AGUSMIN PROMOTIONAL ENTERPRISES, INC., PETITIONER, VS. HON. COURT OF APPEALS, P. B. DE JESUS & CO., INC., BENJAMIN V. GUIANG, AND CRISOSTOMO LICERALDE, RESPONDENTS.

Agusmin Promotional Enterprises versus Court of Appeals

The Case

This is a petition for review by certiorari brought by Agusmin Promotional Enterprises, Inc. against the Court of Appeals, P.B. de Jesus and Company, Inc., Benjamin Guiang, and Crisostomo Liceralde. The dispute began as a quarrel among timber concessionaires over forest areas in Agusan del Sur and over who had the better right to log them. It matters to the Bar candidate because it shows how the Supreme Court treats administrative decisions that never became final, and how a timber licensee who logs an area already awarded to another, despite a bond posted to protect that other, acts in bad faith and must answer for the value of the logs taken.

Procedural History

The controversy passed through the Office of the Director of Forestry, then to the Secretary of Agriculture and Natural Resources, and then to the Office of the President. The Secretary of Agriculture and Natural Resources ruled in favor of Guiang and Liceralde in one case, and later denied Agusmin's appeal in another. The Office of the President, through the Executive Secretary, reversed the Secretary in the first case and modified him in the second. P.B. de Jesus and Company, Guiang, and Liceralde then filed a petition for certiorari, prohibition, and mandamus with the Court of First Instance of Manila, which rendered judgment declaring both letter-decisions of the Office of the President null and void, declaring the Secretary's earlier decision final and executory, and condemning Agusmin to pay damages and attorney's fees. Agusmin appealed to the Court of Appeals, which affirmed the trial court in full. Agusmin then came to the Supreme Court by appeal by certiorari.

Facts

Guiang and Liceralde held ordinary timber licenses over forest areas in Talacogon, Agusan del Sur. In March 1957, together with six other timber concessionaires, they asked the Secretary of Agriculture and Natural Resources whether they could consolidate their concessions in a corporation they would form. The Secretary interposed no objection, and the eight licensees organized Agusmin Promotional Enterprises, Inc., which was issued a consolidated timber license in July 1957.

In 1968, Guiang and Liceralde, having differences with the majority group in the corporation, asked to withdraw their original forest areas from the consolidated license of Agusmin. The Director of Forestry refused, saying the request was beyond his jurisdiction. On appeal, the Secretary of Agriculture and Natural Resources reversed the Director and authorized the withdrawal. Guiang and Liceralde moved for immediate execution, and the Secretary granted it upon their posting a bond to answer for whatever damage Agusmin might suffer should its appeal prosper. Guiang, Liceralde, and Pedro B. de Jesus then formed P.B. de Jesus and Company, Inc., which was issued a consolidated timber license covering their areas.

Agusmin appealed to the Office of the President, but Guiang and Liceralde moved to dismiss the appeal for failure to pay the correct appeal fee. The Office of the President reversed the Secretary. Guiang and Liceralde moved for reconsideration, and when the motion remained unresolved for months, they filed suit. Meanwhile, Agusmin sought renewal of its timber license over a larger area, which was reduced after objection by P.B. de Jesus and Company. The Office of the President later issued a decision declaring its earlier ruling final and executory. The President then issued Letter of Instruction No. 172, ordering the cancellation of the timber license issued to Agusmin. The trial court and the Court of Appeals ruled for P.B. de Jesus and Company.

Issues

• Whether or not the Court of Appeals erred in holding that the issue of the validity of the respective timber licenses had become moot and academic.
• Whether or not the Court of Appeals erred in not holding that the decisions of the Executive Secretary were validly issued.
• Whether or not the Court of Appeals erred in holding that Agusmin's logging operations were without valid right and in condemning it to pay the value of the logs taken.

Applicable Provisions

The decision does not quote any statute or rule verbatim. It applies Executive Order No. 19, series of 1966, which required the payment of an appeal fee for every appeal or petition for review with the Office of the President, and Letter of Instruction No. 172, which ordered the cancellation of the timber license issued to Agusmin. The Court also invokes the settled rule on administrative procedure, which it states in these words:

In deciding administrative questions, technical rules of procedure are not strictly enforced and due process of law in the strict judicial sense is not indispensable.

This rule bears on the case because it explains why the Court did not need to resolve the procedural objections to the Executive Secretary's decisions, the same having been overtaken by the cancellation of Agusmin's license.

Ruling

On the first issue, the Court held that the Court of Appeals never ruled the validity of the Executive Secretary's decisions to be moot. What was moot was the issue concerning the validity of the respective timber licenses, because Letter of Instruction No. 172 had cancelled Agusmin's license, leaving it without any right to assert against the private respondents.

On the second issue, the Court found little useful purpose in discussing whether the Executive Secretary's decisions were validly issued. Letter of Instruction No. 172, in effect, reversed and set aside those decisions before they became final and enforceable. The Court of Appeals had correctly observed that the Executive Secretary's decision never gained finality because a motion for reconsideration was filed and remained unresolved, prompting the filing of the suits below.

On the third issue, the Court held that Agusmin's contention was without merit. The Secretary's decision in favor of Guiang and Liceralde was immediately executed upon the filing of a bond to answer for whatever damages Agusmin might incur, and a consolidated timber license was soon issued in the name of P.B. de Jesus and Company. Agusmin was therefore in bad faith when it conducted logging operations in areas already awarded to P.B. de Jesus and Company, despite the bond. The award of 1,278,834 pesos and 90 centavos was upheld. The Court declined to reallocate the damages to Liceralde, there being an issue of fact still to be resolved.

Doctrine

An administrative decision that is the subject of a timely motion for reconsideration which remains unresolved does not acquire finality, and may be reversed or set aside by a subsequent executive act before it becomes final and enforceable. A timber licensee who conducts logging operations in an area already awarded to another, after that other has posted a bond precisely to answer for damages, acts in bad faith and is liable for the value of the logs taken. In administrative proceedings, technical rules of procedure are not strictly enforced, and due process in the strict judicial sense is not indispensable.

Disposition

The Supreme Court denied the petition and affirmed the judgment of the Court of Appeals, with costs against Agusmin Promotional Enterprises, Inc.

Remember This

The one line to memorize is that an administrative decision still under an unresolved motion for reconsideration has not attained finality, and logging in another's awarded area despite a bond is bad faith. Examiners use this case to test the finality of administrative decisions and the liability of a licensee who logs without a valid right.