DAVID V RIVERA genuine and substantial, necessitating the presentation of

evidence by both parties.

FACTS: Claiming to be the owner of an eighteen thousand The petitioners now come before us, seeking the
(18,000)-square meter portion (hereafter, subject land) of nullification of the decision of the Court of Appeals. At the
Lot No. 38-B,[1] a five (5)-hectare lot situated at MacArthur crux of the petition is the issue of whether the denial of the
Highway, Dau, Mabalacat, Pampanga, herein motion to dismiss by way of demurrer to evidence was
respondent Agustin Rivera filed on May 10, 1994 afflicted with grave abuse of discretion.
a Complaint [2] for Maintenance of Peaceful Possession
with Prayer for Restraining Order and Preliminary Injunction We deny the petition.
before the Provincial Adjudication Board (PARAB) of San At the outset, it may be well to point out
Fernando, Pampanga against petitioners heirs of Spouses that certiorari does not lie to review an interlocutory order
Cristino and Consolacion David.[3] The respondent averred denying a motion to dismiss, even if it is in the form of a
that the petitioners had been harassing him for the demurrer to evidence filed after the plaintiff had
purpose of making him vacate the subject land although presented his evidence and rested his case. Being
it had already been given to him sometime in 1957 by the interlocutory, an order denying a demurrer to evidence is
parents of the petitioners as disturbance compensation, in not appealable. Neither can it be the subject of a petition
consideration of his renunciation of his tenurial rights over for certiorari. After such denial, the petitioners should
the original eighteen (18)-hectare farmholding. present their evidence and if the decision of the trial judge
For their part, the petitioners filed a Complaint[4] for would be adverse to them, they could raise on appeal the
ejectment before the Municipal Circuit Trial Court (MCTC) same issues raised in the demurrer.[26] However, it is also
of Mabalacat and Magalang, Pampanga. They alleged settled that the rule admits of an exception, i.e., when the
that the respondent was occupying the subject land denial of a demurrer is tainted with grave abuse of
without paying rentals therefor. The petitioners also discretion amounting to lack or excess of jurisdiction.[27]
averred that they need the subject land for their personal Thus, the petitioners submit that the trial court acted with
use but the respondent refused to vacate it despite grave abuse of discretion in denying the demurrer. They
repeated demands. insist that appeal, not prohibition, is the proper remedy to
In his Answe to the ejectment complaint, the respondent question the judgment of the MCTC and that the question
asserted that the MCTC had no jurisdiction over the case of jurisdiction is one of law which may be ruled upon
in light of the tenancy relationship between him and the without the evidence of the parties.
predecessors-in-interest of the petitioners, as evidenced HELD: We are not convinced. We uphold the Court of
by the Certification [6] issued by the Municipal Agrarian Appeals.
Reform Office (MARO) of Mabalacat, Pampanga. He
likewise reiterated his claim of ownership over the subject It is clear that the respondent filed the petition for
land and informed the court of the complaint he had prohibition to correct what he perceived was an
earlier filed before the PARAB. erroneous assumption of jurisdiction by the MCTC. Indeed,
the propriety of the recourse to the RTC for a writ of
On January 31, 1995, or during the pendency of the prohibition is beyond cavil in view of the following
ejectment case, the PARAB rendered considerations
its Decision[7] declaring the respondent as tenant of the
land and ordering that his peaceful possession thereof be While appeal is the recognized remedy to question the
maintained. Expectedly, the petitioners appealed the judgment of an inferior court, this does not detract from
PARAB Decision to the Department of the Agrarian Reform the authority of a higher court to issue a writ of prohibition
Adjudication Board (DARAB). to restrain the inferior court, among other instances, from
proceeding further on the ground that it heard and
On September 28, 1995, the MCTC rendered decided the case without jurisdiction.[38] Since the right to
its Decision[8] ordering the respondent to vacate the prohibition is defeated not by the existence, but by the
subject land. The court found that there was a dearth of adequacy, of a remedy by appeal, it may accordingly be
evidence supportive of the respondents claim that the granted where the remedy by appeal is not plain, speedy
land is agricultural or that it is devoted to agricultural or adequate.[39]
production. Further, it ruled that the petitioners as the
registered owners have a better right to possession of the To say, as the petitioners argue, that the MCTC Decision
subject land. has already attained finality because the respondent
opted to file a petition for prohibition instead of an appeal
Subsequently, the petitioners filed a Petition for is to sacrifice needlessly respondents right at the altar of
Certiorari[18] in the Court of Appeals. On September 3, 1999, technicalities. Should tenancy relationship be duly proven,
the appellate court rendered a Decision,[19] finding no the respondent as a tenant should be protected in
grave abuse of discretion on the part of the RTC in denying keeping with the social justice precept enshrined in the
the motion to dismiss, as well as the motion for Constitution.[40] Also noteworthy is the fact that the petition
reconsideration of its order. The appellate court for prohibition was filed within the reglementary period to
ratiocinated that the order of denial is merely interlocutory appeal; hence, it cannot be claimed that the same was
and hence cannot be assailed in a petition used as substitute for a lost appeal.
