G.R. No.

84811 August 29, 1989

SOLID HOMES, INC., petitioner,
vs.
TERESITA PAYAWAL and COURT OF APPEALS, respondents.
CRUZ, J.:
We are asked to reverse a decision of the Court of Appeals sustaining the
jurisdiction of the Regional Trial Court of Quezon City over a complaint filed
by a buyer, the herein private respondent, against the petitioner, for delivery
of title to a subdivision lot. The position of the petitioner, the defendant in
that action, is that the decision of the trial court is null and void ab initio
because the case should have been heard and decided by what is now
called the Housing and Land Use Regulatory Board.
The complaint was filed on August 31, 1982, by Teresita Payawal against
Solid Homes, Inc. before the Regional Trial Court of Quezon City and
docketed as Civil Case No. Q-36119. The plaintiff alleged that the defendant
contracted to sell to her a subdivision lot in Marikina on June 9, 1975, for the
agreed price of P 28,080.00, and that by September 10, 1981, she had
already paid the defendant the total amount of P 38,949.87 in monthly
installments and interests. Solid Homes subsequently executed a deed of
sale over the land but failed to deliver the corresponding certificate of title
despite her repeated demands because, as it appeared later, the defendant
had mortgaged the property in bad faith to a financing company. The plaintiff
asked for delivery of the title to the lot or, alternatively, the return of all the
amounts paid by her plus interest. She also claimed moral and exemplary
damages, attorney's fees and the costs of the suit.
Solid Homes moved to dismiss the complaint on the ground that the court
had no jurisdiction, this being vested in the National Housing Authority under
PD No. 957. The motion was denied. The defendant repleaded the objection
in its answer, citing Section 3 of the said decree providing that "the National
Housing Authority shall have exclusive jurisdiction to regulate the real estate
trade and business in accordance with the provisions of this Decree." After
trial, judgment was rendered in favor of the plaintiff and the defendant was
ordered to deliver to her the title to the land or, failing this, to refund to her
the sum of P 38,949.87 plus interest from 1975 and until the full amount was
paid. She was also awarded P 5,000.00 moral damages, P 5,000.00
1
exemplary damages, P 10,000.00 attorney's fees, and the costs of the suit.
Solid Homes appealed but the decision was affirmed by the respondent
2
court, which also berated the appellant for its obvious efforts to evade a
legitimate obligation, including its dilatory tactics during the trial. The
petitioner was also reproved for its "gall" in collecting the further amount of P

1,238.47 from the plaintiff purportedly for realty taxes and registration
expenses despite its inability to deliver the title to the land.
In holding that the trial court had jurisdiction, the respondent court referred to
Section 41 of PD No. 957 itself providing that:
SEC. 41. Other remedies.-The rights and remedies provided in this Decree
shall be in addition to any and all other rights and remedies that may be
available under existing laws.
and declared that "its clear and unambiguous tenor undermine(d) the
(petitioner's) pretension that the court a quo was bereft of jurisdiction." The
decision also dismissed the contrary opinion of the Secretary of Justice as
impinging on the authority of the courts of justice. While we are disturbed by
the findings of fact of the trial court and the respondent court on the dubious
conduct of the petitioner, we nevertheless must sustain it on the jurisdictional
issue.
The applicable law is PD No. 957, as amended by PD No. 1344, entitled
"Empowering the National Housing Authority to Issue Writs of Execution in
the Enforcement of Its Decisions Under Presidential Decree No. 957."
Section 1 of the latter decree provides as follows:
SECTION 1. In the exercise of its function to regulate the real estate trade
and business and in addition to its powers provided for in Presidential
Decree No. 957, the National Housing Authority shall have exclusive
jurisdiction to hear and decide cases of the following nature:
A. Unsound real estate business practices;
B. Claims involving refund and any other claims filed by subdivision lot or
condominium unit buyer against the project owner, developer, dealer, broker
or salesman; and
C. Cases involving specific performance of contractuala statutory obligations
filed by buyers of subdivision lot or condominium unit against the owner,
developer, dealer, broker or salesman. (Emphasis supplied.)
The language of this section, especially the italicized portions, leaves no
room for doubt that "exclusive jurisdiction" over the case between the
petitioner and the private respondent is vested not in the Regional Trial
3
Court but in the National Housing Authority.
The private respondent contends that the applicable law is BP No. 129,
which confers on regional trial courts jurisdiction to hear and decide cases
mentioned in its Section 19, reading in part as follows:
SEC. 19. Jurisdiction in civil cases.-Regional Trial Courts shall exercise
exclusive original jurisdiction:
(1) In all civil actions in which the subject of the litigation is incapable of
pecuniary estimation;
(2) In all civil actions which involve the title to, or possession of, real

property, or any interest therein, except actions for forcible entry into and
unlawful detainer of lands or buildings, original jurisdiction over which is
conferred upon Metropolitan Trial Courts, Municipal Trial Courts, and
Municipal Circuit Trial Courts;
xxx xxx xxx
(8) In all other cases in which the demand, exclusive of interest and cost or
the value of the property in controversy, amounts to more than twenty
thousand pesos (P 20,000.00).
It stresses, additionally, that BP No. 129 should control as the later
enactment, having been promulgated in 1981, after PD No. 957 was issued
in 1975 and PD No. 1344 in 1978.
This construction must yield to the familiar canon that in case of conflict
between a general law and a special law, the latter must prevail regardless
of the dates of their enactment. Thus, it has been held thatThe fact that one law is special and the other general creates a presumption
that the special act is to be considered as remaining an exception of the
general act, one as a general law of the land and the other as the law of the
4
particular case.
xxx xxx xxx
The circumstance that the special law is passed before or after the general
act does not change the principle. Where the special law is later, it will be
regarded as an exception to, or a qualification of, the prior general act; and
where the general act is later, the special statute will be construed as
remaining an exception to its terms, unless repealed expressly or by
5
necessary implication.
It is obvious that the general law in this case is BP No. 129 and PD No. 1344
the special law.
The argument that the trial court could also assume jurisdiction because of
Section 41 of PD No. 957, earlier quoted, is also unacceptable. We do not
read that provision as vesting concurrent jurisdiction on the Regional Trial
Court and the Board over the complaint mentioned in PD No. 1344 if only
because grants of power are not to be lightly inferred or merely implied. The
only purpose of this section, as we see it, is to reserve. to the aggrieved
party such other remedies as may be provided by existing law, like a
6
prosecution for the act complained of under the Revised Penal Code.
On the competence of the Board to award damages, we find that this is part
of the exclusive power conferred upon it by PD No. 1344 to hear and decide
"claims involving refund and any other claims filed by subdivision lot or
condominium unit buyers against the project owner, developer, dealer,
broker or salesman." It was therefore erroneous for the respondent to brush

aside the well-taken opinion of the Secretary of Justice thatSuch claim for damages which the subdivision/condominium buyer may
have against the owner, developer, dealer or salesman, being a necessary
consequence of an adjudication of liability for non-performance of
contractual or statutory obligation, may be deemed necessarily included in
the phrase "claims involving refund and any other claims" used in the
aforequoted subparagraph C of Section 1 of PD No. 1344. The phrase "any
other claims" is, we believe, sufficiently broad to include any and all claims
which are incidental to or a necessary consequence of the claims/cases
specifically included in the grant of jurisdiction to the National Housing
Authority under the subject provisions.
The same may be said with respect to claims for attorney's fees which are
recoverable either by agreement of the parties or pursuant to Art. 2208 of
the Civil Code (1) when exemplary damages are awarded and (2) where the
defendant acted in gross and evident bad faith in refusing to satisfy the
plaintiff 's plainly valid, just and demandable claim.
xxx xxx xxx
Besides, a strict construction of the subject provisions of PD No. 1344 which
would deny the HSRC the authority to adjudicate claims for damages and for
damages and for attorney's fees would result in multiplicity of suits in that the
subdivision condominium buyer who wins a case in the HSRC and who is
thereby deemed entitled to claim damages and attorney's fees would be
forced to litigate in the regular courts for the purpose, a situation which is
7
obviously not in the contemplation of the law. (Emphasis supplied.)
As a result of the growing complexity of the modern society, it has become
necessary to create more and more administrative bodies to help in the
regulation of its ramified activities. Specialized in the particular fields
assigned to them, they can deal with the problems thereof with more
expertise and dispatch than can be expected from the legislature or the
courts of justice. This is the reason for the increasing vesture of quasilegislative and quasi-judicial powers in what is now not unreasonably called
the fourth department of the government.
Statutes conferring powers on their administrative agencies must be liberally
construed to enable them to discharge their assigned duties in accordance
8
with the legislative purpose.
Following this policy in Antipolo Realty
9
Corporation v. National Housing Authority,
the Court sustained the
competence of the respondent administrative body, in the exercise of the
exclusive jurisdiction vested in it by PD No. 957 and PD No. 1344, to
determine the rights of the parties under a contract to sell a subdivision lot.
It remains to state that, contrary to the contention of the petitioner, the case
10
of Tropical Homes v. National Housing Authority is not in point. We upheld

in that case the constitutionality of the procedure for appeal provided for in
PD No. 1344, but we did not rule there that the National Housing Authority
and not the Regional Trial Court had exclusive jurisdiction over the cases
enumerated in Section I of the said decree. That is what we are doing now.
It is settled that any decision rendered without jurisdiction is a total nullity
11
and may be struck down at any time, even on appeal before this Court.
The only exception is where the party raising the issue is barred by estoppel,
12
which does not appear in the case before us. On the contrary, the issue
was raised as early as in the motion to dismiss filed in the trial court by the
petitioner, which continued to plead it in its answer and, later, on appeal to
the respondent court. We have no choice, therefore, notwithstanding the
delay this decision will entail, to nullify the proceedings in the trial court for
lack of jurisdiction.
WHEREFORE, the challenged decision of the respondent court is
REVERSED and the decision of the Regional Trial Court of Quezon City in
Civil Case No. Q-36119 is SET ASIDE, without prejudice to the filing of the
appropriate complaint before the Housing and Land Use Regulatory Board.
No costs.
SO ORDERED.
G.R. No. 164789
August 27, 2009
CHRISTIAN GENERAL ASSEMBLY, INC., Petitioner,
vs.
SPS. AVELINO C. IGNACIO and PRISCILLA T. IGNACIO, Respondents.
DECISION
BRION, J.:
We resolve in this Rule 45 petition the legal issue of whether an action to
rescind a contract to sell a subdivision lot that the buyer found to be under
litigation falls under the exclusive jurisdiction of the Housing and Land Use
Regulatory Board (HLURB).
1
In this petition, Christian General Assembly, Inc. (CGA) prays that we set
2
aside the decision issued by the Court of Appeals (CA) in CAG.R. SP No.
75717 that dismissed its complaint for rescission filed with the Regional Trial
3
Court (RTC) of Bulacan for lack of jurisdiction, as well as the CA resolution
that denied its motion for reconsideration.
FACTUAL ANTECEDENTS
The present controversy traces its roots to the case filed by CGA against the
Spouses Avelino and Priscilla Ignacio (respondents) for rescission of their
Contract to Sell before the RTC, Branch 14, Malolos, Bulacan. The facts,
drawn from the records and outlined below, are not in dispute.
4
On April 30, 1998, CGA entered into a Contract to Sell a subdivision lot

