VOL.

23, MAY 29, 1968

301

In re Mallare

ANNOTATION

ADMINISTRATIVE DECISIONS AS RES JUDICATA

I. Scope of Annotation
This annotation is confined to Supreme Court rulings on the effect and character of decisions of
administrative agencies as res judicata.

The discussion will be limited to such aspects of the doctrine as have been applied to
administrative determinations.

II. Res Judicata Applies to Quasi-Judicial Tribunals

It is settled that the decisions and orders of administrative agencies, rendered pursuant to their
quasi-judicial authority, have upon their finality the character of res judicata (Brillantes v.
Castro, 99 Phil. 497; Ipekjian Merchandising Co., Inc. v. Court of Tax Appeals, L-15430, Sept. 30,
1963).

The rule which forbids the reopening of a matter once judicially determined by competent
authority applies as well to the judicial and quasi-judicial acts of public, executive, or
administrative officers and boards acting within their jurisdiction as to the judgments of courts
having general judicial powers. This rule has been recognized as applying to the decisions of
road or highway commissioners, commissioners of motor transportation, boards of audit,
county boards, tax commissioners, boards, or officers, the federal trade commission, school
commissioners police commissioners, sewers commissioners, land commissioners or officers,
collector of customs, referees in bankruptcy’ court commissioners, boards or other tribunals
administering workmen’s compensation acts, and other like officers and boards. However, a
particular decision or determination may not be conclusive, as where it was not a judicial, as
distinguished from a legislative executive, or ministerial, determination, or the matter was not
within the jurisdiction of the officer or board. (Brillantes v. Castro, 99 Phil. 503, citing 50 C.J.S.,
Judgments, Sec. 690, pp. 148–149).

There are cases in which the doctrine of res judicata has been held applicable to judicial acts of
public, executive, or administrative officers and boards. In this connection, it has been declared
that whenever a final adjudication of persons invested with power to decide on the property
and rights of the citizen is examinable by the Supreme Court, upon a writ of error or a
certiorari, such final adjudication may be pleaded as res judicata. (Brillantes v. Castro, supra,
citing 30 Am. Jur. Judgments, Sec. 164, p. 910).
1. Agency must be conferred judicial power.—In determining whether or not the decision of an
agency would have the charater of res judicata, it should be first established that by some
provision of law, the agency should have been conferred judicial power, ultimately subject to
review by the Supreme Court.

In Frimm v. Atok-Big Wedge Mining Co. (L-11887, Dec. 29, 1959), a petition was filed for the
purpose of compelling a mining corporation to issue certain shares of stock to transferees of
mining claims. The Commission denied the petition, on the ground that the agreement had
violated public policy. If was later contended that the Commission was without jurisdiction over
the matter, hence, its decision could not have the effect of res judicata. According to the
Supreme Court of the Commission had the authority, in the exercise of its quasi-judicial powers,
to pass upon the question of whether or not the claim for issuance of the shares was valid and
to take such steps as may be required for the recognition, protec

In Ipekdjian Merchandising Co. v. Court of Tax Appeals, (L-15430, Sept. 30, 1963), the taxpayer
was held liable for compensating tax in a decision of the Board of Tax Appeals, which under R.A.
No. 1125 was considered to have exercised judicial powers in tax cases. After making partial
payment of the tax, the taxpayer then questioned the same tax in a petition for review filed
with the Court of Tax

Appeals. This was dimissed on ground of res judicata. Taxpayer claimed that this doctrine was
inapplicable to administrative bodies. In sustaining the dismissal, the Supreme Court ruled that
the Board of Tax Appeals had been conferred judicial powers, hence, its decisions have the
character and effect of res judicata.

2. Judgment on the merits.—In order that the judgment of the agency will operate as a bar, it
must have been rendered on the merits. Generally, a judgment of dismissal based on want of
jurisdiction merely, is not an adjudication on the merits. But where the dismissal is based on
absence of jurisdiction as well as other grounds, the judgment is on the merits where on its face
the decision shows that the claim had been considered on the merits.

