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G.R. No. 84811 August 29, 1989SOLID 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 thejurisdiction of the Regional Trial Court of Quezon City over a complaint filedby a buyer, the herein private respondent, against the petitioner, for deliveryof title to a subdivision lot. The position of the petitioner, the defendant inthat action, is that the decision of the trial court is null and void ab initiobecause the case should have been heard and decided by what is nowcalled the Housing and Land Use Regulatory Board.The complaint was filed on August 31, 1982, by Teresita Payawal againstSolid Homes, Inc. before the Regional Trial Court of Quezon City anddocketed as Civil Case No. Q-36119. The plaintiff alleged that the defendantcontracted to sell to her a subdivision lot in Marikina on June 9, 1975, for theagreed price of P 28,080.00, and that by September 10, 1981, she hadalready paid the defendant the total amount of P 38,949.87 in monthlyinstallments and interests. Solid Homes subsequently executed a deed ofsale over the land but failed to deliver the corresponding certificate of titledespite her repeated demands because, as it appeared later, the defendanthad mortgaged the property in bad faith to a financing company. The plaintiffasked for delivery of the title to the lot or, alternatively, the return of all theamounts paid by her plus interest. She also claimed moral and exemplarydamages, attorney's fees and the costs of the suit.Solid Homes moved to dismiss the complaint on the ground that the courthad no jurisdiction, this being vested in the National Housing Authority underPD No. 957. The motion was denied. The defendant repleaded the objectionin its answer, citing Section 3 of the said decree providing that "the NationalHousing Authority shall have exclusive jurisdiction to regulate the real estate

trade and business in accordance with the provisions of this Decree." Aftertrial, judgment was rendered in favor of the plaintiff and the defendant wasordered to deliver to her the title to the land or, failing this, to refund to herthe sum of P 38,949.87 plus interest from 1975 and until the full amount waspaid. She was also awarded P 5,000.00 moral damages, P 5,000.00exemplary 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 respondentcourt,

2which also berated the appellant for its obvious efforts to evade a

legitimate obligation, including its dilatory tactics during the trial. Thepetitioner was also reproved for its "gall" in collecting the further amount of P

1,238.47 from the plaintiff purportedly for realty taxes and registrationexpenses despite its inability to deliver the title to the land.In holding that the trial court had jurisdiction, the respondent court referred toSection 41 of PD No. 957 itself providing that:

SEC. 41. Other remedies.-The rights and remedies provided in this Decreeshall be in addition to any and all other rights and remedies that may beavailable under existing laws.and declared that "its clear and unambiguous tenor undermine(d) the(petitioner's) pretension that the courta quowas bereft of jurisdiction." Thedecision also dismissed the contrary opinion of the Secretary of Justice asimpinging on the authority of the courts of justice. While we are disturbed bythe findings of fact of the trial court and the respondent court on the dubiousconduct of the petitioner, we nevertheless must sustain it on the jurisdictionalissue.The applicable law is PD No. 957, as amended by PD No. 1344, entitled"Empowering the National Housing Authority to Issue Writs of Execution inthe Enforcement of I ts 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 tradeand business and in addition to its powers provided for in PresidentialDecree No. 957, the National Housing Authority shall haveexclusivejurisdictionto hear and decide cases of the following nature:A. Unsound real estate business practices;B. Claims involving refund and any other claimsfiled by subdivision lot orcondominium unit buyer against the project owner, developer, dealer, brokeror salesman; andC. Cases involving specific performance of contractuala statutory obligationsfiled 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 noroom for doubt that "exclusive jurisdiction" over the case between the

petitioner and the private respondent is vested not in the Regional TrialCourt 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 casesmentioned in its Section 19, reading in part as follows:SEC. 19. Jurisdiction in civil cases.-Regional Trial Courts shall exerciseexclusive original jurisdiction:(1) In all civil actions in which the subject of the litigation is incapable ofpecuniary estimation;(2) In all civil actions which involve the title to, or possession of, real


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property, or any interest therein, except actions for forcible entry into andunlawful detainer of lands or buildings, original jurisdiction over which isconferred upon Metropolitan Trial Courts, Municipal Trial Courts, andMunicipal Circuit Trial Courts;

xxx xxx xxx

(8) In all other cases in which the demand, exclusive of interest and cost orthe value of the property in controversy, amounts to more than twentythousand pesos (P 20,000.00).It stresses, additionally, that BP No. 129 should control as the laterenactment, having been promulgated in 1981, after PD No. 957 was issuedin 1975 and PD No. 1344 in 1978.This construction must yield to the familiar canon that in case of conflictbetween a general law and a special law, the latter must prevail regardlessof the dates of their enactment. Thus, it has been held that-The fact that one law is special and the other general creates a presumptionthat the special act is to be considered as remaining an exception of thegeneral act, one as a general law of the land and the other as the law of theparticular case. 4xxx xxx xxxThe circumstance that the special law is passed before or after the generalact does not change the principle. Where the special law is later, it will beregarded as an exception to, or a qualification of, the prior general act; andwhere the general act is later, the special statute will be construed asremaining an exception to its terms, unless repealed expressly or bynecessary implication.

5

It is obvious that the general law in this case is BP No. 129 and PD No. 1344the special law.The argument that the trial court could also assume jurisdiction because ofSection 41 of PD No. 957, earlier quoted, is also unacceptable. We do notread that provision as vesting concurrent jurisdiction on the Regional Trial

Court and the Board over the complaint mentioned in PD No. 1344 if onlybecause grants of power are not to be lightly inferred or merely implied. Theonly purpose of this section, as we see it, is to reserve. to the aggrievedparty such other remedies as may be provided by existing law, like aprosecution 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 partof 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 orcondominium 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 mayhave against the owner, developer, dealer or salesman, being a necessaryconsequence of an adjudication of liability for non-performance of

contractual or statutory obligation, may be deemed necessarily included inthe phrase "claims involving refund and any other claims" used in theaforequoted subparagraph C of Section 1 of PD No. 1344. The phrase "anyother claims" is, we believe, sufficiently broad to include any and all claimswhich are incidental to or a necessary consequence of the claims/casesspecifically included in the grant of jurisdiction to the National HousingAuthority under the subject provisions.The same may be said with respect to claims for attorney's fees which arerecoverable either by agreement of the parties or pursuant to Art. 2208 ofthe Civil Code (1) when exemplary damages are awarded and (2) where thedefendant acted in gross and evident bad faith in refusing to satisfy theplaintiff 's plainly valid, just and demandable claim.xxx xxx xxxBesides, a strict construction of the subject provisions of PD No. 1344 whichwould deny the HSRC the authority to adjudicate claims for damages and fordamages and for attorney's fees would result in multiplicity of suits in that thesubdivision condominium buyer who wins a case in the HSRC and who isthereby deemed entitled to claim damages and attorney's fees would beforced to litigate in the regular courts for the purpose, a situation which isobviously not in the contemplation of the law. (Emphasis supplied.)

