EN BANC

[G.R. No. L-23004. June 30, 1965.]

MAKATI STOCK EXCHANGE,
INC., petitioner, vs.
MANILA STOCK EXCHANGE, respondents.

SECURITIES

AND EXCHANGE COMMISSION

and

Hermenegildo B. Reyes for petitioner.

Solicitor General for respondent Securities and Exchange Commission.
Norberto J. Quisumbing and Emma Quisumbing-Fernando for respondent Manila Stock Exchange.
SYLLABUS
1. SECURITIES AND EXCHANGE COMMISSION; MAY NOT PROHIBIT DOUBLE LISTING OF SECURITIES IN STOCK EXCHANGES. The
Securities and ExchangeCommission's rule that a security already listed in any securities exchange may not be listed anew in any other
securities exchange is beyond the power of the Commission to impose because it results in discrimination and violation of constitutional rights.
2. ID.; ID.; PROHIBITION AGAINST DOUBLE LISTING AS CONDITION FOR LICENSING OF STOCK EXCHANGE. The Securities
and Exchange Commission may not validly impose as a condition precedent for the licensing of a stock exchange its rule against double listing of
securities.

DECISION

BENGZON, J p:
This is a review of the resolution of the Securities and Exchange Commission which would deny the Makati Stock Exchange, Inc.,
permission to operate a stockexchange unless it agreed not to list for trading on its board, securities already listed in the
Manila Stock Exchange.

Objecting to the requirement, Makati Stock Exchange, Inc., contends that the Commission has no power to impose it and that, anyway, it is illegal,
discriminatory and unjust.
Under the law, no stock exchange may do business in the Philippines unless it is previously registered with the Commission by filing a statement
containing the information described in sec. 17 of the Securities act (Commonwealth Act 83, as amended).
It is assumed that the Commission may permit registration if the section is complied with; if not, it may refuse. And there is now no question that
the section has been complied with, or would be complied with, except that the Makati Stock Exchange, upon challenging this particular
requirement of the Commission (rule against double listing) may be deemed to have shown inability or refusal to abide by its rules, and thereby to
have given ground for denying registration. [sec. 17(a) (1) and (d)].
Such rule provides: ". . . nor shall a security already listed in any securities exchange be listed anew in any other securities exchange . . ."
The objection of Makati Stock Exchange, Inc., to this rule is understandable. There is actually only one securities exchange The
Manila Stock Exchange, that has been operating alone for the past 25 years; and all or presumably all available or worthwhile securities
for trading in the market are now listed there. In effect, the Commission permits the Makati Exchange, Inc., to deal only with other securities.
Which is tantamount to permitting a store to open provided it sells only those goods not sold in other stores. And if there's only one existing
store, 1 the result is a monopoly.
It is not far-fetched to assert as petitioner does 2 that for all practical purposes, the Commission's order or resolution, would make it
impossible for the MakatiStock Exchange to operate. So, its "permission" amounted to a "prohibition".
Apparently, the Commission acted "in the public interest". 3 Hence, it is pertinent to inquire whether the Commission may "in the public interest"
prohibit (or make impossible) the establishment of another stock exchange (besides the Manila Stock Exchange), on the ground that the operation
of two or more exchanges adversely affects the public interest.
At first glance, the answer should be in the negative, because the law itself contemplated, and, therefore, tacitly permitted or tolerated at least, the
operation of two or more exchanges.
"Wherever two or more exchanges exist, the Commission, by order, shall require and enforce uniformity of trading regulations in
and/or between said exchanges." [Italics Ours] (Sec. 28b-13, Securities Act.)
In fact, as admitted by respondents, there were five stock exchanges in Manila, before the Pacific War (p. 10, brief), when the Securities Act was
approved or amended. (Respondent Commission even admits that dual listing was practiced then.) So if the existence of more than
one exchange were contrary to public interest, it is strange that the Congress having from time to time enacted legislation amending the Securities
Act, 4 has not bared multiplicity of exchanges.
Forgetting for the moment the monopolistic aspect of the Commission's resolution, let us examine the authority of the Commission to promulgate
and implement the rule in question.
It is fundamental that an administrative officer has only such powers as are expressly granted to him by the statute, and these necessarily implied
in the exercise thereof.

In its brief and its resolution now subject to review, the Commission cites no provision expressly supporting its rule. Nevertheless, it suggests that
the power is "necessary for the execution of the functions vested in it"; but it makes no explanation, perhaps relying on the reasons advanced in
support of its position that trading of the same securities in two or more stock exchanges, fails to give protection to the investors, besides
contravening public interest. (Of this, we shall treat later.)
On the legality of its rule, the Commission's argument is that: (a) it was approved by the Department Head before the War; and (b) it is not in
conflict with the provisions of the Securities Act. In our opinion, the approval of the Department, 5 by itself, adds no weight in a judicial litigation;
and the test is not whether the Act forbids the Commission from imposing a prohibition; but whether it empowers the Commission to prohibit. No
specific portion of the statute has been cited to uphold this power. It is not found in sec. 28 (of the Securities Act), which is entitled "Powers (of the
Commission) with respect to Exchanges and Securities". 6
According to many court precedents, the general power to "regulate" which the Commission has (Sec. 33) does not imply authority to prohibit. 7
The Manila Stock Exchange, obviously the beneficiary of the disputed rule, contends that the power may be inferred from the express power of the
Commission to suspend trading in a security, under said sec. 28 which reads partly:
". . . and if in its opinion, the public interest so requires, summarily to suspending trading in any registered security on any
securities exchange. . . ." (Sec. 28(3), Securities Act.)
However, the Commission has not acted nor claimed to have acted in pursuance of such authority, for the simple reason that suspension
under it, may only be for ten days. Indeed, this section, if applicable, precisely argues against the position of the Commission because the
"suspension", if it is, and as applied to Makati StockExchange, continues for an indefinite period, if not forever; whereas this section 28 authorizes
suspension for ten days only. Besides, the suspension of trading in the security should not be on one exchange only, but on all exchanges; bearing
in mind that suspension should be ordered "for the protection of investors" (first par., sec. 28) in all exchanges, naturally, and "if the public interest
so requires" [sec. 28(3)].
This brings up the Commission's principal conclusions underlying its determination, viz, (a) that the establishment of another exchange in the
environs of Manila would be inimical to the public interest; and (b) that double or multiple listing of securities should be prohibited for the
"protection of the investors."
(a) Public Interest. Having already adverted to this aspect of the matter, and the emerging monopoly of the Manila Stock Exchange, we may, at
this juncture, emphasize that by restricting free competition in the marketing of stocks, and depriving the public of the advantages thereof, the
Commission all but permits what the law punishes as monopolies as "crimes against public interest". 8
"A stock exchange is essentially monopolistic" the Commission states in its resolution (p. 14-a, Appendix, Brief for Petitioner). This reveals the
basic foundation of the Commission's process of reasoning. And yet, a few pages afterwards, it recalls the benefits to be derived "from the
existence of two or more exchanges", and the desirability of "a healthy and fair competition in the securities market", even as it expresses the
belief that "a fair field of competition among stock exchanges should be encouraged"; only to resolve, paradoxically enough, that
Manila Stock Exchange shall, in effect, continue to be the only stock exchange in Manila or in the Philippines.
"Double listing of a security," explains the Commission, "divides the sellers and the buyers, thus destroying the essence of a stock exchange as a
two-way auction market for the securities, where all the buyers and sellers in one geographical area converge in one defined place, and the

bidders compete with each other to purchase the security at the lowest possible price and those seeking to sell it compete with each other to get
the highest price therefor. In this sense, a stock exchangeis essentially monopolistic."
Inconclusive premises, for sure. For it is debatable whether the buyer of stock may get the lowest price where all the sellers assemble in only one
place. The price there, in one sale, will tend to fix the price for the succeeding sales, and he has no chance to get a lower price except at
another stock exchange. Therefore, the arrangement desired by the Commission may, at most, be beneficial to sellers of stock not to buyers;
although what applies to buyers, should obtain equally as to sellers (looking for higher prices). Besides, there is the brokerage fee, which must be
considered. Not to mention the personality of the broker.
(b) Protection of investors. At any rate, supposing the arrangement contemplated is beneficial to investors (as the Commission says), it is to be
doubted whether it is "necessary" for their "protection" within the purview of the Securities Act. As the purpose of the Act is to give adequate and
effective protection to the investing public against fraudulent representations, or false promises, and the imposition of worthless ventures 9 , it is
hard to see how the proposed concentration of the market, has a necessary bearing to the prevention of deceptive devices or unlawful practices.
For it is not mere semantics to declare that acts for the protection of investors are necessarily beneficial to them; but not everything beneficial to
them is necessary for their protection.

And yet, the Commission realizes that if there were two or more exchanges "the same security may sell for more in one exchange and sell for less
in the other. Variance in price of the same security would be the rule . . ." Needless to add, the brokerage rates will also differ.
This precisely, strengthens the objection to the Commission's ruling. Such difference in prices and rates gives the buyer of shares alternative
options, with the opportunity to invest at lower expense; and the seller, to dispose at higher prices. Consequently, for the investors' benefit
(protection is not the word), duality of listing10 should be permitted, nay, encouraged, and other exchanges allowed to operate. The circumstance
that some people "made a lot of money due to the difference in prices of securities traded in the stock exchanges of Manila before the war" as the
Commission noted, furnishes no sufficient reason to let one exchange corner the market. If there was undue manipulation or unfair advantage
in exchange trading the Commission should have other means to correct the specific abuses.
Granted that, as the Commission observes, "what the country needs is not another" market for securities already listed on the
Manila Stock Exchange, but "one that would focus its attention and energies to the listing, of new securities and thus effectively help in raising
capital sorely needed by our . . . unlisted industries and enterprises."
Nonetheless, we discover no legal authority for it to shore up (and stifle) free enterprise and individual liberty along channels leading to that
economic desideratum. 11
The Legislature has specified the conditions under which a stock exchange may legally obtain a permit (sec. 17, Securities Act); it is not for the
Commission to impose others. If the existence of two competing exchanges jeopardizes public interest which is doubtful let the Congress
speak. 12 Undoubtedly, the opinion and recommendations of the Commission will be given weight by the Legislature, in judging whether or not to
restrict individual enterprises and business opportunities. But until otherwise directed by law, the operation of exchanges should not be so
regulated as practically to create a monopoly by preventing the establishment of other stock exchanges, and thereby contravening.
(a) the organizers' (Makati's) Constitutional right to equality before the law;
(b) their guaranteed civil liberty to pursue any lawful employment or trade; and

(c) the investors' right to choose where to buy or to sell, and his privilege to select the brokers in his employment. 13
And no extended elucidation is needed to conclude that for a licensing officer to deny license solely on the basis of what he believes is best for the
economy or the country, may amount to regimentation or, in this instance, the exercise of undelegated legislative powers and discretion.
Thus, it has been held that where the licensing statute does not expressly or impliedly authorize the officer in charge, he may not refuse to grant a
license simply on the ground that a sufficient number of licenses to serve the needs of the public, have already been issued, (53 C.J.S. p. 636.)
Concerning res judicata. Calling attention to the Commission order of May 27, 1963, which Makati Stock did not appeal, the
Manila Stock Exchange pleads the doctrine of res judicata 14 (The order now reviewed is dated May 7, 1964.)
It appears that when Makati Stock Exchange, Inc. presented its articles of incorporation to the Commission, the later, after making some inquiries,
issued on May 27, 1963, an order reading as follows.
"Let the certificate of incorporation of the MAKATI STOCK EXCHANGE be issued, and if the organizers thereof are willing to
abide by the foregoing conditions, they may file the proper application for the registration and licensing of the said Exchange."
In that order, the Commission advanced the opinion that "it would permit the establishment and operation of the proposed Makati Stock Exchange,
provided . . . it shall not list for trading on its board, securities already listed in The Manila Stock Exchange . . ."
Admittedly, Makati Stock Exchange, Inc., has not appealed from that order of May 27, 1963. Now, Manila Stock insists on res judicata.
Why should Makati have appealed ? It got the certificate of incorporation which it wanted. The condition or proviso mentioned would only apply if
and when it subsequently filed the application for registration as stock exchange. It had not yet applied. It was not the time to question the
condition; 15 Makati was still exploring the convenience of soliciting the permit to operate subject to that condition. And it could have logically
thought that, since the condition did not affect its articles of incorporation, it should not appeal the order (of May 27, 1963) which after all, granted
the certificate of incorporation (corporate existence) it wanted at that time.
And when the Makati Stock Exchange finally found that it could not successfully operate with the condition attached, it took the issue by the horns,
and expressing its desire for registration and license, it requested that the condition (against double listing) be dispensed with. The order of the
Commission denying such request is dated May 7, 1964, and is now under review.
Indeed, there can be no valid objection to the discussion of this issue of double listing now, 16 because even if the Makati Stock Exchange, Inc.
may be held to have accepted the permission to operate with the condition against double listing (for having failed to appeal the order of May 27,
1963), Still it was not precluded from afterwards contesting 17 the validity of such condition or rule:
"(1) An Agreement (which shall not be construed as a waiver of any constitutional right or any right to contest the validity of any
rule or regulation) to comply and to enforce so far as is within its powers, compliance by its members, with the provisions of this
Act, and any amendment thereto, and any rule or regulation made or to be made thereunder. (Sec. 17-a-1, Securities Act)
[Italics Ours].)
Surely, this petition for review has suitably been coursed. And making reasonable allowances for the presumption of regularity and validity of
administrative action, we feel constrained to reach the conclusion that the respondent Commission possesses no power to impose the condition or
rule, which, additionally, results in discrimination and violation of constitutional rights.

