Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. L-58292 July 23, 1987
ADAMSON & ADAMSON, INC., petitioner,
vs.
HON. AUGUSTO M. AMORES, JOHNSON & JOHNSON [PHILIPPINES], INC. and the BOARD OF INVESTMENTS, respondents.
FERNAN, J.:
In this petition for certiorari, one of two competing manufacturers of hygienic and other related products claims that it was denied its right to procedural due process by the Board of Investments.
Since its organization on April 5, 1954, Adamson & Adamson, Inc. [hereinafter referred to as Adamson] has been actually engaged in the "manufacture, sale and exportation of absorbent cotton wool products, surgical dressings, bandages, medicinal, pharmaceutical products, chemicals, chemical products, sanitary towels and other articles and commodities.1 Similarly, Johnson & Johnson [Philippines], Inc. [Johnson for short] was organized on February 17, 1956 "to manufacture, import, export, buy, sell or otherwise acquire and deal in and with, either at wholesale or retail, pharmaceutical drugs, toiletry, hygiene products and related products of every kind, and chemical compositions of all kinds and uses."2
As it was not yet a Philippine national as defined by the Investment Incentives Act [Republic Act No. 5186], Adamson applied for certificates of authority from the Board of Investments [BOI] in compliance with Section 4 of the Foreign Investment Act [Republic Act No. 5455]. According to Adamson, said certificates were necessary to enable it "to expand its business activities to areas which while within its aforealleged primary purpose, Adamson was neither actually manufacturing nor marketing as at the effectivity of the aforesaid two laws." ...3 After the publications and postings of notices regarding said applications, Johnson registered its opposition thereto. On May 28, 1973 and on November 7, 1974, the BOI granted Adamson said certificates of authority which it held on to until it became a Philippine national on January 6, 1979.4
On the other hand, Johnson has remained a foreign corporation. Sometime in 1979, after it had acquired new machineries, Johnson commenced the manufacture and marketing of disposable diapers. During the first quarter of 1980, it manufactured sanitary feminine tampons and absorbent cotton.
Alleging that Johnson should not be allowed to expand its business activities "to areas in which it was not licensed and in which it was not actually engaged as at the effectivity of Rep. Act Nos. 5186 and 5455 without first obtaining from the Board of Investments the corresponding certificates of authority after prior publication and posting of notices;" that Johnson's expanded field of business and economic activities was then being adequately exploited by Philippine nationals and therefore, such expansion would not contribute to a "sound and balanced development of the national economy on a self-sustaining basis;" and that Johnson's expanded activities would cause Adamson not only irreparable injury but also injustice, on March 17, 1980, Adamson filed in the BOI a petition praying that therein respondent Johnson be "ordered not only to forthwith stop and desist in the manufacture, distribution, and sale of its aforealleged expanded product lines but also to recall from the market all said products being distributed for sale and that after proper investigation and hearing to make the same permanent."5
The BOI, through its Vice-Chairman and Managing Head, Edgardo L. Tordesillas, required Johnson to answer the petition. Upon motion of Johnson, the BOI granted it an extension of time to file its answer. Thereafter, Adamson filed an urgent motion reiterating its prayer for the issuance of a stop and desist order.
