LCP v COMELEC 2009 DECISION VELASCO, JR. J.

Ratio legis est anima. The spirit rather than the letter of the law. A statute must be read according to its spirit or intent,[1] for what is within the spirit is within the statute although it is not within its letter, and that which is within the letter but not within the spirit is not within the statute.[2] Put a bit differently, that which is within the intent of the lawmaker is as much within the statute as if within the letter; and that which is within the letter of the statute is not within the statute unless within the intent of the lawmakers.[3] Withal, courts ought not to interpret and should not accept an interpretation that would defeat the intent of the law and its legislators.[4] So as it is exhorted to pass on a challenge against the validity of an act of Congress, a coequal branch of government, it behooves the Court to have at once one principle in mind: the presumption of constitutionality of statutes.[5] This presumption finds its roots in the tri-partite system of government and the corollary separation of powers, which enjoins the three great departments of the government to accord a becoming courtesy for each others acts, and not to interfere inordinately with the exercise by one of its official functions. Towards this end, courts ought to reject assaults against the validity of statutes, barring of course their clear unconstitutionality. To doubt is to sustain, the theory in context being that the law is the product of earnest studies by Congress to ensure that no constitutional prescription or concept is infringed.[6] Consequently, before a law duly challenged is nullified, an unequivocal breach of, or a clear conflict with, the Constitution, not merely a doubtful or argumentative one, must be demonstrated in such a manner as to leave no doubt in the mind of the Court.[7] BACKGROUND The consolidated petitions for prohibition commenced by the League of Cities of the Philippines (LCP), City of Iloilo, City of Calbayog, and Jerry P. Treas [8] assail the

constitutionality of the sixteen (16) laws,[9] each converting the municipality covered thereby into a city (cityhood laws, hereinafter) and seek to enjoin the Commission on Elections (COMELEC) from conducting plebiscites pursuant to subject laws.

By Decision[10] dated November 18, 2008, the Court en banc, by a 6-5 vote, granted the petitions and nullified the sixteen (16) cityhood laws for being violative of the Constitution, specifically its Section 10, Article X and the equal protection clause.

Subsequently, respondent local government units (LGUs) moved for reconsideration, raising, as one of the issues, the validity of the factual premises not contained in the pleadings of the parties, let alone established, which became the bases of the Decision subject of reconsideration.[11] By Resolution of March 31, 2009, a divided Court denied the motion for reconsideration.

A second motion for reconsideration followed in which respondent LGUs prayed as follows: WHEREFORE, respondents respectfully pray that the Honorable Court reconsider its Resolution dated March 31, 2009, in so far as it denies for lack of merit respondents Motion for Reconsideration dated December 9, 2008 and in lieu thereof, considering that new and meritorious arguments are raised by respondents Motion for Reconsideration dated December 9, 2008 to grant afore-mentioned Motion for Reconsideration dated December 9, 2008 and dismiss the Petitions For Prohibition in the instant case.

Per Resolution dated April 28, 2009, the Court, voting 6-6, disposed of the motion as follows:

By a vote of 6-6, the Motion for Reconsideration of the Resolution of 31 March 2009 is DENIED for lack of merit. The motion is denied since there is no majority that voted to overturn the Resolution of 31 March 2009. The Second Motion for Reconsideration of the Decision of 18 November 2008 is DENIED for being a prohibited pleading, and the Motion for Leave to Admit Attached Petition in Intervention x x x filed by counsel for Ludivina T. Mas, et al. are also DENIED. No further pleadings shall be entertained. Let entry of judgment be made in due course. x x x

On May 14, 2009, respondent LGUs filed a Motion to Amend the Resolution of April 28, 2009 by Declaring Instead that Respondents Motion for Reconsideration of the Resolution of March 31, 2009 and Motion for Leave to File and to Admit Attached Second Motion for Reconsideration of the Decision Dated November 18, 2008 Remain Unresolved and to Conduct Further Proceedings Thereon.

Per its Resolution of June 2, 2009, the Court declared the May 14, 2009 motion adverted to as expunged in light of the entry of judgment made on May 21, 2009. Justice Leonardo-De Castro, however, taking common cause with Justice Bersamin to grant the motion for reconsideration of the April 28, 2009 Resolution and to recall the entry of judgment, stated the observation, and with reason, that the entry was effected before the Court could act on the aforesaid motion which was filed within the 15-day period counted from receipt of the April 28, 2009 Resolution.[12]

Forthwith, respondent LGUs filed a Motion for Reconsideration of the Resolution of June 2, 2009 to which some of the petitioners and petitioners-in-intervention filed their

respective comments. The Court will now rule on this incident. But first, we set and underscore some basic premises:

(1) The initial motion to reconsider the November 18, 2008 Decision, as Justice Leonardo-De Castro noted, indeed raised new and substantial issues, inclusive of the matter of the correctness of the factual premises upon which the said decision was predicated. The 6-6 vote on the motion for reconsideration per the Resolution of March 31, 2009, which denied the motion on the sole ground that the basic issues have already been passed upon reflected a divided Court on the issue of whether or not the underlying Decision of November 18, 2008 had indeed passed upon the basic issues raised in the motion for reconsideration of the said decision;

(2) The aforesaid May 14, 2009 Motion to Amend Resolution of April 28, 2009 was precipitated by the tie vote which served as basis for the issuance of said resolution. This May 14, 2009 motionwhich mainly argued that a tie vote is inadequate to declare a law unconstitutional remains unresolved; and

(3) Pursuant to Sec. 4(2), Art. VIII of the Constitution, all cases involving the constitutionality of a law shall be heard by the Court en banc and decided with the concurrence of a majority of the Members who actually took part in the deliberations on the issues in the case and voted thereon.

The basic issue tendered in this motion for reconsideration of the June 2, 2009 Resolution boils down to whether or not the required vote set forth in the aforesaid Sec. 4(2), Art. VIII is

limited only to the initial vote on the petition or also to the subsequent voting on the motion for reconsideration where the Court is called upon and actually votes on the constitutionality of a law or like issuances. Or, as applied to this case, would a minute resolution dismissing, on a tie vote, a motion for reconsideration on the sole stated groundthat the basic issues have already been passed suffice to hurdle the voting requirement required for a declaration of the unconstitutionality of the cityhood laws in question?

The 6-6 vote on the motion to reconsider the Resolution of March 31, 2009, which denied the initial motion on the sole ground that the basic issues had already been passed upon betrayed an evenly divided Court on the issue of whether or not the underlying Decision of November 18, 2008 had indeed passed upon the issues raised in the motion for reconsideration of the said decision. But at the end of the day, the single issue that matters and the vote that really counts really turn on the constitutionality of the cityhood laws. And be it remembered that the inconclusive 6-6 tie vote reflected in the April 28, 2009 Resolution was the last vote on the issue of whether or not the cityhood laws infringe the Constitution. Accordingly, the motions of the respondent LGUs, in light of the 6-6 vote, should be deliberated anew until the required concurrence on the issue of the validity or invalidity of the laws in question is, on the merits, secured.

It ought to be clear that a deadlocked vote does not reflect the majority of the Members contemplated in Sec. 4 (2) of Art. VIII of the Constitution, which requires that: All cases involving the constitutionality of a treaty, international or executive agreement, or law shall be heard by the Supreme Court en banc, x x x

shall be decided with the concurrence of a majority of the Members who actually took part in the deliberations on the issues in the case and voted thereon. (Emphasis added.)

Webster defines majority as a number greater than half of a total. [13] In plain language, this means 50% plus one. In Lambino v. Commission on Elections , Justice, now Chief Justice, Puno, in a separate opinion, expressed the view that a deadlocked vote of six (6) is not a majority and a non-majority cannot write a rule with precedential value.[14]

As may be noted, the aforequoted Sec. 4 of Art. VIII, as couched, exacts a majority vote in the determination of a case involving the constitutionality of a statute, without distinguishing whether such determination is made on the main petition or thereafter on a motion for reconsideration. This is as it should be, for, to borrow from the late Justice Ricardo J. Francisco: x x x [E]ven assuming x x x that the constitutional requirement on the concurrence of the majority was initially reached in the x x x ponencia, the same is inconclusive as it was still open for review by way of a motion for reconsideration.[15]

To be sure, the Court has taken stock of the rule on a tie-vote situation, i.e., Sec. 7, Rule 56 and the complementary A.M. No. 99-1-09- SC, respectively, providing that: SEC. 7. Procedure if opinion is equally divided. Where the court en banc is equally divided in opinion, or the necessary majority cannot be had, the case shall again be deliberated on, and if after such deliberation no decision is reached, the original action commenced in the court shall be dismissed; in appealed cases, the judgment or order appealed from shall stand affirmed; and on all incidental matters, the petition or motion shall be denied. A.M. No. 99-1-09-SC x x x A motion for reconsideration of a decision or resolution of the Court En Banc or of a Division may be granted upon a vote of

a majority of the En Banc or of a Division, as the case may be, who actually took part in the deliberation of the motion. If the voting results in a tie, the motion for reconsideration is deemed denied.

But since the instant cases fall under Sec. 4 (2), Art. VIII of the Constitution, the aforequoted provisions ought to be applied in conjunction with the prescription of the Constitution that the cases shall be decided with the concurrence of a majority of the Members who actually took part in the deliberations on the issues in the instant cases and voted thereon. To repeat, the last vote on the issue of the constitutionality of the cityhood bills is that reflected in the April 28, 2009 Resolutiona 6-6 deadlock.

On the postulate then that first, the finality of the November 18, 2008 Decision has yet to set in, the issuance of the precipitate[16] entry of judgment notwithstanding, and second, the deadlocked vote on the second motion for reconsideration did not definitely settle the constitutionality of the cityhood laws, the Court is inclined to take another hard look at the underlying decision. Without belaboring in their smallest details the arguments for and against the procedural dimension of this disposition, it bears to stress that the Court has the power to suspend its own rules when the ends of justice would be served thereby. [17] In the performance of their duties, courts should not be shackled by stringent rules which would result in manifest injustice. Rules of procedure are only tools crafted to facilitate the attainment of justice. Their strict and rigid application must be eschewed, if they result in technicalities that tend to frustrate rather than promote substantial justice. Substantial rights must not be prejudiced by a rigid and technical application of the rules in the altar of expediency. When a case is impressed with public interest, a relaxation of the application of the rules is in order.[18] Time and again, this Court has suspended its own rules or excepted a particular case from their operation whenever the higher interests of justice so require.[19]

While perhaps not on all fours with the case, because it involved a purely business transaction, what the Court said in Chuidian v. Sandiganbayan[20] is most apropos: To reiterate what the Court has said in Ginete vs. Court of Appeals and other cases, the rules of procedure should be viewed as mere instruments designed to facilitate the attainment of justice. They are not to be applied with severity and rigidity when such application would clearly defeat the very rationale for their conception and existence. Even the Rules of Court reflects this principle. The power to suspend or even disregard rules, inclusive of the one-motion rule, can be so pervasive and compelling as to alter even that which this Court has already declared to be final. The peculiarities of this case impel us to do so now.

The Court, by a vote of 6-4, grants the respondent LGUs motion for reconsideration of the Resolution of June 2, 2009, as well as their May 14, 2009 motion to consider the second motion for reconsideration of the November 18, 2008 Decision unresolved, and also grants said second motion for reconsideration. This brings us to the substantive aspect of the case. The Undisputed Factual Antecedents in Brief During the 11th Congress,[21] fifty-seven (57) cityhood bills were filed before the House of Representatives.[22] Of the fifty-seven (57), thirty-three (33) eventually became laws. The twenty-four (24) other bills were not acted upon. Later developments saw the introduction in the Senate of Senate Bill (S. Bill) No. 2157[23] to amend Sec. 450 of Republic Act No. (RA) 7160, otherwise known as the Local Government Code (LGC) of 1991. The proposed amendment sought to increase the income requirement to qualify for conversion into a city from PhP 20 million average annual income to PhP 100 million locally generated income. In March 2001, S. Bill No. 2157 was signed into law as RA 9009 to take effect on June 30, 2001. As thus amended by RA 9009, Sec. 450 of the LGC of 1991 now provides that [a] municipality x x x may be converted into a component city if it has a [certified] locally generated

average annual income x x x of at least [PhP 100 million] for the last two (2) consecutive years based on 2000 constant prices. After the effectivity of RA 9009, the Lower House of the 12 th Congress adopted in July 2001 House (H.) Joint Resolution No. 29[24] which, as its title indicated, sought to exempt from the income requirement prescribed in RA 9009 the 24 municipalities whose conversions into cities were not acted upon during the previous Congress. The 12th Congress ended without the Senate approving H. Joint Resolution No. 29. Then came the 13th Congress (July 2004 to June 2007), which saw the House of Representatives re-adopting H. Joint Resolution No. 29 as H. Joint Resolution No. 1 and forwarding it to the Senate for approval. The Senate, however, again failed to approve the joint resolution. During the Senate session held on November 6, 2006, Senator Aquilino Pimentel, Jr. asserted that passing H. Resolution No. 1 would, in net effect, allow a wholesale exemption from the income requirement imposed under RA 9009 on the municipalities. For this reason, he suggested the filing by the House of Representatives of individual bills to pave the way for the municipalities to become cities and then forwarding them to the Senate for proper action.[25] Heeding the advice, sixteen (16) municipalities filed, through their respective sponsors, individual cityhood bills. Common to all 16 measures was a provision exempting the municipality covered from the PhP 100 million income requirement. As of June 7, 2007, both Houses of Congress had approved the individual cityhood bills, all of which eventually lapsed into law on various dates. Each cityhood law directs the COMELEC, within thirty (30) days from its approval, to hold a plebiscite to determine whether the voters approve of the conversion. As earlier stated, the instant petitions seek to declare the cityhood laws unconstitutional for violation of Sec. 10, Art. X of the Constitution, as well as for violation of the equal-protection clause. The wholesale conversion of municipalities into cities, the petitioners bemoan, will reduce the share of existing cities in the Internal Revenue Allotment (IRA), since more cities will partake of the internal revenue set aside for all cities under Sec. 285 of the LGC of 1991.[26]

Petitioners-in-intervention, LPC members themselves, would later seek leave and be allowed to intervene. Aside from their basic plea to strike down as unconstitutional the cityhood laws in question, petitioners and petitioners-in-intervention collectively pray that an order issue enjoining the COMELEC from conducting plebiscites in the affected areas. An alternative prayer would urge the Court to restrain the poll body from proclaiming the plebiscite results. On July 24, 2007, the Court en banc resolved to consolidate the petitions and the petitions-in-intervention. On March 11, 2008, it heard the parties in oral arguments. The Issues In the main, the issues to which all others must yield pivot on whether or not the cityhood laws violate (1) Sec. 10. Art. X of the Constitution and (2) the equal protection clause. In the November 18, 2008 Decision granting the petitions, Justice Antonio T. Carpio, for the Court, resolved the twin posers in the affirmative and accordingly declared the cityhood laws unconstitutional, deviating as they do from the uniform and non-discriminatory income criterion prescribed by the LGC of 1991. In so doing, the ponencia veritably agreed with the petitioners that the Constitution, in clear and unambiguous language, requires that all the criteria for the creation of a city shall be embodied and written in the LGC, and not in any other law. After a circumspect reflection, the Court is disposed to reconsider. Petitioners threshold posture, characterized by a strained interpretation of the Constitution, if accorded cogency, would veritably curtail and cripple Congress valid exercise of its authority to create political subdivisions. By constitutional design[27] and as a matter of long-established principle, the power to create political subdivisions or LGUs is essentially legislative in character. [28] But even without any constitutional grant, Congress can, by law, create, divide, merge, or altogether abolish or alter the boundaries of a province, city, or municipality. We said as much in the fairly recent case, Sema v. CIMELEC.[29] The 1987 Constitution, under its Art. X, Sec. 10, nonetheless provides for the creation of LGUs, thus:

Section 10. No province, city, municipality, or barangay shall be created, divided, merged, abolished, or its boundary substantially altered, except in accordance with the criteria established in the local government code and subject to approval by a majority of the votes cast in a plebiscite in the political units directly affected. (Emphasis supplied.)

