Page 1 of 52

1.) 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.

From a submission agreement of the Luzon Development Bank (LDB) and the
Association of Luzon Development Bank Employees (ALDBE) arose an arbitration case
to resolve the following issue:

Whether or not the company has violated the Collective Bargaining

Agreement provision and the Memorandum of Agreement dated April
1994, on promotion.

At a conference, the parties agreed on the submission of their respective Position

Papers on December 1-15, 1994. Atty. Ester S. Garcia, in her capacity as Voluntary
Arbitrator, received ALDBE's Position Paper on January 18, 1995. LDB, on the other
hand, failed to submit its Position Paper despite a letter from the Voluntary Arbitrator
reminding them to do so. As of May 23, 1995 no Position Paper had been filed by LDB.

On May 24, 1995, without LDB's Position Paper, the Voluntary Arbitrator rendered a
decision disposing as follows:

WHEREFORE, finding is hereby made that the Bank has not adhered to
the Collective Bargaining Agreement provision nor the Memorandum of
Agreement on promotion.

Hence, this petition for certiorari and prohibition seeking to set aside the decision of the
Voluntary Arbitrator and to prohibit her from enforcing the same.

In labor law context, arbitration is the reference of a labor dispute to an impartial third
person for determination on the basis of evidence and arguments presented by such
parties who have bound themselves to accept the decision of the arbitrator as final and
binding.

Arbitration may be classified, on the basis of the obligation on which it is based, as

either compulsory or voluntary.

Compulsory arbitration is a system whereby the parties to a dispute are compelled by

the government to forego their right to strike and are compelled to accept the resolution
of their dispute through arbitration by a third party.1 The essence of arbitration remains
since a resolution of a dispute is arrived at by resort to a disinterested third party whose
decision is final and binding on the parties, but in compulsory arbitration, such a third
party is normally appointed by the government.
 Page 2 of 52

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.2 Ideally, arbitration awards are
supposed to be complied with by both parties without delay, such that once an award
has been rendered by an arbitrator, nothing is left to be done by both parties but to
comply with the same. After all, they are presumed to have freely chosen arbitration as
the mode of settlement for that particular dispute. Pursuant thereto, they have chosen a
mutually acceptable arbitrator who shall hear and decide their case. Above all, they
have mutually agreed to de bound by said arbitrator's decision.

In the Philippine context, the parties to a Collective Bargaining Agreement (CBA) are
required to include therein provisions for a machinery for the resolution of grievances
arising from the interpretation or implementation of 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;
 Page 3 of 52

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
 Page 4 of 52

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
Compensation Commission is also provided for in the Labor Code, Circular No. 1-91,
which is the forerunner of the present Revised Administrative Circular No. 1-95, laid
down the procedure for the appealability of its decisions to the Court of Appeals under
the foregoing rationalization, and this was later adopted by Republic Act No. 7902 in
amending Sec. 9 of B.P. 129.

A fortiori, the decision or award of the voluntary arbitrator or panel of arbitrators should
likewise be appealable to the Court of Appeals, in line with the procedure outlined in
Revised Administrative Circular No. 1-95, just like those of the quasi-judicial agencies,
boards and commissions enumerated therein.

This would be in furtherance of, and consistent with, the original purpose of Circular No.
1-91 to provide a uniform procedure for the appellate review of adjudications of all
quasi-judicial entities18 not expressly excepted from the coverage of Sec. 9 of B.P. 129
 Page 5 of 52

by either the Constitution or another statute. Nor will it run counter to the legislative
intendment that decisions of the NLRC be reviewable directly by the Supreme Court
since, precisely, the cases within the adjudicative competence of the voluntary arbitrator
are excluded from the jurisdiction of the NLRC or the labor arbiter.

In the same vein, it is worth mentioning that under Section 22 of Republic Act No. 876,
also known as the Arbitration Law, arbitration is deemed a special proceeding of which
the court specified in the contract or submission, or if none be specified, the Regional
Trial Court for the province or city in which one of the parties resides or is doing
business, or in which the arbitration is held, shall have jurisdiction. A party to the
controversy may, at any time within one (1) month after an award is made, apply to the
court having jurisdiction for an order confirming the award and the court must grant such
order unless the award is vacated, modified or corrected.19

In effect, this equates the award or decision of the voluntary arbitrator with that of the
regional trial court. Consequently, in a petition for certiorari from that award or decision,
the Court of Appeals must be deemed to have concurrent jurisdiction with the Supreme
Court. As a matter of policy, this Court shall henceforth remand to the Court of Appeals
petitions of this nature for proper disposition.

ACCORDINGLY, the Court resolved to REFER this case to the Court of Appeals.

