JOSEPH COCHINGYAN, JR., PETITIONER, VS. HON. GAUDENCIO CLORIBEL, PRESIDING JUDGE OF BRANCH VI, COURT OF FIRST INSTANCE OF MANILA, LEGIONNAIRES ENTERPRISES, INC., IRENEO R. CLAPA…

 Petition for certiorari
to review the orders of the respondent Court of First Instance of Manila (in
civil cases 54912 and 55250) dated November
2, 1966, November 11, 1966, December 19, 1966, December 28, 1966 and January 3, 1967.

By mandate of Republic
Act 1789, otherwise known as the Reparations Law, which took effect on June 21,
1957, the amount of US$20 million was set aside to form a “Trust
Fund” to be used exclusively for the benefit and rehabilitation of
veterans of the Philippines of World War II and their widows and orphans (sec.
2 (d), R.A. 1789). 
This amount is to be generated from cash sales of reparations goods to
be procured from Japan.

On May 18, 1958,
Resolution 24 was adopted at the 13th Convention of the Philippine Veterans
Legion (hereinafter referred to as the PVL)
held in Bacolod City, the resolutory
part of which is as follows:

“NOW, THEREFORE, BE IT RESOLVED, as it is hereby resolved,
that the Philippine Veterans Legion, being the biggest veterans organi­zation,
with members thru out the Philippines, thus the group most greatly affected by
the Reparation Law specifically Sec. 2, Subsection (d), Rep. Act 1789, create
through the initiative of the National Commander, a private enterprise to
undertake the generation of the Trust Fund for the veterans, war widows and
orphans as embodied in the above-entitled law, and hereby CONFIRMING AND
RATIFYING ALL that the National Commander shall do, or cause to be done, under
and by virtue of this Resolution.”

Pursuant
to the above-mentioned resolution, Legion­naire Francisco B. Offemaria formed and organized on June 10, 1958 the
Legionnaires Enterprises, Inc. (hereinafter referred to as the LEI), and
registered the same with the Securities and Exchange Commission with an
authorized capital of P110,000 and a paid-up capital of P25,000, with
himself as president and concurrently chairman of the board of directors.

On November 21, 1958, the
LEI signed a contract with Filipinas Merchandising Corporation
(hereinafter referred to as the Filipinas) whereby the former agreed to sell to the latter all reparations
consumer goods that were to be procured by the LEI under such grant or
award as may be approved by the Reparations Commission (hereinafter referred to
as the Repacom).

On December 3, 1958, in Tokyo, Japan, the PVL
and four other veterans organizations, to wit, the Philippine Association of
War Widows, Parents, and Orphans (hereinafter referred to as the War Widows),
the President Quezon’s Own Guerillas (here­inafter
referred to as the PQOG), the Veterans
Organization of the Philippines (hereinafter referred to as the VOP), and the Defenders of Bataan
and Corregidor (hereinafter referred to as the DBC) entered into an agreement essentially to the
effect “that any award granted to one of us shall ipso facto
confer upon the Commission the authority to consider all other applications submitted by any member as
automatically withdrawn in favor of the awardee,”
stipulating to observe the following sharing in profit percentages:

(a)  A sum equal to 15% of
the invoice value of the goods to be procured, or thirty centavos (P0.30) to
the PVL; and

(b)  A sum equal to 3% of the invoice value of the
goods to be procured, or six centavos (P0.06) each to the War Widows,
PQOG, VOP,
and DBC.

On February 3, 1959,
the PVL succeeded in getting an allocation of
US$4 million from the Repacom which was
embodied in the latter’s Reso­lution 88.

On March 12, 1959,
the Repacom, by virtue of its Resolution 91,
recognized the right of the LEI to act as the business arm of the PVL in the implementation of the said award.

The board of directors of the PVL,
on August 8, 1959, approved
a resolution accepting the 15% guarantee payment offered in writing by the LEI
to the PVL per US$1.00 invoice value of the
goods which may be generated into cash under the grant authorized by the Repacom in its Resolution 88.  Following the acceptance of the 15% guarantee
payment, the board of directors of the PVL, in
a meeting on December 12, 1959,
approved a resolution authorizing its national commander to enter into a
contract with the LEI and to sign on behalf of the PVL.

On January 5, 1960, the LEI, by and through Offemaria and/or Cesar P. Roces,
its president and attorney-in-fact, respectively,
sold to the Panay Legionnaires Enterprises
(hereinafter referred to as the Panay) US$200,000 worth of reparations rights.  On January 10, 1960, it sold US$600,000 worth of reparations
rights to Vicente Magno (hereinafter referred to as Magno).

At the 15th PVL national convention in Iloilo City, the PVL
split into two splinter groups, one body headed by Offemaria
and the other by Jaime Piopongco, each
operating independ­ently for a period of two years — from the last half of
1960 to the first half of 1962.

On October 7, 1960,
the PVL (Piopongco
faction) executed an agreement with Joseph Cochingyan,
Jr.  (hereinafter referred to as Cochingyan) by virtue of which the implementation of
the allocation of US$4 million approved by the Repacom
under Resolution 88 was to be undertaken jointly by Cochingyan
and the management board formed by the PVL.

On February 1, 1961,
the LEI sold US$150,000 worth of reparations rights to Joaquin So.

On March 13, 1961,
the Repacom approved Resolution 396 making
available to the LEI US$1 million of the US$4 million award for imple­mentation
under the fifth reparations year schedule. 
The corresponding procurement order was issued on June 16, 1961 by Repacom
for the procure­ment of reparations consumer goods for the end-use of the LEI
in the amount of US$1 million.

On August
21, 1961, the LEI
sold to Tomas Sy US$200,000 worth of reparations
rights, a contract acquired through assignment by Cesar Eguia
(hereinafter referred to as Eguia).

On September 15, 1961,
the LEI sold to Roman Baldovino US$350,000
worth of reparations rights.  This
contract was subsequently assigned by Baldovino to
Joaquin So on August 30, 1963.

On August 31, 1961,
the LEI sold to World­wide Trading and Development Corporation (herein­after
referred to as the Worldwide) US$500,000 worth of reparations
rights.  This was also subsequently
assigned by Worldwide to Joaquin So.

On March 12, 1963,
a formal contract was executed by and between the PVL
and LEI for the implementation of the PVL
US$1 million award, which
contract stipulated, inter alia:

“NINTH.  That this
contract shall be considered terminated and declared with no force and effect
upon the final payment by the LEGIONNAIRES to the VETERANS in the total sum of
THREE HUNDRED THOUSAND PESOS (P300,000.00) without making any further release
by the VETERANS to the LEGIONNAIRES.”

The
“LEGIONNAIRES” represent the LEI, the “VETERANS” the
PVL, and the sum of P300,000 is the 15% the LEI
stipulated to pay the PVL for
the generation of the US$1 million award (at the agreed exchange rate of P2 to
every US$1) or P0.30 for each $1.00.

On March
15, 1963, by virtue
of a contract of advance sales, the LEI sold to the Keyser Mercan­tile
Co., Inc. (hereinafter referred to as Keyser) $120,000 worth of the $1 million
allocation of the LEI per the Repacom
Resolution 396.  Subject-matter of this
$120,000 allocation consisted of photo­graphic supplies which were to be
procured from Japanese suppliers.

In the latter part of
August 1963, the first shipment of reparations goods procured under the Repacom Resolution 396, consisting of photographic
supplies and materials with an invoice value of US$37,016, left Japan.

On October 16, 1963, Joaquin So filed on his behalf and as
assignee of Worldwide and Baldovino, an action
against the LEI, Cesar Roces, vice-president and
director of the LEI, and the Repacom
for specific performance of his contract of $150,000 executed on September 6,
1961 and the contracts executed by the LEI with Worldwide on
August 31, 1961 for $500,000 and with Baldovino on
September 15, 1961 for $350,000 which he claimed were both assigned to
him.  The said action was premised upon
Joaquin So’s claim that inasmuch as the said con­tracts
totalled US$1 million, all reparations goods procured
under the allocation of the LEI under Resolution 396 for US$1 million
were covered by the aforesaid three contracts and, consequently, the shipment
of photographic materials about to arrive from Japan should be delivered by the
defendants to him.  The said case was
docketed as Civil Case 54912 and was assigned to Branch VI of the Court of
First Instance of Manila.  All claiming
to have a right to the incoming shipment of photographic supplies by virtue of
contracts executed and/or assigned in their favor, Eguia,
Worldwide, and Magno filed motions to
intervene which were all granted.  Keyser
also filed a similar motion, but before its motion could be acted upon, it
withdrew the same and filed a new action against the LEI which was
docketed as Civil Case 55250 and was assigned to Branch I of the Court of First
Instance of Manila.  Eguia,
Magno and Worldwide also filed their
respective motions to intervene in the said Civil Case 55250 for the
enforcement of their respective rights.

On November 7, 1963,
the court issued in Civil Case 54912, pending before Branch VI, a mandatory
preliminary injunction ordering the Repacom to
release the shipment of photographic
materials which had already arrived worth US$37,016 to the plaintiff in the
said case, Joaquin So.  On the other
hand, in Civil Case 55250 pending
before Branch I, the court issued on November 27, 1963 a restraining order enjoining the release of
the goods until further orders
of the said court.

On February
7, 1964, Cochingyan entered into an agreement with the LEI
wherein he assumed, among others, the following obligations:

(a)   To buy all reparations consumer goods
procured or to be procured by the PVL/LEI
under Resolutions 88, 91 and 396, and such other allocations as may be awarded
to PVL/LEI;

(b)   To pay unto the LEI for all goods
actually procured the sum of 20 centavos per dollar if the exchange rate is com­puted
at P2 per US$1.00, or 10 centavos if the exchange rate shall be the free market
rate;

(c)   To assume the obligations of the LEI
to the veterans organizations in the amount of 30 centavos per every dollar to
the PVL, and 6 centavos per every dollar to
each of the War Widows, the VOP,
the DBC and the PQOG;

(d)   To assume all expenses necessary for the
implementation of this agreement, and those incurred for suits involving the PVL and/or LEI respecting said allocations.

The
LEI, on the other hand, specifically declined to issue any warranty at
all, in general, and of its right to still sell or dispose of the same, in
particular.  On the basis of the
above-mentioned agreement, Cochingyan filed
motions and was allowed to intervene in both cases, alleging as his the entire
US$4 million allocation.

On March
12, 1964, Branch I
of the Court of First Instance of Manila, in Civil Case 55250, issued an order
restraining the Bureau of Customs from releasing the goods until further orders
of the said court.

In Civil Case 55250, Panay filed a motion to intervene and also a
petition for the appointment of a Receiver for the LEI on the grounds
first, that a Receiver was necessary to protect the interests of all the
parties claiming the same goods procured under the allocation of the LEI,
and second, that the said corporation was insolvent or in imminent danger of
insolvency due to the gross mismanagement of its officers.  On April 6, 1964, Judge Francisco Arca
of Branch I granted the motion of the intervenor Panay for the appointment of a Receiver for the LEI
and required the parties to agree on a common receiver.  The court (Branch I) appointed Atty. Ramon M.
Velayo as the LEI Receiver on April
22, 1964.

Because of the stalemate
arising from the conflicting orders of two branches of the Court of First
Instance of Manila, the parties in both cases who were claiming the same goods
went into serious negotiations, and, as a result, a compromise agree­ment was
executed on May 13, 1964 between Cochingyan,
on one hand, and Worldwide, Eguia, Keyser,
Magno, Panay
and the LEI, on the other, in which it was specifically provided that
the latter (except the LEI), in consideration of the various
undertakings and other obligations assumed by the former -?

