EN BANC

G.R. No. L-3881 August 31, 1950

EDUARDO DE LOS SANTOS, Petitioner, vs. GIL R. MALLARE, LUIS P. TORRES, in his capacity as City Mayor, PANTALEON PIMENTEL, in his capacity as City Treasurer and RAFAEL USON, in his capacity as City Auditor, Respondents.

Francisco S. Reyes for petitioner.Office of the Solicitor General Felix Bautista Angelo and Solicitor Augusto Luciano for respondents.Jose P. Laurel and Abelardo Subido as amici curiae.

TUASON, J.:

This is an original action of quo warranto questioning the legality of the appointment of respondent Gil R. Mallare to the office of city engineer for the City of Baguio which the petitioner occupied and claims to be still occupying. The real issue however is the legality of the petitioner's removal from the same office which would be the effect of Mallare's appointment if the same be allowed to stand. It is the petitioner's contention that under the Constitution he can not be removed against his will and without cause. The complaint against the other respondents has to do merely with their recognition of Mallare as the lawful holder of the disputed office and is entirely dependent upon the result of the basic action against the last-mentioned respondent (Mallare). Stripped of details unessential to the solution of the case, the facts are that Eduardo de los Santos, the petitioner, was appointed City Engineer of Baguio on July 16, 1946, by the President, appointment which was confirmed by the Commission on Appointments on August 6, and on the 23rd of that month, he qualified for and began to exercise the duties and functions of the position. On June 1, 1950, Gil R. Mallare was extended an ad interim appointment by the President to the same position, after which, on June 3, the Undersecretary of the Department of Public Works and Communications directed Santos to report to the Bureau of Public Works for another assignment. Santos refused to vacate the office, and when the City Mayor and the other officials named as Mallare's co-defendants ignored him and paid Mallare the salary corresponding to the position, he commenced these proceedings.

The petitioner rests his case on Article XII of the Constitution, section 4 of which reads: "No officer or employee in the Civil Service shall be removed or suspended except for cause as provided by law." It is admitted in respondents' answer that the City Engineer of Baguio "belongs to the unclassified service." And this Court, in an exhaustive opinion by Mr. Justice Montemayor in the case of Lacson vs. Romero, 47 Off. Gaz., 1778, involving the office of provincial fiscal, ruled that officers or employees in the unclassified as well as those in the classified service are protected by the above-cited provision of the organic law. But there is this difference between the Lacson case and the case at bar: Section 2545 of the Revised Administrative Code, which falls under Chapter 61 entitled "City of Baguio," authorizes the Governor General (now the President) to remove at pleasure any of the officers enumerated therein, one of whom is the city engineer. The first question that presents itself is, is this provision still in force?

Section 2 of Article XVI of the Constitution declares that "All laws of the Philippine Islands shall continue in force until the inauguration of the Commonwealth of the Philippines; thereafter, such laws shall remain operative, unless inconsistent with this Constitution, until amended, altered, modified, or repealed by the Congress of the Philippines, . . . ." It seems plain beyond doubt that the provision of section 2545 of the Revised Administrative Code, he (Governor-General now President) may remove at pleasure any of the said appointive officers," is incompatible with the constitutional inhibition that "No officer or employee in the Civil Service shall be removed or suspended except for cause as provided by law." The two provisions are mutually repugnant and absolutely irreconcilable. One in express terms permits what the other in similar terms prohibits. The Constitution leaves it to the Congress to provide for the cause of removal, and it is suggested that the President's pleasure is itself a cause. The phrase "for cause" in connection with the removals of public officers has acquired a well-defined concept. "It means for reasons which the law and sound public policy recognized as sufficient warrant for removal, that is, legal cause, and not merely causes which the appointing power in the exercise of discretion may deem sufficient. It is implied that officers may not be removed at the mere will of those vested with the power of removal, or without any cause. Moreover, the cause must relate to and affect the administration of the office, and must be restricted to something of a substantial nature directly affecting the rights and interests of the public."(43 Am. Jur., 47, 48.) Reconsideration of the decision in Lacson vs. Romero as far as officers in the unclassified service are concerned is urged. It is contended that only officers and employees in the classified service should be brought within the purview of Article XII of the Constitution. Section 1 of this article ordains: "A Civil Service embracing all branches and subdivisions of the Government shall be provided by law. Appointments in the Civil Service, except as those which are policy-determining, primarily confidential or highly technical in nature, shall be made only according to merit and fitness, to be determined as far as practicable by competitive examination." The first clause is a definition of the scope of Civil Service, the men and women which section 4 protects. It seems obvious from that definition that the entire Civil Service is contemplated, except positions "which are policy-determining, primarily confidential or highly technical in nature." This theory is confirmed by the enactment of Commonwealth Act No. 177 on November 30, 1936 to implement Article XII of the Constitution. Commonwealth Act No. 177 explains Civil Service almost in the identical words of that article of the organic law. As a contemporaneous construction, this Act affords an index to the meaning of Civil Service as conceived by the framers of the Constitution. "The principle of contemporaneous construction may be applied to the construction given by the legislature to the constitutional provisions dealing with legislative powers and procedure. Though not conclusive, such interpretation is generally conceded as being entitled to great weight." (U.S. vs. Sprague, 282 U.S., 716; 75 L. ed. 640; 51 S. Ct., 220; 71 A.L.R., 1381; Den ex dem. Murray vs. Hoboken Land and Improv. Co., 18 How. [U.S.], 272; 15 L. ed., 372; Clark vs. Boyce, 20 Ariz., 544; 185 P., 136, citing R.C.L.; 11 Am. Jur. 699.) The principle of express mention and implied exclusion may be made use of also to drive home this point. We are led to the same conclusion by the existing provisions at the time of the adoption of the Constitution. Civil Service as embracing both classes of officers and employees possessed definite legal and statutory meaning when the Constitution was approved. Section 670 of the Revised Administrative Code already provided that "Persons in the Philippine civil service pertain either to the classified service," and went on to say that "The classified service embraces all not expressly declared to be in the unclassified service." Then section 671 described persons in the unclassified service as "officers, other than the provincial treasurers and assistant directors of bureaus or offices, appointed by the President of the Philippines, with the consent of the Commission on Appointments of the National Assembly, and all other officers of the government whose appointments are by law vested in the President of the Philippines alone." The rules of the construction inform us that the words use in the constitution are to be given the sense they have in common use. (Okanogan Indians vs. United States, 279, U.S., 665; 64 A.L.R., 1434; 73 Law ed., 894.) It has been said that we must look to the history of the times, examine the state of things existing when the Constitution was framed and adopted, (Rhode Islands vs. Massachusetts, 12 Pet., 657; 9 Law ed., 1233), and interpret it in the light of the law then in operation. (Mattox vs. United States, 156, U.S., 237; 39 Law ed., 409.)chanrobles virtual law library

Attention is drawn to supposed inconveniences of tying the hands of the appointing power in changing and shifting officers in the unclassified service. "If - it is argued - all important officers and employees of the government falling within the unclassified service as enumerated in section 671 of the Revised Administrative Code as amended by Commonwealth Act No. 177, may not be removed by the President except for cause as provided by law, . . . the President would be seriously crippled in the discharge of the grave duty and responsibility laid upon him by the Constitution to take care that the laws faithfully executed." Questions of expediency are, of course, beyond the province of the court to take into account in the interpretation of laws or of the Constitution where the language is otherwise clear. But the argument is, we think, unsound even if the case be approached from this angle. It contains its own refutation. The Constitution and the law implementing it afford adequate safeguards against such consequences as have been painted.