In Frimm v. Atok-Big Wedge Mining Co., supra, a claim for the issuance of shares was based on
an agreement for such issuance in exchange for mining claims. A petition was filed with the
Securities and Exchange Commission for recognition, protection and enforcement of such claim.
This was denied on the ground that the agreement violated public policy. This ruling was later
attacked as not res judicata because it was not on the merits. In overruling this contention, the
Supreme Court pointed out that in resolving the questions presented in the petition, the latter
had to pass on the merits of the agreement for a determination of the legality of the proposed
issuance of shares.

In Bañas v. Philippine Veterans Board, (L-13398, Oct. 20, 1959), plaintiff filed a claim with the
Auditor General for expenses incurred for the accommodation, medicine and other supplies
furnished to Philippine veterans by him as owner and physician of a clinic, pursuant to a
contract entered into between him and the Philippine Veterans Board. Under the agreement,
payment would be made on a reimbursement basis by the U.S. Government represented by the
Administrator of Veterans Affairs. The agreement provided for the authority of said
Administrator to suspend payment whenever he believes the terms of the agreement had not
been followed. On the basis of the evidence presented, the Auditor General dismissed the claim
on various grounds, among which were that claimant had violated his contract in several
respects. He had failed to provide proper hospital care and treatment to veterans patients, for
which he was prosecuted and convicted of estafa. This decision of the Auditor General was
never appealed by plaintiff. Instead, he filed subsequently a complaint with. the Court of First
Instance asserting the same claim. This was dismissed by the court on ground of res judicata.
On appeal, it was contended by plaintiff that res judicata was inapplicable since there was no
adjudication on the merits. The Supreme Court overruled this contention, holding that the
decision of the Auditor General showed on its face that he had considered the claim on its
merits, hence, his decision operated as a bar to the subsequent suit.

3. Dispositive portion is controlling.—For the purpose of res judicata, the dispositive part
controls the expressions made in the body of the opinion (Frimm v. Securities and Exchange
Commission, supra, citing Neri v. Arce, 52 O.G. 2537; Siari Valley Estates v. Lucasan, L-11805,
Oct. 31, 1957; Contreras v. Felix, 78 Phil. 570; Govern-ment v. Ramon y Vasquez, 78 Phil. 669).

In the Frimm case, it was contended that the decision of the Securities and Exchange
Commission denying relief for the recognition, protection and enforcement of a claim was not
intended to be final, because the decision itself stated that “until the validity or enforceability
thereof is established in Court, the Commisson should not grant the remedy.” In ruling
however, that the decision constituted res judicata, the Supreme Court pointed out the
dispositive part of the Commission’s decision, did not contain any reservation of future action in
favor of the claim owners; hence, it operated as a final ruling on the questions presented.

III. Res Judicata Applied

The essential requisites for the existence of res judicata are: (1) the former judgment must be
final; (2) it must have been rendered by a court having jurisdiction of the subject matter and the
parties; (3) it must be a judgment on the merits; and (4) there must be, between the first and
second actions—(a) identity of parties, (b) identity of subject matter, and (c) identity of cause of
action Ipekjian Merchandising Co., Inc. v. Court of Tax Appeals, supra, citing Navarro v. Director
of Lands, L18814, July 31, 1962; Aring v. Original, L-18464, Dec. 29, 1962).

In Frimm v. Atok-Big Wedge Mining Co., supra, a complaint was filed with the Securities and
Exchange Commission to compel in effect a corporation to issue shares of its capital stock
pursuant to a contract whereby the corporation had acquired certain mining claims held by
some of its officials, in exchange for its stock worth P1 million. The corporation had refused to
issue all the shares agreed upon because the claims turned out to be worth only P150,000
according to the findings of the Bureau of Science. After hearings at which evidence was
presented, the Commission rendered a decision denying the order sought, on the basis of the
findings that (1) the Mining claims had been grossly overvalued; (2) that the directors had acted
in connivance with the claim owners; and (3) that in connection with the valuation of the claims
the directors had not only acted negligently, but three of them had received from the claim
owners a reward, profit or advantage. On these grounds, the Commission ruled the agreement
to be illegal and contrary to public policy, hence, void and unenforceable. No appeal was taken
from this decision of the Commission. Subsequently, a suit was filed with the Court of First
Instance to compel the corporation to issue said shares pursuant to said agreement. The
complaint was dismissed on the ground of res judicata, This was challenged but the Supreme
Court ruled that all the requisites for the application of the doctrine to the decision of the
Commission were fully established by the facts of the case.