On May 8, 1980, Director Justiniano Y. Ascaño of the BOI's Project Administration and Legal Department, set the petition for hearing in a letter which reads thus:
Please be informed that the Petition filed by Adamson & Adamson, Inc. praying that the Board of Investments issue an immediate order to respondent Johnson & Johnson Philippines, Inc. to stop and desist from manufacturing, distributing and selling disposable diapers, sanitary feminine tampons and absorbent cotton has been set for hearing on May 14, 1980 at the PALD Conference Room at 2:30 P.M. 6
On May 9, 1980, Johnson filed its answer to the petition alleging that it did not have to secure from the BOI a certificate of authority for the manufacture, distribution and sale of disposable diapers, sanitary tampons and absorbent cotton because said business activities were but a continuation of its principal business activity; that assuming that it had expanded or developed its principal business activity, such expansion or development was in the same line of business that it was actually and lawfully engaged in prior to the effectivity of Republic Act No. 5455; that the products complained of were within the category of the products the manufacture, importation or sale of which it had disclosed to the BOI prior to the effectivity of the aforesaid law; and that assuming that there were modifications in the form and quality of said products, such were mere improvements and/or development of the same line of products which needed no prior authorization from the BOI.7
The May 14, 1980 hearing was held as scheduled and per its minutes the following transpired therein:
NOTES ON THE HEARING ON THE PETITION OF ADAMSON & ADAMSON AGAINST JOHNSON & JOHNSON CONDUCTED ON 14 MA Y 1980 A T THE BOI BOARD ROOM
Present:
| Director J. Y. Ascaño | - Legal Department |
| Div. Chief, E.O. Arrobio | - Foreign Business |
| Div. Arturo C. del Rosario | -do- |
| Oscar C. Pacquing | -do- |
| Jaime Torres | - Chemical Industries Dept. |
| Matilde Domingo | -do- |
| Atty. J. R. Blanco | - Counsel, Adamson & Adamson |
| Mr. Lucas Adamson | - Pres., Adamson & Adamson |
| Atty. Esguerra | - Blanco Law Office |
| Atty. E. de los Angeles | - Counsel, Johnson & Johnson |
| Mr. de Leon | - Johnson's Representative |
| Mr. Robles | -do- |
| Mr Natividad | -do- |
The Chairman made the opening statement that the proceedings was for the purpose of hearing the Petition filed by Adamson against Johnson and to hear arguments and receive evidences from the parties in order to resolve the case expeditiously.
The Chairman re-stated the main issue raised on the petition, that Johnson & Johnson allegedly expanded into another line of business without securing prior authority from the Board of Investments as provided under the law and the rules because Respondent is not actually and lawfully engaged in the manufacture of the products [disposable diapers, sanitary feminine tampons and absorbent cotton] and that a stop and desist order be issued by the Board against Respondent. The Chairman then requested both parties to give their views and evidences so that on the basis of which, the Board can act immediately on the Petition.
Counsel for the Petitioner, Atty. Blanco expounded on his views on the merits of the Petition and upon summing up the justifications for the prayer in the Petition, cited the letter of Minister Ongpin as Head of the Iron and Steel Authority to Goodyear Steel Pipe Corporation, directing it to cease operations on its activities which were not authorized by the ISA, that BOI a government instrumentality has the power and authority to issue a stop and desist order.
Thereafter, the Chairman asked counsel for the Respondent, Atty. de los Angeles, if Respondent added equipment in the manufacture of diapers in 1979; if these were imported and the value thereof, to which Counsel answered that there were new equipment introduced and imported valued at US$4 Million and that the required authority from the Central Bank was secured. Counsel also stated that there was an investment made in the amount of US$l Million generated by borrowings.
Counsel for Respondent also stated that the composition of diaper is similar to that of the sanitary napkins which Respondent has been producing since 1971 which is made of rayon and cotton, that the product is an improvement of the product to meet the policy of the Board.
Mr. Natividad, one of the representatives of Johnson & Johnson likewise stated that Respondent has installed equipment to produce sanitary tampons way back in 1968 but were actually completed in 1972. However, marketing thereof was not pursued for strictly business marketing reasons. Production of Johnson's cottonette [soft puff], on the other hand, was discontinued after 2 years from 1967 but Johnson's buds have been introduced since 1968. In the production of diapers, Mr. Natividad informed the Committee that surplus profits of the corporation was put in and therefore not considered as fresh capital.
At this juncture, Mr. Adamson discussed three types of tampons and inquired how Johnson & Johnson can install machines to produce tampons [OB] type in 1968 when the product was introduced by Karl Heinz only in 1973.
In this connection, Mr. Natividad stated that their mother company has been producing tampons but it was not the OB type but of another type, however, construction is the same, as can be supported by documents.
On the Chairman's acknowledgment, Counsel for Petitioner, Atty. Blanco presented three issues to the Committee.
1] Johnson & Johnson allegedly manufactured, distributed and marketed disposable cotton diapers in 1979 which it is not actually and lawfully engaged in as of the effectivity of R.A. 5455;
2] Johnson & Johnson manufactured, distributed and marketed likewise tampons and absorbent cotton in the early 1980 without prior authority from the Board; and
3] Can Johnson & Johnson resurrect the production of products which it has abandoned in 1974? That in its report it failed to consider the phrase 'in which they were actually and lawfully engaged in provided in the law.