The argument proceeds, contrary to its context, on the assumption that removes of civil service officers and employees are absolutely prohibited, which is not the case. The Constitution authorizes removals and only requires that they be for cause. And the occasions for removal would be greatly diminished if the injunction of section 1 of Article XII of the Constitution - that appointments in the civil service shall be made only according to merit and fitness, to be determined as far as practicable by competitive examination - would be adhered of meticulously in the first place. By far greater mischiefs would be fomented by an unbridled authority to remove. Such license would thwart the very aims of the Constitution which are expounded by Dean Aruego, himself a member of the Constitutional Convention, in the following remarks copied with approval in Lacson vs. Romero, supra:

The adoption of the "merit system" in government service has secured efficiency and social justice. It eliminates the political factor in the selection of civil employees which is the first essential to an efficient personnel system. It insures equality of opportunity to all deserving applicants desirous of a career in the public service. It advocates a new concept of the public office as a career open to all and not the exclusive patrimony of any party or faction to be doled out as a reward for party service. The "merit system" was adopted only after the nations of the world took cognizance of its merits. Political patronage in the government service was sanctioned in 1879 by the Constitutional right of President of the United States to act alone in the matter of removals. From the time of Andrew Jackson the principle of the "To the victor belongs the spoils' dominated the Federal Government. The system undermined moral values and destroyed administrative efficiency.Since the establishment of the American Regime in the Philippines we have enjoyed the benefits of the "merit system." The Schurmann Commission advocated in its reports that "the greatest care should be taken in the selection of the officials for administration. They should be men of the highest character and fitness, and partisan politics should be entirely separated from the government." The fifth act passed by the Philippine Commission created a Board of Civil Service. It instituted a system here that was far more radical and thorough than that in the United States. The Governor-General after William Taft adopted the policy of appointing Filipinos in the government regardless of their party affiliation. As the result of these the personnel of the Civil Service had gradually come to be one of which the people of the United States could feel justly proud. Necessity for Constitutional provision. - The inclusion in the constitution of provisions regarding the "merit system" is a necessity of modern times. As its establishment secures good government the citizens have a right to accept its guarantee as a permanent institution. Separation, suspension, demotions and transfers. - The "merit system" will be ineffective if no safeguards are placed around the separation and removal of public employees. The Committee's report requires that removals shall be made only for "causes and in the manner provided by law. This means that there should be bona fide reasons and action maybe taken only after the employee shall have been given a fair hearing. This affords the public employees reasonable security of tenure. (II Aruego's Framing of the Constitution, 886, 887, 890.)

As has been seen, three specified classes of positions - policy-determining, primarily confidential and highly technical - are excluded from the merit system and dismissal at pleasure of officers and employees appointed therein is allowed by the Constitution. These positions involved the highest degree of confidence, or are closely bound out with and dependent on other positions to which they are subordinate, or are temporary in nature. It may truly be said that the good of the service itself demands that appointments coming under this category determinable at the will of the officer that makes them. The office of city engineer is neither primarily confidential, policy-determining, nor highly technical. Every appointment implies confidence, but much more than ordinary confidence is reposed in the occupant of a position that is primarily confidential. The latter phrase denotes not only confidence in the aptitude of the appointee for the duties of the office but primarily close intimacy which insures freedom of intercourse without embarrassment or freedom from misgivings of betrayals of personal trust or confidential matters of state. Nor is the position of city engineer policy-determining. A city engineer does not formulate a method of action for the government or any its subdivisions. His job is to execute policy, not to make it. With specific reference to the City Engineer of Baguio, his powers and duties are carefully laid down for him be section 2557 of the Revised Administrative Code and are essentially ministerial in character. Finally, the position of city engineer is technical but not highly so. A city engineer is not required nor is he supposed to possess a technical skill or training in the supreme or superior degree, which is the sense in which "highly technical" is, we believe, employed in the Constitution. There are hundreds of technical men in the classified civil service whose technical competence is not lower than that of a city engineer. As a matter of fact, the duties of a city engineer are eminently administrative in character and could very well be discharged by non-technical men possessing executive ability.

Section 10 of Article VIII of the Constitution requires that "All cases involving the constitutionality of a treaty or law shall be heard and decided by the Supreme Court in banc," and warns that "no treaty or law may be declared unconstitutional without the concurrence of two-thirds of all the members of the Court." The question arises as to whether this judgment operates as invalidation of section 2545 of the Revised Administrative Code or a part of it so as to need at least eight votes to make effective. The answer should be in negative.

We are not declaring any part of section 2545 of the Revised Administrative Code unconstitutional. What we declare is that the particular provision thereof which gave the Chief Executive power to remove officers at pleasure has been repealed by the Constitution and ceased to be operative from the time that instrument went into effect. Unconstitutionally, as we understand it, denotes life and vigor, and unconstitutional legislation presupposes posteriority in point of time to the Constitution. It is a statute that "attempts to validate and legalize a course of conduct the effect of which the Constitution specifically forbids (State ex-rel. Mack vs. Guckenberger, 139 Ohio St., 273; 39 NE. [2d], 840.) A law that has been repealed is as good as if it had never been enacted, and can not, in the nature of things, contravene or pretend to contravene constitutional inhibition. So, unlike legislation that is passed in defiance of the Constitution, assertive and menacing, the questioned part of section 2545 of the Revised Administrative Code does not need a positive declaration of nullity by the court to put it out of the way. To all intents and purposes, it is non-existent, outlawed and eliminated from the statute book by the Constitution itself by express mandate before this petitioner was appointed. Incidentally, the last discussion answers and disposes of the proposition that in accepting appointment under section 2545 of the Revised Administrative Code, the petitioner must be deemed to have accepted the conditions and limitations attached to the appointment. If the clause of section 2545 which authorized the President to remove officers of the City of Baguio at pleasure had been abrogated when petitioner's appointment was issued, the appointee can not presumed to have abided by this condition.

We therefore hold that the petitioner is entitled to remain in office as City Engineer of Baguio with all the emoluments, rights and privileges appurtenant thereto, until he resigns or is removed for cause, and that respondent Mallare's appointment is ineffective in so far as it may adversely affect those emoluments, rights and privileges. Without costs.

