G.R. No.

120319 October 6, 1995

LUZON DEVELOPMENT BANK, petitioner,

vs.
ASSOCIATION OF LUZON DEVELOPMENT BANK EMPLOYEES and ATTY. ESTER S. GARCIA
in her capacity as VOLUNTARY ARBITRATOR, respondents.

ROMERO, J.:

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

Whether or not the company has violated the Collective Bargaining Agreement
provision and the Memorandum of Agreement dated April 1994, on promotion.

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

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

WHEREFORE, finding is hereby made that the Bank has not adhered to the
Collective Bargaining Agreement provision nor the Memorandum of Agreement 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. 1The essence of arbitration remains since a resolution of a dispute is
arrived at by resort to a disinterested third party whose decision is final and binding on the parties, but in
compulsory arbitration, such a third party is normally appointed by the government.

Under voluntary arbitration, on the other hand, referral of a dispute by the parties is made, pursuant
to a voluntary arbitration clause in their collective agreement, to an impartial third person for a final
and binding resolution. 2Ideally, arbitration awards are supposed to be complied with by both parties
without delay, such that once an award has been rendered by an arbitrator, nothing is left to be done by
both parties but to comply with the same. After all, they are presumed to have freely chosen arbitration as
the mode of settlement for that particular dispute. Pursuant thereto, they have chosen a mutually
acceptable arbitrator who shall hear and decide their case. Above all, they have mutually agreed to de
bound by said arbitrator's decision.

In the Philippine context, the parties to a Collective Bargaining Agreement (CBA) are required to
include therein provisions for a machinery for the resolution of grievances arising from the
interpretation or implementation of the CBA or company personnel policies. 3 For this purpose, parties
to a CBA shall name and designate therein a voluntary arbitrator or a panel of arbitrators, or include a
procedure for their selection, preferably from those accredited by the National Conciliation and Mediation
Board (NCMB). Article 261 of the Labor Code accordingly provides for exclusive original jurisdiction of
such voluntary arbitrator or panel of arbitrators over (1) the interpretation or implementation of the CBA
and (2) the interpretation or enforcement of company personnel policies. Article 262 authorizes them, but
only upon agreement of the parties, to exercise jurisdiction over other labor disputes.

On the other hand, a labor arbiter under Article 217 of the Labor Code has jurisdiction over the
following enumerated cases:

. . . (a) Except as otherwise provided under this Code the Labor Arbiters shall have
original and exclusive jurisdiction to hear and decide, within thirty (30) calendar days
after the submission of the case by the parties for decision without extension, even in
the absence of stenographic notes, the following cases involving all workers, whether
agricultural or non-agricultural:

1. Unfair labor practice cases;

2. Termination disputes;

3. If accompanied with a claim for reinstatement, those cases that workers may file
involving wages, rates of pay, hours of work and other terms and conditions of
employment;

4. Claims for actual, moral, exemplary and other forms of damages arising from the
employer-employee relations;

5. Cases arising from any violation of Article 264 of this Code, including questions
involving the legality of strikes and lockouts;

6. Except claims for Employees Compensation, Social Security, Medicare and

maternity benefits, all other claims, arising from employer-employee relations,
including those of persons in domestic or household service, involving an amount
exceeding five thousand pesos (P5,000.00) regardless of whether accompanied with
a claim for reinstatement.

xxx xxx xxx

It will thus be noted that the jurisdiction conferred by law on a voluntary arbitrator or a panel of such
arbitrators is quite limited compared to the original jurisdiction of the labor arbiter and the appellate
jurisdiction of the National Labor Relations Commission (NLRC) for that matter. 4 The state of our
present law relating to voluntary arbitration provides that "(t)he award or decision of the Voluntary
Arbitrator . . . shall be final and executory after ten (10) calendar days from receipt of the copy of the
award or decision by the parties," 5 while the "(d)ecision, awards, or orders of the Labor Arbiter are final
and executory unless appealed to the Commission by any or both parties within ten (10) calendar days
from receipt of such decisions, awards, or orders." 6 Hence, while there is an express mode of appeal from
the decision of a labor arbiter, Republic Act No. 6715 is silent with respect to an appeal from the decision
of a voluntary arbitrator.

Yet, past practice shows that a decision or award of a voluntary arbitrator is, more often than not,
elevated to the Supreme Court itself on a petition for certiorari, 7 in effect equating the voluntary
arbitrator with the NLRC or the Court of Appeals. In the view of the Court, this is illogical and imposes an
unnecessary burden upon it.

In Volkschel Labor Union, et al. v. NLRC, et al., 8 on the settled premise that the judgments of courts
and awards of quasi-judicial agencies must become final at some definite time, this Court ruled that the
awards of voluntary arbitrators determine the rights of parties; hence, their decisions have the same legal
effect as judgments of a court. In Oceanic Bic Division (FFW), et al. v. Romero, et al., 9 this Court ruled
that "a voluntary arbitrator by the nature of her functions acts in a quasi-judicial capacity." Under these
rulings, it follows that the voluntary arbitrator, whether acting solely or in a panel, enjoys in law the status
of a quasi-judicial agency but independent of, and apart from, the NLRC since his decisions are not
appealable to the latter. 10

Section 9 of B.P. Blg. 129, as amended by Republic Act No. 7902, provides that the Court of Appeals
shall exercise:

xxx xxx xxx

(B) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions,
orders or awards of Regional Trial Courts and quasi-judicial agencies,
instrumentalities, boards or commissions, including the Securities and Exchange
Commission, the Employees Compensation Commission and the Civil Service
Commission, except those falling within the appellate jurisdiction of the Supreme
Court in accordance with the Constitution, the Labor Code of the Philippines under
Presidential Decree No. 442, as amended, the provisions of this Act, and of
subparagraph (1) of the third paragraph and subparagraph (4) of the fourth
paragraph of Section 17 of the Judiciary Act of 1948.

