EN BANC
on promotion.
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
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 third
party.1The 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 agreement, to an impartial third
person for a final and binding
resolution.2Ideally, 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 the CBA or company
personnel policies.3 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 National Labor Relations Commission
(NLRC) for that matter.4 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 parties,"5 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,
or orders."6 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 certiorari,7 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.
In Volkschel Labor Union, et al. v. NLRC, et
al.,8 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
al. v. Romero, et al.,9 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 apart
from, the NLRC since his decisions are not
appealable to the latter.10
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 tribunal operating under the
Construction Industry Arbitration
Commission,11 that the broader term
"instrumentalities" was purposely included in
the above-quoted provision.
An "instrumentality" is anything used as a
means or agency.12 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 which a certain government act or
function is performed.13 The word
"instrumentality," with respect to a state,
contemplates an authority to which the state
delegates governmental power for the
performance of a state function.14 An individual
person, like an administrator or executor, is a
judicial instrumentality in the settling of an
estate,15 in the same manner that a sub-agent
appointed by a bankruptcy court is an
instrumentality of the court,16and a trustee in
bankruptcy of a defunct corporation is an
instrumentality of the state.17
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 for certiorari from that award or decision, the
Compensation Commission is also provided Court of Appeals must be deemed to have
for in the Labor Code, Circular No. 1-91, concurrent jurisdiction with the Supreme
which is the forerunner of the present Revised Court. As a matter of policy, this Court shall
Administrative Circular No. 1-95, laid down the henceforth remand to the Court of Appeals
procedure for the appealability of its decisions petitions of this nature for proper disposition.
to the Court of Appeals under the foregoing
rationalization, and this was later adopted by ACCORDINGLY, the Court resolved to
Republic Act No. 7902 in amending Sec. 9 of REFER this case to the Court of Appeals.
B.P. 129.
SO ORDERED.
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 LUZON
adjudications of all quasi-judicial entities18 not
expressly excepted from the coverage of Sec. DEVELOPMENT
BANK vs. ASSO. OF
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
LDB EMPLOYEES
adjudicative competence of the voluntary
arbitrator are excluded from the jurisdiction of and GARCIA
the NLRC or the labor arbiter.
MARCH 26, 2011 ~ VBDIAZ
In the same vein, it is worth mentioning that
under Section 22 of Republic Act No. 876,
also known as the Arbitration Law, arbitration LUZON DEVELOPMENT BANK
is deemed a special proceeding of which the vs. ASSO. OF LDB EMPLOYEES
court specified in the contract or submission,
or if none be specified, the Regional Trial and GARCIA
Court for the province or city in which one of
the parties resides or is doing business, or in G.R. No. 120319
which the arbitration is held, shall have
jurisdiction. A party to the controversy may, at
October 6, 1995
any time within one (1) month after an award FACTS: From a submission agreement
is made, apply to the court having jurisdiction
for an order confirming the award and the of the LDB and the Association of
court must grant such order unless the award
is vacated, modified or corrected.19
Luzon Development Bank Employees
(ALDBE) arose an arbitration case to
In effect, this equates the award or decision of
the voluntary arbitrator with that of the resolve the following issue:
regional trial court. Consequently, in a petition
Whether or not the company has
violated the CBA provision and the
MOA on promotion.
At a conference, the parties agreed on
the submission of their respective
Position Papers. Atty. Garcia, in her
capacity as Voluntary Arbitrator,
received ALDBE’s Position Paper ;
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.
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
CBA provision nor the MOA 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.
ISSUE: WON a voluntary arbiter’s
decision is appealable to the CA and
not the SC
HELD: the Court resolved to REFER
this case to the Court of Appeals.
YES
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 NLRC for that matter. The
“(d)ecision, awards, or orders of the
Labor Arbiter are final and
executory unless appealed to the
Commission …” 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 SC
itself on a petition for certiorari, in
effect equating the voluntary arbitrator
with the NLRC or the CA. In the view
of the Court, this is illogical and
imposes an unnecessary burden upon it.
In Volkschel Labor Union, et
al. v. NLRC, et al., 8 on the settled
premise that thejudgments 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 al. v. Romero, et al., this
Court ruled that “a voluntary arbitrator
by the nature of her functionsacts 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 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:
(B) Exclusive appellate jurisdiction
over all final judgments, decisions,
resolutions, orders or awards of RTC s
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.
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.”
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
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
function. An individual person, like an
administrator or executor, is a 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 court, and a
trustee in bankruptcy of a defunct
corporation is an 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 CA
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 CA, 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.
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 RTC 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.
In effect, this equates the award or
decision of the voluntary arbitrator with
that of the RTC. Consequently, in a
petition for certiorari from that award
or decision, the CA must be deemed to
have concurrent jurisdiction with the
SC. As a matter of policy, this Court
shall henceforth remand to the Court of
Appeals petitions of this nature for
proper disposition.
NOTES:
1. 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 third
party. 1The 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
agreement, to an impartial third person
for a final and binding
resolution. 2Ideally, 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.
2. 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.
 THIRD DIVISION
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 counting from 9 August
1973.1 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 plant itself
and related facilities and to cede the same to
the NSC.2
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 or entities authorized by law may be
parties in a civil case."3 The trial court also
referred to non-compliance by petitioner ISA
with the requirements of Section 16, Rule 3 of
the Rules of Court.4
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 government
from its private business
ventures.5 (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 orinstrumentalities,
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:
National Power Corporation;6 Philippine Ports
Authority;7 National Housing
Authority;8 Philippine National Oil
Company;9 Philippine National
Railways; 10 Public Estates
Authority; 11 Philippine Virginia Tobacco
Administration,12 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 the action and on such terms as are
just. 13 In the instant case, the Republic has
precisely moved to take over the proceedings
as party-plaintiff.
In E.B. Marcha Transport Company, Inc. v.
Intermediate Appellate Court, 14 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 by
the Republic of the Philippines
and bring back as it were to
square one.16 (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,
anddirect 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 accordingly directed the
Solicitor General to proceed with the
suit. 17
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.
Iron and Steel
Authority vs. Court of
Appeals GR No.
102976, October 25,
1995
FACTS: The Iron and Steel Authority (ISA)
was created by PD No. 272, in order,
generally, to develop and promote the iron
and steel industry in the Philippines. Initially, it
was created for a term of 5 years but when its
original term expired, its term was extended
for another 10 years by EO No. 555. The
National Steel Corporation (NSC) then a
wholly owned subsidiary of the National
Development Corporation which is an entity
wholly owned by the National Government
embarked on an expansion program which
includes the construction of a steel mill in
Iligan City. Proclamation No. 2239 was issued
by the President withdrawing from sale or
settlement a tract of land in Iligan City to be
used by the NSC. However, certain portions of
the public land under Proclamation 2239 were
occupied by Maria Cristina Fertilizer Co.
(MCFC). LOI No. 1277 was issued directing
NSC to negotiate with the owners of MCFC for
and on behalf of the Government for the
compensation of MCFCâs present occupancy
rights on the subject land. The LOI directed
that ISA may exercise the power of eminent
domain should the negotiations fail. The
negotiations failed and ISA commenced
expropriation proceedings against MCFC.