“x x x
agree to defer the enforcement of their respective contracts with LEI on
condition that their respective contracts shall be charged and enforced on the
additional allocation  that would be made
available to the LEI and/or PVL in implement­ation of
the balance of said PVL and/or LEI allocation
approved by the Commission under its Resolution No. 88, as amended by its
Resolution No. 91 and any other allocation that the LEI and/or the PVL may secure either as new, or additional allocation or
allocation in substitution, in order that all the reparations consumer goods
procured under Resolution No. 396 can be delivered to Cochingyan,
in implementation of his contract with LEI of February 7, 1964, which contract
was duly ratified and confirmed by the Board of Directors of LEI and its
stockholders; x x x“.

Joaquin
So refused to join the compromise agreement; thus, a proviso was included
therein requiring Cochingyan to file an appropriate bond in favor of the LEI, its Receiver, or Joaquin So to answer for damages that might be awarded to the latter.

Atty. Velayo, the LEI Receiver, submitted the Compromise Agreement
on May 13, 1964
to both Branch VI and Branch I in Civil Cases 54912 and 55250, res­pectively,
which, in separate orders both dated June 1, 1964, approved the same.

After the approval of the
aforementioned com­promise agreement in Civil Cases 54912 and 55250, and after
the said approval was virtually confirmed by this Court when we denied the
petition for pre­liminary injunction filed by Joaquin So in certiorari
proceedings docketed as G.R. No. L-23026 and L-23027, * Filipinas, which had also entered into a contract with
the LEI covering all goods under the LEI allocation (totalling an invoice value of US$4 million), filed, on July
18, 1964, a motion to intervene in Civil Case 55250, seeking the enforcement of
its contract with LEI and further praying that all other contracts
executed by the LEI with other parties in the case be declared null and
void.  However, seeing the futility of a
continued court litigation, Filipinas, on September 30, 1965 and October 8, 1965, respec­tively, executed an
agreement and supplemental agreement with Cochingyan,
assigning and transferring to the latter all its rights,
obligations and interests of whatsoever nature. 
The agreement dated September 30, 1965 provides, among other things, that:

“4.  FILIPINAS hereby agrees to respect the Compromise Agreement entered
into among COCHINGYAN and other claimant
buyers of PVL and LEI duly approved by the Court of
First Instance of Manila in Civil Case No. 55250 (Branch I) and Civil Case No.
54912 (Branch VI), and therefore, shall refrain from taking any action judicial
or otherwise which may directly or indirectly impede or prevent the expeditious
implementation of the aforesaid compromise agreement.”

x x
x                          x
x x                             x x x

“d.  Provided, however, that if COCHINGYAN shall fail to pay the sum due FILIPINAS on any
par­ticular shipment, the same shall constitute a lien on the next shipment and
said shipment shall not be released until the amount in arrears and the amount
due on said shipment be first paid by COCHINGYAN.

“5. This
compromise agree­ment shall be submitted to the Court for approval so that the
same can be implemented in rela­tion to and harmoniously with the compromise
agreement between COCHINGYAN and other buyer-claimants of PVL/LEI.”

On November
15, 1965, Atty. Velayo, then the LEI Receiver, submitted to Branch I
the compromise agreement between Filipinas and Cochingyan in
Civil Case 55250, and on December 9, 1965, the said court approved said compromise
agreement and its supple­ment, and in approving said compromise agreement
ordered the Receiver of the LEI:

“To implement the contract of LEI and Cochingyan dated February 7, 1964, pursuant to the
Compromise Agreement of May 13, 1964
approved by this Court in its Order of June 1, 1964 and the Compromise Agree­ment of Cochingyan and Filipinas of September 30, 1965, and finally
the parties to said compromise agreements are hereby enjoined to comply with
the terms and conditions thereof.”

On October
13, 1964, Resolution
522 was passed by the Repacom approving the procurement of goods worth
US$1.5 million, but under this no implementation has started as yet.

In addition to $120,000
worth of photographic films and supplies covered by Reparations Contracts Nos.
439 and 448, Cochingyan agreed on January
8, 1965 to sell to Keyser
$300,000 worth of photographic films and supplies at P7.00 to every US$1.00
f.o.b. Japan instead of $200,000 at P7.10 to every US$1.00.  To secure full compliance by the parties to
this agreement, the PVL and LEI gave their conformity
to it, the former by Resolution 13 approved on October 2, 1965 and the latter by a resolution approved on
the same date.

Because of the series of amicable settlements mentioned above,
the parties thought that implement­ation of the allocation of the LEI could be made without the need of a Receiver.  Thus, on December 31, 1965, the LEI filed in
Civil Case 55250 a motion for the dissolution of the receivership of the LEI, which motion was granted by the court on February 21, 1966.

On the very same day when the receivership of the LEI was dissolved, Cochingyan
filed an urgent ex-parte motion, dated February 21,
1966, alleging that as the attorney-in-fact of the LEI to
implement the US$4 million PVL/LEI
allocation and because the
receivership was already dissolved, his power of attorney be exclusively recognized
as it was “necessary for the purpose of implementing the Compromise
Agreements entered into by the parties to this case on May 13, 1964, September
30, 1965 and February 17, 1966.” The court, on February 23, 1966, granted said motion.

On February 12, 1966,
Judge Arca, before whom Civil Case 55250 was pending,
indorsed said case to Branch VI for consolidation with Civil Case 54912, which indorsement was accepted by Judge Cloribel,
Presiding Judge of Branch VI.

Realizing also the uselessness of a continued court litigation,
Joaquin So, who refused to join the Compromise Agreement of May 13, 1964,
executed on February 17, 1966 with Cochingyan
a compromise agreement under
which he, Worldwide and Tomas Torrefranca, as
assignee of Cesar P. Roces, in consideration of the
sum of P1 million payable pro rata upon the arrival of the goods procured under the
allocation of the LEI, renounced their respective claims against the
allocations of the LEI, and assigned to Cochingyan the contracts executed in their
favor.  More particularly, Joaquin So, on
his behalf and as assignee of Baldovino, renounced
all his claims against PVL and the LEI
and assigned in favor of Cochingyan all the contracts in his favor and his
claim for advances made by him to the LEI; Torrefranca,
as assignee of Roces, renounced all his claims
against the LEI and waived all his rights under the various powers of
attorney executed in his favor and that of Cesar Roces,
and Worldwide assigned to Cochingyan its contract of US$340,000 worth of
porcelain wares, renounced all its claims to the balance of US$3 million, and
assigned to intervenor all contracts and powers of
attorney in its favor.  The amount of P1 million to be paid by Cochingyan to Worldwide, Joaquin
So and Torrefranca was to be paid to them at the rate
of P1.10 for every US$1.00 of the goods procured under Resolution 396 up to
US$600,000 value of said goods, or P660,000, while the balance of P340,000  was to be paid at the rate of P0.75 for every
US$1.00 from the goods procured under the Ninth Reparations Schedule.  The aforesaid amounts were to be paid by Cochingyan within thirty (30) days from the
release of said goods to him.  The agree­ments
also provided, inter alia, that:

“4.  In the event that Cochingyan
shall fail to pay any amount due Worldwide, Joaquin So and Torrefranca,
for any ship­ment that would have arrived, then said amount shall constitute a
lien on all subsequent shipments and the same shall not be released to Cochingyan until all unpaid arrears shall have been
paid.  Provided, however, that the last
shipment of the goods procured under Resolution No. 396, shall not be released
to Cochingyan but that a portion thereof sufficient
to pay the amount due Worldwide, Joaquin So and Torrefranca
for said last shipment and any amount on arrears shall be retained and at the
option of the latter the goods thus retained may be deli­vered to them in full
payment of their unpaid claims or that they may demand payment in cash of the
value thereof.”

On the same day, i.e., February 17, 1966, World­wide,
Joaquin So and Torrefranca executed a supple­mental
agreement among themselves apportioning the payment of the P1.10 due them at P0.85 to Worldwide
and Torrefranca, and P0.25 to Joaquin So.  With respect to the balance of P340,000 which
was pay­able at P0.75 per US$1.00, Joaquin So was to receive P0.25, and Worldwide
and Torrefranca, P0.50.

Parenthetically, the parties-payees to the foregoing agreement
have not been fully paid by Cochingyan up to
the present.

Even before the dissolution of the LEI receivership was
actually ordered and during the period from February 22, 1966 to October 13,
1966, when the LEI was no longer under receivership, reparations
consumer goods procured under the PVL/LEI
allocation had arrived in the Philippines, and Cochingyan
took delivery of the same in various shipments from the Repacom.

After all the goods were delivered to Coching­yan,
the parties who were entitled to share in the proceeds of the goods, as well as
the Veterans, the PVL and LEI and four
other veterans organizations, as agreed upon in the various amicable
settlements, requested Cochingyan, on various
instances, to pay them their respective shares as the goods delivered to him
were all fully paid by the buyers, but to no avail.

On July 6, 1966, by reason of Cochingyan’s
alleged unreasonable refusal to pay the parties-payees and the veterans, a
motion for payment and to compel payment was, for the first time, filed against
Cochingyan, which was granted by the court in
its order dated July 9, 1966.

On August
12, 1966, the PVL also filed a motion against Cochingyan
for the payment of its shares in accordance with the agreements, and the
respondent court granted the same in its order dated August
24, 1966.

On August 24, 1966,
Worldwide and Torrefranca filed an
“urgent motion for a definite order for Joseph Cochingyan,
Jr. to pay parties the agreed consideration,” stating therein, among
others, unsavory but proper averments for compliance and payment of
parties-payees’ shares.  In view of Cochingyan’s failure to file an opposition to said
motion, it was granted by the court by order dated September 1, 1966. 
However, the said order was, after a motion was filed, clarified and Cochingyan was directed to effect immediately
payment of all that are due and payable to the parties-payees.

Due to several motions filed by parties-payees for the payment of
dues by Cochingyan, the court on November 19, 1966, finally admonished him to pay the said
parties immediately “otherwise disciplinary action would be taken against him.”

By reason of the serious
disagreements and the renewed conflicts of the parties in these cases, Cochingyan filed on October 12, 1966, an urgent ex-parte
unverified motion to reinstate the receivership of the LEI and
recommended Atty. Mariano L. Mercado for appointment as Receiver.  The LEI filed an opposition to the
said motion but the court, overruling the said opposition, on October 14, 1966
reinstated the receivership of the LEI and appointed Cochingyan’s
nominee, Atty. Mercado, as the LEI Receiver, on a bond of P10,000 which the court required Cochingyan to
file, to answer for damages in the event that the appointment of a receiver be
later adjudged as not justified.

On October 31, 1966,
Attys. Dolorfino and Casiano
Villanueva, representing PVL and four other
veterans organizations, filed a motion for recon­sideration of the order of October 14, 1966 reinstating the LEI
receivership and appointing Atty. Mercado as the LEI receiver.  However, before the court could finally
resolve said motion for reconsideration, it issued an order dated November 17, 1966 requiring all parties to the Compromise Agreement of May 13, 1964, namely, Cochingyan, Eguia, Magno, Panay, Worldwide and Keyser, to give their comments and stand on the said motion and to submit their
common choice of receiver five (5) days from December 10, 1966.  In compliance with the said order, the
parties submitted different names as their nominees for LEI
receiver.  The LEI submitted the
names of Juan Q. Miranda, Tomas G. Mapa and Ireneo R. Clapano, Jr.; Magno and
Eguia submitted
the names of Atty. Iturralde, Tomas G. Mapa, and Ireneo R. Clapano, Jr.; Cochingyan submitted the name of Atty. Mercado but did
not oppose the nomination of his former counsel, Atty. Ireneo
R. Clapano, Jr.; Worldwide nominated Natalio
R. Castillo; and Panay submitted the names of Attys. Ireneo R. Clapano, Jr. and
Ernesto P. Golez. 
On December 6, 1966, the court finally set the hearing of Attys.
Dolorfino and Villanueva’s motion for reconsideration
and the various manifes­tations of the parties on December 10, 1966 in order that all could be fully heard on
their respective stands on the incident.

