G.R. No.
120319 October 6, 1995 delay, such that once an award has been rendered by an arbitrator, nothing is left to be done by both
LUZON DEVELOPMENT BANK, petitioner,
vs.
ASSOCIATION OF LUZON DEVELOPMENT BANK EMPLOYEES and ATTY. ESTER S. GARCIA in
her capacity as VOLUNTARY ARBITRATOR, respondents.
ROMERO, J.:
From a submission agreement of the Luzon Development Bank (LDB) and the Association of Luzon
Development Bank Employees (ALDBE) arose an arbitration case to resolve the following issue:
Whether or not the company has violated the Collective Bargaining Agreement
provision and the Memorandum of Agreement dated April 1994, on promotion.
At a conference, the parties agreed on the submission of their respective Position Papers on December
1-15, 1994. Atty. Ester S. Garcia, in her capacity as Voluntary Arbitrator, received ALDBE's Position
Paper on January 18, 1995. LDB, on the other hand, failed to submit its Position Paper despite a letter
from the Voluntary Arbitrator reminding them to do so. As of May 23, 1995 no Position Paper had been
filed by LDB.
On May 24, 1995, without LDB's Position Paper, the Voluntary Arbitrator rendered a decision disposing
as follows:
WHEREFORE, finding is hereby made that the Bank has not adhered to the
Collective Bargaining Agreement provision nor the Memorandum of Agreement on
promotion.
Hence, this petition for certiorari and prohibition seeking to set aside the decision of the Voluntary
Arbitrator and to prohibit her from enforcing the same.
In labor law context, arbitration is the reference of a labor dispute to an impartial third person for
determination on the basis of evidence and arguments presented by such parties who have bound
themselves to accept the decision of the arbitrator as final and binding.
Arbitration may be classified, on the basis of the obligation on which it is based, as either compulsory or
voluntary.
Compulsory arbitration is a system whereby the parties to a dispute are compelled by the government
to forego their right to strike and are compelled to accept the resolution of their dispute through
arbitration by a 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.
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
parties but to comply with the same. After all, they are presumed to have freely chosen arbitration as
the mode of settlement for that particular dispute. Pursuant thereto, they have chosen a mutually
acceptable arbitrator who shall hear and decide their case. Above all, they have mutually agreed to de
bound by said arbitrator's decision.
In the Philippine context, the parties to a Collective Bargaining Agreement (CBA) are required to include
therein provisions for a machinery for the resolution of grievances arising from the interpretation or
implementation of the CBA or company personnel policies. 3 For this purpose, parties to a CBA shall
name and designate therein a voluntary arbitrator or a panel of arbitrators, or include a procedure for
their selection, preferably from those accredited by the National Conciliation and Mediation Board
(NCMB). Article 261 of the Labor Code accordingly provides for exclusive original jurisdiction of such
voluntary arbitrator or panel of arbitrators over (1) the interpretation or implementation of the CBA and
(2) the interpretation or enforcement of company personnel policies. Article 262 authorizes them, but
only upon agreement of the parties, to exercise jurisdiction over other labor disputes.
On the other hand, a labor arbiter under Article 217 of the Labor Code has jurisdiction over the following
enumerated cases:
. . . (a) Except as otherwise provided under this Code the Labor Arbiters shall have
original and exclusive jurisdiction to hear and decide, within thirty (30) calendar days
after the submission of the case by the parties for decision without extension, even in
the absence of stenographic notes, the following cases involving all workers, whether
agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that workers may file
involving wages, rates of pay, hours of work and other terms and conditions of
employment;
4. Claims for actual, moral, exemplary and other forms of damages arising from the
employer-employee relations;
5. Cases arising from any violation of Article 264 of this Code, including questions
involving the legality of strikes and lockouts;
6. Except claims for Employees Compensation, Social Security, Medicare and
maternity benefits, all other claims, arising from employer-employee relations,
including those of persons in domestic or household service, involving an amount
exceeding five thousand pesos (P5,000.00) regardless of whether accompanied with
a claim for reinstatement.
xxx xxx xxx
It will thus be noted that the jurisdiction conferred by law on a voluntary arbitrator or a panel of such
arbitrators is quite limited compared to the original jurisdiction of the labor arbiter and the appellate
jurisdiction of the National Labor Relations Commission (NLRC) for that matter.4 The state of our
present law relating to voluntary arbitration provides that "(t)he award or decision of the Voluntary
Arbitrator . . . shall be final and executory after ten (10) calendar days from receipt of the copy of the
award or decision by the parties,"5 while the "(d)ecision, awards, or orders of the Labor Arbiter are final
and executory unless appealed to the Commission by any or both parties within ten (10) calendar days
from receipt of such decisions, awards, or orders." 6 Hence, while there is an express mode of appeal
from the decision of a labor arbiter, Republic Act No. 6715 is silent with respect to an appeal from the
decision of a voluntary arbitrator.
Yet, past practice shows that a decision or award of a voluntary arbitrator is, more often than not,
elevated to the Supreme Court itself on a petition for certiorari,7 in effect equating the voluntary
arbitrator with the NLRC or the Court of Appeals. In the view of the Court, this is illogical and imposes
an unnecessary burden upon it.
In Volkschel Labor Union, et al. v. NLRC, et al.,8 on the settled premise that the judgments of courts and
awards of quasi-judicial agencies must become final at some definite time, this Court ruled that the
awards of voluntary arbitrators determine the rights of parties; hence, their decisions have the same
legal effect as judgments of a court. In Oceanic Bic Division (FFW), et al. v. Romero, et al.,9 this Court
ruled that "a voluntary arbitrator by the nature of her functions acts in a quasi-judicial capacity." Under
these rulings, it follows that the voluntary arbitrator, whether acting solely or in a panel, enjoys in law the
status of a quasi-judicial agency but independent of, and apart from, the NLRC since his decisions are
not appealable to the latter.10
Section 9 of B.P. Blg. 129, as amended by Republic Act No. 7902, provides that the Court of Appeals
shall exercise:
xxx xxx xxx
(B) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions,
orders or awards of Regional Trial Courts and quasi-judicial agencies,
instrumentalities, boards or commissions, including the Securities and Exchange
Commission, the Employees Compensation Commission and the Civil Service
Commission, except those falling within the appellate jurisdiction of the Supreme
Court in accordance with the Constitution, the Labor Code of the Philippines under
Presidential Decree No. 442, as amended, the provisions of this Act, and of
subparagraph (1) of the third paragraph and subparagraph (4) of the fourth paragraph
of Section 17 of the Judiciary Act of 1948.
xxx xxx xxx
Assuming arguendo that the voluntary arbitrator or the panel of voluntary arbitrators may not strictly be
considered as a quasi-judicial agency, board or commission, still both he and the panel are
comprehended within the concept of a "quasi-judicial instrumentality." It may even be stated that it was
to meet the very situation presented by the quasi-judicial functions of the voluntary arbitrators here, as
well as the subsequent arbitrator/arbitral tribunal operating under the Construction Industry Arbitration
Commission,11 that the broader term "instrumentalities" was purposely included in the above-quoted
provision.
An "instrumentality" is anything used as a means or agency.12 Thus, the terms governmental "agency"
or "instrumentality" are synonymous in the sense that either of them is a means by which a government
acts, or by which a certain government act or function is performed. 13 The word "instrumentality," with
respect to a state, contemplates an authority to which the state delegates governmental power for the
performance of a state function.14 An individual person, like an administrator or executor, is a judicial
instrumentality in the settling of an estate,15 in the same manner that a sub-agent appointed by a
bankruptcy court is an instrumentality of the court,16and a trustee in bankruptcy of a defunct corporation
is an instrumentality of the state.17
The voluntary arbitrator no less performs a state function pursuant to a governmental power delegated
to him under the provisions therefor in the Labor Code and he falls, therefore, within the contemplation
of the term "instrumentality" in the aforequoted Sec. 9 of B.P. 129. The fact that his functions and
powers are provided for in the Labor Code does not place him within the exceptions to said Sec. 9 since
he is a quasi-judicial instrumentality as contemplated therein. It will be noted that, although the
Employees 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 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.
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:
(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;
(Emphasis supplied)
P.D. No. 272 initially created petitioner ISA for a term of five (5) years counting from 9 August
1973.1 When ISA's original term expired on 10 October 1978, its term was extended for another ten (10)
years by Executive Order No. 555 dated 31 August 1979.
The National Steel Corporation ("NSC") then a wholly owned subsidiary of the National Development
Corporation which is itself an entity wholly owned by the National Government, embarked on an
expansion program embracing, among other things, the construction of an integrated steel mill in Iligan
City. The construction of such a steel mill was considered a priority and major industrial project of the
Government. Pursuant to the expansion program of the NSC, Proclamation No. 2239 was issued by the
President of the Philippines on 16 November 1982 withdrawing from sale or settlement a large tract of
public land (totalling about 30.25 hectares in area) located in Iligan City, and reserving that land for the
use and immediate occupancy of NSC.
Since certain portions of the public land subject matter Proclamation No. 2239 were occupied by a non-
operational chemical fertilizer plant and related facilities owned by private respondent Maria Cristina
Fertilizer Corporation ("MCFC"), Letter of Instruction (LOI), No. 1277, also dated 16 November 1982,
was issued directing the NSC to "negotiate with the owners of MCFC, for and on behalf of the
Government, for the compensation of MCFC's present occupancy rights on the subject land." LOI No.
1277 also directed that should NSC and private respondent MCFC fail to reach an agreement within a
period of sixty (60) days from the date of LOI No. 1277, petitioner ISA was to exercise its power of
eminent domain under P.D. No. 272 and to initiate expropriation proceedings in respect of occupancy
rights of private respondent MCFC relating to the subject public land as well as the plant itself and
related facilities and to cede the same to the NSC.2
Negotiations between NSC and private respondent MCFC did fail. Accordingly, on 18 August 1983,
petitioner ISA commenced eminent domain proceedings against private respondent MCFC in the
Regional Trial Court, Branch 1, of Iligan City, praying that it (ISA) be places in possession of the
property involved upon depositing in court the amount of P1,760,789.69 representing ten percent (10%)
of the declared market values of that property. The Philippine National Bank, as mortgagee of the plant
facilities and improvements involved in the expropriation proceedings, was also impleaded as party-
defendant.
