G.R. No.

L-33146 May 31, 1977

THE COMMISSIONER OF CUSTOMS, and THE COLLECTOR OF

CUSTOMS, petitioners,
vs.
HON. PEDRO C. NAVARRO, Judge of the Court of First Instance of Rizal,
Branch II (Pasig, Rizal), and JUANITO S. FLORES, doing business under
the name and style of JS. F. ENTERPRISES and ASIATIC
INCORPORATED, represented by EUGENIO VILLANUEVA, respondents

The stress, and rightly so, by the Commissioner of Customs and the Collector
of Customs in their exhaustive and scholarly petition for certiorari, filed on
February 11, 1971, was on the jurisdictional issue. It sought to nullify and set
aside order 1 of respondent Judge Pedro C. Navarro 2 dated January 4, 1971,
issuing a writ of preliminary injunction as prayed for by private respondents
Juanito S. Flores and Asiatic Incorporated the importers of 1,350 cartons of
fresh fruits, restraining petitioners from proceeding with the auction sale of
such perishable goods. Classified as non-essential consumer commodities,
they were banned by Central Bank Circulars Nos. 289, 294 and 295 as
prohibited importation or importation contrary to law and thus made subject to
forfeiture proceedings by petitioner Collector of Customs pursuant to the
relevant sections of the Tariff and Customs Code.3 In a detailed and specific
fashion, petitioners pointed out how violative was the assumption of
jurisdiction by respondent Judge over an incident of a pending seizure and
forfeiture proceeding which, as held in a number of decisions, was a matter
falling within the exclusive competence of the customs authorities. The
persuasive character of the petition is thus evident, resulting in this Court
issuing on February 15, 1971 a resolution requiring respondents to file an
answer and at the same time issuing a writ of preliminary injunction as prayed
for by petitioners to prevent the challenged order of respondent Judge from
being implemented. Instead of preparing an answer, they just submitted a
manifestation stating that "after an intensive and serious study of the merit of
the case, the respondents have decided to abandon its interest in the case."

ISSUE:

Whether or not the question of seizure and forfeiture is for the administrative
in the first instance and then the Commissioner of Customs?

HELD

That such jurisdiction of the customs authorities is exclusive was made clear
in Pacis v. Averia,22 decided in 1966. This Court, speaking through Justice J.
P. Bengzon, realistically observed: "This original jurisdiction of the Court of
First Instance, when exercised in an action for recovery of personal property
which is a subject of a forfeiture proceeding in the Bureau of Customs, tends
to encroach upon, and to render futile, the jurisdiction of the Collector of
Customs in seizure and forfeiture proceedings."23 The court "should yield to
the jurisdiction of the Collector of Customs."24 Such a ruling, as pointed out by
Justice Zaldivar in Auyong Hian v. Court of Tax Appeals,25 promulgated less
than a year later, could be traced to Government v. Gale,26 a 1913 decision,
where there was a recognition in the opinion of Justice Carson that a Collector
of Customs when sitting in forfeiture proceedings constitutes a tribunal upon
which the law expressly confers jurisdiction to hear and determine all
questions touching the forfeiture and further disposition of the subject matter
of such proceedings.27

The controlling principle was set forth anew in Ponce Enrile v. Vinuya,28
decided in 1971. Thus: "The prevailing doctrine is that the exclusive
jurisdiction in seizure and forfeiture cases vested in the Collector of Customs
precludes a court of first instance from assuming cognizance over such a
matter."29 Reference was then made in the opinion to previous cases.30 Then it
continued: "Papa v. Mago likewise deserves to be cited. The opinion of
Justice Zaldivar for the Court emphatically asserted the doctrine anew in the
following language: 'It is the settled rule, therefore, that the Bureau of
Customs acquires exclusive jurisdiction over imported goods, for the purposes
of enforcement of the customs laws, from the moment the goods are actually
in its possession or control, even if no warrant of seizure or detention had
previously been issued by the Collector of Customs in connection with seizure
and forfeiture proceedings. In the present case, the Bureau of Customs
actually seized the goods in question on November 4, 1966, and so from that
date the Bureau of Customs acquired jurisdiction over the goods for the
purposes of the enforcement of the tariff and customs laws, to the exclusion of
the regular courts.
G.R. No. 88550 April 18, 1990

