n, Jr. vs.

Office of the Ombudsman

G.R. No. 134990. April 27, 2000.*

MANUEL M. LEYSON, JR., petitioner, vs. OFFICE OF THE OMBUDSMAN, TIRSO

ANTIPORDA, Chairman, UCPB and CIIF Oil Mills, and OSCAR A. TORRALBA, President,
CIIF Oil Mills, respondents.
Coconut Levy Funds; Classes.—We find no grave abuse of discretion committed by the
Ombudsman. COCOFED v. PCGG referred to in Republic v. Sandiganbayan reviewed the
history of the coconut levy funds. These funds actually have four (4) general classes: (a) the
Coconut Investment Fund created under R.A. No. 6260; (b) the Coconut Consumers
Stabilization Fund created under P.D. No. 276;

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* SECOND DIVISION.

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Leyson, Jr. vs. Office of the Ombudsman

(c) the Coconut Industry Development Fund created under P.D. No. 582; and, (d) the Coconut
Industry Stabilization Fund created under P.D. No. 1841. The various laws relating to the
coconut industry were codified in 1976. On 21 October of that year, P.D. No. 961 was
promulgated. On 11 June 1978 it was amended by P.D. No. 1468 by inserting a new provision
authorizing the use of the balance of the Coconut Industry Development Fund for the acquisition
of “shares of stocks in corporations organized for the purpose of engaging in the establishment
and operation of industries x x x commercial activities and other allied business undertakings
relating to coconut and other palm oil indust(ries).” From this fund thus created, or the CIIF,
shares of stock in what have come to be known as the “CIIF companies” were purchased.

Same; Police Power; Taxation; The coconut levy funds were raised by the state’s police and
taxing powers such that the utilization and proper management thereof were certainly the
concern of the Government.—We then stated in COCOFED that the coconut levy funds were
raised by the State’s police and taxing powers such that the utilization and proper management
thereof were certainly the concern of the Government. These funds have a public character and
are clearly affected with public interest.

Government Owned and Controlled Corporations (GOCC); Requisites; Any agency organized as
a stock or non-stock corporation vested with functions relating to public needs whether
governmental or proprietary in nature, and owned by the government directly or through its
instrumentalities either wholly, or, where applicable as in the case of stock corporations, to the
extent of at least fifty-one (51%) percent of its capital stock.—Quimpo v. Tanodbayan involved
the issue as to whether PETROPHIL was a government owned or controlled corporation the
employees of which fell within the jurisdictional purview of the Tanodbayan for purposes of The
Anti-Graft and Corrupt Practices Act. We upheld the jurisdiction of the Tanodbayan on the
ratiocination that—While it may be that PETROPHIL was not originally “created” as a
government-owned or controlled corporation, after it was acquired by PNOC, which is a
government-owned or controlled corporation, PETROPHIL became a subsidiary of PNOC and
thus shed-off its private status. It is now funded and owned by the government as, in fact, it was
acquired to perform functions related to government programs and policies on oil, a vital
commodity in the economic life of the nation. It was acquired not

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Leyson, Jr. vs. Office of the Ombudsman

temporarily but as a permanent adjunct to perform essential government or government-related

functions, as the marketing arm of the PNOC to assist the latter in selling and distributing oil and
petroleum products to assure and maintain an adequate and stable domestic supply. But these
jurisprudential rules invoked by petitioner in support of his claim that the CIIF companies are
government owned and/or controlled corporations are incomplete without resorting to the
definition of “government owned or controlled corporation” contained in par. (13), Sec. 2,
Introductory Provisions of the Administrative Code of 1987, i.e., any agency organized as a stock
or non-stock corporation vested with functions relating to public needs whether governmental or
proprietary in nature, and owned by the Government directly or through its instrumentalities
either wholly, or, where applicable as in the case of stock corporations, to the extent of at least
fifty-one (51) percent of its capital stock. The definition mentions three (3) requisites, namely,
first, any agency organized as a stock or non-stock corporation; second, vested with functions
relating to public needs whether governmental or proprietary in nature; and, third, owned by the
Government directly or through its instrumentalities either wholly, or, where applicable as in the
case of stock corporations, to the extent of at least fifty-one (51) percent of its capital stock.

