Titling of public lands

For purposes of legal research of foreign readers visiting this blog, on the subject of the legal system
involving the titling of public lands in the Philippines, may I share some basic readings thereon as
published in the website of the Department of Environment and Natural Resources
(www.lmb.denr.gov.ph). I have also added a relevant 1999 Supreme Court decision on the same
subject matter.

Frequently Asked Questions

How can one acquire TITLE? 

For original registration, when no title has yet been issued over a parcel
of land, it can be acquired either by:

1. Judicial proceedings - by filing petition for registration in Court.

2. Administrative proceedings - filing an appropriate application for

patent (e.g. homestead) in the Administrative body (DENR) and
registration of this patent becomes the basis for issuance of the
Original Certificate of Title by the Register of Deeds.

What are the main classification of lands as to ownership?

1. Private properties - those which are titled.

2. Public lands - those which have not been titled as

well as those public dominion or outside the commerce
of man such as road, public plaza and rivers.

What are Public Lands?

All Lands that are not acquired by private person or corporation, either by grant or purchase are
public lands. The common understanding therefore, is that all lands which have no title or not
registered to private individual are public land. These are
grouped into:

1. Alienable or disposable (A & D Lands) - those that can be acquired or issued title. Our constitution
provides that only agricultural lands can be disposed of to private citizens.

2. Non-alienable lands - includes timber or forest lands, mineral lands, national parks. No title can be
issued over any portion within this area.

What are the modes of disposition or how can one acquire title over A&D lands? The modes are:

1. by Homestead Patent

2. by Sales Patent
3. by Lease

4. By Free Patent or Administrative legalization

What are the evidence or proof of ownership over a parcel of land?

The best evidence of ownership is the certificate of title duly issued by the Register of Deeds
concerned. However, in the absence of a title, tax
declaration coupled by actual possession and existence of improvement also substantiate claim for
ownership.

What is a TITLE?

A title refers to the legal right to own a property and the certificate of title is the document which
confers such right of ownership to an individual, association or corporation.

How can one acquire TITLE?

For original registration, when no title has yet been issued over a parcel of land, it can be acquired
either by:

1. Judicial proceedings - by filing petition for registration in Court.

2. Administrative proceedings - filing an appropriate application for patent (e.g. homestead) in the
Administrative body (DENR) and registration of this patent becomes the basis for issuance of the
Original Certificate of Title by the Register of Deeds.

In subsequent registration of Title, what are necessary to effect the same?

Transfer of title is effected by executing a document such as deed of sale wherein the registered
owner (seller) transfer the ownership to a buyer. The capital gains tax and other taxes must be paid
before clearance can be secured from the BIR. This will be submitted to the Register of Deeds
concerned, together with the title which will be surrendered for issuance of a new title in the name
of the buyer.

Subsequent registration of title is a function and jurisdiction of the Register of Deeds under the LRA
as the land involved is already a private property outside the jurisdiction of the DENR.

In case the registered owner dies, how can ownership be transferred to the heirs?

When a registered owner died without leaving a last will and testament, the heirs can transfer the
title to themselves by executing an extra-judicial settlement of the estate, on condition that the heirs
are in agreement of how to
dispose the properties. If there is conflict and heirs can not agree, they should
bring a case before the court which will make a decision for them.

Is possession the same as ownership? Who are informal settlers??

No. Possession means actual and exclusive control of property by physical occupation and this could
be in good faith or in bad faith. On the other hand, ownership implies the legal right of possession,
control and enjoyment by the owner who has established evidence that he owns the property.

Informal settlers are those in possession of land without the benefit of a title and without consent of
the owner. Their possession is not permanent and has no legal basis for occupation. The possessor
must strive to acquire title to the land before his possession can become permanent.

In cases where there are conflicting claims, who shall have a better right?

In cases where both claimants have no title, there are many factors to consider
like actual possession. The one who occupies the land especially in good faith has
better right as against someone with doubtful documents or has recently acquired
rights without knowledge of the one in possession. However, all factors must be
fully evaluated to determine preferential rights.

Foreshore

Q. What are the accepted definitions for Foreshore areas?

A string of land margining a body of water, the part of a seashore between the low-water line usually
at the seaward margin of a low tide terrace and the upper limit wave wash at high tide usually
marked by a beach scarp or berm. (1998 Fisheries Code of the Philippines)

Foreshore land is a part of the shore, which is alternately covered and uncovered by the ebb and
flow of the tide. (DAO 99-34, series 1999)

That part of the land adjacent to the sea, which is alternately covered and left dry by the ordinary
flow of the tides. (The Law on Public Land Conflicts in the Philippines by Alfonso S. Borja)

That part of the shore, which is between high and low watermarks and alternately covered with
water and left by the flux and reflux of the tides. It is indicated by the middle line between the
highest and lowest tide. (Bouvier's Law dictionary, page 825)

Foreshore Lease Application 

Q: What is a Foreshore Lease Application (FLA)?

A type of application covering foreshore lands, marshy lands and other lands bordering bodies of
water for commercial, industrial or other productive purposes other than agriculture.

Q: Are mangrove areas/timberland covered by this type of application?

No, all mangrove areas are excluded from the coverage of this application.

Q: What is the maximum allowable area that may be leased?

Under DENR Administrative Order (DAO) No. 34, series of 1999, any person, corporation, association
or partnership may lease not more than 144 hectares.
Q: Who are eligible to apply for an FLA?

Any Filipino citizen of lawful age can apply for this application. Furthermore, corporations,
associations or partnerships with at least 60% of the capital being owned by Filipino citizens are
eligible to apply for an FLA.

Q: Where should one file a Foreshore Lease Application (FLA)?

The FLA or renewal shall be filed with the Community Environment and Natural Resources Office
(CENRO), which has jurisdiction over the area.

Q: How much does an application fee cost?

An application fee cost Php100.00 plus documentary stamp, which is non-refundable. This is
necessary for both new application and renewal.

Q: Who has the authority to collect user’s fee due on foreshore leases?

The DENR Field Office (PENRO/CENRO) may be authorized to collect user’s fee due on leases of
foreshore lands and whatever fees accruing in the usage of such areas.

Q: For how long can one lease the foreshore area (FLA term)?