xxx xxx xxx

Assuming arguendo that the voluntary arbitrator or the panel of voluntary arbitrators may not strictly
be considered as a quasi-judicial agency, board or commission, still both he and the panel are
comprehended within the concept of a "quasi-judicial instrumentality." It may even be stated that it
was to meet the very situation presented by the quasi-judicial functions of the voluntary arbitrators
here, as well as the subsequent arbitrator/arbitral tribunal operating under the Construction Industry
Arbitration Commission, 11 that the broader term "instrumentalities" was purposely included in the above-
quoted provision.
An "instrumentality" is anything used as a means or agency. 12 Thus, the terms governmental "agency"
or "instrumentality" are synonymous in the sense that either of them is a means by which a government
acts, or by which a certain government act or function is performed. 13 The word "instrumentality," with
respect to a state, contemplates an authority to which the state delegates governmental power for the
performance of a state function. 14 An individual person, like an administrator or executor, is a judicial
instrumentality in the settling of an estate, 15 in the same manner that a sub-agent appointed by a
bankruptcy court is an instrumentality of the court, 16 and 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 entities 18 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:

xxx xxx xxx

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

xxx xxx xxx

(Emphasis supplied)
P.D. No. 272 initially created petitioner ISA for a term of five (5) years counting from 9 August
1973. 1 When ISA's original term expired on 10 October 1978, its term was extended for another ten (10)
years by Executive Order No. 555 dated 31 August 1979.

The National Steel Corporation ("NSC") then a wholly owned subsidiary of the National Development
Corporation which is itself an entity wholly owned by the National Government, embarked on an
expansion program embracing, among other things, the construction of an integrated steel mill in
Iligan City. The construction of such a steel mill was considered a priority and major industrial project
of the Government. Pursuant to the expansion program of the NSC, Proclamation No. 2239 was
issued by the President of the Philippines on 16 November 1982 withdrawing from sale or settlement
a large tract of public land (totalling about 30.25 hectares in area) located in Iligan City, and
reserving that land for the use and immediate occupancy of NSC.

Since certain portions of the public land subject matter Proclamation No. 2239 were occupied by a
non-operational chemical fertilizer plant and related facilities owned by private respondent Maria
Cristina Fertilizer Corporation ("MCFC"), Letter of Instruction (LOI), No. 1277, also dated 16
November 1982, was issued directing the NSC to "negotiate with the owners of MCFC, for and on
behalf of the Government, for the compensation of MCFC's present occupancy rights on the subject
land." LOI No. 1277 also directed that should NSC and private respondent MCFC fail to reach an
agreement within a period of sixty (60) days from the date of LOI No. 1277, petitioner ISA was to
exercise its power of eminent domain under P.D. No. 272 and to initiate expropriation proceedings in
respect of occupancy rights of private respondent MCFC relating to the subject public land as well as
the plant itself and related facilities and to cede the same to the NSC. 2

Negotiations between NSC and private respondent MCFC did fail. Accordingly, on 18 August 1983,
petitioner ISA commenced eminent domain proceedings against private respondent MCFC in the
Regional Trial Court, Branch 1, of Iligan City, praying that it (ISA) be places in possession of the
property involved upon depositing in court the amount of P1,760,789.69 representing ten percent
(10%) of the declared market values of that property. The Philippine National Bank, as mortgagee of
the plant facilities and improvements involved in the expropriation proceedings, was also impleaded
as party-defendant.

On 17 September 1983, a writ of possession was issued by the trial court in favor of ISA. ISA in turn
placed NSC in possession and control of the land occupied by MCFC's fertilizer plant installation.

The case proceeded to trial. While the trial was ongoing, however, the statutory existence of
petitioner ISA expired on 11 August 1988. MCFC then filed a motion to dismiss, contending that no
valid judgment could be rendered against ISA which had ceased to be a juridical person. Petitioner
ISA filed its opposition to this motion.

In an Order dated 9 November 1988, the trial court granted MCFC's motion to dismiss and did
dismiss the case. The dismissal was anchored on the provision of the Rules of Court stating that
"only natural or juridical persons or entities authorized by law may be parties in a civil case." 3 The
trial court also referred to non-compliance by petitioner ISA with the requirements of Section 16, Rule 3 of
the Rules of Court. 4

Petitioner ISA moved for reconsideration of the trial court's Order, contending that despite the
expiration of its term, its juridical existence continued until the winding up of its affairs could be
completed. In the alternative, petitioner ISA urged that the Republic of the Philippines, being the real
party-in-interest, should be allowed to be substituted for petitioner ISA. In this connection, ISA
referred to a letter from the Office of the President dated 28 September 1988 which especially
directed the Solicitor General to continue the expropriation case.

The trial court denied the motion for reconsideration, stating, among other things that:

The property to be expropriated is not for public use or benefit [__] but for the use
and benefit [__] of NSC, a government controlled private corporation engaged in
private business and for profit, specially now that the government, according to
newspaper reports, is offering for sale to the public its [shares of stock] in the
National Steel Corporation in line with the pronounced policy of the present
administration to disengage the government from its private business
ventures. 5 (Brackets supplied)

Petitioner went on appeal to the Court of Appeals. In a Decision dated 8 October 1991, the Court of
Appeals affirmed the order of dismissal of the trial court. The Court of Appeals held that petitioner
ISA, "a government regulatory agency exercising sovereign functions," did not have the same rights
as an ordinary corporation and that the ISA, unlike corporations organized under the Corporation
Code, was not entitled to a period for winding up its affairs after expiration of its legally mandated
term, with the result that upon expiration of its term on 11 August 1987, ISA was "abolished and [had]
no more legal authority to perform governmental functions." The Court of Appeals went on to say
that the action for expropriation could not prosper because the basis for the proceedings, the ISA's
exercise of its delegated authority to expropriate, had become ineffective as a result of the
delegate's dissolution, and could not be continued in the name of Republic of the Philippines,
represented by the Solicitor General:

It is our considered opinion that under the law, the complaint cannot prosper, and
therefore, has to be dismissed without prejudice to the refiling of a new complaint for
expropriation if the Congress sees it fit." (Emphases supplied)

At the same time, however, the Court of Appeals held that it was premature for the trial court
to have ruled that the expropriation suit was not for a public purpose, considering that the
parties had not yet rested their respective cases.