ACCORDINGLY, the license of the petitioner to operate a stock exchange is approved without such condition. Costs shall be paid by the
Manila Stock Exchange. So ordered.
Bautista Angelo, Concepcion, Reyes, J.B.L., Paredes, Dizon, Regala, Makalintal, Bengzon, J.P., and Zaldivar, JJ., concur.
Barrera, J., is on leave.
||| (Makati Stock Exchange, Inc. v. SEC, G.R. No. L-23004, June 30, 1965)
EN BANC
[G.R. No. 90336. August 12, 1991.]
RUPERTO TAULE, petitioner, vs. SECRETARY LUIS T. SANTOS and GOVERNOR LEANDRO VERCELES, respondents.
Balgos & Perez and Bugaring, Tugonon & Associates Law Offices for petitioner.
Juan G. Atencia for private respondent.

DECISION

GANCAYCO, J p:
The extent of authority of the Secretary of Local Government over the katipunan ng mga barangay or the barangay councils is brought to the fore
in this case.
On June 18, 1989, the Federation of Associations of Barangay Councils (FABC) of Catanduanes, composed of eleven (11) members, in their
capacities as Presidents of the Association of Barangay Councils in their respective municipalities, convened in Virac, Catanduanes with six
members in attendance for the purpose of holding the election of its officers.
Present were petitioner Ruperto Taule of San Miguel, Allan Aquino of Viga, Vicente Avila of Virac, Fidel Jacob of Panganiban, Leo Sales of
Caramoran and Manuel Torres of Baras. The Board of Election Supervisors/Consultants was composed of Provincial Government Operation
Officer (PGOO) Alberto P. Molina, Jr. as Chairman with Provincial Treasurer Luis A. Manlapaz, Jr. and Provincial Election Supervisor Arnold
Soquerata as members. LLpr

When the group decided to hold the election despite the absence of five (5) of its members, the Provincial Treasurer and the Provincial Election
Supervisor walked out.
The election nevertheless proceeded with PGOO Alberto P. Molina, Jr. as presiding officer. Chosen as members of the Board of Directors were
Taule, Aquino, Avila, Jacob and Sales.
Thereafter, the following were elected officers of the FABC:
President - Ruperto Taule
Vice-President - Allan Aquino
Secretary - Vicente Avila
Treasurer - Fidel Jacob
Auditor - Leo Sales 1
On June 19, 1989, respondent Leandro I. Verceles, Governor of Catanduanes, sent a letter to respondent Luis T. Santos, the Secretary of Local
Government, * protesting the election of the officers of the FABC and seeking its nullification in view of several flagrant irregularities in the manner
it was conducted. 2
In compliance with the order of respondent Secretary, petitioner Ruperto Taule as President of the ABC, filed his comment on the letter-protest of
respondent Governor denying the alleged irregularities and denouncing said respondent Governor for meddling or intervening in the election of
FABC officers which is a purely non-partisan affair and at the same time requesting for his appointment as a member of the Sangguniang
Panlalawigan of the province being the duly elected President of the FABC in Catanduanes. 3
On August 4, 1989, respondent Secretary issued a resolution nullifying the election of the officers of the FABC in Catanduanes held on June 18,
1989 and ordering a new one to be conducted as early as possible to be presided by the Regional Director of Region V of the Department of Local
Government. 4
Petitioner filed a motion for reconsideration of the resolution of August 4, 1989 but it was denied by respondent Secretary in his resolution of
September 5, 1989. 5
In the petition for certiorari before Us, petitioner seeks the reversal of the resolutions of respondent Secretary dated August 4, 1989 and
September 5, 1989 for being null and void.
Petitioner raises the following issues:
1) Whether or not the respondent Secretary has jurisdiction to entertain an election protest involving the election of the officers
of the Federation of Association of Barangay Councils;
2) Whether or not the respondent Governor has the legal personality to file an election protest;
3) Assuming that the respondent Secretary has jurisdiction over the election protest, whether or not he committed grave abuse
of discretion amounting to lack of jurisdiction in nullifying the election;

The Katipunan ng mga Barangay is the organization of all sangguniang barangays in the following levels: in municipalities to be known
as katipunang bayan; in cities,katipunang panlungsod; in provinces, katipunang panlalawigan; in regions, katipunang pampook; and on the
national level, katipunan ng mga barangay. 6
The Local Government Code provides for the manner in which the katipunan ng mga barangay at all levels shall be organized:
"SECTION 110. Organization. (l) The katipunan at all levels shall be organized in the following manner:
(a) The katipunan in each level shall elect a board of directors and a set of officers. The president of each level shall represent
the katipunan concerned in the next higher level of organization.
(b) The katipunan ng mga barangay shall be composed of the katipunang pampook, which shall in turn be composed of the
presidents of the katipunang panlalawigan and the katipunang panlungsod. The presidents of the katipunang bayan in each
province shall constitute the katipunang panlalawigan. The katipunang panlungsod and the katipunang bayan shall be
composed of the punong barangays of cities and municipalities, respectively.
xxx xxx xxx."
The respondent Secretary, acting in accordance with the provision of the Local Government Code empowering him to "promulgate in detail the
implementing circulars and the rules and regulations to carry out the various administrative actions required for the initial implementation of this
Code in such a manner as will ensure the least disruption of on-going programs and project," 7 issued Department of Local Government Circular
No. 89-09 on April 7, 1989, 8 to provide the guidelines for the conduct of the elections of officers of the Katipunan ng mga Barangay at the
municipal, city, provincial, regional and national levels.

It is now the contention of petitioner that neither the constitution nor the law grants jurisdiction upon the respondent Secretary over election
contests involving the election of officers of the FABC, the katipunan ng mga barangay at the provincial level. It is petitioner's theory that under
Article IX, C, Section 2 of the 1987 Constitution, it is the Commission on Elections which has jurisdiction over all contests involving elective
barangay officials.
On the other hand, it is the opinion of the respondent Secretary that any violation of the guidelines as set forth in said circular would be a ground
for filing a protest and would vest upon the Department jurisdiction to resolve any protest that may be filed in relation thereto.
Under Article IX, C, Section 2(2) of the 1987 Constitution, the Commission on Elections shall exercise "exclusive original jurisdiction over all
contests relating to the elections, returns, and qualifications of all elective regional, provincial, and city officials, and appellate jurisdiction over all
contests involving elective municipal officials decided by trial courts of general jurisdiction, or involving elective barangay officials decided by trial
courts of limited jurisdiction." The 1987 Constitution expanded the jurisdiction of the COMELEC by granting it appellate jurisdiction over all
contests involving elective municipal officials decided by trial courts of general jurisdiction or elective barangay officials decided by trial courts of
limited jurisdiction. 9
The jurisdiction of the COMELEC over contests involving elective barangay officials is limited to appellate jurisdiction from decisions of the trial
courts. Under the law, 10the sworn petition contesting the election of a barangay officer shall be filed with the proper Municipal or Metropolitan
Trial Court by any candidate who has duly filed a certificate of candidacy and has been voted for the same office within 10 days after the

proclamation of the results. A voter may also contest the election of any barangay officer on the ground of ineligibility or of disloyalty to the
Republic of the Philippines by filing a sworn petition for quo warranto with the Metropolitan or Municipal Trial Court within 10 days after the
proclamation of the results of the election. 11 Only appeals from decisions of inferior courts on election matters as aforestated may be decided by
the COMELEC.
The Court agrees with the Solicitor General that the jurisdiction of the COMELEC is over popular elections, the elected officials of which are
determined through the will of the electorate. An election is the embodiment of the popular will, the expression of the sovereign power of the
people. 12 It involves the choice or selection of candidates to public office by popular vote. 13 Specifically, the term "election," in the context of the
Constitution, may refer to the conduct of the polls, including the listing of voters, the holding of the electoral campaign, and the casting and
counting of the votes 14 which do not characterize the election of officers in the Katipunan ng mga barangay. "Election contests" would refer to
adversary proceedings by which matters involving the title or claim of title to an elective office, made before or after proclamation of the winner, is
settled whether or not the contestant is claiming the office in dispute 15 and in the case of elections of barangay officials, it is restricted to
proceedings after the proclamation of the winners as no pre-proclamation controversies are allowed. 16
The jurisdiction of the COMELEC does not cover protests over the organizational set-up of the katipunan ng mga barangay composed of popularly
elected punong barangays as prescribed by law whose officers are voted upon by their respective members. The COMELEC exercises only
appellate jurisdiction over election contests involving elective barangay officials decided by the Metropolitan or Municipal Trial Courts which
likewise have limited jurisdiction. The authority of the COMELEC over the katipunan ng mga barangay is limited by law to supervision of the
election of the representative of the katipunan concerned to the sanggunian in a particular level conducted by their own respective
organization. 17
However, the Secretary of Local Government is not vested with jurisdiction to entertain any protest involving the election of officers of the FABC.
There is no question that he is vested with the power to promulgate rules and regulations as set forth in Section 222 of the Local Government
Code.
Likewise, under Book IV, Title XII, Chapter 1, Sec. 3(2) of the Administrative Code of 1987, ** the respondent Secretary has the power to "establish
and prescribe rules, regulations and other issuances and implementing laws on the general supervision of local government units and on the
promotion of local autonomy and monitor compliance thereof by said units."
Also, the respondent Secretary's rule making power is provided in Sec. 7, Chapter II, Book IV of the Administrative Code, to wit:
"(3) Promulgate rules and regulations necessary to carry out department objectives, policies, functions, plans, programs and
projects;"
Thus, DLG Circular No. 89-09 was issued by respondent Secretary in pursuance of his rule-making power conferred by law and which now has
the force and effect of law. 18
Now the question that arises is whether or not a violation of said circular vests jurisdiction upon the respondent Secretary, as claimed by him, to
hear a protest filed in relation thereto and consequently declare an election null and void.
It is a well-settled principle of administrative law that unless expressly empowered, administrative agencies are bereft of quasi-judicial
powers. 19 The jurisdiction of administrative authorities is dependent entirely upon the provisions of the statutes reposing power in them; they
cannot confer it upon themselves. 20 Such jurisdiction is essential to give validity to their determinations. 21

