j.

Other forms of ADR in the PHL

PD 242 in relation to Book IV, Chapter 14, Administrative Code
36. Power Sector Assets and Liabilities Management Corporation v. CIR, GR 198146, August 08, 2017, Carpio, J., En Banc.
FACTS:
Petitioner PSALM is a GOCC created under RA 9136 or Electric Power Industry Reform Act of 2001 (EPIRA). S50 of RA 9136 states that the
principal purpose of PSALM is to manage the orderly sale and privatization of the National Power Corporation (NPC) assets with the objective of
liquidating all NPC financial obligations. PSALM conducted public biddings for the privatization of the Pantabangan-Masiway Hydroelectric
Power Plant and Magat Hydroelectric Power Plant. The winning bidders were $129M and $530M respectively.

BIR demanded payment of P3,813,080,472 deficiency VAT for these sales from NPC. NPC indorsed the BIR letter to PSALM. BIR, NPC, and
PSALM executed a MOA where they agreed that 1) NPC/PSALM shall pay the P3.8B under protest, 2) A ruling from the DOJ that is favorable
to NPC/PSALM shall be tantamount to the filing of an application for refund/tax credit certificate; and BIR undertakes to immediately process
and approve this application. 3) Either party may appeal any adverse decision against. Thus, PSALM paid under protect the P3.8B.

PSALM filed with DOJ a petition for adjudication of the dispute with BIR to resolve the issue of whether the power plants sales should be subject
to VAT. DOJ ruled in favor of PSALM, saying that under EPIRA, the properties are transferred to PSALM and thus PSALM was the seller; the
sale, a one-time sale, was not in the regular pursuit of a commercial activity but effected thru the mandate of EPIRA.

BIR appealed to CA, arguing that DOJ has no jurisdiction. CA held that jurisdiction is conferred by law. The parties cannot stipulate on it by
conferring jurisdiction in a body that has none. Under NIRC, it is CIR that is the proper body to resolve cases involving disputed assessments.
DOJ has no jurisdiction.

Hence this petition.

ISSUE:
Whether the DOJ has jurisdiction over the dispute.
HELD: YES.
1) DOJ has jurisdiction under PD 242- We agree with CA that jurisdiction is conferred by law. This case involves a dispute between PSALM
and NPC, both wholly government-owned corporations, and BIR, a government office. S 1, 2, and 3 of PD 242 states:
Section 1. Provisions of law to the contrary notwithstanding, all disputes, claims and controversies solely between or among the
departments, bureaus, offices, agencies and instrumentalities of the National Government, including constitutional offices or
agencies, arising from the interpretation and application of statutes, contracts or agreements,  shall henceforth be
administratively settled or adjudicated as provided hereinafter: xxx.
Section 2. In all cases involving only questions of law, the same shall be submitted to and settled or adjudicated by the
Secretary of Justice, as Attorney General and ex officio adviser of all government owned or controlled corporations and entities, in
consonance with Section 83 of the Revised Administrative Code. His ruling or determination of the question in each case shall be
conclusive and binding upon all the parties concerned.
Section 3. Cases involving mixed questions of law and of fact or only factual issues shall be submitted to and settled or adjudicated
by:
(a) The Solicitor General, with respect to disputes or claims [or] controversies between or among the departments, bureaus, offices and
other agencies of the National Government;
(b) The Government Corporate Counsel, with respect to disputes or claims or controversies between or among the government-owned
or controlled corporations or entities being served by the Office of the Government Corporate Counsel; and
(c) The Secretary of Justice, with respect to all other disputes or claims or controversies which do not fall under the categories
mentioned in paragraphs (a) and (b).
1.1) “Shall”- The use of “shall” in S1 means that it administrative settlement or adjudication of disputes between government agencies and
offices is not merely permissive but mandatory. When the law says “all disputes, claims, and controversies solely” among government agencies,
the law means all without exception.

