Wilfred P.

Alfeche

Topic: Doctrine of Primary Jurisdiction

Reference: Smart Communications, Inc. and Pilipino Telephone Corporation vs.

National Telecommunications Commission; G.R. 151908; August 12, 2003

Facts:

Pursuant to its rule-making and regulatory powers, the National Telecommunications

Commission (NTC) promulgated rules and regulations on the billing of
telecommunications services. Petitioners-communications companies filed an action for
declaration of nullity of the billing circulars, alleging, among others: that NTC
contravened the Civil Code provisions on sales in regulating the sale of prepaid call
cards; and that the billing circular violated the constitutional prohibition against the
deprivation of property without due process of law. The NTC moved to dismiss the case
for failure of petitioners to exhaust administrative remedies. The trial court denied the
motion to dismiss and enjoined the NTC from implementing the questioned circulars.
The CA, however, dismissed the case on appeal without prejudice to the referral of the
petitioners' grievances and disputes on the assailed issuances with the NTC.

Issue:

Whether or not the CA erred in ruling that the National Telecommunications

Commission (NTC) and not the Regular Court which has jurisdiction over the case.

Ruling:

Yes. In the instant case the court ruled that In questioning the validity or constitutionality
of a rule or regulation issued by an administrative agency, a party need not exhaust
administrative remedies before going to court. This principle applies only where the act
of the administrative agency concerned was performed pursuant to its quasi-judicial
function, and not when the assailed act pertained to its rule-making or quasi-legislative
power. Even assuming arguendo that the principle of exhaustion of administrative
remedies apply in this case, the records reveal that petitioners sufficiently complied with
Wilfred P. Alfeche

this requirement. Even during the drafting and deliberation stages leading to the
issuance of Memorandum Circular No. 13-6-2000, petitioners were able to register their
protests to the proposed billing guidelines. They submitted their respective position
papers setting forth their objections and submitting proposed schemes for the billing
circular. After the same was issued, petitioners wrote successive letters dated July 3,
2000 and July 5, 2000, asking for the suspension and reconsideration of the so-called
Billing Circular. These letters were not acted upon until October 6, 2000, when
respondent NTC issued the second assailed Memorandum implementing certain
provisions of the Billing Circular. This was taken by petitioners as a clear denial of the
requests contained in their previous letters, thus prompting them to seek judicial relief.

Furthermore, the Supreme Court also differentiated the Quasi-legislative from the
Quasi-judicial power of administrative agencies; the honorable court explained
Administrative agencies possess quasi-legislative or rule-making powers and quasi
judicial or administrative adjudicatory powers. Quasi-legislative or rule-making power is
the power to make rules and regulations which results in delegated legislation that is
within the confines of the granting statute and the doctrine of non-delegability and
separability of powers. The rules and regulations that administrative agencies
promulgate, which are the product of a delegated legislative power to create new and
additional legal provisions that have the effect of law, should be within the scope of the
statutory authority granted by the legislature to the administrative agency. It is required
that the regulation be germane to the objects and purposes of the law, and be not in
contradiction to, but in conformity with, the standards prescribed by law. They must
conform to and be consistent with the provisions of the enabling statute in order for such
rule or regulation to be valid. Not to be confused with the quasi-legislative or rule-
making power of an administrative agency is its quasi-judicial or administrative
adjudicatory power. This is the power to hear and determine questions of fact to which
the legislative policy is to apply and to decide in accordance with the standards laid
down by the law itself in enforcing and administering the same law. The administrative
body exercises its quasi judicial power when it performs in a judicial manner an act
which is essentially of an executive or administrative nature, where the power to act in
Wilfred P. Alfeche

such manner is incidental to or reasonably necessary for the performance of the

executive or administrative duty entrusted to it. In carrying out their quasi-judicial
functions, the administrative officers or bodies are required to investigate facts or
ascertain the existence of facts, hold hearings, weigh evidence, and draw conclusions
from them as basis for their official action and exercise of discretion in a judicial nature.
Wilfred P. Alfeche

Topic: Doctrine of Primary Jurisdiction

Reference: Director of Lands vs. Court of Appeals; GR. No. 79684, February 19, 1991

Facts:

Petitioners Director of Lands and the Secretary of Environment and Natural Resources
entered into a contract with respondent B.A. Gonzalez Surveying Company where the
latter was to execute a public land subdivision mapping and the photo-cadastral
mapping. Written demands were made from the Bureau of Lands to the private
respondent but were not heeded. Hence, the contract was cancelled and declared the
performance bond forfeited.

On a motion for reconsideration filed by the private respondent, the Director of Lands
reinstated the said contract without however granting the company's request for a price
adjustment wherein the private respondent seasonably appealed to the Secretary of
Environment and Natural Resources but was still pending. Subsequently, Director of
Lands conducted a public bidding for the cadastral survey of several municipalities.
rmando Villamayor and Cristina Matuod were declared as the successful bidders for the
Numancia and Valderama projects.