As may be noted, the afore-quoted provision specifically provides for the creation of political subdivisions in accordance with the criteria established in the local government code, subject to the approval of the voters in the unit concerned. The criteria referred to are the verifiable indicators of viability, i.e., area, population, and income, now set forth in Sec. 450 of the LGC of 1991, as amended by RA 9009. The petitioners would parlay the thesis that these indicators or criteria must be written only in the LGC and not in any other statute. Doubtless, the code they are referring to is the LGC of 1991. Pushing their point, they conclude that the cityhood laws that exempted the respondent LGUs from the income standard spelled out in the amendatory RA 9009 offend the Constitution. Petitioners posture does not persuade. The supposedly infringed Art. X, Sec. 10 is not a new constitutional provision. Save for the use of the term barrio in lieu of barangay, may be instead of shall, the change of the phrase unit or units to political unit and the addition of the modifier directly to the word affected, the aforesaid provision is a substantial reproduction of Art. XI, Sec. 3 of the 1973 Constitution, which reads: Section 3. No province, city, municipality, or barrio may be created, divided, merged, abolished, or its boundary substantially altered, except in accordance with the criteria established in the local government code and subject to approval by a majority of the votes cast in a plebiscite in the unit or units affected. (Emphasis supplied.) It bears notice, however, that the code similarly referred to in the 1973 and 1987 Constitutions is clearly but a law Congress enacted. This is consistent with the aforementioned plenary power of Congress to create political units. Necessarily, since Congress wields the vast poser of creating political subdivisions, surely it can exercise the lesser authority of requiring a set of criteria, standards, or ascertainable indicators of viability for their creation. Thus, the only conceivable reason why the Constitution employs the clause in accordance with the criteria established in the local government code is to lay stress that it is Congress alone, and no

other, which can impose the criteria. The eminent constitutionalist, Fr. Joaquin G. Bernas, S.J., in his treatise on Constitutional Law, specifically on the subject provision, explains: Prior to 1965, there was a certain lack of clarity with regard to the power to create, divide, merge, dissolve, or change the boundaries of municipal corporations. The extent to which the executive may share in this power was obscured by Cardona v. Municipality of Binangonan.[30] Pelaez v. Auditor General subsequently clarified the Cardona case when the Supreme Court said that the authority to create municipal corporations is essentially legislative in nature.[31] Pelaez, however, conceded that the power to fix such common boundary, in order to avoid or settle conflicts of jurisdiction between adjoining municipalities, may partake of an administrative nature-involving as it does, the adoption of means and ways to carry into effect the law creating said municipalities.[32] Pelaez was silent about division, merger, and dissolution of municipal corporations. But since division in effect creates a new municipality, and both dissolution and merger in effect abolish a legal creation, it may fairly be inferred that these acts are also legislative in nature. Section 10 [Art. X of the 1987 Constitution], which is a legacy from the 1973 Constitution, goes further than the doctrine in the Pelaez case. It not only makes creation, division, merger, abolition or substantial alteration of boundaries of provinces, cities, municipalities x x x subject to criteria established in the local government code, thereby declaring these actions properly legislative , but it also makes creation, division, merger, abolition or substantial alteration of boundaries subject to approval by a majority of the votes cast in a plebiscite in the political units directly affected.[33] x x x (Emphasis added.)

It remains to be observed at this juncture that when the 1987 Constitution speaks of the LGC, the reference cannot be to any specific statute or codification of laws, let alone the LGC of 1991.[34] Be it noted that at the time of the adoption of the 1987 Constitution, Batas Pambansa Blg. (BP) 337, the then LGC, was still in effect. Accordingly, had the framers of the 1987 Constitution intended to isolate the embodiment of the criteria only in the LGC, then they would have actually referred to BP 337. Also, they would then not have provided for the enactment by Congress of a new LGC, as they did in Art. X, Sec. 3[35] of the Constitution. Consistent with its plenary legislative power on the matter, Congress can, via either a consolidated set of laws or a much simpler, single-subject enactment, impose the said verifiable criteria of viability. These criteria need not be embodied in the local government code, albeit this code is the ideal repository to ensure, as much as possible, the element of uniformity. Congress can even, after making a codification, enact an amendatory law, adding to the existing layers of

indicators earlier codified, just as efficaciously as it may reduce the same. In this case, the amendatory RA 9009 upped the already codified income requirement from PhP 20 million to PhP 100 million. At the end of the day, the passage of amendatory laws is no different from the enactment of laws, i.e., the cityhood laws specifically exempting a particular political subdivision from the criteria earlier mentioned. Congress, in enacting the exempting law/s, effectively decreased the already codified indicators. Petitioners theory that Congress must provide the criteria solely in the LGC and not in any other law strikes the Court as illogical. For if we pursue their contention to its logical conclusion, then RA 9009 embodying the new and increased income criterion would, in a way, also suffer the vice of unconstitutionality. It is startling, however, that petitioners do not question the constitutionality of RA 9009, as they in fact use said law as an argument for the alleged unconstitutionality of the cityhood laws. As it were, Congress, through the medium of the cityhood laws, validly decreased the income criterion vis--vis the respondent LGUs, but without necessarily being unreasonably discriminatory, as shall be discussed shortly, by reverting to the PhP 20 million threshold what it earlier raised to PhP 100 million. The legislative intent not to subject respondent LGUs to the more stringent requirements of RA 9009 finds expression in the following uniform provision of the cityhood laws: Exemption from Republic Act No. 9009. The City of x x x shall be exempted from the income requirement prescribed under Republic Act No. 9009. In any event, petitioners constitutional objection would still be untenable even if we were to assume purely ex hypothesi the correctness of their underlying thesis, viz: that the conversion of a municipality to a city shall be in accordance with, among other things, the income criterion set forth in the LGC of 1991, and in no other; otherwise, the conversion is invalid. We shall explain. Looking at the circumstances behind the enactment of the laws subject of contention, the Court finds that the LGC-amending RA 9009, no less, intended the LGUs covered by the cityhood laws to be exempt from the PhP 100 million income criterion. In other words, the cityhood laws, which merely carried out the intent of RA 9009, adhered, in the final analysis, to the criteria established in the Local Government Code, pursuant to Sec. 10, Art. X of the 1987 Constitution. We shall now proceed to discuss this exemption angle.[36]

Among the criteria established in the LGC pursuant to Sec.10, Art. X of the 1987 Constitution are those detailed in Sec. 450 of the LGC of 1991 under the heading Requisites for Creation. The section sets the minimum income qualifying bar before a municipality or a cluster of barangays may be considered for cityhood. Originally, Sec. 164 of BP 337 imposed an average regular annual income of at least ten million pesos for the last three consecutive years as a minimum income standard for a municipal-to-city conversion. The LGC that BP 337established was superseded by the LGC of 1991 whose then Sec. 450 provided that [a] municipality or cluster of barangays may be converted into a component city if it has an average annual income, x x x of at least twenty million pesos (P20,000,000.00) for at least two (2) consecutive years based on 1991 constant prices x x x. RA 9009 in turn amended said Sec. 450 by further increasing the income requirement to PhP 100 million, thus: Section 450. Requisites for Creation. (a) A municipality or a cluster of barangays may be converted into a component city if it has a locally generated average annual income, as certified by the Department of Finance, of at least One Hundred Million Pesos (P100,000,000.00) for the last two (2) consecutive years based on 2000 constant prices, and if it has either of the following requisites: xxxx (c) The average annual income shall include the income accruing to the general fund, exclusive of special funds, transfers, and non-recurring income. (Emphasis supplied.) The legislative intent is not at all times accurately reflected in the manner in which the resulting law is couched. Thus, applying a verba legis[37] or strictly literal interpretation of a statute may render it meaningless and lead to inconvenience, an absurd situation or injustice. [38] To obviate this aberration, and bearing in mind the principle that the intent or the spirit of the law is the law itself,[39] resort should be to the rule that the spirit of the law controls its letter.[40] It is in this respect that the history of the passage of RA 9009 and the logical inferences derivable therefrom assume relevancy in discovering legislative intent.[41] The rationale behind the enactment of RA 9009 to amend Sec. 450 of the LGC of 1991 can reasonably be deduced from Senator Pimentels sponsorship speech on S. Bill No. 2157. Of particular significance is his statement regarding the basis for the proposed increase from PhP 20

million to PhP 100 million in the income requirement for municipalities wanting to be converted into cities, viz: Senator Pimentel. Mr. President, I would have wanted this bill to be included in the whole set of proposed amendments that we have introduced to precisely amend the [LGC]. However, it is a fact that there is a mad rush of municipalities wanting to be converted into cities . Whereas in 1991, when the [LGC] was approved, there were only 60 cities, today the number has increased to 85 cities, with 41 more municipalities applying for conversion x x x. At the rate we are going, I am apprehensive that before long this nation will be a nation of all cities and no municipalities. It is for that reason, Mr. President, that we are proposing among other things, that the financial requirement, which, under the [LGC], is fixed at P20 million, be raised to P100 million to enable a municipality to have the right to be converted into a city, and the P100 million should be sourced from locally generated funds.

Congress to be sure knew, when RA 9009 was being deliberated upon, of the pendency of several bills on cityhood, wherein the applying municipalities were qualified under the then obtaining PhP 20 million-income threshold. These included respondent LGUs. Thus, equally noteworthy is the ensuing excerpts from the floor exchange between then Senate President Franklin Drilon and Senator Pimentel, the latter stopping short of saying that the income threshold of PhP 100 million under S. Bill No. 2157 would not apply to municipalities that have pending cityhood bills, thus: THE PRESIDENT. The Chair would like to ask for some clarificatory point. x x x THE PRESIDENT. This is just on the point of the pending bills in the Senate which propose the conversion of a number of municipalities into cities and which qualify under the present standard. We would like to know the view of the sponsor: Assuming that this bill becomes a law, will the Chamber apply the standard as proposed in this bill to those bills which are pending for consideration? SENATOR PIMENTEL, Mr. President, it might not be fair to make this bill x x x [if] approved, retroact to the bills that are pending in the Senate for conversion from municipalities to cities.

THE PRESIDENT. Will there be an appropriate language crafted to reflect that view? Or does it not become a policy of the Chamber, assuming that this bill becomes a law x x x that it will apply to those bills which are already approved by the House under the old version of the [LGC] and are now pending in the Senate? The Chair does not know if we can craft a language which will limit the application to those which are not yet in the Senate. Or is that a policy that the Chamber will adopt? SENATOR PIMENTEL. Mr. President, personally, I do not think it is necessary to put that provision because what we are saying here will form part of the interpretation of this bill. Besides, if there is no retroactivity clause, I do not think that the bill would have any retroactive effect. THE PRESIDENT. So the understanding is that those bills which are already pending in the Chamber will not be affected. SENATOR PIMENTEL. These will not be affected, Mr. President. (Emphasis and underscoring supplied.) What the foregoing Pimental-Drilon exchange eloquently indicates are the following complementary legislative intentions: (1) the then pending cityhood bills would be outside the pale of the minimum income requirement of PhP 100 million that S. Bill No. 2159 proposes; and (2) RA 9009 would not have any retroactive effect insofar as the cityhood bills are concerned.
[42]

Given the foregoing perspective, it is not amiss to state that the basis for the inclusion of the exemption clause of the cityhood laws is the clear-cut intent of Congress of not according retroactive effect to RA 9009. Not only do the congressional records bear the legislative intent of exempting the cityhood laws from the income requirement of PhP 100 million. Congress has now made its intention to exempt express in the challenged cityhood laws. Legislative intent is part and parcel of the law, the controlling factor in interpreting a statute. In construing a statute, the proper course is to start out and follow the true intent of the Legislature and to adopt the sense that best harmonizes with the context and promotes in the fullest manner the policy and objects of the legislature. [43] In fact, any interpretation that runs counter to the legislative intent is unacceptable and invalid.[44] Torres v. Limjap could not have been more precise: The intent of a Statute is the Law. If a statute is valid, it is to have effect according to the purpose and intent of the lawmaker. The intent is x x x the essence of the law and the primary rule of construction is to ascertain and give effect to that intent. The intention of the legislature in enacting a law is the law itself, and must be enforced when ascertained, although it may not be

consistent with the strict letter of the statute . Courts will not follow the letter of a statute when it leads away from the true intent and purpose of the legislature and to conclusions inconsistent with the general purpose of the act. Intent is the spirit which gives life to a legislative enactment . In construing statutes the proper course is to start out and follow the true intent of the legislature x x x. [45] (Emphasis supplied.) As emphasized at the outset, behind every law lies the presumption of constitutionality. [46] Consequently, to him who would assert the unconstitutionality of a statute belongs the burden of proving otherwise. Laws will only be declared invalid if a conflict with the Constitution is beyond reasonable doubt.[47] Unfortunately for petitioners and petitioners-in-intervention, they failed to discharge their heavy burden. It is contended that the deliberations on the cityhood bills and the covering joint resolution were undertaken in the 11th and/or the 12th Congress. Accordingly, so the argument goes, such deliberations, more particularly those on the unapproved resolution exempting from RA 9009 certain municipalities, are without significance and would not qualify as extrinsic aids in construing the cityhood laws that were passed during the 13th Congress, Congress not being a continuing body. The argument is specious and glosses over the reality that the cityhood billswhich were already being deliberated upon even perhaps before the conception of RA 9009were again being considered during the 13th Congress after being tossed around in the two previous Congresses. And specific reference to the cityhood bills was also made during the deliberations on RA 9009. At the end of the day, it is really immaterial if Congress is not a continuing legislative body. What is important is that the debates, deliberations, and proceedings of Congress and the steps taken in the enactment of the law, in this case the cityhood laws in relation to RA 9009 or vice versa, were part of its legislative history and may be consulted, if appropriate, as aids in the interpretation of the law.[48] And of course the earlier cited DrilonPimentel exchange on whether or not the 16 municipalities in question would be covered by RA 9009 is another vital link to the historical chain of the cityhood bills. This and other proceedings on the bills are spread in the Congressional journals, which cannot be conveniently reduced to pure rhetoric without meaning whatsoever, on the simplistic and non-sequitur pretext that Congress is not a continuing body and that unfinished business in either chamber is deemed terminated at the end of the term of Congress. This brings us to the challenge to the constitutionality of cityhood laws on equal protection grounds.

To the petitioners, the cityhood laws, by granting special treatment to respondent municipalities/LGUs by way of exemption from the standard PhP 100 million minimum income requirement, violate Sec.1, Art. III of the Constitution, which in part provides that no person shall be denied the equal protection of the laws. Petitioners challenge is not well taken. At its most basic, the equal protection clause proscribes undue favor as well as hostile discrimination. Hence, a law need not operate with equal force on all persons or things to be conformable with Sec. 1, Art. III of the Constitution. The equal protection guarantee is embraced in the broader and elastic concept of due process, every unfair discrimination being an offense against the requirements of justice and fair play. It has nonetheless come as a separate clause in Sec. 1, Art. III of the Constitution to provide for a more specific protection against any undue discrimination or antagonism from government. Arbitrariness in general may be assailed on the basis of the due process clause. But if a particular challenged act partakes of an unwarranted partiality or prejudice, the sharper weapon to cut it down is the equal protection clause. [49] This constitutional protection extends to all persons, natural or artificial, within the territorial jurisdiction. Artificial persons, as the respondent LGUs herein, are, however, entitled to protection only insofar as their property is concerned.[50] In the proceedings at bar, petitioner LCP and the intervenors cannot plausibly invoke the equal protection clause, precisely because no deprivation of property results by virtue of the enactment of the cityhood laws. The LCPs claim that the IRA of its member-cities will be substantially reduced on account of the conversion into cities of the respondent LGUs would not suffice to bring it within the ambit of the constitutional guarantee. Indeed, it is presumptuous on the part of the LCP member-cities to already stake a claim on the IRA, as if it were their property, as the IRA is yet to be allocated. For the same reason, the municipalities that are not covered by the uniform exemption clause in the cityhood laws cannot validly invoke constitutional protection. For, at this point, the conversion of a municipality into a city will only affect its status as a political unit, but not its property as such. As a matter of settled legal principle, the fundamental right of equal protection does not require absolute equality. It is enough that all persons or things similarly situated should be treated alike, both as to rights or privileges conferred and responsibilities or obligations imposed. The equal protection clause does not preclude the state from recognizing and acting upon factual

differences between individuals and classes. It recognizes that inherent in the right to legislate is the right to classify,[51] necessarily implying that the equality guaranteed is not violated by a legislation based on reasonable classification. Classification, to be reasonable, must (1) rest on substantial distinctions; (2) be germane to the purpose of the law; (3) not be limited to existing conditions only; and (4) apply equally to all members of the same class. [52] The Court finds that all these requisites have been met by the laws challenged as arbitrary and discriminatory under the equal protection clause. As things stand, the favorable treatment accorded the sixteen (16) municipalities by the cityhood laws rests on substantial distinction. Indeed, respondent LGUs, which are subjected only to the erstwhile PhP 20 million income criterion instead of the stringent income requirement prescribed in RA 9009, are substantially different from other municipalities desirous to be cities. Looking back, we note that respondent LGUs had pending cityhood bills before the passage of RA 9009. There lies part of the tipping difference. And years before the enactment of the amendatory RA 9009, respondents LGUs had already met the income criterion exacted for cityhood under the LGC of 1991. Due to extraneous circumstances, however, the bills for their conversion remained unacted upon by Congress. As aptly observed by then Senator, now Manila Mayor, Alfredo Lim in his speech sponsoring H. Joint Resolution No. 1, or the cityhood bills, respondent LGUs saw themselves confronted with the changing of the rules in the middle of the game. Some excerpts of Senator Lims sponsorship speech: x x x [D]uring the Eleventh Congress, fifty-seven (57) municipalities applied for city status, confident that each has met the requisites for conversion under Section 450 of the [LGC], particularly the income threshold of P20 million. Of the 57 that filed, thirty-two (32) were enacted into law; x x x while the rest twenty-four (24) in all failed to pass through Congress. Shortly before the long recess of Congress in February 2001, to give way to the May elections x x x, Senate Bill No. 2157, which eventually became [RA] 9009, was passed into law, effectively raising the income requirement for creation of cities to a whoopingP100 million x x x. Much as the proponents of the 24 cityhood bills then pending struggled to beat the effectivity of the law on June 30, 2001, events that then unfolded were swift and overwhelming that Congress just did not have the time to act on the measures. Some of these intervening events were x x x the impeachment of President Estrada x x x and the May 2001 elections. The imposition of a much higher income requirement for the creation of a city x x x was unfair; like any sport changing the rules in the middle of the game.