On 17 September 1983, a writ of possession was issued by the trial court in favor of ISA. ISA in turn
placed NSC in possession and control of the land occupied by MCFC's fertilizer plant installation.
The case proceeded to trial. While the trial was ongoing, however, the statutory existence of petitioner
ISA expired on 11 August 1988. MCFC then filed a motion to dismiss, contending that no valid judgment
could be rendered against ISA which had ceased to be a juridical person. Petitioner ISA filed its
opposition to this motion.
In an Order dated 9 November 1988, the trial court granted MCFC's motion to dismiss and did dismiss
the case. The dismissal was anchored on the provision of the Rules of Court stating that "only natural or
juridical persons or entities authorized by law may be parties in a civil case." 3 The trial court also
referred to non-compliance by petitioner ISA with the requirements of Section 16, Rule 3 of the Rules of
Court.4
Petitioner ISA moved for reconsideration of the trial court's Order, contending that despite the expiration
of its term, its juridical existence continued until the winding up of its affairs could be completed. In the
alternative, petitioner ISA urged that the Republic of the Philippines, being the real party-in-interest,
should be allowed to be substituted for petitioner ISA. In this connection, ISA referred to a letter from
the Office of the President dated 28 September 1988 which especially directed the Solicitor General to
continue the expropriation case.
The trial court denied the motion for reconsideration, stating, among other things that:
The property to be expropriated is not for public use or benefit [__] but for the use and
benefit [__] of NSC, a government controlled private corporation engaged in private
business and for profit, specially now that the government, according to newspaper
reports, is offering for sale to the public its [shares of stock] in the National Steel
Corporation in line with the pronounced policy of the present administration to
disengage the government from its private business ventures. 5 (Brackets supplied)
Petitioner went on appeal to the Court of Appeals. In a Decision dated 8 October 1991, the Court of
Appeals affirmed the order of dismissal of the trial court. The Court of Appeals held that petitioner ISA,
"a government regulatory agency exercising sovereign functions," did not have the same rights as an
ordinary corporation and that the ISA, unlike corporations organized under the Corporation Code, was
not entitled to a period for winding up its affairs after expiration of its legally mandated term, with the
result that upon expiration of its term on 11 August 1987, ISA was "abolished and [had] no more legal
authority to perform governmental functions." The Court of Appeals went on to say that the action for
expropriation could not prosper because the basis for the proceedings, the ISA's exercise of its
delegated authority to expropriate, had become ineffective as a result of the delegate's dissolution, and
could not be continued in the name of Republic of the Philippines, represented by the Solicitor General:
It is our considered opinion that under the law, the complaint cannot prosper, and
therefore, has to be dismissed without prejudice to the refiling of a new complaint for
expropriation if the Congress sees it fit." (Emphases supplied)
At the same time, however, the Court of Appeals held that it was premature for the trial court to
have ruled that the expropriation suit was not for a public purpose, considering that the parties
had not yet rested their respective cases.
In this Petition for Review, the Solicitor General argues that since ISA initiated and prosecuted the
action for expropriation in its capacity as agent of the Republic of the Philippines, the Republic, as
principal of ISA, is entitled to be substituted and to be made a party-plaintiff after the agent ISA's term
had expired.
Private respondent MCFC, upon the other hand, argues that the failure of Congress to enact a law
further extending the term of ISA after 11 August 1988 evinced a "clear legislative intent to terminate the
juridical existence of ISA," and that the authorization issued by the Office of the President to the
Solicitor General for continued prosecution of the expropriation suit could not prevail over such negative
intent. It is also contended that the exercise of the eminent domain by ISA or the Republic is improper,
since that power would be exercised "not on behalf of the National Government but for the benefit of
NSC."
The principal issue which we must address in this case is whether or not the Republic of the Philippines
is entitled to be substituted for ISA in view of the expiration of ISA's term. As will be made clear below,
this is really the only issue which we must resolve at this time.
Rule 3, Section 1 of the Rules of Court specifies who may be parties to a civil action:
Sec. 1. Who May Be Parties. — Only natural or juridical persons or entities authorized
by law may be parties in a civil action.
Under the above quoted provision, it will be seen that those who can be parties to a civil action
may be broadly categorized into two (2) groups:
(a) those who are recognized as persons under the law whether natural, i.e.,
biological persons, on the one hand, or juridical person such as corporations, on the
other hand; and
(b) entities authorized by law to institute actions.
Examination of the statute which created petitioner ISA shows that ISA falls under category (b) above.
P.D. No. 272, as already noted, contains express authorization to ISA to commence expropriation
proceedings like those here involved:
Sec. 4. Powers and Functions. — The Authority shall have the following powers and
functions:
(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;
(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:
(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;
(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 "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.
(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.
(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.
(Emphases supplied)
When the statutory term of a non-incorporated agency expires, the powers, duties and functions as well
as the assets and liabilities of that agency revert back to, and are re-assumed by, the Republic of the
Philippines, in the absence of special provisions of law specifying some other disposition thereof such
as, e.g., devolution or transmission of such powers, duties, functions, etc. to some other identified
successor agency or instrumentality of the Republic of the Philippines. When the expiring agency is
an incorporated one, the consequences of such expiry must be looked for, in the first instance, in the
charter of that agency and, by way of supplementation, in the provisions of the Corporation Code.
Since, in the instant case, ISA is a non-incorporated agency or instrumentality of the Republic, its
powers, duties, functions, assets and liabilities are properly regarded as folded back into the
Government of the Republic of the Philippines and hence assumed once again by the Republic, no
special statutory provision having been shown to have mandated succession thereto by some other
entity or agency of the Republic.
The procedural implications of the relationship between an agent or delegate of the Republic of the
Philippines and the Republic itself are, at least in part, spelled out in the Rules of Court. The general
rule is, of course, that an action must be prosecuted and defended in the name of the real party in
interest. (Rule 3, Section 2) Petitioner ISA was, at the commencement of the expropriation proceedings,
a real party in interest, having been explicitly authorized by its enabling statute to institute expropriation
proceedings. The Rules of Court at the same time expressly recognize the role of representative
parties:
Sec. 3. Representative Parties. — A trustee of an expressed trust, a guardian, an
executor or administrator, or a party authorized by statute may sue or be sued without
joining the party for whose benefit the action is presented or defended; but the court
may, at any stage of the proceedings, order such beneficiary to be made a party. . . . .
(Emphasis supplied)
In the instant case, ISA instituted the expropriation proceedings in its capacity as an agent or delegate
or representative of the Republic of the Philippines pursuant to its authority under P.D. No. 272. The
present expropriation suit was brought on behalf of and for the benefit of the Republic as the principal of
ISA. Paragraph 7 of the complaint stated:
7. The Government, thru the plaintiff ISA, urgently needs the subject parcels of land
for the construction and installation of iron and steel manufacturing facilities that are
indispensable to the integration of the iron and steel making industry which is vital to
the promotion of public interest and welfare. (Emphasis supplied)
The principal or the real party in interest is thus the Republic of the Philippines and not the
National Steel Corporation, even though the latter may be an ultimate user of the properties
involved should the condemnation suit be eventually successful.
From the foregoing premises, it follows that the Republic of the Philippines is entitled to be substituted
in the expropriation proceedings as party-plaintiff in lieu of ISA, the statutory term of ISA having expired.
Put a little differently, the expiration of ISA's statutory term did not by itself require or justify the
dismissal of the eminent domain proceedings.
It is also relevant to note that the non-joinder of the Republic which occurred upon the expiration of
ISA's statutory term, was not a ground for dismissal of such proceedings since a party may be dropped
or added by order of the court, on motion of any party or on the court's own initiative at any stage of the
action and on such terms as are just. 13 In the instant case, the Republic has precisely moved to take
over the proceedings as party-plaintiff.
In E.B. Marcha Transport Company, Inc. v. Intermediate Appellate Court, 14 the Court recognized that
the Republic may initiate or participate in actions involving its agents. There the Republic of the
Philippines was held to be a proper party to sue for recovery of possession of property although the
"real" or registered owner of the property was the Philippine Ports Authority, a government agency
vested with a separate juridical personality. The Court said:
It can be said that in suing for the recovery of the rentals, the Republic of the
Philippines acted as principal of the Philippine Ports Authority, directly exercising the
commission it had earlier conferred on the latter as its agent. . . .15 (Emphasis
supplied)
 In E.B. Marcha, the Court also stressed that to require the Republic to commence all over
again another proceeding, as the trial court and Court of Appeals had required, was to
generate unwarranted delay and create needless repetition of proceedings:
More importantly, as we see it, dismissing the complaint on the ground that the
Republic of the Philippines is not the proper party would result in needless delay in
the settlement of this matter and also in derogation of the policy against multiplicity of
suits. Such a decision would require the Philippine Ports Authority to refile the very
same complaint already proved by the Republic of the Philippines and bring back as it
were to square one.16 (Emphasis supplied)
As noted earlier, the Court of Appeals declined to permit the substitution of the Republic of the
Philippines for the ISA upon the ground that the action for expropriation could not prosper because the
basis for the proceedings, the ISA's exercise of its delegated authority to expropriate, had become
legally ineffective by reason of the expiration of the statutory term of the agent or delegated i.e., ISA.
Since, as we have held above, the powers and functions of ISA have reverted to the Republic of the
Philippines upon the termination of the statutory term of ISA, the question should be addressed whether
fresh legislative authority is necessary before the Republic of the Philippines may continue the
expropriation proceedings initiated by its own delegate or agent.
While the power of eminent domain is, in principle, vested primarily in the legislative department of the
government, we believe and so hold that no new legislative act is necessary should the Republic
decide, upon being substituted for ISA, in fact to continue to prosecute the expropriation proceedings.