Mr. Robles, representative of Respondent Johnson & Johnson, in answer to the above manifestations of Atty. Blanco, stated that they did not omit consideration of Sec. 3, Rule IV of the Rules of R.A. 5455 and that the activities contained in their Form 7 is a matter of generalization. Mr. Robles explained that Johnson & Johnson's expansion is in the same line of business for which no authority is required from the Board as it has been engaged prior to 1968 in the manufacture and marketing of pharmaceutical drugs, hygienic products, toiletries and which activities they were engaged in as to date. He further explained that if Johnson see [sic] that the markets are good, there is no reason for Johnson to make an expansion but only to improve its products for the benefit of the consumers.
Mr. Robles further stated that under the law, they have the right to engage in business as long as they do not violate any provision of law.
The Chairman, then emphasized to the parties that the issues have been cleared and the facts gathered from the hearing shall be useful and that there being no other matters to be discussed, he asked the parties to submit their respective memorandum within fifteen [15] days from the date of the hearing.
On this point, Atty. Blanco informed the Chairman that he cannot produce his memo within said period but he will submit it later, which the Chairman granted
The meeting was adjourned at 3:30 p.m.
Certified correct:
[Sgd.]
MARILOU P. OCAMPO
NOTED:
[Sgd.]
LETICIA VIÑA-IBAY
Acting Division Head. 8
The parties thereafter expounded on their arguments in said hearing thru the following pleadings: Johnson's memorandum, Adamson's reply memorandum, the former's rejoinder memorandum, and the latter's surrejoinder.9
Impatient over what it considered a delay in the resolution of its prayer for a preliminary stop and desist order, Adamson filed a motion dated August 19, 1980 praying that "hearings be forthwith scheduled for the reception of evidence on the merits of petitioner's petition's prayer for a permanent stop and desist order, as well as the parties notified thereof and furnished with a copy of the transcript of stenographic notes and/or excerpts of the preliminary hearing on 14th May 1980 and the rules of this Honorable Commission's procedures for hearings on the merits."10 Johnson opposed the motion and Adamson filed a rejoinder thereto.
Director Ascaño denied said motion for lack of merit in his order of October 16, 1980. The order noted that during the May 14, 1980 hearing, both parties were afforded every opportunity to fully discuss the facts and the issues involved and that after Adamson had filed its motion of August 19, 1980, another hearing was conducted on September 5, 1980. It stated that there was no compelling reason to hold another hearing considering that the parties had discussed extensively the facts and expounded in a scholarly manner the legal provisions involved in their respective memoranda, and that another hearing would be inconsistent with Adamson's plea for an early disposition of the petition and the BOI's objectives and policies on the matter.11
On October 21, 1980, the BOI sent Adamson the following letter:
Gentlemen:
Please be informed of the Board decision dismissing the Petition filed by Adamson & Adamson, Inc. against Johnson & Johnson [Phils.], Inc. praying that the Board of Investments issue a stop and desist order against the latter from continuing in the manufacture and marketing of disposable diapers, sanitary feminine tampons and absorbent cotton. The Board finds that the said activities constitute expansion in the same line of business in which Johnson & Johnson [Phils.], Inc. was actually and lawfully engaged in as of the effectivity of Republic Act No. 5455 and the same were financed by internally generated funds, hence do not need prior BOI approval.
Please be guided accordingly.
Very truly yours,
[Sgd.]
LILIA R. BAUTISTA
Governor. 12
Dismayed by the turn of events against it, on November 20, 1980 Adamson filed in the Court of First Instance of Manila a petition seeking judicial relief from the BOI decision pursuant to Section 8 of Republic Act No. 5455 [Civil Case No. 136282]. Contending that the BOI's letter-decision dismissing its petition was based merely on the oral arguments of the parties at the May 14, 1980 hearing, Adamson averred that its right to be heard and to present evidence on the merits of its prayer for a permanent stop and desist order was violated. It argued that as Johnson continued to engage in its expanded business activities in violation of Republic Act No. 5455 to the detriment of Philippine nationals who were adequately exploiting Johnson's expanded business activities, it was entitled to exemplary and moral damages. It prayed that the BOI's letter decision be set aside and that a writ of preliminary injunction and/or restraining order be issued enjoining Johnson from engaging in its expanded business activities.13
The lower court gave due course to the petition, issued a temporary restraining order and set a hearing on the prayer for a writ of preliminary injunction.