7

As a result of the growing complexity of the modern society, it has becomenecessary to create more and more administrative bodies to help in theregulation of its ramified activities. Specialized in the particular fieldsassigned to them, they can deal with the problems thereof with moreexpertise and dispatch than can be expected from the legislature or thecourts 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 liberallyconstrued to enable them to discharge their assigned duties in accordancewith 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 theexclusive jurisdiction vested in it by PD No. 957 and PD No. 1344, todetermine 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 caseof Tropical Homes v. National Housing Authority

10is not in point. We upheld


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in that case the constitutionality of the procedure for appeal provided for inPD No. 1344, but we did not rule there that the National Housing Authorityand not the Regional Trial Court had exclusive jurisdiction over the casesenumerated 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 nullityand may be struck down at any time, even on appeal before this Court.11

The only exception is where the party raising the issue is barred by estoppel,12

which does not appear in the case before us. On the contrary, the issuewas raised as early as in the motion to dismiss filed in the trial court by thepetitioner, which continued to plead it in its answer and, later, on appeal tothe respondent court. We have no choice, therefore, notwithstanding thedelay this decision will entail, to nullify the proceedings in the trial court forlack of jurisdiction.WHEREFORE, the challenged decision of the respondent court isREVERSED and the decision of the Regional Trial Court of Quezon City inCivil Case No. Q-36119 is SET ASIDE, without prejudice to the filing of theappropriate complaint before the Housing and Land Use Regulatory Board.No costs.SO ORDERED.

G.R. No. 164789 August 27, 2009CHRISTIAN GENERAL ASSEMBLY, INC.,Petitioner,vs.SPS. AVELINO C. IGNACIO and PRISCILLA T. IGNACIO,Respondents.D E C I S I O NBRION, J .:We resolve in this Rule 45 petition the legal issue of whether an action torescind a contract to sell a subdivision lot that the buyer found to be underlitigation falls under the exclusive jurisdiction of the Housing and Land UseRegulatory Board (HLURB).In this petition,

1Christian 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 TrialCourt (RTC) of Bulacan for lack of jurisdiction, as well as the CA resolution

3

that denied its motion for reconsideration.FACTUAL ANTECEDENTS

The present controversy traces its roots to the case filed by CGA against theSpouses Avelino and Priscilla Ignacio (respondents) for rescission of theirContract to Sell before the RTC, Branch 14, Malolos, Bulacan. The facts,

drawn from the records and outlined below, are not in dispute.On April 30, 1998, CGA entered into a Contract to Sell a subdivision lot

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(subject property) with the respondentsthe registered owners anddevelopers of a housing subdivision known as Villa Priscilla Subdivisionlocated 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 payablewithin 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 toSell to extend the payment period from three to five years, calculated from

the date of purchase and based on the increased total consideration ofP2,706,600, 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 propertysuffered from fatal flaws and defects. CGA learned that the subject propertywas 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 inCutcut, Pulilan, Bulacan

5had been placed under Presidential Decree (PD)

No. 27s Operation Land Transfer.6According 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 thefarm lots previously awarded to the tenant-beneficiaries, including Lot 2-Fpreviously awarded to Adriano, and Lot 2-G Bsd-04-000829 awarded to

Sison. On appeal, the Office of the President8and the CA

9upheld 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 toSell was a rescissible contract under Article 1381 of the Civil Code. CGA

asked the trial court to rescind the contract; order the respondents to returnthe 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.957

12and PD No. 1344, the respondents claimed that the case falls within


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the exclusive jurisdiction of the HLURB since it involved the sale of asubdivision lot. CGA opposed the motion to dismiss, claiming that the actionis for rescission of contract, not specific performance, and is not among theactions 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 respondentsmotion to dismiss. The RTC held that the action for rescission of contract

and damages due to the respondents fraudulent misrepresentation that theyare the rightful owners of the subject property, free from all liens and

encumbrances, is outside the HLURBs jurisdiction.1avvphi1The respondents countered by filing a petition for certiorari with the CA. In itsOctober 20, 2003 decision, the CA found merit in the respondents positionand set the RTC order aside; the CA ruled that the HLURB had exclusivejurisdiction 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 andPD No. 1344.

Contending that the CA committed reversible error, the CGA now comesbefore the Court asking us to overturn the CA decision and resolution.

THE PETITIONIn its petition, CGA argues that the CA erred -

(1) in applying Article 1191 of the Civil Code for breach of reciprocalobligation, while the petitioners action is for the rescissionof a rescissiblecontract 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 petitionersaction by applying Antipolo Realty Corp v. National Housing Corporation

13

and other cited cases.In essence, the main issue we are asked to resolve is which of the two theregular court or the HLURBhas 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 specificperformance and does not cover actions for rescission.

Taking the opposing view, respondents insist that since CGAs case involvesthe sale of a subdivision lot, it falls under the HLURBs exclusive jurisdiction.

THE COURTS RULINGWe find no merit in the petition and consequently affirm the CA decision.

Development of the HLURBs jurisdictionThe nature of an action and the jurisdiction of a tribunal are determined bythe material allegations of the complaint and the law governing at the timethe 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 partiesconsent or by their waiver in favor of a court that would otherwise have nojurisdiction 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 lawsdefining the HLURBs jurisdiction and authority.PD No. 957, enacted on July 12, 1976, was intended to closely superviseand regulate the real estate subdivision and condominium businesses in

order to curb the growing number of swindling and fraudulent manipulationsperpetrated 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 andcondominium sellers and operators, such as failure to deliver titles to thebuyers or titles free from liens and encumbrances, and to pay real estate

taxes, and fraudulent sales of the same subdivision lots to different innocentpurchasers 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 PresidentialDecree 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 orcondominium unit buyer against the project owner, developer, dealer, broker

or salesman; andC. 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 theregulatory 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 NationalHousing Authority pursuant to Presidential Decree Nos. 957, 1216, 1344 and

other related laws are hereby transferred to the Commission [HumanSettlements 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


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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 HSRCwas renamed as the HLURB.

Rationale for HLURBs extensive quasi-judicial powersThe surge in the real estate business in the country brought with it anincreasing number of cases between subdivision owners/developers and lotbuyers on the issue of the extent of the HLURBs exclusive jurisdiction. Inthe cases that reached us, we have consistently ruled that the HLURB hasexclusive jurisdiction over complaints arising from contracts between thesubdivision developer and the lot buyer or those aimed at compelling the

subdivision developer to comply with its contractual and statutory obligationsto make the subdivision a better place to live in.

15

We explained the HLURBs exclusive jurisdiction at length in Sps. Osea v.Ambrosio,

16where we said:

Generally, the extent to which an administrative agency may exercise itspowers 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 andbusiness and in addition to its powers provided for in Presidential Decree

No. 957, the National Housing Authority shall have exclusive jurisdiction tohear and decide cases of the following nature:A. Unsound real estate business practices;


or salesman; andC. Cases involving specific performance of contractual and statutory

obligations filed by buyers of subdivision lots or condominium units againstthe owner, developer, dealer, broker or salesman.

