Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 88550 April 18, 1990
INDUSTRIAL ENTERPRISES, INC., petitioner,
vs.
THE HON. COURT OF APPEALS, MARINDUQUE MINING & INDUSTRIAL CORPORATION,
THE HON. GERONIMO VELASCO in his capacity as Minister of Energy and PHILIPPINE
NATIONAL BANK,respondents.
Manuel M. Antonio and Dante Cortez for petitioner.
Pelaez, Adriano & Gregorio for respondent MMIC.
The Chief Legal Counsel for respondent PNB.

MELENCIO-HERRERA, J.:
This petition seeks the review and reversal of the Decision of respondent Court of Appeals in CAG.R. CV No. 12660, 1 which ruled adversely against petitioner herein.
Petitioner Industrial Enterprises Inc. (IEI) was granted a coal operating contract by the
Government through the Bureau of Energy Development (BED) for the exploration of two coal
blocks in Eastern Samar. Subsequently, IEI also applied with the then Ministry of Energy for
another coal operating contract for the exploration of three additional coal blocks which, together
with the original two blocks, comprised the so-called "Giporlos Area."
IEI was later on advised that in line with the objective of rationalizing the country's over-all coal
supply-demand balance . . . the logical coal operator in the area should be the Marinduque
Mining and Industrial Corporation (MMIC), which was already developing the coal deposit in
another area (Bagacay Area) and that the Bagacay and Giporlos Areas should be awarded to
MMIC (Rollo, p. 37). Thus, IEI and MMIC executed a Memorandum of Agreement whereby IEI
assigned and transferred to MMIC all its rights and interests in the two coal blocks which are the
subject of IEI's coal operating contract.
Subsequently, however, IEI filed an action for rescission of the Memorandum of Agreement with
damages against MMIC and the then Minister of Energy Geronimo Velasco before the Regional
Trial Court of Makati, Branch 150, 2alleging that MMIC took possession of the subject coal blocks
even before the Memorandum of Agreement was finalized and approved by the BED; that MMIC
discontinued work thereon; that MMIC failed to apply for a coal operating contract for the
adjacent coal blocks; and that MMIC failed and refused to pay the reimbursements agreed upon
and to assume IEI's loan obligation as provided in the Memorandum of Agreement (Rollo, p. 38).
IEI also prayed that the Energy Minister be ordered to approve the return of the coal operating
contract from MMIC to petitioner, with a written confirmation that said contract is valid and
effective, and, in due course, to convert said contract from an exploration agreement to a
development/production or exploitation contract in IEI's favor.
Respondent, Philippine National Bank (PNB), was later impleaded as co-defendant in an
Amended Complaint when the latter with the Development Bank of the Philippines effected extra-