There is neither a statutory nor constitutional provision expressly or even by necessary implication conferring upon the Secretary of Local
Government the power to assume jurisdiction over an election protest involving officers of the katipunan ng mga barangay. An understanding of
the extent of authority of the Secretary over local governments is therefore necessary if We are to resolve the issue at hand.
Presidential power over local governments is limited by the Constitution to the exercise of general supervision 22 "to ensure that local affairs are
administered according to law." 23 The general supervision is exercised by the President through the Secretary of Local Government. 24
In administrative law, supervision means overseeing or the power or authority of an officer to see that the subordinate officers perform their duties.
If the latter fails or neglects to fulfill them the former may take such action or step as prescribed by law to make them perform their duties. Control,
on the other hand, means the power of an officer to alter or modify or nullify or set aside what a subordinate officer had done in the performance of
his duties and to substitute the judgment of the former for that of the latter. The fundamental law permits the Chief Executive to wield no more
authority than that of checking whether said local government or the officers thereof perform their duties as provided by statutory enactments.
Hence, the President cannot interfere with local governments so long as the same or its officers act within the scope of their
authority. 25 Supervisory power, when contrasted with control, is the power of mere oversight over an inferior body; it does not include any
restraining authority over such body. 26
Construing the constitutional limitation on the power of general supervision of the President over local governments, We hold that respondent
Secretary has no authority to pass upon the validity or regularity of the election of the officers of the katipunan. To allow respondent Secretary to
do so will give him more power than the law or the Constitution grants. It will in effect give him control over local government officials for it will
permit him to interfere in a purely democratic and non-partisan activity aimed at strengthening the barangay as the basic component of local
governments so that the ultimate goal of fullest autonomy may be achieved. In fact, his order that the new elections to be conducted be presided
by the Regional Director is a clear and direct interference by the Department with the political affairs of the barangays which is not permitted by the
limitation of presidential power to general supervision over local governments. 27
Indeed, it is the policy of the state to ensure the autonomy of local governments. 28 This state policy is echoed in the Local Government Code
wherein it is declared that "the State shall guarantee and promote the autonomy of local government units to ensure their fullest development as
self-reliant communities and make them more effective partners in the pursuit of national development and social progress." 29 To deny the
Secretary of Local Government the power to review the regularity of the elections of officers of the katipunan would be to enhance the avowed
state policy of promoting the autonomy of local governments.
Moreover, although the Department is given the power to prescribe rules, regulations and other issuances, the Administrative Code limits its
authority to merely "monitoring compliance" by local government units of such issuances. 30 To monitor means "to watch, observe or
check." 31 This is compatible with the power of supervision of the Secretary over local governments which as earlier discussed is limited to
checking whether the local government unit concerned or the officers thereof perform their duties as provided by statutory enactments. Even the
Local Government Code which grants the Secretary power to issue implementing circulars, rules and regulations is silent as to how these
issuances should be enforced. Since the respondent Secretary exercises only supervision and not control over local governments, it is truly
doubtful if he could enforce compliance with the DLG Circular. 32 Any doubt therefore as to the power of the Secretary to interfere with local affairs
should be resolved in favor of the greater autonomy of the local government.

Thus, the Court holds that in assuming jurisdiction over the election protest filed by respondent Governor and declaring the election of the officers
of the FABC on June 18, 1989 as null and void, the respondent Secretary acted in excess of his jurisdiction. The respondent Secretary not having

the jurisdiction to hear an election protest involving officers of the FABC, the recourse of the parties is to the ordinary courts. The Regional Trial
Courts have the exclusive original jurisdiction to hear the protest.33
The provision in DLG Circular No. 89-15 amending DLG Circular No. 89-09 which states that "whenever the guidelines are not substantially
complied with, the election shall be declared null and void by the Department of Local Government and an election shall conduct anew," being
invoked by the Solicitor General cannot be applied. DLG Circular No. 89-15 was issued on July 3, 1989 after the June 18, 1989 elections of the
FABC officers and it is the rule in statutory construction that laws, including circulars and regulations, 34 cannot be applied
retrospectively. 35 Moreover, such provision is null and void for having been issued in excess of the respondent Secretary's jurisdiction, inasmuch
as an administrative authority cannot confer jurisdiction upon itself.
As regards the second issue raised by petitioner, the Court finds that respondent Governor has the personality to file the protest. Under Section
205 of the Local Government Code, the membership of the sangguniang panlalawigan consists of the governor, the vice-governor, elective
members of the said sanggunian, and the presidents of the katipunang panlalawigan and the kabataang barangay provincial federation. The
governor acts as the presiding officer of the sangguniang panlalawigan. 36
As presiding officer of the sangguniang panlalawigan, the respondent governor has an interest in the election of the officers of the FABC since its
elected president becomes a member of the assembly. If the president of the FABC assumes his presidency under questionable circumstances
and is allowed to sit in the sangguniang panlalawigan, the official actions of the sanggunian may be vulnerable to attacks as to their validity or
legality. Hence, respondent governor is a proper party to question the regularity of the elections of the officers of the FABC.
As to the third issue raised by petitioner, the Court has already ruled that the respondent Secretary has no jurisdiction to hear the protest and
nullify the elections.
Nevertheless, the Court holds that the issue of the validity of the elections should now be resolved in order to prevent any unnecessary delay that
may result from the commencement of an appropriate action by the parties.
The elections were declared null and void primarily for failure to comply with Section 2.4 of DLG Circular No. 89-09 which provides that "the
incumbent FABC President or the Vice-President shall preside over the reorganizational meeting, there being a quorum." The rule specifically
provides that it is the incumbent FABC President or Vice-President who shall preside over the meeting. The word "shall" should be taken in its
ordinary signification, i.e., it must be imperative or mandatory and not merely permissive, 37 as the rule is explicit and requires no other
interpretation. If it had been intended that any other official should preside, the rules would have provided so, as it did in the elections at the town
and city levels 38 as well as the regional level. 39
It is admitted that neither the incumbent FABC President nor the Vice-President presided over the meeting and elections but Alberto P. Molina, Jr.,
the Chairman of the Board of Election Supervisors/Consultants. Thus, there was a clear violation of the aforesaid mandatory provision. On this
ground, the elections should be nullified.
Under Sec. 2.3.2.7 of the same circular it is provided that a Board of Election Supervisors/Consultants shall be constituted to oversee and or
witness the canvassing of votes and proclamation of winners. The rules confine the role of the Board of Election Supervisors/Consultants to
merely overseeing and witnessing the conduct of elections. This is consistent with the provision in the Local Government Code limiting the
authority of the COMELEC to the supervision of the election. 40

In case at bar, PGOO Molina, the Chairman of the Board, presided over the elections. There was direct participation by the Chairman of the Board
in the elections contrary to what is dictated by the rules. Worse, there was no Board of Election Supervisors to oversee the elections in view of the
walk out staged by its two other members, the Provincial COMELEC Supervisor and the Provincial Treasurer. The objective of keeping the election
free and honest was therefore compromised.
The Court therefore finds that the election of officers of the FABC held on June 18, 1989 is null and void for failure to comply with the provisions of
DLG Circular No. 89-09.
Meanwhile, pending resolution of this petition, petitioner filed a supplemental petition alleging that public respondent Local Government Secretary,
in his memorandum dated June 7, 1990, designated Augusto Antonio as temporary representative of the Federation to the sangguniang
panlalawigan of Catanduanes. 41 By virtue of this memorandum, respondent governor swore into said office Augusto Antonio on June 14,
1990. 42
The Solicitor General filed his comment on the supplemental petition 43 as required by the resolution of the Court dated September 13, 1990.
In his comment, the Solicitor General dismissed the supervening event alleged by petitioner as something immaterial to the petition. He argues
that Antonio's appointment was merely temporary "until such time that the provincial FABC president in that province has been elected, appointed
and qualified." 44 He stresses that Antonio's appointment was only a remedial measure designed to cope with the problems brought about by the
absence of a representative of the FABC to the "sangguniang panlalawigan."
Sec. 205 (2) of the Local Government Code (B.P. Blg. 337) provides
"(2) The sangguniang panlalawigan shall be composed of the governor, the vice-governor, elective members of the said
sanggunian, and the presidents of the katipunang panlalawigan and the kabataang barangay provincial federation who shall be
appointed by the President of the Philippines." (Emphasis supplied.)
Batas Pambansa Blg. 51, under Sec. 2 likewise states:
"xxx xxx xxx
The sangguniang panlalawigan of each province shall be composed of the governor as chairman and presiding officer, the vicegovernor as presiding officer pro tempore, the elective sangguniang panlalawigan members, and the appointive members
consisting of the president of the provincial association of barangay councils,and the president of the provincial federation of the
kabataang barangay." (Emphasis supplied.)
In Ignacio vs. Banate, Jr. 45 the Court, interpreting similarly worded provisions of Batas Pambansa Blg. 337 and Batas Pambansa Blg. 51 on the
composition of thesangguniang panlungsod, 46 declared as null and void the appointment of private respondent Leoncio Banate, Jr. as member of
the Sangguniang Panlungsod of the City of Roxas representing the katipunang panlungsod ng mga barangay for he lacked the eligibility and
qualification required by law, not being a barangay captain and for not having been elected president of the association of barangay councils. The
Court held that an unqualified person cannot be appointed a member of the sanggunian, even in an acting capacity. In Reyes vs. Ferrer, 47 the
appointment of Nemesio L. Rasgo, Jr. as representative of the youth sector to the sangguniang panlungsod of Davao City was declared invalid
since he was never the president of the kabataang barangay city federation as required by Sec. 173, Batas Pambansa Blg 337.

In the present controversy involving the sangguniang panlalawigan, the law is likewise explicit. To be appointed by the President of the Philippines
to sit in thesangguniang panlalawigan is the president of the katipunang panlalawigan. The appointee must meet the qualifications set by
law. 48 The appointing power is bound by law to comply with the requirements as to the basic qualifications of the appointee to the sangguniang
panlalawigan. The President of the Philippines or his alter ego, the Secretary of Local Government, has no authority to appoint anyone who does
not meet the minimum qualification to be the president of the federation of barangay councils.
Augusto Antonio is not the president of the federation. He is a member of the federation but he was not even present during the elections despite
notice. The argument that Antonio was appointed as a remedial measure in the exigency of the service cannot be sustained. Since Antonio does
not meet the basic qualification of being president of the federation, his appointment to the sangguniang panlalawigan is not justified
notwithstanding that such appointment is merely in a temporary capacity. If the intention of the respondent Secretary was to protect the interest of
the federation in the sanggunian, he should have appointed the incumbent FABC President in a hold-over capacity. For even under the guidelines,
the term of office of officers of the katipunan at all levels shall be from the date of their election until their successors shall have been duly elected
and qualified, without prejudice to the terms of their appointments as members of the sanggunian to which they may be correspondingly
appointed. 49 Since the election is still under protest such that no successor of the incumbent has as yet qualified, the respondent Secretary has
no choice but to have the incumbent FABC President sit as member of the sanggunian. He could even have appointed petitioner since he was
elected the president of the federation but not Antonio. The appointment of Antonio, allegedly the protege of respondent Governor, gives credence
to petitioner's charge of political interference by respondent Governor in the organization. This should not be allowed. The barangays should be
insulated from any partisan activity or political intervention if only to give true meaning to local autonomy.

