G.R. No.

L-33022 April 22, 1975

CENTRAL BANK OF THE PHILIPPINES, petitioner,

vs.
COURT OF APPEALS and ABLAZA CONSTRUCTION & FINANCE CORPORATION, respondents.

Petition of the Central Bank of the Philippines for review of the decision of the Court of Appeals in CA-G.R. No. 43638-R affirming the
judgment of the Court of First Instance of Rizal in Civil Case No. Q-10919 sentenced petitioner to pay respondent Ablaza Construction
and Finance Corporation damages for breach contract in that after having formally and officially awarded, pursuant to the results of the
usual bidding to Ablaza in December 1965 the "contract" for the construction of its San Fernando, La Union branch building and
allowed said contractor to commence the work up to about May, 1966, albeit without any written formal contract having been executed,
the Bank failed and refused to proceed with the project, unless the plans were revised and a lower price were agreed to by Ablaza, the
Bank claiming that its action was pursuant to the policy of fiscal restraint announced by the then new President of the Philippines on
December 30, 1965 and the Memorandum Circular No. 1 dated December 31, 1965 of the same President.

The factual background of this case is related in the following portions of the decision of the trial court, which the Court of Appeals
affirmed without modification:

Sometime in 1965, defendant Central Bank of the Philippines issued Invitations to Bid and Instructions to Bidders for
the purpose of receiving sealed proposals for the general construction of its various proposed regional offices,
including the Central Bank regional office building in San Fernando, La Union.

In response to the aforesaid Invitations to Bid, the plaintiff Ablaza Construction and Finance Corporation, which was
one of the qualified bidders, submitted a bid proposal for the general construction of defendant's proposed regional
office building in San Fernando, La Union at the public bidding held on November 3, 1965. The said proposal was, as
required by the defendant accompanied by a cash bidder's bond in the sum of P275,000.00.

On December 7, 1965, the Monetary Board of the defendant Central Bank of the Philippines, after evaluating all the
bid proposals submitted during the above-mentioned bidding, unanimously voted and approved the award to the
plaintiff of the contract for the general construction of defendant's proposed regional office building in San Fernando,
La Union, for the sum of P3,749,000.00 under plaintiff's Proposal Item No. 2.

Pursuant thereto, on December 10, 1965, Mr. Rizalino L. Mendoza, Assistant to the Governor and concurrently the
Chairman of the Management Building Committee of the defendant Central Bank of the Philippines, set a telegram to
the plaintiff, informing the latter that the contract for the general construction of defendant's proposed regional office
building in San Fernando, La Union, had been awarded to the plaintiff. The said telegram was followed by a formal
letter, also dated December 10, 1965, duly signed by said Mr. Rizalino L. Mendoza, confirming the approval of the
award of the above-stated contract under plaintiff's Proposal Item No. 2 in the amount of P3,749,000.00.

Upon receipt of the aforementioned letter, plaintiff immediately accepted the said award by means of a letter dated
December 15, 1965, whereby plaintiff also requested permission for its workmen to enter the site of the project, build
a temporary shelter and enclosure, and do some clearing job thereat. Accordingly, said permission was granted by
the defendant as embodied in its letter dated January 4, 1966, addressed to the plaintiff..

Within five (5) days from receipt by the plaintiff of the said notice of award, and several times thereafter Mr.
Nicomedes C. Ablaza, an officer of the plaintiff corporation, went personally to see Mr. Rizalino L. Mendoza at the
latter's Central Bank office to follow up the signing of the corresponding contract. A performance bond in the total
amount of P962,250.00 (P275,000.00 of which was in cash and P687,250.00 in the form of a surety bond) was
subsequently posted by the plaintiff in compliance with the above-stated Instructions to Bidders, which bond was duly
accepted by the defendant.

Pursuant to the permission granted by the defendant, as aforesaid, plaintiff commenced actual construction work on
the project about the middle of January, 1966. On February 8, 1966, by means of a formal letter, defendant requested
the plaintiff to submit a schedule of deliveries of materials which, according to plaintiff's accepted proposal, shall be
furnished by the defendant. In compliance therewith, on February 16, 1966, plaintiff submitted to the defendant the
schedule of deliveries requested for.

During the period when the actual construction work on the project was in progress, Mr. Nicomedes G. Ablaza had
several meetings with Mr. Rizalino L. Mendoza at the latter's office in the Central Bank. During those meetings, they
discussed the progress of the construction work being then undertaken by the plaintiff of the projects of the defendant
in San Fernando, La Union, including the progress of the excavation work.

Sometime during the early part of March, 1966, Mr. Rizalino L. Mendoza was at the construction site of the said
project. While he was there, he admitted having seen pile of soil in the premises. At that time, the excavation work
being undertaken by the plaintiff was about 20% complete. On March 22, 1966, defendant again wrote the plaintiff,
requesting the latter to submit the name of its representative authorized to sign the building contract with the
defendant. In compliance with the said request, plaintiff submitted to the defendant the name of its duly authorized
representative by means of a letter dated March 24, 1966.

A meeting called by the defendant was held at the conference room of the Central Bank on May 20, 1966. At the said
meeting, the defendant, thru Finance Secretary Eduardo Romualdez, announced, among other things, the reduction
of the appropriations for the construction of the defendant's various proposed regional offices, including that of the
proposed San Fernando, La Union regional office building, the construction of which had already been started by the
plaintiff. He also stated that the Central Bank Associated Architects would be asked to prepare new plans and
designs based on such reduced appropriations. The defendant, during that same meeting, also advised the plaintiff,
thru Messrs. Nicomedes G. Ablaza and Alfredo G. Ablaza (who represented the plaintiff corporation at the said
meeting), to stop its construction work on the Central Bank Regional office building in San Fernando, La Union. This
was immediately complied with by the plaintiff, although its various construction equipment remained in the jobsite.
 The defendant likewise presented certain offer and proposals to the plaintiff, among which were: (a) the immediate
return of plaintiff's cash bidder's bond of P275,000.00; (b) the payment of interest on said bidder's bond at 12% per
annum; (c) the reimbursement to the plaintiff of the value of all the work accomplished at the site; (d) the entering into
a negotiated contract with the plaintiff on the basis of the reduced appropriation for the project in question; and (e) the
reimbursement of the premium on plaintiff's performance bond. Not one of these offers and proposals of the
defendant, however, was accepted by the plaintiff during that meeting of May 20, 1966.

On June 3, 1966, plaintiff, thru counsel, wrote the defendant, demanding for the formal execution of the
corresponding contract, without prejudice to its claim for damages. The defendant, thru its Deputy Governor, Mr.
Amado R. Brinas, on June 15, 1966, replied to the said letter of the plaintiff, whereby the defendant claimed that an
agreement was reached between the plaintiff and the defendant during the meeting held on May 20, 1966. On the
following day, however, in its letter dated June 16, 1966, the plaintiff, thru counsel, vehemently denied that said
parties concluded any agreement during the meeting in question.

On July 5, 1966, defendant again offered to return plaintiff's cash bidder's bond in the amount of P275,000.00. The
plaintiff, thru counsel, on July 6, 1966, agreed to accept the return of the said cash bond, without prejudice, however,
to its claims as contained in its letters to the defendant dated June 3, June 10, and June 16, 1966, and with further
reservation regarding payment of the corresponding interest thereon. On July 7, 1966, the said sum of P275,000.00
was returned by the defendant to the plaintiff.

On January 30, 1967, in accordance with the letter of the plaintiff, thru counsel, dated January 26, 1967, the
construction equipment of the plaintiff were pulled out from the construction site, for which the plaintiff incurred
hauling expenses.

The negotiations of the parties for the settlement of plaintiff's claims out of court proved to be futile; hence, the
present action was instituted by plaintiff against the defendant." (Pp. 249-256, Rec. on Appeal).

It may be added that the Instructions to Bidders on the basis of which the bid and award in question were submitted and made
contained, among others, the following provisions: têñ.£îhqwâ£

IB 113.4 The acceptance of the Proposal shall be communicated in writing by the Owner and no other act of the
Owner shall constitute the acceptance of the Proposal. The acceptance of a Proposal shall bind the successful bidder
to execute the Contract and to be responsible for liquidated damages as herein provided. The rights and obligations
provided for in the Contract shall become effective and binding upon the parties only with its formal execution.

xxx xxx xxx

IB 114.1 The bidder whose proposal is accepted will be required to appear at the Office of the Owner in person, or, if
a firm or corporation, a duly authorized representative shall so appear, and to execute that contract within five (5)
days after notice that the contract has been awarded to him. Failure or neglect to do so shall constitute a breach of
agreement effected by the acceptance of the Proposal.

xxx xxx xxx

IB 118.1 The Contractor shall commence the work within ten (10) calendar days from the date he receives a copy of
the fully executed Contract, and he shall complete the work within the time specified." (Pp. 18-19 & 58-59, Petitioner-
Appellant's Brief.)

In the light of these facts, petitioner has made the following assignment of errors: têñ.£îhqwâ£

I. THE COURT OF APPEALS ERRED IN HOLDING THAT THERE WAS A PERFECTED CONTRACT BETWEEN
PETITIONER CENTRAL BANK OF THE PHILIPPINES AND RESPONDENT ABLAZA CONSTRUCTION &
FINANCE CORPORATION FOR THE GENERAL CONSTRUCTION WORK OF PETITIONER'S REGIONAL OFFICE
BUILDING AT SAN FERNANDO, LA UNION.

II. THE COURT OF APPEALS ERRED IN HOLDING THAT PETITIONER HAS COMMITTED A BREACH OF
CONTRACT.

III. THE COURT OF APPEALS ERRED IN HOLDING THAT PETITIONER HAD GIVEN ITS APPROVAL TO THE
WORK DONE BY RESPONDENT ABLAZA CONSTRUCTION & FINANCE CORPORATION.

IV. THE COURT OF APPEALS ERRED IN HOLDING THAT THE AWARD OF ACTUAL AND COMPENSATORY
DAMAGES, ATTORNEY'S FEES AND RETAINING FEE IS FAIR AND REASONABLE, AND IN HOLDING THAT
PETITIONER IS LIABLE FOR COSTS." (Pp. A & B, Petitioner-Appellant's Brief.)

Under the first assigned error, petitioner denotes the major part of its effort to the discussion of its proposition that there could be no
perfected contract in this case, (contrary to the conclusion of the courts below) because there is no showing of compliance, and in fact,
there has been no compliance with the requirement that there must be a certification of the availability of funds by the Auditor General
pursuant to Section 607 of the Revised Administrative Code which provides thus: têñ.£îhqwâ£

Section 607. Certificate showing appropriation to meet contract. — Except in the case of a contract for personal
service or for supplies to be carried in stock, no contract involving an expenditure by the National Government of
three thousand pesos or more shall be entered into or authorized until the Auditor General shall have certified to the
officer entering into such obligation that funds have been duly appropriated for such purpose and that the amount
necessary to cover the proposed contract is available for expenditure on account thereof. When application is made
to the Auditor General for the certificate herein required, a copy of the proposed contract or agreement shall be
submitted to him accompanied by a statement in writing from the officer making the application showing all
 obligations not yet presented for audit which have been incurred against the appropriation to which the contract in
question would be chargeable; and such certificate, when signed by the Auditor, shall be attached to and become a
part of the proposed contract, and the sum so certified shall not thereafter be available for expenditure for any other
purposes until the Government is discharged from the contract in question.

Except in the case of a contract for supplies to be carried in stock, no contract involving the expenditure by any
province, municipality, chartered city, or municipal district of two thousand pesos or more shall be entered into or
authorized until the treasurer of the political division concerned shall have certified to the officer entering into such
contract that funds have been duly appropriated for such purpose and that the amount necessary to cover the
proposed contract is available for expenditure on account thereof. Such certificate, when signed by the said treasurer,
shall be attached to and become part of the proposed contract and the sum so certified shall not thereafter be
available for expenditure for any other purpose until the contract in question is lawfully abrogated or discharged.

For the purpose of making the certificate hereinabove required ninety per centum of the estimated revenues and
receipts which should accrue during the current fiscal year but which are yet uncollected, shall be deemed to be in
the treasury of the particular branch of the Government against which the obligation in question would create a
charge." (Pp. 23-25, Petitioner-Appellant's Brief.)

It is contended that in view of such omission and considering the provisions of Section 608 of the same code to the effect that "a
purported contract entered into contrary to the requirements of the next preceding section hereof shall be wholly void", "no contract
between the petitioner and respondent Ablaza Construction and Finance Corporation for the general construction of the proposed
regional office building of the Central Bank in San Fernando, La Union, was ever perfected because only the first stage, that is the
award of the contract to the lowest responsible bidder, respondent Ablaza Construction and Finance Corporation, was completed." (p.
29, Petitioner-Appellant's Brief.) And in support of this pose, petitioner relies heavily on Tan C. Tee & Co. vs. Wright thus: têñ.£îhqwâ£

The aforesaid requirements of the Revised Administrative Code for the perfection of government contracts have been
upheld by this Honorable Court in the case of Tan C. Tee Co. vs. Wright, 53 Phil. 172, in which case it was held that
the award of the contract to the lowest bidder does not amount to entering into the contract because of the
requirement of Section 607 of the Revised Administrative Code that a copy of the proposed contract shall be
submitted to the Auditor General together with a request for the availability of funds to cover the proposed contract.
Thus, this Honorable Court held: têñ.£îhqwâ£

'To award the contract to the lowest responsible bidder is not the equivalent of entering into the
contract. Section 607 of the Administrative Code requires that a copy of the proposed contract shall
be submitted along with the request for the certificate of availability of funds, but there could be no
proposed contract to be submitted until after the award was made.'

And to guide government authorities in the letting of government contracts, this Honorable Court, in said case of Tan
C. Tee vs. Wright, supra, laid down the procedure which should be followed, as follows: têñ.£îhqwâ£

`PROCEDURE WHICH SHOULD BE FOLLOWED IN THE LETTING OF CONTRACTS FOR

INSULAR WORKS. — The procedure which should be followed in the letting of contracts for Insular
works is the following: First, there is an award of the contract by the Director of Public Works to the
lowest responsible bidder. Second, there is a certificate of availability of funds to be obtained from
the Insular Auditor, and in some cases from the Insular Treasurer, to cover the proposed contract.
And third, there is a contract to be executed on behalf of the Government by the Director of Public
Works with the approval of the department head.'" (Pp. 27-28, Petitioner-Appellant's Brief.)

The contention is without merit. To start with, the record reveals that it is more of an afterthought. Respondent never raised this
question whether in its pleadings or at the hearings in the trial court. We have also read its brief in the appellate court and no mention is
made therein of this point. Not even in its memorandum submitted to that court in lieu of oral argument is there any discussion thereof,
even as it appears that emphasis was given therein to various portions of the Revised Manual of Instructions to Treasurers regarding
the perfection and constitution of public contracts. In fact, reference was made therein to Administrative Order No. 290 of the President
of the Philippines, dated February 5, 1959, requiring "all contracts of whatever nature involving P10,000 or more to be entered into by
all bureaus and offices, ... including the ... Central Bank ... shall be submitted to the Auditor General for examination and review before
the same are perfected and/or consummated, etc.", without mentioning, however, that said administrative order was no longer in force,
the same having been revoked on January 17, 1964 by President Macapagal under Administrative Order No. 81, s. 1964.

Hence, if only for the reason that it is a familiar rule in procedure that defenses not pleaded in the answer may not be raised for the first
time on appeal, petitioner's position cannot be sustained. Indeed, in the Court of Appeals, petitioner could only bring up such questions
as are related to the issues made by the parties in their pleadings, particularly where factual matters may be involved, because to
permit a party to change his theory on appeal "would be unfair to the adverse party." (II, Moran, Rules of Court, p. 505, 1970 ed.)
Furthermore, under Section 7 of Rule 51, the appellate court cannot consider any error of the lower court "unless stated in the
assignment of errors and properly argued in the brief."

Even prescinding from this consideration of belatedness, however, it is Our considered view that contracts entered into by petitioner
Central Bank are not within the contemplation of Sections 607 and 608 cited by it. Immediately to be noted, Section 607 specifically
refers to "expenditure(s) of the National Government" and that the term "National Government" may not be deemed to include
the Central Bank. Under the Administrative Code itself, the term "National Government" refers only to the central government,
consisting of the legislative, executive and judicial departments of the government, as distinguished from local governments and
other governmental entities and is not synonymous, therefore, with the terms "The Government of the Republic of the Philippines" or
"Philippine Government", which are the expressions broad enough to include not only the central government but also the provincial
and municipal governments, chartered cities and other government-controlled corporations or agencies, like the Central Bank. (I,
Martin, Administrative Code, p. 15.)

To be sure the Central Bank is a government instrumentality. But it was created as an autonomous body corporate to be governed by
the provisions of its charter, Republic Act 265, "to administer the monetary and banking system of the Republic." (Sec. 1) As such, it is
authorized "to adopt, alter and use a corporate seal which shall be judicially noticed; to make contracts; to lease or own real and
personal property, and to sell or otherwise dispose of the same; to sue and be sued; and otherwise to do and perform any and all things
that may be necessary or proper to carry out the purposes of this Act. The Central Bank may acquire and hold such assets and incur
such liabilities as result directly from operations authorized by the provisions of this Act, or as are essential to the proper conduct of
such operations." (Sec. 4) It has capital of its own and operates under a budget prepared by its own Monetary Board and otherwise
appropriates money for its operations and other expenditures independently of the national budget. It does not depend on the National
Government for the financing of its operations; it is the National Government that occasionally resorts to it for needed budgetary
accommodations. Under Section 14 of the Bank's charter, the Monetary Board may authorize such expenditures by the Central Bank as
are in the interest of the effective administration and operation of the Bank." Its prerogative to incur such liabilities and expenditures is
not subject to any prerequisite found in any statute or regulation not expressly applicable to it. Relevantly to the issues in this case, it is
not subject, like the Social Security Commission, to Section 1901 and related provisions of the Revised Administrative Code which
require national government constructions to be done by or under the supervision of the Bureau of Public Works. (Op. of the Sec. of
Justice No. 92, Series of 1960) For these reasons, the provisions of the Revised Administrative Code invoked by the Bank do not apply
to it. To Our knowledge, in no other instance has the Bank ever considered itself subject thereto.

In Zobel vs. City of Manila, 47 Phil. 169, this Court adopted a restrictive construction of Section 607 of the Administrative Code thus:

The second question to be considered has reference to the applicability of section 607 of the Administrative Code to contracts made by
the City of Manila. In the second paragraph of said section it is declared that no contract involving the expenditure by any province,
municipality, township, or settlement of two thousand pesos or more shall be entered into or authorized until the treasurer of the political
division concerned shall have certified to the officer entering into such contract that funds have been duly appropriated for such
purpose and that the amount necessary to cover the proposed contract is available for expenditure on account thereof. It is admitted
that no such certificate was made by the treasurer of Manila at the time the contract now in question was made. We are of the opinion
that the provision cited has no application to contracts of a chartered city, such as the City of Manila. Upon examining said provision
(sec. 607) it will be found that the term chartered city, or other similar expression, such as would include the City of Manila, is not used;
and it is quite manifest from the careful use of terms in said section that chartered cities were intended to be excluded. In this
connection the definitions of "province," "municipality," and "chartered city," given in section 2 of the Administrative Code are instructive.
The circumstance that for certain purposes the City of Manila has the status both of a province and a municipality (as is true in the
distribution of revenue) is not inconsistent with this conclusion."1

We perceive no valid reason why the Court should not follow the same view now in respect to the first paragraph of the section by
confirming its application only to the offices comprised within the term National Government as above defined, particularly insofar as
government-owned or created corporations or entities having powers to make expenditures and to incur liabilities by virtue of their own
corporate authority independently of the national or local legislative bodies, as in the case of the petitioner herein, are concerned.
Whenever necessary, the Monetary Board, like any other corporate board, makes all required appropriations directly from the funds of
the Bank and does not need any official statement of availability from its treasurer or auditor and without submitting any papers to,
much less securing the approval of the Auditor General or any outside authority before doing so. Indeed, this is readily to be inferred
from the repeal already mentioned earlier of Administrative Order No. 290, s. 1959, which petitioner tried to invoke, overlooking perhaps
such repeal. In other words, by that repeal, the requirement that the Central Bank should submit to the Auditor General for examination
and review before contracts involving P10,000 or more to be entered into by it "before the same are perfected and/or consummated"
had already been eliminated at the time the transaction herein involved took place. Consequently, the point of invalidity pressed,
belatedly at that, by petitioner has no leg to stand on.

The other main contention of petitioner is that the purported or alleged contract being relied upon by respondent never reached the
stage of perfection which would make it binding upon the parties and entitle either of them to sue for specific performance in case of
breach thereof. In this connection, since the transaction herein involved arose from the award of a construction contract2 by a
government corporation and the attempt on its part to discontinue with the construction several months after such award had been
accepted by the contractor and after the latter had already commenced the work without any objection on the part of the corporation, so
much so that entry into the site for the purpose was upon express permission from it, but before any written contract has been
executed, it is preferable that certain pertinent points be clarified for the proper resolution of the issue between the parties here and the
general guidance of all who might be similarly situated.

Petitioner buttresses its position in regard to this issue on the provisions earlier quoted in this opinion of the Instruction to Bidders: têñ.
£îhqwâ£

IB 113.4 The acceptance of the Proposal shall be communicated in writing by the Owner and no other act of the
Owner shall constitute the acceptance of the Proposal. The acceptance of a Proposal shall bind the successful bidder
to execute the Contract and to be responsible for liquidated damages as herein provided. The rights and obligations
provided for in the Contract shall become effective and binding upon the parties only with its formal execution.

xxx xxx xxx

IB 118.1 The Contractor shall commence the work within ten (10) calendar days from the date he receives a copy of
the fully executed Contract, and he shall complete the work within the time specified." (Pp. 18-19, Petitioner-
Appellant's Brief.)

Petitioner insists that under these provisions, the rights and obligations of the Bank and Ablaza could become effective and binding only
upon the execution of the formal contract, and since admittedly no formal contract has yet been signed by the parties herein, there is
yet no perfected contract to speak of and respondent has, therefore, no cause of action against the Bank. And in refutation of
respondent's argument that it had already started the work with some clearing job and foundation excavations, which has never been
stopped by petitioner who had previously given express permission to respondent to enter the jobsite, build a temporary shelter and
enclosures thereon, petitioner counters that under the above instructions, respondent is supposed to commence the work "within ten
(10) calendar days from the date he receives a copy of the fully executed Contract," and for said respondent to have started actual
construction work before any contract has been signed was unauthorized and was consequently undertaken at his own risk, all the
above circumstances indicative of estoppel notwithstanding.

We are not persuaded that petitioner's posture conforms with law and equity. According to Paragraph IB 114.1 of the Instructions to
Bidders, Ablaza was "required to appear in the office of the Owner (the Bank) in person, or, if a firm or corporation, a duly authorized
representative (thereof), and to execute the contract within five (5) days after notice that the contract has been awarded to him. Failure
or neglect to do so shall constitute a breach of agreement effected by the acceptance of the Proposal." There can be no other meaning
of this provision than that the Bank's acceptance of the bid of respondent Ablaza effected an actionable agreement between them. We
cannot read it in the unilateral sense suggested by petitioner that it bound only the contractor, without any corresponding responsibility
or obligation at all on the part of the Bank. An agreement presupposes a meeting of minds and when that point is reached in the
negotiations between two parties intending to enter into a contract, the purported contract is deemed perfected and none of them may
thereafter disengage himself therefrom without being liable to the other in an action for specific performance.

The rather ambiguous terms of Paragraph IB 113.4 of the Instructions to Bidders relied upon by petitioner have to be reconciled with
the other paragraphs thereof to avoid lack of mutuality in the relation between the parties. This invoked paragraph stipulates that "the
acceptance of (respondent's) Proposal shall bind said respondent to execute the Contract and to be responsible for liquidated damages
as herein provided." And yet, even if the contractor is ready and willing to execute the formal contract within the five (5) day period
given to him, petitioner now claims that under the invoked provision, it could refuse to execute such contract and still be absolutely free
from any liability to the contractor who, in the meantime, has to make necessary arrangements and incur expenditures in order to be
able to commence work "within ten (10) days from the date he receives a copy of the fully executed Contract," or be responsible for
damages for delay. The unfairness of such a view is too evident to be justified by the invocation of the principle that every party to a
contract who is sui juris and who has entered into it voluntarily and with full knowledge of its unfavorable provisions may not
subsequently complain about them when they are being enforced, if only because there are other portions of the Instruction to Bidders
which indicate the contrary. Certainly, We cannot sanction that in the absence of unavoidable just reasons, the Bank could simply
refuse to execute the contract and thereby avoid it entirely. Even a government owned corporation may not under the guise of
protecting the public interest unceremoniously disregard contractual commitments to the prejudice of the other party. Otherwise, the
door would be wide open to abuses and anomalies more detrimental to public interest. If there could be instances wherein a
government corporation may justifiably withdraw from a commitment as a consequence of more paramount considerations, the case at
bar is not, for the reasons already given, one of them.

As We see it then, contrary to the contention of the Bank, the provision it is citing may not be considered as determinative of the
perfection of the contract here in question. Said provision only means that as regards the violation of any particular term or condition to
be contained in the formal contract, the corresponding action therefor cannot arise until after the writing has been fully executed. Thus,
after the Proposal of respondent was accepted by the Bank thru its telegram and letter both dated December 10, 1965 and respondent
in turn accepted the award by its letter of December 15, 1965, both parties became bound to proceed with the subsequent steps
needed to formalize and consummate their agreement. Failure on the part of either of them to do so, entities the other to compensation
for the resulting damages. To such effect was the ruling of this Court in Valencia vs. RFC 103 Phil. 444. We held therein that the award
of a contract to a bidder constitutes an acceptance of said bidder's proposal and that "the effect of said acceptance was to perfect a
contract, upon notice of the award to (the bidder)". (at p. 450) We further held therein that the bidder's "failure to (sign the
corresponding contract) do not relieve him of the obligation arising from the unqualified acceptance of his offer. Much less did it affect
the existence of a contract between him and respondent". (at p. 452)

It is neither just nor equitable that Valencia should be construed to have sanctioned a one-sided view of the perfection of contracts in
the sense that the acceptance of a bid by a duly authorized official of a government-owned corporation, financially and otherwise
autonomous both from the National Government and the Bureau of Public Works, insofar as its construction contracts are concerned,
binds only the bidder and not the corporation until the formal execution of the corresponding written contract.

Such unfairness and inequity would even be more evident in the case at bar, if We were to uphold petitioner's pose. Pertinently to the
point under consideration, the trial court found as follows:

To determine the amount of damages recoverable from the defendant, plaintiff's claim for actual damages in the sum of P298,433.35,
as hereinabove stated, and the recommendation of Messrs. Ambrosio R. Flores and Ricardo Y. Mayuga, as contained in their separate
reports (Exhs. "13" and "15"), in the amounts of P154,075.00 and P147,500.00, respectively, should be taken into account.

There is evidence on record showing that plaintiff incurred the sum of P48,770.30 for the preparation of the jobsite, construction of
bodegas, fences field offices, working sheds, and workmen's quarters; that the value of the excavation work accomplished by the
plaintiff at the site was P113,800.00; that the rental of the various construction equipment of the plaintiff from the stoppage of work until
the removal thereof from the jobsite would amount to P78,540.00 (Exhs. "K" - "K-l"); that the interest on the cash bond of P275,000.00
from November 3, 1965 to July 7, 1966 at 12% per annum would be P22,000.00; that for removing said construction equipment from
the jobsite to Manila, plaintiff paid a hauling fee of P700.00 (Exhs. "L" - "L-1" ); that for the performance bond that the plaintiff posted as
required under its contract with the defendant, the former was obliged to pay a premium of P2,216.55; and that the plaintiff was likewise
made to incur the sum of P32,406.50, representing the 3% contractor's tax (Exhs. "AA" - "A-l"). The itemized list of all these
expenditures, totalling P298,433.35 is attached to the records of this case (Annex "B", Complaint) and forms part of the evidence of the
plaintiff. Mr. Nicomedes G. Ablaza, the witness for the plaintiff, properly identified said document and affirmed the contents thereof
when he testified during the hearing. The same witness likewise explained in detail the various figures contained therein, and identified
the corresponding supporting papers.

It is noteworthy, in this connection, that there is nothing in the records that would show that the defendant assailed the accuracy and/or
reasonableness of the figures presented by the plaintiff; neither does it appear that the defendant offered any evidence to refute said
figures.

While it is claimed by the defendant that the plaintiff incurred a total expense of only P154,075.00 according to the report of Mr.
Ambrosio R. Flores, or P147,500.00, according to the report of Mr. Ricardo Y. Mayuga, the Court finds said estimates to be inaccurate.
To cite only an instance, in estimating, the value of the excavation work, the defendant merely measured the depth, length and width of
the excavated, area which was submerged in water, without ascertaining the volume of rock and the volume of earth actually excavated
as was done by the plaintiff who prepared a detailed plan showing the profile of the excavation work performed in the site (Exh. "B").
Likewise, the unit measure adopted by the defendant was in cubic meter while it should be in cubic yard. Also the unit price used by the
defendant was only P8.75 for rock excavation while it should be P10.00 per cubic yard; and only P4.95 for earth excavation while it
should be P5.50 per cubic yard as clearly indicated in plaintiff's proposal (Annex "A", Complaint; same as Annex "1", Answer). The
Court, therefore, can not give credence to defendant's, aforementioned estimates in view of their evident inaccuracies.

The Court finds from the evidence adduced that Plaintiff claim for actual damages in the sum of P298,433.35 is meritorious.

The Bulk of plaintiffs claims consists of expected profit which it failed to realize due to the breach of the contract in question by the
defendant. As previously stated, the plaintiff seeks to recover the amount of P814,190.00 by way of unrealized expected profit. This
figure represents 18% of P4,523,275.00 which is the estimated direct cost of the subject project.
As it has been established by the evidence that the defendant in fact was guilty of breach of contract and, therefore, liable for damages
(Art. 1170, New Civil Code), the Court finds that the plaintiff is entitled to recover from the defendant unrealized expected profit as part
of the actual or compensatory damages. Indemnification for damages shall comprehend not only the value of the loss suffered, but also
that of the profits which the obligee failed to obtain (Art. 2200, New Civil Code).

Where a party is guilty of breach of contract, the other party is entitled to recover the profit which the latter would have been able to
make had the contract been performed (Paz P. Arrieta, et al., plaintiffs-appellees, vs. National Rice Corporation defendant-appellant,
G.R. No. L-15645, promulgated on January 31, 1964; Vivencio Cerrano, plaintiff-appellee, vs. Tan Chuco, defendant-appellant, 38 Phil.
392).

Regarding the expected profit, a number of questions will have to be answered: Is the 18% unrealized expected profit being claimed by
the plaintiff reasonable? Would the plaintiff be entitled to the whole amount of said expected profit although there was only partial
performance of the contract? Would the 18% expected profit be based on the estimated direct cost of the subject in the amount of
P4,523,275.00, or on plaintiff's bid proposal of P3,749,000.00?

On the question of reasonableness of the 18% expected profit, the Court noted that according to defendant's own expert witness, Mr.
Ambrosio R. Flores, 25% contractor's profit for a project similar in magnitude as the one involved in the present case would be ample
and reasonable. Plaintiff's witness, Mr. Nicomedes G. Ablaza, an experienced civil engineer who has been actively engaged in the
construction business, testified that 15% to 20% contractor's profit would be in accordance with the standard engineering practice.
Considering the type of the project involved in this case, he stated, the contractor's profit was placed at 18%. Taking into consideration
the fact that this percentage of profit is even lower than what defendant's witness considered to be ample and reasonable, the Court
believes that the reasonable percentage should be 18% inasmuch as the actual work was not done completely and the plaintiff has not
invested the whole amount of money called for by the project." (Pp. 263-268, Record on Appeal.)

These findings have not been shown to Us to be erroneous. And additional and clarificatory details, which We find to be adequately
supported by the record, are stated in Respondents' brief thus: têñ.£îhqwâ£

23. In a letter dated January 4, 1966, petitioner Central Bank, through the same Mr. Mendoza, to this request of
respondent Ablaza. (Annex "D-1" to the Partial Stipulation of Facts, R.A., p. 146).

24. Acting upon this written permission, respondent Ablaza immediately brought its men and equipment from Manila
to the construction site in San Fernando, La Union, and promptly commenced construction work thereat. This work,
consisted of the setting up of an enclosure around the site, the building of temporary shelter for its workmen, and the
making of the necessary excavation works. (Commissioner's Report, R.A., p. 181).

25. Following the commencement of such construction work, petitioner Central Bank, through a letter dated February
8, 1966, formally requested respondent Ablaza to submit to petitioner the following:têñ.£îhqwâ£

(a) A schedule of deliveries of material which, under the terms of respondent Ablaza's approved
proposal, were to be furnished by petitioner.

(b) A time-table for the accomplishment of the construction work.

In short, as early as February 8, 1966, or more than three months prior to petitioner's repudiation of
the contract in question the latter (petitioner) already took the above positive steps it compliance
with its own obligations under the contract.

26. Acting upon petitioner's above letter of February 8, 1966, on February 16, 1966, respondent Ablaza submitted the
schedule of deliveries requested by petitioner. (Commissioner's Report, R.A., p. 182; Decision id., 252; also Exhs. "D"
to "D-7", inclusive.)

27. During the period of actual construction, respondent Ablaza, on several occasions, actually discussed the
progress of the work with Mr. Mendoza. In addition, in March 1966, the latter (Mr. Mendoza) personally visited the
construction site. There he saw the work which respondent had by that time already accomplished which consisted of
the completion of approximately 20% of the necessary excavation works. (Commissioner's Report, R.A., p.
182; Decision, id., p. 252).

28. Following Mr. Mendoza's visit at the construction site, or more specifically on March 22, 1966, the latter
(Mendoza) wrote to respondent Ablaza, instructing the latter to formally designate the person to represent the
corporation at the signing of the formal construction contract. (Exh. "H"; also t.s.n., pp. 119-121, December 18, 1967).

29. By a letter dated March 24, 1966, respondent Ablaza promptly complied with the above request. (Exh. "I"; also
t.s.n., pp 121-123, December 18, 1967).

30. Subsequently, respondent Ablaza posted the required performance guaranty bond in the total amount of
P962,250.00, consisting of (a) a cash bond in the amount of P275,000.00, and (b) a surety bond, PSIC Bond No. B-
252-ML, dated May 19, 1966, in the amount of P687,250.00. In this connection, it is important to note that the specific
purpose of this bond was to guarantee "the faithful Performance of the Contract" by respondent Ablaza. (Partial
Stipulation of Facts, par. 6, R.A., p. 141). This performance guaranty bond was duly accepted by petitioner.(Id.)

31. However, on May 20, 1966, petitioner Central Bank called for a meeting with representatives of respondent
Ablaza and another contractor. This meeting was held at the Conference Room of the Central Bank Building. At this
meeting, then Finance Secretary Eduardo Romualdez, who acted as the representative of petitioner, announced that
the Monetary Board had decided to reduce the appropriations for the various proposed Central Bank regional office
buildings, including the one for San Fernando, La Union.
 32. In view of this decision, Secretary Romualdez informed respondent Ablaza that new plans and designs for the
proposed regional office building in San Fernando would have to be drawn up to take account of the reduction in
appropriation. Secretary Romualdez then advised respondent to suspend work at the construction site in San
Fernando in the meanwhile. (Decision, R.A., pp. 253-254).

33. After making the above announcements, Secretary Romualdez proposed that all existing contracts previously
entered into between petitioner Central Bank and the several winning contractors (among them being respondent
Ablaza) be considered set aside.

34. Obviously to induce acceptance of the above proposal, Secretary Romualdez offered the following concessions to
respondent Ablaza: têñ.£îhqwâ£

(a) That its cash bond in the amount of P275,000.00 be released immediately, and that interest be
paid thereon at the rate of 12% per annum.

(b) That respondent Ablaza be reimbursed for expenses incurred for the premiums on the
performance bond which it posted, and which petitioner had already accepted. (Decision, R.A., pp.
253-254).

35. In addition, Secretary Romualdez also proposed the conclusion of a new contract with respondent Ablaza for the
construction of a more modest regional office building at San Fernando, La Union, on a negotiated basis. However,
the sincerity and feasibility of this proposal was rendered dubious by a caveat attached to it, as follows: têñ.£îhqwâ£

'4. Where auditing regulations would permit, the Central Bank would enter into a negotiated
contract with the said corporation (Ablaza) for the construction work on the building on the basis of
the revised estimates.' (Annex "8" to Answer, R.A., p. 95).

36. The revised cost fixed for this proposed alternative regional office building was fixed at a maximum of
P3,000,000.00 (compared to P3,749,000.00 under the contract originally awarded to respondent). (Annex "6-A" to
Answer, R.A., p. 87).

37. Needless perhaps to state, respondent Ablaza rejected the above proposals (pars. 34 and 35, supra.), and on
June 3, 1966, through counsel, wrote to petitioner demanding the formal execution of the contract previously awarded
to it, or in the alternative, to pay "all damages and expenses suffered by (it) in the total amount of P1,181,950.00 ...
"(Annex "7" to Answer, R.A., pp. 89-91; Decision, id., p. 254).

38. In a letter dated June 15, 1966, petitioner Central Bank, through Deputy Governor Amado R. Brinas, replied to
respondent Ablaza's demand denying any liability on the basis of the following claim: têñ.£îhqwâ£

`(That, allegedly) in line with the agreement ... reached between the Central Bank and Ablaza
Construction and Finance Corporation at a meeting held ... on May 20, 1966,' "whatever
agreements might have been previously agreed upon between (petitioner and respondent) would
be considered set aside." (Decision, R.A., p. 255; Annex "8" to Answer, id., pp. 93-96.)

39. The above claim was, however, promptly and peremptorily denied by respondent Ablaza, through counsel, in a
letter dated June 16, 1966. (Partial Stipulation of Facts, par. 9, R.A., p. 142, also Annex "G" thereof; Commissioner's
Report, R.A., p. 185; Decision, id., p. 255.)" (Appellee's Brief, pars. 23 to 39, pp. 14-19.)

None of these facts is seriously or in any event sufficiently denied in petitioner's reply brief.

Considering all these facts, it is quite obvious that the Bank's insistence now regarding the need for the execution of the formal contract
comes a little too late to be believable. Even assuming arguendo that the Revised Manual of Instructions to Treasurers were applicable
to the Central Bank, which is doubtful, considering that under the provisions of its charter already referred to earlier, disbursements and
expenditures of the Bank are supposed to be governed by rules and regulations promulgated by the Monetary Board, in this particular
case, the attitude and actuations then of the Bank in relation to the work being done by Ablaza prior to May 20, 1966 clearly indicate
that both parties assumed that the actual execution of the written contract is a mere formality which could not materially affect their
respective contractual rights and obligations. In legal effect, therefore, the Bank must be considered as having waived such
requirement.

To be more concrete, from December 15, 1965, when Ablaza accepted the award of the contract in question, both parties were
supposed to have seen to it that the formal contract were duly signed. Under the Instructions to Bidders, Ablaza was under obligation to
sign the same within five (5) days from notice of the award, and so, he called on the Bank at various times for that purpose. The Bank
never indicated until May, 1966 that it would not comply. On the contrary, on February 8, 1966, Ablaza was requested to submit a
"schedule of deliveries of materials" which under the terms of the bid were to be furnished by the Bank. On March 22, 1966, Ablaza
received a letter from the Bank inquiring as to who would be Ablaza's representative to sign the formal contract. In the meanwhile, no
less than Mr. Rizalino Mendoza, the Chairman of the Management Building Committee of the Central Bank who had been signing for
the Bank all the communications regarding the project at issue, had visited the construction site in March, 1966, just before he wrote the
request abovementioned of the 22nd of that month for the nomination of the representative to sign the formal contract, and actually saw
the progress of the work and that it was being continued, but he never protested or had it stopped. All these despite the fact that the
Memorandum Circular being invoked by the Bank was issued way back on December 31, 1965 yet. And when finally on May 20, 1966
the Bank met with the representatives of Ablaza regarding the idea of changing the plans to more economical ones, there was no
mention of the non-execution of the contract as entitling the Bank to back out of it unconditionally. Rather, the talk, according to the
findings of the lower courts, was about the possibility of setting aside whatever agreement there was already. Under these
circumstances, it appears that respondent has been made to believe up to the time the Bank decided definitely not to honor any
agreement at all that its execution was not indispensable to a contract to be considered as already operating and respondent could
therefore proceed with the work, while the contract could be formalized later.
Petitioner contends next that its withdrawal from the contract is justified by the policy of economic restraint ordained by Memorandum
Circular No. 1. We do not see it that way. Inasmuch as the contract here in question was perfected before the issuance of said
Memorandum Circular, it is elementary that the same may not be enforced in such a manner as to result in the impairment of the
obligations of the contract, for that is not constitutionally permissible. Not even by means of a statute, which is much more weighty than
a mere declaration of policy, may the government issue any regulation relieving itself or any person from the binding effects of a
contract. (Section 1 (10), Article III, Philippine Constitution of 1953 and Section 11, Article IV, 1973 Constitution of the Philippines.)
Specially in the case of the Central Bank, perhaps, it might not have been really imperative that it should have revised its plans,
considering that it has its own resources independent of those of the national government and that the funds of the Central Bank are
derived from its own operations, not from taxes. In any event, if the memorandum circular had to be implemented, the corresponding
action in that direction should have been taken without loss of time and before the contract in question had taken deeper roots. It is thus
clear that in unjustifiably failing to honor its contract with respondent, petitioner has to suffer the consequences of its action.

The last issue submitted for Our resolution refers to the amount of damages awarded to Ablaza by the trial court and found by the Court
of Appeals to be "fair and reasonable." Again, after a review of the record, We do not find sufficient ground to disturb the appealed
judgment even in this respect, except as to attorney's fees.

There are three principal items of damages awarded by the courts below, namely: (1) compensation for actual work done in the amount
of P298,433.35, (2) unrealized profits equivalent to 18% of the contract price of P3,749,000 or P674,820.00 and (3) 15% of the total
recovery as attorney's fees in addition to the P5,000 already paid as retaining fee. All of these items were the subject of evidence
presented by the parties. According to the Court of Appeals: têñ.£îhqwâ£

As regard the accuracy and reasonableness of the award for damages, both actual and compensatory, it is to be
noted that the trial court subjected the Commissioner's report and the evidence adduced therein to a careful scrutiny.
Thus, when the appellant called the trial court's attention to the fact that the P814,190.00 unrealized expected profit
being claimed by appellee represented 18% of P4,523,275.00 which was the estimated cost of the project, while the
contract awarded to appellee was only in the amount of P3,749,000.00 as per its bid proposal, the Court made the
necessary modification. It is further to be noted that the amount of 18% of the estimated cost considered in the said
award is much less than that given by appellant's own expert witness, Ambrosio R. Flores. He testified that 25% as
contractor's profit "would be fair, ample and reasonable." (T.s.n, p. 557, Batalla.)" (p. 17 A, Appellant's brief.)

Basically, these are factual conclusions which We are not generally at liberty to disregard. And We have not been shown that they are
devoid of reasonable basis.

There can be no dispute as to the legal obligation of petitioner to pay respondent the actual expenses it has incurred in performing its
part of the contract.

Upon the other hand, the legal question of whether or not the Bank is liable for unrealized profits presents no difficulty. In Arrieta vs.
Naric G.R. No. L-15645, Jan. 31, 1964, 10 SCRA 79, this Court sustained as a matter of law the award of damages n the amount of
U.S. $286,000, payable in Philippine Currency, measured in the rate of exchange prevailing at the time the obligation was incurred
(August, 1952), comprising of unrealized profits of the plaintiff, Mrs. Paz Arrieta, in a case where a government-owned corporation, the
Naric failed to proceed with the purchase of imported rice after having accepted and approved the bid of Arrieta and after she had
already closed her contract with her foreign sellers.

Actually, the law on the matter is unequivocally expressed in Articles 2200 and 2201 of the Civil Code thus: têñ.£îhqwâ£

ART. 2200. Identification for damages shall comprehend not only the value of the loss suffered, but also that of the
profits, which the obligee failed to obtain..

ART. 2201. In contracts and quasi-contracts, the damages for which the obligor who acted in good faith is liable shall
be those that are the natural and probable consequences of the breach of the obligation, and which the parties have
forseen or could have reasonably foreseen at the time the obligation was constituted.

In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible for all damages which may be
reasonably attributed to the non- performance of the obligation.

Construing these provisions, the following is what this Court held in Cerrano vs. Tan Chuco, 38 Phil. 392: têñ.£îhqwâ£

.... Article 1106 (now 2200) of the Civil Code establishes the rule that prospective profits may be recovered as
damages, while article 1107 (now 2201) of the same Code provides that the damages recoverable for the breach of
obligations not originating in fraud (dolo) are those which were or might have been foreseen at the time the contract
was entered into. Applying these principles to the facts in this case, we think that it is unquestionable that defendant
must be deemed to have foreseen at the time he made the contract that in the event of his failure to perform it, the
plaintiff would be damaged by the loss of the profit he might reasonably have expected to derive from its use.

When the existence of a loss is established, absolute certainty as to its amount is not required. The benefit to be
derived from a contract which one of the parties has absolutely failed to perform is of necessity to some extent, a
matter of speculation, but the injured party is not to be denied all remedy for that reason alone. He must produce the
best evidence of which his case is susceptible and if that evidence warrants the inference that he has been damaged
by the loss of profits which he might with reasonable certainty have anticipated but for the defendant's wrongful act,
he is entitled to recover. As stated in Sedgwick on Damages (Ninth Ed., par. 177):

The general rule is, then, that a plaintiff may recover compensation for any gain which he can make it appear with
reasonable certainty the defendant's wrongful act prevented him from acquiring, ...'. (See also Algarra vs. Sandejas,
27 Phil. Rep., 284, 289; Hicks vs. Manila Hotel Co., 28 Phil. Rep., 325.) (At pp. 398-399.)

Later, in General Enterprises, Inc. vs. Lianga Bay Logging Co. Inc., 11 SCRA 733, Article 2200 of the Civil Code was again applied as
follows: têñ.£îhqwâ£
 Regarding the actual damages awarded to appellee, appellant contends that they are unwarranted inasmuch as
appellee has failed to adduce any evidence to substantiate them even assuming arguendo that appellant has failed to
supply the additional monthly 2,000,000 board feet for the remainder of the period agreed upon in the contract Exhibit
A. Appellant maintains that for appellee to be entitled to demand payment of sales that were not effected it should
have proved (1) that there are actual sales made of appellee's logs which were not fulfilled, (2) that it had obtained
the best price for such sales, (3) that there are buyers ready to buy at such price stating the volume they are ready to
buy, and (4) appellee could not cover the sales from the logs of other suppliers. Since these facts were not proven,
appellee's right to unearned commissions must fail.

This argument must be overruled in the light of the law and evidence on the matter. Under Article 2200 of the Civil
Code, indemnification for damages comprehends not only the value of the loss suffered but also that of the profits
which the creditor fails to obtain. In other words, lucrum cessans is also a basis for indemnification. The question then
that arises is: Has appellee failed to make profits because of appellant's breach of contract, and in the affirmative, is
there here basis for determining with reasonable certainty such unearned profits?

Appellant's memorandum (p. 9) shows that appellee has sold to Korea under the contract in question the following
board feet of logs, Breareton Scale: têñ.£îhqwâ£

Months Board Feet

From June to August 1959 3,007,435

September, 1959 none
October, 1959 2,299,805
November, 1959 801,021
December, 1959 1,297,510

Total 7,405,861

The above figures tally with those of Exhibit N. In its brief (p. 141) appellant claims that in less than six months' time
appellee received by way of commission the amount of P117,859.54, while in its memorandum, appellant makes the
following statement:

`11. The invoice F.O.B. price of the sale through plaintiff General is P767,798.82 but the agreed F.O.B. price was
P799,319.00, the commission at 13% (F.O.B.) is P117,859.54. But, as there were always two prices — Invoice F.O.B
price and F.O.B. price as per contract, because of the sales difference amounting to P31,920.18, and the same was
deducted from the commission, actually paid to plaintiff General is only P79,580.82.' " It appears, therefore, that
during the period of June to December, 1959, in spite of the short delivery incurred by appellant, appellee had been
earning its commission whenever logs were delivered to it. But from January, 1960, appellee had ceased to earn any
commission because appellant failed to deliver any log in violation of their agreement. Had appellant continued to
deliver the logs as it was bound to pursuant to the agreement it is reasonable to expect that it would have continued
earning its commission in much the same manner as it used to in connection with the previous shipments of logs,
which clearly indicates that it failed to earn the commissions it should earn during this period of time. And this
commission is not difficult to estimate. Thus, during the seventeen remaining months of the contract, at the rate of at
least 2,000,000 board feet, appellant should have delivered thirty-four million board feet. If we take the number of
board feet delivered during the months prior to the interruption, namely, 7,405,861 board feet, and the commission
received by appellee thereon, which amounts to P79,580.82, we would have that appellee received a commission of
P.0107456 per board feet. Multiplying 34 million board feet by P.0107456, the product is P365,350.40, which
represents the lucrum cessans that should accrue to appellee. The award therefore, made by the court a quo of the
amount of P400,000.00 as compensatory damages is not speculative, but based on reasonable estimate.

In the light of these considerations, We cannot say that the Court of Appeals erred in making the aforementioned award of damages for
unrealized profits to respondent Ablaza.

With respect to the award for attorney's fees, We believe that in line with the amount fixed in Lianga, supra., an award of ten per
centum (10%) of the amount of the total recovery should be enough.

PREMISES CONSIDERED, the decision of the Court of Appeals in this case is affirmed, with the modification that the award for
attorney's fees made therein is hereby reduced to ten per centum (10%) of the total recovery of respondent Ablaza.

Costs against petitioner.

 [G.R. No. L-9657.  November 29, 1956.]
LEOPOLDO T. BACANI and MATEO A. MATOTO, Plaintiffs-Appellees, vs. NATIONAL COCONUT CORPORATION, ET AL., Defendants, NATIONAL
COCONUT CORPORATION and BOARD OF LIQUIDATORS, Defendants-Appellants.
Plaintiffs herein are court stenographers assigned in Branch VI of the Court of First Instance of Manila. During the pendency of Civil Case No. 2293
of said court, entitled Francisco Sycip vs. National Coconut Corporation, Assistant Corporate Counsel Federico Alikpala, counsel for Defendant,
requested said stenographers for copies of the transcript of the stenographic notes taken by them during the hearing. Plaintiffs complied with the
request by delivering to Counsel Alikpala the needed transcript containing 714 pages and thereafter submitted to him their bills for the payment of
their fees. The National Coconut Corporation paid the amount of P564 to Leopoldo T. Bacani and P150 to Mateo A. Matoto for said transcript at the
rate of P1 per page.
Upon inspecting the books of this corporation, the Auditor General disallowed the payment of these fees and sought the recovery of the amounts
paid. On January 19, 1953, the Auditor General required the Plaintiffs to reimburse said amounts on the strength of a circular of the Department of
Justice wherein the opinion was expressed that the National Coconut Corporation, being a government entity, was exempt from the payment of
the fees in question. On February 6, 1954, the Auditor General issued an order directing the Cashier of the Department of Justice to deduct from
the salary of Leopoldo T. Bacani the amount of P25 every payday and from the salary of Mateo A. Matoto the amount of P10 every payday
beginning March 30, 1954. To prevent deduction of these fees from their salaries and secure a judicial ruling that the National Coconut Corporation
is not a government entity within the purview of section 16, Rule 130 of the Rules of Court, this action was instituted in the Court of First Instance
of Manila.
Defendants set up as a defense that the National Coconut Corporation is a government entity within the purview of section 2 of the Revised
Administrative Code of 1917 and, hence, it is exempt from paying the stenographers’ fees under Rule 130 of the Rules of Court. After trial, the
court found for the Plaintiffs declaring (1) “that Defendant National Coconut Corporation is not a government entity within the purview of section
16, Rule 130 of the Rules of Court; (2) that the payments already made by said Defendant to Plaintiffs herein and received by the latter from the
former in the total amount of P714, for copies of the stenographic transcripts in question, are valid, just and legal;  and (3) that Plaintiffs are under
no obligation whatsoever to make a refund of these payments already received by them.” This is an appeal from said decision.
Under section 16, Rule 130 of the Rules of Court, the Government of the Philippines is exempt from paying the legal fees provided for therein, and
among these fees are those which stenographers may charge for the transcript of notes taken by them that may be requested by any interested
person (section 8). The fees in question are for the transcript of notes taken during the hearing of a case in which the National Coconut Corporation
is interested, and the transcript was requested by its assistant corporate counsel for the use of said corporation.
On the other hand, section 2 of the Revised Administrative Code defines the scope of the term “Government of the Republic of the Philippines” as
follows:
“‘The Government of the Philippine Islands’ is a term which refers to the corporate governmental entity through which the functions of
government are exercised throughout the Philippine Islands, including, save as the contrary appears from the context, the various arms through
which political authority is made effective in said Islands, whether pertaining to the central Government or to the provincial or municipal branches
or other form of local government.”
The question now to be determined is whether the National Coconut Corporation may be considered as included in the term “Government of the
Republic of the Philippines” for the purposes of the exemption of the legal fees provided for in Rule 130 of the Rules of Court.
As may be noted, the term “Government of the Republic of the Philippines” refers to a government entity through which the functions of
government are exercised, including the various arms through which political authority is made effective in the Philippines, whether pertaining to
the central government or to the provincial or municipal branches or other form of local government. This requires a little digression on the nature
and functions of our government as instituted in our Constitution.
To begin with, we state that the term “Government” may be defined as “that institution or aggregate of institutions by which an independent
society makes and carries out those rules of action which are necessary to enable men to live in a social state, or which are imposed upon the
people forming that society by those who possess the power or authority of prescribing them” (U.S. vs. Dorr, 2 Phil., 332). This institution, when
referring to the national government, has reference to what our Constitution has established composed of three great departments, the legislative,
executive, and the judicial, through which the powers and functions of government are exercised. These functions are twofold: constitute and
ministrant. The former are those which constitute the very bonds of society and are compulsory in nature; the latter are those that are undertaken
only by way of advancing the general interests of society, and are merely optional. President Wilson enumerates the constituent functions as
follows:
“‘(1)  The keeping of order and providing for the protection of persons and property from violence and robbery.
‘(2)  The fixing of the legal relations between man and wife and between parents and children.
‘(3)  The regulation of the holding, transmission, and interchange of property, and the determination of its liabilities for debt or for crime.
‘(4)  The determination of contract rights between individuals.
‘(5)  The definition and punishment of crime.
‘(6)  The administration of justice in civil cases.
‘(7)  The determination of the political duties, privileges, and relations of citizens.
‘(8)  Dealings of the state with foreign powers: the preservation of the state from external danger or encroachment and the advancement of its
international interests.’“ (Malcolm, The Government of the Philippine Islands, p. 19.)
The most important of the ministrant functions are: public works, public education, public charity, health and safety regulations, and regulations of
trade and industry. The principles deter mining whether or not a government shall exercise certain of these optional functions are: (1) that a
government should do for the public welfare those things which private capital would not naturally undertake and (2) that a government should do
these things which by its very nature it is better equipped to administer for the public welfare than is any private individual or group of individuals.
(Malcolm, The Government of the Philippine Islands, pp. 19-20.)
From the above we may infer that, strictly speaking, there are functions which our government is required to exercise to promote its objectives as
expressed in our Constitution and which are exercised by it as an attribute of sovereignty, and those which it may exercise to promote merely the
welfare, progress and prosperity of the people. To this latter class belongs the organization of those corporations owned or controlled by the
government to promote certain aspects of the economic life of our people such as the National Coconut Corporation. These are what we call
government-owned or controlled corporations which may take on the form of a private enterprise or one organized with powers and formal
characteristics of a private corporations under the Corporation Law.
The question that now arises is: Does the fact that these corporation perform certain functions of government make them a part of the
Government of the Philippines?
The answer is simple: they do not acquire that status for the simple reason that they do not come under the classification of municipal or public
corporation. Take for instance the National Coconut Corporation. While it was organized with the purpose of “adjusting the coconut industry to a
position independent of trade preferences in the United States” and of providing “Facilities for the better curing of copra products and the proper
utilization of coconut by-products”, a function which our government has chosen to exercise to promote the coconut industry, however, it was
given a corporate power separate and distinct from our government, for it was made subject to the provisions of our Corporation Law in so far as
its corporate existence and the powers that it may exercise are concerned (sections 2 and 4, Commonwealth Act No. 518). It may sue and be sued
in the same manner as any other private corporations, and in this sense it is an entity different from our government. As this Court has aptly said,
“The mere fact that the Government happens to be a majority stockholder does not make it a public corporation” (National Coal Co. vs. Collector of
Internal Revenue, 46 Phil., 586-587). “By becoming a stockholder in the National Coal Company, the Government divested itself of its sovereign
character so far as respects the transactions of the corporation. Unlike the Government, the corporation may be sued without its consent, and is
subject to taxation. Yet the National Coal Company remains an agency or instrumentality of government.” (Government of the Philippine Islands vs.
Springer, 50 Phil., 288.)
To recapitulate, we may mention that the term “Government of the Republic of the Philippines” used in section 2 of the Revised Administrative
Code refers only to that government entity through which the functions of the government are exercised as an attribute of sovereignty, and in this
are included those arms through which political authority is made effective whether they be provincial, municipal or other form of local
government. These are what we call municipal corporations. They do not include government entities which are given a corporate personality
separate and distinct from the government and which are governed by the Corporation Law. Their powers, duties and liabilities have to be
determined in the light of that law and of their corporate charters. They do not therefore come within the exemption clause prescribed in section
16, Rule 130 of our Rules of Court.
“Public corporations are those formed or organized for the government of a portion of the State.” (Section 3, Republic Act No. 1459, Corporation
Law).
“‘The generally accepted definition of a municipal corporation would only include organized cities and towns, and like organizations, with political
and legislative powers for the local, civil government and police regulations of the inhabitants of the particular district included in the boundaries of
the corporation.’ Heller vs. Stremmel, 52 Mo. 309, 312.”
“In its more general sense the phrase ‘municipal corporation’ may include both towns and counties, and other public corporations created by
government for political purposes. In its more common and limited signification, it embraces only incorporated villages, towns and cities. Dunn vs.
Court of County Revenues, 85 Ala. 144, 146, 4 So. 661.” (McQuillin, Municipal Corporations, 2nd ed., Vol. 1, p. 385.)
“We may, therefore, define a municipal corporation in its historical and strict sense to be the incorporation, by the authority of the government, of
the inhabitants of a particular place or district, and authorizing them in their corporate capacity to exercise subordinate specified powers of
legislation and regulation with respect to their local and internal concerns. This power of local government is the distinctive purpose and the
distinguishing feature of a municipal corporation proper.” (Dillon, Municipal Corporations, 5th ed., Vol. I, p. 59.)
It is true that under section 8, Rule 130, stenographers may only charge as fees P0.30 for each page of transcript of not less than 200 words before
the appeal is taken and P0.15 for each page after the filing of the appeal, but in this case the National Coconut Corporation has agreed and in fact
has paid P1.00 per page for the services rendered by the Plaintiffs and has not raised any objection to the amount paid until its propriety was
disputed by the Auditor General. The payment of the fees in question became therefore contractual and as such is valid even if it goes beyond the
limit prescribed in section 8, Rule 130 of the Rules of Court.
As regards the question of procedure raised by Appellants, suffice it to say that the same is insubstantial, considering that this case refers not to a
money claim disapproved by the Auditor General but to an action of prohibition the purpose of which is to restrain the officials concerned from
deducting from Plaintiffs’ salaries the amount paid to them as stenographers’ fees. This case does not come under section 1, Rule 45 of the Rules of
Court relative to appeals from a decision of the Auditor General.
Wherefore, the decision appealed from is affirmed, without pronouncement as to costs.
 [ GR No. 167810, Oct 04, 2010 ]

REPUBLIC v. ATTY. RICHARD B. RAMBUYONG +

This petition for review assails the May 20, 2004 Decision [1] and April 13, 2005 Resolution[2] of the Court of Appeals (CA) in CA-G.R. SP
No. 72800, which dismissed the petition before it and denied reconsideration, respectively.
Factual Antecedents

Alfredo Y. Chu (Chu) filed a case for collection of a sum of money and/or damages against the National Power Corporation (NPC)
docketed as Civil Case No. 1-197 which was raffled to the Regional Trial Court (RTC) of Ipil, Zamboanga Sibugay, Branch 24. Appearing
as counsel for Chu is Atty. Richard B. Rambuyong (Atty. Rambuyong) who was then the incumbent Vice-Mayor of Ipil, Zamboanga
Sibugay.

Thereafter, NPC filed a Motion for Inhibition [3] of Atty. Rambuyong arguing that under Section 90 (b), (1) of Republic Act (RA) No.
7160, otherwise known as the Local Government Code, sanggunian members are prohibited "to appear as counsel before any court
wherein x x x any office, agency or instrumentality of the government is the adverse party." NPC contended that being a government-
owned or controlled corporation, it is embraced within the term "instrumentality."

Ruling of the Regional Trial Court

In an Order[4] dated January 4, 2002, the RTC ruled that government-owned or controlled corporations are expressly excluded from
Section 90 (b), (1) of the Local Government Code. Citing other provisions of the Local Government Code wherein the phrase "including
government-owned or controlled corporations" is explicitly included, the trial court held that if it was the intention of the framers of RA
7160 to impose obligations or give rights and privileges to local government units, agencies, instrumentalities or corporate entities, then
they would have explicitly stated so. The RTC further held that "to insistently maintain that 'government-owned or controlled
corporations' are included in the signification of 'agency and instrumentality of the government' x x x would be leaving behind what is
apparent in favor of opening the door to the realm of presumption, baseless conjecture and even absurdity." [5]

The dispositive portion of the Order reads: 

WHEREFORE, upon the foregoing disquisition, the defendant's motion is DENIED due course, and this Court declares:

1. Sec. 90 of R.A. 7160 does not include government-owned or controlled corporations as among the political units against which
lawyer members of the Sanggunian cannot appear as counsel of the adverse party; 
2.  
3. That Atty. Richard B. Rambuyong, who is the incumbent Vice-Mayor of the Municipality of Ipil, Zamboanga Sibugay, is not
disqualified to continue acting as counsel for the plaintiff in this case.

SO ORDERED.[6]

Petitioner filed a motion for reconsideration but it was denied. [7]

Hence, petitioner filed a petition for certiorari with the CA alleging grave abuse of discretion on the part of the trial judge in ruling that
the statutory prohibition pertaining to the private practice of law by sanggunian members does not apply to cases where the adverse
party is a government-owned or controlled corporation.

Ruling of the Court of Appeals

On May 20, 2004, the CA dismissed the petition for lack of merit. The CA pointed out that for certiorari to lie, there must be a
capricious, arbitrary and whimsical exercise of power. It held that there was no showing that the trial judge exercised his power of
judgment capriciously, arbitrarily and whimsically. Neither did it find proof that the trial judge, in making the rulings, was motivated by
passion or personal hostility towards the petitioner.

It ruled that if ever there has been an erroneous interpretation of the law, the same may be attributed to a mere error of judgment which
is definitely not the same as "grave abuse of discretion." The dispositive portion of the Decision states:

WHEREFORE, in view of the foregoing, the instant petition is DISMISSED.

SO ORDERED.[8]

The motion for reconsideration of NPC was denied. Hence, the present petition.

Issues

Petitioner raises the following arguments:

I 

BOTH THE LOCAL GOVERNMENT CODE AND THE 1987 ADMINISTRATIVE [CODE] ESSENTIALLY REQUIRE ATTY.
RAMBUYONG TO INHIBIT HIMSELF FROM ACTING AS COUNSEL AGAINST NPC IN THE PROCEEDINGS BELOW.
II

NPC IS INCLUDED IN THE TERM "INSTRUMENTALITY" OF GOVERNMENT.