judicial foreclosures on certain mortgages, particularly the Mortgage Trust Agreement, dated 13
July 1981, constituted in its favor by MMIC after the latter defaulted in its obligation totalling
around P22 million as of 15 July 1984. The Court of Appeals eventually dismissed the case
against the PNB (Resolution, 21 September 1989).
Strangely enough, Mr. Jesus S. Cabarrus is the President of both IEI and MMIC.
In a summary judgment, the Trial Court ordered the rescission of the Memorandum of
Agreement, declared the continued efficacy of the coal operating contract in favor of IEI; ordered
the reversion of the two coal blocks covered by the coal operating contract; ordered BED to issue
its written affirmation of the coal operating contract and to expeditiously cause the conversion
thereof from exploration to development in favor of IEI; directed BED to give due course to IEI's
application for a coal operating contract; directed BED to give due course to IEI's application for
three more coal blocks; and ordered the payment of damages and rehabilitation expenses (Rollo,
pp. 9-10).
In reversing the Trial Court, the Court of Appeals held that the rendition of the summary judgment
was not proper since there were genuine issues in controversy between the parties, and more
importantly, that the Trial Court had no jurisdiction over the action considering that, under
Presidential Decree No. 1206, it is the BED that has the power to decide controversies relative to
the exploration, exploitation and development of coal blocks (Rollo, pp. 43-44).
Hence, this petition, to which we resolved to give due course and to decide.
Incidentally, the records disclose that during the pendency of the appeal before the Appellate
Court, the suit against the then Minister of Energy was dismissed and that, in the meantime, IEI
had applied with the BED for the development of certain coal blocks.
The decisive issue in this case is whether or not the civil court has jurisdiction to hear and decide
the suit for rescission of the Memorandum of Agreement concerning a coal operating contract
over coal blocks. A corollary question is whether or not respondent Court of Appeals erred in
holding that it is the Bureau of Energy Development (BED) which has jurisdiction over said action
and not the civil court.
While the action filed by IEI sought the rescission of what appears to be an ordinary civil contract
cognizable by a civil court, the fact is that the Memorandum of Agreement sought to be rescinded
is derived from a coal-operating contract and is inextricably tied up with the right to develop coalbearing lands and the determination of whether or not the reversion of the coal operating contract
over the subject coal blocks to IEI would be in line with the integrated national program for coaldevelopment and with the objective of rationalizing the country's over-all coal-supply-demand
balance, IEI's cause of action was not merely the rescission of a contract but the reversion or
return to it of the operation of the coal blocks. Thus it was that in its Decision ordering the
rescission of the Agreement, the Trial Court, inter alia, declared the continued efficacy of the
coal-operating contract in IEI's favor and directed the BED to give due course to IEI's application
for three (3) IEI more coal blocks. These are matters properly falling within the domain of the
BED.
For the BED, as the successor to the Energy Development Board (abolished by Sec. 11, P.D.
No. 1206, dated 6 October 1977) is tasked with the function of establishing a comprehensive and
integrated national program for the exploration, exploitation, and development and extraction of
fossil fuels, such as the country's coal resources; adopting a coal development program;
regulating all activities relative thereto; and undertaking by itself or through service contracts
such exploitation and development, all in the interest of an effective and coordinated
development of extracted resources.
Thus, the pertinent sections of P.D. No. 1206 provide:

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

Bureau of Energy Development, hereinafter referred to in this Section as the
Bureau, which shall have the following powers and functions, among others:
a. Administer a national program for the encouragement, guidance, and
whenever necessary, regulation of such business activity relative to
the exploration, exploitation, development, and extraction of fossil fuels such as
petroleum, coal, . . .
The decisions, orders, resolutions or actions of the Bureau may be appealed to
the Secretary whose decisions are final and executory unless appealed to the
President. (Emphasis supplied.)
That law further provides that the powers and functions of the defunct Energy Development
Board relative to the implementation of P.D. No. 972 on coal exploration and development have
been transferred to the BED, provided that coal operating contracts including the transfer or
assignment of interest in said contracts, shall require the approval of the Secretary (Minister) of
Energy (Sec. 12, P.D. No. 1206).
Sec. 12. . . . the powers and functions transferred to the Bureau of Energy
Development are:
xxx xxx xxx
ii. The following powers and functions of the Energy Development Board under
PD No. 910 . . .
(1) Undertake by itself or through other arrangements, such as service contracts,
the active exploration, exploitation, development, and extraction of energy
resources . . .
(2) Regulate all activities relative to the exploration, exploitation, development,
and extraction of fossil and nuclear fuels . . .
(P.D. No. 1206) (Emphasis supplied.)
P.D. No. 972 also provides:
Sec. 8. Each coal operating contract herein authorized shall . . . be executed by
the Energy Development Board.
Considering the foregoing statutory provisions, the jurisdiction of the BED, in the first instance, to
pass upon any question involving the Memorandum of Agreement between IEI and MMIC,
revolving as its does around a coal operating contract, should be sustained.
In recent years, it has been the jurisprudential trend to apply the doctrine of primary jurisdiction in
many cases involving matters that demand the special competence of administrative agencies. It
may occur that the Court has jurisdiction to take cognizance of a particular case, which means
that the matter involved is also judicial in character. However, if the case is such that its
determination requires the expertise, specialized skills and knowledge of the proper
administrative bodies because technical matters or intricate questions of facts are involved, then
relief must first be obtained in an administrative proceeding before a remedy will be supplied by
the courts even though the matter is within the proper jurisdiction of a court. This is the doctrine
of primary jurisdiction. It applies "where a claim is originally cognizable in the courts, and comes
into play whenever enforcement of the claim requires the resolution of issues which, under a