While trial was on-going the statutory
existence of ISA had expired prompting
MCFC to file the dismissal of the case since
ISA has ceased to be a juridical person. The
trial court granted MCFCâs motion to dismiss
anchoring on the Rules of Court that âonly
natural or juridical persons or entities
authorized by law may be parties to a civil
case.â ISA moved for a reconsideration
contending that despite the expiration of its
term, its juridicial existence continued until the
winding up of its affairs could be completed. In
the alternative ISA urged that the Rep. of the
Philippines should be allowed to be
substituted in its place. The RTC denied its
motion for reconsideration. This was affirmed
by the CA.
ISSUE: Whether or not the Republic of the
Philippines is entitled to be substituted for ISA
in view of the expiration of ISAâs term.
HELD: There is no provision in PD No. 272
recognizing ISA as possessing general or
comprehensive juridical personality separate
and distinct from that of the Government. ISA
in fact appears to be a non-incorporated
agency or instrumentality 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 case in corporate form, that is to
say, are incorporated agencies or
instrumentalities, sometimes with and other
times without capital stock, and accordingly
vested with a juridical personality distinct from
the personality of the Republic. The term
âAuthorityâ has been used to designate both
incorporated and non-incorporated agencies
or instrumentalities of the Government. The
Court considers that 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 full
panoply of powers and attributes which are
compendiously described as âlegal
personality.â 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 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 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. 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. The
expiration of ISAâs statutory did not by itself
require or justify the dismissal of the eminent
domain proceedings. Further, no new
legislative act is necessary should the
Republic decide, upon being substituted for
ISA, in fact to continue to prosecute the
expropriation proceedings.
THIRD DIVISION
G.R. No. 149179. July 15, 2005
PHILIPPINE LONG DISTANCE TELEPHONE
COMPANY, INC., Petitioners,
vs.
CITY OF BACOLOD, FLORENTINO T.
GUANCO, in his capacity as the City
Treasurer of Bacolod City, and ANTONIO
G. LACZI, in his capacity as the City Legal
Officer of Bacolod City, Respondents.
DECISION
GARCIA, J.:
In this appeal by way of a petition for review
on certiorari under Rule 45 of the Rules of
Court, petitioner Philippine Long Distance
Telephone Company (PLDT), seeks the
reversal and setting aside of the July 23,
2001 decision1of the Regional Trial Court at
Bacolod City, Branch 42, dismissing its
petition in Civil Case No. 99-10786, an action
to declare petitioner as exempt from the
payment of franchise and business taxes
sought to be imposed and collected by the
respondent City of Bacolod.
The material facts are not at all disputed:
PLDT is a holder of a legislative franchise
under Act No. 3436, as amended, to render
local and international telecommunications
services. On August 24, 1991, the terms and
conditions of its franchise were consolidated
under Republic Act No. 7082,2 Section 12 of
which embodies the so-called "in-lieu-of-all-
taxes" clause, whereunder PLDT shall pay a
franchise tax equivalent to three percent (3%)
of all its gross receipts, which franchise tax
shall be "in lieu of all taxes". More specifically,
the provision pertinently reads:
SEC. 12. xxx In addition thereto, the grantee,
its successors or assigns shall pay a franchise
tax equivalent to three percent (3%) of all
gross receipts of the telephone or other
telecommunications businesses transacted
under this franchise by the grantee, its
successors or assigns, and the said
percentage shall be in lieu of all taxeson this
franchise or earnings thereof. xxx (Italics
ours).
Meanwhile, or on January 1, 1992, Republic
Act No. 7160, otherwise known as the Local
Government Code, took effect. Section 137 of
the Code, in relation to Section 151 thereof,
grants cities and other local government units
the power to impose local franchise tax on
businesses enjoying a franchise, thus:
SEC. 137. Franchise Tax. – Notwithstanding
any exemption granted by any law or other
special law, the province may impose a tax on
businesses enjoying a franchise, at a rate not
exceeding fifty percent (50%) of one percent
(1%) of the gross annual receipts for the
preceding calendar year based on the
incoming receipt, or realized, within its
territorial jurisdiction.
xxx xxx xxx
SEC. 151. Scope of Taxing Powers. – Except
as otherwise provided in this Code, the city,
may levy the taxes, fees, and charges which
the province or municipality may
impose: Provided, however, That the taxes,
fees, and charges levied and collected by
highly urbanized and independent component
cities shall accrue to them and distributed in
accordance with the provisions of this Code.
The rates of taxes that the city may levy may
exceed the maximum rates allowed for the
province or municipality by not more than fifty
percent (50%) except the rates of professional
and amusement taxes.
By Section 193 of the same Code, all tax
exemption privileges then enjoyed by all
persons, whether natural or juridical, save
those expressly mentioned therein, were
withdrawn, necessarily including those taxes
from which PLDT is exempted under the "in-
lieu-of-all-taxes" clause in its charter. We
quote Section 193:
SEC. 193. Withdrawal of Tax Exemption
Privileges. – Unless otherwise provided in this
Code, tax exemptions or incentives granted
to, or presently enjoyed by all persons,
whether natural or juridical, including
government-owned or controlled corporations,
except local water districts, cooperatives duly
registered under R.A. 6938, non-stock and
non-profit hospitals and educational
institutions, are hereby withdrawn upon the
effectivity of this Code.
Aiming to level the playing field among
telecommunication companies, Congress
enacted Republic Act No. 7925, otherwise
known as the Public Telecommunications
Policy Act of the Philippines, which took effect
on March 16, 1995. To achieve the legislative
intent, Section 23 thereof, also known as the
"most-favored- treatment" clause, provides for
an equality of treatment in the
telecommunications industry, thus:
SEC. 23. Equality of Treatment in the
Telecommunications Industry – Any
advantage, favor, privilege, exemption, or
immunity granted under existing franchises, or
may hereafter be granted shall ipso
facto become part of previously granted
telecommunications franchises and shall be
accorded immediately and unconditionally to
the grantees of such franchises: Provided,
however, That the foregoing shall neither
apply to nor affect provisions of
telecommunications franchises concerning
territory covered by the franchise, the life span
of the franchise, or the type of the service
authorized by the franchise.
In August 1995, the City of Bacolod, invoking
its authority under Section 137, in relation to
Section 151 and Section 193, supra, of
the Local Government Code, made an
assessment on PLDT for the payment of
franchise tax due the City.
Complying therewith, PLDT began paying the
City franchise tax from the year 1994 until the
third quarter of 1998, at which time the total
franchise tax it had paid the City already
amounted to ₱2,770,696.37.
On June 2, 1998, the Department of Finance
through its Bureau of Local Government
Finance (BLGF), issued a ruling to the effect
that as of March 16, 1995, the effectivity date
of the Public Telecommunications Policy Act
of the Philippines (Rep. Act. No. 7925), PLDT,
among other telecommunication companies,
became exempt from local franchise tax.
Pertinently, the BLGF ruling reads:
It appears that RA 7082 further amending
ACT No. 3436 which granted to PLDT a
franchise to install, operate and maintain a
telephone system throughout the Philippine
Islands was approved on August 3, 1991.
Section 12 of said franchise, likewise,
contains the ‘in lieu of all taxes’ proviso.
In this connection, Section 23 of RA 7925,
quoted hereunder, which was approved on
March 1, 1995 provides for the equality of
treatment in the telecommunications industry:
xxx xxx xxx
On the basis of the aforequoted Section 23 of
RA 7925, PLDT as a telecommunications
franchise holder becomes automatically
covered by the tax exemption provisions of
RA 7925, which took effect on March 16,
1995.