Same; Ombudsman; Where there is no showing that certain corporations, majority of whose
shares are owned by the UCPB-CIIF, are vested with functions relating to public needs whether
governmental or proprietary in nature, they are not within the scope of the Ombudsman’s
jurisdiction.—In the present case, all three (3) corporations comprising the CIIF companies were
organized as stock corporations. The UCPB-CIIF owns 44.10% of the shares of LEGASPI OIL,
91.24% of the shares of GRANEXPORT, and 92.85% of the shares of UNITED COCONUT.
Obviously, the below 51% shares of stock in LEGASPI OIL removes this firm from the
definition of a government owned or controlled corporation. Our concern has thus been limited
to GRANEXPORT and UNITED COCONUT as we go back to the second requisite.
Unfortunately, it is in this regard that petitioner failed to substantiate his contentions. There is no
showing that GRANEXPORT and/or UNITED COCONUT was vested with functions relating to
public needs whether governmental or proprietary in nature unlike PETROPHIL in Quimpo. The
Court thus concludes that the CIIF companies are, as found by public respondent, private
corporations not within the scope of its jurisdiction.

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Leyson, Jr. vs. Office of the Ombudsman

Actions; Pleadings and Practice; Forum Shopping; Words and Phrases; Forum shopping consists
of filing multiple suits involving the same parties for the same cause of action, either
simultaneously or successively, for the purpose of obtaining a favorable judgment; There is no
forum shopping where the cause of action in the case before the Ombudsman is for violation of
the Anti-Graft and Corrupt Practices Act while the cause of action pending before the trial court
is for collection of a sum of money plus damages.—A brief note on private respondents’ charge
of forum shopping. Executive Secretary v. Gordon is instructive that forum shopping consists of
filing multiple suits involving the same parties for the same cause of action, either
simultaneously or successively, for the purpose of obtaining a favorable judgment. It is readily
apparent that the present charge will not prosper because the cause of action herein, i.e., violation
of The Anti-Graft and Corrupt Practices Act, is different from the cause of action in the case
pending before the trial court which is collection of a sum of money plus damages.

SPECIAL CIVIL ACTION in the Supreme Court. Certiorari.

The facts are stated in the opinion of the Court.

Dioscoro P. Timtiman, Jr. for petitioner.

Lope R. Torres for private respondents.

BELLOSILLO, J.:

On 7 February 1996 International Towage and Transport Corporation (ITTC); a domestic

corporation engaged in the lighterage or shipping business, entered into a one (l)-year contract
with Legaspi Oil Company, Inc. (LEGASPI OIL), Granexport Manufacturing Corporation
(GRANEXPORT) and United Coconut Chemicals, Inc. (UNITED COCONUT), comprising the
Coconut Industry Investment Fund (CIIF) companies, for the transport of coconut oil in bulk
through MT Transasia. The majority shareholdings of these CIIF companies are owned by the
United Coconut Planters Bank (UCPB) as administrator of the CIIF. Under the terms of the
contract, either party could terminate the agreement provided a three (3)-month advance notice
was given to the other party. How-

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Leyson, Jr. vs. Office of the Ombudsman

ever, in August 1996, or prior to the expiration of the contract, the CIIF companies with their
new President, respondent Oscar A. Torralba, terminated the contract without the requisite
advance notice. The CIIF companies engaged the services of another vessel, MT Marilag,
operated by Southwest Maritime Corporation.

On 11 March 1997 petitioner Manuel M. Leyson, Jr., Executive Vice President of ITTC, filed
with public respondent Office of the Ombudsman a grievance case against respondent Oscar A.
Torralba. The following is a summary of the irregularities and corrupt practices allegedly
committed by respondent Torralba: (a) breach of contract—unilateral cancellation of valid and
existing contract; (b) bad faith—falsification of documents and reports to stop the operation of
MT Transasia; (c) manipulation—influenced their insurance to disqualify MT Transasia; (d)
unreasonable denial of requirement imposed; (e) double standards and inconsistent in favor of
MT Marilag; (f) engaged and entered into a contract with Southwest Maritime Corp. which is not
the owner of MT Marilag, where liabilities were waived and whose paid-up capital is only
P250,000.00; and, (g) overpricing in the freight rate causing losses of millions of pesos to
Cocochem.1

On 2 January 1998 petitioner charged respondent Tirso Antiporda, Chairman of UCPB and CIIF
Oil Mills, and respondent Oscar A. Torralba with violation of The Anti-Graft and Corrupt
Practices Act also before the Ombudsman anchored on the aforementioned alleged irregularities
and corrupt practices.