III 

THE PROHIBITION IN SECTION 90(b), (1) OF RA 7160 INTENDS TO PREVENT PUBLIC OFFICIALS FROM REPRESENTING
INTEREST ADVERSE TO THE GOVERNMENT.
IV 

BACANI CASE IS NO LONGER THE PREVAILING JURISPRUDENCE ON THE REAL MEANING OF GOVERNMENT
INSTRUMENTALITIES.
V 
ATTY. RICHARD RAMBUYONG IS THE REAL-PARTY-IN-INTEREST IN THE SUBJECT PETITION. [9]
In the main the issue is whether NPC is an instrumentality of government such that Atty. Rambuyong, as a sanggunian member, should
not appear as counsel against it.

Petitioner's Arguments

Petitioner contends that the trial court refused to apply the law, specifically Section 90 (b), (1) of RA 7160, which clearly states that
lawyer-sanggunian members cannot appear as counsel in any case where the adverse party is a local government unit, office, agency or
instrumentality. It argues that courts are not authorized to distinguish where the law makes no distinction.

Petitioner alleges that the RTC gravely abused its discretion when it failed to recognize that the 1987 Administrative Code and the Local
Government Code are in pari materia in defining the terms used in the latter, such as "office, agency or instrumentality." It argues that
the RTC acted beyond the scope of its jurisdiction when it constricted the definition of "instrumentality" in Section 90 (b), (1) of RA
7160 to exclude government-owned and controlled corporations.

Petitioner argues that NPC is an instrumentality of government and that there is no cogent reason to exclude government-owned and
controlled corporations from the operation of Section 90 (b), (1) of RA 7160.

Finally, petitioner claims that the government's challenge against Atty. Rambuyong's appearance is directed against him alone to the
exclusion of his client whose right to prosecute his claim as party litigant is beyond question.

Respondent's Arguments

On the other hand, respondent contends that the party who would be benefited or injured by the compulsory inhibition of plaintiffs
counsel is the plaintiff in Civil Case No. 1-197. Thus, , he insists that the plaintiff is the real party in interest and his (Atty. Rambuyong)
inclusion as respondent in the present petition is erroneous.

Our Ruling

The petition has merit.

Instrumentality of the Government

The provisions of law relevant to the present case state:

Sec. 90.[10] Practice of Profession. (a) All governors, city and municipal mayors are prohibited from practicing their profession or
engaging in any occupation, other than the exercise of their functions as local chief executives. 

(b) Sanggunian members may practice their professions, engage in any occupation, or teach in schools except during session hours:
Provided, That sanggunian members who are also members of the Bar shall not: 

(1) Appear as counsel before any court in any civil case wherein a local government unit or any office, agency, or instrumentality of the
government is the adverse party;           
xxx   xxx   xxx
Sec. 5.[11] Rules of Interpretation. In the interpretation of the provisions of this Code, the following rules shall apply:         
xxx   xxx   xxx
(e) In the resolution of controversies arising under this Code where no legal provision or jurisprudence applies, resort may be
had to the customs and traditions in the place where the controversies take place. (Emphasis supplied.) 
Sec. 2.[12] General Terms Defined. Unless the specific words of the text, or the context as a whole, or a particular statute, shall require a
different meaning:            
xxx   xxx   xxx
(4) "Agency of the Government" refers to any of the various units of the Government, including a department, bureau, office,
instrumentality, or government-owned or controlled corporations, or a local government or a distinct unit therein.
xxx   xxx   xxx
(10) Instrumentality refers to any agency of the National Government, not integrated within the department framework, vested with
special functions or jurisdiction by law, endowed with some if not all corporate powers, administering special funds, and enjoying
operational autonomy, usually through a charter. This term includes regulatory agencies, chartered institutions and
government-owned or controlled corporations. (Emphasis supplied.)
In Aparri v. Court of Appeals,,13 the Court instructs: 

It is the rule in statutory construction that if the words and phrases of a statute are not obscure or ambiguous, its meaning and the
intention of the legislature must be determined from the language employed, and, where there is no ambiguity in the words, there is no
room for construction. The courts may not speculate as to the probable intent of the legislature apart from the words. The reason for the
rule is that the legislature must be presumed to know the meaning of words, to have used words advisedly and to have expressed its
intent by use of such words as are found in the statute.
Section 2 of the Administrative Code of 1987 is clear and unambiguous. It categorically provides that the term "instrumentality"
includes government-owned or controlled corporations. Hence there is no room for construction. All that has to be done is to apply the
law as called for by the circumstances of the case. It is not disputed that the NPC is a government-owned or controlled corporation.
Therefore following Section 2 of the Administrative Code of 1987, the NPC is clearly an instrumentality of the government.

It is also significant to point out that in Maceda v. Macaraig, Jr.[14] the Court stated that "[t]he NPC is a government
instrumentality with the enormous task of undertaking development of hydroelectric generation of power and production of electricity
from other sources, as well as the transmission of electric power on a nationwide basis, to improve the quality of life of the people
pursuant to the State policy embodied in Section [9], Article II of the 1987 Constitution."

Given the categorical words of both the law and jurisprudence, to still go to extra-ordinary lengths to interpret the intention of the
lawmakers and come out with the construction that a government-owned or controlled corporation like the NPC is not included within
the term "instrumentality of the government" is grave abuse of discretion.

"By grave abuse of discretion is meant, such capricious and whimsical exercise of judgment as is equivalent to lack of
jurisdiction."[15] "Grave abuse of discretion is an evasion of a positive duty or a virtual refusal to perform a duty enjoined by law or to act
in contemplation of law as when the judgment rendered is not based on law and evidence but on caprice, whim and despotism." [16]

The strained and contrary interpretation of clearly worded provisions of law, which therefore should be merely applied and not
interpreted, is an earmark of despotism and grave abuse of discretion.

Finally, Section 446 of the Local Government Code provides that "[t]he sanggnniang bayan, the legislative body of the municipality,
shall be composed of the municipal vice mayor as the presiding officer x x x." Thus, pursuant to Sec. 90 (b), (1) of the Local
Government Code, Atty. Rambuyong, as sanggunian member, cannot appear as counsel of a party adverse to the
NPC, which is an instrumentality of government.

WHEREFORE, the petition is GRANTED. The May 20, 2004 Decision and April 13,2005 Resolution of the Court of Appeals in CA-
G.R. SP No. 72800 are REVERSED and SET ASIDE. Atty. Richard B. Rambuyong is disqualified from appearing in Civil Case No. 1-197.

SO ORDERED.

G.R. No. 88291 June 8, 1993

ERNESTO M. MACEDA, petitioner,
vs.
HON. CATALINO MACARAIG, JR., in his capacity as Executive Secretary, Office of the President, HON. VICENTE JAYME,
ETC., ET AL., respondents.

Just like lightning which does strike the same place twice in some instances, this matter of indirect tax exemption of the private
respondent National Power Corporation (NPC) is brought to this Court a second time. Unfazed by the Decision We promulgated on
May 31, 19911 petitioner Ernesto Maceda asks this Court to reconsider said Decision. Lest We be criticized for denying due process to
the petitioner. We have decided to take a second look at the issues. In the process, a hearing was held on July 9, 1992 where all
parties presented their respective arguments. Etched in this Court's mind are the paradoxical claims by both petitioner and private
respondents that their respective positions are for the benefit of the Filipino people.

A Chronological review of the relevant NPC laws, specially with respect to its tax exemption provisions, at the risk of being repetitious
is, therefore, in order.

On November 3, 1936, Commonwealth Act No. 120 was enacted creating the National Power Corporation, a public corporation, mainly
to develop hydraulic power from all water sources in the Philippines.2 The sum of P250,000.00 was appropriated out of the funds in the
Philippine Treasury for the purpose of organizing the NPC and conducting its preliminary work.3 The main source of funds for the NPC
was the flotation of bonds in the capital markets4 and these bonds

. . . issued under the authority of this Act shall be exempt from the payment of all taxes by the Commonwealth of the
Philippines, or by any authority, branch, division or political subdivision thereof and subject to the provisions of the Act
of Congress, approved March 24, 1934, otherwise known as the Tydings McDuffle Law, which facts shall be stated
upon the face of said bonds. . . . .5

On June 24, 1938, C.A. No. 344 was enacted increasing to P550,000.00 the funds needed for the initial operations of the NPC and
reiterating the provision of the flotation of bonds as soon as the first construction of any hydraulic power project was to be decided by
the NPC Board.6 The provision on tax exemption in relation to the issuance of the NPC bonds was neither amended nor deleted.

On September 30, 1939, C.A. No. 495 was enacted removing the provision on the payment of the bond's principal and interest in "gold
coins" but adding that payment could be made in United States dollars.7 The provision on tax exemption in relation to the issuance of
the NPC bonds was neither amended nor deleted.

On June 4, 1949, Republic Act No. 357 was enacted authorizing the President of the Philippines to guarantee, absolutely and
unconditionally, as primary obligor, the payment of any and all NPC loans.8 He was also authorized to contract on behalf of the NPC
with the International Bank for Reconstruction and Development (IBRD) for NPC loans for the accomplishment of NPC's corporate
objectives9 and for the reconstruction and development of the economy of the country. 10 It was expressly stated that:

Any such loan or loans shall be exempt from taxes, duties, fees, imposts, charges, contributions and restrictions of
the Republic of the Philippines, its provinces, cities and municipalities. 11

On the same date, R.A. No. 358 was enacted expressly authorizing the NPC, for the first time, to incur other types of indebtedness,
aside from indebtedness incurred by flotation of bonds. 12 As to the pertinent tax exemption provision, the law stated as follows:

To facilitate payment of its indebtedness, the National Power Corporation shall be exempt from all taxes, duties, fees,
imposts, charges, and restrictions of the Republic of the Philippines, its provinces, cities and municipalities. 13

On July 10, 1952, R.A. No. 813 was enacted amending R.A. No. 357 in that, aside from the IBRD, the President of the Philippines was
authorized to negotiate, contract and guarantee loans with the Export-Import Bank of of Washigton, D.C., U.S.A., or any other
international financial institution. 14 The tax provision for repayment of these loans, as stated in R.A. No. 357, was not amended.

On June 2, 1954, R.A. No. 987 was enacted specifically to withdraw NPC's tax exemption for real estate taxes. As enacted, the law
states as follows:

To facilitate payment of its indebtedness, the National Power Corporation shall be exempt from all taxes, except real
property tax, and from all duties, fees, imposts, charges, and restrictions of the Republic of the Philippines, its
provinces, cities, and municipalities.15

On September 8, 1955, R.A. No. 1397 was enacted directing that the NPC projects to be funded by the increased
indebtedness 16 should bear the National Economic Council's stamp of approval. The tax exemption provision related to the payment of
this total indebtedness was not amended nor deleted.

On June 13, 1958, R.A. No. 2055 was enacted increasing the total amount of foreign loans NPC was authorized to incur to
US$100,000,000.00 from the US$50,000,000.00 ceiling in R.A. No. 357. 17 The tax provision related to the repayment of these loans
was not amended nor deleted.
On June 13, 1958, R.A. No. 2058 was enacting fixing the corporate life of NPC to December 31, 2000. 18 All laws or provisions of laws
and executive orders contrary to said R.A. No. 2058 were expressly repealed. 19

On June 18, 1960, R.A. No 2641 was enacted converting the NPC from a public corporation into a stock corporation with an authorized
capital stock of P100,000,000.00 divided into 1,000.000 shares having a par value of P100.00 each, with said capital stock wholly
subscribed to by the Government. 20 No tax exemption was incorporated in said Act.

On June 17, 1961, R.A. No. 3043 was enacted increasing the above-mentioned authorized capital stock to P250,000,000.00 with the
increase to be wholly subscribed by the Government. 21 No tax provision was incorporated in said Act.

On June 17, 1967, R.A. No 4897 was enacted. NPC's capital stock was increased again to P300,000,000.00, the increase to be wholly
subscribed by the Government. No tax provision was incorporated in said Act. 22

On September 10, 1971, R.A. No. 6395 was enacted revising the charter of the NPC, C.A. No. 120, as amended. Declared as primary
objectives of the nation were:

Declaration of Policy. — Congress hereby declares that (1) the comprehensive development, utilization and
conservation of Philippine water resources for all beneficial uses, including power generation, and (2) the total
electrification of the Philippines through the development of power from all sources to meet the needs of industrial
development and dispersal and the needs of rural electrification are primary objectives of the nation which shall be
pursued coordinately and supported by all instrumentalities and agencies of the government, including the financial
institutions. 23

Section 4 of C.A. No. 120, was renumbered as Section 8, and divided into sections 8 (a) (Authority to incur Domestic Indebtedness)
and Section 8 (b) (Authority to Incur Foreign Loans).

As to the issuance of bonds by the NPC, Paragraph No. 3 of Section 8(a), states as follows:

The bonds issued under the authority of this subsection shall be exempt from the payment of all taxes by the
Republic of the Philippines, or by any authority, branch, division or political subdivision thereof which facts shall be
stated upon the face of said bonds. . . . 24

As to the foreign loans the NPC was authorized to contract, Paragraph No. 5, Section 8(b), states as follows:

The loans, credits and indebtedness contracted under this subsection and the payment of the principal, interest and
other charges thereon, as well as the importation of machinery, equipment, materials and supplies by the
Corporation, paid from the proceeds of any loan, credit or indebtedeness incurred under this Act, shall also be
exempt from all taxes, fees, imposts, other charges and restrictions, including import restrictions, by the Republic of
the Philippines, or any of its agencies and political subdivisions. 25

A new section was added to the charter, now known as Section 13, R.A. No. 6395, which declares the non-profit character and tax
exemptions of NPC as follows:

The Corporation shall be non-profit and shall devote all its returns from its capital investment, as well as excess
revenues from its operation, for expansion. To enable the Corporation to pay its indebtedness and obligations and in
furtherance and effective implementation of the policy enunciated in Section one of this Act, the Corporation is hereby
declared exempt:

(a) From the payment of all taxes, duties, fees, imposts, charges costs and service fees in any court or administrative
proceedings in which it may be a party, restrictions and duties to the Republic of the Philippines, its provinces, cities,
and municipalities and other government agencies and instrumentalities;

(b) From all income taxes, franchise taxes and realty taxes to be paid to the National Government, its provinces,
cities, municipalities and other government agencies and instrumentalities;

(c) From all import duties, compensating taxes and advanced sales tax, and wharfage fees on import of foreign goods
required for its operations and projects; and

(d) From all taxes, duties, fees, imposts and all other charges its provinces, cities, municipalities and other
government agencies and instrumentalities, on all petroleum products used by the Corporation in the generation,
transmission, utilization, and sale of electric power. 26

On November 7, 1972, Presidential Decree No. 40 was issued declaring that the electrification of the entire country
was one of the primary concerns of the country. And in connection with this, it was specifically stated that:

The setting up of transmission line grids and the construction of associated generation facilities in Luzon, Mindanao
and major islands of the country, including the Visayas, shall be the responsibility of the National Power Corporation
(NPC) as the authorized implementing agency of the State. 27

xxx xxx xxx

It is the ultimate objective of the State for the NPC to own and operate as a single integrated system all generating
facilities supplying electric power to the entire area embraced by any grid set up by the NPC. 28
On January 22, 1974, P.D. No. 380 was issued giving extra powers to the NPC to enable it to fulfill its role under aforesaid P.D. No. 40.
Its authorized capital stock was raised to P2,000,000,000.00, 29 its total domestic indebtedness was pegged at a maximum of
P3,000,000,000.00 at any one time, 30 and the NPC was authorized to borrow a total of US$1,000,000,000.00 31 in foreign loans.

The relevant tax exemption provision for these foreign loans states as follows:

The loans, credits and indebtedness contracted under this subsection and the payment of the principal, interest and
other charges thereon, as well as the importation of machinery, equipment, materials, supplies and services, by the
Corporation, paid from the proceeds of any loan, credit or indebtedness incurred under this Act, shall also be exempt
from all direct and indirect taxes, fees, imposts, other charges and restrictions, including import restrictions previously
and presently imposed, and to be imposed by the Republic of the Philippines, or any of its agencies and political
subdivisions. 32 (Emphasis supplied)

Section 13(a) and 13(d) of R.A. No 6395 were amended to read as follows:

(a) From the payment of all taxes, duties, fees, imposts, charges and restrictions to the Republic of the Philippines, its
provinces, cities, municipalities and other government agencies and instrumentalities including the taxes, duties, fees,
imposts and other charges provided for under the Tariff and Customs Code of the Philippines, Republic Act
Numbered Nineteen Hundred Thirty-Seven, as amended, and as further amended by Presidential Decree No. 34
dated October 27, 1972, and Presidential Decree No. 69, dated November 24, 1972, and costs and service fees in
any court or administrative proceedings in which it may be a party;

xxx xxx xxx

(d) From all taxes, duties, fees, imposts, and all other charges imposed directly or indirectly  by the Republic of the
Philippines, its provinces, cities, municipalities and other government agencies and instrumentalities, on all petroleum
products used by the Corporation in the generation, transmission, utilization and sale of electric power. 33 (Emphasis
supplied)

On February 26, 1970, P.D. No. 395 was issued removing certain restrictions in the NPC's sale of electricity to its different
customers. 34 No tax exemption provision was amended, deleted or added.

On July 31, 1975, P.D. No. 758 was issued directing that P200,000,000.00 would be appropriated annually to cover the unpaid
subscription of the Government in the NPC authorized capital stock, which amount would be taken from taxes accruing to the General
Funds of the Government, proceeds from loans, issuance of bonds, treasury bills or notes to be issued by the Secretary of Finance for
this particular purpose. 35

On May 27, 1976 P.D. No. 938 was issued

(I)n view of the accelerated expansion programs for generation and transmission facilities which includes nuclear
power generation, the present capitalization of National Power Corporation (NPC) and the ceilings for domestic and
foreign borrowings are deemed insufficient; 36

xxx xxx xxx

(I)n the application of the tax exemption provisions of the Revised Charter, the non-profit character of NPC has not
been fully utilized because of restrictive interpretation of the taxing agencies of the government on said provisions; 37

xxx xxx xxx

(I)n order to effect the accelerated expansion program and attain the declared objective of total electrification of the
country, further amendments of certain sections of Republic Act No. 6395, as amended by Presidential Decrees Nos.
380, 395 and 758, have become imperative; 38

Thus NPC's capital stock was raised to P8,000,000,000.00, 39 the total domestic indebtedness ceiling was increased to
P12,000,000,000.00, 40 the total foreign loan ceiling was raised to US$4,000,000,000.00 41 and Section 13 of R.A. No. 6395, was
amended to read as follows:

The Corporation shall be non-profit and shall devote all its returns from its capital investment as well as excess
revenues from its operation, for expansion. To enable the Corporation to pay to its indebtedness and obligations and
in furtherance and effective implementation of the policy enunciated in Section one of this Act, the Corporation,
including its subsidiaries, is hereby declared exempt from the payment of all forms of taxes, duties, fees, imposts as
well as costs and service fees including filing fees, appeal bonds, supersedeas bonds, in any court or administrative
proceedings. 42

II

On the other hand, the pertinent tax laws involved in this controversy are P.D. Nos. 882, 1177, 1931 and Executive Order No. 93 (S'86).

On January 30, 1976, P.D. No. 882 was issued withdrawing the tax exemption of NPC with regard to imports as follows:

WHEREAS, importations by certain government agencies, including government-owned or controlled corporation, are
exempt from the payment of customs duties and compensating tax; and

WHEREAS, in order to reduce foreign exchange spending and to protect domestic industries, it is necessary to
restrict and regulate such tax-free importations.
 NOW THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers vested in me
by the Constitution, and do hereby decree and order the following:

Sec. 1. All importations of any government agency, including government-owned or controlled corporations which are
exempt from the payment of customs duties and internal revenue taxes, shall be subject to the prior approval of an
Inter-Agency Committee which shall insure compliance with the following conditions:

(a) That no such article of local manufacture are available in sufficient quantity and comparable quality at reasonable
prices;

(b) That the articles to be imported are directly and actually needed and will be used exclusively by the grantee of the
exemption for its operations and projects or in the conduct of its functions; and

(c) The shipping documents covering the importation are in the name of the grantee to whom the goods shall be
delivered directly by customs authorities.

xxx xxx xxx

Sec. 3. The Committee shall have the power to regulate and control the tax-free importation of government agencies
in accordance with the conditions set forth in Section 1 hereof and the regulations to be promulgated to implement
the provisions of this Decree. Provided, however, That any government agency or government-owned or controlled
corporation, or any local manufacturer or business firm adversely affected by any decision or ruling of the Inter-
Agency Committee may file an appeal with the Office of the President within ten days from the date of notice
thereof. . . . .

xxx xxx xxx

Sec. 6. . . . . Section 13 of Republic Act No. 6395; . . .. and all similar provisions of all general and special laws and
decrees are hereby amended accordingly.

x x x           x x x          x x x

On July 30, 1977, P.D. 1177 was issued as it was

. . . declared the policy of the State to formulate and implement a National Budget that is an instrument of national
development, reflective of national objectives, strategies and plans. The budget shall be supportive of and consistent
with the socio-economic development plan and shall be oriented towards the achievement of explicit objectives and
expected results, to ensure that funds are utilized and operations are conducted effectively, economically and
efficiently. The national budget shall be formulated within a context of a regionalized government structure and of the
totality of revenues and other receipts, expenditures and borrowings of all levels of government-owned or controlled
corporations. The budget shall likewise be prepared within the context of the national long-term plan and of a long-
term budget program. 43

In line with such policy, the law decreed that

All units of government, including government-owned or controlled corporations, shall pay income taxes, customs duties and other
taxes and fees are imposed under revenues laws: provided, that organizations otherwise exempted by law from the payment of such
taxes/duties may ask for a subsidy from the General Fund in the exact amount of taxes/duties due: provided, further, that a procedure
shall be established by the Secretary of Finance and the Commissioner of the Budget, whereby such subsidies shall automatically be
considered as both revenue and expenditure of the General Fund. 44

The law also declared that —

[A]ll laws, decrees, executive orders, rules and regulations or parts thereof which are inconsistent with the provisions
of the Decree are hereby repealed and/or modified accordingly. 45

On July 11, 1984, most likely due to the economic morass the Government found itself in after the Aquino assassination, P.D. No. 1931
was issued to reiterate that:

WHEREAS, Presidential Decree No. 1177 has already expressly repealed the grant of tax privileges to any
government-owned or controlled corporation and all other units of government; 46

and since there was a

. . . need for government-owned or controlled corporations and all other units of government enjoying tax privileges to
share in the requirements of development, fiscal or otherwise, by paying the duties, taxes and other charges due from
them. 47

it was decreed that:

Sec. 1. The provisions of special on general law to the contrary notwithstanding, all exemptions from the payment of
duties, taxes, fees, imposts and other charges heretofore granted in favor of government-owned or controlled
corporations including their subsidiaries, are hereby withdrawn.
 Sec. 2. The President of the Philippines and/or the Minister of Finance, upon the recommendation of the Fiscal
Incentives Review Board created under Presidential Decree No. 776, is hereby empowered to restore, partially or
totally, the exemptions withdrawn by Section 1 above, any applicable tax and duty, taking into account, among
others, any or all of the following:
1) The effect on the relative price levels;
2) The relative contribution of the corporation to the revenue generation effort;
3) The nature of the activity in which the corporation is engaged in; or
4) In general the greater national interest to be served.
xxx xxx xxx
Sec. 5. The provisions of Presidential Decree No. 1177 as well as all other laws, decrees, executive orders,
administrative orders, rules, regulations or parts thereof which are inconsistent with this Decree are hereby repealed,
amended or modified accordingly.

On December 17, 1986, E.O. No. 93 (S'86) was issued with a view to correct presidential restoration or grant of tax exemption to other
government and private entities without benefit of review by the Fiscal Incentives Review Board, to wit:

WHEREAS, Presidential Decree Nos. 1931 and 1955 issued on June 11, 1984 and October 14, 1984, respectively,
withdrew the tax and duty exemption privileges, including the preferential tax treatment, of government and private
entities with certain exceptions, in order that the requirements of national economic development, in terms of fiscals
and other resources, may be met more adequately;

xxx xxx xxx

WHEREAS, in addition to those tax and duty exemption privileges were restored by the Fiscal Incentives Review
Board (FIRB), a number of affected entities, government and private, had their tax and duty exemption privileges
restored or granted by Presidential action without benefit or review by the Fiscal Incentives Review Board (FIRB);

x x x           x x x          x x x

Since it was decided that:

[A]ssistance to government and private entities may be better provided where necessary by explicit subsidy and
budgetary support rather than tax and duty exemption privileges if only to improve the fiscal monitoring aspects of
government operations.

It was thus ordered that:

Sec. 1. The Provisions of any general or special law to the contrary notwithstanding, all tax and duty incentives
granted to government and private entities are hereby withdrawn, except:
a) those covered by the non-impairment clause of the Constitution;
b) those conferred by effective internation agreement to which the Government of the Republic of the Philippines is a
signatory;
c) those enjoyed by enterprises registered with:
(i) the Board of Investment pursuant to Presidential Decree No. 1789, as amended;
(ii) the Export Processing Zone Authority, pursuant to Presidential Decree No. 66 as amended;
(iii) the Philippine Veterans Investment Development Corporation Industrial Authority pursuant to
Presidential Decree No. 538, was amended.
d) those enjoyed by the copper mining industry pursuant to the provisions of Letter of Instructions No. 1416;
e) those conferred under the four basic codes namely:
(i) the Tariff and Customs Code, as amended;
(ii) the National Internal Revenue Code, as amended;
(iii) the Local Tax Code, as amended;
(iv) the Real Property Tax Code, as amended;
f) those approved by the President upon the recommendation of the Fiscal Incentives Review
Board.
Sec. 2. The Fiscal Incentives Review Board created under Presidential Decree No. 776, as amended, is hereby
authorized to:
a) restore tax and/or duty exemptions withdrawn hereunder in whole or in part;
b) revise the scope and coverage of tax and/or duty exemption that may be restored;
c) impose conditions for the restoration of tax and/or duty exemption;
d) prescribe the date of period of effectivity of the restoration of tax and/or duty exemption;

e) formulate and submit to the President for approval, a complete system for the grant of subsidies to deserving
beneficiaries, in lieu of or in combination with the restoration of tax and duty exemptions or preferential treatment in
taxation, indicating the source of funding therefor, eligible beneficiaries and the terms and conditions for the grant
thereof taking into consideration the international commitment of the Philippines and the necessary precautions such
that the grant of subsidies does not become the basis for countervailing action.

Sec. 3. In the discharge of its authority hereunder, the Fiscal Incentives Review Board shall take into account any or
all of the following considerations:
a) the effect on relative price levels;
b) relative contribution of the beneficiary to the revenue generation effort;
c) nature of the activity the beneficiary is engaged; and
d) in general, the greater national interest to be served.
xxx xxx xxx
Sec. 5. All laws, orders, issuances, rules and regulations or parts thereof inconsistent with this Executive Order are
hereby repealed or modified accordingly.

E.O. No. 93 (S'86) was decreed to be effective 48 upon the promulgation of the rules and regulations, to be issued by the Ministry of
Finance. 49 Said rules and regulations were promulgated and published in the Official Gazette
on February 23, 1987. These became effective on the 15th day after promulgation 50 in the Official Gasetter, 51 which 15th day was
March 10, 1987.

III

Now to some definitions. We refer to the very simplistic approach that all would-be lawyers, learn in their TAXATION I course, which fro
convenient reference, is as follows:

Classifications or kinds of Taxes:

According to Persons who pay or who bear the burden:

a. Direct Tax — the where the person supposed to pay the tax really pays it. WITHOUT transferring the burden to
someone else.
Examples: Individual income tax, corporate income tax, transfer taxes (estate tax, donor's tax), residence tax,
immigration tax
b. Indirect Tax — that where the tax is imposed upon goods BEFORE reaching the consumer who ultimately pays for
it, not as a tax, but as a part of the purchase price.
Examples: the internal revenue indirect taxes (specific tax, percentage taxes, (VAT) and the tariff and customs
indirect taxes (import duties, special import tax and other dues) 52

IV

To simply matter, the issues raised by petitioner in his motion for reconsideration can be reduced to the following:
(1) What kind of tax exemption privileges did NPC have?
(2) For what periods in time were these privileges being enjoyed?
(3) If there are taxes to be paid, who shall pay for these taxes?
V

Petitioner contends that P.D. No. 938 repealed the indirect tax exemption of NPC as the phrase "all forms of taxes etc.," in its section
10, amending Section 13, R.A. No. 6395, as amended by P.D. No. 380, does not expressly include "indirect taxes."

His point is not well-taken.

A chronological review of the NPC laws will show that it has been the lawmaker's intention that the NPC was to be completely tax
exempt from all forms of taxes — direct and indirect.

NPC's tax exemptions at first applied to the bonds it was authorized to float to finance its operations upon its creation by virtue of C.A.
No. 120.

When the NPC was authorized to contract with the IBRD for foreign financing, any loans obtained were to be completely tax exempt.

After the NPC was authorized to borrow from other sources of funds — aside issuance of bonds — it was again specifically exempted
from all types of taxes "to facilitate payment of its indebtedness." Even when the ceilings for domestic and foreign borrowings were
periodically increased, the tax exemption privileges of the NPC were maintained.

NPC's tax exemption from real estate taxes was, however, specifically withdrawn by Rep. Act No. 987, as above stated. The exemption
was, however, restored by R.A. No. 6395.

Section 13, R.A. No. 6395, was very comprehensive in its enumeration of the tax exemptions allowed NPC. Its section 13(d) is the
starting point of this bone of contention among the parties. For easy reference, it is reproduced as follows:

[T]he Corporation is hereby declared exempt:

xxx xxx xxx

(d) From all taxes, duties, fees, imposts and all other charges imposed by the Republic of the Philippines, its
provinces, cities, municipalities and other government agencies and instrumentalities, on all petroleum products used
by the Corporation in the generation, transmission, utilization, and sale of electric power.

P.D. No. 380 added phrase "directly or indirectly" to said Section 13(d), which now reads as follows:

xxx xxx xxx

(d) From all taxes, duties, fees, imposts, and all other charges imposed directly or indirectly  by the Republic of the
Philippines, its provinces, cities, municipalities and other government agencies and instrumentalities, on all petroleum
products used by the Corporation in the generation, transmission, utilization and sale of electric power. (Emphasis
supplied)

Then came P.D. No. 938 which amended Sec. 13(a), (b), (c) and (d) into one very simple paragraph as follows:

The Corporation shall be non-profit and shall devote all its returns from its capital investment as well as excess
revenues from its operation, for expansion. To enable the Corporation to pay its indebtedness and obligations and in
furtherance and effective implementation of the policy enunciated in Section one of this Act, the Corporation,
including its subsidiaries, is hereby declared exempt from the payment of ALL FORMS OF taxes, duties, fees,
 imposts as well as costs and service fees including filing fees, appeal bonds, supersedeas bonds, in any court or
administrative proceedings. (Emphasis supplied)

Petitioner reminds Us that:

[I]t must be borne in mind that Presidential Decree Nos. 380

and 938 were issued by one man, acting as such the Executive and Legislative. 53

xxx xxx xxx

[S]ince both presidential decrees were made by the same person, it would have been very easy for him to retain the
same or similar language used in P.D. No. 380 P.D. No. 938 if his intention were to preserve the indirect tax
exemption of NPC. 54

Actually, P.D. No. 938 attests to the ingenuousness of then President Marcos no matter what his fault were. It should be noted that
section 13, R.A. No. 6395, provided for tax exemptions for the following items:
13(a) : court or administrative proceedings;
13(b) : income, franchise, realty taxes;
13(c) : import of foreign goods required for its operations and projects;
13(d) : petroleum products used in generation of electric power.

P.D. No. 938 lumped up 13(b), 13(c), and 13(d) into the phrase "ALL FORMS OF TAXES, ETC.,", included 13(a) under the "as well as"
clause and added PNOC subsidiaries as qualified for tax exemptions.

This is the only conclusion one can arrive at if he has read all the NPC laws in the order of enactment or issuance as narrated above in
part I hereof. President Marcos must have considered all the NPC statutes from C.A. No. 120 up to its latest amendments, P.D. No.
380, P.D. No. 395 and P.D. No. 759, AND came up 55 with a very simple Section 13, R.A. No. 6395, as amended by P.D. No. 938.

One common theme in all these laws is that the NPC must be enable to pay its indebtedness 56 which, as of P.D. No. 938, was P12
Billion in total domestic indebtedness, at any one time, and U$4 Billion in total foreign loans at any one time. The NPC must be and has
to be exempt from all forms of taxes if this goal is to be achieved.

By virtue of P.D. No. 938 NPC's capital stock was raised to P8 Billion. It must be remembered that to pay the government share in its
capital stock P.D. No. 758 was issued mandating that P200 Million would be appropriated annually to cover the said unpaid
subscription of the Government in NPC's authorized capital stock. And significantly one of the sources of this annual appropriation of
P200 million is TAX MONEY accruing to the General Fund of the Government. It does not stand to reason then that former President
Marcos would order P200 Million to be taken partially or totally from tax money to be used to pay the Government subscription in the
NPC, on one hand, and then order the NPC to pay all its indirect taxes, on the other.

The above conclusion that then President Marcos lumped up Sections 13 (b), 13 (c) and (d) into the phrase "All FORMS OF" is
supported by the fact that he did not do the same for the tax exemption provision for the foreign loans to be incurred.

The tax exemption on foreign loans found in Section 8(b), R.A. No. 6395, reads as follows:

The loans, credits and indebtedness contracted under this subsection and the payment of the principal, interest and
other charges thereon, as well as the importation of machinery, equipment, materials and supplies by the
Corporation, paid from the proceeds of any loan, credit or indebtedness incurred under this Act, shall also be exempt
from all taxes, fees, imposts, other charges and restrictions, including import restrictions, by the Republic of the
Philippines, or any of its agencies and political subdivisions. 57

The same was amended by P.D. No. 380 as follows:

The loans, credits and indebtedness contracted this subsection and the payment of the principal, interest and other
charges thereon, as well as the importation of machinery, equipment, materials, supplies and services, by the
Corporation, paid from the proceeds of any loan, credit or indebtedness incurred under this Act, shall also be exempt
from all direct and indirect taxes, fees, imposts, other charges and restrictions, including import
restrictions previously and presently imposed, and to be imposed  by the Republic of the Philippines, or any of its
agencies and political subdivisions. 58 (Emphasis supplied)

P.D. No. 938 did not amend the same 59 and so the tax exemption provision in Section 8 (b), R.A. No. 6395, as amended by P.D. No.
380, still stands. Since the subject matter of this particular Section 8 (b) had to do only with loans and machinery imported, paid for from
the proceeds of these foreign loans, THERE WAS NO OTHER SUBJECT MATTER TO LUMP IT UP WITH, and so, the tax exemption
stood as is — with the express mention of "direct
and indirect" tax exemptions. And this "direct and indirect" tax exemption privilege extended to "taxes, fees, imposts, other charges . . .
to be imposed" in the future  — surely, an indication that the lawmakers wanted the NPC to be exempt from ALL FORMS of taxes —
direct and indirect.

It is crystal clear, therefore, that NPC had been granted tax exemption privileges for both direct and indirect taxes under P.D. No. 938.

VI

Five (5) years on into the now discredited New Society, the Government decided to rationalize government receipts and expenditures
by formulating and implementing a National Budget. 60 The NPC, being a government owned and controlled corporation had to be shed
off its tax exemption status privileges under P.D. No. 1177. It was, however, allowed to ask for a subsidy from the General Fund in the
exact amount of taxes/duties due.
Actually, much earlier, P.D. No. 882 had already repealed NPC's tax-free importation privileges. It allowed, however, NPC to appeal
said repeal with the Office of the President and to avail of tax-free importation privileges under its Section 1, subject to the prior
approval of an Inter-Agency Committed created by virtue of said P.D. No. 882. It is presumed that the NPC, being the special creation
of the State, was allowed to continue its tax-free importations.

This Court notes that petitioner brought to the attention of this Court, the matter of the abolition of NPC's tax exemption privileges by
P.D. No. 1177 61 only in his Common Reply/Comment to private Respondents' "Opposition" and "Comment" to Motion for
Reconsideration, four (4) months AFTER the motion for Reconsideration had been filed. During oral arguments heard on July 9, 1992,
he proceeded to discuss this tax exemption withdrawal as explained by then Secretary of Justice Vicente Abad Santos in opinion No.
133 (S '77). 62 A careful perusal of petitioner's senate Blue Ribbon Committee Report No. 474, the basis of the petition at bar, fails to
yield any mention of said P.D. No. 1177's effect on NPC's tax exemption privileges. 63 Applying by analogy Pulido vs. Pablo, 64 the court
declares that the matter of P.D. No. 1177 abolishing NPC's tax exemption privileges was not seasonably invoked 65 by the petitioner.

Be that as it may, the Court still has to discuss the effect of P.D. No. 1177 on the NPC tax exemption privileges as this statute has been
reiterated twice in P.D. No. 1931. The express repeal of tax privileges of any government-owned or controlled corporation (GOCC).
NPC included, was reiterated in the fourth whereas clause of P.D. No. 1931's preamble. The subsidy provided for in Section 23, P.D.
No. 1177, being inconsistent with Section 2, P.D. No. 1931, was deemed repealed as the Fiscal Incentives Revenue Board was tasked
with recommending the partial or total restoration of tax exemptions withdrawn by Section 1, P.D. No. 1931.

The records before Us do not indicate whether or not NPC asked for the subsidy contemplated in Section 23, P.D. No. 1177.
Considering, however, that under Section 16 of P.D. No. 1177, NPC had to submit to the Office of the President its request for the P200
million mandated by P.D. No. 758 to be appropriated annually by the Government to cover its unpaid subscription to the NPC
authorized capital stock and that under Section 22, of the same P.D. No. NPC had to likewise submit to the Office of the President its
internal operating budget for review due to capital inputs of the government (P.D. No. 758) and to the national government's guarantee
of the domestic and foreign indebtedness of the NPC, it is clear that NPC was covered by P.D. No. 1177.

There is reason to believe that NPC availed of subsidy granted to exempt GOCC's that suddenly found themselves having to pay taxes.
It will be noted that Section 23, P.D. No. 1177, mandated that the Secretary of Finance and the Commissioner of the Budget had to
establish the necessary procedure to accomplish the tax payment/tax subsidy scheme of the Government. In effect, NPC, did not put
any cash to pay any tax as it got from the General Fund the amounts necessary to pay different revenue collectors for the taxes it had
to pay.

In his memorandum filed July 16, 1992, petitioner submits:

[T]hat with the enactment of P.D. No. 1177 on July 30, 1977, the NPC lost all its duty and tax exemptions, whether
direct or indirect. And so there was nothing to be withdrawn or to be restored under P.D. No. 1931, issued on June
11, 1984. This is evident from sections 1 and 2 of said P.D. No. 1931, which reads:

"Section 1. The provisions of special or general law to the contrary notwithstanding, all exemptions
from the payment of duties, taxes, fees, imports and other charges heretofore granted in favor of
government-owned or controlled corporations including their subsidiaries are hereby withdrawn."

Sec. 2. The President of the Philippines and/or the Minister of Finance, upon the recommendation
of the Fiscal Incentives Review Board created under P.D. No. 776, is hereby empowered to restore
partially or totally, the exemptions withdrawn by section 1 above. . . .

Hence, P.D. No. 1931 did not have any effect or did it change NPC's status. Since it had already lost all its tax
exemptions privilege with the issuance of P.D. No. 1177 seven (7) years earlier or on July 30, 1977, there were no
tax exemptions to be withdrawn by section 1 which could later be restored by the Minister of Finance upon the
recommendation of the FIRB under Section 2 of P.D. No. 1931. Consequently, FIRB resolutions No. 10-85, and 1-86,
were all illegally and validly issued since FIRB acted beyond their statutory authority by creating and not merely
restoring the tax exempt status of NPC. The same is true for FIRB Res. No. 17-87 which restored NPC's tax
exemption under E.O. No. 93 which likewise abolished all duties and tax exemptions but allowed the President upon
recommendation of the FIRB to restore those abolished.

The Court disagrees.

Applying by analogy the weight of authority that:

When a revised and consolidated act re-enacts in the same or substantially the same terms the provisions of the act
or acts so revised and consolidated, the revision and consolidation shall be taken to be a continuation of the former
act or acts, although the former act or acts may be expressly repealed by the revised and consolidated act; and all
rights
and liabilities under the former act or acts are preserved and may be enforced. 66

the Court rules that when P.D. No. 1931 basically reenacted in its Section 1 the first half of Section 23, P.D. No. 1177, on withdrawal of
tax exemption privileges of all GOCC's said Section 1, P.D. No. 1931 was deemed to be a continuation of the first half of Section 23,
P.D. No. 1177, although the second half of Section 23, P.D. No. 177, on the subsidy scheme for former tax exempt GOCCs had been
expressly repealed by Section 2 with its institution of the FIRB recommendation of partial/total restoration of tax exemption privileges.

The NPC tax privileges withdrawn by Section 1. P.D. No. 1931, were, therefore, the same NPC tax exemption privileges withdrawn by
Section 23, P.D. No. 1177. NPC could no longer obtain a subsidy for the taxes it had to pay. It could, however, under P.D. No. 1931,
ask for a total restoration of its tax exemption privileges, which, it did, and the same were granted under FIRB Resolutions Nos. 10-
85 67 and 1-86 68 as approved by the Minister of Finance.

Consequently, contrary to petitioner's submission, FIRB Resolutions Nos. 10-85 and 1-86 were both legally and validly issued by the
FIRB pursuant to P.D. No. 1931. FIRB did not created NPC's tax exemption status but merely restored it. 69
Some quarters have expressed the view that P.D. No. 1931 was illegally issued under the now rather infamous Amendment No. 6 70 as
there was no showing that President Marcos' encroachment on legislative prerogatives was justified under the then prevailing condition
that he could legislate "only if the Batasang Pambansa 'failed or was unable to act inadequately on any matter that in his judgment
required immediate action' to meet the 'exigency'. 71

Actually under said Amendment No. 6, then President Marcos could issue decrees not only when the Interim Batasang Pambansa
failed or was unable to act adequately on any matter for any reason that in his (Marcos') judgment required immediate action, but also
when there existed a grave emergency or a threat or thereof. It must be remembered that said Presidential Decree was issued only
around nine (9) months after the Philippines unilaterally declared a moratorium on its foreign debt payments 72 as a result of the
economic crisis triggered by loss of confidence in the government brought about by the Aquino assassination. The Philippines was then
trying to reschedule its debt payments. 73 One of the big borrowers was the NPC 74 which had a US$ 2.1 billion white elephant of a
Bataan Nuclear Power Plant on its back. 75 From all indications, it must have been this grave emergency of a debt rescheduling which
compelled Marcos to issue P.D. No. 1931, under his Amendment 6 power. 76

The rule, therefore, that under the 1973 Constitution "no law granting a tax exemption shall be passed without the concurrence of a
majority of all the members of the Batasang Pambansa" 77 does not apply as said P.D. No. 1931 was not passed by the Interim
Batasang Pambansa but by then President Marcos under His Amendment No. 6 power.

P.D. No. 1931 was, therefore, validly issued by then President Marcos under his Amendment No. 6 authority.

Under E.O No. 93 (S'86) NPC's tax exemption privileges were again clipped by, this time, President Aquino. Its section 2 allowed the
NPC to apply for the restoration of its tax exemption privileges. The same was granted under FIRB Resolution No. 17-87 78 dated June
24, 1987 which restored NPC's tax exemption privileges effective, starting March 10, 1987, the date of effectivity of E.O. No. 93 (S'86).

FIRB Resolution No. 17-87 was approved by the President on October 5, 1987. 79 There is no indication, however, from the records of
the case whether or not similar approvals were given by then President Marcos for FIRB Resolutions Nos. 10-85 and 1- 86. This has
led some quarters to believe that a "travesty of justice" might have occurred when the Minister of Finance approved his own
recommendation as Chairman of the Fiscal Incentives Review Board as what happened in Zambales Chromate vs. Court of
Appeals  80 when the Secretary of Agriculture and Natural Resources approved a decision earlier rendered by him when he was the
Director of Mines, 81 and in Anzaldo vs. Clave  82 where Presidential Executive Assistant Clave affirmed, on appeal to Malacañang, his
own decision as Chairman of the Civil Service Commission. 83

Upon deeper analysis, the question arises as to whether one can talk about "due process" being violated when FIRB Resolutions Nos.
10-85 and 1-86 were approved by the Minister of Finance when the same were recommended by him in his capacity as Chairman of
the Fiscal Incentives Review Board. 84

In Zambales Chromite and Anzaldo, two (2) different parties were involved: mining groups and scientist-doctors, respectively. Thus,
there was a need for procedural due process to be followed.

In the case of the tax exemption restoration of NPC, there is no other comparable entity — not even a single public or private
corporation — whose rights would be violated if NPC's tax exemption privileges were to be restored. While there might have been a
MERALCO before Martial Law, it is of public knowledge that the MERALCO generating plants were sold to the NPC in line with the
State policy that NPC was to be the State implementing arm for the electrification of the entire country. Besides, MERALCO was limited
to Manila and its environs. And as of 1984, there was no more MERALCO — as a producer of electricity — which could have objected
to the restoration of NPC's tax exemption privileges.

It should be noted that NPC was not asking to be granted tax exemption privileges for the first time. It was just asking that its tax
exemption privileges be restored. It is for these reasons that, at least in NPC's case, the recommendation and approval of NPC's tax
exemption privileges under FIRB Resolution Nos. 10-85 and 1-86, done by the same person acting in his dual capacities as Chairman
of the Fiscal Incentives Review Board and Minister of Finance, respectively, do not violate procedural due process.

While as above-mentioned, FIRB Resolution No. 17-87 was approved by President Aquino on October 5, 1987, the view has been
expressed that President Aquino, at least with regard to E.O. 93 (S'86), had no authority to sub-delegate to the FIRB, which was
allegedly not a delegate of the legislature, the power delegated to her thereunder.

A misconception must be cleared up.

When E.O No. 93 (S'86) was issued, President Aquino was exercising both Executive and Legislative powers. Thus, there was no
power delegated to her, rather it was she who was delegating her power. She delegated it to the FIRB, which, for purposes of E.O No.
93 (S'86), is a delegate of the legislature. Clearly, she was not sub-delegating her power.

And E.O. No. 93 (S'86), as a delegating law, was complete in itself — it set forth the policy to be carried out 85 and it fixed the standard
to which the delegate had to conform in the performance of his functions, 86 both qualities having been enunciated by this Court
in Pelaez vs. Auditor General. 87

Thus, after all has been said, it is clear that the NPC had its tax exemption privileges restored from June 11, 1984 up to the present.

VII

The next question that projects itself is — who pays the tax?

The answer to the question could be gleamed from the manner by which the Commissaries of the Armed Forces of the Philippines sell
their goods.

By virtue of P.D. No. 83, 88 veterans, members of the Armed of the Philippines, and their defendants but groceries and other goods free
of all taxes and duties if bought from any AFP Commissaries.
In practice, the AFP Commissary suppliers probably treat the unchargeable specific, ad valorem and other taxes on the goods
earmarked for AFP Commissaries as an added cost of operation and distribute it over the total units of goods sold as it would any other
cost. Thus, even the ordinary supermarket buyer probably pays for the specific, ad valorem  and other taxes which theses suppliers do
not charge the AFP Commissaries. 89

IN MUCH THE SAME MANNER, it is clear that private respondents-oil companies have to absorb the taxes they add to the bunker fuel
oil they sell to NPC.

It should be stated at this juncture that, as early as May 14, 1954, the Secretary of Justice renders an opinion, 90 wherein he stated and
We quote:

xxx xxx xxx

Republic Act No. 358 exempts the National Power Corporation from "all taxes, duties, fees, imposts, charges, and
restrictions of the Republic of the Philippines and its provinces, cities, and municipalities." This exemption is broad
enough to include all taxes, whether direct or indirect, which the National Power Corporation may be required to pay,
such as the specific tax on petroleum products. That it is indirect or is of no amount [should be of no moment], for it is
the corporation that ultimately pays it. The view which refuses to accord the exemption because the tax is first paid
by the seller disregards realities and gives more importance to form than to substance. Equity and law always exalt
substance over from.

xxx xxx xxx

Tax exemptions are undoubtedly to be construed strictly but not so grudgingly as knowledge that many impositions
taxpayers have to pay are in the nature of indirect taxes. To limit the exemption granted the National Power
Corporation to direct taxes notwithstanding the general and broad language of the statue will be to thwrat the
legislative intention in giving exemption from all forms of taxes and impositions without distinguishing between those
that are direct and those that are not. (Emphasis supplied)

In view of all the foregoing, the Court rules and declares that the oil companies which supply bunker fuel oil to NPC have to pay the
taxes imposed upon said bunker fuel oil sold to NPC. By the very nature of indirect taxation, the economic burden of such taxation is
expected to be passed on through the channels of commerce to the user or consumer of the goods sold. Because, however, the NPC
has been exempted from both direct and indirect taxation, the NPC must beheld exempted from absorbing the economic burden of
indirect taxation. This means, on the one hand, that the oil companies which wish to sell to NPC absorb all or part of the economic
burden of the taxes previously paid to BIR, which could they shift to NPC if NPC did not enjoy exemption from indirect taxes. This
means also, on the other hand, that the NPC may refuse to pay the part of the "normal" purchase price of bunker fuel oil which
represents all or part of the taxes previously paid by the oil companies to BIR. If NPC nonetheless purchases such oil from the oil
companies — because to do so may be more convenient and ultimately less costly for NPC than NPC itself importing and hauling and
storing the oil from overseas — NPC is entitled to be reimbursed by the BIR for that part of the buying price of NPC which verifiably
represents the tax already paid by the oil company-vendor to the BIR.

It should be noted at this point in time that the whole issue of who WILL pay these indirect taxes HAS BEEN RENDERED moot and
academic by E.O. No. 195 issued on June 16, 1987 by virtue of which the ad valorem  tax rate on bunker fuel oil was reduced to ZERO
(0%) PER CENTUM. Said E.O. no. 195 reads as follows:

EXECUTIVE ORDER NO. 195

AMENDING PARAGRAPH (b) OF SECTION 128 OF THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED
BY REVISING THE EXCISE TAX RATES OF CERTAIN PETROLEUM PRODUCTS.

xxx xxx xxx

Sec. 1. Paragraph (b) of Section 128 of the National Internal Revenue Code, as amended, is hereby amended to
read as follows:
Par. (b) — For products subject to ad valorem tax only:
PRODUCT AD VALOREM TAX RATE
1. . . .
2. . . .
3. . . .
4. Fuel oil, commercially known as bunker oil and on similar fuel oils having more or less the same generating power
0%
xxx xxx xxx
Sec. 3. This Executive Order shall take effect immediately.
Done in the city of Manila, this 17th day of June, in the year of Our Lord, nineteen hundred and eighty-seven.
(Emphasis supplied)

The oil companies can now deliver bunker fuel oil to NPC without having to worry about who is going to bear the economic burden of
the ad valorem taxes. What this Court will now dispose of are petitioner's complaints that some indirect tax money has been illegally
refunded by the Bureau of Internal Revenue to the NPC and that more claims for refunds by the NPC are being processed for payment
by the BIR.

A case in point is the Tax Credit Memo issued by the Bureau of Internal Revenue in favor of the NPC last July 7, 1986 for
P58.020.110.79 which were for "erroneously paid specific and ad valorem  taxes during the period from October 31, 1984 to April 27,
1985. 91 Petitioner asks Us to declare this Tax Credit Memo illegal as the PNC did not have indirect tax exemptions with the enactment
of P.D. No. 938. As We have already ruled otherwise, the only questions left are whether NPC Is entitled to a tax refund for the tax
component of the price of the bunker fuel oil purchased from Caltex (Phils.) Inc. and whether the Bureau of Internal Revenue properly
refunded the amount to NPC.
After P.D. No. 1931 was issued on June 11, 1984 withdrawing the
tax exemptions of all GOCCs — NPC included, it was only on May 8, 1985 when the BIR issues its letter authority to the NPC
authorizing it to withdraw tax-free bunker fuel oil from the oil companies pursuant to FIRB Resolution No. 10-85. 92 Since the tax
exemption restoration was retroactive to June 11, 1984 there was a need. therefore, to recover said amount as Caltex (PhiIs.) Inc. had
already paid the BIR the specific and ad valorem taxes on the bunker oil it sold NPC during the period above indicated and had billed
NPC correspondingly. 93 It should be noted that the NPC, in its letter-claim dated September 11, 1985 to the Commissioner of the
Bureau of Internal Revenue DID NOT CATEGORICALLY AND UNEQUIVOCALLY STATE that itself paid the P58.020,110.79 as part of
the bunker fuel oil price it purchased from Caltex (Phils) Inc. 94

The law governing recovery of erroneously or illegally, collected taxes is section 230 of the National Internal Revenue Code of 1977, as
amended which reads as follows:

Sec. 230. Recover of tax erroneously or illegally collected. — No suit or proceeding shall be maintained in any court
for the recovery of any national internal revenue tax hereafter alleged to have been erroneously or illegally assessed
or collected, or of any penalty claimed to have been collected without authority, or of any sum alleged to have been
excessive or in any Manner wrongfully collected. until a claim for refund or credit has been duly filed with the
Commissioner; but such suit or proceeding may be maintained, whether or not such tax, penalty, or sum has been
paid under protest or duress.

In any case, no such suit or proceeding shall be begun after the expiration of two years from the date of payment of
the tax or penalty regardless of any supervening cause that may arise after payment; Provided, however, That the
Commissioner may, even without a written claim therefor, refund or credit any tax, where on the face of the return
upon which payment was made, such payment appears clearly, to have been erroneously paid.

x x x           x x x          x x x

Inasmuch as NPC filled its claim for P58.020,110.79 on September 11, 1985, 95 the Commissioner correctly issued the Tax Credit
Memo in view of NPC's indirect tax exemption.

Petitioner, however, asks Us to restrain the Commissioner from acting favorably on NPC's claim for P410.580,000.00 which represents
specific and ad valorem  taxes paid by the oil companies to the BIR from June 11, 1984 to the early part of 1986. 96

A careful examination of petitioner's pleadings and annexes attached thereto does not reveal when the alleged claim for a
P410,580,000.00 tax refund was filed. It is only stated In paragraph No. 2 of the Deed of Assignment 97 executed by and between NPC
and Caltex (Phils.) Inc., as follows:

That the ASSIGNOR(NPC) has a pending tax credit claim with the Bureau of Internal Revenue amounting to
P442,887,716.16. P58.020,110.79 of which is due to Assignor's oil purchases from the Assignee (Caltex [Phils.] Inc.)

Actually, as the Court sees it, this is a clear case of a "Mexican standoff." We cannot restrain the BIR from refunding said amount
because of Our ruling that NPC has both direct and indirect tax exemption privileges. Neither can We order the BIR to refund said
amount to NPC as there is no pending petition for review on certiorari of a suit for its collection before Us. At any rate, at this point in
time, NPC can no longer file any suit to collect said amount EVEN IF lt has previously filed a claim with the BIR because it is time-
barred under Section 230 of the National Internal Revenue Code of 1977. as amended, which states:

In any case, no such suit or proceeding shall be begun after the expiration of two years from the date of payment of
the tax or penalty REGARDLESS of any supervening cause that may arise after payment. . . . (Emphasis supplied)

The date of the Deed of Assignment is June 6. 1986. Even if We were to assume that payment by NPC for the amount of
P410,580,000.00 had been made on said date. it is clear that more than two (2) years had already elapsed from said date. At the same
time, We should note that there is no legal obstacle to the BIR granting, even without a suit by NPC, the tax credit or refund claimed by
NPC, assuming that NPC's claim had been made seasonably, and assuming the amounts covered had actually been paid previously by
the oil companies to the BIR.

WHEREFORE, in view of all the foregoing, the Motion for Reconsideration of petitioner is hereby DENIED for lack of merit and the
decision of this Court promulgated on May 31, 1991 is hereby AFFIRMED.

SO ORDERED.
G.R. No. 102976 October 25, 1995

IRON AND STEEL AUTHORITY, petitioner,

vs.
THE COURT OF APPEALS and MARIA CRISTINA FERTILIZER CORPORATION, respondents.

Petitioner Iron and Steel Authority ("ISA") was created by Presidential Decree (P.D.) No. 272 dated 9 August 1973 in order, generally,
to develop and promote the iron and steel industry in the Philippines. The objectives of the ISA are spelled out in the following terms:

Sec. 2. Objectives — The Authority shall have the following objectives:

(a) to strengthen the iron and steel industry of the Philippines and to expand the domestic and export markets for the
products of the industry;

(b) to promote the consolidation, integration and rationalization of the industry in order to increase industry capability
and viability to service the domestic market and to compete in international markets;

(c) to rationalize the marketing and distribution of steel products in order to achieve a balance between demand and
supply of iron and steel products for the country and to ensure that industry prices and profits are at levels that
provide a fair balance between the interests of investors, consumers suppliers, and the public at large;

(d) to promote full utilization of the existing capacity of the industry, to discourage investment in excess capacity, and
in coordination, with appropriate government agencies to encourage capital investment in priority areas of the
industry;

(e) to assist the industry in securing adequate and low-cost supplies of raw materials and to reduce the excessive
dependence of the country on imports of iron and steel.

The list of powers and functions of the ISA included the following:

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

xxx xxx xxx

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

xxx xxx xxx

(Emphasis supplied)

P.D. No. 272 initially created petitioner ISA for a term of five (5) years counting from 9 August 1973.1 When ISA's original term expired
on 10 October 1978, its term was extended for another ten (10) years by Executive Order No. 555 dated 31 August 1979.

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

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

Negotiations between NSC and private respondent MCFC did fail. Accordingly, on 18 August 1983, petitioner ISA commenced eminent
domain proceedings against private respondent MCFC in the Regional Trial Court, Branch 1, of Iligan City, praying that it (ISA) be
places in possession of the property involved upon depositing in court the amount of P1,760,789.69 representing ten percent (10%) of
the declared market values of that property. The Philippine National Bank, as mortgagee of the plant facilities and improvements
involved in the expropriation proceedings, was also impleaded as party-defendant.
On 17 September 1983, a writ of possession was issued by the trial court in favor of ISA. ISA in turn placed NSC in possession and
control of the land occupied by MCFC's fertilizer plant installation.

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

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

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

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

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

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

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

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

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

Private respondent MCFC, upon the other hand, argues that the failure of Congress to enact a law further extending the term of ISA
after 11 August 1988 evinced a "clear legislative intent to terminate the juridical existence of ISA," and that the authorization issued by
the Office of the President to the Solicitor General for continued prosecution of the expropriation suit could not prevail over such
negative intent. It is also contended that the exercise of the eminent domain by ISA or the Republic is improper, since that power would
be exercised "not on behalf of the National Government but for the benefit of NSC."

The principal issue which we must address in this case is whether or not the Republic of the Philippines is entitled to be substituted for
ISA in view of the expiration of ISA's term. As will be made clear below, this is really the only issue which we must resolve at this time.

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

Sec. 1. Who May Be Parties. — Only natural or juridical persons or entities authorized by law may be parties in a civil
action.

Under the above quoted provision, it will be seen that those who can be parties to a civil action may be broadly categorized
into two (2) groups:
(a) those who are recognized as persons under the law whether natural, i.e., biological persons, on the one hand, or
juridical person such as corporations, on the other hand; and
(b) entities authorized by law to institute actions.

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

Sec. 4. Powers and Functions. — The Authority shall have the following powers and functions:
xxx xxx xxx
(j) to initiate expropriation of land required for basic iron and steel facilities for subsequent resale and/or lease to the
companies involved if it is shown that such use of the State's power is necessary to implement the construction of
capacity which is needed for the attainment of the objectives of the Authority;
xxx xxx xxx
(Emphasis supplied)
 It should also be noted that the enabling statute of ISA expressly authorized it to enter into certain kinds of contracts "for and
in behalf of the Government" in the following terms:
xxx xxx xxx
(i) to negotiate, and  when necessary, to enter into contracts for and in behalf of the government, for the bulk
purchase of materials, supplies or services for any sectors in the industry, and to maintain inventories of such
materials in order to insure a continuous and adequate supply thereof and thereby reduce operating costs of such
sector;
xxx xxx xxx
(Emphasis supplied)

Clearly, ISA was vested with some of the powers or attributes normally associated with juridical personality. There is, however, no
provision in P.D. No. 272 recognizing ISA as possessing general or comprehensive juridical personality separate and distinct from that
of the Government. The ISA in fact appears to the Court to be a non-incorporated agency or instrumentality of the Republic of the
Philippines, or more precisely of the Government of the Republic of the Philippines. It is common knowledge that other agencies or
instrumentalities of the Government of the Republic are cast in corporate form, that is to say, are incorporated
agencies or instrumentalities, sometimes with and at other times without capital stock, and accordingly vested with a juridical
personality distinct from the personality of the Republic. Among such incorporated agencies or instrumentalities are: National Power
Corporation;6 Philippine Ports Authority;7 National Housing Authority;8 Philippine National Oil Company;9 Philippine National
Railways; 10 Public Estates Authority; 11 Philippine Virginia Tobacco Administration,12 and so forth. It is worth noting that the term
"Authority" has been used to designate both incorporated and non-incorporated agencies or instrumentalities of the Government.

We consider that the ISA is properly regarded as an agent or delegate of the Republic of the Philippines. The Republic itself is a body
corporate and juridical person vested with the full panoply of powers and attributes which are compendiously described as "legal
personality." The relevant definitions are found in the Administrative Code of 1987:

Sec. 2. General Terms Defined. — Unless the specific words of the text, or the context as a whole, or a particular
statute, require a different meaning:

(1) Government of the Republic of the Philippines refers to the corporate governmental entity through which the
functions of government are exercised throughout the Philippines, including, save as the contrary appears from the
context, the various arms through which political authority is made effective in the Philippines, whether pertaining to
the autonomous regions, the provincial, city, municipal or barangay subdivisions or other forms of local government.
xxx xxx xxx
(4) Agency of the Government  refers to any of the various units of the Government, including a department,
bureau, office, instrumentality, or government-owned or controlled corporation, or a local government or a distinct unit
therein.
xxx xxx xxx
(10) Instrumentality refers to any agency of the National Government, not integrated within the department
framework, vested with special functions or jurisdiction by law, endowed with some if not all corporate powers,
administering special funds, and enjoying operational autonomy, usually through a charter. This term includes
regulatory agencies, chartered institutions and government-owned or controlled corporations.
xxx xxx xxx
(Emphases supplied)

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

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

Sec. 3. Representative Parties. — A trustee of an expressed trust, a guardian, an executor or administrator, or a
party authorized by statute may sue or be sued without joining the party for whose benefit the action is presented or
defended; but the court may, at any stage of the proceedings, order such beneficiary to be made a party. . . . .
(Emphasis supplied)

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

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

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

From the foregoing premises, it follows that the Republic of the Philippines is entitled to be substituted in the expropriation proceedings
as party-plaintiff in lieu of ISA, the statutory term of ISA having expired. Put a little differently, the expiration of ISA's statutory term did
not by itself require or justify the dismissal of the eminent domain proceedings.
It is also relevant to note that the non-joinder of the Republic which occurred upon the expiration of ISA's statutory term, was not a
ground for dismissal of such proceedings since a party may be dropped or added by order of the court, on motion of any party  or on the
court's own initiative at any stage of the action  and on such terms as are just. 13 In the instant case, the Republic has precisely moved
to take over the proceedings as party-plaintiff.