The extent to which the HLURB has been vested with quasi-judicial authoritymust also be determined by referring to the terms of P.D. No. 957, "The

Subdivision And Condominium Buyers' Protective Decree." Section 3 of thisstatute provides:

x x x National Housing Authority [now HLURB]. - The National HousingAuthority 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 957which provide:

WHEREAS, numerous reports reveal that many real estate subdivisionowners, developers, operators, and/or sellers have reneged on their

representations and obligations to provide and maintain properly subdivisionroads, drainage, sewerage, water systems, lighting systems, and othersimilar 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 andcondominium sellers and operators, such as failure to deliver titles to thebuyers or titles free from liens and encumbrances, and to pay real estate

taxes, and fraudulent sales of the same subdivision lots to different innocentpurchasers for value;

x x x xWHEREAS, this state of affairs has rendered it imperative that the real

estate subdivision and condominium businesses be closely supervised andregulated, 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 atproviding for an appropriate government agency, the HLURB, to which all

parties aggrieved in the implementation of provisions and the enforcement ofcontractual rights with respect to said category of real estate may take

recourse. The business of developing subdivisions and corporations beingimbued with public interest and welfare, any question arising from the

exercise of that prerogative should be brought to the HLURB which has thetechnical know-how on the matter. In the exercise of its powers, the HLURB

must commonly interpret and apply contracts and determine the rights ofprivate 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-changingtimes. There are hundreds of administrative bodies now performing thisfunction 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 undertheir particular expertise.

In the Solid Homes case for example the Court affirmed the competence ofthe Housing and Land Use Regulatory Board to award damages although


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this is an essentially judicial power exercisable ordinarily only by the courtsof justice. This departure from the traditional allocation of governmental

powers is justified by expediency, or the need of the government to respondswiftly and competently to the pressing problems of the modern world.

[Emphasis supplied.]Another caseAntipolo Realty Corporation v. NHA17

explained the grantof the HLURBs expansive quasi-judicial powers. We said:

In this era of clogged court dockets, the need for specialized administrativeboards or commissions with the special knowledge, experience and

capability to hear and determine promptly disputes on technical matters oressentially factual matters, subject to judicial review in case of grave abuseof discretion, has become well nigh indispensable. Thus, in 1984, the Courtnoted 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 anadministrative agency may exercise is defined in the enabling act of suchagency. In other words, the extent to which an administrative entity may

exercise such powers depends largely, if not wholly on the provisions of thestatute creating or empowering such agency. In the exercise of such powers,

the agency concerned must commonly interpret and apply contracts anddetermine the rights of private parties under such contracts, One thrust of

the multiplication of administrative agencies is that the interpretation ofcontracts and the determination of private rights thereunder is no longer a

uniquely judicial function, exercisable only by our regular courts. [Emphasissupplied.]

Subdivision cases under the RTCs jurisdictionThe expansive grant of jurisdiction to the HLURB does not mean, however,

that all cases involving subdivision lots automatically fall under itsjurisdiction. As we said in Roxas v. Court of Appeals:

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In our view, the mere relationship between the parties, i.e., that of being

subdivision owner/developer and subdivision lot buyer, does notautomatically vest jurisdiction in the HLURB. For an action to fall within the

exclusive jurisdiction of the HLURB, the decisive element is the nature of theaction as enumerated in Section 1 of P.D. 1344. On this matter, we haveconsistently held that the concerned administrative agency, the National

Housing Authority (NHA) before and now the HLURB, has jurisdiction overcomplaints 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 appearthat 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

andSuntay v. Gocolay

20that the HLURB has no jurisdiction over cases filed by

subdivision or condominium owners or developers against subdivision lot orcondominium unit buyers or owners. The rationale behind this can be foundin the wordings of Sec. 1, PD No. 1344, which expressly qualifies that the

cases cognizable by the HLURB are those instituted by subdivision orcondomium buyers or owners against the project developer or owner. This is

also in keeping with the policy of the law, which is to curb unscrupulouspractices in the real estate trade and business.

21

Thus, in the cases of Fajardo Jr. v. Freedom to Build, Inc.,[22]and Cadimasv. Carrion,

23we upheld the RTCs jurisdiction even if the subject matter was

a subdivision lot since it was the subdivision developer who filed the actionagainst the buyer for violation of the contract to sell.

The only instance that HLURB may take cognizance of a case filed by thedeveloper 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 orcondominium unit. This was what happened in Francel Realty Corporation v.Sycip,

24where 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. PresidingJudge, RTC, Branch 30, Manila,

25the case falls under the jurisdiction of the

regular courts and not the HLURB. Similarly, in Spouses Dela Cruz v. Courtof Appeals,

26we held that the RTC had jurisdiction over a case where the

conflict involved a subdivision lot buyer and a party who owned a number ofsubdivision lots but was not himself the subdivision developer.

The Present CaseIn the present case, CGA is unquestionably the buyer of a subdivision lot

from the respondents, who sold the property in their capacities as owner anddeveloper. As CGA stated in its complaint:

2.01. Defendants are the registered owners and developers of a housingsubdivision 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 atLot 1, Block 4 of the said Villa Priscilla Subdivision xxx
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xxx2.04 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 byTransfer 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 thedefendants 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 thatthey 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 cleanon its face, the title covering the subject lot actually suffers from fatal flawsand defects as it is part of the property involved in litigation even before the

original Contract to Sell (Annex "A"), which defendants deliberately andfraudulently 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 NicanorAdriano and Ceferino Sison, former tenants-beneficiaries of Purificacion S.

Imperial, whose property at Cutcut, Pulilan, Bulacan originally covered byTCT 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 thesame 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 alreadyan Implementing Order dated November 10, 1997.

xxx3.03 As may thus be seen, the defendants deliberately and fraudulently

concealed from the plaintiff that fact that the parcel of land sold to the latterunder 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 awardedto the original owner, Purificacion S. Imperial.

xxx3.05 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 datefor the subject property in the total amount of P2,515,899.20, thus formaldemand 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

[Emphasissupplied.]From these allegations, the main thrust of the CGA complaint is clearto

compel the respondents to refund the payments already made for thesubject property because the respondents were selling a property that they

apparently did not own. In other words, CGA claims that since therespondents cannot comply with their obligations under the contract, i.e., todeliver the property free from all liens and encumbrances, CGA is entitled torescind the contract and get a refund of the payments already made. Thiscause 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 andbusiness 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


or salesman; andWe 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 or1381 of the Civil Code, the fact remains that what CGA principally wants is arefund of all payments it already made to the respondents. This intent, amplyarticulated 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 theOctober 20, 2003 Decision of the Court of Appeals in CA G.R. SP No. 75717dismissing for lack of jurisdiction the CGA complaint filed with the RTC,Branch 14 of Malolos, Bulacan.SO ORDERED.ARTURO D. BRIONAssociate JusticeWE CONCUR:


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G.R. No. L-30637 July 16, 1987LIANGA 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 TIMBERCORPORATION,respondents.TEEHANKEE, C.J .:The Court grants the petition for certiorari and prohibition and holds thatrespondent judge, absent any showing of grave abuse of discretion, has nocompetence nor authority to review anew the decision in administrativeproceedings of respondents public officials (director of forestry, secretary ofagriculture and natural resources and assistant executive secretaries of theOffice of the President) in determining the correct boundary line of thelicensed timber areas of the contending parties. The Court reaffirms theestablished principle that findings of fact by an administrative board oragency or official, following a hearing, are binding upon the courts and willnot be disturbed except where the board, agency and/or official(s) havegone beyond their statutory authority, exercised unconstitutional powers or

clearly acted arbitrarily and without regard to their duty or with grave abuseof discretion.The parties herein are both forest concessionaries whose licensed areas areadjacent to each other. The concession of petitioner Lianga Bay LoggingCorporation Co., Inc. (hereinafter referred to as petitioner Lianga) asdescribed in its Timber License Agreement No. 49, is located in themunicipalities of Tago, Cagwait, Marihatag and Lianga, all in the Province ofSurigao, consisting of 110,406 hectares, more or less, while that ofrespondent Ago Timber Corporation (hereinafter referred to as respondentAgo) granted under Ordinary Timber License No. 1323-60 [New] is locatedat Los Arcos and San Salvador, Province of Agusan, with an approximatearea of 4,000 hectares. It was a part of a forest area of 9,000 hectaresoriginally licensed to one Narciso Lansang under Ordinary Timber License

No. 584-'52.Since the concessions of petitioner and respondent are adjacent to eachother, they have a common boundary-the Agusan-Surigao Provincialboundary-whereby the eastern boundary of respondent Ago's concession ispetitioner Lianga's western boundary. The western boundary of petitionerLianga is described as "... Corner 5, a point in the intersection of theAgusan-Surigao Provincial boundary and Los Arcos-Lianga Road; thencefollowing Agusan-Surigao Provincial boundary in a general northerly andnorthwesterly and northerly directions about 39,500 meters to Corner 6, apoint at the intersection of the Agusan-Surigao Provincial boundary and

Nalagdao Creek ..." The eastern boundary of respondent Ago's concessionis described as "... point 4, along the Agusan-Surigao boundary; thencefollowing Agusan-Surigao boundary in a general southeasterly and southerlydirections 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'sconcession areas, the Director of Forestry ordered a survey to establish onthe ground the common boundary of their respective concession areas.Forester Cipriano Melchor undertook the survey and fixed the commonboundary as "Corner 5 of Lianga Bay Logging Company at Km. 10.2 insteadof Km. 9.7 on the Lianga-Arcos Road and lines N900E, 21,000 meters; N12W, 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 easternboundary should be the provincial boundary line of Agusan-Surigao asdescribed in Section 1 of Art. 1693 of the Philippine Commission asindicated in the green pencil in the attached sketch" of the areas as preparedby the Bureau of Forestry.

2The Director of Forestry, after considering the

evidence, found:

That the claim of the Ago Timber Corporation portrays a line (green line) fardifferent in alignment with the line (red) as indicated in the original LicenseControl Map of this Office;That the claim of the Ago Timber Corporation (green line does not conformto the distance of 6,800 meters from point 3 to point 4 of the originaldescription of the area of Narciso Lansang but would project said line to adistance of approximately 13,800 meters;That to follow the claim of the Ago Timber Corporation would increase thearea of Narciso Lansang from 9,000 to 12,360 hectares;That to follow the claim of the Ago Timber Corporation would reduce thearea of the Lianga Bay Logging, Co., Inc. to 107,046 hectares instead of thearea 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; andfurther, that it also runs counter to the intentions of this Office in granting theTimber License Agreement to the Lianga Bay Logging Co., Inc. Theintentions of this Office in granting the two licenses (Lansang and LiangaBay Logging Co., Inc.) are patently manifest in that distances and bearingsare the controlling factors. If mention was ever made of the Agusan-Surigaoboundary, as the common boundary line of both licensees, this Office couldnot have meant the Agusan-Surigao boundary as described under Section 1of Act 1693 of the Philippine Commission for were it so it could have been soeasy for this Office to mention the distance from point 3 to point 4 of Narciso


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Lansang as approximately 13,800 meters. This cannot be considered amistake 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 competenttechnical men. The Agusan-Surigao boundary as mentioned in the technical

descriptions of both licensees, is, therefore, patently an imaginary line basedon B.F. License Control Map. Such being the case, it is reiterated thatdistance 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 inred pencil of the sketch attached to the decision.In an appeal interposed by respondent Ago, docketed in the Department ofAgriculture and Natural Resources as DANR Case No. 2268, the then ActingSecretary of Agriculture and Natural Resources Jose Y. Feliciano, in adecision dated August 9, 1965 set aside the appealed decision of theDirector of Forestry and ruled that "(T)he common boundary line of thelicensed areas of the Ago Timber Corporation and the Lianga Bay LoggingCo., Inc., should be that indicated by the green line on the same sketchwhich had been made an integral part of the appealed decision."

4

Petitioner elevated the case to the Office of the President, where in adecision dated June 16, 1966, signed by then Assistant Executive SecretaryJose J. Leido, Jr., the ruling of the then Secretary of Agriculture and NaturalResources was affirmed.

5On motion for reconsideration, the Office of the

President issued another decision dated August 9, 1968 signed by thenAssistant Executive Secretary Gilberto Duavit reversing and overturning thedecision of the then Acting Secretary of Agriculture and Natural Resourcesand affirming in totoand reinstating the decision, dated March 20, 1961, ofthe Director of Forestry.

6

Respondent Ago filed a motion for reconsideration of the decision datedAugust 9, 1968 of the Office of the President but after written opposition ofpetitioner 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 TimberCorporation, 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 CorrectBoundary Line of License Timber Areas and Damages with PreliminaryInjunction" reiterating once more the same question raised and passed uponin DANR Case No. 2268 and insisting that "a judicial review of suchdivergent administrative decisions is necessary in order to determine thecorrect boundary fine of the licensed areas in question."

8

As prayed for, respondent judge issued a temporary restraining order onOctober 28, 1968, on a bond of P20,000, enjoining the defendants fromcarrying out the decision of the Office of the President. The correspondingwrit was issued the next day, or on October 29, 1968.

9

On November 10, 1968, defendant Lianga (herein petitioner) moved fordismissal of the complaint and for dissolution of the temporary restrainingorder on grounds that the complaint states no cause of action and that thecourt has no jurisdiction over the person of respondent public officials andrespondent corporation. It also submitted its opposition to plaintiff's (hereinrespondent prayer for the issuance of a writ of preliminary injunction.

10A

supplemental motion was filed on December 6, 1968.11

On December 19, 1968, the lower court issued an order denying petitionerLianga's motion to dismiss and granting the writ of preliminary injunctionprayed for by respondent Ago.