On 30 January 1998 public respondent dismissed the complaint based on its finding that—

The case is a simple case of breach of contract with damages which should have been filed in the
regular court. This Office has no jurisdiction to determine the legality or validity of the
termination of the contract entered into by CIIF and ITTC. Besides the entities

_______________

1 Rollo, pp. 21-22.

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Leyson, Jr. vs. Office of the Ombudsman

involved are private corporations (over) which this Office has no jurisdiction.2

On 4 June 1998 reconsideration of the dismissal of the complaint was denied. The Ombudsman
was unswayed in his finding that the present controversy involved breach of contract as he also
took into account the circumstance that petitioner had already filed a collection case before the
Regional Trial Court of Manila-Br. 15, docketed as Civil Case No. 97-83354. Moreover, the
Ombudsman found that the filing of the motion for reconsideration on 31 March 1998 was
beyond the inextendible period of five (5) days from notice of the assailed resolution on 19
March 1998.3

Petitioner now imputes grave abuse of discretion on public respondent in dismissing his
complaint. He submits that inasmuch as Philippine Coconut Producers Federation, Inc.
(COCOFED) v. PCGG4 and Republic v. Sandiganbayan5 have declared that the coconut levy
funds are public funds then, conformably with Quimpo v. Tanodbayan,6 corporations formed and
organized from those funds or whose controlling stocks are from those funds should be regarded
as government owned and/or controlled corporations. As in the present case, since the funding or
controlling interest of the companies being headed by private respondents was given or owned
by the CIIF as shown in the certification of their Corporate Secretary,7 it follows that they are
government owned and/or controlled corporations. Corollarily. petitioner asserts that

_______________

2 Resolution of Graft Investigation Officer II David B. Corpuz approved by Director Angel C.

Mayoralgo, Assistant Ombudsman Abelardo L. Aportadera and Ombudsman Aniano A. Desierto;
Rollo, p. 22.

3 Rollo, pp. 56-57.

4 G.R. No. 75713, 2 October 1989, 178 SCRA 236.

5 G.R. No. 96073, 16 February 1993, En Banc Resolution.

6 G.R. No. 72553, 2 December 1986, 146 SCRA 137.

7 Annexes, “K,” “L” to “L-l,” and “M” to “M-1” of Petition; Rollo, pp. 80-84.

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Leyson, Jr. vs. Office of the Ombudsman

respondents Antiporda and Torralba are public officers subject to the jurisdiction of the
Ombudsman.

Petitioner alleges next that public respondent’s conclusion that his complaint refers to a breach of
contract is whimsical, capricious and irresponsible amounting to a total disregard of its main
point, i.e., whether private respondents violated The Anti-Graft and Corrupt Practices Act when
they entered into a contract with Southwest Maritime Corporation which was grossly
disadvantageous to the government in general and to the CIIF in particular. Petitioner admits that
his motion for reconsideration was filed out of time. Nonetheless, he advances that public
respondent should have relaxed its rules in the paramount interest of justice; after all, the delay
was just a matter of days and he, a layman not aware of technicalities, personally filed the
complaint.

Private respondents counter that the CIIF companies were duly organized and are existing by
virtue of the Corporation Code. Their stockholders are private individuals and entities. In
addition, private respondents contend that they are not public officers as defined under The Anti-
Graft and Corrupt Practices Act but are private executives appointed by the Boards of Directors
of the CIIF companies. They asseverate that petitioner’s motion for reconsideration was filed
through the expert assistance of a learned counsel. They then charge petitioner with forum
shopping since he had similarly filed a case for collection of a sum of money plus damages
before the trial court.

The Office of the Solicitor General maintains that the Ombudsman approved the
recommendation of the investigating officer to dismiss the complaint because he sincerely
believed there was no sufficient basis for the criminal indictment of private respondents.

We find no grave abuse of discretion committed by the Ombudsman. COCOFED v. PCGG

referred to in Republic v. Sandiganbayan reviewed the history of the coconut levy funds. These
funds actually have four (4) general classes: (a)

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Leyson, Jr. vs. Office of the Ombudsman

the Coconut Investment Fund created under R.A. No. 6260;8 (b) the Coconut Consumers
Stabilization Fund created under P.D. No. 276;9 (c) the Coconut Industry Development Fund
created under P.D. No. 582;10 and, (d) the Coconut Industry Stabilization Fund created under
P.D. No. 1841.11

The various laws relating to the coconut industry were codified in 1976. On 21 October of that
year, P.D. No. 96112 was promulgated. On 11 June 1978 it was amended by P.D. No. 146813 by
inserting a new provision authorizing the use of the balance of the Coconut Industry
Development Fund for the acquisition of “shares of stocks in corporations organized for the
purpose of engaging in the establishment and operation of industries x x x commercial activities
and other allied business undertakings relating to coconut and other palm oil industries).”14
From this fund thus created, or the CIIF, shares of stock in what have come to be known as the
“CIIF companies” were purchased.

We then stated in COCOFED that the coconut levy funds were raised by the State’s police and
taxing powers such that the utilization and proper management thereof were certainly the
concern of the Government. These funds have a public character and are clearly affected with
public interest.