In the case of Brillantes vs. Castro. (99 Phil. 497) plaintiff filed a complaint for unpaid salaries
and overtime compensation with the Wage Administrative Service. Upon agreement of the
parties, who bound themselves to abide by the decision of the Service, the matter was tried and
decided by the Service which dismissed the claim on the merits. The decision of the Service was
never appealed nor reviewed in accordance with the special procedures prescribed in the
Minimum Wage Law. Thereafter, plaintiff filed a case asserting the same claim in the Court of
First Instance. The complaint was dismissed on the ground that it was barred by prior judgment.
In sustaining the dismissal, the Supreme Court ruled that since the proceeding before the
Service may be regarded as a suit by one party against another and the Service acted as a quasi-
judicial body and the proceeding had before it was quasi-judicial, the failure of the plaintiff to
appeal the decision rendered it final and conclusive and served as a bar to another action
between the same parties involving the same subject matter and cause of action and the same
issues.

In Divinagracia v. Court of First Instance (L-17690, Dec. 28, 1961, 3 SCRA 775), the Don Bosco
Institute was held liable for workmen’s compensation by the Workmen’s Compensation
Commission, despite its contention that it was exempt as non-profit entity. The Institute
appealed to the Commission en banc, reiterating its claim to exempttion, but the award was
affirmed. It then filed a petition for certiorari with the Supreme Court, but this was dismissed.
Subsequently, it filed a complaint for prohibition against the Commission in the Court of First
Instance which enjoined the execution of the award on the ground of the exempt character of
the Institute. In overruling the contention of the Institute, the Supreme Court ruled that with
respect to the issue of the Institute’s exemption and alleged lack of jurisdiction of the
Commission, its final decision constituted res judicata.

In Luison v. Garcia, (103 Phil. 453), the parties were candidates for mayor. The certificate of
candidacy of Luison was filed by the local chapter of Nacionalista Party duly signed by the
chairman and secretary, while Garcia’s certificate of candidacy was filed by the local branch of
the Liberal Party but signed only by a candidate for vice-mayor. The executive secretary of the
Nacionalista Party questioned the sufficiency of the certificate of candidacy filed in behalf of
Garcia before the Commission on Elections, which in a resolution declared Garcia ineligible after
investigation. This ruling was not appealed. Notwithstanding this ruling, Garcia continued with
his candidacy and garnered a majority of the votes cast. Luison filed a protest against Garcia, on
ground of ineligibility but the trial court ruled in favor of Gan cia. In the appeal, the Supreme
Court sustained Luison and ruled that the resolution of the Commission on Elections was res
judicata on the question of Garcia’s ineligibility.

In Batangas Transportation Co. v. Velando (L-20675, June 23, 1965), a claim filed in 1955 for
workmen’s compensation was denied on the ground that the alleged compensable disease did
not arise out of the employment. Reconsideration was sought, but this was repeatedly denied.
In 1962, however, the decision was considered and compensation was awarded. In the appeal
to the Supreme Court, it was held that as the prior dismissal of the case had not been appealed,
it was acquired upon finality the character of res judicata and was a bar to any relief on the
same cause of action.

IV. Res Judicata not Applied

Where one or more of the requisites for the application of the doctrine are not satisfied, the
decision or determination will not constitute a bar to the subsequent proceeding.