WHEREFORE, the petition is GRANTED in that the resolution of respondent Secretary dated August 4, 1989 is hereby SET ASIDE for having
been issued in excess of jurisdiction.
The election of the officials of the ABC Federation held on June 18, 1989 is hereby annulled. A new election of officers of the federation is hereby
ordered to be conducted immediately in accordance with the governing rules and regulations.
The Supplemental petition is hereby GRANTED. The appointment of Augusto Antonio as representative to the Sangguniang Panlalawigan in a
temporary capacity is declared null and void.
No costs.
SO ORDERED.
Fernan, C .J ., Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Feliciano, Padilla, Bidin, Sarmiento, Grio-Aquino, Medialdea,
Regalado and Davide, Jr., JJ ., concur.
||| (Taule v. Santos, G.R. No. 90336, August 12, 1991)

FIRST DIVISION
[G.R. No. 84811. August 29, 1989.]
SOLID HOMES, INC., petitioner, vs. TERESITA PAYAWAL and COURT OF APPEALS, respondents.
||| (Solid Homes, Inc. v. Payawal, G.R. No. 84811, August 29, 1989)

4. ID.; STATUTES CONFERRING POWERS ON ADMINISTRATIVE AGENCIES, LIBERALLY CONSTRUED. Statutes conferring powers on
their administrative agencies must be liberally construed to enable them to discharge their assigned duties in accordance with the legislative
purpose||| (Solid Homes, Inc. v. Payawal, G.R. No. 84811, August 29, 1989)

DECISION

CRUZ, J p:
We are asked to reverse a decision of the Court of Appeals sustaining the jurisdiction of the Regional Trial Court of Quezon City over a complaint
filed by a buyer, the herein private respondent, against the petitioner, for delivery of title to a subdivision lot. The position of the petitioner, the
defendant in that action, is that the decision of the trial court is null and void ab initio because the case should have been heard and decided by
what is now called the Housing and Land Use Regulatory Board. LibLex
The complaint was filed on August 31, 1982, by Teresita Payawal against Solid Homes, Inc. before the Regional Trial Court of Quezon City and
docketed as Civil Case No. Q-36119. The plaintiff alleged that the defendant contracted to sell to her a subdivision lot in Marikina on June 9, 1975,
for the agreed price of P28,080.00, and that by September 10, 1981, she had already paid the defendant the total amount of P38,949.87 in
monthly installments and interests. Solid Homes subsequently executed a deed of sale over the land but failed to deliver the corresponding
certificate of title despite her repeated demands because, as it appeared later, the defendant had mortgaged the property in bad faith to a
financing company. The plaintiff asked for delivery of the title to the lot or, alternatively, the return of all the amounts paid by her plus interest. She
also claimed moral and exemplary damages, attorney's fees and the costs of the suit.
Solid Homes moved to dismiss the complaint on the ground that the court had no jurisdiction, this being vested in the National Housing Authority
under PD No. 957. The motion was denied. The defendant repleaded the objection in its answer, citing Section 3 of the said decree providing that
"the National Housing Authority shall have exclusive jurisdiction to regulate the real estate trade and business in accordance with the provisions of
this Decree." After trial, judgment was rendered in favor of the plaintiff and the defendant was ordered to deliver to her the title to the land or, failing

this, to refund to her the sum of P38,949.87 plus interest from 1975 and until the full amount was paid. She was also awarded P5,000.00 moral
damages, P5,000.00 exemplary damages, P10,000.00 attorney's fees, and the costs of the suit. 1
Solid Homes appealed but the decision was affirmed by the respondent court, 2 which also berated the appellant for its obvious efforts to evade a
legitimate obligation, including its dilatory tactics during the trial. The petitioner was also reproved for its "gall" in collecting the further amount of
P1,238.47 from the plaintiff purportedly for realty taxes and registration expenses despite its inability to deliver the title to the land.
In holding that the trial court had jurisdiction, the respondent court referred to Section 41 of PD No. 957 itself providing that:
SEC. 41. Other remedies. The rights and remedies provided in this Decree shall be in addition to any and all other rights and
remedies that may be available under existing laws.
and declared that "its clear and unambiguous tenor undermine(d) the (petitioner's) pretension that the court a quo was bereft of jurisdiction."
The decision also dismissed the contrary opinion of the Secretary of Justice as impinging on the authority of the courts of justice.
While we are disturbed by the findings of fact of the trial court and the respondent court on the dubious conduct of the petitioner, we nevertheless
must sustain it on the jurisdictional issue.
The applicable law is PD No. 957, as amended by PD No. 1344, entitled "Empowering the National Housing Authority to Issue Writs of Execution
in the Enforcement of Its Decisions Under Presidential Decree No. 967." Section 1 of the latter decree provides as follows:
SECTION 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, dealer, broker or salesman. (Emphasis supplied.)
The language of this section, especially the italicized portions, leaves no room for doubt that "exclusive jurisdiction" over the case between the
petitioner and the private respondent is vested not in the Regional Trial Court but in the National Housing Authority. 3
The private respondent contends that the applicable law BP No. 129, which confers on regional trial courts jurisdiction to hear and decide cases
mentioned in its Section 19, reading in part as follows:
SEC. 19. Jurisdiction in civil cases. Regional Trial Courts shall exercise exclusive original jurisdiction:
(1) In all civil actions in which the subject of the litigation is incapable of pecuniary estimation;
(2) In all civil actions which involve the title to, or possession of, real property, or any interest therein, except actions for forcible
entry into and unlawful detainer of lands or buildings, original jurisdiction over which is conferred upon Metropolitan Trial Courts,
Municipal Trial Courts, and Municipal Circuit Trial Courts;

xxx xxx xxx

(8) In all other cases in which the demand, exclusive of interest and cost or the value of the property in controversy, amounts to
more than twenty thousand pesos (P20,000.00).
It stresses, additionally, that BP No. 129 should control as the later enactment, having been promulgated in 1981, after PD No. 957 was issued in
1975 and PD No. 1344in 1978. llcd
This construction must yield to the familiar canon that in case of conflict between a general law and a special law, the latter must prevail regardless
of the dates of their enactment. Thus, it has been held that
The fact that one law is special and the other general creates a presumption that the special act is to be considered as
remaining an exception of the general act, one as a general law of the land and the other as the law of the particular case. 4
xxx xxx xxx
The circumstance that the special law is passed before or after the general act does not change the principle. Where the special
law is later, it will be regarded as an exception to, or a qualification of, the prior general act; and where the general act is later,
the special statute will be construed as remaining an exception to its terms, unless repealed expressly or by necessary
implication. 5
It is obvious that the general law in this case is BP No. 129 and PD No. 1344 the special law.
The argument that the trial court could also assume jurisdiction because of Section 41 of PD No. 957, earlier quoted, is also unacceptable. We do
not read that provision as vesting concurrent jurisdiction on the Regional Trial Court and the Board over the complaint mentioned in PD No. 1344 if
only because grants of power are not to be lightly inferred or merely implied. The only purpose of this section, as we see it, is to reserve to the
aggrieved party such other remedies as may be provided by existing law, like a prosecution for the act complained of under the Revised Penal
Code. 6

On the competence of the Board to award damages, we find that this is part of the exclusive power conferred upon it by PD No. 1344 to hear and
decide "claims involving refund and any other claims filed by subdivision lot or condominium unit buyers against the project owner, developer,
dealer, broker or salesman." It was therefore erroneous for the respondent to brush aside the well-taken opinion of the Secretary of Justice that
Such claim for damages which the subdivision condominium buyer may have against the owner, developer, dealer or salesman, being a necessary
consequence of an adjudication of liability for non-performance of contractual or statutory obligation, may be deemed necessarily included in the
phrase "claims involving refund and any other claims" used in the aforequoted subparagraph C of Section 1 of PD No. 1344. The phrase "any
other claims" is, we believe, sufficiently broad to include any and all claims which are incidental to or a necessary consequence of the
claims/cases specifically included in the grant of jurisdiction to the National Housing Authority under the subject provisions.
The same may be said with respect to claims for attorney's fees which are recoverable either by agreement of the parties or pursuant to Art. 2208
of the Civil Code (1) when exemplary damages are awarded and (2) where the defendant acted in gross and evident bad faith in refusing to satisfy
the plaintiffs plainly valid, just and demandable claim. LibLex

xxx xxx xxx

Besides, a strict construction of the subject provisions of PD No. 1344 which would deny the HSRC the authority to adjudicate
claims for damages and for damages and for attorney's fees would result in multiplicity of suits in that the
subdivision/condominium buyer who wins a case in the HSRC and who is thereby deemed entitled to claim damages and
attorney's fees would be forced to litigate in the regular courts for the purpose, a situation which is obviously not in the
contemplation of the law. (Emphasis supplied.) 7
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 quasilegislative and quasi-judicial powers in what is now not unreasonably called the fourth department of the government.
Statutes conferring powers on their administrative agencies must be liberally construed to enable them to discharge their assigned duties in
accordance with the legislative purpose. 8 Following this policy in Antipolo Realty Corporation v. National Housing Authority, 9 the Court sustained
the competence of the respondent administrative body, in the exercise of the exclusive jurisdiction vested in it by PD No. 957 and PD No. 1344, to
determine the rights of the parties under a contract to sell a subdivision lot.
It remains to state that, contrary to the contention of the petitioner, the case of Tropical Homes v. National Housing Authority 10 is not in point. We
upheld in that case the constitutionality of the procedure for appeal provided for in PD No. 1344, but we did not rule there that the National
Housing Authority and not the Regional Trial Court had exclusive jurisdiction over the cases enumerated in Section 1 of the said decree. That is
what we are doing now. LexLib
It is settled that any decision rendered without jurisdiction is a total nullity and may be struck down at any time, even on appeal before this Court.
11 The only exception is where the party raising the issue is barred by estoppel, 12 which does not appear in the case before us. On the contrary,
the issue was raised as early as in the motion to dismiss filed in the trial court by the petitioner, which continued to plead it in its answer and, later,
on appeal to the respondent court. We have no choice, therefore, notwithstanding the delay this decision will entail, to nullify the proceedings in
the trial court for lack of jurisdiction.
WHEREFORE, the challenged decision of the respondent court is REVERSED and the decision of the Regional Trial Court of Quezon City in Civil
Case No. Q-36119 is SET ASIDE, without prejudice to the filing of the appropriate complaint before the Housing and Land Use Regulatory Board.
No costs.
SO ORDERED.
Narvasa, Gancayco, Grio-Aquino and Medialdea, JJ ., concur.
||| (Solid Homes, Inc. v. Payawal, G.R. No. 84811, August 29, 1989)
EN BANC
[G.R. No. 96681. December 2, 1991.]

HON. ISIDRO CARIO, in his capacity as Secretary of the Department of Education, Culture & Sports, DR. ERLINDA
LOLARGA, in her capacity as Superintendent of City Schools of Manila, petitioners, vs. THE COMMISSION ON HUMAN
RIGHTS, GRACIANO BUDOY, JULIETA BABARAN, ELSA IBABAO, HELEN LUPO, AMPARO GONZALES, LUZ DEL
CASTILLO, ELSA REYES and APOLINARIO ESBER, respondents.

DECISION

NARVASA, C.J p:
The issue raised in the special civil action of certiorari and prohibition at bar, instituted by the Solicitor General, may be formulated as follows:
where the relief sought from the Commission on Human Rights by a party in a case consists of the review and reversal or modification of a
decision or order issued by a court of justice or government agency or official exercising quasi-judicial functions, may the Commission take
cognizance of the case and grant that relief? Stated otherwise, where a particular subject-matter is placed by law within the jurisdiction of a court
or other government agency or official for purposes of trial and adjudgment, may the Commission on Human Rights take cognizance of the same
subject-matter for the same purposes of hearing and adjudication?
The facts narrated in the petition are not denied by the respondents and are hence taken as substantially correct for purposes of ruling on the legal
questions posed in the present action. These facts, 1 together with others involved in related cases recently resolved by this Court, 2 or otherwise
undisputed on the record, are hereunder set forth.
1. On September 17, 1990, a Monday and a class day, some 800 public school teachers, among them members of the Manila Public School
Teachers Association (MPSTA) and Alliance of Concerned Teachers (ACT) undertook what they described as "mass concerted actions" to
"dramatize and highlight" their plight resulting from the alleged failure of the public authorities to act upon grievances that had time and again been
brought to the latter's attention. According to them they had decided to undertake said "mass concerted actions" after the protest rally staged at the
DECS premises on September 14, 1990 without disrupting classes as a last call for the government to negotiate the granting of demands had
elicited no response from the Secretary of Education. The "mass actions" consisted in staying away from their classes, converging at the Liwasang
Bonifacio, gathering in peaceable assemblies, etc. Through their representatives, the teachers participating in the mass actions were served with
an order of the Secretary of Education to return to work in 24 hours or face dismissal, and a memorandum directing the DECS officials concerned
to initiate dismissal proceedings against those who did not comply and to hire their replacements. Those directives notwithstanding, the mass
actions continued into the week, with more teachers joining in the days that followed. 3
Among those who took part in the "concerted mass actions" were the eight (8) private respondents herein, teachers at the Ramon Magsaysay
High School, Manila, who had agreed to support the non-political demands of the MPSTA. 4
2. "For failure to heed the return-to-work order, the CHR complainants (private respondents) were administratively charged on the basis of the
principal's report and given five (5) days to answer the charges. They were also preventively suspended for ninety (90) days 'pursuant to Section
41 of P.D. 807' and temporarily replaced (unmarked CHR Exhibits, Annexes F, G, H). An investigation committee was consequently formed to hear
the charges in accordance with P.D. 807." 5