SO ORDERED.
 Page 6 of 52

2.) 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

 Page 7 of 52

(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.
 Page 8 of 52

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:
 Page 9 of 52

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:
 Page 10 of 52

Sec. 4. Powers and Functions. — The Authority shall have the following
powers and functions:

xxx xxx xxx

(j) to initiate expropriation of land required for basic iron and steel
facilities for subsequent resale and/or lease to the companies involved if it
is shown that such use of the State's power is necessary to implement the
construction of capacity which is needed for the attainment of the
objectives of the Authority;

xxx xxx xxx

(Emphasis supplied)

It should also be noted that the enabling statute of ISA expressly authorized it to
enter into certain kinds of contracts "for and in behalf of the Government" in the
following terms:

xxx xxx xxx

(i) to negotiate, and when necessary, to enter into contracts for and in
behalf of the government, for the bulk purchase of materials, supplies or
services for any sectors in the industry, and to maintain inventories of
such materials in order to insure a continuous and adequate supply
thereof and thereby reduce operating costs of such sector;

xxx xxx xxx

(Emphasis supplied)

Clearly, ISA was vested with some of the powers or attributes normally associated with
juridical personality. There is, however, no provision in P.D. No. 272 recognizing ISA as
possessing general or comprehensive juridical personality separate and distinct from
that of the Government. The ISA in fact appears to the Court to be a non-incorporated
agency or instrumentality of the Republic of the Philippines, or more precisely of the
Government of the Republic of the Philippines. It is common knowledge that other
agencies or instrumentalities of the Government of the Republic are cast
in corporate form, that is to say, are incorporated agencies or instrumentalities,
sometimes with and at other times without capital stock, and accordingly vested with a
juridical personality distinct from the personality of the Republic. Among such
incorporated agencies or instrumentalities are: 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
 Page 11 of 52

"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
 Page 12 of 52

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
 Page 13 of 52

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.
 Page 14 of 52

While the power of eminent domain is, in principle, vested primarily in the legislative
department of the government, we believe and so hold that no new legislative act is
necessary should the Republic decide, upon being substituted for ISA, in fact to
continue to prosecute the expropriation proceedings. For the legislative authority, a long
time ago, enacted a continuing or standing delegation of authority to the President of
the Philippines to exercise, or cause the exercise of, the power of eminent domain on
behalf of the Government of the Republic of the Philippines. The 1917 Revised
Administrative Code, which was in effect at the time of the commencement of the
present expropriation proceedings before the Iligan Regional Trial Court, provided that:

Sec. 64. Particular powers and duties of the President of the Philippines.
— In addition to his general supervisory authority, the President of the
Philippines shall have such other specific powers and duties as are
expressly conferred or imposed on him by law, and also, in particular, the
powers and duties set forth in this Chapter.

Among such special powers and duties shall be:

xxx xxx xxx

(h) To determine when it is necessary or advantageous to exercise the

right of eminent domain in behalf of the Government of the
Philippines; and to direct the Secretary of Justice, where such act is
deemed advisable, to cause the condemnation proceedings to be begun
in the court having proper jurisdiction. (Emphasis supplied)

The Revised Administrative Code of 1987 currently in force has substantially

reproduced the foregoing provision in the following terms:

Sec. 12. Power of eminent domain. — The President shall determine

when it is necessary or advantageous to exercise the power of eminent
domain in behalf of the National Government, and direct the Solicitor
General, whenever he deems the action advisable, to institute
expopriation proceedings in the proper court. (Emphasis supplied)

In the present case, the President, exercising the power duly delegated under
both the 1917 and 1987 Revised Administrative Codes in effect made a
determination that it was necessary and advantageous to exercise the power of
eminent domain in behalf of the Government of the Republic and 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
 Page 15 of 52

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.

Romero, Melo, Vitug and Panganiban, JJ., concur.

 Page 16 of 52

3.) [G.R. No. 149179. July 15, 2005]

PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, INC., petitioner, 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 decision[1] of 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 taxes on 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

 Page 17 of 52

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 P2,770,696.37.
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
 Page 18 of 52

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 Mayors Permit but the City of Bacolod withheld issuance thereof pending
PLDTs payment of its franchise tax liability in the following amounts: (1) P358,258.30 for
the fourth quarter of 1998; and (b) P1,424,578.10 for the year 1999, all in the aggregate
amount of P1,782,836.40, excluding surcharges and interest, about which PLDT was
duly informed by the City Treasurer via a 5th Indorsement dated March 16, 1999 for
PLDTs appropriate action.[4]
In time, PLDT filed a protest[5] 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
petition[7] 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 Mayors Permit for the year 1999; and requiring it to
 Page 19 of 52

refund the amount of P2,770,606.37, 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 PLDTs 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