1.2) Purpose- The purpose of PD 242 is to provide for a speedy and efficient administrative adjudication of disputes between government offices
or agencies under the Executive branch and to filter cases to lessen the clogged dockets of the courts. PD 242 is not unconstitutional. It does not
diminish the jurisdiction of courts but only prescribes an administrative procedure for settlement of disputes among departments, bureaus,
offices, agencies, and instrumentalities of the National Government, including GOCCs, so that they need not always repair to the courts for
the settlement of controversies. The procedure is not much different than the arbitration procedures in RA 876 and Labor Code.

1.3) “Solely”- PD 242 will only apply when all the parties involved are purely government offices and GOCCs. Here, PSALM and NPC are
GOCCs and BIR is a national government office. PD 242 applies. SOJ has jurisdiction PSALM, NPC, and BIR acknowledged in their MOA that
SOJ indeed has jurisdiction over their dispute.

This case is unlike PNOC v. CA where the parties were BIR (government bureau), PNOC, and PNB (both GOCCs), and Tirso Savellano (private
citizen) and where we thus held that PD 242 is inapplicable. It was Savellano who gave BIR the information that resulted in the investigation of
PNOC and PNB.

In contrast, this case is a dispute solely between PSALM and NPC, and BIR. PD 242 applies.

2) President’s power of control; alter-ego- It is only proper that intra-governmental disputes be settled administratively since the opposing
government offices, agencies and instrumentalities are all under the President's executive control and supervision. S17, Art. VII of the
constitution states that: "The President shall have control of all the executive departments, bureaus and offices. He shall ensure that the laws be
faithfully executed." 
Thus, if two executive offices cannot agree, it is only logical that the president, as the sole executive who has control over both offices in dispute,
should resolve the dispute instead of the courts. Only after the president has settled the dispute can the courts’ jurisdiction be invoked. Under the
doctrine of qualified political agency, “all executive organizations are adjuncts of the Executive Department, the heads of the various executive
departments are assistants and agents of the Chief Executive xxx. The acts of the Secretaries of such departments, performed and
promulgated in the regular course of business, are, unless disapproved or reprobated by the Chief Executive presumptively the acts of
the Chief Executive."

3) Exhaustion of administrative remedies- Under this doctrine, where a remedy before an administrative body is provided by statute, relief must
be sought by exhausting this remedy prior to bringing an action in court in order to give the administrative body every opportunity to decide a
matter that comes within its jurisdiction. A litigant cannot go to court without first pursuing his administrative remedies, otherwise his action is
premature. PD 242 (now Chapter 14, Book IV, EO 292) provides for such administrative remedy.

4) CA ruled that under NIRC, the dispute is within CIR’s authority to resolve:
SEC 4. Power of the Commissioner to Interpret Tax Laws and to Decide Tax Cases. - The power to interpret the provisions of this
Code and other tax laws shall be under the exclusive and original jurisdiction of the Commissioner, subject to review by the Secretary
of Finance.
The power to decide disputed assessments, refunds in internal revenue taxes, fees or other charges. penalties imposed in relation
thereto, or other matters arising under this Code or other laws or portions thereof administered by the Bureau of Internal Revenue is
vested in the Commissioner, subject to the exclusive appellate jurisdiction of the Court of Tax Appeals
The first paragraph subjects his decision to review by the secretary of finance, alter ego of the president. Thus, the president’s constitutional
power of control is preserved. This power of control cannot be limited or withdrawn by congress.

The second paragraph is in conflict with PD 242. To harmonize, this interpetation should be adopted: 1) As to private entities and BIR, the power
to decide disputed assessments etc. or other matters arising under NIRC or other laws administered by BIR is vested in CIR subject to exclusive
appellate jurisdiction of CTA in accordance with S4, NIRC. 2) Where the disputing parties are all public entities, the case shall be governed by
PD 242.

Also, NIRC is a general law while PD 242 is a special law that applies only to disputes involving solely government offices, agencies,
instrumentalities.

5) PD 242 is now embodied in Chapter 14, Book IV, EO 292 or Administrative Code of 1987, which took effect Nov. 24, 1989.

SC reinstated the SOJ decision, holding that the sale is not subject to VAT.

