AMERICAN INTER-FASHION CORP. V. OFFICE OF THE PRESIDENT - CASE DIGEST - CONSTITUTIONAL LAW

Kenzo
AMERICAN INTER-FASHION CORP. V. OFFICE OF THE PRESIDENT                               G.R. No. 92422 May 23, 1991

FACTS:

On April 27, 1984, respondent Glorious Sun Fashion (GLORIOUS)was found guilty of dollar-salting ((occurs when dollars are removed from the Philippines without approval from the Central Bank and transferred to an account outside the county.) ) and misdeclaration of importations by the Garments and Textile Export Board (GTEB) in OSC Case No. 84-B-1 and, as a result of which, the export quotas allocated to it were cancelled.

Soon after the rendition of the GTEB decision, respondent GLORIOUS filed a petition for certiorari and prohibition with the Court, docketed as G.R. No. 67180, contending that its right to due process of law was violated, and that the GTEB decision was not supported by substantial evidence.

Giving credence to the allegations of respondent GLORIOUS, the Court issued a resolution on June 4, 1984, ordering GTEB to conduct further proceedings in the administrative case against respondent GLORIOUS.

However, on July 25, 1984, respondent GLORIOUS filed a manifestation of its intention to withdraw the petition. On August 20, 1984, the Court granted respondent GLORIOUS' motion for withdrawal.

Respondent GLORIOUS filed another motion to dismiss with prejudice, which was duly noted by the Court in a resolution dated September 10, 1984.

More than two years later, on October 15, 1986, respondent GLORIOUS filed with the GTEB a petition for the restitution of its export quota allocation and requested for a reconsideration of the GTEB decision dated April 27, 1984.

Once again, respondent GLORIOUS alleged that the charges against it in OSC Case No. 84-B-1 were not supported by evidence. Moreover, it alleged that the GTEB decision cancelling its export quotas was rendered as a result of duress, threats, intimidation and undue influence exercised by former Minister Roberto V. Ongpin in order to transfer GLORIOUS' export quotas to "Marcos crony-owned" corporations De Soleil Apparel Manufacturing Corporation [DSA] and petitioner American Inter-fashion (AIFC).

Respondent GLORIOUS further alleged that it was coerced by Mr. Roberto Ongpin to withdraw its petition in G.R. No. 67180 and to enter into joint venture agreements paving the way for the creation of DSA and petitioner AIFC which were allowed to service respondent GLORIOUS' export quotas and to use its plant facilities, machineries and equipment.

On September 4, 1987, the GTEB denied the petition of respondent GLORIOUS. An appeal was then taken on October 5, 1987 to the Office of the President, docketed as OP Case No. 3781.
At this point, petitioner AIFC sought to intervene in the proceedings and filed its opposition to GLORIOUS' appeal on November 27, 1987, claiming that the GTEB decision dated April 27, 1984 has long become final, and that a favorable action on the appeal would result in the forfeiture of the export quotas which were legally allocated to it.

On September 7, 1989, the Office of the President ruled in favor of respondent GLORIOUS, finding the proceedings before the GTEB in 1984 irregular, and remanded the case to GTEB for further proceedings.

The motion for reconsideration of AIFC was subsequently denied on February 20, 1990.

Hence, this petition.

ISSUE:

WON the final judgment in G.R. No. 67180 constitutes res judicata to the instant case on the ground that the final judgment in G.R. NO. 67180 was a judgment on the merits.

WON private respondent Glorious Sun was not denied due process during the hearings held in GTEB.

HELD:

1. NO. The petitioner contends that in entertaining the appeal of private respondent Glorious, the Office of the President “had unwittingly made itself a tool in a cunning move to resurrect a decision which had become final and executory more than three years earlier. The petitioner asseverates resolution dismissing G.R. No. 67180 was res judicata on the matter.

The Supreme Court said that one of the requirements for a judgment to be a bar to a subsequent case is that it must be a judgment on the merits. A judgment is upon the merits when it amounts to a declaration of the law as to the respective rights and duties of the parties, based upon the ultimate fact or state of facts disclosed by the pleadings and evidence, and upon which the right of recovery depends, irrespective of formal, technical or dilatory objection or contentions.

Certainly, the dismissal of G.R. No. 67180 cannot be categorized as a judgment on the merits. The action in 1984 did not resolve anything. In fact, when the court heard the parties during the oral arguments, GTEB was not able to present any showing of misdeclaration of imports.

The motion to withdraw the petition arose from the fears of Mr. Nemesio Co that not only Glorious Sun but his other businesses would be destroyed by the martial law regime. The resolution dismissing G.R. No. 67180 was based solely on the notice of withdrawal by the private respondent. The dismissal of the petition was clearly based on a technical matter rather than on the merits of the petition.

Hence, it cannot constitute res judicata.

2. NO. The Petitioner contends that Glorious Sun was not denied due process. Although AIFC admits that the 1984 GTEB decision failed to disclose to Glorious vital evidence used by GTEB in arriving at its conclusion that Glorious was guilty of dollar-salting, it contends that the subsequent disclosure in 1987, where relevant documents were given to Glorious and that the latter was given an opportunity to comment thereon, cured the defect.

This contention by AIFC, the court holds, is misleading. The SC recognized that the instant petition involves the 1984 resolution of the GTEB.

AIFC cannot use as an excuse the subsequent disclosure of the evidence used by the GTEB to Glorious in 1987 to justify the 1984 GTEB resolution.

The glaring fact is that Glorious was denied due process when GTEB failed to disclose evidence used by it in rendering a resolution against Glorious.

Moreover, the documents disclosed to Glorious by GTEB in 1987 enhanced the charge that the former was denied due process.

Attention was also brought to the Puno affidavit, wherein Puno, the Chairman of the Investigating Panel created by the Ministry of Trade and Industry admitted that he was pressured by Minister Ongpin to look for ways and means to remove the quotas from Glorious. AIFC claims that it is an inconsequential matter in that the GTEB Board did not give credence to it and also, none of the members of the committee would agree that there was any pressure or instruction from Minister Ongpin.

The Supreme Court said that the fact that the other members would not agree that there was pressure from Ongpin does not mean that Puno was not telling the truth. Mr. Puno stated that he was pressured. He did not state that the members of the investigating panel were pressured. Mr. Puno was the Chairman of the Investigating Panel. Hence, it is plausible that in view of his position he was the one pressured by Minister Ongpin. There is every reason to suspect that even before Glorious Sun was investigated, a decision to strip it of its quotas and to award them to friends of their administration had already been made.

The Supreme Court also held that although factual findings of administrative agencies are generally accorded respect, such factual findings may be disregarded if they are not supported by evidence; where the findings are initiated by fraud, imposition or collusion; where the procedures which lead to the factual findings are irregular; when palpable errors are committed; or when grave abuse of discretion arbitrariness or capriciousness is manifest.

Contrary to the petitioner's posture, the record clearly manifests that in canceling the export quotas of the private respondent GTEB violated the private respondent’s constitutional right to due process. Before the cancellation in 1984, Glorious had been enjoying export quotas granted to it since 1977. In effect, the private respondent’s export quota allocation which initially was a privilege evolved into some form of property right which should not be removed from it arbitrarily and without due process only to hurriedly confer it on another.

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