The term of the Foreshore lease Contract shall be for a period of twenty-five (25) years and
renewable for another 25 years, at the option of the lessor (DENR).

Q: When should one apply for a renewal of the FLA?

Application for renewal shall be filed sixty (60) days prior to its expiration.

Q: What are the preparatory requirements for the Foreshore Lease Application?

The application shall contain particulars of the following:

1. Nature of the proposed utilization/feasibility study;

2. Nature of development or activity;

3. Location and size of the area;

4. Sketch of the area; boundaries and description of said area;

5. Other information that the DENR may require.

An application shall only be accepted if properly subscribed and sworn to by the applicant, or in the
case of juridical person, by its president, general manager or duly authorized agent, and
accompanied by the following documents.

1. If the applicant is a government employee, a written permission from the department head or
head of the agency concerned

2., If the applicant is a naturalized Filipino citizen, a copy of the following is necessary:
3. Certificate of naturalization;

4. Certification by the Office of the Solicitor General that it has not filed or taken any action for his
denaturalization, or any action that may effect his citizenship.

5. If the applicant is a corporation, association or cooperative, 3 copies of the following must be

submitted:

6. Articles of incorporation;

7. By-Laws;

8. Minutes of the latest organizational meeting of its stockholders/general assembly, electing the
present members of the Board of Directors certified by its Secretary;

9. Minutes of the latest organizational meeting of the Board of Directors, electing the present
officers of the corporation, association, or cooperative, certified by its Secretary;

10. Minutes of the latest organizational meeting of the Board of Directors indicating the authority of
the officer to file the application in behalf of the corporation.

If the applicant uses a name, style or trade name, 3 copies of the following must be submitted:

1. Certificate of registration of such name, style, or trade name with the Department of Trade and
Industry (DTI) certified by the officer of the said Department;

2. Income tax return for the preceding years, if the applicant was already in existence at the time
and required to file said return.

3. Boundaries and description of said area.

4. Other information that the DENR may require.

FREE PATENT

A free patent is a mode of acquiring a parcel of alienable and disposable public land which is suitable
for agricultural purposes, thru the administrative confirmation of imperfect and incomplete title.
Agricultural public lands classified as alienable and disposable are subject for disposition under Free
Patent.

The applicant for a free patent must comply with the following qualifications:

1. He must be a natural born citizen of the Philippines.

2. He must not be the owner of more than twelve (12) hectares of land.

3. The land must have been occupied and cultivated for at least thirty (30) years prior to April 16,
1990 by the applicant or his predecessors-in-interest and shall have paid the real estate tax thereon.

4. A minor can apply for a free patent, provided he is duly represented by his natural parents or legal
guardian and has been occupying and cultivating the area applied for either by himself or his
predecessor-in-interest
The following are the steps leading to the approval and issuance of a free patent:

1. Filing of application;

2. Investigation;

3. Posting of notice for two (2) consecutive weeks in the provincial capitol or municipal building and
barangay hall concerned;

4. Order of approval of application and issuance of patent;

5. Preparation of Patent in Judicial Form 54 and 54-D and the technical description duly transcribed
at the back thereof;

6. Transmittal of the Free Patent to the Register of Deeds concerned for the issuance of the
corresponding Original Certificate of Title.

The following officials of the Department of Environment and Natural Resources (DENR) are
authorized to approve applications for homestead and free patents:

1. Up to 5 hectares – Provincial Environment and Natural Resources Officer (PENRO)

2. More than 5 Ha. to 10 Ha. – Regional Executive Director of the DENR.

(See: http://lmb.denr.gov.ph/free.html).

HOMESTEAD PATENT

Homestead Patent is a mode of acquiring alienable and disposable lands of the public domain for
agricultural purposes conditioned upon actual cultivation and residence.

Where should Homestead Application be filed?

A Homestead application like any other public land applications should be filed at the DENR-
Community Environment and Natural Resources Office where the land being applied for is located.

Who are qualified to apply

Citizens of the Philippines.

Over 18 years old or head of the family.

Not the owner of more than 12 hectares of land pursuant to the 1987 constitution

Can a married woman make a Homestead entry?

A married woman can now apply for a patent application under DAO-2002-13 dated June 24, 2002
issued by the then Secretary of the Department of Environment and Natural Resources Heherzon T.
Alvarez. This is in accordance with Article II, Section 14 of the Constitution and Republic Act No. 7192
otherwise known as the "Women in Development and Nation Building Act" as implemented by DAO
No. 98-15 of May 27, 1998 on "Revised Guidelines on the Implementation of Gender and
Development (GAD) Activities in the DENR". This Administrative Order gives women, equal right as
men in filing, acceptance, processing and approval of public land applications.

Legal Requirements

Application fee of P50.00;

Entry fee of P5.00;

Final fee of P5.00;

Approved plan and technical description of the land applied for; 

Actual occupation and residence by the applicant; 

Steps leading to the issuance of a Homestead patent

Filing of application;

Preliminary Investigation;

Approval of application;

Filing of final proof which consists of two (2) parts; 

Notice of intention to make Final Proof which is posted for 30 days. 

Testimony of the homesteader corroborated by two (2) witnesses mentioned in the notice. The Final
Proof is filed not earlier than 1 year after the approval of the application but within 5 years from the
said date. 

Confirmatory Final Investigation; 

Order of Issuance of Patent; 

Preparation of patent using Judicial Form No. 67 and 67-D and the technical description duly
inscribed at the back thereof; 

Transmittal of the Homestead patent to the Register of Deeds concerned. 

Signing and Approving Authority For Homestead and Free Patents:

Up to 5 hectares (has.) - PENRO

More than 5 Has. to 10 Has. - RED

More than 10 Has. - DENR Secretary

MISCELLANEOUS SALES PATENT

REPUBLIC ACT NO. 730 is an act permitting sale without public auction of alienable and disposable
lands of the public domain for residential purpose.
The application to purchase the land is called the Miscellaneous Sales Application and the
corresponding patent is called the Miscellaneous Sales Patent.

Who are Qualified to Apply?

A Filipino citizen of lawful age, married; if single, applicant must be the head or bread winner of the
family;

He is not the owner of a home lot in the municipality/city where the land applied for is located;

He must have occupied in good faith the land applied for and constructed a house thereon where
he/she and family is actually residing. 