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

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

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

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

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

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

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

Among such special powers and duties shall be:

xxx xxx xxx

(h) To determine when it is necessary or advantageous to exercise the right of eminent domain in behalf of the
Government of the Philippines; and to direct the Secretary of Justice, where such act is deemed advisable, to cause
the condemnation proceedings to be begun in the court having proper jurisdiction. (Emphasis supplied)

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

Sec. 12. Power of eminent domain. — The President shall determine when it is necessary or advantageous to

exercise the power of eminent domain in behalf of the National Government, and direct the Solicitor General,
whenever he deems the action advisable, to institute expopriation proceedings in the proper court. (Emphasis
supplied)

In the present case, the President, exercising the power duly delegated under both the 1917 and 1987 Revised Administrative
Codes in effect made a determination that it was necessary and advantageous to exercise the power of eminent domain in
behalf of the Government of the Republic and accordingly directed the Solicitor General to proceed with the suit. 17

It is argued by private respondent MCFC that, because Congress after becoming once more the depository of primary legislative power,
had not enacted a statute extending the term of ISA, such non-enactment must be deemed a manifestation of a legislative design to
discontinue or abort the present expropriation suit. We find this argument much too speculative; it rests too much upon simple silence
on the part of Congress and casually disregards the existence of Section 12 of the 1987 Administrative Code already quoted above.

Other contentions are made by private respondent MCFC, such as, that the constitutional requirement of "public use" or "public
purpose" is not present in the instant case, and that the indispensable element of just compensation is also absent. We agree with the
Court of Appeals in this connection that these contentions, which were adopted and set out by the Regional Trial Court in its order of
dismissal, are premature and are appropriately addressed in the proceedings before the trial court. Those proceedings have yet to
produce a decision on the merits, since trial was still on going at the time the Regional Trial Court precipitously dismissed the
expropriation proceedings. Moreover, as a pragmatic matter, the Republic is, by such substitution as party-plaintiff, accorded an
opportunity to determine whether or not, or to what extent, the proceedings should be continued in view of all the subsequent
developments in the iron and steel sector of the country including, though not limited to, the partial privatization of the NSC.
WHEREFORE, for all the foregoing, the Decision of the Court of Appeals dated 8 October 1991 to the extent that it affirmed the trial
court's order dismissing the expropriation proceedings, is hereby REVERSED and SET ASIDE and the case is REMANDED to the
court a quo which shall allow the substitution of the Republic of the Philippines for petitioner Iron and Steel Authority and for further
proceedings consistent with this Decision. No pronouncement as to costs.

SO ORDERED.

A.M. No. RTJ-06-2017             June 19, 2008

LT. GEN. ALFONSO P. DAGUDAG (Ret.), complainant,

vs.
JUDGE MAXIMO G.W. PADERANGA, Regional Trial Court, Branch 38, Cagayan de Oro City, respondent.

This is a complaint for gross ignorance of the law and conduct unbecoming a judge filed by retired Lt. Gen. Alfonso P. Dagudag (Gen.
Dagudag), Head of Task Force Sagip Kalikasan, against Judge Maximo G. W. Paderanga (Judge Paderanga), Presiding Judge of the
Regional Trial Court, Branch 38, Cagayan de Oro City.

On or about 30 January 2005, the Region VII Philippine National Police Regional Maritime Group (PNPRMG) received information that
MV General Ricarte of NMC Container Lines, Inc. was shipping container vans containing illegal forest products from Cagayan de Oro
to Cebu. The shipments were falsely declared as cassava meal and corn grains to avoid inspection by the Department of Environment
and Natural Resources (DENR).1

On 30 and 31 January 2005, a team composed of representatives from the PNPRMG, DENR, and the Philippine Coast Guard
inspected the container vans at a port in Mandaue City, Cebu. The team discovered the undocumented forest products and the names
of the shippers and consignees:

Container Van No. Shipper Consignee

NCLU – 2000492-22GI Polaris Chua Polaris Chua
IEAU – 2521845-2210 Polaris Chua Polaris Chua
NOLU – 2000682-22GI Rowena Balangot Rowena Balangot
INBU – 3125757-BB2210 Rowena Balangot Rowena Balangot
NCLU – 20001591-22GI Jovan Gomez Jovan Gomez
GSTU – 339074-US2210 Jovan Gomez Jovan Gomez
CRXU – 2167567 Raffy Enriquez Raffy Enriquez
NCLU – 2001570-22GI Raffy Enriquez Raffy Enriquez

The crew of MV General Ricarte failed to produce the certificate of origin forms and other pertinent transport documents covering the
forest products, as required by DENR Administrative Order No. 07-94. Gen. Dagudag alleged that, since nobody claimed the forest
products within a reasonable period of time, the DENR considered them as abandoned and, on 31 January 2005, the Provincial
Environment and Natural Resources Office (PENRO) Officer-in-Charge (OIC), Richard N. Abella, issued a seizure receipt to NMC
Container Lines, Inc.2

On 1 February 2005, Community Environment and Natural Resources Office (CENRO) OIC Loreto A. Rivac (Rivac) sent a notice to
NMC Container Lines, Inc. asking for explanation why the government should not confiscate the forest products.3 In an affidavit4 dated
9 February 2005, NMC Container Lines, Inc.’s Branch Manager Alex Conrad M. Seno stated that he did not see any reason why the
government should not confiscate the forest products and that NMC Container Lines, Inc. had no knowledge of the actual content of the
container vans.

On 2, 9, and 15 February 2005, DENR Forest Protection Officer Lucio S. Canete, Jr. posted notices on the CENRO and PENRO
bulletin boards and at the NMC Container Lines, Inc. building informing the unknown owner about the administrative adjudication
scheduled on 18 February 2005 at the Cebu City CENRO. Nobody appeared during the adjudication.5 In a resolution6 dated 10 March
2005, Rivac, acting as adjudication officer, recommended to DENR Regional Executive Director Clarence L. Baguilat that the forest
products be confiscated in favor of the government.

In a complaint7 dated 16 March 2005 and filed before Judge Paderanga, a certain Roger C. Edma (Edma) prayed that a writ of replevin
be issued ordering the defendants DENR, CENRO, Gen. Dagudag, and others to deliver the forest products to him and that judgment
be rendered ordering the defendants to pay him moral damages, attorney’s fees, and litigation expenses. On 29 March 2005, Judge
Paderanga issued a writ of replevin8 ordering Sheriff Reynaldo L. Salceda to take possession of the forest products.

In a motion to quash the writ of replevin,9 the defendants DENR, CENRO, and Gen. Dagudag prayed that the writ of replevin be set
aside: (1) Edma’s bond was insufficient; (2) the forest products were falsely declared as cassava meal and corn grains; (3) Edma was
not a party-in-interest; (4) the forest products were not covered by any legal document; (5) nobody claimed the forest products within a
reasonable period of time; (6) the forest products were already considered abandoned; (7) the forest products were lawfully seized
under the Revised Forestry Code of the Philippines; (8) replevin was not proper; (9) courts could not take cognizance of cases pending
before the DENR; (10) Edma failed to exhaust administrative remedies; and (11) the DENR was the agency responsible for the
enforcement of forestry laws. In a motion to dismiss ad cautelam10 dated 12 April 2005, the defendants prayed that the complaint for
replevin and damages be dismissed: (1) the real defendant is the Republic of the Philippines; (2) Edma failed to exhaust administrative
remedies; (3) the State cannot be sued without its consent; and (4) Edma failed to allege that he is the owner or is entitled to the
possession of the forest products.

In an order11 dated 14 April 2005, Judge Paderanga denied the motion to quash the writ of replevin for lack of merit.

Gen. Dagudag filed with the Office of the Court Administrator (OCA) an affidavit-complaint12 dated 8 July 2005 charging Judge
Paderanga with gross ignorance of the law and conduct unbecoming a judge. Gen. Dagudag stated that:

During the x x x hearing, [Judge Paderanga] showed manifest partiality in favor of x x x Edma. DENR’s counsel was
lambasted, cajoled and intimidated by [Judge Paderanga] using words such as "SHUT UP" and "THAT’S BALONEY."

xxxx

Edma in the replevin case cannot seek to recover the wood shipment from the DENR since he had not sought administrative
remedies available to him. The prudent thing for [Judge Paderanga] to have done was to dismiss the replevin suit outright.

xxxx

[Judge Paderanga’s] act[s] of taking cognizance of the x x x replevin suit, issuing the writ of replevin and the subsequent
denial of the motion to quash clearly demonstrates [sic] ignorance of the law.

In its 1st Indorsement13 dated 1 August 2005, the OCA directed Judge Paderanga to comment on the affidavit-complaint. In his
comment14 dated 6 September 2005, Judge Paderanga stated that he exercised judicial discretion in issuing the writ of replevin and
that he could not delve into the issues raised by Gen. Dagudag because they were related to a case pending before him.

In its Report15 dated 10 July 2006, the OCA found that Judge Paderanga (1) violated the doctrine of exhaustion of administrative
remedies; (2) violated the doctrine of primary jurisdiction; and (3) used inappropriate language in court. The OCA recommended that
the case be re-docketed as a regular administrative matter; that Judge Paderanga be held liable for gross ignorance of the law and for
violation of Section 6, Canon 6 of the New Code of Judicial Conduct for the Philippine Judiciary;16 and that he be fined P30,000.

In its Resolution17 dated 16 August 2006, the Court re-docketed the case as a regular administrative matter and required the parties to
manifest whether they were willing to submit the case for decision based on the pleadings already filed. Judge Paderanga manifested
his willingness to submit the case for decision based on the pleadings already filed.18 Since Gen. Dagudag did not file any
manifestation, the Court considered him to have waived his compliance with the 16 August 2006 Resolution.19

The Court finds Judge Paderanga liable for gross ignorance of the law and for conduct unbecoming a judge.

The DENR is the agency responsible for the enforcement of forestry laws. Section 4 of Executive Order No. 192 states that the DENR
shall be the primary agency responsible for the conservation, management, development, and proper use of the country’s natural
resources.

Section 68 of Presidential Decree No. 705, as amended by Executive Order No. 277, states that possessing forest products without the
required legal documents is punishable. Section 68-A states that the DENR Secretary or his duly authorized representatives may order
the confiscation of any forest product illegally cut, gathered, removed, possessed, or abandoned.

In the instant case, the forest products were possessed by NMC Container Lines, Inc. without the required legal documents and were
abandoned by the unknown owner. Consequently, the DENR seized the forest products.

Judge Paderanga should have dismissed the replevin suit outright for three reasons. First, under the doctrine of exhaustion of
administrative remedies, courts cannot take cognizance of cases pending before administrative agencies. In Factoran, Jr. v. Court of
Appeals,20 the Court held that:

The doctrine of exhaustion of administrative remedies is basic. Courts, for reasons of law, comity and
convenience, should not entertain suits unless the available administrative remedies have first been resorted to and
the proper authorities have been given an appropriate opportunity to act and correct their alleged errors, if any,
committed in the administrative forum. (Emphasis ours)

In Dy v. Court of Appeals,21 the Court held that a party must exhaust all administrative remedies before he can resort to the courts.
In Paat v. Court of Appeals,22 the Court held that:

This Court in a long line of cases has consistently held that before a party is allowed to seek the intervention of the court,
it is a pre-condition that he should have availed of all the means of administrative processes afforded him. Hence, if a
remedy within the administrative machinery can still be resorted to by giving the administrative officer concerned every
opportunity to decide on a matter that comes within his jurisdiction then such remedy should be exhausted first before
court’s judicial power can be sought. The premature invocation of court’s intervention is fatal to one’s cause of
action. Accordingly, absent any finding of waiver or estoppel the case is susceptible of dismissal for lack of cause of action.
(Emphasis ours)

In the instant case, Edma did not resort to, or avail of, any administrative remedy. He went straight to court and filed a complaint for
replevin and damages. Section 8 of Presidential Decree No. 705, as amended, states that (1) all actions and decisions of the Bureau of
Forest Development Director are subject to review by the DENR Secretary; (2) the decisions of the DENR Secretary are appealable to
the President; and (3) courts cannot review the decisions of the DENR Secretary except through a special civil action for certiorari or
prohibition. In Dy,23 the Court held that all actions seeking to recover forest products in the custody of the DENR shall be directed to that
agency — not the courts. In Paat,24 the Court held that:
 Dismissal of the replevin suit for lack of cause of action in view of the private respondents’ failure to exhaust
administrative remedies should have been the proper course of action by the lower court instead of assuming
jurisdiction over the case and consequently issuing the writ [of replevin]. Exhaustion of the remedies in the
administrative forum, being a condition precedent prior to one’s recourse to the courts and more importantly, being an
element of private respondents’ right of action, is too significant to be waylaid by the lower court.

xxxx

Moreover, the suit for replevin is never intended as a procedural tool to question the orders of confiscation and
forfeiture issued by the DENR in pursuance to the authority given under P.D. 705, as amended. Section 8 of the said law is
explicit that actions taken by the

Director of the Bureau of Forest Development concerning the enforcement of the provisions of the said law are subject to
review by the Secretary of DENR and that courts may not review the decisions of the Secretary except through a
special civil action for certiorari or prohibition. (Emphasis ours)

Second, under the doctrine of primary jurisdiction, courts cannot take cognizance of cases pending before administrative agencies of
special competence. The DENR is the agency responsible for the enforcement of forestry laws. The complaint for replevin itself stated
that members of DENR’s Task Force Sagip Kalikasan took over the forest products and brought them to the DENR Community
Environment and Natural Resources Office. This should have alerted Judge Paderanga that the DENR had custody of the forest
products, that administrative proceedings may have been commenced, and that the replevin suit had to be dismissed outright. In Tabao
v. Judge Lilagan25 — a case with a similar set of facts as the instant case — the Court held that:

The complaint for replevin itself states that the shipment x x x [was] seized by the NBI for verification of supporting documents.
It also states that the NBI turned over the seized items to the DENR "for official disposition and appropriate action." x x x To
our mind, these allegations [should] have been sufficient to alert respondent judge that the DENR has custody of the
seized items and that administrative proceedings may have already been commenced concerning the shipment.
Under the doctrine of primary jurisdiction, courts cannot take cognizance of cases pending before administrative
agencies of special competence. x x x The prudent thing for respondent judge to have done was to dismiss the
replevin suit outright. (Emphasis ours)

In Paat,26 the Court held that:

[T]he enforcement of forestry laws, rules and regulations and the protection, development and management of forest lands fall
within the primary and special responsibilities of the Department of Environment and

Natural Resources. By the very nature of its function, the DENR should be given a free hand unperturbed by judicial
intrusion to determine a controversy which is well within its jurisdiction. The assumption by the trial court, therefore,
of the replevin suit filed by private respondents constitutes an unjustified encroachment into the domain of the
administrative agency’s prerogative. The doctrine of primary jurisdiction does not warrant a court to arrogate unto
itself the authority to resolve a controversy the jurisdiction over which is initially lodged with an administrative body
of special competence. (Emphasis ours)

Third, the forest products are already in custodia legis and thus cannot be the subject of replevin. There was a violation of the Revised
Forestry Code and the DENR seized the forest products in accordance with law. In Calub v. Court of Appeals,27 the Court held that
properties lawfully seized by the DENR cannot be the subject of replevin:

Since there was a violation of the Revised Forestry Code and the seizure was in accordance with law, in our view
the [properties seized] were validly deemed in custodia legis. [They] could not be subject to an action for replevin. For
it is property lawfully taken by virtue of legal process and considered in the custody of the law, and not otherwise. (Emphasis
ours)

Judge Paderanga’s acts of taking cognizance of the replevin suit and of issuing the writ of replevin constitute gross ignorance of the
law. In Tabao,28 the Court held that:

Under the doctrine of primary jurisdiction, courts cannot take cognizance of cases pending before administrative of special
competence. x x x [T]he plaintiff in the replevin suit who [sought] to recover the shipment from the DENR had not
exhausted the administrative remedies available to him. The prudent thing for respondent judge to have done was to
dismiss the replevin suit outright.

Under Section 78-A of the Revised Forestry Code, the DENR secretary or his authorized representatives may order the
confiscation of forest products illegally cut, gathered, removed, or possessed or abandoned.

xxxx

Respondent judge’s act of taking cognizance of the x x x replevin suit clearly demonstrates ignorance of the law. x x x
[J]udges are expected to keep abreast of all laws and prevailing jurisprudence. Judges are duty bound to have more than just
a cursory acquaintance with laws and jurisprudence. Failure to follow basic legal commands constitutes gross ignorance
of the law from which no one may be excused, not even a judge. (Emphasis ours)

Canon 6 of the New Code of Judicial Conduct for the Philippine Judiciary states that competence is a prerequisite to the due
performance of judicial office. Section 3 of Canon 6 states that judges shall take reasonable steps to maintain and enhance their
knowledge necessary for the proper performance of judicial duties. Judges should keep themselves abreast with legal developments
and show acquaintance with laws.29

The rule that courts cannot prematurely take cognizance of cases pending before administrative agencies is basic. There was no
reason for Judge Paderanga to make an exception to this rule. The forest products were in the custody of the DENR and Edma had not
availed of any administrative remedy. Judge Paderanga should have dismissed the replevin suit outright. In Español v. Toledo-
Mupas,30 the Court held that:

Being among the judicial front-liners who have direct contact with the litigants, a wanton display of utter lack of familiarity with
the rules by the judge inevitably erodes the confidence of the public in the competence of our courts to render justice. It
subjects the judiciary to embarrassment. Worse, it could raise the specter of corruption.

When the gross inefficiency springs from a failure to consider so basic and elemental a rule, a law, or a principle in the
discharge of his or her duties, a judge is either too incompetent and undeserving of the exalted position and title he or she
holds, or the oversight or omission was deliberately done in bad faith and in grave abuse of judicial authority.

The OCA found Judge Paderanga liable for using inappropriate language in court: "We x x x find respondent’s intemperate use of "Shut
up!" and "Baloney!" well nigh inappropriate in court proceedings. The utterances are uncalled for."31

Indeed, the 14 and 22 April 2005 transcripts of stenographic notes show that Judge Paderanga was impatient, discourteous, and
undignified in court:

Atty. Luego: Your Honor, we want to have this motion because that is...
Judge Paderanga: I am asking you why did you not make any rejoinder[?]
xxxx
Atty. Luego: I apologize, Your Honor. We are ready to...
Judge Paderanga: Ready to what? Proceed.

Atty. Luego: Yes, Your Honor. We filed this motion to quash replevin, Your Honor, on the grounds, first and foremost, it is our
contention, Your Honor, with all due respect of [sic] this Honorable Court, that the writ of replevin dated March 29, 2005 was
improper, Your Honor, for the reasons that the lumber, subject matter of this case, were apprehended in accordance with...

Judge Paderanga: Where is your proof that it was apprehended? Where is your proof? Is that apprehension proven by a
seizure receipt? Where is your seizure receipt?

Atty. Luego: Under the rules...

Judge Paderanga: Where is your seizure receipt? You read your rules. What does [sic] the rules say? Where in your rules
does it say that it does not need any seizure receipt? You look at your rules. You point out the rules. You take out your rules
and then you point out. Do you have the rules?

xxxx

Atty. Luego: Your Honor, there was no seizure receipt, but during the apprehension, Your Honor, there was no claimant.

Judge Paderanga: Answer me. Is there a seizure receipt?

Atty. Luego: But during the apprehension, Your Honor, no owner has [sic] appeared.

xxxx

Atty. Luego: According to [the] rules, Your Honor, if there is no...

Judge Paderanga: Whom are you seizing it from? To [sic] whom are you taking it from?

Atty. Luego: From the shipping company, Your Honor.

xxxx

Atty. Luego: Your Honor please, the shipping company denied the ownership of that lumber.

xxxx

Atty. Luego: But the shipping company, Your Honor,...

Judge Paderanga: Shut up. That’s baloney. You are seizing it from nobody. Then how can you seize it from the shipping
company. Are you not? You are a lawyer. Who is in possession of the property? The shipping company. Why did you not issue
[a] seizure receipt to the shipping company?

Atty. Luego: But the... May I continue, Your Honor?

xxxx

Judge Paderanga: Stop talking about the shipping company. Still you did not issue a seizure receipt here. Well, I’m telling you
you should have issued [a] seizure receipt to the shipping company.

xxxx
 Judge Paderanga: You are a lawyer. You should know how to write pleadings. You write the pleadings the way it should
be, not the way you think it should be.

Atty. Luego: I’m sorry, Your Honor.

Judge Paderanga: You are an officer of the court. You should be careful with your language. You say that I am wrong. It’s
you who are [sic] wrong because you do not read the law.

xxxx

Judge Paderanga: Then you read the law. How dare you say that the Court is wrong.

xxxx

Judge Paderanga: Are you not representing [the DENR]?

Atty. Luego: Yes, in this case, Your Honor.

Judge Paderanga: Then you are representing them. They are your clients. What kind of a lawyer are you?32

xxxx

Atty. Tiamson: Specifically it was stated in the [Factoran] versus Court of Appeals [case] that the Court should not interfere,
Your Honor.

Judge Paderanga: No.

xxxx

Judge Paderanga: The problem with you people is you do not use your heads.

Atty. Tiamson: We use our heads, your Honor.

xxxx

Atty. Tiamson: Your Honor, we would like to put on record that we use our heads, your Honor.33 (Emphasis ours)

Section 6, Canon 6 of the New Code of Judicial Conduct for the Philippine Judiciary states that judges shall be patient, dignified, and
courteous in relation to lawyers. Rule 3.04, Canon 3 of the Code of Judicial Conduct states that judges should be patient and courteous
to lawyers, especially the inexperienced. They should avoid the attitude that the litigants are made for the courts, instead of the courts
for the litigants.

Judicial decorum requires judges to be temperate in their language at all times. They must refrain from inflammatory, excessively
rhetoric, or vile language.34 They should (1) be dignified in demeanor and refined in speech; (2) exhibit that temperament of utmost
sobriety and self-restraint; and (3) be considerate, courteous, and civil to all persons who come to their court.35 In Juan de la Cruz v.
Carretas,36 the Court held that:

A judge who is inconsiderate, discourteous or uncivil to lawyers x x x who appear in his sala commits an impropriety and fails
in his duty to reaffirm the people’s faith in the judiciary. He also violates Section 6, Canon 6 of the New Code of Judicial
Conduct for the Philippine Judiciary.

xxxx

It is reprehensible for a judge to humiliate a lawyer x x x. The act betrays lack of patience, prudence and restraint. Thus, a
judge must at all times be temperate in his language. He must choose his words x x x with utmost care and sufficient control.
The wise and just man is esteemed for his discernment. Pleasing speech increases his persuasiveness.

Equanimity and judiciousness should be the constant marks of a dispenser of justice. A judge should always keep his passion
guarded. He can never allow it to run loose and overcome his reason. He descends to the level of a sharp-tongued, ill-
mannered petty tyrant when he utters harsh words x x x. As a result, he degrades the judicial office and erodes public
confidence in the judiciary.

Judge Paderanga’s refusal to consider the motion to quash the writ of replevin, repeated interruption of the lawyers, and utterance of
"shut up," "that’s baloney," "how dare you say that the court is wrong," "what kind of a lawyer are you?," and "the problem with you
people is you do not use your heads" are undignified and very unbecoming a judge. In Office of the Court Administrator v.
Paderanga,37 the Court already reprimanded Judge Paderanga for repeatedly saying "shut up," being arrogant, and declaring that he
had "absolute power" in court. He has not changed.

Section 8, Rule 140 of the Rules of Court classifies gross ignorance of the law as a serious offense. It is punishable by (1) dismissal
from the service, forfeiture of benefits, and disqualification from reinstatement to any public office; (2) suspension from office without
salary and other benefits for more than three months but not exceeding six months; or (3) a fine of more than P20,000 but not
exceeding P40,000.38 Section 10 of Rule 140 classifies conduct unbecoming a judge as a light offense. It is punishable by (1) a fine of
not less than P1,000 but not exceeding P10,000; (2) censure; (3) reprimand; or (4) admonition with warning.39
The Court notes that this is Judge Paderanga’s third offense. In Office of the Court Administrator v. Paderanga,40 the Court held him
liable for grave abuse of authority and simple misconduct for unceremoniously citing a lawyer in contempt while declaring himself as
having "absolute power" and for repeatedly telling a lawyer to "shut up." In Beltran, Jr. v. Paderanga,41 the Court held him liable for
undue delay in rendering an order for the delay of nine months in resolving an amended formal offer of exhibits. In both cases, the
Court sternly warned Judge Paderanga that the commission of another offense shall be dealt with more severely. The instant case and
the two cases decided against him demonstrate Judge Paderanga’s arrogance, incorrigibility, and unfitness to become a judge.

Judge Paderanga has two other administrative cases pending against him — one42 for gross ignorance of the law, knowingly rendering
an unjust judgment, and grave abuse of authority, and the other43 for gross misconduct, grave abuse of authority, and gross ignorance
of the law.

The Court will not hesitate to impose the ultimate penalty on those who have fallen short of their accountabilities. It will not tolerate any
conduct that violates the norms of public accountability and diminishes the faith of the people in the judicial system.44

WHEREFORE, the Court finds Judge Maximo G.W. Paderanga, Regional Trial Court, Branch 38, Cagayan de Oro
City, GUILTY of GROSS IGNORANCE OF THE LAW and UNBECOMING CONDUCT. Accordingly, the Court DISMISSES him from
the service, with forfeiture of all retirement benefits, except accrued leave credits, and with prejudice to reinstatement or appointment to
any public office, including government-owned or controlled corporations.

SO ORDERED.

G.R. No. 191810               June 22, 2015

JIMMY T. GO a.k.a. JAIME T. GAISANO, Petitioner,

vs.
BUREEAU OF IMMIGRATION AND DEPORTATION and its COMMISIONERS and LUIS T. RAMOS, Respondents,

This is a petition for review on certiorari under Rule 45 of the Rules of Court (Rules) seeking to nullify the October 28, 2009
Decision1 and March 22, 2010 Resolution2 of the Court of Appeals in CA-G.R. SP No. 88840, which affirmed as final and executor the
April 17, 2002 Decision3 of the Bureau of Immigration (BI) in BSI-D.C. No. ADD-01-117.

In June 1999, the Concerned Employee’s of Noah’s Arc Group of Companies filed a letter0complaint against petitioner Jimmy T. Go
a.k.a. Jaime T. Gaisano (Go) and his father, Carlos Go, Sr. a.k.a. Go Kian Lu (Go, Sr.) It was claimed that Go, Sr. was an
undocumented alien who later adopted the Filipino name ‘Carlos Go, Sr." Allegedly, Go. Sr. obtained for himself some basic education
and married a Chinese woman name Rosario Tan. Their union produced ten (10) children, one of whom is petitioner Go. On the
premise that Go, Sr. was an undocumented alien, petitioner Go is also an alien, being a child of a Chinese citizen.

A year after, in April 2000, a complaint-affidavit4 for deportation of petitioner Go was initiated, this time by Luis T. Ramos (Ramos),
before the Bureau of Immigration. Ramos alleged that while petitioner Go represents himself as a Filipino citizen, his personal
circumstances and relevant records indicate that he is a Chinese citizen born in the Philippines to Chinese parents, which is in violation
of Commonwealth Act (C.A.) No. 613, otherwise known as the Philippine Immigration Act of 1940, as amended. To prove his
contention, Ramos presented the birth certificates of petitioner Go as well as that of his sister Juliet GO (Juliet) and older brother Carlos
Go, Jr. (Carlos, Jr.). The birth certificate indicates petitioner Go as "FChinese." The pertinent page from the Registry of Births also
states that the citizenship of Baby Jimmy Go is "Chinese." Further, the birth certificates of his siblings show that they were born of
Chinese parents.

Petitioner Go refuted the allegations in his counter-affidavit. He alleged that his father, Go, Sr., who was the son of a Chinese father
and Filipina mother, elected Philippine citizenship, as evidenced by his having taken the Oath of Allegiance on July 11, 1950 and
having executed an Affidavit of Election of Philippine Citizenship on July 12, 1950. He added that Go, Sr. was a registered voter and
actually voted in the 1952 and 1955 elections. As regards the entry in his siblings’ certificates of birth, petitioner Go averred that Juliet
and Carlos, Jr., were born on June 3, 1946 and April 2, 1949, respectively, or prior to their father’s election of Philippine citizenship.
Finally, petitioner Go asserted that his birth certificate states that his father’s citizenship is "Filipino."

In October 2000, the National Bureau of Investigation (NBI) forwarded to the BI a copy of its Investigation Report and probe on the
investigation conducted against petitioner Go and GO, Sr. pursuant to the letter complaint of the Concerned Employees of Noah’s Arc
Group of Companies. The finding of the Special Investigator, which were affirmed by the Chief of the SLPS-NBI, stated that the election
of Philippine citizenship of Go, Sr. was in accordance with the provisions of the 1935 Constitution and that the erasure on the original
birth certificate of petitioner Go could not be attributed to him or Go, Sr. because said document was on file with the local civil registrar
of Iloilo City.

Finding the evidence and report of the NBA as conclusive of the citizenship of petitioner Go and Go, Sr., BI Associate Commissioner
Linda L. Malenab-Hornilla subsequently rendered a Resolution dated February 14, 2001 that dismissed the complaint for deportation
filed against petitioner Go.5

However, on March 8, 2001,6 the BI Board of Commissioners (Board) reversed the case dismissal, holding that the election of
Philippine citizenship of Go, Sr. was made out of time. The Board then directed the preparation and filing of the appropriate deportation
charges against petitioner Go.

One July 3, 2001, the corresponding Charge Sheet7 was filed against petitioner Go for violation of Section 37(a)(9), in relation to
Section 45(e) of C.A. No. 613, as amended, committed as follows:

1. That Respondent was born on October 25, 1952 in Iloilo City, as evidenced by a copy of his birth certificate
wherein his citizenship was recorded a "Chinese";

2. That Respondent through some stealth machinations was able to subsequently cover up his true and actual
citizenship as Chinese and illegally acquired a Philippine Passport under the name JAIME T. GAISANO, with the use
 of falsified documents and untruthful declarations, in violation of the above-cited provisions of the Immigration Act[;]
[and]

3. That [R]espondent being an alien, has formally and officially represents and introduces himself as a citizen of the
Philippines, for fraudulent purposes and in order to evade any requirements of the immigration laws, also in violation
of said law.

CONTRARY TO LAW.8

In November 2001, petitioner Go and Go, Sr. filed a petition for certiorari and prohibition with application for injunctive reliefs before the
Regional Trial Court (RTC) of Pasig City, Branch 167, docketed as SCA No. 2218, seeking to annul and set aside the March 8,
2001.9 Essentially, they challenged the jurisdiction of the Board to continue with the deportation proceedings.

In the interim, the Board issued a Decision dated April 17, 2002 in BSI-D.C. No. ADD-01-117, ordering the apprehension and
deportation of petitioner Go. The dispositive portion of which reads:

WHEREFORE, in view of the foregoing, the Board of Commissioners hereby Orders the apprehension of respondent JIMMY T. GO @
JAIME T. GAISANO and that he be then deported to CHINA of which he is a citizen, without prejudice, however, to the continuation of
any and all criminal and other proceedings that are pending court or before the prosecution arm of the Philippine Government, if any.
And that upon expulsion, he is thereby ordered barred from entry into the Philippines.

SO ORDERED.10

The Board gave weight to the documents submitted against petitioner Go, to wit:

1. The Certificate of Birth of petitioner Go, issued on November 23, 1999 by the local civil registrar of Iloilo City, which showed
that Baby Jimmy Go is "FChinese";

2. The Certificate of Live Birth of Juliet Go, which certified that her citizenship was Chinese. The same certificate also stated
that Go, Sr. was a "Chinese" and the mother "Rosario Tan" was also "Chinese"; and

3. The Certificate of Live Birth of Carlos Go, Jr., whose citizenship was also certified as "Chinese."

The Board held that all documents submitted were prima-facie evidence of the facts regarding the nationality of petitioner Go pursuant
to Article 41011 of the Civil Code as they are considered public documents. Further, it was opined that petitioner Go’s claim of being
Filipino totally lacks merit since his father’s election of Philippine citizenship was void for having been filed five (5) years after his
attainment of the age of majority or when he was twenty-six (26) years old. The Board also observed that the certified true copy of the
Oath of Allegiance of Go, Sr. appears to have been subscribed and sworn to before the Deputy Clerk of Court of Iloilo City on July
11,1950 while his Affidavit of Election was subscribed and sworn to before the same public officer a day after. The Board considered
this a irregular since Go, Sr. filed his Oath of Allegiance prior to his actual election of the Philippine citizenship contrary to Section 1 of
C.A. 625, which provides:

Election of Philippine Citizenship must be expressed in a statement before any officer authorized to administer oaths and filed with the
nearest civil registry and accompanied by an Oath of Allegiance to the Philippine Constitution.

In view of the adverse judgment, petitioner Go and Go, Sr. filed before the Pasig RTC a supplemental petition to declare the nullity of
the Board’s April 17, 2002 Decision.12

The Pasig RTC issued a writ of preliminary prohibitory injunction pending litigation on the main issue, enjoining the BI from enforcing
the April 17, 2002 Decision.13 Later, however, it dissolved the writ in a Decision dated January 6, 2004, which dismissed the petition for
lack of merit.14 A motion for reconsideration was filed, but it was denied in an Order issued on May 3, 2004.15

Petitioner Go and Go, Sr. then questioned before the CA the RTC’s January 6, 2004 Decision and May 3, 2004 Order by way of a
petition for certiorari under Rule 65 of the Rules, which was docketed as CA-G.R. SP No. 85143.16 The appellate court, however,
dismissed the petition and denied the motion for reconsideration on October 25, 2004 and February 16, 2005, respectively. 17

Meantime, on November 16, 2004, the Board issued a warrant of deportation, which led to the apprehension and detention of petitioner
Go pending his deportation.18

Thereafter, petitioner Go and Go, Sr. filed before this Court a petition for review on certiorari, docketed as G.R. Nos. 167569 and
167570, assailing the CA decision and resolution CA-G.R. SP No. 85143.

Petitioner Go also appealed to the Office of the President (OP), which, on September 29, 2004, concurred with the findings of the
Board.19 The OP likewise denied the motion for reconsideration on February 11, 2005.20 As a result, petitioner Go elevated the case to
the CA via petition for review under Rule 43 of the Rules.21

Meanwhile, the Court resolved G.R. Nos. 167569 and 167570 when Go, Sr. v. Ramos22 was promulgated on September 4, 2009. The
decision sustained the October 25, 2004 Decision and February 16, 2005 Resolution of the CA in CA-G.R. SP No. 85143.

More than a month after, on October 28, 2009, the CA dismissed the Rule 43 petition, holding that the April 17, 2002 Decision of the
Board which was the subject of appeal to the OP, had already become final and executor. The CA denied petitioner Go’s motion for
reconsideration on March 22, 2010; hence, this petition raising the issues as follows:

1. The Honorable Court erred in dismissing the instant petition;

 2. The Honorable Court erred in declaring that the April 17, 2002 Decision of the Bureau of Immigration and Deportation in
BSI-D.C. No. ADD-01-117 is final and executor; and

3. The Honorable Court erred in not ruling on the irregularity of the issuance of the Office of the President of its September 29,
2004 and February 11, 2005 Resolutions.23

We deny.

Petitioner Go presume that the April 17, 2002 Decision of the Board has not yet attained finality due to the pendency of his Motion for
Leave to Admit Attached Second (2nd) Motion for Reconsideration, which this Court allegedly failed to resolve. He is mistaken.

As a general rule, a second motion for reconsideration cannot be entertained. Section 2 or Rule 52 of the Rules of Court is
unequivocal.24 The Court resolutely holds that a second motion for reconsideration is a prohibited pleading, and only for extraordinarily
persuasive reasons and after an express leave has been first obtained may such motion be entertained.25 The restrictive policy against
a second motion for reconsideration is emphasized in A.M. No. 10-4-20-SC, as amended (Internal Rules of the Supreme Court).
Section 3, Rule 15 of which states:

SEC. 3. Second motion for reconsideration. – The Court shall not entertain a second motion for reconsideration, and any exception to
this rule can only be granted in the higher interest of justice by the Court en banc upon a vote of at least two-thirds of its actual
membership. There is reconsideration "in the higher interest of justice" when the assailed decision is not only legally erroneous, but is
likewise patently unjust and potentially capable of causing unwarranted and irremediable injury or damage to the parties. A second
motion for reconsideration can only be entertained before the ruling sought to be reconsidered becomes final by operation of law or by
the Court’s declaration.

In the Division, a vote of three Members shall be required to elevate a second motion for reconsideration to the Court En Banc.

The Court has the power prerogative to suspend its own rules and to exempt a case from their operation of and when justice requires it.
In the exercise of sound discretion, we may determine issues which are of transcendental importance. This case is definitely not an
exception.

Upon examination of the records of G.R. Nos. 167569 and 167570, We found that on August 18, 2010 petitioner’s Motion for Leave to
Attach a Second Motion for Reconsideration and the Second Motion for Reconsideration were denies and noted without action,
respectively. Thus, the CA is correct in ruling that the April 17, 2002 Decision of the Board may no longer be reviewed as it already
attained finality and should remain so. Based on the principle of immutability of judgment, a decision must become final and executor at
some point in time; all litigations must necessarily come to an end.

Xxx A definitive final judgment, however erroneous, is no longer subject to change or revision.

A decision that has acquired finality becomes immutable and unalterable. This quality of immutability precludes the modification of a
final judgment, even if the modification is meant to correct erroneous conclusions of fact and law. And this postulate holds true whether
the modification is made by the court that rendered it or by the highest court in the land. The orderly administration of justice requires
that, at the risk of occasional errors, the judgments/resolutions of a court much reach a point of finality set by the law. The noble
purpose is to write finis to dispute once and for all. This is a fundamental principle our justice system, without which there would be no
end to litigations. Utmost respect and adherence to this principle must always be maintained by those who exercise the power
adjudication. Any act, which violates such principle, must immediately be struck down. Indeed, the principle of conclusiveness of prior
adjudications is not confined in its operation to the judgments of what are ordinarily known as courts, but extends to all bodies upon
which judicial powers had been conferred. Xxx26

Subject to certain recognized exceptions such a (1) the correction of clerical errors; (2) the so-called nunc pro tunc entries which cause
no prejudice to any party; (3) void judgments; and (4) whenever circumstances transpire after the finality of the decision rendering its
execution unjust and inequitable, which are not present in this case, the principle of immutability leaves the judgment undisturbed as
nothing further can be done except to execute it.27

Notably, the subject matters of Go, Sr. and the present case are essentially the same as both involve identical facts and evidence.
Necessarily, this case should be disposed in the same way that G.R. Nos. 167569 and 167570 in Go, Sr. were resolved.

In Go, Sr. which was promulgated on September 4, 2009, the validity of the April 17, 2002 BI Decision that ordered the apprehension
and deportation of petitioner Go was already passed upon with finality. Therein, one of the issues presented for resolution was whether
the evidence adduced by petitioner Go and his father, Go, Sr., to prove their claim of Philippine citizenship is substantial and sufficient
to oust the BI of its jurisdiction from continuing with the deportation proceedings in order to give way to a formal judicial action to pass
upon the issue of alienage, While petitioner Go and Go, Sr. conceded that BI has jurisdiction to hear cases against an alleged alien,
they insisted that judicial intervention may be resorted to when the claim to citizenship is so substantial that there are reasonable
grounds to believe that claim is correct. They posited that the judicial intervention required is not merely a judicial review of the
proceedings below but a full-blown, adversarial, trial-type proceedings where the rules of evidence are strictly observed. The Court
disagreed and opined that the jurisdiction of the BI is not divested by mere claim of citizenship, it was held;

There can be no question that the Board has the authority to hear and determine the deportation case against a deportee and in the
process determine also the question of citizenship raised by him. However, this Court, following American jurisprudence, laid down the
exception to the primary jurisdiction enjoyed by the deportation board in the case of Chua Hiong v. Deportation Board wherein we
stressed that judicial determination is permitted in cases when the courts themselves believe that there is substantial evidence
supporting the claim of citizenship so substantial that there are reasonable grounds for the belief that the claim is correct. Moreover,
when the evidence submitted by a deportee is conclusive of his citizenship, the right to immediate review should also be recognized
and the courts shall promptly enjoin the deportation proceedings.

While we are mindful that resort to the courts may be had, the same should be allowed only in the sound discretion of a competent
court in proper proceedings.1âwphi1 After all, the Board’s jurisdiction is not divested by the mere claim of citizenship. Moreover, a
deportee who claims to be a citizen and not therefore subject to deportation has the right to have his citizenship reviewed by the courts,
after the deportation proceedings. The decision of the Board on the question is of course, not final but subject to review by the courts.
After a careful evaluation of the evidence, the appellate court was not convinced that the same was sufficient to oust the Board of its
jurisdiction to continue with the deportation proceedings considering that what were presented particularly the birth certificated of
Jimmy, as well as those of his siblings, Juliet Go and Carlos Go, Jr. indicate that they are Chinese citizens. Furthermore, like the Board,
it found the election of Carlos of Philippine citizenship, which was offered as additional proof of his claim, irregular as it was not made
on time.

We find no cogent reason to overturn the above findings of the appellate tribunal. The question of whether substantial evidence had
been presented to allow immediate recourse to the regular court is a question of fact which is beyond this Court’s power of review for it
is not a trier of facts. None of the exceptions in which this Court may resolve factual issues has been shown to exist in this case. Even if
we evaluate their arguments and the evidence they presented once again, the same conclusion will still be reached.28

The Bureau of Immigration is the agency that can best determine whether petitioner Go violated certain provisions of C.A. No. 613, as
amended. In this jurisdiction, courts will not interfere in matters which are addressed to the sound discretion of government agencies
entrusted with the regulation of activities coming under the special technical knowledge and training of such agencies.29 By reason of
the special knowledge and expertise of administrative departments over matters falling within their jurisdiction, they are in a better
position to pass judgment thereon and their findings of fact in that regard are generally accorded respect, if not finality by the courts.30

Moreover, a petition for review under Rule 45 of the Rules generally bars any question pertaining to the factual issues. The well-settled
rule is that questions of fact are not reviewable in petitions for review under Rule 45, subject only to certain exceptions, among them,
the lack of sufficient support in evidence of the trial court’s judgment or the appellate court’s misapprehension of the adduced
facts.31 None of the exceptions was convincingly shown to be present in this case.

In addition, this Court cannot let it pass to declare that petitioner Go is guilty of forum-shopping

Forum shopping is defined as:

[w]hen a party repetitively avails of several judicial remedies in different courts, simultaneously or successively, all substantially founded
on the same transactions and the same essential facts and circumstances, and all raising substantially the same issues either pending
in or already resolved adversely by some other court.

Forum shopping consists of the following elements:

a. Identity of parties, or at least such parties as represent the same interests in both actions;

b. Identity of rights asserted and relief prayed for, the relief being founded on the same facts; and

c. The identity of the two preceding particulars, such that any judgment rendered in the other action will, regardless of which
party is successful, amount to res judicata in the under consideration.32

In Go, Sr. petitioner Go and Go, Sr. challenged in G.R. Nos. 167569 and 167570 the October 25, 2004 Decision and February 16, 2005
Resolution of the CA in CA-G.R. SP No. 85143, which affirmed the January 6, 2004 Decision and May 3, 2004 Order of the Pasig RTC
in SCA No. 2218 that upheld the Charge Sheet dated July 3, 2001 and the April 17, 2002 Decision of the Board. We eventually affirmed
the CA Decision and Resolution.

On the other hand, in this case petitioner Go seeks to nullify the October 28, 2009 Decision and March 22, 2010 Resolution of the CA in
CA-G.R. SP No. 88840 ruling that the April 17, 2002 Decision had already become final executor in view of Our Decision in Go, Sr. To
note, after filing G.R. Nos. 167569 and 167570 before this Court, petitioner Go still appealed the same April 17, 2002 Board Decision to
the Office of the President. Unfortunately for him, the OP also denied his appeal and motion for reconsideration. With the denial, he
filed a petition for review under Rule 43 before the CA, which, as aforesaid, sustained the BI Decision.

We have held in Tze Sun Wong v. Kenny Wong33 that from the denial of the motion for reconsideration by the BI Board of
Commissioners, the aggrieved party has three (3) options: (a) he may file an appeal directly to the CA via Rule 43 provided that he
shows that any of the exceptions to the exhaustion doctrine attend; (b) absent any of the exceptions, he may exhaust the available
administrative remedies within the executive machinery, namely, an appeal to the Secretary of Justice and then to the OP, and
thereafter, appeal the OP’s decision via Rule 43; or (c) he may directly resort certiorari before the CA strictly on jurisdictional grounds,
provided that he explains why any of the aforementioned remedies cannot be taken as "adequate and speedy."

Petitioner Go availed of remedies (b) and (c) above in his desire to obtain a favorable judgment. In Go, Sr., petitioner Go, together with
his father, elevated the case to the CA via Rule 65 petition. In this case, he immediately appealed to the OP, by-passing the Secretary
of Justice.

Similar to Go, Sr., ruling on whether petitioner Go is a Filipino citizen is not what We are called upon to in this case.1âwphi1 The Court
does not even have to rule once more on the issue of citizenship to determine whether the BI proceedings may be enjoined to give way
to a judicial determination of the same because the matter was already passed upon with finality in Go, Sr. At this moment, petitioner’s
Philippine citizenship claim cannot be settled before Us. There are factual issues that make his citizenship controversial; hence, must
first be resolved before the BI and not before the Supreme Court, which is not a trier of facts.34

WHEREFORE, the foregoing considered, the instant petition for review on certiorari is DENIED. The October 28, 2009 Decision and
March 22, 2010 Resolution of the Court of Appeals in CA-G.R. SP No. 88840, which affirmed as final the April 17, 2002 Decision of the
Bureau of Immigration, are AFFIRMED.

SO ORDERED.
G.R. No. 156287               February 16, 2010

FELICITAS M. MACHADO and MARCELINO P. MACHADO, Petitioners,

vs.
RICARDO L. GATDULA, COMMISSION ON THE SETTLEMENT OF LAND PROBLEMS, and IRINEO S. PAZ, Sheriff IV, Office of
the Provincial Sheriff, San Pedro, Laguna, Respondents.

Before this Court is the Petition for Review on Certiorari1 filed by petitioners Felicitas M. Machado and Marcelino P. Machado (the
Machados), assailing the decision2 of the Court of Appeals (CA) dated January 31, 2002 and the resolution3 dated December 5, 2002 in
CA-G.R. SP No. 65871. The CA decision dismissed the Machados’ petition for certiorari and their motion for reconsideration, and
upheld the jurisdiction of the Commission on Settlement of Land Problems (COSLAP) to render judgment over a private land and to
issue the corresponding writs of execution and demolition.

THE FACTUAL ANTECEDENTS

The dispute involves two adjoining parcels of land located in Barangay San Vicente, San Pedro, Laguna, one belonging to the
Machados, and the other belonging to respondent Ricardo L. Gatdula (Gatdula).

On February 2, 1999, Gatdula wrote a letter4 to the COSLAP requesting assistance because the Machados allegedly blocked the right
of way to his private property by constructing a two-door apartment on their property.

Acting on Gatdula’s letter, the COSLAP conducted a mediation conference on February 25, 1999; the parties then agreed to have a
verification survey conducted on their properties and to share the attendant expenses. Thereafter, the COSLAP issued an Order dated
March 16, 1999 directing the Chief of the Survey Division of the Community Environment and Natural Resources Office – Department
of Environment and Natural Resources (CENRO-DENR), to conduct a verification survey on May 9, 1999. The order likewise stated
that in the event that no surveyor is available, the parties may use the services of a private surveyor, whom the CENRO-DENR Survey
Division would deputize.

As scheduled, a private surveyor, Junior Geodetic Engineer Abet F. Arellano (Engr. Arellano), conducted a verification survey of the
properties in the presence of both parties. Engr. Arellano submitted a report to the COSLAP finding that the structure built by the
Machados encroached upon an alley found within the Gatdula property. Engr. Arellano’s findings corroborated the separate report of
Engineer Noel V. Soqueco of the CENRO, Los Baños, Laguna that had also been submitted to the COSLAP.

The Machados contested these reports in their position paper dated August 26, 1999. They alleged that Gatdula had no right of action
since they did not violate Gatdula’s rights.5 They further assailed the jurisdiction of the COSLAP, stating that the proper forum for the
present case was the Regional Trial Court of San Pedro, Laguna.

The COSLAP Ruling

On October 25, 1999, the COSLAP issued a resolution6 (October 25, 1999 COSLAP Resolution) directing the Machados to reopen the
right of way in favor of Gatdula. In so ruling, the COSLAP relied on the verification survey made by Engr. Arellano, which established
that the Machados had encroached on the existing alley in Gatdula’s property.

The COSLAP declared the Machados estopped from questioning its jurisdiction to decide the case, since they actively participated in
the mediation conferences and the verification surveys without raising any jurisdictional objection. It ruled that its jurisdiction does not
depend on the convenience of the Machados.

The Machados filed a motion for reconsideration which the COSLAP denied in a resolution dated January 24, 2000.

On February 18, 2000, the Machados filed a notice of appeal7 with the Office of the President (OP).
While this appeal was pending, the COSLAP, upon Gatdula’s motion, issued a writ of execution8 enforcing the terms of the October 25,
1999 COSLAP Resolution. The Machados opposed the writ by filing a motion to quash on March 30, 2001.9 They argued that the
October 25, 1999 COSLAP Resolution was not yet ripe for execution in view of the pending appeal before the OP.

Since the Machados persistently refused to reopen the right of way they closed, the provincial sheriff recommended to COSLAP the
issuance of a writ of demolition. The COSLAP issued the writ of demolition10 on July 12, 2001.

The CA Ruling

On July 31, 2001, the Machados went to the CA for relief through a Petition for Certiorari and Prohibition,11 claiming that the COSLAP
issued the writs of execution and demolition with grave abuse of discretion.

The CA found the Machados’ claim unfounded and, accordingly, dismissed their petition in its decision of January 31, 2002.12 It
declared that the COSLAP correctly issued the assailed writs because the October 25, 1999 COSLAP Resolution had already become
final and executory for failure of the Machados to avail of the proper remedy against the COSLAP orders and resolutions. Under
Section 3 (2)13 of Executive Order No. 561 (EO 561), the resolutions, orders, and decisions of the COSLAP become final and executory
30 days after promulgation, and are appealable by certiorari only to the Supreme Court. In Sy v. Commission on the Settlement of Land
Problems,14 it was held that under the doctrine of judicial hierarchy, the orders, resolutions and decisions of the COSLAP, as a quasi-
judicial agency, are directly appealable to the CA under Rule 43 of the 1997 Rules of Civil Procedure, and not to the Supreme Court.
Thus, the CA ruled that the Machados’ appeal to the OP was not the proper remedy and did not suspend the running of the period for
finality of the October 25, 1999 COSLAP Resolution.

On the issue of jurisdiction, the CA found that the COSLAP was created to provide a more effective mechanism for the expeditious
settlement of land problems, in general; the present case, therefore, falls within its jurisdiction.15 Moreover, the Machados’ active
participation in the mediation conference and their consent to bring about the verification survey bound them to the COSLAP’s
decisions, orders and resolutions.

From this CA decision, the Machados filed a motion for reconsideration,16 which the CA subsequently denied in its Resolution of
December 5, 2002.17

The Machados thus filed the present Rule 45 petition with this Court, raising two vital issues:

1. Whether the COSLAP has jurisdiction over Gatdula’s complaint for right of way against the Machados; and

2. Whether the COSLAP can validly issue the writs of execution and demolition against the Machados.

THE COURT’S RULING

We find the petition meritorious.

The COSLAP does not have jurisdiction over the present case

In resolving the issue of whether the COSLAP has jurisdiction over the present case, a review of the history of the COSLAP and an
account of the laws creating the COSLAP and its predecessor, the Presidential Action Committee on Land Problems (PACLAP), is in
order.

The COSLAP’s forerunner, the PACLAP, was created on July 31, 1970 pursuant to Executive Order No. 251. As originally conceived,
the committee was tasked to expedite and coordinate the investigation and resolution of land disputes, streamline and shorten
administrative procedures, adopt bold and decisive measures to solve land problems, and/or recommend other solutions.

On March 19, 1971, Executive Order No. 305 was issued reconstituting the PACLAP. The committee was given exclusive jurisdiction
over all cases involving public lands and other lands of the public domain,18 and was likewise vested with adjudicatory powers phrased
in broad terms:

1. To investigate, coordinate, and resolve expeditiously land disputes, streamline administrative proceedings, and, in general, to adopt
bold and decisive measures to solve problems involving public lands and lands of the public domain.19 [emphasis supplied]

Thereafter, Presidential Decree No. 832 (PD 832)20 was issued on November 27, 1975 reorganizing the PACLAP and enlarging its
functions and duties. The decree also granted PACLAP quasi-judicial functions. Section 2 of PD 832 states:

Section 2. Functions and duties of the PACLAP. – The PACLAP shall have the following functions and duties:

1. Direct and coordinate the activities, particularly the investigation work, of the various government agencies and
agencies involved in land problems or disputes, and streamline administrative procedures to relieve small settlers and
landholders and members of cultural minorities of the expense and time-consuming delay attendant to the solution of
such problems or disputes;

2. Refer for immediate action any land problem or dispute brought to the attention of the PACLAP, to any member
agency having jurisdiction thereof: Provided, That when the Executive Committee decides to act on a case, its
resolution, order or decision thereon shall have the force and effect of a regular administrative resolution, order or
decision, and shall be binding upon the parties therein involved and upon the member agency having jurisdiction
thereof;

xxxx
 4. Evolve and implement a system of procedure for the speedy investigation and resolution of land disputes or
problems at provincial level, if possible. [emphasis supplied]

The PACLAP was abolished by EO 561 effective on September 21, 1979, and was replaced by the COSLAP. Unlike the former laws,
EO 561 specifically enumerated the instances when the COSLAP can exercise its adjudicatory functions:

Section 3. Powers and Functions. – The Commission shall have the following powers and functions:

xxxx

2. Refer and follow up for immediate action by the agency having appropriate jurisdiction any land problem or dispute referred to the
Commission: Provided, That the Commission may, in the following cases, assume jurisdiction and resolve land problems or disputes
which are critical and explosive in nature considering, for instance, the large number of the parties involved, the presence or
emergence of social tension or unrest, or other similar critical situations requiring immediate action:

(a) Between occupants/squatters and pasture lease agreement holders or timber concessionaires;
(b) Between occupants/squatters and government reservation grantees;
(c) Between occupants/squatters and public land claimants or applicants;
(d) Petitions for classification, release and/or subdivision of lands of the public domain; and
(e) Other similar land problems of grave urgency and magnitude.

The Commission shall promulgate such rules and procedures as will ensure expeditious resolution and action on the above cases. The
resolution, order or decision of the Commission on any of the foregoing cases shall have the force and effect of a regular administrative
resolution, order or decision and shall be binding upon the parties therein and upon the agency having jurisdiction over the same. Said
resolution, order or decision shall become final and executory within thirty (30) days from its promulgation and shall be appealable by
certiorari only to the Supreme Court. [emphasis supplied]

Under these terms, the COSLAP has two different rules in acting on a land dispute or problem lodged before it, e.g., COSLAP can
assume jurisdiction only if the matter is one of those enumerated in paragraph 2(a) to (e) of the law. Otherwise, it should refer the case
to the agency having appropriate jurisdiction for settlement or resolution.21 In resolving whether to assume jurisdiction over a case or to
refer it to the particular agency concerned, the COSLAP considers: (a) the nature or classification of the land involved; (b) the parties to
the case; (c) the nature of the questions raised; and (d) the need for immediate and urgent action thereon to prevent injury to persons
and damage or destruction to property. The terms of the law clearly do not vest on the COSLAP the general power to assume
jurisdiction over any land dispute or problem.22 Thus, under EO 561, the instances when the COSLAP may resolve land disputes are
limited only to those involving public lands or those covered by a specific license from the government, such as pasture lease
agreements, timber concessions, or reservation grants.23

Undisputably, the properties involved in the present dispute are private lands owned by private parties, none of whom is a squatter, a
patent lease agreement holder, a government reservation grantee, a public land claimant or a member of any cultural minority.24

Moreover, the dispute between the parties can hardly be classified as critical or explosive in nature that would generate social tension
or unrest, or a critical situation that would require immediate and urgent action. The issues raised in the present case primarily involve
the application of the Civil Code provisions on Property and the Easement of Right of Way. As held in Longino v. General,25 "disputes
requiring no special skill or technical expertise of an administrative body that could be resolved by applying pertinent provisions of the
Civil Code are within the exclusive jurisdiction of the regular courts."

The Machados cannot invoke Section 3, paragraph 2(e) of EO 561, which provides that the COSLAP may assume jurisdiction over
complaints involving "other similar land problems of grave urgency," to justify the COSLAP’s intervention in this case. The statutory
construction principle of ejusdem generic prescribes that where general words follow an enumeration of persons or things, by words of
a particular and specific meaning, such general words are not to be construed in their widest extent but are to be held as applying only
to persons or things of the same kind as those specifically mentioned.26 A dispute between two parties concerning the right of way over
private lands cannot be characterized as similar to those enumerated under Section 3, paragraph 2(a) to (d) of EO 561.1avvphi1

In Davao New Town Development Corporation v. Commission on the Settlement of Land Problems27 – where we ruled that the
COSLAP does not have blanket authority to assume every matter referred to it – we made it clear that its jurisdiction is confined only to
disputes over lands in which the government has a proprietary or regulatory interest.

The CA apparently misread and misapplied the Court’s ruling in Bañaga v. Court of Appeals.28 Bañaga involved two contending parties
who filed free patent applications for a parcel of public land with the Bureau of Lands. Because of the Bureau of Lands’ failure to act
within a reasonable time on the applications and to conduct an investigation, the COSLAP decided to assume jurisdiction over the case.
Since the dispute involved a public land on a free patent issue, the COSLAP undeniably had jurisdiction over the Bañaga case.

Jurisdiction is conferred by law and a judgment issued by a quasi-judicial body without jurisdiction is void

By reason of the Machados’ active participation in the mediation conferences and the COSLAP verification surveys, the CA declared
the Machados estopped from questioning the body’s jurisdiction and bound by its decisions, orders and resolutions. We disagree with
this ruling.

Jurisdiction over a subject matter is conferred by law and not by the parties’ action or conduct.29 Estoppel generally does not confer
jurisdiction over a cause of action to a tribunal where none, by law, exists. In Lozon v. NLRC,30 we declared that:

Lack of jurisdiction over the subject matter of the suit is yet another matter. Whenever it appears that the court has no jurisdiction over
the subject matter, the action shall be dismissed. This defense may be interposed at any time, during appeal or even after final
judgment. Such is understandable, as this kind of jurisdiction is conferred by law and not within the courts, let alone the parties, to
themselves determine or conveniently set aside. In People v. Casiano, this Court, on the issue of estoppel, held:
The operation of the principle of estoppel on the question of jurisdiction seemingly depends upon whether the lower court actually had
jurisdiction or not. If it had no jurisdiction, but the case was tried and decided upon the theory that it had jurisdiction, the parties are not
barred, on appeal, from assailing such jurisdiction, for the same ‘must exist as a matter of law, and may not be conferred by consent of
the parties or by estoppel’ However if the lower court had jurisdiction, and the case was heard and decided upon a given theory, such,
for instance, as that the court had no jurisdiction, the party who induced it to adopt such theory will not be permitted, on appeal, to
assume an inconsistent position – that the lower court had jurisdiction. Here, the principle of estoppel applies. The rule that jurisdiction
in conferred by law, and does not depend upon the will of the parties, has no bearing thereon. [emphasis supplied]

In this case, the COSLAP did not have jurisdiction over the subject matter of the complaint filed by Gatdula, yet it proceeded to assume
jurisdiction over the case and even issued writs of execution and demolition against the Machados. The lack of jurisdiction cannot be
cured by the parties’ participation in the proceedings before the COSLAP.31 Under the circumstances, the Machados can rightfully
question its jurisdiction at anytime, even during appeal or after final judgment. A judgment issued by a quasi-judicial body without
jurisdiction is void.32 It cannot be the source of any right or create any obligation. All acts pursuant to it and all claims emanating from it
have no legal effect. The void judgment can never become final and any writ of execution based on it is likewise void.33

WHEREFORE, premises considered, we GRANT the petition for review on certiorari. The assailed Court of Appeals decision dated
January 31, 2002 and resolution dated December 5, 2002 in CA-G.R. SP No. 65871 are REVERSED and SET ASIDE. The Decision of
the Commission on the Settlement of Land Problems dated October 25, 1999 in COSLAP Case No. 99-59, as well as the writ of
execution dated March 21, 2001 and the writ of demolition dated July 12, 2001, are declared NULL and VOID for having been issued
without jurisdiction.

SO ORDERED.

G.R. No. 165569               July 29, 2010

UNIVERSITY OF SANTO TOMAS, GLENDA A. VARGAS, MA. SOCORRO S. GUANHING, in their capacities as Dean and
Assistant Dean, respectively, of the College of Nursing of the University of Santo Tomas, and RODOLFO N. CLAVIO, in his
capacity as Registrar of the University of Santo Tomas, Petitioners,
vs.
DANES B. SANCHEZ, Respondent.

Where a valid cause of action exists, parties may not simply bypass litigation by the simple expediency of a Motion to Dismiss. Instead
of abbreviating the proceedings, it has had the opposite effect: unnecessary litigation for almost seven years. Here, in particular, where
any resolution of the case will depend on the appreciation of evidence, a full-blown trial is necessary to unearth all relevant facts and
circumstances.

This petition for review on certiorari assails the Decision1 dated July 20, 2004 of the Court of Appeals (CA) in CA-G.R. SP No. 79404
which affirmed the denial of petitioners’ motion to dismiss and directed the Regional Trial Court (RTC) of Dinalupihan, Bataan, Branch
5, to proceed with trial. Also assailed is the Resolution2 dated September 22, 2004 denying the motion for reconsideration.

Factual Antecedents

This case began with a Complaint3 for Damages filed by respondent Danes B. Sanchez (respondent) against the University of Santo
Tomas (UST) and its Board of Directors, the Dean and the Assistant Dean of the UST College of Nursing, and the University Registrar
for their alleged unjustified refusal to release the respondent’s Transcript of Records (ToR). The case was raffled to Branch 5 of the
RTC of Dinalupihan, Bataan, and docketed as Civil Case No. DH-788-02.

In his Complaint, respondent alleged that he graduated from UST on April 2, 2002 with a Bachelor’s Degree of Science in Nursing. He
was included in the list of candidates for graduation and attended graduation ceremonies. On April 18, 2002, respondent sought to
secure a copy of his ToR with the UST Registrar’s Office, paid the required fees, but was only given a Certificate of Graduation by the
Registrar. Despite repeated attempts by the respondent to secure a copy of his ToR, and submission of his class cards as proof of his
enrolment, UST refused to release his records, making it impossible for him to take the nursing board examinations, and depriving him
of the opportunity to make a living. The respondent prayed that the RTC order UST to release his ToR and hold UST liable for actual,
moral, and exemplary damages, attorney’s fees, and the costs of suit.