12Lianga's Motion for Reconsideration of the

Order was denied on May 9, 1969.13

Hence, this petition praying of theCourt (a) to declare that the Director of Forestry has the exclusivejurisdiction to determine the common boundary of the licensed areas ofpetitioners and respondents and that the decision of the Office of the

President dated August 9, 1968 is final and executory; (b) to order thedismissal 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 ofjurisdiction and with grave abuse of discretion, amounting to lack ofjurisdiction, in issuing the temporary restraining order dated October 28,1968 and granting the preliminary injunction per its Order dated December19, 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 theenforcement of the preliminary injunction and related orders issued by therespondent 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 boundaryfine of its licensed timber area, for the same issue had already beendetermined by the Director of Forestry, the Secretary of Agriculture andNatural Resources and the Office of the President, administrative officialsunder whose jurisdictions the matter properly belongs. Section 1816 of theRevised Administrative Code vests in the Bureau of Forestry, the jurisdictionand authority over the demarcation, protection, management, reproduction,reforestation, occupancy, and use of all public forests and forest reservesand over the granting of licenses for game and fish, and for the taking offorest products, including stone and earth therefrom. The Secretary of


10/19


11/19

released" and instead a decision was released on August 9, 1968, signed bythen Assistant Executive Secretary Gilberto M. Duavit, which reversed thefindings and conclusions of the Office of the President in its first decisiondated June 16, 1966 and signed by then Assistant Executive Secretary

Leido.It is elementary that a draftof a decision does not operate as judgment on acase until the same is duly signed and delivered to the clerk for filing andpromulgation. A decision cannot be considered as binding on the partiesuntil its promulgation.

23Respondent should be aware of this rule. In still

another case ofAgo v. Court of Appeals,24

(where herein respondent Agowas the petitioner) the Court held that, "While it is to be presumed that thejudgment 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 andsigned, while it has not yet been delivered to the clerk for filing, it is stinsubject to amendment or change by the judge. It is only when the judgmentsigned by the judge is actually filed with the clerk of court that it becomes avalid and binding judgment. Prior thereto, it could still be subject to

amendment and change and may not, therefore, constitute the real judgmentof the court."Respondent alleges "that in view of the hopelessly conflicting decisions ofthe administrative bodies and/or offices of the Philippine government, andthe important questions of law and fact involved therein, as well as the well-grounded fear and suspicion that some anomalous, illicit and unlawfulconsiderations had intervened in the concealment of the decision of August15, 1966 (Annex "D") of Assistant Executive Secretary Gilberto M. Duavit, ajudicial review of such divergent administrative decisions is necessary inorder to determine the correct boundary line of the licensed areas inquestion and restore the faith and confidence of the people in the actuationsof 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 forreconsideration and the substitution thereof by the Duavit decision grantingreconsideration does not justify judicial review. Beliefs, suspicions andconjectures cannot overcome the presumption of regularity and legality ofofficial actions.

25It is presumed that an official of a department performs his

official duties regularly.26

It should be noted, furthermore, that ashereinabove stated with regard to the case history in the Office of thePresident, Ago's motion for reconsideration of the Duavit decision datedAugust 9, 1968 was denied in the Order dated October 2, 1968 and signedby Assistant Executive Secretary Leido himself (who thereby joined in the

reversal of his own first decision dated June 16, 1966 and signed byhimself).The Ordinary Timber License No. 1323-'60[New] which approved thetransfer to respondent Ago of the 4,000 hectares from the forest area

originally licensed to Narciso Lansang, stipulates certain conditions, termsand limitations, among which were: that the decision of the Director ofForestry as to the exact location of its licensed areas is final; that the licenseis subject to whatever decision that may be rendered on the boundaryconflict between the Lianga Bay Logging Co. and the Ago TimberCorporation; that the terms and conditions of the license are subject tochange at the discretion of the Director of Forestry and the license may bemade to expire at an earlier date. Under Section 1834 of the RevisedAdministrative Code, the Director of Forestry, upon granting any license,may prescribe and insert therein such terms, conditions, and limitations, notinconsistent with law, as may be deemed by him to be in the public interest.The license operates as a contract between the government andrespondent. Respondent, therefore, is estopped from questioning the termsand stipulation thereof.

Clearly, the injunctive writ should not have been issued. The provisions oflaw explicitly provide that Courts of First Instance shall have the power toissue writ of injunction, mandamus, certiorari, prohibition, quo warranto andhabeas corpus in their respective places,

27if the petition filed relates to the

acts or omissions of an inferior court, or of a corporation, board, officer orperson, within their jurisdiction.

28

The jurisdiction or authority of the Court of First Instance to control orrestrain acts by means of the writ of injunction is limited only to acts whichare being committed within the territorial boundaries of their respectiveprovinces or districts

29except 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

31which

involved a petition for certiorari and prohibition filed in the Court of First

Instance of Isabela against the same respondent public officials as here andwhere the administrative proceedings taken were similar to the case at bar,the Court laid down the rule that: "We agree with the petitioner that therespondent Court acted without jurisdiction in issuing a preliminary injunctionagainst the petitioners Executive Secretary, Secretary of Agriculture andNatural Resources and the Director of Forestry, who have their officialresidences in Manila and Quezon City, outside of the territorial jurisdiction ofthe respondent Court of First Instance of Isabela. Both the statutoryprovisions and the settled jurisdiction of this Court unanimously affirm thatthe extraordinary writs issued by the Court of First Instance are limited to


12/19

and operative only within their respective provinces and districts."A different rule applies only when the point in controversy relates solely to adetermination of a question of law whether the decision of the respondentadministrative officials was legally corrector not.

32We 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 toissue injunctive writs in order to control acts outside of their premises ordistricts. We went further and said that when the petition filed with the courtsof first instance not onlyquestions the legal correctness of the decision ofadministrative officials but also seeks to enjointhe enforcement of the saiddecision, the court could not validly issue the writ of injunction when theofficials sought to be restrained from enforcing the decision are not stationedwithin its territory.1avvphi1"To recapitulate, insofar as injunctive or prohibitory writs are concerned, therule still stands that courts of first instance have the power to issue writslimited to and operative only within their respective provinces or districts. "The writ of preliminary injunction issued by respondent court is furthermorevoid, since it appears that the forest area described in the injunctive writ

includes areas not licensed to respondent Ago. The forest area referred toand described therein comprises the whole area originally licensed toNarciso Lansang under the earlier Ordinary Timber License No. 58452. Onlya portion of this area was in fact transferred to respondent Ago as describedin its Ordinary Timber License No. 1323-'60[New].It is abundantly clear that respondent court has no jurisdiction over thesubject matter of Civil Case No. 1253 of the Court of First Instance ofAgusan nor has it jurisdiction to decide on the common boundary of thelicensed areas of petitioner Lianga and respondent Ago, as determined byrespondents public officials against whom no case of grave abuse ofdiscretion has been made. Absent a cause of action and jurisdiction,respondent Judge acted with grave abuse of discretion and excess, if notlack, of jurisdiction in refusing to dismiss the case under review and in

issuing the writ of preliminary injunction enjoining the enforcement of thefinal decision dated August 9, 1968 and the order affirming the same datedOctober 2, 1968 of the Office of the President.ACCORDINGLY, the petition for certiorari and prohibition is granted. Therestraining order heretofore issued by the Court against enforcement of thepreliminary injunction and related orders issued by respondent judge is thecase below is made permanent and the respondent judge or whoever hastaken his place is hereby ordered to dismiss Civil Case No. 1253.SO ORDERED.