Requirements in the filing of a Miscellaneous Sales Application under R. A. No. 730

Application Filing fee of P50.00;

Approved plan and technical description of the land applied for; 

Affidavit of the applicant stating that:

He is not the owner of any other home lot in the municipality/city where he resides. 

He is requesting that the land be sold to him under the provision of R. A. No. 730.

If the applicant is single, he must submit an affidavit stating that he is the head or bread winner of
the family; 

The land is not needed for public use. 

Maximum area that may be granted to an applicant

The applicant can only be granted a maximum area of 1,000 square meters.

Presidential Decree No. 2004 dated December 30, 1985 amended Section 2 of Republic Act 730 thus,
lands acquired under this Act before and after the issuance of patent thereon are no longer subject
to any restriction.

Steps in Acquiring a Miscellaneous Sales Patent

Filing of application at the CENRO;

investigation and appraisal of the land applied for;

Survey of the land if not yet surveyed;

Investigation report whether the applicant possesses the qualification for direct sales;

Comment and recommendation of the District/City engineer with the concurrence of the Regional
Director, Department of Public works and Highways;
Recommendation to the PENRO for approval of appraisal and request for authority to sell without
public auction;

Approval of appraisal and grant of authority to sell by the PENRO; 

Posting of notice of sale without public auction for thirty (30) consecutive days in the following
places:

CENRO Bulletin board 

Municipal building bulletin board 

Barangay Hall bulletin board 

On the land itself 

Submission of the proofs of posting and payment of at least 10% of the appraised value of the land; 

Order of Award; 

Proof of full payment of the purchase price of the land; 

Order issuance of Miscellaneous Sales Patent in Judicial Form No. 167 with the technical description
duly inscribed at the back thereof; 

Approval and signature of the Miscellaneous Sales Patent by the official concerned; 

Transmittal of the Miscellaneous Sales Patent to the Register of Deeds concerned for the issuance of
the corresponding Original Certificate of the Title to the applicant. 

Supreme Court Decision

Excerpts from:

HEIRS OF MARIANO, JUAN, TARCELA and JOSEFA, all surnamed BRUSAS, petitioners, vs. COURT OF
APPEALS and HEIRS OF SPOUSES INES BRUSAS and CLETO REBOSA, respondents. [G.R. No. 126875.
August 26, 1999]

X x x.

The pivotal issues to be resolved are: first, who are the rightful owners of the disputed property - is it
the heirs of Mariano, Juan, Josefa and Tarcela Brusas, whose claim of ownership is evidenced by a
survey and subdivision plan; or, is it the heirs of spouses Ines Brusas and Cleto Rebosa, whose claim
of ownership flows from an original certificate of title in the name of their parents, and covering the
litigated property? And second, was there fraud on the part of Ines Brusas in causing the registration
of the disputed land under her name thus entitling petitioners to the reconveyance of their shares
therein?

It is a fundamental principle in land registration that the certificate of title serves as evidence of an
indefeasible and incontrovertible title to the property in favor of the person whose name appears
therein. A title once registered under the Torrens System cannot be defeated even by adverse, open
and notorious possession; neither can it be defeated by prescription. It is notice to the whole world
and as such all persons are bound by it and no one can plead ignorance of the registration.

The real purpose of the Torrens System of land registration is to quiet title to land and stop forever
any question as to its legality. Once a title is registered the owner may rest secure without the
necessity of waiting in the portals of the court, or sitting on the mirador de su casa, to avoid the
possibility of losing his land. Indeed, titles over lands under the Torrens system should be given
stability for on it greatly depends the stability of the country's economy.Interest reipublicae ut sit
finis litium.

This does not mean, however, that the landowner whose property has been wrongfully or
erroneously registered in another’s name is without remedy in law. When a person obtains a
certificate of title to a land belonging to another and he has full knowledge of the rights of the true
owner, he is considered guilty of fraud. He may then be compelled to transfer the land to the
defrauded owner so long as the property has not passed to the hands of an innocent purchaser for
value.

In the instant case, the litigated property is still registered in the name of Ines Brusas, so that insofar
as procedure is concerned, petitioners were correct in availing of the remedy of reconveyance.
However, an action for reconveyance presupposes the existence of a defrauded party who is the
lawful owner of the disputed property. It is thus essential for petitioners to prove by clear and
convincing evidence their title to the property, and the fact of fraud committed by Ines Brusas in
registering their property in her name, which they miserably failed to do so.

Primarily, the survey and subdivision plan submitted in evidence by petitioners are inferior proofs of
ownership and cannot prevail against the original certificate of title in the name of Ines Brusas who
remains and is recognized as the registered owner of the disputed property.

The survey of the land in the name of the five (5) children of Sixto Brusas is only an indication that
each has an interest over the property, but it does not define the nature and extent of those
interests, nor the particular portions of the property to which those interests appertain. The
subdivision plan, on the other hand, is of doubtful evidentiary value and can hardly be the basis of a
claim of ownership. A careful examination thereof shows that it is nothing but a sketch of the land
purportedly prepared by a private land surveyor. It is not apparent therein when and where the
partition was made, or who caused the property to be subdivided. Worse, this document was not
even signed by any of the parties to the supposed partition to show their conformity thereto, nor
acknowledged in writing by any of them or their heirs.

Even petitioners’ tax declarations and tax receipts are unavailing. It is well-settled that they are not
conclusive evidence of ownership or of the right to possess land, in the absence of any other strong
evidence to support them.The fact that the disputed property may have been declared for taxation
purposes in the names of the brothers and sisters of Ines Brusas does not necessarily prove their
ownership thereof. The tax receipts and tax declarations are merely indicia of a claim of ownership.