regulatory scheme, have been placed within the special competence of an administrative body,
in such case the judicial process is suspended pending referral of such issues to the
administrative body for its view" (United States v. Western Pacific Railroad Co., 352 U.S. 59,
Emphasis supplied).
Clearly, the doctrine of primary jurisdiction finds application in this case since the question of
what coal areas should be exploited and developed and which entity should be granted coal
operating contracts over said areas involves a technical determination by the BED as the
administrative agency in possession of the specialized expertise to act on the matter. The Trial
Court does not have the competence to decide matters concerning activities relative to the
exploration, exploitation, development and extraction of mineral resources like coal. These
issues preclude an initial judicial determination. It behooves the courts to stand aside even when
apparently they have statutory power to proceed in recognition of the primary jurisdiction of an
administrative agency.
One thrust of the multiplication of administrative agencies is that the interpretation
of contracts and the determination of private rights thereunder is no longer a
uniquely judicial function, exercisable only by our regular courts (Antipolo Realty
Corp. vs. National Housing Authority, 153 SCRA 399, at 407).
The application of the doctrine of primary jurisdiction, however, does not call for the dismissal of
the case below. It need only be suspended until after the matters within the competence of the
BED are threshed out and determined. Thereby, the principal purpose behind the doctrine of
primary jurisdiction is salutarily served.
Uniformity and consistency in the regulation of business entrusted to an
administrative agency are secured, and the limited function of review by the
judiciary are more rationally exercised, by preliminary resort, for ascertaining and
interpreting the circumstances underlying legal issues, to agencies that are better
equipped than courts by specialization, by insight gained through experience, and
by more flexible procedure (Far East Conference v. United States, 342 U.S. 570).
With the foregoing conclusion arrived at, the question as to the propriety of the summary
judgment rendered by the Trial Court becomes unnecessary to resolve.
WHEREFORE, the Court Resolved to DENY the petition. No costs.
SO ORDERED.
Paras, Padilla, Sarmiento and Regalado, JJ., concur.

Footnotes
1 Penned by Justice Nicolas P. Lapena, Jr. and concurred in by Justices
Emeterio C. Cui and Justo P. Torres.
2 Judge Benigno M. Puno, Presiding.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION

G.R. No. 151908

August 12, 2003

SMART COMMUNICATIONS, INC. (SMART) and PILIPINO TELEPHONE CORPORATION

(PILTEL), petitioners,
vs.
NATIONAL TELECOMMUNICATIONS COMMISSION (NTC), respondent.
x---------------------------------------------------------x
G.R. No. 152063 August 12, 2003
GLOBE TELECOM, INC. (GLOBE) and ISLA COMMUNICATIONS CO., INC.
(ISLACOM), petitioners,
vs.
COURT OF APPEALS (The Former 6th Division) and the NATIONAL
TELECOMMUNICATIONS COMMISSION, respondents.
YNARES-SANTIAGO, J.:
Pursuant to its rule-making and regulatory powers, the National Telecommunications
Commission (NTC) issued on June 16, 2000 Memorandum Circular No. 13-6-2000, promulgating
rules and regulations on the billing of telecommunications services. Among its pertinent
provisions are the following:
(1) The billing statements shall be received by the subscriber of the telephone service not
later than 30 days from the end of each billing cycle. In case the statement is received
beyond this period, the subscriber shall have a specified grace period within which to pay
the bill and the public telecommunications entity (PTEs) shall not be allowed to
disconnect the service within the grace period.
(2) There shall be no charge for calls that are diverted to a voice mailbox, voice prompt,
recorded message or similar facility excluding the customer's own equipment.
(3) PTEs shall verify the identification and address of each purchaser of prepaid SIM
cards. Prepaid call cards and SIM cards shall be valid for at least 2 years from the date of
first use. Holders of prepaid SIM cards shall be given 45 days from the date the prepaid
SIM card is fully consumed but not beyond 2 years and 45 days from date of first use to
replenish the SIM card, otherwise the SIM card shall be rendered invalid. The validity of
an invalid SIM card, however, shall be installed upon request of the customer at no
additional charge except the presentation of a valid prepaid call card.
(4) Subscribers shall be updated of the remaining value of their cards before the start of
every call using the cards.
(5) The unit of billing for the cellular mobile telephone service whether postpaid or
prepaid shall be reduced from 1 minute per pulse to 6 seconds per pulse. The authorized
rates per minute shall thus be divided by 10.1
The Memorandum Circular provided that it shall take effect 15 days after its publication in a
newspaper of general circulation and three certified true copies thereof furnished the UP Law
Center. It was published in the newspaper, The Philippine Star, on June 22, 2000.2 Meanwhile,
the provisions of the Memorandum Circular pertaining to the sale and use of prepaid cards and
the unit of billing for cellular mobile telephone service took effect 90 days from the effectivity of
the Memorandum Circular.

On August 30, 2000, the NTC issued a Memorandum to all cellular mobile telephone service
(CMTS) operators which contained measures to minimize if not totally eliminate the incidence of
stealing of cellular phone units. The Memorandum directed CMTS operators to:
a. strictly comply with Section B(1) of MC 13-6-2000 requiring the presentation and
verification of the identity and addresses of prepaid SIM card customers;
b. require all your respective prepaid SIM cards dealers to comply with Section B(1) of
MC 13-6-2000;
c. deny acceptance to your respective networks prepaid and/or postpaid customers using
stolen cellphone units or cellphone units registered to somebody other than the applicant
when properly informed of all information relative to the stolen cellphone units;
d. share all necessary information of stolen cellphone units to all other CMTS operators
in order to prevent the use of stolen cellphone units; and
e. require all your existing prepaid SIM card customers to register and present valid
identification cards.3
This was followed by another Memorandum dated October 6, 2000 addressed to all public
telecommunications entities, which reads:
This is to remind you that the validity of all prepaid cards sold on 07 October 2000 and
beyond shall be valid for at least two (2) years from date of first use pursuant to MC 13-62000.
In addition, all CMTS operators are reminded that all SIM packs used by subscribers of
prepaid cards sold on 07 October 2000 and beyond shall be valid for at least two (2)
years from date of first use. Also, the billing unit shall be on a six (6) seconds pulse
effective 07 October 2000.
For strict compliance.4
On October 20, 2000, petitioners Isla Communications Co., Inc. and Pilipino Telephone
Corporation filed against the National Telecommunications Commission, Commissioner Joseph
A. Santiago, Deputy Commissioner Aurelio M. Umali and Deputy Commissioner Nestor C.
Dacanay, an action for declaration of nullity of NTC Memorandum Circular No. 13-6-2000 (the
Billing Circular) and the NTC Memorandum dated October 6, 2000, with prayer for the issuance
of a writ of preliminary injunction and temporary restraining order. The complaint was docketed
as Civil Case No. Q-00-42221 at the Regional Trial Court of Quezon City, Branch 77.5
Petitioners Islacom and Piltel alleged, inter alia, that the NTC has no jurisdiction to regulate the
sale of consumer goods such as the prepaid call cards since such jurisdiction belongs to the
Department of Trade and Industry under the Consumer Act of the Philippines; that the Billing
Circular is oppressive, confiscatory and violative of the constitutional prohibition against
deprivation of property without due process of law; that the Circular will result in the impairment
of the viability of the prepaid cellular service by unduly prolonging the validity and expiration of
the prepaid SIM and call cards; and that the requirements of identification of prepaid card buyers
and call balance announcement are unreasonable. Hence, they prayed that the Billing Circular
be declared null and void ab initio.
Soon thereafter, petitioners Globe Telecom, Inc and Smart Communications, Inc. filed a joint
Motion for Leave to Intervene and to Admit Complaint-in-Intervention.6 This was granted by the
trial court.