Instead of filing an Answer, petitioners filed a Motion to Dismiss4 where they claimed that they refused to release respondent’s ToR
because he was not a registered student, since he had not been enrolled in the university for the last three semesters. They claimed
that the respondent’s graduation, attendance in classes, and taking/passing of examinations were immaterial because he ceased to be
a student when he failed to enroll during the second semester of school year 2000-2001. They also sought the dismissal of the case on
the ground that the complaint failed to state a cause of action, as paragraph 10 of the complaint admitted that:

10. On several occasions, [respondent] went to see the [petitioners] to get his ToR, but all of these were futile for he was not even
entertained at the Office of the Dean. Worst, he was treated like a criminal forcing him to admit the fact that he did not enroll for the last
three (3) semesters of his schooling. [Petitioner] Dean tried to persuade the [respondent] to give the original copies of the Class Cards
which he has in his possession. These are the only [bits of] evidence on hand to prove that he was in fact officially enrolled.
[Respondent] did not give the said class cards and instead gave photo copies to the [Petitioner] Dean. The Office of the Dean of
Nursing of [petitioner] UST became very strict in receiving documents from the [respondent]. [They have] to be scrutinized first before
the same are received. Receiving, as [respondent] believes, is merely a ministerial function [of] the [petitioners] and the documents
presented for receiving need not be scrutinized especially so when x x x they are not illegal. Copies of the class cards are hereto
attached as "F" hereof.5

After the parties filed their responsive pleadings,6 petitioners filed a Supplement to their Motion to Dismiss,7 alleging that respondent
sought administrative recourse before the Commission on Higher Education (CHED) through a letter-complaint dated January 21, 2003.
Thus, petitioners claimed that the CHED had primary jurisdiction to resolve matters pertaining to school controversies, and the filing of
the instant case was premature.
Ruling of the Regional Trial Court

After another exchange of pleadings,8 the RTC issued an Order9 dated April 1, 2003 denying the Motion to Dismiss on the ground that
the issues involved required an examination of the evidence, which should be threshed out during trial. Petitioners’ Motion for
Reconsideration10 was denied in an Order11 dated August 1, 2003, so petitioners sought recourse before the CA.

Ruling of the Court of Appeals

The CA affirmed the denial of petitioners’ Motion to Dismiss, and directed the RTC to proceed with trial.

Issues

Petitioners seek recourse before us raising the following issues:

1) The CHED exercises quasi-judicial power over controversies involving school matters and has primary jurisdiction over
respondent’s demand for the release of his ToR. Thus, respondent failed to exhaust administrative remedies;

2) Since respondent sought recourse with both the CHED and the RTC, respondent violated the rule against forum-shopping;
and

3) The Complaint failed to state a cause of action, since respondent admitted that he was not enrolled in UST in the last three
semesters prior to graduation.

Our Ruling

The petition is denied for lack of merit.

The doctrine of exhaustion of administrative remedies does not apply in this case.

The doctrine of exhaustion of administrative remedies requires that where a

remedy before an administrative agency is provided, the administrative agency concerned must be given the opportunity to decide a
matter within its jurisdiction before an action is brought before the courts.12 Failure to exhaust administrative remedies is a ground for
dismissal of the action.13

In this case, the doctrine does not apply because petitioners failed to demonstrate that recourse to the CHED is mandatory – or even
possible – in an action such as that brought by the respondent, which is essentially one for mandamus and damages. The doctrine of
exhaustion of administrative remedies admits of numerous exceptions,14 one of which is where the issues are purely legal and well
within the jurisdiction of the trial court, as in the present case.15 Petitioners’ liability – if any – for damages will have to be decided by the
courts, since any judgment inevitably calls for the application and the interpretation of the Civil Code.16 As such, exhaustion of
administrative remedies may be dispensed with. As we held in Regino v. Pangasinan Colleges of Science and Technology:17

x x x exhaustion of administrative remedies is applicable when there is competence on the part of the administrative body to act upon
the matter complained of. Administrative agencies are not courts; x x x neither [are they] part of the judicial system, [or] deemed judicial
tribunals. Specifically, the CHED does not have the power to award damages. Hence, petitioner could not have commenced her case
before the Commission. (Emphasis ours)

In addition, the rule on primary jurisdiction applies only where the administrative agency exercises quasi-judicial or adjudicatory
functions.18 Thus, an essential requisite for this doctrine to apply is the actual existence of quasi-judicial power.19 However, petitioners
have not shown that the CHED possesses any such power to "investigate facts or ascertain the existence of facts, hold hearings, weigh
evidence, and draw conclusions."20 Indeed, Section 8 of Republic Act No. 772221 otherwise known as the Higher Education Act of 1994,
certainly does not contain any express grant to the CHED of judicial or quasi-judicial power.

Petitioners also claim that even without any express grant of quasi-judicial power by the legislature, the CHED is authorized to
adjudicate the case filed by respondent on the strength of the following provisions of the Manual of Regulations of Private Schools:22

(1) Section 33, which authorizes the CHED to cancel or revoke the graduation of any student whose records are found to be fraudulent:

Section 33. Authority to Graduate Without Department Approval. One of the benefits which may be made available for accredited
schools of the appropriate level is the authority to graduate students from accredited courses or programs of study without prior
approval of the Department, the conditions of which are as follows:

a) The school head must furnish the Regional Office of the region where the school is situated a copy of its certificate of
accreditation.

b) Within two weeks after the graduation exercise, the school shall submit to the Regional Office concerned an alphabetical list
of graduates by course, accompanied by a certification under oath signed by the school registrar certifying that the students
listed (1) have complied with all the requirements of the Department, (2) were conferred their respective certificates or degrees
on a specific date, (3) have complete scholastic records on file in the school, and (4) have their Form 137 for high school and
Form IX for college, as the case may be, in the custody of the school. This list shall be sufficient basis for issuing special
orders, if still necessary.

The school will be held fully liable for the veracity of the records without prejudice to any legal action, including revocation of
government recognition, as may be called for under the circumstances.
The Department reserves the right to cancel or revoke the graduation of any student whose records are found to be fraudulent.

(2) Section 72, which permits the school to withhold students’ credentials under certain specified circumstances, and authorizes the
CHED to

issue a student’s credentials in case these are unlawfully withheld by the school:

Section 72. Withholding of Credentials. The release of the transfer credentials of any pupil or student may be withheld for reasons of
suspension, expulsion, or non-payment of financial obligations or property responsibility of the pupil or student to the school. The
credentials shall be released as soon as his obligation shall have been settled or the penalty of suspension or expulsion lifted.

However, if, after due inquiry, a school is found to have unjustifiably refused to issue transfer credentials or student records, the
Department may issue the same without prejudice to the imposition of appropriate administrative sanctions against the school
concerned.

The most cursory perusal of these provisions shows that they are inapplicable. Section 33 concerns the conditions and authority of
accredited schools to authorize the graduation of students without the prior authority of the CHED. Corollarily, the CHED may cancel or
revoke the graduation if it is found to be fraudulent. We are not aware that the CHED has taken any action to revoke the respondent’s
graduation, though it is free to do so.

As regards Section 72, it refers to a school’s right to withhold the release of credentials due to "suspension, expulsion, or non-payment
of financial obligations or property responsibility." None of these circumstances is present, and there has been no intimation that
respondent’s ToR has been withheld on any of these grounds.

In any event, even if we were to assume that these provisions were applicable, the CHED remains without authority to adjudicate an
action for damages.

Respondent is not guilty of forum shopping

Forum shopping exists when, as a result of an adverse opinion in one

forum, a party seeks a favorable opinion (other than by appeal or certiorari) in another, or when he institutes two or more actions or
proceedings grounded on the same cause, on the gamble that one or the other court would make a favorable disposition.23 Here, there
can be no forum shopping precisely because the CHED is without quasi-judicial power, and cannot make any disposition of the case –
whether favorable or otherwise. As we held in Cabarrus, Jr. v. Bernas:24

The courts, tribunal and agencies referred to under Circular No. 28-91, revised Circular No. 28-91 and Administrative Circular No. 04-94
are those vested with judicial powers or quasi-judicial powers and those who not only hear and determine controversies between
adverse parties, but to make binding orders or judgments. As succinctly put by R.A. 157, the NBI is not performing judicial or quasi-
judicial functions. The NBI cannot therefore be among those forums contemplated by the Circular that can entertain an action or
proceeding, or even grant any relief, declaratory or otherwise.

The Complaint states a cause of action

Under Rule 16, Section 1(g) of the Rules of Court, a motion to dismiss may be made on the ground that the pleading asserting the
claim states no cause of action.25 To clarify the essential test required to sustain dismissal on this ground, we have explained that "[t]he
test of the sufficiency of the facts found in a petition, to constitute a cause of action, is whether admitting the facts alleged, the court
could render a valid judgment upon the same in accordance with the prayer of the petition."26 Stated otherwise, a complaint is said to
assert a sufficient cause of action if, admitting what appears solely on its face to be correct, the plaintiff would be entitled to the relief
prayed for.27

The Complaint makes the following essential allegations: that petitioners unjustifiably refused to release respondent’s ToR despite his
having obtained a degree from UST; that petitioners’ claim that respondent was not officially enrolled is untrue; that as a result of
petitioners’ unlawful actions, respondent has not been able to take the nursing board exams since 2002; that petitioners’ actions
violated Articles 19-21 of the Civil Code; and that petitioners should be ordered to release respondent’s ToR and held liable for
₱400,000.00 as moral damages, ₱50,000.00 as exemplary damages, ₱50,000.00 as attorney’s fees and costs of suit, and ₱15,000.00
as actual damages. Clearly, assuming that the facts alleged in the Complaint are true, the RTC would be able to render a valid
judgment in accordance with the prayer in the Complaint.

Petitioners argue that paragraph 10 of the Complaint contains an admission that respondent was not officially enrolled at UST. Said
paragraph reads:

10. On several occasions, [respondent] went to see the [petitioners] to get his ToR, but all of these were futile for he was not even
entertained at the Office of the Dean. Worst, he was treated like a criminal forcing him to admit the fact that he did not enroll for the last
three (3) semesters of his schooling. [Petitioner] Dean tried to persuade the [respondent] to give the original copies of the Class Cards
which he has in his possession. These are the only [bits of] evidence on hand to prove that he was in fact officially enrolled.
[Respondent] did not give the said class cards and instead gave photo copies to the [Petitioner] Dean. The Office of the Dean of
Nursing of [petitioner] UST became very strict in receiving documents from the [respondent]. [They have] to be scrutinized first before
the same are received. Receiving, as [respondent] believes, is merely a ministerial function [of] the [petitioners] and the documents
presented for receiving need not be scrutinized especially so when x x x they are not illegal. Copies of the class cards are hereto
attached as "F" hereof.28

This statement certainly does not support petitioners’ claim that respondent admitted that he was not enrolled.1avvphi1 On the contrary,
any allegation concerning the use of force or intimidation by petitioners, if substantiated, can only serve to strengthen respondent’s
complaint for damages.
We fully agree with the RTC’s finding that a resolution of the case requires the presentation of evidence during trial. Based on the
parties’ allegations, the issues in this case are far from settled. Was respondent enrolled or not? Was his degree obtained fraudulently?
If so, why was he permitted by the petitioners to graduate? Was there fault or negligence on the part of any of the parties? Clearly,
these are factual matters which can be best ventilated in a full-blown proceeding before the trial court.

WHEREFORE, the petition is DENIED. The Decision dated July 20, 2004 and the Resolution dated September 22, 2004 of the Court of
Appeals in CA-G.R. SP No. 79404 are AFFIRMED. The Regional Trial Court of Dinalupihan, Bataan, Branch 5, is DIRECTED to
continue the proceedings in Civil Case No. DH-788-02 with all deliberate speed.

Costs against petitioners.

SO ORDERED.

G.R. No. 153155 September 30, 2005

MANUEL D. LAXINA, SR., Petitioners,

vs.
OFFICE OF THE OMBUDSMAN, EVANGELINE URSAL, HON. JOSE E. LINA, JR., in his capacity as Secretary of the Department
of Interior and Local Government (DILG), and HON. FELICIANO BELMONTE, JR., in his capacity as City Mayor of Quezon
City, Respondent.

The instant petition seeks the review of the 24 April 2002 Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 66412, affirming
the 2 July 2001 Memorandum Order2  and the 1 August 2001 Order3 of the Office of the Ombudsman in OMB-ADM-00-0350,4 imposing
upon petitioner the penalty of dismissal from office with forfeiture of material benefits pursuant to Sec. 25(2) of Republic Act (R.A.) No.
6770.5

Petitioner Manuel D. Laxina, Sr. was Barangay Chairman of Brgy. Batasan Hills, Quezon City. On 15 December 1998, Evangeline
Ursal ("Ursal"), Barangay Clerk of Batasan Hills, Quezon City, filed with the National Bureau of Investigation (NBI) a complaint for
attempted rape against petitioner. Petitioner was subsequently charged with sexual harassment before the Regional Trial Court of
Quezon City.6

On 13 March 2000, Ursal brought before the Department of Interior and Local Government (DILG) a complaint-affidavit charging
petitioner with grave misconduct for the alleged attempted rape. However, the DILG referred the complaint to the Quezon City Council
("City Council")for appropriate action. Said complaint was docketed as Adm. Case No. 00-13 before the City Council.7

Thereafter, on 30 March 2000, Ursal filed with the Office of the Ombudsman a similar complaint-affidavit charging petitioner with grave
misconduct, docketed as OMB ADM Case No. 0-00-0350.8 Petitioner filed his counter-affidavit and attached thereto the affidavits of two
witnesses. On 15 August 2000, the Administrative Adjudication Bureau (AAB) of the Office of the Ombudsman exonerated petitioner
from the charge, dismissing the complaint for lack of substantial evidence.9 However, on 2 July 2001, upon review, and with the
approval of the Ombudsman, petitioner was found guilty of grave misconduct and meted the penalty of dismissal, with forfeiture of
material benefits, per its Memorandum Order.10

Petitioner sought reconsideration of the adjudication, alleging lack of jurisdiction on the part of the Ombudsman, but the motion was
denied.11

Meanwhile, Ursal asked the City Council to waive its jurisdiction in favor of the Ombudsman.12 The City Council merely noted Ursal’s
motion.13

On 20 August 2001, the AAB issued an order directing Quezon City Mayor Feliciano R. Belmonte, Jr. to implement the 2 July
2001 Memorandum Order and to submit a compliance report.14 Mayor Belmonte issued an implementing order, notifying petitioner of
his dismissal from service and enjoining him to cease and desist from performing his duties as barangay captain.15

Petitioner sought the review of the Ombudsman’s Memorandum Order  before the CA, arguing that: (i) the Office of the Ombudsman did
not have jurisdiction over the administrative complaint; (ii) Ursal’s filing of the same administrative case before the Office of the
Ombudsman and the City Council through the DILG warranted the dismissal of both cases; and (iii) petitioner was denied due process
in the proceedings before the Ombudsman.16

In its Decision promulgated on 24 April 2002, the CA dismissed the petition for lack of merit. According to the CA, petitioner participated
in the proceedings before the Ombudsman and questioned the Ombudsman’s jurisdiction for the first time only in his motion for
reconsideration, or after the Ombudsman had found him guilty of grave misconduct. Thus, he is estopped from impugning the
jurisdiction of the Ombudsman over the case.17 The CA found the Ombudsman’s assumption of jurisdiction justified since it became
aware of the earlier case before the City Council only when petitioner filed his motion for reconsideration.18 In addition, the CA stated
that the Ombudsman was justified in not dismissing the administrative cases as a penalty for forum-shopping because petitioner and
Ursal are in pari delicto.19 Neither was petitioner deprived of administrative due process since he was allowed to present evidence and
said evidence were passed upon by the Ombudsman, the CA added.20

Before this Court, petitioner seeks the dismissal of the administrative charge against him anchored on the following assignment of
errors:

I. THE PUBLIC RESPONDENTS COMMITTED A GRAVE ERROR OF LAW IN REFUSING TO DISMISS THE CASES AGAINST
PETITIONER ON THE GROUND OF "FORUM SHOPPING" AND MISAPPLYING INSTEAD THE PRINCIPLE OF ESTOPPEL.

II. THE COURT OF APPEALS COMMITTED A GRAVE ERROR OF LAW WHEN IT REFUSED TO PREVENT PUBLIC
RESPONDENTS FROM PREMATURELY IMPLEMENTING THE MEMORANDUM ORDER DISMISSING PETITIONER – A DULY
ELECTED OFFICIAL – DESPITE THE FACT THAT THE ORDER IS NOT YET FINAL AND EXECUTORY CONTRARY TO THE
DOCTRINE LAID DOWN BY THE SUPREME COURT IN "LAPID VS. COURT OF APPEALS", 329 SCRA 771.

III. THE RESPONDENTS AND THE COURT OF APPEALS COMMITTED A GRAVE ERROR OF LAW IN VIOLATING THE RIGHT OF
PETITIONER TO DUE PROCESS IN DECREEING HIS DISMISSAL OF PETITIONER WITHOUT SUBSTANTIAL EVIDENCE AND
WITHOUT CONSIDERING THE EVIDENCE OF PETITIONER. 21

Petitioner likewise seeks the issuance of a temporary restraining order and/or writ of preliminary injunction to enjoin public respondents
from implementing the Order of the Ombudsman and to reinstate him to the position of Barangay Chairman of Brgy. Batasan Hills,
Quezon City.

Petitioner claims that estoppel cannot apply to him because he never invoked the jurisdiction of the Ombudsman, much less sought
affirmative relief therefrom.22 Arguing that he has no obligation to disclose the fact that there is another identical case pending before
another forum since he is not the one who instituted the identical cases,23 he reiterates the rule that when two or more courts have
concurrent jurisdiction, the first to validly acquire jurisdiction takes it to the exclusion of the other or the rest.24

On the second assignment of error, petitioner claims that he is entitled to the injunctive relief as prayed for in his petition before the CA.
He asserts that Adm. Order No. 7, as amended by Adm. Order No. 14-A of the Office of the Ombudsman, decreeing that all
administrative orders, directives and decisions rendered by the said office are immediately executory notwithstanding the perfection of
an appeal unless a temporary restraining order shall have first been secured, is contrary to the expressed mandate of R.A. No. 6770.
Moreover, citing the case of Lapid v. Court of Appeals,25  petitioner claims that an appeal if timely filed stays the immediate
implementation of a decision, and that the fact that the Ombudsman Act has given the parties the right to appeal should carry with it the
stay of said decision pending appeal.26

Lastly, petitioner maintains that he was deprived of administrative due process when the Ombudsman refused to consider his evidence
and rendered a decision that is not supported by substantial evidence.27 Questioning the findings of fact made by the Ombudsman,
claiming that these were "speculations, surmises, probabilities, half-truths and other unfounded/unsupported hearsay
evidence,"28 petitioner invokes the principles employed in a prosecution for the crime of rape29 and points out that the Ombudsman did
not adhere to these principles.30

In his Comment,31 Mayor Belmonte substantially reiterates the findings and reasoning of the CA Decision. He notes that the injunctive
reliefs prayed for by petitioner are improper as he had already issued an implementing order dismissing petitioner from service, and
another person has been sworn into office as Barangay Chairman of Brgy. Batasan Hills, Quezon City.32

Meanwhile, the Office of the Ombudsman, through the Office of the Solicitor General (OSG), while advancing the same reasoning as
the appellate court’s additionally argues that the City Council’s assumption of jurisdiction over the case will not deprive the Ombudsman
of its constitutional mandate to give justice to the victims of oppressive acts of public officials and to protect the citizenry from illegal
acts or omissions of any government official.33 Even assuming that there was forum-shopping, petitioner is estopped from questioning
the technical defect.34 Besides, technical rules of procedure should be applied with liberality, and at any rate, in administrative
proceedings, technical rules of procedure and evidence are not strictly applied, the OSG emphasizes.35

The petition must be denied.

At the onset, it must be stressed that the rule on forum-shopping applies only to judicial cases or proceedings,36 and not to
administrative cases. Petitioner has not cited any rule or circular on forum-shopping issued by the Office of the Ombudsman or that of
the City Council. In fact, it was only on 15 September 2003 that the Ombudsman, in Administrative Order No.17, S. 2003, required that
a Certificate of Non-Forum Shopping be attached to the written complaint against a public official or employee. Supreme Court
Administrative Circulars Nos. 04-94 and 28-9137 adverted to by petitioner mention only initiatory pleadings in a court of law when
another case is pending before other tribunals or agencies of the government as the pleadings to which the rule on forum-shopping
applies, thus:

The complaint and other initiatory pleadings referred to and subject of this Circular are the original civil complaint, counterclaim, cross-
claim, third (fourth, etc.) party complaint, or complaint-in-intervention, petition, or application wherein a party asserts his claim for relief.

Ursal filed identical complaint-affidavits before the City Council, through the DILG, and the Office of the Ombudsman. A review of the
said complaints-affidavits shows that far from being the typical initiatory pleadings referred to in the above-mentioned circulars, they
merely contain a recital of the alleged culpable acts of petitioner. Ursal did not make any claim for relief, nor pray for any penalty for
petitioner.

Petitioner claims that the Ombudsman has no jurisdiction over the case since the City Council had earlier acquired jurisdiction over the
matter. The Court is not convinced.

The mandate of the Ombudsman to investigate complaints against erring public officials, derived from both the Constitution38 and the
law39 gives it jurisdiction over the complaint against petitioner. The Constitution has named the Ombudsman and his Deputies as the
protectors of the people who shall act promptly on complaints filed in any form or manner against public officials or employees of the
government.40 To fulfill this mandate, R.A. No. 6770, or the Ombudsman Act of 1989, was enacted, giving the Ombudsman or his
Deputies jurisdiction over complaints on all kinds of malfeasance, misfeasance and non-feasance41 against officers or employees of the
government, or any subdivision, agency or instrumentality therefor, including government-owned or controlled corporations, and the
disciplinary authority over all elective and appointive officials, except those who may be removed only by impeachment or over
members of Congress and the Judiciary.42 On the other hand, under R.A. No. 7160 or the Local Government Code, the sangguniang
panlungsod or sangguniang bayan has disciplinary authority over any elective barangay official.43 Without a doubt, the Office of the
Ombudsman has concurrent jurisdiction with the Quezon City Council over administrative cases against elective officials such as
petitioner.

The Ombudsman was not aware of the pending case before the Quezon City Council when the administrative complaint was filed
before it. There was no mention of such complaint either in the complaint-affidavit or in the counter-affidavit of petitioner. Thus, the
Ombudsman, in compliance with its duty to act on all complaints against officers and employees of the government, took cognizance of
the case, made its investigation, and rendered its decision accordingly.

As explained quite frequently, a party may be barred from raising questions of jurisdiction where estoppel by laches has set in. Estoppel
by laches is failure or neglect for an unreasonable and unexplained length of time to do what, by exercising due diligence, ought to
have been done earlier, warranting a presumption that the party entitled to assert it has either abandoned it or has acquiesced to the
correctness and fairness of its resolution. This doctrine is based on grounds of public policy which for peace of society requires the
discouragement of stale claims and, unlike the statute of limitations, is not a mere question of time but is principally an issue of inequity
or unfairness of permitting a right or claim to be enforced or espoused.44

Petitioner is also estopped from questioning the jurisdiction of the Ombudsman. A perusal of the records shows that he participated in
the proceedings by filing his counter-affidavit with supporting evidence. Neither did he inform the Ombudsman of the existence of the
other administrative complaint of which he is presumably aware at the time the proceedings in the Ombudsman were on-going. It was
only when the Ombudsman rendered an adverse decision that he disclosed the proceedings before the Quezon City Council and raised
the issue of jurisdiction. Thus, it has been held that participation in the administrative proceedings without raising any objection thereto
bars the parties from raising any jurisdictional infirmity after an adverse decision is rendered against them.45

Another submission made by petitioner is that he was deprived of his right to administrative due process when he was dismissed from
service without substantial evidence and without consideration of the evidence he proffered. He raises as a defense Ursal’s failure to
state the actual date of commission of the alleged attempted rape, the impossibility of the assault, and the affidavits of his other
subordinates.46 Calling attention to the weakness of Ursal’s evidence, he states that such evidence is not sufficient to establish the
crime of rape, in whatever stage.47 Finally, he argues that as testament to his innocence, his constituents voted him to a third term.48

Again, the Court is not impressed.

Petitioner was accorded the opportunity to be heard. He was required to answer the formal charge and given a chance to present
evidence in his behalf. He was not denied due process. More importantly, the decision of the Ombudsman is well supported by
substantial evidence.

A finding of guilt in an administrative case would have to be sustained for as long as it is supported by substantial evidence that
respondent has committed the acts stated in the complaint or formal charge.49 Substantial evidence has been defined as such relevant
evidence as a reasonable mind might accept as adequate to support a conclusion. This is different from the degree of proof required in
criminal proceedings, which calls for a finding of guilt beyond reasonable doubt.50 Petitioner’s reliance on the rules on prosecution for
the crime of rape is therefore misplaced. What is at issue in the case before the Ombudsman is whether his acts constitute grave
misconduct, and not whether he is guilty of the crime of attempted rape.

There is no basis for believing petitioner’s claim that the Ombudsman had refused to consider his evidence. As properly observed by
the CA,51 the Ombudsman passed upon petitioner’s evidence which, however, was found bereft of credibility. In fact, unfortunately for
petitioner at that, the Ombudsman and the CA discovered Ursal’s allegations more credible, supported and corroborated as they were
by the medical findings, the NBI reports and the surrounding circumstances.

One final point. The Court notes that the order made by the Ombudsman requiring Mayor Belmonte to implement the Memorandum
Order dated 2 July 2001 dismissing petitioner was made even though the Memorandum Order had not yet attained finality.52 Under the
Ombudsman Act, a motion for reconsideration may be filed within five (5) days after receipt of the written notice, while all administrative
disciplinary cases, orders, directives, or decisions of the Office of the Ombudsman may be appealed to the Supreme Court by filing a
petition for certiorari within ten (10) days from receipt of the order, directive or decision or denial of the motion for reconsideration in
accordance with Rule 45 of the Rules of Court. 53

Petitioner received a copy of the Memorandum Order on 23 July 2001, and filed his motion for reconsideration on 27 July 2001. The
motion was denied in the Order dated 1 August 2001, copy of which was received by petitioner on 21 August 2001. Petitioner thereafter
filed his petition with the CA on 31 August 2001, or within the reglementary period provided by the Rules.54

Thus, it was improper for the Ombudsman to order the implementation of the Memorandum Order  before it could become final and
executory. In Lapid v. Court of Appeals,55 this Court held that the import of Section 27 of the Ombudsman Act is that all other decisions
of the Office of the Ombudsman which impose penalties that are not enumerated in the said Section 27 are not final, unappealable and
immediately executory.56 An appeal timely filed, such as the one filed in the instant case, will therefore stay the immediate
implementation of the decision.57 Thus:

In all these other cases therefore, the judgment imposed therein will become final after the lapse of the reglementary period of appeal if
no appeal is perfected or, an appeal therefrom having been taken, the judgment in the appellate tribunal becomes final. It is this final
judgment which is then correctly categorized as a "final and executory judgment" in respect to which execution shall issue as a matter
of right. In other words, the fact that the Ombudsman Act gives parties the right to appeal from its decisions should generally carry with
it the stay of these decisions pending appeal. Otherwise, the essential nature of these judgments as being appealable would be
rendered nugatory.58

However, the implementation sought to be enjoined is already fait accompli. Petitioner had already stepped down and a new barangay
chairman for Brgy. Batasan Hills had already been sworn in. Injunction would not lie anymore, as the acts sought to be enjoined have
already been accomplished or consummated.
WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals dated 24 April 2002 is AFFIRMED. Costs against
petitioner.

SO ORDERED.

G.R. No. 80916 November 9, 1990

C.T. TORRES ENTERPRISES, INC., petitioner,

vs.
HON. ROMEO J. HIBIONADA, EFREN DIONGON, and PLEASANTVILLE DEVELOPMENT CORPORATION, respondents.

The same issue of jurisdiction that was raised in Solid Homes v. Payawal 1 is raised in the case at bar. The same ruling laid down in
that earlier case must be applied in the present controversy.

The petitioner as agent of private respondent Pleasantville Development Corporation sold a subdivision lot on installment to private
respondent Efren Diongon. The installment payments having been completed, Diongon demanded the delivery of the certificate of title
to the subject land. When neither the petitioner nor Pleasantville complied, he filed a complaint against them for specific performance
and damages in the Regional Trial Court of Negros Occidental. This was docketed as Civil Case No. 3514. The two defendants each
filed an answer with cross-claim and counterclaim. The plaintiff filed a reply and answered the counterclaims. Pre-trial was scheduled
and heard and trial briefs were submitted by Pleasantville and Diongon. The case was set for initial hearing. It was then that C.T. Torres
Enterprises filed a motion to dismiss for lack of jurisdiction, contending that the competent body to hear and decide the case was the
Housing and Land Use Regulatory Board. The motion was heard and Diongon later filed an opposition. On September 17, 1987, the
trial court 2 denied the motion to dismiss in an order reading as follows:

Before this Court for resolution is the Motion to Dismiss filed by defendant C.T. Torres Enterprises, Inc. alleging
among other things, that this Court has no jurisdiction over the subject matter considering that the present action falls
within the jurisdiction of the Housing and Land Use Regulatory Board by virtue of Executive Order No. 90 dated
December 17, 1986.

Plaintiff filed an opposition to the said motion to dismiss traversing the allegations therein stated. A perusal of both
pleadings and the complaint filed by plaintiff, the issue to be determined are basically governed by the provisions of
the New Civil Code, particularly on contracts. The complaint is one for specific performance with damages which is a
justiciable issue under the Civil Code and jurisdiction to hear the said issue is conferred on the regular Courts
pursuant to Batas Pambansa Blg. 129.

It is, therefore, the finding of this Court that jurisdiction as conferred by law is vested in the regular courts and not in
the Housing and Land Use Regulatory Board. The Motion to Dismiss is, therefore, DENIED for lack of merit.

SO ORDERED.

The petitioner is now before this Court on certiorari to question this order.

In holding that the complaint for specific performance with damages was justiciable under the Civil Code and so came under the
jurisdiction of the regular courts under B.P. 129, the trial court failed to consider the express provisions of P.D. No. 1344 and related
decrees. It also erred in supposing that only the regular courts can interpret and apply the provisions of the Civil Code, to the exclusion
of the quasi-judicial bodies.

P.D. No. 957, promulgated July 12, 1976 and otherwise known as "The Subdivision and Condominium Buyers' Protective Decree,"
provides that the National Housing Authority shall have exclusive authority to regulate the real estate trade and business.

The scope of the regulatory authority lodged in the National Housing Authority is indicated in the second and third paragraphs of the
preamble, thus:

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

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

P.D. No. 1344, which was promulgated April 2, 1978, and empowered the National Housing Authority to issue writs of execution in the
enforcement of its decisions under P.D. No. 957, specified the quasi-judicial jurisdiction of the agency as follows:

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

A. Unsound real estate business practices;

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

C.  Cases involving specific performance of contractual and statutory obligations filed by buyers of subdivision lots or
condominium units against the owner, developer, dealer, broker or salesman. (Emphasis supplied)

Under E.O. No. 648 dated February 7, 1981, the regulatory functions conferred on the National Housing Authority under P.D. Nos.
957,1344 and other related laws were transferred to the Human Settlements Regulatory Commission, which was renamed Housing and
Land Use Regulatory Board by E.O. No. 90 dated December 17, 1986.

It is clear from Section 1(c) of the above quoted PD No. 1344 that the complaint for specific performance with damages filed by
Diongon with the Regional Trial Court of Negros Occidental comes under the jurisdiction of the Housing and Land Use Regulatory
Board. Diongon is a buyer of a subdivision lot seeking specific performance of the seller's obligation to deliver to him the corresponding
certificate of title.

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

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

Thus we have held:

It is by now commonplace learning that many administrative agencies exercise and perform adjudicatory powers and
functions, though to a limited extent only. Limited delegation of judicial or quasi-judicial authority to administrative
agencies (e.g. the Securities and Exchange Commission and the National Labor Relations Commission) is well
recognized in our jurisdiction, basically because the need for special competence and experience has been
recognized as essential in the resolution of questions of complex or specialized character and because of a
companion recognition that the dockets of our regular courts have remained crowded and clogged. 3

x x x           x x x          x x x

As a result of the growing complexity of the modern society, it has become necessary to create more and more
administrative bodies to help in the regulation of its ramified activities. Specialized in the particular fields assigned to
them, they can deal with the problems thereof with more expertise and dispatch than can be expected from the
legislature or the courts of justice. This is the reason for the increasing vesture of quasi-legislative and quasi-judicial
powers in what is now not unquestionably called the fourth department of the government. 4

x x x           x x x          x x x

There is no question that a statute may vest exclusive original jurisdiction in an administrative agency over certain
disputes and controversies falling within the agency's special expertise. The very definition of an administrative
agency includes its being vested with quasi-judicial powers. The ever increasing variety of powers and functions
given to administrative agencies recognizes the need for the active intervention of administrative agencies in matters
calling for technical knowledge and speed in countless controversies which cannot possibly be handled by regular
courts. 5

The argument of the private respondents that the petition is premature because no motion for reconsideration of the questioned order
of trial court had been filed stresses the rule but disregards the exception. It is settled that the motion for reconsideration may be
dispensed with if the issue raised is a question of law, 6 as in the case at bar. The issue pleaded here is lack of jurisdiction. It could
therefore be raised directly and immediately with this Court without the necessity of an antecedent motion for reconsideration.

We hold, in sum, that the complaint for specific performance and damages was improperly filed with the respondent court, jurisdiction
over the case being exclusively vested in the Housing and Land Use Regulatory Board. We also hold that the order denying the motion
to dismiss was subject to immediate challenge before this Court as the filing (and denial) of a motion for reconsideration was not an
indispensable requirement.
WHEREFORE, the petition is GRANTED. The questioned Order of September 17, 1987, is SET ASIDE and Civil Case No. 3514 in the
Regional Trial Court of Negros Occidental is hereby DISMISSED, without prejudice to the filing of the proper complaint with the Housing
and Land Use Regulatory Board if so desired. No costs.

SO ORDERED.

[G.R. No. 139360. September 23, 2003.]

HLC CONSTRUCTION AND DEVELOPMENT CORPORATION AND HENRY LOPEZ CHUA, Petitioners, v. EMILY
HOMES SUBDIVISION HOMEOWNERS ASSOCIATION (EHSHA), LUCIO ABBOT, JAIME ABRIS, MARINA
ACUÑA, PATROCENIO ALCOBA, MARCILINA ALFAFARA, JOSE ALMARIO, CELISTINO AMBAYEN, PERLITA
ANDRADE, ALBINO ANGELES, RONALDO ANGELES, REYNALDO ANGELITUD, ROMEO ANITO, NICASIO
ARENDAIN, ERNESTO ARENDAIN, MAGELLAN ARO, ROSCIANA ASILUM, PURIFICACION BALGUE,
WILFREDA BALO, HILARION BENTILANON, JUDITH BERNAL, AURELIA BERNAT, GEMMA BORNON,
VIRGINIA BOYOSE, SAMAON BUAT, ANNETE BUESA, ZENAIDA CADOYAS, MARIA GILDA CALAMBA,
FLORDELIZ CALLIDO, MANUEL CAMAHALAN, MARIA LOURDES CANO, NOEL CAPINPIN, ANNIE
CAMPOREDONDO, REBECCA CARBELLIDO, SHIRLEY CARTALABA, BRIGGITTE CARVAJAL, ANNIE CENTINA,
SILVERIO CHUAN, JOSEPHINE CONOMAN, VICTOR CORRAL, REZIE CRISPINO, OFELIA CUSTODIO,
ALEJANDRO DERECHO, MERLYN DIAZ, PAQUITO DOMINGO, EFREN DURANO, FELECIDAD ESCALARIS,
VIOLETA ESPIJA, EUGENE FERNANDEZ, DOMINADOR FLORENTINO, GALILEO FLORES, HERMINIGILDO
FLORES, PETE FLORES, GLORIA FONTILLA, WILLIAM GALIDO, RENE ELPIDIO GALILIA, RENATO GAZO,
CESAR GEGARE JR., ANGELI GELIA, MONINA GENTICA, PEDRO GERSALIA, ARACELI GIMAY, ARTHUR GOC-
ONG, RICARDO GONZAGA, WILMA GONZALES, ALSON GRANADA, MERLIE GUILLERMO, GABRIEL
HERNANDEZ JR., ANTONIO IBIS, HOMER IMPERIAL, ROMEO JANOTO, EDGAR JERA, ROMEO LITO JESURO,
RODRIGO JUMALIN, FURTONATO JUSON, ARLYN LABOR, LETICIA LAGUNSAY, HAZEL MARIE LAINGO,
ROSIELYN DE LEON, WILMA LIMBURAN, JEANA LINAO, VICENTA MIGUELITA LLOREN, MYRNA LOFRANCO,
ESTELA LOVITOS, LORNA MACATUAL, NELIA MADELO, MARIO MAGHANOY, GILBERT MAGHANOY, MARY
ANN MANALO, ROGER MANAPOL, QUIRICO MARI, EMELITA MARTINEZ, MIRRIAM MASUELA, MILAGROS
MEDINA, SUSAN MELCHOR, AMELIA MONDEJAR, PABLO MORENO JR., LAZARO NAMOCO, DARWIN
NARAGA, FEDERICO NARAGA, GRACE NECOR, MARY JEAN JAURIGUE NONOL, DANILO NOVERO SR.,
BERNARDO NUÑEZ JR., RICARDO OBTINARIO, JOJO CAESAR OCAMPO, THELMA OLAC, JENNIFER OLARTE,
ANTONIO PACE JR., RODRIGO PACHORO, NOLI PADASAY, EVA PALMA, IMELDA PALMA, REUBEN PANCER,
CORAZON RAMA PEDROSA, MELODIA PEPITO, IRENE PIAMONTE, GEORGE POPA, MARINA QUIÑONEZ,
JOSEPHINE QUITAYEN, CERINA RABOR, HAIDE RAMOS, SABAS RELACION III, ERICSON RELATADO,
VICTORINO RELATORRES, RAQUEL RELLON, EDUARDO REVILLIEZA, RONNIE RIOJA, LUNESTO ROJAS,
TEODORA DEL ROSARIO, LILIA ROSIL, FLORECITA SALERA, CARLITO SANORIA, DELINO SARDIDO,
JOSELITO SARMIENTO, GLADYS JOY SEGISMUNDO, RENATO SELMA, NORMA SULTAN, PRESCILLA TABAR,
ANDRES TAC-AN JR., RODOLFO TAJONERA JR., ELVIRA TALON, ALBERTO TAMBA, LILIA TAMBA, SOLITA
TAPANG, TERESA VALDEZ, ALEXANDER VILLARBA, DANILO WONG, MANUEL YOLORES, NAPOLEON
FEROLIN, AGNES CRISPINO and HILARIO I. MAPAYO, in his capacity as Presiding Judge of Regional Trial
Court, Branch 19, Digos, Davao del Sur, Respondents.

Assailed in the instant petition for certiorari under Rule 65 1 of the Rules of Court is the March 15, 1999 order 2 of the
Regional Trial Court of Davao del Sur, Branch 19, denying the motion to dismiss of petitioners HLC Construction and
Development Corporation and Henry Lopez Chua, on the ground of lack of jurisdiction and a defective certification
against non-forum shopping.chanrob1es virtua1 1aw 1ibrary

Respondents Emily Homes Subdivision Homeowners Association (EHSHA) and the 150 individual members thereof
filed on October 21, 1998 a civil action for breach of contract, damages and attorney’s fees with the Regional Trial
Court of Davao del Sur, Branch 19, against petitioners, the developers of low-cost housing units like Emily Homes
Subdivision. Respondents alleged that petitioners used substandard materials in the construction of their houses, like
coco lumber and termite-infested door jambs. Petitioners furthermore allegedly did not adhere to the house plan
specifications because the ceiling lines were sagging and there were "deviations from the plumb line of the mullions,
door jams (sic) and concrete columns." 3 Respondents asked petitioners to repair their defective housing units but
petitioners failed to do so. Respondents had to repair their defective housing units using their own funds. Hence, they
prayed for actual and moral damages arising from petitioners’ breach of the contract plus exemplary damages and
attorney’s fees.

On December 11, 1998, petitioners filed a motion to dismiss the complaint, claiming that it was the Housing and Land
Use Regulatory Board (HLURB) and not the trial court which had jurisdiction over the case. They also cited the
defective certification on non-forum shopping which was signed only by the president of EHSHA and not by all its
members; such defect allegedly warranted the dismissal of the complaint.

The trial court denied petitioners’ motion to dismiss on the ground that the case fell within its jurisdiction, not with the
HLURB, and that respondents’ certificate of non-forum shopping substantially complied with Rule 7, Section 5 of the
1997 Rules of Civil Procedure. It also denied petitioners’ motion for reconsideration.

Aggrieved, petitioners filed the instant petition for certiorari, alleging that the trial court committed grave abuse of
discretion amounting to lack or in excess of jurisdiction in holding (1) that the case between petitioners and
respondents fell within the jurisdiction of the civil courts and (2) that respondents had substantially complied with the
rules on forum shopping despite the fact that only one of the 150 respondents had signed the certificate therefor.

Petitioners are correct that the case between them and respondents fell within the jurisdiction of the HLURB, not the
trial court. However, we cannot sustain petitioners’ contention that respondents’ certificate of non-forum shopping
was defective, thus allegedly warranting the outright dismissal thereof by the trial court.

The general rule is that the certificate of non-forum shopping must be signed by all the plaintiffs in a case and the
signature of only one of them is insufficient. 4 However, the Court has also stressed that the rules on forum shopping
were designed to promote and facilitate the orderly administration of justice and thus should not be interpreted with
such absolute literalness as to subvert its own ultimate and legitimate objective. 5 The strict compliance with the
provisions regarding the certificate of non-forum shopping merely underscores its mandatory nature in that the
certification cannot be altogether dispensed with or its requirements completely disregarded. It does not thereby
prohibit substantial compliance with its provisions under justifiable circumstances. 6

Thus in the recent case of Cavile, Et. Al. v. Heirs of Clarita Cavile, Et Al., 7 we ruled:chanrob1es virtual 1aw library

[T]he execution by Thomas George Cavile, Sr., in behalf of all the other petitioners of the certificate of non-forum
shopping constitutes substantial compliance with the Rules. All the petitioners, being relatives and co-owners of the
properties in dispute, share a common interest thereon. They also share a common defense in the complaint for
partition filed by respondents. Thus, when they filed the instant petition, they filed it as a collective, raising only one
argument to defend their rights over the properties in question. There is sufficient basis, therefore, for Thomas
George Cavile, Sr. to speak for and in behalf of his co-petitioners that they have not filed any action or claim involving
the same issues in another court or tribunal, nor is there other pending action or claim in another court or tribunal
involving the same issues. Moreover, it has been held that the merits of the substantive aspects of the case may be
deemed as "special circumstances" for the Court to take cognizance of a petition for review although the certification
against forum shopping was executed and signed by only one of the petitioners.chanrob1es virtua1 1aw 1ibrary

The above ruling is squarely applicable to the present case. Respondents (who were plaintiffs in the trial court) filed
the complaint against petitioners as a group, represented by their homeowners’ association president who was
likewise one of the plaintiffs, Mr. Samaon M. Buat. Respondents raised one cause of action which was the breach of
contractual obligations and payment of damages. They shared a common interest in the subject matter of the case,
being the aggrieved residents of the poorly constructed and developed Emily Homes Subdivision. Due to the collective
nature of the case, there was no doubt that Mr. Samaon M. Buat could validly sign the certificate of non-forum
shopping in behalf of all his co-plaintiffs. In cases therefore where it is highly impractical to require all the plaintiffs to
sign the certificate of non-forum shopping, it is sufficient, in order not to defeat the ends of justice, for one of
plaintiffs, acting as representative, to sign the certificate provided that, as in Cavile Et. Al., the plaintiffs share a
common interest in the subject matter of the case or filed the case as a "collective," raising only one common cause of
action or defense.

In any case, even if it was correct for the trial court to rule that respondents had substantially complied with the rules
on forum shopping and thus, their complaint before it should not be dismissed, we find that the trial court should have
nonetheless dismissed the complaint for a more important reason — it had no jurisdiction over it. It is the HLURB, not
the trial court, which had jurisdiction over respondents’ complaint. The HLURB 8 is the government agency
empowered to regulate the real estate trade and business, having exclusive jurisdiction to hear and decide cases
involving:chanrob1es virtual 1aw library

(a) unsound real estate business practices;

(b) claims involving refunds and any other claims filed by subdivision lot or condominium unit buyers against the
project owner, developer, dealer, broker or salesman; and

(c) cases involving specific performance of contractual and statutory obligations filed by buyers of subdivision lots or
condominium units against the owner, developer, dealer, broker or salesman. 9

In this case, respondents’ complaint was for the reimbursement of expenses incurred in repairing their defective
housing units constructed by petitioners. Clearly, the HLURB had jurisdiction to hear it. In the case of Arranza v. B. F.
Homes, Inc., 10 this Court ruled that:chanrob1es virtual 1aw library

. . . the HLURB has 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. 11

The fact that the subject matter of the complaint involved defective housing units did not remove the complaint from
the HLURB’s jurisdiction. The delivery of habitable houses was petitioners’ responsibility under their contract with
respondents. The trial court should have granted the motion to dismiss filed by petitioners so that the issues therein
could be expeditiously heard and resolved by the HLURB.
WHEREFORE, the petition is hereby GRANTED. The March 15, 1999 order of the Regional Trial Court of Davao del Sur,
Branch 19, denying the petitioners’ motion to dismiss, is ANNULLED and Civil Case No. 3731 before it (trial court) is
hereby DISMISSED for lack of jurisdiction. This is without prejudice to the re-filing of the respondents’ complaint in
the HLURB.chanrob1es virtua1 1aw 1ibrary

SO ORDERED.

G.R. No. 156164               September 4, 2009

SPS. LEONARDO AND MILAGROS CHUA, Petitioners,

vs.
HON. JACINTO G. ANG, DENNIS R. PASTRANA, IN THEIR CAPACITIES AS CITY AND ASSISTANT PROSECUTOR OF PASIG,
RESPECTIVELY, FERDINAND T. SANTOS, ROBERT JOHN L. SOBREPEÑA, NOEL M. CARIÑO, ROBERTO S. ROCO, ALICE
ODCHIQUE-BONDOC,* ROMULO T. SANTOS AND ENRIQUE A. SOBREPEÑA, JR., Respondents.

Before us is the petition for certiorari1] filed by the spouses Leonardo and Milagros Chua (petitioners) to assail the Resolution dated
November 4, 2002 of the City Prosecutor of Pasig in I.S. No. PSG 02-02-09150. The City Prosecutor’s Resolution dismissed the
complaint filed by the petitioners against Ferdinand T. Santos, Robert John L. Sobrepeña, Noel M. Cariño, Roberto S. Roco, Alice
Odchique-Bondoc, Romulo T. Santos and Enrique A. Sobrepeña, Jr. (private respondents) for violation of Presidential Decree (P.D.)
No. 957, otherwise known as "The Subdivision and Condominium Buyers Protective Decree."

FACTUAL BACKGROUND

The antecedent facts, drawn from the records, are briefly summarized below.

On February 11, 1999, the petitioners (as buyers) and Fil-Estate Properties, Inc. (FEPI, as developers) executed a Contract To Sell2 a
condominium unit. Despite the lapse of three (3) years, FEPI failed to construct and deliver the contracted condominium unit to the
petitioners.

As a result, the petitioners filed on September 3, 2002 a Complaint-Affidavit3 before the Office of the City Prosecutor of Pasig City
accusing the private respondents, as officers and directors of FEPI, of violating P.D. No. 957, specifically its Sections 17 and 20, in
relation with Section 39.4 These provisions state:

Sec. 17. Registration. - All contracts to sell, deeds of sale and other similar instruments relative to the sale or conveyance of the
subdivision lots and condominium units, whether or not the purchase price is paid in full, shall be registered by the seller in the Office of
the Register of Deeds of the province or city where the property is situated.

xxx

Sec. 20. Time of Completion. - Every owner or developer shall construct and provide the facilities, improvements, infrastructures and
other forms of development, including water supply and lighting facilities, which are offered and indicated in the approved subdivision or
condominium plans, brochures, prospectus, printed matters, letters or in any form of advertisement, within one year from the date of the
issuance of the license for the subdivision or condominium project or such other period of time as may be fixed by the Authority.

xxx

Sec. 39. Penalties. - Any person who shall violate any of the provisions of this Decree and/or any rule or regulation that may be issued
pursuant to this Decree shall, upon conviction, be punished by a fine of not more than twenty thousand (P20,000.00) pesos and/or
imprisonment of not more than ten years: Provided, That in the case of corporations, partnership, cooperatives, or associations, the
President, Manager or Administrator or the person who has charge of the administration of the business shall be criminally responsible
for any violation of this Decree and/or the rules and regulations promulgated pursuant thereto. [Emphasis supplied]

The petitioners alleged that the private respondents did not construct and failed to deliver the contracted condominium unit to them and
did not register the Contract to Sell with the Register of Deeds.

Of the seven (7) private respondents, only private respondent Alice Odchique-Bondoc filed a Counter-Affidavit.5 She countered that the
City Prosecutor has no jurisdiction over the case since it falls under the exclusive jurisdiction of the Housing and Land Use Regulatory
Board (HLURB).
On November 4, 2002, Assistant City Prosecutor Dennis R. Pastrana and Pasig City Prosecutor Jacinto G. Ang (public respondents),
respectively issued and approved the Resolution6 dismissing the complaint for being premature. The Resolution held that it is the
HLURB that has exclusive jurisdiction over cases involving real estate business and practices.

THE PETITION and THE PARTIES’ POSITIONS

On December 12, 2002, the petitioners filed the present petition7 anchored on the following ground:

PUBLIC RESPONDENTS COMMITTED MANIFEST ERROR AND GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK
AND/OR EXCESS OF JURISDICTION, WHEN IT DISMISSED PETITIONER'S COMPLAINANT (sic) ON THE GROUND THAT THE
HLURB, NOT THEIR OFFICE HAS JURISDICTION TO CONDUCT PRELIMINARY INVESTIGATION AND FILE THE
CORRESPONDING INFORMATION IN COURT FOR CRIMINAL VIOLATIONS OF P.D. No. 957. 8

The petitioners argue that jurisdiction to entertain criminal complaints is lodged with the city prosecutor and that the jurisdiction of the
HLURB under P.D. No. 957 is limited to the enforcement of contractual rights, not the investigation of criminal complaints.

In their Comment,9 the private respondents submit that the petition should be dismissed outright because the petitioners failed to avail
of other remedies provided by law, such as (a) the filing of a motion for reconsideration with the City Prosecutor of Pasig City, (b) the
filing of a petition for review with the Secretary of the Department of Justice (DOJ), (c) the filing of a motion for reconsideration of any
judgment rendered by the DOJ, or (d) the filing of an appeal or a petition for certiorari with the Court of Appeals (CA); that even
if certiorari is a proper remedy, the petition was filed in violation of the hierarchy of courts; and that even on the merits, the petition must
fail since the public respondents correctly dismissed the complaint as a reasonable interpretation of P.D. No. 957 which requires a prior
determination by the HLURB that a corporation violated P.D. No. 957 before criminal charges may be filed against its corporate officers.

In their Reply, the petitioners reiterate that the public respondents abdicated their authority to conduct a preliminary investigation and to
indict the private respondents for criminal violations of P.D. No. 957 when they dismissed the criminal complaint for being premature.10

OUR RULING

We find the petition meritorious.

At the outset, we note that the petitioners indeed filed the present petition for certiorari without prior recourse to other available
remedies provided by law and the observance of the judicial hierarchy of courts. Nonetheless, the rules on prior recourse to these
available remedies are not without exceptions, nor is the observance of the judicial hierarchy of courts an inflexible rule; the peculiarity,
uniqueness and unusual character of the factual and circumstantial settings of a case may allow the flexible application of these
established legal principles to achieve fair and speedy dispensation of justice.

A prior motion for reconsideration is unnecessary: (a) where the order is a patent nullity, as where the court a quo has no jurisdiction;
(b) where the questions raised in the certiorari proceedings have been duly raised and passed upon by the lower court, or are the same
as those raised and passed upon in the lower court; (c) where there is an urgent necessity for the resolution of the question and any
further delay would prejudice the interests of the Government or of the petitioner; (d) where, under the circumstances, a motion for
reconsideration would be useless; (e) where petitioner was deprived of due process and there is an extreme urgency for relief; (f)
where, in a criminal case, relief from an order of arrest is urgent and the grant of such relief by the trial court is improbable; (g) where
the proceedings in the lower court are a nullity for lack of due process; (h) where the proceedings were ex parte or in which the
petitioner had no opportunity to object; or (i) where the issue raised is one purely of law or where public interest is involved.11

On the other hand, prior exhaustion of administrative remedies may be dispensed with and judicial action may be validly resorted to
immediately: (a) when there is a violation of due process; (b) when the issue involved is purely a legal question; (c) when the
administrative action is patently illegal amounting to lack or excess of jurisdiction; (d) when there is estoppel on the part of the
administrative agency concerned; (e) when there is irreparable injury; (f) when the respondent is a department secretary whose acts as
an alter ego of the President bear the implied and assumed approval of the latter; (g) when to require exhaustion of administrative
remedies would be unreasonable; (h) when it would amount to a nullification of a claim; (i) when the subject matter is a private land in
land case proceedings; (j) when the rule does not provide a plain, speedy and adequate remedy; or (k) when there are circumstances
indicating the urgency of judicial intervention.12

On the non-observance of the principle of hierarchy of courts, it must be remembered that this rule generally applies to cases involving
conflicting factual allegations. Cases which depend on disputed facts for decision cannot be brought immediately before us as we are
not triers of facts.13 A strict application of this rule may be excused when the reason behind the rule is not present in a case, as in the
present case, where the issues are not factual but purely legal. In these types of questions, this Court has the ultimate say so that we
merely abbreviate the review process if we, because of the unique circumstances of a case, choose to hear and decide the legal issues
outright.14

In the present petition for certiorari, we find that there are four (4) compelling reasons to allow the petitioners' invocation of our
jurisdiction in the first instance, even without prior recourse to a motion for reconsideration or to the exhaustion of administrative
remedies, and even in disregard of the principle of hierarchy of courts.

First, the petitioners raise a pure question of law involving jurisdiction over criminal complaints for violation of P.D. No. 957. A question
of law exists when the doubt or controversy concerns the correct application of law or jurisprudence to a certain set of facts; or when
the issue does not call for an examination of the probative value of the evidence presented, the truth or falsehood of facts being
admitted.15 As noted earlier, this Court is the undisputed final arbiter of all questions of law.

Second, the present case requires prompt action because public interest and welfare are involved in subdivision and condominium
development, as the terms of P.D. Nos. 957 and 1344 expressly reflect.16 Questions of conflicting processes, essentially based on
jurisdiction, will consistently recur as people’s need for housing (and hence, subdivisions and condominiums) escalate. Shelter is a
basic human need whose fulfillment cannot afford any kind of delay.17
Third, considering that this case has been pending for nearly seven (7) years (since the filing of the Complaint-Affidavit on September
3, 2002) to the prejudice not only of the parties involved, but also of the subdivision and condominium regulatory system and its need
for the prompt determination of controversies, the interests of justice now demand the direct resolution of the jurisdictional issue this
proceeding poses. As mentioned, at stake in this case is shelter – a basic human need and to remand the case to the DOJ for a
determination of the merits of the parties’ jurisdictional tug-of-war would not serve any purpose other than to further delay its
resolution.18 Thus, the practicality of the situation and the need for the speedy administration of justice justify a departure from the strict
application of procedural rules. Besides, the issue before us presents no special difficulty, and we feel it should be decided now, without
going through the procedural formalities that shall anyway end up with this Court.

Fourth, the petition is meritorious. The public respondents committed grave abuse of discretion in dismissing the criminal complaints for
violation of P.D. No. 957 on the ground that jurisdiction lies with the HLURB.

Generally, the extent to which an administrative agency may exercise its powers depends largely, if not wholly, on the provisions of the
statute creating and defining the terms of the agency’s mandate. P.D. No. 1344 clarifies and spells out the quasi-judicial dimensions of
the grant of jurisdiction to the HLURB in the following specific terms:19

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

A. Unsound real estate business practices;

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

C. Cases involving specific performance of contractual and statutory obligations filed by buyers of subdivision lots or
condominium units against the owner, developer, dealer, broker or salesman.

The extent of its quasi-judicial authority, on the other hand, is defined by the terms of P.D. No. 957 whose Section 3 provides:

x x x National Housing Authority [now HLURB]. - The National Housing Authority shall have exclusive jurisdiction to regulate the real
estate trade and business in accordance with the provisions of this Decree.

The provisions of P.D No. 957 were intended to encompass all questions regarding subdivisions and condominiums. The intention was
to provide for an appropriate government agency, the HLURB, to which all parties – buyers and sellers of subdivision and condominium
units - may seek remedial recourse. The law recognized, too, that subdivision and condominium development involves public interest
and welfare and should be brought to a body, like the HLURB, that has technical expertise.20 In the exercise of its powers, the HLURB,
on the other hand, is empowered to interpret and apply contracts, and determine the rights of private parties under these contracts.
This ancillary power, generally judicial, is now no longer with the regular courts to the extent that the pertinent HLURB laws provide.21

Viewed from this perspective, the HLURB’s jurisdiction over contractual rights and obligations of parties under subdivision and
condominium contracts comes out very clearly. But hand in hand with this definition and grant of authority is the provision on criminal
penalties for violations of the Decree, provided under the Decree’s Section 39, heretofore quoted. Significantly, nothing in P.D. No. 957
vests the HLURB with jurisdiction to impose the Section 39 criminal penalties. What the Decree provides is the authority of the HLURB
to impose administrative fines under Section 38, as implemented by the Rules Implementing the Subdivision and Condominium Buyer’s
Protective Decree. This Section of the Decree provides:

Sec. 38. Administrative Fines. – The Authority may prescribe and impose fines not exceeding ten thousand pesos for violations of the
provisions of this Decree or of any rule or regulation thereunder. Fines shall be payable to the Authority and enforceable through writs
of execution in accordance with the provisions of the Rules of Court.1avvphi1

The Implementing Rules, for their part, clarify that "The implementation and payment of administrative fines shall not preclude criminal
prosecution of the offender under Section 39 of the Decree." Thus, the implementing rules themselves expressly acknowledge that two
separate remedies with differing consequences may be sought under the Decree, specifically, the administrative remedy and criminal
prosecution.

Unless the contrary appears under other provisions of law (and in this case no such provision applies), the determination of the criminal
liability lies within the realm of criminal procedure as embodied in the Rules of Court. Section 2, Rule 112 of these Rules provide that
the prerogative to determine the existence or non-existence of probable cause lies with the persons duly authorized by law; as provided
in this Rule, they are (a) Provincial or City Prosecutors and their assistants; (b) Judges of the Municipal Trial Courts and Municipal
Circuit Trial Courts; (c) National and Regional State Prosecutors; and (d) other officers as may be authorized by law.

In the present case, the petitioners have expressly chosen to pursue the criminal prosecution as their remedy but the prosecutor
dismissed their complaint. The prosecutor’s dismissal for prematurity was apparently on the view that an administrative finding of
violation must first be obtained before recourse can be made to criminal prosecution. This view is not without its model in other laws;
one such law is in the prosecution of unfair labor practice under the Labor Code where no criminal prosecution for unfair labor practice
can be instituted without a final judgment in a previous administrative proceeding.22 The need for a final administrative determination in
unfair labor practice cases, however, is a matter expressly required by law. Where the law is silent on this matter, as in this case, the
fundamental principle – that administrative cases are independent from criminal actions23 – fully applies, subject only to the rules on
forum shopping under Section 5, Rule 7 of the Rules of Court.24 In the present case, forum shopping is not even a matter for
consideration since the petitioners have chosen to pursue only one remedy – criminal prosecution. Thus, we see no bar to their
immediate recourse to criminal prosecution by filing the appropriate complaint before the prosecutor’s office.

In light of these legal realities, we hold that the public respondent prosecutors should have made a determination of probable cause in
the complaint before them, instead of simply dismissing it for prematurity. Their failure to do so and the dismissal they ordered
effectively constituted an evasion of a positive duty and a virtual refusal to perform a duty enjoined by law; they acted on the case in a
manner outside the contemplation of law. This is grave abuse of discretion amounting to a lack of or in excess of jurisdiction warranting
a reversal of the assailed resolution.25 In the concrete context of this case, the public prosecutors effectively shied away from their duty
to prosecute, a criminal violation of P.D. No. 957 as mandated by Section 5, Rule 110 of the Rules of Court and Republic Act No.
5180,26 as amended,27 otherwise known as the Law on Uniform Procedure of Preliminary Investigation.

As a final word, we stress that the immediate recourse to this Court that this Decision allows should not serve as a precedent in other
cases where the prosecutor dismisses a criminal complaint, whether under P.D. No. 957 or any other law. Recourse to (a) the filing a
motion for reconsideration with the City or Provincial Prosecutor, (b) the filing a petition for review with the Secretary of the DOJ, (c) the
filing a motion for reconsideration of any judgment rendered by the DOJ, and (d) intermediate recourse to the CA, are remedies that the
dictates of orderly procedure and the hierarchy of authorities cannot dispense with. Only the extremely peculiar circumstances of the
present case compelled us to rule as we did; thus our ruling in this regard is a rare one that should be considered pro hac vice.

WHEREFORE, we hereby GRANT the petition and accordingly REVERSE and SET ASIDE the Resolution dated November 4, 2002 of
the City Prosecutor of Pasig in I.S. No. PSG 02-02-09150. The complaint is hereby ordered returned to the Office of the City Prosecutor
of Pasig City for the determination of probable cause and the filing of the necessary information, if warranted. No costs.

SO ORDERED.

G.R. No. 128354             April 26, 2005

HOME BANKERS SAVINGS & TRUST CO., Petitioner,

vs.
THE HONORABLE COURT OF APPEALS, PABLO N. AREVALO, FRANCISCO A. UY, SPOUSES LEANDRO A. SORIANO, JR.
and LILIAN SORIANO, ALFREDO LIM and FELISA CHI LIM/ALFREDO LIM, Respondents.

Before us is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to annul the Decision1 of the Court of Appeals
(CA) dated November 28, 1996 in CA-G.R. SP No. 40892 and its Resolution dated February 19, 1997 denying petitioner’s motion for
reconsideration.

Each of private respondents entered into separate contracts to sell with TransAmerican Sales and Exposition (TransAmerican) through
the latter’s Owner/General Manager, Engr. Jesus Garcia, involving certain portions of land covered by Transfer Certificate of Title (TCT)
No. 19155, located at No. 45 Gen. Lim Street, Heroes Hill, Quezon City, together with one unit three-storey townhouse to be built on
each portion, as follows:

Respondent Pablo N. Arevalo purchased the portion of land denominated as Unit No. 52 for the amount of P750,000.00 on
August 21, 1988 and had already fully paid the purchase price on September 3, 1988;

Respondent Alfredo Lim purchased the portion of land denominated as Unit No. 13 for the amount of P800,000.00 on
December 22, 1988 and fully paid the same upon execution of the agreement on the same day;

Respondent Francisco A. Uy purchased the portion of land denominated as Unit No. 64 on October 29, 1988 in the amount
of P800,000.00 payable in installments and had allegedly made a total payment of P581,507.41.  He ordered to stop the
payment of all [postdated] checks from September 1990 to November 1995 on the ground of non-completion of his unit and
had later learned of the foreclosure of the property;

Respondent spouses Leandro A. Soriano, Jr. and Lilian Soriano purchased the portion of land denominated as Unit No. 35 on
February 15, 1990 in the amount of P1,600,000.00 and had allegedly made a payment of P669,960.00.  They had stopped
paying because of non-completion of the project and had later learned of the foreclosure of the property;

Respondents Alfredo Lim and Santos Lim purchased the portion of land denominated as Unit No. 76 for P700,000.00 on
October 1988 and had been fully paid as of March 18, 1989; Santos Lim subsequently sold and assigned his share of the
property to private respondent Felisa Chi Lim on May 12, 1989.

It is stipulated in their respective contracts that their individual townhouses will be fully completed and constructed as per plans and
specifications and the respective titles thereto shall be delivered and transferred to private respondents free from all liens and
encumbrances upon their full payment of the purchase price.  However, despite repeated demands, Garcia/TransAmerican failed to
comply with their undertakings.