Accordingly, PLDT shall be exempt from the
payment of franchise and business taxes
imposable by LGUs under Sections 137 and
143, respectively, of the LGC [Local
Government Code], upon the effectivity of RA
7925 on March 16, 1995. However, PLDT
shall be liable to pay the franchise and
business taxes on its gross receipts realized
from January 1, 1992 up to March 15, 1995,
during which period PLDT was not enjoying
the ‘most favored clause’ proviso of RA 7025
[sic].3
Invoking the aforequoted ruling, PLDT then
stopped paying local franchise and business
taxes to Bacolod City starting the fourth
quarter of 1998.
The controversy came to a head-on when,
sometime in 1999, PLDT applied for the
issuance of a Mayor’s Permit but the City of
Bacolod withheld issuance thereof pending
PLDT’s payment of its franchise tax liability in
the following amounts: (1) ₱358,258.30 for the
fourth quarter of 1998; and (b) ₱1,424,578.10
for the year 1999, all in the aggregate amount
of ₱1,782,836.40, excluding surcharges and
interest, about which PLDT was duly informed
by the City Treasurer via a 5th Indorsement
dated March 16, 1999 for PLDT’s "appropriate
action".4
In time, PLDT filed a protest5 with the Office of
the City Legal Officer, questioning the
assessment and at the same time asking for a
refund of the local franchise taxes it paid in
1997 until the third quarter of 1998.
In a reply-letter dated March 26, 1999,6 City
Legal Officer Antonio G. Laczi denied the
protest and ordered PLDT to pay the
questioned assessment.
Hence, on May 14, 1999, in the Regional Trial
Court at Bacolod City, PLDT filed its
petition7 in Civil Case No. 99-10786, therein
praying for a judgment declaring it as exempt
from the payment of local franchise and
business taxes; ordering the respondent City
to henceforth cease and desist from
assessing and collecting said taxes; directing
the City to issue the Mayor’s Permit for the
year 1999; and requiring it to refund the
amount of ₱2,770,606.37, allegedly
representing overpaid franchise taxes for the
years 1997 and 1998 with interest until fully
paid.
In time, the respondent City filed its
Answer/Comment to the petition,8 basically
maintaining that Section 137 of the Local
Government Code remains as the operative
law despite the enactment of the Public
Telecommunications Policy Act of the
Philippines (Rep. Act No. 7925), and
accordingly prayed for the dismissal of the
petition.
In the ensuing pre-trial conference, the parties
manifested that they would not present any
testimonial evidence, and merely requested
for time to file their respective memoranda, to
which the trial court acceded.
Eventually, in the herein assailed decision
dated July 23, 2001,9 the trial court dismissed
PLDT’s petition, thus:
WHEREFORE, premises considered, the
petition should be, as it is hereby
DISMISSED. No costs.
SO ORDERED.
Therefrom, PLDT came to this Court via the
present recourse, imputing the following errors
on the part of the trial court:
5.01.a. THE LOWER COURT ERRED IN
SUSTAINING RESPONDENTS’ POSITION
THAT SECTION 137 OF THE LOCAL
GOVERNMENT CODE, WHICH, IN
RELATION TO SECTION 151 THEREOF,
ALLOWS RESPONDENT CITY TO IMPOSE
THE FRANCHISE TAX, IS APPLICABLE IN
THIS CASE.
5.01.b. THE LOWER COURT ERRED IN NOT
HOLDING THAT UNDER PETITIONER’S
FRANCHISE (REPUBLIC ACT NO. 7082), AS
AMENDED AND EXPANDED BY SECTION
23 OF REPUBLIC ACT NO. 7925 (PUBLIC
TELECOMMUNICATIONS POLICY ACT),
TAKING INTO ACCOUNT THE
FRANCHISES OF GLOBE TELECOM, INC.,
(GLOBE) (REPUBLIC ACT NO. 7229) AND
SMART COMMUNICATIONS, INC. (SMART)
(REPUBLIC ACT NO. 7294), WHICH WERE
ENACTED SUBSEQUENT TO THE LOCAL
GOVERNMENT CODE, NO FRANCHISE
TAXES MAY BE IMPOSED ON PETITIONER
BY RESPONDENT CITY.
5.01.c. THE LOWER COURT ERRED IN NOT
GIVING WEIGHT TO THE RULING OF THE
DEPARTMENT OF FINANCE, THROUGH
ITS BUREAU OF LOCAL GOVERNMENT
FINANCE, THAT PETITIONER IS EXEMPT
FROM THE PAYMENT OF FRANCHISE AND
BUSINESS TAXES IMPOSABLE BY LOCAL
GOVERNMENT UNITS UNDER THE LOCAL
GOVERNMENT CODE.
5.01.d. THE LOWER COURT ERRED IN
DISMISSING THE PETITION BELOW.
As we see it, the only question which
commends itself for our resolution is, whether
or not Section 23 of Rep. Act No. 7925, also
called the "most-favored-treatment" clause,
operates to exempt petitioner PLDT from the
payment of franchise tax imposed by the
respondent City of Bacolod.
Contrary to petitioner’s claim, the issue thus
posed is not one of "first impression" insofar
as this Court is concerned. For sure, this is
not the first time for petitioner PLDT to invoke
the jurisdiction of this Court on the same
question, albeit involving another city.
In PLDT vs. City of Davao,10 this Court has
had the occasion to interpret Section 23 of
Rep. Act No. 7925. There, we ruled that
Section 23 does not operate to exempt PLDT
from the payment of franchise tax imposed
upon it by the City of Davao:
In sum, it does not appear that, in approving
§23 of R.A. No. 7925, Congress intended it to
operate as a blanket tax exemption to all
telecommunications entities. Applying the rule
of strict construction of laws granting tax
exemptions and the rule that doubts should be
resolved in favor of municipal corporations in
interpreting statutory provisions on municipal
taxing powers, we hold that §23 of R.A. No.
7925 cannot be considered as having
amended petitioner's franchise so as to entitle
it to exemption from the imposition of local
franchise taxes. Consequently, we hold that
petitioner is liable to pay local franchise taxes
in the amount of ₱3,681,985.72 for the period
covering the first to the fourth quarter of 1999
and that it is not entitled to a refund of taxes
paid by it for the period covering the first to the
third quarter of 1998.11
Explains this Court in the same case:
To begin with, tax exemptions are highly
disfavored. The reason for this was explained
by this Court in Asiatic Petroleum Co. v.
Llanes, in which it was held:
. . . Exemptions from taxation are highly
disfavored, so much so that they may almost
be said to be odious to the law. He who claims
an exemption must be able to point to some
positive provision of law creating the right. . .
As was said by the Supreme Court of
Tennessee in Memphis vs. U. & P. Bank (91
Tenn., 546, 550), ‘The right of taxation is
inherent in the State. It is a prerogative
essential to the perpetuity of the government;
and he who claims an exemption from the
common burden must justify his claim by the
clearest grant of organic or statute law.’ Other
utterances equally or more emphatic come
readily to hand from the highest authority.