3. In the administrative case docketed as Case No. DECS 90-082 in which CHR complainants Graciano Budoy, Jr., Julieta Babaran, Luz del
Castillo, Apolinario Esber were, among others, named respondents, 6 the latter filed separate answers, opted for a formal investigation, and also
moved "for suspension of the administrative proceedings pending resolution by . . . (the Supreme) Court of their application for issuance of an
injunctive writ/temporary restraining order." But when their motion for suspension was denied by Order dated November 8, 1990 of the
Investigating Committee, which later also denied their motion for reconsideration orally made at the hearing of November 14, 1990, "the
respondents led by their counsel staged a walkout signifying their intent to boycott the entire proceedings." 7 The case eventually resulted in a
Decision of Secretary Cario dated December 17, 1990, rendered after evaluation of the evidence as well as the answers, affidavits and
documents submitted by the respondents, decreeing dismissal from the service of Apolinario Esber and the suspension for nine (9) months of
Babaran, Budoy and del Castillo. 8
4. In the meantime, the "MPSTA filed a petition for certiorari before the Regional Trial Court of Manila against petitioner (Cario), which was
dismissed (unmarked CHR Exhibit, Annex I). Later, the MPSTA went to the Supreme Court (on certiorari, in an attempt to nullify said dismissal,
grounded on the) alleged violation of the striking teachers' right to due process and peaceable assembly docketed as G.R. No. 95445, supra. The
ACT also filed a similar petition before the Supreme Court . . . docketed as G.R. No. 95590." 9 Both petitions in this Court were filed in behalf of
the teacher associations, a few named individuals, and "other teacher-members so numerous similarly situated" or "other similarly situated public
school teachers too numerous to be impleaded. " LLjur
5. In the meantime, too, the respondent teachers submitted sworn statements dated September 27, 1990 to the Commission on Human Rights to
complain that while they were participating in peaceful mass actions, they suddenly learned of their replacements as teachers, allegedly without
notice and consequently for reasons completely unknown to them. 10
6. Their complaints and those of other teachers also "ordered suspended by the . . . (DECS)," all numbering forty-two (42) were docketed as
"Striking Teachers CHR Case No. 90-775." In connection therewith the Commission scheduled a "dialogue" on October 11, 1990, and sent a
subpoena to Secretary Cario requiring his attendance therein. 11
On the day of the "dialogue," although it said that it was "not certain whether he (Sec. Cario) received the subpoena which was served at his
office, . . . (the) Commission, with the Chairman presiding, and Commissioners Hesiquio R. Mallilin and Narciso C. Monteiro, proceeded to hear
the case;" it heard the complainants' counsel (a) explain that his clients had been "denied due process and suspended without formal notice, and
unjustly, since they did not join the mass leave," and (b) expatiate on the grievances which were "the cause of the mass leave of MPSTA teachers,
(and) with which causes they (CHR complainants) sympathize." 12 The Commission thereafter issued an Order 13 reciting these facts and making
the following disposition:
"To be properly apprised of the real facts of the case and be accordingly guided in its investigation and resolution of the matter,
considering that these forty two teachers are now suspended and deprived of their wages, which they need very badly,
Secretary Isidro Cario, of the Department of Education, Culture and Sports, Dr. Erlinda Lolarga, school superintendent of
Manila and the Principal of Ramon Magsaysay High School, Manila, are hereby enjoined to appear and enlighten the
Commission en banc on October 19, 1990 at 11:00 AM. and to bring with them any and all documents relevant to the allegations
aforestated herein to assist the Commission in this matter. Otherwise, the Commission will resolve the complaint on the basis of
complainants' evidence.
xxx xxx xxx."

7. Through the Office of the Solicitor General, Secretary Cario sought and was granted leave to file a motion to dismiss the case. His motion to
dismiss was submitted on November 14, 1990 alleging as grounds therefor, "that the complaint states no cause of action and that the CHR has no
jurisdiction over the case." 14
8. Pending determination by the Commission of the motion to dismiss, judgments affecting the "striking teachers" were promulgated in two (2)
cases, as aforestated, viz.: llcd
a) The Decision dated December 17, 1990 of Education Secretary Cario in Case No. DECS 90-082, decreeing dismissal from
the service of Apolinario Esber and the suspension for nine (9) months of Babaran, Budoy and del Castillo; 15 and
b) The joint Resolution of this Court dated August 6, 1991 in G.R. Nos. 95445 and 95590 dismissing the petitions without
prejudice to any appeals, if still timely, that the individual petitioners may take to the Civil Service Commission on the matters
complained of," 16 and inter alia "ruling that it was prima facie lawful for petitioner Cario to issue return-to-work orders, file
administrative charges against recalcitrants, preventively suspend them, and issue decision on those charges." 17
9. In an Order dated December 28, 1990, respondent Commission denied Sec. Cario's motion to dismiss and required him and Superintendent
Lolarga "to submit their counter-affidavits within ten (10) days . . . (after which) the Commission shall proceed to hear and resolve the case on the
merits with or without respondents counter affidavit." 18 It held that the "striking teachers" "were denied due process of law; . . . they should not
have been replaced without a chance to reply to the administrative charges;" there had been a violation of their civil and political rights which the
Commission was empowered to investigate; and while expressing its "utmost respect to the Supreme Court . . . the facts before . . . (it) are
different from those in the case decided by the Supreme Court" (the reference being unmistakably to this Court's joint Resolution of August 6, 1991
in G.R. Nos. 95445 and 95590, supra).

It is to invalidate and set aside this Order of December 28, 1990 that the Solicitor General, in behalf of petitioner Cario, has commenced the
present action ofcertiorari and prohibition.
The Commission on Human Rights has made clear its position that it does not feel bound by this Court's joint Resolution in G.R. Nos. 95445 and
95590, supra. It has also made plain its intention "to hear and resolve the case (i.e., Striking Teachers HRC Case No. 90-775) on the merits." It
intends, in other words, to try and decide orhear and determine, i.e., exercise jurisdiction over the following general issues:
1) whether or not the striking teachers were denied due process, and just cause exists for the imposition of administrative
disciplinary sanctions on them by their superiors; and
2) whether or not the grievances which were "the cause of the mass leave of MPSTA teachers, (and) with which causes they
(CHR complainants) sympathize," justify their mass action or strike.
The Commission evidently intends to itself adjudicate, that is to say, determine with character of finality and definiteness, the same issues which
have been passed upon and decided by the Secretary of Education, Culture & Sports, subject to appeal to the Civil Service Commission, this
Court having in fact, as aforementioned, declared that the teachers affected may take appeals to the Civil Service Commission on said matters, if
still timely. LLjur

The threshold question is whether or not the Commission on Human Rights has the power under the Constitution to do so; whether or not, like a
court of justice, 19 or even a quasi-judicial agency, 20 it has jurisdiction or adjudicatory powers over, or the power to try and decide, or hear and
determine, certain specific type of cases, like alleged human rights violations involving civil or political rights.
The Court declares the Commission on Human Rights to have no such power; and that it was not meant by the fundamental law to be another
court or quasi-judicial agency in this country, or duplicate much less take over the functions of the latter.
The most that may be conceded to the Commission in the way of adjudicative power is that it may investigate, i.e., receive evidence and make
findings of fact as regards claimed human rights violations involving civil and political rights. But fact-finding is not adjudication, and cannot be
likened to the judicial function of a court of justice, or even a quasi-judicial agency or official. The function of receiving evidence and ascertaining
therefrom the facts of a controversy is not a judicial function, properly speaking. To be considered such, the faculty of receiving evidence and
making factual conclusions in a controversy must be accompanied by the authority of applying the law to those factual conclusions to the end that
the controversy may be decided or determined authoritatively, finally and definitively, subject to such appeals or modes of review as may be
provided by law. 21 This function, to repeat, the Commission does not have. 22
The proposition is made clear by the constitutional provisions specifying the powers of the Commission on Human Rights.
The Commission was created by the 1987 Constitution as an independent office. 23 Upon its constitution, it succeeded and superseded the
Presidential Committee on Human Rights existing at the time of the effectivity of the Constitution. 24 Its powers and functions are the following: 25
"(1) Investigate, on its own or on complaint by any party, all forms of human rights violations involving civil and political rights;
(2) Adopt its operational guidelines and rules of procedure, and cite for contempt for violations thereof in accordance with the
Rules of Court;
(3) Provide appropriate legal measures for the protection of human rights of all persons within the Philippines, as well as
Filipinos residing abroad, and provide for preventive measures and legal aid services to the underprivileged whose
human rights have been violated or need protection;
(4) Exercise visitorial powers over jails, prisons, or detention facilities;
(5) Establish a continuing program of research, education, and information to enhance respect for the primacy of human rights;
(6) Recommend to the Congress effective measures to promote human rights and to provide for compensation to victims of
violations of human rights, or their families;
(7) Monitor the Philippine Government's compliance with international treaty obligations on human rights;
(8) Grant immunity from prosecution to any person whose testimony or whose possession of documents or other evidence is
necessary or convenient to determine the truth in any investigation conducted by it or under its authority;
(9) Bequest the assistance of any department, bureau, office, or agency in the performance of its functions; LLjur
(10) Appoint its officers and employees in accordance with law; and

(11) Perform such other duties and functions as may be provided by law."
As should at once be observed, only the first of the enumerated powers and functions bears any resemblance to adjudication or adjudgment. The
Constitution clearly and categorically grants to the Commission the power to investigate all forms of human rights violations involving civil and
political rights. It can exercise that power on its own initiative or on complaint of any person. It may exercise that power pursuant to such rules of
procedure as it may adopt and, in cases of violations of said rules, cite for contempt in accordance with the Rules of Court. In the course of any
investigation conducted by it or under its authority, it may grant immunity from prosecution to any person whose testimony or whose possession of
documents or other evidence is necessary or convenient to determine the truth. It may also request the assistance of any department, bureau,
office, or agency in the performance of its functions, in the conduct of its investigation or in extending such remedy as may be required by its
findings. 26
But it cannot try and decide cases (or hear and determine causes) as courts of justice, or even quasijudicial bodies do. To investigate is not to
adjudicate or adjudge. Whether in the popular or the technical sense, these terms have well understood and quite distinct meanings.
"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: . . . to subject to an official probe . . .: to conduct
an official inquiry." 27 The purpose of 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;" 28 "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; . . . an inquiry, judicial or otherwise, for the discovery and collection of facts
concerning a certain matter or matters." 29
"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 the parties to a court case) on the merits of issues raised: . . . to pass judgment on:
settle judicially: . . . act as judge." 30 And "adjudge" means "to decide or rule upon as a judge or with judicial or quasi-judicial powers: . . . to award
or grant judicially in a case of controversy . . ." 31
In the 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. . . . Implies a judicial determination of
a fact, and the entry of a judgment." 32
Hence it is that the Commission on Human Rights, having merely the power "to investigate," cannot and should not "try and resolve on the merits"
(adjudicate) the matters involved in Striking Teachers HRC Case No. 90-775, as it has announced it means to do; and it cannot do so even if there
be a claim that in the administrative disciplinary proceedings against the teachers in question, initiated and conducted by the DECS, their human
rights, or civil or political rights had been transgressed. More particularly, the Commission has no power to "resolve on the merits" the question of
(a) whether or not the mass concerted actions engaged in by the teachers constitute a strike and are prohibited or otherwise restricted by law; (b)
whether or not the act of carrying on and taking part in those actions, and the failure of the teachers to discontinue those actions and return to their
classes despite the order to this effect by the Secretary of Education, constitute infractions of relevant rules and regulations warranting

administrative disciplinary sanctions, or are justified by the grievances complained of by them; and (c) what where the particular acts done by each
individual teacher and what sanctions, if any, may properly be imposed for said acts or omissions. LLjur
These are matters undoubtedly and clearly within the original jurisdiction of the Secretary of Education, being within the scope of the disciplinary
powers granted to him under the Civil Service Law, and also, within the appellate jurisdiction of the Civil Service Commission.