For the legislative authority, a long time ago, enacted a continuing or standing delegation of authority to
the President of the Philippines to exercise, or cause the exercise of, the power of eminent domain on
behalf of the Government of the Republic of the Philippines. The 1917 Revised Administrative Code,
which was in effect at the time of the commencement of the present expropriation proceedings before
the Iligan Regional Trial Court, provided that:
Sec. 64. Particular powers and duties of the President of the Philippines. — In
addition to his general supervisory authority, the President of the Philippines shall
have such other specific powers and duties as are expressly conferred or imposed on
him by law, and also, in particular, the powers and duties set forth in this Chapter.
Among such special powers and duties shall be:
(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 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.
G.R. No. 149179. July 15, 2005
PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, INC., Petitioners,
vs.
CITY OF BACOLOD, FLORENTINO T. GUANCO, in his capacity as the City Treasurer of Bacolod
City, and ANTONIO G. LACZI, in his capacity as the City Legal Officer of Bacolod
City, Respondents.
DECISION
GARCIA, J.:
In this appeal by way of a petition for review on certiorari under Rule 45 of the Rules of Court, petitioner
Philippine Long Distance Telephone Company (PLDT), seeks the reversal and setting aside of the July
23, 2001 decision1 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.
SEC. 151. Scope of Taxing Powers. – Except as otherwise provided in this Code, the city, may levy the
taxes, fees, and charges which the province or municipality may impose: Provided, however, That the
taxes, fees, and charges levied and collected by highly urbanized and independent component cities
shall accrue to them and distributed in accordance with the provisions of this Code.
The rates of taxes that the city may levy may exceed the maximum rates allowed for the province or
municipality by not more than fifty percent (50%) except the rates of professional and amusement taxes.
By Section 193 of the same Code, all tax exemption privileges then enjoyed by all persons, whether
natural or juridical, save those expressly mentioned therein, were withdrawn, necessarily including
those taxes from which PLDT is exempted under the "in-lieu-of-all-taxes" clause in its charter. We quote
Section 193:
SEC. 193. Withdrawal of Tax Exemption Privileges. – Unless otherwise provided in this Code, tax
exemptions or incentives granted to, or presently enjoyed by all persons, whether natural or juridical,
including government-owned or controlled corporations, except local water districts, cooperatives duly
registered under R.A. 6938, non-stock and non-profit hospitals and educational institutions, are hereby
withdrawn upon the effectivity of this Code.
Aiming to level the playing field among telecommunication companies, Congress enacted Republic Act
No. 7925, otherwise known as the Public Telecommunications Policy Act of the Philippines, which took
effect on March 16, 1995. To achieve the legislative intent, Section 23 thereof, also known as the "most-
favored- treatment" clause, provides for an equality of treatment in the telecommunications industry,
thus:
SEC. 23. Equality of Treatment in the Telecommunications Industry – Any advantage, favor, privilege,
exemption, or immunity granted under existing franchises, or may hereafter be granted shall ipso
facto become part of previously granted telecommunications franchises and shall be accorded
immediately and unconditionally to the grantees of such franchises: Provided, however, That the
foregoing shall neither apply to nor affect provisions of telecommunications franchises concerning
territory covered by the franchise, the life span of the franchise, or the type of the service authorized by
the franchise.
In August 1995, the City of Bacolod, invoking its authority under Section 137, in relation to Section 151
and Section 193, supra, of the Local Government Code, made an assessment on PLDT for the payment
of franchise tax due the City.
Complying therewith, PLDT began paying the City franchise tax from the year 1994 until the third
quarter of 1998, at which time the total franchise tax it had paid the City already amounted to
₱2,770,696.37.
On June 2, 1998, the Department of Finance through its Bureau of Local Government Finance (BLGF),
issued a ruling to the effect that as of March 16, 1995, the effectivity date of the Public
Telecommunications Policy Act of the Philippines (Rep. Act. No. 7925), PLDT, among other
telecommunication companies, became exempt from local franchise tax. Pertinently, the BLGF ruling
reads:
It appears that RA 7082 further amending ACT No. 3436 which granted to PLDT a franchise to install,
operate and maintain a telephone system throughout the Philippine Islands was approved on August 3,
1991. Section 12 of said franchise, likewise, contains the ‘in lieu of all taxes’ proviso.
In this connection, Section 23 of RA 7925, quoted hereunder, which was approved on March 1, 1995
provides for the equality of treatment in the telecommunications industry:
On the basis of the aforequoted Section 23 of RA 7925, PLDT as a telecommunications franchise
holder becomes automatically covered by the tax exemption provisions of RA 7925, which took effect
on March 16, 1995.
Accordingly, PLDT shall be exempt from the payment of franchise and business taxes imposable by
LGUs under Sections 137 and 143, respectively, of the LGC [Local Government Code], upon the
effectivity of RA 7925 on March 16, 1995. However, PLDT shall be liable to pay the franchise and
business taxes on its gross receipts realized from January 1, 1992 up to March 15, 1995, during which
period PLDT was not enjoying the ‘most favored clause’ proviso of RA 7025 [sic]. 3
Invoking the aforequoted ruling, PLDT then stopped paying local franchise and business taxes to
Bacolod City starting the fourth quarter of 1998.
The controversy came to a head-on when, sometime in 1999, PLDT applied for the issuance of a
Mayor’s Permit but the City of Bacolod withheld issuance thereof pending PLDT’s payment of its
franchise tax liability in the following amounts: (1) ₱358,258.30 for the fourth quarter of 1998; and (b)
₱1,424,578.10 for the year 1999, all in the aggregate amount of ₱1,782,836.40, excluding surcharges
and interest, about which PLDT was duly informed by the City Treasurer via a 5th Indorsement dated
March 16, 1999 for PLDT’s "appropriate action".4
In time, PLDT filed a protest5 with the Office of the City Legal Officer, questioning the assessment and
at the same time asking for a refund of the local franchise taxes it paid in 1997 until the third quarter of
1998.
In a reply-letter dated March 26, 1999,6 City Legal Officer Antonio G. Laczi denied the protest and
ordered PLDT to pay the questioned assessment.
Hence, on May 14, 1999, in the Regional Trial Court at Bacolod City, PLDT filed its 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 Mayor’s Permit for the year 1999;
and requiring it to refund the amount of ₱2,770,606.37, allegedly representing overpaid franchise taxes
for the years 1997 and 1998 with interest until fully paid.
In time, the respondent City filed its Answer/Comment to the petition,8 basically maintaining that Section
137 of the Local Government Code remains as the operative law despite the enactment of the Public
Telecommunications Policy Act of the Philippines (Rep. Act No. 7925), and accordingly prayed for the
dismissal of the petition.
In the ensuing pre-trial conference, the parties manifested that they would not present any testimonial
evidence, and merely requested for time to file their respective memoranda, to which the trial court
acceded.
Eventually, in the herein assailed decision dated July 23, 2001,9 the trial court dismissed PLDT’s
petition, thus:
WHEREFORE, premises considered, the petition should be, as it is hereby DISMISSED. No costs.
SO ORDERED.
Therefrom, PLDT came to this Court via the present recourse, imputing the following errors on the part
of the trial court:
5.01.a. THE LOWER COURT ERRED IN SUSTAINING RESPONDENTS’ POSITION THAT SECTION
137 OF THE LOCAL GOVERNMENT CODE, WHICH, IN RELATION TO SECTION 151 THEREOF,
ALLOWS RESPONDENT CITY TO IMPOSE THE FRANCHISE TAX, IS APPLICABLE IN THIS CASE.
5.01.b. THE LOWER COURT ERRED IN NOT HOLDING THAT UNDER PETITIONER’S FRANCHISE
(REPUBLIC ACT NO. 7082), AS AMENDED AND EXPANDED BY SECTION 23 OF REPUBLIC ACT
NO. 7925 (PUBLIC TELECOMMUNICATIONS POLICY ACT), TAKING INTO ACCOUNT THE
FRANCHISES OF GLOBE TELECOM, INC., (GLOBE) (REPUBLIC ACT NO. 7229) AND SMART
COMMUNICATIONS, INC. (SMART) (REPUBLIC ACT NO. 7294), WHICH WERE ENACTED
SUBSEQUENT TO THE LOCAL GOVERNMENT CODE, NO FRANCHISE TAXES MAY BE IMPOSED
ON PETITIONER BY RESPONDENT CITY.
5.01.c. THE LOWER COURT ERRED IN NOT GIVING WEIGHT TO THE RULING OF THE
DEPARTMENT OF FINANCE, THROUGH ITS BUREAU OF LOCAL GOVERNMENT FINANCE, THAT
PETITIONER IS EXEMPT FROM THE PAYMENT OF FRANCHISE AND BUSINESS TAXES
IMPOSABLE BY LOCAL GOVERNMENT UNITS UNDER THE LOCAL GOVERNMENT CODE.
5.01.d. THE LOWER COURT ERRED IN DISMISSING THE PETITION BELOW.
As we see it, the only question which commends itself for our resolution is, whether or not Section 23 of
Rep. Act No. 7925, also called the "most-favored-treatment" clause, operates to exempt petitioner
PLDT from the payment of franchise tax imposed by the respondent City of Bacolod.
Contrary to petitioner’s claim, the issue thus posed is not one of "first impression" insofar as this Court
is concerned. For sure, this is not the first time for petitioner PLDT to invoke the jurisdiction of this Court
on the same question, albeit involving another city.
In PLDT vs. City of Davao,10 this Court has had the occasion to interpret Section 23 of Rep. Act No.