INDUSTRIAL ENTERPRISES, INC., petitioner,

vs.
THE HON. COURT OF APPEALS, MARINDUQUE MINING & INDUSTRIAL
CORPORATION, THE HON. GERONIMO VELASCO in his capacity as Minister of
Energy and PHILIPPINE NATIONAL BANK, respondents.

Petitioner Industrial Enterprises Inc. (IEI) was granted a coal operating

contract by the Government through the Bureau of Energy Development
(BED) for the exploration of two coal blocks in Eastern Samar. Subsequently,
IEI also applied with the then Ministry of Energy for another coal operating
contract for the exploration of three additional coal blocks which, together with
the original two blocks, comprised the so-called "Giporlos Area."

IEI was later on advised that in line with the objective of rationalizing the
country's over-all coal supply-demand balance . . . the logical coal operator in
the area should be the Marinduque Mining and Industrial Corporation (MMIC),
which was already developing the coal deposit in another area (Bagacay
Area) and that the Bagacay and Giporlos Areas should be awarded to MMIC
(Rollo, p. 37). Thus, IEI and MMIC executed a Memorandum of Agreement
whereby IEI assigned and transferred to MMIC all its rights and interests in
the two coal blocks which are the subject of IEI's coal operating contract.

Subsequently, however, IEI filed an action for rescission of the Memorandum

of Agreement with damages against MMIC and the then Minister of Energy
Geronimo Velasco before the Regional Trial Court of Makati, Branch 150, 2
alleging that MMIC took possession of the subject coal blocks even before the
Memorandum of Agreement was finalized and approved by the BED; that
MMIC discontinued work thereon; that MMIC failed to apply for a coal
operating contract for the adjacent coal blocks; and that MMIC failed and
refused to pay the reimbursements agreed upon and to assume IEI's loan
obligation as provided in the Memorandum of Agreement (Rollo, p. 38). IEI
also prayed that the Energy Minister be ordered to approve the return of the
coal operating contract from MMIC to petitioner, with a written confirmation
that said contract is valid and effective, and, in due course, to convert said
contract from an exploration agreement to a development/production or
exploitation contract in IEI's favor.

Respondent, Philippine National Bank (PNB), was later impleaded as co-

defendant in an Amended Complaint when the latter with the Development
Bank of the Philippines effected extra-judicial foreclosures on certain
mortgages, particularly the Mortgage Trust Agreement, dated 13 July 1981,
constituted in its favor by MMIC after the latter defaulted in its obligation
totalling around P22 million as of 15 July 1984

ISSUES
Whether or not the civil court has jurisdiction to hear and decide the suit for
rescission of the Memorandum of Agreement concerning a coal operating
contract over coal blocks?

Whether or not respondent Court of Appeals erred in holding that it is the

Bureau of Energy Development (BED) which has jurisdiction over said action
and not the civil court?

HELD:

No, the Civil Court has no jurisdiction to hear and decide.

For the BED, as the successor to the Energy Development Board (abolished
by Sec. 11, P.D. No. 1206, dated 6 October 1977) is tasked with the function
of establishing a comprehensive and integrated national program for the
exploration, exploitation, and development and extraction of fossil fuels, such
as the country's coal resources; adopting a coal development program;
regulating all activities relative thereto; and undertaking by itself or through
service contracts such exploitation and development, all in the interest of an
effective and coordinated development of extracted resources.

Thus, the pertinent sections of P.D. No. 1206 provide:

Sec. 6. Bureau of Energy Development. There is created in the Department a

Bureau of Energy Development, hereinafter referred to in this Section as the
Bureau, which shall have the following powers and functions, among others:

a. Administer a national program for the encouragement, guidance, and

whenever necessary, regulation of such business activity relative to the
exploration, exploitation, development, and extraction of fossil fuels such as
petroleum, coal, . . .