In this Petition for Review, the Solicitor General argues that since ISA initiated and prosecuted the
action for expropriation in its capacity as agent of the Republic of the Philippines, the Republic, as
principal of ISA, is entitled to be substituted and to be made a party-plaintiff after the agent ISA's
term had expired.

Private respondent MCFC, upon the other hand, argues that the failure of Congress to enact a law
further extending the term of ISA after 11 August 1988 evinced a "clear legislative intent to terminate
the juridical existence of ISA," and that the authorization issued by the Office of the President to the
Solicitor General for continued prosecution of the expropriation suit could not prevail over such
negative intent. It is also contended that the exercise of the eminent domain by ISA or the Republic
is improper, since that power would be exercised "not on behalf of the National Government but for
the benefit of NSC."
The principal issue which we must address in this case is whether or not the Republic of the
Philippines is entitled to be substituted for ISA in view of the expiration of ISA's term. As will be made
clear below, this is really the only issue which we must resolve at this time.

Rule 3, Section 1 of the Rules of Court specifies who may be parties to a civil action:

Sec. 1. Who May Be Parties. Only natural or juridical persons or entities

authorized by law may be parties in a civil action.

Under the above quoted provision, it will be seen that those who can be parties to a civil
action may be broadly categorized into two (2) groups:

(a) those who are recognized as persons under the law whether natural, i.e.,
biological persons, on the one hand, or juridical person such as corporations, on the
other hand; and

(b) entities authorized by law to institute actions.

Examination of the statute which created petitioner ISA shows that ISA falls under category (b)
above. P.D. No. 272, as already noted, contains express authorization to ISA to commence
expropriation proceedings like those here involved:

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

xxx xxx xxx

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

xxx xxx xxx

(Emphasis supplied)

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

xxx xxx xxx

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

xxx xxx xxx

 (Emphasis supplied)

Clearly, ISA was vested with some of the powers or attributes normally associated with juridical
personality. There is, however, no provision in P.D. No. 272 recognizing ISA as possessing general
or comprehensive juridical personality separate and distinct from that of the Government. The ISA in
fact appears to the Court to be a non-incorporated agency or instrumentality of the Republic of the
Philippines, or more precisely of the Government of the Republic of the Philippines. It is common
knowledge that other agencies or instrumentalities of the Government of the Republic are cast
in corporate form, that is to say, are incorporated agencies 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.

xxx xxx xxx

(4) Agency of the Government refers to any of the various units of the Government,
including a department, bureau, office, instrumentality, or government-owned or
controlled corporation, or a local government or a distinct unit therein.

xxx xxx xxx

(10) Instrumentality refers to any agency of the National Government, not integrated
within the department framework, vested with special functions or jurisdiction by
law, endowed with some if not all corporate powers, administering special funds, and
enjoying operational autonomy, usually through a charter. This term includes
regulatory agencies, chartered institutions and government-owned or controlled
corporations.

xxx xxx xxx

(Emphases supplied)
When the statutory term of a non-incorporated agency expires, the powers, duties and functions as
well as the assets and liabilities of that agency revert back to, and are re-assumed by, the Republic
of the Philippines, in the absence of special provisions of law specifying some other disposition
thereof such as, e.g., devolution or transmission of such powers, duties, functions, etc. to some
other identified successor agency or instrumentality of the Republic of the Philippines. When the
expiring agency is an incorporated one, the consequences of such expiry must be looked for, in the
first instance, in the charter of that agency and, by way of supplementation, in the provisions of the
Corporation Code. Since, in the instant case, ISA is a non-incorporated agency or instrumentality of
the Republic, its powers, duties, functions, assets and liabilities are properly regarded as folded back
into the Government of the Republic of the Philippines and hence assumed once again by the
Republic, no special statutory provision having been shown to have mandated succession thereto by
some other entity or agency of the Republic.

The procedural implications of the relationship between an agent or delegate of the Republic of the
Philippines and the Republic itself are, at least in part, spelled out in the Rules of Court. The general
rule is, of course, that an action must be prosecuted and defended in the name of the real party in
interest. (Rule 3, Section 2) Petitioner ISA was, at the commencement of the expropriation
proceedings, a real party in interest, having been explicitly authorized by its enabling statute to
institute expropriation proceedings. The Rules of Court at the same time expressly recognize the role
of representative parties:

Sec. 3. Representative Parties. A trustee of an expressed trust, a guardian, an

executor or administrator, or a party authorized by statute may sue or be sued
without joining the party for whose benefit the action is presented or defended; but
the court may, at any stage of the proceedings, order such beneficiary to be made a
party. . . . . (Emphasis supplied)

In the instant case, ISA instituted the expropriation proceedings in its capacity as an agent or
delegate or representative of the Republic of the Philippines pursuant to its authority under P.D. No.
272. The present expropriation suit was brought on behalf of and for the benefit of the Republic as
the principal of ISA. Paragraph 7 of the complaint stated:

7. The Government, thru the plaintiff ISA, urgently needs the subject parcels of land
for the construction and installation of iron and steel manufacturing facilities that are
indispensable to the integration of the iron and steel making industry which is vital to
the promotion of public interest and welfare. (Emphasis supplied)

The principal or the real party in interest is thus the Republic of the Philippines and not the
National Steel Corporation, even though the latter may be an ultimate user of the properties
involved should the condemnation suit be eventually successful.

From the foregoing premises, it follows that the Republic of the Philippines is entitled to be
substituted in the expropriation proceedings as party-plaintiff in lieu of ISA, the statutory term of ISA
having expired. Put a little differently, the expiration of ISA's statutory term did not by itself require or
justify the dismissal of the eminent domain proceedings.

It is also relevant to note that the non-joinder of the Republic which occurred upon the expiration of
ISA's statutory term, was not a ground for dismissal of such proceedings since a party may be
dropped or added by order of the court, on motion of any party or on the court's own initiative at any
stage of the action and on such terms as are just. 13 In the instant case, the Republic has precisely
moved to take over the proceedings as party-plaintiff.