Indeed, the Secretary of Education has, as above narrated, already taken cognizance of the issues and resolved them, 33 and it appears that
appeals have been seasonably taken by the aggrieved parties to the Civil Service Commission; and even this Court itself has had occasion to
pass upon said issues. 34
Now, it is quite obvious that whether or not the conclusions reached by the Secretary of Education in disciplinary cases are correct and are
adequately based on substantial evidence; whether or not the proceedings themselves are void or defective in not having accorded the
respondents due process; and whether or not the Secretary of Education had in truth committed "human rights violations involving civil and
political rights," are matters which may be passed upon and determined through a motion for reconsideration addressed to the Secretary of
Education himself, and in the event of an adverse verdict, may be renewed by the Civil Service Commission and eventually by the Supreme Court.
The Commission on Human Rights simply has no place in this scheme of things. It has no business intruding into the jurisdiction and functions of
the Education Secretary or the Civil Service Commission. It has no business going over the same ground traversed by the latter and making its
own judgment on the questions involved. This would accord success to what may well have been the complaining teachers' strategy to abort,
frustrate or negate the judgment of the Education Secretary in the administrative cases against them which they anticipated would be adverse to
them.
This cannot be done. It will not be permitted to be done.
In any event, the investigation by the Commission on Human Rights would serve no useful purpose. If its investigation should result in conclusions
contrary to those reached by Secretary Cario, it would have no power anyway to reverse the Secretary's conclusions. Reversal thereof can only
by done by the Civil Service Commission and lastly by this Court. The only thing the Commission can do, if it concludes that Secretary Cario was
in error, is to refer the matter to the appropriate Government agency or tribunal for assistance; that would be the Civil Service Commission. 35 It
cannot arrogate unto itself the appellate jurisdiction of the Civil Service Commission.
WHEREFORE, the petition is granted; the Order of December 29, 1990 is ANNULLED and SET ASIDE, and the respondent Commission on
Human Rights and the Chairman and Members thereof are prohibited "to hear and resolve the case (i.e., Striking Teachers HRC Case No. 90-775)
on the merits."
SO ORDERED
Melencio-Herrera, Cruz, Feliciano, Bidin, Grio-Aquino, Medialdea, Regalado, Davide, Jr. and Romero, JJ., concur.
Gutierrez, Jr., J., concurs in the result. The teachers are not to be blamed for exhausting all means to overcome the Secretary's arbitrary act of not
reinstating them.
||| (Cario v. Commission on Human Rights, G.R. No. 96681, December 02, 1991)

FIRST DIVISION
[G.R. No. 136913. May 12, 2000.]
ANITA C. BUCE, petitioner, vs. THE HONORABLE COURT OF APPEALS, SPS. BERNARDO C. TIONGCO and ARACELI
TIONGCO, SPS. DIONISIO TIONGCO and LUCILA TIONGCO, and JOSE M. TIONGCO, respondents.
Melgar Tria and Associates for petitioner.
Abano Pamfilo Paras Pineda and Agustin Law Offices for respondents.
SYNOPSIS
Petitioner leased a 56-square meter parcel of land. The lease contract was for a period of fifteen years to commence on 1 June 1979 and to end
on 1 June 1994 "subject to renewal for another ten (10) years, under the same terms and conditions." Petitioner then constructed a building and
paid the required monthly rental. Private respondents later demanded a gradual increase in the rental until it reached P400 in 1985. For July and
August 1991, petitioner paid P1,000.00 as monthly rental. Private respondents' counsel wrote petitioner informing her of the increase in the rent to
P1,576.58 effective January 1992 pursuant to the provisions of the Rent Control Law. Petitioner tendered checks payable to private respondent
Jose Tiongco as administrator. As might be expected, private respondents refused to accept the same. Petitioner filed with the Regional Trial Court
of Manila a complaint for specific performance with prayer for consignation. She prayed that private respondents be ordered to accept the rentals
in accordance with the lease contract and to respect the lease of fifteen years, which was renewable for another ten years, at the rate of P200 a
month. The RTC declared the lease contract automatically renewed for ten years and considered as evidence thereof (a) the stipulations in the
contract giving the lessee the right to construct buildings and improvements, and (b) the filing by petitioner of the complaint almost one year before
the expiration of the initial term of fifteen years. On appeal, the Court of Appeals reversed the decision of the RTC, and ordered petitioner to
immediately vacate the leased premises on the ground that the contract expired on 1 June 1994 without being renewed and to pay the rental
arrearages at the rate of P1,000 monthly. Petitioner filed a motion for reconsideration, but it was denied by the appellate court. Hence, the present
petition. The basic issue, as agreed upon by the parties, is the correct interpretation of the contract provision "this lease shall be for a period of
fifteen (15) years effective June 1, 1979, subject to renewal for another ten (10) years, under the same terms and conditions."
The Supreme Court ruled that the renewal of the subject contract may be had only upon their mutual agreement or at the will of both of the parties.
Since the private respondents were not amenable to a renewal, they cannot be compelled to execute a new contract when the old contract
terminated on 1 June 1994. It is the owner-lessor's prerogative to terminate the lease at its expiration. The continuance, effectivity and fulfillment of
a contract of lease cannot be made to depend exclusively upon the free and uncontrolled choice of the lessee between continuing the payment of

the rentals or not, completely depriving the owner of any say in the matter. Mutuality does not obtain in such a contract of lease and no equality
exists between the lessor and the lessee since the life of the contract would be dictated solely by the lessee. The Court, however, reversed the
decision of the Court of Appeals insofar as it ordered the petitioner to immediately vacate the leased premises, without prejudice, to the filing by
the private respondents of an action for the recovery of possession of the subject property because the issue of possession of the leased premises
was not among the issues agreed upon by the parties or threshed out before the court a quo. Neither was it raised by private respondents on
appeal. The Court of Appeals went beyond the bounds of its authority when after interpreting the questioned provision of the lease contract in favor
of the private respondents, it proceeded to order petitioner to vacate the subject premises.
||| (Buce v. Court of Appeals, G.R. No. 136913, May 12, 2000)

DECISION

DAVIDE, JR., C.J p:

The basic issue in this petition is whether the parties intended an automatic renewal of the lease contract 1 when they agreed that the lease shall
be for a period of fifteen years "subject to renewal for another ten (10) years." LibLex
Petitioner leased a 56-square meter parcel of land located at 2068 Quirino Avenue, Pandacan, Manila. The lease contract was for a period of
fifteen years to commence on 1 June 1979 and to end on 1 June 1994 "subject to renewal for another ten (10) years, under the same terms and
conditions." Petitioner then constructed a building and paid the required monthly rental of P200. Private respondents, through their administrator
Jose Tiongco, later demanded a gradual increase in the rental until it reached P400 in 1985. For July and August 1991, petitioner paid private
respondents P1,000 as monthly rental. 2
On 6 December 1991, private respondents counsel wrote petitioner informing her of the increase in the rent to P1,576.58 effective January 1992
pursuant to the provisions of the Rent Control Law. 3 Petitioner, however, tendered checks dated 5 October 1991, 4 5 November 1991, 5 5
December 1991, 6 5 January 1992, 7 31 May 1992, 8 and 2 January 1993 9 for only P400 each, payable to Jose Tiongco as administrator. As
might be expected, private respondents refused to accept the same.
On 9 August 1993, petitioner filed with the Regional Trial Court of Manila a complaint for specific performance with prayer for consignation, which
was docketed as Civil Case No. 93-67135. She prayed that private respondents be ordered to accept the rentals in accordance with the lease
contract and to respect the lease of fifteen years, which was renewable for another ten years, at the rate of P200 a month.

In their Answer, private respondents countered that petitioner had already paid the monthly rent of P1,000 for July and August
1991. Under Republic Act No. 877, as amended, rental payments should already be P1,576.58 10 per month; hence, they were justified in refusing
the checks for P400 that petitioner tendered. Moreover, the phrase in the lease contract authorizing renewal for another ten years does not mean
automatic renewal; rather, it contemplates a mutual agreement between the parties.

During the pendency of the controversy, counsel for private respondents wrote petitioner reminding her that the contract expired on 1 June 1994
and demanding that she pay the rentals in arrears, which then amounted to P33,000.
On 29 August 1995, the RTC declared the lease contract automatically renewed for ten years and considered as evidence thereof (a) the
stipulations in the contract giving the lessee the right to construct buildings and improvements and (b) the filing by petitioner of the complaint
almost one year before the expiration of the initial term of fifteen years. It then fixed the monthly rent at P400 from 1 June 1990 to 1 June 1994;
P1,000 from 1 June 1994 until 1 June 1999; and P1,500 for the rest of the period or from 1 June 2000 to 1 June 2004, reasoning that the
continuous increase of rent from P200 to P250 then P300, P400 and finally P1,000 caused "an inevitable novation of their contract." 11
On appeal, the Court of Appeals reversed the decision of the RTC, and ordered petitioner to immediately vacate the leased premises on the
ground that the contract expired on 1 June 1994 without being renewed and to pay the rental arrearages at the rate of P1,000 monthly. 12
According to the Court of Appeals, the phrase in the contract "this lease shall be for a period of fifteen (15) years effective June 1, 1979, subject to
renewal for another ten (10) years, under the same terms and conditions" is unclear as to who may exercise the option to renew. The stipulation
allowing the construction of a building and other improvements and the fact that the complaint was filed a year before the expiration of the contract
are not indicative of automatic renewal. It applied the ruling in Fernandez v. Court of Appeals 13 that without a stipulation that the option to renew
the lease is solely for the benefit of one party any renewal of a lease contract must be upon the agreement of the parties. Since private
respondents were not agreeable to an extension, the original term of the lease ended on 1 June 1994. Private respondents refusal to accept
petitioners checks for P400 was justified because although the original contract specified a monthly rental of P200, the tender and acceptance of
the increased rental of P1,000 novated the contract of lease; thus, petitioner was estopped from claiming that the monthly rental is otherwise.
The Court of Appeals denied petitioners motion for reconsideration. Hence this petition.
Petitioner contends that by ordering her to vacate the premises, the Appellate Court went beyond the bounds of its authority because the case she
filed before the RTC was for "Specific Performance" not unlawful detainer. The power to order the lessee to vacate the leased premises is lodged
in another forum. Additionally, private respondents did not pray for the ejectment of petitioners from the leased premises in their Answer with
Counterclaim; well-settled is the rule that a court cannot award relief not prayed for in the complaint or compulsory counterclaim.
Petitioner further maintains that the phrase "renewable for another ten years at the option of both parties" in the Fernandez case clearly indicated
the intention of the parties to renew the contract only upon mutual agreement. Whereas in this case the contract states, "[T]his lease shall be for a
period of fifteen (15) years effective June 1, 1979, subject to renewal for another ten (10) years, under the same terms and conditions," making
this stipulation subject to interpretation with due regard to the contemporaneous and subsequent acts of the parties. The stipulation in the contract
allowing the lessee to construct buildings and improvements; her filing of the complaint a year before the expiration of the initial 15-year term; and
private respondents acceptance of the increased rental are contemporaneous and subsequent acts that signify the intention of the parties to
renew the contract.
On the other hand, private respondents aver that even if the original petition filed before the RTC was not for unlawful detainer, the order of the
Court of Appeals requiring petitioner to vacate the premises is but a logical consequence of its finding that the lease contract had expired. To
require another litigation would constitute multiplicity of suits; besides, petitioner has no other reason to stay in the premises. There is no basis
why Fernandez should not be applied to the case at bar. Absent contrary stipulation in reciprocal contracts, the period of lease is deemed to be for
the benefit of both parties.