On May 30, 1989, Engr. Garcia and his wife Lorelie Garcia obtained from petitioner Home Bankers Savings and Trust Company
(formerly Home Savings Bank and Trust Company) a loan in the amount of P4,000,000.00 and without the prior approval of the
Housing and Land Use Regulatory Board (HLURB), the spouses mortgaged7 eight lots covered by TCT Nos. 3349 to 3356 as
collateral.  Petitioner registered its mortgage on these titles without any other encumbrance or lien annotated therein.  The proceeds of
the loan were intended for the development of the lots into an eight-unit townhouse project.  However, five out of these eight titles
turned out to be private respondents’ townhouses subject of the contracts to sell with Garcia/TransAmerican.

When the loan became due, Garcia failed to pay his obligation to petitioner.  Consequently, petitioner instituted an extrajudicial
foreclosure8 on the subject lots and being the highest bidder in the public auction, a certificate of sale9 in its favor was issued by the
sheriff on February 26, 1990.  Subsequently, the sheriff’s certificate of sale was registered and annotated on the titles of the subject lots
in the Register of Deeds of Quezon City.
On November 8, 1990, private respondents filed a complaint with the Office of Appeals, Adjudication and Legal Affairs (OAALA),
HLURB, against Garcia/TransAmerican as seller/developer of the property and petitioner, as indispensable party, for non-delivery of
titles and non-completion of the subdivision project.10 They prayed for the completion of the units, annulment of the mortgage in favor of
petitioner, release of the mortgage on the lots with fully paid owners and delivery of their titles, and for petitioner to compute individual
loan values of amortizing respondents and to accept payments from them and damages.

Petitioner filed its Answer contending that private respondents have no cause of action against it; that at the time of the loan application
and execution of the promissory note and real estate mortgage by Garcia, there were no known individual buyers of the subject land
nor annotation of any contracts, liens or encumbrances of third persons on the titles of the subject lots; that the loan was granted and
released without notifying HLURB as it was not necessary.

Private respondents filed their Reply and a motion for the judgment on the pleadings.  Petitioner did not file a rejoinder.  Private
respondents filed a manifestation reiterating for a judgment on their pleadings and asked that the reliefs prayed for be rendered as far
as petitioner was concerned. Upon motion of private respondents, the case against Garcia/TransAmerican was archived for failure to
serve summons on him/it despite efforts to locate his whereabouts or its office.  The case was then considered submitted for decision.

On August 16, 1991, OAALA rendered its Decision,11 the dispositive portion of which reads:

WHEREFORE, Judgment is hereby rendered as follows:

1.       Declaring the mortgage executed by and between respondents Engr. Jesus Garcia/TransAmerican Sales and
Exposition and Home Bankers Savings and Trust Company (formerly Home Savings Bank and Trust Company) to be
unenforceable as against all the complainants;

2.       Ordering the Register of Deeds of Quezon City to cancel the annotations of the mortgage indebtedness between
respondents Engr. Jesus Garcia and Home Bankers Savings and Trust Company (formerly Home Savings Bank and Trust
Company);

3.       Ordering, likewise the Register of Deeds of Quezon City to cancel the annotation of the Certificate of Sale in favor of the
respondent Home Bankers Savings and Trust Company on the following Transfer Certificates of Title to wit:
1) TCT No. 3350
2) TCT No. 3351
3) TCT No. 3352
4) TCT No. 3354
5) TCT No. 3356
4. Ordering respondent Home Bankers Savings and Trust Company (formerly Home Savings Bank and Trust Company) to:
4.1.   AS TO THE FIRST CAUSE OF ACTION
Deliver to Complainant Pablo N. Arevalo TCT No. 3352 free from all liens and encumbrances.
4.2.   AS TO THE SECOND CAUSE OF ACTION
Deliver to Complainant Alfredo Lim TCT No. 3356 free from all liens and encumbrances.
4.3.   AS TO THE THIRD CAUSE OF ACTION
To compute and/or determine the loan value of complainant Francisco A. Uy who was not able to complete or make
full payment and to accept payment and/or receive amortization from said complainant Francisco A. Uy and upon full
payment to deliver TCT No. 3351 free from all liens and encumbrances.
4.4.   AS TO THE FOURTH CAUSE OF ACTION

To compute and/or determine the loan value of Complainant Spouses Leandro A. Soriano, Jr. and Lilian Soriano who
were not able to complete or make full payment and to accept and/or receive amortization from said Complainants
Soriano and upon full payment to deliver TCT No. 3354 free from all liens and encumbrances.

4.5.   AS TO THE FIFTH CAUSE OF ACTION

Deliver to complainant Alfredo Lim and Felisa Chi Lim TCT No. 3350 free from all liens and encumbrances.

without prejudice to its right to require respondent Engr. Jesus Garcia/TransAmerican to constitute new collaterals in lieu of the
said titles sufficient in value to cover the mortgage obligation.12

Petitioner filed an appeal with the Board of Commissioners of the HLURB which dismissed the same in a decision dated June 15,
1992.13 Petitioner then elevated the case to the Office of the President which rendered a decision dated June 30, 199514 dismissing the
appeal and affirming the June 15, 1992 decision of the HLURB.  Petitioner’s motion for reconsideration was also denied in a Resolution
dated May 7, 1996.15

Petitioner filed a petition for review with the CA which, in the herein assailed decision dated November 28, 1996, denied the petition
and affirmed the decision of the Office of the President.  The CA applied the case of Union Bank of the Philippines vs. HLURB, et
al.,16 where it was held that the act of a subdivision developer of mortgaging the subdivision without the knowledge and consent of a unit
buyer and without the approval of the National Housing Authority (NHA, now HLURB) is violative of Section 18 of P.D. No. 957 thus,
falling under the exclusive jurisdiction of HLURB.

The CA upheld the findings of the OAALA, HLURB that private respondents had already entered into separate contracts to sell with
TransAmerican as early as 1988 while it was only in 1989 that spouses Garcia applied for a loan with petitioner and executed a
mortgage contract over the subject lots; that the proceeds of the loan were purposely intended for the development of a property which
was the same property subject of the contracts to sell; that despite the contracts to sell, Garcia/TransAmerican did not apprise petitioner
of the existence of these contracts nor did petitioner exhaust any effort to inquire into their existence since petitioner merely relied on
the purported clean reconstituted titles in the name of Garcia; that the mortgage of the subject lots without the consent of the buyers
and the authorization of the HLURB is a clear violation of P.D. No. 957; that the mortgage contract is void and unenforceable against
private respondents.

Petitioner’s motion for reconsideration was denied by the CA in its Resolution dated February 19, 1997.17
Petitioner is now before us raising the following grounds in support of its petition:

A.  THE OFFICE OF THE PRESIDENT ERRED IN RULING THAT THE HLURB HAS JURISDICTION TO NULLIFY OR
DECLARE UNENFORCEABLE THE REAL ESTATE MORTGAGE VALIDLY CONSTITUTED BY THE OWNER.

B. ASSUMING ARGUENDO THAT THE HLURB HAS JURISDICTION, RESPONDENT COURT MANIFESTLY ERRED IN
FINDING THE REAL ESTATE MORTGAGE IN FAVOR OF HOME AS INVALID AND UNENFORCEABLE AGAINST
RESPONDENTS.

C. IN THE EVENT THAT THE DECISION OF THE RESPONDENT COURT FINDING THE REAL ESTATE MORTGAGE IN
FAVOR OF HOME AS INVALID AND UNENFORCEABLE AGAINST RESPONDENTS IS UPHELD, THE UNREGISTERED
CONTRACTS TO SELL IN FAVOR OF RESPONDENTS SHOULD ALSO BE HELD VALID ONLY AS TO THE PARTIES
THERETO BUT UNENFORCEABLE AGAINST PETITIONER.

Private respondents filed their Comment and petitioner filed its Reply thereto.

In a Resolution dated February 23, 2004, we gave due course to the petition and required the parties to submit their respective
memoranda which they complied with.

The petition is devoid of merit.

Notably, the issues raised are mere rehash of the issues already passed upon by the HLURB, the Office of the President and the CA
which we uphold as we find no reversible errors committed.

Petitioner claims that HLURB has no power to declare the mortgage contract over real property executed between a real estate
developer and petitioner, a banking institution, void or unenforceable, as it is properly within the jurisdiction of the Regional Trial Court. 
Petitioner asserts that being a mortgagee of the subject lots and a purchaser in good faith, it is not a project owner, developer, or dealer
contemplated under P.D. No. 1344, the law which expanded the jurisdiction of the NHA; and that since there is no seller-buyer
relationship existing between it and private respondents, HLURB has no jurisdiction to rule on the validity of the mortgage and to annul
foreclosure proceedings.

The argument is untenable.

The CA did not err in affirming the decision of the Office of the President that HLURB has jurisdiction to declare invalid the mortgage
contract executed between Garcia/TransAmerican and petitioner over the subject lots insofar as private respondents are concerned.  It
correctly relied on Union Bank of the Philippines vs. HLURB, et al.18 where we squarely ruled on the question of HLURB’s jurisdiction to
hear and decide a condominium buyer’s complaint for: (a) annulment of a real estate mortgage constituted by the project owner without
the consent of the buyer and without the prior written approval of the NHA; (b) annulment of the foreclosure sale; and (c) annulment of
the condominium certificate of title that was issued to the highest bidder at the foreclosure sale, thus:

. . .  The issue in HLURB Case No. REM-062689-4077 is the validity of the real estate mortgage of David’s condominium unit
that FRDC executed in favor of the Union Bank and Far East Bank without prior approval of the National Housing Authority
and the legality of the title which the mortgage banks acquired as highest bidder therefore in the extrajudicial foreclosure sale.
The applicable provisions of P.D. No. 957, otherwise known as "The Subdivision and Condominium Buyer’s Protective
Decree" are quoted hereunder as follows:

Sec. 3.  NATIONAL HOUSING AUTHORITY. –  The National Housing Authority shall have exclusive jurisdiction to
regulate the real estate trade and business in accordance with the provisions of this Decree.

Section 18.  Mortgages – No mortgage on any unit or lot shall be made by the owner or developer without prior written
approval of the authority.  Such approval shall not be granted unless it is shown that the proceeds of the mortgage loan shall
be used for the development of the condominium or subdivision project and effective measures have been provided to ensure
such utilization.  The loan value of each lot or unit covered by the mortgage shall be determined and the buyer thereof if any
shall be notified before the release of the loan.  The buyer may, at his option, pay his installment for the lot or unit directly to
the mortgagee who shall apply the payments to the corresponding mortgage indebtedness secured by the particular lot or unit
being paid for, with a view to enabling said buyer to obtain title over the lot or unit promptly after full payment thereof.

P.D. No. 1344 of April 2, 1978 expanded the jurisdiction of the National Housing Authority to include the following:

Sec. 1.  In the exercise of its function to regulate the real estate trade and business and in addition to its powers provided for in
Presidential Decree No. 957, the National Housing Authority shall have exclusive jurisdiction to hear and decide cases of the
following nature:
A.      Unsound real estate business practices;
B.      Claims involving refund and any other claims filed by subdivision lot or condominium unit buyer against the
project owner, developer, dealer, broker or salesman; and
C.       Cases involving specific performance of contractual and statutory obligations filed by buyers of subdivision lot
or condominium unit against the owner, developer, broker or salesman.
On February 7, 1981, Executive Order No. 648 transferred the regulatory and quasi-judicial functions of the NHA to the Human
Settlements Regulatory Commission.
Sec. 8.  TRANSFER OF FUNCTIONS. – The regulatory functions of the National Housing Authority pursuant to Presidential
Decree Nos. 957, 1216, 1344 and other related laws are hereby transferred to the Commission, together with such applicable
personnel, appropriation, records, equipment and property necessary for the enforcement and implementation of such
functions.  Among these regulatory functions are:
1.   Regulation of the real estate trade and business:
...
7.   Approval of mortgage on any subdivision lot or condominium unit made by the owner or developer;
...
 11. Hear and decide cases on unsound real estate business practices; claims involving refund filed against
project owners, developers, dealers, brokers, or salesmen; and cases of specific performance.

Executive Order No. 90 dated December 17, 1986 changed the name of the Human Settlements Regulatory Commission to
Housing and Land Use Regulatory Board (HLURB).

Clearly, FRDC’s act of mortgaging the condominium project to Bancom and FEBTC, without the knowledge and consent of
David as buyer of a unit therein, and without the approval of the NHA (now HLURB) as required by P.D. No. 957, was not only
an unsound real estate business practice but also highly prejudicial to the buyer.  David, who has a cause of action for
annulment of the mortgage, the mortgage foreclosure sale, and the condominium certificate of title that was issued to the UBP
and FEBTC as the highest bidders at the sale.  The case falls within the exclusive jurisdiction of the NHA (now HLURB) as
provided in P.D. No. 957 of 1976 and P.D. No. 1344 of 1978.
...
We hold that the jurisdiction of the HLURB to regulate the real estate trade is broad enough to include jurisdiction over
complaints for specific performance of the sale, or annulment of the mortgage, of a condominium unit, with damages.19

Petitioner avers that the Union Bank ruling is not applicable in its case, since it had no knowledge of any buyer of the subject lots at the
time the mortgage was constituted; that there was no construction in the subject lots at the time petitioner accepted the same as
collateral; that the title to the subject property was still in the process of being reconstituted and the loan was in fact meant for the
development of the subject lots into an eight-unit townhouse project.

We are not persuaded.

Contrary to petitioner’s claim that there were no buyers of the subject lots at the time of the constitution of the mortgage, records show
that private respondents Arevalo, Uy, Alfredo Lim and Santos Lim had entered into contracts to sell with Garcia/TransAmerican as early
as 1988 for their respective lots.  In fact, they, except for Uy, had already fully paid their townhouse units in 1988 without the certificates
of title being delivered to them. Garcia mortgaged the subject lots without their knowledge and consent.

While private respondents spouses Soriano bought the subject lots after the constitution of the mortgage in favor of petitioner, the
subject lots are, as early as 1988, subdivision lots which as defined under Section 2(e) of P.D. No. 957 to mean any of the lots, whether
residential, commercial, industrial, or recreational in a subdivision project20 are entitled to the protection of P.D. No. 957.

Under Section 18 of P.D. No. 957, it is provided that no mortgage on any unit or lot shall be made by the owner or developer without
prior written approval of the authority.  Such approval shall not be granted unless it is shown that the proceeds of the mortgage loan
shall be used for the development of the condominium or subdivision project and effective measures have been provided to ensure
such utilization.  As in the Union Bank, the mortgage was constituted on the subject lots in favor of petitioner without the prior written
approval from the HLURB, thus HLURB has jurisdiction to rule on the validity of the mortgage.

Notwithstanding that petitioner became the owner of the subject lots by being the highest bidder in the extrajudicial foreclosure sale, it
must be remembered that it was first a mortgagee of the same.  Since the lot was mortgaged in violation of Section 18 of P.D. No. 957,
HLURB has jurisdiction to declare the mortgage void insofar as private respondents are concerned and to annul the foreclosure sale. 
In Far East Bank and Trust Co. vs. Marquez,21 we held that Section 18 of P.D. No. 957 is a prohibitory law, and acts committed contrary
to it are void.  We said:

In determining whether a law is mandatory, it is necessary to ascertain the legislative intent, as stated by Sen. Arturo M.
Tolentino, an authority on civil law:

There is no well-defined rule by which a mandatory or prohibitory law may, in all circumstances, be distinguished from
one which is directory, suppletory, or permissive.  In the determination of this question, the prime object is to
ascertain the legislative intention.  Generally speaking, those provisions which are mere matter of form, or which are
not material, do not affect any substantial right, and do not relate to the essence of the thing to be done, so that
compliance is a matter of convenience rather than substance, are considered to be directory.  On the other hand,
statutory provisions which relate to matters of substance, affect substantial rights and are the very essence of the
thing required to be done, are regarded as mandatory.

In Philippine National Bank vs. Office of the President, we had occasion to mull over the intent of P.D. No. 957 thus:

. . .  [T]he unmistakable intent of the law [is] to protect innocent lot buyers from scheming subdivision developers.  As
between these small lot buyers and the gigantic financial institutions which the developers deal with, it is obvious that
the law – as an instrument of social justice – must favor the weak.  Indeed, the petitioner Bank had at its disposal vast
resources with which it could adequately protect its loan activities, and therefore is presumed to have conducted the
usual "due diligence" checking and ascertaining (whether thru ocular inspection or other modes of investigation) the
actual status, condition, utilization and occupancy of the property offered as collateral, . . .  On the other hand, private
respondents obviously were powerless to discover attempt of the land developer to hypothecate the property being
sold to them.  It was precisely in order to deal with this kind of situation that P.D. No. 957 was enacted, its very
essence and intendment being to provide a protective mantle over helpless citizens who may fall prey to the
razzmatazz of what P.D. No. 957 termed "unscrupulous subdivision and condominium sellers."

Concededly, P.D. No. 957 aims to protect innocent lot buyers.  Section 18 of the decree directly addresses the
problem of fraud committed against buyers when the lot they have contracted to purchase, and which they have
religiously paid for, is mortgaged without their knowledge.  The avowed purpose of P.D. No. 957 compels the reading
of Section 18 as prohibitory – acts committed contrary to it are void.  Such construal ensures the attainment of the
purpose of the law: to protect lot buyers, so that they do not end up still homeless despite having fully paid for their
home lots with their hard-earned cash.22

Since the mortgage is void, HLURB’s orders of the cancellation of the sheriff’s certificate of sale, release of the mortgaged lots and
delivery of the corresponding titles to respondents who had fully paid the purchase price of the units are but the necessary
consequences of the invalidity of the mortgage for the protection of private respondents.
Anent the second issue, petitioner contends that since the titles on their face were free from any claims, liens and encumbrances at the
time of the mortgage, it is not obliged under the law to go beyond the certificates of title registered under the Torrens system and had
every reason to rely on the correctness and validity of those titles.

We are not convinced.

While the cases23 cited by petitioner held that the mortgagee is not under obligation to look beyond the certificate of title when on its
face, it was free from lien or encumbrances, the mortgagees therein were considered in good faith as they were totally innocent and
free from negligence or wrongdoing in the transaction.  In this case, petitioner knew that the loan it was extending to
Garcia/TransAmerican was for the purpose of the development of the eight-unit townhouses.  Petitioner’s insistence that prior to the
approval of the loan, it undertook a thorough check on the property and found the titles free from liens and encumbrances would not
suffice.  It was incumbent upon petitioner to inquire into the status of the lots which includes verification on whether Garcia had secured
the authority from the HLURB to mortgage the subject lots.  Petitioner failed to do so.  We likewise find petitioner negligent in failing to
even ascertain from Garcia if there are buyers of the lots who turned out to be private respondents.  Petitioner’s want of knowledge due
to its negligence takes the place of registration, thus it is presumed to know the rights of respondents over the lot.  The conversion of
the status of petitioner from mortgagee to buyer-owner will not lessen the importance of such knowledge.24 Neither will the conversion
set aside the consequence of its negligence as a mortgagee.25

Judicial notice can be taken of the uniform practice of banks to investigate, examine and assess the real estate offered as security for
the application of a loan.  We cannot overemphasize the fact that the Bank cannot barefacedly argue that simply because the title or
titles offered as security were clean of any encumbrances or lien, that it was thereby relieved of taking any other step to verify the over-
reaching implications should the subdivision be auctioned on foreclosure.26 We find apropos to cite our ruling in Far East Bank and
Trust Co. vs. Marquez, thus:27

Petitioner argues that it is an innocent mortgagee whose lien must be respected and protected, since the title offered as
security was clean of any encumbrances or lien.  We do not agree.

. . .  As a general rule, where there is nothing on the certificate of title to indicate any cloud or vice in the ownership of the
property, or any encumbrance thereon, the purchaser is not required to explore further than what the Torrens Title upon its
face indicates in quest for any hidden defect or inchoate right that may subsequently defeat his right thereto.  This rule,
however, admits of an exception as where the purchaser or mortgagee has knowledge of a defect or lack of title in the vendor,
or that he was aware of sufficient facts to induce a reasonably prudent man to inquire into the status of the property in
litigation.

Petitioner bank should have considered that it was dealing with a [townhouse] project that was already in progress.  A
reasonable person should have been aware that, to finance the project, sources of funds could have been used other than the
loan, which was intended to serve the purpose only partially.  Hence, there was need to verify whether any part of the property
was already the subject of any other contract involving buyers or potential buyers.  In granting the loan, petitioner bank should
not have been content merely with a clean title, considering the presence of circumstances indicating the need for a thorough
investigation of the existence of buyers like respondent.  Having been wanting in care and prudence, the latter cannot be
deemed to be an innocent mortgagee.

Petitioner cannot claim to be a mortgagee in good faith.  Indeed it was negligent, as found by the Office of the President and
by the CA.  Petitioner should not have relied only on the representation of the mortgagor that the latter had secured all
requisite permits and licenses from the government agencies concerned.  The former should have required the submission of
certified true copies of those documents and verified their authenticity through its own independent effort.

Having been negligent in finding out what respondent’s rights were over the lot, petitioner must be deemed to possess
constructive knowledge of those rights.

As to the third issue, petitioner contends that private respondents were negligent in failing to register their contracts to sell in
accordance with Section 17 of P.D. No. 957; that private respondents’ unregistered contracts to sell are binding only on them and
Garcia/TransAmerican but not on petitioner which had no actual or constructive notice of the sale at the time the mortgage was
constituted.

We disagree.

Section 17 of P.D. No. 95728 provides that the seller shall register the contracts to sell with the Register of Deeds of Quezon City.  Thus,
it is Garcia’s responsibility as seller to register the contracts and petitioner should not blame private respondents for not doing so.  As
we have said earlier, considering petitioner’s negligence in ascertaining the existence or absence of authority from HLURB for
Garcia/TransAmerican to mortgage the subject lots, petitioner cannot claim to be an innocent purchaser for value and in good faith. 
Petitioner is bound by private respondents’ contracts to sell executed with Garcia/TransAmerican.

The last paragraph of Section 18 of P.D. No. 957 provides that respondents who have not yet paid in full have the option to pay their
installment for the lot directly to the mortgagee (petitioner) who is required to apply such payments to the corresponding mortgage
indebtedness secured by the particular lot or unit being paid for, with a view to enabling said buyer to obtain title over the lot or unit
promptly after full payment thereof.  Thus, petitioner is obliged to accept the payment of remaining unpaid amortizations, without
prejudice to petitioner bank’s seeking relief against the subdivision developer.29

Notably, although no issue was taken on the fact that the case against Garcia/TransAmerican, the developer/seller and mortgagor of
the subject lots, was archived for failure to serve summons on him/it as his whereabouts or the office could not be located, it must be
stated that Garcia/TransAmerican is not an indispensable party since a final determination on the validity of the mortgage over the
subject lots can be rendered against petitioner.  Thus, the absence of Garcia/TransAmerican did not hamper the OAALA from resolving
the dispute between private respondents and petitioner.

In China Bank vs. Oliver,30 we held that the mortgagor, who allegedly misrepresented herself to be Mercedes M. Oliver, the registered
owner of TCT No. S-50195, is not an indispensable party in a case filed by a person claiming to be the true registered owner, for
annulment of mortgage and cancellation of title against the mortgagee, China Bank.  We found therein that even without the mortgagor,
the true Mercedes Oliver can prove in her complaint that she is the real person referred in the title and she is not the same person using
the name who entered into a deed of mortgage with the mortgagee, China Bank.

In the present case, private respondents, in their complaint, alleged that the mortgage was constituted without the prior written approval
of the HLURB which is in violation of Section 18 of P.D. No. 957.  Petitioner’s admission that it granted and released the loan without
notifying the HLURB because of its belief that it was not necessary to do so, is fatal to petitioner’s defense.  As a consequence thereof,
the mortgage constituted in favor of petitioner can be declared invalid as against private respondents even without the presence of
Garcia/TransAmerican.  It is worthy to mention that the assailed decision was rendered merely against petitioner and had not made any
pronouncement as to Garcia/TransAmerican’s liability to private respondents for the non-completion of the projects; or to herein
petitioner, as mortgagee.

The present case merely involves the liability of petitioner bank to private respondents as buyers of the lots and townhouse units.

WHEREFORE, the petition is DISMISSED for lack of merit.

SO ORDERED.

G.R. No. 180394             September 29, 2008

MARJORIE B. CADIMAS, by her Attorney-In-Fact, VENANCIO Z. ROSALES,

vs.
MARITES CARRION and GEMMA HUGO, Respondents.

This is a petition for review on certiorari1 under Rule 45 of the 1997 Rules of Civil Procedure, assailing the Decision2 and Resolution3 of
the Court of Appeals in CA-G.R. SP No. 98572. The appellate court set aside two orders4 of the Regional Trial Court (RTC), Branch 85,
Quezon City issued in Civil Case No. Q-04-53581 on the ground that the trial court had no jurisdiction over the case.

The instant petition stemmed from the complaint5 for accion reivindicatoria and damages filed by petitioner Marjorie B. Cadimas,
through her attorney-in-fact, Venancio Z. Rosales, against respondents Marites Carrion and Gemma Hugo. The complaint was
docketed as Civil Case No. Q-04-53581 and raffled to Branch 85 of the RTC of Quezon City.

In the complaint, petitioner averred that she and respondent Carrion were parties to a Contract To Sell dated 4 August 2003, wherein
petitioner sold to respondent Carrion a town house located at Lot 4-F-1-12 No. 23 Aster Street, West Fairview Park Subdivision,
Quezon City for the sum of P330,000.00 to be paid in installments. According to petitioner, Carrion had violated paragraph 8 of said
contract when she transferred ownership of the property to respondent Hugo under the guise of a special power of attorney, which
authorized the latter to manage and administer the property for and in behalf of respondent Carrion. Allegedly, petitioner asked
respondent Carrion in writing to explain the alleged violation but the latter ignored petitioner’s letter, prompting petitioner to demand in
writing that Carrion and Hugo vacate the property and to cancel the contract.6

On 28 October 2004, petitioner filed a Motion To Declare Defendant Marites Carrion In Default,7 alleging that despite the service of
summons and a copy of the complaint, respondent Carrion failed to file a responsive pleading within the reglementary period.

Respondent Hugo filed a Motion To Dismiss8 on her behalf and on behalf of respondent Carrion on 18 November 2004, citing the
grounds of lack of jurisdiction to hear the case on the part of the RTC and estoppel and/or laches on the part of petitioner. Respondent
Hugo argued that the Housing and Land Use Regulatory Board (HLURB) has jurisdiction over the complaint because ultimately, the
sole issue to be resolved was whether petitioner, as the owner and developer of the subdivision on which the subject property stood,
was guilty of committing unsound real estate business practices.

In the same motion, respondent Hugo averred that the RTC had not acquired jurisdiction over the person of respondent Carrion for not
complying with Section 16, Rule 14 of the Rules of Court on the proper service of summons on a non-resident defendant. However,
attached to the motion was a special power of attorney, whereby respondent Carrion had authorized respondent Hugo, among others,
to manage and administer the subject property and to prosecute and defend all suits to protect her rights and interest in said property.9

After petitioner filed a comment on the motion to dismiss, the RTC issued an Omnibus Order10 on 21 March 2005, which denied the
motion to dismiss. The RTC held that the court’s jurisdiction is not determined by the defenses set up in the answer or the motion to
dismiss.

In the same omnibus order, the RTC ruled that summons was served properly, thus, the court had acquired jurisdiction over respondent
Carrion. The RTC noted that respondent Hugo’s failure to disclose at the outset that she was equipped with a special power of attorney
was an act constitutive of misleading the court. Thus, the RTC declared respondent Carrion in default, directed petitioner to present
evidence ex-parte against respondent Carrion, and respondent Hugo to file an answer.

On 18 April 2005, respondent Hugo filed an answer on her behalf and as the attorney-in-fact of respondent Carrion.11 The answer
pleaded a compulsory counterclaim for damages. The following day, petitioner presented evidence ex-parte against respondent
Carrion. Thus, on 22 April 2005, respondent Hugo sought a reconsideration of the omnibus order, praying for the dismissal of the
complaint, the cancellation of the presentation of evidence ex-parte, the lifting of the order of default against respondent Carrion and
the issuance of an order directing the extraterritorial service of summons on respondent Carrion.12

On 17 January 2007, the RTC issued an order, upholding its jurisdiction over petitioner’s complaint. Citing the interest of substantial
justice, the RTC lifted the order of default against respondent Carrion and set the pre-trial conference of the case.13
However, respondents elevated the matter to the Court of Appeals via a special civil action for certiorari, praying that the Omnibus
Order dated 21 March 2005 and Order dated 17 January 2007 issued by Judge Teodoro T. Riel be reversed and set aside and that the
complaint in Civil Case No. Q-04-53581 be dismissed for lack of jurisdiction.

On 27 September 2007, the Court of Appeals rendered the assailed Decision granting respondents’ petition for certiorari. The appellate
court set aside the assailed orders of the RTC and ordered the dismissal of petitioner’s complaint for lack of jurisdiction. In its
Resolution dated 9 November 2007, the Court of Appeals denied petitioner’s motion for reconsideration.

Hence, the instant petition, raising the following arguments: (1) based on the allegations in the complaint, the RTC has jurisdiction over
Civil Case No. Q-04-53581; (2) in any case, respondents have expressly submitted to or recognized the jurisdiction of the RTC by filing
an answer with counterclaim; and (3) respondents erroneously availed of a Rule 65 petition instead of filing a timely appeal from the
order denying their motion to dismiss.14

Essentially, petitioner argues that based on the allegations in the complaint and the reliefs sought, the RTC has jurisdiction over the
matter. In any case, the compulsory counterclaim pleaded in the answer of respondents was an express recognition on their part of the
jurisdiction of the RTC over the complaint for accion reivindicatoria, petitioner adds.

The petition is meritorious.

The nature of an action and the jurisdiction of a tribunal are determined by the material allegations of the complaint and the law at the
time the action was commenced. Jurisdiction of the tribunal over the subject matter or nature of an action is conferred only by law and
not by the consent or waiver upon a court which, otherwise, would have no jurisdiction over the subject matter or nature of an action.15

An examination of Section 1 of Presidential Decree (P.D.) No. 1344,16 which enumerates the regulatory functions of the HLURB,17

readily shows that its quasi-judicial function is limited to hearing only the following specific cases:

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

A. Unsound real estate business practices;

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

C. Cases involving specific performance of contractual and statutory obligations filed by buyers of subdivision lot or
condominium unit against the owner, developer, dealer or salesman.

The aforequoted provision must be read in the light of the statute’s preamble or the introductory or preparatory clause that explains the
reasons for its enactment or the contextual basis for its interpretation. The scope of the regulatory authority thus lodged in the National
Housing Authority (NHA) [now HLURB] is indicated in the second and third preambular paragraphs of the statute which provide:

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

WHEREAS, reports of alarming magnitude also show cases of swindling and fraudulent manipulations perpetrated by unscrupulous
subdivision and condominium sellers and operators, such as failure to deliver titles to the buyers or titles free from liens and
encumbrances, and to pay real estate taxes, and fraudulent sales of the same subdivision lots to different innocent purchasers for
value ."18

The boom in the real estate business all over the country resulted in more litigation between subdivision owners/developers and lot
buyers with the issue of the jurisdiction of the NHA or the HLURB over such controversies as against that of regular courts. In the cases
that reached this Court, the ruling has consistently been that the NHA or the HLURB has 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.19

We agree with the ruling of the RTC that it has jurisdiction over the case based on the allegations of the complaint. Nothing in the
complaint or in the contract to sell suggests that petitioner is the proper party to invoke the jurisdiction of the HLURB. There is nothing
in the allegations in the complaint or in the terms and conditions of the contract to sell that would suggest that the nature of the
controversy calls for the application of either P.D. No. 957 or P.D. No. 1344 insofar as the extent of the powers and duties of the
HLURB is concerned.

Note particularly paragraphs (b) and (c) of Sec. 1, P.D. No. 1344 as worded, where the HLURB’s jurisdiction concerns cases
commenced by subdivision lot or condominium unit buyers. As to paragraph (a), concerning "unsound real estate practices," the logical
complainants would be the buyers and customers against the sellers (subdivision owners and developers or condominium builders and
realtors), and not vice versa.20

The complaint does not allege that petitioner is a subdivision lot buyer. The contract to sell does not contain clauses which would
indicate that petitioner has obligations in the capacity of a subdivision lot developer, owner or broker or salesman or a person engaged
in real estate business. From the face of the complaint and the contract to sell, petitioner is an ordinary seller of an interest in the
subject property who is seeking redress for the alleged violation of the terms of the contract to sell. Petitioner’s complaint alleged that a
contract to sell over a townhouse was entered into by and between petitioner and respondent Carrion and that the latter breached the
contract when Carrion transferred the same to respondent Hugo without petitioner’s consent.21 Thus, petitioner sought
the cancellation of the contract and the recovery of possession and ownership of the town house. Clearly, the complaint is well within
the jurisdiction of the RTC.

In Javellana v. Hon. Presiding Judge, RTC, Branch 30, Manila,22 the Court affirmed the jurisdiction of the RTC over the complaint
for accion publiciana and sum of money on the ground that the complaint did not allege that the subject lot was part of a subdivision
project but that the sale was an ordinary sale on an installment basis. Even the mere assertion that the defendant is a subdivision
developer or that the subject lot is a subdivision lot does not automatically vest jurisdiction on the HLURB. On its face, the complaint
must sufficiently describe the lot as a subdivision lot and sold by the defendant in his capacity as a subdivision developer to fall within
the purview of P.D. No. 957 and P.D. No. 1344 and thus within the exclusive jurisdiction of the HLURB.23

In their comment, respondents cite Antipolo Realty Corp. v. National Housing Authority,24 to bolster the argument that the HLURB has
jurisdiction over controversies involving the determination of the rights of the parties under a contract to sell a subdivision lot. Antipolo
Realty is not squarely applicable to the instant controversy. The issue in said case called for the determination of whether the developer
complied with its obligations to complete certain specified improvements in the subdivision within the specified period of time, a case
that clearly falls under Section 1, paragraph (c) of P.D. No. 1344.

In the instances where the jurisdiction of the HLURB was upheld, the allegations in the complaint clearly showed that the case involved
the determination of the rights and obligations of the parties in a sale of real estate under P.D. No. 957,25 or the complaint for specific
performance sought to compel the subdivision developer to comply with its undertaking under the contract to sell,26 or the claim by the
subdivision developer would have been properly pleaded as a counterclaim in the HLURB case filed by the buyer against the developer
to avoid splitting causes of action.27

The statement in Suntay v. Gocolay28 to the effect that P.D. No. 957 encompasses all questions regarding subdivisions and
condominiums, which was cited by the Court of Appeals in the assailed decision, is a mere obiter dictum. As a matter of fact, the Court
in Suntay nullified the orders issued by the HLURB over the action for the annulment of an auction sale, cancellation of notice of levy
and damages on the ground of lack of jurisdiction. P.D. No. 957 and P.D. No. 1344 were not the applicable laws because the action
was brought against a condominium buyer and not against the developer, seller, or broker contemplated under P.D. No. 1344. The
action likewise involved the determination of ownership over the disputed condominium unit, which by its nature does not fall under the
classes of disputes cognizable by the HLURB under Section 1 of P.D. No. 1344.

The Court of Appeals held that the provision in the contract to sell mandating membership of the buyer of the housing unit in a housing
corporation was a strong indication that the property purchased by respondent Carrion from petitioner was part of a tract of land
subdivided primarily for residential purposes. Thus, the appellate court concluded that the HLURB has jurisdiction over the controversy
because the property subject thereof was part of a subdivision project.

Not every controversy involving a subdivision or condominium unit falls under the competence of the HLURB29 in the same way that the
mere allegation of relationship between the parties, i.e., that of being subdivision owner/developer and subdivision lot buyer, does not
automatically vest jurisdiction in the HLURB. For an action to fall within the exclusive jurisdiction of the HLURB, the decisive element is
the nature of the action as enumerated in Section 1 of P.D. No. 1344.30 Notably, in Spouses Dela Cruz v. Court of Appeals,31 the Court
upheld the jurisdiction of the RTC over the complaint for cancellation of the contract to sell of a subdivision house and lot because the
case did not fall under any of the cases mentioned in Section 1, P.D. No. 1344. In interpreting said provision, the Court explained, thus:

On this matter, we have consistently held that the concerned administrative agency, the National Housing Authority (NHA) before and
now the HLURB, has jurisdiction over complaints aimed at compelling the subdivision developer to comply with its contractual and
statutory obligations.

For their part, respondents claim that the resolution of the case ultimately calls for the interpretation of the contract to sell and the
determination of whether petitioner is guilty of committing unsound real estate business practices, thus, the proper forum to hear and
decide the matter is the HLURB. The argument does not impress.

It is an elementary rule of procedural law that jurisdiction of the court over the subject matter is determined by the allegations of the
complaint irrespective of whether or not the plaintiff is entitled to recover upon all or some of the claims asserted therein. As a
necessary consequence, the jurisdiction of the court cannot be made to depend upon the defenses set up in the answer or upon the
motion to dismiss, for otherwise, the question of jurisdiction would almost entirely depend upon the defendant. What determines the
jurisdiction of the court is the nature of the action pleaded as appearing from the allegations in the complaint. The averments in the
complaint and the character of the relief sought are the matters to be consulted.32 Thus, the allegations in respondents’ motion to
dismiss on the unsound real estate business practices allegedly committed by petitioner, even if proved to be true, cannot serve to oust
the RTC of its jurisdiction over actions for breach of contract and damages which has been conferred to it by law.

WHEREFORE, the instant petition for review on certiorari is GRANTED and the Decision dated 27 September 2007 and Resolution
dated 9 November 2007 of the Court of Appeals in CA-G.R. SP No. 98572 are REVERSED and SET ASIDE. The orders dated 21
March 2005 and 17 January 2007 of the Regional Trial Court, Branch 85, Quezon City in Civil Case No. Q-04-53581 are REINSTATED.
The Regional Trial Court is ORDERED to resume the proceedings in and decide Civil Case No. Q-04-53581 with deliberate speed.
Costs against respondents.

SO ORDERED.
G.R. No. 131683               June 19, 2000

JESUS LIM ARRANZA; LORENZO CINCO; QUINTIN TAN; JOSE ESCOBAR; ELBERT FRIEND; CLASSIC HOMES VILLAGE
ASSOCIATION, INC.; BF NORTHWEST HOMEOWNERS' ASSOCIATION, INC.; and UNITED BF HOMEOWNERS'
ASSOCIATIONS, INC., petitioners,
vs.
B.F. HOMES, INC. AND THE HONORABLE COURT OF APPEALS, respondent.

For resolution in this petition is the issue of whether it is the Securities and Exchange Commission (SEC) or the Housing and Land Use
Regulatory Board (HLURB) that has jurisdiction over a complaint filed by subdivision homeowners against a subdivision developer that
is under receivership for specific performance regarding basic homeowners' needs such as water, security and open spaces.

Respondent BF Homes, Inc. (BFHI), is a domestic corporation engaged in developing subdivisions and selling residential lots. One of
the subdivisions that respondent developed was the BF Homes Parañaque Subdivision, which now sprawls across not only a portion of
the City of Parañaque but also those of the adjoining cities of Las Piñas and Muntinlupa.

When the Central Bank ordered the closure of Banco Filipino, which had substantial investments in respondent BFHI, respondent filed
with the SEC a petition for rehabilitation and a declaration that it was in a state of suspension of payments. On 18 March 1985, the SEC
placed respondent under a management committee. Upon that committee's dissolution on 2 February 1988, the SEC appointed Atty.
Florencio B. Orendain as a Receiver, and approved a Revised Rehabilitation Plan.

As a Receiver, Orendain instituted a central security system and unified the sixty-five homeowners' associations into an umbrella
homeowners' association called United BF Homeowners' Associations, Inc. (UBFHAI), which was thereafter incorporated with the
Home Insurance and Guaranty Corporation (HIGC).1

In 1989, respondent, through Orendain, turned over to UBFHAI control and administration of security in the subdivision, the Clubhouse
and the open spaces along Concha Cruz Drive. Through the Philippine Waterworks and Construction Corporation (PWCC),
respondent's managing company for waterworks in the various BF Homes subdivisions, respondent entered into an agreement with
UBFHAI for the annual collection of community assessment fund and for the purchase of eight new pumps to replace the over-
capacitated pumps in the old wells.

On 7 November 1994, Orendain was relieved by the SEC of his duties as a Receiver, and a new Board of Receivers consisting of
eleven members of respondent's Board of Directors was appointed for the implementation of Phases II and III of respondent's
rehabilitation.2 The new Board, through its Chairman, Albert C. Aguirre, revoked the authority given by Orendain to use the open spaces
at Concha Cruz Drive and to collect community assessment funds; deferred the purchase of new pumps; recognized BF Parañaque
Homeowners' Association, Inc., (BFPHAI) as the representative of all homeowners in the subdivision; took over the management of the
Clubhouse; and deployed its own security guards in the subdivision.

Consequently, on 5 July 1995, herein petitioners filed with the HLURB a class suit "for and in behalf of the more than 7,000
homeowners in the subdivision" against respondent BFHI, BF Citiland Corporation, PWCC and A.C. Aguirre Management Corporation
"to enforce the rights of purchasers of lots" in BF Homes Parañaque3 . They alleged that:

1. The forty (40) wells, mostly located at different elevations in Phases 3 and 4 of the subdivision and with only twenty-seven
(27) productive, are the sources of the inter-connected water system in the 765-hectare subdivision;

2. There is only one drainage and sewer system;

3. There is one network of roads;

4. There are eight (8) entry and exit points to the subdivision and from three (3) municipalities (now cities), a situation obtaining
in this subdivision only and nowhere else;

5. There was no security force for the entire subdivision until 1988;
 6. There are not enough open spaces in the subdivision in relation to the total land area developed; and whatever open
spaces are available have been left unkempt, undeveloped and neglected;

7. There are no zoning guidelines which resulted in unregulated constructions of structures and the proliferation of business
establishments in residential areas; and

8. The BFPHAI became "moribund" sometime in 1980 on account of its failure to cope with the delivery of basic services
except for garbage collection.

Petitioners raised "issues" on the following basic needs of the homeowners: rights-of-way; water; open spaces; road and perimeter wall
repairs; security; and the interlocking corporations that allegedly made it convenient for respondent "to compartmentalize its obligations
as general developer, even if all of these are hooked into the water, roads, drainage and sewer systems of the subdivision."4 Thus,
petitioner prayed that:

A. A cease-and-desist order from selling any of the properties within the subdivision be issued against respondent BFHI, BF
Citi, ACAMC, and/or any and all corporations acting as surrogates/alter-egos, sister companies of BFHI and/or its stockholders
until the warranties, facilities and infrastructures shall have been complied with or put up (and) the advances of UBFHAI
reimbursed, otherwise, to cease and desist from rescinding valid agreements or contracts for the benefit of complainants, or
committing acts diminishing, duliting or otherwise depriving complainants of their rights under the law as homeowners;

B. After proper proceedings the bond or deposit put up by respondent BF Homes, Inc. be forfeited in favor of petitioners;

C. Respondent BFHI be ordered to immediately turnover the roads, open spaces, and other facilities built or put up for the
benefit of lot buyers/homeowners in the subdivision to complainant UBFHAI as representative of all homeowners in BF Homes
Parañaque, free from all liens, encumbrances, and taxes in arrears;

D. If the open spaces in the subdivision are not sufficient as required by law, to impose said penalties/sanctions against BFHI
or the persons responsible therefor;

E. Order the reimbursement of advances made by UBFHAI;

F. Turn over all amounts which may have been collected from users' fees of the stop of open space at Concha Cruz Drive;

G. Order PWCC to effect and restore 24-hour water supply to all residents by adding new wells replacing over-capacitated
pumps and otherwise improving water distribution facilities;

H. Order PWCC to continue collecting the Community Development Fund and remit all amounts collected to UBFHAI;

I. Order BFHI to immediately withdraw the guards at the clubhouse and the 8 entry and exit points to the subdivision, this
being an act of usurpation and blatant display of brute force;

J. The appropriate penalties/sanctions be imposed against BF Citi, ACAMC or any other interlocking corporation of BFHI or
any of its principal stockholders in respect of the diminution/encroaching/violation on the rights of the residents of the
subdivision to enjoy/avail of the facilities/services due them; and

K. Respondents be made to pay attorney's fees and the costs of this suit.5

In its answer, respondent claimed that (a) it had complied with its contractual obligations relative to the subdivision's development; (b)
respondent could not be compelled to abide by agreements resulting from Orendain's ultra vires acts; and (c) petitioners were
precluded from instituting the instant action on account of Section 6(c) of P.D. No. 902-A providing for the suspension of all actions for
claims against a corporation under receivership. Respondent interposed counterclaims and grayed for the dismissal of the complaint.6

Petitioners thereafter filed an urgent motion for a cease-and-desist/status quo order. Acting on this motion, HLURB Arbiter Charito M.
Bunagan issued a 20-day temporary restraining order to avoid rendering nugatory and ineffectual any judgment that could be issued in
the case;7 and subsequently, an Order granting petitioners' prayer for preliminary injunction was issued

enjoining and restraining respondent BF Homes, Incorporated, its agents and all persons acting for and in its behalf from
taking over/administering the Concha Garden Row, from issuing stickers to residents and non-residents alike for free or with
fees, from preventing necessary improvements and repairs of infrastructures within the authority and administration of
complainant UBFHAI, and from directly and indirectly taking over security in the eight (8) exit points of the subdivision or in any
manner interfering with the processing and vehicle control in subject gates and otherwise to remove its guards from the gates
upon posting of a bond of One Hundred Thousand Pesos (P100,000.00) which bond shall answer for whatever damages
respondents may sustain by reason of the issuance of the writ of preliminary injunction if it turns out that complainant is not
entitled thereto.8

Respondent thus filed with the Court of Appeals a petition for certiorari and prohibition docketed as CA-G.R. SP No. 39685. It
contended in the main that the HLURB acted "completely without jurisdiction" in issuing the Order granting the writ of preliminary
injunction considering that inasmuch as respondent is under receivership, the "subject matter of the case is one exclusively within the
jurisdiction of the SEC."9

On 28 November 1997, the Court of Appeals rendered a decision 10 annulling and setting aside the writ of preliminary injunction issued
by the HLURB. It ruled that private respondents' action may properly be regarded as a "claim" within the contemplation of PD No. 902-A
which should be placed on equal footing with those of petitioners' other creditor or creditors and which should be filed with the
Committee of Receivers. In any event, pursuant to Section 6(c) of P.D. No. 902-A and SEC's Order of 18 March 1985, petitioners'
action against respondent, which is under receivership, should be suspended.
Hence, petitioners filed the instant petition for review on certiorari. On 26 January 1998, the Court issued a temporary restraining order
(TRO) enjoining respondent, its officers, representatives and persons acting upon its orders from

(a) taking over/administering the Concha Garden Row; (b) issuing stickers to residents and non-residents alike for free or with
fees; (c) preventing necessary improvements and repairs of infrastructures within the authority and administration of
complainant United BF Homeowners' Association, Inc. (UBFHAI); (d) directly and indirectly taking over security in the eight (8)
exit points of all of BF Homes Parañaque Subdivision or in any manner interfering with the processing and vehicle control in
the subject gates; and (e) otherwise to remove its guards from the gates. . . . . 11

Respondent's motion to lift the TRO was denied.

At the hearing on 1 July 1998, the primary issue in this case was defined as "which body has jurisdiction over petitioners' claims, the
Housing and Land Use Regulatory Board (HLURB) or the Securities and Exchange Commission (SEC)?" The collateral issue to be
addressed is "assuming that the HLURB has jurisdiction, may the proceedings therein be suspended pending the outcome of the
receivership before the SEC?"

For their part, petitioners argue that the complaint referring to rights of way, water, open spaces, road and perimeter wall repairs,
security and respondent's interlocking corporations that facilitated circumvention of its obligation involves unsound real estate practices.
The action is for specific performance of a real estate developers' obligations under P.D. No. 957, and the relief sought is revocation of
the subdivision project's registration certificate and license to sell. These issues are within the jurisdiction of the HLURB. Even if
respondent is under receivership, its obligations as a real estate developer under P.D. No. 957 are not suspended. Section 6(c) of P.D.
No. 902-A, as amended by P.D. No. 957, on "suspension of all actions for claims against corporations" refers solely to monetary claims
which are but incidental to petitioner's complaints against BFHI, and if filed elsewhere than the HLURB, it would result to splitting
causes of action. Once determined in the HLURB, however, the monetary awards should be submitted to the SEC as established
claims. Lastly, the acts enjoined by the HLURB are not related to the disposition of BFHI's assets as a corporation undergoing its final
phase of rehabilitation.

On the other hand, respondent asserts that the SEC, not the HLURB, has jurisdiction over petitioners' complaint based on the contracts
entered into by the former receiver. The SEC, being the appointing authority, should be the one to take cognizance of controversies
arising from the performance of the receiver's duties. Since respondent's properties are under the SEC's custodia legis, they are
exempt from any court process.

Jurisdiction is the authority to hear and determine a cause — the right to act in a case. 12 It is conferred by law and not by mere
administrative policy of any court or tribunal. 1 It is determined by the averments of the complaint and not by the defense contained in
the answer. 14 Hence, the jurisdictional issue involved here shall be determined upon an examination of the applicable laws and the
allegations of petitioners' complaint before the HLURB.

Presidential Decree No. 957 (The Subdivision and Condominium Buyers' Protective Decree) was issued on 12 July 1976 in answer to
the popular call for correction of pernicious practices of subdivision owners and/or developers that adversely affected the interests of
subdivision lot buyers. Thus, one of the "whereas clauses" of P.D. No. 957 states:

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

Sec. 3 of P.D. No. 957 empowered the National Housing Authority (NHA) with the "exclusive jurisdiction to regulate the real estate trade
and business." On 2 April 1978, P.D. No. 1344 was issued to expand the jurisdiction of the NHA to include the following:

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

A. Unsound real estate business practices;

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

C. Cases involving specific performance of contractual and statutory obligations filed by buyers of subdivision lot or
condominium unit against the owner, developer, dealer, broker or salesman. (Emphasis supplied.)

Thereafter, the regulatory and quasi-judicial functions of the NHA were transferred to the Human Settlements Regulatory Commission
(HSRC) by virtue of Executive Order No. 648 dated 7 February 1981. Section 8 thereof specifies the functions of the NHA that were
transferred to the HSRC including the authority to hear and decide "cases on unsound real estate business practices; claims involving
refund filed against project owners, developers, dealers, brokers or salesmen and cases of specific performance." Executive Order No.
90 dated 17 December 1986 renamed the HSRC as the Housing and Land Use Regulatory Board (HLURB). 15

The boom in the real estate business all over the country resulted in more litigation between subdivision owners/developers and lot
buyers with the issue of the jurisdiction of the NHA or the HLURB over such controversies as against that of regular courts. In the
cases 16 that reached this Court, the ruling has consistently been that the NHA or the HLURB has 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.

Notably, in Antipolo Realty Corporation v. National Housing Authority, 17 one of the issues raised by the homeowners was the failure of
Antipolo Realty to develop the subdivision in accordance with its undertakings under the contract to sell. Such undertakings include
providing the subdivision with concrete curbs and gutters, underground drainage system, asphalt paved roads, independent water
system, electrical installation with concrete posts, landscaping and concrete sidewalks, developed park or amphitheater and 24-hour
security guard service. The Court held that the complaint filed by the homeowners was within the jurisdiction of the NHA.1avvphi1

Similarly, in Alcasid v.  Court of Appeals, 18 the Court ruled that the HLURB, not the RTC, has jurisdiction over the complaint of lot
buyers for specific performance of alleged contractual and statutory obligations of the defendants, to wit, the execution of contracts of
sale in favor of the plaintiffs and the introduction in the disputed property of the necessary facilities such as asphalting and street lights.

In the case at bar, petitioners' complaint is for specific performance to enforce their rights as purchasers of subdivision lots as regards
rights of way, water, open spaces, road and perimeter wall repairs, and security. Indisputably then, the HLURB has jurisdiction over the
complaint.

The fact that respondent is under receivership does not divest the HLURB of that jurisdiction.1awphil A receiver is a person appointed
by the court, or in this instance, by a quasi-judicial administrative agency, in behalf of all the parties for the purpose of preserving and
conserving the property and preventing its possible destruction or dissipation, if it were left in the possession of any of the parties. 19 It is
the duty of the receiver to administer the assets of the receivership estate; and in the management and disposition of the property
committed to his possession, he acts in a fiduciary capacity and with impartiality towards all interested persons. 20 The appointment of a
receiver does not dissolve a corporation, nor does it interfere with the exercise of its corporate rights. 21 In this case where there
appears to be no restraints imposed upon respondent as it undergoes rehabilitation receivership, 22 respondent continues to exist as a
corporation and hence, continues or should continue to perform its contractual and statutory responsibilities to petitioners as
homeowners.

Receivership is aimed at the preservation of, and at making more secure, existing rights; it cannot be used as an instrument for the
destruction of those rights. 2

No violation of the SEC order suspending payments to creditors would result as far as petitioners' complaint before the HLURB is
concerned. To reiterate, what petitioners seek to enforce are respondent's obligations as a subdivision developer. Such claims are
basically not pecuniary in nature although it could incidentally involve monetary considerations. All that petitioners' claims entail is the
exercise of proper subdivision management on the part of the SEC-appointed Board of Receivers towards the end that homeowners
shall enjoy the ideal community living that respondent portrayed they would have when they bought real estate from it.

Neither may petitioners be considered as having "claims" against respondent within the context of the following  proviso of Section 6 (c)
of P.D. No. 902-A, as amended by P.D. Nos. 1653, 1758 and 1799, to warrant suspension of the HLURB proceedings:

[U]pon appointment of a management committee, rehabilitation receiver, board or body, pursuant to this Decree, all actions
for claims against corporations, partnerships or associations under management or receivership pending before any court,
tribunal, board or body shall be suspended accordingly. (Emphasis supplied.)

In Finasia Investments and Finance Corporation v. Court of Appeals, 24 this Court defined and explained the term "claim" in Section 6
(c) of P.D. No. 902-A, as amended, as follows:

We agree with the public respondent that the word "claim" as used in Sec. 6 (c) of P.D. 902-A, as amended, refers to debts or
demands of a pecuniary nature. It means "the assertion of a right to have money paid. It is used in special proceedings like
those before administrative court, on insolvency." (Emphasis supplied.)

Hence, in Finansia Investments, the Court held that a civil case to nullify a special power of attorney because the principal's signature
was forged should not be suspended upon the appointment of a receiver of the mortgagee to whom a person mortgaged the property
owned by such principal. The Court ruled that the cause of action in that civil case "does not consist of demand for payment of debt or
enforcement of pecuniary liability." It added:

It has nothing to do with the purpose of Section 6 (c) of P.D. 902-A, as amended, which is to prevent a creditor from obtaining
an advantage or preference over another with respect to action against corporation, partnership, association under
management or receivership and to protect and preserve the rights of party litigants as well as the interest of the investing
public or creditors. Moreover, a final verdict on the question of whether the special power of attorney in question is a forgery or
not will not amount to any preference or advantage to Castro who was not shown to be a creditor of FINASIA. 25

In this case, under the complaint for specific performance before the HLURB, petitioners do not aim to enforce a pecuniary demand.
Their claim for reimbursement should be viewed in the light of respondent's alleged failure to observe its statutory and contractual
obligations to provide petitioners a "decent human settlement" and "ample opportunities for improving their quality of life." 26 The
HLURB, not the SEC, is equipped with the expertise to deal with that matter.

On the other hand, the jurisdiction of the SEC is defined by P.D. No. 902-A, as amended, as follows:

Sec. 5. In addition to the regulatory and adjudicative functions of the Securities and Exchange Commission over corporations,
partnerships and other forms of associations registered with it as expressly granted under existing laws and decrees, it shall
have original and exclusive jurisdiction to hear and decide cases involving:

a) Devices or schemes employed by or any act of the board of directors, business associates, its officers or partners,
amounting to fraud and misrepresentation which may be detrimental to the interest of the public and/or of the
stockholders, partners, members of associations or organizations registered with the Commission;

b) Controversies arising out of intra-corporate or partnership relations, between and among stockholders, members of
associates; between any or all of them and the corporation, partnership or association of which they are stockholders,
members, or associates, respectively; and between such corporation, partnership or association and the State insofar
as it concerns their individual franchise or right to exist as such entity; [and]

c) Controversies in the election or appointments of directors, trustees, officers, or managers of such corporation,
partnerships or associations.
For the SEC to acquire jurisdiction over any controversy under these provisions, two elements must be considered: (1) the status or
relationship of the parties; and (2) the nature of the question that is the subject of their controversy. 27 The first element requires that the
controversy must arise "out of intra-corporate or partnership relations between and among stockholders, members or associates;
between any or all of them and the corporation, partnership or association of which they are stockholders, members or associates,
respectively; and between such corporation, partnership or association and the State in so far as it concerns their individual
franchises." 28 Petitioners are not stockholders, members or associates of respondent. They are lot buyers and now homeowners in the
subdivision developed by the respondent.

The second element requires that the dispute among the parties be intrinsically connected with the regulation or the internal affairs of
the corporation, partnership or association. 29 The controversy in this case is remotely related to the "regulation" of respondent
corporation or to respondent's "internal affairs."

It should be stressed that the main concern in this case is the is the issue of jurisdiction over petitioners' complaint against respondent
for specific performance. P.D. No. 902-A, as amended, defines the jurisdiction of the SEC; while P.D. No. 957, as amended, delineates
that of the HLURB. These two quasi-judicial agencies exercise functions that are distinct from each other. The SEC has authority over
the operation of all kinds of corporations, partnerships or associations with the end in view of protecting the interests of the investing
public and creditors. On the other hand, the HLURB has jurisdiction over matters relating to observance of laws governing corporations
engaged in the specific business of development of subdivisions and condominiums. The HLURB and the SEC being bestowed with
distinct powers and functions, the exercise of those functions by one shall not abate the performance by the other of its own functions.
As respondent puts it, "there is no contradiction between P.D. No. 902-A and P.D. No. 957." 30

What complicated the jurisdictional issue in this case is the fact that petitioners are primarily praying for the retention of respondent's
obligations under the Memorandum of Agreement that Receiver Orendain had entered into with them but which the present Board of
Receivers had revoked.

In Figueroa v. SEC, 31 this Court has declared that the power to overrule or revoke the previous acts of the management or Board of
Directors of the entity under receivership is within a receiver's authority, as provided for by Section 6 (d) (2) of P.D. No. 902-A. Indeed,
when the acts of a previous receiver or management committee prove disadvantageous or inimical to the rehabilitation of a distressed
corporation, the succeeding receiver or management committee may abrogate or cast aside such acts. However, that prerogative is not
absolute. It should be exercised upon due consideration of all pertinent and relevant laws when public interest and welfare are involved.
The business of developing subdivisions and corporations being imbued with public interest and welfare, any question arising from the
exercise of that prerogative should be brought to the proper agency that has technical know-how on the matter.

P.D. No. 957 was promulgated to encompass all questions regarding subdivisions and condominiums. It is aimed at providing for an
appropriate government agency, the HLURB, to which all parties aggrieved in the implementation of its provisions and the enforcement
of contractual rights with respect to said category of real estate may take recourse. Nonetheless, the powers of the HLURB may not in
any way be deemed as in derogation of the SEC's authority. P.D. Nos. 902-A and 957, as far as both are concerned with corporations,
are laws in pari materia. P.D. No. 902-A relates to all corporations, while P.D. No. 957 pertains to corporations engaged in the
particular business of developing subdivisions and condominiums. Although the provisions of these decrees on the issue of jurisdiction
appear to collide when a corporation engaged in developing subdivisions and condominiums is under receivership, the same decrees
should be construed as far as reasonably possible to be in harmony with each other to attain the purpose of an expressed national
policy. 32

Hence, the HLURB should take jurisdiction over petitioners' complaint because it pertains to matters within the HLURB's competence
and expertise. The HLURB should view the issue of whether the Board of Receivers correctly revoked the agreements entered into
between the previous receiver and the petitioners from the perspective of the homeowners' interests, which P.D. No. 957 aims to
protect. Whatever monetary awards the HLURB may impose upon respondent are incidental matters that should be addressed to the
sound discretion of the Board of Receivers charged with maintaining the viability of respondent as a corporation. Any controversy that
may arise in that regard should then be addressed to the SEC.

It is worth noting that the parties agreed at the 1 July 1998 hearing that should the HLURB establish and grant petitioners' claims, the
same should be referred to the SEC. Thus, the proceedings at the HLURB should not be suspended notwithstanding that respondent is
still under receivership. The TRO that this Court has issued should accordingly continue until such time as the HLURB shall have
resolved the controversy. The present members of the Board of Receivers should be reminded of their duties and responsibilities as an
impartial Board that should serve the interests of both the homeowners and respondent's creditors. Their interests, financial or
otherwise, as members of respondent's Board of Directors should be circumscribed by judicious and unbiased performance of their
duties and responsibilities as members of the Board of Receivers. Otherwise, respondent's full rehabilitation may face a bleak future.
Both parties should never give full rein to acts that could prove detrimental to the interests of the homeowners and eventually
jeopardize respondent's rehabilitation.

WHEREFORE, the questioned Decision of the Court of Appeals is hereby REVERSED and SET ASIDE. This case is REMANDED to
the Housing and Land Use Regulatory Board for continuation of proceedings with dispatch as the Securities and Exchange
Commission proceeds with the rehabilitation of respondent BF Homes, Inc., through the Board of Receivers. Thereafter, any and all
monetary claims duly established before the HLURB shall be referred to the Board of Receivers for proper disposition and thereafter, to
the SEC, if necessary. No costs.

SO ORDERED.
G.R. No. 135808             October 6, 2008

SECURITIES AND EXCHANGE COMMISSION, petitioner,

vs.
INTERPORT RESOURCES CORPORATION, MANUEL S. RECTO, RENE S. VILLARICA, PELAGIO RICALDE, ANTONIO REINA,
FRANCISCO ANONUEVO, JOSEPH SY and SANTIAGO TANCHAN, JR., respondents.

This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the Decision,1 dated 20 August 1998, rendered
by the Court of Appeals in C.A.-G.R. SP No. 37036, enjoining petitioner Securities and Exchange Commission (SEC) from taking
cognizance of or initiating any action against the respondent corporation Interport Resources Corporation (IRC) and members of its
board of directors, respondents Manuel S. Recto, Rene S. Villarica, Pelagio Ricalde, Antonio Reina, Francisco Anonuevo, Joseph Sy
and Santiago Tanchan, Jr., with respect to Sections 8, 30 and 36 of the Revised Securities Act. In the same Decision of the appellate
court, all the proceedings taken against the respondents, including the assailed SEC Omnibus Orders of 25 January 1995 and 30
March 1995, were declared void.

The antecedent facts of the present case are as follows.