Prior to the hearing on December 10, 1966, i.e., on December
7, 1966, other
parties who were interested but were not required to file their comments on the
motion for reconsideration of Attys. Dolorfino and
Villanueva, also submitted their nominees for LEI Receiver.  The PVL and
Cesar P. Roces, assignor of Torrefranca,
submitted the names of Natalio R. Castillo and Zosimo C. Soria, while the four
veterans organizations, namely, VOP, PQOG, DBC, and the War Widows
nominated Castillo or Soria.

At the hearing of December
10, 1966, where all
the parties were fully heard and represented, the propriety of again placing the
LEI under receiver­ship was fully discussed and deliberated upon.  However, as the parties could not agree, or
sit down with Cochingyan, although the other parties them­selves had
their conferences on who would be submitted as the common nominee, majority of
the parties to the Compromise Agreement (Keyser, LEI, Magno, Panay and
Eguia), including PVL which now changed its
stand, submitted, in a joint manifesta­tion dated December 12, 1966, the name
of Atty. Ireneo R. Clapano,
Jr. to replace Atty. Mercado.

On December
13, 1966, Cochingyan filed a manifestation praying that Atty.
Mercado be retained as the LEI Receiver, reiterating his manifestation
of November 29, 1966.

On December 19, 1966,
the Court issued an order denying the PVL’s
motion dated October 31, 1966,
relieving Atty. Mercado as the LEI Receiver, and appointing, in his
stead, Atty. Ireneo R. Clapano,
Jr.

On December 21, 1966,
Cochingyan filed a motion for reconsideration
of the order of December 19, 1966,
which was set for hearing by him on December
24, 1966.  However, on the
day of the hearing, an urgent motion was filed by the counsel of Magno and
Eguia for the postponement and resetting of
the hearing of Cochingyan’s motion to January
7, 1967.  In the early morning prior to hearing time of
January 7, 1967,
the branch clerk of court informed all the parties and those who had other
cases on that motion day that the presiding Judge was invited to the Malacañang Open House by the President of the Philippines.  All
the parties in these cases were also informed about the two telegrams from Iloilo City requesting the postpone­ment of the
incidents of the case, one from the counsel of the LEI and the other
from the counsel of Panay, protesting that they did not receive or
were not furnished copies of the motions to be heard on that day.  Thus, the lower court re-set the said motion
for January 28, 1967 to be heard together with other motions in both cases.

On October 18, 1966,
the Executive Secretary wrote a letter to the Chairman of the Repacom stating that “The President desires
that you suspend all reparations awards to the Philippine Veterans Legion until
further investigation by you and submit your recommendation on this
matter.”

Since the contract for the procurement of goods that would
complete Cochingyan’s allocation of US$1
million had long been signed, the Repacom approved
a second release of allocation to the PVL/LEI
in the amount of $789,600 under Resolution 199 (66) dated September 8, 1966,
and on the same date, issued the corresponding purchase order.

In the meantime, Panay, Keyser, Eguia
and Magno learned that Cochingyan had
left for Japan in October 1966 and had entered into contracts with various Japanese
firms whereby he committed $710,000 of the $789,600 for items that were never
ordered by Panay, Keyser, Eguia or Magno.

On October
19, 1966, Panay filed an urgent motion praying that its
contract with the LEI for US$200,000 be implemented according to the
terms and conditions of the Compromise Agreement of May 13, 1964.  This
motion was not objected to by the other parties to the said agreement.  Panay‘s motion was set for hearing on October 22, 1966 and Cochingyan
was given five days to file his opposi­tion thereto.  Alleging that Cochingyan
was in Tokyo following up procurements on the LEI alloca­tion, despite
the appointment and existence of a Receiver at that time, his counsel filed an
urgent ex-parte motion for extension to file an
opposition, and he was granted until October 29, 1966 within which to do
so.  However, without verifying whether
his motion was granted or not, Cochingyan’s counsel
filed his opposition on November 2, 1966 at 3:30 in the afternoon, which was
clearly out of time.  The respondent
court, therefore, issued on November 2, 1966 an order granting the motion of Panay because the same was non-controversial and was
asking only what was due it under the Compromise Agreement, and ordering the LEI
Receiver, then Atty. Mercado, to comply with the LEI’s
obligation to Panay.  Cochingyan
filed on November 7, 1966 a motion for reconsideration of the
aforesaid order, while the LEI filed on November 23, 1966 a reply to the opposition contained in Cochingyan’s motion for reconsideration.

On November 4, 1966,
Keyser filed an urgent ex-parte motion for the
enforcement of its contract with the LEI of US$120,000 according to the
terms and conditions of the Compromise Agreement of May 13, 1964. 
After hearing, and after the LEI, Cochingyan’s
principal, had filed its conformity to the same, the court granted the said
motion by its order of November 11,
1966.  Cochingyan
also moved on November 14, 1966
to reconsider the said order, but the LEI on November 24, 1966 and Keyser on November 25, 1966 filed their respective oppositions
thereto.

Eguia and Magno,
on November 23, 1966, also filed a motion for the enforcement of their respective rights
and contracts under the Compromise Agreement of May 13, 1964.  On November
24, 1966, the LEI,
Cochingyan’s principal, filed a
manifestation signifying its conformity to this motion.

On December 20, 1966, the counsel of the LEI filed a
motion praying the court that in accordance with the Agreement of February 7,
1964 executed by the LEI and Cochingyan,
the latter, as attorney­-in-fact of the former, must be made to comply with the
conditions thereof and pay the dues in favor of the veterans in the amount of
more than P112,000, which had been long overdue, from goods already released to Cochingyan.

On December 27, 1966, the LEI Receiver, in compliance with
the order of December 19, 1966 “to religiously and faithfully implement
the Com­promise Agreement of May 13, 1964,” filed an ex-­parte motion, with the conformity of all the parties
affected, asking the respondent court that in compliance with its order of
December 19, 1966, the Receiver be allowed to submit firm offers on behalf of Panay for US$200,000, Keyser for US$120,000, Eguia for US$200,000, Magno
for US$134,600, Worldwide for US$135,000, or a total of US$789,600
which is equivalent to the amount authorized to be procured by the Repacom for the LEI under the 9th Reparations
Schedule in partial implementation of the allocation of the PVL/LEI
for US$3 million.  On January 3, 1967, the court granted the
aforesaid motion of the Receiver.

Worldwide filed also on December 27, 1966 an urgent ex-parte motion asking the LEI Receiver to pay to it
directly upon the release of each ship­ment the sum of P0.85 (which includes
that due to Torrefranca) per US$1.00, by reason of
the fact that until that date, Cochingyan had
failed to pay them their share in the proceeds of the goods pursuant to the
Agreement of February 17, 1966.  On December 28, 1967, the court granted
the said motion and ordered the LEI Receiver to pay directly to World­wide
on the date of the release of reparations goods its claim of P0.85 for every
US$1.00.  Cochingyan
did not move to reconsider this order.

When the LEI Receiver assumed
office, he received a letter dated December 21, 1966 from the LEI’s legal
counsel, informing the former that Cochingyan had
been negotiating in Tokyo, Japan, for the procurement of reparations
goods not ordered by the other parties to the Compromise Agreement of May 13,
1964 to promote his personal business interests; that he did not pay on time
the veterans’ share corresponding to the goods already released to him; that
there were arrears due the veterans; and that other parties who had dues from Cochingyan corresponding to goods already
released to him had also been complaining that payments in their favor had not
been made, or, if at all made, were paid in postdated checks and in small
amounts.

Immediately after the
Receiver had qualified as such, Cochingyan, through counsel, filed an urgent ex-parte
motion and manifestation dated December 22, 1966 praying therein that the Receiver be ordered
to “deliver to the Intervenor (Cochingyan) all said goods upon release thereof to him by
the Commission.” At the hearing of the aforesaid motion, the LEI Receiver unqualifiedly
informed the court and Cochingyan’s counsel “that the Receiver is glad to
deliver the goods to Intervenor” provided that
the taxes due thereon be paid.  Cochingyan’s counsel manifested that they were
ready to pay the Receiver.

The Chairman of the Board
of Directors of the LEI, Col. Cirilo B. Garcia, on January 4, 1967 again informed the LEI Receiver about Cochingyan’s failure
to comply with the agreements he had signed with the other parties to the case,
tabulating in figures the arrears due in favor of the said parties and the
veterans, despite the fact that Cochingyan had already been fully paid P2,900,000 by
the buyers of the reparations goods delivered to Cochingyan by the Repacom.

On January 6, 1967, the LEI
Receiver received another letter from the officers of the LEI inform­ing
him that Cochingyan had
signed proposed contracts with several Japanese suppliers for the procurement of
goods through reparations on the basis of allocations allotted to other parties
in the Compromise Agreement of May 13, 1964, inspite
of the presence of a Receiver appointed to manage the procurement of goods
intended for the LEI.

Pursuant to the order of
the court dated January 3, 1967 granting the LEI Receiver’s motion to
submit firm offers for some parties to the Compromise Agreement of May 13,
1964, the LEI Receiver wrote Cochingyan
a letter dated January 10, 1967 requesting the latter to submit firm offers of
goods to be procured by him in accord­ance with existing agreements with other
parties in the case in order to hasten the immediate implementation of the
veterans’ allocations which had already been delayed for almost six years.

However, without waiting
for January 28, 1967 when his motions for reconsideration of some orders of the
Court and other related motions were to be heard, Cochingyan
(hereinafter referred to as the petitioner) filed on January 14, 1967 the
instant petition for certiorari with preliminary injunction and
restraining order, praying that a restraining order be issued enjoining the
presiding Judge of Branch VI of the Court of First Instance of Manila (hereinafter
referred to as the respondent court or Judge) and the other respondents (e.g.,
the LEI, Ireneo R. Clapano,
Jr. [hereinafter referred to as the respondent Receiver], Keyser, Panay, Magno, Eguia, the PVL, Worldwide,
Filipinas, Joaquin So, Torrefranca and the Repacom), their agents, representatives,
attorneys-in-fact and other persons acting on their behalf, from
enforcing, during the proceedings, the orders of the respondent Judge dated
November 2, 1966, November 11, 1966, December 19 and 28, 1966 and January 3,
1967, respectively; that a writ of preliminary injunction issue enjoin­ing the
respondents, their agents, attorneys-in-fact, representatives and other persons
acting on their behalf from enforcing the above orders; that pending the
proceedings, Atty. Mariano. L. Mercado be reinstated as the LEI Receiver
under the bond filed by him with the respondent court; and that after hearing,
the above-enumerated orders be declared null and void.

On January 16, 1966, the petitioner
filed a supplemental petition bringing to the attention of this Court and
asking to be enjoined, an order of the respondent Judge issued on January 14,
1967 granting a motion of the LEI Receiver praying the court a quo
to allow him “to withdraw part of the goods which are perishable and
dispose of the same to qualified and
interested persons for expenses and maintenance of the corporation under
receiver­ship and for the payment of veterans and other parties in these cases
of their dues.”

This Court, on January
17, 1967, issued a
resolution requiring the respondents to file, not later than January
25, 1967, their
answer to the petition and supplemental petition for certiorari, and
issuing a temporary restraining order effective immediately until further
orders from the Court.

On January
25, 1967, the
respondents filed their respective answers, and, on various dates in February
and April 1967, their respective memoranda.