7925. There, we ruled that Section 23 does not operate to exempt PLDT from the payment of franchise
tax imposed upon it by the City of Davao:
In sum, it does not appear that, in approving §23 of R.A. No. 7925, Congress intended it to operate as a
blanket tax exemption to all telecommunications entities. Applying the rule of strict construction of laws
granting tax exemptions and the rule that doubts should be resolved in favor of municipal corporations
in interpreting statutory provisions on municipal taxing powers, we hold that §23 of R.A. No. 7925
cannot be considered as having amended petitioner's franchise so as to entitle it to exemption from the
imposition of local franchise taxes. Consequently, we hold that petitioner is liable to pay local franchise
taxes in the amount of ₱3,681,985.72 for the period covering the first to the fourth quarter of 1999 and
that it is not entitled to a refund of taxes paid by it for the period covering the first to the third quarter of
1998.11
Explains this Court in the same case:
To begin with, tax exemptions are highly disfavored. The reason for this was explained by this Court
in Asiatic Petroleum Co. v. Llanes, in which it was held:
. . . Exemptions from taxation are highly disfavored, so much so that they may almost be said to be
odious to the law. He who claims an exemption must be able to point to some positive provision of law
creating the right. . . As was said by the Supreme Court of Tennessee in Memphis vs. U. & P. Bank (91
Tenn., 546, 550), ‘The right of taxation is inherent in the State. It is a prerogative essential to the
perpetuity of the government; and he who claims an exemption from the common burden must justify
his claim by the clearest grant of organic or statute law.’ Other utterances equally or more emphatic
come readily to hand from the highest authority. In Ohio Life Ins. and Trust Co. vs. Debolt (16 Howard,
416), it was said by Chief Justice Taney, that the right of taxation will not be held to have been
surrendered, ‘unless the intention to surrender is manifested by words too plain to be mistaken.’ In the
case of the Delaware Railroad Tax (18 Wallace, 206, 226), the Supreme Court of the United States said
that the surrender, when claimed, must be shown by clear, unambiguous language, which will admit of
no reasonable construction consistent with the reservation of the power. If a doubt arises as to the
intent of the legislature, that doubt must be solved in favor of the State. In Erie Railway Company vs.
Commonwealth of Pennsylvania (21 Wallace, 492, 499), Mr. Justice Hunt, speaking of exemptions,
observed that a State cannot strip itself of the most essential power of taxation by doubtful words. ‘It
cannot, by ambiguous language, be deprived of this highest attribute of sovereignty.’ In Tennessee vs.
Whitworth (117 U.S., 129, 136), it was said: ‘In all cases of this kind the question is as to the intent of
the legislature, the presumption always being against any surrender of the taxing power.’ In Farrington
vs. Tennessee and County of Shelby (95 U.S., 379, 686), Mr. Justice Swayne said: ‘. . . When
exemption is claimed, it must be shown indubitably to exist. At the outset, every presumption is against
it. A well-founded doubt is fatal to the claim. It is only when the terms of the concession are too explicit
to admit fairly of any other construction that the proposition can be supported.’
The tax exemption must be expressed in the statute in clear language that leaves no doubt of the
intention of the legislature to grant such exemption. And, even if it is granted, the exemption must be
interpreted in strictissimi jurisagainst the taxpayer and liberally in favor of the taxing authority.
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.
R.A. No. 7925 is thus a legislative enactment designed to set the national policy on telecommunications
and provide the structures to implement it to keep up with the technological advances in the industry
and the needs of the public. The thrust of the law is to promote gradually the deregulation of the entry,
pricing, and operations of all public telecommunications entities and thus promote a level playing field in
the telecommunications industry. There is nothing in the language of §23 nor in the proceedings of both
the House of Representatives and the Senate in enacting R.A. No. 7925 which shows that it
contemplates the grant of tax exemptions to all telecommunications entities, including those whose
exemptions had been withdrawn by the LGC.
What this Court said in Asiatic Petroleum Co. v. Llanes applies mutatis mutandis to this case: ‘When
exemption is claimed, it must be shown indubitably to exist. At the outset, every presumption is against
it. A well-founded doubt is fatal to the claim. It is only when the terms of the concession are too explicit
to admit fairly of any other construction that the proposition can be supported.’ In this case, the word
‘exemption’ in §23 of R.A. No. 7925 could contemplate exemption from certain regulatory or reporting
requirements, bearing in mind the policy of the law. It is noteworthy that, in holding Smart and Globe
exempt from local taxes, the BLGF did not base its opinion on §23 but on the fact that the franchises
granted to them after the effectivity of the LGC exempted them from the payment of local franchise and
business taxes.
As in City of Davao, supra, petitioner presently argues that because Smart Communications, Inc.
(SMART) and Globe Telecom (GLOBE) under whose respective franchises granted after the effectivity
of the Local Government Code, are exempt from franchise tax, it follows that petitioner is likewise
exempt from the franchise tax sought to be collected by the City of Bacolod, on the reasoning that the
grant of tax exemption to SMART and GLOBE ipso factoapplies to PLDT, consistent with the "most-
favored-treatment" clause found in Section 23 of the Public Telecommunications Policy Act of the
Philippines (Rep. Act No. 7925).
Again, there is nothing novel in petitioner’s contention. In fact, this Court in City of Davao, even
adverted to PLDT’s argument therein, thus:
Finally, it [PLDT] argues that because Smart and Globe are exempt from the franchise tax, it follows
that it must likewise be exempt from the tax being collected by the City of Davao because the grant of
tax exemption to Smart and Globe ipso facto extended the same exemption to it.
In rejecting PLDT’s contention, this Court ruled in City of Davao as follows:
The acceptance of petitioner’s theory would result in absurd consequences. To illustrate: In its
franchise, Globe is required to pay a franchise tax of only one and one-half percentum (1/2% [sic] ) of all
gross receipts from its transactions while Smart is required to pay a tax of three percent (3%) on all
gross receipts from business transacted. Petitioner’s theory would require that, to level the playing field,
any "advantage, favor, privilege, exemption, or immunity" granted to Globe must be extended to all
telecommunications companies, including Smart. If, later, Congress again grants a franchise to another
telecommunications company imposing, say, one percent (1%) franchise tax, then all other
telecommunications franchises will have to be adjusted to "level the playing field" so to speak. This
could not have been the intent of Congress in enacting Section 23 of Rep. Act 7925. Petitioner’s theory
will leave the Government with the burden of having to keep track of all granted telecommunications
franchises, lest some companies be treated unequally. It is different if Congress enacts a law
specifically granting uniform advantages, favor, privilege, exemption or immunity to all
telecommunications entities.
On PLDT’s motion for reconsideration in Davao, the Court added in its en banc Resolution of March 25,
2003,12 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:
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 WHEREFORE, the instant petition is DENIED and the assailed decision dated July 23, 2001 of the
pricing by dominant carriers. Equal access should be granted to all operators connecting into the lower court AFFIRMED.
interexchange network. There should be no discrimination against any carrier in terms of priorities
and/or quality of services. Costs against petitioner.

Nor does the term ‘exemption’ in § 23 of R.A. No. 7925 mean tax exemption. The term refers to SO ORDERED.
exemption from certain regulations and requirements imposed by the National Telecommunications
Commission (NTC). For instance, R.A. No. 7925, § 17 provides: ‘The Commission shall exempt any
specific telecommunications service from its rate or tariff regulations if the service has sufficient
competition to ensure fair and reasonable rates or tariffs.’ Another exemption granted by the law in line
with its policy of deregulation is the exemption from the requirement of securing permits from the NTC
every time a telecommunications company imports equipment.13

In the same en banc Resolution, the Court even rejected PLDT’s contention that the "in-lieu-of-all-taxes"
clause does not refer to "tax exemption" but to "tax exclusion" and hence, the strictissimi juris rule does
not apply, explaining that these two terms actually mean the same thing, such that the rule that tax
exemption should be applied in strictissimi juris against the taxpayer and liberally in favor of the
government applies equally to tax exclusions. Thus:

Indeed, both in their nature and in their effect there is no difference between tax exemption and tax
exclusion. Exemption is an immunity or privilege; it is freedom from a charge or burden to which others
are subjected. Exclusion, on the other hand, is the removal of otherwise taxable items from the reach of
taxation, e.g., exclusions from gross income and allowable deductions. Exclusion is thus also an
immunity or privilege which frees a taxpayer from a charge to which others are subjected.
Consequently, the rule that tax exemption should be applied in strictissimi juris against the taxpayer and
liberally in favor of the government applies equally to tax exclusions. To construe otherwise the ‘in lieu
of all taxes’ provision invoked is to be inconsistent with the theory that R.A. No. 7925, § 23 grants tax
exemption because of a similar grant to Globe and Smart. 14

PLDT likewise argued in said case that the RTC at Davao City erred in not giving weight to the ruling of
the BLGF which, according to petitioner, is an administrative agency with technical expertise and
mastery over the specialized matters assigned to it. But then again, we held in Davao:

To be sure, the BLGF is not an administrative agency whose findings on questions of fact are given
weight and deference in the courts. The authorities cited by petitioner pertain to the Court of Tax
Appeals, a highly specialized court which performs judicial functions as it was created for the review of
tax cases. In contrast, the BLGF was created merely to provide consultative services and technical
assistance to local governments and the general public on local taxation, real property assessment, and
other related matters, among others. The question raised by petitioner is a legal question, to wit, the
interpretation of §23 of R.A. No. 7925. There is, therefore, no basis for claiming expertise for the BLGF
that administrative agencies are said to possess in their respective fields. 15

We note, quite interestingly, that apart from the particular local government unit involved in the earlier
case 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.
G.R. No. 84811 August 29, 1989
SOLID HOMES, INC., petitioner,
vs.
TERESITA PAYAWAL and COURT OF APPEALS, respondents.
CRUZ, J.:
We are asked to reverse a decision of the Court of Appeals sustaining the jurisdiction of the Regional
Trial Court of Quezon City over a complaint filed by a buyer, the herein private respondent, against the
petitioner, for delivery of title to a subdivision lot. The position of the petitioner, the defendant in that
action, is that the decision of the trial court is null and void ab initio because the case should have been
heard and decided by what is now called the Housing and Land Use Regulatory Board.
The complaint was filed on August 31, 1982, by Teresita Payawal against Solid Homes, Inc. before the
Regional Trial Court of Quezon City and docketed as Civil Case No. Q-36119. The plaintiff alleged that
the defendant contracted to sell to her a subdivision lot in Marikina on June 9, 1975, for the agreed price
of P 28,080.00, and that by September 10, 1981, she had already paid the defendant the total amount
of P 38,949.87 in monthly installments and interests. Solid Homes subsequently executed a deed of
sale over the land but failed to deliver the corresponding certificate of title despite her repeated
demands because, as it appeared later, the defendant had mortgaged the property in bad faith to a
financing company. The plaintiff asked for delivery of the title to the lot or, alternatively, the return of all
the amounts paid by her plus interest. She also claimed moral and exemplary damages, attorney's fees
and the costs of the suit.