The decisions, orders, resolutions or actions of the Bureau may be appealed

to the Secretary whose decisions are final and executory unless appealed to
the President. (Emphasis supplied.)

That law further provides that the powers and functions of the defunct Energy
Development Board relative to the implementation of P.D. No. 972 on coal
exploration and development have been transferred to the BED, provided that
coal operating contracts including the transfer or assignment of interest in said
contracts, shall require the approval of the Secretary (Minister) of Energy
(Sec. 12, P.D. No. 1206).

Sec. 12. . . . the powers and functions transferred to the Bureau of Energy
Development are:

xxx xxx xxx

ii. The following powers and functions of the Energy Development Board
under PD No. 910 . . .
 (1) Undertake by itself or through other arrangements, such as service
contracts, the active exploration, exploitation, development, and extraction of
energy resources . . .

(2) Regulate all activities relative to the exploration, exploitation,

development, and extraction of fossil and nuclear fuels . . .

(P.D. No. 1206) (Emphasis supplied.)

P.D. No. 972 also provides:

Sec. 8. Each coal operating contract herein authorized shall . . . be executed

by the Energy Development Board.

Considering the foregoing statutory provisions, the jurisdiction of the BED, in

the first instance, to pass upon any question involving the Memorandum of
Agreement between IEI and MMIC, revolving as its does around a coal
operating contract, should be sustained.

2nd issue:

NO. In recent years, it has been the jurisprudential trend to apply the doctrine
of primary jurisdiction in many cases involving matters that demand the
special competence of administrative agencies. It may occur that the Court
has jurisdiction to take cognizance of a particular case, which means that the
matter involved is also judicial in character. However, 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. This is the
doctrine of primary jurisdiction. It applies "where a claim is originally
cognizable in the courts, and comes into play whenever enforcement of the
claim requires the resolution of issues which, under a regulatory scheme,
have been placed within the special competence of an administrative body, in
such case the judicial process is suspended pending referral of such issues to
the administrative body for its view" (United States v. Western Pacific Railroad
Co., 352 U.S. 59, Emphasis supplied).

Clearly, the doctrine of primary jurisdiction finds application in this case since
the question of what coal areas should be exploited and developed and which
entity should be granted coal operating contracts over said areas involves a
technical determination by the BED as the administrative agency in
possession of the specialized expertise to act on the matter. The Trial Court
does not have the competence to decide matters concerning activities relative
to the exploration, exploitation, development and extraction of mineral
resources like coal. These issues preclude an initial judicial determination.
G.R. No. L-50444 August 31, 1987

ANTIPOLO REALTY CORPORATION, petitioner,

vs.
THE NATIONAL HOUSING AUTHORITY, HON. G.V. TOBIAS, in his
capacity as General Manager of the National Housing Authority, THE
HON. JACOBO C. CLAVE, in his capacity as Presidential Executive
Assistant and VIRGILIO A. YUSON, respondents.

By virtue of a Contract to Sell dated 18 August 1970, Jose Hernando acquired

prospective and beneficial ownership over Lot. No. 15, Block IV of the
Ponderosa Heights Subdivision in Antipolo, Rizal, from the petitioner Antipolo
Realty Corporation.

On 28 August 1974, Mr. Hernando transferred his rights over Lot No. 15 to
private respondent Virgilio Yuson. The transfer was embodied in a Deed of
Assignment and Substitution of Obligor (Delegacion), executed with the
consent of Antipolo Realty, in which Mr. Yuson assumed the performance of
the vendee's obligations under the original contract, including payment of his
predecessor's installments in arrears. However, for failure of Antipolo Realty
to develop the subdivision project in accordance with its undertaking under
Clause 17 of the Contract to Sell, Mr. Yuson paid only the arrearages
pertaining to the period up to, and including, the month of August 1972 and
stopped all monthly installment payments falling due thereafter Clause 17
reads:

Clause 17. — SUBDIVISION BEAUTIFICATION. To insure the beauty of the

subdivision in line with the modern trend of urban development, the SELLER
hereby obligates itself to provide the subdivision with:

a) Concrete curbs and gutters

b) Underground drainage system

c) Asphalt paved roads

d) Independent water system

e) Electrical installation with concrete posts.

f) Landscaping and concrete sidewall

g) Developed park or amphi-theatre

h) 24-hour security guard service.