Undaunted, they came back during the [12th] Congress x x x. They filed House Joint Resolution No. 29 seeking exemption from the higher income requirement of RA 9009. For the second time, [however], time ran out from them. For many of the municipalities whose Cityhood Bills are now under consideration, this year, at the closing days of the [13th] Congress, marks their ninth year appealing for fairness and justice. x x x I, for one, share their view that fairness dictates that they should be given a legal remedy by which they could be allowed to prove that they have all the necessary qualifications for city status using the criteria set forth under the [LGC] prior to its amendment by RA 9009. Hence, when House Joint Resolution No. 1 reached the Senate x x x I immediately set the public hearing x x x. On July 25, 2006, I filed Committee Report No. 84 x x x. On September 6, I delivered the sponsorship x x x. x x x By November 14, the measure had reverted to the period of individual amendments. This was when the then acting majority leader, x x x informed the Body that Senator Pimentel and the proponents of House Joint Resolution No. 1 have agreed to the proposal of the Minority Leader for the House to first approve the individual Cityhood Bills of the qualified municipalities, along with the provision exempting each of them from the higher income requirement of RA 9009. x x x This led to the certification issued by the proponents short-listing fourteen (14) municipalities deemed to be qualified for city-status. Acting on the suggestion of Senator Pimentel, the proponents lost no time in working for the approval by the House of Representatives of their individual Cityhood Bills, each containing a provision of exemption from the higher income requirement of RA 9009. On the last session day of last year, December 21, the House transmitted to the Senate the Cityhood Bills of twelve out of the 14 prequalified municipalities. Your Committee immediately conducted the public hearing x x x. The whole process I enumerated [span] three Congresses x x x. In essence, the Cityhood Bills now under consideration will have the same effect as that of House Joint Resolution No. 1 because each of the 12 bills seeks exemption from the higher income requirement of RA 9009. The proponents are invoking the exemption on the basis of justice and fairness. Each of the 12 municipalities has all the requisites for conversion into a component city based on the old requirements set forth under Section 450

of the [LGC], prior to its amendment by RA 9009 , namely: x x x[53] (Emphasis supplied.) In hindsight, the peculiar conditions, as depicted in Senator Lims speech, which respondent LGUs found themselves in were unsettling. They were qualified cityhood applicants before the enactment of RA 009. Because of events they had absolutely nothing to do with, a spoiler in the form of RA 9009 supervened. Now, then, to impose on them the much higher income requirement after what they have gone through would appear to be indeed unfair, to borrow from Senator Lim. Thus, the imperatives of fairness dictate that they should be given a legal remedy by which they would be allowed to prove that they have all the necessary qualifications for city status, using the criteria set forth under the LGC of 1991 prior to its amendment by RA 9009. Truly, the peculiar conditions of respondent LGUs, which are actual and real, provide sufficient grounds for legislative classification. To be sure, courts, regardless of doubts they might be entertaining, cannot question the wisdom of the congressional classification, if reasonable, or the motivation underpinning the classification.[54] By the same token, they do not sit to determine the propriety or efficacy of the remedies Congress has specifically chosen to extend. That is its prerogative. The power of the Legislature to make distinctions and classifications among persons is, to reiterate, neither curtailed nor denied by the equal protection clause. A law can be violative of the constitutional limitation only when the classification is without reasonable basis. The classification is also germane to the purpose of the law. The exemption of respondent LGUs/municipalities from the PhP 100 million income requirement was meant to reduce the inequality occasioned by the passage of the amendatory RA 9009. From another perspective, the exemption was unquestionably designed to insure that fairness and justice would be accorded respondent LGUs. Let it be noted that what were then the cityhood bills covering respondent LGUs were part and parcel of the original 57 conversion bills filed in the 11 thCongress, 33 of those became laws before the adjournment of that Congress. The then bills of the challenged cityhood laws were not acted upon due, inter alia, to the impeachment of then President Estrada, the related jueteng scandal investigations conducted before, and the EDSA events that followed the aborted impeachment.

While the equal protection guarantee frowns upon the creation of a privileged class without justification, inherent in the equality clause is the exhortation for the Legislature to pass laws promoting equality or reducing existing inequalities. The enactment of the cityhood laws was in a real sense an attempt on the part of Congress to address the inequity dealt the respondent LGUs. These laws positively promoted the equality and eliminated the inequality, doubtless unintended, between respondent municipalities and the thirty-three (33) other municipalities whose cityhood bills were enacted during the 11th Congress. Respondent municipalities and the 33 other municipalities, which had already been elevated to city status, were all found to be qualified under the old Sec. 450 of the LGC of 1991 during the 11th Congress. As such, both respondent LGUs and the 33 other former municipalities are under like circumstances and conditions. There is, thus, no rhyme or reason why an exemption from the PhP 100 million requirement cannot be given to respondent LGUs. Indeed, to deny respondent LGUs/municipalities the same rights and privileges accorded to the 33 other municipalities when, at the outset they were similarly situated, is tantamount to denying the former the protective mantle of the equal protection clause. In effect, petitioners and petitioners-inintervention are creating an absurd situation in which an alleged violation of the equal protection clause of the Constitution is remedied by another violation of the same clause. The irony is not lost to the Court. Then too the non-retroactive effect of RA 9009 is not limited in application only to conditions existing at the time of its enactment. It is intended to apply for all time, as long as the contemplated conditions obtain. To be more precise, the legislative intent underlying the enactment of RA 9009 to exclude would-be-cities from the PhP 100 million criterion would hold sway, as long as the corresponding cityhood bill has been filed before the effectivity of RA 9009 and the concerned municipality qualifies for conversion into a city under the original version of Sec. 450 of the LGC of 1991. Viewed in its proper light, the common exemption clause in the cityhood laws is an application of the non-retroactive effect of RA 9009 on the cityhood bills . It is not a declaration of certain rights, but a mere declaration of prior qualification and/or compliance with the nonretroactive effect of RA 9009. Lastly and in connection with the third requisite, the uniform exemption clause would apply to municipalities that had pending cityhood bills before the passage of RA 9009 and were compliant with then Sec. 450 of the LGC of 1991, which prescribed an income requirement of PhP 20 million. It is hard to imagine, however, if there are still municipalities out there

belonging in context to the same class as the sixteen (16) respondent LGUs. Municipalities that cannot claim to belong to the same class as the 16 cannot seek refuge in the cityhood laws. The former have to comply with the PhP 100 million income requirement imposed by RA 9009. A final consideration. The existence of the cities consequent to the approval of the creating, but challenged, cityhood laws in the plebiscites held in the affected LGUs is now an operative fact. New cities appear to have been organized and are functioning accordingly, with new sets of officials and employees. Other resulting events need not be enumerated. The operative fact doctrine provides another reason for upholding the constitutionality of the cityhood laws in question. In view of the foregoing discussion, the Court ought to abandon as it hereby abandons and sets aside the Decision of November 18, 2008 subject of reconsideration. And by way of summing up the main arguments in support of this disposition, the Court hereby declares the following:

(1) Congress did not intend the increased income requirement in RA 9009 to apply to the cityhood bills which became the cityhood laws in question. In other words, Congress intended the subject cityhood laws to be exempted from the income requirement of PhP 100 million prescribed by RA 9009; (2) The cityhood laws merely carry out the intent of RA 9009, now Sec. 450 of the LGC of 1991, to exempt respondent LGUs from the PhP 100 million income requirement; (3) The deliberations of the 11th or 12th Congress on unapproved bills or resolutions are extrinsic aids in interpreting a law passed in the 13th Congress. It is really immaterial if Congress is not a continuing body. The hearings and deliberations during the 11 th and 12th Congress may still be used as extrinsic reference inasmuch as the same cityhood bills which were filed before the passage of RA 9009 were being considered during the 13 th Congress. Courts may fall back on the history of a law, as here, as extrinsic aid of statutory construction if the literal application of the law results in absurdity or injustice.

(4) The exemption accorded the 16 municipalities is based on the fact that each had pending cityhood bills long before the enactment of RA 9009 that substantially distinguish them from other municipalities aiming for cityhood. On top of this, each of the 16 also met the PhP 20 million income level exacted under the original Sec. 450 of the 1991 LGC. And to stress the obvious, the cityhood laws are presumed constitutional. As we see it, petitioners have not overturned the presumptive constitutionality of the laws in question.

WHEREFORE, respondent LGUs Motion for Reconsideration dated June 2, 2009, their Motion to Amend the Resolution of April 28, 2009 by Declaring Instead that Respondents Motion for Reconsideration of the Resolution of March 31, 2009 and Motion for Leave to File and to Admit Attached Second Motion for Reconsideration of the Decision Dated November 18, 2008 Remain Unresolved and to Conduct Further Proceedings, dated May 14, 2009, and their second Motion for Reconsideration of the Decision dated November 18, 2008 are GRANTED. The June 2, 2009, the March 31, 2009, and April 31, 2009 Resolutions are REVERSED and SET ASIDE. The entry of judgment made on May 21, 2009 must accordingly be RECALLED.

The instant consolidated petitions and petitions-in-intervention are DISMISSED. The cityhood laws, namely Republic Act Nos. 9389, 9390, 9391, 9392, 9393, 9394, 9398, 9404, 9405, 9407, 9408, 9409, 9434, 9435, 9436, and 9491 are

declared VALID and CONSTITUTIONAL.

SO ORDERED.

PRESBITERO J. VELASCO, JR. Associate Justice

FIRST DIVISION

[G.R. No. 147096. January 15, 2002]

REPUBLIC OF THE PHILIPPINES, represented by NATIONAL TELECOMMUNICATIONS COMMISSION, petitioner, vs. EXPRESS TELECOMMUNICATION CO., INC. and BAYAN TELECOMMUNICATIONS CO., INC., respondents.

[G.R. No. 147210. January 15, 2002]

BAYAN TELECOMMUNICATIONS (Bayantel), INC., petitioner, TELECOMMUNICATION CO., INC. (Extelcom), respondent. DECISION YNARES-SANTIAGO, J.:

vs. EXPRESS

On December 29, 1992, International Communications Corporation (now Bayan Telecommunications, Inc. or Bayantel) filed an application with the National Telecommunications Commission (NTC) for a Certificate of Public Convenience or Necessity (CPCN) to install, operate and maintain a digital Cellular Mobile Telephone System/Service (CMTS) with prayer for a Provisional Authority (PA). The application was docketed as NTC Case No. 92-486.[1] Shortly thereafter, or on January 22, 1993, the NTC issued Memorandum Circular No. 4-193 directing all interested applicants for nationwide or regional CMTS to file their respective applications before the Commission on or before February 15, 1993, and deferring the acceptance of any application filed after said date until further orders.[2] On May 6, 1993, and prior to the issuance of any notice of hearing by the NTC with respect to Bayantels original application, Bayantel filed an urgent ex-parte motion to admit an amended

application.[3]On May 17, 1993, the notice of hearing issued by the NTC with respect to this amended application was published in the Manila Chronicle. Copies of the application as well as the notice of hearing were mailed to all affected parties. Subsequently, hearings were conducted on the amended application. But before Bayantel could complete the presentation of its evidence, the NTC issued an Order datedDecember 19, 1993 stating: In view of the recent grant of two (2) separate Provisional Authorities in favor of ISLACOM and GMCR, Inc., which resulted in the closing out of all available frequencies for the service being applied for by herein applicant, and in order that this case may not remain pending for an indefinite period of time, AS PRAYED FOR, let this case be, as it is, hereby ordered ARCHIVED without prejudice to its reinstatement if and when the requisite frequency becomes available. SO ORDERED.[4] On June 18, 1998, the NTC issued Memorandum Circular No. 5-6-98 re-allocating five (5) megahertz (MHz) of the radio frequency spectrum for the expansion of CMTS networks. The reallocated 5 MHz were taken from the following bands: 1730-1732.5 / 1825-1827.5 MHz and 1732.5-1735 / 1827.5-1830 MHz.[5] Likewise, on March 23, 1999, Memorandum Circular No. 3-3-99 was issued by the NTC reallocating an additional five (5) MHz frequencies for CMTS service, namely: 1735-1737.5 / 1830-1832.5 MHz; 1737.5-1740 / 1832.5-1835 MHz; 1740-1742.5 / 1835-1837.5 MHz; and 1742.5-1745 / 1837.5-1840 MHz.[6] On May 17, 1999, Bayantel filed an Ex-Parte Motion to Revive Case,[7] citing the availability of new frequency bands for CMTS operators, as provided for under Memorandum Circular No. 3-3-99. On February 1, 2000, the NTC granted BayanTels motion to revive the latters application and set the case for hearings on February 9, 10, 15, 17 and 22, 2000. [8] The NTC noted that the application was ordered archived without prejudice to its reinstatement if and when the requisite frequency shall become available. Respondent Express Telecommunication Co., Inc. (Extelcom) filed in NTC Case No. 92-486 an Opposition (With Motion to Dismiss) praying for the dismissal of Bayantels application. [9] Extelcomargued that Bayantels motion sought the revival of an archived application filed almost eight (8) years ago. Thus, the documentary evidence and the allegations of respondent Bayantel in this application are all outdated and should no longer be used as basis of the necessity for the proposed CMTS service. Moreover, Extelcom alleged that there was no public need for the service applied for by Bayantel as the present five CMTS operators --- Extelcom, Globe Telecom, Inc., Smart Communication, Inc., Pilipino Telephone Corporation, and Isla Communication Corporation, Inc. --- more than adequately addressed the market demand, and all are in the process of enhancing and expanding their respective networks based on recent technological developments. Extelcom likewise contended that there were no available radio frequencies that could accommodate a new CMTS operator as the frequency bands allocated in NTC Memorandum Circular No. 3-3-99were intended for and had in fact been applied for by the existing CMTS

operators. The NTC, in its Memorandum Circular No. 4-1-93, declared it its policy to defer the acceptance of any application for CMTS. All the frequency bands allocated for CMTS use under the NTCs Memorandum Circular No. 5-11-88 and Memorandum Circular No. 2-12-92 had already been allocated to the existing CMTS operators. Finally, Extelcom pointed out that Bayantel is its substantial stockholder to the extent of about 46% of its outstanding capital stock, and Bayantels application undermines the very operations ofExtelcom. On March 13, 2000, Bayantel filed a Consolidated Reply/Comment,[10] stating that the opposition was actually a motion seeking a reconsideration of the NTC Order reviving the instant application, and thus cannot dwell on the material allegations or the merits of the case. Furthermore, Extelcom cannot claim that frequencies were not available inasmuch as the allocation and assignment thereof rest solely on the discretion of the NTC. In the meantime, the NTC issued on March 9, 2000 Memorandum Circular No. 9-3-2000, re-allocating the following radio frequency bands for assignment to existing CMTS operators and to public telecommunication entities which shall be authorized to install, operate and maintain CMTS networks, namely: 1745-1750MHz / 1840-1845MHz; 1750-1775MHz / 18451850MHz; 1765-1770MHz / 1860-1865MHz; and 1770-1775MHz / 1865-1870MHz.[11] On May 3, 2000, the NTC issued an Order granting in favor of Bayantel a provisional authority to operate CMTS service.[12] The Order stated in pertinent part: On the issue of legal capacity on the part of Bayantel, this Commission has already taken notice of the change in name of International Communications Corporation to Bayan Telecommunications, Inc. Thus, in the Decision entered in NTC Case No. 93-284/94200 dated 19 July 1999, it was recognized that Bayan Telecommunications, Inc., was formerly named International Communications Corp. Bayantel and ICC Telecoms, Inc. are one and the same entity, and it necessarily follows that what legal capacity ICC Telecoms has or has acquired is also the legal capacity that Bayantel possesses. On the allegation that the Commission has committed an error in allowing the revival of the instant application, it appears that the Order dated 14 December 1993 archiving the same was anchored on the non-availability of frequencies for CMTS. In the same Order, it was expressly stated that the archival hereof, shall be without prejudice to its reinstatement if and when the requisite frequency becomes available. Inherent in the said Order is the prerogative of the Commission in reviving the same, subject to prevailing conditions. The Order of 1 February 2001, cited the availability of frequencies for CMTS, and based thereon, the Commission, exercising its prerogative, revived and reinstated the instant application. The fact that the motion for revival hereof was made ex-parte by the applicant is of no moment, so long as the oppositors are given the opportunity to be later heard and present the merits of their respective oppositions in the proceedings. On the allegation that the instant application is already obsolete and overtaken by developments, the issue is whether applicant has the legal, financial and technical capacity to undertake the proposed project. The determination of such capacity lies solely within the discretion of the Commission, through its applicable rules and regulations. At any rate, the oppositors are not precluded from showing evidence disputing such capacity in the proceedings at hand. On the alleged non-availability of frequencies for the proposed service in view of the pending

applications for the same, the Commission takes note that it has issued Memorandum Circular 93-2000, allocating additional frequencies for CMTS. The eligibility of existing operators who applied for additional frequencies shall be treated and resolved in their respective applications, and are not in issue in the case at hand. Accordingly, the Motions for Reconsideration filed by SMARTCOM and GLOBE TELECOMS/ISLACOM and the Motion to Dismiss filed by EXTELCOM are hereby DENIED for lack of merit.[13] The grant of the provisional authority was anchored on the following findings: COMMENTS: 1. Due to the operational mergers between Smart Communications, Inc. and Pilipino Telephone Corporation (Piltel) and between Globe Telecom, Inc. (Globe) and Isla Communications, Inc. (Islacom), free and effective competition in the CMTS market is threatened. The fifth operator, Extelcom, cannot provide good competition in as much as it provides service using the analog AMPS. The GSM system dominates the market. 2. There are at present two applicants for the assignment of the frequencies in the 1.7 Ghz and 1.8 Ghz allocated to CMTS, namely Globe and Extelcom. Based on the number of subscribers Extelcom has, there appears to be no congestion in its network - a condition that is necessary for an applicant to be assigned additional frequencies. Globe has yet to prove that there is congestion in its network considering its operational merger with Islacom. 3. Based on the reports submitted to the Commission, 48% of the total number of cities and municipalities are still without telephone service despite the more than 3 million installed lines waiting to be subscribed. CONCLUSIONS: 1. To ensure effective competition in the CMTS market considering the operational merger of some of the CMTS operators, new CMTS operators must be allowed to provide the service. 2. The re-allocated frequencies for CMTS of 3 blocks of 5 Mhz x 2 is sufficient for the number of applicants should the applicants be qualified. 3. There is a need to provide service to some or all of the remaining cities and municipalities without telephone service. 4. The submitted documents are sufficient to determine compliance to the technical requirements. The applicant can be directed to submit details such as channeling plans, exact locations of cell sites, etc. as the project implementation progresses, actual area coverage ascertained and traffic data are made available. Applicant appears to be technically qualified to undertake the proposed project and offer the proposed service.