37. Philippine Veterans Investment Development Corp. v. Hon. Velez, GR 84295, July 18, 1991, Griño-Aquino, J., First Division.
FACTS:
Respondent PH Veterans Assistance Commission (PVAC) filed in RTC a complaint for foreclosure of mortgage against petitioners PHIVIDEC
and PHIVICEC Industrial Authority (PIA). PHIVIDEC and PIA filed an answer with counterclaim, alleging lack of jurisdiction of RTC since the
case is covered by the arbitration powers of the Government Corporate Counsel under PD 242 S3(b) and 6:
Sec. 1. Provisions of law to the contrary notwithstanding, all disputes, claims and controversies solely between or among the
departments, bureaus, offices, agencies and instrumentalities of the National Government, including government-owned or controlled
corporations but excluding constitutional offices or agencies, arising from the  interpretation and application of statutes, contracts or
agreements, shall henceforth be administratively settled or adjudicated as provided hereinafter: xxx.
Sec. 3. . . .
(b) The Government Corporate Counsel, with respect to disputes or claims or controversies between or among the government-owned
or controlled corporations or entities being served by the Office of the Government Corporate Counsel;
Sec. 6. The final decisions rendered in the settlement or adjudication of all such disputes, claims or controversies shall have the same
force and effect as final decisions of the court of justice. 

Judge Velez denied the motion to dismiss on the ground that PD 242 is unconstitutional for emasculating and impairing judicial power.

Petitioners filed a petition for certiorari with SC. SC required PHIVIDEC, PIA, and PVAC to inform SC whether they are government agencies
or GOCCs. PHIVIDEC and PIA manifested that they are GOCCs created under PD 243 and 538 respectively. PVAC manifested that under PD
244, it is a government office or agency.

ISSUE:
Whether PD 242 is unconstitutional for emasculating judicial power.
HELD: NO.
Since the foreclosure proceeding filed by PVAC against PHIVIDEC and PIA arose from the interpretation and application of the mortgage
contract between them, P.D. No. 242 applies to the case.

PD 242 does not diminish the jurisdiction of courts but only prescribes an administrative procedure for the settlement of certain types of
disputes between or among departments, bureaus, offices, agencies, and instrumentalities of the National Government, including GOCCs, so that
they need not always repair to the courts for the settlement of controversies arising from the interpretation and application of statutes, contracts or
agreements. The procedure is not much different, and no less desirable, than the arbitration procedures provided in Republic Act No. 876
(Arbitration Law) and in Section 26, R.A. 6715 (The Labor Code). It is an alternative to, or a substitute for, traditional litigation in court with the
added advantage of avoiding the delays, vexations and expense of court proceedings. Or, as P.D. No. 242 itself explains, its purpose is "the
elimination of needless clogging of court dockets to prevent the waste of time and energies not only of the government lawyers but also of the
courts, and eliminates expenses incurred in the filing and prosecution of judicial actions.
The notion that PD 242 would emasculate court jurisdiction is erroneous. In fact, RoC make spre-trial mandatory so that the parties may
consider, among others, the possibility of a submission to arbitration.

P.D. No. 242 is a valid law prescribing an administrative arbitration procedure for certain disputes among offices, agencies and instrumentalities
under the executive control and supervision of the President of the Philippines. Since PVAC filed Civil Case No. 11157 against PHIVIDEC and
PIA without first passing through the administrative channel, the judicial action was premature for non-exhaustion of administrative
remedies, hence, dismissible on that account 

Katarungang Pambarangay
38. Chavez v. CA, GR 159411, March 18, 2005, Puno, J., Second Division.
FACTS:
Petitioner Teodoro Chavez and respondent Jacinto Trillana entered into a contract of lease whereby Chavez leased to Trillana his fishpond in
Taliptip, Bulacan for 6 years from Oct. 23, 1994 to Oct. 23, 2000. The rental for the whole term was P2,240,000. Paragraph 5 of the contract
states that respondent shall undertake all construction and preservation of improvements in the fishpond that may be destroyed during the lease at
his expense.