These improvements shall be complete within a period of two (2) years from
date of this contract. Failure by the SELLER shall permit the BUYER to
suspend his monthly installments without any penalties or interest charges
until such time that such improvements shall have been completed. 1
On 14 October 1976, the president of Antipolo Realty sent a notice to private
respondent Yuson advising that the required improvements in the subdivision
had already been completed, and requesting resumption of payment of the
monthly installments on Lot No. 15. For his part, Mr. Yuson replied that he
would conform with the request as soon as he was able to verify the truth of
the representation in the notice.

Mr. Yuson refused to pay the September 1972-October 1976 monthly

installments but agreed to pay the post October 1976 installments. Antipolo
Realty responded by rescinding the Contract to Sell, and claiming the
forfeiture of all installment payments previously made by Mr. Yuson

Aggrieved by the rescission of the Contract to Sell, Mr. Yuson brought his
dispute with Antipolo Realty before public respondent NHA through a letter-
complaint dated 10 May 1977 which complaint was docketed in NHA as Case
No. 2123.

Antipolo Realty filed a Motion to Dismiss which was heard on 2 September

1977. Antipolo Realty, without presenting any evidence, moved for the
consolidation of Case No. 2123 with several other cases filed against it by
other subdivision lot buyers, then pending before the NHA. In an Order issued
on 7 February 1978, the NHA denied the motion to dismiss and scheduled
Case No. 2123 for hearing.

After hearing, the NHA rendered a decision on 9 March 1978 ordering the
reinstatement of the Contract to Sell.

Antipolo Realty filed a Motion for Reconsideration asserting: (a) that it had
been denied due process of law since it had not been served with notice of
the scheduled hearing; and (b) that the jurisdiction to hear and decide Mr.
Yuson's complaint was lodged in the regular courts, not in the NHA, since that
complaint involved the interpretation and application of the Contract to Sell.

ISSUE:

Whether or not that the jurisdiction to hear and decide Mr. Yuson's complaint was
lodged in the regular courts, not in the NHA, since that complaint involved the
interpretation and application of the Contract to Sell?

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, 7 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
Presidential Decree No. 1344 12 clarified and spelled out the quasi-judicial
dimensions of the grant of regulatory authority to the NHA in the following
quite specific terms:

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 sub- division 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.)

The substantive provisions being applied and enforced by the NHA in the
instant case are found in Section 23 of Presidential Decree No. 957 which
reads:

Sec. 23. Non-Forfeiture of Payments. — No installment payment made by a

buyer in a subdivision or condominium project for the lot or unit he contracted
to buy shall be forfeited in favor of the owner or developer when the buyer,
after due notice to the owner or developer, desists from further payment due
to the failure of the owner or developer to develop the subdivision or
condominium project according to the approved plans and within the time
limit for complying with the same. Such buyer may, at his option, be
reimbursed the total amount paid including amortization and interests but
excluding delinquency interests, with interest thereon at the legal rate.
(emphasis supplied.)

Having failed to comply with its contractual obligation to complete certain

specified improvements in the subdivision within the specified period of two
years from the date of the execution of the Contract to Sell, petitioner was not
entitled to exercise its options under Clause 7 of the Contract. Hence,
petitioner could neither rescind the Contract to Sell nor treat the installment
payments made by the private respondent as forfeited in its favor. Indeed,
under the general Civil Law, 13 in view of petitioner's breach of its contract with
private respondent, it is the latter who is vested with the option either to
rescind the contract and receive reimbursement of an installment payments
(with legal interest) made for the purchase of the subdivision lot in question, or
to suspend payment of further purchase installments until such time as the
petitioner had fulfilled its obligations to the buyer. The NHA was therefore
correct in holding that private respondent's prior installment payments could
not be forfeited in favor of petitioner.