for certiorari under Rule 65 of the Rules of Court. In addition,
it held that issues raised in the petition for prohibition were At this point, let it be stressed that we are not passing upon
the propriety of the issuance of a writ of prohibition in favor
of the respondent. As we have earlier pointed out, TC rendered judgment in favor Serrano and against Estrella.
adjudication on this matter is best left to the RTC, where The decision became final and executor, and the sheriff
the case for prohibition pends, after the reception of the sold the house owned by Estrella at public auction to
evidence of both parties. Serrano. Estrella vacated the house and it was turned over
to Serrano.
Third. We cannot also sustain the petitioners assertion that
jurisdiction is a question of law; hence, the RTC could have Serrano and Esperanza Longino, a PNR retiree, executed
ruled on the matter without the reception of the parties an agreement, in which Serrano allowed her to occupy a
evidence. The very issue determinative of the question of portion of the property. Longino also filed an application
jurisdiction is the real relationship existing between the with the PNR for a lease of the property. When Serrano
parties. It is necessary that evidence thereon be first learned of the application, she wrote PNR, citing the RTC
presented by the parties before the question of jurisdiction decision and informed them on her purchase of Estrella’s
may be passed upon by the court. house. PNR recommended the approval of Serrano’s
It should be pointed out that the petitioners elevated to application and the denial of Longino’s.
the appellate court the Order of the RTC denying their
motion to dismiss by way of demurrer to evidence. A PNR and Longino executed a lease contract near the
demurrer to evidence is an objection by one party to the house of Serrano, formerly owned by Estrella. Serrano filed
adequacy of the evidence of his adversary to make out a a handwritten complaint with the Commission on
case. Otherwise stated, the party demurring challenges Settlement of Land Problems (COSLAP) demanding that
the sufficiency of the whole evidence to sustain a PNR lease the property to her. COSLAP issued a status quo
verdict.[41] In this case, the trial court ruled that order then assumed jurisdiction over the case. COSLAP
respondents evidence in support of his application for a rendered a resolution in favor of Serrano and against
writ of prohibition was sufficient to require the presentation Longino. COSLAP issued a writ of execution when Longino
of petitioners contravening proof. The RTC did not commit failed to appeal the decision.
grave abuse of discretion in so ruling.
Longino filed a petition for prohibition against COSLAP with
the CA, but the latter dismissed the petition. Hence,
Longino filed this petition with the SC.

LONGINO V GENERAL Issues: WON petition for prohibition under Rule 65 was the
proper remedy? Yes.
Overview: COSLAP rendered a decision and issued a writ
of execution in favor of Serrano and against Longino. The Rationale: The principal purpose for the writ of prohibition
CA affirmed this decision. However, on a petition for is to prevent an encroachment, excess, usurpation or
prohibition against COSLAP, the SC ruled that the CA erred assumption of jurisdiction on the part of an inferior court or
in affirming COSLAP’s decision and that the remedy quasi-judicial tribunal. It is granted when it is necessary for
chosen by Longino was proper. Since the COSLAP was the orderly administration of justice, or prevent the use of
without jurisdiction to render such decision, it was null and the strong arm of the law in an oppressive or vindictive
void and never final and executor and that the principal manner, or multiplicity of actions. The writs of certiorari and
purpose for the writ of prohibition is to prevent an prohibition, for that matter, are intended to annul or void
encroachment, excess, usurpation or assumption of proceedings in order to insure the fair and orderly
jurisdiction on the part of an inferior court or quasi-judicial administration of justice.
tribunal.
Requisites:
Facts :Philippine National Railways (PNR) executed a (1) it must be directed against a tribunal, corporation,
contract of lease in favor of Julian Estrella over its property. board or person exercising functions, judicial or ministerial;
Estrella filed an application with the PNR for a lease of an (2) the tribunal, corporation, board or person has acted
additional area but the latter did not act on the said without or in excess of its jurisdiction, or with grave abuse
application. Sometime after, Estrella and Serrano entered of discretion;
into a verbal contract of lease in which one of the (3) there is no appeal or any other plain, speedy, and
apartments to be constructed would be leased to Serrano. adequate remedy in the ordinary course of law
However, Estrella failed to construct the apartments.