Solid Homes moved to dismiss the complaint on the ground that the court had no jurisdiction, this being
vested in the National Housing Authority under PD No. 957. The motion was denied. The defendant
repleaded the objection in its answer, citing Section 3 of the said decree providing that "the National
Housing Authority shall have exclusive jurisdiction to regulate the real estate trade and business in
accordance with the provisions of this Decree." After trial, judgment was rendered in favor of the plaintiff
and the defendant was ordered to deliver to her the title to the land or, failing this, to refund to her the
sum of P 38,949.87 plus interest from 1975 and until the full amount was paid. She was also awarded P
5,000.00 moral damages, P 5,000.00 exemplary damages, P 10,000.00 attorney's fees, and the costs
of the suit.1
Solid Homes appealed but the decision was affirmed by the respondent court, 2 which also berated the
appellant for its obvious efforts to evade a legitimate obligation, including its dilatory tactics during the
trial. The petitioner was also reproved for its "gall" in collecting the further amount of P 1,238.47 from
the plaintiff purportedly for realty taxes and registration expenses despite its inability to deliver the title
to the land.
In holding that the trial court had jurisdiction, the respondent court referred to Section 41 of PD No. 957
itself providing that:
SEC. 41. Other remedies.-The rights and remedies provided in this Decree shall be in
addition to any and all other rights and remedies that may be available under existing
laws.
and declared that "its clear and unambiguous tenor undermine(d) the (petitioner's) pretension that the
court a quowas bereft of jurisdiction." The decision also dismissed the contrary opinion of the Secretary
of Justice as impinging on the authority of the courts of justice. While we are disturbed by the findings of
fact of the trial court and the respondent court on the dubious conduct of the petitioner, we nevertheless
must sustain it on the jurisdictional issue.
The applicable law is PD No. 957, as amended by PD No. 1344, entitled "Empowering the National
Housing Authority to Issue Writs of Execution in the Enforcement of Its Decisions Under Presidential
Decree No. 957." Section 1 of the latter decree provides as follows:
SECTION 1. In the exercise of its function to regulate the real estate trade and
business and in addition to its powers provided for in Presidential Decree No. 957, the
National Housing Authority shall 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;
(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;
(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
The circumstance that the special law is passed before or after the general act does
not change the principle. Where the special law is later, it will be regarded as an
exception to, or a qualification of, the prior general act; and where the general act is
later, the special statute will be construed as remaining an exception to its terms,
unless repealed expressly or by necessary implication. 5
It is obvious that the general law in this case is BP No. 129 and PD No. 1344 the special law.
The argument that the trial court could also assume jurisdiction because of Section 41 of PD No. 957,
earlier quoted, is also unacceptable. We do not read that provision as vesting concurrent jurisdiction on
the Regional Trial Court and the Board over the complaint mentioned in PD No. 1344 if only because
grants of power are not to be lightly inferred or merely implied. The only purpose of this section, as we
see it, is to reserve. to the aggrieved party such other remedies as may be provided by existing law, like
a prosecution for the act complained of under the Revised Penal Code. 6
On the competence of the Board to award damages, we find that this is part of the exclusive power
conferred upon it by PD No. 1344 to hear and decide "claims involving refund and any other claims filed
by subdivision lot or condominium unit buyers against the project owner, developer, dealer, broker or
salesman." It was therefore erroneous for the respondent to brush aside the well-taken opinion of the
Secretary of Justice that-
Such claim for damages which the subdivision/condominium buyer may have against
the owner, developer, dealer or salesman, being a necessary consequence of an
adjudication of liability for non-performance of contractual or statutory obligation, may
be deemed necessarily included in the phrase "claims involving refund and any other
claims" used in the aforequoted subparagraph C of Section 1 of PD No. 1344. The
phrase "any other claims" is, we believe, sufficiently broad to include any and all
claims which are incidental to or a necessary consequence of the claims/cases
specifically included in the grant of jurisdiction to the National Housing Authority under
the subject provisions.
The same may be said with respect to claims for attorney's fees which are
recoverable either by agreement of the parties or pursuant to Art. 2208 of the Civil
Code (1) when exemplary damages are awarded and (2) where the defendant acted
in gross and evident bad faith in refusing to satisfy the plaintiff 's plainly valid, just and
demandable claim.
Besides, a strict construction of the subject provisions of PD No. 1344 which would
deny the HSRC the authority to adjudicate claims for damages and for damages and
for attorney's fees would result in multiplicity of suits in that the subdivision
condominium buyer who wins a case in the HSRC and who is thereby deemed
entitled to claim damages and attorney's fees would be forced to litigate in the regular
courts for the purpose, a situation which is obviously not in the contemplation of the
law. (Emphasis supplied.)7
As a result of the growing complexity of the modern society, it has become necessary to create more
and more administrative bodies to help in the regulation of its ramified activities. Specialized in the
particular fields assigned to them, they can deal with the problems thereof with more expertise and
dispatch than can be expected from the legislature or the courts of justice. This is the reason for the
increasing vesture of quasi-legislative and quasi-judicial powers in what is now not unreasonably called
the fourth department of the government.
Statutes conferring powers on their administrative agencies must be liberally construed to enable them
to discharge their assigned duties in accordance with the legislative purpose. 8 Following this policy in
Antipolo Realty Corporation v. National Housing Authority, 9 the Court sustained the competence of the
respondent administrative body, in the exercise of the exclusive jurisdiction vested in it by PD No. 957
and PD No. 1344, to determine the rights of the parties under a contract to sell a subdivision lot.
It remains to state that, contrary to the contention of the petitioner, the case of Tropical Homes v.
National Housing Authority 10 is not in point. We upheld in that case the constitutionality of the
procedure for appeal provided for in PD No. 1344, but we did not rule there that the National Housing
Authority and not the Regional Trial Court had exclusive jurisdiction over the cases enumerated in
Section I of the said decree. That is what we are doing now.
It is settled that any decision rendered without jurisdiction is a total nullity and may be struck down at
any time, even on appeal before this Court. 11 The only exception is where the party raising the issue is
barred by estoppel, 12 which does not appear in the case before us. On the contrary, the issue was
raised as early as in the motion to dismiss filed in the trial court by the petitioner, which continued to
plead it in its answer and, later, on appeal to the respondent court. We have no choice, therefore,
notwithstanding the delay this decision will entail, to nullify the proceedings in the trial court for lack of
jurisdiction.
WHEREFORE, the challenged decision of the respondent court is REVERSED and the decision of the
Regional Trial Court of Quezon City in Civil Case No. Q-36119 is SET ASIDE, without prejudice to the
filing of the appropriate complaint before the Housing and Land Use Regulatory Board. No costs.
SO ORDERED.
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 decision 2 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 resolution 3 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 lot 4 (subject property) with the
respondents – the registered owners and developers of a housing subdivision known as Villa Priscilla
Subdivision located in Barangay Cutcut, Pulilan, Bulacan. Under the Contract to Sell, CGA would pay
₱2,373,000.00 for the subject property on installment basis; they were to pay a down payment of
₱1,186,500, with the balance payable within three years on equal monthly amortization payments of
₱46,593.85, inclusive of interest at 24% per annum, starting June 1998.
On August 5, 2000, the parties mutually agreed to amend the Contract to Sell to extend the payment
period from three to five years, calculated from the date of purchase and based on the increased total
consideration of ₱2,706,600, with equal monthly installments of ₱37,615.00, inclusive of interest at 24%
per annum, starting September 2000.
According to CGA, it religiously paid the monthly installments until its administrative pastor discovered
that the title covering the subject property suffered from fatal flaws and defects. CGA learned that the
subject property was actually part of two consolidated lots (Lots 2-F and 2-G Bsd-04-000829 [OLT]) that
the respondents had acquired from Nicanor Adriano (Adriano) and Ceferino Sison (Sison), respectively.
Adriano and Sison were former tenant-beneficiaries of Purificacion S. Imperial (Imperial) whose
property in Cutcut, Pulilan, Bulacan5 had been placed under Presidential Decree (PD) No. 27’s
Operation Land Transfer.6 According to CGA, Imperial applied for the retention of five hectares of her
land under Republic Act No. 6657,7 which the Department of Agrarian Reform (DAR) granted in its
October 2, 1997 order (DAR Order). The DAR Order authorized Imperial to retain the farm lots
previously awarded to the tenant-beneficiaries, including Lot 2-F previously awarded to Adriano, and Lot
2-G Bsd-04-000829 awarded to Sison. On appeal, the Office of the 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 -
(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;
Section 3 of PD No. 957 granted the National Housing Authority (NHA) the "exclusive jurisdiction to
regulate the real estate trade and business." Thereafter, PD No. 1344 was issued on April 2, 1978 to
expand the jurisdiction of the NHA to include the following:
SECTION 1. In the exercise of its functions to regulate the real estate trade and business and in
addition to its powers provided for in Presidential Decree No. 957, the National Housing Authority shall
have exclusive jurisdiction to hear and decide cases of the following nature:
A. Unsound real estate business practices;
B. Claims involving refund and any other claims filed by subdivision lot or condominium unit
buyer against the project owner, developer, dealer, broker or salesman; and
C. Cases involving specific performance of contractual and statutory obligations filed by buyers
of subdivision lot or condominium unit against the owner, developer, dealer, broker or
salesman.
Executive Order No. 648 (EO 648), dated February 7, 1981, transferred the regulatory and quasi-
judicial functions of the NHA to the Human Settlements Regulatory Commission (HSRC). Section 8 of
EO 648 provides:
SECTION 8. Transfer of Functions. -The regulatory functions of the National Housing Authority pursuant
to Presidential Decree Nos. 957, 1216, 1344 and other related laws are hereby transferred to the
Commission [Human Settlements Regulatory Commission]. x x x. Among these regulatory functions
are: 1) Regulation of the real estate trade and business; x x x 11) Hear and decide cases of unsound
real estate business practices; claims involving refund filed against project owners, developers, dealers,
brokers, or salesmen; and cases of specific performance.
