus P0.37 centavo per kilometer authorized fare plus P0.05 centavos (which is 15% of P0.37 centavos) is equivalent to P0.42 centavos, the allowed rate in 1990. Supposing the LTFRB grants another five (P0.05) centavo increase per kilometer in 1994, then, the base or reference for computation would have to be P0.47 centavos (which is P0.42 + P0.05 centavos).

If bus operators will exercise their authority to impose an additional 20% over and above the authorized fare, then the fare to be collected shall amount to P0.56 (that is, P0.47 authorized LTFRB rate plus 20% of P0.47 which is P0.29). In effect, commuters will be continuously subjected, not only to a double fare adjustment but to a compounding fare as well. On their part, transport operators shall enjoy a bigger chunk of the pie. Aside from fare increase applied for, they can still collect an additional amount by virtue of the authorized fare range. Mathematically, the situation translates into the following: Year** LTFRB rate*** kilometer authorized Fare collected Range Fare to be per

1990 P0.37 15% 1994 P0.42 + 0.05 = 0.47 1998 P0.56 + 0.05 = 0.61 2002 P0.73 + 0.05 = 0.78 20% (P0.16) P0.94

(P0.05) 20% (P0.09) 20% (P0.12)

P0.42 P0.56 P0.73

Moreover, rate making or rate fixing is not an easy task. It is a delicate and sensitive government function that requires dexterity of judgment and sound discretion with the settled goal of arriving at a just and reasonable rate acceptable to both the public utility and the public. Several factors, in fact, have to be taken into consideration before a balance could be achieved. A rate should not be confiscatory as would place an operator in a situation where he will continue to operate at a loss. Hence, the rate should enable public utilities to generate revenues sufficient to cover operational costs and provide reasonable return on the investments. On the other hand, a rate which is too high becomes discriminatory. It is contrary to public interest. A rate, therefore, must be reasonable and fair and must be affordable to the end user who will utilize the services. Given the complexity of the nature of the function of rate-fixing and its far-reaching effects on millions of commuters, government must not relinquish this important function in favor of those who would benefit and profit from the industry. Neither should the requisite notice and hearing be done away with. The people, represented by reputable oppositors, deserve to be given full opportunity to be heard in their opposition to any fare increase. The present administrative procedure, 14 to our mind, already mirrors an orderly and satisfactory arrangement for all parties involved. To do away with such a procedure and allow just one party, an interested party at that, to determine what the rate should be, will undermine the right of the other parties to due process. The purpose of a hearing is precisely to determine what a just and reasonable rate is. 15 Discarding such procedural and constitutional right is certainly inimical to our fundamental law and to public interest. On the presumption of public need. A certificate of public convenience (CPC) is an authorization granted by the LTFRB for the operation of land transportation services for public use as required by law. Pursuant to Section 16(a) of the Public Service Act, as amended, the following requirements must be met before a CPC may be granted, to wit: (i) the applicant must be a citizen of the Philippines, or a corporation or co-partnership, association or joint-stock company constituted and organized under the laws of the Philippines, at least 60 per centum of its stock or paid-up capital must belong entirely to citizens of the Philippines; (ii) the applicant must be financially capable of undertaking the proposed service and meeting the responsibilities incident to its operation; and (iii) the applicant must prove that the operation of the public service proposed and the authorization to do business will promote the public interest in a proper and suitable manner. It is understood that there must be proper notice and hearing before the PSC can exercise its power to issue a CPC.