What perhaps militates heavily against petitioners is the Affidavit (of waiver) marked Exh. "4"
executed sometime in 1960 by Mariano, Tarcela, Juan and Josefa, whereby they relinquished, ceded
and transferred to Ines Brusas their rights and interests over the controversial property, and
recognized her as the absolute owner thereof, thus – 

WE, MARIANO BRUSAS, JUAN BRUSAS, TARCELA BRUSAS and JOSEFA BRUSAS, all of legal age,
married except the last who is a widow, residence (sic) and with postal address at Baao, Camarines
Sur, after having been duly sworn to according to law, state the following, to wit –

That we are the brothers and sisters of Ines Brusas, applicant of Free Patent Application No. 10-4375
covering Lots 1 and 2, Psu-116520, situated in Baao, Camarines Sur;

That by virtue of this instrument, we relinquish, cede and transfer whatever rights and interests we
might have over Lots 1 and 2, Psu-116520 in favor of our sister, Ines Brusas;

That we do not have any opposition to Ines Brusas acquiring title to said Lots 1 and 2, Psu-116520 by
virtue of her Free Patent Application No. 10-4375;

That we recognize our sister, Ines Brusas as the legal and absolute owner of Lots 1 and 2, Psu-
116520 as covered by her Free Patent Application No. 10-4375;

WHEREFORE, we sign this instrument of our own will and voluntary act and after the same has been
translated in our own native dialect and understood fully its contents, this April 20, 1960
at Naga City.

(SGD) MARIANO BRUSAS (SGD) JUAN BRUSAS

(SGD) TARCELA BRUSAS (SGD) JOSEFA BRUSAS

On the basis of the foregoing reasons alone the instant case should immediately be dismissed.
Having failed to show any valid title to the land involved petitioners are not the proper parties who
can rightfully claim to have been fraudulently deprived thereof. Nonetheless, for the satisfaction of
all and sundry, we shall proceed to refute their accusation of fraud. 

First, Ines Brusas allegedly misrepresented in her application for free patent that she was the only
claimant of the disputed property, without disclosing that her other brothers and sisters were
claiming portions that supposedly belonged to them. It is worthy to emphasize, to the point of being
repetitious, that Juan, Tarcela, Mariano and Josefa executed an affidavit of waiverrecognizing Ines
Brusas as the legal and absolute owner of Lots 1 and 2, and manifesting that they have no opposition
to Ines Brusas’ acquiring certificates of title over those lots. It was on the basis of this affidavit of
waiver that Ines stated in her application for free patent that she was the sole claimant of Lots 1 and
2. Certainly this is not fraud. At any rate, it appears from the records that Juan, Tarcela, Mariano and
Josefa were notified of the application for free patent of Ines Brusas and duly afforded the
opportunity to object to the registration and to substantiate their claims, which they failed to do.
Hence their opposition was accordingly disregarded and Ines Brusas’ application was given due
course. Petitioners cannot thus feign ignorance of the registration. Moreover, it is significant that
petitioners never contested the order of the Bureau of Lands disregarding their claims, i.e., by filing a
motion for reconsideration, or an appeal, for that purpose. This could only mean that they either
agreed with the order or decided to abandon their claims.
Petitioners next assailed the genuineness of Exh. "4" asserting that the signatures therein were
forged. However, no evidence was adduced by them to substantiate their allegation. It appears that
they submitted for examination by the NBI eighteen (18) specimen signatures of Juan, Tarcela,
Mariano and Josefa. Unfortunately, no standard signature could be found for the year 1960 when
Exh. "4" was executed. Petitioners admitted that they were unable to produce what was required by
the NBI, hence, they “just had to give up.”

Furthermore, there was another Affidavit (Exh. "11") signed in the same year by the Brusases, Ines
included, recognizing Mariano Brusas as the sole claimant of Lots 3 and 4 and waiving their interests
therein in his favor. This fact all the more confirms that the affidavit of waiver in favor of Ines Brusas
was authentic. As correctly observed by the appellate court – 

It is significant to note that aside from the supposedly falsified affidavit, Exhibit 4, another affidavit,
was executed by Ines, together with Tarcela, Juan and Josefa, all surnamed Brusas, renouncing their
rights to Lots 3 and 4 in favor of Mariano Brusas (Exhibit 11). Both appear to have been notarized by
the same Notary Public on April 22, 1960. The existence of the two affidavits, Exhibits 4 and 11,
strongly suggests that the Brusas[es] recognized Ines Brusas as the sole claimant of Lots 1 and 2 and
Mariano Brusas, the sole claimant of Lots 3 and 4.

It is not for private respondents to deny forgery. The burden of proof that the affidavit of waiver  is
indeed spurious rests on petitioners. Yet, significantly, even as they insist on forgery they never
really took serious efforts in establishing such allegation by preponderant evidence. It must be
stressed that mere allegations of fraud are not enough. Intentional acts to deceive and deprive
another of his right, or in some manner injure him, must be specifically alleged and proved.

The affidavit of waiver in favor of Ines, being a public document duly acknowledged before a notary
public, under his hand and seal, with his certificate thereto attached, is prima facie evidence of the
facts stated therein. Petitioners cannot impugn its validity by mere self-serving allegations. There
must be evidence of the clearest and most satisfactory character. Correlatively, in granting the
application of Ines Brusas for free patent, the Bureau of Lands enjoyed the presumption of regularity
in the performance of its official duties. This presumption has not been rebutted by petitioners as
there was likewise no evidence of any anomaly or irregularity in the proceedings which led to the
registration of the land.

Finally, as we are not trier of facts, we generally rely upon and are bound by the conclusions of the
lower courts, which are better equipped and have better opportunity to assess the evidence first-
hand, including the testimony of witnesses. We have consistently adhered to the rule that findings of
the Court of Appeals are final and conclusive, and cannot ordinarily be reviewed by this Court as long
as they are based on substantial evidence. Among the exceptions to this rule are: (a) when the
conclusion is grounded entirely on speculations, surmises or conjectures; (b) when the inference
made is manifestly mistaken, absurd or impossible; (c) where there is grave abuse of discretion; (d)
when the judgment is based on a misapprehension of facts; (e) when the findings of facts are
conflicting; and, (f) when the Court of Appeals, in making its findings, goes beyond the issues of the
case and the same is contrary to the admissions of both the appellant and appellee. We emphasize
that none of these exceptions is present in this case.
WHEREFORE, the petition is DENIED. The 16 July 1996 Decision of the Court of Appeals ordering
petitioners to vacate the disputed property and restore respondents in possession thereof, as well as
its 30 September 1996 Resolution denying reconsideration, is AFFIRMED. Costs against petitioners.