Private respondents argue that the alleged contemporaneous and subsequent acts do not determine the real intention of the parties as regards
renewal of the lease contract. Had they intended an automatic renewal of the lease contract they would have agreed on a 25-year period instead.
Correlatively, private respondents' letter reminding petitioner of the expiration of the contract on 1 June 1994 and demanding payment of the
rentals in arrears signifies that they are no longer interested in renewing the contract. Also petitioner's refusal to pay the increased rental of P1,000
as early as 1991 and private respondents' refusal to accept the P400 tendered constituted a disagreement on the rate of rental; hence, any
renewal is out of the question. cdasia
The basic issue, as agreed upon by the parties, is the correct interpretation of the contract provision "this lease shall be for a period of fifteen (15)
years effective June 1, 1979, subject to renewal for another ten (10) years, under the same terms and conditions."
The literal meaning of the stipulations shall control if the terms of the contract are clear and leave no doubt upon the intention of the contracting
parties. 14 However, if the terms of the agreement are ambiguous resort is made to contract interpretation which is the determination of the
meaning attached to written or spoken words that make the contract. 15 Also, to ascertain the true intention of the parties, their actions,
subsequent or contemporaneous, must be principally considered. 16
The phrase "subject to renewal for another ten (10) years" is unclear on whether the parties contemplated an automatic renewal or extension of
the term, or just an option to renew the contract; and if what exists is the latter, who may exercise the same or for whose benefit it was stipulated.
In this jurisdiction, a fine delineation exists between renewal of the contract and extension of its period. Generally, the renewal of a contract
connotes the death of the old contract and the birth or emergence of a new one. A clause in a lease providing for an extension operates of its own
force to create an additional term, but a clause providing for a renewal merely creates an obligation to execute a new lease contract for the
additional term. As renewal of the contract contemplates the cessation of the old contract, then it is necessary that a new one be executed
between the parties. 17
There is nothing in the stipulations in the contract and the parties' actuation that shows that the parties intended an automatic renewal or extension
of the term of the contract. Even the RTC conceded that the issue of automatic renewal is debatable. The fact that the lessee was allowed to
introduce improvements on the property is not indicative of the intention of the lessors to automatically extend the contract. Considering the
original 15-year duration of the contract, structures would have necessarily been constructed, added, or built on the property, which in its previous
state was an idle 56-square meter lot in the heart of Manila. Petitioner leased the property for the purpose of turning it into a commercial
establishment and to which it has been transformed as Anita's Grocery and Store. Neither the filing of the complaint a year before the expiration of
the 15-year term nor private respondents' acceptance of the increased rentals has any bearing on the intention of the parties regarding renewal. It
must be recalled that the filing of the complaint was even spawned by private respondents' refusal to accept the payment of monthly rental in the
amount of only P400.
Now on the applicability of Fernandez v. Court of Appeals to the case at bar. Although the factual scenario in that case with regard to the renewal
option is slightly off-tangent to the case under consideration because the intention of the parties therein for future mutual agreement was clearly
discernible in their contract, we cannot completely disregard the pronouncement of this Court in that case; thus:
[I]n a reciprocal contract like a lease, the period must be deemed to have been agreed upon for the benefit of both
parties, absent language showing that the term was deliberately set for the benefit of the lessee or lessor alone. 18 We are not
aware of any presumption in law that the term was deliberately set for the benefit of the lessee alone. Koh and Cruz in effect
rested upon such a presumption. But that presumption cannot reasonably be indulged in casually in an era of rapid economic
change, marked by, among other things, volatile costs of living and fluctuations in the value of domestic currency. The longer the

period the more clearly unreasonable such a presumption would be. In an age like that we live in, very specific language is
necessary to show an intent to grant a unilateral faculty to extend or renew a contract of lease to the lessee alone or to the
lessor alone for that matter. 19

In the case at bar, it was not specifically indicated who may exercise the option to renew, neither was it stated that the option was given for the
benefit of herein petitioner. Thus, pursuant to the Fernandez ruling and Article 1196 of the Civil Code, the period of the lease contract is deemed to
have been set for the benefit of both parties. Renewal of the contract may be had only upon their mutual agreement or at the will of both of them.
Since the private respondents were not amenable to a renewal, they cannot be compelled to execute a new contract when the old contract
terminated on 1 June 1994. It is the owner-lessor's prerogative to terminate the lease at its expiration. 20 The continuance, effectivity and
fulfillment of a contract of lease cannot be made to depend exclusively upon the free and uncontrolled choice of the lessee between continuing the
payment of the rentals or not, completely depriving the owner of any say in the matter. Mutuality does not obtain in such a contract of lease and no
equality exists between the lessor and the lessee since the life of the contract would be dictated solely by the lessee. 21
After the lease terminated on 1 June 1994 without any agreement for renewal being reached, petitioner became subject to ejectment from the
premises. 22 It must be noted, however, that private respondents did not include in their Answer with Counterclaim a prayer for the restoration of
possession of the leased premises. Neither did they file with the proper Metropolitan Trial Court an unlawful detainer suit 23 against petitioner after
the expiration of the lease contact. Moreover, the issues agreed upon by the parties to be resolved during the pre-trial were the correct
interpretation of the contract and the validity of private respondents refusal to accept petitioners payment of P400 as monthly rental. 24 They later
limited the issue to the first, i.e., the correct interpretation of the contract. 25 The issue of possession of the leased premises was not among the
issues agreed upon by the parties or threshed out before the court a quo. Neither was it raised by private respondents on appeal.
Accordingly, as correctly contended by the petitioner, the Court of Appeals went beyond the bounds of its authority 26 when after interpreting the
questioned provision of the lease contract in favor of the private respondents it proceeded to order petitioner to vacate the subject premises.
WHEREFORE, the instant petition is partly GRANTED. The assailed decision of the Court of Appeals is REVERSED insofar as it ordered the
petitioner to immediately vacate the leased premises, without prejudice, however, to the filing by the private respondents of an action for the
recovery of possession of the subject property.
No costs. cda
SO ORDERED.
Puno, Kapunan and Pardo, JJ., concur.
Ynares-Santiago, J., took no part.
||| (Buce v. Court of Appeals, G.R. No. 136913, May 12, 2000)

SECOND DIVISION

[G.R. No. 126554. May 31, 2000.]

ARB CONSTRUCTION CO., INC., and MARK MOLINA, petitioners, vs. COURT OF APPEALS, TBS SECURITY AND
INVESTIGATION AGENCY represented by CECILIA R. BACLAY, respondents.
Jose F. Maacop for petitioners.
Villamor Villamor & Bahia Law Offices for private respondent.
SYNOPSIS
TBS Security and Investigation Agency (TBSS) entered into two (2) Service Contracts with ARB Construction Co., Inc., (ARBC) with a term of oneyear, on renewable basis. However, with only a few months of existence, ARBC wanted to terminate their contract and replace TBSS with Global
Security Investigation Agency (GSIA). TBSS did not agree because the contract could not be pre-terminated, in which ARBC agreed.
Nevertheless, the number of guards assigned to them was reduced to only one by Mark Molina, ARBC's Vice-President for Operation. Thus, TBSS
filed a complaint for Preliminary Injunction against ARBC and GSIA. TBSS prayed for the court to declare their contract to be subsisting and ARBC
to refrain from replacing their guards with the GSIA guards, and for award of attorney's fees. ARBC moved to dismiss the complaint for lack of
merit. TBSS filed a Motion for Leave to File Amended and Supplemental Complaint. TBSS submitted that it desired to pursue a case for Sum of
Money and Damages instead of Preliminary Injunction and maintained that the cause of action would not substantially change as both were based
on the same set of facts. ARBC opposed the motion. The trial court, however, granted the motion of TBSS to file the Amended and Supplemental
Complaint. ARBC filed a Motion for Reconsideration, but it was denied. Meanwhile, Mark Molina filed a Motion to Dismiss the Amended and
Supplemental Complaint on the ground that it did not state a cause of action insofar as he was concerned. The trial court denied his motion, and
directed him to file his answer. ARBC filed a petition with the Court of Appeals (CA). Molina, likewise filed his own petition with the CA. The CA
consolidated both appeals upon motion of TBSS. The CA rendered a decision denying both petitions. Hence, this petition.
The petition was partially granted. The Supreme Court reversed the denial of the Motion to Dismiss filed by Mark Molina. Molina could not be held
jointly and severally liable for any obligation which petitioner ARBC may be held accountable, absent any proof of bad faith or malice on his part. It
was incorrect to make him personally liable for his actuation as Vice President for Operation of ARBC. However, the Court affirmed the decision
granting the TBSS's Motion for leave to file Amended and Supplemental Complaint, for such did not alter the cause of action and the theory of the
case.
||| (ARB Construction Co., Inc. v. Court of Appeals, G.R. No. 126554, May 31, 2000)

DECISION

BELLOSILLO, J p:
ARB CONSTRUCTION CO., INC. (ARBC) and MARK MOLINA, Vice President for Operations of ARBC, in this consolidated petition, assail the
Decision of the Court of Appeals in CA-G.R. SP Nos. 36330 and 36489 as well as the orders of the trial court dated 9 September 1994 and 9
December 1994 granting private respondent TBS Security and Investigation Agency's Motion for Leave to File Amended and Supplemental
Complaint and denying petitioner Mark Molina's Motion to Dismiss, respectively. cda
On 15 August 1993 TBS Security and Investigation Agency (TBSS) entered into two (2) Service Contracts with ARBC wherein TBSS agreed to
provide and post security guards in the five (5) establishments being maintained by ARBC. Clause 10 of the Service Contracts provides
10. This contract shall be effective for a period of one (1) year commencing from 15th August 1993 and shall be considered
automatically renewed for the same period unless otherwise a written notice of termination shall have been given by one party
to the other party thirty (30) days in advance.
In a letter dated 23 February 1994 ARBC informed TBSS of its desire to terminate the Service Contracts effective thirty (30) days after receipt of
the letter. Also, in a letter dated 22 March 1994, ARBC through its Vice President for Operations, Mark Molina, informed TBSS that it was replacing
its security guards with those of Global Security Investigation Agency (GSIA).
In response to both letters, TBSS informed ARBC that the latter could not preterminate the Service Contracts nor could it post security guards from
GSIA as it would run counter to the provisions of their Service Contracts.
On 23 March 1994 Molina wrote TBSS conceding that indeed the "security contract dated 15 August 1993 stipulates that the duration of the
service shall be for a period of one year, ending on 15 August 1994 . . . and could not be preterminated until then." 1 Nevertheless, Molina
decreased the security guards to only one (1) allegedly pursuant to Clause 2 of the Service Contracts which provides
2. The AGENCY shall adopt a guarding system and post guards in accordance thereof, in the premises of the client throughout
the whole 24 hours daily, using variable shifts of the guards at such hours as may be designated by the CLIENT or AGENCY. As
required by the CLIENT, the security guards to be assigned by the AGENCY shall consist initially of the following . . . subject to
be increased or decreased by the CLIENT at its sole discretion depending on the security situation or the exigency of the
service, by giving the AGENCY at least SEVEN (7) days prior notice. 2
Thus on 28 March 1994 TBSS filed a Complaint for Preliminary Injunction against ARBC and GSIA praying
A. Forthwith and Ex-parte, that a Temporary Restraining Order be issued declaring the status quo and directing the Defendants
or any person(s) acting in their behalf from performing acts of replacing the Plaintiff's security guards from other agencies; LLpr
B. After due hearing that a Writ of Preliminary Injunction, in like tenor, be issued upon posting of such bond as the Honorable
Court may require;
C. After due hearing, that judgment be rendered
1. Declaring the two (2) contracts for Security Services between Plaintiff and ARBC to be subsisting until August 15,
1994;

2. Ordering Defendant GLOBAL to refrain from taking over the security services of ARBC and to withdraw its guards
from the premises of ARBC, if they have been posted earlier;
3. Ordering ARBC to pay Plaintiff attorney's fees in the amount of P50.000.00 . . . 3
In Answer, ARBC claimed that it decreased the number of security guards being posted at its establishments to only one (1) as the security guards
assigned by TBSS were found to be grossly negligent and inefficient, citing the following incidents
8. On February 6, 1994, a Mitsubishi roadgrader of herein defendant was stripped of parts amounting to P58,642.00;
9. On February 25, 1994, a concrete vibrator and mercury light assembly were stolen from the construction site of the
Multipurpose Hall beside the swimming pool of herein defendant which is worth P2,800.00 . . . 4
In conclusion, it prayed that the complaint against it be dismissed for lack of merit.