In Ohio Life Ins. and Trust Co. vs. Debolt (16
Howard, 416), it was said by Chief Justice
Taney, that the right of taxation will not be
held to have been surrendered, ‘unless the
intention to surrender is manifested by words
too plain to be mistaken.’ In the case of
the Delaware Railroad Tax (18 Wallace, 206,
226), the Supreme Court of the United States
said that the surrender, when claimed, must
be shown by clear, unambiguous language,
which will admit of no reasonable construction
consistent with the reservation of the power. If
a doubt arises as to the intent of the
legislature, that doubt must be solved in favor
of the State. In Erie Railway Company vs.
Commonwealth of Pennsylvania (21 Wallace,
492, 499), Mr. Justice Hunt, speaking of
exemptions, observed that a State cannot
strip itself of the most essential power of
taxation by doubtful words. ‘It cannot, by
ambiguous language, be deprived of this
highest attribute of sovereignty.’ In Tennessee
vs. Whitworth (117 U.S., 129, 136), it was
said: ‘In all cases of this kind the question is
as to the intent of the legislature, the
presumption always being against any
surrender of the taxing power.’ In Farrington
vs. Tennessee and County of Shelby (95 U.S.,
379, 686), Mr. Justice Swayne said: ‘. . .
When exemption is claimed, it must be shown
indubitably to exist. At the outset, every
presumption is against it. A well-founded
doubt is fatal to the claim. It is only when the
terms of the concession are too explicit to
admit fairly of any other construction that the
proposition can be supported.’
The tax exemption must be expressed in the
statute in clear language that leaves no doubt
of the intention of the legislature to grant such
exemption. And, even if it is granted, the
exemption must be interpreted in strictissimi
juris against the taxpayer and liberally in favor
of the taxing authority.
xxx xxx xxx
The fact is that the term ‘exemption’ in §23 is
too general. A cardinal rule in statutory
construction is that legislative intent must be
ascertained from a consideration of the statute
as a whole and not merely of a particular
provision. For, taken in the abstract, a word or
phrase might easily convey a meaning which
is different from the one actually intended. A
general provision may actually have a limited
application if read together with other
provisions. Hence, a consideration of the law
itself in its entirety and the proceedings of
both Houses of Congress is in order.
xxx xxx xxx
R.A. No. 7925 is thus a legislative enactment
designed to set the national policy on
telecommunications and provide the
structures to implement it to keep up with the
technological advances in the industry and the
needs of the public. The thrust of the law is to
promote gradually the deregulation of the
entry, pricing, and operations of all public
telecommunications entities and thus promote
a level playing field in the telecommunications
industry. There is nothing in the language of
§23 nor in the proceedings of both the House
of Representatives and the Senate in enacting
R.A. No. 7925 which shows that it
contemplates the grant of tax exemptions to
all telecommunications entities, including
those whose exemptions had been withdrawn
by the LGC.
What this Court said in Asiatic Petroleum Co.
v. Llanes applies mutatis mutandis to this
case: ‘When exemption is claimed, it must be
shown indubitably to exist. At the outset, every
presumption is against it. A well-founded
doubt is fatal to the claim. It is only when the
terms of the concession are too explicit to
admit fairly of any other construction that the
proposition can be supported.’ In this case,
the word ‘exemption’ in §23 of R.A. No. 7925
could contemplate exemption from certain
regulatory or reporting requirements, bearing
in mind the policy of the law. It is noteworthy
that, in holding Smart and Globe exempt from
local taxes, the BLGF did not base its opinion
on §23 but on the fact that the franchises
granted to them after the effectivity of the LGC
exempted them from the payment of local
franchise and business taxes.
As in City of Davao, supra, petitioner presently
argues that because Smart Communications,
Inc. (SMART) and Globe Telecom (GLOBE)
under whose respective franchises granted
after the effectivity of the Local Government
Code, are exempt from franchise tax, it follows
that petitioner is likewise exempt from the
franchise tax sought to be collected by the
City of Bacolod, on the reasoning that the
grant of tax exemption to SMART and
GLOBE ipso facto applies to PLDT, consistent
with the "most-favored-treatment" clause
found in Section 23 of the Public
Telecommunications Policy Act of the
Philippines (Rep. Act No. 7925).
Again, there is nothing novel in petitioner’s
contention. In fact, this Court in City of Davao,
even adverted to PLDT’s argument therein,
thus:
Finally, it [PLDT] argues that because Smart
and Globe are exempt from the franchise tax,
it follows that it must likewise be exempt from
the tax being collected by the City of Davao
because the grant of tax exemption to Smart
and Globe ipso facto extended the same
exemption to it.
In rejecting PLDT’s contention, this Court
ruled in City of Davao as follows:
The acceptance of petitioner’s theory would
result in absurd consequences. To illustrate:
In its franchise, Globe is required to pay a
franchise tax of only one and one-half
percentum (1/2% [sic] ) of all gross receipts
from its transactions while Smart is required to
pay a tax of three percent (3%) on all gross
receipts from business transacted. Petitioner’s
theory would require that, to level the playing
field, any "advantage, favor, privilege,
exemption, or immunity" granted to Globe
must be extended to all telecommunications
companies, including Smart. If, later,
Congress again grants a franchise to another
telecommunications company imposing, say,
one percent (1%) franchise tax, then all other
telecommunications franchises will have to be
adjusted to "level the playing field" so to
speak. This could not have been the intent of
Congress in enacting Section 23 of Rep. Act
7925. Petitioner’s theory will leave the
Government with the burden of having to keep
track of all granted telecommunications
franchises, lest some companies be treated
unequally. It is different if Congress enacts a
law specifically granting uniform advantages,
favor, privilege, exemption or immunity to all
telecommunications entities.
On PLDT’s motion for reconsideration
in Davao, the Court added in its en
banc Resolution of March 25, 2003,12that even
as it is a state policy to promote a level
playing field in the communications industry,
Section 23 of Rep. Act No. 7925 does not
refer to tax exemption but only to exemption
from certain regulations and requirements
imposed by the National Telecommunications
Commission:
xxx. The records of Congress are bereft of
any discussion or even mention of tax
exemption. To the contrary, what the
Chairman of the Committee on
Transportation, Rep. Jerome V. Paras,
mentioned in his sponsorship of H.B. No.
14028, which became R.A. No. 7925, were
‘equal access clauses’ in interconnection
agreements, not tax exemptions. He said:
There is also a need to promote a level
playing field in the telecommunications
industry. New entities must be granted
protection against dominant carriers through
the encouragement of equitable access
charges and equal access clauses in
interconnection agreements and the strict
policing of predatory pricing by dominant
carriers.Equal access should be granted to all
operators connecting into the interexchange
network. There should be no discrimination
against any carrier in terms of priorities and/or
quality of services.
Nor does the term ‘exemption’ in § 23 of R.A.
No. 7925 mean tax exemption. The term
refers to exemption from certain regulations
and requirements imposed by the National
Telecommunications Commission (NTC). For
instance, R.A. No. 7925, § 17 provides: ‘The
Commission shall exempt any specific
telecommunications service from its rate or
tariff regulations if the service has sufficient
competition to ensure fair and reasonable
rates or tariffs.’ Another exemption granted by
the law in line with its policy of deregulation is
the exemption from the requirement of
securing permits from the NTC every time a
telecommunications company imports
equipment.13
In the same en banc Resolution, the Court
even rejected PLDT’s contention that the "in-
lieu-of-all-taxes" clause does not refer to "tax
exemption" but to "tax exclusion" and hence,
the strictissimi juris rule does not apply,
explaining that these two terms actually mean
the same thing, such that the rule that tax
exemption should be applied in strictissimi
juris against the taxpayer and liberally in favor
of the government applies equally to tax
exclusions. Thus:
Indeed, both in their nature and in their effect
there is no difference between tax exemption
and tax exclusion. Exemption is an immunity
or privilege; it is freedom from a charge or
burden to which others are subjected.
