G.R. No. L-20420; May 30, 1963
BOTELHO SHIPPING CORPORATION, petitioner, vs. THE HON. JOSE N. LEUTERIO, SENATOR FERDINAND MARCOS, REPRESENTATIVE RAMON BAGATSING and ABELARDO SUBIDO, respondents.

FACTS

Petitioner Botelho Shipping Corporation, a Filipino-owned entity, applied for and was allocated two ocean-going vessels under the Philippine Reparations Program. The procedural journey involved the submission of a tentative fifth-year reparations schedule by the Reparations Commission to the National Economic Council (NEC). The NEC, citing a verbal report on Japan’s likely funding limit, recommended a reduced schedule to the President, eliminating the ocean-going vessels item. However, the President, in his approved tentative schedule, restored the vessels and increased the total allocation. Subsequently, the Reparations Commission successfully negotiated a final, even larger schedule with Japan, which included vessels and specifically allotted one to Botelho. A contract was executed after Botelho made the required down payment.
Meanwhile, respondents Marcos, Bagatsing, and Subido filed a court action to nullify the President’s expanded schedule, arguing it contravened the NEC’s recommendation. The trial court issued a preliminary injunction. Botelho intervened, seeking exemption from this injunction. The court later rendered a decision declaring the President’s expanded schedule null and void for projects not recommended by the NEC but made its injunction permanent except for two other intervenors, not including Botelho. This left Botelho’s contract and vessel allocation under injunction.

ISSUE

Whether the respondent court committed a grave abuse of discretion in nullifying the President’s approval of the reparations schedule and in enjoining Botelho’s contract, despite the NEC’s recommendation being merely advisory under the governing law at the time.

RULING

Yes, the respondent court committed grave abuse of discretion. The Supreme Court granted the petition for certiorari, finding the remedy appropriate given the urgency involving international agreements and petitioner’s impending losses. The legal logic is clear: under Republic Act No. 1789 (the Reparations Act) as it stood when the President acted, the role of the National Economic Council was purely advisory. The law vested the President with the ultimate authority to approve the reparations schedule. Therefore, the President’s act of restoring the ocean-going vessels to the schedule, even contrary to the NEC’s reduced recommendation, was a valid exercise of his discretionary power. The respondent court itself recognized this legal principle in a prior order involving other intervenors, correctly stating that the NEC’s recommendation was not binding. However, it contradicted this finding in its final decision against Botelho. This inconsistency and the erroneous retroactive application of a later amendatory law (R.A. No. 3079), which was not in force during the relevant approvals, constituted an abuse of discretion. Consequently, the judgment and permanent injunction against Botelho were annulled.