Santos v. MallareFacts: Eduardo de los Santos was appointed City Engineer of Baguio on July 16, 1946 by the President of the Philippines. His appointment was confirmed by the Commission on Appointments on August 6, and on the 23rd, he qualified for and began to exercise the duties and functions of the position. On June 1, 1950, Gil R. Mallare was extended an Ad interim appointment by the President to the same position, after which, on June 3, the Undersecretary of the Department of Public Works and Communications directed Santos to report to the Bureau of Public Works for another assignment. Santos refused to vacate the office. The City Mayor and the other city officials ignored him and paid Mallare the salary corresponding to the position. Santos filed this quo warranto to question the legality of the appointment of respondent Gil R. Mallare to the office of city engineer for the City of Baguio which the petitioner occupied and claims to be still occupying.Issue: WON the removal of Santos as city engineer as he was appointment, confirmed and started to exercise his duties as such was legal. Held: No. It is illegal and he should remain as city engineer. The position of City Engineer of Baguio belongs to the category of unclassified service. In Lacson v. Romero, the Court held that officers or employees in the unclassified as well as those in the classified service are protected by Article XII, Sec. 4 of the 1935 Constitution which states that no officer or employee in the Civil Service shall be removed or suspended except for cause as provided by law. However, Section2545 of the Revised Administrative Code, which falls under Chapter 61 entitled "City of Baguio, "authorizes the Governor General (now the President) to remove at pleasure any of the officers enumerated therein, one of whom is the city engineer. It is obvious that the aforequoted constitutional provision is contrary to the provision of the RAC. And Sec. 2 of Article XVI of the Constitution declares that all laws of the Philippine Islands shall continue in force until the inauguration of the Commonwealth of the Philippines; thereafter, such laws shall remain operative, unless inconsistent with this Constitution, until amended, altered, modified, or repealed by the Congress of the Philippines. The Constitution leaves it to the Congress to provide for the cause of removal, and it is suggested that the President's pleasure is itself a cause. The phrase "for cause" in connection with the removals of public officers has acquired a well-defined concept. It means for reasons which the law and sound public policy recognized as sufficient warrant for removal, that is, legal cause, and not merely causes which the appointing power in the exercise of discretion may deem sufficient. It is implied that officers may not be removed at the mere will of those vested with the power of removal, or without any cause. Moreover, the cause must relate to and affect the administration of the office, and must be restricted to something of a substantial nature directly affecting the rights and interests of the public. Sec. 1 of Art. XII of the Constitution states that a Civil Service embracing all branches and subdivisions of the Government shall be provided by law. Appointments in the Civil Service, except as those which are policy-determining, primarily confidential or highly technical in nature, shall be made only according to merit and fitness, to be determined as far as practicable by competitive examination. The first clause is a definition of the scope of Civil Service, the men and women which section 4 protects. It seems obvious from that definition that the entire Civil Service is contemplated, except positions "which are policy-determining, primarily confidential or highly technical in nature. Hence, the existing provisions at the time of the adoption of the Constitution. Civil Service as embracing both classes of officers and employees possessed definite legal and statutory meaning when the Constitution was approved. Section 670 of the Revised Administrative Code already provided that "Persons in the Philippine civil service pertain either to the classified service," and went on to say that "The classified service embraces all not expressly declared to be in the unclassified service." Then section 671 described persons in the unclassified service as officers, other than the provincial treasurers and assistant directors of bureaus or offices, appointed by the President of the Philippines, with the consent of the Commission on Appointments of the National Assembly, and all other officers of the government whose appointments are by law vested in the President of the Philippines alone. The office of city engineer is neither primarily confidential, policy-determining, nor highly technical. Every appointment implies confidence, but much more than ordinary confidence is reposed in the occupant of a position that is primarily confidential. The latter phrase denotes not only confidence in the aptitude of the appointee for the duties of the office but primarily close intimacy which insures freedom of intercourse without embarrassment or freedom from misgivings of betrayals of personal trust or confidential matters of state. Nor is the position of city engineer policy-determining. A city engineer does not formulate a method of action for the government or any its subdivisions. His job is to execute policy, not to make it. With specific reference to the City Engineer of Baguio, his powers and duties are carefully laid down for him be section 2557 of the Revised Administrative Code and are essentially ministerial in character. Finally, the position of city engineer is technical but not highly so. A city engineer is not required nor is he supposed to possess a technical skill or training in the supreme or superior degree, which is the sense in which "highly technical" is, we believe, employed in the Constitution. There are hundreds of technical men in the classified civil service whose technical competence is not lower than that of a city engineer. As a matter of fact, the duties of a city engineer are eminently administrative in character and could very well be discharged by non-technical men possessing executive ability.

G.R. No. L-19850 January 30, 1964

VIGAN ELECTRIC LIGHT COMPANY, INC., petitioner, vs.THE PUBLIC SERVICE COMMISSION, respondent.

Raymundo A. Armovit for petitioner.Federico S. Arlos and P. H. del Pilar for respondent.

CONCEPCION, J.:

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 ............................................................P2.301 25 watt bulb per month ............................................................3.001 40 watt bulb per month ............................................................4.501 50 watt bulb per month ............................................................5.501 60 watt bulb per month ............................................................6.501 75 watt bulb per month ............................................................7.501 80 watt bulb per month ............................................................8.001 100 watt bulb per month ............................................................9.001 150 watt bulb per month ............................................................13.001 200 watt bulb per month ............................................................17.00METER RATE

For the first 15For the first 15 Kw. hrs. ............................................................P0.40For the next 35 Kw. hrs. .............................................................30For the next 50 Kw. hrs. .............................................................25For all over 100 Kw. hrs. .............................................................20Minimum 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.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.

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, 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 watt per night.Minimum Charge: P1.00

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.

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 letter-petition 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 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:

x x x x x x x x x

(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 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.

Vigan Electric Light Co., Inc. v. Public Service Commission, 11 SCRA 317 (1964)

FACTS: In an alleged letter-petition, petitioner was charged with black market of electric meters and that its meters were installed in bad faith to register excessive rates. Petitioner received a communication from General Auditing Office (GAO) that it will be audited. PSC issued subsequently a subpoena duces tecum requiring petitioners to produce before PSC, during a conference scheduled for April 10, 1962, certain book of accounts. Petitioner moved to quash such subpoena. The conference was postponed twice until it was finally cancelled. In May 1962, PSC issued an order, which after finding that petitioner had an excess of revenues by 18%, lowered the present meter rates of petitioner. Hence, this petition for certiorari is instituted.

ISSUE: WON notice and hearing is required

RULING: Yes.

In support to its special defense, respondent PSC maintains that rate-fixing is a legislative function; that legislative or rule-making powers may constitutionally be exercised without previous notice or hearing. Although the rule-making power and even the power to fix rates when such are meant to apply to all enterprises of a given kind throughout the Philippines may partake of legislative character, such is not the nature of the order complained of. Here, the order exclusively applies to petitioner. What is more, it is predicated upon the finding of fact, whether the petitioner is making a profit more than 12% of its invested capital which is denied by the petitioner. Obviously, the latter is entitled to cross-examine the maker of the said report, and to introduce evidence to disprove the contents thereof and/or explain or complement the same, as well as to refute the conclusions 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 CA No. 146, explicitly require notice and hearing.Wherefore, we hold that the determination of the issue involved in the order complained of partakes the nature of 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.

EN BANC

[G.R. No. L-9223. June 30, 1956.]

EDUARDO BRILLANTES, Plaintiff-Appellant, vs. LEONARDO CASTRO, doing business under the name and style of ALMACAS POLICE PROTECTIVE BUREAU, Defendant-Appellee.