Exclusion, on the other hand, is the removal of
otherwise taxable items from the reach of
taxation, e.g., exclusions from gross income
and allowable deductions. Exclusion is thus
also an immunity or privilege which frees a
taxpayer from a charge to which others are
subjected. Consequently, the rule that tax
exemption should be applied in strictissimi
juris against the taxpayer and liberally in favor
of the government applies equally to tax
exclusions. To construe otherwise the ‘in lieu
of all taxes’ provision invoked is to be
inconsistent with the theory that R.A. No.
7925, § 23 grants tax exemption because of a
similar grant to Globe and Smart.14
PLDT likewise argued in said case that the
RTC at Davao City erred in not giving weight
to the ruling of the BLGF which, according to
petitioner, is an administrative agency with
technical expertise and mastery over the
specialized matters assigned to it. But then
again, we held in Davao:
To be sure, the BLGF is not an administrative
agency whose findings on questions of fact
are given weight and deference in the courts.
The authorities cited by petitioner pertain to
the Court of Tax Appeals, a highly specialized
court which performs judicial functions as it
was created for the review of tax cases. In
contrast, the BLGF was created merely to
provide consultative services and technical
assistance to local governments and the
general public on local taxation, real property
assessment, and other related matters,
among others. The question raised by
petitioner is a legal question, to wit, the
interpretation of §23 of R.A. No. 7925. There
is, therefore, no basis for claiming expertise
for the BLGF that administrative agencies are
said to possess in their respective fields.15
We note, quite interestingly, that apart from
the particular local government unit involved in
the earlier case ofPLDT vs. Davao, the
arguments presently advanced by petitioner
on the issue herein posed are but a mere
reiteration if not repetition of the very same
arguments it has already raised in Davao. For
sure, the errors presently assigned are
substantialy the same as those in Davao, all
of which have been adequately addressed
and passed upon by this Court in its decision
therein as well as in its en banc resolution in
that case.
WHEREFORE, the instant petition is DENIED
and the assailed decision dated July 23, 2001
of the lower court AFFIRMED.
Costs against petitioner.
SO ORDERED.
FIRST DIVISION
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 exemplary damages, P 10,000.00
attorney's fees, and the costs of the suit.1
Solid Homes appealed but the decision was
affirmed by the respondent court, 2 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 quowas 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
Court but in the National Housing Authority. 3
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 that-
The 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 particular
case. 4
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
necessary implication. 5
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
prosecution for the act complained of under
the Revised Penal Code. 6
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 that-
Such 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
obviously not in the
contemplation of the law.
(Emphasis supplied.)7
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 quasi-
legislative 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 with the
legislative purpose. 8 Following this policy in
Antipolo Realty Corporation v. National
Housing Authority, 9 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 of
Tropical Homes v. National Housing
Authority 10 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 and may be struck
down at any time, even on appeal before this
Court. 11 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.
FACTS: The complaint was filed by Teresita
Payawal against Solid Homes, Inc. before the
Regional Trial Court of Quezon City. Teresite,
alleged that Solid Homes sold to her a
subdivision lot in Marikina on June 9, 1975, for
P 28,080.00, and that by September 10, 1981,
she had already paid the full amount of P
38,949.87 including interests. Solid Homes
subsequently executed a deed of sale over
the land but failed to deliver the corresponding
certificate of title because it was later
discovered that Solid Homes 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.
ISSUE: WON the National Housing Authority
has the jurisdiction to decide the case.
HELD: Yes. 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. In the exercise of its
function to regulate the real estate trade and
†¦ 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 statutory obligations’ filed by
buyers of subdivision lot or condominium unit
against the owner, developer, dealer, broker
or salesman. (Emphasis supplied.) 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. It is
obvious that the general law in this case is BP
No. 129(Jurisdiction of courts in Civil Cases)
and PD No. 1344 (Empowering the NHA) the
special law. 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
quasi-legislative and quasi-judicial powers in
what is now not unreasonably called the fourth
department of the government.
SECOND DIVISION
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).
In this petition,1 Christian General Assembly,
Inc. (CGA) prays that we set aside the
decision2 issued by the Court of Appeals (CA)
in CA–G.R. SP No. 75717 that dismissed its
complaint for rescission filed with the Regional
Trial Court (RTC) of Bulacan for lack of
jurisdiction, as well as the CA resolution3 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.
On April 30, 1998, CGA entered into a
Contract to Sell a subdivision lot4 (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 ₱2,373,000.00 for the subject
property on installment basis; they were to
pay a down payment of ₱1,186,500, with the
balance payable within three years on equal
monthly amortization payments of
₱46,593.85, 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 ₱2,706,600, with equal
monthly installments of ₱37,615.00, 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 Cutcut, Pulilan,
Bulacan5 had been placed under Presidential
Decree (PD) No. 27’s Operation Land
Transfer.6 According to CGA, Imperial applied
for the retention of five hectares of her land
under Republic Act No. 6657,7 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 Sison. On appeal,
the Office of the President8 and the
CA9 upheld the DAR Order. Through the
Court’s 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 a complaint
against the respondents before the RTC on
April 30, 2002.10 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, attorney’s fees and litigation
expenses.
Instead of filing an answer, the respondents
filed a motion to dismiss asserting that the
RTC had no jurisdiction over the case.11 Citing
PD No. 95712 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 HLURB’s
jurisdiction.
1avv phi1
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 petitioner’s 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
petitioner’s action by applying Antipolo
Realty Corp v. National Housing
Corporation13 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
CGA’s 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 CGA’s case involves the sale of a
subdivision lot, it falls under the HLURB’s
exclusive jurisdiction.
THE COURT’S RULING
We find no merit in the petition and
consequently affirm the CA decision.
Development of the HLURB’s 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 jurisdiction over
the subject matter or the nature of an
action.14Thus, the determination of whether
the CGA’s cause of action falls under the
jurisdiction of the HLURB necessitates a
closer examination of the laws defining the
HLURB’s 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 HLURB’s 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 HLURB’s 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 to make the subdivision a better
place to live in.15
We explained the HLURB’s exclusive
jurisdiction at length in Sps. Osea v.
Ambrosio,16 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 quasi-judicial 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.]
Another case – Antipolo Realty Corporation v.
NHA17 – explained the grant of the HLURB’s
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 RTC’s jurisdiction
The expansive grant of jurisdiction to the
HLURB does not mean, however, that all
cases involving subdivision lots automatically
fall under its jurisdiction. As we said in Roxas
v. Court of Appeals: 18
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 HLURB’s 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.]
Pursuant to Roxas, we held in Pilar
Development Corporation v. Villar19 and
Suntay v. Gocolay20 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
practices in the real estate trade and
business.21
Thus, in the cases of Fajardo Jr. v. Freedom
to Build, Inc.,[22] and Cadimas v.
Carrion,23 we upheld the RTC’s 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. Sycip,24 where
the HLURB took cognizance of the
developer’s 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 Judge, RTC, Branch 30,
Manila,25 the case falls under the jurisdiction
of the regular courts and not the HLURB.
