CHAPTER I – GENERAL PRINCIPLES

A. Definition of Administrative Law

01. Luzon Dev. Bank vs. Association of LDBE, G.R. No. 120319 Oct. 6, 1995;
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.
FACTS: 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.
Voluntary Arbitrator: 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.
ISSUE: WON the voluntary arbiter’s decision is appealable to the CA.
HELD: YES.
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
An "instrumentality" is anything used as a means or agency.12 Thus, the terms governmental "agency" or
"instrumentality" are synonymous in the sense that either of them is a means by which a government acts,
or by which a certain government act or function is performed.13 The word "instrumentality," with respect
to a state, contemplates an authority to which the state delegates governmental power for the performance
of a state function.14 An individual person, like an administrator or executor, is a judicial instrumentality in
the settling of an estate,15 in the same manner that a sub-agent appointed by a bankruptcy court is an
instrumentality of the court,16and a trustee in bankruptcy of a defunct corporation is an instrumentality of
the state.17
The voluntary arbitrator no less performs a state function pursuant to a governmental power delegated to
him under the provisions therefor in the Labor Code and he falls, therefore, within the contemplation of the
term "instrumentality" in the aforequoted Sec. 9 of B.P. 129. The fact that his functions and powers are
provided for in the Labor Code does not place him within the exceptions to said Sec. 9 since he is a quasi-
judicial instrumentality as contemplated therein. It will be noted that, although the Employees Compensation
Commission is also provided for in the Labor Code, Circular No. 1-91, which is the forerunner of the present
Revised Administrative Circular No. 1-95, laid down the procedure for the appealability of its decisions to
the Court of Appeals under the foregoing rationalization, and this was later adopted by Republic Act No.
7902 in amending Sec. 9 of B.P. 129.

02. Iron & Steel Authority vs. CA, G.R. No. 102976 Oct. 25, 1995;
G.R. No. 102976 October 25, 1995
IRON AND STEEL AUTHORITY, petitioner,
vs.
THE COURT OF APPEALS and MARIA CRISTINA FERTILIZER CORPORATION, respondents.
FACTS:
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.
P.D. No. 272 initially created petitioner ISA for a term of five (5) years counting from 9 August
1973. 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.
Negotiations between NSC and private respondent MCFC did fail.
RTC: 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." The trial court denied the motion for reconsideration,
stating, among other things that:
CA: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."

ISSUE: WON the Republic of the Phil is entitled to be substituted for ISA in view of the expiration of ISA’s
term

HELD:
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 worth noting that the term "Authority" has been used to designate both incorporated and non-
incorporated agencies or instrumentalities of the Government.
 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.
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.
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.

03. PLDT vs. City of Bacolod, G.R. No. 149179, July 15, 2005
G.R. No. 149179. July 15, 2005
PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, INC., Petitioners,
vs.
CITY OF BACOLOD, FLORENTINO T. GUANCO, in his capacity as the City Treasurer of Bacolod City, and
ANTONIO G. LACZI, in his capacity as the City Legal Officer of Bacolod City, Respondents.
FACTS: In August 1995, the City of Bacolod, invoking its authority under Section 137, in relation to Section
151 and Section 193, supra, of the Local Government Code, made an assessment on PLDT for the payment
of franchise tax due the City.
Complying therewith, PLDT began paying the City franchise tax from the year 1994 until the third quarter
of 1998, at which time the total franchise tax it had paid the City already amounted to ₱2,770,696.37.
On June 2, 1998, the Department of Finance through its Bureau of Local Government Finance (BLGF),
issued a ruling to the effect that as of March 16, 1995, the effectivity date of the Public Telecommunications
Policy Act of the Philippines (Rep. Act. No. 7925), PLDT, among other telecommunication companies,
became exempt from local franchise tax. Pertinently, the BLGF ruling reads:
Invoking the aforequoted ruling, PLDT then stopped paying local franchise and business taxes to Bacolod City
starting the fourth quarter of 1998.
The controversy came to a head-on when, sometime in 1999, PLDT applied for the issuance of a Mayor’s
Permit but the City of Bacolod withheld issuance thereof pending PLDT’s payment of its franchise tax liability
in the following amounts: (1) ₱358,258.30 for the fourth quarter of 1998; and (b) ₱1,424,578.10 for the
year 1999, all in the aggregate amount of ₱1,782,836.40, excluding surcharges and interest, about which
PLDT was duly informed by the City Treasurer via a 5th Indorsement dated March 16, 1999 for PLDT’s
"appropriate action".4
In time, PLDT filed a protest5 with the Office of the City Legal Officer, questioning the assessment and at the
same time asking for a refund of the local franchise taxes it paid in 1997 until the third quarter of 1998.
City Legal Officer Antonio G. Laczi: denied the protest and ordered PLDT to pay the questioned assessment.
RTC: dismissed PLDT’s petition
ISSUE: WON BLGF is an administrative agency with technical expertise and mastery over the specialized
matters in the case at bar.
HELD: NO.
PLDT likewise argued in said case that the RTC at Davao City erred in not giving weight to the ruling of the
BLGF which, according to petitioner, is an administrative agency with technical expertise and mastery over
the specialized matters assigned to it. But then again, we held in Davao:
To be sure, the BLGF is not an administrative agency whose findings on questions of fact are given weight
and deference in the courts. The authorities cited by petitioner pertain to the Court of Tax Appeals, a highly
specialized court which performs judicial functions as it was created for the review of tax cases. In contrast,
the BLGF was created merely to provide consultative services and technical assistance to local governments
and the general public on local taxation, real property assessment, and other related matters, among others.
The question raised by petitioner is a legal question, to wit, the interpretation of §23 of R.A. No. 7925. There
is, therefore, no basis for claiming expertise for the BLGF that administrative agencies are said to possess in
their respective fields.15