D E C I S I O N

MONTEMAYOR, J.:

This is an appeal from the order of the Court of First Instance of Manila presided by Judge E. Soriano dated February 12, 1955, granting the motion to dismiss filed by the Defendant Leonardo Castro and dismissing the complaint of the Plaintiff Eduardo Brillantes. For a statement of the facts of the case we adopt that made by the trial court which we reproduce below:chanroblesvirtuallawlibrary

It appears that on December 1, 1953, the Plaintiff filed a complaint against the Defendant before the Wage Administration Service for the recovery of alleged unpaid salary and overtime pay, the said case bearing No. C-1046; chan roblesvirtualawlibrarythat on February 15, 1954; chan roblesvirtualawlibrarythe Plaintiff and the Defendant entered into an ARBITRATION AGREEMENT whereby they agreed 1. That they submit their case to the Wage Administration Service for investigation; chan roblesvirtualawlibraryand 2. That they bind themselves to abide by whatever decision this Office may render on the case and that they recognize said decision to be final and conclusive; chan roblesvirtualawlibrarythat in accordance with the said agreement, the parties, assisted by their respective counsel, adduced evidence before the Wage Administrative Service; chan roblesvirtualawlibrarythat on May 31, 1954, the latter rendered a decision containing its findings and the following dispositive parts WHEREFORE, considering the evidence presented, the claim for overtime and underpayment is hereby dismissed but the Respondent is adjudged to pay to the claimant the amount of fifty pesos and eighty-eight centavos (P50.88) corresponding to his salary for services rendered in the month of November, 1953 and to deposit the same within five (5) days from receipt thereof; chan roblesvirtualawlibrarythat no appeal was taken from the said decision, and that on November 10, 1954, the Plaintiff filed a complaint against the Defendant with this Court over the same subject- matter and cause of action litigated between them before, and decided by, the Wage Administration Service. (pp. 22-23, Record on Appeal.)

In support of its order of dismissal, the trial court made the following observations and conclusions which we quote with favor:chanroblesvirtuallawlibrary

It is evident that the aforesaid decision rendered by the Hearing Officer of the Wage Administration Service was pursuant to the authority granted to the Secretary of Labor to delegate any or all of his powers in the administration or enforcement of the Minimum Wage Law to the Chief of the WAS, who may act personally or through duly authorized representative Republic Act No. 602, The Minimum Wage Law, section 12(e). Section 7 of the same Act also pertinently provides that Any person aggrieved by an order of the Secretary of Labor issued under this Act may obtain a review of such order in the Supreme Court by filing in such court within fifteen (15) days after the entry and publication of such order a written petition praying that the order of the Secretary of Labor be modified or set aside in whole or in part cralaw The Jurisdiction of the Wage Administration Service to render the aforesaid decision, as well as the remedy of the aggrieved party against such a decision, is impliedly recognized by the Supreme Court in Gonzales vs. Hon. Secretary of Labor, et als., G.R. No. L- 6409, wherein it was said:chanroblesvirtuallawlibrary The point raised by the Solicitor General on behalf of the Respondent. Secretary of Labor that Petitioners remedy is to appeal to the President of the Philippines is not well taken. Section 7 of the law creating the WAS (Rep. Act No. 602) expressly authorized any person aggrieved by an order of the Secretary of Labor to obtain a review of such order in the Supreme Court. In view of the failure of the herein Plaintiff to avail himself of the remedy marked out by said Section 7 of Republic Act No. 602 within the time therein specified, the aforesaid decision of the Wage Administration Service became final and conclusive, not only by clear implication but also by express agreement of the parties That they bind themselves to abide by whatever decision this Office (WAS) may render on the case, and that they recognize said decision to be final and conclusive. To permit the herein Plaintiff to institute the present case before this Court, after the same had been finally and conclusively decided by the Wage Administration Service, is therefore to allow him to go back on his own solemn agreement, to set at naught the provisions of Republic Act No. 602; chan roblesvirtualawlibraryand to encourage duplication of work, if not conflicting judgments, by authorizing a party first to file his case with the Wage Administration Service and thereafter, in case of an adverse decision, to refile the same case with the Court of First Instance. This could not have been the legislators intention in the enactment of Republic Act No. 602. (pp. 23-24, Record on Appeal.)

Attorney Manuel Y. Macias counsel for Appellant in his brief concedes that the decision rendered by the hearing officer of the WAS is an order issued pursuant to Section 7, above quoted, of the Minimum Wage Law in relation to Section 12 (a) which authorizes delegation by the Secretary of Labor of his powers in the administration or enforcement of the Minimum Wage Law to the Chief of the Wage Administrative Service. He, however, contends that the right to go to the Supreme Court for review of said order granted by Section 7 of the Minimum Wage Law is not exclusive, because according to him, under said Section 7 the review by this Tribunal is limited to questions of law and that the findings of fact contained in the appealed decision must be accepted. This is not entirely correct. The findings of fact made by the Secretary of Labor or his delegate are accepted and are conclusive only if supported by substantial evidence. So that Plaintiff could well have appealed from the decision of the WAS to this Tribunal, even on question of fact, if he was prepared and in a position to show that the findings of fact of the WAS were not supported by substantial evidence. Then counsel for Appellant, referring to the hearing officer of the WAS and his decision, says the following:chanroblesvirtuallawlibrary

Appellant cannot accept the findings of fact in the decision of the Hearing Officer of the Wage Administration Service because they are not merely contrary to the facts but a scandalous distortion of them with no other end in view but to favor Appellee, the Respondent employer. The Hearing Officer, to promote this end, callously ignored Appellants evidence. His so-called decision is a mockery of justice, and absolute nullity for which no fair minded citizen can have any respect. (p. 5, Appellants Brief.)

And of Judge Soriano who dismissed Plaintiffs complaint, the same counsel comments thus:chanroblesvirtuallawlibrary

The court a quo refused to perform the functions of a trial court and rendered the foregoing ruling without any evidence having been first presented pro or con. It decided an Issue in favor of one party and against the other upon the mere representations of the favored party and refused absolutely to hear the other. The court a quos act in so doing is a plain violation of the right to due process p. 8, Appellants Brief.)

The above is couched in strong and disrespectful language unbecoming a lawyer who is an officer of the court, and highly improper in referring to an administrative official authorized to render decisions and especially to a Judge of the Court of First Instance. If Plaintiff-Appellant and his counsel were dissatisfied with the findings of the hearing officer of the WAS; chan roblesvirtualawlibraryif they believed that the findings were a distortion of the facts as contained in the evidence, they should have appealed from said decision to this Tribunal. And if they were really convinced that said hearing officer of the WAS deliberately distorted the facts to favor the employer, they should have prepared charges of partiality and malfeasance and lodged the same with the proper authorities for investigation. Now is neither the time nor the occasion to air said grievance, assuming for the moment that it is real and well founded. And as to the reference to the trial court, said court merely acted upon the motion to dismiss. It considered the complaint and the motion to dismiss. That was enough. There was no need for the presentation of any evidence. So, the action of the trial court was proper and warranted; chan roblesvirtualawlibrarywhich cannot be said of the comment and observations of counsel above reproduced. Said counsel is hereby admonished to use more temperate and respectful language and observe more proper conduct in the future.

We fully agree with the trial court in its order dismissing the complaint on the ground that the action is barred by prior judgment. There is no question that the complaint filed by Plaintiff-Appellant with the WAS may be regarded as a suit by one party against another to enforce a right; chan roblesvirtualawlibrarythat the WAS in entertaining said suit, hearing the parties and deciding the case acted as a quasi-judicial body and the proceedings before it were quasi-judicial proceedings, and conducted in accordance with law, and so was the decision rendered. Not only this, but the parties before the commencement of the proceedings signed an agreement whereby they submitted their case to the WAS, binding themselves by whatever decision the WAS may render on the same, and that they recognized the decision to be final and conclusive. After signing that agreement or pledge, Plaintiff- Appellant may not now be heard to say that the decision rendered by the WAS has no legal effect on him. Besides, even assuming that despite the agreement the decision did not automatically become final, still Plaintiffs failure to appeal therefrom to the Supreme Court as provided by the Minimum Wage Law (Rep. Act 602) rendered it final and conclusive and served as a bar to another action between the same parties involving the same subject matter and cause of action and the same issues.