Hence, Serrano was compelled to construct, at her Grave abuse of discretion: it must be demonstrated that
expense, a commercial apartment on a portion of the the lower court or tribunal has exercised its power in an
property leased by Estrella. She also built a second arbitrary and despotic manner, by reason of passion or
commercial apartment. personal hostility, and it must be patent and gross as would
amount to an evasion or to a unilateral refusal to perform
Upon expiration of the lease of Estrella, PNR officials told the duty enjoined or to act in contemplation of law
Serrano that Estrella had no right to lease a portion of the
property to third persons. Serrano filed a complaint for Excess of jurisdiction: the court, board or office has
damages against Estrella and was able to present her jurisdiction over the case but has transcended the same or
evidence ex parte. PNR and Serrano then entered into a acted without authority. The writ of prohibition will not lie to
lease contract over that portion of the lot. enjoin acts already done.
Plain, speedy and adequate remedy: if it will promptly the parties was not critical and explosive in nature so as to
relieve the petitioner from the injurious effects of the generate social tension or unrest, or a critical situation
judgment or rule, order or resolution of the lower court or which required immediate action. The issues raised by the
agency parties in their pleadings involved the application of the
New Civil Code in relation to the Charter of the PNR, which
In a case where a lower court or quasi-judicial body clearly do involve the application of the expertise of the
commits an error in the excess of its jurisdiction, if such error COSLAP.
is one of judgment, it is revocable only by appeal. On the
other hand, if the act complained of was issued by such Judgment: decision of the CA and COSLAP are reversed
court or body with grave abuse of discretion, which is and set aside
tantamount to lack or in excess of jurisdiction, the remedy
of the aggrieved party is to file a petition for certiorari
and/or prohibition under Rule 65 of the Rules of Court.
Indeed, a decision of a court without jurisdiction is null and HOLY SPIRIT HOMEOWNERS V DEFENSOR
void. It could never become final and executory; hence,
appeal therefrom by writ of error is out of the question. Facts: A number of presidential issuances prior to the
passage of R.A. No. 9207, authorized the creation and
The CA erred in ruling that the COSLAP had jurisdiction on development of what is now known as the National
the complaint of Serrano and that the latter was the legal Government Center (NGC).
possessor and had preferential right to lease the property.
Consequently, the Resolution of the COSLAP as well as the On March 5, 1972, former President Ferdinand Marcos
writ issued by it are null and void. The COSLAP had no issued Proclamation No. 1826, reserving a parcel of land in
jurisdiction over the complaint of Serrano. The nature of the Constitution Hills, Quezon City, covering a little over 440
action, as well as which court or body has jurisdiction over hectares as a national government site to be known as the
it, is determined based on the allegations in the complaint NGC.
irrespective of whether or not the plaintiff is entitled to the
relief prayed for. Jurisdiction over the action does not On August 11, 1987, then President Corazon Aquino issued
depend on the defenses set forth in the answer, or in a Proclamation No. 137, excluding 150 of the 440 hectares
motion to dismiss of the defendant. Even if a tribunal or a of the reserved site from the coverage of Proclamation No.
quasi-judicial body of the government has jurisdiction over 1826 and authorizing instead the disposition of the
an action but exceeds its authority in the course of the excluded portion by direct sale to the bona fide residents
proceedings, such act is null and void. therein.

Administrative agencies are tribunals of limited jurisdiction In view of the rapid increase in population density in the
and, as such, could wield only such as are specifically portion excluded by Proclamation No. 137 from the
granted to them by the enabling statutes. In relation coverage of Proclamation No. 1826, former President Fidel
thereto is the doctrine of primary jurisdiction involving Ramos issued Proclamation No. 248 on September 7, 1993,
matters that demand the special competence of authorizing the vertical development of the excluded
administrative agencies even if the question involved is portion to maximize the number of families who can
also judicial in nature. Courts cannot and will not resolve a effectively become beneficiaries of the government’s
controversy involving a question within which the socialized housing program.