In E.B. Marcha Transport Company, Inc. v. Intermediate Appellate Court, 14 the Court recognized that
the Republic may initiate or participate in actions involving its agents. There the Republic of the
Philippines was held to be a proper party to sue for recovery of possession of property although the "real"
or registered owner of the property was the Philippine Ports Authority, a government agency vested with a
separate juridical personality. The Court said:

It can be said that in suing for the recovery of the rentals, the Republic of the
Philippines acted as principal of the Philippine Ports Authority, directly exercising the
commission it had earlier conferred on the latter as its agent. . . . 15 (Emphasis
supplied)

In E.B. Marcha, the Court also stressed that to require the Republic to commence all over
again another proceeding, as the trial court and Court of Appeals had required, was to
generate unwarranted delay and create needless repetition of proceedings:

More importantly, as we see it, dismissing the complaint on the ground that the
Republic of the Philippines is not the proper party would result in needless delay in
the settlement of this matter and also in derogation of the policy against multiplicity of
suits. Such a decision would require the Philippine Ports Authority to refile the very
same complaint already proved by the Republic of the Philippines and bring back as
it were to square one. 16 (Emphasis supplied)

As noted earlier, the Court of Appeals declined to permit the substitution of the Republic of the
Philippines for the ISA upon the ground that the action for expropriation could not prosper because
the basis for the proceedings, the ISA's exercise of its delegated authority to expropriate, had
become legally ineffective by reason of the expiration of the statutory term of the agent or
delegated i.e., ISA. Since, as we have held above, the powers and functions of ISA have reverted to
the Republic of the Philippines upon the termination of the statutory term of ISA, the question should
be addressed whether fresh legislative authority is necessary before the Republic of the Philippines
may continue the expropriation proceedings initiated by its own delegate or agent.

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

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

Among such special powers and duties shall be:

 xxx xxx xxx

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

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

The Revised Administrative Code of 1987 currently in force has substantially reproduced the
foregoing provision in the following terms:

Sec. 12. Power of eminent domain. The President shall determine when it is
necessary or advantageous to exercise the power of eminent domain in behalf of the
National Government, 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. 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 quo was bereft of jurisdiction." The decision also dismissed the contrary opinion of the
Secretary of Justice as impinging on the authority of the courts of justice. While we are disturbed by
the findings of fact of the trial court and the respondent court on the dubious conduct of the
petitioner, we nevertheless must sustain it on the jurisdictional issue.

The applicable law is PD No. 957, as amended by PD No. 1344, entitled "Empowering the National
Housing Authority to Issue Writs of Execution in the Enforcement of Its Decisions Under Presidential
Decree No. 957." Section 1 of the latter decree provides as follows:

SECTION 1. In the exercise of its function to regulate the real estate trade and
business and in addition to its powers provided for in Presidential Decree No. 957,
the National Housing Authority shall have exclusive jurisdiction to hear and decide
cases of the following nature:

A. Unsound real estate business practices;

B. Claims involving refund and any other claims filed by subdivision lot or
condominium unit buyer against the project owner, developer, dealer, broker or
salesman; and

C. Cases involving specific performance of contractuala statutory obligations filed by

buyers of subdivision lot or condominium unit against the owner, developer, dealer,
broker or salesman. (Emphasis supplied.)

The language of this section, especially the italicized portions, leaves no room for doubt that
"exclusive jurisdiction" over the case between the petitioner and the private respondent is vested not
in the Regional Trial Court but in the National Housing Authority. 3

The private respondent contends that the applicable law is BP No. 129, which confers on regional
trial courts jurisdiction to hear and decide cases mentioned in its Section 19, reading in part as
follows:

SEC. 19. Jurisdiction in civil cases.-Regional Trial Courts shall exercise exclusive
original jurisdiction:

(1) In all civil actions in which the subject of the litigation is incapable of pecuniary
estimation;

(2) In all civil actions which involve the title to, or possession of, real property, or any
interest therein, except actions for forcible entry into and unlawful detainer of lands or
buildings, original jurisdiction over which is conferred upon Metropolitan Trial Courts,
Municipal Trial Courts, and Municipal Circuit Trial Courts;

xxx xxx xxx

 (8) In all other cases in which the demand, exclusive of interest and cost or the value
of the property in controversy, amounts to more than twenty thousand pesos (P
20,000.00).

It stresses, additionally, that BP No. 129 should control as the later enactment, having been
promulgated in 1981, after PD No. 957 was issued in 1975 and PD No. 1344 in 1978.

This construction must yield to the familiar canon that in case of conflict between a general law and
a special law, the latter must prevail regardless of the dates of their enactment. Thus, it has been
held that-

The fact that one law is special and the other general creates a presumption that the
special act is to be considered as remaining an exception of the general act, one as
a general law of the land and the other as the law of the particular case. 4

xxx xxx xxx

The circumstance that the special law is passed before or after the general act does
not change the principle. Where the special law is later, it will be regarded as an
exception to, or a qualification of, the prior general act; and where the general act is
later, the special statute will be construed as remaining an exception to its terms,
unless repealed expressly or by necessary implication. 5

It is obvious that the general law in this case is BP No. 129 and PD No. 1344 the special law.

The argument that the trial court could also assume jurisdiction because of Section 41 of PD No.
957, earlier quoted, is also unacceptable. We do not read that provision as vesting concurrent
jurisdiction on the Regional Trial Court and the Board over the complaint mentioned in PD No. 1344
if only because grants of power are not to be lightly inferred or merely implied. The only purpose of
this section, as we see it, is to reserve. to the aggrieved party such other remedies as may be
provided by existing law, like a prosecution for the act complained of under the Revised Penal
Code. 6

On the competence of the Board to award damages, we find that this is part of the exclusive power
conferred upon it by PD No. 1344 to hear and decide "claims involving refund and any other
claims filed by subdivision lot or condominium unit buyers against the project owner, developer,
dealer, broker or salesman." It was therefore erroneous for the respondent to brush aside the well-
taken opinion of the Secretary of Justice that-