In the case of Pealosa vs. Tuason, 22 Phil. 303, 314, we held:chanroblesvirtuallawlibrary

cralaw a judgment rendered cralaw by a court of competent jurisdiction on the merits, is a bar to any future suit between the same parties or their privies upon the same cause of action so long as it remains unreserved; or in the language of Mr. Justice Field in the opinion just cited:chanroblesvirtuallawlibrary

It is a finality as to the claim or demand in controversy, concluding parties and those in privity with them, not only as to every matter which was offered and received to sustain or defeat the claim or demand, but as to any other admissible matter which might have been offered for that purpose.

And in the case of Tejedor vs. Palet, 61 Phil. 494, 502-503, we equally held:chanroblesvirtuallawlibrary

The rule is often stated in general terms that a judgment is conclusive not only upon the questions actually contested and determined, but upon all matters which might have been litigated and decided in that suit; chan roblesvirtualawlibraryand this is undoubtedly true of all matters properly belonging to the subject of the controversy and within the scope of the issues cralaw . (citing 34 C.J., pp. 909-911.)

The authorities above cited on res adjudicata refer to decisions rendered by the courts. Are they applicable to decisions of a quasi-judicial body like the Wage Administration Service (WAS)? The answer is in the affirmative, as may be seen from the following authorities:chanroblesvirtuallawlibrary

The rule which forbids the reopening of a matter once judicially determined by competent authority applies as well to the judicial and quasi-judicial acts of public, executive, or administrative officers and boards acting within their jurisdiction as to the judgments of courts having general judicial powers. This rule has been recognized as applying to the decisions of road or highway commissioners, commissioners of motor transportation, boards of audit, county boards, tax commissioners, boards, or officers, the federal trade commission, school commissioners, police commissioners, sewers commissioners, land commissioners or officers, collector of customs, referees in bankruptcy court commissioners, boards or other tribunals administering workmens compensation acts, and other like officers and boards. However, a particular decision or determination may not be conclusive, as where it was not a judicial, as distinguished from a legislative, executive, or ministerial, determination, or the matter was not within the jurisdiction of the officer or board cralaw . (50 C.J. S., Judgments, Sec. 690, pp. 148-149).

cralaw There are, however, cases in which the doctrine of res judicata has been held applicable to judicial acts of public, executive, or administrative officers and boards. In this connection, it has been declared that whenever a final adjudication of persons invested with power to decide on the property and rights of the citizen is examinable by the Supreme Court, upon a writ of error or a certiorari, such final adjudication may be pleaded as res judicata. (30 Am. Jur., Judgments, Sec. 164, p. 910). (Italics Supplied).

In view of the foregoing, the order appealed from is affirmed. No costs.

Eduardo Brillantes vs. Leonardo CastroGr. No. L-9223 June 30, 1956Facts: On December 1, 1953, Brillantes filed a complaint against Castro before the Wage Administration Service (WAS) for the recovery of the alleged unpaid salary and overtime pay. On February 15, 1954 Brillantes and Castro entered into an Arbitration Agreement whereby they agreed 1. That they submit their case to the WAS for investigation; and 2. That they bind themselves to abide by whatever decision WAS may render over the case; and that they recognize said decision to be final and conclusive. WAS ruling: the claim for overtime and underpayment is hereby dismissed but the respondent is adjudged to pay the claimant P50.88 corresponding to his salary for services rendered in the month of November. No appeal was taken from this decision and on November 10, 1954, Brillantes filed a complaint against Castro with this Court over the same subject matter and cause of action litigated between them before and decided by the WAS. The counsel of Brillantes agreed that the decision rendered by the hearing officer of the WAS is an order issued pursuant to section 7 of Minimum Wage Law in relation section 12 which authorizes delegation by the Secretary of Labor of his powers in the administration or enforcement of the MWL to the Chief of the WAS, however he contends that the right to go to the Supreme Court for review of said order granted by section 7 of MWL is not exclusive because under said section the review by this Tribunal is limited to question of law and that the findings of fact contained in the appealed decision must be accepted. Trial Court ruling: dismissed the complaint on the ground that it is barred by prior judgment. Hence, this appeal.Issue: whether or not, the second complaint is barred by prior judgment.

Held: affirmative; the SC fully agree with the decision of the trial court that the complaint is barred by prior judgment. There is no question that the complaint filed by Brillantes with the WAS may be regarded as a suit by one party as against another to enforce a right; that the WAS in entertaining said suit, hearing the parties and deciding the case acted as quasi-judicial body and the proceedings before it were quasi-judicial proceedings, and conducted in accordance with law, and so was the decision rendered. The failure of Brillantes to appeal from said decision to the SC as provided by the Minimum wage law rendered it final and conclusive and served as a bar to another action between the same parties involving the same subject matter and cause of action and the same issues. Besides, the parties signed an agreement whereby they submitted their case to the WAS, binding themselves to abide by whatever decision it would validly render.Note:the principle of res judicata is applicable to decisions of a quasi-judicial body like the WAS. In this connection, it has been declared that whatever a final adjudication of persons invested with power to decide on the property and rights of the citizen is examinable by the SC, upon a writ of error or a certiorari; such final adjudication may be pleaded as res judicata.

Republic of the PhilippinesSUPREME COURTManila

FIRST DIVISION

G.R. Nos. 76142-43December 27, 1993

VDA FISH BROKER and/or VENERANDO ALONZO, petitioner, vs.NATIONAL LABOR RELATIONS COMMISSION, RUPERTO BULA and VIRGILIO SALAC, respondents.

Jose Edward L. Navarro for petitioners.

Arellano, Malonzo & Capoyoc Law Offices for private respondents.

BELLOSILLO, J.:

The ruling of public respondent National Labor Relations Commission (NLRC) that "[t]he resolution of a corollary issue in a case does not constitute res judicata to a subsequent case involving the same question of a employer-employee relationship," 1 is disputed by the petitioner and the Office of the Solicitor General (OSG).

Petitioner VDA Fish Broker (VDA), a duly licensed fish broker, owned, operated and represented herein by petitioner Venerando D. Alonzo, is in the business of selling fish. It engaged the services of private respondents Ruperto Bula and Virgilio Salac, among others, as batilyos "to arrange the fish in the baera . . . (including) emptying or filling the baera or pulling or dragging the baeras in or out of the designated area." 2

On 14 May 1982, a complaint for non-payment of service incentive leave pay, emergency cost of living allowance, thirteenth month pay, legal holiday and premium pay for rest day and holiday was filed against VDA, and Venerando and Corazon Alonzo by Samahan ng Nagkakaisang Batilyo-NFL represented by its local president and herein respondent Ruperto Bula. Respondent Virgilio Salac also signed the complaint, subsequently docketed as Case No. NLRC-NCR-5-3832-82.