Thereupon, the private respondent filed a petition for prohibition and mandamus with a
prayer for a temporary restraining order alleging that the Director of Lands acted without
or in excess of jurisdiction in awarding the said cadastral survey projects to other
persons while the appeals of the private respondent remain pending.

Issues:

1) Whether or not the public bidding conducted by the Director of Lands was valid.

2) Whether or not the Director of Lands acted with grave abuse of discretion.
Wilfred P. Alfeche

Ruling:

The petitioner Director of Lands is "the official vested with direct and executive control of
the disposition of the lands of the public domain." Specifically, Section 4 of
Commonwealth Act No. 141 provides that . . . The Director of Lands shall have direct
executive control of the survey, classification, lease, sale, or any form of concession or
disposition and management of the public domain, and his decisions as to questions of
fact shall be conclusive when approved by the Secretary of Agriculture and Commerce
(now the Secretary of Environment and Natural Resources)."

We likewise take cognizance of the wealth of jurisprudence on this doctrine of primary

administrative jurisdiction and exhaustion of administrative remedies. The Court has
consistently held that "acts of an administrative agency must not casually be over-
turned by a court, and a court should as a rule not substitute its judgment for that of the
administrative agency acting within the parameters of its own competence," unless
"there be a clear showing of arbitrary action or palpable and serious error." In similar
vein, we reiterated recently the rule that the findings of fact of quasi-judicial agencies
which have acquired expertise because their jurisdiction is confined to specific matters,
in the present case cadastral surveys and mappings and land registration, are accorded
not only respect but more often than not even finality.
Wilfred P. Alfeche

Topic: Doctrine of Primary Jurisdiction

Reference: Villaflor v CA and Nasipit Lumber Co., Inc. G.R. No. 95694. October 9,
1997.

Facts:

On December 2, 1948, petitioner filed a sales application with the Bureau of Lands
covering a tract of public lands consisting of 140 hectares. In paragraph 6 thereof, he
recognized that the land is of public domain. On August 16, 1950, petitioner entered into
a Deed of Relinquishment of Rights in favor of private respondent in consideration of
P5,000. On the same date, August 16, 1950, private respondent filed a sales application
over two parcels of land which was correspondingly awarded the following day. On
January 31, 1974, petitioner protested the sales application of private respondent
claiming ownership, and claiming that it has not paid the P5,000 provided for in the
deed. The Director of Lands, however, found that petitioner was paid the stipulated
amount, the same being part of the administrative process in the disposition of the land
in question, that his sales application was rejected for leasing the same to another even
before he had acquired transmissible rights thereto and that he recognized the public
character of the land in his application and relinquished any and all rights he may have
by virtue of continuous occupation and cultivation thereon. The same was affirmed by
the Minister of Natural Resources. On July 6, 1978, petitioner filed a complaint before
the Regional Trial Court of Agusan del Norte and Butuan City for Declaration of Nullity
(Deed of Relinquishment of Rights), Recovery of Possession and Damages, at about
the same time he appealed the decision of the Minister of Natural Resources at to the
Office of the President. The trial court dismissed the complaint, which on appeal was
affirmed by the Court of Appeals Hence, this recourse, petitioner assailing the findings
of the Bureau of Lands and the capacity of corporations to acquire public lands.

Issue:

Whether or not the doctrine of primary jurisdiction may be applied in this case.
Wilfred P. Alfeche

Ruling:

Yes. The rationale underlying the doctrine of primary jurisdiction finds application in this
case, since the questions on the identity of the land in dispute and the factual
qualification of private respondent as an awardee of a sales application require a
technical determination by the Bureau of Lands as the administrative agency with the
expertise to determine such matters. Because these issues preclude prior judicial
determination, it behooves the courts to stand aside even when they apparently have
statutory power to proceed, in recognition of the primary jurisdiction of the administrative
agency. Petitioner initiated his action with a protest before the Bureau of Lands and
followed it through in the Ministry of Natural Resources and thereafter in the Office of
the President. Consistent with the doctrine of primary jurisdiction, the trial and the
appellate courts had reason to rely on the findings of these specialized administrative
bodies.
Wilfred P. Alfeche

Topic: Doctrine of Primary Jurisdiction

Reference: INDUSTRIAL ENTERPRISES, INC. vs. THE HON. COURT OF APPEALS

G.R. No. 88550

Facts:

Industrial Enterprises Inc. (IEI) was granted a coal operating contract by the
Government through the Bureau of Energy Development (BED) for the exploration of
two coal blocks in Eastern Samar. Subsequently, IEI also applied with the then Ministry
of Energy for another coal operating contract for the exploration of three additional coal
blocks which, together with the original two blocks, comprised the so-called Giporlos
Area. IEI was later on advised that in line with the objective of rationalizing the country's
over-all coal supply-demand balance, the logical coal operator in the area should be the
Marinduque Mining and Industrial Corporation (MMIC), which was already developing
the coal deposit in another area (Bagacay Area) and that the Bagacay and Giporlos
Areas should be awarded to MMIC. Thus, IEI and MMIC executed a Memorandum of
Agreement whereby IEI assigned and transferred to MMIC all its rights and interests in
the two coal blocks which are the subject of IEI's coal operating contract.