jurisdiction of an administrative tribunal, especially when
the question demands the sound exercise of On May 14, 2003, President Gloria Macapagal-Arroyo
administrative discretion requiring special knowledge, signed into law R.A. No. 9207. Petitioner Holy Spirit
experience and services of the administrative tribunal to Homeowners Association, Inc. (Association) is a
determine technical and intricate matters of fact. The homeowners association from the West Side of the NGC. It
court cannot arrogate into itself the authority to resolve a is represented by its president, Nestorio F. Apolinario, Jr.,
controversy, the jurisdiction of which is initially lodged with who is a co-petitioner in his own personal capacity and on
the administrative body of special competence. But behalf of the association. The instant petition for prohibition
disputes requiring no special skill or technical expertise of under Rule 65 of the 1997 Rules of Civil Procedure, with
an administrative body and which could be resolved by prayer for the issuance of a temporary restraining order
applying pertinent provisions of the Civil Code are within and/or writ of preliminary injunction, seeks to prevent
the exclusive jurisdiction of the regular courts. respondents from enforcing the implementing rules and
regulations (IRR) of Republic Act No. 9207, otherwise
In resolving whether to assume jurisdiction over a case or known as the "National Government Center (NGC)
to refer the same to the particular agency concerned, the Housing and Land Utilization Act of 2003."
COSLAP has to consider the nature or classification of the
land involved, the parties to the case, the nature of the ISSUE: Whether an IRR issued by an administrative office
questions raised, and the need for immediate and urgent may be reviewed by Courts
action thereon to prevent injuries to persons and damage
or destruction of property. The law does not vest HELD: Yes. Administrative agencies possess quasi-
jurisdiction on the COSLAP over any land dispute or legislative or rule-making powers and quasi-judicial or
problem. The property subject of the application of both administrative adjudicatory powers. Quasilegislative or
parties is not public land but property belonging to the PNR, rule-making power is the power to make rules and
which is a part of its North Rail Project. he dispute between regulations which results in delegated legislation that is
within the confines of the granting statute and the doctrine properly falls under the jurisdiction of the Regional Trial
of non-delegability and separability of powers. In Court.
questioning the validity or constitutionality of a rule or
regulation issued by an administrative agency, a party In any case, petitioners’ allegation that “respondents are
need not exhaust administrative remedies before going to performing or threatening to perform functions without or
court. This principle, however, applies only where the act in excess of their jurisdiction” may appropriately be
of the administrative agency concerned was performed enjoined by the trial court through a writ of injunction
pursuant to its quasi-judicial function, and not when the or a temporary restraining order.
assailed act pertained to its rulemaking or quasi-legislative
power. WHEREFORE, the instant petition for prohibition is DISMISSED.

The assailed IRR was issued pursuant to the quasi-legislative

power of the Committee expressly authorized by R.A. No. MATUGUINA INTEGRATED WOOD PRODUCTS INC V CA
9207. The petition rests mainly on the theory that the
assailed IRR issued by the Committee is invalid on the FACTS: The Acting Director of the Bureau of Forest
ground that it is not germane to the object and purpose of Development issued Provisional Timber License (PTL) No. 30,
the statute it seeks to implement. Where what is assailed is covering an area of 5,400 hectares to Ms. Milagros
the validity or constitutionality of a rule or regulation issued Matuguina who was then doing business under the name
by the administrative agency in the performance of its of MLE, a sole proprietorship venture. A portion of the said
quasi-legislative function, the regular courts have area was located within the territorial boundary of Mati,
jurisdiction to pass upon the same. Since the regular courts Davao Oriental, and adjoined the timber concession of
have jurisdiction to pass upon the validity of the assailed Davao Enterprises Corporation (DAVENCOR), the private
IRR issued by the Committee in the exercise of its quasi- respondent in this case.
legislative power, the judicial course to assail its validity
must follow the doctrine of hierarchy of courts. Although Petitioner Matuguina Integrated Wood Products, Inc.
the Supreme Court, Court of Appeals and the Regional (MIWPI), was incorporated.
Trial Courts have concurrent jurisdiction to issue writs of Milagros Matuguina became the majority stockholder of
certiorari, prohibition, mandamus, quo warranto, habeas MIWPI when the latter’s Board of Directors approved by
corpus and injunction, such concurrence does not give Resolution the transfer of 1,000,000 shares from Henry Wee
the petitioner unrestricted freedom of choice of court to Milagros Matuguina, thus giving her seventy percent
forum. True, this Court has the full discretionary power to (70%) stock ownership of MIWPI.
take cognizance of the petition filed directly with it if
compelling reasons, or the nature and importance of the In a letter to the Director of Forest Development (BFD),
issues raised, so warrant. A direct invocation of the Court’s Milagros Matuguina requested the Director for a change
original jurisdiction to issue these writs should be allowed of name and transfer of management of PTL No. 30, from
only when there are special and important reasons a single proprietorship under her name, to that of MIWPI.
therefor, clearly and specifically set out in the petition.