Similarly, in Spouses Dela Cruz v. Court of
Appeals,26 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. Ignacio’s 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 Adriano’s Lot 2-F and
Ceferino Sison’s 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 of the HLURB’s exclusive jurisdiction and
amount of P2,515,899.20, thus formal outside the reach of the regular courts.
demand therefor was made on the Accordingly, CGA has to file its complaint
defendants thru a letter dated April 5, before the HLURB, the body with the proper
2002, which they received but refused jurisdiction.
to acknowledge receipt. Copy of said
letter is hereto attached and made WHEREFORE, premises considered, we
part hereof as Annex "J". 27 [Emphasis DENY the petition and AFFIRM the October
supplied.] 20, 2003 Decision of the Court of Appeals in
CA G.R. SP No. 75717 dismissing for lack of
From these allegations, the main thrust of the jurisdiction the CGA complaint filed with the
CGA complaint is clear – to compel the RTC, Branch 14 of Malolos, Bulacan.
respondents to refund the payments already
made for the subject property because the SO ORDERED.
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 CGA’s contention – that the CA erred

in applying Article 1191 of the Civil Code as
basis for the contract’s 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
CHRISTIAN GENERAL ASSEMBLY, INC., and damages due to the respondents’
Petitioner, vs. SPS. AVELINO C. IGNACIO fraudulent misrepresentation that they are the
and PRISCILLA T. IGNACIO, Respondents. rightful owners of the subject property, free
G.R. No. 164789 August 27, 2009 from all liens and encumbrances, is outside
the HLURB’s jurisdiction. The respondents
countered by filing a petition for certiorari with
the CA. CA set the RTC order aside and ruled
Facts: CGA entered into a Contract to Sell a
that the HLURB had exclusive jurisdiction over
subdivision lotwith the respondents – the
the subject matter of the complaint since it
registered owners and developers of a
involved a contract to sell a subdivision lot
housing subdivision known as Villa Priscilla
based on the provisions of PD No. 957 and
Subdivision located in Barangay Cutcut,
PD No. 1344. Contending that the CA
Pulilan, Bulacan. Under the Contract to Sell,
committed reversible error, the CGA now
CGA would for the subject property on
comes before the Court asking us to overturn
installment basis. Subsequently, the parties
the CA decision and resolution.
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 an increased total Issue: is it the regular courts or the HLURB
consideration CGA religiously paid the which has jurisdiction over CGA’s action for
monthly installments until its administrative rescission and damages?
pastor discovered that the title covering the
subject property suffered from fatal flaws and
defects. CGA learned that the subject property
Ruling: The action within the ambit of the
was actually a part of a property under
HLURB’s exclusive jurisdiction and outside
litigation making the contract to sell entered
the reach of the regular courts since the main
into a rescissible contract under Article 1381
thrust of the CGA complaint is clear – to
of the Civil Code. Aggrieved after discovering
compel the respondents to refund the
these circumstances, CGA filed a complaint
payments already made for the subject
against the respondents before the RTC
property because the respondents were
asking trial court to rescind contract and an
selling a property that they apparently did not
award of damages. Instead of filing an
own. In other words, CGA claims that since
answer, the respondents filed a motion to
the respondents cannot comply with their
dismiss asserting that the RTC had no
obligations under the contract, i.e., to deliver
jurisdiction over the case Citing PD No. 12
the property free from all liens and
957 and PD No. 1344, the respondents
encumbrances, CGA is entitled to rescind the
claimed that the case falls within the exclusive
contract and get a refund of the payments
jurisdiction of the HLURB since it involved the
already made. This cause of action clearly
sale of a subdivision lot. CGA opposed the
falls under the actions contemplated by
motion to dismiss, claiming that the action is
Paragraph (b), Section 1 of PD No. 1344,
for rescission of contract, not specific
which reads: SEC. 1. In the exercise of its
performance, and is not among the actions
functions to regulate the real estate trade and
within the exclusive jurisdiction of the HLURB,
business and in addition to its powers
as specified by PD No. 957 and PD No. 1344.
provided for in Presidential Decree No. 957,
The RTC issued an order denying the
the National Housing Authority shall have
respondents’ motion to dismiss. The RT C
exclusive jurisdiction to hear and decide cases
held that the action for rescission of contract
of the following nature: 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. Accordingly, CGA has to
file its complaint before the HLURB, the body
with the proper jurisdiction.
EN BANC
G.R. No. 106498 June 28, 1993
LOLITA DADUBO, petitioner,
vs.
CIVIL SERVICE COMMISSION and the
DEVELOPMENT BANK OF THE
PHILIPPINES, respondents.
Francisco P. Duran for petitioner.
CRUZ, J.:
Petitioner Lolita A. Dadubo, Senior Accounts
Analyst and Rosario B. Cidro, Cash
Supervisor, of the Development Bank of the
Philippines, Borongan Branch were
administratively charged with conduct
prejudicial to the best interest of the
service.1 The charges were based on reports
on the unposted withdrawal of P60,000.00
from Savings Account No. 87-692 in the name
of Eric Tiu, Edgar Tiu, and/or Pilar Tiu.
The formal investigations revealed that in the
morning of August 13, 1987, Erlinda Veloso,
authorized representative of the Tius,
presented an undated withdrawal slip for
P60,000.00.2 Dadubo, as acting teller,
prepared the corresponding ticket and
voucher in the name of the cash supervisor,
Rosario Cidro. Dadubo initialed the withdrawal
slip, ticket and voucher, all dated August 13,
1987, and passed on to Cidro all the
documents on the said transaction. These
were then forwarded to the accountant,
Reynaldo Dorado, who signed the voucher
ledger card of the Tius' savings account and
forwarded the documents to Apolinario
Babaylon, bookkeeper, who was also acting
as posting machine operator. After posting the
amount of P60,000.00 on the ledger card and
passbook, Babaylon initialed the withdrawal
slip and returned the documents to Dorado,
who approved the withdrawal and thereafter
disbursed the P60,000.00 to Veloso.
The Received payment portion of the
withdrawal slip was signed Veloso but Cidro,
who disbursed the amount, failed to initial the
passbook.
After banking hours, another withdrawal slip
was presented by Feliciano Bugtas, Jr., also
an employee of the Tius.3 This was the
second P60,000.00 withdrawal. Veloso did not
know about it. The withdrawal slip was
processed and approved on the same day,
August 13, 1987. The space Posted by was
initialed by Babaylon but no posting was
actually made because the passbook was not
presented. While the withdrawal slip was
dated August 13, 1987, all other supporting
documents were dated August 14, 1987, this
being a withdrawal after banking hours (ABH).
The following day, August 14, 1987, prior to
the payment of the ABH withdrawal, Veloso
presented another undated withdrawal slip for
P60,000.00.4 This was the third P60,000.00
withdrawal. The withdrawal slip was received
by Dorado, who handed it to Dadubo. At that
time, Cidro was encashing the check at PNB
to satisfy the ABH withdrawal. When she
returned from the bank, she paid this
withdrawal to Veloso, who thought that what
she was collecting was the P60,000.00
corresponding to the withdrawal slip she
presented that morning.