(subject property) with the respondents the registered owners and

developers of a housing subdivision known as Villa Priscilla Subdivision
located in Barangay Cutcut, Pulilan, Bulacan. Under the Contract to Sell,
CGA would pay P2,373,000.00 for the subject property on installment basis;
they were to pay a down payment of P1,186,500, with the balance payable
within three years on equal monthly amortization payments of P46,593.85,
inclusive of interest at 24% per annum, starting June 1998.
On August 5, 2000, the parties mutually agreed to amend the Contract to
Sell to extend the payment period from three to five years, calculated from
the date of purchase and based on the increased total consideration of
P2,706,600, with equal monthly installments of P37,615.00, inclusive of
interest at 24% per annum, starting September 2000.
According to CGA, it religiously paid the monthly installments until its
administrative pastor discovered that the title covering the subject property
suffered from fatal flaws and defects. CGA learned that the subject property
was actually part of two consolidated lots (Lots 2-F and 2-G Bsd-04-000829
[OLT]) that the respondents had acquired from Nicanor Adriano (Adriano)
and Ceferino Sison (Sison), respectively. Adriano and Sison were former
tenant-beneficiaries of Purificacion S. Imperial (Imperial) whose property in
5
Cutcut, Pulilan, Bulacan had been placed under Presidential Decree (PD)
6
No. 27s Operation Land Transfer. According to CGA, Imperial applied for
7
the retention of five hectares of her land under Republic Act No. 6657,
which the Department of Agrarian Reform (DAR) granted in its October 2,
1997 order (DAR Order). The DAR Order authorized Imperial to retain the
farm lots previously awarded to the tenant-beneficiaries, including Lot 2-F
previously awarded to Adriano, and Lot 2-G Bsd-04-000829 awarded to
8
9
Sison. On appeal, the Office of the President and the CA upheld the DAR
Order. Through the Courts Resolution dated January 19, 2005 in G.R. No.
165650, we affirmed the DAR Order by denying the petition for review of the
appellate decision.
Understandably aggrieved after discovering these circumstances, CGA filed
10
a complaint against the respondents before the RTC on April 30, 2002.
CGA claimed that the respondents fraudulently concealed the fact that the
subject property was part of a property under litigation; thus, the Contract to
Sell was a rescissible contract under Article 1381 of the Civil Code. CGA
asked the trial court to rescind the contract; order the respondents to return
the amounts already paid; and award actual, moral and exemplary damages,
attorneys fees and litigation expenses.
Instead of filing an answer, the respondents filed a motion to dismiss
11
asserting that the RTC had no jurisdiction over the case. Citing PD No.
12
957 and PD No. 1344, the respondents claimed that the case falls within

the exclusive jurisdiction of the HLURB since it involved the sale of a

subdivision lot. CGA opposed the motion to dismiss, claiming that the action
is for rescission of contract, not specific performance, and is not among the
actions within the exclusive jurisdiction of the HLURB, as specified by PD
No. 957 and PD No. 1344.
On October 15, 2002, the RTC issued an order denying the respondents
motion to dismiss. The RTC held that the action for rescission of contract
and damages due to the respondents fraudulent misrepresentation that they
are the rightful owners of the subject property, free from all liens and
encumbrances, is outside the HLURBs jurisdiction.1avvphi1
The respondents countered by filing a petition for certiorari with the CA. In its
October 20, 2003 decision, the CA found merit in the respondents position
and set the RTC order aside; the CA ruled that the HLURB had exclusive
jurisdiction over the subject matter of the complaint since it involved a
contract to sell a subdivision lot based on the provisions of PD No. 957 and
PD No. 1344.
Contending that the CA committed reversible error, the CGA now comes
before the Court asking us to overturn the CA decision and resolution.
THE PETITION
In its petition, CGA argues that the CA erred (1) in applying Article 1191 of the Civil Code for breach of reciprocal
obligation, while the petitioners action is for the rescission of a rescissible
contract under Article 1381 of the same Code, which is cognizable by the
regular court; and
(2) in holding that the HLURB has exclusive jurisdiction over the petitioners
13
action by applying Antipolo Realty Corp v. National Housing Corporation
and other cited cases.
In essence, the main issue we are asked to resolve is which of the two the
regular court or the HLURB has exclusive jurisdiction over CGAs action
for rescission and damages.
According to CGA, the exclusive jurisdiction of the HLURB, as set forth in
PD No. 1344 and PD No. 957, is limited to cases involving specific
performance and does not cover actions for rescission.
Taking the opposing view, respondents insist that since CGAs case involves
the sale of a subdivision lot, it falls under the HLURBs exclusive jurisdiction.
THE COURTS RULING
We find no merit in the petition and consequently affirm the CA decision.
Development of the HLURBs jurisdiction
The nature of an action and the jurisdiction of a tribunal are determined by
the material allegations of the complaint and the law governing at the time
the action was commenced. The jurisdiction of the tribunal over the subject

matter or nature of an action is conferred only by law, not by the parties

consent or by their waiver in favor of a court that would otherwise have no
14
jurisdiction over the subject matter or the nature of an action. Thus, the
determination of whether the CGAs cause of action falls under the
jurisdiction of the HLURB necessitates a closer examination of the laws
defining the HLURBs jurisdiction and authority.
PD No. 957, enacted on July 12, 1976, was intended to closely supervise
and regulate the real estate subdivision and condominium businesses in
order to curb the growing number of swindling and fraudulent manipulations
perpetrated by unscrupulous subdivision and condominium sellers and
operators. As one of its "whereas clauses" states:
WHEREAS, reports of alarming magnitude also show cases of swindling and
fraudulent manipulations perpetrated by unscrupulous subdivision and
condominium sellers and operators, such as failure to deliver titles to the
buyers or titles free from liens and encumbrances, and to pay real estate
taxes, and fraudulent sales of the same subdivision lots to different innocent
purchasers for value;
Section 3 of PD No. 957 granted the National Housing Authority (NHA) the
"exclusive jurisdiction to regulate the real estate trade and business."
Thereafter, PD No. 1344 was issued on April 2, 1978 to expand the
jurisdiction of the NHA to include the following:
SECTION 1. In the exercise of its functions to regulate the real estate trade
and business and in addition to its powers provided for in Presidential
Decree No. 957, the National Housing Authority shall have exclusive
jurisdiction to hear and decide cases of the following nature:
A. Unsound real estate business practices;
B. Claims involving refund and any other claims filed by subdivision lot or
condominium unit buyer against the project owner, developer, dealer, broker
or salesman; and
C. Cases involving specific performance of contractual and statutory
obligations filed by buyers of subdivision lot or condominium unit against the
owner, developer, dealer, broker or salesman.
Executive Order No. 648 (EO 648), dated February 7, 1981, transferred the
regulatory and quasi-judicial functions of the NHA to the Human Settlements
Regulatory Commission (HSRC). Section 8 of EO 648 provides:
SECTION 8. Transfer of Functions. -The regulatory functions of the National
Housing Authority pursuant to Presidential Decree Nos. 957, 1216, 1344 and
other related laws are hereby transferred to the Commission [Human
Settlements Regulatory Commission]. x x x. Among these regulatory
functions are: 1) Regulation of the real estate trade and business; x x x 11)
Hear and decide cases of unsound real estate business practices; claims

involving refund filed against project owners, developers, dealers, brokers,

or salesmen; and cases of specific performance.
Pursuant to Executive Order No. 90 dated December 17, 1986, the HSRC
was renamed as the HLURB.
Rationale for HLURBs extensive quasi-judicial powers
The surge in the real estate business in the country brought with it an
increasing number of cases between subdivision owners/developers and lot
buyers on the issue of the extent of the HLURBs exclusive jurisdiction. In
the cases that reached us, we have consistently ruled that the HLURB has
exclusive jurisdiction over complaints arising from contracts between the
subdivision developer and the lot buyer or those aimed at compelling the
subdivision developer to comply with its contractual and statutory obligations
15
to make the subdivision a better place to live in.
We explained the HLURBs exclusive jurisdiction at length in Sps. Osea v.
16
Ambrosio, where we said:
Generally, the extent to which an administrative agency may exercise its
powers depends largely, if not wholly, on the provisions of the statute
creating or empowering such agency. Presidential Decree (P.D.) No. 1344,
"Empowering The National Housing Authority To Issue Writ Of Execution In
The Enforcement Of Its Decision Under Presidential Decree No. 957,"
clarifies and spells out the quasi-judicial dimensions of the grant of
jurisdiction to the HLURB in the following specific terms:
SEC. 1. In the exercise of its functions to regulate the real estate trade and
business and in addition to its powers provided for in Presidential Decree
No. 957, the National Housing Authority shall have exclusive jurisdiction to
hear and decide cases of the following nature:
A. Unsound real estate business practices;
B. Claims involving refund and any other claims filed by subdivision lot or
condominium unit buyer against the project owner, developer, dealer, broker
or salesman; and
C. Cases involving specific performance of contractual and statutory
obligations filed by buyers of subdivision lots or condominium units against
the owner, developer, dealer, broker or salesman.
The extent to which the HLURB has been vested with quasi-judicial authority
must also be determined by referring to the terms of P.D. No. 957, "The
Subdivision And Condominium Buyers' Protective Decree." Section 3 of this
statute provides:
x x x National Housing Authority [now HLURB]. - The National Housing
Authority shall have exclusive jurisdiction to regulate the real estate trade
and business in accordance with the provisions of this Decree.
The need for the scope of the regulatory authority thus lodged in the HLURB