This request was favorably endorsed by the BFD and
A petition for prohibition is also not the proper remedy to approved the same.
assail an IRR issued in the exercise of a quasi-legislative Milagros Matuguina and petitioner MIWPI executed a
function. Prohibition is an extraordinary writ directed Deed of Transfer transferring all of the former’s rights,
against any tribunal, corporation, board, officer or person, interests, ownership and participation in Provincial Timber
whether exercising judicial, quasi-judicial or ministerial License No. 30 to the latter for and in consideration of
functions, ordering said entity or person to desist from 148,000 shares of stocks in MIWPI.
further proceedings when said proceedings are without or
in excess of said entity’s or person’s jurisdiction, or are A copy of said deed was submitted to the Director of
accompanied with grave abuse of discretion, and there is Forest Development and Petitioner MIWPI had since been
no appeal or any other plain, speedy and adequate acting as holder and licensee of PTL No. 30.
remedy in the ordinary course of law.
Pending approval of the request to transfer the PTL to
MIWPI, DAVENCOR complained to the District Forester at
Prohibition lies against judicial or ministerial functions, but
Mati, Davao Oriental that Milagros Matuguina/MLE had
not against legislative or quasi-legislative functions.
encroached into and was conducting logging operations
Generally, the purpose of a writ of prohibition is to keep a
in DAVENCOR’s timber concession.
lower court within the limits of its jurisdiction in order to
maintain the administration of justice in orderly channels. Investigation Committee found that MLE had encroached
Prohibition is the proper remedy to afford relief against on the concession area of DAVENCOR. In line with this, the
usurpation of jurisdiction or power by an inferior court, or Director of Forest Development issued an Order, finding
when, in the exercise of jurisdiction in handling matters and declaring MLE to have encroached upon, and
clearly within its cognizance the inferior court transgresses conducted illegal logging operations within the licensed
the bounds prescribed to it by the law, or where there is no or concession area of DAVENCOR.
adequate remedy available in the ordinary course of law
by which such relief can be obtained. Where the principal MLE appealed the Order. However, during the pendency
relief sought is to invalidate an IRR, petitioners’ remedy is of the appealed case with the Minister of Natural
an ordinary action for its nullification, an action which Resources, Ma. Milagros Matuguina disposed of her shares
in petitioner MIWPI, thereby ceasing to be a stockholder of  Plaintiff has acted in bad faith and is now in
the petitioner. estoppel from questioning the Writ of Execution
issued against Milagros Matuguina.
 Court has no jurisdiction over the nature and
SECRETARY OF NATURAL RESOURCES’ DECISION: Affirming subject matter of this action, especially because
the aforesaid order of the Director of Forest Development there’s a failure to exhaust all administrative
stating that MLE have encroached upon and conducted remedies and because of estoppel.
illegal operation within the license concession area of
Davao Enterprises. Meanwhile, on June 2, 1987, the trial court issued an order
granting the petitioner’s prayer for the issuance of a writ of
Subsequently, a writ of execution was issued in favor of the preliminary injunction against the private respondents and
respondent DAVENCOR, which states that the Order of the Secretary of Natural Resources, ordering them to
execution must be enforced, implemented, and executed desist, refrain and prevent from enforcing respondent
against Matuguina Logging Enterprises. Secretary’s Decision as well as the writ of execution.
Consequently, MIWPI filed the instant complaint for TC: rendered Decision in favor of the petitioner, said that
prohibition, damages and injunction, with prayer for the order or execution is hereby declared null and void
restraining order, in the Regional Trial Court. MIWPI stated and without any legal effect.
its primary cause of action
CA: Reversed the lower court’s pronouncements.