IN VIEW OF THE FOREGOING and considering that there is prima facie evidence to show that Applicant is legally, technically and financially qualified and that the proposed service is technically feasible and economically viable, in the interest of public service, and in order to facilitate the development of telecommunications services in all areas of the country, as well as to ensure healthy competition among authorized CMTS providers, let a PROVISIONAL AUTHORITY (P.A.) be issued to Applicant BAYAN TELECOMMUNICATIONS, INC. authorizing it to construct, install, operate and maintain a Nationwide Cellular Mobile Telephone Systems (CMTS), subject to the following terms and conditions without prejudice to a final decision after completion of the hearing which shall be called within thirty (30) days from grant of authority, in accordance with Section 3, Rule 15, Part IV of the Commissions Rules of Practice and Procedure. xxx.[14] Extelcom filed with the Court of Appeals a petition for certiorari and prohibition, docketed as CA-G.R. SP No. 58893, seeking the annulment of the Order reviving the application of Bayantel, the Order granting Bayantel a provisional authority to construct, install, operate and maintain a nationwide CMTS, and Memorandum Circular No. 9-3-2000 allocating frequency bands to new public telecommunication entities which are authorized to install, operate and maintain CMTS.
[15] [16]

On September 13, 2000, the Court of Appeals rendered the assailed Decision, the dispositive portion of which reads:

WHEREFORE, the writs of certiorari and prohibition prayed for are GRANTED. The Orders of public respondent dated February 1, 2000 and May 3, 2000 in NTC Case No. 92-486 are hereby ANNULLED and SET ASIDEand the Amended Application of respondent Bayantel is DISMISSED without prejudice to the filing of a new CMTS application. The writ of preliminary injunction issued under our Resolution dated August 15, 2000, restraining and enjoining the respondents from enforcing the Orders dated February 1, 2000 and May 3, 2000 in the said NTC case is hereby made permanent. The Motion for Reconsideration of respondent Bayantel dated August 28, 2000 is denied for lack of merit. SO ORDERED.[17] Bayantel filed a motion for reconsideration of the above decision. [18] The NTC, represented by the Office of the Solicitor General (OSG), also filed its own motion for reconsideration. [19] On the other hand, Extelcom filed a Motion for Partial Reconsideration, praying that NTC Memorandum Circular No. 9-3-2000 be also declared null and void.[20] On February 9, 2001, the Court of Appeals issued the assailed Resolution denying all of the motions for reconsideration of the parties for lack of merit.[21] Hence, the NTC filed the instant petition for review on certiorari, docketed as G.R. No. 147096, raising the following issues for resolution of this Court: A. Whether or not the Order dated February 1, 2000 of the petitioner which revived the application of respondent Bayantel in NTC Case No. 92-486 violated respondent Extelcoms right to procedural due process of law;

B. Whether or not the Order dated May 3, 2000 of the petitioner granting respondent Bayantel a provisional authority to operate a CMTS is in substantial compliance with NTC Rules of Practice and Procedure and Memorandum Circular No. 9-14-90 dated September 4, 1990.[22] Subsequently, Bayantel also filed its petition for review, docketed as G.R. No. 147210, assigning the following errors: I. THE COURT OF APPEALS SERIOUSLY ERRED IN ITS INTERPRETATION OF THE PRINCIPLE OF EXHAUSTION OF ADMINISTRATIVE REMEDIES WHEN IT FAILED TO DISMISS HEREIN RESPONDENTS PETITION FOR CERTIORARI DESPITE ITS FAILURE TO FILE A MOTION FOR RECONSIDERATION. II. THE COURT OF APPEALS SERIOUSLY ERRED IN ITS FINDING THAT THE REVIVAL OF NTC CASE NO. 92-486 ANCHORED ON A EX-PARTE MOTION TO REVIVE CASE WAS TANTAMOUNT TO GRAVE ABUSE OF DISCRETION ON THE PART OF THE NTC. III. THE COURT OF APPEALS SERIOUSLY ERRED WHEN IT DENIED THE MANDATE OF THE NTC AS THE AGENCY OF GOVERNMENT WITH THE SOLE DISCRETION REGARDING ALLOCATION OF FREQUENCY BAND TO TELECOMMUNICATIONS ENTITIES. IV. THE COURT OF APPEALS SERIOUSLY ERRED IN ITS INTERPRETATION OF THE LEGAL PRINCIPLE THAT JURISDICTION ONCE ACQUIRED CANNOT BE LOST WHEN IT DECLARED THAT THE ARCHIVED APPLICATION SHOULD BE DEEMED AS A NEW APPLICATION IN VIEW OF THE SUBSTANTIAL CHANGE IN THE CIRCUMSTANCES ALLEGED IN ITS AMENDMENT APPLICATION. V. CONTRARY TO THE FINDING OF THE COURT OF APPEALS, THE ARCHIVING OF THE BAYANTEL APPLICATION WAS A VALID ACT ON THE PART OF THE NTC EVEN IN THE ABSENCE OF A SPECIFIC RULE ON ARCHIVING OF CASES SINCE RULES OF PROCEDURE ARE, AS A MATTER OF COURSE, LIBERALLY CONSTRUED IN PROCEEDINGS BEFORE ADMINISTRATIVE BODIES AND SHOULD GIVE WAY TO THE GREATER HIERARCHY OF PUBLIC WELFARE AND PUBLIC INTEREST. VI. CONTRARY TO THE FINDING OF THE COURT OF APPEALS, THE ARCHIVING OF BAYANTELS APPLICATION WAS NOT VIOLATIVE OF THE SUMMARY NATURE OF THE PROCEEDINGS IN THE NTC UNDER SEC. 3, RULE 1 OF THE NTC REVISED RULES OF PROCEDURE.

VII. THE COURT OF APPEALS SERIOUSLY ERRED IN ITS FINDING THAT THE ARCHIVING OF BAYANTELS APPLICATION WAS VIOLATIVE OF THE ALLEGED DECLARED POLICY OF THE GOVERNMENT ON THE TRANSPARENCY AND FAIRNESS OF ADMINISTRATIVE PROCESS IN THE NTC AS LAID DOWN IN SEC 4(1) OF R.A. NO. 7925.

VIII.

THE COURT OF APPEALS SERIOUSLY ERRED IN ITS FINDING THAT THE NTC VIOLATED THE PROVISIONS OF THE CONSTITUTION PERTAINING TO DUE PROCESS OF LAW.

IX. THE COURT OF APPEALS SERIOUSLY ERRED IN DECLARING THAT THE MAY 3, 2000 ORDER GRANTING BAYANTEL A PROVISIONAL AUTHORITY SHOULD BE SET ASIDE AND REVERSED. i. Contrary to the finding of the Court of Appeals, there was no violation of the NTC Rule that the legal, technical, financial and economic documentations in support of the prayer for provisional authority should first be submitted. ii. Contrary to the finding of the Court of Appeals, there was no violation of Sec. 3, Rule 15 of the NTC Rules of Practice and Procedure that a motion must first be filed before a provisional authority could be issued. iii. Contrary to the finding of the Court of Appeals that a plea for provisional authority necessitates a notice and hearing, the very rule cited by the petitioner (Section 5, Rule 4 of the NTC Rules of Practice and Procedure) provides otherwise. iv. Contrary to the finding of the Court of Appeals, urgent public need is not the only basis for the grant of a provisional authority to an applicant; v. Contrary to the finding of the Court of Appeals, there was no violation of the constitutional provision on the right of the public to information when the Common Carrier Authorization Department (CCAD) prepared its evaluation report.[23] Considering the identity of the matters involved, this Court resolved to consolidate the two petitions.[24] At the outset, it is well to discuss the nature and functions of the NTC, and analyze its powers and authority as well as the laws, rules and regulations that govern its existence and operations. The NTC was created pursuant to Executive Order No. 546, promulgated on July 23, 1979. It assumed the functions formerly assigned to the Board of Communications and the Telecommunications Control Bureau, which were both abolished under the said Executive Order. Previously, the NTCs functions were merely those of the defunct Public Service Commission (PSC), created under Commonwealth Act No. 146, as amended, otherwise known as the Public Service Act, considering that the Board of Communications was the successor-ininterest of the PSC. Under Executive Order No. 125-A, issued in April 1987, the NTC became an attached agency of the Department of Transportation and Communications. In the regulatory telecommunications industry, the NTC has the sole authority to issue Certificates of Public Convenience and Necessity (CPCN) for the installation, operation, and maintenance of communications facilities and services, radio communications systems, telephone and telegraph systems. Such power includes the authority to determine the areas of operations of applicants for telecommunications services. Specifically, Section 16 of the Public Service Act authorizes the then PSC, upon notice and hearing, to issue Certificates of Public Convenience for the operation of public services within the Philippines whenever the Commission finds that the operation of the public service proposed and the authorization to do

business will promote the public interests in a proper and suitable manner. [25] The procedure governing the issuance of such authorizations is set forth in Section 29 of the said Act, the pertinent portion of which states: All hearings and investigations before the Commission shall be governed by rules adopted by the Commission, and in the conduct thereof, the Commission shall not be bound by the technical rules of legal evidence. xxx. In granting Bayantel the provisional authority to operate a CMTS, the NTC applied Rule 15, Section 3 of its 1978 Rules of Practice and Procedure, which provides: Sec. 3. Provisional Relief. --- Upon the filing of an application, complaint or petition or at any stage thereafter, the Board may grant on motion of the pleader or on its own initiative, the relief prayed for, based on the pleading, together with the affidavits and supporting documents attached thereto, without prejudice to a final decision after completion of the hearing which shall be called within thirty (30) days from grant of authority asked for. (underscoring ours) Respondent Extelcom, however, contends that the NTC should have applied the Revised Rules which were filed with the Office of the National Administrative Register on February 3, 1993. These Revised Rules deleted the phrase on its own initiative; accordingly, a provisional authority may be issued only upon filing of the proper motion before the Commission. In answer to this argument, the NTC, through the Secretary of the Commission, issued a certification to the effect that inasmuch as the 1993 Revised Rules have not been published in a newspaper of general circulation, the NTC has been applying the 1978 Rules. The absence of publication, coupled with the certification by the Commissioner of the NTC stating that the NTC was still governed by the 1978 Rules, clearly indicate that the 1993 Revised Rules have not taken effect at the time of the grant of the provisional authority to Bayantel. The fact that the 1993 Revised Rules were filed with the UP Law Center on February 3, 1993 is of no moment. There is nothing in the Administrative Code of 1987 which implies that the filing of the rules with the UP Law Center is the operative act that gives the rules force and effect. Book VII, Chapter 2, Section 3 thereof merely states: Filing. --- (1) Every agency shall file with the University of the Philippines Law Center three (3) certified copies of every rule adopted by it. Rules in force on the date of effectivity of this Code which are not filed within three (3) months from the date shall not thereafter be the basis of any sanction against any party or persons. (2) The records officer of the agency, or his equivalent functionary, shall carry out the requirements of this section under pain or disciplinary action. (3) A permanent register of all rules shall be kept by the issuing agency and shall be open to public inspection. The National Administrative Register is merely a bulletin of codified rules and it is furnished only to the Office of the President, Congress, all appellate courts, the National Library,

other public offices or agencies as the Congress may select, and to other persons at a price sufficient to cover publication and mailing or distribution costs.[26] In a similar case, we held: This does not imply however, that the subject Administrative Order is a valid exercise of such quasi-legislative power. The original Administrative Order issued on August 30, 1989, under which the respondents filed their applications for importations, was not published in the Official Gazette or in a newspaper of general circulation. The questioned Administrative Order, legally, until it is published, is invalid within the context of Article 2 of Civil Code, which reads: Article 2. Laws shall take effect after fifteen days following the completion of their publication in the Official Gazette (or in a newspaper of general circulation in the Philippines), unless it is otherwise provided. x x x The fact that the amendments to Administrative Order No. SOCPEC 89-08-01 were filed with, and published by the UP Law Center in the National Administrative Register, does not cure the defect related to the effectivity of the Administrative Order. This Court, in Taada vs. Tuvera (G.R. No. L-63915, December 29, 1986, 146 SCRA 446) stated, thus: We hold therefore that all statutes, including those of local application and private laws, shall be published as a condition for their effectivity, which shall begin fifteen days after publication unless a different effectivity is fixed by the legislature. Covered by this rule are presidential decrees and executive orders promulgated by the President in the exercise of legislative power or, at present, directly conferred by the Constitution. Administrative Rules and Regulations must also be published if their purpose is to enforce or implement existing law pursuant also to a valid delegation. Interpretative regulations and those merely internal in nature, that is, regulating only the personnel of the administrative agency and not the public, need not be published. Neither is publication required of the so-called letters of instructions issued by administrative superiors concerning the rules or guidelines to be followed by their subordinates in the performance of their duties. x x x We agree that the publication must be in full or it is no publication at all since its purpose is to inform the public of the contents of the laws. The Administrative Order under consideration is one of those issuances which should be published for its effectivity, since its purpose is to enforce and implement an existing law pursuant to a valid delegation, i.e., P.D. 1071, in relation to LOI 444 and EO 133.[27]

Thus, publication in the Official Gazette or a newspaper of general circulation is a condition sine qua non before statutes, rules or regulations can take effect. This is explicit from Executive Order No. 200, which repealed Article 2 of the Civil Code, and which states that: Laws shall take effect after fifteen days following the completion of their publication either in the Official Gazette or in a newspaper of general circulation in the Philippines, unless it is otherwise provided.[28] The Rules of Practice and Procedure of the NTC, which implements Section 29 of the Public Service Act (C.A. 146, as amended), fall squarely within the scope of these laws, as explicitly mentioned in the case Taada v. Tuvera.[29] Our pronouncement in Taada vs. Tuvera is clear and categorical. Administrative rules and regulations must be published if their purpose is to enforce or implement existing law pursuant to a valid delegation. The only exceptions are interpretative regulations, those merely internal in nature, or those so-called letters of instructions issued by administrative superiors concerning the rules and guidelines to be followed by their subordinates in the performance of their duties.[30] Hence, the 1993 Revised Rules should be published in the Official Gazette or in a newspaper of general circulation before it can take effect. Even the 1993 Revised Rules itself mandates that said Rules shall take effect only after their publication in a newspaper of general circulation.[31] In the absence of such publication, therefore, it is the 1978 Rules that governs. In any event, regardless of whether the 1978 Rules or the 1993 Revised Rules should apply, the records show that the amended application filed by Bayantel in fact included a motion for the issuance of a provisional authority. Hence, it cannot be said that the NTC granted the provisional authority motu proprio. The Court of Appeals, therefore, erred when it found that the NTC issued its Order of May 3, 2000 on its own initiative. This much is acknowledged in the Decision of the Court of Appeals: As prayer, ICC asked for the immediate grant of provisional authority to construct, install, maintain and operate the subject service and to charge the proposed rates and after due notice and hearing, approve the instant application and grant the corresponding certificate of public convenience and necessity.[32] The Court of Appeals also erred when it declared that the NTCs Order archiving Bayantels application was null and void. The archiving of cases is a widely accepted measure designed to shelve cases in which no immediate action is expected but where no grounds exist for their outright dismissal, albeit without prejudice. It saves the petitioner or applicant from the added trouble and expense of re-filing a dismissed case. Under this scheme, an inactive case is kept alive but held in abeyance until the situation obtains wherein action thereon can be taken. In the case at bar, the said application was ordered archived because of lack of available frequencies at the time, and made subject to reinstatement upon availability of the requisite frequency. To be sure, there was nothing irregular in the revival of the application after the condition therefor was fulfilled.