Such claim for damages which the subdivision/condominium buyer may have against
the owner, developer, dealer or salesman, being a necessary consequence of an
adjudication of liability for non-performance of contractual or statutory obligation, may
be deemed necessarily included in the phrase "claims involving refund and any other
claims" used in the aforequoted subparagraph C of Section 1 of PD No. 1344. The
phrase "any other claims" is, we believe, sufficiently broad to include any and all
claims which are incidental to or a necessary consequence of the claims/cases
specifically included in the grant of jurisdiction to the National Housing Authority
under the subject provisions.
 The same may be said with respect to claims for attorney's fees which are
recoverable either by agreement of the parties or pursuant to Art. 2208 of the Civil
Code (1) when exemplary damages are awarded and (2) where the defendant acted
in gross and evident bad faith in refusing to satisfy the plaintiff 's plainly valid, just
and demandable claim.

xxx xxx xxx

Besides, a strict construction of the subject provisions of PD No. 1344 which would
deny the HSRC the authority to adjudicate claims for damages and for damages and
for attorney's fees would result in multiplicity of suits in that the subdivision
condominium buyer who wins a case in the HSRC and who is thereby deemed
entitled to claim damages and attorney's fees would be forced to litigate in the
regular courts for the purpose, a situation which is obviously not in the contemplation
of the law. (Emphasis supplied.) 7

As a result of the growing complexity of the modern society, it has become necessary to create more
and more administrative bodies to help in the regulation of its ramified activities. Specialized in the
particular fields assigned to them, they can deal with the problems thereof with more expertise and
dispatch than can be expected from the legislature or the courts of justice. This is the reason for the
increasing vesture of quasi-legislative and quasi-judicial powers in what is now not unreasonably
called the fourth department of the government.

Statutes conferring powers on their administrative agencies must be liberally construed to enable
them to discharge their assigned duties in accordance with the legislative purpose. 8 Following this
policy in Antipolo Realty Corporation v. National Housing Authority, 9 the Court sustained the competence
of the respondent administrative body, in the exercise of the exclusive jurisdiction vested in it by PD No.
957 and PD No. 1344, to determine the rights of the parties under a contract to sell a subdivision lot.

It remains to state that, contrary to the contention of the petitioner, the case of Tropical Homes v.
National Housing Authority 10 is not in point. We upheld in that case the constitutionality of the procedure
for appeal provided for in PD No. 1344, but we did not rule there that the National Housing Authority and
not the Regional Trial Court had exclusive jurisdiction over the cases enumerated in Section I of the said
decree. That is what we are doing now.

It is settled that any decision rendered without jurisdiction is a total nullity and may be struck down at
any time, even on appeal before this Court. 11 The only exception is where the party raising the issue is
barred by estoppel, 12which 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 decision2 issued
by the Court of Appeals (CA) in CAG.R. SP No. 75717 that dismissed its complaint for rescission
filed with the Regional Trial Court (RTC) of Bulacan for lack of jurisdiction, as well as the CA
resolution3 that denied its motion for reconsideration.

FACTUAL ANTECEDENTS

The present controversy traces its roots to the case filed by CGA against the Spouses Avelino and
Priscilla Ignacio (respondents) for rescission of their Contract to Sell before the RTC, Branch 14,
Malolos, Bulacan. The facts, drawn from the records and outlined below, are not in dispute.

On April 30, 1998, CGA entered into a Contract to Sell a subdivision lot4 (subject property) with the
respondents the registered owners and developers of a housing subdivision known as Villa
Priscilla Subdivision located in Barangay Cutcut, Pulilan, Bulacan. Under the Contract to Sell, CGA
would pay P2,373,000.00 for the subject property on installment basis; they were to pay a down
payment of P1,186,500, with the balance payable within three years on equal monthly amortization
payments of P46,593.85, 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 P2,706,600, with equal monthly installments of P37,615.00, 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. 27s Operation Land Transfer.6 According to CGA, Imperial applied for the retention
of five hectares of her land under Republic Act No. 6657,7 which the Department of Agrarian Reform
(DAR) granted in its October 2, 1997 order (DAR Order). The DAR Order authorized Imperial to
retain the farm lots previously awarded to the tenant-beneficiaries, including Lot 2-F previously
awarded to Adriano, and Lot 2-G Bsd-04-000829 awarded to Sison. On appeal, the Office of the
President8 and the CA9 upheld the DAR Order. Through the Courts 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, attorneys 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 HLURBs 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
petitioners 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 petitioners 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 CGAs 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 CGAs case involves the sale of a
subdivision lot, it falls under the HLURBs exclusive jurisdiction.

THE COURTS RULING

We find no merit in the petition and consequently affirm the CA decision.

Development of the HLURBs jurisdiction

The nature of an action and the jurisdiction of a tribunal are determined by the material allegations of
the complaint and the law governing at the time the action was commenced. The jurisdiction of the
tribunal over the subject matter or nature of an action is conferred only by law, not by the parties
consent or by their waiver in favor of a court that would otherwise have no jurisdiction over the
subject matter or the nature of an action.14Thus, the determination of whether the CGAs cause of
action falls under the jurisdiction of the HLURB necessitates a closer examination of the laws
defining the HLURBs 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 HLURBs 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 HLURBs
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 HLURBs exclusive jurisdiction at length in Sps. Osea v. Ambrosio, 16 where we
said:

Generally, the extent to which an administrative agency may exercise its powers depends largely, if
not wholly, on the provisions of the statute creating or empowering such agency. Presidential Decree
(P.D.) No. 1344, "Empowering The National Housing Authority To Issue Writ Of Execution In The
Enforcement Of Its Decision Under Presidential Decree No. 957," clarifies and spells out the quasi-
judicial dimensions of the grant of jurisdiction to the HLURB in the following specific terms:

SEC. 1. In the exercise of its functions to regulate the real estate trade and business and in addition
to its powers provided for in Presidential Decree No. 957, the National Housing Authority shall have
exclusive jurisdiction to hear and decide cases of the following nature:

A. Unsound real estate business practices;

B. Claims involving refund and any other claims filed by subdivision lot or condominium unit
buyer against the project owner, developer, dealer, broker or salesman; and

C. Cases involving specific performance of contractual and statutory obligations filed by

buyers of subdivision lots or condominium units against the owner, developer, dealer, broker
or salesman.