is indicated in the second, third and fourth preambular paragraphs of PD 957

which provide:
WHEREAS, numerous reports reveal that many real estate subdivision
owners, developers, operators, and/or sellers have reneged on their
representations and obligations to provide and maintain properly subdivision
roads, drainage, sewerage, water systems, lighting systems, and other
similar basic requirements, thus endangering the health and safety of home
and lot buyers;
WHEREAS, reports of alarming magnitude also show cases of swindling and
fraudulent manipulations perpetrated by unscrupulous subdivision and
condominium sellers and operators, such as failure to deliver titles to the
buyers or titles free from liens and encumbrances, and to pay real estate
taxes, and fraudulent sales of the same subdivision lots to different innocent
purchasers for value;
xxxx
WHEREAS, this state of affairs has rendered it imperative that the real
estate subdivision and condominium businesses be closely supervised and
regulated, and that penalties be imposed on fraudulent practices and
manipulations committed in connection therewith.
The provisions of PD 957 were intended to encompass all questions
regarding subdivisions and condominiums. The intention was aimed at
providing for an appropriate government agency, the HLURB, to which all
parties aggrieved in the implementation of provisions and the enforcement of
contractual rights with respect to said category of real estate may take
recourse. The business of developing subdivisions and corporations being
imbued with public interest and welfare, any question arising from the
exercise of that prerogative should be brought to the HLURB which has the
technical know-how on the matter. In the exercise of its powers, the HLURB
must commonly interpret and apply contracts and determine the rights of
private parties under such contracts. This ancillary power is no longer a
uniquely judicial function, exercisable only by the regular courts.
As observed in C.T. Torres Enterprises, Inc. v. Hibionada:
The argument that only courts of justice can adjudicate claims resoluble
under the provisions of the Civil Code is out of step with the fast-changing
times. There are hundreds of administrative bodies now performing this
function by virtue of a valid authorization from the legislature. This quasijudicial function, as it is called, is exercised by them as an incident of the
principal power entrusted to them of regulating certain activities falling under
their particular expertise.
In the Solid Homes case for example the Court affirmed the competence of
the Housing and Land Use Regulatory Board to award damages although

this is an essentially judicial power exercisable ordinarily only by the courts

of justice. This departure from the traditional allocation of governmental
powers is justified by expediency, or the need of the government to respond
swiftly and competently to the pressing problems of the modern world.
[Emphasis supplied.]
17
Another case Antipolo Realty Corporation v. NHA explained the grant
of the HLURBs expansive quasi-judicial powers. We said:
In this era of clogged court dockets, the need for specialized administrative
boards or commissions with the special knowledge, experience and
capability to hear and determine promptly disputes on technical matters or
essentially factual matters, subject to judicial review in case of grave abuse
of discretion, has become well nigh indispensable. Thus, in 1984, the Court
noted that between the power lodged in an administrative body and a court,
the unmistakable trend has been to refer it to the former.
xxx
In general, the quantum of judicial or quasi-judicial powers which an
administrative agency may exercise is defined in the enabling act of such
agency. In other words, the extent to which an administrative entity may
exercise such powers depends largely, if not wholly on the provisions of the
statute creating or empowering such agency. In the exercise of such powers,
the agency concerned must commonly interpret and apply contracts and
determine the rights of private parties under such contracts, One thrust of
the multiplication of administrative agencies is that the interpretation of
contracts and the determination of private rights thereunder is no longer a
uniquely judicial function, exercisable only by our regular courts. [Emphasis
supplied.]
Subdivision cases under the RTCs jurisdiction
The expansive grant of jurisdiction to the HLURB does not mean, however,
that all cases involving subdivision lots automatically fall under its
18
jurisdiction. As we said in Roxas v. Court of Appeals:
In our view, the mere relationship between the parties, i.e., that of being
subdivision owner/developer and subdivision lot buyer, does not
automatically vest jurisdiction in the HLURB. For an action to fall within the
exclusive jurisdiction of the HLURB, the decisive element is the nature of the
action as enumerated in Section 1 of P.D. 1344. On this matter, we have
consistently held that the concerned administrative agency, the National
Housing Authority (NHA) before and now the HLURB, has jurisdiction over
complaints aimed at compelling the subdivision developer to comply with its
contractual and statutory obligations.
xxx
Note particularly pars. (b) and (c) as worded, where the HLURBs jurisdiction

concerns cases commenced by subdivision lot or condominium unit buyers.

As to par. (a), concerning "unsound real estate practices," it would appear
that the logical complainant would be the buyers and customers against the
sellers (subdivision owners and developers or condominium builders and
realtors ), and not vice versa. [Emphasis supplied.]
19
Pursuant to Roxas, we held in Pilar Development Corporation v. Villar and
20
Suntay v. Gocolay that the HLURB has no jurisdiction over cases filed by
subdivision or condominium owners or developers against subdivision lot or
condominium unit buyers or owners. The rationale behind this can be found
in the wordings of Sec. 1, PD No. 1344, which expressly qualifies that the
cases cognizable by the HLURB are those instituted by subdivision or
condomium buyers or owners against the project developer or owner. This is
also in keeping with the policy of the law, which is to curb unscrupulous
21
practices in the real estate trade and business.
Thus, in the cases of Fajardo Jr. v. Freedom to Build, Inc.,[22] and Cadimas
23
v. Carrion, we upheld the RTCs jurisdiction even if the subject matter was
a subdivision lot since it was the subdivision developer who filed the action
against the buyer for violation of the contract to sell.
The only instance that HLURB may take cognizance of a case filed by the
developer is when said case is instituted as a compulsory counterclaim to a
pending case filed against it by the buyer or owner of a subdivision lot or
condominium unit. This was what happened in Francel Realty Corporation v.
24
Sycip, where the HLURB took cognizance of the developers claim against
the buyer in order to forestall splitting of causes of action.
Obviously, where it is not clear from the allegations in the complaint that the
property involved is a subdivision lot, as in Javellana v. Hon. Presiding
25
Judge, RTC, Branch 30, Manila, the case falls under the jurisdiction of the
regular courts and not the HLURB. Similarly, in Spouses Dela Cruz v. Court
26
of Appeals, we held that the RTC had jurisdiction over a case where the
conflict involved a subdivision lot buyer and a party who owned a number of
subdivision lots but was not himself the subdivision developer.
The Present Case
In the present case, CGA is unquestionably the buyer of a subdivision lot
from the respondents, who sold the property in their capacities as owner and
developer. As CGA stated in its complaint:
2.01. Defendants are the registered owners and developers of a housing
subdivision presently known as Villa Priscilla Subdivision located at Brgy.
Cutcut, Pulilan, Bulacan;
2.02 On or about April 30, 1998, the plaintiff thru its Administrative Pastor
bought from defendants on installment basis a parcel of land designated at
Lot 1, Block 4 of the said Villa Priscilla Subdivision xxx

xxx
2.04 At the time of the execution of the second Contract to Sell (Annex "B"),
Lot 1, Block 4 of the Villa Priscilla Subdivision was already covered by
Transfer Certificate of Title No. T-127776 of the Registry of Deeds of
Quezon City in the name of Iluminada T. Soneja, married to Asterio Soneja
(defendant Priscilla T. Ignacios sister and brother-in-law) and the
defendants as co-owners, but the latter represented themselves to be the
real and absolute owners thereof, as in fact it was annotated in the title that
they were empowered to sell the same. Copy of TCT No. T-127776 is hereto
attached and made part hereof as Annex "C".
2.05 Plaintiff has been religiously paying the agreed monthly installments
until its Administrative Pastor discovered recently that while apparently clean
on its face, the title covering the subject lot actually suffers from fatal flaws
and defects as it is part of the property involved in litigation even before the
original Contract to Sell (Annex "A"), which defendants deliberately and
fraudulently concealed from the plaintiff;
2.06 As shown in the technical description of TCT No. T-127776 (Annex
"C"), it covers a portion of consolidated Lots 2-F and 2-G Bsd-04-000829
(OLT), which were respectively acquired by defendants from Nicanor
Adriano and Ceferino Sison, former tenants-beneficiaries of Purificacion S.
Imperial, whose property at Cutcut, Pulilan, Bulacan originally covered by
TCT No. 240878 containing an area of 119,431 square meters was placed
under Operation Land Transfer under P.D. No. 27;
2.07 Said Purificacion S. Imperial applied for retention of five (5) hectares of
her property at Cutcut, Pulilan, Bulacan under Rep, Act No. 6657 and the
same was granted by the Department of Agrarian Reform (DAR) to cover in
whole or in part farm lots previously awarded to tenants-beneficiaries,
including inter alia Nicanor Adrianos Lot 2-F and Ceferino Sisons Lot 2-G
Bsd-04-000829 (OLT).
xxx
2.08 Said order of October 2, 1997 was affirmed and declared final and
executory, and the case was considered closed, as in fact there was already
an Implementing Order dated November 10, 1997.
xxx
3.03 As may thus be seen, the defendants deliberately and fraudulently
concealed from the plaintiff that fact that the parcel of land sold to the latter
under the Contract to Sell (Annexes "A" and "B") is part of the property
already under litigation and in fact part of the five-hectare retention awarded
to the original owner, Purificacion S. Imperial.
xxx
3.05 Plaintiff is by law entitled to the rescission of the Contracts to Sell

(Annexes "A" and "B") by restitution of what has already been paid to date
for the subject property in the total amount of P2,515,899.20, thus formal
demand therefor was made on the defendants thru a letter dated April 5,
2002, which they received but refused to acknowledge receipt. Copy of said
27
letter is hereto attached and made part hereof as Annex "J". [Emphasis
supplied.]
From these allegations, the main thrust of the CGA complaint is clear to
compel the respondents to refund the payments already made for the
subject property because the respondents were selling a property that they
apparently did not own. In other words, CGA claims that since the
respondents cannot comply with their obligations under the contract, i.e., to
deliver the property free from all liens and encumbrances, CGA is entitled to
rescind the contract and get a refund of the payments already made. This
cause of action clearly falls under the actions contemplated by Paragraph
(b), Section 1 of PD No. 1344, which reads:
SEC. 1. In the exercise of its functions to regulate the real estate trade and
business and in addition to its powers provided for in Presidential Decree
No. 957, the National Housing Authority shall have exclusive jurisdiction to
hear and decide cases of the following nature:
xxx
B. Claims involving refund and any other claims filed by subdivision lot or
condominium unit buyer against the project owner, developer, dealer, broker
or salesman; and
We view CGAs contention that the CA erred in applying Article 1191 of the
Civil Code as basis for the contracts rescission to be a negligible point.
Regardless of whether the rescission of contract is based on Article 1191 or
1381 of the Civil Code, the fact remains that what CGA principally wants is a
refund of all payments it already made to the respondents. This intent, amply
articulated in its complaint, places its action within the ambit of the HLURBs
exclusive jurisdiction and outside the reach of the regular courts.
Accordingly, CGA has to file its complaint before the HLURB, the body with
the proper jurisdiction.
WHEREFORE, premises considered, we DENY the petition and AFFIRM the
October 20, 2003 Decision of the Court of Appeals in CA G.R. SP No. 75717
dismissing for lack of jurisdiction the CGA complaint filed with the RTC,
Branch 14 of Malolos, Bulacan.
SO ORDERED.
ARTURO D. BRION
Associate Justice
WE CONCUR:

G.R. No. L-30637

July 16, 1987
LIANGA BAY LOGGING, CO., INC., petitioner,
vs.
HON. MANUEL LOPEZ ENAGE, in his capacity as Presiding Judge of
Branch II of the Court of First, Instance of Agusan, and AGO TIMBER
CORPORATION, respondents.
TEEHANKEE, C.J.:
The Court grants the petition for certiorari and prohibition and holds that
respondent judge, absent any showing of grave abuse of discretion, has no
competence nor authority to review anew the decision in administrative
proceedings of respondents public officials (director of forestry, secretary of
agriculture and natural resources and assistant executive secretaries of the
Office of the President) in determining the correct boundary line of the
licensed timber areas of the contending parties. The Court reaffirms the
established principle that findings of fact by an administrative board or
agency or official, following a hearing, are binding upon the courts and will
not be disturbed except where the board, agency and/or official(s) have
gone beyond their statutory authority, exercised unconstitutional powers or
clearly acted arbitrarily and without regard to their duty or with grave abuse
of discretion.
The parties herein are both forest concessionaries whose licensed areas are
adjacent to each other. The concession of petitioner Lianga Bay Logging
Corporation Co., Inc. (hereinafter referred to as petitioner Lianga) as
described in its Timber License Agreement No. 49, is located in the
municipalities of Tago, Cagwait, Marihatag and Lianga, all in the Province of
Surigao, consisting of 110,406 hectares, more or less, while that of
respondent Ago Timber Corporation (hereinafter referred to as respondent
Ago) granted under Ordinary Timber License No. 1323-60 [New] is located
at Los Arcos and San Salvador, Province of Agusan, with an approximate
area of 4,000 hectares. It was a part of a forest area of 9,000 hectares
originally licensed to one Narciso Lansang under Ordinary Timber License
No. 584-'52.
Since the concessions of petitioner and respondent are adjacent to each
other, they have a common boundary-the Agusan-Surigao Provincial
boundary-whereby the eastern boundary of respondent Ago's concession is
petitioner Lianga's western boundary. The western boundary of petitioner
Lianga is described as "... Corner 5, a point in the intersection of the
Agusan-Surigao Provincial boundary and Los Arcos-Lianga Road; thence
following Agusan-Surigao Provincial boundary in a general northerly and
northwesterly and northerly directions about 39,500 meters to Corner 6, a
point at the intersection of the Agusan-Surigao Provincial boundary and

Nalagdao Creek ..." The eastern boundary of respondent Ago's concession

is described as "... point 4, along the Agusan-Surigao boundary; thence
following Agusan-Surigao boundary in a general southeasterly and southerly
directions about 12,000 meters to point 5, a point along Los Arcos-Lianga
1
Road; ..."
Because of reports of encroachment by both parties on each other's
concession areas, the Director of Forestry ordered a survey to establish on
the ground the common boundary of their respective concession areas.
Forester Cipriano Melchor undertook the survey and fixed the common
boundary as "Corner 5 of Lianga Bay Logging Company at Km. 10.2 instead
of Km. 9.7 on the Lianga-Arcos Road and lines N900E, 21,000 meters; N12
W, 21,150 meters; N40 W, 3,000 meters; N31 W, 2,800 meters; N50 W,
1,700 meters" which respondent Ago protested claiming that "its eastern
boundary should be the provincial boundary line of Agusan-Surigao as
described in Section 1 of Art. 1693 of the Philippine Commission as
indicated in the green pencil in the attached sketch" of the areas as prepared
2
by the Bureau of Forestry. The Director of Forestry, after considering the
evidence, found:
That the claim of the Ago Timber Corporation portrays a line (green line) far
different in alignment with the line (red) as indicated in the original License
Control Map of this Office;
That the claim of the Ago Timber Corporation (green line does not conform
to the distance of 6,800 meters from point 3 to point 4 of the original
description of the area of Narciso Lansang but would project said line to a
distance of approximately 13,800 meters;
That to follow the claim of the Ago Timber Corporation would increase the
area of Narciso Lansang from 9,000 to 12,360 hectares;
That to follow the claim of the Ago Timber Corporation would reduce the
area of the Lianga Bay Logging, Co., Inc. to 107,046 hectares instead of the
area granted which is 110,406 hectares.
and ruled that "the claim of the Ago Timber Corporation runs counter to the
intentions of this Office is granting the license of Mr. Narciso Lansang; and
further, that it also runs counter to the intentions of this Office in granting the
Timber License Agreement to the Lianga Bay Logging Co., Inc. The
intentions of this Office in granting the two licenses (Lansang and Lianga
Bay Logging Co., Inc.) are patently manifest in that distances and bearings
are the controlling factors. If mention was ever made of the Agusan-Surigao
boundary, as the common boundary line of both licensees, this Office could
not have meant the Agusan-Surigao boundary as described under Section 1
of Act 1693 of the Philippine Commission for were it so it could have been so
easy for this Office to mention the distance from point 3 to point 4 of Narciso

Lansang as approximately 13,800 meters. This cannot be considered a

mistake considering that the percentage of error which is more or less 103%
is too high an error to be committed by an Office manned by competent
technical men. The Agusan-Surigao boundary as mentioned in the technical
descriptions of both licensees, is, therefore, patently an imaginary line based
on B.F. License Control Map. Such being the case, it is reiterated that
distance and bearings control the description where an imaginary line exists.
3
The decision fixed the common boundary of the licensed areas of the Ago
Timber Corporation and Lianga Bay Logging Co., Inc. as that indicated in
red pencil of the sketch attached to the decision.
In an appeal interposed by respondent Ago, docketed in the Department of
Agriculture and Natural Resources as DANR Case No. 2268, the then Acting
Secretary of Agriculture and Natural Resources Jose Y. Feliciano, in a
decision dated August 9, 1965 set aside the appealed decision of the
Director of Forestry and ruled that "(T)he common boundary line of the
licensed areas of the Ago Timber Corporation and the Lianga Bay Logging
Co., Inc., should be that indicated by the green line on the same sketch
4
which had been made an integral part of the appealed decision."
Petitioner elevated the case to the Office of the President, where in a
decision dated June 16, 1966, signed by then Assistant Executive Secretary
Jose J. Leido, Jr., the ruling of the then Secretary of Agriculture and Natural
5
Resources was affirmed. On motion for reconsideration, the Office of the
President issued another decision dated August 9, 1968 signed by then
Assistant Executive Secretary Gilberto Duavit reversing and overturning the
decision of the then Acting Secretary of Agriculture and Natural Resources
and affirming in toto and reinstating the decision, dated March 20, 1961, of
6
the Director of Forestry.
Respondent Ago filed a motion for reconsideration of the decision dated
August 9, 1968 of the Office of the President but after written opposition of
petitioner Lianga, the same was denied in an order dated October 2, 1968,
7
signed by then Assistant Executive Secretary Jose J. Leido, Jr.
On October 21, 1968, a new action was commenced by Ago Timber
Corporation, as plaintiff, in the Court of First Instance of Agusan, Branch II,
docketed thereat as Civil Case No. 1253, against Lianga Bay Logging Co.,
Inc., Assistant Executive Secretaries Jose J. Leido, Jr. and Gilberto M.
Duavit and Director of Forestry, as defendants, for "Determination of Correct
Boundary Line of License Timber Areas and Damages with Preliminary
Injunction" reiterating once more the same question raised and passed upon
in DANR Case No. 2268 and insisting that "a judicial review of such
divergent administrative decisions is necessary in order to determine the
8
correct boundary fine of the licensed areas in question."

As prayed for, respondent judge issued a temporary restraining order on

October 28, 1968, on a bond of P20,000, enjoining the defendants from
carrying out the decision of the Office of the President. The corresponding
9
writ was issued the next day, or on October 29, 1968.
On November 10, 1968, defendant Lianga (herein petitioner) moved for
dismissal of the complaint and for dissolution of the temporary restraining
order on grounds that the complaint states no cause of action and that the
court has no jurisdiction over the person of respondent public officials and
respondent corporation. It also submitted its opposition to plaintiff's (herein
10
respondent prayer for the issuance of a writ of preliminary injunction. A
11
supplemental motion was filed on December 6, 1968.
On December 19, 1968, the lower court issued an order denying petitioner
Lianga's motion to dismiss and granting the writ of preliminary injunction
12
prayed for by respondent Ago. Lianga's Motion for Reconsideration of the
13
Order was denied on May 9, 1969. Hence, this petition praying of the
Court (a) to declare that the Director of Forestry has the exclusive
jurisdiction to determine the common boundary of the licensed areas of
petitioners and respondents and that the decision of the Office of the
President dated August 9, 1968 is final and executory; (b) to order the
dismissal of Civil Case No. 1253 in the Court of First Instance of Agusan; (c)
to declare that respondent Judge acted without jurisdiction or in excess of
jurisdiction and with grave abuse of discretion, amounting to lack of
jurisdiction, in issuing the temporary restraining order dated October 28,
1968 and granting the preliminary injunction per its Order dated December
19, 1968; and (d) to annul the aforementioned orders.
After respondent's comments on the petition and petitioner's reply thereto,
this Court on June 30, 1969 issued a restraining order enjoining in turn the
enforcement of the preliminary injunction and related orders issued by the
14
respondent court in Civil Case No. 1253.
The Court finds merit in the petition.
Respondent Judge erred in taking cognizance of the complaint filed by
respondent Ago, asking for the determination anew of the correct boundary
fine of its licensed timber area, for the same issue had already been
determined by the Director of Forestry, the Secretary of Agriculture and
Natural Resources and the Office of the President, administrative officials
under whose jurisdictions the matter properly belongs. Section 1816 of the
Revised Administrative Code vests in the Bureau of Forestry, the jurisdiction
and authority over the demarcation, protection, management, reproduction,
reforestation, occupancy, and use of all public forests and forest reserves
and over the granting of licenses for game and fish, and for the taking of
forest products, including stone and earth therefrom. The Secretary of