Pursuant to Executive Order No. 90 dated December 17, 1986, the HSRC was renamed as the HLURB.
Rationale for HLURB’s extensive quasi-judicial powers
The surge in the real estate business in the country brought with it an increasing number of cases
between subdivision owners/developers and lot buyers on the issue of the extent of the HLURB’s
exclusive jurisdiction. In the cases that reached us, we have consistently ruled that the HLURB has
exclusive jurisdiction over complaints arising from contracts between the subdivision developer and the
lot buyer or those aimed at compelling the subdivision developer to comply with its contractual and
statutory obligations to make the subdivision a better place to live in. 15
We explained the HLURB’s exclusive jurisdiction at length in Sps. Osea v. Ambrosio, 16 where we said:
Generally, the extent to which an administrative agency may exercise its powers depends largely, if not
wholly, on the provisions of the statute creating or empowering such agency. Presidential Decree (P.D.)
No. 1344, "Empowering The National Housing Authority To Issue Writ Of Execution In The Enforcement
Of Its Decision Under Presidential Decree No. 957," clarifies and spells out the quasi-judicial
dimensions of the grant of jurisdiction to the HLURB in the following specific terms:
SEC. 1. In the exercise of its functions to regulate the real estate trade and business and in addition to
its powers provided for in Presidential Decree No. 957, the National Housing Authority shall have
exclusive jurisdiction to hear and decide cases of the following nature:
A. Unsound real estate business practices;
B. Claims involving refund and any other claims filed by subdivision lot or condominium unit
buyer against the project owner, developer, dealer, broker or salesman; and
C. Cases involving specific performance of contractual and statutory obligations filed by buyers
of subdivision lots or condominium units against the owner, developer, dealer, broker or
salesman.
The extent to which the HLURB has been vested with quasi-judicial authority must also be determined
by referring to the terms of P.D. No. 957, "The Subdivision And Condominium Buyers' Protective
Decree." Section 3 of this statute provides:
x x x National Housing Authority [now HLURB]. - The National Housing Authority shall have exclusive
jurisdiction to regulate the real estate trade and business in accordance with the provisions of this
Decree.
The need for the scope of the regulatory authority thus lodged in the HLURB is indicated in the second,
third and fourth preambular paragraphs of PD 957 which provide:
WHEREAS, numerous reports reveal that many real estate subdivision owners, developers, operators,
and/or sellers have reneged on their representations and obligations to provide and maintain properly
subdivision roads, drainage, sewerage, water systems, lighting systems, and other similar basic
requirements, thus endangering the health and safety of home and lot buyers;
WHEREAS, reports of alarming magnitude also show cases of swindling and fraudulent manipulations
perpetrated by unscrupulous subdivision and condominium sellers and operators, such as failure to
deliver titles to the buyers or titles free from liens and encumbrances, and to pay real estate taxes, and
fraudulent sales of the same subdivision lots to different innocent purchasers for value;
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’.
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.
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. Villar 19 and Suntay v. Gocolay20 that
the HLURB has no jurisdiction over cases filed by subdivision or condominium owners or developers
against subdivision lot or condominium unit buyers or owners. The rationale behind this can be found in
the wordings of Sec. 1, PD No. 1344, which expressly qualifies that the cases cognizable by the HLURB
are those instituted by subdivision or condomium buyers or owners against the project developer or
owner. This is also in keeping with the policy of the law, which is to curb unscrupulous practices in the
real estate trade and business.21
Thus, in the cases of Fajardo Jr. v. Freedom to Build, Inc.,[22] and Cadimas v. Carrion,23 we upheld the
RTC’s jurisdiction even if the subject matter was a subdivision lot since it was the subdivision developer
who filed the action against the buyer for violation of the contract to sell.
The only instance that HLURB may take cognizance of a case filed by the developer is when said case
is instituted as a compulsory counterclaim to a pending case filed against it by the buyer or owner of a
subdivision lot or condominium unit. This was what happened in Francel Realty Corporation v.
Sycip,24 where the HLURB took cognizance of the developer’s claim against the buyer in order to
forestall splitting of causes of action.
Obviously, where it is not clear from the allegations in the complaint that the property involved is a
subdivision lot, as in Javellana v. Hon. Presiding Judge, RTC, Branch 30, Manila,25 the case falls under
the jurisdiction of the regular courts and not the HLURB. Similarly, in Spouses Dela Cruz v. Court of
Appeals,26 we held that the RTC had jurisdiction over a case where the conflict involved a subdivision
lot buyer and a party who owned a number of subdivision lots but was not himself the subdivision
developer.
The Present Case
In the present case, CGA is unquestionably the buyer of a subdivision lot from the respondents, who
sold the property in their capacities as owner and developer. As CGA stated in its complaint:
2.01. Defendants are the registered owners and developers of a housing subdivision presently
known as Villa Priscilla Subdivision located at Brgy. Cutcut, Pulilan, Bulacan;
2.02 On or about April 30, 1998, the plaintiff thru its Administrative Pastor bought from
defendants on installment basis a parcel of land designated at Lot 1, Block 4 of the said Villa
Priscilla Subdivision xxx
2.04 At the time of the execution of the second Contract to Sell (Annex "B"), Lot 1, Block 4 of
the Villa Priscilla Subdivision was already covered by Transfer Certificate of Title No. T-127776
of the Registry of Deeds of Quezon City in the name of Iluminada T. Soneja, married to Asterio
Soneja (defendant Priscilla T. Ignacio’s sister and brother-in-law) and the defendants as co-
owners, but the latter represented themselves to be the real and absolute owners thereof, as in
fact it was annotated in the title that they were empowered to sell the same. Copy of TCT No.
T-127776 is hereto attached and made part hereof as Annex "C".
2.05 Plaintiff has been religiously paying the agreed monthly installments until its
Administrative Pastor discovered recently that while apparently clean on its face, the title
covering the subject lot actually suffers from fatal flaws and defects as it is part of the property
involved in litigation even before the original Contract to Sell (Annex "A"), which defendants
deliberately and fraudulently concealed from the plaintiff;
2.06 As shown in the technical description of TCT No. T-127776 (Annex "C"), it covers a
portion of consolidated Lots 2-F and 2-G Bsd-04-000829 (OLT), which were respectively
acquired by defendants from Nicanor Adriano and Ceferino Sison, former tenants-beneficiaries
of Purificacion S. Imperial, whose property at Cutcut, Pulilan, Bulacan originally covered by
TCT No. 240878 containing an area of 119,431 square meters was placed under Operation
Land Transfer under P.D. No. 27;
2.07 Said Purificacion S. Imperial applied for retention of five (5) hectares of her property at
Cutcut, Pulilan, Bulacan under Rep, Act No. 6657 and the same was granted by the
Department of Agrarian Reform (DAR) to cover in whole or in part farm lots previously
awarded to tenants-beneficiaries, including inter alia Nicanor Adriano’s Lot 2-F and Ceferino
Sison’s Lot 2-G Bsd-04-000829 (OLT).
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.
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.
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 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:
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.
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.
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.
This act of admission needs no further elaboration to prove that Dadubo is guilty of
the charge. Such admission is however treated as a mitigating circumstance which is
offset by the aggravating circumstance of taking advantage of her official position.
There is no reason for her to change or alter entries in the ledger unless she intends
to benefit therefrom or to conceal some facts.
Further, it should be noted that the report was made only on September 28, 1987 (the
date the report on reconciliation was submitted to the Regional Office). It should be
emphasized as earlier stated that Dadubo was not authorized to reconcile the
subsidiary ledger cards for the period ending August 20, 1987. Hence, as
emphatically stated in the MSPB decision, ". . . respondent Dadubo manipulated the
bank records to conceal the offense which constituted the act of dishonesty."
 The opinion of an acting Internal Audit Officer, whose report was among the
preliminary findings considered in the investigation of the case, is not conclusive as
there are other available and convincing evidence to prove the guilt of Dadubo.
Dadubo has brought her case to this Court in this petition for certiorari. She claims that CSC Resolution
No. 92-878 failed to comply with the constitutional requirement to state clearly and distinctly the facts an
the law on which the decision is based; CSC Resolution No. 92-878 conflicts with the findings of fact in
CSC Resolution No. 91-642; the Commission manifestly overlooked or disregarded certain relevant
facts not disputed by the parties; and it based its conclusions entirely on speculations, surmises or
conjectures.
Required to comment, the Solicitor General argued that CSC Resolution No. 92-878 did not need to
restate the legal and factual bases of the original decision in CSC-MSPB No. 497 which already
explained the relevant facts and the applicable law. The petitioner had admitted that she changed the
entry of the dates in the subsidiary ledger card from August 13 to 14 in the course of her reconciliation
work although she was not authorized to do this. This admission, along with the other evidence
Presented during the investigation in the bank, proved Dadubo's guilt. Moreover, the affidavit of Albert
C. Ballicud was inadmissible in evidence because he was never subjected to cross-examination.
The petitioner's challenges are mainly factual. The rule is that the findings of fact of administrative
bodies, if based on substantial evidence, are controlling on the reviewing authority. 10 is settled that it is
not for the appellate court to substitute its own judgment for that of the administrative agency on the
sufficiency of the evidence and the credibility of the witnesses. 11 Administrative decisions on matters
within their jurisdiction are entitled to respect and can only be set aside on proof of grave abuse of
discretion, fraud or error of law. 12 None of these vices has been shown in this case.
sufficiently proved her guilt of embezzlement of bank funds, which in unquestionably prejudicial to the
best interest of the bank.
The charge against the respondent in an administrative case need not be drafted with the precision of
an information in a criminal prosecution. It is sufficient that he is apprised of the substance of the charge
against him; what is controlling is the allegation of the acts complained of, not the designation of the
offense. 15
We must also dismiss the petitioner's complaint that CSC Resolution No. 92-878 failed to comply with
the constitutional requirement to state clearly and distinctly the facts and the law on which a decision is
based. We have held that this provision applies only to courts of justice and not to administrative bodies
like the Civil Service Commission. 16 In any event, there was an earlier statement of the facts and the
law involved in the decision rendered by the MSPB dated February 28, 1990, which affirmed DBP's
decision to dismiss the petitioner. In both decisions, the facts and the law on which they were based
were clearly and distinctly stated.