On December 19, 1980, after the said hearing was conducted, the lower court issued an order denying Adamson's prayer for a preliminary injunction and dissolved the temporary restraining order it had issued.14 The lower court saw no extreme urgency for the issuance of a preliminary injunction and held that to grant said writ would prejudge the case in favor of Adamson considering that the status quo or the last actual peaceable uncontested status prior to the filing of the petition in the BOI was that Johnson was manufacturing and/or marketing absorbent cotton, sanitary tampons and disposable diapers.
Citing Section 4, Rule IV of the Rules and Regulations to Implement Republic Act No. 5455, the lower court ruled that Johnson did not have to obtain BOI prior authorization to engage in the questioned business activities because on September 30, 1968 [when the said law took effect], Johnson was actually engaged in the manufacture and/or marketing of absorbent cotton, sanitary tampons and disposable diapers and therefore its alleged expanded business activities were in the same line of business it was engaged in prior to the aforesaid date. The lower court stressed that fact was best shown in Johnson's report to the BOI wherein it listed absorbent cotton, sanitary tampons and disposable diapers under the respective product groups of cotton products, hygiene products and non-woven fabrics.
Anent Adamson's claims that the May 14, 1980 hearing at the BOI was only on the issue of whether or not a temporary desist order should be issued and that it was denied its right to present its evidence on the merits of the petition, the lower court found that Adamson's right to due process was respected in the aforesaid hearing. It noted that Johnson even presented witnesses who were cross-examined by Adamson's counsel. It added that the question of whether or not Adamson was deprived of its day in court was immaterial to the issue of whether or not it was entitled to a writ of preliminary injunction as Adamson had failed to establish its right to said writ and that said right was violated.
Adamson's motion for reconsideration of the lower court's order was duly opposed by Johnson. When said motion was heard, the issue of whether or not Adamson may introduce new evidence in support of its motion, arose. After the parties had submitted their respective memoranda, the lower court allowed the introduction of new evidence.
Adamson then filed a request for subpoena. The pertinent portions of said request state:
Please forthwith issue subpoena duces tecum to the following persons commanding them to appear before this Honorable Court at the hearing on Thursday 4th June 1981 at 1:30 p.m. with the following documents and to there and then give testimony in connection thereto:
Names:
1. Atty. Lilia R. Bautista, herself Governor
2. Atty. Justiniano Y. Ascaño himself Director, Project Adm. & Legal Dept.
Common Address:
BOARD OF INVESTMENTS
Industry & Investments Bldg.
385 Buendia Avenue Extension
Makati, Metro Manila
Common Documents:
1. BOI's entire file on the 1980 case of Adamson & Adamson, Inc. vs. Johnson & Johnson [Phils.], Inc.
2. BOI's entire file on Adamson & Adamson, Inc.
3. BOI's entire file on Johnson & Johnson [Phils.], Inc.
4. BOI's written rules of procedure in litigious proceedings before BOI. 15
As said request was granted by the lower court, Johnson moved to quash the subpoena on the grounds, among other things, that it was improper and oppressive to require Director Ascaño and Governor Bautista to testify and explain their decision of October 21, 1980 and the proceedings relative thereto; that said officials were not the custodians of BOI records; and that the documents sought to be produced had no relevance to the issues raised in the motion for reconsideration.
The BOI joined Johnson in objecting to the request for subpoena and adopted as its own Johnson's motion to quash. Adamson opposed said motion.
On August 18, 1981, the lower court issued the following order:
Considering the contentions and arguments respectively invoked by the parties through counsel, the Court finds the Motion to Quash subpoena meritorious. In so far as the request for subpoena concerns Governor Lilia R. Bautista and Atty. Justiniano Y. Ascaño the Court finds that the testimony of the two BOI officials does not appear to be relevant and indispensable in the light of the allegations in the opposition of the petitioner that these BOI officers would be asked merely on the procedure that was followed in the questioned hearing of 14 May 1980 and since the proceedings that transpired would appear in the record of the BOI case entitled Adamson & Adamson, Inc., petitioner, versus Johnson & Johnson [Philippines], Inc., respondent.