In Makati Stock Exchange, Inc. v. Securities and Exchange Commission, (L-23004, June 30,
1965), petitioner was issued a certificate of incorporation. In the same order, dated May 27,
1963 of the Securities and Exchange Commission, a statement was made that “if the organizers
thereof, are willing to abide by the foregoing conditions, they may file the proper application
for the registration and licensing of said exchange.” One of the conditions referred to was that
it should not list for trading on its board, securities already listed in the Manila Stock Exchange.
Subsequently, petitioner applied for registration as stock exchange. The Commission resolved
to deny the application unless petitioner complied with the above condition. It was contended
that the limitation was res judicata by virtue of the order dated May 27, 1963. On appeal, the
Supreme Court ruled that since the order of May 27, 1963 did not deal with registration of
petitioner as stock exchange but only with issuance of its certificate of incorporation, there was
no determination of the question of registration as subject to the condition, which could
become final.

In Sanchez v. Del Rosario (L-16878, April 26, 1961,1 SCRA 1103), a petition was filed by one
Maximo Ortega with the Commission on Elections to annul the certificates of candidacy of
Nacionalista Party candidates of which appellant Del Rosario was one. The certif icates, being
proper on their faces, were given due course. In the elections, Del Rosario received the highest
number of votes for the office of mayor. Subsequently, a quo warranto proceeding was
instituted by plaintiff, a defeated candidate, on the ground of ineligibility of Del Rosario for lack
of the required age, since he is only a little over 21 years at the time of his election. Among
other defenses, the ruling of the Commission on Elections was pleaded as res judicata. It was
held, however, that the ruling of the Commission did not have the character of res judicata,
since the petition to annul did not involve the same parties nor the same issues. The question
of ineligibility of a candidate for non-age is beyond the usual and proper cognizance of the
Commission and consequently could not have been litigated therein.

In Reotan v. NARIC (L-16223, Feb. 27, 1962, 4 SCRA 418). judgment was rendered awarding
various amounts as overtime compensation to former employees of the NARIC. The judgment
was questioned on the ground that it dealt with a matter already res judicata. It appeared that
during the pendency of the case in the Court of First Instance, an examiner’s report was
submitted in a case before the Court of Industrial Relations involving the NARIC and its
employees. In said report, the sums found due to the plaintiffs in the Court of First Instance
were very much smaller than those awarded by the Court of First Instance. In the appeal, the
Supreme Court noted that as the plaintiffs were no longer employed in the NARIC, the CIR was
without jurisdiction over their claims.

Moreover, they had not authorized the institution of their claims in the CIR. Finally, it appeared
that the examiner’s report was not approved by the CIR. Hence, the plea of res judicata was
without basis.

V. Res Judicata not Applicable to Regulatory Orders

Where administrative bodies exercise regulatory or quasi-legislative power, laying down rules
and regulations, or even specific orders to be adhered to by persons subject thereto, the
principle of res judicata is not applicable, hence, such rules and regulations, or orders may be
amended or modified to conform to the requirements of law and the public interest.

The announced rule, in this regard, is that “in proceedings before a commission, which involve
either directly or as a necessary consequence, the annulment, modification or alteration of a
previous order by it entered, the doctrine of estoppel or res judicata, as usually applied to
judgment of courts of record, is without application whatever.” (Benito v. Public Service
Commission, 86 Phil. 624; Raymundo Trans. Co. v. Tanay Transit Co. and Yangco, 63 Phil. 1064.)

In Benito v. Public Service Commission, supra, the operators of an electric light plant were
ordered to desist from collecting light bills in advance for flat rate service. Challenging the
order, the operators invoked cases in the Public Service Commission appeared to have allowed
the collection of light bills in advance. In overruling the contention, the Supreme Court pointed
out that first, the Commission should have the power to revoke and correct erroneous ruling
and, secondly, because the doctrine of estoppel or res judicata is not applicable to regulatory
orders of the Commission.—PROF. PERFECTO V. FERNANDEZ.

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AS<br/>RES JUDICATA, 23 SCRA 301, April 29, 1968