 Plaintiff has a distinct and separate personality of
its own under the law, and was never a party to
the case between DAVENCOR and MLE; ISSUE(S):

 That the defendant Minister acted in grave abuse 1) Was the Petitioner denied due process when it
of discretion. was adjudged liable with MLE for encroaching
upon the timber concession of DAVENCOR in the
 That defendant Minister is doing, threatens or is respondent Minister's order of Execution?
about to do, or is procuring or suffering to be
done, some act which definitely is in violation of 2) Is the petitioner a transferee of MLE's interest, as to
the plaintiff’s rights respecting the subject matter make it liable for the latter’s illegal logging
of the action, and unless said act or acts are operations in DAVENCOR’s timber concession, or
restrained or prohibited at least during the more specifically, is it possible to pierce the veil of
pendency of this case, said act or acts would MIWPI’s corporate existence, making it a mere
probably work not only injustice to plaintiff but conduit or successor of MLE?
world tend to render the judgment of this
Honorable court ineffectual; HELD: (1) Yes, the petitioner was denied due process. (2)
The issue of piercing the corporate veil should be threshed
 That the commission or continuance of the acts out in the proper proceeding and not in a case for
complained of during the present litigation would prohibition.
not only cause great and irreparable injury, but will
also work injustice to the plaintiff, and would RATIO: This Court held that only real parties in interest in an
complicate, aggravate and multiply the issues in action are bound by judgment therein and by writs of
this case; execution and demolition issued pursuant thereto.

MIWPI, likewise alleges that they have been constrained to The writ of execution must conform to the judgment which
bring the present action. is to be executed, as it may not vary the terms of the
judgment it seeks to enforce. Nor may it go beyond the
TC: Issued a TRO the next day restraining and/or enjoining terms of the judgment which sought to be executed.
the private respondents and the Hon. Secretary of Natural Where the execution is not in harmony with the judgment
Resources from enforcing, implementing and/or carrying which gives it life and exceeds it, it has pro tanto no
into effect, the decision of the respondent Secretary validity. To maintain otherwise would be to ignore the
dated October 1, 1986, as well as the order of execution. constitutional provision against depriving a person of his
(1st case) property without due process of law.
PRIVATE RESPONDENT DAVENCOR’s DEFENSES: Filed The writ of execution issued by the Secretary of Natural
MOTION TO DISMISS alleging trial court had no jurisdiction. Resources on January 8, 1987 clearly varies the term of his
 That neither Milagros Matuguina nor Matuguina Decision of October 1, 1986, inasmuch as the Writ includes
Integrated Wood Products, Inc. advised the MIWPI as party liable whereas the Decision only
defendant Davencor of the change of name, and mentions Milagros Matuguina/MLE.
transfer of management of PTL No. 30. From There is no basis for the issuance of the Order of Execution
Milagros Matuguina to Matuguina Integrated against the petitioner. The same was issued without giving
Wood Products, Inc., during the pendency of MNR the petitioner an opportunity to defend itself and oppose
Case before the Bureau of Forest Develoment and the request of DAVENCOR for the issuance of a writ of
the Ministry of Natural Resources. execution against it. It does not appear that petitioner was
at all furnished with a copy of DAVENCOR’ss letter
requesting for the Execution of the Honorable Secretary’s
decision against it. Petitioner was suddenly made liable In the first place the alleged control of plaintiff corporation
upon the order of execution by the respondent Secretary’s was not evident in any particular corporate acts of plaintiff
expedient conclusions that MLE and MIWPI are one and corporation, wherein Maria Milagros Matuguina Logging
the same, apparently on the basis merely of DAVENCOR’s Enterprises using plaintiff corporation, executed acts or
letter requesting for the Order, and without hearing or powers directly involving plaintiff corporation.
impleading MIWPI. Until the issuance of the Order of
execution, petitioner was not included or mentioned in the Neither was there any evidence of defendants, that Maria
proceedings as having any participation in the Milagros Matuguina Logging Enterprises, using the facilities
encroachment in DAVENCORs timber concession. and resources of plaintiff corporation, involved itself in
Essentially, Prohibition is a remedy to prevent inferior transaction using both single proprietorship and plaintiff
courts, corporations, boards or persons from usurping or corporation in such particular line of business undertakings.
exercising a jurisdiction or power with which they have not
been vested by law. As we held in Mafinco Trading
Corporation vs. Ople, et al, in a certiorari or prohibition TAN V COMELEC
case, only issues affecting the jurisdiction of the tribunal,
board and offices involved may be resolved on the basis FACTS: Petitioners, who are residents of Province of Negros
of undisputed facts. Occidental, filed a petition for prohibition to stop the
COMELEC from holding a plebiscite for the ratification of
The issue of whether or not petitioner is an alter ego of Batas Pambansa Blg. 885 which provides for the creation
Milagros Matuguina/MLE, is one of fact, and which should of Negros del Norte. The plebiscite was scheduled for
have been threshed out in the administrative proceedings, January 3, 1986. The petition was filed on December 3,
and not in the prohibition proceedings in the trial court, 1985.