While, as held by the Court of Appeals, there are no clear provisions in the Rules of the NTC which expressly allow the archiving of any application, this recourse may be justified under Rule 1, Section 2 of the 1978 Rules, which states: Sec. 2. Scope.--- These rules govern pleadings, practice and procedure before the Board of Communications (now NTC) in all matters of hearing, investigation and proceedings within the jurisdiction of the Board. However, in the broader interest of justice and in order to best serve the public interest, the Board may, in any particular matter, except it from these rules and apply such suitable procedure to improve the service in the transaction of the public business. (underscoring ours) The Court of Appeals ruled that the NTC committed grave abuse of discretion when it revived Bayantels application based on an ex-parte motion. In this regard, the pertinent provisions of the NTC Rules: Sec. 5. Ex-parte Motions. --- Except for motions for provisional authorization of proposed services and increase of rates, ex-parte motions shall be acted upon by the Board only upon showing of urgent necessity therefor and the right of the opposing party is not substantially impaired.[33] Thus, in cases which do not involve either an application for rate increase or an application for a provisional authority, the NTC may entertain ex-parte motions only where there is an urgent necessity to do so and no rights of the opposing parties are impaired. The Court of Appeals ruled that there was a violation of the fundamental right of Extelcom to due process when it was not afforded the opportunity to question the motion for the revival of the application. However, it must be noted that said Order referred to a simple revival of the archived application of Bayantel in NTC Case No. 92-426. At this stage, it cannot be said that Extelcoms right to procedural due process was prejudiced. It will still have the opportunity to be heard during the full-blown adversarial hearings that will follow. In fact, the records show that the NTC has scheduled several hearing dates for this purpose, at which all interested parties shall be allowed to register their opposition. We have ruled that there is no denial of due process where full-blown adversarial proceedings are conducted before an administrative body.[34] With Extelcom having fully participated in the proceedings, and indeed, given the opportunity to file its opposition to the application, there was clearly no denial of its right to due process. In Zaldivar vs. Sandiganbayan (166 SCRA 316 [1988]), we held that the right to be heard does not only refer to the right to present verbal arguments in court. A party may also be heard through his pleadings. where opportunity to be heard is accorded either through oral arguments or pleadings, there is no denial of procedural due process. As reiterated in National Semiconductor (HK) Distribution, Ltd. vs. NLRC (G.R. No. 123520, June 26, 1998), the essence of due process is simply an opportunity to be heard, or as applied to administrative proceedings, an opportunity to explain one's side. Hence, in Navarro III vs. Damaso (246 SCRA 260 [1995]), we held that a formal or trial-type hearing is not at all times and not in all instances essential. Plainly, petitioner was not denied due process.[35]

Extelcom had already entered its appearance as a party and filed its opposition to the application. It was neither precluded nor barred from participating in the hearings thereon. Indeed, nothing, not even the Order reviving the application, bars or prevents Extelcom and the other oppositors from participating in the hearings and adducing evidence in support of their respective oppositions. The motion to revive could not have possibly caused prejudice to Extelcom since the motion only sought the revival of the application. It was merely a preliminary step towards the resumption of the hearings on the application of Bayantel. The latter will still have to prove its capability to undertake the proposed CMTS. Indeed, in its Order dated February 1, 2000, the NTC set several hearing dates precisely intended for the presentation of evidence on Bayantels capability and qualification. Notice of these hearings were sent to all parties concerned, including Extelcom. As regards the changes in the personal circumstances of Bayantel, the same may be ventilated at the hearings during Bayantels presentation of evidence. In fact, Extelcom was able to raise its arguments on this matter in the Opposition (With Motion to Dismiss) anent the reopening and re-instatement of the application of Bayantel. Extelcom was thus heard on this particular point. Likewise, the requirements of notice and publication of the application is no longer necessary inasmuch as the application is a mere revival of an application which has already been published earlier. At any rate, the records show that all of the five (5) CMTS operators in the country were duly notified and were allowed to raise their respective oppositions to Bayantels application through the NTCs Order dated February 1, 2000. It should be borne in mind that among the declared national policies under Republic Act No. 7925, otherwise known as the Public Telecommunications Policy Act of the Philippines, is the healthy competition among telecommunications carriers, to wit: A healthy competitive environment shall be fostered, one in which telecommunications carriers are free to make business decisions and to interact with one another in providing telecommunications services, with the end in view of encouraging their financial viability while maintaining affordable rates.[36] The NTC is clothed with sufficient discretion to act on matters solely within its competence. Clearly, the need for a healthy competitive environment in telecommunications is sufficient impetus for the NTC to consider all those applicants who are willing to offer competition, develop the market and provide the environment necessary for greater public service. This was the intention that came to light with the issuance of Memorandum Circular 93-2000, allocating new frequency bands for use of CMTS. This memorandum circular enumerated the conditions prevailing and the reasons which necessitated its issuance as follows: the international accounting rates are rapidly declining, threatening the subsidy to the local exchange service as mandated in EO 109 and RA 7925; the public telecommunications entities which were obligated to install, operate and maintain local exchange network have performed their obligations in varying degrees;

after more than three (3) years from the performance of the obligations only 52% of the total number of cities and municipalities are provided with local telephone service. there are mergers and consolidations among the existing cellular mobile telephone service (CMTS) providers threatening the efficiency of competition; there is a need to hasten the installation of local exchange lines in unserved areas; there are existing CMTS operators which are experiencing congestion in the network resulting to low grade of service; the consumers/customers shall be given the freedom to choose CMTS operators from which they could get the service.[37]

Clearly spelled out is the need to provide enhanced competition and the requirement for more landlines and telecommunications facilities in unserved areas in the country. On both scores, therefore, there was sufficient showing that the NTC acted well within its jurisdiction and in pursuance of its avowed duties when it allowed the revival of Bayantels application. We now come to the issue of exhaustion of administrative remedies. The rule is wellentrenched that a party must exhaust all administrative remedies before resorting to the courts. The premature invocation of the intervention of the court is fatal to ones cause of action. This rule would not only give the administrative agency an opportunity to decide the matter by itself correctly, but would also prevent the unnecessary and premature resort to courts. [38] In the case of Lopez v. City of Manila,[39] we held: As a general rule, where the law provides for the remedies against the action of an administrative board, body or officer, relief to courts can be sought only after exhausting all remedies provided. The reason rests upon the presumption that the administrative body, if given the chance to correct its mistake or error, may amend its decision on a given matter and decide it properly. Therefore, where a remedy is available within the administrative machinery, this should be resorted to before resort can be made to the courts, not only to give the administrative agency the opportunity to decide the matter by itself correctly, but also to prevent unnecessary and premature resort to courts. Clearly, Extelcom violated the rule on exhaustion of administrative remedies when it went directly to the Court of Appeals on a petition for certiorari and prohibition from the Order of the NTC dated May 3, 2000, without first filing a motion for reconsideration. It is well-settled that the filing of a motion for reconsideration is a prerequisite to the filing of a special civil action for certiorari. The general rule is that, in order to give the lower court the opportunity to correct itself, a motion for reconsideration is a prerequisite to certiorari. It also basic that petitioner must exhaust all other available remedies before resorting to certiorari. This rule, however, is subject to certain exceptions such as any of the following: (1) the issues raised are purely legal in nature, (2) public interest is involved, (3) extreme urgency is obvious or (4) special circumstances warrant immediate or more direct action.[40]

This case does not fall under any of the recognized exceptions to this rule. Although the Order of the NTC dated May 3, 2000 granting provisional authority to Bayantel was immediately executory, it did not preclude the filing of a motion for reconsideration. Under the NTC Rules, a party adversely affected by a decision, order, ruling or resolution may within fifteen (15) days file a motion for reconsideration. That the Order of the NTC became immediately executory does not mean that the remedy of filing a motion for reconsideration is foreclosed to the petitioner.[41] Furthermore, Extelcom does not enjoy the grant of any vested interest on the right to render a public service. The Constitution is quite emphatic that the operation of a public utility shall not be exclusive. Thus: No franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted to citizens of the Philippines or to corporations organized under the laws of the Philippines at least sixty per centum of whose capital is owned by such citizens, nor shall such franchise, certificate or authorization be exclusive in character or for a longer period than fifty years. Neither shall any such franchise or right be granted except under the condition that it shall be subject to amendment, alteration, or repeal by the Congress when the common good so requires. xxx xxx xxx.[42]
[43]

In Radio Communications of the Phils., Inc. v. National Telecommunications Commission, we held:

It is well within the powers of the public respondent to authorize the installation by the private respondent network of radio communications systems in Catarman, Samar and San Jose, Mindoro. Under the circumstances, the mere fact that the petitioner possesses a franchise to put up and operate a radio communications system in certain areas is not an insuperable obstacle to the public respondents issuing the proper certificate to an applicant desiring to extend the same services to those areas. The Constitution mandates that a franchise cannot be exclusive in nature nor can a franchise be granted except that it must be subject to amendment, alteration, or even repeal by the legislature when the common good so requires. (Art. XII, sec. 11 of the 1986 Constitution). There is an express provision in the petitioners franchise which provides compliance with the above mandate (RA 2036, sec. 15). Even in the provisional authority granted to Extelcom, it is expressly stated that such authority is not exclusive. Thus, the Court of Appeals erred when it gave due course to Extelcoms petition and ruled that it constitutes an exception to the rule on exhaustion of administrative remedies. Also, the Court of Appeals erred in annulling the Order of the NTC dated May 3, 2000, granting Bayantel a provisional authority to install, operate and maintain CMTS. The general rule is that purely administrative and discretionary functions may not be interfered with by the courts. Thus, in Lacuesta v. Herrera,[44] it was held: xxx (T)he powers granted to the Secretary of Agriculture and Commerce (natural resources) by law regarding the disposition of public lands such as granting of licenses, permits, leases and contracts, or approving, rejecting, reinstating, or canceling applications, are all executive and

administrative in nature. It is a well recognized principle that purely administrative and discretionary functions may not be interfered with by the courts. (Coloso vs. Board of Accountancy, G.R. No. L-5750, April 20, 1953) In general, courts have no supervising power over the proceedings and actions of the administrative departments of the government. This is generally true with respect to acts involving the exercise ofjudgement or discretion and findings of fact. (54 Am. Jur. 558-559) xxx. The established exception to the rule is where the issuing authority has gone beyond its statutory authority, exercised unconstitutional powers or clearly acted arbitrarily and without regard to his duty or with grave abuse of discretion.[45] None of these obtains in the case at bar. Moreover, in petitions for certiorari, evidentiary matters or matters of fact raised in the court below are not proper grounds nor may such be ruled upon in the proceedings. As held in National Federation of Labor v. NLRC:[46] At the outset, it should be noted that a petition for certiorari under Rule 65 of the Rules of Court will prosper only if there is a showing of grave abuse of discretion or an act without or in excess of jurisdiction on the part of the National Labor Relations Commission. It does not include an inquiry as to the correctness of the evaluation of evidence which was the basis of the labor official or officer in determining his conclusion. It is not for this Court to re-examine conflicting evidence, re-evaluate the credibility of witnesses nor substitute the findings of fact of an administrative tribunal which has gained expertise in its special field. Considering that the findings of fact of the labor arbiter and the NLRC are supported by evidence on record, the same must be accorded due respect and finality. This Court has consistently held that the courts will not interfere in matters which are addressed to the sound discretion of the government agency entrusted with the regulation of activities coming under the special and technical training and knowledge of such agency.[47] It has also been held that the exercise of administrative discretion is a policy decision and a matter that can best be discharged by the government agency concerned, and not by the courts. [48] In Villanueva v. Court of Appeals,[49] it was held that findings of fact which are supported by evidence and the conclusion of experts should not be disturbed. This was reiterated in Metro Transit Organization, Inc. v. National Labor Relations Commission, [50] wherein it was ruled that factual findings of quasi-judicial bodies which have acquired expertise because their jurisdiction is confined to specific matters are generally accorded not only respect but even finality and are binding even upon the Supreme Court if they are supported by substantial evidence. Administrative agencies are given a wide latitude in the evaluation of evidence and in the exercise of its adjudicative functions. This latitude includes the authority to take judicial notice of facts within its special competence. In the case at bar, we find no reason to disturb the factual findings of the NTC which formed the basis for awarding the provisional authority to Bayantel. As found by the NTC, Bayantel has been granted several provisional and permanent authorities before to operate various telecommunications services.[51] Indeed, it was established that Bayantel was the first company to comply with its obligation to install local exchange lines pursuant to E.O. 109 and R.A. 7925. In recognition of the same, the provisional authority awarded in favor of Bayantel to operate Local Exchange Services in Quezon City, Malabon, Valenzuela and the entire Bicol region was made

permanent and a CPCN for the said service was granted in its favor. Prima facie evidence was likewise found showing Bayantels legal, financial and technical capacity to undertake the proposed cellular mobile telephone service. Likewise, the May 3, 2000 Order did not violate NTC Memorandum Circular No. 9-1490 dated September 4, 1990, contrary to the ruling of the Court of Appeals. The memorandum circular sets forth the procedure for the issuance of provisional authority thus: EFFECTIVE THIS DATE, and as part of the Commissions drive to streamline and fast track action on applications/petitions for CPCN other forms of authorizations, the Commission shall be evaluating applications/petitions for immediate issuance of provisional authorizations, pending hearing and final authorization of an application on its merit. For this purpose, it is hereby directed that all applicants/petitioners seeking for provisional authorizations, shall submit immediately to the Commission, either together with their application or in a Motion all their legal, technical, financial, economic documentations in support of their prayer for provisional authorizations for evaluation. On the basis of their completeness and their having complied with requirements, the Commission shall be issuing provisional authorizations. Clearly, a provisional authority may be issued even pending hearing and final determination of an application on its merits. Finally, this Court finds that the Manifestations of Extelcom alleging forum shopping on the part of the NTC and Bayantel are not impressed with merit. The divisions of the Supreme Court are not to be considered as separate and distinct courts. The Supreme Court remains a unit notwithstanding that it works in divisions. Although it may have three divisions, it is but a single court. Actions considered in any of these divisions and decisions rendered therein are, in effect, by the same Tribunal. The divisions of this Court are not to be considered as separate and distinct courts but as divisions of one and the same court.[52] Moreover, the rules on forum shopping should not be literally interpreted. We have stated thus: It is scarcely necessary to add that Circular No. 28-91 must be so interpreted and applied as to achieve the purposes projected by the Supreme Court when it promulgated that circular. Circular No. 28-91 was designed to serve as an instrument to promote and facilitate the orderly administration of justice and should not be interpreted with such absolute literalness as to subvert its own ultimate and legitimate objection or the goal of all rules of procedure which is to achieve substantial justice as expeditiously as possible.[53] Even assuming that separate actions have been filed by two different parties involving essentially the same subject matter, no forum shopping was committed as the parties did not resort to multiple judicial remedies. The Court, therefore, directed the consolidation of the two cases because they involve essentially the same issues. It would also prevent the absurd situation wherein two different divisions of the same court would render altogether different rulings in the cases at bar.