On May 16, 1967, the
petitioner filed a petition for the withdrawal of his supplemental petition of
January 16, 1967, to enable the res­pondent court to take cognizance of a joint
urgent motion dated May 7, 1967 filed with the said court by the parties
concerned for the release of the goods which had arrived and were at the
customs area or in customs bonded warehouses. 
Manifestations were filed by Filipinas and Repacom
on June 3, 1967, by Panay on
June 10, 1967 and by the LEI Receiver on June 13, 1967, all interposing
no objection to the petitioner’s petition, except that the respondent Receiver
moved that he be allowed to participate in the deliberations of the court below
regarding the release of the goods involved in the case.  The PVL,
through Atty. Lacanienta, filed an opposition on June 5,
1967, and the
petitioner filed a reply thereto. 
Representations were made that further delay in the release of the goods
involved would result in mounting storage fees and losses from pilferage and
deterioration of the goods, part of which were photographic films and papers
which had actually lost their value because of the lapse of their expiry date.

On July 15, 1967, this
Court resolved to grant the aforementioned petition for withdrawal of the
petitioner’s supplemental petition which prayed for the annulment of the order
of the respondent Court of January 14, 1967; to lift partially the
restraining order of January 17, 1967 insofar as it refers to said order of
January 14, 1967; and to deny the LEI Receiver’s motion which should be
addressed to the sound discretion of the respondent court.  By virtue of this Court’s resolution,
reparations goods worth US$504,170.12 have been duly received and taken away by
the petitioner.  Thus, the reparations
goods still in issue in this case are worth US$307,578.67; and the remaining
and unimplemented balance of the initial US$1 million PVL–LEI
allocation is $188,251.21.

On November 7, 1967, this
Court resolved to refer to Mr. Justice Martin of the Court of Appeals, for
investigation, report and recommendation, (a) the charge of bribery against the
respondent Judge Cloribel; (b) the charges of
contempt against Atty. Clapano, Atty. Patajo and the petitioner; and (c) the complaint for
disciplinary action against Atty. Lacanienta.  The foregoing charges arose from certain
incidents in the case at bar.

On November 13, 1968, the
Repacom issued Resolution 243 (68) permanently
disqualifying the petitioner from further dealing or transacting with the Repacom relative to the procurement of reparations
goods for the end-users World War II Veterans Enterprises, Inc. (WARVETS), the PVL, the
LEI, and the United Disabled Veterans Asso­ciation of the Philippines (UDVAP) and/or any other end-user for whom/which he may be
the attorney-in-fact, or with whom/which he may be connected in any capacity
whatsoever, because of his failure to replace the performance bonds issued by
the Consolacion Insurance Co., Inc., a bonding
company which he admitted to be bankrupt and in the process of liquidation,
guaranteeing the payment to the Repacom of the
difference between the free market rate of exchange and the old rate of
exchange of P2.00 to $1.00 relative to the f.o.b. value of the reparations
goods procured for the said end-users, with other performance bonds issued by
qualified bonding companies acceptable to the Repacom
pursuant to Resolution 113 (68), despite having been given notice of the said
resolution and sufficient time to comply therewith and not­withstanding the
orders dated August 15, 1968 and September 27, 1968 of the respondent court in
Civil Cases 54912 and 55250 stopping the release to the petitioner of the
reparations goods subject of the said cases unless such requirement on
replacement is first complied with — it being the opinion of the Repacom that his failure to replace the said bonds
is a clear proof that he is not financially qualified according to the
Reparations Law to have any further dealing or transaction with the Repacom.

On February 14, 1969, the Repacom
issued Resolution 43 (69), (a) accepting the proposal of the petitioner to
replace the useless and worth­less judicial bonds in the aggregate amount of
P670,300.20 issued by the Consolacion Insurance Co.,
Inc., as follows:  (1) replacements of as
many of the said judicial bonds as shall aggregate P150,000 immediately upon
acceptance of the proposal; and (2) replacements of the remainder of the said
judicial bonds at the rate of P100,000 per
month thereafter until all the said judicial bonds are fully replaced; provided
that the said replacement bonds shall be issued by qualified bonding companies
acceptable to the Repacom and shall
further be subject to the approval by the proper court; and (b) temporarily
lifting the permanent disqualification of the petitioner imposed in Resolution
243 (68) dated November 13, 1968, effective upon his filing of the replacement
judicial bond and/or bonds in the aggregate amount of P150,000 that is/are in
accordance with the foregoing conditions and/or acceptable to the Repacom, provided that any failure of the petitioner
to replace any of the remainder of the said useless and worthless judicial
bonds in the manner and within the period specified above, and/or comply with
the foregoing conditions, shall automatically revoke and render ineffective the
said resolution and automatically restore his permanent disqualifi­cation
imposed by Resolution 243 (68) without need of any further action and/or resolution of the Repacom to that effect.

On March 12, 1969,
the petitioner filed with the respondent Court a motion for replacement and
substitution of bonds wherein he offered to submit a bond executed by the Traveller’s Multi-Indemnity Corporation (Bond No. G-(16)
239/69) in the amount of P150,150.32 to substitute for Bond No. G-8556
-P67,341.30, Bond No. G-8575 – P65,405.34, and Bond No. G-8667 – P16,403.68 all
issued by Consolacion Insurance and Surety Co.,
Inc.  However, the Repacom
filed an opposition, dated March 14,
1969, to the said motion of the petitioner, on the grounds (1) that
in Civil Case 255-M (11611) of Branch XIV of
the Court of First Instance of Rizal, entitled
“United Disabled Veterans
Association of the Philippines
(Reformist Block) v. The Reparations Commission, et al.,” an order dated March 11, 1969 was issued
enjoining the implementation of Repacom
Resolution 43 (69) until further orders from the said court; (2) that because
of the said restrain­ing order, the petitioner had no right to propose the
substitution and replacement of the bonds because Resolution 43 (69) which was
the source of his right or authority had been temporarily rendered ineffective
by the said restraining order; and (3) that there was no allegation, much less any showing that the said bonds,
assuming they could properly be considered, had been previously found
acceptable by the Repacom
per the conditions of Resolution 43 (69).

On March 24, 1969, the respondent
Receiver filed a motion praying, upon the grounds stated therein, that pending
the determination of the questioned order appointing him as the LEI
Receiver, and in view of the oppository stand of the
petitioner that the Receiver is still restrained to act as such despite this
Court’s resolution of July 15, 1968, an order be issued categorically authorizing
the LEI Receiver to sell the goods now at the
piers and different bonded warehouses worth US$307,578.67 and allowing him to
fully implement the balance of the US$1 million PVL–LEI reparations allocation in the amount of $188,251.21,
subject in all cases to the approval of the respondent Court.  The Receiver cited, among others, Repacom Resolu­tion 243 (68) dated November 13, 1968 permanently
disqualifying the petitioner from any further dealing or transaction with the Repacom relative to the procurement of reparations
goods.

The petitioner, on June 2,
1969, filed his comments
and opposition to the respondent Receiver’s motion, dated March
21, 1969, and
prayed, upon the grounds stated therein, that the said motion be denied.

On July 28, 1969, the
respondent Receiver filed a supplemental motion praying that he be allowed to immediately
conduct a detailed inventory and
examination of the goods in question in the presence of all the parties and/or
their duly authorized representatives, with authority to incur expenses to be
later on reimbursed him; that the sale of the goods be by negotiated sale to
third persons not parties to the case who are willing and qualified to take the
goods as a whole under a “no selective release scheme” and as defined
by the rules and regulations of the Repacom;
that the Repacom, being the owner and consignee
of the goods sought to be sold, be ordered to make available to the Receiver
all records involving the goods, and extend full coope­ration to the Receiver
by clearing all the goods after payment of costs and other procurement
expenses, from the Customs area and custody, ready for sale, under the
supervision of the respondent Court.

On September 5, 1970, the petitioner filed his comments on the
Receiver’s supplemental motion, and a motion to hold the Receiver in contempt
of court, praying that the Receiver’s motion dated March 21, 1969 and his
supplemental motion dated July 25, 1970, among others, be denied and that the LEI
Receiver, Atty. Clapano, be severely censured,
disciplined and punished for contempt of court. 
In this particular pleading, the petitioner made the claim that by
virtue of this Court’s resolution dated July
15, 1968 granting his petition for withdrawal of his supplemental
petition for certiorari, the reparations goods in question ceased to be
the subject of any action pending before this Court.

The respondent Receiver, on September 24, 1970, filed his reply to the petitioner’s
comment, an answer and opposition to the motion to hold him in contempt, and a
counter-petition to punish the petitioner for contempt of court — all embodied
in one pleading.  It reiterated the
respondent Receiver’s prayer that his motion dated March 21, 1969 and its supplement, dated July 25, 1970, be granted.

A panoramic appraisal of the facts of this case will show that
two issues are primarily involved, to wit:

(1)  Did
the respondent Court issue the questioned orders without or in excess of
jurisdiction or with grave abuse of discretion?

(2)  Has this Court lost juris­diction over the
reparations goods by virtue of its reso­lution dated July 15, 1968 granting the petitioner’s petition
to withdraw his supplemental petition for certiorari?

1.  Pursuant to Section 1,
Rule 65 of the Rules of Court, the writ of certiorari lies if the
following requisites concur:  (a) that it
is directed against a tribunal, board or officer exercising judicial functions;
and (b) that such tribunal, board or officer has acted without or in excess of
jurisdiction or with grave abuse of dis­cretion; and (c) that there is no appeal
nor any plain, speedy and adequate remedy in the ordinary course of law.  Not all the foregoing requisites are present
in the case at bar.

There is no gainsaying as
to the presence of the first requisite — the respondent court being a
tribunal exercising judicial functions. 
Regard­ing the second requisite, it is not disputed that the respondent
court has jurisdiction over the civil cases in question.  It had acquired jurisdiction over the
parties-signatories to the Compromise Agree­ment of May 13, 1964 and the other agreements and the
subject-matter thereof.  Thus, even
assuming arguendo that
the respondent Judge committed errors in issuing the questioned orders, they
are merely errors of judgment and not errors of jurisdiction.  A line must be drawn between errors of
judgment and errors of jurisdiction.  An
error of judgment is one which the court may commit in the exercise of its
jurisdiction.  An error of jurisdiction
renders an order or judgment void or voidable.  Errors of jurisdiction are reviewable on certiorari; errors of judgment, only
by appeal.^[1] Errors of judgment or of procedure, not relating to the court’s juris­diction or amounting to
grave abuse of discretion, are not reviewable by certiorari.^[2] Where the issue or question involved affects
the wisdom or soundness of the decision, not the
jurisdiction of the court to render said decision or its validity, the same is
beyond the province of the special civil action for certiorari.^[3] Indeed, when the court has jurisdiction over
the subject-matter, the orders or decisions upon all questions pertaining to
the cause are orders or decisions within its jurisdiction, and however
irregular or erroneous they may be, they cannot be corrected by certiorari.^[4] Whether or not the respondent Judge abused
his discretion in issuing the said orders, will be discussed later.

The third requisite, i.e.,
the absence of appeal or any speedy and adequate remedy in the ordinary course
of law, cannot likewise be said to be present in the instant case.  No motions for reconsideration were filed in
the case of the orders dated December 28, 1966 and January 3, 1967, respectively.  The motions for reconsideration filed in the
case of the orders dated November 2, 1966, November 11, 1966 and December 19, 1966, respectively, were not yet resolved before
the petitioner filed the instant petition for certiorari.

Well settled in this jurisdiction is the rule that before filing a petition for certiorari,
the petitioner should first call the attention of the respondent judge and
afford him a chance or opportunity to correct his error, if any, in an
appropriate motion for reconsideration. 
An omission to comply with this procedural requirement justifies a
denial of the writ of certiorari applied for.^[5] The reason for this rule is that issues,
which courts of first instance are bound to decide, should not be taken
summarily from them and sub­mitted to an appellate court, without first giving
the lower courts an opportunity to dispose of the same with due deliberation.^[6]

To be sure, there are
well-defined exceptions to the foregoing rule, e.g. (a) where the
question of jurisdiction has been squarely raised, argued
before, submitted to, and met and decided by the respondent court; (b) where
the questioned order is a patent nullity; and (c) where there is a deprivation
of the petitioner’s fundamental right to due process.^[7] Not one of these exceptions, however,
obtains in the instant case, as will be shown later.