SO ORDERED.

SUPREME COURT
Manila

THIRD DIVISION

G.R. NO. 144322             February 6, 2007

METROPOLITAN BANK and TRUST COMPANY, INC., Petitioner, 

vs.
NATIONAL WAGES AND PRODUCTIVITY COMMISSION and REGIONAL TRIPARTITE
WAGES AND PRODUCTIVITY BOARD - REGION II, Respondents.

DECISION

AUSTRIA-MARTINEZ, J.:

Before the Court is a Petition for Review on Certiorari under Rule 45 of the Revised Rules of
Court seeking the reversal of the Decision1 of the Court of Appeals (CA) dated July 19, 2000 in
CA-G.R. SP No. 42240 which denied the petition for certiorari and prohibition of Metropolitan
Bank and Trust Company, Inc. (petitioner).

The procedural antecedents and factual background of the case are as follows:

On October 17, 1995, the Regional Tripartite Wages and Productivity Board, Region II,
Tuguegarao, Cagayan (RTWPB), by virtue of Republic Act No. 6727 (R.A. No. 6727), otherwise
known as the Wage Rationalization Act,2issued Wage Order No. R02-03 (Wage Order), as
follows:

Section 1. Upon effectivity of this Wage Order, all employees/workers in the private sector
throughout Region II, regardless of the status of employment are granted an across-the-board
increase of P15.00 daily.3

The Wage Order was published in a newspaper of general circulation on December 2, 1995 4 and
took effect on January 1, 1996.5 Its Implementing Rules6 were approved on February 14,
1996.7 Per Section 13 of the Wage Order, any party aggrieved by the Wage Order may file an
appeal with the National Wages and Productivity Commission (NWPC) through the RTWPB
within 10 calendar days from the publication of the Wage Order.

In a letter-inquiry to the NWPC dated May 7, 1996, the Bankers' Council for Personnel
Management (BCPM), on behalf of its member-banks, requested for a ruling on the eligibility of
establishments with head offices outside Region II to seek exemption from the coverage of the
Wage Order since its member-banks are already paying more than the prevailing minimum wage
rate in the National Capital Region (NCR), which is their principal place of business. 8
In a letter-reply dated July 16, 1996, the NWPC stated that the member-banks of BCPM are
covered by the Wage Order and do not fall under the exemptible categories listed under the
Wage Order.9

In a letter-inquiry to the NWPC dated July 23, 1996, petitioner sought for interpretation of the
applicability of said Wage Order.10 The NWPC referred petitioner's inquiry to the RTWPB.

In a letter-reply dated August 12, 1996, the RTWPB clarified that the Wage Order covers all
private establishments situated in Region II, regardless of the voluntary adoption by said
establishments of the wage orders established in Metro Manila and irrespective of the amounts
already paid by the petitioner.11

On October 15, 1996, the petitioner filed a Petition for Certiorari and Prohibition with the CA
seeking nullification of the Wage Order on grounds that the RTWPB acted without authority when
it issued the questioned Wage Order; that even assuming that the RTWPB was vested with the
authority to prescribe an increase, it exceeded its authority when it did so without any ceiling or
qualification; that the implementation of the Wage Order will cause the petitioner, and other
similarly situated employers, to incur huge financial losses and suffer labor unrest. 12

On March 24, 1997, the Office of the Solicitor General (OSG) filed a Manifestation and Motion in
lieu of Comment affirming the petitioner's claim that the RTWPB acted beyond its authority in
issuing the Wage Order prescribing an across-the-board increase to all workers and employees
in Region II, effectively granting additional or other benefits not contemplated by R.A. No. 6727. 13

In view of the OSG's manifestation, the CA directed respondents NWPC and RTWPB to file their
comment.14

On September 22, 1997, respondents filed their Comment praying that the petition should be
dismissed outright for petitioner's procedural lapses; that certiorari and prohibition are unavailing
since petitioner failed to avail of the remedy of appeal prescribed by the Wage Order; that the
Wage Order has long been in effect; and that the issuance of the Wage Order was performed in
the exercise of a purely administrative function.15

On July 19, 2000, the CA rendered its Decision denying the petition. The appellate court held
that a writ of prohibition can no longer be issued since implementation of the Wage Order had
long become fait accompli, the Wage Order having taken effect on January 1, 1996 and its
implementing rules approved on February 14, 1996; that a writ of certiorari is improper since the
Wage Order was issued in the exercise of a purely administrative function, not judicial or quasi-
judicial; that the letter-query did not present justiciable controversies ripe for consideration by the
respondents in the exercise of their wage-fixing function, since no appeal from the Wage Order
was filed; that petitioner never brought before the said bodies any formal and definite challenge
to the Wage Order and it cannot pass off the letter-queries as actual applications for relief; that
even if petitioner's procedural lapse is disregarded, a regional wage order prescribing a wage
increase across-the-board applies to banks adopting a unified wage system and a disparity in
wages between employees holding similar positions in different regions is not wage distortion. 16

Hence, the present petition anchored on the following grounds:

4.1 THE COURT OF APPEALS ERRED IN REFUSING TO DECLARE WAGE ORDER

NO. R02-03 NULL AND VOID AND OF NO LEGAL EFFECT.

4.1.1 THE BOARD, IN ISSUING WAGE ORDER NO. R02-03, EXCEEDED THE
AUTHORITY DELEGATED TO IT BY CONGRESS.
 4.1.2 WAGE ORDER NO. R02-03 IS AN UNREASONABLE INTRUSION INTO
THE PROPERTY RIGHTS OF PETITIONER.

4.1.3 WAGE ORDER NO. R02-03 UNDERMINES THE VERY ESSENCE OF

COLLECTIVE BARGAINING.

4.1.4 WAGE ORDER NO. R02-03 FAILS TO TAKE INTO ACCOUNT THE VERY
RATIONALE FOR A UNIFIED WAGE STRUCTURE.

4.2 PETITIONER'S RECOURSE TO A WRIT OF CERTIORARI AND PROHIBITION

WAS PROPER.17

Following the submission of the Comment 18 and Reply19 thereto, the Court gave due course to the
petition and required both parties to submit their respective memoranda. 20 In compliance
therewith, petitioner and respondents submitted their respective memoranda. 21

Petitioner poses two issues for resolution, to wit: (1) whether Wage Order No. R02-03 is void and
of no legal effect; and (2) whether petitioner's recourse to a petition for certiorari and prohibition
with the CA was proper.