The extent to which the HLURB has been vested with quasi-judicial authority must also be
determined by referring to the terms of P.D. No. 957, "The Subdivision And Condominium Buyers'
Protective Decree." Section 3 of this statute provides:

x x x National Housing Authority [now HLURB]. - The National Housing Authority shall have exclusive
jurisdiction to regulate the real estate trade and business in accordance with the provisions of this
Decree.
The need for the scope of the regulatory authority thus lodged in the HLURB is indicated in the
second, third and fourth preambular paragraphs of PD 957 which provide:

WHEREAS, numerous reports reveal that many real estate subdivision owners, developers,
operators, and/or sellers have reneged on their representations and obligations to provide and
maintain properly subdivision roads, drainage, sewerage, water systems, lighting systems, and other
similar basic requirements, thus endangering the health and safety of home and lot buyers;

WHEREAS, reports of alarming magnitude also show cases of swindling and fraudulent
manipulations perpetrated by unscrupulous subdivision and condominium sellers and operators,
such as failure to deliver titles to the buyers or titles free from liens and encumbrances, and to pay
real estate taxes, and fraudulent sales of the same subdivision lots to different innocent purchasers
for value;

xxxx

WHEREAS, this state of affairs has rendered it imperative that the real estate subdivision and
condominium businesses be closely supervised and regulated, and that penalties be imposed on
fraudulent practices and manipulations committed in connection therewith.

The provisions of PD 957 were intended to encompass all questions regarding subdivisions and
condominiums. The intention was aimed at providing for an appropriate government agency, the
HLURB, to which all parties aggrieved in the implementation of provisions and the enforcement of
contractual rights with respect to said category of real estate may take recourse. The business of
developing subdivisions and corporations being imbued with public interest and welfare, any
question arising from the exercise of that prerogative should be brought to the HLURB which has the
technical know-how on the matter. In the exercise of its powers, the HLURB must commonly
interpret and apply contracts and determine the rights of private parties under such contracts. This
ancillary power is no longer a uniquely judicial function, exercisable only by the regular courts.

As observed in C.T. Torres Enterprises, Inc. v. Hibionada:

The argument that only courts of justice can adjudicate claims resoluble under the provisions of the
Civil Code is out of step with the fast-changing times. There are hundreds of administrative bodies
now performing this function by virtue of a valid authorization from the legislature. This quasi-judicial
function, as it is called, is exercised by them as an incident of the principal power entrusted to them
of regulating certain activities falling under their particular expertise.

In the Solid Homes case for example the Court affirmed the competence of the Housing and Land
Use Regulatory Board to award damages although this is an essentially judicial power exercisable
ordinarily only by the courts of justice. This departure from the traditional allocation of governmental
powers is justified by expediency, or the need of the government to respond swiftly and competently
to the pressing problems of the modern world. [Emphasis supplied.]

Another case Antipolo Realty Corporation v. NHA17 explained the grant of the HLURBs
expansive quasi-judicial powers. We said:

In this era of clogged court dockets, the need for specialized administrative boards or commissions
with the special knowledge, experience and capability to hear and determine promptly disputes on
technical matters or essentially factual matters, subject to judicial review in case of grave abuse of
discretion, has become well nigh indispensable. Thus, in 1984, the Court noted that between the
power lodged in an administrative body and a court, the unmistakable trend has been to refer it to
the former.

xxx

In general, the quantum of judicial or quasi-judicial powers which an administrative agency may
exercise is defined in the enabling act of such agency. In other words, the extent to which an
administrative entity may exercise such powers depends largely, if not wholly on the provisions of
the statute creating or empowering such agency. In the exercise of such powers, the agency
concerned must commonly interpret and apply contracts and determine the rights of private parties
under such contracts, One thrust of the multiplication of administrative agencies is that the
interpretation of contracts and the determination of private rights thereunder is no longer a uniquely
judicial function, exercisable only by our regular courts. [Emphasis supplied.]

Subdivision cases under the RTCs jurisdiction

The expansive grant of jurisdiction to the HLURB does not mean, however, that all cases involving
subdivision lots automatically fall under its jurisdiction. As we said in Roxas v. Court of Appeals: 18

In our view, the mere relationship between the parties, i.e., that of being subdivision owner/developer
and subdivision lot buyer, does not automatically vest jurisdiction in the HLURB. For an action to fall
within the exclusive jurisdiction of the HLURB, the decisive element is the nature of the action as
enumerated in Section 1 of P.D. 1344. On this matter, we have consistently held that the concerned
administrative agency, the National Housing Authority (NHA) before and now the HLURB, has
jurisdiction over complaints aimed at compelling the subdivision developer to comply with its
contractual and statutory obligations.

xxx

Note particularly pars. (b) and (c) as worded, where the HLURBs jurisdiction concerns cases
commenced by subdivision lot or condominium unit buyers. As to par. (a), concerning "unsound real
estate practices," it would appear that the logical complainant would be the buyers and customers
against the sellers (subdivision owners and developers or condominium builders and realtors ), and
not vice versa. [Emphasis supplied.]

Pursuant to Roxas, we held in Pilar Development Corporation v. Villar19 and Suntay v. Gocolay20 that
the HLURB has no jurisdiction over cases filed by subdivision or condominium owners or developers
against subdivision lot or condominium unit buyers or owners. The rationale behind this can be
found in the wordings of Sec. 1, PD No. 1344, which expressly qualifies that the cases cognizable by
the HLURB are those instituted by subdivision or condomium buyers or owners against the project
developer or owner. This is also in keeping with the policy of the law, which is to curb unscrupulous
practices in the real estate trade and business.21

Thus, in the cases of Fajardo Jr. v. Freedom to Build, Inc.,[22] and Cadimas v. Carrion,23 we upheld
the RTCs 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 developers claim against the buyer
in order to forestall splitting of causes of action.