It is worth adding that inasmuch as Civil Service Resolution No. 92-878 was rendered only to resolve
DBP's motion for reconsideration, it was not really necessary to re-state the factual an, legal bases for
the said decisions. Even resolutions issued by this Court do not need to conform, to the first paragraph
of Article VIII, Section 14, of the Constitution, for reasoning extensively discussed in Borromeo v. Court
of Appeals 17 and other subsequent cases. 18
We find no justification to nullify or modify the questioned resolution. It would perhaps have been more
thorough if certain other officers of the bank had been also investigated for their part in the anomalous
transaction. But that matter is not before this Court and cannot be resolved by us at this time.

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
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.

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
G.R. No. L-30637 July 16, 1987
LIANGA BAY LOGGING, CO., INC., petitioner,
vs.
HON. MANUEL LOPEZ ENAGE, in his capacity as Presiding Judge of Branch II of the Court of
First, Instance of Agusan, and AGO TIMBER CORPORATION, respondents.
TEEHANKEE, C.J.:
The Court grants the petition for certiorari and prohibition and holds that respondent judge, absent any
showing of grave abuse of discretion, has no competence nor authority to review anew the decision in
administrative proceedings of respondents public officials (director of forestry, secretary of agriculture
and natural resources and assistant executive secretaries of the Office of the President) in determining
the correct boundary line of the licensed timber areas of the contending parties. The Court reaffirms the
established principle that findings of fact by an administrative board or agency or official, following a
hearing, are binding upon the courts and will not be disturbed except where the board, agency and/or
official(s) have gone beyond their statutory authority, exercised unconstitutional powers or clearly acted
arbitrarily and without regard to their duty or with grave abuse of discretion.
The parties herein are both forest concessionaries whose licensed areas are adjacent to each other.
The concession of petitioner Lianga Bay Logging Corporation Co., Inc. (hereinafter referred to as
petitioner Lianga) as described in its Timber License Agreement No. 49, is located in the municipalities
of Tago, Cagwait, Marihatag and Lianga, all in the Province of Surigao, consisting of 110,406 hectares,
more or less, while that of respondent Ago Timber Corporation (hereinafter referred to as respondent
Ago) granted under Ordinary Timber License No. 1323-60 [New] is located at Los Arcos and San
Salvador, Province of Agusan, with an approximate area of 4,000 hectares. It was a part of a forest area
of 9,000 hectares originally licensed to one Narciso Lansang under Ordinary Timber License No. 584-
'52.
Since the concessions of petitioner and respondent are adjacent to each other, they have a common
boundary-the Agusan-Surigao Provincial boundary-whereby the eastern boundary of respondent Ago's
concession is petitioner Lianga's western boundary. The western boundary of petitioner Lianga is
described as "... Corner 5, a point in the intersection of the Agusan-Surigao Provincial boundary and
Los Arcos-Lianga Road; thence following Agusan-Surigao Provincial boundary in a general northerly
and northwesterly and northerly directions about 39,500 meters to Corner 6, a point at the intersection
of the Agusan-Surigao Provincial boundary and Nalagdao Creek ..." The eastern boundary of
respondent Ago's concession is described as "... point 4, along the Agusan-Surigao boundary; thence
following Agusan-Surigao boundary in a general southeasterly and southerly directions about 12,000
meters to point 5, a point along Los Arcos-Lianga Road; ..." 1
Because of reports of encroachment by both parties on each other's concession areas, the Director of
Forestry ordered a survey to establish on the ground the common boundary of their respective
concession areas. Forester Cipriano Melchor undertook the survey and fixed the common boundary as
"Corner 5 of Lianga Bay Logging Company at Km. 10.2 instead of Km. 9.7 on the Lianga-Arcos Road
and lines N900E, 21,000 meters; N12 W, 21,150 meters; N40 W, 3,000 meters; N31 W, 2,800 meters;
N50 W, 1,700 meters" which respondent Ago protested claiming that "its eastern boundary should be
the provincial boundary line of Agusan-Surigao as described in Section 1 of Art. 1693 of the Philippine
Commission as indicated in the green pencil in the attached sketch" of the areas as prepared by the
Bureau of Forestry. 2 The Director of Forestry, after considering the evidence, found:
That the claim of the Ago Timber Corporation portrays a line (green line) far different in
alignment with the line (red) as indicated in the original License Control Map of this Office;
That the claim of the Ago Timber Corporation (green line does not conform to the distance of
6,800 meters from point 3 to point 4 of the original description of the area of Narciso Lansang
but would project said line to a distance of approximately 13,800 meters;
That to follow the claim of the Ago Timber Corporation would increase the area of Narciso
Lansang from 9,000 to 12,360 hectares;
That to follow the claim of the Ago Timber Corporation would reduce the area of the Lianga
Bay Logging, Co., Inc. to 107,046 hectares instead of the area granted which is 110,406
hectares.
and ruled that "the claim of the Ago Timber Corporation runs counter to the intentions of this Office is
granting the license of Mr. Narciso Lansang; and further, that it also runs counter to the intentions of this
Office in granting the Timber License Agreement to the Lianga Bay Logging Co., Inc. The intentions of
this Office in granting the two licenses (Lansang and Lianga Bay Logging Co., Inc.) are patently
manifest in that distances and bearings are the controlling factors. If mention was ever made of the
Agusan-Surigao boundary, as the common boundary line of both licensees, this Office could not have
meant the Agusan-Surigao boundary as described under Section 1 of Act 1693 of the Philippine
Commission for were it so it could have been so easy for this Office to mention the distance from point 3
to point 4 of Narciso Lansang as approximately 13,800 meters. This cannot be considered a mistake
considering that the percentage of error which is more or less 103% is too high an error to be committed
by an Office manned by competent technical men. The Agusan-Surigao boundary as mentioned in the
technical descriptions of both licensees, is, therefore, patently an imaginary line based on B.F. License
Control Map. Such being the case, it is reiterated that distance and bearings control the description
where an imaginary line exists. 3The decision fixed the common boundary of the licensed areas of the
Ago Timber Corporation and Lianga Bay Logging Co., Inc. as that indicated in red pencil of the sketch
attached to the decision.
In an appeal interposed by respondent Ago, docketed in the Department of Agriculture and Natural
Resources as DANR Case No. 2268, the then Acting Secretary of Agriculture and Natural Resources
Jose Y. Feliciano, in a decision dated August 9, 1965 set aside the appealed decision of the Director of
Forestry and ruled that "(T)he common boundary line of the licensed areas of the Ago Timber
Corporation and the Lianga Bay Logging Co., Inc., should be that indicated by the green line on the
same sketch which had been made an integral part of the appealed decision." 4
Petitioner elevated the case to the Office of the President, where in a decision dated June 16, 1966,
signed by then Assistant Executive Secretary Jose J. Leido, Jr., the ruling of the then Secretary of
Agriculture and Natural Resources was affirmed. 5 On motion for reconsideration, the Office of the
President issued another decision dated August 9, 1968 signed by then Assistant Executive Secretary
Gilberto Duavit reversing and overturning the decision of the then Acting Secretary of Agriculture and
Natural Resources and affirming in toto and reinstating the decision, dated March 20, 1961, of the
Director of Forestry. 6
Respondent Ago filed a motion for reconsideration of the decision dated August 9, 1968 of the Office of
the President but after written opposition of petitioner Lianga, the same was denied in an order dated
October 2, 1968, signed by then Assistant Executive Secretary Jose J. Leido, Jr. 7
On October 21, 1968, a new action was commenced by Ago Timber Corporation, as plaintiff, in the
Court of First Instance of Agusan, Branch II, docketed thereat as Civil Case No. 1253, against Lianga
Bay Logging Co., Inc., Assistant Executive Secretaries Jose J. Leido, Jr. and Gilberto M. Duavit and
Director of Forestry, as defendants, for "Determination of Correct Boundary Line of License Timber
Areas and Damages with Preliminary Injunction" reiterating once more the same question raised and
passed upon in DANR Case No. 2268 and insisting that "a judicial review of such divergent
administrative decisions is necessary in order to determine the correct boundary fine of the licensed
areas in question." 8
As prayed for, respondent judge issued a temporary restraining order on October 28, 1968, on a bond
of P20,000, enjoining the defendants from carrying out the decision of the Office of the President. The
corresponding writ was issued the next day, or on October 29, 1968. 9
On November 10, 1968, defendant Lianga (herein petitioner) moved for dismissal of the complaint and
for dissolution of the temporary restraining order on grounds that the complaint states no cause of
action and that the court has no jurisdiction over the person of respondent public officials and
respondent corporation. It also submitted its opposition to plaintiff's (herein respondent prayer for the
issuance of a writ of preliminary injunction. 10 A supplemental motion was filed on December 6, 1968. 11
On December 19, 1968, the lower court issued an order denying petitioner Lianga's motion to dismiss
and granting the writ of preliminary injunction prayed for by respondent Ago. 12 Lianga's Motion for
Reconsideration of the Order was denied on May 9, 1969. 13 Hence, this petition praying of the Court (a)
to declare that the Director of Forestry has the exclusive jurisdiction to determine the common boundary
of the licensed areas of petitioners and respondents and that the decision of the Office of the President
dated August 9, 1968 is final and executory; (b) to order the dismissal of Civil Case No. 1253 in the
Court of First Instance of Agusan; (c) to declare that respondent Judge acted without jurisdiction or in
excess of jurisdiction and with grave abuse of discretion, amounting to lack of jurisdiction, in issuing the
temporary restraining order dated October 28, 1968 and granting the preliminary injunction per its Order
dated December 19, 1968; and (d) to annul the aforementioned orders.
After respondent's comments on the petition and petitioner's reply thereto, this Court on June 30, 1969
issued a restraining order enjoining in turn the enforcement of the preliminary injunction and related
orders issued by the respondent court in Civil Case No. 1253. 14
The Court finds merit in the petition.