On 16 May 1994 TBSS filed a Motion for Leave to File Attached Amended and Supplemental Complaint. TBSS submitted that it now desired to
pursue a case for Sum of Money and Damages instead of the one previously filed for Preliminary Injunction. It maintained that the Amended and
Supplemental Complaint would not substantially alter its cause of action as both the original and amended complaint were based on the same set
of facts. 5
In addition to the allegations in its original complaint, TBSS alleged in its Amended and Supplemental Complaint that ARBC illegally deducted from
the payroll the amounts of P15,500.00 and P2,800.00 representing the value of one (1) unit concrete vibrator and cassette recorder, respectively. It
further argued that ARBC withheld additional amounts from its payroll as payment for the parts of the grader that were stolen. 6 TBSS maintained
that ARBC had an outstanding obligation of P472,080.46. Corollarily, TBSS prayed for moral damages of P500,000.00, exemplary damages of
P200.000.00 and attorney's fees of P50,000.00.
On 2 May 1994 the trial court issued a temporary restraining order but due to the exigency of the situation TBSS decided to withdraw its security
contingent from ARBC's premises on 13 May 1994.
ARBC opposed the Motion for Leave to File Amended and Supplemental Complaint 7 contending that the cause of action had been substantially
altered.
On 9 September 1994 the RTC of Makati, Br. 59, granted the motion of TBSS to file the Amended and Supplemental Complaint rationalizing thus

Should the court find the allegations in the pleadings to be inadequate, the Court should allow the party to file proper
amendments in accordance with the mandate of the Rules of Court that amendments to pleadings are favored and should be
liberally allowed, particularly in the early stages of the law suit, so that the actual merit of the controversy may be speedily
determined without regard to technicalities and in the most expeditious and inexpensive manner . . . 8
ARBC filed a Motion for Reconsideration but on 3 November 1994 the motion was denied.

Meanwhile, Mark Molina filed a Motion to Dismiss 9 the Amended and Supplemental Complaint on the ground that it did not state a cause of
action insofar as he was concerned. But on 9 December 1994 the trial court denied the motion to dismiss and directed Molina instead to file his
answer within ten (10) days from receipt of the order. prcd
On 30 January 1995 ARBC filed a Petition 10 with the Court of Appeals alleging that the trial court committed grave abuse of discretion in issuing
the Orders of 9 September 1994 and 3 November 1994. On 15 February 1995 Molina likewise filed a Petition before the Court of Appeals similarly
attributing grave abuse of discretion to the trial court in issuing the order of 9 December 1994.
Parenthetically, upon motion of TBSS, the petition of Mark Molina in CA-G.R. SP No. 36484 was consolidated with the petition of ARBC in CA-G.R.
SP No. 36330.
On 16 August 1996 the Court of Appeals rendered a Decision 11 denying both petitions of ARBC and Molina. On 3 October 1996
petitioners' Motion for Reconsideration12 was denied. Hence, this petition.
In their consolidated Petition before this Court, petitioners first submit that THE COURT OF APPEALS ERRED IN HOLDING THAT PRIVATE
RESPONDENT HAD THE RIGHT TO CHANGE ITS CAUSE OF ACTION IN VIEW OF A CHANGE IN THE SITUATION OF THE PARTIES AFTER
THE FILING OF THE ORIGINAL COMPLAINT. 13 In support of this assigned error petitioners insist that
. . . (T)here was not only a substantial change in private respondent's cause of action but there was even an alteration in the
theory of the case. . . (W)hile in the original complaint the only thing alleged and is being prayed for is for petitioner ARB (ARBC)
to be enjoined from replacing the security guards of private respondent . . . and for the two contracts . . . to be enforced until
August 15, 1994 and for petitioner ARB (ARBC) to be ordered to pay . . . attorney's fees, what is alleged and is being prayed for
in the amended and supplemental complaint is for both petitioners to be ordered to pay P171,853.80 (for unpaid services) . . .
and P300,226.66 (for lost income) . . . plus moral and exemplary damages and attorney's fees.
Obviously, petitioner ARB (ARBC) is being required to answer for a liability or legal obligation under the amended and
supplemental complaint wholly different from that stated in the original complaint such as but not limited to the amount of
P171,852.80 which was never mentioned in the original contract. Under these circumstances, a different cause of action was
introduced by the amendment.
Also, there was a change in the theory of the case. Whereas in the original contract what is sought for by private respondent is
the enforcement of the two (2) contracts which is what is known in legal parlance as specific performance, in the amended and
supplemental complaint what is sought for is . . . a rescission of the contracts with damages . . . 14
We cannot subscribe to the contention of petitioners that the Amended and Supplemental Complaint substantially changed TBSS' cause of action
nor was there any alteration in the theory of the case. As correctly observed by the Court of Appeals, "the amendatory allegations are mere
amplifications of the cause of action for damages . . . An amendment will not be considered as stating a new cause of action if the facts alleged in
the amended complaint show substantially the same wrong with respect to the same transaction, or if what are alleged refer to the same matter
but are more fully and differently stated, or where averments which were implied are made in expressed terms, and the subject of the controversy
or the liability sought to be enforced remains the same." 15
The original as well as amended and supplemental complaints readily disclose that the averments contained therein are almost identical. In the
original complaint, TBSS prays, among others, that the two (2) Service Contracts be declared as subsisting until 15 August 1994 and that

petitioners be made to pay P50,000.00 as attorney's fees. 16 Significantly, in its penultimate paragraph, TBSS prays "for such other reliefs that are
considered just and equitable under the premises." 17 This is a "catch-all" phrase which definitely covers the amplifications and additional
averments contained in the Amended and Supplemental Complaint. Due to events supervening after the filing of the original complaint, it became
incumbent upon TBSS to amend its original complaint. One of the supervening events was the withholding by petitioner ARBC of some amounts
intended for the payroll of TBSS due to pilferage or losses which allegedly occurred due to the negligence and inefficiency of TBSS' security
guards. Plainly, this withholding of the payroll was only an offshoot of the pretermination of the two (2) Service Contracts on the part of ARBC.
Significantly, the pretermination of the Service Contracts was already alleged in the original complaint. In fact it was one, if not the most basic,
issue discussed therein. Since the withholding of the payroll was only an offshoot of the issue on the pretermination of the contract, we can safely
conclude that the allegation on the withholding of the payroll in the Amended and Supplemental Complaint was only an amplification of an issue
that was already included and discussed in the original complaint. It was therefore error on the part of petitioners to conclude that private
respondent changed its cause of action in the Amended and Supplemental Complaint. Neither could they say that they were being made to
answer for a liability or legal obligation that was wholly different from that stated in the original complaint.
Grave abuse of discretion therefore could not be imputed to the trial court for admitting the Amended and Supplemental Complaint of private
respondent TBSS. It also follows that the appellate court could not be faulted for putting its stamp of approval on the order of the trial court
admitting the same. prcd
Petitioners also argue, as their second assigned error, that THE COURT OF APPEALS ERRED IN HOLDING THAT THE ALLEGATIONS IN THE
AMENDED AND SUPPLEMENTAL COMPLAINT WERE SUFFICIENT TO HOLD PETITIONER MOLINA LIABLE TO PRIVATE RESPONDENT IN
HIS PERSONAL CAPACITY. In support of their contention petitioners submit
. . . (W)hen . . . Molina allegedly applied P171,853.80 payable to private respondent to the losses suffered by petitioner ARB
(ARBC) due to the negligence and indifference of the private respondent's security guards and when petitioner Molina replaced
the said security guards . . . Molina was not acting in his personal capacity but . . . as officer of petitioner ARB (ARBC).
Since petitioner Molina did not so act in his personal capacity but only in his official capacity as officer of petitioner ARB (ARBC)
then petitioner Molina cannot be held personally liable for the alleged liability of petitioner ARB (ARBC) . . . 18
In affirming the order of the trial court denying petitioner Molina's Motion to Dismiss, the appellate court ruled
Similarly, We find no error committed by respondent Judge in denying the motion to dismiss.
In paragraphs 5, 17, 18 of the amended and supplemental complaint, it is alleged:
5. But fate would have it that defendant ARBC would subsequently breach the aforesaid contracts by surreptitiously
preterminating the same and as precursor thereto, defendant ARBC, through defendant Mark Molina, would impute
against plaintiff pretended and fabricated violations and baselessly blame plaintiff for alleged losses of company
properties by just deducting the values thereof from plaintiff's billings without even complying with the procedure agreed
upon in contracts . . . .
It may be pertinent to state that all these accusations and imputations, albeit false and concocted, were made by
defendant Mark P. Molina . . . .

17. Such unsalutary breach of contract by defendant ARBC through defendant Mark Molina has resulted to plaintiff's damage
and prejudice by way of lost income consisting of the unexpired portion of the contract, i.e., up to August 15, 1994, entailing a
total amount of P300,266.66 . . .
The above allegations, particularly the subparagraph, "It may be pertinent to state that all these accusations and imputations,
albeit false and concocted, were made by defendant Mark P. Molina," are sufficient statement of a cause of action against
petitioner Mark Molina in his personal capacity. 19
In this regard, we agree with petitioners. It is basic that a corporation is invested by law with a personality separate and distinct from those of the
persons composing it as well as from that of any other legal entity to which it may be related. As a general rule, a corporation may not be made to
answer for acts or liabilities of its stockholders or those of the legal entities to which it may be connected and vice versa. However, the veil of
corporate fiction may be pierced when it is used as a shield to further an end subversive of justice; or for purposes that could not have been
intended by the law that created it; or to defeat public convenience, justify wrong, protect fraud, or defend crime; or to perpetuate deception; or as
an alter ego, adjunct or business conduit for the sole benefit of the stockholders. 20
Prescinding from the foregoing, the general rule is that officers of a corporation are not personally liable for their official acts unless it is shown that
they have exceeded their authority. 21 Article 31 of the Corporation Code is in point
SECTION 31. Liability of directors, trustees or officers. Directors or trustees who willfully and knowingly vote for or assent to
patently unlawful acts of the corporation or who are guilty of gross negligence or bad faith in directing the affairs of the
corporation or acquire any personal or pecuniary interest in conflict with their duty as such directors, or trustees shall be liable
jointly and severally for all damages resulting therefrom suffered by the corporation, its stockholders or members and other
persons . . . .
On the basis hereof, petitioner Molina could not be held jointly and severally liable for any obligation which petitioner ARBC may be held
accountable for, absent any proof of bad faith or malice on his part. Corollarily, it is also incorrect on the part of the Court of Appeals to conclude
that there was a sufficient cause of action against Molina as to make him personally liable for his actuations as Vice President for Operations of
ARBC. A cursory reading of the records of the instant case would reveal that Molina did not summarily withhold certain amounts from the payroll of
TBSS. Instead, he enumerated instances 22 which in his view were enough bases to do so.
Finally, petitioners contend that THE COURT OF APPEALS ERRED IN HOLDING THAT THE TRIAL COURT DID NOT GRAVELY ABUSE ITS
DISCRETION IN GRANTING PRIVATE RESPONDENT'S MOTION FOR LEAVE TO FILE AMENDED AND SUPPLEMENTAL COMPLAINT AND
IN DENYING PETITIONER MOLINA'S MOTION TO DISMISS. In support hereof, petitioners submit that
. . . (T)he trial court admitted the amended and supplemental complaint which substantially changed the cause of action and
theory of the case of the private respondent. Therefore, there is (sic) abuse of discretion on the part of the trial court contrary to
the ruling of the Court of Appeals that there is none. 23
As already discussed, the Amended and Supplemental Complaint did not substantially alter the cause of action and theory of the case.
Consequently, the trial court and the appellate court could not be charged with grave abuse of discretion in admitting the same. prcd

WHEREFORE, the PETITION is PARTIALLY GRANTED. The assailed Decision of the Court of Appeals in CA-G.R. SP No. 36489 affirming the 9
December 1994 Order of the Regional Trial Court-Br. 59, Makati City, which denied the Motion to Dismiss of petitioner Mark Molina is REVERSED
and SET ASIDE.
However, the assailed Decision of the appellate court in CA-G.R. SP No. 36330 affirming the 9 September 1994 Order of the Regional Trial CourtBr. 59, Makati City, granting TBS Security and Investigation Agency's Motion for Leave to File Amended and Supplemental Complaint is likewise
AFFIRMED. The case is remanded to the trial court for further proceedings. No costs.
SO ORDERED.
Mendoza and Buena, JJ., concur.
Quisumbing and De Leon, Jr., JJ., are on leave.
||| (ARB Construction Co., Inc. v. Court of Appeals, G.R. No. 126554, May 31, 2000)