Anent the first issue, petitioner maintains that the RTWPB, in issuing said Wage Order, exceeded
the authority delegated to it under R.A. No. 6727, which is limited to determining and fixing the
minimum wage rate within their respective territorial jurisdiction and with respect only to
employees who do not earn the prescribed minimum wage rate; that the RTWPB is not
authorized to grant a general across-the-board wage increase for non-minimum wage earners;
that Employers Confederation of the Philippines v. National Wages and Productivity
Commission22(hereafter referred to as "ECOP") is not authority to rule that respondents have
been empowered to fix wages other than the minimum wage since said case dealt with an
across-the-board increase with a salary ceiling, where the wage adjustment is applied to
employees receiving a certain denominated salary ceiling; that the Wage Order is an
unreasonable intrusion into its property rights; that the Wage Order undermines the essence of
collective bargaining; that the Wage Order fails to take into account the rationale for a unified
wage structure.

As to the second issue, petitioner submits that ultra vires acts of administrative agencies are
correctible by way of a writ of certiorari and prohibition; that even assuming that it did not observe
the proper remedial procedure in challenging the Wage Order, the remedy of certiorari and
prohibition remains available to it by way of an exception, on grounds of justice and equity; that
its failure to observe procedural rules could not have validated the manner by which the disputed
Wage Order was issued.

Respondents counter that the present petition is fatally defective from inception since no appeal
from the Wage Order was filed by petitioner; that the letter-query to the NWPC did not constitute
the appeal contemplated by law; that the validity of the Wage Order was never raised before the
respondents; that the implementation of the Wage Order had long become fait accompli for
prohibition to prosper. Respondents insist that, even if petitioner's procedural lapses are
disregarded, the Wage Order was issued pursuant to the mandate of R.A. No. 6727 and in
accordance with the Court's pronouncements in the ECOP case;23 that the Wage Order is not an
intrusion on property rights since it was issued after the required public hearings; that the Wage
Order does not undermine but in fact recognizes the right to collective bargaining; that the Wage
Order did not result in wage distortion.

The Court shall first dispose of the procedural matter relating to the propriety of petitioner's
recourse to the CA before proceeding with the substantive issue involving the validity of the
Wage Order.
Certiorari as a special civil action is available only if the following essential requisites concur: (1)
it must be directed against a tribunal, board, or officer exercising judicial or quasi-judicial
functions; (2) the tribunal, board, or officer must have acted without or in excess of jurisdiction or
with grave abuse of discretion amounting lack or excess of jurisdiction; and (3) there is no appeal
nor any plain, speedy, and adequate remedy in the ordinary course of law. 24

On the other hand, prohibition as a special civil action is available only if the following essential
requisites concur: (1) it must be directed against a tribunal, corporation, board, officer, or person
exercising functions, judicial, quasi-judicial, or ministerial; (2) the tribunal, corporation, board or
person has acted without or in excess of its jurisdiction, or with grave abuse of discretion
amounting lack or excess of jurisdiction; and (3) there is no appeal or any other plain, speedy,
and adequate remedy in the ordinary course of law. 25

A respondent is said to be exercising judicial function where he has the power to determine what
the law is and what the legal rights of the parties are, and then undertakes to determine these
questions and adjudicate upon the rights of the parties. 26 Quasi-judicial function is a term which
applies to the action, discretion, etc., of public administrative officers or bodies, who are required
to investigate facts or ascertain the existence of facts, hold hearings, and draw conclusions from
them as a basis for their official action and to exercise discretion of a judicial nature. 27 Ministerial
function is one which an officer or tribunal performs in the context of a given set of facts, in a
prescribed manner and without regard to the exercise of his own judgment upon the propriety or
impropriety of the act done.28

In the issuance of the assailed Wage Order, respondent RTWPB did not act in any judicial,
quasi-judicial capacity, or ministerial capacity. It was in the nature of subordinate legislation,
promulgated by it in the exercise of delegated power under R.A. No. 6727. It was issued in the
exercise of quasi-legislative power. Quasi-legislative or rule-making power is exercised by
administrative agencies through the promulgation of rules and regulations within the confines of
the granting statute and the doctrine of non-delegation of certain powers flowing from the
separation of the great branches of the government. 29

Moreover, the rule on the special civil actions of certiorari and prohibition equally mandate that
these extra-ordinary remedies are available only when "there is no appeal or any other plain,
speedy, and adequate remedy in the ordinary course of law." A remedy is considered plain,
speedy and adequate if it will promptly relieve the petitioner from the injurious effects of the
judgment or rule, order or resolution of the lower court or agency.30

Section 13 of the assailed Wage Order explicitly provides that any party aggrieved by the Wage
Order may file an appeal with the NWPC through the RTWPB within 10 days from the publication
of the wage order.31 The Wage Order was published in a newspaper of general circulation on
December 2, 1995.32

In this case, petitioner did not avail of the remedy provided by law. No appeal to the NWPC was
filed by the petitioner within 10 calendar days from publication of the Wage Order on December
2, 1995. Petitioner was silent until seven months later, when it filed a letter-inquiry on July 24,
1996 with the NWPC seeking a clarification on the application of the Wage Order. Evidently, the
letter-inquiry is not an appeal.