where it is precisely the failure of the respondent Minister of
Natural Resources to proceed as mandated by law in the Petitioners contend that BP 885 is unconstitutional because
execution of its order which is under scrutiny. Art. XI, Sec. 3 of the Constitution provides that no local
government unit may be created, divided, merged or
It is settled that a corporation is clothed with a personality
abolished or its boundary substantially altered unless it is in
separate and distinct from that of persons composing it. It
accordance with the criteria established in the Local
may not generally be held liable for that of the persons
Government Code and subject to the approval by a
composing it. It may not be held liable for the personal
majority of votes in the unit or units thus affected.
indebtedness of its stockholders or those of the entities
connected with it. Conversely, a stockholder cannot be
Sec. 197 of the Local Government Code enumerates the
made to answer for any of its financial obligations even if
conditions for the creation of a new local government unit
he should be its president.
and one of them is that:
But for the separate juridical personality of a corporation
to be disregarded, the wrongdoing must be clearly and “its creation shall not reduce the population and
convincingly established. It cannot be presumed. income of the mother province or provinces at the
time of said creation to less than the minimum
In the case at bar, there is, insufficient basis for the requirements under this section.”
appellate court’s ruling that MIWPI is the same as
Matuguina. The trial court’s observation is enlightening. However, due to Christmas holiday, the Supreme Court
was only able to act with the petition after the plebiscite
It is the vehement contention of defendants, to bolster its was already held.
claim, that plaintiff corporation is the alter ego of Maria
Milagros Matuguina Logging Enterprises, because when The petitioners thus filed a supplemental pleading assailing
Milagros Matuguina became the Chairman of the Board the plebiscite on the ground that only the inhabitants of
of Directors of plaintiff corporation, she requested for the Negros del Norte were allowed to vote in the plebiscite.
change of name and transfer of management of PTL No. Voters from the rest of Negros Occidental were excluded
30, from her single proprietorship, to plaintiff corporation. from the plebiscite.

Secondly, when Milagros Matuguina executed the deed Respondents argued that the remaining cities and
of transfer, transferring her forest concession under PTL No, municipalities of Province of Negros Occidental not
30, together with all the structures and improvements included in Negros del Norte do not fall within the meaning
therein, to plaintiff corporation, for a consideration and scope of terms “unit or units thus affected” referred to
of P14,800.00 representing 148,000 shares of stocks of in Sec. 3, Art. XI. Of the Constitution.
plaintiff corporation actually all existing shares of stocks of
Milagros Matuguina, in plaintiff corporation represents Respondents also argued that the issue is already moot
77.4% therein; suffice to say that plaintiff corporation because the majority of residents of Negros del Norte
practically became an alter ego of Milagros Matuguina. already ratified BP 885 in a plebiscite held on January 3,
1986.
Defendants’ arguments on this peripheral aspect of
ISSUE NO. 1: ON MOOTNESS
corporate existence, do not at all indicate that such a
legal fiction, was granted.
The case is not moot because it involves an issue that is
capable of repetition but can evade review. Non- ISSUE NO. 4: WON Supreme Court may mandate
resolution of this case might tempt those who have selfish COMELEC to hold another plebiscite to include all the
motives to create, divide, merge or abolish local voters in the entire province of Negros Occidental
government units knowing that that Supreme Court will not
entertain challenges to their acts if they manage to finalize No. In the first place, BP 885 is unconstitutional so it cannot
those acts before the Court is able to respond. be ratified by the people.

ON MERITS
ISSUE NO. 2: WON “unit or units affected” include the DIAZ V SECRETARY OF FINANCE
mother province
Facts: Petitioners Renato V. Diaz and Aurora Ma. F. Timbol
Yes. In the case at bar, the boundaries of the existing (petitioners) filed this petition for declaratory relief assailing
province of Negros Occidental would necessarily be the validity of the impending imposition of value-added
substantially altered by the division of its existing tax (VAT) by the Bureau of Internal Revenue (BIR) on the
boundaries in order that there can be created the new collections of tollway operators. Court treated the case as
province of Negros del Norte. Hence, both the parent one of prohibition.
province of Negros Occidental and the new province of
Negros del Norte are “political units affected”. Petitioners hold the view that Congress did not, when it
enacted the NIRC, intend to include toll fees within the
The respondents cited Gov. Paredes v. Hon. Executive meaning of "sale of services" that are subject to VAT; that
Secretary to the President to defend its argument but that a toll fee is a "user's tax," not a sale of services; that to
case only involves a division of a barangay which is the impose VAT on toll fees would amount to a tax on public
smallest unit in the Local Government Code. In the case at service; and that, since VAT was never factored into the
bar, what is involved is a division of a province, the largest formula for computing toll fees, its imposition would violate
political unit contemplated in Art. XI of the Constitution. the non-impairment clause of the constitution.