On 6 August 1994, the Board of Directors of IRC approved a Memorandum of Agreement with Ganda Holdings Berhad (GHB). Under
the Memorandum of Agreement, IRC acquired 100% or the entire capital stock of Ganda Energy Holdings, Inc. (GEHI),2 which would
own and operate a 102 megawatt (MW) gas turbine power-generating barge. The agreement also stipulates that GEHI would assume a
five-year power purchase contract with National Power Corporation. At that time, GEHI's power-generating barge was 97% complete
and would go on-line by mid-September of 1994. In exchange, IRC will issue to GHB 55% of the expanded capital stock of IRC
amounting to 40.88 billion shares which had a total par value of P488.44 million.3

On the side, IRC would acquire 67% of the entire capital stock of Philippine Racing Club, Inc. (PRCI). PRCI owns 25.724 hectares of
real estate property in Makati. Under the Agreement, GHB, a member of the Westmont Group of Companies in Malaysia, shall extend
or arrange a loan required to pay for the proposed acquisition by IRC of PRCI.4

IRC alleged that on 8 August 1994, a press release announcing the approval of the agreement was sent through facsimile transmission
to the Philippine Stock Exchange and the SEC, but that the facsimile machine of the SEC could not receive it. Upon the advice of the
SEC, the IRC sent the press release on the morning of 9 August 1994.5

The SEC averred that it received reports that IRC failed to make timely public disclosures of its negotiations with GHB and that some of
its directors, respondents herein, heavily traded IRC shares utilizing this material insider information. On 16 August 1994, the SEC
Chairman issued a directive requiring IRC to submit to the SEC a copy of its aforesaid Memorandum of Agreement with GHB. The SEC
Chairman further directed all principal officers of IRC to appear at a hearing before the Brokers and Exchanges Department (BED) of
the SEC to explain IRC's failure to immediately disclose the information as required by the Rules on Disclosure of Material Facts.6

In compliance with the SEC Chairman's directive, the IRC sent a letter dated 16 August 1994 to the SEC, attaching thereto copies of
the Memorandum of Agreement. Its directors, Manuel Recto, Rene Villarica and Pelagio Ricalde, also appeared before the SEC on 22
August 1994 to explain IRC's alleged failure to immediately disclose material information as required under the Rules on Disclosure of
Material Facts.7

On 19 September 1994, the SEC Chairman issued an Order finding that IRC violated the Rules on Disclosure of Material Facts, in
connection with the Old Securities Act of 1936, when it failed to make timely disclosure of its negotiations with GHB. In addition, the
SEC pronounced that some of the officers and directors of IRC entered into transactions involving IRC shares in violation of Section 30,
in relation to Section 36, of the Revised Securities Act.8

Respondents filed an Omnibus Motion, dated 21 September 1994, which was superseded by an Amended Omnibus Motion, filed on 18
October 1994, alleging that the SEC had no authority to investigate the subject matter, since under Section 8 of Presidential Decree No.
902-A,9 as amended by Presidential Decree No. 1758, jurisdiction was conferred upon the Prosecution and Enforcement Department
(PED) of the SEC. Respondents also claimed that the SEC violated their right to due process when it ordered that the respondents
appear before the SEC and "show cause why no administrative, civil or criminal sanctions should be imposed on them," and, thus,
shifted the burden of proof to the respondents. Lastly, they sought to have their cases tried jointly given the identical factual situations
surrounding the alleged violation committed by the respondents.10
Respondents also filed a Motion for Continuance of Proceedings on 24 October 1994, wherein they moved for discontinuance of the
investigations and the proceedings before the SEC until the undue publicity had abated and the investigating officials had become
reasonably free from prejudice and public pressure.11

No formal hearings were conducted in connection with the aforementioned motions, but on 25 January 1995, the SEC issued an
Omnibus Order which thus disposed of the same in this wise:12

WHEREFORE, premised on the foregoing considerations, the Commission resolves and hereby rules:

1. To create a special investigating panel to hear and decide the instant case in accordance with the Rules of Practice and
Procedure Before the Prosecution and Enforcement Department (PED), Securities and Exchange Commission, to be
composed of Attys. James K. Abugan, Medardo Devera (Prosecution and Enforcement Department), and Jose Aquino
(Brokers and Exchanges Department), which is hereby directed to expeditiously resolve the case by conducting continuous
hearings, if possible.

2. To recall the show cause orders dated September 19, 1994 requiring the respondents to appear and show cause why no
administrative, civil or criminal sanctions should be imposed on them.

3. To deny the Motion for Continuance for lack of merit.

Respondents filed an Omnibus Motion for Partial Reconsideration,13 questioning the creation of the special investigating panel to hear
the case and the denial of the Motion for Continuance. The SEC denied reconsideration in its Omnibus Order dated 30 March 1995.14

The respondents filed a petition before the Court of Appeals docketed as C.A.-G.R. SP No. 37036, questioning the Omnibus Orders
dated 25 January 1995 and 30 March 1995.15 During the proceedings before the Court of Appeals, respondents filed a Supplemental
Motion16 dated 16 May 1995, wherein they prayed for the issuance of a writ of preliminary injunction enjoining the SEC and its agents
from investigating and proceeding with the hearing of the case against respondents herein. On 5 May 1995, the Court of Appeals
granted their motion and issued a writ of preliminary injunction, which effectively enjoined the SEC from filing any criminal, civil or
administrative case against the respondents herein.17

On 23 October 1995, the SEC filed a Motion for Leave to Quash SEC Omnibus Orders so that the case may be investigated by the
PED in accordance with the SEC Rules and Presidential Decree No. 902-A, and not by the special body whose creation the SEC had
earlier ordered.18

The Court of Appeals promulgated a Decision19 on 20 August 1998. It determined that there were no implementing rules and
regulations regarding disclosure, insider trading, or any of the provisions of the Revised Securities Acts which the respondents allegedly
violated. The Court of Appeals likewise noted that it found no statutory authority for the SEC to initiate and file any suit for civil liability
under Sections 8, 30 and 36 of the Revised Securities Act. Thus, it ruled that no civil, criminal or administrative proceedings may
possibly be held against the respondents without violating their rights to due process and equal protection. It further resolved that
absent any implementing rules, the SEC cannot be allowed to quash the assailed Omnibus Orders for the sole purpose of re-filing the
same case against the respondents.20

The Court of Appeals further decided that the Rules of Practice and Procedure Before the PED, which took effect on 14 April 1990, did
not comply with the statutory requirements contained in the Administrative Code of 1997. Section 8, Rule V of the Rules of Practice and
Procedure Before the PED affords a party the right to be present but without the right to cross-examine witnesses presented against
him, in violation of Section 12(3), Chapter 3, Book VII of the Administrative Code. 21

In the dispositive portion of its Decision, dated 20 August 1998, the Court of Appeals ruled that22:

WHEREFORE, [herein petitioner SEC's] Motion for Leave to Quash SEC Omnibus Orders is hereby DENIED. The petition for
certiorari, prohibition and mandamus is GRANTED. Consequently, all proceedings taken against [herein respondents] in this
case, including the Omnibus Orders of January 25, 1995 and March 30, 1995 are declared null and void. The writ of
preliminary injunction is hereby made permanent and, accordingly, [SEC] is hereby prohibited from taking
cognizance or initiating any action, be they civil, criminal, or administrative against [respondents] with respect to Sections 8
(Procedure for Registration), 30 (Insider's duty to disclose when trading) and 36 (Directors, Officers and Principal
Stockholders) in relation to Sections 46 (Administrative sanctions) 56 (Penalties) 44 (Liabilities of Controlling persons) and 45
(Investigations, injunctions and prosecution of offenses) of the Revised Securities Act and Section 144 (Violations of the Code)
of the Corporation Code. (Emphasis provided.)

The SEC filed a Motion for Reconsideration, which the Court of Appeals denied in a Resolution23 issued on 30 September 1998.

Hence, the present petition, which relies on the following grounds24:

THE COURT OF APPEALS ERRED WHEN IT DENIED PETITIONER'S MOTION FOR LEAVE TO QUASH THE ASSAILED
SEC OMNIBUS ORDERS DATED JANUARY 25 AND MARCH 30, 1995.

II

THE COURT OF APPEALS ERRED WHEN IT RULED THAT THERE IS NO STATUTORY AUTHORITY WHATSOEVER FOR
PETITIONER SEC TO INITIATE AND FILE ANY SUIT BE THEY CIVIL, CRIMINAL OR ADMINISTRATIVE AGAINST
RESPONDENT CORPORATION AND ITS DIRECTORS WITH RESPECT TO SECTION 30 (INSIDER'S DUTY TO
DISCOLSED [sic] WHEN TRADING) AND 36 (DIRECTORS OFFICERS AND PRINCIPAL STOCKHOLDERS) OF THE
REVISED SECURITIES ACT; AND
 III

THE COURT OF APPEALS ERRED WHEN IT RULED THAT RULES OF PRACTICE AND PROSECUTION BEFORE THE
PED AND THE SICD RULES OF PROCEDURE ON ADMINISTRATIVE ACTIONS/PROCEEDINGS 25 ARE INVALID AS THEY
FAIL TO COMPLY WITH THE STATUTORY REQUIREMENTS CONTAINED IN THE ADMINISTRATIVE CODE OF 1987.

The petition is impressed with merit.

Before discussing the merits of this case, it should be noted that while this case was pending in this Court, Republic Act No. 8799,
otherwise known as the Securities Regulation Code, took effect on 8 August 2000. Section 8 of Presidential Decree No. 902-A, as
amended, which created the PED, was already repealed as provided for in Section 76 of the Securities Regulation Code:

SEC. 76. Repealing Clause. - The Revised Securities Act (Batas Pambansa Blg. 178), as amended, in its entirety, and
Sections 2, 4 and 8 of Presidential Decree 902-A, as amended, are hereby repealed. All other laws, orders, rules and
regulations, or parts thereof, inconsistent with any provision of this Code are hereby repealed or modified accordingly.

Thus, under the new law, the PED has been abolished, and the Securities Regulation Code has taken the place of the Revised
Securities Act.

The Court now proceeds with a discussion of the present case.

I. Sctions 8, 30 and 36 of the Revised Securities Act do not require the enactment of implementing rules to make them binding
and effective.

The Court of Appeals ruled that absent any implementing rules for Sections 8, 30 and 36 of the Revised Securities Act, no civil, criminal
or administrative actions can possibly be had against the respondents without violating their right to due process and equal protection,
citing as its basis the case Yick Wo v. Hopkins.26 This is untenable.

In the absence of any constitutional or statutory infirmity, which may concern Sections 30 and 36 of the Revised Securities Act, this
Court upholds these provisions as legal and binding. It is well settled that every law has in its favor the presumption of validity. Unless
and until a specific provision of the law is declared invalid and unconstitutional, the same is valid and binding for all intents and
purposes.27 The mere absence of implementing rules cannot effectively invalidate provisions of law, where a reasonable construction
that will support the law may be given. In People v. Rosenthal,28 this Court ruled that:

In this connection we cannot pretermit reference to the rule that "legislation should not be held invalid on the ground of
uncertainty if susceptible of any reasonable construction that will support and give it effect. An Act will not be declared
inoperative and ineffectual on the ground that it furnishes no adequate means to secure the purpose for which it is passed, if
men of common sense and reason can devise and provide the means, and all the instrumentalities necessary for its execution
are within the reach of those intrusted therewith." (25 R.C.L., pp. 810, 811)

In Garcia v. Executive Secretary,29 the Court underlined the importance of the presumption of validity of laws and the careful
consideration with which the judiciary strikes down as invalid acts of the legislature:

The policy of the courts is to avoid ruling on constitutional questions and to presume that the acts of the political departments
are valid in the absence of a clear and unmistakable showing to the contrary. To doubt is to sustain. This presumption is based
on the doctrine of separation of powers which enjoins upon each department a becoming respect for the acts of the other
departments. The theory is that as the joint act of Congress and the President of the Philippines, a law has been carefully
studied and determined to be in accordance with the fundamental law before it was finally enacted.

The necessity for vesting administrative authorities with power to make rules and regulations is based on the impracticability of
lawmakers' providing general regulations for various and varying details of management.30 To rule that the absence of implementing
rules can render ineffective an act of Congress, such as the Revised Securities Act, would empower the administrative bodies to defeat
the legislative will by delaying the implementing rules. To assert that a law is less than a law, because it is made to depend on a future
event or act, is to rob the Legislature of the power to act wisely for the public welfare whenever a law is passed relating to a state of
affairs not yet developed, or to things future and impossible to fully know.31 It is well established that administrative authorities have the
power to promulgate rules and regulations to implement a given statute and to effectuate its policies, provided such rules and
regulations conform to the terms and standards prescribed by the statute as well as purport to carry into effect its general policies.
Nevertheless, it is undisputable that the rules and regulations cannot assert for themselves a more extensive prerogative or deviate
from the mandate of the statute.32 Moreover, where the statute contains sufficient standards and an unmistakable intent, as in the case
of Sections 30 and 36 of the Revised Securities Act, there should be no impediment to its implementation.

The reliance placed by the Court of Appeals in Yick Wo v. Hopkins33 shows a glaring error. In the cited case, this Court found
unconstitutional an ordinance which gave the board of supervisors authority to refuse permission to carry on laundries located in
buildings that were not made of brick and stone, because it violated the equal protection clause and was highly discriminatory and
hostile to Chinese residents and not because the standards provided therein were vague or ambiguous.

This Court does not discern any vagueness or ambiguity in Sections 30 and 36 of the Revised Securities Act, such that the acts
proscribed and/or required would not be understood by a person of ordinary intelligence.

Section 30 of the Revised Securities Act

Section 30 of the Revised Securities Act reads:

Sec. 30. Insider's duty to disclose when trading. - (a) It shall be unlawful for an insider to sell or buy a security of the issuer,
if he knows a fact of special significance with respect to the issuer or the security that is not generally available, unless (1) the
insider proves that the fact is generally available or (2) if the other party to the transaction (or his agent) is identified, (a) the
insider proves that the other party knows it, or (b) that other party in fact knows it from the insider or otherwise.
 (b) "Insider" means (1) the issuer, (2) a director or officer of, or a person controlling, controlled by, or under common control
with, the issuer, (3) a person whose relationship or former relationship to the issuer gives or gave him access to a fact of
special significance about the issuer or the security that is not generally available, or (4) a person who learns such a fact from
any of the foregoing insiders as defined in this subsection, with knowledge that the person from whom he learns the fact is
such an insider.

(c) A fact is "of special significance" if (a) in addition to being material it would be likely, on being made generally available, to
affect the market price of a security to a significant extent, or (b) a reasonable person would consider it especially important
under the circumstances in determining his course of action in the light of such factors as the degree of its specificity, the
extent of its difference from information generally available previously, and its nature and reliability.

(d) This section shall apply to an insider as defined in subsection (b) (3) hereof only to the extent that he knows of a fact of
special significance by virtue of his being an insider.

The provision explains in simple terms that the insider's misuse of nonpublic and undisclosed information is the gravamen of illegal
conduct. The intent of the law is the protection of investors against fraud, committed when an insider, using secret information, takes
advantage of an uninformed investor. Insiders are obligated to disclose material information to the other party or abstain from trading
the shares of his corporation. This duty to disclose or abstain is based on two factors: first, the existence of a relationship giving access,
directly or indirectly, to information intended to be available only for a corporate purpose and not for the personal benefit of anyone; and
second, the inherent unfairness involved when a party takes advantage of such information knowing it is unavailable to those with
whom he is dealing.34

In the United States (U.S.), the obligation to disclose or abstain has been traditionally imposed on corporate "insiders," particularly
officers, directors, or controlling stockholders, but that definition has since been expanded.35 The term "insiders" now includes persons
whose relationship or former relationship to the issuer gives or gave them access to a fact of special significance about the issuer or the
security that is not generally available, and one who learns such a fact from an insider knowing that the person from whom he learns
the fact is such an insider. Insiders have the duty to disclose material facts which are known to them by virtue of their position but which
are not known to persons with whom they deal and which, if known, would affect their investment judgment. In some cases, however,
there may be valid corporate reasons for the nondisclosure of material information. Where such reasons exist, an issuer's decision not
to make any public disclosures is not ordinarily considered as a violation of insider trading. At the same time, the undisclosed
information should not be improperly used for non-corporate purposes, particularly to disadvantage other persons with whom an insider
might transact, and therefore the insider must abstain from entering into transactions involving such securities.36

Respondents further aver that under Section 30 of the Revised Securities Act, the SEC still needed to define the following
terms: "material fact," "reasonable person," "nature and reliability" and "generally available."  37 In determining whether or not
these terms are vague, these terms must be evaluated in the context of Section 30 of the Revised Securties Act. To fully understand
how the terms were used in the aforementioned provision, a discussion of what the law recognizes as a fact of special significance is
required, since the duty to disclose such fact or to abstain from any transaction is imposed on the insider only in connection with a fact
of special significance.

Under the law, what is required to be disclosed is a fact of "special significance" which may be (a) a material fact which would be
likely, on being made generally available, to affect the market price of a security to a significant extent, or (b) one which a reasonable
person would consider especially important in determining his course of action with regard to the shares of stock.

(a) Material Fact - The concept of a "material fact" is not a new one. As early as 1973, the Rules Requiring Disclosure of Material Facts
by Corporations Whose Securities Are Listed In Any Stock Exchange or Registered/Licensed Under the Securities Act, issued by the
SEC on 29 January 1973, explained that "[a] fact is material if it induces or tends to induce or otherwise affect the sale or purchase of
its securities." Thus, Section 30 of the Revised Securities Act provides that if a fact affects the sale or purchase of securities, as well as
its price, then the insider would be required to disclose such information to the other party to the transaction involving the securities.
This is the first definition given to a "fact of special significance."

(b.1) Reasonable Person - The second definition given to a fact of special significance involves the judgment of a "reasonable person."
Contrary to the allegations of the respondents, a "reasonable person" is not a problematic legal concept that needs to be clarified for
the purpose of giving effect to a statute; rather, it is the standard on which most of our legal doctrines stand. The doctrine on negligence
uses the discretion of the "reasonable man" as the standard.38 A purchaser in good faith must also take into account facts which put a
"reasonable man" on his guard.39 In addition, it is the belief of the reasonable and prudent man that an offense was committed that sets
the criteria for probable cause for a warrant of arrest.40 This Court, in such cases, differentiated the reasonable and prudent man from
"a person with training in the law such as a prosecutor or a judge," and identified him as "the average man on the street," who weighs
facts and circumstances without resorting to the calibrations of our technical rules of evidence of which his knowledge is nil. Rather, he
relies on the calculus of common sense of which all reasonable men have in abundance.41 In the same vein, the U.S. Supreme Court
similarly determined its standards by the actual significance in the deliberations of a "reasonable investor," when it ruled in TSC
Industries, Inc. v. Northway, Inc.,42 that the determination of materiality "requires delicate assessments of the inferences a ‘reasonable
shareholder' would draw from a given set of facts and the significance of those inferences to him."

(b.2) Nature and Reliability - The factors affecting the second definition of a "fact of special significance," which is of such importance
that it is expected to affect the judgment of a reasonable man, were substantially lifted from a test of materiality pronounced in the case
In the Matter of Investors Management Co., Inc.43:

Among the factors to be considered in determining whether information is material under this test are the degree of its
specificity, the extent to which it differs from information previously publicly disseminated, and its reliability in light of its nature
and source and the circumstances under which it was received.

It can be deduced from the foregoing that the "nature and reliability" of a significant fact in determining the course of action a
reasonable person takes regarding securities must be clearly viewed in connection with the particular circumstances of a case. To
enumerate all circumstances that would render the "nature and reliability" of a fact to be of special significance is close to impossible.
Nevertheless, the proper adjudicative body would undoubtedly be able to determine if facts of a certain "nature and reliability" can
influence a reasonable person's decision to retain, sell or buy securities, and thereafter explain and justify its factual findings in its
decision.
(c) Materiality Concept - A discussion of the "materiality concept" would be relevant to both a material fact which would affect the
market price of a security to a significant extent and/or a fact which a reasonable person would consider in determining his or her cause
of action with regard to the shares of stock. Significantly, what is referred to in our laws as a fact of special significance is referred to in
the U.S. as the "materiality concept" and the latter is similarly not provided with a precise definition. In Basic v. Levinson,44 the U.S.
Supreme Court cautioned against confining materiality to a rigid formula, stating thus:

A bright-line rule indeed is easier to follow than a standard that requires the exercise of judgment in the light of all the
circumstances. But ease of application alone is not an excuse for ignoring the purposes of the Securities Act and Congress'
policy decisions. Any approach that designates a single fact or occurrence as always determinative of an inherently fact-
specific finding such as materiality, must necessarily be overinclusive or underinclusive.

Moreover, materiality "will depend at any given time upon a balancing of both the indicated probability that the event will occur and the
anticipated magnitude of the event in light of the totality of the company activity."45 In drafting the Securities Act of 1934, the U.S.
Congress put emphasis on the limitations to the definition of materiality:

Although the Committee believes that ideally it would be desirable to have absolute certainty in the application of the
materiality concept, it is its view that such a goal is illusory and unrealistic. The materiality concept is judgmental in nature
and it is not possible to translate this into a numerical formula. The Committee's advice to the [SEC] is to avoid this
quest for certainty and to continue consideration of materiality on a case-by-case basis as disclosure problems are
identified." House Committee on Interstate and Foreign Commerce, Report of the Advisory Committee on Corporate
Disclosure to the Securities and Exchange Commission, 95th Cong., 1st Sess., 327 (Comm.Print 1977). (Emphasis
provided.)46

(d) Generally Available - Section 30 of the Revised Securities Act allows the insider the defense that in a transaction of securities,
where the insider is in possession of facts of special significance, such information is "generally available" to the public. Whether
information found in a newspaper, a specialized magazine, or any cyberspace media be sufficient for the term "generally available" is a
matter which may be adjudged given the particular circumstances of the case. The standards cannot remain at a standstill. A medium,
which is widely used today was, at some previous point in time, inaccessible to most. Furthermore, it would be difficult to approximate
how the rules may be applied to the instant case, where investigation has not even been started. Respondents failed to allege that the
negotiations of their agreement with GHB were made known to the public through any form of media for there to be a proper
appreciation of the issue presented.

Section 36(a) of the Revised Securities Act

As regards Section 36(a) of the Revised Securities Act, respondents claim that the term "beneficial ownership" is vague and that it
requires implementing rules to give effect to the law. Section 36(a) of the Revised Securities Act is a straightforward provision that
imposes upon (1) a beneficial owner of more than ten percent of any class of any equity security or (2) a director or any officer of the
issuer of such security, the obligation to submit a statement indicating his or her ownership of the issuer's securities and such changes
in his or her ownership thereof. The said provision reads:

Sec. 36. Directors, officers and principal stockholders. - (a) Every person who is directly or indirectly the beneficial owner
of more than ten per centum of any [class] of any equity security which is registered pursuant to this Act, or who is [a] director
or an officer of the issuer of such security, shall file, at the time of the registration of such security on a securities exchange or
by the effective date of a registration statement or within ten days after he becomes such a beneficial owner, director or officer,
a statement with the Commission and, if such security is registered on a securities exchange, also with the exchange, of the
amount of all equity securities of such issuer of which he is the beneficial owner, and within ten days after the close of each
calendar month thereafter, if there has been a change in such ownership during such month, shall file with the Commission,
and if such security is registered on a securities exchange, shall also file with the exchange, a statement indicating his
ownership at the close of the calendar month and such changes in his ownership as have occurred during such calendar
month. (Emphasis provided.)

Section 36(a) refers to the "beneficial owner." Beneficial owner has been defined in the following manner:

[F]irst, to indicate the interest of a beneficiary in trust property (also called "equitable ownership"); and second, to refer to the
power of a corporate shareholder to buy or sell the shares, though the shareholder is not registered in the corporation's books
as the owner. Usually, beneficial ownership is distinguished from naked ownership, which is the enjoyment of all the benefits
and privileges of ownership, as against possession of the bare title to property.47

Even assuming that the term "beneficial ownership" was vague, it would not affect respondents' case, where the respondents are
directors and/or officers of the corporation, who are specifically required to comply with the reportorial requirements under Section 36(a)
of the Revised Securities Act. The validity of a statute may be contested only by one who will sustain a direct injury as a result of its
enforcement.48

Sections 30 and 36 of the Revised Securities Act were enacted to promote full disclosure in the securities market and prevent
unscrupulous individuals, who by their positions obtain non-public information, from taking advantage of an uninformed public. No
individual would invest in a market which can be manipulated by a limited number of corporate insiders. Such reaction would stifle, if not
stunt, the growth of the securities market. To avert the occurrence of such an event, Section 30 of the Revised Securities Act prevented
the unfair use of non-public information in securities transactions, while Section 36 allowed the SEC to monitor the transactions entered
into by corporate officers and directors as regards the securities of their companies.

In the case In the Matter of Investor's Management Co.,49 it was cautioned that "the broad language of the anti-fraud provisions," which
include the provisions on insider trading, should not be "circumscribed by fine distinctions and rigid classifications." The ambit of anti-
fraud provisions is necessarily broad so as to embrace the infinite variety of deceptive conduct.50

In Tatad v. Secretary of Department of Energy,51 this Court brushed aside a contention, similar to that made by the respondents in this
case, that certain words or phrases used in a statute do not set determinate standards, declaring that:
 Petitioners contend that the words "as far as practicable," "declining" and "stable" should have been defined in R.A. No. 8180
as they do not set determinate and determinable standards. This stubborn submission deserves scant consideration. The
dictionary meanings of these words are well settled and cannot confuse men of reasonable intelligence. x x x. The fear of
petitioners that these words will result in the exercise of executive discretion that will run riot is thus groundless. To be sure,
the Court has sustained the validity of similar, if not more general standards in other cases.

Among the words or phrases that this Court upheld as valid standards were "simplicity and dignity,"52 "public interest,"53 and "interests of
law and order."54

The Revised Securities Act was approved on 23 February 1982. The fact that the Full Disclosure Rules were promulgated by the SEC
only on 24 July 1996 does not render ineffective in the meantime Section 36 of the Revised Securities Act. It is already unequivocal that
the Revised Securities Act requires full disclosure and the Full Disclosure Rules were issued to make the enforcement of the law more
consistent, efficient and effective. It is equally reasonable to state that the disclosure forms later provided by the SEC, do not, in any
way imply that no compliance was required before the forms were provided. The effectivity of a statute which imposes reportorial
requirements cannot be suspended by the issuance of specified forms, especially where compliance therewith may be made even
without such forms. The forms merely made more efficient the processing of requirements already identified by the statute.

For the same reason, the Court of Appeals made an evident mistake when it ruled that no civil, criminal or administrative actions can
possibly be had against the respondents in connection with Sections 8, 30 and 36 of the Revised Securities Act due to the absence of
implementing rules. These provisions are sufficiently clear and complete by themselves. Their requirements are specifically set out, and
the acts which are enjoined are determinable. In particular, Section 855 of the Revised Securities Act is a straightforward enumeration of
the procedure for the registration of securities and the particular matters which need to be reported in the registration statement thereof.
The Decision, dated 20 August 1998, provides no valid reason to exempt the respondent IRC from such requirements. The lack of
implementing rules cannot suspend the effectivity of these provisions. Thus, this Court cannot find any cogent reason to prevent the
SEC from exercising its authority to investigate respondents for violation of Section 8 of the Revised Securities Act.

II. The right to cross-examination is not absolute and cannot be demanded during investigative proceedings before the PED.

In its assailed Decision dated 20 August 1998, the Court of Appeals pronounced that the PED Rules of Practice and Procedure was
invalid since Section 8, Rule V56 thereof failed to provide for the parties' right to cross-examination, in violation of the Administrative
Code of 1987 particularly Section 12(3), Chapter 3, Book VII thereof. This ruling is incorrect.

Firstly, Section 4, Rule I of the PED Rules of Practice and Procedure, categorically stated that the proceedings before the PED are
summary in nature:

Section 4. Nature of Proceedings - Subject to the requirements of due process, proceedings before the "PED" shall be
summary in nature not necessarily adhering to or following the technical rules of evidence obtaining in the courts of law. The
Rules of Court may apply in said proceedings in suppletory character whenever practicable.

Rule V of the PED Rules of Practice and Procedure further specified that:

Section 5. Submission of Documents - During the preliminary conference/hearing, or immediately thereafter, the Hearing
Officer may require the parties to simultaneously submit their respective verified position papers accompanied by all
supporting documents and the affidavits of their witnesses, if any which shall take the place of their direct testimony. The
parties shall furnish each other with copies of the position papers together with the supporting affidavits and documents
submitted by them.

Section 6. Determination of necessity of hearing. - Immediately after the submission by the parties of their position papers and
supporting documents, the Hearing Officer shall determine whether there is a need for a formal hearing. At this stage, he may,
in his discretion, and for the purpose of making such determination, elicit pertinent facts or information, including documentary
evidence, if any, from any party or witness to complete, as far as possible, the facts of the case. Facts or information so
elicited may serve as basis for his clarification or simplifications of the issues in the case. Admissions and stipulation of facts to
abbreviate the proceedings shall be encouraged.

Section 7. Disposition of Case. If the Hearing Officer finds no necessity of further hearing after the parties have submitted their
position papers and supporting documents, he shall so inform the parties stating the reasons therefor and shall ask them to
acknowledge the fact that they were so informed by signing the minutes of the hearing and the case shall be deemed
submitted for resolution.

As such, the PED Rules provided that the Hearing Officer may require the parties to submit their respective verified position papers,
together with all supporting documents and affidavits of witnesses. A formal hearing was not mandatory; it was within the discretion of
the Hearing Officer to determine whether there was a need for a formal hearing. Since, according to the foregoing rules, the holding of
a hearing before the PED is discretionary, then the right to cross-examination could not have been demanded by either party.

Secondly, it must be pointed out that Chapter 3, Book VII of the Administrative Code, entitled "Adjudication," does not affect the
investigatory functions of the agencies. The law creating the PED, Section 8 of Presidential Decree No. 902-A, as amended, defines the
authority granted to the PED, thus:

SEC. 8. The Prosecution and Enforcement Department shall have, subject to the Commission's control and supervision, the
exclusive authority to investigate, on complaint or motu proprio, any act or omission of the Board of Directors/Trustees of
corporations, or of partnerships, or of other associations, or of their stockholders, officers or partners, including any fraudulent
devices, schemes or representations, in violation of any law or rules and regulations administered and enforced by the
Commission; to file and prosecute in accordance with law and rules and regulations issued by the Commission and in
appropriate cases, the corresponding criminal or civil case before the Commission or the proper court or body upon prima
facie finding of violation of any laws or rules and regulations administered and enforced by the Commission; and to perform
such other powers and functions as may be provided by law or duly delegated to it by the Commission. (Emphasis provided.)
The law creating PED empowers it to investigate violations of the rules and regulations promulgated by the SEC and to file and
prosecute such cases. It fails to mention any adjudicatory functions insofar as the PED is concerned. Thus, the PED Rules of Practice
and Procedure need not comply with the provisions of the Administrative Code on adjudication, particularly Section 12(3), Chapter 3,
Book VII.

In Cariño v. Commission on Human Rights,57 this Court sets out the distinction between investigative and adjudicative functions, thus:

"Investigate," commonly understood, means to examine, explore, inquire or delve or probe into, research on, study. The
dictionary definition of "investigate" is "to observe or study closely; inquire into systematically: "to search or inquire into" xx to
subject to an official probe xx: to conduct an official inquiry." The purpose of an investigation, of course is to discover, to find
out, to learn, obtain information. Nowhere included or intimated is the notion of settling, deciding or resolving a controversy
involved in the facts inquired into by application of the law to the facts established by the inquiry.

The legal meaning of "investigate" is essentially the same: "(t)o follow up step by step by patient inquiry or observation. To
trace or track; to search into; to examine and inquire into with care and accuracy; to find out by careful inquisition; examination;
the taking of evidence; a legal inquiry;" "to inquire; to make an investigation," "investigation" being in turn described as "(a)n
administrative function, the exercise of which ordinarily does not require a hearing. 2 Am J2d Adm L Sec. 257; xx an inquiry,
judicial or otherwise, for the discovery and collection of facts concerning a certain matter or matters."

"Adjudicate," commonly or popularly understood, means to adjudge, arbitrate, judge, decide, determine, resolve, rule on,
settle. The dictionary defines the term as "to settle finally (the rights and duties of parties to a court case) on the merits of
issues raised: xx to pass judgment on: settle judicially: xx act as judge." And "adjudge" means "to decide or rule upon as a
judge or with judicial or quasi-judicial powers: xx to award or grant judicially in a case of controversy x x x."

In a legal sense, "adjudicate" means: "To settle in the exercise of judicial authority. To determine finally. Synonymous with adjudge in
its strictest sense;" and "adjudge" means: "To pass on judicially, to decide, settle, or decree, or to sentence or condemn. x x x Implies a
judicial determination of a fact, and the entry of a judgment."

There is no merit to the respondent's averment that the sections under Chapter 3, Book VII of the Administrative Code, do not
distinguish between investigative and adjudicatory functions. Chapter 3, Book VII of the Administrative Code, is unequivocally entitled
"Adjudication."

Respondents insist that the PED performs adjudicative functions, as enumerated under Section 1(h) and (j), Rule II; and Section 2(4),
Rule VII of the PED Rules of Practice and Procedure:

Section 1. Authority of the Prosecution and Enforcement Department - Pursuant to Presidential Decree No. 902-A, as
amended by Presidential Decree No. 1758, the Prosecution and Enforcement Department is primarily charged with the
following:

xxxx

(h) Suspends or revokes, after proper notice and hearing in accordance with these Rules, the franchise or certificate of
registration of corporations, partnerships or associations, upon any of the following grounds:

1. Fraud in procuring its certificate of registration;

2. Serious misrepresentation as to what the corporation can do or is doing to the great prejudice of or damage to the general
public;

3. Refusal to comply or defiance of any lawful order of the Commission restraining commission of acts which would amount to
a grave violation of its franchise;

xxxx

(j) Imposes charges, fines and fees, which by law, it is authorized to collect;

xxxx

Section 2. Powers of the Hearing Officer. The Hearing Officer shall have the following powers:

xxxx

4. To cite and/or declare any person in direct or indirect contempt in accordance with pertinent provisions of the Rules of
Court.

Even assuming that these are adjudicative functions, the PED, in the instant case, exercised its investigative powers; thus, respondents
do not have the requisite standing to assail the validity of the rules on adjudication. A valid source of a statute or a rule can only be
contested by one who will sustain a direct injury as a result of its enforcement.58 In the instant case, respondents are only being
investigated by the PED for their alleged failure to disclose their negotiations with GHB and the transactions entered into by its directors
involving IRC shares. The respondents have not shown themselves to be under any imminent danger of sustaining any personal injury
attributable to the exercise of adjudicative functions by the SEC. They are not being or about to be subjected by the PED to charges,
fees or fines; to citations for contempt; or to the cancellation of their certificate of registration under Section 1(h), Rule II of the PED
Rules of Practice and Procedure.

To repeat, the only powers which the PED was likely to exercise over the respondents were investigative in nature, to wit:
 Section 1. Authority of the Prosecution and Enforcement Department - Pursuant to Presidential Decree No. 902-A, as
amended by Presidential Decree No. 1758, the Prosecution and Enforcement Department is primarily charged with the
following:

xxxx

b. Initiates proper investigation of corporations and partnerships or persons, their books, records and other properties and
assets, involving their business transactions, in coordination with the operating department involved;

xxxx

e. Files and prosecutes civil or criminal cases before the Commission and other courts of justice involving violations of laws
and decrees enforced by the Commission and the rules and regulations promulgated thereunder;

f. Prosecutes erring directors, officers and stockholders of corporations and partnerships, commercial paper issuers or persons
in accordance with the pertinent rules on procedures;

The authority granted to the PED under Section 1(b), (e), and (f), Rule II of the PED Rules of Practice and Procedure, need not comply
with Section 12, Chapter 3, Rule VII of the Administrative Code, which affects only the adjudicatory functions of administrative bodies.
Thus, the PED would still be able to investigate the respondents under its rules for their alleged failure to disclose their negotiations with
GHB and the transactions entered into by its directors involving IRC shares.

This is not to say that administrative bodies performing adjudicative functions are required to strictly comply with the requirements of
Chapter 3, Rule VII of the Administrative Code, particularly, the right to cross-examination. It should be noted that under Section 2.2 of
Executive Order No. 26, issued on 7 October 1992, abbreviated proceedings are prescribed in the disposition of administrative cases:

2. Abbreviation of Proceedings. All administrative agencies are hereby directed to adopt and include in their respective Rules
of Procedure the following provisions:

xxxx

2.2 Rules adopting, unless otherwise provided by special laws and without prejudice to Section 12, Chapter 3, Book VII of the
Administrative Code of 1987, the mandatory use of affidavits in lieu of direct testimonies and the preferred use of depositions
whenever practicable and convenient.

As a consequence, in proceedings before administrative or quasi-judicial bodies, such as the National Labor Relations Commission and
the Philippine Overseas Employment Agency, created under laws which authorize summary proceedings, decisions may be reached on
the basis of position papers or other documentary evidence only. They are not bound by technical rules of procedure and
evidence. 59 In fact, the hearings before such agencies do not connote full adversarial proceedings.60 Thus, it is not necessary for the
rules to require affiants to appear and testify and to be cross-examined by the counsel of the adverse party. To require otherwise would
negate the summary nature of the administrative or quasi-judicial proceedings.61 In Atlas Consolidated Mining and Development
Corporation v. Factoran, Jr.,62 this Court stated that:

[I]t is sufficient that administrative findings of fact are supported by evidence, or negatively stated, it is sufficient that findings of
fact are not shown to be unsupported by evidence. Substantial evidence is all that is needed to support an administrative
finding of fact, and substantial evidence is "such relevant evidence as a reasonable mind might accept as adequate to support
a conclusion."

In order to comply with the requirements of due process, what is required, among other things, is that every litigant be given reasonable
opportunity to appear and defend his right and to introduce relevant evidence in his favor.63

III. The Securities Regulations Code did not repeal Sections 8, 30 and 36 of the Revised Securities Act since said provisions
were reenacted in the new law.

The Securities Regulations Code absolutely repealed the Revised Securities Act. While the absolute repeal of a law generally deprives
a court of its authority to penalize the person charged with the violation of the old law prior to its appeal, an exception to this rule comes
about when the repealing law punishes the act previously penalized under the old law. The Court, in Benedicto v. Court of Appeals,
sets down the rules in such instances:64

As a rule, an absolute repeal of a penal law has the effect of depriving the court of its authority to punish a person charged
with violation of the old law prior to its repeal. This is because an unqualified repeal of a penal law constitutes a legislative act
of rendering legal what had been previously declared as illegal, such that the offense no longer exists and it is as if the person
who committed it never did so. There are, however, exceptions to the rule. One is the inclusion of a saving clause in the
repealing statute that provides that the repeal shall have no effect on pending actions. Another exception is where the
repealing act reenacts the former statute and punishes the act previously penalized under the old law. In such instance, the
act committed before the reenactment continues to be an offense in the statute books and pending cases are not affected,
regardless of whether the new penalty to be imposed is more favorable to the accused. (Emphasis provided.)

In the present case, a criminal case may still be filed against the respondents despite the repeal, since Sections 8, 65 12,66 26,67 2768 and
2369 of the Securities Regulations Code impose duties that are substantially similar to Sections 8, 30 and 36 of the repealed Revised
Securities Act.

Section 8 of the Revised Securities Act, which previously provided for the registration of securities and the information that needs to be
included in the registration statements, was expanded under Section 12, in connection with Section 8 of the Securities Regulations
Code. Further details of the information required to be disclosed by the registrant are explained in the Amended Implementing Rules
and Regulations of the Securities Regulations Code, issued on 30 December 2003, particularly Sections 8 and 12 thereof.
Section 30 of the Revised Securities Act has been reenacted as Section 27 of the Securities Regulations Code, still penalizing an
insider's misuse of material and non-public information about the issuer, for the purpose of protecting public investors. Section 26 of the
Securities Regulations Code even widens the coverage of punishable acts, which intend to defraud public investors through various
devices, misinformation and omissions.

Section 23 of the Securities Regulations Code was practically lifted from Section 36(a) of the Revised Securities Act. Both provisions
impose upon (1) a beneficial owner of more than ten percent of any class of any equity security or (2) a director or any officer of the
issuer of such security, the obligation to submit a statement indicating his or her ownership of the issuer's securities and such changes
in his or her ownership thereof.

Clearly, the legislature had not intended to deprive the courts of their authority to punish a person charged with violation of the old law
that was repealed; in this case, the Revised Securities Act.

IV. The SEC retained the jurisdiction to investigate violations of the Revised Securities Act, reenacted in the Securities
Regulations Code, despite the abolition of the PED.

Section 53 of the Securities Regulations Code clearly provides that criminal complaints for violations of rules and regulations enforced
or administered by the SEC shall be referred to the Department of Justice (DOJ) for preliminary investigation, while the SEC
nevertheless retains limited investigatory powers.70 Additionally, the SEC may still impose the appropriate administrative sanctions
under Section 54 of the aforementioned law.71

In Morato v. Court of Appeals,72 the cases therein were still pending before the PED for investigation and the SEC for resolution when
the Securities Regulations Code was enacted. The case before the SEC involved an intra-corporate dispute, while the subject matter of
the other case investigated by the PED involved the schemes, devices, and violations of pertinent rules and laws of the company's
board of directors. The enactment of the Securities Regulations Code did not result in the dismissal of the cases; rather, this Court
ordered the transfer of one case to the proper regional trial court and the SEC to continue with the investigation of the other case.

The case at bar is comparable to the aforecited case. In this case, the SEC already commenced the investigative proceedings against
respondents as early as 1994. Respondents were called to appear before the SEC and explain their failure to disclose pertinent
information on 14 August 1994. Thereafter, the SEC Chairman, having already made initial findings that respondents failed to make
timely disclosures of their negotiations with GHB, ordered a special investigating panel to hear the case. The investigative proceedings
were interrupted only by the writ of preliminary injunction issued by the Court of Appeals, which became permanent by virtue of the
Decision, dated 20 August 1998, in C.A.-G.R. SP No. 37036. During the pendency of this case, the Securities Regulations Code
repealed the Revised Securities Act. As in Morato v. Court of Appeals, the repeal cannot deprive SEC of its jurisdiction to continue
investigating the case; or the regional trial court, to hear any case which may later be filed against the respondents.

V. The instant case has not yet prescribed.

Respondents have taken the position that this case is moot and academic, since any criminal complaint that may be filed against them
resulting from the SEC's investigation of this case has already prescribed.73 They point out that the prescription period applicable to
offenses punished under special laws, such as violations of the Revised Securities Act, is twelve years under Section 1 of Act No. 3326,
as amended by Act No. 3585 and Act No. 3763, entitled "An Act to Establish Periods of Prescription for Violations Penalized by Special
Acts and Municipal Ordinances and to Provide When Prescription Shall Begin to Act."74 Since the offense was committed in 1994, they
reasoned that prescription set in as early as 2006 and rendered this case moot. Such position, however, is incongruent with the factual
circumstances of this case, as well as the applicable laws and jurisprudence.

It is an established doctrine that a preliminary investigation interrupts the prescription period.75 A preliminary investigation is essentially
a determination whether an offense has been committed, and whether there is probable cause for the accused to have committed an
offense:

A preliminary investigation is merely inquisitorial, and it is often the only means of discovering the persons who may be
reasonably charged with a crime, to enable the fiscal to prepare the complaint or information. It is not a trial of the case on the
merits and has no purpose except that of determining whether a crime has been committed or whether there is probable cause
to believe that the accused is guilty thereof.76

Under Section 45 of the Revised Securities Act, which is entitled Investigations, Injunctions and Prosecution of Offenses, the Securities
Exchange Commission (SEC) has the authority to "make such investigations as it deems necessary to determine whether any person
has violated or is about to violate any provision of this Act XXX." After a finding that a person has violated the Revised Securities Act,
the SEC may refer the case to the DOJ for preliminary investigation and prosecution.

While the SEC investigation serves the same purpose and entails substantially similar duties as the preliminary investigation conducted
by the DOJ, this process cannot simply be disregarded. In Baviera v. Paglinawan,77 this Court enunciated that a criminal complaint is
first filed with the SEC, which determines the existence of probable cause, before a preliminary investigation can be commenced by the
DOJ. In the aforecited case, the complaint filed directly with the DOJ was dismissed on the ground that it should have been filed first
with the SEC. Similarly, the offense was a violation of the Securities Regulations Code, wherein the procedure for criminal prosecution
was reproduced from Section 45 of the Revised Securities Act. 78 This Court affirmed the dismissal, which it explained thus:

The Court of Appeals held that under the above provision, a criminal complaint for violation of any law or rule administered by
the SEC must first be filed with the latter. If the Commission finds that there is probable cause, then it should refer the case to
the DOJ. Since petitioner failed to comply with the foregoing procedural requirement, the DOJ did not gravely abuse its
discretion in dismissing his complaint in I.S. No. 2004-229.

A criminal charge for violation of the Securities Regulation Code is a specialized dispute. Hence, it must first be referred to an
administrative agency of special competence, i.e., the SEC. Under the doctrine of primary jurisdiction, courts will not determine
a controversy involving a question within the jurisdiction of the administrative tribunal, where the question demands the
exercise of sound administrative discretion requiring the specialized knowledge and expertise of said administrative tribunal to
determine technical and intricate matters of fact. The Securities Regulation Code is a special law. Its enforcement is
particularly vested in the SEC. Hence, all complaints for any violation of the Code and its implementing rules and regulations
 should be filed with the SEC. Where the complaint is criminal in nature, the SEC shall indorse the complaint to the DOJ for
preliminary investigation and prosecution as provided in Section 53.1 earlier quoted.

We thus agree with the Court of Appeals that petitioner committed a fatal procedural lapse when he filed his criminal complaint
directly with the DOJ. Verily, no grave abuse of discretion can be ascribed to the DOJ in dismissing petitioner's complaint.

The said case puts in perspective the nature of the investigation undertaken by the SEC, which is a requisite before a criminal case
may be referred to the DOJ. The Court declared that it is imperative that the criminal prosecution be initiated before the SEC, the
administrative agency with the special competence.

It should be noted that the SEC started investigative proceedings against the respondents as early as 1994. This investigation
effectively interrupted the prescription period. However, said proceedings were disrupted by a preliminary injunction issued by the Court
of Appeals on 5 May 1995, which effectively enjoined the SEC from filing any criminal, civil, or administrative case against the
respondents herein.79 Thereafter, on 20 August 1998, the appellate court issued the assailed Decision in C.A. G.R. SP. No. 37036
ordering that the writ of injunction be made permanent and prohibiting the SEC from taking cognizance of and initiating any action
against herein respondents. The SEC was bound to comply with the aforementioned writ of preliminary injunction and writ of injunction
issued by the Court of Appeals enjoining it from continuing with the investigation of respondents for 12 years. Any deviation by the SEC
from the injunctive writs would be sufficient ground for contempt. Moreover, any step the SEC takes in defiance of such orders will be
considered void for having been taken against an order issued by a court of competent jurisdiction.

An investigation of the case by any other administrative or judicial body would likewise be impossible pending the injunctive writs issued
by the Court of Appeals. Given the ruling of this Court in Baviera v. Paglinawan,80 the DOJ itself could not have taken cognizance of the
case and conducted its preliminary investigation without a prior determination of probable cause by the SEC. Thus, even presuming
that the DOJ was not enjoined by the Court of Appeals from conducting a preliminary investigation, any preliminary investigation
conducted by the DOJ would have been a futile effort since the SEC had only started with its investigation when respondents
themselves applied for and were granted an injunction by the Court of Appeals.

Moreover, the DOJ could not have conducted a preliminary investigation or filed a criminal case against the respondents during the
time that issues on the effectivity of Sections 8, 30 and 36 of the Revised Securities Act and the PED Rules of Practice and Procedure
were still pending before the Court of Appeals. After the Court of Appeals declared the aforementioned statutory and regulatory
provisions invalid and, thus, no civil, criminal or administrative case may be filed against the respondents for violations thereof, the DOJ
would have been at a loss, as there was no statutory provision which respondents could be accused of violating.

Accordingly, it is only after this Court corrects the erroneous ruling of the Court of Appeals in its Decision dated 20 August 1998 that
either the SEC or DOJ may properly conduct any kind of investigation against the respondents for violations of Sections 8, 30 and 36 of
the Revised Securities Act. Until then, the prescription period is deemed interrupted.

To reiterate, the SEC must first conduct its investigations and make a finding of probable cause in accordance with the doctrine
pronounced in Baviera v. Paglinawan.81 In this case, the DOJ was precluded from initiating a preliminary investigation since the SEC
was halted by the Court of Appeals from continuing with its investigation. Such a situation leaves the prosecution of the case at a
standstill, and neither the SEC nor the DOJ can conduct any investigation against the respondents, who, in the first place, sought the
injunction to prevent their prosecution. All that the SEC could do in order to break the impasse was to have the Decision of the Court of
Appeals overturned, as it had done at the earliest opportunity in this case. Therefore, the period during which the SEC was prevented
from continuing with its investigation should not be counted against it. The law on the prescription period was never intended to put the
prosecuting bodies in an impossible bind in which the prosecution of a case would be placed way beyond their control; for even if they
avail themselves of the proper remedy, they would still be barred from investigating and prosecuting the case.

Indubitably, the prescription period is interrupted by commencing the proceedings for the prosecution of the accused. In criminal cases,
this is accomplished by initiating the preliminary investigation. The prosecution of offenses punishable under the Revised Securities Act
and the Securities Regulations Code is initiated by the filing of a complaint with the SEC or by an investigation conducted by the
SEC motu proprio. Only after a finding of probable cause is made by the SEC can the DOJ instigate a preliminary investigation. Thus,
the investigation that was commenced by the SEC in 1995, soon after it discovered the questionable acts of the respondents,
effectively interrupted the prescription period. Given the nature and purpose of the investigation conducted by the SEC, which is
equivalent to the preliminary investigation conducted by the DOJ in criminal cases, such investigation would surely interrupt the
prescription period.

VI. The Court of Appeals was justified in denying SEC's Motion for Leave to Quash SEC Omnibus Orders dated 23 October
1995.

The SEC avers that the Court of Appeals erred when it denied its Motion for Leave to Quash SEC Omnibus Orders, dated 23 October
1995, in the light of its admission that the PED had the sole authority to investigate the present case. On this matter, this Court cannot
agree with the SEC.

In the assailed decision, the Court of Appeals denied the SEC's Motion for Leave to Quash SEC Omnibus Orders, since it found other
issues that were more important than whether or not the PED was the proper body to investigate the matter. Its refusal was premised
on its earlier finding that no criminal, civil, or administrative case may be filed against the respondents under Sections 8, 30 and 36 of
the Revised Securities Act, due to the absence of any implementing rules and regulations. Moreover, the validity of the PED Rules on
Practice and Procedure was also raised as an issue. The Court of Appeals, thus, reasoned that if the quashal of the orders was
granted, then it would be deprived of the opportunity to determine the validity of the aforementioned rules and statutory provisions. In
addition, the SEC would merely pursue the same case without the Court of Appeals having determined whether or not it may do so in
accordance with due process requirements. Absent a determination of whether the SEC may file a case against the respondents based
on the assailed provisions of the Revised Securities Act, it would have been improper for the Court of Appeals to grant the SEC's
Motion for Leave to Quash SEC Omnibus Orders.

In all, this Court rules that no implementing rules were needed to render effective Sections 8, 30 and 36 of the Revised Securities Act;
nor was the PED Rules of Practice and Procedure invalid, prior to the enactment of the Securities Regulations Code, for failure to
provide parties with the right to cross-examine the witnesses presented against them. Thus, the respondents may be investigated by
the appropriate authority under the proper rules of procedure of the Securities Regulations Code for violations of Sections 8, 30, and 36
of the Revised Securities Act.82
IN VIEW OF THE FOREGOING, the instant Petition is GRANTED. This Court hereby REVERSES the assailed Decision of the Court of
Appeals promulgated on 20 August 1998 in CA-G.R. SP No. 37036 and LIFTS the permanent injunction issued pursuant thereto. This
Court further DECLARES that the investigation of the respondents for violations of Sections 8, 30 and 36 of the Revised Securities Act
may be undertaken by the proper authorities in accordance with the Securities Regulations Code. No costs.

SO ORDERED.

G.R. No. 141949             October 14, 2002

CEFERINO PADUA, petitioner,
vs.
HON. SANTIAGO RANADA, PRESIDING JUDGE OF MAKATI, RTC, BRANCH 137,
PHILIPPINE NATIONAL CONSTRUCTION CORP.,
TOLL REGULATORY BOARD,
DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS, and
REPUBLIC OF THE PHILIPPINES, respondents.

-----------------------------

G.R. No. 151108             October 14, 2002

EDUARDO C. ZIALCITA, petitioner,
vs.
TOLL REGULATORY BOARD AND CITRA METRO MANILA TOLLWAYS CORPORATION, respondents.

The focal point upon which these two consolidated cases converge is whether Resolution No. 2001-89 issued by the Toll Regulatory
Board (TRB) is valid.

A brief narration of the factual backdrop is imperative, thus:

On November 9, 2001, the TRB issued Resolution No. 2001-89 authorizing provisional toll rate adjustments at the Metro Manila
Skyway, effective January 1, 2002,[1] thus:

"NOW THEREFORE, it is RESOLVED, as it is hereby RESOLVED:

1. That in view of urgent public interest, the Board hereby GRANTS to the Metro Manila Skyway Project, Provisional Relief in
accordance with Rule 10, Section 3 of the Rules of Practice and Procedure Governing Hearing before the Toll Regulatory
Board which states, among others "that the Board may grant (provisional relief)…in its own initiative…without prejudice to the
final decision after completion of the hearing…;"

2. That the Provisional Relief shall be in form of an interim toll rate adjustment in accordance with Section 7.04(3) of the
Supplemental Toll Operation Agreement, dated November 27, 1995, referring to Interim Adjustments in Toll Rates upon the
occurrence of a significant currency devaluation:

"Be APPROVED, as it is hereby APPROVED.

"RESOLVED FURTHER, as it is hereby RESOLVED:

"That the ProvisionalToll Rates, which are not to exceed the following:

Toll Rates for Implementation

Unrounded
Section
Toll Rates
CLASS 1 CLASS 2 CLASS 3

Elevated Portion 75.00 75.00 150.00 225.00

At-Grade Portion

Magallanes to Bicutan 19.35 19.50 38.50 58.00

Bicutan to Sucat 11.21 11.00 22.50 34.00

Sucat to Alabang 10.99 11.00 21.00 32.50

* includes C5 entry/exit and Merville exit.

"For implementation starting January 1, 2002 after its publication once a week for three (3) consecutive weeks in a newspaper of
general circulation and that said Provisional Toll Rate Increase shall remain in effect until such time that the TRB Board has determined
otherwise:

"Be APPROVED as it is hereby APPROVED.

"RESOLVED FURTHERMORE, as it is hereby RESOLVED that the Provisional Toll Rates be implemented in two (2) stages in
accordance with the following schedule:

Unrounded Toll Toll Rates for Implementation For Class 1 as Reference

Rates as
Section
Maximum for JANUARY 1, 2002 to JUNE 30, 2002 to
One (1) Year JULY 1, 2002 DECEMBER 31, 2002

Elevated
75.00 65.00 75.00
Portion

At-Grade
Portion

Magallanes to
19.35 15.00 20.00
Bicutan

Bicutan to
11.21 9.00 11.00
Sucat

Sucat to
10.99 9.00 11.00
Alabang

"PROVIDED that the recovery of the sum from the interim rate adjustment shall be applied starting the year 2003.

"APPROVED as it is hereby APPROVED."

On December 17, 24 and 31, 2001, the above Resolution approving provisional toll rate adjustments was published in the newspapers
of general circulation.[2]

Tracing back the events that led to the issuance of the said Resolution, it appears that on February 27, 2001 the Citra Metro Manila
Tollways Corporation (CITRA) filed with the TRB an application for an interim adjustment of the toll rates at the Metro Manila Skyway
Project – Stage 1.[3] CITRA moored its petition on the provisions of the "Supplemental Toll Operation Agreement" (STOA),[4]
authorizing it, as the investor, to apply for and if warranted, to be granted an interim adjustment of toll rates in the event of a "significant
currency devaluation." The relevant portions of the STOA read:

a. The Investor and/or the Operator shall be entitled to apply for and if warranted, to be granted an interim adjustment of Toll Rates
upon the occurrence of any of the following events:

xxx     xxx

(ii) a significant currency devaluation

xxx     xxx

(i) A currency devaluation shall be deemed "significant" if it results in a depreciation of the value of the Philippine peso relative to the
US dollar by at least 10%. For purposes hereof the exchange rate between the Philippine peso and the US dollar which shall be
applicable shall be the exchange rate between the above mentioned currencies in effect as of the date of approval of the prevailing
preceding Toll Rate.

(ii) The Investor’s right to apply for an interim Toll Rate adjustment under section 7.04 (3) (a) (ii) shall be effective only while any
Financing is outstanding and have not yet been paid in full.

xxx     xxx

(iv) An interim adjustment in Toll Rate shall be considered such amount as may be required to provide interim relief to the Investor from
a substantial increase in debt-service burden resulting from the devaluation."[5]

Claiming that the peso exchange rate to a U.S. dollar had devaluated from P26.1671 in 1995 to P48.00 in 2000, CITRA alleged that
there was a compelling need for the increase of the toll rates to meet the loan obligations of the Project and the substantial increase in
debt-service burden.

Due to heavy opposition, CITRA’s petition remained unresolved. This prompted CITRA to file on October 9, 2001 an "Urgent Motion for
Provisional Approval,"[6] this time, invoking Section 3, Rule 10 of the "Rules of Practice and Procedure Governing Hearing Before the
Toll Regulatory Board" (TRB Rules of Procedure) which provides:
"SECTION 3. Provisional Relief. – Upon the filing of an application or petition for the approval of the initial toll rate or toll rate
adjustment, or at any stage, thereafter, the Board may grant on motion of the pleader or in its own initiative, the relief prayed for without
prejudice to a final decision after completion of the hearing should the Board find that the pleading, together with the affidavits and
supporting documents attached thereto and such additional evidence as may have been requested and presented, substantially
support the provisional order; Provided: That the Board may, motu proprio, continue to issue orders or grant relief in the exercise of its
powers of general supervision under existing laws. Provided: Finally, that pending finality of the decision, the Board may require the
Petitioner to deposit in whole or in part in escrow the provisionally approved adjustment or initial toll rates." (Emphasis supplied)

On October 30, 2001, CITRA moved to withdraw[7] its "Urgent Motion for Provisional Approval" without prejudice to its right to seek or
be granted provisional relief under the above-quoted provisions of the TRB Rules of Procedure, obviously, referring to the power of the
Board to act on its own initiative.

On November 7, 2001, CITRA wrote a letter[8] to TRB expressing its concern over the undue delay in the proceeding, stressing that
any further setback would bring the Project’s financial condition, as well as the Philippine banking system, to a total collapse. CITRA
recounted that out of the US$354 million funding from creditors, two-thirds (2/3) thereof came from the Philippine banks and financial
institutions, such as the Landbank of the Philippines and the Government Service Insurance Services. Thus, CITRA requested TRB to
find a timely solution to its predicament.

On November 9, 2001, TRB granted CITRA’s motion to withdraw[9] the Urgent Motion for Provisional Approval and, at the same time,
issued Resolution No. 2001-89,[10] earlier quoted.

Hence, petitioners Ceferino Padua and Eduardo Zialcita assail before this Court the validity and legality of TRB Resolution No. 2001-
89.

Petitioner Ceferino Padua, as a toll payer, filed an "Urgent Motion for a Temporary Restraining Order to Stop Arbitrary Toll Fee
Increases"[11] in G.R. No. 141949,[12] a petition for mandamus earlier filed by him. In that petition, Padua seeks to compel respondent
Judge Santiago Ranada of the Regional Trial Court, Branch 137, Makati City, to issue a writ of execution for the enforcement of the
Court of Appeals’ Decision dated August 4, 1989 in CA-G.R. SP No. 13235. In its Decision, the Court of Appeals ordered the exclusion
of certain portions of the expressways (from Villamor Air Base to Alabang in the South, and from Balintawak to Tabang in the North)
from the franchise of the PNCC.

In his urgent motion, petitioner Padua claims that: (1) Resolution No. 2001-89 was issued without the required publication and in
violation of due process; (2) alone, TRB Executive Director Jaime S. Dumlao, Jr., could not authorize the provisional toll rate
adjustments because the TRB is a collegial body; and (3) CITRA has no standing to apply for a toll fee increase since it is an "investor"
and not a "franchisee-operator."

On January 4, 2002, petitioner Padua filed a "Supplemental Urgent Motion for a TRO against Toll Fee Increases,"[13] arguing further
that: (1) Resolution 2001-89 refers exclusively to the Metro Manila Skyway Project, hence, there is no legal basis for the imposition of
the increased rate at the at-grade portions; (2) Resolution No. 2001-89 was issued without basis considering that while it was signed by
three (3) of the five members of the TRB, none of them actually attended the hearing; and 3) the computation of the rate adjustment
under the STOA is inconsistent with the rate adjustment formula under Presidential Decree No. 1894.[14]

On January 10, 2002, the Office of the Solicitor General (OSG) filed, in behalf of public respondent TRB, Philippine National
Construction Corporation (PNCC), Department of Public Works and Highways (DPWH) and Judge Ranada, a "Consolidated
Comment"[15] contending that: (1) the TRB has the exclusive jurisdiction over all matters relating to toll rates; (2) Resolution No. 2001-
89 covers both the Skyway and the at-grade level of the South Luzon Expressway as provided under the STOA; (3) that while
Resolution No. 2001-89 does not mention any factual basis to justify its issuance, however, it does not mean that TRB's finding of facts
is not supported by evidence; and (4) petitioner Padua cannot assail the validity of the STOA because he is not a party thereto.

Upon the other hand, on January 9, 2002, petitioner Eduardo Zialcita, as a taxpayer and as Congressman of Parañaque City, filed the
present petition for prohibition[16] with prayer for a temporary restraining order and/or writ of preliminary injunction against TRB and
CITRA, docketed as G.R. No. 151108, impugning the same Resolution No. 2001-89.

Petitioner Zialcita asserts that the provisional toll rate adjustments are exorbitant and that the TRB violated its own Charter, Presidential
Decree No. 1112,[17] when it promulgated Resolution No. 2001-89 without the benefit of any public hearing. He also maintains that the
TRB violated the Constitution when it did not express clearly and distinctly the facts and the law on which Resolution No. 2001-89 was
based. And lastly, he claims that Section 3, Rule 10 of the TRB Rules of Procedure is not sanctioned by P.D. No. 1112.

Private respondent CITRA, in its comment[18] on Congressman Zialcita’s petition, counters that: (1) the TRB has primary administrative
jurisdiction over all matters relating to toll rates; (2) prohibition is an inappropriate remedy because its function is to restrain acts about
to be done and not acts already accomplished; (3) Resolution No. 2001-89 was issued in accordance with law; (4) Section 3, Rule 10 of
the TRB Rules is constitutional; and (5) private respondent and the Republic of the Philippines would suffer more irreparable damages
than petitioner.

The TRB, through the OSG, filed a separate comment[19] reiterating the same arguments raised by private respondent CITRA.

On January 11, 2002, this Court resolved to consolidate the instant petitions, G.R. No. 141949 and G.R. No. 151108.[20]

We rule for the respondents.

In assailing Resolution No. 2001-89, petitioners came to us via two unconventional remedies – one is an urgent motion for a TRO to
stop arbitrary toll fee increases; and the other is a petition for prohibition. Unfortunately, both are procedurally impermissible.

Petitioner Padua’s motion is a leap to a legal contest of different dimension. As previously stated, G.R. No. 141949 is a petition for
mandamus seeking to compel respondent Judge Ranada to issue a writ of execution for the enforcement of the Court of Appeal’s
Decision dated August 4, 1989 in CA-G.R. SP No. 13235. The issue therein is whether the application for a writ of execution should be
by a mere motion or by an action for revival of judgment. Thus, for petitioner Padua to suddenly interject in the same petition the issue
of whether Resolution No. 2001-89 is valid is to drag this Court to his web of legal convolution. Courts cannot, as a case progresses,
resolve the intrinsic merit of every issue that comes along its way, particularly those which bear no relevance to the resolution of the
case.

Certainly, petitioner Padua’s recourse in challenging the validity of TRB Resolution No. 2001-89 should have been to institute an action,
separate and independent from G.R. No. 141949.