However, IEI filed an action for rescission of the Memorandum of Agreement with
damages against MMIC and the then Minister of Energy Geronimo Velasco before the
Regional Trial Court of Makati alleging that MMIC took possession of the subject coal
blocks even before the Memorandum of Agreement was finalized and approved by the
BED; that MMIC discontinued work thereon; that MMIC failed to apply for a coal
operating contract for the adjacent coal blocks; and that MMIC failed and refused to pay
the reimbursements agreed upon and to assume IEI's loan obligation as provided in the
Memorandum of Agreement. IEI also prayed that the Energy Minister be ordered to
approve the return of the coal operating contract from MMIC to petitioner, with a written
confirmation that said contract is valid and effective, and, in due course, to convert said
contract from an exploration agreement to a development/production or exploitation
contract in IEI's favor. In a summary judgment, the Trial Court ordered the rescission of
the Memorandum of Agreement, declared the continued efficacy of the coal operating
contract in favor of IEI; ordered the reversion of the two coal blocks covered by the coal
Wilfred P. Alfeche

operating contract; ordered BED to issue its written affirmation of the coal operating
contract and to expeditiously cause the conversion thereof from exploration to
development in favor of IEI; directed BED to give due course to IEI's application for a
coal operating contract; directed BED to give due course to IEI's application for three
more coal blocks; and ordered the payment of damages and rehabilitation expenses.
The Court of Appeals in reversing the RTC decision, held that the rendition of the
summary judgment was not proper since there were genuine issues in controversy
between the parties, and more importantly, that the Trial Court had no jurisdiction over
the action considering that, under Presidential Decree No. 1206, it is the BED that has
the power to decide controversies relative to the exploration, exploitation and
development of coal blocks.

Issue:

Whether or not the civil court has jurisdiction to hear and decide the suit for rescission of
the Memorandum of Agreement concerning a coal operating contract over coal blocks.
A corollary question is whether or not respondent Court of Appeals erred in holding that
it is the Bureau of Energy Development (BED) which has jurisdiction over said action
and not the civil court.

Ruling:

Yes. The application of the doctrine of primary jurisdiction does not call for the dismissal
of the case. It need only be suspended until after the matters within the competence of
the BED are threshed out and determined. Thereby, the principal purpose behind the
doctrine of primary jurisdiction is served.

While the action filed by IEI sought the rescission of what appears to be an ordinary civil
contract cognizable by a civil court, the fact is that the Memorandum of Agreement
sought to be rescinded is derived from a coal-operating contract and is tied up with the
right to develop coal-bearing lands and the determination of whether or not the
reversion of the coal operating contract over the subject coal blocks to IEI would be in
Wilfred P. Alfeche

line with the integrated national program for coal-development and with the objective of
rationalizing the country's over-all coal-supply-demand balance, IEI's cause of action
was not merely the rescission of a contract but the reversion or return to it of the
operation of the coal blocks. Thus it was that in its Decision ordering the rescission of
the Agreement, the Trial Court, declared the continued efficacy of the coal-operating
contract in IEI's favor and directed the BED to give due course to IEI's application for
three IEI more coal blocks. These are matters properly falling within the domain of the
BED.

The BED is tasked with the function of establishing a comprehensive and integrated
national program for the exploration, exploitation, and development and extraction of
fossil fuels, such as the country's coal resources; adopting a coal development program;
regulating all activities relative thereto; and undertaking by itself or through service
contracts such exploitation and development, all in the interest of an effective and
coordinated development of extracted resources.

It has been the jurisprudential trend to apply the doctrine of primary jurisdiction in many
cases involving matters that demand the special competence of administrative
agencies. It may occur that the Court has jurisdiction to take cognizance of a particular
case, which means that the matter involved is also judicial in character. However, if the
case is such that its determination requires the expertise, specialized skills and
knowledge of the proper administrative bodies because technical matters or intricate
questions of facts are involved, then relief must first be obtained in an administrative
proceeding before a remedy will be supplied by the courts even though the matter is
within the proper jurisdiction of a court. This is the doctrine of primary jurisdiction. It
applies "where a claim is originally cognizable in the courts, and comes into play
whenever enforcement of the claim requires the resolution of issues which, under a
regulatory scheme, have been placed within the special competence of an
administrative body, in such case the judicial process is suspended pending referral of
such issues to the administrative body for its view".

Clearly, the doctrine of primary jurisdiction finds application in this case since the
question of what coal areas should be exploited and developed and which entity should
Wilfred P. Alfeche

be granted coal operating contracts over said areas involves a technical determination
by the BED as the administrative agency in possession of the specialized expertise to
act on the matter. The Trial Court does not have the competence to decide matters
concerning activities relative to the exploration, exploitation, development and extraction
of mineral resources like coal. These issues preclude an initial judicial determination. It
behooves the courts to stand aside even when apparently they have statutory power to
proceed in recognition of the primary jurisdiction of an administrative agency.