This Court has held,
likewise, that where the petitioner filed his petition for certiorari,
without waiting for the resolution of his motion for reconsideration in the
lower court, the writ cannot be granted. 
For, if there is an appeal or other adequate remedy, like a motion for
reconsi­deration, which is still pending in the court below, the petition for certiorari
should be denied.^[8]

The respondent Judge did
not commit a grave abuse of discretion when he issued the questioned
orders.  Grave abuse of discretion, another require­ment in order that the instant petition for certiorari may prosper, “implies such capricious and
whimsical exercise of judgment as is equivalent to lack of jurisdiction, or, in
other words, where the power is exercised in an arbitrary or despotic manner by
reason of passion or personal hostility, and it must be so patent and gross as
to amount to an evasion of positive duty or to a virtual refusal to perform the
duty enjoined or to act at all in contemplation of law.”^[9]
But the respondent Judge’s orders are not claimed to have been motivated by
passion and personal hostility.  They are
not despotic or arbitrary but were prompted by justifiable grounds.  A perusal of the questioned orders and the
circumstances under which they were issued will show that the respondent Judge
did not gravely abuse his discretion in issuing them.

Let us take the orders
dated November 2, 1966, November 11, 1966, and January 3, 1967, respectively.  The first granted the motion of Panay that
its contract for US$200,000 with the LEI be implemented by the respondent
Receiver.  The second allowed the urgent
ex-parte motion of Keyser (filed on November
4, 1966) praying for
an order directing the implementation of its contract with the LEI for
US$120,000.  The third also sanctioned
the ex-parte motion filed by the LEI Receiver asking for
authority to submit firm offers on behalf of Panay for
US$200,000, Keyser for
US$120,000, Eguia for
US$200,000, Magno for
US$134,600, and Worldwide for US$135,000, or a total of US$789,600
which is equivalent to the amount authorized to be procured by the Repacom for the LEI under the 9th Reparations Schedule in partial
implementation of the balance of the PVL–LEI allocation
of US$3 million.

It must be recalled that
under the Compro­mise Agreement of May 13, 1964 by and between the petitioner,
on the one hand, and Worldwide, Eguia, Keyser, Magno, Panay and
the LEI, on the other, the latter (except the LEI), in consideration of the various undertakings and other obligations
assumed by the former, agreed to defer the enforce­ment of their respective
contracts with the LEI on condition that the said contracts shall be
charged and enforced on the additional allocation that would be made available
to the LEI and/or PVL in implementation
of the balance of the said PVL–LEI
allocation; and that this same agreement was submitted to and simultaneously
approved in separate orders both dated June 1, 1964 by Branches VI and I of the
Court of First Instance of Manila in Civil Cases Nos. 54912 and 55250,
respectively.

Pursuant to Article 2037
of the Civil Code, “A compromise has upon the parties the effect and
authority of res judicata;
x x x,” and this is
true even if the compromise is not judicially approved.^[10] Since the above compromise agreement
possesses judicial imprimatur, a fortiori, it stands on a similar
if not better footing than one which does not carry judicial sanction.  The basis, therefore, for the issuance of the
orders for the enforcement and implementation of the contracts of sale and/or
instructions to the LEI Receiver to implement and enforce the sales
agreement, is the abovequoted provision of the
Compromise Agreement of May 13, 1964 which has been properly approved by the
respondent court.  In issuing the said
orders, the respondent court only implemented a covenant which had been
long agreed and approved by the said court. 
The petitioner has no cause to complain in the implementation of the
rights of other parties to the Compromise Agreement.  The parties thereto (except the LEI) had
agreed to allow the petitioner to implement the entire US$1 million.  This alloca­tion, except for the remaining
and unimplemented balance of $188,251.21, had already been exhausted.  It is now their turn to implement their
contracts.  Thus, when the Repacom approved Resolution 199 (66), the LEI
notified the said parties that the Repacom had
already set aside US$789,600, made available under the 9th and 10th year
reparations schedule.  Knowing that the
petitioner had no more allocation to implement except the amount of
$188,251.21, the parties filed their motions for implementation ex­-parte.  No notice was
given to the petitioner because he was not going to be affected by any ruling
on the matter.  Indeed,
the motions for implementation were not necessary since all that Panay, Keyser, Magno
and Eguia had to do was to exercise their
rights under the said Compromise Agreement of May 13, 1964 by making their demands for implementation
directly with the LEI.  Thus,
since the orders partake of the nature of (or are technically) motions for
execution based on a compromise agreement which had been judicially approved,
the respondent court did not act with grave abuse of discretion in issuing the
same.  After all, the petitioner himself
stated in his petition that the Compromise Agreement of May 13,
1964 is res judicata and is
the law between the parties.

Parenthetically, the
petitioner’s right is also being implemented by the LEI Receiver as
could be gleaned from the letter of the latter to the former dated January
10, 1967 requesting
the petitioner to submit firm offers of goods to be procured by him in
accordance with the existing agreements with other parties.

The petitioner cannot
complain that he was not given the right to be heard on the foregoing motions
for implementation because the same were filed ex-parte.  Section 6, Rule 15 of the Rules of Court,
provides:

“Sec. 6.  Proof of
service to be filed with motion.  No
motion shall be acted upon by the court, without proof of service of the notice
thereof, except when the court is satisfied that the rights of the adverse party
or parties are not affected.” (Under­scoring supplied)

It
is clear from the abovequoted rule that if the court
is satisfied that the adverse party’s rights will not be affected, it may act
upon a motion even without proof of service thereof on the said adverse
party.  This particular circumstance
obtains here.  Since the petitioner is a
signatory to the Compromise Agreement of May 13, 1964, the provisions of which are sought to be
implemented, he cannot now allege that any of his rights is being violated.  Indeed, the petitioner is bound to comply
with his obligation to allow the enforcement of the contracts of the other
parties concerned, and his opposition to the enforcement of the said contracts
as well as his act of questioning the
orders allowing the enforcement
thereof and authorizing the LEI Receiver to submit firm
offers therefor, are gross violations of his obligations and in derogation of the respondents’ rights in whose favor the orders were issued.  Being himself the wrongdoer, this Court has the authority not only to
dismiss his petition but also to grant to the respondents
further reliefs just and equitable in the premises.

“Where plaintiff in an
injunction suit is himself the wrongdoer in first invading the rights of
defendant whom he seeks to enjoin, and should therefore be denied all equitable
relief on that account, he cannot complain that, instead of dis­missing his
complaint, as demanded in defendant’s answer, the court grants a further relief
to defendant by enjoin­ing plaintiff and thus adjudi­cating all the equities
between the parties growing out of the facts alleged or litigated.”^[11]

Moreover, during the
hearing of Panay’s motion
on October 22, 1966, the respondent court granted the request of the
petitioner’s counsel that he be given five days to file his opposition to the
motion and the court made it clear, and it was agreed in open court, that after
the expiration of the said period, the incident would be deemed submitted for
resolution.  Consequently, the respondent
court acted correctly when it resolved the motion after the expiration of the
five-day period.  And as earlier stated,
his motion for reconsideration of the order of November 2, 1966 is still pending because the petitioner came
up to this Court on a petition for certiorari before his motion could be
resolved.

With reference to the
order of November 11, 1966, the petitioner was given ample opportunity to be
heard on the propriety of the said order when his motion for reconsideration
which he filed on November 14, 1966 was given due course by the respondent
court, and which, together with the oppositions thereto filed by the LEI
on November 24, 1966 and by Keyser on November 25, 1966, was properly
heard and ventilated on November 26, 1966. 
However, before the respondent court could resolve his motion, the
petitioner brought up the instant petition for certiorari.

The petitioner claims
that Keyser has no more contract to be implemented because under an
agreement executed by them on January 8, 1965, the petitioner sold an
additional $300,000 worth of photographic supplies to Keyser in
consideration of which Keyser had in effect agreed to release the
petitioner from any obligation under the Compromise Agreement of May 13, 1964
to recognize Keyser’s contract of $120,000 with the LEI.  This is not correct.  Paragraph 7 of the contract of January
8, 1965, cited by
the petitioner to support his allegation that Keyser had revoked its
$120,000 contract with the LEI, provides:

“7.    Keyser
and Cochingyan (the petitioner) agree that
this agreement even (sic) not approved by
the court, revokes and supercedes any and all agreements, undertakings
and arrangements heretofore made and entered into between them.”

A
cursory perusal of the above paragraph will show that there is nothing therein
which suggests a renunciation by Keyser of its $120,000 contract with
the LEI.  The contract of January
8, 1965 is an
agreement of Keyser with the petitioner, and not with the LEI;
therefore, it has no application whatsoever to the enforcement of the agreement
between the LEI and Keyser. 
It is clearly mis­leading to allege that by virtue of the said contract,
the agreement between the LEI and Keyser is no longer
enforceable.  Keyser, therefore,
has all the right to have its $120,000 contract with the LEI implemented. 
This was the basis of the order of November 11, 1966.

The petitioner claims
that he has a right to be heard in any motion which any of the respondents may
file by reason of the fact that he is a buyer of the US$4 million PVL–LEI allocation under his February 7, 1964
contract with the LEI, and that he is an assignee of Filipinas
for US$4 million of the PVL–LEI
allocation.  But he overlooks the fact
that by reason of the Compromise Agreement of May 13, 1964, Eguia,
Panay, Magno,
Worldwide and Keyser agreed to allow him to buy all the goods
procured under Resolution 396 of the Repacom
in the amount of US$1 million, provided their respective contracts of
purchase with the LEI will be implemented against the balance of the PVL–LEI
allocation of US$4 million, i.e., the allocation made available
in addition to the first US$1 million. 
Indeed, his Compromise Agreement with Filipinas dated September 30, 1965 takes favorable
cognizance of the May 13, 1964
Compromise Agreement with other parties because it provides that it (the
agreement with Filipinas) must “be implemented in relation to and
harmoniously with the Compromise Agreement between Cochingyan
and the other buyer-claimants of PVL/LEI.” In
fact, when Branch I of the Court of First Instance of Manila approved the
Filipinas-Cochingyan contract, it ordered the LEI
Receiver -?

“x x x to
implement the contract of LEI and Cochingyan dated
February 7, 1964, pursuant to the Compromise Agreement of May 13, 1964 approved
by this Court in its Order of June 1, 1964 and the Compromise Agreement of Cochingyan and Filipinas of September 30, 1965 and finally
the parties to said compromise agreements are hereby enjoined to comply with
the terms and the conditions thereof.”

Finally, the order of
January 3, 1967 was issued on motion of the LEI Receiver upon the re­quest
of the LEI which had to take such legal step,
otherwise it could be held liable for damages and could be exposed to lawsuits
which the parties-buyers might file against it for specific perform­ance of
their clearly established rights, should the Receiver fail to implement
their respective contracts.  Rather than
risk the certainty of incurring expenses and facing court litigations, the LEI
saw the need to write the Receiver to obtain instructions from the court to
submit firm offers to satisfy the requirements of the parties-buyers pursuant
to the Compromise Agreement of May 13,
1964.  We likewise fail to
see any abuse of dis­cretion on the part of the respondent court in issuing
this order.