PETITIONERS 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,
 Page 20 of 52

operates to exempt petitioner PLDT from the payment of franchise tax imposed by the
respondent City of Bacolod.
Contrary to petitioners 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 P3,681,985.72 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.
 Page 21 of 52

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.
 Page 22 of 52

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 petitioners contention. In fact, this Court in City of
Davao, even adverted to PLDTs 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 PLDTs contention, this Court ruled in City of Davao as follows:

The acceptance of petitioners 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.
Petitioners 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. Petitioners 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 PLDTs motion for reconsideration in Davao, the Court added in its en

banc Resolution of March 25, 2003,[12] that 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:
 Page 23 of 52

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 PLDTs 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
 Page 24 of 52

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 of PLDT 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.
 Page 25 of 52

4.) 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:
 Page 26 of 52

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 haveexclusive
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;
 Page 27 of 52

(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
 Page 28 of 52

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,
 Page 29 of 52

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.
 Page 30 of 52

5.) 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)
 Page 31 of 52

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 President 8 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.1avvphi1

The respondents countered by filing a petition for certiorari with the CA. In its October
20, 2003 decision, the CA found merit in the respondents’ position and set the RTC
order aside; the CA ruled that the HLURB had exclusive jurisdiction over the subject
matter of the complaint since it involved a contract to sell a subdivision lot based on the
provisions of PD No. 957 and PD No. 1344.

Contending that the CA committed reversible error, the CGA now comes before the
Court asking us to overturn the CA decision and resolution.

THE PETITION

In its petition, CGA argues that the CA erred -

 Page 32 of 52

(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.14 Thus, 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;
 Page 33 of 52

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:
 Page 34 of 52

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;
 Page 35 of 52

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’.
 Page 36 of 52

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
 Page 37 of 52

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,
 Page 38 of 52

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 amount of P2,515,899.20, thus formal demand therefor was
made on the defendants thru a letter dated April 5, 2002, which they received but
refused to acknowledge receipt. Copy of said letter is hereto attached and made
part hereof as Annex "J". 27[Emphasis supplied.]

From these allegations, the main thrust of the CGA complaint is clear – to compel the
respondents to refund the payments already made for the subject property because the
respondents were selling a property that they apparently did not own. In other words,
CGA claims that since the respondents cannot comply with their obligations under the
 Page 39 of 52

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 of the HLURB’s exclusive jurisdiction and outside the reach of the regular
courts. Accordingly, CGA has to file its complaint before the HLURB, the body with the
proper jurisdiction.

WHEREFORE, premises considered, we DENY the petition and AFFIRM the October
20, 2003 Decision of the Court of Appeals in CA G.R. SP No. 75717 dismissing for lack
of jurisdiction the CGA complaint filed with the RTC, Branch 14 of Malolos, Bulacan.

SO ORDERED.
 Page 40 of 52

6.) 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.3This 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.
 Page 41 of 52

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.
 Page 42 of 52

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
 Page 43 of 52

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.
 Page 44 of 52

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.
 Page 45 of 52

7.) 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
 Page 46 of 52

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
 Page 47 of 52

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
 Page 48 of 52

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
 Page 49 of 52

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
 Page 50 of 52

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
 Page 51 of 52

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
 Page 52 of 52

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 in Director 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.1avvphi1

"To recapitulate, insofar as injunctive or prohibitory writs are concerned, the rule still
stands that courts of first instance have the power to issue writs limited to and operative
only within their respective provinces or districts. "

The writ of preliminary injunction issued by respondent court is furthermore void, since it
appears that the forest area described in the injunctive writ includes areas not licensed
to respondent Ago. The forest area referred to and described therein comprises the
whole area originally licensed to Narciso Lansang under the earlier Ordinary Timber
License No. 58452. Only a portion of this area was in fact transferred to respondent Ago
as described in its Ordinary Timber License No. 1323-'60[New].

It is abundantly clear that respondent court has no jurisdiction over the subject matter of
Civil Case No. 1253 of the Court of First Instance of Agusan nor has it jurisdiction to
decide on the common boundary of the licensed areas of petitioner Lianga and
respondent Ago, as determined by respondents public officials against whom no case of
grave abuse of discretion has been made. Absent a cause of action and jurisdiction,
respondent Judge acted with grave abuse of discretion and excess, if not lack, of
jurisdiction in refusing to dismiss the case under review and in issuing the writ of
preliminary injunction enjoining the enforcement of the final decision dated August 9,
1968 and the order affirming the same dated October 2, 1968 of the Office of the
President.

ACCORDINGLY, the petition for certiorari and prohibition is granted. The restraining
order heretofore issued by the Court against enforcement of the preliminary injunction
and related orders issued by respondent judge is the case below is made permanent
and the respondent judge or whoever has taken his place is hereby ordered to dismiss
Civil Case No. 1253.

SO ORDERED.

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