With respect to the BOI files of the petitioner and private respondent Johnson & Johnson, the petitioner concedes that trade and industrial secrets will be excluded from examination. However, the petitioner did not specify which files it sought to be brought before the Court. If the request of petitioner refers to the record of said BOI case only, the Court agrees with the petitioner that the said record may be presented in Court at the trial of the present case, provided, however, that the documents which the BOI considers confidential for being trade and industrial secrets be excluded. But the request for the production of the record of said BOI case could not be entertained for the present, because it was erroneously addressed to Governor Bautista and Atty. Ascaño who are not the custodians of said records.
PREMISES CONSIDERED, the Request for subpoena filed by the petitioner is hereby denied.
SO ORDERED. 16
Thereafter, Adamson filed the instant petition for certiorari with a prayer for the issuance of a preliminary injunction.
Alleging that the May 14, 1980 hearing was held only for the purpose of determining whether an immediate stop and desist order should be issued considering that no issues had as yet been joined as the notice for the hearing was sent to the parties a day before Johnson filed its answer, Adamson claims that in acting on the merits of the petition, the BOI violated its right to procedural due process. Specifically, Adamson contends that its "cardinal primary rights" were violated in the BOI proceedings because: [a] the May 14, 1980 hearing being merely on the issuance of an immediate stop and desist order and not on the merits of the petition, it was "not given an opportunity to fully present its case and to adduce evidence to establish its right to the issuance of a permanent stop and desist order against Johnson"; [b] the decision of the BOI Board of Governors was not supported by substantial evidence as no documentary and testimonial evidence were presented under oath; and [c] said decision was based on the views and findings of Director Ascaño and not on the Board of Governors' independent consideration of the law and the facts of the controversy because the members of said board were not present and no stenographic notes were taken during the hearing.17
According to Adamson, the lower court acted with grave abuse of discretion amounting to lack of jurisdiction in relying on said void BOI decision and in issuing the order of August 18, 1981 which sustained the motion to quash subpoena thereby preventing it from establishing the irregular BOI proceeding and exercising its right to examine the entire BOI records of both companies.18 Adamson comes to this Court raising the following issues:
a. Can a Court of First Instance for the purpose of denying a verified petition for preliminary injunction adopt a decision of an administrative agency rendered in violation of a party's constitutional right to procedural due process?
b. Is a party entitled to establish by testimonial and documentary evidence the fact of such denial of due process? 19
Although the instant petition was filed before the lower court could resolve petitioner's motion for reconsideration of the order denying its prayer for a preliminary injunction and, therefore, strictly speaking, it was prematurely filed, We opt to rule on the issues raised herein to facilitate the final disposition of the case in the lower court [See Philippine Global Communications, Inc. vs. Relova, G.R. No. 52819, October 2, 1980, 100 SCRA 254,260].
While administrative tribunals exercising quasi-judicial powers are free from the rigidity of certain procedural requirements they are bound by law and practice to observe the fundamental and essential requirements of due process in justiciable cases presented before them.20 However, the standard of due process that must be met in administrative tribunals allows a certain latitude as long as the element of fairness is not ignored.21 Hence, there is no denial of due process where records show that hearings were held with prior notice to adverse parties.22 But even in the absence of previous notice, there is no denial of procedural due process as long as the parties are given the opportunity to be heard.23
Based on the foregoing, We rule that petitioner was not deprived of its right to procedural due process in the BOI. In the first place, it was notified of the May 14, 1980 hearing. The notice specified that the hearing was on the petition although it also stated therein with particularity, petitioner's prayer for a stop and desist order. Necessarily, it is immaterial that said notice was sent before Johnson filed its answer to the petition and there was yet no joinder of issues considering that the proceeding was before an administrative tribunal where technicalities that should be observed in a regular court may be dispensed with.