It must also be noted that the NWPC only referred petitioner's letter-inquiry to the RTWPB.
Petitioner did not appeal the letter-reply dated August 12, 1996 of the RTWPB to the NWPC. No
direct action was taken by the NWPC on the issuance or implementation of the Wage Order.
Petitioner failed to invoke the power of the NWPC to review regional wage levels set by the
RTWPB to determine if these are in accordance with prescribed guidelines. Thus, not only was it
improper to implead the NWPC as party-respondent in the petition before the CA and this Court,
but also petitioner failed to avail of the primary jurisdiction of the NWPC under Article 121 of the
Labor Code, to wit:
ART. 121. Powers and Functions of the Commission. - The Commission shall have the following
powers and functions:

xxxx

(d) To review regional wage levels set by the Regional Tripartite Wages and Productivity
Boards to determine if these are in accordance with prescribed guidelines and national
development plans;

xxxx

(f) To review plans and programs of the Regional Tripartite Wages and Productivity
Boards to determine whether these are consistent with national development plans;

(g) To exercise technical and administrative supervision over the Regional Tripartite
Wages and Productivity Boards;

xxxx

(Emphasis supplied)

Under the doctrine of primary jurisdiction, courts cannot and will not resolve a controversy
involving a question which is within the jurisdiction of an administrative tribunal, especially where
the question demands the exercise of sound administrative discretion requiring the special
knowledge, experience and services of the administrative tribunal to determine technical and
intricate matters of fact.33

Nevertheless, the Court will proceed to resolve the substantial issues in the present petition
pursuant to the well-accepted principle that acceptance of a petition for certiorari or prohibition as
well as the grant of due course thereto is addressed to the sound discretion of the court. 34 It is a
well-entrenched principle that rules of procedure are not inflexible tools designed to hinder or
delay, but to facilitate and promote the administration of justice. Their strict and rigid application,
which would result in technicalities that tend to frustrate, rather than promote substantial justice,
must always be eschewed.35

As to respondents' submission that the implementation of the Wage Order can no longer be
restrained since it has become fait accompli, the Wage Order having taken effect on January 1,
1996 and its implementing rules approved on February 14, 1996, suffice it to state that courts will
decide a question otherwise moot if it is capable of repetition yet evading review. 36 Besides, a
case becomes moot and academic only when there is no more actual controversy between the
parties or no useful purpose can be served in passing upon the merits. Such circumstances do
not obtain in the present case. The implementation of the Wage Order does not in any way
render the case moot and academic, since the issue of the validity of the wage order subsists
even after its implementation and which has to be determined and passed upon to resolve
petitioner's rights and consequent obligations therein.

It is worthy to quote the Court's pronouncements in Tan v. Commission on Elections, 37 thus:

For this Honorable Court to yield to the respondents' urging that, as there has been fait accompli,
then this Honorable Court should passively accept and accede to the prevailing situation is an
unacceptable suggestion. Dismissal of the instant petition, as respondents so propose is a
proposition fraught with mischief. Respondents' submission will create a dangerous precedent.
Should this Honorable Court decline now to perform its duty of interpreting and indicating what
the law is and should be, this might tempt again those who strut about in the corridors of power
to recklessly and with ulterior motives commit illegal acts, either brazenly or stealthily, confident
that this Honorable Court will abstain from entertaining future challenges to their acts if they
manage to bring about a fait accompli. 38

Having disposed of this procedural issue, the Court now comes to the substance of the petition.

R.A. No. 6727 declared it a policy of the State to rationalize the fixing of minimum wages and to
promote productivity-improvement and gain-sharing measures to ensure a decent standard of
living for the workers and their families; to guarantee the rights of labor to its just share in the
fruits of production; to enhance employment generation in the countryside through industrial
dispersal; and to allow business and industry reasonable returns on investment, expansion and
growth.39

In line with its declared policy, R.A. No. 672740 created the NWPC,41 vested with the power to
prescribe rules and guidelines for the determination of appropriate minimum wage and
productivity measures at the regional, provincial or industry levels; 42 and authorized the RTWPB
to determine and fix the minimum wage rates applicable in their respective regions, provinces, or
industries therein and issue the corresponding wage orders, subject to the guidelines issued by
the NWPC.43 Pursuant to its wage fixing authority, the RTWPB may issue wage orders which set
the daily minimum wage rates,44 based on the standards or criteria set by Article 12445 of the
Labor Code.

In ECOP,46 the Court declared that there are two ways of fixing the minimum wage: the "floor-
wage" method and the "salary-ceiling" method. The "floor-wage" method involves the fixing of a
determinate amount to be added to the prevailing statutory minimum wage rates. On the other
hand, in the "salary-ceiling" method, the wage adjustment was to be applied to employees
receiving a certain denominated salary ceiling. In other words, workers already being paid more
than the existing minimum wage (up to a certain amount stated in the Wage Order) are also to be
given a wage increase.47

To illustrate: under the "floor wage method", it would have been sufficient if the Wage Order
simply set P15.00 as the amount to be added to the prevailing statutory minimum wage rates,
while in the "salary-ceiling method", it would have been sufficient if the Wage Order states a
specific salary, such as P250.00, and only those earning below it shall be entitled to the salary
increase.

In the present case, the RTWPB did not determine or fix the minimum wage rate by the "floor-
wage method" or the "salary-ceiling method" in issuing the Wage Order. The RTWPB did not set
a wage level nor a range to which a wage adjustment or increase shall be added. Instead, it
granted an across-the-board wage increase of P15.00 to all employees and workers of Region 2.
In doing so, the RTWPB exceeded its authority by extending the coverage of the Wage Order to
wage earners receiving more than the prevailing minimum wage rate, without a denominated
salary ceiling. As correctly pointed out by the OSG, the Wage Order granted additional benefits
not contemplated by R.A. No. 6727.

In no uncertain terms must it be stressed that the function of promulgating rules and regulations
may be legitimately exercised only for the purpose of carrying out the provisions of a law. The
power of administrative agencies is confined to implementing the law or putting it into effect.
Corollary to this guideline is that administrative regulation cannot extend the law and amend a
legislative enactment.48 It is axiomatic that the clear letter of the law is controlling and cannot be
amended by a mere administrative rule issued for its implementation. 49 Indeed, administrative or
executive acts, orders, and regulations shall be valid only when they are not contrary to the laws
or the Constitution.50

Where the legislature has delegated to an executive or administrative officers and boards
authority to promulgate rules to carry out an express legislative purpose, the rules of
administrative officers and boards, which have the effect of extending, or which conflict with the
authority-granting statute, do not represent a valid exercise of the rule-making power but
constitute an attempt by an administrative body to legislate. 51

It has been said that when the application of an administrative issuance modifies existing laws or
exceeds the intended scope, as in this case, the issuance becomes void, not only for being ultra
vires, but also for being unreasonable.52

Thus, the Court finds that Section 1, Wage Order No. R02-03 is void insofar as it grants a wage
increase to employees earning more than the minimum wage rate; and pursuant to the
separability clause53 of the Wage Order, Section 1 is declared valid with respect to employees
earning the prevailing minimum wage rate. 1awphi1.net

Prior to the passage of the Wage Order, the daily minimum wage rates in Region II was set
at P104.00 for the Province of Isabela, P103.00 for the Province of Cagayan, P101.00 for the
Province of Nueva Vizcaya, and P100.00 for the Provinces of Quirino and Batanes. 54 Only
employees earning the above-stated minimum wage rates are entitled to the P15.00 mandated
increase under the Wage Order.