B. Origin and Development of Administrative Law Cases:

04. Solid Homes vs. Payawal, G.R. No. 84811, Aug. 29, 1989
G.R. No. 84811 August 29, 1989
SOLID HOMES, INC., petitioner,
vs.
TERESITA PAYAWAL and COURT OF APPEALS, respondents.

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.
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.
ISSUE: WON trial court had jurisdiction over cases involving claims, refund and any other claims filed by
subdivision lot or condominium unit buyers against the project owner, developer, dealer, broker or salesman?

HELD:
The Supreme Court ruled that the applicable law is PD No. 957. The National Housing Authority has
the jurisdiction.
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. (P.D. 957 as
amended by P.D. 1344)

05. Christian General Assembly vs. Ignacio, G.R. No. 164789, Aug. 27, 2009
G.R. No. 164789 August 27, 2009
CHRISTIAN GENERAL ASSEMBLY, INC., Petitioner,
vs.
SPS. AVELINO C. IGNACIO and PRISCILLA T. IGNACIO, Respondents.
FACTS: On April 30, 1998, CGA entered into a Contract to Sell a subdivision lot4 (subject property) with
the respondents – the registered owners and developers of a housing subdivision known as Villa Priscilla
Subdivision located in Barangay Cutcut, Pulilan, Bulacan. Under the Contract to Sell, CGA would pay
₱2,373,000.00 for the subject property on installment basis; they were to pay a down payment of
₱1,186,500, with the balance payable within three years on equal monthly amortization payments of
₱46,593.85, inclusive of interest at 24% per annum, starting June 1998.
On August 5, 2000, the parties mutually agreed to amend the Contract to Sell to extend the payment
period from three to five years, calculated from the date of purchase and based on the increased total
consideration of ₱2,706,600, with equal monthly installments of ₱37,615.00, inclusive of interest at 24%
per annum, starting September 2000.
According to CGA, it religiously paid the monthly installments until its administrative pastor discovered that
the title covering the subject property suffered from fatal flaws and defects. CGA learned that the subject
property was actually part of two consolidated lots (Lots 2-F and 2-G Bsd-04-000829 [OLT]) that the
respondents had acquired from Nicanor Adriano (Adriano) and Ceferino Sison (Sison), respectively. Adriano
and Sison were former tenant-beneficiaries of Purificacion S. Imperial (Imperial) whose property in Cutcut,
Pulilan, Bulacan5 had been placed under Presidential Decree (PD) No. 27’s Operation Land Transfer.6
According to CGA, Imperial applied for the retention of five hectares of her land under Republic Act No.
6657,7 which the Department of Agrarian Reform (DAR) granted in its October 2, 1997 order (DAR
Order). The DAR Order authorized Imperial to retain the farm lots previously awarded to the tenant-
beneficiaries, including Lot 2-F previously awarded to Adriano, and Lot 2-G Bsd-04-000829 awarded to
Sison. On appeal, the Office of the President8 and the CA9 upheld the DAR Order. Through the Court’s
Resolution dated January 19, 2005 in G.R. No. 165650, we affirmed the DAR Order by denying the
petition for review of the appellate decision.
Understandably aggrieved after discovering these circumstances, CGA filed a complaint against the
respondents before the RTC on April 30, 2002.10 CGA claimed that the respondents fraudulently concealed
the fact that the subject property was part of a property under litigation; thus, the Contract to Sell was a
rescissible contract under Article 1381 of the Civil Code. CGA asked the trial court to rescind the contract;
order the respondents to return the amounts already paid; and award actual, moral and exemplary
damages, attorney’s fees and litigation expenses.
Instead of filing an answer, the respondents filed a motion to dismiss asserting that the RTC had no
jurisdiction over the case.11 Citing PD No. 95712 and PD No. 1344, the respondents claimed that the case
falls within the exclusive jurisdiction of the HLURB since it involved the sale of a subdivision lot. CGA opposed
the motion to dismiss, claiming that the action is for rescission of contract, not specific performance, and is
not among the actions within the exclusive jurisdiction of the HLURB, as specified by PD No. 957 and PD No.
1344.