Moreover, the Supreme Court said that Gov. Paredes v.
Executive Secretary is “one of those cases the discretion The government avers that the NIRC imposes VAT on all
of the Court is allowed considerable leeway”. kinds of services of franchise grantees, including tollway
operations; that the Court should seek the meaning and
The Supreme Court adopted the dissenting opinion of intent of the law from the words used in the statute; and
Justice Vicente Abad in Lopez, Jr. v. COMELEC which that the imposition of VAT on tollway operations has been
declared unconstitutional a referendum which did not the subject as early as 2003 of several BIR rulings and
include all people of Bulacan and Rizal, when such circulars.
referendum were intended to ascertain if the people of
said provinces were willing to give up some of their towns The government also argues that petitioners have no right
to Metropolitan Manila. to invoke the non-impairment of contracts clause since
they clearly have no personal interest in existing toll
It is a well-accepted rule that to ascertain the meaning of operating agreements (TOAs) between the government
a particular provision, it can be gleaned from a provision and tollway operators. At any rate, the non-impairment
in pari materia. Parliamentary Bill No. 3644, which was the clause cannot limit the State's sovereign taxing power
draft bill of BP 885, provides that “the plebiscite shall be which is generally read into contracts.
conducted in areas affected within a period of 120 days
from the approval of the Act”. The proponents could have Issue: May toll fees collected by tollway operators be
anticipated the strong challenge against the legality of BP subjected to VAT (Are tollway operations a franchise
885 that is why they deliberately added that phrase that and/or a service that is subject to VAT)?
states that the territory covered by Negros del Norte
constitutes the unit affected. Held: When a tollway operator takes a toll fee from a
motorist, the fee is in effect for the latter's use of the tollway
ISSUE NO. 3: WON BP 885 is Constitutional facilities over which the operator enjoys private proprietary
rights that its contract and the law recognize. In this sense,
No. Sec. 97 of the Local Government Code states that no the tollway operator is no different from the service
province can be created unless if it has at least 3,500 km2. providers under Section 108 who allow others to use their
Negros del Norte only has at most 2,865 square kilometres properties or facilities for a fee.
considering the statistics relating to the land area of
municipalities and cities that constitute Negros del Norte. Tollway operators are franchise grantees and they do not
belong to exceptions that Section 119 spares from the
Respondents argue that the water must be included in the payment of VAT. The word "franchise" broadly covers
computation of the territory of Negros del Norte. government grants of a special right to do an act or series
of acts of public concern. Tollway operators are, owing to
Supreme Court said no. Sec. 197 states that “territory need the nature and object of their business, "franchise
not be contiguous if it comprises 2 or more islands”. This grantees." The construction, operation, and maintenance
goes to show that the word “territory” has reference only of toll facilities on public improvements are activities of
to the mass of land area and excludes water over which public consequence that necessarily require a special
the political unit exercises control. grant of authority from the state.
A tax is imposed under the taxing power of the
government principally for the purpose of raising revenues
to fund public expenditures. Toll fees, on the other hand,
are collected by private tollway operators as
reimbursement for the costs and expenses incurred in the
construction, maintenance and operation of the tollways,
as well as to assure them a reasonable margin of income.
Although toll fees are charged for the use of public
facilities, therefore, they are not government exactions
that can be properly treated as a tax. Taxes may be
imposed only by the government under its sovereign
authority, toll fees may be demanded by either the
government or private individuals or entities, as an
attribute of ownership.

The imposition of VAT on toll fees has far-reaching

implications. Its imposition would impact, not only on the
more than half a million motorists who use the tollways
everyday, but more so on the government’s effort to raise
revenue for funding various projects and for reducing
budgetary deficits. To dismiss the petition and resolve the
issues later, after the challenged VAT has been imposed,
could cause more mischief both to the tax-paying public
and the government. A belated declaration of nullity of
the BIR action would make any attempt to refund to the
motorists what they paid an administrative nightmare with
no solution. Consequently, it is not only the right, but the
duty of the Court to take cognizance of and resolve the
issues that the petition raises. Although the petition does
not strictly comply with the requirements of Rule 65, the
Court has ample power to waive such technical
requirements when the legal questions to be resolved are
of great importance to the public. The same may be said
of the requirement of locus standi which is a mere
procedural requisite.