We rule, likewise, that the NTC has legal standing to file and initiate legal action in cases where it is clear that its inaction would result in an impairment of its ability to execute and perform its functions. Similarly, we have previously held in Civil Service Commission v. Dacoycoy[54] that the Civil Service Commission, as an aggrieved party, may appeal the decision of the Court of Appeals to this Court. As correctly stated by the NTC, the rule invoked by Extelcom is Rule 65 of the Rules of Civil Procedure, which provides that public respondents shall not appear in or file an answer or comment to the petition or any pleading therein. [55] The instant petition, on the other hand, was filed under Rule 45 where no similar proscription exists. WHEREFORE, in view of the foregoing, the consolidated petitions are GRANTED. The Court of Appeals Decision dated September 13, 2000 and Resolution dated February 9, 2001 are REVERSED and SET ASIDE. The permanent injunction issued by the Court of Appeals is LIFTED. The Orders of the NTC dated February 1, 2000 and May 3, 2000 are REINSTATED. No pronouncement as to costs. SO ORDERED. Davide, Jr., C.J., (Chairman), Puno, Kapunan, and Pardo, JJ., concur. Fortich vs Corona Date: August 19, 1999 Petitioners: Hon. Carlos Fortich, Hon Rey Baula, et al Respondents: Hon. Renato Corona, Hon. Ernesto Garilao, et al Ponente: Ynares Santiago Facts: Concerns the MR of the courts resolution dated November 17, 1998 and motion to refer the case tothe Court en banc. In previous case, the Court voted two-two on the separate motions for reconsideration,as a result of which the decision was affirmed. The Court noted in a resolution dated January 27, 1999 that the movants have no legal personalityto seek redress before the Court as their motion to intervene was already denied and that the motion torefer the case to the Court en banc is akin to a second MR which is prohibited.In this motion, both respondents and intervenors prayed that the case be referred to the case inbanc inasmuch as their earlier MR was resolved by a vote of two-two, the required number to carry adecision under the Constitution (3 votes) was not met. Issue:WON failure to meet the three votes justifies the referral of the case to the court en banc H e l d : N o Ratio:A careful reading of the constitutional provision reveals the intention of the framers to draw adistinction between cases, on the one hand, and matters, on the other hand, such that cases are decidedwhile matters, which include motions, are resolved. Otherwise put, the word decided must refer tocases; while the word resolved must refer to matters, applying the rule of reddendo singula singulis.With this interpretation, it is clear that only cases are referred to the Court en banc for decisionwhenever the required number of votes is not obtained. Conversely, the rule does not apply where, as inthis case, the required three votes is not obtained in the resolution of a MR. Hence, the second sentenceof the provision speaks only of case and not matter. The reason is simple. Article VIII, Section 4(3)pertains to the disposition of cases by a division. If there is a tie in the voting, there is no decision. Theonly way to dispose of the case then is to refer it to the Court en banc. On the other hand, if a case hasalready been decided by the division and the losing party files a MR,

the failure of the division to resolvethe motion because of a tie in the voting does not leave the case undecided. There is still the decisionwhich must stand in view of the failure of the members of the division to muster the necessary vote for itsreconsideration. Quite plainly, if the voting results in a tie, the motion for reconsideration is lost. Theassailed decision is not reconsidered and must therefore be deemed affirmed. Such was the ruling of thisCourt in the Resolution of November 17, 1998. Issue:WON the referral to the court en banc is justified on the ground that the issues are of firstimpression H e l d : N o Ratio: The issues presented before us by the movants are matters of no extraordinary import to merit theattention of the Court en banc. The issue of whether or not the power of the local government units toreclassify lands is subject to the approval of the DAR is no longer novel, this having been decided by thisCourt in the case of Province of Camarines Sur, et al. vs. Court of Appeals wherein we held that localgovernment units need not obtain the approval of the DAR to convert or reclassify lands from agriculturalto non-agricultural use.Moreover, the Decision sought to be reconsidered was arrived at by a unanimous vote of all five (5)members of the Second Division of this Court. Stated otherwise, this Second Division is of the opinion thatthe matters raised by movants are nothing new and do not deserve the consideration of the Court enbanc. Thus, the participation of the full Court in the resolution of movants motions for reconsiderationwould be inappropriate. Issue:WON the referral to the court en banc partakes of the nature of a second MR H e l d : Y e s Ratio: The contention, therefore, that our Resolution of November 17, 1998 did not dispose of the earlierMR of the Decision dated April 24, 1998 is flawed. Consequently, the present MR necessarily partakes of the nature of a second motion for reconsideration which, according to the clear and unambiguouslanguage of Rule 56, Section 4, in relation to Rule 52, Section 2, of the 1997 Rules of Civil Procedure, isprohibited. True, there are exceptional cases when this Court may entertain a second motion forreconsideration, such as where there are extraordinarily persuasive reasons. Even then, we have ruledthat such second MRs must be filed with express leave of court first obtained. In this case, not only didmovants fail to ask for prior leave of court, but more importantly, they have been unable to show thatthere are exceptional reasons for us to give due course to their second motions for reconsideration.Stripped of the arguments for referral of this incident to the Court en banc, the motions subject of thisresolution are nothing more but rehashes of the motions for reconsideration which have been denied inthe Resolution of November 17, 1998. To be sure, the allegations contained therein have already beenraised before and passed upon by this Court in the said Resolution. Issue:WON the Win-Win Resolution was valid H e l d : N o Ratio: This refers to the resolution by authority of the President modifying the Decision dated 29 March1996 of the OP through Executive Secretary Ruben Torres. NQSRMDCs (Norberto Quisumbing) Applicationfor Conversion is approved only with respect to 44 hectares as recommended by the DA. The remaining100 hectares found to be suitable for agriculture shall be distributed to qualified farmer beneficiaries (FBs)in accordance with RA 6657 The resolution is void and of no legal effect considering that the March 29, 1996 decision of theOffice of the President had already become final and executory even prior to the filing of the MR whichbecame the basis of the said Win-Win Resolution. While it may be true that on its face the nullification of the Win-Win Resolution was grounded on a procedural

rule pertaining to the reglementary period toappeal or move for reconsideration, the underlying consideration therefor was the protection of thesubstantive rights of petitioners. Just as a losing party has the right to file an appeal within theprescribed period, the winning party also has the correlative right to enjoy the finality of the resolution of his/her case.In other words, the finality of the March 29, 1996 OP Decision accordingly vested appurtenantrights to the land in dispute on petitioners as well as on the people of Bukidnon and other parts of thecountry who stand to be benefited by the development of the property.Before finally disposing of these pending matters, we feel it necessary to rule once and for all onthe legal standing of intervenors in this case. In their present motions, intervenors insist that they are realparties in interest inasmuch as they have already been issued certificates of land ownership award, orCLOAs, and that while they are seasonal farmworkers at the plantation, they have been identified by theDAR as qualified beneficiaries of the property. These arguments are, however, nothing new as in fact theyhave already been raised in intervenors earlier motion for reconsideration of our April 24, 1998 Decision.Again as expressed in the opinion of Mr. Justice Martinez, intervenors, who are admittedly not regular butseasonal farmworkers, have no legal or actual and substantive interest over the subject land inasmuch asthey have no right to own the land. Rather, their right is limited only to a just share of the fruits of theland. Moreover, the Win-Win Resolution itself states that the qualified beneficiaries have yet to becarefully and meticulously determined by the Department of Agrarian Reform. Absent any definitivefinding of the DAR, intervenors cannot as yet be deemed vested with sufficient interest in the controversyas to be qualified to intervene in this case. Likewise, the issuance of the CLOA's to them does not grantthem the requisite standing in view of the nullity of the Win-Win Resolution. No legal rights can emanatefrom a resolution that is null and void.Melo:By mandate of the Constitution, cases heard by a division when the required majority of at least 3 votes inthe division is not obtained are to be heard and decided by the Court En Banc. The deliberations of the 1986 Constitutional Commission disclose that if the case is not decided in adivision by a majority vote, it goes to the Court En Banc and not to a larger divisionIn a situation where a division of 5 has only 4 members, the 5th member having inhibited himself or isotherwise not in a position to participate, or has retired, a minimum of 3 votes would still be requiredbefore there can be any valid decision or resolution by that division. There may, then, be instances whena deadlock may occur, i.e., the votes tied at 2-2. It is my humble view that under the clear andunequivocal provisions of the 1986 Constitution, if the required majority is not reached in a division, thecase should automatically go to Court En Banc. I submit that the requirement of 3 votes equally applies to motions for reconsideration because theprovision contemplates cases or matters (which for me has no material distinction insofar as divisionsare concerned) heard by a division, and a motion for reconsideration cannot be divorced from the decisionin a case that it seeks to be reconsidered. Consequently, if the required minimum majority of 3 votes isnot met, the matter of the motion for reconsideration has to be heard by the Court En Banc, as mandatedby the Constitution (par. 3, Sec. 4, Art. VIII). To say that the motion is lost in the division on a 2-2 vote, isto construe something which cannot be sustained by a reading of the Constitution. To argue that a motionfor reconsideration is not a case but only a matter which does not concern a case, so that, eventhough the vote thereon in the division is 2-2, the matter or issue is not required to elevated to the CourtEn Banc, is to engage in a lot of unfounded hairsplitting.

EN BANC [G.R. No. 127022. June 28, 2000] FIRESTONE CERAMICS, INC., BOOMTOWN DEVELOPMENT CORPORATION, Spouses CYNTHIA D. CHING and CHING TIONG KENG, Spouses CARMEN SOCO and LORENZO ONG ENG CHONG, Spouses SOLEDAD B. YU and YU SY CHIA and LETICIA NOCOM CHAN, petitioners, vs. COURT OF APPEALS, LORENZO J. GANA, PATROCINIO E. MARGOLLES, ALICE E. SOTTO, VIRGINIA E. VILLONGCO, EDGARDO C. ESPINOSA, LUCIA E. LAPERAL, NORMA C. ESPINOSA, TERESITA E. CASAL, PELTAN DEVELOPMENT, INC., REGIONAL TRIAL COURT (formerly CFI of Rizal) and the REGISTER OF DEEDS OF LAS PIAS, METRO MANILA.respondents. ALEJANDRO B. REY, petitioner-intervenor.

[G.R. No. 127245. June 28, 2000] REPUBLIC OF THE PHILIPPINES, represented by the DIRECTOR, LAND MANAGEMENT BUREAU, petitioner, vs. HON. COURT OF APPEALS, LORENZO J. GANA, PATROCNIO E. MARGOLLES, ALICE E. SOTTO, VIRGINIA E. VILLONGCO, EDGARDO C. ESPINOSA, LUCIA A. LAPERAL, NORMA C. ESPINOSA, TERESITA E. CASAL, PELTAN DEVELOPMENT INC., THE REGIONAL TRIAL COURT (formerly CFI) of RIZAL, and THE REGISTER OF DEEDS OF LAS PIAS, respondents. RESOLUTION PURISIMA, J.: This resolves petitioners Motions to Refer to the Court En Banc these consolidated cases, which the Third Division decided on September 2, 1999. The motions for reconsideration seasonably filed by the petitioners, Republic of the Philippines and Firestone Ceramics, Inc., et al., are pending. Under Supreme Court Circular No. 2-89, dated February 7, 1989, as amended by the Resolution of November 18, 1993:

xxx, the following are considered en banc cases: 1.....Cases in which the constitutionality or validity of any treaty, international or executive agreement, law, executive order, or presidential decree, proclamation, order, instruction, ordinance, or regulation is in question; 2.....Criminal cases in which the appealed decision imposes the death penalty; 3.....Cases raising novel questions of law; 4.....Cases affecting ambassadors, other public ministers and consuls; 5.....Cases involving decisions, resolutions or orders of the Civil Service Commission, Commission on Elections, and Commission on Audit; 6.....Cases where the penalty to be imposed is the dismissal of a judge, officer or employee of the judiciary, disbarment of a lawyer, or either the suspension of any of them for a period of more than one (1) year or a fine exceeding P10,000.00 or both; 7.....Cases where a doctrine or principle laid down by the court en banc or in division may be modified or reversed; 8.....Cases assigned to a division which in the opinion of at least three (3) members thereof merit the attention of the court en banc and are acceptable to a majority of the actual membership of the court en banc; and 9.....All other cases as the court en banc by a majority of its actual membership may deem of sufficient importance to merit its attention. The cases at bar involve a vast tract of land with an area of around ninetynine (99) hectares presumptively belonging to the Republic of the Philippines, which land had been adjudicated to private individuals by a court alleged to be without jurisdiction. Since the validity of the said decision and the original certificate of title as well as transfer certificates of title issued pursuant thereto

hinges on the classification of subject area at the time it was so adjudicated, determination of the validity of the disposition thereof is in order. The assailed decision does not indicate the classification of the land in question, when the herein private respondents obtained their decree of registration thereover. In Limketkai Sons Milling, Inc. vs. Court of Appeals, the Court conceded that it is not infallible. Should any error of judgment be perceived, it does not blindly adhere to such error, and the parties adversely affected thereby are not precluded from seeking relief therefrom, by way of a motion for reconsideration. In this jurisdiction, rectification of an error, more than anything else, is of paramount importance. Here, there was submitted to the Court en consulta, petitioners Motions to Refer to the Court En Banc these consolidated cases for the consideration of the Court. A pleading, entitled "FOR THE CONSIDERATION OF THE COURT EN BANC, EN CONSULTA," was presented but when the same was first brought to its attention on March 7, 2000, the Court opined that since the Third Division had not yet acted on subject motions to refer the cases to the Banc, it was then premature for the Court to resolve the consulta. However, the Court succinctly cautioned that the action of the Third Division on the matter would just be tentative. On March 8, 2000, the Third Division voted 4-1 to deny petitioners motion to transfer these cases to the Banc. Thus, on March 14, 2000, the Court deliberated on the consulta and thereafter, voted 9-5 to accept the cases for the Banc to pass upon in view of the finding that the cases above entitled are of sufficient importance to merit its attention. Evidently, the action of the Court under the premises is a legitimate and valid exercise of its RESIDUAL POWER within the contemplation of paragraph 9 of the Resolution En Banc of November 18, 1993, which reads: "All other cases as the court en banc by a majority of its actual membership may deem of sufficient importance to merit its attention." (underscoring supplied) Untenable is the contention of Justice Panganiban that the Chief Justice and the eight (8) Associate Justices who voted to treat these consolidated cases as En Banc cases, have not given any cogent or compelling reason for such action. Considering that paragraph 9 of the Resolution of this Court dated November 18, 1993, has been cited to support the majority opinion, it is decisively clear that these consolidated cases have been found to be of sufficient importance to merit the attention and disposition of the entire Court

en banc and therefore, the prayer of the Republic of the Philippines and the private petitioners for the Court en banc to hear and resolve their pending motions for reconsideration, is meritorious. The aforesaid finding by the Court constitutes a reason cogent and compelling enough to warrant the majority ruling that the Court En Banc has to act upon and decide petitioners motions for reconsideration. It bears stressing that where, as in the present cases, the Court En Banc entertains a case for its resolution and disposition, it does so without implying that the Division of origin is incapable of rendering objective and fair justice. The action of the Court simply means that the nature of the cases calls for en banc attention and consideration. Neither can it be concluded that the Court has taken undue advantage of sheer voting strength. It was merely guided by the well-studied finding and sustainable opinion of the majority of its actual membership - that, indeed, subject cases are of sufficient importance meriting the action and decision of the whole Court. It is, of course, beyond cavil that all the members of this highest Court of the land are always embued with the noblest of intentions in interpreting and applying the germane provisions of law, jurisprudence, rules and Resolutions of the Court to the end that public interest be duly safeguarded and rule of law be observed. Reliance by Justice Panganiban on the ruling of the Court in the Sumilao case is misplaced. The said case is not on all fours with these cases. In the Sumilao case, before it was brought to the Banc en consulta, the motion for reconsideration of the decision therein rendered had been voted upon by the Second Division with a vote of 2-2. The Court ruled that the stalemate resulting from the said voting constituted a denial of the motion for reconsideration. In the two consolidated cases under consideration, however, the Motions for Reconsideration of the petitioners, Republic of the Philippines and Firestone Ceramics, Inc., et al., are pending and unresolved. Taking into account the importance of these cases and the issues raised, let alone the enormous value of the area in litigation, which is claimed as government property, there is merit in the prayer of petitioners that their pending motions for reconsideration should be resolved by the Court En Banc. WHEREFORE, these consolidated cases are considered and treated as en banc cases; and petitioners motions for reconsideration are hereby set for oral argument on July 18, 2000, at 11:00 a.m. Let corresponding notices issue.

SO ORDERED.

Philippine Duplicators, Inc. vs. NLRC, 241 SCRA 380 (1995)

Posted by Pius Morados on November 10, 2011

(Labor Standards Commissions included in the computation of 13th month pay) Facts: Petitioner Corporation pays its salesmen a small fixed or guaranteed wage; the greater part of the latters wages or salaries being composed of the sales or incentive commissions earned on actual sales of duplicating machines closed by them. Thus the sales commissions received for every duplicating machine sold constituted part of the basic compensation or remuneration of the salesmen of the Philippine Duplicators for doing their job. The Labor Arbiter directed Petitioner Duplicators to pay 13th month pay to private respondent employees computed on the basis of their fixed wages plus sales commission. Sec. 4 of the Supplementary Rules and Regulations Implementing PD No. 851 (Revised Guidelines Implementing 13th Month Pay) provides that overtime pay, earning and other remuneration which are not part of the basic salary shall not be included in the computation of the 13th month pay. Petitioner Corporation contends that their sales commission should not be included in the computation of the 13th month pay invoking the consolidated cases of Boie-Takeda Chemicals, Inc. vs Hon. Dionisio dela Serna and Philippine Fuji Xerox Corp. vs Hon. Crecencio Trajano, were the so-called commissions of medical representatives of Boie-Takeda Chemicals and rankand-file employees of Fuji Xerox Co. were not included in the term basic salary in computing the 13th month pay. Issue: WON sales commissions comprising a pre-determined percent of the selling price of the goods are included in the computation of the 13th month pay. Held: Yes. These commission which are an integral part of the basic salary structure of the Philippine Duplicators employees-salesmen, are not overtime payments, nor profit-sharing payments nor any other fringe benefit. Thus, salesmens commissions comprising a predetermined percent of the selling price of the goods were properly included in the term basic salary for purposes of computing the 13th month pay. Commissions of medical representatives of Boie-Takeda Chemicals and rank-and-file employees of Fuji Xerox Co. were not included in the term basic salary because these were paid as productivity bonuses which is not included in the computation of 13th month pay.