Quimpo v. Tanodbayan involved the issue as to whether PETROPHIL was a government owned
or controlled corporation the employees of which fell within the jurisdictional purview of the
Tanodbayan for purposes of The Anti-Graft and Corrupt Practices Act. We upheld the jurisdiction
of the Tanodbayan on the ratiocination that—

_______________

8 Effective 19 June 1971.

9 Effective 20 August 1973.

10 Effective 14 November 1974.

11 Effective 2 October 1981.

12 Coconut Industry Code.

13 Revised Coconut Industry Code.

14 Sec. 9, PD No. 1468.

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Leyson, Jr. vs. Office of the Ombudsman

While it may be that PETROPHIL was not originally “created” as a government-owned or

controlled corporation, after it was acquired by PNOC, which is a government-owned or
controlled corporation, PETROPHIL became a subsidiary of PNOC and thus shed-off its private
status. It is now funded and owned by the government as, in fact, it was acquired to perform
functions related to government programs and policies on oil, a vital commodity in the economic
life of the nation. It was acquired not temporarily but as a permanent adjunct to perform essential
government or government-related functions, as the marketing arm of the PNOC to assist the
latter in selling and distributing oil and petroleum products to assure and maintain an adequate
and stable domestic supply.

But these jurisprudential rules invoked by petitioner in support of his claim that the CIIF
companies are government owned and/or controlled corporations are incomplete without
resorting to the definition of “government owned or controlled corporation” contained in par.
(13), Sec. 2, Introductory Provisions of the Administrative Code of 1987, i.e., any agency
organized as a stock or non-stock corporation vested with functions relating to public needs
whether governmental or proprietary in nature, and owned by the Government directly or
through its instrumentalities either wholly, or, where applicable as in the case of stock
corporations, to the extent of at least fifty-one (51) percent of its capital stock. The definition
mentions three (3) requisites, namely, first, any agency organized as a stock or non-stock
corporation; second, vested with functions relating to public needs whether governmental or
proprietary in nature; and, third, owned by the Government directly or through its
instrumentalities either wholly, or, where applicable as in the case of stock corporations, to the
extent of at least fifty-one (51) percent of its capital stock.

In the present case, all three (3) corporations comprising the CIIF companies were organized as
stock corporations. The UCPB-CIIF owns 44.10% of the shares of LEGASPI OIL, 91.24% of the
shares of GRANEXPORT, and 92.85% of the shares of UNITED COCONUT.15 Obviously, the
below 51%

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15 See Note 7.

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Leyson, Jr. vs. Office of the Ombudsman

shares of stock in LEGASPI OIL removes this firm from the definition of a government owned
or controlled corporation. Our concern has thus been limited to GRANEXPORT and UNITED
COCONUT as we go back to the second requisite. Unfortunately, it is in this regard that
petitioner failed to substantiate his contentions. There is no showing that GRANEXPORT and/or
UNITED COCONUT was vested with functions relating to public needs whether governmental
or proprietary in nature unlike PETROPHIL in Quimpo. The Court thus concludes that the CIIF
companies are, as found by public respondent, private corporations not within the scope of its
jurisdiction.

With the foregoing conclusion, we find it unnecessary to resolve the other issues raised by
petitioner.

A brief note on private respondents’ charge of forum shopping. Executive Secretary v. Gordon16
is instructive that forum shopping consists of filing multiple suits involving the same parties for
the same cause of action, either simultaneously or successively, for the purpose of obtaining a
favorable judgment. It is readily apparent that the present charge will not prosper because the
cause of action herein, i.e., violation of The Anti-Graft and Corrupt Practices Act, is different
from the cause of action in the case pending before the trial court which is collection of a sum of
money plus damages.

WHEREFORE, the petition is DISMISSED. The Resolution of public respondent Office of the
Ombudsman of 30 January 1998 which dismissed the complaint of petitioner Manuel M. Leyson,
Jr., as well as its Order of 4 June 1998 denying his motion for reconsideration, is AFFIRMED.
Costs against petitioner.

SO ORDERED.

Mendoza, Quisumbing, Buena and De Leon, Jr., JJ., concur.

_______________

16 G.R. No. 134171, 18 November 1998, 298 SCRA 736.

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237

Philippine Aeolus Automotive United Corporation vs. NLRC

Petition dismissed, resolution affirmed.

Notes.—Even vested rights may be taken away by the State in the exercise of its absolute police
power. (Atok BigWedge Mining Company vs. Intermediate Appellate Court, 261 SCRA 528
[1996])

As a general rule, the power to tax is an incident of sovereignty and is unlimited in its range,
acknowledging in its very nature no limits, so that security against its abuse is to be found only
in the responsibility of the legislature which imposes the tax on the constituency who are to pay
it. (Mactan Cebu International Airport Authority vs. Marcos, 261 SCRA 667 [1996])