When Dadubo informed Cidro about the third
withdrawal, till money of P100,000.00 was
made to service it. Prior to the payment of the
third P60,000.00 withdrawal, Veloso came
back and presented another withdrawal slip
for P40,000.00.5 The petitioner claimed she
disbursed P100,000.00 to Veloso, covering
the third P60,000.00 and the P40,000.00
withdrawals. On the other hand, Veloso
testified that she received only P40,000.00
from the petitioner. She acknowledged receipt
of the amount by signing the withdrawal slip
and indicating opposite her signature the
amount of P40,000.00.
That left the balance of P60,000.00
unaccounted for and directly imputable to
Dadubo.
On the basis of these findings, DBP found
Dadubo guilty of dishonesty for embezzlement
of bank funds. She was penalized with
dismissal from the service.6 Cidro was
adjudged guilty of gross neglect of duty and
fined in an amount equivalent to one month
basic salary, payable through salary
deductions in not more than 12 installments.
Dadubo appealed to the Merit Systems
Protection Board (MSPB),7 which affirmed the
decision of the DBP, declaring as follows:
There is nothing in the records
to show that the Senior
Manager, Personnel Services
and Vice-Chairman, both of
the DBP, abused their
discretion in deciding the case
against the appellant or that
their decision was made and
attended with arbitrariness or
unfairness. To all intents and
purposes, the ensuing
decision was a necessary
consequence of the evidence.
However, DBP was reversed by the Civil
Service Commission in its Resolution No. 91-
642, dated May 21, 1991,8which reduced
Dadubo's penalty to suspension for six
months on the ground that:
Although Dadubo made
alterations on the dates in the
Ledger Card from August 13
to August 14, the fact remains
that the bank was defrauded
on account of said ABH
withdrawal (for) which Cidro is
held responsible and
accordingly found guilty of
Gross Neglect of Duty and
Inefficiency and Incompetence
in the Performance of Official
Duty. It was also Dadubo who
reported on the irreconcilable
P60,000.00. The most that
Dadubo could be charged with
is willful violation of office
regulation when she undertook
reconciliation for under the
Bank Manual the tellers are
not allowed access to the
savings account ledger cards.
Respondent DBP moved reconsideration. On
July 16, 1992, the Commission acting
favorably on the motion, promulgated
Resolution No.
92-8789 affirming the earlier findings of the
DBP as to Dadubo guilt, thus —
The records reveal that
Dadubo admitted in her
Answer that she changed
entry of the date August 13 to
14 in the ledger in the course
of her reconciliation which she
was advised not to do.
xxx xxx xxx
This act of admission needs
no further elaboration to prove
that Dadubo is guilty of the
charge. Such admission is
however treated as a
mitigating circumstance which
is offset by the aggravating
circumstance of taking
advantage of her official
position. There is no reason
for her to change or alter
entries in the ledger unless
she intends to benefit
therefrom or to conceal some
facts.
Further, it should be noted that
the report was made only on
September 28, 1987 (the date
the report on reconciliation
was submitted to the Regional
Office). It should be
 emphasized as earlier stated
that Dadubo was not
authorized to reconcile the
subsidiary ledger cards for the
period ending August 20,
1987. Hence, as emphatically
stated in the MSPB decision, ".
. . respondent Dadubo
manipulated the bank records
to conceal the offense which
constituted the act of
dishonesty."
The opinion of an acting
Internal Audit Officer, whose
report was among the
preliminary findings
considered in the investigation
of the case, is not conclusive
as there are other available
and convincing evidence to
prove the guilt of Dadubo.
Dadubo has brought her case to this Court in
this petition for certiorari. She claims that CSC
Resolution No. 92-878 failed to comply with
the constitutional requirement to state clearly
and distinctly the facts an the law on which the
decision is based; CSC Resolution No. 92-878
conflicts with the findings of fact in CSC
Resolution No. 91-642; the Commission
manifestly overlooked or disregarded certain
relevant facts not disputed by the parties; and
it based its conclusions entirely on
speculations, surmises or conjectures.
Required to comment, the Solicitor General
argued that CSC Resolution No. 92-878 did
not need to restate the legal and factual bases
of the original decision in CSC-MSPB No. 497
which already explained the relevant facts and
the applicable law. The petitioner had
admitted that she changed the entry of the
dates in the subsidiary ledger card from
August 13 to 14 in the course of her
reconciliation work although she was not
authorized to do this. This admission, along
with the other evidence Presented during the
investigation in the bank, proved Dadubo's
guilt. Moreover, the affidavit of Albert C.
Ballicud was inadmissible in evidence
because he was never subjected to cross-
examination.
The petitioner's challenges are mainly factual.
The rule is that the findings of fact of
administrative bodies, if based on substantial
evidence, are controlling on the reviewing
authority. 10 is settled that it is not for the
appellate court to substitute its own judgment
for that of the administrative agency on the
sufficiency of the evidence and the credibility
of the witnesses. 11 Administrative decisions
on matters within their jurisdiction are entitled
to respect and can only be set aside on proof
of grave abuse of discretion, fraud or error of
law. 12 None of these vices has been shown in
this case.
The petitioner's invocation of due process is
without merit. Her complaint that she was not
sufficiently informed of the charges against
her has no basis. While the rules governing
Judicial trials should be observed as much as
possible, their strict observance is not
indispensable in administrative cases. 13 As
this Court has held, "the standard of due
process that must be met in administrative
tribunals allows a certain latitude as long as
the element of fairness is not ignored." 14
The essence of due process is distilled in the
immortal cry of Themistocles to Eurybiades:
"Strike, but hear me first!" Less dramatically, it
simply connotes an opportunity to be heard.
The petitioner had several opportunities to be
heard and to present evidence that she was
not guilty of embezzlement but only of failure
to comply with the tellering procedure. Not
only did she testify at her formal investigation
but she also filed a motion for reconsideration
with the DBP, then appealed to the Merit
Systems Protection Board (MSPB), and later
elevated the case to the Civil Service
Commission. Having been given all these
opportunities to be heard, which she fully
availed of, she cannot now complain that she
was denied due process.
Appreciation of the evidence submitted by the
parties was, to repeat, the prerogative of the
administrative body, subject to reversal only
upon a clear showing of arbitrariness. The
rejection of the affidavit of Ballicud, for
example, was not improper because there
was nothing in that document showing that the
petitioner did not embezzle the P60,000.00.
It is true that the petitioner was formally
charged with conduct prejudicial to the best
interest of the bank and not specifically with
embezzlement. Nevertheless, the allegations
and the evidence presented sufficiently
proved her guilt of embezzlement of bank
funds, which in unquestionably prejudicial to
the best interest of the bank.
The charge against the respondent in an
administrative case need not be drafted with
the precision of an information in a criminal
prosecution. It is sufficient that he is apprised
of the substance of the charge against him;
what is controlling is the allegation of the acts
complained of, not the designation of the
offense. 15
We must also dismiss the petitioner's
complaint that CSC Resolution No. 92-878
failed to comply with the constitutional
requirement to state clearly and distinctly the
facts and the law on which a decision is
based. We have held that this provision
applies only to courts of justice and not to
administrative bodies like the Civil Service
Commission. 16 In any event, there was an
earlier statement of the facts and the law
involved in the decision rendered by the
MSPB dated February 28, 1990, which
affirmed DBP's decision to dismiss the
petitioner. In both decisions, the facts and the
law on which they were based were clearly
and distinctly stated.