Obviously, where it is not clear from the allegations in the complaint that the property involved is a
subdivision lot, as in Javellana v. Hon. Presiding Judge, RTC, Branch 30, Manila,25 the case falls
under the jurisdiction of the regular courts and not the HLURB. Similarly, in Spouses Dela Cruz v.
Court of Appeals,26 we held that the RTC had jurisdiction over a case where the conflict involved a
subdivision lot buyer and a party who owned a number of subdivision lots but was not himself the
subdivision developer.

The Present Case

In the present case, CGA is unquestionably the buyer of a subdivision lot from the respondents, who
sold the property in their capacities as owner and developer. As CGA stated in its complaint:

2.01. Defendants are the registered owners and developers of a housing subdivision
presently known as Villa Priscilla Subdivision located at Brgy. Cutcut, Pulilan, Bulacan;

2.02 On or about April 30, 1998, the plaintiff thru its Administrative Pastor bought from
defendants on installment basis a parcel of land designated at Lot 1, Block 4 of the said Villa
Priscilla Subdivision xxx

xxx

2.04 At the time of the execution of the second Contract to Sell (Annex "B"), Lot 1, Block 4 of
the Villa Priscilla Subdivision was already covered by Transfer Certificate of Title No. T-
127776 of the Registry of Deeds of Quezon City in the name of Iluminada T. Soneja, married
to Asterio Soneja (defendant Priscilla T. Ignacios 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 Adrianos Lot 2-F and Ceferino
Sisons Lot 2-G Bsd-04-000829 (OLT).

xxx

2.08 Said order of October 2, 1997 was affirmed and declared final and executory, and the
case was considered closed, as in fact there was already an Implementing Order dated
November 10, 1997.

xxx

3.03 As may thus be seen, the defendants deliberately and fraudulently concealed from the
plaintiff that fact that the parcel of land sold to the latter under the Contract to Sell (Annexes
"A" and "B") is part of the property already under litigation and in fact part of the five-hectare
retention awarded to the original owner, Purificacion S. Imperial.

xxx

3.05 Plaintiff is by law entitled to the rescission of the Contracts to Sell (Annexes "A" and "B")
by restitution of what has already been paid to date for the subject property in the total
amount of P2,515,899.20, thus formal demand therefor was made on the defendants thru a
letter dated April 5, 2002, which they received but refused to acknowledge receipt. Copy of
said letter is hereto attached and made part hereof as Annex "J". 27 [Emphasis supplied.]

From these allegations, the main thrust of the CGA complaint is clear to compel the respondents to
refund the payments already made for the subject property because the respondents were selling a
property that they apparently did not own. In other words, CGA claims that since the respondents
cannot comply with their obligations under the contract, i.e., to deliver the property free from all liens
and encumbrances, CGA is entitled to rescind the contract and get a refund of the payments already
made. This cause of action clearly falls under the actions contemplated by Paragraph (b), Section 1
of PD No. 1344, which reads:

SEC. 1. In the exercise of its functions to regulate the real estate trade and business and in addition
to its powers provided for in Presidential Decree No. 957, the National Housing Authority shall have
exclusive jurisdiction to hear and decide cases of the following nature:

xxx

B. Claims involving refund and any other claims filed by subdivision lot or condominium unit
buyer against the project owner, developer, dealer, broker or salesman; and

We view CGAs contention that the CA erred in applying Article 1191 of the Civil Code as basis for
the contracts 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 HLURBs 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.3 This was the second P60,000.00 withdrawal. Veloso did not know about it. The
withdrawal slip was processed and approved on the same day, August 13, 1987. The space Posted
by was initialed by Babaylon but no posting was actually made because the passbook was not presented.
While the withdrawal slip was dated August 13, 1987, all other supporting documents were dated August
14, 1987, this being a withdrawal after banking hours (ABH).
The following day, August 14, 1987, prior to the payment of the ABH withdrawal, Veloso presented
another undated withdrawal slip for P60,000.00. 4 This was the third P60,000.00 withdrawal. The
withdrawal slip was received by Dorado, who handed it to Dadubo. At that time, Cidro was encashing the
check at PNB to satisfy the ABH withdrawal. When she returned from the bank, she paid this withdrawal
to Veloso, who thought that what she was collecting was the P60,000.00 corresponding to the withdrawal
slip she presented that morning.

When Dadubo informed Cidro about the third withdrawal, till money of P100,000.00 was made to
service it. Prior to the payment of the third P60,000.00 withdrawal, Veloso came back and presented
another withdrawal slip for P40,000.00. 5 The petitioner claimed she disbursed P100,000.00 to Veloso,
covering the third P60,000.00 and the P40,000.00 withdrawals. On the other hand, Veloso testified that
she received only P40,000.00 from the petitioner. She acknowledged receipt of the amount by signing the
withdrawal slip and indicating opposite her signature the amount of P40,000.00.

That left the balance of P60,000.00 unaccounted for and directly imputable to Dadubo.

On the basis of these findings, DBP found Dadubo guilty of dishonesty for embezzlement of bank
funds. She was penalized with dismissal from the service. 6 Cidro was adjudged guilty of gross neglect
of duty and fined in an amount equivalent to one month basic salary, payable through salary deductions in
not more than 12 installments.

Dadubo appealed to the Merit Systems Protection Board (MSPB), 7 which affirmed the decision of the
DBP, declaring as follows:

There is nothing in the records to show that the Senior Manager, Personnel Services
and Vice-Chairman, both of the DBP, abused their discretion in deciding the case
against the appellant or that their decision was made and attended with arbitrariness
or unfairness. To all intents and purposes, the ensuing decision was a necessary
consequence of the evidence.

However, DBP was reversed by the Civil Service Commission in its Resolution No. 91-642, dated
May 21, 1991, 8which reduced Dadubo's penalty to suspension for six months on the ground that:

Although Dadubo made alterations on the dates in the Ledger Card from August 13
to August 14, the fact remains that the bank was defrauded on account of said ABH
withdrawal (for) which Cidro is held responsible and accordingly found guilty of Gross
Neglect of Duty and Inefficiency and Incompetence in the Performance of Official
Duty. It was also Dadubo who reported on the irreconcilable P60,000.00. The most
that Dadubo could be charged with is willful violation of office regulation when she
undertook reconciliation for under the Bank Manual the tellers are not allowed access
to the savings account ledger cards.