Secondly, during the hearing, petitioner was given the opportunity to present its case, including its prayer for a stop and desist order. As clearly enunciated in the minutes of the hearing which We have painstakingly studied and set forth herein to determine if any irregularity attended the questioned BOI proceeding, it was conducted for the purpose of hearing the arguments and receiving evidence of the parties "to resolve the case expeditiously." Having been given the opportunity to put forth its case, petitioner has only itself, or, better still, its counsel and officers who were present therein, to blame for its failure to do so.24
Petitioner's right to procedural due process was not violated when the hearing was conducted before a director of the BOI and not before the members of the board themselves who decided the case. The requirements of a fair hearing do not mandate that the actual taking of testimony or the presentation of evidence be before the same officer who will make the decision on the case.25 1avvphi1
Neither does the absence of stenographers during the hearing affect petitioner's right to due process. Section 16 of Republic Act No. 5186, which provides for the powers and duties of the BOI, does not specify that said board is a board of record. The first paragraph of said section merely mentions minutes" in connection with proceedings of the board. Therefore, the absence of a transcript of stenographic notes taken during the BOI hearing cannot be claimed to have deprived petitioner of due process of law.26
Petitioner's suspicion that something aberrant surrounded the drafting of the minutes of the May 14, 1980 hearing because it received a copy thereof five months later is unfounded as it is unsupported by evidence. The delayed delivery of the minutes to the petitioner does not at all alter the fact that a hearing was conducted on the petition in the BOI and petitioner was given the opportunity to present its side of the controversy.
It should be noted that said hearing was not the only venue for the ventilation of petitioner's arguments. Aside from the September 5, 1980 hearing, the parties also submitted their respective memoranda. They were, therefore, afforded ample opportunity to assert their arguments in both the petition and the prayer for a stop and desist order.
The BOI decision having been arrived at with due regard for the parties' right to procedural due process, petitioner's contention that the lower court abused its discretion in relying on said BOI decision when it denied petitioner's prayer for a writ of preliminary injunction and granted Johnson's motion to quash subpoena, does not merit further consideration. Suffice it to state that whatever objections petitioner may have on the validity and correctness of the BOI decision may be threshed out in the lower court.
WHEREFORE, the petition for certiorari is hereby dismissed and the lower court is ordered to expedite the disposition of Civil Case No. 136282 for judicial relief. Costs against petitioner.
SO ORDERED.
Gutierrez, Jr., Feliciano, Bidin and Cortes, JJ., concur.
Footnotes
1 Rollo, p. 186.
2 Rollo, p. 183.
3 Petition, p. 3; Rollo, p. 5.
4 Rollo, p. 37.
5 Annex A to petition, Rollo, pp. 23-25.
6 Annex B to Petition; Rollo, p. 27.
7 Public respondent's memorandum. pp. 9-5, Rollo, pp- 91-93.
8 Annex 1 to Private respondent's comment; Rollo, pp. 79-81.
9 Rollo, P. 28.
10 Annex C to Petition; Rollo, pp. 28-29.
11 Annex D to Petition; Rollo, pp. 30-34.
12 Annex E to Petition; Rollo, p. 35.
13 Annex F to Petition; Rollo, pp. 36-41.
14 Annex G to Petition; Rollo, pp. 43-50.
15 Rollo, P. 98.
16 Annex H to Petition; Rollo, pp. 51 to 52.
17 Petition, pp. 16-17.
18 Petition, pp. 19-21.
19 Petition, p. 1.
20 Baguio Country Club Corporation vs. NLRC, G.R. No. 55624, November 19, 1982, 118 SCRA 557, 562.
21 Gas Corporation of the Philippines vs. Inciong, L-49481, October 23, 1979, 93 SCRA 653.
22 Jacqueline Industries vs. NLRC, 1-37034, January 30, 1976, 69 SCRA 242.
23 Superior Concrete Products, Inc. vs. Workmen's Compensation Confession, L-42020, March 31, 1978, 82 SCRA 270, 274 citing Batangas-Laguna-Tayabas Bus Co. vs. Cadiao, L-28725, March 12, 1968, 22 SCRA 987.
24 Gas Corporation of the Philippines vs. Inciong, supra; GOP-CCP Workers Union vs. CIR, L-30833, September 10, 1979, 93 SCRA 118.
25 American Tobacco Co. vs. Director of Patents, L-26803, October 14, 1975, 67 SCRA 287.
26 Police Commission vs. Lood, L-34637, February 24, 1984, 127 SCRA 757.
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