RTC: issued an order denying the respondents’ motion to dismiss, is outside the HLURB’s jurisdiction.
CA: ruled that the HLURB had exclusive jurisdiction over the subject matter of the complaint
ISSUE: Which of the two – the regular court or the HLURB – has exclusive jurisdiction over CGA’s action for
rescission and damages.
HELD: HLURB
The nature of an action and the jurisdiction of a tribunal are determined by the material allegations of the
complaint and the law governing at the time the action was commenced. The jurisdiction of the tribunal over
the subject matter or nature of an action is conferred only by law, not by the parties’ consent or by their
waiver in favor of a court that would otherwise have no jurisdiction over the subject matter or the nature of
an action.14 Thus, the determination of whether the CGA’s cause of action falls under the jurisdiction of the
HLURB necessitates a closer examination of the laws defining the HLURB’s jurisdiction and authority.
The surge in the real estate business in the country brought with it an increasing number of cases between
subdivision owners/developers and lot buyers on the issue of the extent of the HLURB’s exclusive jurisdiction.
In the cases that reached us, we have consistently ruled that the HLURB has exclusive jurisdiction over
complaints arising from contracts between the subdivision developer and the lot buyer or those aimed at
compelling the subdivision developer to comply with its contractual and statutory obligations to make the
subdivision a better place to live in.15
We view CGA’s contention – that the CA erred in applying Article 1191 of the Civil Code as basis for the
contract’s rescission – to be a negligible point. Regardless of whether the rescission of contract is based on
Article 1191 or 1381 of the Civil Code, the fact remains that what CGA principally wants is a refund of all
payments it already made to the respondents. This intent, amply articulated in its complaint, places its
action within the ambit of the HLURB’s exclusive jurisdiction and outside the reach of the regular courts.
Accordingly, CGA has to file its complaint before the HLURB, the body with the proper jurisdiction.

C. Criticisms and Advantages of Administrative Law Cases:

06. Dadubo vs. CSC, G.R. No. 106498, June 28, 1993
G.R. No. 106498 June 28, 1993
LOLITA DADUBO, petitioner,
vs.
CIVIL SERVICE COMMISSION and the DEVELOPMENT BANK OF THE PHILIPPINES, respondents.
FACTS:
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.
After banking hours, another withdrawal slip was presented by Feliciano Bugtas, Jr., also an
employee of the Tius.3This was the second P60,000.00 withdrawal. Veloso did not know about it. The
withdrawal slip was processed and approved on the same day, August 13, 1987. The space Posted by was
initialed by Babaylon but no posting was actually made because the passbook was not presented. While the
withdrawal slip was dated August 13, 1987, all other supporting documents were dated August 14, 1987,
this being a withdrawal after banking hours (ABH).
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 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.
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:
xxx xxx xxx
This act of admission needs no further elaboration to prove that Dadubo is guilty of the charge.
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."
ISSUE: WON that CSC failed to complied with the constitutional requirement clearly state the facts and the
law which the decision based
HELD:
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.
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.

07. Lianga Bay vs. Enage, G.R. No. L-30637, July 16, 1987
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.
FACTS: 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.
Director of Forestry: The 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.
Department of Agriculture and Natural Resources: "(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

Office of the President: 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

Office of the President: denied the motion for reconsideration filed by Ago
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

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

ISSUE: WON the court has jurisdiction over the subject matter.
HELD: NO.
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