On 26 May 1983, Labor Arbiter Porfirio E. Villanueva dismissed the case for lack of merit. He ruled that there was no employer-employee relationship between VDA and the batilyos as the latter did their tasks

. . . in their own way so that they could earn more, as a matter of fact, a batilyo could earn from P60.00 to P150.00 a day for two to four hours work. They are paid by the results according to the number of baeras they have completed. Fish brokers have no control and supervision over the batilyos. After completing their job for two or four hours they could abandon the fish brokers and transfer to another fish broker. They don't observe any regular working hours nor (do) the accomplish any time record . . . . 3

The Labor Arbiter discarded the alleged written agreement of 20 March 1975 between Samahan ng Nagkakaisang Batilyo-NFL and the Fish Brokers Association of the Philippines which recognize the existence of direct employer-employee relationship between fish brokers and batilyos because it did not appear that VDA was a signatory therein. No appeal was taken from this decision.

Claiming that they were terminated from the service by VDA on or about 1 January 1984, Salac and Bula filed separate complaints against VDA and/or Venerando Alonzo for illegal dismissal and for recovery of moral and exemplary damages docketed as Case Nos. NLRC-NCR-1-153-84 and NLRC-NCR-1-169-84.

On 28 August 1984, Labor Arbiter Adelaido F. Martinez dismissed the complaints on the ground that there was no employer-employee relationship between the opposing parties. He took note of the earlier decision in Case No. NLRC-NCR-5-3832-82 but nonetheless made his own finding that Salac and Bula

. . . are independent contractors and they are, as such, laborers or employees of the respondents (VDA). They undertake to do a piece of work for their own account, under their own responsibility and with minimum interference on the part of the respondents . . . . They offer their services to the other fish brokers, dealers, catchers and the general public and are only paid only when they render service. They are without any employer. 4

This decision was appealed to the NLRC. On 8 August 1986, the NLRC reversed the decision of the Labor Arbiter, directed VDA and Alonzo to reinstate Salac and Bula to their former positions without loss of seniority rights and privileges, and to pay their back wages from 1 January 1984 until actual reinstatement.

On 17 October 1986, this petition for certiorari, prohibition and mandamus with prayer for the issuance of a restraining order was filed seeking reversal of the decision of the NLRC primarily on the ground that a previous case ruling that no employment relationship existed between the private parties constituted a bar to the present suit. On 27 October 1986, we issued a temporary restraining order enjoining respondents from taking further action on the assailed decision. 5

In its comment, the OSG subscribed to the res judicata theory of petitioner. Consequently, the NLRC had to file its own comment sustaining its assailed decision. Private respondents did not submit any comment.

We have several times applied the concept of res judicata to administrative decisions. In San Luis v. Court of Appeals, 6 through Mme. Justice Irene R. Cortes, we made the following pronouncement:

. . . . 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 (Brillantes v. Castro, 99 Phil. 497 [1956], Ipekdjian Merchandising Co., Inc. v. Court of Tax Appeals, G.R. No. L-15430, September 30, 1963, 9 SCRA 72). The rule of res judicata which forbids the reopening of a matter once judicially determined by competent authority applies as well to the judicial and quasi-judicial acts of public, executive or administrative officers and boards acting within their jurisdiction as to the judgments of courts having general judicial powers (Brillantes v. Castro, supra at 503).

Indeed, the principle of conclusiveness of prior adjudications is not confined in its operation to the judgments of what are ordinarily known as courts, but it extends to all bodies upon whom judicial powers had been conferred. Hence, whenever any board, tribunal or person is by law vested with authority to judicially determine a question . . . such determination, when it has become final, is as conclusive between the same parties litigating for the same cause as though the adjudication had been made by a court of general jurisdiction (Ipekdjian Merchandising Co., Inc. v. Court of Tax Appeals, supra at 76).

The NLRC however claims that res judicata cannot be applied here because the causes of action and issues in the two cases are different. For a while it is true that the earlier case, Case No. NLRC-NCR-5-3832-82, pertains to non-payment of service incentive leave pay, emergency cost of living allowance, thirteenth month pay, legal holiday and premium pay for rest day and holiday, and the later case, Case Nos. NLRC-NCR-1-153-84 and NLRC-NCR-1-169-84, is for illegal dismissal and for moral and exemplary damages, nonetheless, we find that the issue of employer-employee relationship is crucial in the determination of the rights of the parties in both cases. Moreover, it is erroneous to suggest that res judicata applies only where there are similar cases of action. In Nabus v. Court of Appeals, 7 we stated:

The principle of res judicata actually embraces two different concepts: (1) bar by former judgment and (2) conclusiveness of judgment. There is "bar by former judgment" when, between the first case where the judgment was rendered, and the second case where such judgment is invoked, there is identity of parties, subject matter and cause of action. When the three identities are present, the judgment on the merits rendered in the first constitutes as absolute bar to the subsequent action. It is final as to the claim or demand in controversy, including the parties and those in privity with them, not only as to every matter which was offered and received to sustain or defeat the claim or demand, but as to any other admissible matter which might have been offered for that purpose. But where between the first case wherein judgment is invoked, there is identity of parties, but there is no identity of cause of action, the judgment is conclusive in the second case, only as those matters actually and directly controverted and determined, and not as to matters merely involved therein. This is what is termed conclusiveness of the judgment (Viray, etc. vs. Marinas, etc., et al. 49 SCRA 44 [1973]).

American jurisprudence on the matter, 8 although merely persuasive, is even more categorical:

An administrative determination may also operate by way of collateral estoppel (or res judicata in a limited sense) in a subsequent proceeding in regard to the parties to a prior proceeding and as to matters actually and legally determined therein (Farm Invest. Co. v. Carpenter, 9 Wyo 110, 61 P 258 . . . .). Where the underlying issue in the two proceedings is the same, the adjudication of the issue in the first proceeding is determinative of the same issue in the second (United States v. Willard Tablet Co. [CA 7 Ind] 141 F2d 141, 152 ALR 1194 [where remedies sought by government in two proceedings were different, the first before the Federal Trade Commission and the second before a court, the identical issue of falsity of labeling was involved in each]. See also Federal Trade Com. v. Morton Salt Co. 334 US 37, 92 L ed 1196, 68 S Ct 822, 1 ALR 2d 269). An issue of fact litigated and determined by an administrative decision, and essential to the decision, is conclusive between the parties in a subsequent action, even though a different claim is involved (See People v. Western Airlines, Inc. 42 Cal 2d 621, 268 P2d 723, app dismd 348 US 859, 99 L ed 677, 75 S Ct 87. In an action at law, a party is estopped to deny the truth of a finding which was essential to the administrative determination, and may not offer evidence to show that the determination was not justified as matter of law Lumberman's Mut. Casualty Co. v. Bissell, 220 Mich 352, 190 NW 283, 28 ALR 874. As to matters of fact within the scope of the authority of the officers of the Land Department of the United States, their findings must be taken as conclusive in the absence of fraud and mistake, upon the principle of estoppel by former adjudication Whitehill v. Victoria Land & Cattle Co. 18 NM 520, 139 P 184).

It is undisputed that the factual issue of the existence of employer-employee relationship has been determined with finality in the earlier case of Case No. NLRC-NCR-5-3832-82, hence, that same finding should have been deemed conclusive in Case Nos. NLRC-NCR-1-153-84 and NLRC-NCR-1-169-84. Were we to ignore the principle of res judicata, an absurd situation would arise where the same administrative agency would have diametrically opposed conclusions based on apparently similar circumstances. The effect may even be more farcical in the sense that private respondents are given dual or conditional status, i.e., they are employees for the purpose of reinstatement, but independent contractors for purposes of entitlement to service incentive leave pay, etc.