Agriculture and Natural Resources, as department head, may repeal or in

the decision of the Director of Forestry when advisable in the public
15
interests, whose decision is in turn appealable to the Office of the
16
President.
In giving due course to the complaint below, the respondent court would
necessarily have to assess and evaluate anew all the evidence presented in
17
the administrative proceedings, which is beyond its competence and
jurisdiction. For the respondent court to consider and weigh again the
evidence already presented and passed upon by said officials would be to
allow it to substitute its judgment for that of said officials who are in a better
position to consider and weigh the same in the light of the authority
specifically vested in them by law. Such a posture cannot be entertained, for
it is a well-settled doctrine that the courts of justice will generally not interfere
with purely administrative matters which are addressed to the sound
discretion of government agencies and their expertise unless there is a clear
showing that the latter acted arbitrarily or with grave abuse of discretion or
when they have acted in a capricious and whimsical manner such that their
18
action may amount to an excess or lack of jurisdiction.
A doctrine long recognized is that where the law confines in an
administrative office the power to determine particular questions or matters,
upon the facts to be presented, the jurisdiction of such office shall prevail
19
over the courts.
The general rule, under the principles of administrative law in force in this
jurisdiction, is that decisions of administrative officers shall not be disturbed
by the courts, except when the former have acted without or in excess of
their jurisdiction, or with grave abuse of discretion. Findings of administrative
officials and agencies who have acquired expertise because their jurisdiction
is confined to specific matters are generally accorded not only respect but at
20
times even finality of such findings are supported by substantial evidence.
As recently stressed by the Court, "in this era of clogged court dockets, the
need for specialized administrative boards or commissions with the special
knowledge, experience and capability to hear and determine promptly
disputes on technical matters or essentially factual matters, subject to
judicial review in case of grave abuse of discretion, has become well nigh
21
indispensable."
The facts and circumstances in the instant case are similar to the earlier
22
case of Pajo, et al. v. Ago, et al. (where therein respondent Pastor Ago is
the president of herein respondent Ago Timber Corporation). In the said
case, therein respondent Pastor Ago, after an adverse decision of the
Director of Forestry, Secretary of Agriculture and Natural Resources and
Executive Secretary in connection with his application for renewal of his

expired timber licenses, filed with the Court of First instance of Agusan a
petition for certiorari, prohibition and damages with preliminary injunction
alleging that the rejection of his application for renewal by the Director of
Forestry and Secretary of Agriculture and Natural Resources and its
affirmance by the Executive Secretary constituted an abuse of discretion and
was therefore illegal. The Court held that "there can be no question that
petitioner Director of Forestry has jurisdiction over the grant or renewal of
respondent Ago's timber license (Sec. 1816, Rev. Adm. Code); that
petitioner Secretary of Agriculture and Natural Resources as department
head, is empowered by law to affirm, modify or reject said grant or renewal
of respondent Ago's timber license by petitioner Director of Forestry (Sec.
79[c], Rev. Adm. Code); and that petitioner Executive Secretary, acting for
and in behalf and by authority of the President has, likewise, jurisdiction to
affirm, modify or reverse the orders regarding the grant or renewal of said
timber license by the two aforementioned officials." The Court went on to say
that, "(I)n the case of Espinosa, et al. v. Makalintal, et al. (79 Phil. 134; 45
Off. Gaz. 712), we held that the powers granted to the Secretary of
Agriculture and Commerce (Natural Resources) by law regarding the
disposition of public lands such as granting of licenses, permits, leases, and
contracts or approving, rejecting, reinstating, or cancelling applications or
deciding conflicting applications, are all executive and administrative in
nature. It is a well-recognized principle that purely administrative and
discretionary functions may not be interfered with by the courts. In general,
courts have no supervising power over the proceedings and actions of the
administrative departments of the government. This is generally true with
respect to acts involving the exercise of judgment or discretion, and findings
of act. Findings of fact by an administrative board, agency or official,
following a hearing, are binding upon the courts and will not be disturbed
except where the board, agency or official has gone beyond his statutory
authority, exercised unconstitutional powers or clearly acted arbitrarily and
without regard to his duty or with grave abuse of discretion. And we have
repeatedly held that there is grave abuse of discretion justifying the issuance
of the writ of certiorari only when there is capricious and whimsical exercise
of judgment as is equivalent to lack of jurisdiction. (Abad Santos v. Province
of Tarlac, 67 Phil. 480; Tan vs. People, 88 Phil. 609)"
Respondent Ago contends that the motion filed by petitioner Lianga for
reconsideration of the decision of the Office of the President was denied in
an alleged "decision" dated August 15, 1966, allegedly signed by then
Assistant Executive Secretary Jose J. Leido, Jr. that, "however, for some
mysterious, unknown if not anomalous reasons and/or illegal considerations,
the "decision" allegedly dated August 15, 1966(Annex "D") was never

released" and instead a decision was released on August 9, 1968, signed by

then Assistant Executive Secretary Gilberto M. Duavit, which reversed the
findings and conclusions of the Office of the President in its first decision
dated June 16, 1966 and signed by then Assistant Executive Secretary
Leido.
It is elementary that a draft of a decision does not operate as judgment on a
case until the same is duly signed and delivered to the clerk for filing and
promulgation. A decision cannot be considered as binding on the parties
23
until its promulgation. Respondent should be aware of this rule. In still
24
another case of Ago v. Court of Appeals, (where herein respondent Ago
was the petitioner) the Court held that, "While it is to be presumed that the
judgment that was dictated in open court will be the judgment of the court,
the court may still modify said order as the same is being put into writing.
And even if the order or judgment has already been put into writing and
signed, while it has not yet been delivered to the clerk for filing, it is stin
subject to amendment or change by the judge. It is only when the judgment
signed by the judge is actually filed with the clerk of court that it becomes a
valid and binding judgment. Prior thereto, it could still be subject to
amendment and change and may not, therefore, constitute the real judgment
of the court."
Respondent alleges "that in view of the hopelessly conflicting decisions of
the administrative bodies and/or offices of the Philippine government, and
the important questions of law and fact involved therein, as well as the wellgrounded fear and suspicion that some anomalous, illicit and unlawful
considerations had intervened in the concealment of the decision of August
15, 1966 (Annex "D") of Assistant Executive Secretary Gilberto M. Duavit, a
judicial review of such divergent administrative decisions is necessary in
order to determine the correct boundary line of the licensed areas in
question and restore the faith and confidence of the people in the actuations
of our public officials and in our system of administration of justice."
The mere suspicion of respondent that there were anomalies in the nonrelease of the Leido "decision" allegedly denying petitioner's motion for
reconsideration and the substitution thereof by the Duavit decision granting
reconsideration does not justify judicial review. Beliefs, suspicions and
conjectures cannot overcome the presumption of regularity and legality of
25
official actions. It is presumed that an official of a department performs his
26
official duties regularly. It should be noted, furthermore, that as
hereinabove stated with regard to the case history in the Office of the
President, Ago's motion for reconsideration of the Duavit decision dated
August 9, 1968 was denied in the Order dated October 2, 1968 and signed
by Assistant Executive Secretary Leido himself (who thereby joined in the

reversal of his own first decision dated June 16, 1966 and signed by
himself).
The Ordinary Timber License No. 1323-'60[New] which approved the
transfer to respondent Ago of the 4,000 hectares from the forest area
originally licensed to Narciso Lansang, stipulates certain conditions, terms
and limitations, among which were: that the decision of the Director of
Forestry as to the exact location of its licensed areas is final; that the license
is subject to whatever decision that may be rendered on the boundary
conflict between the Lianga Bay Logging Co. and the Ago Timber
Corporation; that the terms and conditions of the license are subject to
change at the discretion of the Director of Forestry and the license may be
made to expire at an earlier date. Under Section 1834 of the Revised
Administrative Code, the Director of Forestry, upon granting any license,
may prescribe and insert therein such terms, conditions, and limitations, not
inconsistent with law, as may be deemed by him to be in the public interest.
The license operates as a contract between the government and
respondent. Respondent, therefore, is estopped from questioning the terms
and stipulation thereof.
Clearly, the injunctive writ should not have been issued. The provisions of
law explicitly provide that Courts of First Instance shall have the power to
issue writ of injunction, mandamus, certiorari, prohibition, quo warranto and
27
habeas corpus in their respective places, if the petition filed relates to the
acts or omissions of an inferior court, or of a corporation, board, officer or
28
person, within their jurisdiction.
The jurisdiction or authority of the Court of First Instance to control or
restrain acts by means of the writ of injunction is limited only to acts which
are being committed within the territorial boundaries of their respective
29
provinces or districts except where the sole issue is the legality of the
30
decision of the administrative officials.
31
In the leading case of Palanan Lumber Plywood Co., Inc. v. Arranz which
involved a petition for certiorari and prohibition filed in the Court of First
Instance of Isabela against the same respondent public officials as here and
where the administrative proceedings taken were similar to the case at bar,
the Court laid down the rule that: "We agree with the petitioner that the
respondent Court acted without jurisdiction in issuing a preliminary injunction
against the petitioners Executive Secretary, Secretary of Agriculture and
Natural Resources and the Director of Forestry, who have their official
residences in Manila and Quezon City, outside of the territorial jurisdiction of
the respondent Court of First Instance of Isabela. Both the statutory
provisions and the settled jurisdiction of this Court unanimously affirm that
the extraordinary writs issued by the Court of First Instance are limited to

and operative only within their respective provinces and districts."

A different rule applies only when the point in controversy relates solely to a
determination of a question of law whether the decision of the respondent
32
administrative officials was legally correct or not. We thus declared in
33
Director of Forestry v. Ruiz. "In Palanan Lumber & Plywood Co., Inc.,
supra, we reaffirmed the rule of non-jurisdiction of courts of first instance to
issue injunctive writs in order to control acts outside of their premises or
districts. We went further and said that when the petition filed with the courts
of first instance not only questions the legal correctness of the decision of
administrative officials but also seeks to enjoin the enforcement of the said
decision, the court could not validly issue the writ of injunction when the
officials sought to be restrained from enforcing the decision are not stationed
within its territory.1avvphi1
"To recapitulate, insofar as injunctive or prohibitory writs are concerned, the
rule still stands that courts of first instance have the power to issue writs
limited to and operative only within their respective provinces or districts. "
The writ of preliminary injunction issued by respondent court is furthermore
void, since it appears that the forest area described in the injunctive writ
includes areas not licensed to respondent Ago. The forest area referred to
and described therein comprises the whole area originally licensed to
Narciso Lansang under the earlier Ordinary Timber License No. 58452. Only
a portion of this area was in fact transferred to respondent Ago as described
in its Ordinary Timber License No. 1323-'60[New].
It is abundantly clear that respondent court has no jurisdiction over the
subject matter of Civil Case No. 1253 of the Court of First Instance of
Agusan nor has it jurisdiction to decide on the common boundary of the
licensed areas of petitioner Lianga and respondent Ago, as determined by
respondents public officials against whom no case of grave abuse of
discretion has been made. Absent a cause of action and jurisdiction,
respondent Judge acted with grave abuse of discretion and excess, if not
lack, of jurisdiction in refusing to dismiss the case under review and in
issuing the writ of preliminary injunction enjoining the enforcement of the
final decision dated August 9, 1968 and the order affirming the same dated
October 2, 1968 of the Office of the President.
ACCORDINGLY, the petition for certiorari and prohibition is granted. The
restraining order heretofore issued by the Court against enforcement of the
preliminary injunction and related orders issued by respondent judge is the
case below is made permanent and the respondent judge or whoever has
taken his place is hereby ordered to dismiss Civil Case No. 1253.
SO ORDERED.