It is worth adding that inasmuch as Civil
Service Resolution No. 92-878 was rendered
only to resolve DBP's motion for
reconsideration, it was not really necessary to
re-state the factual an, legal bases for the said
decisions. Even resolutions issued by this
Court do not need to conform, to the first
paragraph of Article VIII, Section 14, of the
Constitution, for reasoning extensively
discussed in Borromeo v. Court of
Appeals 17 and other subsequent cases. 18
We find no justification to nullify or modify the
questioned resolution. It would perhaps have
been more thorough if certain other officers of
the bank had been also investigated for their
part in the anomalous transaction. But that
matter is not before this Court and cannot be
resolved by us at this time.
WHEREFORE, the petition is DISMISSED for
lack of a clear showing of grave abuse of
discretion on the part of the Civil Service
Commission in issuing the questioned
resolutions. Costs against the petitioner.
SO ORDERED.
FACTS Petitioner Lolita Dadubo, Senior
Accts Analyst and Rosario Cidro, Cash
Supervisor of the DBP were administratively
charged with conduct prejudicial to the best
interest of the service. In the morning of
August 13, 1987 Erlinda Veloso authorized
representative of the Tius, presented an
undated withdrawal slip for 60K. This was
encashed. After banking hours, a
2nd withdrawal slip, also for 60 K, was
presented by a Feliciano Bugtas Jr. also an
employee of the Tius. Veloso did not know
about this. No posting of this amount was
actually made because the passbook was not
presented. While the withdrawal slip was
dated 8/13, all other supporting docs were
dated 8/14 this being a withdrawal after
banking hours. The ff day, prior to the
payment of the 2 nd withdrawal, Veloso
presented another undated withdrawal slip for
60 K, which was handed to Dadubo. Cidro
paid Veloso the amount corresponding to the
2 nd 60K, on the thought that it was such 2
nd withdrawal that Velosos was trying to
collect. It turned out that the 3 rd 60K, that
was handed to Dadubo was not paid by the
bank to Veloso. Dadubo and Cidro were then
found guilty by the DBP of dishonesty and
embezzlement of bank funds, due to the
unposted withdrawal of 60K. Dadubo was
dismissed from service. Thi s was because of
petitioner’s action in changing the entry date
in the ledger in the course of her reconciliation
which she was advised not to do. MSPB
affirmed CSC reversed and reduced Dadubo’s
penalty to merely 6 mo suspension. However,
upon MR of the D BP, the CSC reversed its
own decision and affirmed the earlier findings
of the DBP as to Dadubo’s guilt. However,
such resolution did not state clearly and
distinctly the facts and law on which it was
based.
ISSUE W/N the petitioner was deprived of
due process when she was not sufficiently
informed of the charges against her.
HELD NO . While the rules governing judicial
trials should be observed as much as possible
their strict observance is not indispensable in
administrative cases. The standard of due
process that must be met in admin tribunals
allows a certain latitude as long as the
element of fairness is not ignored. The
petitioner had several opportunities to be
heard and to present evidence that she was
not guilty of embezzlement but only of failure
to comply with the tellering
procedure. Chapter 5 (Rules of Procedure),
Chapter 6 and Chapter 7 | Admin Law Cases |
Dean Roy 2D 2012 4 Appreciation of the
evidence submitted by the parties was the
prerogative of the admin body, subject to
reversal only upon a clear showing of
arbitrariness. It is true that petitioner was
charged with conduct prejudicial to the best
interest of the bank and not specifically with
embezzlement. Nevertheless, the allegations
and the evidence presented sufficiently
proved her guilt of embezzlement. The
constitutional requirement to state clearly and
distinctly the facts and the law upon which the
decision is based applies only to courts of
justice and not to administrative bodies like
the CSC.
FIRST DIVISION
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 Road; ..." 1
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 by the Bureau of Forestry. 2 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. 3The 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 which had been made an
integral part of the appealed decision." 4
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
Resources was affirmed. 5 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 the Director of
Forestry. 6
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, signed by then Assistant Executive
Secretary Jose J. Leido, Jr. 7
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 correct boundary fine of the licensed areas
in question." 8
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
writ was issued the next day, or on October
29, 1968. 9
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 respondent prayer for the
issuance of a writ of preliminary injunction.10 A
supplemental motion was filed on December
6, 1968. 11
On December 19, 1968, the lower court
issued an order denying petitioner Lianga's
motion to dismiss and granting the writ of
preliminary injunction prayed for by
respondent Ago. 12 Lianga's Motion for
Reconsideration of the Order was denied on
May 9, 1969. 13 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 respondent court in Civil Case
No. 1253. 14
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
interests, 15 whose decision is in turn
appealable to the Office of the President. 16
In giving due course to the complaint below,
the respondent court would necessarily have
to assess and evaluate anew all the evidence
presented in the administrative
proceedings, 17 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 action may amount to an
excess or lack of jurisdiction. 18
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 over the
courts. 19
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 times even finality of such
findings are supported by substantial
evidence. 20 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
indispensable." 21
The facts and circumstances in the instant
case are similar to the earlier case of Pajo, et
al. v. Ago, et al. 22 (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 until
its promulgation. 23 Respondent should be
aware of this rule. In still another case of Ago
v. Court of Appeals,24 (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 well-grounded 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 non-release 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 official actions. 25 It is presumed that
an official of a department performs his official
duties regularly. 26 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 habeas corpus in their
respective places, 27 if the petition filed relates
to the acts or omissions of an inferior court, or
of a corporation, board, officer or person,
within their jurisdiction. 28
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
provinces or districts 29 except where the sole
issue is the legality of the decision of the
administrative officials. 30
In the leading case of Palanan Lumber
Plywood Co., Inc. v. Arranz 31 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 administrative officials
was legally correct or not. 32 We thus declared
inDirector of Forestry v. Ruiz. 33 "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.
1avv phi1
"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.
Lianga Bay Logging, Co.,
Inc. v. Enage,
G.R. No. L-30637, July 16, 1987
Facts: The parties are both forest
concessionaries whose licensed areas are
adjacent to each other. Since the concessions
of petitioner and respondent are adjacent to
each other, they have a common boundary.
Reports of encroachment by both parties on
each other’s concessions triggered a survey
to establish the common boundary of the
respective concession areas and was held
that the claim of Ago Timber Corporation runs
counter to the intentions of the Office granting
the Timber License Agreement to Lianga Bay
Logging. Ago Timber appealed to Department
of Agriculture and Natural Resources and set
aside the appealed decision of the Director of
Forestry and ruled in favor of Ago. Lianga Bay
Logging elevated the case to office of
President and ruling of Agriculture and Natural
Resources was affirmed. On Motion for
Recon, decision was reversed and reinstated
decision of Director of Forestry. A civil action
was instituted by Ago Timber to determine the
correct boundary line of license timber areas.
TRO was set in place. Lianga brought the
case to SC on certiorari.
grave abuse of discretion or when they have
acted in a capricious and whimsical manner
such that their action may amount to an
excess or lack of jurisdiction.

Issue: WON respondent court has jurisdiction

over the administrative case

Held: Respondent Judge erred in taking

cognizance of the complaint filed by
respondent Ago, asking for the determination
anew of the correct boundary line 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 modify the decision of the Director of
Forestry when advisable in the public
interests, whose decision is in turn appealable
to the Office of the President. 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. 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