II

The remedy of prohibition initiated by petitioner Zialcita in G.R. No. 151108 also suffers several infirmities. Initially, it violates the twin
doctrine of primary administrative jurisdiction and non-exhaustion of administrative remedies.

P.D. No. 1112 explicitly provides that "the decisions of the TRB on petitions for the increase of toll rate shall be appealable to the Office
of the President within ten (10) days from the promulgation thereof."[21] P.D. No. 1894 reiterates this instruction and further provides:

"SECTION 9. The GRANTEE shall have the right and authority to adjust any existing toll being charged the users of the Expressways
under the following guidelines:

xxx     xxx

c) Any interested Expressways user shall have the right to file, within a period of ninety (90) days after the date of publication of the
adjusted toll rate (s), a petition with the Toll Regulatory Board for a review of the adjusted toll rate (s); provided, however, that
notwithstanding the filing of such petition and the pendency of the resolution thereof, the adjusted toll shall be enforceable and
collectible by the GRANTEE effective on the first day of January in accordance with the immediately preceding paragraph.

xxx     xxx

e) Decisions of the Toll Regulatory Board on petitions for review of adjusted toll shall be appealable to the Office of the President within
ten (10) days from the promulgation thereof."

These same provisions are incorporated in the TRB Rules of Procedure, particularly in Section 6, Rule 5 and Section 1, Rule 12
thereof.[22]

Obviously, the laws and the TRB Rules of Procedure have provided the remedies of an interested Expressways user.[23] The initial
proper recourse is to file a petition for review of the adjusted toll rates with the TRB. The need for a prior resort to this body is with
reason. The TRB, as the agency assigned to supervise the collection of toll fees and the operation of toll facilities, has the necessary
expertise, training and skills to judiciously decide matters of this kind. As may be gleaned from the petition, the main thrust of petitioner
Zialcita’s argument is that the provisional toll rate adjustments are exorbitant, oppressive, onerous and unconscionable. This is
obviously a question of fact requiring knowledge of the formula used and the factors considered in determining the assailed rates.
Definitely, this task is within the province of the TRB.

We take cognizance of the wealth of jurisprudence on the doctrine of primary administrative jurisdiction and exhaustion of
administrative remedies. In this era of clogged court dockets, the need for specialized administrative boards or commissions with the
special knowledge, experience and capability to hear and determine promptly disputes on technical matters or intricate questions of
facts, subject to judicial review in case of grave abuse of discretion, is indispensable. Between the power lodged in an administrative
body and a court, the unmistakable trend is to refer it to the former."[24] In Industrial Enterprises, Inc. vs. Court of Appeals,[25] we
ruled:

"x x x, if the case is such that its determination requires the expertise, specialized skills and knowledge of the proper administrative
bodies because technical matters or intricate questions of facts are involved, then relief must first be obtained in an administrative
proceeding before a remedy will be supplied by the courts even though the matter is within the proper jurisdiction of a court."

Moreover, petitioner Zialcita’s resort to prohibition is intrinsically inappropriate. It bears stressing that the office of this remedy is not to
correct errors of judgment but to prevent or restrain usurpation of jurisdiction or authority by inferior tribunals and to compel them to
observe the limitation of their jurisdictions. G.R. No. 151108, while designated as a petition for prohibition, has for its object the setting
aside of Resolution No. 2001-89 on the ground that it was issued without prior notice, hearing and publication and that the provisional
toll rate adjustments are exorbitant. This is not the proper subject of prohibition because as long as the inferior court, tribunal or board
has jurisdiction over the person and subject matter of the controversy, the writ will not lie to correct errors and irregularities in
procedure, or to prevent an erroneous decision or an enforcement of an erroneous judgment. And even in cases of encroachment,
usurpation, and improper assumption of jurisdiction, the writ will not issue where an adequate and applicable remedy by appeal, writ or
error, certiorari, or other prescribed methods of review are available.[26] In this case, petitioner Zialcita should have sought a review of
the assailed Resolution before the TRB.

III

Even granting that petitioners’ recourse to the instant remedies is in order, still, we cannot rule in their favor.

For one, it is not true that the provisional toll rate adjustments were not published prior to its implementation on January 1, 2002.
Records show that they were published on December 17, 24 and 31, 2001[27] in three newspapers of general circulation, particularly
the Philippine Star, Philippine Daily Inquirer and The Manila Bulletin. Surely, such publications sufficiently complied with Section 5 of
P.D. No. 1112 which mandates that "no new rates shall be collected unless published in a newspaper of general publication at least
once a week for three consecutive weeks." At any rate, it must be pointed out that under Letter of Instruction No. 1334-A,[28] the TRB
may grant and issue ex-parte to any petitioner, without need of notice, publication or hearing, provisional authority to collect, pending
hearing and decision on the merits of the petition, the increase in rates prayed for or such lesser amount as the TRB may in its
discretion provisionally grant. That LOI No. 1334-A has the force and effect of law finds support in a catena of cases decreeing that "all
proclamations, orders, decrees, instructions, and acts promulgated, issued, or done by the former President (Ferdinand E. Marcos) are
part of the law of the land, and shall remain valid, legal, binding, and effective, unless modified, revoked or superseded by subsequent
proclamations, orders, decrees, instructions, or other acts of the President."[29] In Association of Small Landowners in the Philippines,
Inc. vs. Secretary of Agrarian Reform,[30] this Court held:

"The Court wryly observes that during the past dictatorship, every presidential issuance, by whatever name it was called, had the force
and effect of law because it came from President Marcos. Such are the ways of despots. Hence, it is futile to argue, as the petitioners
do in G.R. No. 79744, that LOI 474 could not have repealed P.D. No. 27 because the former was only a letter of instruction. The
important thing is that it was issued by President Marcos, whose word was law during that time." (Emphasis supplied)

For another, it is not true that it was TRB Executive Director Dumlao, Jr. alone who issued Resolution No. 2001-89. The Resolution
itself contains the signature of the four TRB Directors, namely, Simeon A. Datumanong, Emmanuel P. Bonoan, Ruben S. Reinoso, Jr.
and Mario K. Espinosa.[31] Petitioner Padua would argue that while these Directors signed the Resolution, none of them personally
attended the hearing. This argument is misplaced. Under our jurisprudence, an administrative agency may employ other persons, such
as a hearing officer, examiner or investigator, to receive evidence, conduct hearing and make reports, on the basis of which the agency
shall render its decision. Such a procedure is a practical necessity.[32] Thus, in Mollaneda vs. Umacob,[33] we ruled:

" x x x At any rate, it cannot be gainsaid that the term "administrative body or agency" includes the subordinate officials upon whose
hand the body or agency delegates a portion of its authority. Included therein are the hearing officers through whose eyes and ears the
administrative body or agency observes the demeanor, conduct and attitude of the witnesses and listens to their testimonies.

"It must be emphasized that the appointment of competent officers to hear and receive evidence is commonly resorted to by
administrative bodies or agencies in the interest of an orderly and efficient disposition of administrative cases. x x x

"x x x Corollarily, in a catena of cases, this Court laid down the cardinal requirements of due process in administrative proceedings, one
of which is that "the tribunal or body or any of its judges must act on its or his own independent consideration of the law and facts of the
controversy, and not simply accept the views of a subordinate." Thus, it is logical to say that this mandate was rendered precisely to
ensure that in cases where the hearing or reception of evidence is assigned to a subordinate, the body or agency shall not merely rely
on his recommendation but instead shall personally weigh and assess the evidence which the said subordinate has gathered."

Be that as it may, we must stress that the TRB’s authority to grant provisional toll rate adjustments does not require the conduct of a
hearing. Pertinent laws and jurisprudence support this conclusion.

It may be recalled that Former President Ferdinand E. Marcos promulgated P.D. No. 1112 creating the TRB on March 31, 1977. The
end in view was to authorize the collection of toll fees for the use of certain public improvements in order to attract private sector
investment in the government infrastructure projects. The TRB was tasked to supervise the collection of toll fees and the operation of
toll facilities. One of its powers is to "issue, modify and promulgate from time to time the rates of toll that will be charged the direct users
of toll facilities and upon notice and hearing, to approve or disapprove petitions for the increase thereof."[34]

To clarify the intent of P.D. No. 1112 as to the extent of the TRB’s power,[35] Former President Marcos further issued LOI No. 1334-A
expressly allowing the TRB to grant ex-parte provisional or temporary increase in toll rates, thus:

"NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Republic of the Philippines, by virtue of the powers vested in me
by the Constitution, do hereby direct, order and instruct the Toll Regulatory Board to grant and issue ex-parte to any petitioner, without
need of notice, publication or hearing, provisional authority to collect, pending hearing of and decision on the merits of such petition, the
increase in rates prayed for or such lesser amount as the Board may in its discretion provisionally grant, upon (a) a finding that the said
petition is sufficient in form and substance, (b) the submission of an affidavit by the petitioner showing that the increase in rates
substantially conforms to the formula, if any stipulated in the franchise or toll operation agreement/certificate of the petitioner and that
failure to immediately impose and collect the increase in rates would result in outright delay or stoppage of urgently needed
improvements, expansion or repairs of toll facilities and/or in great irreparable injury to the petitioner, and (c) the submission by the
petitioner to the Board of a bond, in such amount and from such surety or sureties and under such terms and conditions as the Board
shall fix, to guarantee the refund of the increase in rates to the affected toll payers in case it is finally determined, after notice and
hearing, that the petitioner is not entitled, in whole or in part, to the same. Any provisional toll rate increases shall be effective
immediately upon approval without need of publication."

Thereafter, the TRB promulgated as part of its Rules of Procedure, the following provision:

"RULE 5

PROCEDURE FOR APPROVAL OF TOLL RATE

"Section 2. Provisional Relief – Upon initial findings of the Board that the Petition for the approval of initial toll rate or the petition for toll
rate adjustment is in accordance with Sections 1 and 2 of Rule 2, Section 2 of Rule 3 and Section 1 of Rule 4 hereof, the Board within a
reasonable time after the filing of the Petition, may in an en banc decision provisionally approve the initial toll rate or toll rate
adjustment, without the necessity of any notice and hearing."

From the foregoing, it is clear that a hearing is not necessary for the grant of provisional toll rate adjustment. The language of LOI No.
1334-A is not susceptible of equivocation. It "directs, orders and instructs" the TRB to issue provisional toll rates adjustment ex-parte
without the need of notice, hearing and publication. All that is necessary is that it be issued upon (1) a finding that the main petition is
sufficient in form and substance; (2) the submission of an affidavit showing that the increase in rates substantially conforms to the
formula, if any is stipulated in the franchise or toll operation agreement, and that failure to immediately impose and collect the increase
in rates would result in great irreparable injury to the petitioner; and (3) the submission of a bond. Again, whether or not CITRA
complied with these requirements is an issue that must be addressed to the TRB.

The practice is not something peculiar. We have ruled in a number of cases that an administrative agency may be empowered to
approve provisionally, when demanded by urgent public need, rates of public utilities without a hearing. The reason is easily discerned
from the fact that provisional rates are by their nature temporary and subject to adjustment in conformity with the definitive rates
approved after final hearing.[36] In Maceda vs. Energy Regulatory Board,[37] we ruled that while the ERB is not precluded from
conducting a hearing on the grant of provisional authority –which is of course, the better procedure – however, it can not be stigmatized
if it failed to conduct one. Citing Citizens’ Alliance for Consumer Protection vs. Energy Regulatory Board,[38] this Court held:

In the light of Section 8 quoted above, public respondent Board need not even have conducted formal hearings in these cases prior to
issuance of its Order of 14 August 1987 granting a provisional increase of prices. The Board, upon its own discretion and on the basis
of documents and evidence submitted by private respondents, could have issued an order granting provisional relief immediately upon
filing by private respondents of their respective applications. In this respect, the Court considers the evidence presented by private
respondents in support of their applications -–.i.e., evidence showing that importation costs of petroleum products had gone up; that the
peso had depreciated in value; and that the Oil Price Stabilization Fund (OPSF) had been depleted – as substantial and hence
constitutive of at least prima facie basis for issuance by the Board of a provisional relief order granting an increase in the prices of
petroleum products.

Anent petitioner Padua’s contention that CITRA has no standing to apply for a toll fee increase, suffice it to say that CITRA’s right stems
from the STOA which was entered into by no less than the Republic of the Philippines and by the PNCC. Section 7.04 of the STOA
provides that the Investor, CITRA, and/or the Operator, PNCC, shall be entitled to apply for and if warranted, to be granted an interim
adjustment of toll rates in case of force majeure and a significant currency valuation.[39] Now, unless set aside through proper action,
the STOA has the force and effect of law between the contracting parties, and is entitled to recognition by this Court. [40] On the same
breath, we cannot sustain Padua’s contention that the term "Metro Manila Skyway" Project excludes the at-grade portions of the South
Luzon Expressway considering that under the same STOA the "Metro Manila Skyway" includes: "(a) the South Metro Manila Skyway,
coupled with the rehabilitated at-grade portion of the South Luzon Expressway, from Alabang to Quirino Avenue; (b) the Central Metro
Manila Skyway, from Quirino Avenue to A. Bonifacio Avenue; x x x."[41]

Petitioner Zialcita faults the TRB for not stating the facts and the law on which Resolution No. 2001-89 is based. Petitioner is wrong.
Suffice it to state that while Section 14, Article VIII of the 1987 Constitution provides that "no decision shall be rendered by any court
without expressing therein clearly and distinctly the facts and the law on which it is based," this rule applies only to a decision of a court
of justice, not TRB.[42]

At this point, let it be stressed that we are not passing upon the reasonableness of the provisional toll rate adjustments. As we have
earlier mentioned, this matter is best addressed to the TRB.

IV

In fine, as what we intimated in Philippine National Construction Corp. vs. Court of Appeals,[43] we commend petitioners for devoting
their time and effort on a matter so imbued with public interest as in this case. But we can do no better than to brush aside their chief
objections to the provisional toll rate adjustments, for a different approach would lead this Court astray into the field of factual conflict
where its pronouncements would not rest on solid grounds. Time and again, we have impressed that this Court is not a trier of facts,
more so, in the consideration of an extraordinary remedy of prohibition where only questions of lack or excess of jurisdiction or grave
abuse of discretion is to be entertained.

And to accord the main petition for mandamus in G.R. No. 141949 the full deliberation it deserves, we deem it appropriate to discuss its
merit on another occasion. Anyway, G.R. No. 141949 was consolidated with G.R. No. 151108 only by reason of petitioner Padua’s
deviant motion assailing Resolution 2001-89. As we have previously said, the main petition in G.R. No. 141949 presents an entirely
different issue and is set on a different factual landscape.

WHEREFORE, petitioner Padua’s "Urgent Motion for Temporary Restraining Order to Stop Arbitrary Toll Fee Increases" is DENIED
and petitioner Zialcita’s "Petition for Prohibition" is DISMISSED.

SO ORDERED.
G.R. No. 166910               October 19, 2010

ERNESTO B. FRANCISCO, JR. and JOSE MA. O. HIZON, Petitioners,

vs.
TOLL REGULATORY BOARD, PHILIPPINE NATIONAL CONSTRUCTION CORPORATION, MANILA NORTH TOLLWAYS
CORPORATION, BENPRES HOLDINGS CORPORATION, FIRST PHILIPPINE INFRASTRUCTURE DEVELOPMENT
CORPORATION, TOLLWAY MANAGEMENT CORPORATION, PNCC SKYWAY CORPORATION, CITRA METRO MANILA
TOLLWAYS CORPORATION and HOPEWELL CROWN INFRASTRUCTURE, INC., Respondents.

x - - - - - - - - - - - - - - - - - - - - - - -x

G.R. No. 169917

HON. IMEE R. MARCOS, RONALDO B. ZAMORA, CONSUMERS UNION OF THE PHILIPPINES, INC., QUIRINO A. MARQUINEZ,
HON. LUIS A. ASISTIO, HON. ERICO BASILIO A. FABIAN, HON. RENATO "KA RENE" B. MAGTUBO, HON. RODOLFO G.
PLAZA, HON. ANTONIO M. SERAPIO, HON. EMMANUEL JOEL J. VILLANUEVA, HON. ANIBAN NG MGA MANGGAGAWA SA
AGRIKULTURA (AMA), INC., ANIBAN NG MGA MAGSASAKA, MANGINGISDA AT MANGGAGAWA SA AGRIKULTURA-
KATIPUNAN, INC., KAISAHAN NG MGA MAGSASAKA SA AGRIKULTURA, INC., KILUSAN NG MANGAGAWANG
MAKABAYAN, Petitioners,
vs.
The REPUBLIC OF THE PHILIPPINES, acting by and through the TOLL REGULATORY BOARD, MANILA NORTH TOLLWAYS
CORPORATION, PHILIPPINE NATIONAL CONSTRUCTION CORPORATION, and FIRST PHILIPPINE INFRASTRUCTURE
DEVELOPMENT CORP., Respondents.

x - - - - - - - - - - - - - - - - - - - - - - -x

G.R. No. 173630

GISING KABATAAN MOVEMENT, INC., BARANGAY COUNCIL OF SAN ANTONIO, MUNICIPALITY OF SAN PEDRO, LAGUNA
[as Represented by COUNCILOR CARLON G. AMBAYEC], and YOUNG PROFESSIONALS AND ENTREPRENEURS OF SAN
PEDRO, LAGUNA Petitioners,
vs.
THE REPUBLIC OF THE PHILIPPINES, acting through the TOLL REGULATORY BOARD (TRB), PHILIPPINE NATIONAL
CONSTRUCTION CORPORATION (PNCC), Respondents.

x - - - - - - - - - - - - - - - - - - - - - - -x

G.R. No. 183599

THE REPUBLIC OF THE PHILIPPINES, represented by the TOLL REGULATORY BOARD, Petitioner,

vs.
YOUNG PROFESSIONALS AND ENTREPRENEURS OF SAN PEDRO, LAGUNA, Respondent.

Before us are four petitions; the first three are special civil actions under Rule 65, assailing and seeking to nullify certain statutory
provisions, presidential actions and implementing orders, toll operation-related contracts and issuances on the construction,
maintenance and operation of the major tollway systems in Luzon. The petitions likewise seek to restrain and permanently prohibit the
implementation of the allegedly illegal toll fee rate hikes for the use of the North Luzon Expressway ("NLEX"), South Luzon Expressway
("SLEX") and the South Metro Manila Skyway ("SMMS"). The fourth, a petition for review under Rule 45, seeks to annul and set aside
the decision dated June 23, 2008 of the Regional Trial Court ("RTC") of Pasig, in SCA No. 3138-PSG, enjoining the original toll
operating franchisee from collecting toll fees in the SLEX.

By Resolution of March 20, 2007, the Court ordered the consolidation of the first three petitions, docketed as G.R. Nos. 166910,
169917 and 173630, respectively. The fourth petition, G.R. No. 183599, would later be ordered consolidated with the earlier three
petitions.

The Facts

The antecedent facts are as follows—

On March 31, 1977, then President Ferdinand E. Marcos issued Presidential Decree No. ("P.D.") 1112, authorizing the establishment of
toll facilities on public improvements.1 This issuance, in its preamble, explicitly acknowledged "the huge financial requirements" and the
necessity of tapping "the resources of the private sector" to implement the government’s infrastructure programs. In order to attract
private sector involvement, P.D. 1112 allowed "the collection of toll fees for the use of certain public improvements that would allow a
reasonable rate of return on investments." The same decree created the Toll Regulatory Board ("TRB") and invested it under Section 3
(a) (d) and (e) with the power to enter, for the Republic, into contracts for the construction, maintenance and operation of tollways, grant
authority to operate a toll facility, issue therefor the necessary Toll Operation Certificate ("TOC") and fix initial toll rates, and, from time
to time, adjust the same after due notice and hearing.
On the same date, P.D. 1113 was issued, granting to the Philippine National Construction Corporation ("PNCC"), then known as the
Construction and Development Corporation of the Philippines ("CDCP"), for a period of thirty years from May 1977 – or up to May 2007
– a franchise to construct, maintain and operate toll facilities in the North Luzon and South Luzon Expressways, with the right to collect
toll fees at such rates as the TRB may fix and/or authorize. Particularly, Section 1 of P.D. 1113 delineates the coverage of the
expressways from Balintawak, Caloocan City to Carmen, Rosales, Pangasinan and from Nichols, Pasay City to Lucena, Quezon. And
because the franchise is not self-executing, as it was in fact made subject, under Section 3 of P.D. 1113, to "such conditions as may be
imposed by the Board in an appropriate contract to be executed for such purpose," TRB and PNCC signed in October 1977, a Toll
Operation Agreement ("TOA") on the North Luzon and South Luzon Tollways, providing for the detailed terms and conditions for the
construction, maintenance and operation of the expressway.2

On December 22, 1983, P.D. 1894 was issued therein further granting PNCC a franchise over the Metro Manila Expressway ("MMEX"),
and the expanded and delineated NLEX and SLEX. Particularly, PNCC was granted the "right, privilege and authority to construct,
maintain and operate any and all such extensions, linkages or stretches, together with the toll facilities appurtenant thereto, from any
part of the North Luzon Expressway, South Luzon Expressway and/or Metro Manila Expressway and/or to divert the original route and
change the original end-points of the North Luzon Expressway and/or South Luzon Expressway as may be approved by the
[TRB]."3 Under Section 2 of P.D. 1894, "the franchise granted the [MMEX] and all extensions, linkages, stretches and diversions after
the approval of the decree that may be constructed after the approval of this decree [on December 22, 1983] shall likewise have a term
of thirty (30) years, commencing from the date of completion of the project."

As expressly set out in P.D. 1113 and reiterated in P.D. 1894, PNCC may sell or assign its franchise thereunder granted or cede the
usufruct4 thereof upon the President’s approval.5 This same provision on franchise transfer and cession of usufruct is likewise found in
P.D. 1112.6

Then came the 1987 Constitution with its franchise provision.7

In 1993, the Government Corporate Counsel ("GCC"), acting on PNCC’s request, issued Opinion No. 224, s. 1993,8 later affirmed by
the Secretary of Justice,9 holding that PNCC may, subject to certain clearance and approval requirements, enter into a joint venture
("JV") agreement ("JVA") with private entities without going into public bidding in the selection of its JV partners. PNCC’s query was
evidently prompted by the need to seek out alternative sources of financing for expanding and improving existing expressways, and to
link them to economic zones in the north and to the CALABARZON area in the south.

MOU for the construction, rehabilitation

and expansion of expressways

On February 8, 1994, the Department of Public Works and Highways ("DPWH"), TRB, PNCC, Benpres Holdings Corporation
("Benpres") and First Philippine Holdings Corporation ("FPHC"), among other private and government entities/agencies, executed a
Memorandum of Understanding ("MOU") envisaged to open the door for the entry of private capital in the rehabilitation, expansion (to
Subic and Clark) and extension, as flagship projects, of the expressways north of Manila, over which PNCC has a franchise. To carry
out their undertakings under the MOU, Benpres and FPHC formed, as their infrastructure holding arm, the First Philippine Infrastructure
and Development Corporation ("FPIDC").

Consequent to the MOU execution, PNCC entered into financial and/or technical JVAs with private entities/investors for the toll
operation of its franchised areas following what may be considered as a standard pattern, viz.: (a) after a JVA is concluded and the
usual government approval of the assignment by PNCC of the usufruct in the franchise under P.D. 1113, as amended, secured, a new
JV company is specifically formed to undertake a defined toll road project; (b) the Republic of the Philippines, through the TRB, as
grantor, PNCC, as operator, and the new corporation, as investor/concessionaire, with its lender, as the case may be, then execute a
Supplemental Toll Operation Agreement ("STOA") to implement the TOA previously issued; and (c) once the requisite STOA approval
is given, project prosecution starts and upon the completion of the toll road project or of a divisible phase thereof, the TRB fixes or
approves the initial toll rate after which, it passes a board resolution prescribing the periodic toll rate adjustment.

The STOA defines the scope of the road project coverage, the terminal date of the concession, and includes provisions on initial toll
rate and a built-in formula for adjustment of toll rates, investment recovery clauses and contract termination in the event of the
concessionaire’s, PNCC’s or TRB’s default, as the case may be.

The following events or transactions, involving the personalities as indicated, transpired with respect to the following projects:

The South Metro Manila Skyway (SMMS)

(Buendia – Bicutan elevated stretch) Project

PNCC entered into a JV partnership arrangement with P.T. Citra, an Indonesian company, and created, for the SMMS project, the Citra
Metro Manila Tollways Corporation ("CMMTC").

On November 27, 1995, TRB, PNCC and CMMTC executed a STOA for the SMMS project ("CITRA STOA"). And on April 7, 1996, then
President Fidel V. Ramos approved the CITRA STOA.

Phase I of the SMMS project – the Bicutan to Buendia elevated expressway stretch – was completed in December 1998, and the
consequent initial toll rates for its use implemented a month after. On November 26, 2004, the TRB passed Resolution No. 2004-53,
approving the periodic toll rate adjustment for the SMMS.

The NLEX Expansion Project (Rehabilitated and Widened NLEX, Subic Expressway, Circumferential Road C-5)

In reply to the query of the then TRB Chairman, the Department of Justice ("DOJ") issued DOJ Opinion No. 79, s. of 1994, echoing an
earlier opinion of the GCC, that the TRB can implement the NLEX expansion project through a JV scheme with private investors
possessing the requisite technical and financial capabilities.

On May 16, 1995, then President Ramos approved the assignment of PNCC’s usufructuary rights as franchise holder to a JV company
to be formed by PNCC and FPIDC. PNCC and FPIDC would later ink a JVA for the rehabilitation and modernization of the NLEX –
referred in certain pleadings as the North Luzon Tollway project.10 The Manila North Tollways Corporation ("MNTC") was formed for the
purpose.

On April 30, 1998, the Republic, through the TRB, PNCC and MNTC, executed a STOA for the North Luzon Tollway project ("MNTC
STOA") in which MNTC was authorized, inter alia, to subcontract the operation and maintenance of the project, provided that the
majority of the outstanding shares of the contractor shall be owned by MNTC. The MNTC STOA covers three phases comprising of ten
segments, including the rehabilitated and widened NLEX, the Subic Expressway and the circumferential Road C-5.11 The STOA is to be
effective for thirty years, reckoned from the issuance of the toll operation permit for the last completed phase or until December 31,
2030, whichever is earlier. The Office of the President ("OP") approved the STOA on June 15, 1998.

On August 2, 2000, pursuant to the MNTC STOA, the Tollways Management Corporation ("TMC")—formerly known as the Manila
North Tollways Operation and Maintenance Corporation—was created to undertake the operation and maintenance of the NLEX
tollway facilities, interchanges and related works.

On January 27, 2005, the TRB issued Resolution No. 2005-04 approving the initial authorized toll rates for the closed and flat toll
systems applicable to the new NLEX.

The South Luzon Expressway Project (Nichols to Lucena City)

For the SLEX expansion project, PNCC and Hopewell Holdings Limited ("HHL"), as JV partners, executed a Memorandum of
Agreement ("MOA"),12 which eventually led to the formation of a JV company – Hopewell Crown Infrastructure, Inc. ("HCII"), now MTD
Manila Expressways, Inc., ("MTDME"). And pursuant to the PNCC-MTDME JVA, the South Luzon Tollway Corporation ("SLTC") and
the Manila Toll Expressway Systems, Inc. ("MATES") were incorporated to undertake the financing, construction, operation and
maintenance of the resulting Project Toll Roads forming part of the SLEX. The toll road projects are divisible toll sections or segments,
each segment defined as to its starting and end points and each with the corresponding distance coverage. The proposed JVA, as later
amended, between PNCC and MTDME was approved by the OP on June 30, 2000.

Eventually, or on February 1, 2006, a STOA13 for the financing, design, construction, lane expansion and maintenance of the Project
Toll Roads (PTR) of the rehabilitated and improved SLEX was executed by and among the Republic, PNCC, SLTC, as investor, and
MATES, as operator. To be precise, the PTRs, under the STOA, comprise and contemplated the full rehabilitation and/or roadway
widening of the following existing toll roads or facilities: PTR 1 – that portion of the tollway commencing at the end of South MM Skyway
to the Filinvest exit at Alabang (1-242 km); PTR 2 – the tollway from Alabang to Calamba, Laguna (27.28 km); PTR 3 – the tollway from
Calamba to Sto. Tomas, Batangas (7.6 km) and PTR 4 – the tollway from Sto. Tomas to Lucena City (54.27 km).14

Under Clause 6.03 of the STOA, the Operator, after substantially completing a TPR, shall file an application for a Toll Operation Permit
over the relevant completed TPR or segment, which shall include a request for a review and approval by the TRB of the calculation of
the new current authorized toll rate.

G.R. No. 166910

Petitioners Francisco and Hizon, as taxpayers and expressway users, seek to nullify the various STOAs adverted to above and the
corresponding TRB resolutions, i.e. Res. Nos. 2004-53 and 2005-04, fixing initial rates and/or approving periodic toll rate adjustments
therefor. To the petitioners, the STOAs and the toll rate-fixing resolutions violate the Constitution in that they veritably impose on the
public the burden of financing tollways by way of exorbitant fees and thus depriving the public of property without due process. These
STOAs are also alleged to be infirm as they effectively awarded purported "build-operate-transfer" ("BOT") projects without public
bidding in violation of the BOT Law (R.A. 6957, as amended by R.A. 7718).

Petitioners likewise assail the constitutionality of Sections 3 (a) and (d) of P.D. 1112 in relation to Section 8 (b) of P.D. 1894 insofar as
they vested the TRB, on one hand, toll operation awarding power while, on the other hand, granting it also the power to issue, modify
and promulgate toll rate charges. The TRB, so petitioners bemoan, cannot be an awarding party of a TOA and, at the same time, be the
regulator of the tollway industry and an adjudicator of rate exactions disputes.

Additionally, petitioners also seek to nullify certain provisions of P.D. 1113 and P.D. 1894, which uniformly grant the President the
power to approve the transfer or assignment of usufruct or the rights and privileges thereunder by the tollway operator to third parties,
particularly the transfer effected by PNCC to MNTC. As argued, the authority to approve partakes of an exercise of legislative power
under Article VI, Section 1 of the Constitution.15

In the meantime, or on April 8, 2010, the TRB issued a Certificate of Substantial Completion16 with respect to PTR 1 (Alabang-Filinvest
stretch) and PTR 2 (Alabang-Calamba segments) of SLEX, signifying the completion of the full rehabilitation/expansion of both
segments and the linkages/interchanges in between pursuant to the requirements of the corresponding STOA. TRB on even date
issued a Toll Operation Permit in favor of MATES over said PTRs 1 and 2.17 Accordingly, upon due application, the TRB approved the
publication of the toll rate matrix for PTRs 1 and 2, the rate to take effect on June 30, 2010.18 The implementation of the published rate
would, however, be postponed to August 2010.

On July 5, 2010, petitioner Francisco filed a Supplemental Petition with prayer for the issuance of a temporary restraining order ("TRO")
and/or status quo order focused on the impending collection of what was perceived to be toll rate increases in the SLEX. The assailed
adjustments were made public in a TRB notice of toll rate increases for the SLEX from Alabang to Calamba on June 6, 2010, and were
supposed to have been implemented on June 30, 2010. On August 13, 2010, the Court granted the desired TRO, enjoining the
respondents in the consolidated cases from implementing the toll rate increases in the SLEX.

In their Consolidated Comment/Opposition to the Supplemental Petition, respondents SLTC et al., aver that the disputed rates are
actually initial and opening rates, not an increase or adjustment of the prevailing rate, for the new expanded and rehabilitated SLEX. In
fine, the new toll rates are, per SLTC, for a new and upgraded facility, i.e. the aforementioned Project Toll Roads 1 and 2 put up
pursuant to the 2006 Republic-PNCC-SLTC-MATES STOA adverted to.

G.R. No. 169917

While they raise, for the most part, the same issues articulated in G.R. No. 166910, such as the public bidding requirement, the power
of the President to approve the assignment of PNCC’s usufructuary rights to cover (as petitioners Imee R. Marcos, et al., would stress)
even the assignment of the expressway from Balintawak to Tabang, the virtual amendment and extension of a statutory franchise by
way of administrative action (e.g., the execution of a STOA or issuance of a TOC), petitioners in G.R. No. 169917 – some of them then
and still are members of the House of Representatives – have, as their main focus, the North Luzon Tollway project and the
agreements and devices entered in relation therewith.

Petitioners also assail the MNTC STOA on the ground that it granted the lenders (Asian Development Bank/World Bank) of MNTC, as
project concessionaire, the unrestricted rights to appoint a substitute entity to replace MNTC in case of an MNTC Default before
prepayment of the loans, while also granting said lenders, in appropriate cases, the option to extend the "concession or franchise" for a
period not exceeding fifty years coinciding with the full payment of the loans.

G.R. No. 173630

Apart from those taken up in the other petitions for certiorari and prohibition, petitioners, in G.R. No. 173630, whose members and
constituents allegedly traverse SLEX daily, aver that TRB ought to have applied the provisions of R.A. 6957 [BOT Law] and R.A. 9184
[Government Procurement Reform Act], which require public bidding for the prosecution of the SLEX project.

G.R. No. 183599

Civil Case – SCA No. 3138-PSG before the RTC

On September 14, 2007, the Young Professionals and Entrepreneurs of San Pedro, Laguna ("YPES"), one of the petitioners in G.R.
No. 173630, filed before the RTC, Branch 155, in Pasig City, a special civil action for certiorari, etc., against the TRB, docketed as SCA
No. 3138-PSG, containing practically identical issues raised in G.R. No. 173630. Like its petition in G.R. No. 173630, YPES, before the
RTC, assailed and sought to nullify the April 27, 2007 TOC, which TRB issued to PNCC inasmuch as the TOC worked to extend
PNCC’s tollway operation franchise for the SLEX. As YPES argued, only the Congress can extend the term of PNCC’s franchise which
expired on May 1, 2007.

Ruling of the RTC in SCA No. 3138-PSG

By Decision19 dated June 23, 2008, the RTC, for the main stated reason that the authority to grant or renew franchises belongs only to
Congress, granted YPES’ petition, disposing as follows:

ACCORDINGLY, the instant Petition for Certiorari, Prohibition and Mandamus is hereby GRANTED and the questioned Toll Operation
Certificate (TOC) covering the [SLEX] issued by respondent TRB in April, 2007, is hereby ordered ANNULLED and SET ASIDE.

FURTHER, respondent PNCC is hereby immediately PROHIBITED from collecting toll fess along the SLEX facilities as it no longer has
the power and authority to do so.

FINALLY, as mandated under Section 9 of PD No. 1113, respondent PNCC is hereby COMMANDED to turn over without further delay
the physical assets and facilities of the SLEX including improvements thereon, together with the equipment and appurtenances directly
related to their operations, without any cost, to the Government through the Toll Regulatory Board x x x.20

Thus, the instant petition for review on certiorari under Rule 45, filed by the TRB on pure questions of law, docketed as G.R. No.
183599.

In their separate comments, public and private respondents uniformly seek the dismissal of the three special civil actions on the
threshold issue of the absence of a justiciable case and lack of locus standi on the part of the petitioners therein. Other grounds raised
range from the impropriety of certiorari to nullify toll operation agreements; the inapplicability of the public bidding rules in the selection
by PNCC of its JV partners and the authority of the President to approve TOAs and the transfer of usufructuary rights. PNCC argues, in
esse, that its continuous toll operations did not constitute an extension of its franchise, its authority to operate after the expiry date
thereof in May 2007 being based on the valid authority of TRB to issue TOC.

The Issues

The principal consolidated but interrelated issues tendered before the Court, most of which with constitutional undertones, may be
reduced into six (6) and formulated in the following wise: first, whether or not an actual case or controversy exists and, relevantly,
whether petitioners in the first three petitions have locus standi; second, whether the TRB is vested with the power and authority to
grant what amounts to a franchise over tollway facilities; third, corollary to the second, whether the TRB can enter into TOAs and, at the
same time, promulgate toll rates and rule on petitions for toll rate adjustments; fourth, whether the President is duly authorized to
approve contracts, inclusive of assignment of contracts, entered into by the TRB relative to tollway operations; fifth, whether the subject
STOAs covering the NLEX, SLEX and SMMS and their respective extensions, linkages, etc. are valid;  sixth, whether a public bidding is
required or mandatory for these tollway projects.

Expressly prayed, if not subsumed, in the first three petitions, is to prohibit TRB and its concessionaires from collecting toll fees along
the Skyway and Luzon Tollways.

Preliminary Issues

Existence of an Actual Controversy, its Ripeness and

the Locus Standi to Sue

The power of judicial review can only be exercised in connection with a bona fide controversy involving a statute, its implementation or
a government action.21 Withal, courts will decline to pass upon constitutional issues through advisory opinions, bereft as they are of
authority to resolve hypothetical or moot questions.22 The limitation on the power of judicial review to actual cases and controversies
defines the role assigned to the judiciary in a tripartite allocation of power, to assure that the courts will not intrude into areas committed
to the other branches of government.23

In The Province of North Cotabato v. The Government of the Republic of the Philippines Peace Panel on Ancestral Domain (GRP), the
Court has expounded anew on the concept of actual case or controversy and the requirement of ripeness for judicial review, thus:

An actual case or controversy involves a conflict of legal rights, an assertion of opposite legal claims, susceptible of judicial resolution
as distinguished from a hypothetical or abstract difference or dispute. There must be a contrariety of legal rights x x x. The Court can
decide the constitutionality of an act x x x only when a proper case between opposing parties is submitted for judicial determination.

Related to the requirement of an actual case or controversy is the requirement of ripeness. A question is ripe for adjudication when the
act being challenged has had a direct adverse effect on the individual challenging it. x x x [I]t is a prerequisite that something had then
been accomplished or performed by either branch before a court may come into the picture, and the petitioner must allege the
existence of an immediate or threatened injury to itself as a result of the challenged action. He must show that he has sustained or is
immediately in danger of sustaining some direct injury as a result of the act complained of.24

But even with the presence of an actual case or controversy, the Court may refuse judicial review unless the constitutional question or
the assailed illegal government act is brought before it by a party who possesses what in Latin is technically called locus standi or the
standing to challenge it.25 To have standing, one must establish that he has a "personal and substantial interest in the case such that he
has sustained, or will sustain, direct injury as a result of its enforcement."26 Particularly, he must show that (1) he has suffered some
actual or threatened injury as a result of the allegedly illegal conduct of the government; (2) the injury is fairly traceable to the
challenged action; and (3) the injury is likely to be redressed by a favorable action.27

Petitions for certiorari and prohibition are, as here, appropriate remedies to raise constitutional issues and to review and/or prohibit or
nullify, when proper, acts of legislative and executive officials.28 The present petitions allege that then President Ramos had exercised
vis-à-vis an assignment of franchise, a function legislative in character. As alleged, too, the TRB, in the guise of entering into contracts
or agreements with PNCC and other juridical entities, virtually enlarged, modified to the core and/or extended the statutory franchise of
PNCC, thereby usurping a legislative prerogative. The usurpation came in the form of executing the assailed STOAs and the issuance
of TOCs. Grave abuse of discretion is also laid on the doorstep of the TRB for its act of entering into these same contracts or
agreements without the required public bidding mandated by law, specifically the BOT Law (R.A. 6957, as amended) and the
Government Procurement Reform Act (R.A. 9184).

In fine, the certiorari petitions impute on then President Ramos and the TRB, the commission of acts that translate inter alia into
usurpation of the congressional authority to grant franchises and violation of extant statutes. The petitions make a prima facie case for
certiorari and prohibition; an actual case or controversy ripe for judicial review exists. Verily, when an act of a branch of government is
seriously alleged to have infringed the Constitution, it becomes not only the right but in fact the duty of the judiciary to settle the dispute.
In doing so, the judiciary merely defends the sanctity of its duties and powers under the Constitution.29

In any case, the rule on standing is a matter of procedural technicality, which may be relaxed when the subject in issue or the legal
question to be resolved is of transcendental importance to the public.30 Hence, even absent any direct injury to the suitor, the Court can
relax the application of legal standing or altogether set it aside for non-traditional plaintiffs, like ordinary citizens, when the public
interest so requires.31 There is no doubt that individual petitioners, Marcos, et al., in G.R. No. 169917, as then members of the House of
Representatives, possess the requisite legal standing since they assail acts of the executive they perceive to injure the institution of
Congress. On the other hand, petitioners Francisco, Hizon, and the other petitioning associations, as taxpayers and/or mere users of
the tollways or representatives of such users, would ordinarily not be clothed with the requisite standing. While this is so, the Court is
wont to presently relax the rule on locus standi owing primarily to the transcendental importance and the paramount public interest
involved in the implementation of the laws on the Luzon tollways, a roadway complex used daily by hundreds of thousands of motorists.
What we said a century ago in Severino v. Governor General is just as apropos today:

When the relief is sought merely for the protection of private rights, x x x [the relator’s] right must clearly appear. On the other
hand, when the question is one of public right and the object of the mandamus is to procure the enforcement of a public duty,
the people are regarded as the real party in interest, and the relator at whose instigation the proceedings are instituted need
not show that he has any legal or special interest in the result, it being sufficient to show that he is a citizen and as such interested
in the execution of the laws.32 (Words in bracket and emphasis added.)

Accordingly, We take cognizance of the present case on account of its transcendental importance to the public.

Second Issue: TRB Empowered to Grant Authority to Operate

Toll Facility /System

It is abundantly clear that Sections 3 (a) and (e) of P.D. 1112 in relation to Section 4 of P.D. 1894 have invested the TRB with sufficient
power to grant a qualified person or entity with authority to construct, maintain, and operate a toll facility and to issue the corresponding
toll operating permit or TOC.

Sections 3 (a) and (e) of P.D. 1112 and Section 4 of P.D. 1894 amply provide the power to grant authority to operate toll facilities:

Section 3. Powers and Duties of the Board. The Board shall have in addition to its general powers of administration the following
powers and duties:

(a) Subject to the approval of the President of the Philippines, to enter into contracts in behalf of the Republic of the Philippines with
persons, natural or juridical, for the construction, operation and maintenance of toll facilities such as but not limited to national
highways, roads, bridges, and public thoroughfares. Said contract shall be open to citizens of the Philippines and/or to corporations or
associations qualified under the Constitution and authorized by law to engage in toll operations;

xxxx
(e) To grant authority to operate a toll facility and to issue therefore the necessary "Toll Operation Certificate" subject to such conditions
as shall be imposed by the Board including inter alia the following:

(1) That the Operator shall desist from collecting toll upon the expiration of the Toll Operation Certificate.

(2) That the entire facility operated as a toll system including all operation and maintenance equipment directly related thereto
shall be turned over to the government immediately upon the expiration of the Toll Operation Certificate.

(3) That the toll operator shall not lease, transfer, grant the usufruct of, sell or assign the rights or privileges acquired under the
Toll Operation Certificate to any person, firm, company, corporation or other commercial or legal entity, nor merge with any
other company or corporation organized for the same purpose, without the prior approval of the President of the Philippines. In
the event of any valid transfer of the Toll Operation Certificate, the Transferee shall be subject to all the conditions, terms,
restrictions and limitations of this Decree as fully and completely and to the same extent as if the Toll Operation Certificate has
been granted to the same person, firm, company, corporation or other commercial or legal entity.

(4) That in time of war, rebellion, public peril, emergency, calamity, disaster or disturbance of peace and order, the President
of the Philippines may cause the total or partial closing of the toll facility or order to take over thereof by the Government
without prejudice to the payment of just compensation.

(5) That no guarantee, Certificate of Indebtedness, collateral, securities, or bonds shall be issued by any government agency
or government-owned or controlled corporation on any financing program of the toll operator in connection with his
undertaking under the Toll Operation Certificate.

(6) The Toll Operation Certificate may be amended, modified or revoked whenever the public interest so requires.

(a) The Board shall promulgate rules and regulations governing the procedures for the grant of Toll Certificates. The
rights and privileges of a grantee under a Toll Operation Certificate shall be defined by the Board.

(b) To issue rules and regulations to carry out the purposes of this Decree.

SECTION 4. The Toll Regulatory Board is hereby given jurisdiction and supervision over the GRANTEE with respect to the
Expressways, the toll facilities necessarily appurtenant thereto and, subject to the provisions of Section 8 and 9 hereof, the toll that the
GRANTEE will charge the users thereof.

By explicit provision of law, the TRB was given the power to grant administrative franchise for toll facility projects.

The concerned petitioners would argue, however, that PNCC’s [then CDCP’s] franchise, as toll operator, was granted via P.D. 1113, on
the same day P.D. 1112, creating the TRB, was issued. It is thus pointed out that P.D. 1112 could not have plausibly granted the TRB
with the power and jurisdiction to issue a similar franchise. Pushing the point, they maintain that only Congress has, under the 1987
Constitution, the exclusive prerogative to grant franchise to operate public utilities.

We are unable to agree with petitioners’ stance and their undue reliance on Article XII, Section 11 of the Constitution, which states that:

SEC. 11. No franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted except to
citizens of the Philippines or to corporations or associations organized under the laws of the Philippines at least sixty per centum of
whose capital is owned by such citizens, nor shall such franchise, certificate, or authorization be exclusive in character or for a longer
period than fifty years. Neither shall any such franchise or right be granted except under the condition that it shall be subject to
amendment, alteration, or repeal by the Congress when the common good so requires x x x.

The limiting thrust of the foregoing constitutional provision on the grant of franchise or other forms of authorization to operate public
utilities may, in context, be stated as follows: (a) the grant shall be made only in favor of qualified Filipino citizens or corporations; (b)
Congress can impair the obligation of franchises, as contracts; and (c) no such authorization shall be exclusive or exceed fifty years.

A franchise is basically a legislative grant of a special privilege to a person.33 Particularly, the term, franchise, "includes not only
authorizations issuing directly from Congress in the form of statute, but also those granted by administrative agencies to which the
power to grant franchise has been delegated by Congress."34 The power to authorize and control a public utility is admittedly a
prerogative that stems from the Legislature. Any suggestion, however, that only Congress has the authority to grant a public utility
franchise is less than accurate. As stressed in Albano v. Reyes—a case decided under the aegis of the 1987 Constitution—there is
nothing in the Constitution remotely indicating the necessity of a congressional franchise before "each and every public utility may
operate," thus:

That the Constitution provides x x x that the issuance of a franchise, certificate or other form of authorization for the operation of a
public utility shall be subject to amendment, alteration or repeal by Congress does not necessarily imply x x x that only Congress has
the power to grant such authorization. Our statute books are replete with laws granting specified agencies in the Executive Branch the
power to issue such authorization for certain classes of public utilities.35 (Emphasis ours.)

In such a case, therefore, a special franchise directly emanating from Congress is not necessary if the law already specifically
authorizes an administrative body to grant a franchise or to award a contract.36 This is the same view espoused by the Secretary of
Justice in his opinion dated January 9, 2006, when he stated:

That the administrative agencies may be vested with the authority to grant administrative franchises or concessions over the operation
of public utilities under their respective jurisdiction and regulation, without need of the grant of a separate legislative franchise, has been
upheld by the Supreme Court x x x.37
Under the 1987 Constitution, Congress has an explicit authority to grant a public utility franchise. However, it may validly delegate its
legislative authority, under the power of subordinate legislation,38 to issue franchises of certain public utilities to some administrative
agencies. In Kilusang Mayo Uno Labor Center v. Garcia, Jr., We explained the reason for the validity of subordinate legislation, thus:

Such delegation of legislative power to an administrative agency is permitted in order to adapt to the increasing complexity of modern
life. As subjects for governmental regulation multiply, so does the difficulty of administering the laws. Hence, specialization even in
legislation has become necessary.39 (Emphasis ours.)

As aptly pointed out by the TRB and other private respondents, the Land Transportation Franchising and Regulatory Board ("LTFRB"),
the Civil Aeronautics Board ("CAB"), the National Telecommunications Commission ("NTC"), and the Philippine Ports Authority ("PPA"),
to name a few, have been such delegates. The TRB may very well be added to the growing list, having been statutorily endowed, as
earlier indicated, the power to grant to qualified persons, authority to construct road projects and operate thereon toll facilities. Such
grant, as evidenced by the corresponding TOC or set out in a TOA, "may be amended, modified, or revoked [by the TRB] whenever the
public interest so requires."40

In Philippine Airlines, Inc. v. Civil Aeronautics Board,41 the Court reiterated its holding in Albano that the CAB, like the PPA, has
sufficient statutory powers under R.A. 776 to issue a Certificate of Public Convenience and Necessity, or Temporary Operating
Permit to a domestic air transport operator who, although not possessing a legislative franchise, meets all the other requirements
prescribed by law. We held therein that "there is nothing in the law nor in the Constitution which indicates that a legislative franchise is
an indispensable requirement for an entity to operate as a domestic air transport operator."42 We further explicated:

Congress has granted certain administrative agencies the power to grant licenses for, or to authorize the operation of certain public
utilities. With the growing complexity of modern life, the multiplication of the subjects of governmental regulation, and the increased
difficulty of administering the laws, there is a constantly growing tendency towards the delegation of greater powers by the legislature,
and towards the approval of the practice by the courts. It is generally recognized that a franchise may be derived indirectly from the
state through a duly designated agency, and to this extent, even the power to grant franchises has frequently been delegated, even to
agencies other than those of a legislative nature. In pursuance of this, it has been held that privileges conferred by grant by local
authorities as agents for the state constitute as much a legislative franchise as though the grant had been made by an act of the
Legislature.43 (Emphasis ours.)

The validity of the delegation by Congress of its franchising prerogative is beyond cavil. So it was that in Tatad v. Secretary of the
Department of Energy,44 We again ruled that the delegation of legislative power to administrative agencies is valid. In the instant case,
the certiorari petitioners assume and harp on the lack of authority of PNCC to continue with its NLEX, SLEX, MMEX operations, in joint
venture with private investors, after the lapse of its P.D. 1113 franchise. None of these petitioners seemed to have taken due stock of
and appreciated the valid delegation of the appropriate power to TRB under P.D. 1112, as enlarged in P.D. 1894. To be sure, a
franchise may be derived indirectly from the state through a duly designated agency, and to this extent, the power to grant franchises
has frequently been delegated, even to agencies other than those of a legislative nature.45 Consequently, it has been held that
privileges conferred by grant by administrative agencies as agents for the state constitute as much a legislative franchise as though the
grant had been made by an act of the Legislature.46

While it may be, as held in Strategic Alliance Development Corporation v. Radstock Securities Limited,47 that PNCC’s P.D. 1113
franchise had already expired effective May 1, 2007, this fact of expiration did not, however, carry with it the cancellation of PNCC’s
authority and that of its JV partners granted under P.D. 1112 in relation to Section 1 of P.D. 1894 to construct, operate and maintain
"any and all such extensions, linkages or stretches, together with the toll facilities appurtenant thereto, from any part of the North Luzon
Expressway, South Luzon Expressway and/or Metro Manila Expressway and/or to divert the original route and change the original end-
points of the [NLEX]and/or [SLEX] as may be approved by the [TRB]. And to highlight the point, the succeeding Section 2 of P.D. 1894
specifically provides that the franchise for the extension and toll road projects constructed after the approval of P.D. 1894 shall be thirty
years, counted from project completion. Indeed, prior to the expiration of PNCC’s original franchise in May 2007, the TRB, in the
exercise of its special powers under P.D. 1112, signed supplemental TOAs with PNCC and its JV partners. These STOAs covered the
expansion and rehabilitation of NLEX and SLEX, as the case may be, and/or the construction, operation and maintenance of toll road
projects contemplated in P.D.1894. And there can be no denying that the corresponding toll operation permits have been issued.

In fine, the STOAs48 TRB entered with PNCC and its JV partners had the effect of granting authorities to construct, operate and
maintain toll facilities, but with the injection of additional private sector investments consistent with the intent of P.D. Nos. 1112, 1113
and 1894.49 The execution of these STOAs came in 1995, 1998 and 2006, or before the expiration of PNCC’s original franchise on May
1, 2007. In accordance with applicable laws, these transactions have actually been authorized and approved by the President of the
Philippines.50 And as a measure to ensure the legality of the said transactions and in line with due diligence requirements, a review
thereof was secured from the GCC and the DOJ, prior to their execution.

Inasmuch as its charter empowered the TRB to authorize the PNCC and like entities to maintain and operate toll facilities, it may be
stated as a corollary that the TRB, subject to certain qualifications, infra, can alter the conditions of such authorization. Well settled is
the rule that a legislative franchise cannot be modified or amended by an administrative body with general delegated powers to grant
authorities or franchises. However, in the instant case, the law granting a direct franchise to PNCC51 evidently and specifically conferred
upon the TRB the power to impose conditions in an appropriate contract.52 And to reiterate, Section 3 of P.D. 1113 provides that "[t]his
[PNCC] franchise is granted subject to such conditions as may be imposed by the [TRB] in an appropriate contract to be executed for
this purpose, and with the understanding and upon the condition that it shall be subject to amendment, alteration or repeal when public
interest so requires."53 A similarly worded proviso is found in Section 6 of P.D. 1894. It is in this light that the TRB entered into the
subject STOAs in order to allow the infusion of additional investments in the subject infrastructure projects. Prior to the expiration of
PNCC’s franchise on May 1, 2007, the STOAs merely imposed additional conditionalities, or as aptly pointed out by SLTC et al.,
obviously having in mind par. 16.06 of its STOA with TRB,54 served as supplement, to the existing TOA of PNCC with TRB. We have
carefully gone over the different STOAs and discovered that the tollway projects covered thereby were all undertaken under the P.D.
1113 franchise of PNCC. And it cannot be over-emphasized that the respective STOAs of MNTC and SLTC each contain provisions
addressing the eventual expiration of PNCC’s P.D. 1113 franchise and authorizing, thru the issuance by the TRB of a TOC, the
implementation of a given toll project even after May 1, 2007. Thus:

MNTC STOA

2.6 CONCESSION PERIOD. In order to sustain the financial viability and integrity of the Project, GRANTOR [TRB] hereby grants
MNTC the CONCESSION for the PROJECT ROADS for a period commencing upon the date that this [STOA] comes into effect under
Clause 4.1 until 31 December 2030 or thirty years after the issuance of the corresponding TOLL OPERATION PERMIT for the last
completed phase…. Accordingly, unless the PNCC FRANCHISE is further extended beyond its expiry on 01 May 2007, GRANTOR
undertakes to issue the necessary [TOC] for the rehabilitated and refurbished [NLEX] six months prior to the expiry of the PNCC
FRANCHISE on 01 May 2007….

SLTC STOA

2.03 Authority of Investor and Operator to Undertake the Project

(1) The GRANTOR [TRB] has determined that the Project Toll Roads are within the existing SLEX and are thus covered by the
PNCC Franchise that is due to expire on May 1, 2007. PNCC has committed to exert its best efforts to obtain an extension x x
x It is understood and agreed that in the event the PNCC Franchise is not renewed beyond the said expiry date, this [STOA]
and the Concession granted x x x will stand in place of the PNCC Franchise and serve as a new concession, or authority,
pursuant to Section 3 (a) of the TRB Charter, for the Investor to undertake the Project and for the Operator to Operate and
Maintain the Project Toll Roads immediately upon the expiration of the PNCC Franchise, without need of the execution x x x of
any other document to effect the same.

(2) x x x in the event it is subsequently decreed by competent authority that the issuance by the Grantor of a [TOC] is
necessary x x x the Grantor shall x x x cause the TRB x x x to issue such [TOC] in favor of the Operator, embodying the terms
and conditions of this Agreement.

The foregoing notwithstanding, there are to be sure certain aspects in PNCC’s legislative franchise beyond the altering reach of TRB.
We refer to the coverage area of the tollways and the expiry date of PNCC’s original franchise, which is May 1, 2007, as expressly
stated under Sections 1 and 2 of P.D. 1894, respectively. The fact that these two items were specifically and expressly defined by law,
i.e. P.D. 1113, indicates an intention that any alteration, modification or repeal thereof should only be done through the same medium.
We said as much in Radstock, thus: "[T]he term of the x x x franchise, ‘which is 30 years from 1 May 1977, shall remain the same,’ as
expressly provided in the first sentence of x x x Section 2 of P.D. 1894."55 It is likewise worth noting what We further held in that case:

The TRB does not have the power to give back to PNCC the toll assets and facilities which were automatically turned over to the
Government, by operation of law, upon the expiration of the franchise of the PNCC on 1 May 2007. Whatever power the TRB may have
to grant authority to operate a toll facility or to issue a "[TOC]," such power does not obviously include the authority to transfer back to
PNCC ownership of National Government assets, like the toll assets and facilities, which have become National Government property
upon the expiry of PNCC’s franchise x x x.56 (Emphasis in the original.)

Verily, upon the expiration of PNCC’s legislative franchise on May 1, 2007, the new authorities to construct, maintain and operate the
subject tollways and toll facilities granted by the TRB pursuant to the validly executed STOAs and TOCs, shall begin to operate and be
treated as administrative franchises or authorities. Pursuant to Section 3 (e) P.D. 1112, TRB possesses the power and duty, inter alia
to:

x x x grant authority to operate a toll facility and to issue therefore the necessary "Toll Operation Certificate" subject to such conditions
as shall be imposed by the [TRB] including inter alia x x x.

This is likewise consistent with the position of the Secretary of Justice in Opinion No. 122 on November 24, 1995,57 thus:

TRB has no authority to extend the legislative franchise of PNCC over the existing NSLE (North and South Luzon Expressways).
However, TRB is not precluded under Section 3 (e) of P.D. No. 1112 (TRB Charter) to grant PNCC and its joint venture partner the
authority to operate the existing toll facility of the NSLE and to issue therefore the necessary "Toll Operation Certificate x x x.

It should be noted that the existing franchise of PNCC over the NSLE, which will expire on May 1, 2007, gives it the "right, privilege and
authority to construct, maintain and operate" the NSLE. The Toll Operation Certificate which TRB may issue to the PNCC and its joint
venture partner after the expiration of its franchise on May 1, 2007 is an entirely new authorization, this time for the operation and
maintenance of the NSLE x x x. In other words, the right of PNCC and its joint venture partner, after May 7, 2007 [sic] to operate and
maintain the existing NSLE will no longer be founded on its legislative franchise which is not thereby extended, but on the new
authorization to be granted by the TRB pursuant to Section 3 (e), above quoted, of P.D. No. 1112. (Emphasis ours.)

The same opinion was thereafter made by the Secretary of Justice on January 9, 2006, in Opinion No. 1,58 stating that:

The existing franchise of PNCC over the NSLE, which will expire on May 1, 2007, gives it the "right, privilege and authority to construct,
maintain and operate the NSLE." The Toll Operation Certificate which the TRB may issue to the PNCC and its joint venture partner
after the expiration of its franchise on May 1, 2007 is an entirely new authorization, this time for the operation and maintenance of the
NSLE…. [T]he right of PNCC and its joint venture partner, after May 1, 2007, to operate and maintain the existing NSLE will no longer
be founded on its legislative franchise which is not thereby extended, but on the new authorization to be granted by the TRB pursuant
to Section 3 (e) of PD No. 1112.

It appears therefore, that the effect of the STOA is not to extend the Franchise of PNCC, but rather, to grant a new Concession over the
SLEX Project and the OMCo., entities which are separate and distinct from PNCC. While initially, the authority of SLTC and OMCo. to
enter into the STOA with the TRB and thereby become grantees of the Concession, will stem from and be based on the JVA and the
assignment by PNCC to the OMCo. of the Usufruct in the Franchise, we submit that upon the execution by SLTC and the TRB of the
STOA, the right to the Concession will emanate from the STOA itself and from the authority of the TRB under Section 3 (a) of the TRB
Charter. Such being the case, the expiration of the Franchise on 1 May 2007, since such Concession is an entirely new and distinct
concession from the Franchise and is, as stated, granted to entities other than PNCC.

Finally, with regards (sic) the authority of the TRB this Office in Secretary of Justice Opinion No. 92, s. 2000, stated that:

"Suffice it to say that official acts of the President enjoy full faith and confidence of the Government of the Republic of the Philippines
which he represents. Furthermore, considering that the queries raised herein relates to the exercise by the TRB of its regulatory powers
over toll road project, the same falls squarely within the exclusive jurisdiction of TRB pursuant to P.D. No. 1112. Consequently, it is,
therefore, solely within TRB’s prerogative and determination as to what rule shall govern and is made applicable to a specific toll road
project proposal."

The STOA is an explicit grant of the Concession by the Republic of the Philippines, through the TRB pursuant to P.D. (No.) 1112 and
as approved by the President xxx. The foregoing grant is in full accord with the provisions of P.D. (No.) 1112 which authorizes TRB to
enter into contracts on behalf of the Republic of the Philippines for the construction, operation and maintenance of toll facilities. Such
being the case, we opine that no other legal requirement is necessary to make the STOA effective of to confirm MNTC’s (In this case,
SLTC and the OMCO) rights and privileges granted therein." (Emphasis in the original.)

Considering, however, that all toll assets and facilities pertaining to PNCC pursuant to its P.D. 1113 franchise are deemed to have
already been turned over to the National Government on May 1, 2007,59 whatever participation that PNCC may have in the new
authorities to construct, maintain and operate the subject tollways, shall be limited to doing the same in trust for the National
Government. In Radstock, the Court held that "[w]ith the expiration of PNCC’s franchise, [its] assets and facilities … were automatically
turned over, by operation of law, to the government at no cost."60 The Court went on further to state that the Government’s ownership of
PNCC’s toll assets inevitably resulted in its owning too of the toll fees and the net income derived, after May 1, 2007, from the toll
assets and facilities.61 But as We have earlier discussed, the tollways and toll facilities should remain functioning in accordance with the
validly executed STOAs and TOCs. However, PNCC’s assets and facilities, or, in short, its very share/participation in the JVAs and the
STOAs, inclusive of its percentage share in the toll fees collected by the JV companies currently operating the tollways shall likewise
automatically accrue to the Government.

In fine, petitioners’ claim about PNCC’s franchise being amenable to an amendment only by an act of Congress, or, what practically
amounts to the same thing, that the TRB is without authority at all to modify the terms and conditions of PNCC’s franchise, i.e. by
amending its TOA/TOC, has to be rejected. Their lament then that the TRB, through the instrumentality of mere contracts and an
administrative operating certificate, or STOAs and TOC, to be precise, effectively, but invalidly amended PNCC legislative franchise,
are untenable. For, the bottom line is, the TRB has, through the interplay of the pertinent provisions of P.D. Nos. 1112, 1113 and 1894,
the power to grant the authority to construct and operate toll road projects and toll facilities by way of a TOA and the corresponding
TOC. What is otherwise a legislative power to grant or renew a franchise is not usurped by the issuance by the TRB of a TOC. But to
emphasize, the case of the TRB is quite peculiarly unique as the special law conferring the legislative franchise likewise vested the TRB
with the power to impose conditions on the franchise, albeit in a limited sense, by excluding from the investiture the power to amend or
modify the stated lifetime of the franchise, its coverage and the ownership arrangement of the toll assets following the expiration of the
legislative franchise.62

At this juncture, the Court wishes to express the observation that P.D. Nos. 1112, 1113 and 1894, as couched and considered as a
package, very well endowed the TRB with extraordinary powers. For, subject to well-defined limitations and approval requirements, the
TRB can, by way of STOAs, allow and authorize, as it has allowed and authorized, a legislative franchisee, PNCC, to share its
concession with another entity or JV partners, the authorization effectively covering periods beyond May 2007. However, this
unpalatable reality, a leftover of the martial law regime, presents issues on the merits and the wisdom of the economic programs, which
properly belong to the legislature or the executive to address. The TRB is not precluded from granting PNCC and its joint venture
partners authority, through a TOC for a period following the term of the proposed SMMS, with the said TOC serving as an entirely new
authorization upon the expiration of PNCC’s franchise on May 1, 2007. In short, after May 1, 2007, the operation and maintenance of
the NLEX and the other subject tollways will no longer be founded on P.D. 1113 or portions of P.D. 1894 (PNCC’s original franchise)
but on an entirely new authorization, i.e. a TOC, granted by the TRB pursuant to its statutory authority under Sections 3 (a) and (e) of
P.D. 1112.