This is the dilemma the principle of res judicata seeks to avoid. Both private parties have already submitted the question of the existence of employer-employee relationship before the Labor Arbiter in Case No. NLRC-NCR-5-3832-82 which, incidentally, private respondents have allowed to become final by not appealing from it; consequently, they are precluded from disputing the same findings a second time. We thus rule that the administrative finding on the merit of the absence of employer-employee relationship between petitioner and private respondents in Case No. NLRC-NCR-5-3832-82, absent any showing of change in the circumstances of the parties, or that the decision in Case No. NLRC-NCR-5-3832-82 has been reversed or vacated, is conclusive upon Case Nos. NLRC-NCR-1-153-84 and NLRC-NCR-1-169-84 should have been dismissed.

Petitioner also disputes the ruling of the NLRC sustaining private respondents' argument that "since the complainants (herein private respondents) are bona fide members of Samahang Nagkakaisang Batilyos-NFL, certified as the sole and exclusive bargaining representative of the rank-and-file employees in VDA RC3 Fish Broker per Order of 10 August 1982 in Case No. NCR-LRD-M-4-143-82, the issue of their status as employees of respondent (herein petitioner) is rendered moot and academic." 9 Petitioner argues that no inference of employer-employee relation may be deduced from this alleged circumstance because no such relationship actually existed, and neither was there any order to that effect presented at the hearing.

This is not wholly correct for photocopies of such copies were in the records and attached as annexes to two of private respondents' pleadings submitted for the consideration of the Labor Arbiter and the NLRC. 10 But the determination in Case No. NCR-LRD-M-4-143-82 (for certification election) cannot be considered more conclusive as to the existence of employer-employee relationship that the decision in Case No. NLRC-NCR-5-3832-82 (for money claims).

In the decision of the Labor Arbiter, which was set aside by the assailed NLRC decision, it was stated:

We note that the Order in Case NCR-LRD-183-82 relied upon the complainants was issued on August 10, 1982, while the Decision in Case NLRC-NCR-5-3832-82 relied upon by respondents was promulgated on May 20, 1983. The later pronouncement should prevail, according to which there is no employer-employee relationship between respondents and individual complainants. 11

We have checked their records and found correct the finding of the Labor Arbiter that the Order in Case No. NCR-LRD-M-4-143-82 was issued on 10 August 1982, while the Order in Case No. NLRC-NCR-5-3832-82 was promulgated on 20 May 1983. Yet the NLRC, without showing why or how, casually concluded that Case No. NCR-LRD-M-4-143-82 is "the latercase" which "put to rest the latter's (herein private respondents') status as employees." 12 NLRC justified its disregard of the findings of the Labor Arbiter in Case No. NLRC-NCR-5-3832-82 on the basis that the matter of employer-employee relation was allegedly only a corollary issue therein.

We do not subscribe to this observation considering that the certification order in Case No. NCR-LRD-M-4-143-82 was a poor basis for concluding the existence of employer-employee relation not only because there was no categorical statement thereon but also because there was no finding of facts on which a determination of employment relation could be based.

As regards the decision of the Labor Arbiter to ignore the earlier Order in Case No. NCR-LRD-M-4-143-82, the general rule is that, as between prior conflicting judgments involving the same parties or their privies, the last inpoint of time is controlling (Perkins v. Benguet Consol. Min. Co. 55 Cal App 2d 720 . . . .). In such case, it is the later, and not the earlier, judgment is operative as res judicata (California Bank v. Traeger, 215 Cal 346 . . . .). The rule is where in two successive actions between the same parties inconsistent judgments are rendered, the judgment in the second action is controlling in a third action between the parties. 13

While the foregoing may already be sufficient to warrant reversal of the assailed decision and to grant the writ prayed for in the petition, a discussion on the application of the ruling in RJL Martinez Fishing Corporation v. NLRC 14 is in order to correct any misimpression thereon.

The statement in RJL Martinez Fishing Corporation v. NLRC that "the continuity of employment is not the determining factor, but rather, whether the work of the laborer is part of the regular business or occupation of the employer," 15 citing Art. 281 (now 280) of the Labor Code and Philippine Fishing Boat Officers and Engineers Union v. CIR, 16 does not mean that the essential elements of employer-employee relationship are done away with. The statement simply means that where the elements are present, the existence of employer-employee relationship is not affected by the fact that the work is seasonal or intermittent or in the meantime suspended. Otherwise, agents and independent contractors, e.g., playing bands in bars, would be comprehended whenever their services are said to be necessary to the business of one who engages or hires them. Moreover, in view of the unreversed finding of the Arbiter that the control requirement was wanting in this case, there is no occasion to apply the ruling in RJL Martinez Fishing Corporation v. NLRC.

There obviously being grave abuse of discretion, the assailed decision of respondent NLRC must be set aside.

WHEREFORE, the petition for issuance of a writ of certiorari is granted and the assailed decision of respondent National Labor Relations Commission of 8 August 1986 is SET ASIDE. The decision of Labor Arbiter Adelaido F. Martinez dated 28 August 1984 in Case Nos. NLRC-NCR-1-153-84 and NLRC-NCR-1-169-84 is REINSTATED and AFFIRMED. The restraining order we issued on 27 October 1986 is made permanent.

SO ORDERED.

G.R. No. 162784 June 22, 2007

NATIONAL HOUSING AUTHORITY, petitioner, vs.SEGUNDA ALMEIDA, COURT OF APPEALS, and RTC of SAN PEDRO, LAGUNA, BR. 31, respondents.

D E C I S I O N

PUNO, C.J.:

This is a Petition for Review on Certiorari under Rule 45 filed by the National Housing Authority (NHA) against the Court of Appeals, the Regional Trial Court of San Pedro Laguna, Branch 31, and private respondent Segunda Almeida.

On June 28, 1959, the Land Tenure Administration (LTA) awarded to Margarita Herrera several portions of land which are part of the Tunasan Estate in San Pedro, Laguna. The award is evidenced by an Agreement to Sell No. 3787.1 By virtue of Republic Act No. 3488, the LTA was succeeded by the Department of Agrarian Reform (DAR). On July 31, 1975, the DAR was succeeded by the NHA by virtue of Presidential Decree No. 757.2 NHA as the successor agency of LTA is the petitioner in this case.

The records show that Margarita Herrera had two children: Beatriz Herrera-Mercado (the mother of private respondent) and Francisca Herrera. Beatriz Herrera-Mercado predeceased her mother and left heirs.

Margarita Herrera passed away on October 27, 1971.3

On August 22, 1974, Francisca Herrera, the remaining child of the late Margarita Herrera executed a Deed of Self-Adjudication claiming that she is the only remaining relative, being the sole surviving daughter of the deceased. She also claimed to be the exclusive legal heir of the late Margarita Herrera.