G.R. No. 102976 October 25, 1995

IRON AND STEEL AUTHORITY, petitioner,
vs.
THE COURT OF APPEALS and MARIA CRISTINA FERTILIZER
CORPORATION, respondents.
FELICIANO, J.:
Petitioner Iron and Steel Authority ("ISA") was created by Presidential
Decree (P.D.) No. 272 dated 9 August 1973 in order, generally, to develop
and promote the iron and steel industry in the Philippines. The objectives of
the ISA are spelled out in the following terms:
Sec. 2. Objectives The Authority shall have the following objectives:
(a) to strengthen the iron and steel industry of the Philippines and to expand
the domestic and export markets for the products of the industry;
(b) to promote the consolidation, integration and rationalization of the
industry in order to increase industry capability and viability to service the
domestic market and to compete in international markets;
(c) to rationalize the marketing and distribution of steel products in order to
achieve a balance between demand and supply of iron and steel products
for the country and to ensure that industry prices and profits are at levels
that provide a fair balance between the interests of investors, consumers
suppliers, and the public at large;
(d) to promote full utilization of the existing capacity of the industry, to
discourage investment in excess capacity, and in coordination, with
appropriate government agencies to encourage capital investment in priority
areas of the industry;
(e) to assist the industry in securing adequate and low-cost supplies of raw
materials and to reduce the excessive dependence of the country on imports
of iron and steel.
The list of powers and functions of the ISA included the following:
Sec. 4. Powers and Functions. The authority shall have the following
powers and functions:
xxx xxx xxx
(j) to initiate expropriation of land required for basic iron and steel facilities
for subsequent resale and/or lease to the companies involved if it is shown
that such use of the State's power is necessary to implement the
construction of capacity which is needed for the attainment of the objectives
of the Authority;
xxx xxx xxx
(Emphasis supplied)

P.D. No. 272 initially created petitioner ISA for a term of five (5) years
1
counting from 9 August 1973. When ISA's original term expired on 10
October 1978, its term was extended for another ten (10) years by Executive
Order No. 555 dated 31 August 1979.
The National Steel Corporation ("NSC") then a wholly owned subsidiary of
the National Development Corporation which is itself an entity wholly owned
by the National Government, embarked on an expansion program
embracing, among other things, the construction of an integrated steel mill in
Iligan City. The construction of such a steel mill was considered a priority
and major industrial project of the Government. Pursuant to the expansion
program of the NSC, Proclamation No. 2239 was issued by the President of
the Philippines on 16 November 1982 withdrawing from sale or settlement a
large tract of public land (totalling about 30.25 hectares in area) located in
Iligan City, and reserving that land for the use and immediate occupancy of
NSC.
Since certain portions of the public land subject matter Proclamation No.
2239 were occupied by a non-operational chemical fertilizer plant and
related facilities owned by private respondent Maria Cristina Fertilizer
Corporation ("MCFC"), Letter of Instruction (LOI), No. 1277, also dated 16
November 1982, was issued directing the NSC to "negotiate with the owners
of MCFC, for and on behalf of the Government, for the compensation of
MCFC's present occupancy rights on the subject land." LOI No. 1277 also
directed that should NSC and private respondent MCFC fail to reach an
agreement within a period of sixty (60) days from the date of LOI No. 1277,
petitioner ISA was to exercise its power of eminent domain under P.D. No.
272 and to initiate expropriation proceedings in respect of occupancy rights
of private respondent MCFC relating to the subject public land as well as the
2
plant itself and related facilities and to cede the same to the NSC.
Negotiations between NSC and private respondent MCFC did fail.
Accordingly, on 18 August 1983, petitioner ISA commenced eminent domain
proceedings against private respondent MCFC in the Regional Trial Court,
Branch 1, of Iligan City, praying that it (ISA) be places in possession of the
property involved upon depositing in court the amount of P1,760,789.69
representing ten percent (10%) of the declared market values of that
property. The Philippine National Bank, as mortgagee of the plant facilities
and improvements involved in the expropriation proceedings, was also
impleaded as party-defendant.
On 17 September 1983, a writ of possession was issued by the trial court in
favor of ISA. ISA in turn placed NSC in possession and control of the land
occupied by MCFC's fertilizer plant installation.
The case proceeded to trial. While the trial was ongoing, however, the

statutory existence of petitioner ISA expired on 11 August 1988. MCFC then

filed a motion to dismiss, contending that no valid judgment could be
rendered against ISA which had ceased to be a juridical person. Petitioner
ISA filed its opposition to this motion.
In an Order dated 9 November 1988, the trial court granted MCFC's motion
to dismiss and did dismiss the case. The dismissal was anchored on the
provision of the Rules of Court stating that "only natural or juridical persons
3
or entities authorized by law may be parties in a civil case." The trial court
also referred to non-compliance by petitioner ISA with the requirements of
4
Section 16, Rule 3 of the Rules of Court.
Petitioner ISA moved for reconsideration of the trial court's Order,
contending that despite the expiration of its term, its juridical existence
continued until the winding up of its affairs could be completed. In the
alternative, petitioner ISA urged that the Republic of the Philippines, being
the real party-in-interest, should be allowed to be substituted for petitioner
ISA. In this connection, ISA referred to a letter from the Office of the
President dated 28 September 1988 which especially directed the Solicitor
General to continue the expropriation case.
The trial court denied the motion for reconsideration, stating, among other
things that:
The property to be expropriated is not for public use or benefit [__] but for
the use and benefit [__] of NSC, a government controlled private corporation
engaged in private business and for profit, specially now that the
government, according to newspaper reports, is offering for sale to the public
its [shares of stock] in the National Steel Corporation in line with the
pronounced policy of the present administration to disengage the
5
government from its private business ventures. (Brackets supplied)
Petitioner went on appeal to the Court of Appeals. In a Decision dated 8
October 1991, the Court of Appeals affirmed the order of dismissal of the
trial court. The Court of Appeals held that petitioner ISA, "a government
regulatory agency exercising sovereign functions," did not have the same
rights as an ordinary corporation and that the ISA, unlike corporations
organized under the Corporation Code, was not entitled to a period for
winding up its affairs after expiration of its legally mandated term, with the
result that upon expiration of its term on 11 August 1987, ISA was "abolished
and [had] no more legal authority to perform governmental functions." The
Court of Appeals went on to say that the action for expropriation could not
prosper because the basis for the proceedings, the ISA's exercise of its
delegated authority to expropriate, had become ineffective as a result of the
delegate's dissolution, and could not be continued in the name of Republic of
the Philippines, represented by the Solicitor General:

It is our considered opinion that under the law, the complaint cannot prosper,
and therefore, has to be dismissed without prejudice to the refiling of a new
complaint for expropriation if the Congress sees it fit." (Emphases supplied)
At the same time, however, the Court of Appeals held that it was premature
for the trial court to have ruled that the expropriation suit was not for a public
purpose, considering that the parties had not yet rested their respective
cases.
In this Petition for Review, the Solicitor General argues that since ISA
initiated and prosecuted the action for expropriation in its capacity as agent
of the Republic of the Philippines, the Republic, as principal of ISA, is
entitled to be substituted and to be made a party-plaintiff after the agent
ISA's term had expired.
Private respondent MCFC, upon the other hand, argues that the failure of
Congress to enact a law further extending the term of ISA after 11 August
1988 evinced a "clear legislative intent to terminate the juridical existence of
ISA," and that the authorization issued by the Office of the President to the
Solicitor General for continued prosecution of the expropriation suit could not
prevail over such negative intent. It is also contended that the exercise of the
eminent domain by ISA or the Republic is improper, since that power would
be exercised "not on behalf of the National Government but for the benefit of
NSC."
The principal issue which we must address in this case is whether or not the
Republic of the Philippines is entitled to be substituted for ISA in view of the
expiration of ISA's term. As will be made clear below, this is really the only
issue which we must resolve at this time.
Rule 3, Section 1 of the Rules of Court specifies who may be parties to a
civil action:
Sec. 1. Who May Be Parties. Only natural or juridical persons or entities
authorized by law may be parties in a civil action.
Under the above quoted provision, it will be seen that those who can be
parties to a civil action may be broadly categorized into two (2) groups:
(a) those who are recognized as persons under the law whether natural, i.e.,
biological persons, on the one hand, or juridical person such as
corporations, on the other hand; and
(b) entities authorized by law to institute actions.
Examination of the statute which created petitioner ISA shows that ISA falls
under category (b) above. P.D. No. 272, as already noted, contains express
authorization to ISA to commence expropriation proceedings like those here
involved:
Sec. 4. Powers and Functions. The Authority shall have the following
powers and functions:

xxx xxx xxx

(j) to initiate expropriation of land required for basic iron and steel facilities
for subsequent resale and/or lease to the companies involved if it is shown
that such use of the State's power is necessary to implement the
construction of capacity which is needed for the attainment of the objectives
of the Authority;
xxx xxx xxx
(Emphasis supplied)
It should also be noted that the enabling statute of ISA expressly authorized
it to enter into certain kinds of contracts "for and in behalf of the
Government" in the following terms:
xxx xxx xxx
(i) to negotiate, and when necessary, to enter into contracts for and in behalf
of the government, for the bulk purchase of materials, supplies or services
for any sectors in the industry, and to maintain inventories of such materials
in order to insure a continuous and adequate supply thereof and thereby
reduce operating costs of such sector;
xxx xxx xxx
(Emphasis supplied)
Clearly, ISA was vested with some of the powers or attributes normally
associated with juridical personality. There is, however, no provision in P.D.
No. 272 recognizing ISA as possessing general or comprehensive juridical
personality separate and distinct from that of the Government. The ISA in
fact appears to the Court to be a non-incorporated agency or instrumentality
of the Republic of the Philippines, or more precisely of the Government of
the Republic of the Philippines. It is common knowledge that other agencies
or instrumentalities of the Government of the Republic are cast in corporate
form, that is to say, are incorporated agencies or instrumentalities,
sometimes with and at other times without capital stock, and accordingly
vested with a juridical personality distinct from the personality of the
Republic. Among such incorporated agencies or instrumentalities are:
6
7
National Power Corporation; Philippine Ports Authority; National Housing
8
9
Authority; Philippine National Oil Company; Philippine National Railways;
10
11
12
Public Estates Authority; Philippine Virginia Tobacco Administration,
and so forth. It is worth noting that the term "Authority" has been used to
designate both incorporated and non-incorporated agencies or
instrumentalities of the Government.
We consider that the ISA is properly regarded as an agent or delegate of the
Republic of the Philippines. The Republic itself is a body corporate and
juridical person vested with the full panoply of powers and attributes which
are compendiously described as "legal personality." The relevant definitions

are found in the Administrative Code of 1987:

Sec. 2. General Terms Defined. Unless the specific words of the text, or
the context as a whole, or a particular statute, require a different meaning:
(1) Government of the Republic of the Philippines refers to the corporate
governmental entity through which the functions of government are
exercised throughout the Philippines, including, save as the contrary
appears from the context, the various arms through which political authority
is made effective in the Philippines, whether pertaining to the autonomous
regions, the provincial, city, municipal or barangay subdivisions or other
forms of local government.
xxx xxx xxx
(4) Agency of the Government refers to any of the various units of the
Government, including a department, bureau, office, instrumentality, or
government-owned or controlled corporation, or a local government or a
distinct unit therein.
xxx xxx xxx
(10) Instrumentality refers to any agency of the National Government, not
integrated within the department framework, vested with special functions or
jurisdiction by law, endowed with some if not all corporate powers,
administering special funds, and enjoying operational autonomy, usually
through a charter. This term includes regulatory agencies, chartered
institutions and government-owned or controlled corporations.
xxx xxx xxx
(Emphases supplied)
When the statutory term of a non-incorporated agency expires, the powers,
duties and functions as well as the assets and liabilities of that agency revert
back to, and are re-assumed by, the Republic of the Philippines, in the
absence of special provisions of law specifying some other disposition
thereof such as, e.g., devolution or transmission of such powers, duties,
functions, etc. to some other identified successor agency or instrumentality
of the Republic of the Philippines. When the expiring agency is an
incorporated one, the consequences of such expiry must be looked for, in
the first instance, in the charter of that agency and, by way of
supplementation, in the provisions of the Corporation Code. Since, in the
instant case, ISA is a non-incorporated agency or instrumentality of the
Republic, its powers, duties, functions, assets and liabilities are properly
regarded as folded back into the Government of the Republic of the
Philippines and hence assumed once again by the Republic, no special
statutory provision having been shown to have mandated succession thereto
by some other entity or agency of the Republic.
The procedural implications of the relationship between an agent or delegate

of the Republic of the Philippines and the Republic itself are, at least in part,
spelled out in the Rules of Court. The general rule is, of course, that an
action must be prosecuted and defended in the name of the real party in
interest. (Rule 3, Section 2) Petitioner ISA was, at the commencement of the
expropriation proceedings, a real party in interest, having been explicitly
authorized by its enabling statute to institute expropriation proceedings. The
Rules of Court at the same time expressly recognize the role of
representative parties:
Sec. 3. Representative Parties. A trustee of an expressed trust, a
guardian, an executor or administrator, or a party authorized by statute may
sue or be sued without joining the party for whose benefit the action is
presented or defended; but the court may, at any stage of the proceedings,
order such beneficiary to be made a party. . . . . (Emphasis supplied)
In the instant case, ISA instituted the expropriation proceedings in its
capacity as an agent or delegate or representative of the Republic of the
Philippines pursuant to its authority under P.D. No. 272. The present
expropriation suit was brought on behalf of and for the benefit of the
Republic as the principal of ISA. Paragraph 7 of the complaint stated:
7. The Government, thru the plaintiff ISA, urgently needs the subject parcels
of land for the construction and installation of iron and steel manufacturing
facilities that are indispensable to the integration of the iron and steel making
industry which is vital to the promotion of public interest and welfare.
(Emphasis supplied)
The principal or the real party in interest is thus the Republic of the
Philippines and not the National Steel Corporation, even though the latter
may be an ultimate user of the properties involved should the condemnation
suit be eventually successful.
From the foregoing premises, it follows that the Republic of the Philippines is
entitled to be substituted in the expropriation proceedings as party-plaintiff in
lieu of ISA, the statutory term of ISA having expired. Put a little differently,
the expiration of ISA's statutory term did not by itself require or justify the
dismissal of the eminent domain proceedings.
It is also relevant to note that the non-joinder of the Republic which occurred
upon the expiration of ISA's statutory term, was not a ground for dismissal of
such proceedings since a party may be dropped or added by order of the
court, on motion of any party or on the court's own initiative at any stage of
13
the action and on such terms as are just. In the instant case, the Republic
has precisely moved to take over the proceedings as party-plaintiff.
14
In E.B. Marcha Transport Company, Inc. v. Intermediate Appellate Court,
the Court recognized that the Republic may initiate or participate in actions
involving its agents. There the Republic of the Philippines was held to be a

proper party to sue for recovery of possession of property although the "real"
or registered owner of the property was the Philippine Ports Authority, a
government agency vested with a separate juridical personality. The Court
said:
It can be said that in suing for the recovery of the rentals, the Republic of the
Philippines acted as principal of the Philippine Ports Authority, directly
exercising the commission it had earlier conferred on the latter as its agent. .
15
. . (Emphasis supplied)
In E.B. Marcha, the Court also stressed that to require the Republic to
commence all over again another proceeding, as the trial court and Court of
Appeals had required, was to generate unwarranted delay and create
needless repetition of proceedings:
More importantly, as we see it, dismissing the complaint on the ground that
the Republic of the Philippines is not the proper party would result in
needless delay in the settlement of this matter and also in derogation of the
policy against multiplicity of suits. Such a decision would require the
Philippine Ports Authority to refile the very same complaint already proved
16
by the Republic of the Philippines and bring back as it were to square one.
(Emphasis supplied)
As noted earlier, the Court of Appeals declined to permit the substitution of
the Republic of the Philippines for the ISA upon the ground that the action
for expropriation could not prosper because the basis for the proceedings,
the ISA's exercise of its delegated authority to expropriate, had become
legally ineffective by reason of the expiration of the statutory term of the
agent or delegated i.e., ISA. Since, as we have held above, the powers and
functions of ISA have reverted to the Republic of the Philippines upon the
termination of the statutory term of ISA, the question should be addressed
whether fresh legislative authority is necessary before the Republic of the
Philippines may continue the expropriation proceedings initiated by its own
delegate or agent.
While the power of eminent domain is, in principle, vested primarily in the
legislative department of the government, we believe and so hold that no
new legislative act is necessary should the Republic decide, upon being
substituted for ISA, in fact to continue to prosecute the expropriation
proceedings. For the legislative authority, a long time ago, enacted a
continuing or standing delegation of authority to the President of the
Philippines to exercise, or cause the exercise of, the power of eminent
domain on behalf of the Government of the Republic of the Philippines. The
1917 Revised Administrative Code, which was in effect at the time of the
commencement of the present expropriation proceedings before the Iligan
Regional Trial Court, provided that:

Sec. 64. Particular powers and duties of the President of the Philippines.
In addition to his general supervisory authority, the President of the
Philippines shall have such other specific powers and duties as are
expressly conferred or imposed on him by law, and also, in particular, the
powers and duties set forth in this Chapter.
Among such special powers and duties shall be:
xxx xxx xxx
(h) To determine when it is necessary or advantageous to exercise the right
of eminent domain in behalf of the Government of the Philippines; and to
direct the Secretary of Justice, where such act is deemed advisable, to
cause the condemnation proceedings to be begun in the court having proper
jurisdiction. (Emphasis supplied)
The Revised Administrative Code of 1987 currently in force has substantially
reproduced the foregoing provision in the following terms:
Sec. 12. Power of eminent domain. The President shall determine when it
is necessary or advantageous to exercise the power of eminent domain in
behalf of the National Government, and direct the Solicitor General,
whenever he deems the action advisable, to institute expopriation
proceedings in the proper court. (Emphasis supplied)
In the present case, the President, exercising the power duly delegated
under both the 1917 and 1987 Revised Administrative Codes in effect made
a determination that it was necessary and advantageous to exercise the
power of eminent domain in behalf of the Government of the Republic and
17
accordingly directed the Solicitor General to proceed with the suit.
It is argued by private respondent MCFC that, because Congress after
becoming once more the depository of primary legislative power, had not
enacted a statute extending the term of ISA, such non-enactment must be
deemed a manifestation of a legislative design to discontinue or abort the
present expropriation suit. We find this argument much too speculative; it
rests too much upon simple silence on the part of Congress and casually
disregards the existence of Section 12 of the 1987 Administrative Code
already quoted above.
Other contentions are made by private respondent MCFC, such as, that the
constitutional requirement of "public use" or "public purpose" is not present
in the instant case, and that the indispensable element of just compensation
is also absent. We agree with the Court of Appeals in this connection that
these contentions, which were adopted and set out by the Regional Trial
Court in its order of dismissal, are premature and are appropriately
addressed in the proceedings before the trial court. Those proceedings have
yet to produce a decision on the merits, since trial was still on going at the
time the Regional Trial Court precipitously dismissed the expropriation

proceedings. Moreover, as a pragmatic matter, the Republic is, by such

substitution as party-plaintiff, accorded an opportunity to determine whether
or not, or to what extent, the proceedings should be continued in view of all
the subsequent developments in the iron and steel sector of the country
including, though not limited to, the partial privatization of the NSC.
WHEREFORE, for all the foregoing, the Decision of the Court of Appeals
dated 8 October 1991 to the extent that it affirmed the trial court's order
dismissing the expropriation proceedings, is hereby REVERSED and SET
ASIDE and the case is REMANDED to the court a quo which shall allow the
substitution of the Republic of the Philippines for petitioner Iron and Steel
Authority and for further proceedings consistent with this Decision. No
pronouncement as to costs.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 120319 October 6, 1995
LUZON DEVELOPMENT BANK, petitioner,
vs.
ASSOCIATION OF LUZON DEVELOPMENT BANK EMPLOYEES and
ATTY. ESTER S. GARCIA in her capacity as VOLUNTARY
ARBITRATOR, respondents.
ROMERO, J.:
From a submission agreement of the Luzon Development Bank (LDB) and
the Association of Luzon Development Bank Employees (ALDBE) arose an
arbitration case to resolve the following issue:
Whether or not the company has violated the Collective Bargaining
Agreement provision and the Memorandum of Agreement dated April 1994,
on promotion.
At a conference, the parties agreed on the submission of their respective
Position Papers on December 1-15, 1994. Atty. Ester S. Garcia, in her
capacity as Voluntary Arbitrator, received ALDBE's Position Paper on
January 18, 1995. LDB, on the other hand, failed to submit its Position Paper
despite a letter from the Voluntary Arbitrator reminding them to do so. As of
May 23, 1995 no Position Paper had been filed by LDB.
On May 24, 1995, without LDB's Position Paper, the Voluntary Arbitrator
rendered a decision disposing as follows:

WHEREFORE, finding is hereby made that the Bank has not adhered to the
Collective Bargaining Agreement provision nor the Memorandum of
Agreement on promotion.
Hence, this petition for certiorari and prohibition seeking to set aside the
decision of the Voluntary Arbitrator and to prohibit her from enforcing the
same.
In labor law context, arbitration is the reference of a labor dispute to an
impartial third person for determination on the basis of evidence and
arguments presented by such parties who have bound themselves to accept
the decision of the arbitrator as final and binding.
Arbitration may be classified, on the basis of the obligation on which it is
based, as either compulsory or voluntary.
Compulsory arbitration is a system whereby the parties to a dispute are
compelled by the government to forego their right to strike and are
compelled to accept the resolution of their dispute through arbitration by a
1
third party. The essence of arbitration remains since a resolution of a
dispute is arrived at by resort to a disinterested third party whose decision is
final and binding on the parties, but in compulsory arbitration, such a third
party is normally appointed by the government.
Under voluntary arbitration, on the other hand, referral of a dispute by the
parties is made, pursuant to a voluntary arbitration clause in their collective
2
agreement, to an impartial third person for a final and binding resolution.
Ideally, arbitration awards are supposed to be complied with by both parties
without delay, such that once an award has been rendered by an arbitrator,
nothing is left to be done by both parties but to comply with the same. After
all, they are presumed to have freely chosen arbitration as the mode of
settlement for that particular dispute. Pursuant thereto, they have chosen a
mutually acceptable arbitrator who shall hear and decide their case. Above
all, they have mutually agreed to de bound by said arbitrator's decision.
In the Philippine context, the parties to a Collective Bargaining Agreement
(CBA) are required to include therein provisions for a machinery for the
resolution of grievances arising from the interpretation or implementation of
3
the CBA or company personnel policies. For this purpose, parties to a CBA
shall name and designate therein a voluntary arbitrator or a panel of
arbitrators, or include a procedure for their selection, preferably from those
accredited by the National Conciliation and Mediation Board (NCMB). Article
261 of the Labor Code accordingly provides for exclusive original jurisdiction
of such voluntary arbitrator or panel of arbitrators over (1) the interpretation
or implementation of the CBA and (2) the interpretation or enforcement of
company personnel policies. Article 262 authorizes them, but only upon
agreement of the parties, to exercise jurisdiction over other labor disputes.

On the other hand, a labor arbiter under Article 217 of the Labor Code has
jurisdiction over the following enumerated cases:
. . . (a) Except as otherwise provided under this Code the Labor Arbiters
shall have original and exclusive jurisdiction to hear and decide, within thirty
(30) calendar days after the submission of the case by the parties for
decision without extension, even in the absence of stenographic notes, the
following cases involving all workers, whether agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that workers
may file involving wages, rates of pay, hours of work and other terms and
conditions of employment;
4. Claims for actual, moral, exemplary and other forms of damages arising
from the employer-employee relations;
5. Cases arising from any violation of Article 264 of this Code, including
questions involving the legality of strikes and lockouts;
6. Except claims for Employees Compensation, Social Security, Medicare
and maternity benefits, all other claims, arising from employer-employee
relations, including those of persons in domestic or household service,
involving an amount exceeding five thousand pesos (P5,000.00) regardless
of whether accompanied with a claim for reinstatement.
xxx xxx xxx
It will thus be noted that the jurisdiction conferred by law on a voluntary
arbitrator or a panel of such arbitrators is quite limited compared to the
original jurisdiction of the labor arbiter and the appellate jurisdiction of the
4
National Labor Relations Commission (NLRC) for that matter. The state of
our present law relating to voluntary arbitration provides that "(t)he award or
decision of the Voluntary Arbitrator . . . shall be final and executory after ten
(10) calendar days from receipt of the copy of the award or decision by the
5
parties," while the "(d)ecision, awards, or orders of the Labor Arbiter are
final and executory unless appealed to the Commission by any or both
parties within ten (10) calendar days from receipt of such decisions, awards,
6
or orders." Hence, while there is an express mode of appeal from the
decision of a labor arbiter, Republic Act No. 6715 is silent with respect to an
appeal from the decision of a voluntary arbitrator.
Yet, past practice shows that a decision or award of a voluntary arbitrator is,
more often than not, elevated to the Supreme Court itself on a petition for
7
certiorari, in effect equating the voluntary arbitrator with the NLRC or the
Court of Appeals. In the view of the Court, this is illogical and imposes an
unnecessary burden upon it.
8
In Volkschel Labor Union, et al. v. NLRC, et al., on the settled premise that

the judgments of courts and awards of quasi-judicial agencies must become

final at some definite time, this Court ruled that the awards of voluntary
arbitrators determine the rights of parties; hence, their decisions have the
same legal effect as judgments of a court. In Oceanic Bic Division (FFW), et
9
al. v. Romero, et al., this Court ruled that "a voluntary arbitrator by the
nature of her functions acts in a quasi-judicial capacity." Under these rulings,
it follows that the voluntary arbitrator, whether acting solely or in a panel,
enjoys in law the status of a quasi-judicial agency but independent of, and
10
apart from, the NLRC since his decisions are not appealable to the latter.
Section 9 of B.P. Blg. 129, as amended by Republic Act No. 7902, provides
that the Court of Appeals shall exercise:
xxx xxx xxx
(B) Exclusive appellate jurisdiction over all final judgments, decisions,
resolutions, orders or awards of Regional Trial Courts and quasi-judicial
agencies, instrumentalities, boards or commissions, including the Securities
and Exchange Commission, the Employees Compensation Commission and
the Civil Service Commission, except those falling within the appellate
jurisdiction of the Supreme Court in accordance with the Constitution, the
Labor Code of the Philippines under Presidential Decree No. 442, as
amended, the provisions of this Act, and of subparagraph (1) of the third
paragraph and subparagraph (4) of the fourth paragraph of Section 17 of the
Judiciary Act of 1948.
xxx xxx xxx
Assuming arguendo that the voluntary arbitrator or the panel of voluntary
arbitrators may not strictly be considered as a quasi-judicial agency, board
or commission, still both he and the panel are comprehended within the
concept of a "quasi-judicial instrumentality." It may even be stated that it was
to meet the very situation presented by the quasi-judicial functions of the
voluntary arbitrators here, as well as the subsequent arbitrator/arbitral
11
tribunal operating under the Construction Industry Arbitration Commission,
that the broader term "instrumentalities" was purposely included in the
above-quoted provision.
12
An "instrumentality" is anything used as a means or agency. Thus, the
terms governmental "agency" or "instrumentality" are synonymous in the
sense that either of them is a means by which a government acts, or by
13
which a certain government act or function is performed. The word
"instrumentality," with respect to a state, contemplates an authority to which
the state delegates governmental power for the performance of a state
14
function. An individual person, like an administrator or executor, is a
15
judicial instrumentality in the settling of an estate, in the same manner that
a sub-agent appointed by a bankruptcy court is an instrumentality of the

16

court, and a trustee in bankruptcy of a defunct corporation is an

17
instrumentality of the state.
The voluntary arbitrator no less performs a state function pursuant to a
governmental power delegated to him under the provisions therefor in the
Labor Code and he falls, therefore, within the contemplation of the term
"instrumentality" in the aforequoted Sec. 9 of B.P. 129. The fact that his
functions and powers are provided for in the Labor Code does not place him
within the exceptions to said Sec. 9 since he is a quasi-judicial
instrumentality as contemplated therein. It will be noted that, although the
Employees Compensation Commission is also provided for in the Labor
Code, Circular No. 1-91, which is the forerunner of the present Revised
Administrative Circular No. 1-95, laid down the procedure for the
appealability of its decisions to the Court of Appeals under the foregoing
rationalization, and this was later adopted by Republic Act No. 7902 in
amending Sec. 9 of B.P. 129.
A fortiori, the decision or award of the voluntary arbitrator or panel of
arbitrators should likewise be appealable to the Court of Appeals, in line with
the procedure outlined in Revised Administrative Circular No. 1-95, just like
those of the quasi-judicial agencies, boards and commissions enumerated
therein.
This would be in furtherance of, and consistent with, the original purpose of
Circular No. 1-91 to provide a uniform procedure for the appellate review of
18
adjudications of all quasi-judicial entities not expressly excepted from the
coverage of Sec. 9 of B.P. 129 by either the Constitution or another statute.
Nor will it run counter to the legislative intendment that decisions of the
NLRC be reviewable directly by the Supreme Court since, precisely, the
cases within the adjudicative competence of the voluntary arbitrator are
excluded from the jurisdiction of the NLRC or the labor arbiter.
In the same vein, it is worth mentioning that under Section 22 of Republic
Act No. 876, also known as the Arbitration Law, arbitration is deemed a
special proceeding of which the court specified in the contract or submission,
or if none be specified, the Regional Trial Court for the province or city in
which one of the parties resides or is doing business, or in which the
arbitration is held, shall have jurisdiction. A party to the controversy may, at
any time within one (1) month after an award is made, apply to the court
having jurisdiction for an order confirming the award and the court must
19
grant such order unless the award is vacated, modified or corrected.
In effect, this equates the award or decision of the voluntary arbitrator with
that of the regional trial court. Consequently, in a petition for certiorari from
that award or decision, the Court of Appeals must be deemed to have
concurrent jurisdiction with the Supreme Court. As a matter of policy, this

Court shall henceforth remand to the Court of Appeals petitions of this

nature for proper disposition.
ACCORDINGLY, the Court resolved to REFER this case to the Court of
Appeals.
SO ORDERED