EN BANC

[G.R. No. 123780. September 24, 2002]

In Re: Petition Seeking for Clarification as to the Validity and Forceful Effect of Two (2) Final and Executory but Conflicting Decisions of the Honorable Supreme Court. Group Commander, Intelligence and Security Group, Philippine Army, represented by Colonel PEDRO R. CABUAY, JR., petitioner, vs. DR. POTENCIANO MALVAR and MARCELINO LOPEZ, respondents. HEIRS OF ELINO ADIA, represented by JULIANA ADIA, intervenors. DECISION
SANDOVAL-GUTIERREZ, J.:

Every litigation must come to an end once a judgment becomes final, executory and unappealable. This is a fundamental and immutable legal principle. For (j)ust as a losing party has the right to file an appeal within the prescribed period, the winning party also has the correlative right to enjoy the finality of the resolution of his case by the execution and satisfaction of the judgment, which is the life of the law. Any attempt to thwart this rigid rule and deny the prevailing litigant his right to savour the fruit of his victory, must immediately be struck down.
[1] [2] [3] [4]

For resolution is the motion for reconsideration filed by Dr. Potenciano Malvar and Marcelino Lopez, respondents, of the Decision of this Court in the instant case clarifying that the ruling of the Third Division of this Court in G.R. No. 110900 prevails over the Decision rendered by the First Division in G.R. No. 90380.
[5] [6] [7]

The heirs of Hermogenes Lopez, the heirs of Elino Adia, Ambrosio Aguilar and Eduardo V. Santos were engaged in a legal tug-of-war over the ownership of a parcel of land located in Barrio De la Paz, Antipolo City with an area of 19 hectares, 48 ares and 88 centares more or less, described and delineated in Plan H-138612.
[8]

I Records show that as early as 1920, Fermin Lopez was in possession of the land. He had it declared in his name for taxation purposes and in 1928, filed a homestead application therefor. After his death in 1943, his son Hermogenes Lopez continued occupying and cultivating the land. In the early part of 1936, Hermogenes inquired from the Bureau of Lands about the status of his late fathers homestead application. He learned that it was not acted upon. He then filed his homestead application over the same land, docketed as Homestead Application No. 138612. After he had shown full compliance with the requirements of the Public Land Act, the Director of Lands, on February 7, 1939, approved Plan No. H-138612 in the name of Hermogenes Lopez. Thereafter, the Director of Lands ordered the issuance of the corresponding patent to him . Hermogenes continued to occupy the land as its recognized owner until he transferred his rights thereto in favor of Ambrosio Aguilar through a deed of sale executed on July 31, 1959.
[9] [10]

Records also show that on August 24, 1944, the land was registered in the name of Fernando Gorospe under Original Certificate of Title (OCT) No. 537, pursuant to Free Patent No. 54072 based on the same Homestead Application No. 138612 (of Hermogenes Lopez) but in Gorospes name. Gorospe, in turn, sold the land to spouses Salvador and Rosario de Tagle. Thus, OCT No. 537 was cancelled and, in lieu thereof, Transfer Certificate of Title (TCT) No. 46580 was issued in their names on August 17, 1944. On December 9, 1947, spouses Tagle sold the land to Antonio de Zuzuarregui, Sr., who was then issued TCT No. 7375 after TCT No. 46580 was cancelled. Upon Zuzuarreguis death, the property was adjudicated to his widow, Beatriz de Zuzuarregui, who, on December 17, 1959, obtained TCT No. 72438 upon cancellation of TCT No. 7375. On December 16, 1959, the widow sold the land to Eduardo Santos. Thus, TCT No. 72438 was cancelled and in lieu thereof, TCT No. 72439 was issued in his name.
[11] [12] [13]

Since no certificate of title was yet issued to Hermogenes Lopez, on July 16, 1959, he filed with the then Court of First Instance (CFI) of Rizal an application for registration of the land, docketed as General Land Registration Commission Records No. 2531. This was opposed by Beatriz de Zuzuarregui and Eduardo Santos, claiming that the land was already registered under TCT No. 7375 in the name of Antonio de Zuzuarregui, Sr.. Thus, the proceedings were suspended.
[14]

On December 21, 1959, Hermogenes Lopez filed with the CFI of Rizal a complaint for annulment of OCT 537 and all TCTs derived therefrom against Fernando Gorospe, spouses Tagle, Beatriz de Zuzuarregui and Eduardo Santos. The case was docketed as Civil Case No. 5957. However, the CFI dismissed the complaint on the ground that Hermogenes Lopez was not the real party-in-interest since he had sold the property to Ambrosio Aguilar in December of 1959. This prompted Ambrosio Aguilar to file with the same CFI a similar action against the same defendants, including the Director of Lands, docketed as Civil Case No. 24873 . On April 15, 1981, the court rendered judgment in favor of Ambrosio Aguilar, declaring him the true and lawful owner of the land in question and nullifying, for being void ab initio, OCT No. 537 in the name of Fernando Gorospe and all subsequent Transfer Certificates of Title emanating therefrom.
[15] [16]

On appeal, docketed as CA-G.R. CV No. 07475, the Court of Appeals, affirmed in toto the trial courts judgment and subsequently denied the motion for reconsideration.
[17]

Eduardo Santos then filed a petition for review on certiorari with this Court, docketed as G.R. No. 90380. In a Decision dated September 13, 1990, this Court (First Division) denied the petition and affirmed the Court of Appeals Decision. Speaking through Justice Emilio A. Gancayco, with Chief Justice Andres R. Narvasa, Jutices Isagani A. Cruz, Carolina C. Grio-Aquino and Leo D. Medialdea, concurring, this Court ruled that Ambrosio Aguilar, successor-in-interest of Hermogenes Lopez, is the lawful owner of the property and that with respect to Eduardo Santos, successor-in-interest of Fernando Gorospe, the land in dispute was not brought within the operation of the Land Registration Act, thus:
[18] [19]

1. Records do not indicate that Fernando Gorospe (Eduardo Santos predecessor-ininterest) filed any application for the parcel of land in question. No evidence was submitted to prove that the registration in Gorospes name was made pursuant to a satisfactory showing of his compliance with the requirements for homestead application under the Public Land Act, i.e., that Gorospe took possession and began to work on the property, introduced improvements thereon, and cultivated the same, etc..
[20]

2. Formidable pieces of evidence were presented to support the claim of ownership of Hermogenes Lopez, Ambrosio Aguilars predecessor-in-interest, over the property, to wit: (a) the original tracing cloth of Plan H-138612 (Exhibit A-3) which was surveyed for Hermogenes Lopez; (b) the Microfilm of Plan H-138612 bearing the corresponding Accession No. 103378 (Exhibit D-1); (c) the Whiteprint of Plan H138612, also bearing the same Accession No. 103378 (Exhibit D); (d) the Inventory Book prepared in the year 1951 by the Bureau of Lands (Exhibit XX) containing a list of salvaged plans, among which was Plan H-138612 as surveyed for Hermogenes Lopez; (e) the Index Card of the Bureau of Lands (Exhibit XX-2) showing that Plan H-138612 is one of the salvaged plans and that the same is in the name of Hermogenes Lopez; (f) the consolidated Plan AP-6450 (Exhibit X) prepared by the Bureau of Lands which shows that Hermogenes Lopez is the owner of the parcel of land covered by Plan H-138612; (g) Plans H-147383, Psu-146727 and F 1543 showing the boundary of the land owned by Hermogenes Lopez; and (h) testimonies of persons in the Bureau of Lands which proved that Hermogenes Lopez filed a homestead application bearing No. H-138612 covering the property and that the same was duly processed by the Bureau after he had complied with all the requirements of the law.
[21]

3. Contrary to Eduardo Santos claim, he cannot be considered an innocent purchaser in good faith and for value. He made admissions indicating previous knowledge of the status of the property. Neither he nor his predecessor-in-interest, Fernando Gorospe, had been in possession of the property. He also admitted his prior conviction for illegal construction for fencing the property and constructing a hut thereon. Most telling was his opposition to the application for registration of Hermogenes Lopez in General Land Registration Commission Records No. 2531 filed with the then CFI of Rizal on July 16, 1959. In other words, Eduardo Santos already knew of the existence of Hermogenes claim on the property and yet, he persisted in acquiring the same. 4. As an applicant-possessor who complied with all the necessary requirements for the grant by the Government under the Public Land Act through actual, open, continuous and public possession, Hermogenes Lopez, predecessor-in-interest of Ambrosio Aguilar, is deemed to have already acquired by operation of law, not only a right

to a grant, but the grant itself by the government for it is not necessary that a certificate of title be issued to Hermogenes in order that said grant may be sanctioned by the courts - an application therefor being sufficient under the law. 5. There were some irregularities in the issuance of OCT No. 537 in Fernando Gorospes name, to wit: (a) although it appears on the very face of OCT No. 537 that it was issued because of Homestead Plan H-138612, approved in the name of Hermogenes Lopez, the form used for OCT No. 537 is for a free patent and not for a homestead patent; and (b) OCT No. 537 was issued on August 24, 1944, while TCT No. 46580 derived therefrom, in the names of spouses Tagle who bought the property from Fernando Gorospe, appears to have been issued ahead, or on August 17, 1944, which means that OCT No. 537 was cancelled even before it was issued.
The above Decision in G.R. No. 90380 (rendered by the First Division) became final and executory on November 29, 1990.
[22]

III It appears that the heirs of the late Elino Adia began pursuing their adverse claim of ownership over the same property only in the early part of the 1980s. In 1983, the Adia heirs filed protests with the Bureau of Lands, now known as Lands Management Bureau (LMB), questioning the authenticity of the approved homestead patent of Hermogenes Lopez. The then Regional Director Rodolfo A. Paelmo dismissed the protests, prompting the Adia heirs to charge him before the Tanodbayan with grave misconduct, abuse of discretion and violation of Republic Act No. 3019. On February 14, 1983, these charges were dismissed by the Tanodbayan.
[23] [24]

For their part, the Lopez heirs, on July 16, 1984, filed with the Regional Trial Court (RTC), Branch 71, Antipolo City, a complaint for cancellation of the 1959 deed of sale executed between their predecessor-in-interest, Hermogenes Lopez, and Ambrosio Aguilar over the property, docketed as C ivil Case No. 463-A. The Lopez heirs alleged that the sale was made by Hermogenes Lopez who was unsufficiently educated. After hearing, the trial court rendered its decision (a) declaring void ab initio the 1959 Lopez-Aguilar deed of sale, (b) decreeing the Lopez heirs as the true and Absolute owners of the said parcel of land, and (c) restoring to the Lopez heirs possession thereof. The trial court found that Hermogenes sold the land to Aguilar before the issuance of the corresponding homestead patent or title in his name. Ambrosio Aguilar interposed an appeal to the Court of Appeals, docketed as CA G.R. CV No. 06242. During the pendency of this appeal, the Appellate Court issued an order of execution pending appeal in favor of the Lopez heirs. On August 18, 1987, the Court of Appeals affirmed the RTC assailed decision.
[25] [26] [27]

On March 28, 1985, the Adia heirs filed with the same RTC a separate action for partial quashal of the writ of execution with application for preliminary injunction, docketed as Civil Case No. 613-A, against the Lopez heirs.

When the trial court did not take any action on their application for a writ of preliminary injunction, the Adia heirs filed a petition for certiorari with the Court of Appeals, docketed as AC-G.R. SP No. 05942. In a Decision dated July 15, 1985, the Court of Appeals dismissed the petition, holding that:

3. More importantly, the filing of the instant petition appears to be a last-ditched effort on petitioners (Adia) part to prevent execution of two judgments confirming the validity of the ownership of private respondents, through their predecessors-ininterest. The due approval of the homestead application of Hermogenes Lopez in 1939 (in reiteration of the application of his father Fermin) was confirmed in Civil Case No. 24873. Later, the alleged sale of the property by the uneducated Hermogenes to the Aguilars was set aside in Civil Case No. 463-A. In fine, it is now beyond dispute that private respondents (Heirs of Lopez) are the judicially acknowledged and recognized owners of the property. But this is not all. The authenticity of the title based on the homestead application of Hermogenes Lopez was the subject of protests filed by herein petitioners with the Bureau of Lands. These protests were, however, dismissed by Regional Director Rodolfo A. Paelmo, and for such action the poor Director was even charged by petitioners before the Tanodbayan for grave misconduct, abuse of discretion and violation of Republic Act No. 3019. The complaint was dismissed on February 14, 1983 with the Tanodbayan observing that the action of Director Paelmo was in consonance with the decision in Civil Case No. 25875 wherein Ambrosio Aguilar was declared the owner of the property on the basis of the approved application and decree in favor of Hermogenes Lopez, and also in view of the documents presented by Director Paelmo consisting of the approved plan in the name of Hermogenes Lopez.
[28]

On July 8, 1985, the Adia heirs filed another protest with the LMB, docketed as B.L. Claim 653, assailing Plan H-138612 issued to Hermogenes Lopez and praying that the property be titled in their names. On December 10, 1990, then LMB Director Abelardo Palad rendered a decision in B.L. Claim 653 totally at variance with and virtually disregarding the final Decision of this Court in G.R. No. 90380. Director Palad dismissed the claim of Hermogenes Lopez and those claiming rights under him, and ordered the reconstitution of the homestead application of Elino Adia, or in lieu thereof, the filing of a new application by his heirs, thus:

WHEREFORE, Plan H-138612 appearing in the records of this Office in the name of the heirs of Hermogenes Lopez is hereby as it is, corrected and amended, in that it shall thereafter be considered to be recorded in the name of Elino Adia, now his heirs,

represented by Emiliano and Juliana Adia. The claims of Hermogenes Lopez and all those claiming under him, Francisco R. Cruz and the Overlooking Storeowners and Planters Association, Inc. are hereby dismissed and this case dropped from the records. The homestead application of Elino Adia, covering plan H-138612 shall be reconstituted or in lieu thereof, a new application may be filed by the Heirs of Elino Adia, which shall thereafter be given due course. Within the period of sixty (60) days from receipt of this order, the O.S. & P.A. shall vacate and remove whatever improvements they have in the premises.
[29]

On January 23, 1991, the Lopez heirs filed an urgent motion for reconsideration of the LMB decision, contending that the LMB has no more jurisdiction to entertain, investigate and decide questions of ownership over the property considering this Courts Decision in G.R. No. 90380 declaring Hermogenes Lopez and his heirs the lawful owners of the land. Meanwhile, on February 8, 1991, the Register of Deeds of Marikina City, pursuant to the Decision of this Court (First Division) in G.R. No. 90380, issued TCT No. 196256 in favor of the Lopez heirs. The following annotation appears at the back of said title:

Entry No. 252049/T. No. 196256 ORDER by virtue of an order issued by the Regional Trial Court of Antipolo, Rizal, Branch 71 in Civil Case No. 463-A, the 2nd par. On the face of this certificate of title has been cancelled and superseded in view of the nullification of Original Certificate of Title No. 537 and all titles emanating therefrom up to Transfer Certificate of Title No. 117266. This certificate of title is hereby amended as Issued by virtue of the Decision of the Supreme Court in G.R. No. 90380 on September 13, 1990 (in relation to the Decision in Civil Case No. 463-A as affirmed by the Court of Appeals in CA-G.R. C.V. No. 06242 and the Supreme Court in G.R. No. 81092) which declared that Hermogenes Lopez, now his heirs, as the true and rightful owner by virtue of Homestead Patent Application No. 138612 and the corresponding homestead patent issued in his favor in June 1939, after complying with the requirements of Commonwealth Act No. 141, as amended, otherwise known as the Public Land Act. (Emphasis supplied)
[30]

Going back to the Adia heirs protest before the LMB, it appears that on January 29, 1992, then LMB Director Palad denied the Lopez heirss urgent motion for reconsideration of the LMBs decision in favor of the Adia heirs. Forthwith, the Lopez heirs filed a petition for certiorari with the Court of Appeals (docketed as CA-G.R. SP No. 27602) assailing the LMBs decision and the order denying their motion for reconsideration. Surprisingly, on February 26, 1993, the Court of Appeals, in CA-G.R. SP No. 27602, rendered judgment denying the petition of the Lopez heirs and affirming the LMBs decision. It held that this Courts Decision in G.R. No. 90380 did not bind the government, thus:

1. Other than the Lopez heirs claim that they are the heirs of Hermogenes Lopez, there is no concrete evidence that the property ceased to become part of the public domain; 2. The Supreme Court Decision in G.R. No. 90380 did not bind the government, particularly the LMB, since the latter agency was not impleaded as a party in Civil Case No. 2473 (Ambrosio Aguilar vs. Fernando Gorospe, et al.) for annulment of OCT No. 537 and all titles emanating therefrom, which case eventually reached the Supreme Court as G.R. No. 90380; 3. The principle of res judicata is inapplicable; and 4. The Lopez heirs failed to exhaust all administrative remedies.
From this adverse judgment, the Lopez heirs filed a petition for review on certiorari with this Court, docketed as G.R. No. 110900. The Third Division of this Court, in a Resolution dated August 11, 1993, denied the petition on two (2) grounds: (a) petitioners failed to attach to the petition a duplicate original or certified true copy of the assailed Court of Appeals Decision, as required by this Courts Revised Circular 1-88 (which took effect on July 1, 1991); and (b) even if there was no violation of the Circular, no reversible error was committed by the appellate court. In effect, this Court (Third Division) recognized the Adia heirs claim over the land as valid and, therefore, dismissed the claim of the Lopez heirs. By this ruling, the Third Division reversed and set aside the previous Decision of the First Division in G. R. No. 90380 declaring Hermogenes Lopez and his heirs the lawful owners of the land. Thus, on December 27, 1994, the OIC of the Provincial Environment and Natural Resources Officer of Antipolo City issued eight (8) free patents, in the names of all the Adia heirs. On January 26, 1995, the Register of Deeds of Marikina City issued the corresponding eight (8) Original Certificates of Title, also in their names. IV On October 6, 1995, the Lopez heirs, joined by Dr. Potenciano Malvar, who, on April 20, 1995, bought a portion of the land from the former, filed with the trial court (RTC, Branch 71, Antipolo City) a motion for the issuance of an alias writ of execution of the decision in Civil Case No. 463-A pursuant to the Decision of this Court in G. R. No. 90380 in favor of the Lopez heirs. It must be remembered that in Civil Case No. 463A, the said trial court annulled the 1959 sale between Hermogenes Lopez and Ambrosio Aguilar and restored to the Lopez heirs possession of the property. On December 11, 1995, the RTC granted the motion and issued a writ of execution which would call for the demolition of the communication facilities and other structures belonging to the Intelligence and Security Group (ISG) of the Philippine Army which also purchased a portion of the property from the Adia heirs. This prompted Col. Pedro R. Cabuay, Jr., Group Commander of the ISG, to file with this Court on February 27, 1996 the present Petition Seeking for Clarification as to the Validity and Forceful Effect

of Two (2) Final and Exceutory but Conflicting Decisions (in G.R. No. 90380 and G.R. 110900) of the Honorable Supreme Court. The petition was assigned to the Third Division of this Court. In a Resolution dated January 20, 1997, the Third Division dismissed Col. Cabuay, Jr.s Petition for Clarification as it does not raise any justiciable issue. Forthwith, Col. Pedro R. Cabuay, Jr. and the Adia heirs (intervenors) filed separate motions for reconsideration. The case remained dormant for over two (2) years. On June 9, 1999, acting upon the said motions, the Third Division issued a Resolution treating the Petition for Clarification as a petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure, as amended. The issue raised, therefore, is whether or not the Court of Appeals acted with grave abuse of discretion in affirming the LMB decision in B.L. Claim 653 and disregarding the Decision of this Court (First Division) in G.R. No. 90380. Six (6) months after, or on December 17, 1999, the Third Division rendered the instant Decision holding, in effect, that the Court of Appeals did not act with grave abuse of discretion; and clarifying that the Resolution of this Court in G.R. No. 110900 issued by the Third Division prevails over the Decision in G.R. No. 90380 rendered by the First Division and declaring that the Adia heirs titles are valid, while those of the Lopez heirs are void. The dispositive portion of the instant Decision reads:
[31]

WHEREFORE, 1. The validity of Original Certificates of Title Nos. P-819, P-820, P-821, P-822, P823, P-824, P-825 and P-826, registered in the name of Heirs of Elino Adia, represented by Juliana Adia, is UPHELD; 2. All certificates of title issued to the Heirs of Hermogenes Lopez and successors-ininterest, and all titles originating from any of the certificates of title so issued to the Heirs of Hermogenes Lopez, including Transfer Certificates of Title Nos. 207990, 207991, 207992, 207993, 207994, 207995, 207996, 207997, 207998, 207999, 208000, 208001, 208002, 208358, over subject tract of land, as well as TCT No. 216876 issued to Primex Corporation, and any other title derived therefrom are declared null and void; 3. The Heirs of Hermogenes Lopez and all persons claiming any right under them, including but not limited to Primex Corporation, and Dr. Potenciano Malvar, as well as all members of the Overlooking Storeowners and Planters Association, Inc., their assignees and successors-in-interest, are ordered to remove all their improvements on the areas covered by the Original Certificates of Title Nos. P-819 to P-826 aforementioned and to surrender possession thereof to the Heirs of Elino Adia, represented by Juliana Adia; and

4. The writ of demolition, issued by Branch 71 of the Regional Trial Court, Antipolo City, in Civil Case No. 463-A, is SET ASIDE. No pronouncement as to costs. SO ORDERED.
[32]

The above Decision was penned by Justice Fidel P. Purisima. Thereupon, Dr. Potenciano Malvar and Marcelino Lopez seasonably filed a Motion for Reconsideration with Alternative Prayer for Referral to the Court En Banc. The Adia heirs filed an opposition to the motion for reconsideration. On August 15, 2000, the Court En Banc resolved to accept the present case which was referred to it en consulta by the Third Division. On May 24, 2001, the Office of the Solicitor General (OSG) filed its comment on the motion for reconsideration. The OSG submits that the right of the Lopezes over the land in question is superior to that of the Adias.
[33]

V Considering the conflicting rulings rendered by the First and Third Divisions, the Court En Banc, therefore, has to break the impasse and must now resolve, once and for all, this basic issue: As between the Lopez heirs and the Adia heirs, who lawfully own the subject property? THE EN BANC RULING The weight of evidence and jurisprudence shows that the Lopez heirs are the lawful owners of the land in controversy. To recall, G.R. No. 90380 rendered by the First Division, through Justice Emilio A. Gancayco, recognizes the right of ownership of Hermogenes Lopez (predecessor-ininterest of the Lopez heirs) over the property by reason of his continuous possession since 1920 and his full compliance with the requirements by the Public Land Act for the issuance of a homestead patent. Upon the other hand, G.R. No. 110900 of the Third Division affirmed, in a Resolution, the Court of Appeals Decision in CA-G.R. SP No. 27602 sustaining the LMB decision in B.L. CLAIM 653 dismissing Hermogenes Lopez claim over the property and ordering the reconstitution of the homestead application of the Adia heirs predecessor-in-interest, Elino Adia, or in lieu thereof, the filing of a new application by the heirs of Elino Adia. In justifying the adjudication of the property to the Adia heirs, the Court of Appeals held:

Now, while it is true that Hermogenes Lopez had filed an application for a Homestead Patent over the subject land, and his application was determined as superior to the claims of other persons by the courts, such determination in the cases

that finally reached the Supreme Court did not bind the government, particularly the Lands Management Bureau. The cases cited by petitioners as having declared the subject land as private property because the homestead patent thereon was confirmed by the Supreme Court did not bind the LMB for two reasons: (1) it was not, and was not impleaded as, a party to said cases, and (2) the cases were in personam in nature, in which while the subject thereof was a right over a piece of land, the controversy was in essence between different persons asserting conflicting claims.
The subject property being part of the public domain is within the exclusive jurisdiction of the Lands Management Bureau. It is not only mandated by the Public Land Act but the Supreme Court itself has decreed it to be so x x x. (Emphasis supplied)
[34]

Verily, the reason why the Court of Appeals set aside the claim of the Lopez heirs is because they did not implead the Director of Lands in their case challenging the validity of the Adia heirs titles. It appears from the very caption of the complaint in Civil Case No. 24873 the case that reached this Court as G.R. No. 90380 that the Director of Lands was impleaded as co-defendant by plaintiff Ambrosio Aguilar (successor-in-interest of Hermogenes Lopez) who sought the nullification of OCT No. 537 in the name of Fernando Gorospe (the Adia heirs predecessor-in-interest) and all TCTs emanating therefrom. The Director of Lands even filed his ANSWER through his Counsel and Special Attorney, Irineo C. Alday. In fact, the decision of the trial court in the same Civil Case No. 24873also mentioned that the Director of Lands filed his ANSWER.
[35] [36] [37]

The participation of the Director of Lands in Civil Case No. 24873 having been incontrovertibly established, the Government and the Adia heirs are bound by the decision therein. We reiterate that this decision was affirmed by the Court of Appeals in CA-G.R. CV No. 07475 and by this Court in G.R. No. 90380, holding that Hermogenes Lopez complied with the requirements of the Public Land Act. Having been issued the corresponding Homestead Patent, he is recognized as the owner of the land, thus:

In the early part of 1936, Hermogenes Lopez went to the Bureau of Lands and inquired about his fathers homestead application. He was informed that said application was still unacted upon and was advised to apply in his own name. He complied and his application was docketed as homestead application No. 138612. Subsequently, he was able to prove compliance with the requirements of the Public Land Act and, as a matter of course, the land was surveyed by a government surveyor and on 7 February 1939 the resulting plan H-138612 was approved by the Director of Lands. The latter thereafter ordered the issuance of the corresponding patent in the name of Hermogenes Lopez (page 33, Rollo). He has been in actual and continuous possession thereof and was recognized as its owner

until he transferred his rights to Ambrosio Aguilar, private respondent herein, on 31 July 1959. (Emphasis supplied)
[38]

With the ruling of this Court in G.R. No. 90380 that Hermogenes Lopez is the lawful owner, LMB Director Abelardo Palad should have refrained from adjudicating the property to the Adia heirs since it ceased to be of the public domain and beyond his authority to dispose of. To be more precise, the property became the private property of Hermogenes Lopez as early as 1950, or after the lapse of 30 years of continued possession by Hermogenes and his father Fermin Lopez that began in 1920. This is so because jurisprudence consistently declares that the mere lapse of the statutory period of 30 years of open, continuous and exclusive possession of disposable public land automatically transforms the same into private property and vests title on the possessor. Thus:

x x x [U]nder the provisions of Republic Act No. 1942, which the respondent court held to be inapplicable to the petitioners case, with the latters proven occupation and cultivation for more than 30 years since 1914, by himself and by his predecessors-in-interest, title over the land has vested on petitioner so as to segregate the land from the mass of public land. Thereafter, it is no longer disposable under the Public Land Act as by free patent. x x x. As interpreted in several cases (Susi vs. Razon, et al., 48 Phil. 424 [1925]; Mesina vs. Pineda Vda. De Sonza, G.R. No. L-14722, [May 25, 1960]), when the conditions as specified in the foregoing provision are complied with, the possessor is deemed to have acquired, by operation of law, a right to a grant, a government grant, without the necessity of a certificate of title being issued. The land, therefore, ceased to be of the public domain and beyond the authority of the Director of Lands to dispose of. The application for confirmation is a mere formality, the lack of which does not affect the legal sufficiency of the title as would be evidenced by the patent and the Torrens title to be issued upon the strength of said patent.
[39]

Nothing can more clearly demonstrate the logical inevitability of considering possession of public land which is of the character and duration prescribed by statute as the equivalent of an express grant from the State than the dictum of the statute itself (Section 48 [b] of the Public Land Act) that the possessor(s) x x x shall be conclusively presumed to have performed all the conditions essential to a Government grant and shall be entitled to a certificate of title x x x. No proof being admissible to overcome a conclusive presumption, confirmation proceedings would, in truth be little more than a formality, at the most limited to ascertaining whether the possession claimed is of the required character and length of time; and registration thereunder

would not confer title, but simply recognize a title already vested. The proceedings would not originally convert the land from public to private land, but only to confirm such a conversion already affected by operation of law from the moment the required period of possession became complete. x x x
[40]

[A]lienable public land by a possessor, personally or through his predecessor-ininterest, openly, continuously and exclusively for the prescribed period (30 years under the Public Land Act, as amended) is converted to private property by the mere lapse or completion of said period, ipso jure.
[41]

In the Acme decision, this Court upheld the doctrine that open, exclusive and undisputed possession of alienable public land for the period prescribed by law creates the legal fiction whereby the land, upon completion of the requisite period ipso jure and without need of judicial or other sanction, ceases to be public land and becomes private property.
[42]

[O]pen, continuous and exclusive possession for at least 30 years of alienable public land ipso jure converts the same to private property (Director of Lands vs. IAC, 214 SCRA 604 [1992]). This means that occupation and cultivation for more than 30 years by an applicant and his predecessors-in-interest, vest title on such applicant so as to segregate the land from the mass of public land (NPC vs. Court of Appeals, 218 SCRA 41 [1993]).
[43]

To be sure, the LMB, beginning 1950, no longer had the authority to dispose of the area in favor of the Adia heirs. The same had been segregated from the mass of public land in that year and converted to Hermogenes Lopez private property over which the government had lost jurisdiction. We advert to a few more pertinent pronouncements by this Court, thus:

Under the provisions of Act No. 2874 pursuant to which the title of private respondents predecessor-in-interest was issued, the President of the Philippines or his alter ego, the Director of Lands, has no authority to grant a free patent for land that has ceased to be a public land and has passed to private ownership, and a title so issued is null and void. The nullity arises, not from fraud or deceit, but from the fact that the land is not under the jurisdiction of the Bureau of Lands. The jurisdiction of the Director of Lands is limited only to public lands and does not cover lands privately owned. The purpose of the Legislature in adopting the former Public Land Act, Act No. 2874, was and is to limit its application to lands of the public domain, and lands held in private ownership are not included therein and are not affected in any manner whatsoever thereby. Land held in freehold or free title, or of private ownership, constitutes no part of the public domain and cannot possibly come within the purview of said Act No.2874, inasmuch as the subject of such freehold or private

land is not embraced in any manner in the title of the Act and the same are excluded from the provisions or text thereof.
[44]

Following the Susi doctrine (48 Phil. 424), therefore, private respondents are deemed to have acquired, by operation of law, not only a right to grant, but also a grant of the Government over the controversial land. By such grant, the property in litigation is segregated from the public domain; and becomes private property, over which necessarily, the Director of Lands no longer has jurisdiction. xxx xxx x x x.

Private ownership of land (as when there is prima facie proof of ownership like a duly registered possessory information) is not affected by the issuance of a free patent over the same land, because the Public Land Act applies only to lands of the public domain. The Director of Lands has no authority to grant to another a free patent for land that has ceased to be a public land and has passed to private ownership.
[45]

Another reason why the Lopez heirs claim of ownership must be upheld is the applicability of the law of the case doctrine. We explained this doctrine as follows:

It need not be stated that the Supreme Court, being the court of last resort, is the final arbiter of all legal questions properly brought before it and that its decision in any given case constitutes the law of that particular case. Once its judgment becomes final it is binding on all inferior courts, and hence beyond their power and authority to alter or modify.
[46]

x x x

x x x

x x x

Reasons of public policy, judicial orderliness, economy and judicial time and the interests of litigants, as well as the peace and order of society, all require that stability be accorded the solemn and final judgments of the courts or tribunals of competent jurisdiction. There can be no question that such reasons apply with greater force on final judgments of the highest Court of the land.
[47]

We stress that the Decision of this Court (First Division) in G.R. No. 90380 is the law of the case binding upon the LMB and the Court of Appeals and is beyond their authority to reverse. We, therefore, rule that the Court of Appeals gravely abused its discretion in affirming the LMB decision in B.L. Claim 653 and ignoring the Decision of this Court in G.R. No. 90380. The Third Division of this Court was misled, so to speak, in resolving in G.R. 110900 that no reversible error was committed by the Appellate Court.

Section 4, sub-paragraph (3), Article VIII of the 1987 Constitution, provides:

x x x no doctrine or principle of law laid down by the (Supreme) Court en banc or its Divisions may be modified or reversed except by the Court sitting en banc.
A Decision rendered by a Division of this Court in violation of the above constitutional provision would be in excess of jurisdiction and, therefore, invalid.
[48]

WHEREFORE, the motion for reconsideration is hereby GRANTED and the instant Decision is RECONSIDERED. The Resolution dated August 11, 1993 of the Third Division in G.R. No. 110900 upholding the validity of the land titles in the names of the Adia heirs is SET ASIDE. The Decision dated September 13, 1990 of the First Division in G.R. No. 90380 declaring the LOPEZ HEIRS the lawful owners of the land in question is REINSTATED. SO ORDERED. Davide, Jr., C.J., Bellosillo, Puno, Mendoza, Quisumbing, Ynares-Santiago, Sandoval-Gutierrez, Carpio, Austria-Martinez, Corona, Carpio-Morales, and Callejo, Sr., JJ., concur. Vitug, J., please see separate opinion. Panganiban, J., no part. Former partner of a partys counsel in the motion for reconsideration.