In Aug. 1996, a typhoon damaged the fishpond. Respondent did not immediately undertake repairs as the water level was still high. 3 weeks later,
respondent was informed by a barangay councilor that major repairs were being undertaken with a crane at the instance of petitioner who had
grown impatient with his delay in commencing the work.

Respondent filed a complaint in the office of the barangay captain, complaining about the unauthorized repairs and the ouster of his personnel
from the leased premises and its unlawful taking by petitioner despite the subsisting lease. After conciliation proceedings, a “KASUNDUAN”
was reached, stating that Chavez will return P150k for the unexpired period of the lease to Trillana as follows:
Ang ₱50,000.00 ay ibibigay bago sumapit o pagsapit ng ika-31 ng Oktubre 1996 at ang balanseng ₱100,000.00 ay ibibigay sa loob
ng isang taon subalit magbibigay ng promissory note si G. Chavez at kung mabubuwisang ang kanyang palaisdaan ay ibibigay lahat
ni G. Chavez ang buong ₱150,000.00 sa lalong madaling panahon.
Kung magkakaroon ng sapat at total na kabayaran si G. Chavez kay G. Trillana ang huli ay lalagda sa kasulatan bilang waiver o
walang anumang paghahabol sa nabanggit na buwisan.
Alleging non-compliance with the lease contract and this “kasunduan”, respondent filed a complaint against Chavex in RTC Valenzuela for
P300k reimbursement of rentals for unexpired portion of the lease, P500k unrealized profits, P200k moral damages, P200k exemplary, P100k
attorney’s fees.

RTC ruled for Trillana. CA deleted the P500k unrealized profits. Hence this petition for review.

Chavez claims that RTC had no jurisdiction since his alleged violation of the contract was already amicably settled. The procedure should have
been for enforcement of the settlement as provided n the Revised Katarungang Pambarangay Law. Assuming RTC had jurisdiction, it cannot
award more than P150k.

ISSUE:
Whether RTC had jurisdiction.
HELD: YES.
1) Choices under Art. 2041, NCC- Under the Revised Katarungang Pambarangay Law, an amicable settlement has the force and effect of a final
judgment if not repudiated within 10 days from its date. It may be executed by the lupong tagapamayapa within 6 months from its date or by
action in the municipal court if beyond such 6-month period. This follows Art. 2037 of NCC:
A compromise has upon the parties the effect and authority of  res judicata; but there shall be no execution except in compliance with
a judicial compromise.
But the broad precept in Art. 2037 is qualified by Art. 2041:
If one of the parties fails or refuses to abide by the compromise, the other party may either enforce the compromise or regard it as
rescinded and insist upon his original demand.
1.1) Before NCC, there was no right to rescind compromise agreements. The only recourse was to enforce its terms in case of violation. NCC
created for the first time the right of rescission in Art. 2041, which should be deemed to qualify the broad precept in Art. 2037.

2) Can enforce settlement or regard it as rescinded- Here, the Revised Katarungang Pambarangay Law provides for a two-tiered mode of
enforcement of an amicable settlement, to wit: (a) by execution by the Punong Barangay which is quasi-judicial and summary in nature on
mere motion of the party entitled thereto; and (b) an action in regular form, which remedy is judicial. But this does not rule out the right of
rescission under Art. 2041 of NCC.

Thus, although the “Kasunduan” has the force and effect of a final judgment of a court, Chavez’s non-compliance paved the way for the
application of Art. 2041. Trillana chose to regard the “Kasunduan as rescinded and insist upon his original demand when he filed his complaint
for recovery of unrealized profits and reimbursement of advance rentals, and damages. Respondent was not limited to claiming ₱150,000.00
because although he agreed to the amount in the "Kasunduan," it is axiomatic that a compromise settlement is not an admission of liability but
merely a recognition that there is a dispute and an impending litigation  which the parties hope to prevent by making reciprocal concessions ,
adjusting their respective positions in the hope of gaining balance by the danger of losing.