While adopting in toto the foregoing requisites for the issuance of a CPC, LTFRB Memorandum Circular No. 92-009, Part IV, provides for yet incongruous and contradictory policy guideline on the issuance of a CPC. The guidelines states: The issuance of a Certificate of Public Convenience is determined by public need. The presumption of public need for a service shall be deemed in favor of the applicant, while the burden of proving that there is no need for the proposed service shall be the oppositor's. (Emphasis ours). The above-quoted provision is entirely incompatible and inconsistent with Section 16(c)(iii) of the Public Service Act which requires that before a CPC will be issued, the applicant must prove by proper notice and hearing that the operation of the public service proposed will promote public interest in a proper and suitable manner. On the contrary, the policy guideline states that the presumption of public need for a public service shall be deemed in favor of the applicant. In case of conflict between a statute and an administrative order, the former must prevail. By its terms, public convenience or necessity generally means something fitting or suited to the public need. 16As one of the basic requirements for the grant of a CPC, public convenience and necessity exists when the proposed facility or service meets a reasonable want of the public and supply a need which the existing facilities do not adequately supply. The existence or non-existence of public convenience and necessity is therefore a question of fact that must be established by evidence, real and/or testimonial; empirical data; statistics and such other means necessary, in a public hearing conducted for that purpose. The object and purpose of such procedure, among other things, is to look out for, and protect, the interests of both the public and the existing transport operators. Verily, the power of a regulatory body to issue a CPC is founded on the condition that after fulldress hearing and investigation, it shall find, as a fact, that the proposed operation is for the convenience of the public. 17 Basic convenience is the primary consideration for which a CPC is issued, and that fact alone must be consistently borne in mind. Also, existing operators in subject routes must be given an opportunity to offer proof and oppose the application. Therefore, an applicant must, at all times, be required to prove his capacity and capability to furnish the service which he has undertaken to render. 18 And all this will be possible only if a public hearing were conducted for that purpose. Otherwise stated, the establishment of public need in favor of an applicant reverses well-settled and institutionalized judicial, quasi-judicial and administrative procedures. It allows the party who initiates the proceedings to prove, by mere application, his affirmative allegations. Moreover, the offending provisions of the LTFRB memorandum circular in question would in effect amend the Rules of Court by adding another disputable presumption in the enumeration of 37 presumptions under Rule 131, Section 5 of the Rules of Court. Such usurpation of this Court's authority cannot be countenanced as only this Court is mandated by law to promulgate rules concerning pleading, practice and procedure. 19 Deregulation, while it may be ideal in certain situations, may not be ideal at all in our country given the present circumstances. Advocacy of liberalized franchising and regulatory process is tantamount to an abdication by the government of its inherent right to exercise police power, that is, the right of government to regulate public utilities for protection of the public and the utilities themselves. While we recognize the authority of the DOTC and the LTFRB to issue administrative orders to regulate the transport sector, we find that they committed grave abuse of discretion in issuing DOTC Department Order No. 92-587 defining the policy framework on the regulation of transport services and LTFRB Memorandum Circular No. 92-009 promulgating the implementing guidelines on DOTC

Department Order No. 92-587, the said administrative issuances being amendatory and violative of the Public Service Act and the Rules of Court. Consequently, we rule that the twenty (20%) per centum fare increase imposed by respondent PBOAP on March 16, 1994 without the benefit of a petition and a public hearing is null and void and of no force and effect. No grave abuse of discretion however was committed in the issuance of DOTC Memorandum Order No. 90-395 and DOTC Memorandum dated October 8, 1992, the same being merely internal communications between administrative officers. WHEREFORE, in view of the foregoing, the instant petition is hereby GRANTED and the challenged administrative issuances and orders, namely: DOTC Department Order No. 92-587, LTFRB Memorandum Circular No. 92-009, and the order dated March 24, 1994 issued by respondent LTFRB are hereby DECLARED contrary to law and invalid insofar as they affect provisions therein (a) delegating to provincial bus and jeepney operators the authority to increase or decrease the duly prescribed transportation fares; and (b) creating a presumption of public need for a service in favor of the applicant for a certificate of public convenience and placing the burden of proving that there is no need for the proposed service to the oppositor. The Temporary Restraining Order issued on June 20, 1994 is hereby MADE PERMANENT insofar as it enjoined the bus fare rate increase granted under the provisions of the aforementioned administrative circulars, memoranda and/or orders declared invalid. No pronouncement as to costs. SO ORDERED.