Respondent DBP moved reconsideration. On July 16, 1992, the Commission acting favorably on the
motion, promulgated Resolution No.
92-878 9 affirming the earlier findings of the DBP as to Dadubo guilt, thus

The records reveal that Dadubo admitted in her Answer that

 she changed entry of the date August 13 to 14 in the ledger in the course of her
reconciliation which she was advised not to do.

xxx xxx xxx

This act of admission needs no further elaboration to prove that Dadubo is guilty of
the charge. Such admission is however treated as a mitigating circumstance which is
offset by the aggravating circumstance of taking advantage of her official position.
There is no reason for her to change or alter entries in the ledger unless she intends
to benefit therefrom or to conceal some facts.

Further, it should be noted that the report was made only on September 28, 1987
(the date the report on reconciliation was submitted to the Regional Office). It should
be emphasized as earlier stated that Dadubo was not authorized to reconcile the
subsidiary ledger cards for the period ending August 20, 1987. Hence, as
emphatically stated in the MSPB decision, ". . . respondent Dadubo manipulated the
bank records to conceal the offense which constituted the act of dishonesty."

The opinion of an acting Internal Audit Officer, whose report was among the
preliminary findings considered in the investigation of the case, is not conclusive as
there are other available and convincing evidence to prove the guilt of Dadubo.

Dadubo has brought her case to this Court in this petition for certiorari. She claims that CSC
Resolution No. 92-878 failed to comply with the constitutional requirement to state clearly and
distinctly the facts an the law on which the decision is based; CSC Resolution No. 92-878 conflicts
with the findings of fact in CSC Resolution No. 91-642; the Commission manifestly overlooked or
disregarded certain relevant facts not disputed by the parties; and it based its conclusions entirely on
speculations, surmises or conjectures.

Required to comment, the Solicitor General argued that CSC Resolution No. 92-878 did not need to
restate the legal and factual bases of the original decision in CSC-MSPB No. 497 which already
explained the relevant facts and the applicable law. The petitioner had admitted that she changed
the entry of the dates in the subsidiary ledger card from August 13 to 14 in the course of her
reconciliation work although she was not authorized to do this. This admission, along with the other
evidence Presented during the investigation in the bank, proved Dadubo's guilt. Moreover, the
affidavit of Albert C. Ballicud was inadmissible in evidence because he was never subjected to cross-
examination.

The petitioner's challenges are mainly factual. The rule is that the findings of fact of administrative
bodies, if based on substantial evidence, are controlling on the reviewing authority. 10 is settled that it
is not for the appellate court to substitute its own judgment for that of the administrative agency on the
sufficiency of the evidence and the credibility of the witnesses. 11 Administrative decisions on matters
within their jurisdiction are entitled to respect and can only be set aside on proof of grave abuse of
discretion, fraud or error of law. 12 None of these vices has been shown in this case.

The petitioner's invocation of due process is without merit. Her complaint that she was not
sufficiently informed of the charges against her has no basis. While the rules governing Judicial trials
should be observed as much as possible, their strict observance is not indispensable in
administrative cases. 13 As this Court has held, "the standard of due process that must be met in
administrative tribunals allows a certain latitude as long as the element of fairness is not ignored." 14

The essence of due process is distilled in the immortal cry of Themistocles to Eurybiades: "Strike,
but hear me first!" Less dramatically, it simply connotes an opportunity to be heard. The petitioner
had several opportunities to be heard and to present evidence that she was not guilty of
embezzlement but only of failure to comply with the tellering procedure. Not only did she testify at
her formal investigation but she also filed a motion for reconsideration with the DBP, then appealed
to the Merit Systems Protection Board (MSPB), and later elevated the case to the Civil Service
Commission. Having been given all these opportunities to be heard, which she fully availed of, she
cannot now complain that she was denied due process.

Appreciation of the evidence submitted by the parties was, to repeat, the prerogative of the
administrative body, subject to reversal only upon a clear showing of arbitrariness. The rejection of
the affidavit of Ballicud, for example, was not improper because there was nothing in that document
showing that the petitioner did not embezzle the P60,000.00.

It is true that the petitioner was formally charged with conduct prejudicial to the best interest of the
bank and not specifically with embezzlement. Nevertheless, the allegations and the evidence
presented sufficiently proved her guilt of embezzlement of bank funds, which in unquestionably
prejudicial to the best interest of the bank.

The charge against the respondent in an administrative case need not be drafted with the precision
of an information in a criminal prosecution. It is sufficient that he is apprised of the substance of the
charge against him; what is controlling is the allegation of the acts complained of, not the
designation of the offense. 15

We must also dismiss the petitioner's complaint that CSC Resolution No. 92-878 failed to comply
with the constitutional requirement to state clearly and distinctly the facts and the law on which a
decision is based. We have held that this provision applies only to courts of justice and not to
administrative bodies like the Civil Service Commission. 16 In any event, there was an earlier statement
of the facts and the law involved in the decision rendered by the MSPB dated February 28, 1990, which
affirmed DBP's decision to dismiss the petitioner. In both decisions, the facts and the law on which they
were based were clearly and distinctly stated.

It is worth adding that inasmuch as Civil Service Resolution No. 92-878 was rendered only to resolve
DBP's motion for reconsideration, it was not really necessary to re-state the factual an, legal bases
for the said decisions. Even resolutions issued by this Court do not need to conform, to the first
paragraph of Article VIII, Section 14, of the Constitution, for reasoning extensively discussed
in Borromeo v. Court of Appeals 17 and other subsequent cases. 18

We find no justification to nullify or modify the questioned resolution. It would perhaps have been
more thorough if certain other officers of the bank had been also investigated for their part in the
anomalous transaction. But that matter is not before this Court and cannot be resolved by us at this
time.

WHEREFORE, the petition is DISMISSED for lack of a clear showing of grave abuse of discretion on
the part of the Civil Service Commission in issuing the questioned resolutions. Costs against the
petitioner.
SO ORDERED.

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.