It is not, however,
difficult to imagine why the petitioner is vigorously objecting to the
implementation of the contracts of other parties with the LEI on the
balance of US$3 million of the PVL–LEI
allocation which is now authorized
in the sum of $1.5 million, $789,600 of which was already made available under
the 9th and 10th year reparations schedule, as aforesaid.  In October 1966, he sneaked out of the Philippines, and, with­out informing the other parties,
went to Japan and entered into contracts with various Japanese firms over the amount
of US$789,600 for goods other than those that Panay, Magno, Eguia and
Keyser would
want to order.  Naturally, if out of the
amount of US$789,600, only the sum of US$135,000 (corres­ponding to the share
of Worldwide which
the latter assigned to him) will be awarded to him, and the rest to Panay, Keyser, Eguia
and Magno, then he would be placed in a very
embarrassing position and would lose face with the various Japanese firms with
which he unauthorizedly entered into contracts.

Let us now consider the
questioned order of December 28, 1966. 
Pursuant to the Compromise Agreement of February 17, 1966 and the
supplement thereto of the same date, the petitioner, for and in consideration
of the rights and interests in the reparations goods which Worldwide and Torrefranca
had assigned to him, obligated himself to pay to the latter P0.85 for every
US$1.00 of the said goods released to him up to the amount of P600,000.  On the first release obtained by the petitioner
following the date of execution of the said agreement, he paid what was due to Worldwide and Torrefranca.  However, on the subsequent releases of goods,
he began proving himself short of expectation in the religious performance of
his obligations.  He started paying Worldwide way off the period of 30
days from his receipt of the goods, with checks post-dated at that, for a
period of from 60 to 120 days.  On many
occasions, the petitioner, in spite of
the demands made on him by Worldwide, refused to pay, and because of
such refusal, the latter was compelled to file numerous motions with the
respondent court for it to order the petitioner to pay Worldwide its
legal claim.  Thus, upon an ex-parte motion filed by Worldwide, the respondent
court issued the questioned order of December 28, 1966.

The petitioner impugns
this order on the ground that it is contrary to and in violation of the meaning
and intention of the Compromise Agree­ment of February 17, 1966 which he admits is binding upon the parties
and res judicata.  But the said compromise agreement and the
supplement thereto define the right of Worldwide and Torrefranca
to be paid P0.85 per US$1.00 of reparations goods released to the petitioner
and the latter’s obligation to make such payment.  Since both paragraphs 1 of the aforementioned
two documents alleged by the petitioner to have been violated, do not speak of
a right on his part, but on the contrary, define his obligation to pay, ergo
there is no violation of the petitioner’s right.

He insists, however, that
it violates the provision of the compromise agreement granting him a period of
30 days within which to pay Worldwide and Torrefranca.  We do not agree.  The penal clause of the compromise agreement
states that:

“4.  In the event that Cochingyan
shall fail to pay any amounts due Worldwide, Joaquin So and Torrefranca
for any shipment that would have arrived, then said unpaid amount shall
constitute a lien on all subsequent shipments and the same shall not be released
to Cochingyan until all unpaid arrears shall have
been paid…”

Since
the petitioner has still an unpaid account in favor of Worldwide and Torrefranca for goods released to him in the first and
second weeks of November 1966, Worldwide could have availed itself of
the above penalty clause.  But it chose
to be more liberal and selected the less onerous way of enforcing its rights
through an early payment of its claim. 
If harsher remedies could be made use of by Worldwide, there
should be no reason why it cannot resort to a lighter penalty or remedy in
order to enforce its rights.

Indeed, the order merely
seeks the implementation by the LEI Receiver of an obligation unper­formed
by the petitioner in favor of a party to which he is obligated to pay.  The order was not an amendment to the
agreement because the 30-day period within which to make payments includes the
day of release of the goods, the day following and up to the end of the said
period.  Besides, the LEI Receiver
had been appointed by the respondent court to protect the interests of the
parties by carrying out the provisions of the various compro­mise agreements
that are res judicata. 
Surely, there is no more expeditious and effective protection that the
Receiver could provide than the earliest delivery of whatever belongs to a
party whose interest he is supposed to protect. 
After all, there is no reason why the portion of the money realized from
the goods which by right has to be paid to Worldwide should be kept in
the Receiver’s possession for 30 days. 
If the Receiver had agreed to pay the rightful claim of a party at an
earlier date but well within the period for making such payment, this is far
from censurable.  And the court which
authorized such cannot be faulted because it was merely serving the cause of
justice.

It is apropos to
mention at this juncture that, with respect to the reparations goods that he
has already taken away, the petitioner has not yet paid all his monetary
obligations to the different veterans organizations and persons and entities
who/which are to share in the proceeds of the sale of the goods.  Thus, as far back as January 4, 1967, Col. Cirilo B. Garcia, president and chairman of the Board of
the LEI, wrote the LEI Receiver, Atty. Clapano
(Annex 13, Receiver’s Motion dated June 21, 1969, pp. 1124-1126, Vol. III, Rollo) that the petitioner had the following outstanding
obligations, to wit:

1. P106,394.32 –   representing amounts due the various
veterans organizations;

2.  P 6,000.00   
–  representing the share payable to
the LEI;

3. P988,000.00
–  representing the exchange rate
difference of P1.90 per US$1.00 payable by the LEI to the Repacom
should the payment at free market rate be upheld;

4.  P25,000.00 
– representing P0.30 per US$1.00 payable to Filipinas, which constitutes
a lien on all importations of consumer goods by the LEI;

5.  P40,000.00 
–  representing P0.25 per US$1.00
settlement in favor of the Joaquin So group; and

6.  P13,000.00 
–  representing P0.85 per US$1.00 settlement in
favor of Worldwide.

In
fact, the respondent court had repeatedly warned the petitioner to pay his
obligations to the other parties in this case, pursuant to the various com­promise
agreements–to no avail.

As far as the Repacom is concerned, the peti­tioner does not owe it any amount, except that —
as hereafter to be discussed — he is
obliged to replace the
performance bonds guaranteeing the payment to the Repacom
of the difference between the free
market rate of exchange and the old rate of exchange of P2.00 to $1.00 in
connection with the f.o.b. value of the reparations goods he procured for some
end-users.

The petitioner also
denounces the order of December 19, 1966 which denied the PVL’s
motion for reconsideration on the reinstatement of the LEI receivership,
relieved as receiver Atty. Mariano L. Mercado, and appointed as the new LEI
Receiver Atty. Ireneo R. Clapano,
Jr.  A flashback of the events which
preceded the issuance of the said order will show that the petitioner has
absolutely no reason to complain.

The respondent court, by
virtue of an ex-­parte motion of the petitioner,
issued, on October 14, 1966, an order appointing Atty. Mercado as the
new LEI Receiver.  Neither the
motion for the appointment of Atty. Mercado as the LEI Receiver, nor the
order granting the said motion, was made known to the other parties.  However, the said parties learned about them,
and upon their motions, the respondent court gave all the parties the chance to
be heard and present their candidates for the position if they wished, although
the court is vested with the sole power to select a receiver.  After considering the arguments of all
parties whose rights and interests could be affected thereby, the respondent
court reconsidered its order of October 14, 1966 by explicitly revoking the appointment of
Atty. Mariano L. Mercado and appointing Atty. Clapano
as the LEI Receiver in its order of December 19, 1966.

Certainly, there is no
logic in the petitioner’s assertion that the order of December
19, 1966 should be
held null and void while the order of October 14, 1966 should be valid.  He cannot accept a court’s prerogative to
appoint a receiver, on the one hand, and refuse to admit its power to revoke
such appointment, on the other.  The power
of a court vested in it by law to appoint a receiver necessarily carries with
it the power to revoke the said appoint­ment. 
And although the final selection of a receiver is vested solely in a
court, it is also proper for a judge to receive advice from parties interested
in the trust.^[12] In this case, the respondent court gave
opportunity to all the parties to agree on a person who could be qualified as a
receiver and is supported by at least a majority, if not by all of the
parties.  Indeed, except the petitioner,
there is no organization or person who openly objects to the continuation of
Atty. Clapano as the LEI Receiver.  In fact, his appointment, as the order of December
19, 1966 shows, had
been made by virtue of the indorsement of the
majority of the parties to this case.

Besides, the revocation
of the appointment of Atty. Mercado
as the LEI Receiver was not without
sufficient basis, as shown by the well-reasoned order of the respondent court
which states, inter alia:

“… Further, this Court notes and has observed that the
present receiver has not reported or informed the Court, or his stand defined,
des­pite several incidents in these cases from the date of his appointment, as
to his position on the several conflicting claims of the various opposing
parties in these cases.  Under these
circumstances, the Court is inclined to give credence to one of the parties’
claim that Atty. Mercado’s old age, his having retired from the judiciary and
is residing (sic) in Cavite, may be a handicap in the
faithful and rigorous implementation of the veterans reparations allocation and
in the discharge of his duties as receiver. 
The Court needs a receiver who is physically active, with sufficient
knowledge and experience.”

In
fact, during his entire tenure, Atty. Mercado never visited the LEI
offices, nor had he consulted with the LEI officers to find out how he
could best serve the organization he was representing as receiver.

The position of LEI Receiver should be given to one who is
not only physically fit, but as well knows the case, the parties, and the
procedure at the Repacom — in the words of
the respondent Court, one “who is physically active, with sufficient know­ledge
and experience.” The petitioner himself admits that Atty. Clapano has been trained in the ramifications of
reparations business and is familiar with the transactions in connection
therewith.  For about four years, Clapano was the technical assistant to the then Executive
Director, now Commissioner Mauricio O. Bas of the Repacom.  He was so capable in screening procurement
orders and studying the different legal aspects of every transaction involving
the Repacom that Executive Director Bas would
not sign any procurement order or other communication unless initialed by
him.  Verily, the knowledge and
experience of Clapano in reparations matters would prove
invaluable to the LEI and its buyers.

The petitioner’s argument
that Clapano is not qualified to perform the duties
of the LEI Receiver because he has been his former employee and legal
counsel and therefore privy to his trade secrets, deserves scant attention.  The petitioner concedes that
he had already virtually dismissed Clapano,
therefore, their relation as counsel and client no longer exists.

” … An attorney is not disqualified where the relation of
attorney and client has terminated before the appointment, or where, although
he is attorney for another judgment creditor or defendant, he is not attorney
for the judgment creditor who applied for the receivership; and, a fortiori,
the mere fact that one is a solicitor or practicing barrister, being in no way
connected with the particular parties or subject matter, does not disqualify
him to be a receiver.”^[13]

Clapano can no longer act as the petitioner’s counsel in any of his cases even
if the former’s name has not yet been deleted as
counsel of record.  It is the
petitioner’s fault that although he had dismissed Clapano
as counsel, he (the petitioner) has not given his written consent for Clapano to withdraw as his counsel.  But even this refusal to give his written
consent is of no moment.  Having exercised
the universally recognized right of a client to terminate the relation between
himself and his counsel, which can be done at any time and for any cause, it is
absurd for the petitioner to aver that Atty. Clapano
must obtain his written consent before the latter can withdraw as his
counsel.  At any rate, Atty. Clapano has filed a pleading in the court below wherein he
disavowed any further connection or relation with the peti­tioner and denied
that he is still the petitioner’s counsel in any case.  Besides, no prejudice was caused to the
petitioner’s rights because he was being represented by a chief counsel (Atty. Patajo) at that time. 
Moreover, there is no proof that the respondent Receiver has acquired
trade secrets which he is now adversely using against the petitioner.  On the contrary, the records show that the
respondent Receiver has given his confor­mity to many motions of the
petitioner.  Indeed, it is strange that
the complaint and opposition against the appointment of Clapano
as the LEI Receiver should emanate from the petitioner’s corner.  It should be the other respondents who would
logically express fear and apprehension in the appointment as LEI
Receiver of a former counsel of the adverse party, the petitioner.  After all, he might side with his former
employer.