The Deed of Self-Adjudication was based on a Sinumpaang Salaysay dated October 7, 1960, allegedly executed by Margarita Herrera. The pertinent portions of which are as follows:

SINUMPAANG SALAYSAY

SA SINO MAN KINAUUKULAN;

Akong si MARGARITA HERRERA, Filipina, may 83 taong gulang, balo, kasalukuyang naninirahan at tumatanggap ng sulat sa Nayon ng San Vicente, San Pedro Laguna, sa ilalim ng panunumpa ay malaya at kusang loob kong isinasaysay at pinagtitibay itong mga sumusunod:

1. Na ako ay may tinatangkilik na isang lagay na lupang tirikan (SOLAR), tumatayo sa Nayon ng San Vicente, San Pedro, Laguna, mayroong PITONG DAAN AT PITUMPU'T ISANG (771) METRONG PARISUKAT ang laki, humigit kumulang, at makikilala sa tawag na Lote 17, Bloke 55, at pag-aari ng Land Tenure Administration;

2. Na ang nasabing lote ay aking binibile, sa pamamagitan ng paghuhulog sa Land Tenure Administration, at noong ika 30 ng Julio, 1959, ang Kasunduang sa Pagbibile (AGREEMENT TO SELL No. 3787) ay ginawa at pinagtibay sa Lungsod ng Maynila, sa harap ng Notario Publico na si G. Jose C. Tolosa, at lumalabas sa kaniyang Libro Notarial bilang Documento No. 13, Pagina No. 4; Libro No. IV, Serie ng 1959;

3. Na dahilan sa ako'y matanda na at walang ano mang hanap buhay, ako ay nakatira at pinagsisilbihan nang aking anak na si Francisca Herrera, at ang tinitirikan o solar na nasasabi sa unahan ay binabayaran ng kaniyang sariling cuarta sa Land Tenure Administration;

4. Na alang-alang sa nasasaysay sa unahan nito, sakaling ako'y bawian na ng Dios ng aking buhay, ang lupang nasasabi sa unahan ay aking ipinagkakaloob sa nasabi kong anak na FRANCISCA HERRERA, Filipina, nasa katamtamang gulang, kasal kay Macario Berroya, kasalukuyang naninirahan at tumatanggap ng sulat sa Nayong ng San Vicente, San Pedro Laguna, o sa kaniyang mga tagapagmana at;

5. Na HINIHILING KO sa sino man kinauukulan, na sakaling ako nga ay bawian na ng Dios ng aking buhay ay KILALANIN, IGALANG at PAGTIBAYIN ang nilalaman sa pangalan ng aking anak na si Francisca Herrera ang loteng nasasabi sa unahan.

SA KATUNAYAN NG LAHAT, ako ay nag-didiit ng hinlalaki ng kanan kong kamay sa ibaba nito at sa kaliwang gilid ng unang dahon, dito sa Lungsod ng Maynila, ngayong ika 7 ng Octubre, 1960.4

The said document was signed by two witnesses and notarized. The witnesses signed at the left-hand side of both pages of the document with the said document having 2 pages in total. Margarita Herrera placed her thumbmark5 above her name in the second page and at the left-hand margin of the first page of the document.

The surviving heirs of Beatriz Herrera-Mercado filed a case for annulment of the Deed of Self-Adjudication before the then Court of First Instance of Laguna, Branch 1 in Binan, Laguna (now, Regional Trial Court Branch 25). The case for annulment was docketed as Civil Case No. B-1263.6

On December 29, 1980, a Decision in Civil Case No. B-1263 (questioning the Deed of Self-Adjudication) was rendered and the deed was declared null and void.7

During trial on the merits of the case assailing the Deed of Self-Adjudication, Francisca Herrera filed an application with the NHA to purchase the same lots submitting therewith a copy of the "Sinumpaang Salaysay" executed by her mother. Private respondent Almeida, as heir of Beatriz Herrera-Mercado, protested the application.

In a Resolution8 dated February 5, 1986, the NHA granted the application made by Francisca Herrera, holding that:

From the evidence of the parties and the records of the lots in question, we gathered the following facts: the lots in question are portions of the lot awarded and sold to the late Margarita Herrera on July 28, 1959 by the defunct Land Tenure Administration; protestant is the daughter of the late Beatriz Herrera Mercado who was the sister of the protestee; protestee and Beatriz are children of the late Margarita Herrera; Beatriz was the transferee from Margarita of Lot Nos. 45, 46, 47, 48 and 49, Block 50; one of the lots transferred to Beatriz, e.g. Lot 47, with an area of 148 square meters is in the name of the protestant; protestant occupied the lots in question with the permission of the protestee; protestee is a resident of the Tunasan Homesite since birth; protestee was born on the lots in question; protestee left the place only after marriage but resided in a lot situated in the same Tunasan Homesite; her (protestee) son Roberto Herrera has been occupying the lots in question; he has been there even before the death of the late Margarita Herrera; on October 7, 1960, Margarita Herrera executed a "Sinumpaang Salaysay" whereby she waived or transferred all her rights and interest over the lots in question in favor of the protestee; and protestee had paid the lots in question in full on March 8, 1966 with the defunct Land Tenure Administration.

This Office finds that protestee has a better preferential right to purchase the lots in question.9

Private respondent Almeida appealed to the Office of the President.10 The NHA Resolution was affirmed by the Office of the President in a Decision dated January 23, 1987.11

On February 1, 1987, Francisca Herrera died. Her heirs executed an extrajudicial settlement of her estate which they submitted to the NHA. Said transfer of rights was approved by the NHA.12 The NHA executed several deeds of sale in favor of the heirs of Francisca Herrera and titles were issued in their favor.13 Thereafter, the heirs of Francisca Herrera directed Segunda Mercado-Almeida to leave the premises that she was occupying.

Feeling aggrieved by the decision of the Office of the President and the resolution of the NHA, private respondent Segunda Mercado-Almeida sought the cancellation of the titles issued in favor of the heirs of Francisca. She filed a Complaint on February 8, 1988, for "Nullification of Government Lot's Award," with the Regional Trial Court of San Pedro, Laguna, Branch 31.

In her complaint, private respondent Almeida invoked her forty-year occupation of the disputed properties, and re-raised the fact that Francisca Herrera's declaration of self-adjudication has been adjudged as a nullity because the other heirs were disregarded. The defendant heirs of Francisca Herrera alleged that the complaint was barred by laches and that the decision of the Office of the President was already final and executory.14 They also contended that the transfer of purchase of the subject lots is perfectly valid as the same was supported by a consideration and that Francisca Herrera paid for the property with the use of her own money.15 Further, they argued that plaintiff's occupation of the property was by mere tolerance and that they had been paying taxes thereon.16

The Regional Trial Court issued an Order dated June 14, 1988 dismissing the case for lack of jurisdiction.17 The Court of Appeals in a Decision dated June 26, 1989 reversed and held that the Regional Trial Court had jurisdiction to hear and decide the case involving "title and possession to real property within its jurisdiction."18 The case was then remanded for further proceedings on the merits.

A pre-trial was set after which trial ensued.

On March 9, 1998, the Regional Trial Court rendered a Decision setting aside the resolution of the NHA and the decision of the Office of the President awarding the subject lots in favor of Francisca Herrera. It declared the deeds of sale executed by NHA in favor of Herrera's heirs null and void. The Register of Deeds of Laguna, Calamba Branch was ordered to cancel the Transfer Certificate of Title issued. Attorney's fees were also awarded to private respondent.

The Regional Trial Court ruled that the "Sinumpaang Salaysay" was not an assignment of rights but a disposition of property which shall take effect upon death. It then held that the said document must first be submitted to probate before it can transfer property.

Both the NHA and the heirs of Francisca Herrera filed their respective motions for reconsideration which were both denied on July 21, 1998 for lack of merit. They both appealed to the Court of Appeals. The brief for the heirs of Fran