On October 27, 2000, the trial court issued a temporary restraining order enjoining the NTC from
implementing Memorandum Circular No. 13-6-2000 and the Memorandum dated October 6,
2000.7
In the meantime, respondent NTC and its co-defendants filed a motion to dismiss the case on the
ground of petitioners' failure to exhaust administrative remedies.
Subsequently, after hearing petitioners' application for preliminary injunction as well as
respondent's motion to dismiss, the trial court issued on November 20, 2000 an Order, the
dispositive portion of which reads:
WHEREFORE, premises considered, the defendants' motion to dismiss is hereby denied
for lack of merit. The plaintiffs' application for the issuance of a writ of preliminary
injunction is hereby granted. Accordingly, the defendants are hereby enjoined from
implementing NTC Memorandum Circular 13-6-2000 and the NTC Memorandum, dated
October 6, 2000, pending the issuance and finality of the decision in this case. The
plaintiffs and intervenors are, however, required to file a bond in the sum of FIVE
HUNDRED THOUSAND PESOS (P500,000.00), Philippine currency.
SO ORDERED.8
Defendants filed a motion for reconsideration, which was denied in an Order dated February 1,
2001.9
Respondent NTC thus filed a special civil action for certiorari and prohibition with the Court of
Appeals, which was docketed as CA-G.R. SP. No. 64274. On October 9, 2001, a decision was
rendered, the decretal portion of which reads:
WHEREFORE, premises considered, the instant petition for certiorari and prohibition is
GRANTED, in that, the order of the court a quo denying the petitioner's motion to dismiss
as well as the order of the court a quogranting the private respondents' prayer for a writ
of preliminary injunction, and the writ of preliminary injunction issued thereby, are hereby
ANNULLED and SET ASIDE. The private respondents' complaint and complaint-inintervention below are hereby DISMISSED, without prejudice to the referral of the private
respondents' grievances and disputes on the assailed issuances of the NTC with the said
agency.
SO ORDERED.10
Petitioners' motions for reconsideration were denied in a Resolution dated January 10, 2002 for
lack of merit.11
Hence, the instant petition for review filed by Smart and Piltel, which was docketed as G.R. No.
151908, anchored on the following grounds:
A.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT THE
NATIONAL TELECOMMUNICATIONS COMMISSION (NTC) AND NOT THE REGULAR
COURTS HAS JURISDICTION OVER THE CASE.
B.