It is thus clear that
petitioner has not made out a cause against the appointment of Clapano as receiver. 
But while the court below judiciously revoked Mercado’s appointment and
in his stead appointed Clapano, it would do well for
the court, considering the various incidents in the case, to exercise a tighter
supervision over the new receiver in order to forestall any charge of
unfairness or partiality from any source, always having in mind that a receiver
is to be regarded as the arm, officer or representative of the court; that his
contracts and liabilities are, in contemplation of law, the contracts and
liabilities of the court and that, as a necessary consequence, the receiver is
subject to the control and supervision of the court.

The exercise of a close
supervision over the present receiver augurs a more advantageous alter­native
to considering again the appointment of a new one in place of Clapano for this latter course would again entail delay in
the disposition of this case and, consequently, delay also in the remittance of
the proceeds from the sale of the reparations goods to the “Trust
Fund,” to the prejudice of the veterans of World War II and their widows
and orphans.

2.  The second issue posed
is whether this Court has lost jurisdiction over the reparations goods now
stored at the piers and in different bonded warehouses by virtue of its
resolution dated July 15, 1968 granting the petitioner’s petition to withdraw
his supplemental petition for certiorari, thus supposedly precluding us
by implication from taking cognizance of the LEI Receiver’s motion and
supplemental motion dated March 21, 1969 and July 28, 1970, respectively.

Parenthetically, with
respect to the reparations goods still at the piers and in different bonded
warehouses, the contracts between
the peti­tioner and the
different organizations and persons involved, computed at US$1.00 f.o.b.
invoice value, require the petitioner to pay as follows:

1.  PVL———————————— P0.30

2.  LEI————————————-    0.20

3.  Other veterans

groups:  VOP,

PQOG,
DBC and

War Widows at

P0.06
each ————————–   0.24

P0.74 for all
veterans

4.  Joaquin So ————————– P0.25

5.  Filipinas——————————-   0.30

6.   Worldwide—————————   0.85

P1.40 for private
parties

7.  Reparations Commission——– P2.00

(excluding bank

commissions,
service fees,

freightage, and the premiums

to be paid for the

P1.90 per US$1.00 to guarantee

pay­ment of the difference between

free market rate and preferred rate

to be paid the Repacom)

8. 
Warehousing charges

at present, not

less than P650,000

due to long

storage——————————- P2.20

By order dated January
14, 1967, the
respondent court allowed the LEI Receiver to take partial delivery of
the reparations goods and dispose of part of the same for the maintenance and
expenses of the corporation (LEI).  Thus,
the petitioner filed his supplemental petition for certiorari impugning
the said order as issued in excess of jurisdiction and with grave abuse of
discretion.  However, the parties to this
case apparently came to some sort of an agreement that the petitioner be
allowed to take delivery of the goods because on May 16, 1967 he filed a petition to withdraw his
supplemental petition for certiorari. 
By resolution dated July 15, 1968, as above stated, this Court granted
the petitioner’s petition to withdraw his supplemental petition for certiorari,
thereby paving the way for the delivery to the petitioner of the reparations
goods presently deposited at the piers and in customs bonded warehouses.  However, on November 13, 1968, the Repacom, by
Resolution 243 (68) (pp. 1099-1100, Rollo III),
permanently disqualified the petitioner from further dealing or transacting
with the Repacom relative to the procurement of reparations
goods because of his failure to replace the performance bonds issued by the Consolacion Insurance Co., Inc., a bonding company which he
admitted to be bankrupt and in the process of liquidation.  This insurance firm posted the performance
bonds for the petitioner guaranteeing the payment to the Repacom of
the difference between the free market rate of exchange and the old preferred
rate of P2.00 to US$1.00 relative to the f.o.b. value of the reparations goods
which he procured for the veterans groups.

Petitioner, in order to requalify himself to deal on reparations matters, made
various repre­sentations with the Repacom
to replace the worthless bonds.  His request was granted and the Repacom
adopted Resolution 43 (69) on February 14, 1969 (Annex 10-a, Receiver’s
Motion of March 21, 1969, pp.
1116-1117, Rollo III) allowing him to replace
periodically the judicial bonds, as follows: 
P150,000 initial replacement, and P100,000 monthly thereafter until all worthless judicial bonds in the
total amount of P670,300.20 issued by the Consolacion
Insurance Co., Inc. are fully replaced; and temporarily lifting his
disqualification imposed in Resolution 243 (68) dated November 13, 1968.  However, since February 14, 1969 up to the present, the petitioner has
not replaced the worthless judicial bonds. 
He alleged that he could not file the replacement bonds because in Civil
Case 255-M (11611) of the Court of First Instance of Rizal,
entitled “United Disabled Veterans Association of the Philippines
(Reformist Block) v. The Reparations Commission, et al.,” a restraining
order was issued enjoining the Repacom to act
on any of the repre­sentations of the petitioner to have his initial P150,000
bond approved.  However, the said
restraining order was lifted on January
7, 1970, but still the petitioner has failed to comply with the Repacom’s requirement to replace the bonds.  Because of this failure to comply with the
conditions imposed by Repacom Resolution 43
(69), the permanent disqualification imposed on him by Repacom
Resolution 243 (68) was automatically restored.

The petitioner’s financial incapability and incapacity, and his
failure to replace the worthless bonds, are the principal grounds why the Repacom refuses to allow him to requalify.  This is
aside from the Repacom’s own knowledge,
obtained through its own investigations, that the petitioner has been
implicated in the falsification of the list of the goods to be imported through
reparations as approved by the National Economic Council; likewise, in the
complaint of the United Disabled Veterans Association of the Philippines (UDVAP) that goods procured for its use had been pilfered,
the petitioner is implicated in the pilferage (Annexes 1, 2, 3 and 3-1,
Receiver’s Reply dated September 19, 1970 to petitioner’s comments).

In the aforesaid Repacom
investigation, it was disclosed that the list of goods approved by the National
Economic Council for importation via reparations cover was substituted with
another which included banned items.  The
list was contained in the second page of a 3-page letter of the Council to the Repacom.  The receiving clerk testified in the
investigation that petitioner Cochingyan had
approached and requested her to stamp a second copy of the letter which Cochingyan had brought, with the
date of receipt similar to the original copy, and that she had overheard petitioner
and a certain Mrs. Alcala, who was the clerk’s
superior, talking about the necessity of using a typewriter and a kind of paper
similar to the ones used in the original copy of the letter (“dapat parehong papel, parehong
typewriter”).  Laborers under the employ of the petitioner executed
affidavits pointing to petitioner as the one who directed and supervised them
in taking away reparations goods on specified dates from various warehouses; they narrated in detail how they
unpacked boxes, loaded their contents in petitioner’s waiting car and closed
the boxes to make them appear as though they had not been emptied of their
contents.  A case for theft had been
filed with the office of the city fiscal of Manila
against petitioner and other persons who appeared to have participated in the
pilferage.

The first initial
disqualification of the petitioner had something to do with the more than US$500,000 worth of reparations goods which were released to him, through the then
LEI Receiver, Atty. Ramon M. Velayo.  The lower court allowed the then LEI
Receiver Velayo to take delivery of the goods and
release the same to the petitioner on condition that the latter should file a
bond to be approved by the court to insure that the P1.90 difference between the old rate and the free
market rate would be paid by the petitioner the moment it would be finally
ruled that the rate of exchange should be the free market rate.  These bonds posted by the Consolacion
Insurance Co., Inc., which have now become worthless, are the same bonds which
the Repacom required the petitioner to be
replaced by other bonds to be issued by qualified bonding companies.

For the reasons above
stated, the petitioner is no longer qualified to handle the reparations goods
procured for the PVL/LEI now stored at
the piers and in different bonded warehouses.

Consequently, on March
21, 1969, the LEI Receiver filed a motion followed by a supplement
thereto filed on July 28, 1970, praying this Court (a) to authorize him to sell the reparations goods (now in storage at the piers and in different bonded warehouses) upon the grounds that these goods,
because they have been in storage for four or more years, are rapidly deteriorating
and depreciating in value, and that the storage fees corresponding to these unreleased
reparations goods are mounting
from day to day; and (b) to order
the full implementation of the balance of the US$1 million PVL–LEI
allocation in the amount of $188,251.21. 
Acting on the LEI
Receiver’s two motions, this Court required all the parties to comment
thereon.  The following respondents have
manifested that they have no objection to and are in conformity with the said
two motions:  the Repacom, the PVL, the LEI, Panay, Keyser, Worldwide, Magno, Eguia and Torrefranca.  Atty. Panfilo Manguera, Chief Legal Counsel, Adviser and Head, Legal
Department of the Repacom, made the following manifestation for and in
behalf of the Repacom:

“… It does not wish to entangle itself with the purely
intramural conflicts of the dif­ferent claimants for the reparations goods
procured and to be procured for Legionnaires Enterprises, Inc.  Respondent Commission’s only concern is the
prompt generation of the Veterans Trust Fund which, under the law (Section 2[d]
of Republic Act No. 1789), it is charged with the duty to perform; that under
the established reparations set-up, said reparations goods remain the property
of the government until paid for and payment for the same is required to be in
cash; that the proceeds from the sale are consti­tuted into the Veterans
Trust Fund which under Republic Act No. 3518 (Veterans Bank Act) shall be im­mediately
paid and transmitted to the Philippine Veterans Bank to form a portion of the
capitalization of said bank; that any delay in the generation of said trust fund
will necessarily result in the delay in the transmittal of the proceeds to the
Philippine Veterans Ban, to the prejudice of the intended beneficiaries, the
Filipino Veterans, their widows and orphans; that in the light of the fact
that reparations consumer goods are payable in cash, and until so paid remain
the property of the Government, and the amounts so paid are constituted into
the Veterans Trust Fund, the interest of conflicting claimants should be
confined to whatever margin profits there may be after payment of the value of
the goods is made to the Reparations Commission.  Accordingly, in the expeditious pro­curement
of reparations goods intended for the generation of  the Veterans Trust Fund, the Reparations
Commission should be allowed to undertake the 
corresponding implementation unham­pered by any restraint or injunctive
process and only after the proceeds thereof shall have been generated  should the interested private parties be
allowed to squabble among themselves relative to the goods.” (Emphasis
ours)

On
the respondent Receiver’s motions of March 21, 1969 and July 28, 1970, the Repacom’s
position is that –

“…[I]n the meanwhile, certain vital facts adverted to and
discussed in the Receiver’s Motion have
intervened which have rendered ineffective the position of the
Petitioner, Joseph Cochingyan, Jr., as an
instrumentality for the generation of the Veterans Trust Fund for which the
goods in question had been procured, and cor­respondingly, a situation has thus
arisen by reason of these facts which render it not only imperative, but also
just, fair, valid and reasonable that the Receiver’s motion be given due
course, xxx; that the protection, there­fore, of the paramount public interest
and the expeditious generation of the Veterans Trust Fund intended to be
achieved by the subject procurements demands that the disposition of the goods
thru the Receiver, and the grant of authority to said Receiver to fully
implement the balance of the US$1 Million PVL-LEI allocation,
subject to the approval of the respondent Court, should be given due
course.”

It must be noted that it has been and still is the policy of the Repacom that all reparations goods must be sold and
released under a “no selective release scheme” or pakiao
to one person or entity, provided that before actual release is made, the costs
and the charges and expenses incident to pro­curement (i.e.,f.o.b.
value of costs, back commis­sions, service fees, freightage and storage charges
which the Repacom has advanced to wareshousemen) are fully paid for in cash directly to the Repacom. 
Reparations goods intended for veterans are payable in cash, and, until
so paid, remain the property of the Government. 
As aforementioned, the amounts so paid are constituted into the Veterans
Trust Fund.