Although the concomitant effect of the nullity of the Wage Order to those employees who have
received the mandated increase was not put in issue, this Court shall make a definite
pronouncement thereon to finally put this case to rest. As ruled by the Court in Latchme
Motoomull v. Dela Paz,55 "the Court will always strive to settle the entire controversy in a single
proceeding leaving no root or branch to bear the seeds of future litigation." 56

Applying by analogy, the Court's recent pronouncement in Philippine Ports Authority v.

Commission on Audit,57 thus:

In regard to the refund of the disallowed benefits, this Court holds that petitioners need not
refund the benefits received by them based on our rulings in Blaquera v. Alcala, De Jesus v.
Commission on Audit and Kapisanan ng mga Manggagawa sa Government Service Insurance
System (KMG) v. Commission on Audit.

In Blaquera, the petitioners, who were officials and employees of several government

departments and agencies, were paid incentive benefits pursuant to EO No. 292 and the
Omnibus Rules Implementing Book V of EO No. 292. On January 3, 1993, then President Fidel
V. Ramos issued Administrative Order (AO) No. 29 authorizing the grant of productivity incentive
benefits for the year 1992 in the maximum amount of P1,000. Section 4 of AO No. 29 directed all
departments, offices and agencies which authorized payment of CY 1992 Productivity Incentive
Bonus in excess of P1,000 to immediately cause the refund of the excess. Respondent heads of
the departments or agencies of the government concerned caused the deduction from
petitioners' salaries or allowances of the amounts needed to cover the overpayments. Petitioners
therein filed a petition for certiorari and prohibition before this Court to prevent respondents
therein from making further deductions from their salaries or allowances. The Court ruled against
the refund, thus:

Considering, however, that all the parties here acted in good faith, we cannot
countenance the refund of subject incentive benefits for the year 1992, which amounts the
petitioners have already received. Indeed, no indicia of bad faith can be detected under
the attendant facts and circumstances. The officials and chiefs of offices concerned
disbursed such incentive benefits in the honest belief that the amounts given were due to
the recipients and the latter accepted the same with gratitude, confident that they richly
deserve such benefits.

The said ruling in Blaquera was applied in De Jesus.

In De Jesus, COA disallowed the payment of allowances and bonuses consisting of
representation and transportation allowance, rice allowance, productivity incentive bonus,
anniversary bonus, year-end bonus and cash gifts to members of the interim Board of Directors
of the Catbalogan Water District. This Court affirmed the disallowance because petitioners
therein were not entitled to other compensation except for payment of per diemunder PD No.
198. However, the Court ruled against the refund of the allowances and bonuses received by
petitioners, thus:

This ruling in Blaquera applies to the instant case. Petitioners here received the additional
allowances and bonuses in good faith under the honest belief that LWUA Board
Resolution No. 313 authorized such payment. At the time petitioners received the
additional allowances and bonuses, the Court had not yet decided Baybay Water District.
Petitioners had no knowledge that such payment was without legal basis. Thus, being in
good faith, petitioners need not refund the allowances and bonuses they received but
disallowed by the COA.

Further, in KMG, this Court applied the ruling in Blaquera and De Jesus in holding that the Social
Insurance Group (SIG) personnel of the Government Service Insurance System need not refund
the hazard pay received by them although said benefit was correctly disallowed by COA. The
Court ruled:

The Court however finds that the DOH and GSIS officials concerned who granted hazard
pay under R.A. No. 7305 to the SIG personnel acted in good faith, in the honest belief that
there was legal basis for such grant. The SIG personnel in turn accepted the hazard pay
benefits likewise believing that they were entitled to such benefit. At that time, neither the
concerned DOH and GSIS officials nor the SIG personnel knew that the grant of hazard
pay to the latter is not sanctioned by law. Thus, following the rulings of the Court in De
Jesus v. Commission on Audit, and Blaquera v. Alcala, the SIG personnel who previously
received hazard pay under R.A. No. 7305 need not refund such benefits.

In the same vein, the rulings in Blaquera, De Jesus and KMG apply to this case. Petitioners
received the hazard duty pay and birthday cash gift in good faith since the benefits were
authorized by PPA Special Order No. 407-97 issued pursuant to PPA Memorandum Circular No.
34-95 implementing DBM National Compensation Circular No. 76, series of 1995, and PPA
Memorandum Circular No. 22-97, respectively. Petitioners at that time had no knowledge that the
payment of said benefits lacked legal basis. Being in good faith, petitioners need not refund the
benefits they received.58 (Emphasis supplied)

employees, other than minimum wage earners, who received the wage increase mandated by
the Wage Order need not refund the wage increase received by them since they received the
wage increase in good faith, in the honest belief that they are entitled to such wage increase and
without any knowledge that there was no legal basis for the same.

Considering the foregoing, the Court need not delve on the other arguments raised by the
parties.

WHEREFORE, the petition is PARTIALLY GRANTED. The Decision of the Court of Appeals
dated July 19, 2000 in CA-G.R. SP No. 42240 is MODIFIED. Section 1 of Wage Order No. R02-
03 issued on October 17, 1995 by the Regional Tripartite Wages and Productivity Board for
Region II, Tuguegarao, Cagayan is declared VALID insofar as the mandated increase applies to
employees earning the prevailing minimum wage rate at the time of the passage of the Wage
Order and VOID with respect to its application to employees receiving more than the prevailing
minimum wage rate at the time of the passage of the Wage Order.

No costs.
SO ORDERED.

MA. ALICIA AUSTRIA-MARTINEZ

Associate Justice