Neither did the NHA commit any abuse, let alone a grave abuse of discretion
or act in excess of its jurisdiction when it ordered the reinstatement of the
Contract to Sell between the parties. Such reinstatement is no more than a
logical consequence of the NHA's correct ruling, just noted, that the petitioner
was not entitled to rescind the Contract to Sell. There is, in any case, no
question that under Presidential Decree No. 957, the NHA was legally
empowered to determine and protect the rights of contracting parties under
the law administered by it and under the respective agreements, as well as to
ensure that their obligations thereunder are faithfully performed.
G.R. No. 114711 February 13, 1997

GARMENTS and TEXTILE EXPORT BOARD (GTEB), petitioner,

vs.
COURT OF APPEALS and AMERICAN INTER-FASHION CORPORATION,
respondents.

G.R. No. 115889 February 13, 1997

AMERICAN INTER-FASHION CORPORATION, petitioner,

vs.
GLORIOUS SUN FASHION GARMENTS MANUFACTURING (PHILS.), INC.
and GARMENTS and TEXTILE EXPORT BOARD (GTEB), respondents.

The Garments and Textile Export Board (GTEB) filed the herein petition for
Certiorari from the January 21, 1994 Decision and the March 22, 1994
Resolution of the Court of Appeals in CA-G.R. SP No. 31596 (G.R. No.
114711). Up for our resolution likewise is the petition for Certiorari filed by the
American Inter-Fashion Corporation (AIFC) against the GTEB Resolution of
June 21, 1994 (G.R. No. 115889). These petitions, being interrelated, were
ordered consolidated.
G.R. Nos. 98395-102449 June 19, 1995

GOVERNMENT SERVICE INSURANCE SYSTEM, petitioner,

vs.
CIVIL SERVICE COMMISSION and DR. MANUEL BARADERO,
respondents.

GOVERNMENT SERVICE INSURANCE SYSTEM, petitioner,

vs.
CIVIL SERVICE COMMISSION and MATILDE S. BELO, respondents

In our decision dated October 28, 1994 we held that government service
rendered on a per diem basis is not creditable in computing the length of
service for retirement purposes. Thus, we reversed the questioned resolutions
and orders of the Civil Service Commission (CSC) requiring the Government
Service Insurance System (GSIS) to consider creditable the services of
private respondents on a per diem basis.

However, private respondent Matilde S. Belo in G.R. No 102449 filed a motion

for reconsideration dated 17 November 1994, of this Court 's decision of
October 28, 1994. She insists that the services rendered by her as Vice
Governor of Capiz, between December 31, 1975 to January 1, 1979, be
considered as creditable for purposes of retirement. The Government Service
Insurance System likewise filed a motion for reconsideration on November 22,
1984 in behalf of both private respondents Belo and Dr. Manuel Baradero on
essentially the same grounds. We shall deal with both motions together.

While what respondents Belo and Baradero received were denominated as

"per diem," the amounts received were actually in the nature of a
compensation or pay. What should therefore be considered as controlling in
both cases would be the nature of remuneration, not the label attached to it.

Respondent Belo held the position of Vice-Governor of Capiz continuously

between January 5, 1972 up to February 1, 1988. From January 25, 1972 up
to December 31, 1979, she held office by virtue of an election and was paid a
fixed salary. 1 From December 31, 1979 up to February 1, 1988, she held the
position of Vice Governor of Capiz in a holdover capacity, broken down into
two periods: 2

1. A period in which she was paid on a per diem basis from December 31,
1976 to December 31, 1979; and
 2. A period in which she was paid a fixed salary — from January 1, 1980 to
February 1,1988.