Likewise needing no extended belaboring, in the light of the foregoing dispositions, is the untenable holding of the RTC in SCA No.
3138-PSG that the TRB is without power to issue a TOC to PNCC, amend or renew its authority over the SLEX tollways without
separate legislative enactment. And lest it be overlooked, the TRB may validly issue an entirely new authorization to a JV company
after the lapse of PNCC’s franchise under P.D. 1113. Its thirty-year concession under P.D. 1894, however, does not have the quality of
definiteness as to its start, as by the terms of the issuance, it commences and is to be counted "from the date of approval of the
project," the term project obviously referring to "Metro Manila Expressways and all extensions, linkages, stretches and diversions
refurbishing and rehabilitation of the existing NLEX and SLEX constructed after the approval of the decree in December 1983." The
suggestion, therefore, of the petitioners in G.R. No. 169917, citing a 1989 Court of Appeals ("CA") decision in CA-G.R. 13235 (Republic
v. Guerrero, et al.), that the Balintawak to Tabang portion of the expressway no longer forms part of PNCC’s franchise and, therefore,
PNCC is without any right to assign the same to MNTC via a JVA, is specious. Firstly, in its Decision63 in G.R. No. 89557, a certiorari
proceeding commenced by PNCC to nullify the CA decision adverted to, the Court approved a compromise agreement, which referred
to (1) the PNCC’s authority to collect toll and maintenance fees; and (2) the supervision, approval and control by the DPWH64 of the
construction of additional facilities, on the questioned portion of the NLEX.65 And still in another Decision,66 the Court ruled that the
Balintawak to Tabang stretch was recognized as "part of the franchise of, or otherwise restored as toll facilities to be operated by x x x
PNCC."67 Once stamped with judicial imprimatur, and unless amended, modified or revoked by the parties, a compromise agreement
becomes more than a mere binding contract; as thus sanctioned, the agreement constitutes the court’s determination of the
controversy, enjoining the parties to faithfully comply thereto.68 Verily, like any other judgment, it has the effect and authority of res
judicata.69

At any rate, the PNCC was likewise granted temporary or interim authority by the TRB to operate the SLEX,70 to ensure the continued
development, operations and progress of the projects. We have ruled in Oroport Cargohandling Services, Inc. v. Phividec Industrial
Authority that an administrative agency vested by law with the power to grant franchises or authority to operate can validly grant the
same in the interim when it is necessary, temporary and beneficial to the public.71 The grant by the TRB to PNCC as interim operator of
the SLEX was certainly intended to guarantee the continued operation of the said tollway facility, and to ensure the want of any delay
and inconvenience to the motoring public.

All given, the cited CA holding is not a binding precedent. The time limitation on PNCC’s franchise under either P.D. 1113 or P.D. 1894
does not detract from or diminish the TRB’s delegated authority under P.D. 1112 to enter into separate toll concessions apart and
distinct from PNCC’s original legislative franchise.

Third Issue: TRB’s Power to Enter into Contracts; Issue,

Modify And Promulgate Toll Rates; and to Rule on Petitions
Relative to Toll Rates Level and Increases Valid

The petitioners in the special civil actions cases would have the Court declare as invalid (a) Section 3 (a) and (d) of P.D. 1112 (which
accord the TRB, on one hand, the power to enter into contracts for the construction, and operation of toll facilities, while, on the other
hand, granting it the power to issue and promulgate toll rates) and (b) Section 8 (b) of P.D. 1894 (granting TRB adjudicatory jurisdiction
over matters involving toll rate movements). As submitted, granting the TRB the power to award toll contracts is inconsistent with its
quasi-judicial function of adjudicating petitions for initial toll and periodic toll rate adjustments. There cannot, so petitioners would
postulate, be impartiality in such a situation.

The assailed provisions of P.D. 1112 and P.D. 1894 read:

P.D. 1112

Section 3. Powers and Duties of the Board. The Board shall have in addition to its general powers of administration the following
powers and duties:

(a) Subject to the approval of the President of the Philippines, to enter into contracts in behalf of the Republic of the Philippines
with persons, natural or juridical, for the construction, operation and maintenance of toll facilities such as but not limited to
national highways, roads, bridges, and public thoroughfares. Said contract shall be open to citizens of the Philippines and/or to
corporations or associations qualified under the Constitution and authorized by law to engage in toll operations;

(d) Issue, modify and promulgate from time to time the rates of toll that will be charged the direct users of toll facilities and
upon notice and hearing, to approve or disapprove petitions for the increase thereof. Decisions of the Board on petitions for
the increase of toll rate shall be appealable to the Office of the President within ten (10) days from the promulgation thereof.
Such appeal shall not suspend the imposition of the new rates, provided however, that pending the resolution of the appeal,
the petitioner for increased rates in such case shall deposit in a trust fund such amounts as may be necessary to reimburse toll
payers affected in case a reversal of the decision. (Emphasis ours.)

P.D. 1894

SECTION 8. x x x

(b) For the Metro Manila Expressway and such extensions, linkages, stretches and diversions of the Expressways which may
henceforth be constructed, maintained and operated by the GRANTEE, the GRANTEE shall collect toll at such rates as shall initially be
approved by the Toll Regulatory Board. The Toll Regulatory Board shall have the authority to approve such initial toll rates without the
necessity of any notice and hearing, except as provided in the immediately succeeding paragraph of this Section. For such purpose,
the GRANTEE shall submit for the approval of the Toll Regulatory Board the toll proposed to be charged the users. After approval of
the toll rate(s) by the Toll Regulatory Board and publication thereof by the GRANTEE once in a newspaper of general circulation, the
toll shall immediately be enforceable and collectible upon opening of the expressway to traffic use.

Any interested Expressways users shall have the right to file, within a period of ninety (90) days after the date of publication of the initial
toll rate, a petition with the Toll Regulatory Board for a review of the initial toll rate; provided, however, that the filing of such petition and
the pendency of the resolution thereof shall not suspend the enforceability and collection of the toll in question. The Toll Regulatory
Board, at a public hearing called for the purpose after due notice, shall then conduct a review of the initial toll shall be appealable (sic)
to the Office of the President within ten (10) days from the promulgation thereof. The GRANTEE may be required to post a bond in such
amount and from such surety or sureties and under such terms and conditions as the Toll Regulatory Board shall fix in case of any
petition for review of, or appeal from, decisions of the Toll Regulatory Board.

In case it is finally determined, after a review by the Toll Regulatory Board or appeal therefrom, that the GRANTEE is not entitled, in
whole or in part, to the initial toll, the GRANTEE shall deposit in the escrow account the amount collected under the approved initial toll
fee and such amount shall be refunded to Expressways users who had paid said toll in accordance with the procedure as may be
prescribed or promulgated by the Toll Regulatory Board. (Emphasis ours.)

The petitioners are indulging in gratuitous, if not unfair, conclusion as to the capacity of the TRB to act as a fair and objective tribunal on
matters of toll fee fixing.

Administrative bodies have expertise in specific matters within the purview of their respective jurisdictions. Accordingly, the law
concedes to them the power to promulgate implementing rules and regulations ("IRR") to carry out declared statutory policies –
provided that the IRR conforms to the terms and standards prescribed by that statute.72

The Court does not perceive an irreconcilable clash in the enumerated TRB’s statutory powers, such that the exercise of one negates
another. The ascription of impartiality on the part of the TRB cannot, under the premises, be accorded cogency. Petitioners have not
shown that the TRB lacks the expertise, competence and capacity to implement its mandate of balancing the interests of the toll-paying
motoring public and the imperative of allowing the concessionaires to recoup their investment with reasonable profits. As it were,
Section 9 of P.D. 1894 provides a parametric formula for adjustment of toll rates that takes into account the Peso-US Dollar exchange
rate, interest rate and construction materials price index, among other verifiable and quantifiable variables.

While not determinative of the issue immediately at hand, the grant to and the exercise by an administrative agency of regulating and
allowing the operation of public utilities and, at the same time, fixing the fees that they may charge their customers is now
commonplace. It must be presumed that the Congress, in creating said agencies and clothing them with both adjudicative powers and
contract-making prerogatives, must have carefully studied such dual authority and found the same not breaching any constitutional
principle or concept.73 So must it be for P.D. Nos. 1112 and 1894.

The Court can take judicial cognizance of the exercise by the LTFRB and NTC – both spin-off agencies of the now defunct Public
Service Commission – of similar concurrent powers. The LTFRB, under Executive Order No. ("E.O.") 202,74 series of 1987, is
empowered,75 among others, to regulate the operation of public utilities or "for hire" vehicles and to grant franchises or certificates of
public convenience ("CPC"); and to fix rates or fares, to approve petitions for fare rate increases and to resolve oppositions to such
petitions.

The NTC, on the other hand, has been granted similar powers of granting franchises, allocating areas of operations, rate-fixing and to
rule on petitions for rate increases under E.O. 546,76 s. of 1979.
The Energy Regulatory Commission ("ERC") likewise enjoys on the one hand, the power (a) to grant, modify or revoke an authority to
operate facilities used in the generation of electricity, and on the other, (b) to determine, fix and approve rates and tariffs of
transmission, and distribution retail wheeling charges and tariffs of franchise electric utilities and all electric power rates including that
which is charged to end-users.77 In Chamber of Real Estate and Builders’ Association, Inc. v. ERC, We even categorically stated that
the ERC is a "quasi-judicial and quasi-legislative regulatory body created under Section 38 of the EPIRA, [and] x x x an administrative
agency vested with broad regulatory and monitoring functions over the Philippine electric industry to ensure its successful restructuring
and modernization x x x."78

To summarize, the fact that an administrative agency is exercising its administrative or executive functions (such as the granting of
franchises or awarding of contracts) and at the same time exercising its quasi-legislative (e.g. rule-making) and/or quasi-judicial
functions (e.g. rate-fixing), does not support a finding of a violation of due process or the Constitution. In C.T. Torres Enterprises, Inc. v.
Hibionada,79 We explained the rationale, thus:

It is by now commonplace learning that many administrative agencies exercise and perform adjudicatory powers and functions, though
to a limited extent only. Limited delegation of judicial or quasi-judicial authority to administrative agencies (e.g. the Securities and
Exchange Commission and the National Labor Relations Commission) is well recognized in our jurisdiction, basically because the need
for special competence and experience has been recognized as essential in the resolution of questions of complex or specialized
character and because of a companion recognition that the dockets of our regular courts have remained crowded and clogged.

xxxx

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

xxxx

There is no question that a statute may vest exclusive original jurisdiction in an administrative agency over certain disputes and
controversies falling within the agency's special expertise. The very definition of an administrative agency includes its being vested with
quasi-judicial powers. The ever increasing variety of powers and functions given to administrative agencies recognizes the need for the
active intervention of administrative agencies in matters calling for technical knowledge and speed in countless controversies which
cannot possibly be handled by regular courts. (Emphasis ours.)

Fourth Issue: President Amply Vested With Statutory

Power To Approve TRB Contracts

Just like their parallel stance on the grant to TRB of the power to enter into toll agreements, e.g., TOAs or STOAs, the petitioners in the
first three petitions would assert that the grant to the President of the power to peremptorily authorize the assignment by PNCC, as
franchise holder, of its franchise or the usufruct in its franchise is unconstitutional. It is unconstitutional, so petitioners would claim, for
being an encroachment of legislative power.

As earlier indicated, Section 3 (a) of P.D. 1112 requires approval by the President of any contract TRB may have entered into or
effected for the construction and operation of toll facilities. Complementing Section 3 (a) is 3 (e) (3) of P.D. 1112 enjoining the transfer
of the usufruct of PNCC’s franchise without the President’s prior approval. For perspective, Section 3 (e) (3) of P.D. 1112 provides:

That the toll operator shall not lease, transfer, grant the usufruct of, sell or assign the rights or privileges acquired under the [TOC] to
any person x x x or legal entity nor merge with any other company or corporation organized for the same purpose without the prior
approval of the President of the Philippines. In the event of any valid transfer of the TOC, the Transferee shall be subject to all the
conditions, terms, restrictions and limitations of this Decree x x x.80

The President’s approving authority is of statutory origin. To us, there is nothing illegal, let alone unconstitutional, with the delegation to
the President of the authority to approve the assignment by PNCC of its rights and interest in its franchise, the assignment and
delegation being circumscribed by restrictions in the delegating law itself. As the Court stressed in Kilosbayan v. Guingona, Jr.,81 the
rights and privileges conferred under a franchise may be assigned if authorized by a statute, subject to such restrictions as may be
provided by law, such as the prior approval of the grantor or a government agency.82

There can, therefore, be no serious challenge to this presidential- approving prerogative. Should grave abuse of discretion in some way
infect the exercise of the prerogative, then the approval action may be nullified for that reason, but not on the ground that the underlying
authority is constitutionally doubtful. If the TRB may validly be empowered to grant private entities the authority to operate toll facilities,
would a delegation of a lesser authority to approve the grant to the head of the administrative machinery of the government be
objectionable?

The fact that P.D. 1112 partakes of a martial law issuance does not per se provide an objectionable feature to the decree, albeit it may
be argued with some plausibility that then President Marcos intended to have the final say as to who shall act as the toll operators of
the Luzon expressways. Be that as it may, "all proclamations, orders, decrees, instructions, and acts promulgated, issued, or done by
the former President (Ferdinand E. Marcos) are part of the law of the land, and shall remain valid, legal, binding, and effective, unless
modified, revoked or superseded by subsequent proclamations, orders, decrees, instructions, or other acts of the President."83 To
emphasize, Padua v. Ranada cited Association of Small Landowners in the Philippines, Inc. v. Secretary of Agrarian Reform, quoting
that:

The Court wryly observes that during the past dictatorship, every presidential issuance, by whatever name it was called, had the force
and effect of law because it came from President Marcos. Such are the ways of despots. Hence, it is futile to argue … that LOI 474
could not have repealed P.D. No. 27 because the former was only a letter of instruction. The important thing is that it was issued by
President Marcos, whose word was law during that time.84

Fifth Issue: Assailed STOAs Validly Entered

This brings us to the issue of the validity of certain provisions of the STOAs and related agreements entered into by the TRB, as duly
approved by the President.

Relying on Clause 17.4.185 of the MNTC STOA that the lenders have the unrestricted right to appoint a substitute entity in case of
default of MNTC or of the occurrence of an event of default in respect of the loans, petitioners argue that since MNTC is the assignee or
transferee of PNCC’s franchise, then it steps into the shoes of PNCC. They contend that the act of replacing MNTC as grantee is
tantamount to an amendment or alteration of the PNCC’s original franchise and hence unconstitutional, considering that the
constitutional power to appoint a new franchise holder is reserved to Congress.86

This contention is bereft of merit.

Petitioners’ presupposition that only Congress has the power to directly grant franchises is misplaced. Time and again, We have held
that administrative agencies may be empowered by the Legislature by means of a law to grant franchises or similar
authorizations.87 And this, We have sufficiently addressed in the present case.88 To reiterate, We discussed in Albano that our statute
books are replete with laws granting administrative agencies the power to issue authorizations.89 This delegation of legislative power to
administrative agencies is allowed "in order to adapt to the increasing complexity of modern life."90 Consequently, We have held that the
"privileges conferred by grant by local authorities as agents for the state constitute as much a legislative franchise as though the grant
had been made by an act of the Legislature."91

In this case, the TRB’s charter itself, or Section 3 (e) of P.D. 1112, specifically empowers it to "grant authority to operate a toll facility
and to issue therefore the necessary ‘Toll Operation Certificate’ subject to such conditions as shall be imposed by the [TRB]x x
x."92 Section 3 (a) of the same law permits the TRB to enter into contracts for the construction, operation and maintenance of toll
facilities. Clearly, there is no question that the TRB is vested by the Legislature, through P.D. 1112, with the power not only to grant an
authority to operate a toll facility, but also to enter into contracts for the construction, operation and maintenance thereof.

Petitioners also contend that substituting MNTC as the grantee in case of its default with respect to its loans is tantamount to an
amendment of PNCC’s original franchise and is hence, unconstitutional. We also find this assertion to be without merit. Besides holding
that the Legislature may properly empower administrative agencies to grant franchises pursuant to a law, We have also earlier
explained in this case that P.D. 1113 and the amendatory P.D. 1894 both vested the TRB with the power to impose conditions on
PNCC’s franchise in an appropriate contract and may therefore amend or alter the same when public interest so requires;93 save for the
conditions stated in Sections 1 and 2 of P.D. 1894, which relates to the coverage area of the tollways and the expiration of PNCC’s
original franchise.94 P.D. 1112 provided further that the TRB has the power to amend or modify a Toll Operation Certificate that it issued
when public interest so requires.95 Accordingly, to Our mind, there is nothing infirm much less questionable about the provision in the
STOA, allowing the substitution of MNTC in case it defaults in its loans.

Furthermore, in the subject provision (Clause 17.4.196), the "unrestricted right" of the lender to appoint a substituted entity is never
intended to afford such lender a plenary power to do so. The subject clause states:

17.4.1 The PARTIES acknowledge that following a Notice of Substitution under clauses 17.2 or 17.3 the LENDERS have, subject to the
provisions of Clause 17.4.3, the unrestricted right to appoint a SUBSTITUTED ENTITY in place of MNTC following the declaration of
the occurrence of a MNTC DEFAULT prior to full repayment of the LOANS or of an event of default in respect of the LOANS.
GRANTOR shall extend all reasonable assistance to the AGENT to put in place a SUBSTITUTED ENTITY. MNTC shall make available
all necessary information to potential SUBSTITUTED ENTITY to enable such entity to evaluate the Project. (Emphasis ours.)

It is clear from the above-quoted provision that Clause 17.4.1 should always be construed and read in conjunction with Clauses 17.2,
17.3, 17.4.2, 17.4.3 and 20.12. Clauses 17.2 and 17.3 discuss the procedures that must be followed and undertaken in case of MNTC’s
default prior to the full repayment of the loans, and before the substitution under Clause 17.4.1 could take place. These clauses provide
the following process:

Prior to Full Repayment of the LOANS:

17.2 Upon occurrence of an MNTC DEFAULT under Clause 17.1(a) and (e) prior to full repayment of the LOANS, GRANTOR shall
serve a written Notice of Default to MNTC with copy to the AGENT giving a reasonable period of time to cure the MNTC DEFAULT,
such period being three (3) months from receipt of the notice or such longer period as may be approved by GRANTOR, taking due
consideration of the nature of the default and of the repair works required. If MNTC fails to remedy such default during such three (3)
month or [sic] curing period, GRANTOR may issue a Notice of Substitution on MNTC, copy furnished to the AGENT, which shall take
effect upon the assumption and take over by the SUBSTITUTED ENTITY pursuant to the provisions of Clause 17.4 hereof; Provided,
However, that prior to such assumption and take over by the SUBSTITUTED ENTITY, MNTC shall continue to operate and maintain
the project roads and shall place in an escrow account the toll revenues, save such amounts as may be needed to primarily cover the
operating costs and as may be owing and due to the lenders under the loans and, secondarily, to cover the PNCC Gross Toll Revenue
Share, Provided, Further, that upon the assumption and take over by the SUBSTITUTED ENTITY, such assumption and take over shall
have the effect of revoking the rights, privileges and obligations of MNTC under this AGREEMENT in favor of the SUBSTITUTED
ENTITY and MNTC shall cease to be a PARTY to this AGREEMENT.

17.3 If prior to full repayment of the LOANS MNTC fails to remedy MNTC DEFAULT under Clause 17.1 (b) or an MNTC DEFAULT
occurs under Clause 17.1 (c), (d) or (f) prior to full repayment of the LOANS, GRANTOR shall serve a Notice of Substitution on MNTC,
copy furnished to the AGENT, as provided under Clause 17.4.97 (Emphasis ours)

It is apparent from the above-quoted provision that it is the TRB – representing the Republic of the Philippines as Grantor – which has
control over the situation before Clause 17.4.1 could come into place. To stress, following the condition under Clause 17.4.1, it is only
when Clauses 17.2 and 17.3 have been complied with that the entire Clause 17.4 could begin to materialize.

Clauses 17.4.2 and 17.4.3 also provide for certain parameters as to when a substituted entity could be considered acceptable, and
enumerate the conditions that should be undertaken and complied with.98 Particularly, the subject provisions state:

17.4.2 The SUBSTITUTED ENTITY shall be required to provide evidence to GRANTOR that at the time of substitution:

(i) it is legally and validly nominated by the AGENT as MNTC’s substitute to continue the implementation of the PROJECT.
 (ii) it is legally and validly constituted and has the capability to enter into such agreement as may be required to give effect to
the substitution;

17.4.3 The AGENT shall have one (1) year to effect a substitution under Clause 17.4; Provided, However, that during this time the
AGENT shall not take any action which may jeopardize the continuity of the service and shall take the necessary action to ensure its
continuation. To effect such substitution, the AGENT shall notify its intention to GRANTOR and shall, at the same time, give all
necessary information to GRANTOR. GRANTOR shall, within one (1) month following such notification, inform the AGENT of its
acceptance of the substitution, if the conditions set forth in Clause 17.4.2 have been satisfied. The SUBSTITUTED ENTITY shall be
permitted a reasonable period to cure any MNTC DEFAULT under Clause 17.1 (a), (b) or (e).

From the foregoing, it is clear that the lenders do not actually have an absolute or "unrestricted" right to appoint the SUBSTITUTED
ENTITY in view of TRB’s right to accept or reject the substitution within one (1) month from notice and such right to appoint comes into
force only if and when the TRB decides to effectuate the substitution of MNTC as allowed in Clause 17.2 of the MNTC STOA.

At the same time, Clause 17.4.4 particularizes the conditions upon which the substitution shall become effective, to wit:

17.4.4 The Substitution shall be effective upon:

(a) the appointment of a SUBSTITUTED ENTITY in accordance with the provisions of this Clause 17.4; and,

(b) assumption by the SUBSTITUTED ENTITY of all of the rights and obligations of MNTC under this AGREEMENT, including
the payment of PNCC’s Gross Toll Revenue Share under the JOINT VENTURE AGREEMENT dated 29 August 1995 and all
other agreements in connection with this agreement signed and executed by and between PNCC and MNTC.

The afore-quoted Section (a) of Clause 17.4.4 reiterates the necessity of compliance by the substituted entity with all the conditions
provided under Clause 17.4. Furthermore, following the above-quoted conditions veritably protects the interests of the Government. As
previously discussed supra, PNCC’s assets with respect to its legislative franchise under P.D. 1113, as amended, has already been
automatically turned over to the Government. And whatever share PNCC has in relation to the currently implemented administrative
authority granted by the TRB is merely being held in trust by it in favor of the Government. Accordingly, the fact that Section "b" of
Clause 17.4.4 ensures that the obligation to pay PNCC’s Gross Toll Revenue Share is assumed by the substituted entity, necessarily
means that the Government’s Gross Toll Revenue Share is safeguarded and kept intact.

The MNTC STOA also states that only in case no substituted entity is established in accordance with Clause 17.4 that Clause 17.5
shall be applied. Clause 17.5 grants the lenders the power to extend the concession in case the Grantor (Republic of the Philippines)
takes over the same, for a period not exceeding fifty years, until full payment of the loans.99 Petitioners contend that the option to extend
the concession for that stated period is, however, unconstitutional.

This assertion is impressed with merit. At the outset, Clause 17.5 does not actually grant the lenders of the defaulting concessionaire,
the power to unilaterally extend the concession for a period not exceeding fifty years. For reference, the pertinent provision states:

17.5 Only if no SUBSTITUTE ENTITY is established … shall the GRANTOR [TRB] be entitled to take-over the CONCESSION with no
commitment on the LOANS in which case the OPERATION AND MAINTENANCE CONTRACT shall be assigned to any entity that the
AGENT100 may designate provided such entity has a sufficient legal and technical capacity to perform and assume the obligations of the
OPERATION AND MAINTENANCE CONTRACT under this AGREEMENT. The LENDERS shall receive all TOLL, excepting PNCC’s
revenue share provided for under the JOINT INVESTMENT PROPOSAL (vide: Annex "C" hereof), for as long as required until full
repayment of the LOANS including if necessary an extension of the CONCESSION PERIOD which in no case shall exceed fifty (50)
years; Provided that the LENDERS support all amounts payable under the OPERATION AND MAINTENANCE CONTRACT. For
avoidance of doubt, the GRANTOR will have no obligation in relation to liabilities incurred by MNTC prior to such take-
over.101 (Emphasis supplied)

The afore-quoted provision should be read in conjunction with Clause 20.12, which expressly provides that the MNTC STOA is "made
under and shall be governed by and construed in accordance with" the laws of the Philippines, and particularly, by the provisions of
P.D. Nos. 1112, 1113 and 1894. Under the applicable laws, the TRB may very well amend, modify, alter or revoke the
authority/franchise "whenever the public interest so requires."102 In a word, the power to determine whether or not to continue or extend
the authority granted to a concessionaire to operate and maintain a tollway is vested to the TRB by the applicable laws. The necessity
of whether or not to extend the concession or the authority to construct, operate and maintain a tollway rests, by operation of law, with
the TRB. As such, the lenders cannot unilaterally extend the concession period, or, with like effect, impose upon or demand that the
TRB agree to extend such concession.

Be that as it may, it must be noted, however, that while the TRB is vested by law with the power to extend the administrative franchise
or authority that it granted, nevertheless, it cannot do so for an accumulated period exceeding fifty years. Otherwise, it would violate the
proscription under Article XII, Section 11 of the 1987 Constitution, which states that:103

Sec. 11. No franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted except to citizens
of the Philippines or to corporations or associations organized under the laws of the Philippines at least sixty per centum of whose
capital is owned by such citizens, nor shall such franchise, certificate, or authorization be exclusive in character or for a longer period
than fifty years. Neither shall any such franchise or right be granted except under the condition that it shall be subject to amendment,
alteration or repeal by the Congress when the common good so requires. The State shall encourage equity participation in public
utilities by the general public. The participation of foreign investors in the governing body of any public utility enterprise shall be limited
to their proportionate share in its capital, and all the executive and managing officers of such corporation or associations must be
citizens of the Philippines. (Emphasis Ours)

In this case, the MNTC STOA already has an original stipulated period of thirty years.104 Clause 17.5 allows the extension of this period
if necessary to fully repay the loans made by MNTC to the lenders, thus:

x x x The LENDERS shall receive all TOLL, excepting PNCC’s revenue share provided for under the JOINT INVESTMENT
PROPOSAL (vide: Annex "C" hereof), for as long as required until full repayment of the LOANS including if necessary an extension of
the CONCESSION PERIOD which in no case shall exceed a maximum period of fifty (50) years; x x x (Emphasis ours.)
If the maximum extension as provided for in Clause 17.5, i.e. fifty years, shall be utilized, the accumulated concession period that would
be granted in this case would effectively be eighty years. To Us, this is a clear violation of the fifty-year franchise threshold set by the
Constitution. It is in this regard that we strike down the above-quoted clause, "including if necessary an extension of the CONCESSION
PERIOD which in no case shall exceed a maximum period of fifty (50) years" in Clause 17.5 as void for being violative of the
Constitution.105 It must be made abundantly clear, however, that the nullity shall be limited to such extension beyond the 50-year
constitutional limit.

All told, petitioners’ allegations that the TRB acted with grave abuse of discretion and with gross disadvantage to the Government with
respect to Clauses 17.4.1 and 17.5 of the MNTC STOA are unfounded and speculative.

Petitioners also allege that the MNTC STOA is grossly disadvantageous to the Government since under Clause 11.7 thereof, the
Government, through the TRB, guarantees the viability of the financing program of a toll operator. Under Clause 11.7 of the MNTC
STOA, the TRB agreed to pay monthly, the difference in the toll fees actually collected by MNTC and that which it could have realized
under the STOA. The pertinent provisions states:

11.7 To insure the viability and integrity of the Project, the Parties recognize the necessity for adjustments of the AUTHORIZED TOLL
RATE …. In the event that said adjustment are not effected as provided under this Agreement for reasons not attributable to MNTC, the
GRANTOR [TRB] warrants and so undertakes to compensate, on a monthly basis, the resulting loss of revenue due to the difference
between the AUTHORIZED TOLL RATE actually collected and the AUTHORIZED TOLL RATE which MNTC would have been able to
collect had the … adjustments been implemented. (Emphasis ours)

As set out in the preamble of P.D. 1112, the need to encourage the infusion of private capital in tollway projects is the underlying
rationale behind the enactment of said decree. Owing to the scarce capital available to bankroll a huge capital-intensive project, such
as the North Luzon Tollway project, it is well-nigh inevitable that the financing of these types of projects is sourced from private
investors. Quite naturally, the investors expect the regularity of the cash flow. It is perhaps in this broad context that the obligation of the
Grantor under Clause 11.7 of the MNTC STOA was included in the STOA. To Us, Clause 11.7 is not only grossly disadvantageous to
the Government but a manifest violation of the Constitution.

Section 3 (e) (5) of P.D. 1112 explicitly states:

[t]hat no guarantee, Certificate of Indebtedness, collateral securities, or bonds shall be issued by any government agency or
government-owned or controlled corporation on any financing program of the toll operator in connection with his undertaking under the
Toll Operation Certificate.

What the law seeks to prevent in this situation is the eventuality that the Government, through any of its agencies, could be obligated to
pay or secure, whether directly or indirectly, the financing by the private investor of the project. In this case, under Clause 11.7 of the
MNTC STOA, the Republic of the Philippines (through the TRB) guaranteed the security of the project against revenue losses that
could result, in case the TRB, based on its determination of a just and reasonable toll fee, decides not to effect a toll fee adjustment
under the STOA’s periodic/interim adjustment formula. The OSG, in its Comment, admitted that "the amounts the government
undertook to pay in case of Clause 11.7 violation … is … an undertaking to pay compensatory damage for something akin to a breach
of contract."106 As P.D. 1112 itself expressly prohibits the guarantee of a security in the financing of the toll operator pursuant to its
tollway project, Clause 11.7 cannot be a valid stipulation in the STOA.

This is more so for being in violation of the Constitution. Article VI, Section 29 (1) of the Constitution mandates that "[n]o money shall be
paid out of the Treasury except in pursuance of an appropriation made by law."107 We have held in Radstock that "government funds or
property shall be spent or used solely for public purposes, as expressly mandated by Section 4 (2) of PD 1445 or the Government
Auditing Code."108 Particularly, We held in Radstock case that:

[t]he power to appropriate money from the General Funds of the Government belongs exclusively to the Legislature. Any act in violation
of this iron-clad rule is unconstitutional.

Reinforcing this Constitutional mandate, Sections 84 and 85 of PD 1445 require that before a government agency can enter into a
contract involving the expenditure of government funds, there must be an appropriation law for such expenditure, thus:

Section 84. Disbursement of government funds.

1. Revenue funds shall not be paid out of any public treasury or depository except in pursuance of an appropriation law or other specific
statutory authority.

xxxx

Section 85. Appropriation before entering into contract.

No contract involving the expenditure of public funds shall be entered into unless there is an appropriation therefor, the unexpended
balance of which, free of other obligations, is sufficient to cover the proposed expenditure.

xxxx

Section 86 of PD 1445, on the other hand, requires that the proper accounting official must certify that funds have been appropriated for
the purpose. Section 87 of PD 1445 provides that any contract entered into contrary to the requirements of Sections 85 and 86 shall be
void….109 (Emphasis ours.)

In the instant case, the TRB, by warranting to compensate MNTC with the loss of revenue resulting from the non-implementation of the
periodic and interim toll fee adjustments, violates the very constitutionally guaranteed power of the Legislature, to exclusively
appropriate money for public purpose from the General Funds of the Government. The TRB veritably accorded unto itself the exclusive
authority granted to Congress to appropriate money that comes from the General Funds, by making a warranty to compensate a
revenue loss under Clause 11.7 of the MNTC STOA. There is not even a badge of indication that the aforementioned requisites under
the Constitution and P.D. 1445 in respect of appropriation of money from the General Funds of the Government have been properly
complied with. Worse, P.D. 1112 expressly prohibits the guarantee of security of the financing of a toll operator in connection with his
undertaking under the Toll Operation Certificate. Accordingly, Clause 11.7 of the MNTC STOA, under which the TRB warrants and
undertakes to compensate MNTC’s loss of revenue resulting from the non-implementation of the periodic and interim toll fee
adjustments, is illegal, unconstitutional and hence void.

Parenthetically, We also find a similar provision in the SLTC STOA under Clause 8.08 thereof, which states that: 110

(2) In the event the Authorized Toll Rate and adjustments thereto are not implemented or made effective in accordance with
the provisions of this Agreement, for reasons not attributable to the fault of the Investor and/or the Operator, including the
reversal by the TRB or by any competent court or authority of any such adjustment in the Authorized Toll Rate previously
approved by the TRB, except where such reversal is by reason of a determination of the misapplication of the Authorized Toll
Rates, the Grantor shall compensate the Operator, on a monthly basis and within thirty (30) days of submission by the
Operator of a notice thereof, without interest, for the resulting loss of revenue computed as the difference between:

(a) the actual traffic volume for the month in question multiplied by the Current Authorized Toll Rate as escalated
and/or adjusted, that should be in effect; and

(b) the Gross Toll Revenue for the month in question.

(3) The obligation of the Grantor to compensate the Operator shall continue until the applicable Current Authorized Toll Rate is
implemented.

Akin to what is contemplated in Clause 11.7 of the MNTC STOA, Clauses 8.08 (2) and (3) of the SLTC STOA, under which the TRB
warrants or is obligated to compensate the Operator for its loss of revenue resulting from the non-implementation of the
calculation/formula of authorized toll price and toll rate adjustments found in Clause 8 thereof, are illegal, unconstitutional and, hence,
void. This ruling is consistent with the TRB’s power to determine, without any influence or compulsion – direct or indirect – as to
whether a change in the toll fee rates is warranted. We will discuss the same below.

Petitioners argue that the CITRA, SLTC and MNTC STOAs tie the hands of the TRB as it is bound by the stipulated periodic and interim
toll rate adjustments provided therein. Petitioners contend that the SMMS (CITRA STOA), the SLTC and the MNTC STOA’s provisions
on initial toll rates and periodic/interim toll rate adjustments, by using a built-in automatic toll rate adjustment formula,111 allegedly
guaranteed fixed returns for the investors and negated the public hearing requirement.

This contention is erroneous. The requisite public hearings under Section 3 (d) of P.D. 1112 and Section 8 (b) of P.D. 1894 are not
negated by the fixing of the initial toll rates and the periodic adjustments under the STOA.

Prefatorily, a clear distinction must be made between the statutory prescription on the fixing of initial toll rates, on the one hand, and of
periodic/interim or subsequent toll rates, on the other. First, the hearing required under the said provisos refers to notice and hearing for
the approval or denial of petitions for toll rate adjustments – or the subsequent toll rates, not to the fixing of initial toll rates. By express
legal provision, the TRB is authorized to approve the initial toll rates without the necessity of a hearing. It is only when a challenge on
the initial toll rates fixed ensues that public hearings are required. Section 8 of P.D. 1894 says so:

x x x the GRANTEE shall collect toll at such rates as shall initially be approved by the [TRB]. The [TRB] shall have the authority to
approve such initial toll rates without the necessity of any notice and hearing, except as provided in the immediately
succeeding paragraph of this Section. For such purpose, the GRANTEE shall submit for the approval of the [TRB] the toll proposed
to be charged the users. After approval of the toll rate(s) by the [TRB] and publication thereof by the GRANTEE once in a newspaper of
general circulation, the toll shall immediately be enforceable and collectible upon opening of the expressway to traffic use.

Any interested Expressways users shall have the right to file, within x x x (90) days after the date of publication of the initial toll
rate, a petition with the [TRB] for a review of the initial toll rate; provided, however, that the filing of such petition and the pendency
of the resolution thereof shall not suspend the enforceability and collection of the toll in question. The [TRB], at a public hearing called
for the purpose … shall then conduct a review of the initial toll (sic) shall be appealable to the [OP] within ten (10) days from the
promulgation thereof. (Emphasis ours.)

Of the same tenor is Section 3 (d) of P.D. 1112 stating that the TRB has the power and duty to:

[i]ssue, modify and promulgate from time to time the rates of toll that will be charged the direct users of toll facilities and upon notice
and hearing, to approve or disapprove petitions for the increase thereof. Decisions of the [TRB] on petitions for the increase of toll rate
shall be appealable to the [OP] within ten (10) days from the promulgation thereof. Such appeal shall not suspend the imposition of the
new rates, provided however, that pending the resolution of the appeal, the petitioner for increased rates in such case shall deposit in a
trust fund such amounts as may be necessary to reimburse toll payers affected in case a (sic) reversal of the decision.112 (Emphasis
Ours.)

Similarly in Padua v. Ranada, the fixing of provisional toll rates by the TRB without a public hearing was held to be valid, such
procedure being expressly provided by law.113 To be very clear, it is only the fixing of the initial and the provisional toll rates where a
public hearing is not a vitiating requirement. Accordingly, subsequent toll rate adjustments are mandated by law to undergo both the
requirements of public hearing and publication.

In Manila International Airport Authority ("MIAA") v. Blancaflor, the Court expounded on the necessity of a public hearing in rate
fixing/increases scenario. There, the Court ruled that the MIAA, being an agency attached to the Department of Transportation and
Communications ("DOTC"), is governed by Administrative Code of 1987,114 Book VII, Section 9 of which specifically mandates the
conduct of a public hearing.115 Accordingly, the MIAA’s resolutions, which increased the rates and charges for the use of its facilities
without the required hearing, were struck down as void.116 Similarly, as We do concede, the TRB, being likewise an agency attached to
the DOTC,117 is governed by the same Code and consequently requires public hearing in appropriate cases. It is, therefore, imperative
that in implementing and imposing new, i.e. subsequent toll rates arrived at using the toll rate adjustment formula, the subject tollway
operators and the TRB must necessarily comply not only with the requirement of publication but also with the equally important public
hearing. Accordingly, any fixing of the toll rate, which did not or does not comply with the twin requirements of public hearing and
publication, must therefore be struck down as void. In such case, the previously valid toll rate shall consequently apply, pending
compliance with the twin requirements for the new toll rate.

In the instant consolidated cases, the fixing of the initial toll rates may have indeed come to pass without any public
hearing.118 Unfortunately for petitioners, and notwithstanding its presumptive validity, they did not assail the initial toll rates within the
timeframe provided in P.D. 1112 and P.D. 1894.119 Besides, as earlier explicated, the STOA provisions on periodic rate adjustments are
not a bar to a public hearing as the formula set forth therein remains constant, serving only as a guide in the determination of the level
of toll rates that may be allowed.

It is apropos to state at this juncture that, in determining the reasonableness of the subsequent toll rate increases, it behooves the TRB
to seek out the Commission on Audit ("COA") for assistance in examining and auditing the financial books of the public utilities
concerned. Section 22, Chapter 4, Subtitle B, Title 1, Book V of the Administrative Code of 1987 expressly authorizes the COA to
examine the aforementioned documents in connection with the fixing of rates of every nature, including as in this case, the fixing of toll
fees.120 We have on certain occasions applied this provision. Manila Electric Company, Inc. v. Lualhati easily comes to mind where this
Court tasked the Energy Regulatory Commission to seek the assistance of the COA in determining the reasonableness of the rate
increases that MERALCO intended to implement.121 We have consistently held that "the law is deemed written into every
contract."122 Being a provision of law, this authority of the COA under the Administrative Code should therefore be deemed written in the
subject contracts i.e. the STOAs.

In this regard, during the examination and audit, the public utilities concerned are mandated to "produce all the reports, records, books
of accounts and such other papers as may be required," and the COA is empowered to "examine under oath any official or employee of
the said public utilit[ies]."123 Any public utility unreasonably denying COA access to the aforementioned documents, unnecessarily
obstructs the examination and audit and may be adjudged liable "of concealing any material information concerning its financial status,
shall be subject to the penalties provided by law."124 Finally, the TRB is further obliged to take the appropriate action on the COA Report
with respect to its finding of reasonableness of the proposed rate increases.125

Furthermore, while the periodic, interim and other toll rate adjustment formulas are indicated in the STOAs,126 it does not necessarily
mean that the TRB should accept a rate adjustment predicated on the economic data, references or assumptions adopted by the toll
operator. At the end of the day, the final figures should be those of the TRB based on its appreciation of the relevant rate-influencing
data. In fine, the TRB should exercise its rate-fixing powers vested to it by law within the context of the agreed formula, but always
having in mind that the rates should be just and reasonable. Conversely, it is very well within the power of the TRB under the law to
approve the change in the current toll fees.127 Section 3 (d) of P.D. 1112 grants the TRB the power to "[i]ssue, modify and promulgate
from time to time the rates of toll that will be charged the direct users of toll facilities." But the reasonableness of a possible increase in
the fees must first be clearly and convincingly established by the petitioning entities, i.e. the toll operators. Otherwise, the same should
not be granted by the approving authority concerned. In Philippine Communications Satellite Corporation v. Alcuaz,128 the Court had the
opportunity to explain what is meant by a just and reasonable fixing of rates, thus:

Hence, the inherent power and authority of the State, or its authorized agent, to regulate the rates charged by public utilities should be
subject always to the requirement that the rates so fixed shall be reasonable and just. A commission has no power to fix rates which are
unreasonable or to regulate them arbitrarily. This basic requirement of reasonableness comprehends such rates which must not be so
low as to be confiscatory, or too high as to be oppressive.

What is a just and reasonable rate is not a question of formula but of sound business judgment based upon the evidence it is a
question of fact calling for the exercise of discretion, good sense, and a fair, enlightened and independent judgment. In determining
whether a rate is confiscatory, it is essential also to consider the given situation, requirements and opportunities of the utility. A method
often employed in determining reasonableness is the fair return upon the value of the property to the public utility x x x. (Emphasis
ours.)

If in case the TRB finds the change in the rates to be reasonable and therefore merited, the increase shall then be implemented after
the formalities of public hearing and publication are complied with. In this case, it is clear that the change in the toll fees is immediately
effective and implementable. This is notwithstanding that, in case of an increase in the toll fees, an appeal thereon is filed. The law is
clear. Thus:

x x x Decisions of the [TRB] on petitions for the increase of toll rate shall be appealable to the Office of the President within ten (10)
days from the promulgation thereof. Such appeal shall not suspend the imposition of the new rates, provided however, that pending the
resolution of the appeal, the petitioner for increased rates in such case shall deposit in a trust fund such amounts as may be necessary
to reimburse toll payers affected in case a reversal of the decision.129 (Emphasis ours.)

Besides the settled rule under Section 3 (d) of P.D. 1112 that the power to issue, modify and promulgate toll fees rests with the TRB, it
must also be underscored that the periodic and the interim adjustments found in Clauses 11.4 to 11.6 of the MNTC STOA do not
necessarily guarantee an increase in the toll fees. To stress, the formula is based on many variable factors that could mean either an
increase or a decrease in the toll fees, depending, inter alia, on how well certain economies are doing; and on the projections and
figures published by the Bangko Sentral ng Pilipinas ("BSP").130 It is therefore arduous to contemplate a grossness in a disadvantage
that could only possibly arise in case of a non-implementation of a change – particularly, an increase – in the toll rates.

Petitioners have not incidentally shown that it is the traveling public, the users of the expressways, who shouldered or will shoulder the
completion of the projects by way of exorbitant fees payment, with the investors ending up with a "killing" therefrom. This conclusion, for
all its factual dimension, is too simplistic for acceptance. And it does not consider the reality that the Court is not a trier of facts. Neither
does it take stock of the nature and function of toll roads and toll fees paid by motorists, as aptly elucidated in North Negros Sugar Co.,
Inc. v. Hidalgo,131 thus:

"Toll" is the price of the privilege to travel over that particular highway, and it is a quid pro quo. It rests on the principle that he who,
receives the toll does or has done something as an equivalent to him who pays it. Every traveler has the right to use the turnpike as any
other highway, but he must pay the toll.132

A toll road is a public highway, differing from the ordinary public highways chiefly in this: that the cost of its construction in the first
instance is borne by individuals, or by a corporation, having authority from the state to build it, and, further, in the right of the public to
use the road after completion, subject only to the payment of toll.133
Toll roads are in a limited sense public roads, and are highways for travel, but we do not regard them as public roads in a just sense,
since there is in them a private proprietary right x x x.134 (Emphasis ours.)

Parenthetically, our review of Section 7 of the SMMS STOA readily yields the information that the level of the initial toll rates hinges on
a mix of factors. Tax holidays that may be granted and the tax treatment of dividends may be mentioned. On the other hand, the
subsequent periodic adjustments are provided to address factors that usually weigh on the financial condition of any business
endeavor, such as currency devaluation, inflation and the usual increases in maintenance and operational costs incorporated into the
formula provided therefor. Even with the existence of an automatic toll rate adjustment formula, compliance by the TRB and the other
respondents with the twin requirements of public hearing and publication is still mandatory. To reiterate, laws always occupy a plane
higher than mere contract provisions. In case the minimum statutory requirements are stiffer than that of a contract, or when the
contract does not expressly stipulate the minimum requirements of the law, then We rule that compliance with such minimum legal
requirements should be done. To summarize, any toll fee increase should comply with the legal twin requirements of publication and
public hearing, the absence of which will nullify the imposition and collection of the new toll fees.

In all, the initial toll rates and periodic adjustments appear to Us as simply predicated on the basic rationale for investing in a toll project,
which to repeat is: a reasonable rate of return for the investment. Section 2 (o) of the BOT Law, as amended, provides for a definition
for a reasonable rate of return on investments and operating and maintenance cost.135 Running through the gamut of our statutes
providing for and encouraging partnership of the public and private sector is the paramount common good for infrastructure projects
and the equally important factor of giving a reasonable rate of return to private sector’s investments. The viability of any infrastructure
project depends on the returns – which should be reasonable – of the investment coming from the private sector.

While the interests of the public are ideally to be accorded primacy in considering government contracts, the reality on the ground is
that the tollway projects may not at all be possible or would be difficult to realize without the involvement of the investing private sector,
which expects its usual share of profit. Thus, the Court is at a loss to understand how the level of the initial toll rates, which depended
on several factors indicated above, and the subsequent adjustments resulted in the charging of exorbitant toll fees that, to petitioners,
enabled the investors to shift the burden of financing the completion of the projects on the motoring public.

Neither does the alleged drastic—if we may characterize it as such—steep increase in the level of toll rates for NLEX constitute a
"killing" for PNCC and its partner MNTC. Petitioners make much of the amount of the toll fees vis-à-vis the then prevailing minimum
wage. These plays of figures detract from the essential concern on the propriety of the level of the toll rates vis-à-vis the investments
sunk in the NLEX project with a view, on the part of private investors, to a reasonable return on their investment. Where no substantial
figures were provided on the investments, the projected operating and maintenance costs vis-à-vis the projected revenue from the toll
fees, no substantial conclusions may reasonably be deduced therefrom. Besides, to be taken into account in relation to the costs of the
construction and rehabilitation of the NLEX is the length of the tollway and for which motorists have to pay the corresponding toll.
Certainly, the allegations and conclusions of petitioners as to the unreasonable increase of the toll rates are without adequate factual
mooring.

The use of a tollway is a privilege that comes at a cost. The toll is a price paid for the use of a privilege. There are to be sure alternative
roads and routes, which motorists may fall back on if they are unwilling to pay the toll. The toll, as might be expected, is pegged at a
level that makes the developmental projects and their maintenance viable; otherwise, no investment can be expected for the
furtherance of the projects.

Petitioners Francisco and Hizon alleged that, per the minutes of the TRB meetings, the Board deliberately refrained, particularly with
respect to the Skyway project, from conducting public hearings for the grant of the initial toll rates and on the rate adjustment formula to
be used in order to accelerate the implementation of the projects. The allegation is far from correct. A perusal of the pertinent minutes
of the TRB meetings, particularly that held on August 17, 1995,136 in fact would disclose a picture different from that depicted by said
petitioners. Nothing in the minutes of said meeting tends to indicate that the TRB resolved to dispense with public hearings. We,
therefore, find petitioners Francisco and Hizon’s attempt to mislead the Court by falsely citing supposed portions137 of the August 17,
1995 TRB meeting very unfortunate. They quoted a correction on the minutes of the Special Board Meeting No. 95-05 held on July 26,
1995, which was taken up in the August 17, 1995 meeting for the approval of the minutes of the previous meeting. In said special
meeting of July 26, 1995,138 the Board deliberated on the recommendation of ADG Santos for the conduct of a public hearing or
soliciting the endorsement of the Metro Manila Development Authority ("MMDA").139 But the TRB did not resolve to omit a public hearing
with respect to the toll rates. In fact, the deliberations used the words "in the event the Board decides" and "if the Board conducts,"
clearly conveying the notion that the TRB had not decided or resolved the issue of public hearings. Be that as it may, We rule that the
TRB is mandated to comply with the twin requirements of public hearing and publication.

Petitioners Francisco and Hizon’s lament about the TRB merely relying on, if not yielding to, the recommendation and findings of the
Technical Working Group ("TWG") of the DPWH on matters relative to STOA stipulations and toll-rate fixing cannot be accorded
cogency. In the area involving big finance and complex project planning, banking on the data supplied by technicians and experts is at
once practical as it is inevitable. The Court cannot see its way clear to understand why petitioners would begrudge the TRB for tapping
the technical know-how of others. And it cannot be overemphasized that a recommendation is no more than an exhortation or an urging
as to what is advisable or expedient, not binding on the person to which it is being made.140 To recommend involves the idea that
another has the final decision.141 The ultimate decision still rests with the TRB whether or not to accept the findings of the TWG. The
minutes of the TRB meetings show that its members went through the tedious process of deliberating on the formula to be used in
computing the toll rates. The fact that the TRB might have adopted the TWG’s recommendation would not, on that ground alone, vitiate
the bona fides of the former’s decision nor stain the proceedings leading to such decision. In any case, as earlier held, the toll rate
adjustment formula does not and cannot contravene the legal twin requirements of public hearing and publication.

In another bid to nullify the STOAs in question, petitioners would foist on the Court the arguments that, firstly, President Ramos twisted
the arms of the TRB towards entering into the agreements in question and, secondly, that the CITRA STOA contained restrictive
confidentiality provisions barring the public from knowing their contents and the details of the negotiations related thereto.

We are not persuaded by the first ground, not necessarily because the pressure brought to bear on TRB rendered the STOAs infirm,
but because the allegations on pressure-tactics allegedly employed by President Ramos are too speculative for acceptance.

On the second ground, We fail to see how the insertion of the alleged confidentiality clause in the CITRA STOA translates into grave
abuse of discretion or a violation of the Constitution, particularly Article III, Section 7142 thereof. First off, the Court can take judicial
notice that most commercial contracts, including finance-related project agreements carry the standard confidentiality clause to protect
proprietary data and/or intellectual property rights. This protection angle appears to be the intent of Clause 14.04(l)143 of the CITRA
STOA. And as may be noted, the succeeding Clause 14.04 (2)144 removes from the ambit of the confidentiality restriction the following:
disclosure of any information: (a) not otherwise done by the parties; (b) which is required by law to be disclosed to any person who
is authorized by law to receive the same; (c) to a tribunal hearing pertinent proceedings relative to the contract or agreement; and (d)
to confidential entities and persons relative to the disclosing party like its banks, consultants, financiers and advisors. The second (item
b) exception provides a reasonable dimension to the assailed confidentiality clause.

Needless to stress, the obligation of the government to make information available cannot be exaggerated.145 The constitutional right to
information does not mean that every day and every hour is open house in government offices having custody of the desired
documents.146 Petitioners have not sufficiently shown, thus cannot really be heard to complain, that they had been unreasonably denied
access to information with regard to the MNTC or SMMS STOA. Besides, the remedy for unreasonable denial of information that is a
matter of public concern is by way of mandamus.147

Finally, as to petitioners’ catch-all claim that the STOAs are disadvantageous to the government, as therein represented by the TRB,
suffice it to state for the nonce that behind these agreements are the Board’s expertise and policy determination on technical, financial
and operational matters involving expressways and tollways. It is not for courts to look into the wisdom and practicalities behind the
exercise by the TRB of its contract-making prerogatives under P.D. Nos. 1112, 1113 and 1894, absent proof of grave abuse of
discretion which would justify judicial review. In this regard, the Court recalls what it wrote in G & S Transport Corporation v. Court of
Appeals,148 to wit:

x x x courts, as a rule, refuse to interfere with proceedings undertaken by administrative bodies or officials in the exercise of
administrative functions. This is because such bodies are generally better equipped technically to decide administrative questions and
that non-legal factors, such as government policy on the matter are usually involved in the decision.

Sixth Issue: Public Bidding Not Required

Private petitioners would finally maintain that public bidding is required for the SMMS and the North Luzon/South Luzon Tollways,
partaking as these projects allegedly do of the nature of a BOT infrastructure undertaking under the BOT Law. Prescinding from this
premise, they would conclude that the STOAs in question and related preliminary and post-STOA agreements are null and void for
want of the necessary public bidding required for government infrastructure projects.

The contention is patently flawed.

The BOT Law does not squarely apply to the peculiar case of PNCC, which exercised its prerogatives and obligations under its
franchise to pursue the construction, rehabilitation and expansion of the tollways with chosen partners. The tollway projects may very
well qualify as a build-operate-transfer undertaking. However, given that the projects in the instant case have been undertaken by
PNCC in the exercise of its franchise under P.D. Nos. 1113 and 1894, in joint partnership with its chosen partners at the time when it
was held valid to do so by the OGCC and the DOJ, the public bidding provisions under the BOT Law do not strictly apply. For, as aptly
noted by the OSG, the subject STOAs are not ordinary contracts for the construction of government infrastructure projects, which
requires under the Government Procurement Reform Act or the now-repealed P.D. 1594,149 public bidding as the preferred mode of
contract award. Neither are they contracts where financing or financial guarantees for the project are obtained from the government.
Rather, the STOAs actually constitute a statutorily-authorized transfer or assignment of usufruct of PNCC’s existing franchise to
construct, maintain and operate expressways.150

The conclusion would perhaps be different if the tollway projects were to be prosecuted by an outfit completely different from, and not
related to, PNCC. In such a scenario, the entity awarded the winning bid in a BOT-scheme infrastructure project will have to construct,
operate and maintain the tollways through an automatic grant of a franchise or TOC, in which case, public bidding is required under the
law.

Where, in the instant case, a franchisee undertakes the tollway projects of construction, rehabilitation and expansion of the tollways
under its franchise, there is no need for a public bidding. In pursuing the projects with the vast resource requirements, the franchisee
can partner with other investors, which it may choose in the exercise of its management prerogatives. In this case, no public bidding is
required upon the franchisee in choosing its partners as such process was done in the exercise of management prerogatives and in
pursuit of its right of delectus personae.151 Thus, the subject tollway projects were undertaken by companies, which are the product of
the joint ventures between PNCC and its chosen partners.

Petitioners Francisco and Hizon’s assertions about the TRB awarding the tollway projects to favored companies, unsubstantiated as
they are, need no belaboring. Suffice it to state that the discretion to choose who shall stand as critical JV partners remained all along
with PNCC, at least theoretically. Needless to say, the records do not show that the TRB committed an oversight as an administrative
body over any aspect of tollway operations with regard to PNCC’s selection of partners.

The foregoing disquisitions considered, there is no more point in passing upon the propriety of prohibiting or enjoining, on the ground of
unconstitutionality or grave abuse of discretion, the implementation of the initial toll rates and/or the adjusted toll rates for the SMSS,
expanded NLEX and SLEX, as authorized by the separate TRB resolutions, subject of and originally challenged in these proceedings.

These TRB resolutions and the STOAs upon which they are predicated have long been in effect. The parties have acted on these
issuances and contracts whose existence, as an operative fact, cannot be ignored, let alone erased, even if the charge of
unconstitutionality is given currency.

While not exactly of governing applicability in this case, what the Court wrote in De Agbayani v. Philippine National Bank,152 on the
operative fact doctrine is apropos:

x x x When the courts declare a law to be inconsistent with the Constitution, the former shall be void and the latter shall govern.
Administrative or executive acts, orders and regulations shall be valid only when they are not contrary to the laws of the Constitution."
….

Such a view has support in logic and possesses the merit of simplicity. It may not however be sufficiently realistic. It does not admit of
doubt that prior to the declaration of nullity such challenged legislative or executive act must have been in force and had to
be complied with. This is so as until after the judiciary, in an appropriate case, declares its invalidity, it is entitled to obedience and
respect. Parties may have acted under it and may have changed their positions. What could be more fitting than that in a subsequent
litigation regard be had to what has been done while such legislative or executive act was in operation and presumed to be valid in all
respects. It is now accepted as a doctrine that prior to its being nullified, its existence as a fact must be reckoned with. This is merely to
reflect awareness that precisely because the judiciary is the governmental organ which has the final say on whether or not a legislative
or executive measure is valid, a period of time may have elapsed before it can exercise the power of judicial review that may lead to a
declaration of nullity. It would be to deprive the law of its quality of fairness and justice then, if there be no recognition of what had
transpired prior to such adjudication.

In the language of an American Supreme Court decision: "The actual existence of a statute, prior to such a determination [of
constitutionality], is an operative fact and may have consequences which cannot justly be ignored. The past cannot always be
erased by a new judicial declaration x x x." (Emphasis in the original.)

The petitioners in the first three (3) petitions and the respondent in the fourth have not so said explicitly, but their brief is against the
issuance of P.D. Nos. 1112, 1113 and 1894, which conferred a package of express and implied powers and discretion to the TRB and
the President resulting in the execution of what is perceived to be offending STOAs and the runaway collection of illegal toll fees. And
they have come to the Court to strike down all these issuances, agreements and exactions. While the Court is not insensitive to their
concerns, the rule is that all reasonable doubts should be resolved in favor of the constitutionality of a statute,153 and the validity of the
acts taken in pursuant thereof. It follows, therefore, that the Court will not set aside a law as violative of the Constitution except in a
clear case of breach154 and only as a last resort.155 And as the theory of separation of powers prescribes, the Court does not pass upon
questions of wisdom, expediency and justice of legislation. To Us, petitioners and respondent YPES in the fourth petition have not
discharged the heavy burden of demonstrating in a clear and convincing manner the unconstitutionality of the decrees challenged or
the invalidity of assailed acts of the President and the TRB. Because they failed to do so, the Court must uphold the presumptive
constitutionality and validity of the provisions of the three decrees in question, and the subject contracts and TOCs.

Regarding petitioner Francisco’s Supplemental Petition, the toll rates, the collection of which in the amount based on the formula and
assumptions set forth in the law, and the adverted STOA dated February 1, 2006 and subject of the TRO issued on August 13, 2010,
has been duly published156 and approved by the TRB, as required by Section 5 of P.D. 1112.157 And the party-concessionaires have
adequately demonstrated, and the TRB has virtually acknowledged158 that the said rates subject of the TRO partake of the nature of
opening or initial toll rates, which have not yet been implemented since the time the SLTC STOA took effect.159 To note, the toll rates
subject of the TRO were approved and are to be implemented in connection with the new facility, such as Project Toll Roads 1 and 2
pursuant to the new SLTC STOA and the expanded and rehabilitated SLEX.160 As earlier discussed, public hearing is not required in
the fixing and implementation of initial toll rates. But an interested party aggrieved by the initial rates imposed is not without any
resource as he may, within the time frame provided by Section 8 (b) of P.D. 1894, repair to the TRB for review and thereafter to the
OP.161 As expressly provided in the same section, however, the pendency of the petition for review, if there be any, shall not suspend
the enforceability and collection of the toll in question. In net effect, the challenge before the Court of the SLEX toll rate imposition is
premature. However, the Court treats this Supplemental Petition assailing the toll rates covered by the TRB Notice of Toll Rates
published on June 6, 2010 as a petition for review filed under P.D. 1894, and hereby remands the same to the TRB for a review of the
questioned rates to determine the propriety thereof.

WHEREFORE, the petitions in G.R. Nos. 166910 and 173630 are hereby DENIED for lack of merit. Accordingly, We declare as VALID
AND CONSTITUTIONAL the following:

1. the Supplemental Toll Operation Agreement dated April 30, 1998 covering the North Luzon Tollway Project and the TRB
Board Resolution No. 2005-4 issued pursuant thereto;

2. the Supplemental Toll Operation Agreement dated November 27, 1995 covering the South Metro Manila Skyway and the
TRB Board Resolution No. 2004-53 and previous TRB resolutions issued pursuant thereto;

3. the Supplemental Toll Operation Agreement covering the South Luzon Tollway Project or South Luzon Expressway and the
TRB Board resolutions issued pursuant to the said agreement, particularly the TRB Board resolutions allowing the toll rate
increases that are supposed to have been implemented on June 30, 2010;

4. Section 3, paragraph (a) of Presidential Decree No. 1112, otherwise known as the "Toll Operation Decree," in relation to
Section 3, paragraph (d) thereof and Section 8, paragraph (b) of Presidential Decree No. 1894; and

5. Section 3, paragraph (e) 3 of P.D. No. 1112 and Section 13 of P.D. No. 1894.

We however declare Clause 11.7 of the Supplemental Toll Operation Agreement between the Republic of the Philippines, represented
by respondent TRB, as grantor, the Philippine National Construction Corporation, as franchisee, and the Manila North Tollways
Corporation ("MNTC") dated April 30, 1998; and the clause "including if necessary an extension of the CONCESSION PERIOD which in
no case shall exceed a maximum period of fifty (50) years" in Clause 17.5 of the same STOA, as VOID and UNCONSTITUTIONAL for
being contrary to Section 2, Article XII of the 1987 Constitution. We likewise declare Clauses 8.08 (2) & (3) of the Supplemental Toll
Operation Agreement between the Republic of the Philippines, represented by respondent TRB, as grantor, the Philippine National
Construction Corporation as franchisee, the South Luzon Tollway Corporation as investor, and the Manila Toll Expressway Systems,
Inc. as operator, dated February 1, 2006, as VOID and UNCONSTITUTIONAL.

The petition in G.R. No. 169917 is likewise hereby DENIED for lack of merit. We declare as VALID and CONSTITUTIONAL the
following:

1. Notice of Approval dated May 16, 1995 by former President Fidel V. Ramos on the assignment of PNCC’s usufructuary
rights;

2. the Joint Venture Agreement dated August 29, 1995;

3. the Joint Investment Proposal, etc. dated June 16, 1996;

4. the Supplemental Toll Operation Agreement ("STOA") dated April 30, 1998 and the Notice of Approval of said STOA dated
June 15, 1998 by former President Fidel V. Ramos; and
 5. the provisional toll rate increases published February 9, 2005, granted by the TRB.

The petition in G.R. No. 183599 is GRANTED. Accordingly, the Decision dated June 23, 2008 of the Regional Trial Court, Branch 155
in Pasig City, docketed as SCA No. 3138-PSG, annulling the TOC covering the SLEX, enjoining the original toll operating franchisee
from collecting toll fees in the SLEX, and ordering the turnover of related assets to the Government, is hereby REVERSED and SET
ASIDE, and the petition filed therein by the Young Professionals and Entrepreneurs of San Pedro, Laguna with the RTC of Pasig
is DISMISSED for lack of merit.

In view of the foregoing dispositions in the petitions at bar, the TRO issued by the Court on August 13, 2010 is hereby ordered lifted,
with respect to the petitions in G.R. Nos. 166910, 169917, 173630 and 183599.

The challenge contained in the Supplemental Petition in G.R. No. 166910 against the toll rates subject of the TRB Notice of Toll Rates
published on June 6, 2010, for the SLEX projects, Toll Road Projects 1 and 2 of the new SLTC STOA, and the expanded and
rehabilitated SLEX, is remanded to the TRB for a review of the assailed toll rates to determine whether SLTC and MATES are entitled
to the toll fees.

No Cost.

SO ORDERED.