The petitioner’s
position, however, is that this Court can not act on the LEI Receiver’s
motions because by virtue of its resolution dated July 15, 1968 granting his
petition for withdrawal of his supplemental petition for certiorari, the
reparations goods in question ceased to be the subject of any action pending
before this Court.  We do not subscribe
to this argument.  When we issued the
resolution of July 15, 1968 which should have paved the way for the
delivery to the petitioner of the goods kept at the piers and in customs bonded
warehouses, he was still legally and fully qualified to take delivery
thereof.  However, on November
13, 1968, by
Resolution 243 (68), the Repacom permanently
disqualified him from further dealing or transacting with it relative to the
procure­ment of reparations goods.  Upon
his application, the Repacom, in Resolution 43
(69) of February 14, 1969, temporarily lifted his permanent disqualification upon the conditions
specified in the said resolution, but he failed to comply therewith, causing
the automatic restoration of his permanent disqualification.  The petitioner cannot now, therefore, take
delivery of the reparations goods since he has not taken any steps to lift his
permanent disqualification — one of which is an appeal to the Office of the
President from the refusal of the Repacom to
accept the substi­tute bonds he had submitted.

Moreover, there is a
legal impediment to allowing the petitioner to requalify
himself.  Under the Reparations Law (Rep.
Act 1789, as amended), it is the Repacom which
specifically defines the qualifications and determines who are qualified to
take delivery of the reparations goods, and unless clear abuse is shown in the
exercise of such function, courts should not interfere therewith.  Indeed, the Repacom
is the entity vested by law to “ascertain and verify that the applicant
concerned has enough financial resources and capacity to pay” (Sec. 6 [a-1], R.A. 1789 as amended), and “to
provide for the care, custody, protection and proper delivery to end-users of
all such reparations goods as provided in this Act” (Sec. 6 d, Id.).  The Repacom
is like­wise the entity vested with authority “to hear and decide all
questions and controversies regarding the rules and regulations which it shall
issue to carry out the purposes of this Act, its decisions in all such cases
being appealable directly to the President”
(Sec. 6 h, Id.).  Since the Repacom has disqualified perma­nently and totally
the petitioner from further dealing on reparations matters, and this
disqualification has not been appealed by the petitioner to the President, this
Court can not extend any relief in the matter of the petitioner’s efforts to requalify himself. 
Besides, since the Repacom is neither a
signatory nor a party to any of the various compromise agreements executed by
the private parties-buyers, it cannot be compelled to deliver the goods to
parties it sees unfit to receive them. 
It cannot be bound by any stipulation of the various agreements.  Consequently, the peti­tioner cannot
therefore assert or claim an absolute right over the goods, as in fact he
admits that “his rights did not spring from his dealings with the
Reparations Commission but from his dealings with LEI” (Par. 2, page 2,
Petitioner’s Comments on the Supple­mental Manifestations of the Reparations
Commission).  Thus, unless they are fully
paid for in cash (f.o.b. costs of goods and expenses of procurement), the Repacom is the absolute owner of the goods in
question, although the same are being procured for the PVL/LEI.

The issuance by this
Court of its resolution of July 15, 1968 was implicitly conditioned upon the
petitioner’s ability and qualification to take delivery of the goods.  Being now bereft of such ability and
qualification, he cannot avail himself of the said resolution.  Consequently, this Court still has
jurisdiction over the said goods, and can and will favorably act on the LEI
Receiver’s motion to sell the same, upon the conditions to be hereinafter set
forth, impelled only by the thought that this will best serve public interest
and the interests of the widows and orphans for whose benefit the Veterans
Trust Fund is sought to be generated; and that no prejudice in any way will
result to any of the parties, including the petitioner, because the money to be
realized from the sale of the reparations goods will be deposited with a stable
and reputable bank.  Moreover, we see no
legal impediment to this Court ordering the implementation of the remainder
of the US$1 million allocation in the amount of US$188,251.21.

Finally, the petitioner
vigorously objects to the advance payment made by the Repacom
of ware­housing fees at the rate of P0.50 per ton per day, alleging that it
should be P0.07 per ton per day as agreed upon between him and the Reliance
Warehousing & Commercial Co., Inc. as allegedly approved by the Repacom.  The facts, however, do not support the
petitioner’s stand.  It appears that when
the repa­rations goods released to the petitioner through the then LEI
Receiver Atty. Velayo and pertaining to the first
US$500,000 were about to arrive, the Reliance Warehousing & Commercial Co.,
Inc. alone, among several warehouses, agreed to give a special rate of storage
charge to the PVL–LEI at the rate now
claimed by the petitioner, on condition that the next incoming shipments of
reparations goods be also stored in the Reliance customs bonded warehouse.  There is, however, no clear agreement that
the special rate claimed by the petitioner be also made applicable to the goods
now stored at the said warehouse.  There
is no written agreement to this effect. 
As now contended by the Reliance Warehousing and concurred in by the Repacom, the special rate of warehousing charges
then previously given was made applicable only to the goods previously stored
and long released.  With respect to the
goods now at the warehouse, they should be charged at the rate now claimed by
the Reliance Warehousing and adopted by the Repacom
because the said rate charge has been approved and fixed by the Bureau of
Customs.  The petitioner has not
presented any written agreement or proved any verbal contract existing between
the parties in this case, on the one hand, and the Reliance Warehousing, on the
other, that the rate of warehousing charges be as claimed by him.  Hence, the Repacom
acted correctly when it adopted Resolution 148 (68), dated August 14, 1968
(Annex 5, Receiver’s Reply dated September 19, 1970 to petitioner’s comments),
author­izing the release of the amount of P313,456.32 in favor of the Reliance
Warehousing & Commercial Co., Inc. as warehousing charges, of which the
amount of P272,707.43 was released through a General Voucher (Annex 12,
Receiver’s motion dated March 21, 1969, p. 1123, Rollo
III).

ACCORDINGLY, the petition for certiorari is
hereby dismissed, with costs against the petitioner.

Considering all the
pleadings relative and relevant to the two above-mentioned motions of the Receiver dated March 21, 1969 and July 28,
1970, respectively, and finding the reasons adduced by the said Receiver in his
said two motions, as well as the reasons stated in the manifestations of the Repacom, valid and compelling, this Court hereby
creates a Committee to be composed of (a) Receiver Ireneo
R. Clapano, Jr., as chairman, (b) a representative to
be named without delay by the Reparations Commission, and (c) a representative
of the Court of First Instance of Manila (Branch VI) to be named without delay
by the Presiding Judge thereof.  This
Committee shall, with deliberate speed, and always under the guidance,
supervision and control of the Presiding Judge of Branch VI:

(1)  Make a written inventory of all the
reparations goods above referred to (stored at the piers and in the bonded
warehouses), the dates of the making of such inventory to be communicated priorly to all the parties in this case who or which, at
their options, may send their respective representatives to attend and observe
the making of the inventory;

(2)  As soon as the final
and complete inventory shall have been finished, forthwith furnish this Court
fifteen (15) certified true copies thereof, signed by the chairman and the
members of the Committee and attested by the Presiding Judge;

(3)  Immediately
thereafter, to proceed to sell all the said reparations goods, each sale to be
done either by public auction or by negotiation (negotiated sale), the manner
of sale in every case subject to the prior approval of the Presiding Judge,
always bearing in mind the primary objective of securing the best and/or highest
possible prices for the goods, in the light
of the particular or special environmental circumstances obtaining in
each case;

(4)  To report to the
Presiding Judge, as well as to
this Court, each sale as it is consummated, the report to contain precise information
as to (a) the date of the sale, (b) the kind of goods sold, (c) the quantity
thereof, (d) the nature of the sale, whether by public auction or by negotiated
sale, (e) the amount generated therefrom, and (f) the
name(s) and address(es) of the purchaser(s);

(5)  To deliver the
proceeds of each sale to the Presiding Judge who is hereby directed to deposit
the same without delay with the Philippine Veterans Bank as a savings deposit
in the name of the Philippine Reparations Commission, the disposition thereof
to await the orders of this Court; and

(6)  As soon as all the
said reparations goods shall have been sold, to submit to this Court a final
report attested by the Presiding Judge.

All proper and necessary expenses incurred by the Committee in the discharge of
its functions and duties by virtue of this decision may, from time to time, be
authorized to be paid by the Presiding Judge from the sales proceeds, prior to
their being deposited with the Philippine Veterans Bank as herein-before
directed.

Thereafter, the Reparations Commission shall file with this Court
a verified manifestation itemizing and detailing the charges, taxes and duties
that are due to it by virtue of the importation of the reparations goods in
question.

It appearing that to
require a bond from any of the respondents would be inequitable because none of them are in possession of the goods in question, nor have the power
to dispose of them, nor have received any money proceeds by virtue of
their importation, the Court will not, require the posting of any bond by any
of the respondents.

The Reparations
Commission is hereby authorize to take all proper and necessary steps to
effect the full implementation not only of the balance of the US$1 million PVL–LEI allocation, in the amount of $188,251.21,
but also of the balance of the
US$3 million PVL–LEI allocation.

Barredo, Makasiar,
Antonio, Muñoz Palma, Concepcion,
Jr., and Martin, JJ., concur.

Fernando, C.J., having
previously been retained as counsel by petitioner in other cases took no part.

Teehankee, J., no part.

Aquino, J., in the result.

---

* L-23026 and L-23027 were
dismissed by the Court (Second Division) on January 6, 1977 for having 
become moot and academic.

^[1]
Fernando vs. Vasquez, 31 SCRA 288 (1970).

^[2]
Maritime Company of the Phil., et al. vs. Paredes,
et al., 19 SCRA 569 (1967), and cited cases.

^[3]
Id.

^[4]
Associated Labor Union vs. Ramolete, 13 SCRA 582 (1965) citing Villa-Rey
Transit vs. Hon. E. Bello, 7 SCRA 735 (1963).

^[5]
Del Pilar Transit Inc. vs. Public Service
Commission, 31 SCRA 372, 381-382 (1970); Eastern
Paper Mills Employees Association
vs. Eastern Paper Mills, Inc. 25
SCRA 234 (1968); Arroyo vs. Mencias,
14 SCRA 1050 (1965); Detective & Protective
Bureau, Inc. vs. Cloribel, 26 SCRA 255 (1968); Aquino vs.
Estenzo, 14 SCRA 18 (1965);
Plaza vs. Mencias, 6 SCRA
562 (1962); Sy It vs. Tiangco,
4 SCRA 436 (1962); Santos vs. Cerdenola, 5 SCRA 823 (1962); Pagkakaisa Samahang Manggagawa sa San Miguel Brewery vs.
Enriquez, 108 Phil. 1010 (1960); Cueto vs.
Ortiz, 108 Phil. 538 (1960); Ricafort vs. Fernan, 101 Phil. 575; Collector of Internal Revenue vs.
Reyes, 100 Phil. 822; Nicolas vs. Castillo, 97 Phil. 336.

^[6]
De Chavez vs. Ocampo, 66 Phil. 76, 78.

^[7]
Detective & Protective Bureau, Inc. vs. Cloribel,
supra.

^[8]
Maritime Company of the Phil., et al. vs. Paredes,
et al., supra, and cited cases; Associated Labor Union vs.
Ramolete, supra.

^[9]
Maritime Company of the Phil., et al. vs. Paredes,
et al., supra.

^[10]
Vda. de Guilas vs.
David, 23 SCRA 762, 766 (1968), citing Meneses vs. De la Rosa, 77 Phil. 34.

^[11]
Rodulfa vs. Alfonso, 76 Phil. 225, quoting
Power vs. Village of Athens,
99 N.Y. 592; 2 N.E. 609; 32 C.J., footnote.

^[12]
45 Am Jur 106.

^[13]
53 C.J. 72-73.