Respondent Judge erred in taking cognizance of the complaint filed by respondent Ago, asking for the
determination anew of the correct boundary fine of its licensed timber area, for the same issue had
already been determined by the Director of Forestry, the Secretary of Agriculture and Natural
Resources and the Office of the President, administrative officials under whose jurisdictions the matter
properly belongs. Section 1816 of the Revised Administrative Code vests in the Bureau of Forestry, the
jurisdiction and authority over the demarcation, protection, management, reproduction, reforestation,
occupancy, and use of all public forests and forest reserves and over the granting of licenses for game
and fish, and for the taking of forest products, including stone and earth therefrom. The Secretary of
Agriculture and Natural Resources, as department head, may repeal or in the decision of the Director of
Forestry when advisable in the public interests, 15 whose decision is in turn appealable to the Office of
the President. 16
In giving due course to the complaint below, the respondent court would necessarily have to assess and
evaluate anew all the evidence presented in the administrative proceedings, 17 which is beyond its
competence and jurisdiction. For the respondent court to consider and weigh again the evidence
already presented and passed upon by said officials would be to allow it to substitute its judgment for
that of said officials who are in a better position to consider and weigh the same in the light of the
authority specifically vested in them by law. Such a posture cannot be entertained, for it is a well-settled
doctrine that the courts of justice will generally not interfere with purely administrative matters which are
addressed to the sound discretion of government agencies and their expertise unless there is a clear
showing that the latter acted arbitrarily or with grave abuse of discretion or when they have acted in a
capricious and whimsical manner such that their action may amount to an excess or lack of
jurisdiction. 18
A doctrine long recognized is that where the law confines in an administrative office the power to
determine particular questions or matters, upon the facts to be presented, the jurisdiction of such office
shall prevail over the courts. 19
The general rule, under the principles of administrative law in force in this jurisdiction, is that decisions
of administrative officers shall not be disturbed by the courts, except when the former have acted
without or in excess of their jurisdiction, or with grave abuse of discretion. Findings of administrative
officials and agencies who have acquired expertise because their jurisdiction is confined to specific
matters are generally accorded not only respect but at times even finality of such findings are supported
by substantial evidence. 20 As recently stressed by the Court, "in this era of clogged court dockets, the
need for specialized administrative boards or commissions with the special knowledge, experience and
capability to hear and determine promptly disputes on technical matters or essentially factual matters,
subject to judicial review in case of grave abuse of discretion, has become well nigh indispensable." 21
The facts and circumstances in the instant case are similar to the earlier case of Pajo, et al. v. Ago, et
al. 22 (where therein respondent Pastor Ago is the president of herein respondent Ago Timber
Corporation). In the said case, therein respondent Pastor Ago, after an adverse decision of the Director
of Forestry, Secretary of Agriculture and Natural Resources and Executive Secretary in connection with
his application for renewal of his expired timber licenses, filed with the Court of First instance of Agusan
a petition for certiorari, prohibition and damages with preliminary injunction alleging that the rejection of
his application for renewal by the Director of Forestry and Secretary of Agriculture and Natural
Resources and its affirmance by the Executive Secretary constituted an abuse of discretion and was
therefore illegal. The Court held that "there can be no question that petitioner Director of Forestry has
jurisdiction over the grant or renewal of respondent Ago's timber license (Sec. 1816, Rev. Adm. Code);
that petitioner Secretary of Agriculture and Natural Resources as department head, is empowered by
law to affirm, modify or reject said grant or renewal of respondent Ago's timber license by petitioner
Director of Forestry (Sec. 79[c], Rev. Adm. Code); and that petitioner Executive Secretary, acting for
and in behalf and by authority of the President has, likewise, jurisdiction to affirm, modify or reverse the
orders regarding the grant or renewal of said timber license by the two aforementioned officials." The
Court went on to say that, "(I)n the case of Espinosa, et al. v. Makalintal, et al. (79 Phil. 134; 45 Off.
Gaz. 712), we held that the powers granted to the Secretary of Agriculture and Commerce (Natural
Resources) by law regarding the disposition of public lands such as granting of licenses, permits,
leases, and contracts or approving, rejecting, reinstating, or cancelling applications or deciding
conflicting applications, are all executive and administrative in nature. It is a well-recognized principle
that purely administrative and discretionary functions may not be interfered with by the courts. In
general, courts have no supervising power over the proceedings and actions of the administrative
departments of the government. This is generally true with respect to acts involving the exercise of
judgment or discretion, and findings of act. Findings of fact by an administrative board, agency or
official, following a hearing, are binding upon the courts and will not be disturbed except where the
board, agency or official has gone beyond his statutory authority, exercised unconstitutional powers or
clearly acted arbitrarily and without regard to his duty or with grave abuse of discretion. And we have
repeatedly held that there is grave abuse of discretion justifying the issuance of the writ of certiorari only
when there is capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction.
(Abad Santos v. Province of Tarlac, 67 Phil. 480; Tan vs. People, 88 Phil. 609)"
Respondent Ago contends that the motion filed by petitioner Lianga for reconsideration of the decision
of the Office of the President was denied in an alleged "decision" dated August 15, 1966, allegedly
signed by then Assistant Executive Secretary Jose J. Leido, Jr. that, "however, for some mysterious,
unknown if not anomalous reasons and/or illegal considerations, the "decision" allegedly dated August
15, 1966(Annex "D") was never released" and instead a decision was released on August 9, 1968,
signed by then Assistant Executive Secretary Gilberto M. Duavit, which reversed the findings and
conclusions of the Office of the President in its first decision dated June 16, 1966 and signed by then
Assistant Executive Secretary Leido.
It is elementary that a draft of a decision does not operate as judgment on a case until the same is duly
signed and delivered to the clerk for filing and promulgation. A decision cannot be considered as
binding on the parties until its promulgation. 23 Respondent should be aware of this rule. In still another
case of Ago v. Court of Appeals, 24 (where herein respondent Ago was the petitioner) the Court held
that, "While it is to be presumed that the judgment that was dictated in open court will be the judgment
of the court, the court may still modify said order as the same is being put into writing. And even if the
order or judgment has already been put into writing and signed, while it has not yet been delivered to
the clerk for filing, it is stin subject to amendment or change by the judge. It is only when the judgment
signed by the judge is actually filed with the clerk of court that it becomes a valid and binding judgment.
Prior thereto, it could still be subject to amendment and change and may not, therefore, constitute the
real judgment of the court."
Respondent alleges "that in view of the hopelessly conflicting decisions of the administrative bodies
and/or offices of the Philippine government, and the important questions of law and fact involved
therein, as well as the well-grounded fear and suspicion that some anomalous, illicit and unlawful
considerations had intervened in the concealment of the decision of August 15, 1966 (Annex "D") of
Assistant Executive Secretary Gilberto M. Duavit, a judicial review of such divergent administrative
decisions is necessary in order to determine the correct boundary line of the licensed areas in question
and restore the faith and confidence of the people in the actuations of our public officials and in our
system of administration of justice."
The mere suspicion of respondent that there were anomalies in the non-release of the Leido "decision"
allegedly denying petitioner's motion for reconsideration and the substitution thereof by the Duavit
decision granting reconsideration does not justify judicial review. Beliefs, suspicions and conjectures
cannot overcome the presumption of regularity and legality of official actions. 25 It is presumed that an
official of a department performs his official duties regularly. 26 It should be noted, furthermore, that as
hereinabove stated with regard to the case history in the Office of the President, Ago's motion for
reconsideration of the Duavit decision dated August 9, 1968 was denied in the Order dated October 2,
1968 and signed by Assistant Executive Secretary Leido himself (who thereby joined in the reversal of
his own first decision dated June 16, 1966 and signed by himself).
The Ordinary Timber License No. 1323-'60[New] which approved the transfer to respondent Ago of the
4,000 hectares from the forest area originally licensed to Narciso Lansang, stipulates certain conditions,
terms and limitations, among which were: that the decision of the Director of Forestry as to the exact
location of its licensed areas is final; that the license is subject to whatever decision that may be
rendered on the boundary conflict between the Lianga Bay Logging Co. and the Ago Timber
Corporation; that the terms and conditions of the license are subject to change at the discretion of the
Director of Forestry and the license may be made to expire at an earlier date. Under Section 1834 of the
Revised Administrative Code, the Director of Forestry, upon granting any license, may prescribe and
insert therein such terms, conditions, and limitations, not inconsistent with law, as may be deemed by
him to be in the public interest. The license operates as a contract between the government and
respondent. Respondent, therefore, is estopped from questioning the terms and stipulation thereof.
Clearly, the injunctive writ should not have been issued. The provisions of law explicitly provide that
Courts of First Instance shall have the power to issue writ of injunction, mandamus, certiorari,
prohibition, quo warranto and habeas corpus in their respective places, 27 if the petition filed relates to
the acts or omissions of an inferior court, or of a corporation, board, officer or person, within their
jurisdiction. 28
The jurisdiction or authority of the Court of First Instance to control or restrain acts by means of the writ
of injunction is limited only to acts which are being committed within the territorial boundaries of their
respective provinces or districts 29 except where the sole issue is the legality of the decision of the
administrative officials. 30
In the leading case of Palanan Lumber Plywood Co., Inc. v. Arranz 31 which involved a petition for
certiorari and prohibition filed in the Court of First Instance of Isabela against the same respondent
public officials as here and where the administrative proceedings taken were similar to the case at bar,
the Court laid down the rule that: "We agree with the petitioner that the respondent Court acted without
jurisdiction in issuing a preliminary injunction against the petitioners Executive Secretary, Secretary of
Agriculture and Natural Resources and the Director of Forestry, who have their official residences in
Manila and Quezon City, outside of the territorial jurisdiction of the respondent Court of First Instance of
Isabela. Both the statutory provisions and the settled jurisdiction of this Court unanimously affirm that
the extraordinary writs issued by the Court of First Instance are limited to and operative only within their
respective provinces and districts."
A different rule applies only when the point in controversy relates solely to a determination of a question
of law whether the decision of the respondent administrative officials was legally correct or not. 32 We
thus declared 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.