G.R. No. 102976 October 25, 1995IRON AND STEEL AUTHORITY, petitioner,vs.

THE COURT OF APPEALS and MARIA CRISTINA FERTILIZERCORPORATION, respondents.

FELICIANO, J .:Petitioner Iron and Steel Authority ("ISA") was created by PresidentialDecree (P.D.) No. 272 dated 9 August 1973 in order, generally, to developand promote the iron and steel industry in the Philippines. The objectives ofthe ISA are spelled out in the following terms:Sec. 2. ObjectivesThe Authority shall have the following objectives:(a) to strengthen the iron and steel industry of the Philippines and to expandthe domestic and export markets for the products of the industry;(b) to promote the consolidation, integration and rationalization of theindustry in order to increase industry capability and viability to service thedomestic market and to compete in international markets;

(c) to rationalize the marketing and distribution of steel products in order toachieve a balance between demand and supply of iron and steel productsfor the country and to ensure that industry prices and profits are at levelsthat provide a fair balance between the interests of investors, consumerssuppliers, and the public at large;(d) to promote full utilization of the existing capacity of the industry, todiscourage investment in excess capacity, and in coordination, withappropriate government agencies to encourage capital investment in priorityareas of the industry;(e) to assist the industry in securing adequate and low-cost supplies of rawmaterials and to reduce the excessive dependence of the country on importsof 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 followingpowers and functions:xxx xxx xxx(j) to initiate expropriation of land required for basic iron and steel facilitiesfor subsequent resale and/or lease to the companies involvedif it is shownthat such use of the State's power is necessary to implement theconstruction of capacity which is needed for the attainment of the objectivesof the Authority;xxx xxx xxx(Emphasis supplied)


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P.D. No. 272 initially created petitioner ISA for a term of five (5) yearscounting from 9 August 1973.

1When ISA's original term expired on 10

October 1978, its term was extended for another ten (10) years by ExecutiveOrder No. 555 dated 31 August 1979.

The National Steel Corporation ("NSC") then a wholly owned subsidiary ofthe National Development Corporation which is itself an entity wholly ownedby the National Government, embarked on an expansion programembracing, among other things, the construction of an integrated steel mill inIligan City. The construction of such a steel mill was considered a priorityand major industrial project of the Government. Pursuant to the expansionprogram of the NSC, Proclamation No. 2239 was issued by the President ofthe Philippines on 16 November 1982 withdrawing from sale or settlement alarge tract of public land (totalling about 30.25 hectares in area) located inIligan City, and reserving that land for the use and immediate occupancy ofNSC.Since certain portions of the public land subject matter Proclamation No.2239 were occupied by a non-operational chemical fertilizer plant andrelated facilities owned by private respondent Maria Cristina Fertilizer

Corporation ("MCFC"), Letter of Instruction (LOI), No. 1277, also dated 16November 1982, was issued directing the NSC to "negotiate with the ownersof MCFC,for and on behalf of the Government,for the compensation ofMCFC's present occupancy rights on the subject land." LOI No. 1277 alsodirected that should NSC and private respondent MCFC fail to reach anagreement 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 rightsof private respondent MCFC relating to the subject public land as well as theplant 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 domainproceedings against private respondent MCFC in the Regional Trial Court,

Branch 1, of Iligan City, praying that it (ISA) be places in possession of theproperty involved upon depositing in court the amount of P1,760,789.69representing ten percent (10%) of the declared market values of thatproperty. The Philippine National Bank, as mortgagee of the plant facilitiesand improvements involved in the expropriation proceedings, was alsoimpleaded as party-defendant.On 17 September 1983, a writ of possession was issued by the trial court infavor of ISA. ISA in turn placed NSC in possession and control of the landoccupied 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 thenfiled a motion to dismiss, contending that no valid judgment could berendered against ISA which had ceased to be a juridical person. PetitionerISA filed its opposition to this motion.

In an Order dated 9 November 1988, the trial court granted MCFC's motionto dismiss and did dismiss the case. The dismissal was anchored on theprovision of the Rules of Court stating that "only natural or juridical personsor entities authorized by law may be parties in a civil case."

3The trial court

also referred to non-compliance by petitioner ISA with the requirements ofSection 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 existencecontinued until the winding up of its affairs could be completed. In thealternative, petitioner ISA urged that the Republic of the Philippines, beingthe real party-in-interest, should be allowed to be substituted for petitionerISA. In this connection, ISA referred to a letter from the Office of thePresident dated 28 September 1988 which especially directed the SolicitorGeneral to continue the expropriation case.

The trial court denied the motion for reconsideration, stating, among otherthings that:The property to be expropriated is not for public use or benefit [__] but forthe use and benefit [__] of NSC, a government controlled private corporationengaged in private business and for profit, specially now that thegovernment, according to newspaper reports, is offering for sale to the publicits [shares of stock] in the National Steel Corporation in line with thepronounced policy of the present administration to disengage thegovernment from its private business ventures.

5(Brackets supplied)

Petitioner went on appeal to the Court of Appeals. In a Decision dated 8October 1991, the Court of Appeals affirmed the order of dismissal of thetrial court. The Court of Appeals held that petitioner ISA, "a governmentregulatory agency exercising sovereign functions," did not have the same

rights as an ordinary corporation and that the ISA, unlike corporationsorganized under the Corporation Code, was not entitled to a period forwinding up its affairs after expiration of its legally mandated term, with theresult that upon expiration of its term on 11 August 1987, ISA was "abolishedand [had] no more legal authority to perform governmental functions." TheCourt of Appeals went on to say that the action for expropriation could notprosper because the basis for the proceedings, the ISA's exercise of itsdelegated authority to expropriate, had become ineffective as a result of thedelegate's dissolution, and could not be continued in the name of Republic ofthe Philippines, represented by the Solicitor General:


14/19

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 newcomplaint for expropriationif 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 publicpurpose, considering that the parties had not yet rested their respectivecases.In this Petition for Review, the Solicitor General argues that since ISAinitiated and prosecuted the action for expropriation in its capacity as agentof the Republic of the Philippines, the Republic, as principal of ISA, isentitled to be substituted and to be made a party-plaintiff after the agentISA's term had expired.Private respondent MCFC, upon the other hand, argues that the failure ofCongress to enact a law further extending the term of ISA after 11 August1988 evinced a "clear legislative intent to terminate the juridical existence ofISA," and that the authorization issued by the Office of the President to theSolicitor General for continued prosecution of the expropriation suit could notprevail 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 wouldbe exercised "not on behalf of the National Government but for the benefit ofNSC."The principal issue which we must address in this case is whether or not theRepublic of the Philippines is entitled to be substituted for ISA in view of theexpiration of ISA's term. As will be made clear below, this is really the onlyissue which we must resolve at this time.Rule 3, Section 1 of the Rules of Court specifies who may be parties to acivil action:Sec. 1. Who May Be Parties. Only natural or juridical persons or entitiesauthorized by law may be parties in a civil action.Under the above quoted provision, it will be seen that those who can beparties to a civil action may be broadly categorized into two (2) groups:

(a) those who are recognized aspersons under the law whether natural, i.e.,biological persons, on the one hand, or juridical person such ascorporations, on the other hand; and(b) entities authorized by lawto institute actions.Examination of the statute which created petitioner ISA shows that ISA fallsunder category (b) above. P.D. No. 272, as already noted, contains expressauthorization to ISA to commence expropriation proceedings like those hereinvolved:Sec. 4. Powers and Functions. The Authority shall have the followingpowers and functions:

xxx xxx xxx(j) to initiate expropriation of land required for basic iron and steel facilitiesfor subsequent resale and/or lease to the companies involved if it is shownthat such use of the State's power is necessary to implement the

construction of capacity which is needed for the attainment of the objectivesof the Authority;xxx xxx xxx(Emphasis supplied)It should also be noted that the enabling statute of ISA expressly authorizedit to enter into certain kinds of contracts "for and in behalf of theGovernment"in the following terms:xxx xxx xxx(i) to negotiate, and when necessary, to enter into contracts for and in behalfof the government, for the bulk purchase of materials, supplies or servicesfor any sectors in the industry, and to maintain inventories of such materialsin order to insure a continuous and adequate supply thereof and therebyreduce operating costs of such sector;xxx xxx xxx

(Emphasis supplied)Clearly, ISA was vested with some of the powers or attributes normallyassociated with juridical personality. There is, however, no provision in P.D.No. 272 recognizing ISA as possessing general or comprehensive juridicalpersonality separate and distinct from that of the Government. The ISA infact appears to the Court to be a non-incorporated agency or instrumentalityof the Republic of the Philippines, or more precisely of the Government ofthe Republic of the Philippines. It is common knowledge that other agenciesor instrumentalities of the Government of the Republic are cast in corporateform, that is to say, are incorporated agenciesor instrumentalities,sometimes with and at other times without capital stock, and accordinglyvested with a juridical personality distinct from the personality of theRepublic. Among such incorporated agencies or instrumentalities are:

National Power Corporation;

6

Philippine Ports Authority;

7

National HousingAuthority;8

Philippine National Oil Company;9Philippine National Railways;

10Public Estates Authority;

11Philippine Virginia Tobacco Administration,

12

and so forth. It is worth noting that the term "Authority" has been used todesignate both incorporated and non-incorporated agencies orinstrumentalities of the Government.We consider that the ISA is properly regarded as an agent or delegate of theRepublic of the Philippines. The Republic itself is a body corporate andjuridical person vested with the full panoply of powers and attributes whichare compendiously described as "legal personality." The relevant definitions


15/19

are found in the Administrative Code of 1987:Sec. 2. General Terms Defined. Unless the specific words of the text, orthe context as a whole, or a particular statute, require a different meaning:(1) Government of the Republic of the Philippinesrefers to the corporate

governmental entity through which the functions of government areexercised throughout the Philippines, including, save as the contraryappears from the context, the various arms through which political authorityis made effective in the Philippines, whether pertaining to the autonomousregions, the provincial, city, municipal or barangay subdivisions or otherforms of local government.xxx xxx xxx(4)Agency of the Government refers to any of the various units of theGovernment, including a department, bureau, office, instrumentality, orgovernment-owned or controlled corporation, or a local government or adistinct unit therein.xxx xxx xxx(10) Instrumentality refers to any agency of the National Government, notintegrated 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, usuallythrough a charter. This term includes regulatory agencies, charteredinstitutions 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 revertback to, and are re-assumed by, the Republic of the Philippines, in theabsence of special provisions of law specifying some other dispositionthereof such as, e.g., devolution or transmission of such powers, duties,functions, etc. to some other identified successor agency or instrumentalityof the Republic of the Philippines. When the expiring agency is an

incorporated one, the consequences of such expiry must be looked for, inthe first instance, in the charter of that agency and, by way ofsupplementation, in the provisions of the Corporation Code. Since, in theinstant case, ISA is a non-incorporated agency or instrumentality of theRepublic, its powers, duties, functions, assets and liabilities are properlyregarded as folded back into the Government of the Republic of thePhilippines and hence assumed once again by the Republic, no specialstatutory provision having been shown to have mandated succession theretoby 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 anaction must be prosecuted and defended in the name of the real party ininterest. (Rule 3, Section 2) Petitioner ISA was, at the commencement of the

expropriation proceedings, a real party in interest, having been explicitlyauthorized by its enabling statute to institute expropriation proceedings. TheRules of Court at the same time expressly recognize the role ofrepresentative parties:Sec. 3. Representative Parties. A trustee of an expressed trust, aguardian, an executor or administrator, or a party authorized by statute maysue or be sued without joining the party for whose benefit the action ispresented 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 itscapacity as an agent or delegate or representative of the Republic of thePhilippines pursuant to its authority under P.D. No. 272. The presentexpropriation suit was brought on behalf of and for the benefit of theRepublic as the principal of ISA. Paragraph 7 of the complaint stated:

7. The Government, thru the plaintiff ISA, urgently needs the subject parcelsof land for the construction and installation of iron and steel manufacturingfacilities that are indispensable to the integration of the iron and steel makingindustry 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 thePhilippines and not the National Steel Corporation, even though the lattermay be an ultimate user of the properties involved should the condemnationsuit be eventually successful.From the foregoing premises, it follows that the Republic of the Philippines isentitled to be substituted in the expropriation proceedings as party-plaintiff inlieu 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 occurredupon the expiration of ISA's statutory term, was not a ground for dismissal ofsuch proceedings since a party may be dropped or added by order of thecourt, on motion of any party or on the court's own initiative at any stage ofthe action and on such terms as are just.