In its June 7, 1989 Resolution 3 on the matter, CSC held that the services
rendered for the first holdover period between January 31, 1976 to January 1,
1979 was creditable for purposes of retirement. CSC noted that during the
entire holdover period, respondent Belo actually served on a full time basis as
Vice Governor and was on call 24 hours a day. Disagreeing with the CSC's
insistence that the period in which respondent Belo was paid on a per diem
basis should be credited in computing the number of years of creditable
service to the government, GSIS subsequently filed a petition for certiorari
before this court, questioning the orders of the CSC. Agreeing that per diems
were not compensation within the meaning of Section 1(c) of R.A. 1573 which
amended Section 1(c) of C.A. No. 186 (Government Service Insurance Act),
we granted the petitions in G.R. Nos. 98395 and 102449, 4 and reversed the
CSC Orders and Resolutions in question.

ISSUE

Whether or not regular service in government on a per diem basis, without

any other form of compensation or emolument, is compensation within the
contemplation of the term "service with compensation" under the Government
Service Insurance Act of 1987.

HELD

We are convinced that the "per diem" she received was actually paid for in the
performance of her duties as Vice-Governor of Capiz in a holdover capacity
not as the per diem referred to by section 1(c) of R.A. No 1573 which
amended Section 1(c) of C.A. No. 186 (Government Insurance Service Act). A
closer look at the aforecited provision, moreover, reveals a legislative intent to
make a clear distinction between salary, pay or compensation, on one hand,
and other incidental allowances, including per diems on the other. Section
1(c) provides:

(c) Salary, pay or compensation shall be construed as to exclude all bonuses,

per diems, allowances and overtime pay, or salary, pay or compensation
given to the base pay of the position or rank as fixed by law or regulations. 5

Since it is generally held that an allowance for expenses incident to the

discharge of an office is not a salary of office, 6 it follows that if the
remuneration received by a public official in the performance of his duties
does not constitute a mere "allowance for expenses" but appears to be his
actual base pay, then no amount of categorizing the salary as base pay, a
"per diem" would take the allowances received by petitioner from the term
service with compensation for the purpose of computing the number of years
of service in government. Furthermore, it would grossly violate the law's intent
to reward the public servant's years of dedicated service to government for us
to gloss over the circumstances surrounding the payment of the said
remunerations to the petitioner in taking a purely mechanical approach to the
problem by accepting an attached label at face value.

In the sense in which the phrase "per diem" is used under the Government
Service Insurance Law, a per diem is a daily allowance given for each day an
officer or employee of government is away from his home base. 8 This is its
traditional meaning: its usual signification is as a reimbursement for extra
expenses incurred by the public official in the performance of his duties. 9
Under this definition the per diem intended to cover the cost of lodging and
subsistence of officers and employees when the latter are on duty outside of
their permanent station. 10

The clear intent of the Government Insurance Law was to exclude those extra
incidental expenses or incurred on a daily basis covered by the traditional
definition of the term per diem. An important fact missed from our earlier
decision was that, while respondent Belo was paid on a per diem basis during
her first holdover period as Vice Governor she was subsequently paid a fixed
salary, which apparently rectified an otherwise anomalous situation. The
services rendered by respondent Belo having been continuous, the disputed
period should be credited for purposes of retirement.

The distinctions between salary and per diem made hereinabove were in fact
adverted to in our original decision dated October 28, 1994. In explaining the
allowance of service rendered on a per diem basis in the case of Inocencio
vs. Ferrer of the Social Security System, we noted with approval the
Government Service Insurance System's explanation that the per diem
service which was credited for purposes of retirement was Commissioner
Ferrer's full time service as Hearing Officer not his per diem service for
attendance at Board Meetings. Even then, we indirectly noted the difference
between per diem paid as compensation for services rendered on a full time
basis and per diem as allowance for incidental expenses. Respondent Belo
asserts, with reason, that the per diems paid to her, while reckoned on the
basis of attendance in Board Meetings, were for her full time services as Vice
Governor of the Province of Capiz. In fact, the same service, albeit still on a
holdover basis, was eventually paid with a fixed salary.