13In 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 actionsinvolving its agents. There the Republic of the Philippines was held to be a


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proper party to sue for recovery of possession of property although the "real"or registered owner of the property was the Philippine Ports Authority, agovernment agency vested with a separate juridical personality. The Courtsaid:

It can be said that in suing for the recovery of the rentals, the Republic of thePhilippines acted as principal of the Philippine Ports Authority, directlyexercising 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 tocommence all over again another proceeding, as the trial court and Court ofAppeals had required, was to generate unwarranted delay and createneedless repetition of proceedings:More importantly, as we see it, dismissing the complaint on the ground thatthe Republic of the Philippines is not the proper party would result inneedless delay in the settlement of this matterand also in derogation of thepolicy against multiplicity of suits. Such a decision would require thePhilippine Ports Authority to refile the very same complaint already provedby 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 ofthe Republic of the Philippines for the ISA upon the ground that the actionfor expropriation could not prosper because the basis for the proceedings,the ISA's exercise of its delegated authority to expropriate, had becomelegally ineffective by reason of the expiration of the statutory term of theagent or delegated i.e., ISA. Since, as we have held above, the powers andfunctions of ISA have reverted to the Republic of the Philippines upon thetermination of the statutory term of ISA, the question should be addressedwhether fresh legislative authority is necessary before the Republic of thePhilippines may continue the expropriation proceedings initiated by its owndelegate 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 nonew legislative act is necessary should the Republic decide, upon beingsubstituted for ISA, in fact to continue to prosecute the expropriationproceedings. For the legislative authority, a long time ago, enacted acontinuing or standing delegation of authority to the President of thePhilippines to exercise, or cause the exercise of, the power of eminentdomain on behalf of the Government of the Republic of the Philippines. The1917 Revised Administrative Code, which was in effect at the time of thecommencement of the present expropriation proceedings before the IliganRegional 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 thePhilippines shall have such other specific powers and duties as areexpressly 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 rightof eminent domain in behalf of the Government of the Philippines; and todirect the Secretary of Justice, where such act is deemed advisable, tocause the condemnation proceedings to be begun in the court having properjurisdiction. (Emphasis supplied)The Revised Administrative Code of 1987 currently in force has substantiallyreproduced the foregoing provision in the following terms:Sec. 12. Power of eminent domain. The President shalldetermine when itis necessary or advantageous to exercise the power of eminent domain inbehalf 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 delegatedunder both the 1917 and 1987 Revised Administrative Codes in effect madea determination that it was necessary and advantageous to exercise thepower of eminent domain in behalf of the Government of the Republic andaccordingly directed the Solicitor General to proceed with the suit.

17

It is argued by private respondent MCFC that, because Congress afterbecoming once more the depository of primary legislative power, had notenacted a statute extending the term of ISA, such non-enactment must bedeemed a manifestation of a legislative design to discontinue or abort thepresent expropriation suit. We find this argument much too speculative; itrests too much upon simple silence on the part of Congress and casuallydisregards the existence of Section 12 of the 1987 Administrative Code

already quoted above.Other contentions are made by private respondent MCFC, such as, that theconstitutional requirement of "public use" or "public purpose" is not presentin the instant case, and that the indispensable element of just compensationis also absent. We agree with the Court of Appeals in this connection thatthese contentions, which were adopted and set out by the Regional TrialCourt in its order of dismissal, are premature and are appropriatelyaddressed in the proceedings before the trial court. Those proceedings haveyet to produce a decision on the merits, since trial was still on going at thetime the Regional Trial Court precipitously dismissed the expropriation


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proceedings. Moreover, as a pragmatic matter, the Republic is, by suchsubstitution as party-plaintiff, accorded an opportunity to determine whetheror not, or to what extent, the proceedings should be continued in view of allthe 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 Appealsdated 8 October 1991 to the extent that it affirmed the trial court's orderdismissing the expropriation proceedings, is hereby REVERSED and SETASIDE and the case is REMANDED to the court a quo which shall allow thesubstitution of the Republic of the Philippines for petitioner Iron and SteelAuthority and for further proceedings consistent with this Decision. Nopronouncement as to costs.SO ORDERED.

Republic of the PhilippinesSUPREME COURT

ManilaEN BANC

G.R. No. 120319 October 6, 1995LUZON DEVELOPMENT BANK, petitioner,vs.ASSOCIATION OF LUZON DEVELOPMENT BANK EMPLOYEES andATTY. ESTER S. GARCIA in her capacity as VOLUNTARYARBITRATOR, respondents.

ROMERO, J .:From a submission agreement of the Luzon Development Bank (LDB) andthe Association of Luzon Development Bank Employees (ALDBE) arose anarbitration 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 respectivePosition Papers on December 1-15, 1994. Atty. Ester S. Garcia, in hercapacity as Voluntary Arbitrator, received ALDBE's Position Paper onJanuary 18, 1995. LDB, on the other hand, failed to submit its Position Paperdespite a letter from the Voluntary Arbitrator reminding them to do so. As ofMay 23, 1995 no Position Paper had been filed by LDB.On May 24, 1995, without LDB's Position Paper, the Voluntary Arbitratorrendered a decision disposing as follows:

WHEREFORE, finding is hereby made that the Bank has not adhered to theCollective Bargaining Agreement provision nor the Memorandum ofAgreement 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 thesame.In labor law context, arbitration is the reference of a labor dispute to animpartial third person for determination on the basis of evidence andarguments presented by such parties who have bound themselves to acceptthe decision of the arbitrator as final and binding.Arbitration may be classified, on the basis of the obligation on which it isbased, as either compulsory or voluntary.Compulsory arbitration is a system whereby the parties to a dispute arecompelled by the government to forego their right to strike and arecompelled to accept the resolution of their dispute through arbitration by athird party.

1The essence of arbitration remains since a resolution of a

dispute is arrived at by resort to a disinterested third party whose decision isfinal 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 theparties is made, pursuant to a voluntary arbitration clause in their collectiveagreement, to an impartial third person for a final and binding resolution.

2

Ideally, arbitration awards are supposed to be complied with by both partieswithout 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. Afterall, they are presumed to have freely chosen arbitration as the mode ofsettlement for that particular dispute. Pursuant thereto, they have chosen amutually acceptable arbitrator who shall hear and decide their case. Aboveall, 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 ofthe CBA or company personnel policies.3For this purpose, parties to a CBA

shall name and designate therein a voluntary arbitrator or a panel ofarbitrators, or include a procedure for their selection, preferably from thoseaccredited by the National Conciliation and Mediation Board (NCMB). Article261 of the Labor Code accordingly provides for exclusive original jurisdictionof such voluntary arbitrator or panel of arbitrators over (1) the interpretationor implementation of the CBA and (2) the interpretation or enforcement ofcompany personnel policies. Article 262 authorizes them, but only uponagreement of the parties, to exercise jurisdiction over other labor disputes.


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On the other hand, a labor arbiter under Article 217 of the Labor Code hasjurisdiction over the following enumerated cases:. . . (a) Except as otherwise provided under this Code the Labor Arbitersshall have original and exclusive jurisdiction to hear and decide, within thirty(30) calendar days after the submission of the case by the parties fordecision without extension, even in the absence of stenographic notes, thefollowing 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 workersmay file involving wages, rates of pay, hours of work and other terms andconditions of employment;4. Claims for actual, moral, exemplary and other forms of damages arisingfrom the employer-employee relations;5. Cases arising from any violation of Article 264 of this Code, includingquestions involving the legality of strikes and lockouts;6. Except claims for Employees Compensation, Social Security, Medicareand 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) regardlessof whether accompanied with a claim for reinstatement.xxx xxx xxxIt will thus be noted that the jurisdiction conferred by law on a voluntaryarbitrator or a panel of such arbitrators is quite limited compared to theoriginal jurisdiction of the labor arbiter and t

admin cases ft set1

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