THE HONORABLE COURT OF APPEALS ALSO GRAVELY ERRED IN HOLDING

THAT THE PRIVATE RESPONDENTS FAILED TO EXHAUST AN AVAILABLE
ADMINISTRATIVE REMEDY.
C.
THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE
BILLING CIRCULAR ISSUED BY THE RESPONDENT NTC IS UNCONSTITUTIONAL
AND CONTRARY TO LAW AND PUBLIC POLICY.
D.
THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE PRIVATE
RESPONDENTS FAILED TO SHOW THEIR CLEAR POSITIVE RIGHT TO WARRANT
THE ISSUANCE OF A WRIT OF PRELIMINARY INJUNCTION.12
Likewise, Globe and Islacom filed a petition for review, docketed as G.R. No. 152063, assigning
the following errors:
1. THE HONORABLE COURT OF APPEALS SO GRAVELY ERRED BECAUSE THE
DOCTRINES OF PRIMARY JURISDICTION AND EXHAUSTION OF ADMINISTRATIVE
REMEDIES DO NOT APPLY SINCE THE INSTANT CASE IS FOR LEGAL
NULLIFICATION (BECAUSE OF LEGAL INFIRMITIES AND VIOLATIONS OF LAW) OF
A PURELY ADMINISTRATIVE REGULATION PROMULGATED BY AN AGENCY IN
THE EXERCISE OF ITS RULE MAKING POWERS AND INVOLVES ONLY
QUESTIONS OF LAW.
2. THE HONORABLE COURT OF APPEALS SO GRAVELY ERRED BECAUSE THE
DOCTRINE ON EXHAUSTION OF ADMINISTRATIVE REMEDIES DOES NOT APPLY
WHEN THE QUESTIONS RAISED ARE PURELY LEGAL QUESTIONS.
3. THE HONORABLE COURT OF APPEALS SO GRAVELY ERRED BECAUSE THE
DOCTRINE OF EXHAUSTION OF ADMINISTRATIVE REMEDIES DOES NOT APPLY
WHERE THE ADMINISTRATIVE ACTION IS COMPLETE AND EFFECTIVE, WHEN
THERE IS NO OTHER REMEDY, AND THE PETITIONER STANDS TO SUFFER
GRAVE AND IRREPARABLE INJURY.
4. THE HONORABLE COURT OF APPEALS SO GRAVELY ERRED BECAUSE
PETITIONERS IN FACT EXHAUSTED ALL ADMINISTRATIVE REMEDIES AVAILABLE
TO THEM.
5. THE HONORABLE COURT OF APPEALS SO GRAVELY ERRED IN ISSUING ITS
QUESTIONED RULINGS IN THIS CASE BECAUSE GLOBE AND ISLA HAVE A CLEAR
RIGHT TO AN INJUNCTION.13
The two petitions were consolidated in a Resolution dated February 17, 2003.14
On March 24, 2003, the petitions were given due course and the parties were required to submit
their respective memoranda.15
We find merit in the petitions.
Administrative agencies possess quasi-legislative or rule-making powers and quasi-judicial or
administrative adjudicatory powers. Quasi-legislative or rule-making power is the power to make

rules and regulations which results in delegated legislation that is within the confines of the
granting statute and the doctrine of non-delegability and separability of powers.16
The rules and regulations that administrative agencies promulgate, which are the product of a
delegated legislative power to create new and additional legal provisions that have the effect of
law, should be within the scope of the statutory authority granted by the legislature to the
administrative agency. It is required that the regulation be germane to the objects and purposes
of the law, and be not in contradiction to, but in conformity with, the standards prescribed by
law.17 They must conform to and be consistent with the provisions of the enabling statute in order
for such rule or regulation to be valid. Constitutional and statutory provisions control with respect
to what rules and regulations may be promulgated by an administrative body, as well as with
respect to what fields are subject to regulation by it. It may not make rules and regulations which
are inconsistent with the provisions of the Constitution or a statute, particularly the statute it is
administering or which created it, or which are in derogation of, or defeat, the purpose of a
statute. In case of conflict between a statute and an administrative order, the former must
prevail.18
Not to be confused with the quasi-legislative or rule-making power of an administrative agency is
its quasi-judicial or administrative adjudicatory power. This is the power to hear and determine
questions of fact to which the legislative policy is to apply and to decide in accordance with the
standards laid down by the law itself in enforcing and administering the same law. The
administrative body exercises its quasi-judicial power when it performs in a judicial manner an
act which is essentially of an executive or administrative nature, where the power to act in such
manner is incidental to or reasonably necessary for the performance of the executive or
administrative duty entrusted to it. In carrying out their quasi-judicial functions, the administrative
officers or bodies are required to investigate facts or ascertain the existence of facts, hold
hearings, weigh evidence, and draw conclusions from them as basis for their official action and
exercise of discretion in a judicial nature.19
In questioning the validity or constitutionality of a rule or regulation issued by an administrative
agency, a party need not exhaust administrative remedies before going to court. This principle
applies only where the act of the administrative agency concerned was performed pursuant to its
quasi-judicial function, and not when the assailed act pertained to its rule-making or quasilegislative power. In Association of Philippine Coconut Dessicators v. Philippine Coconut
Authority,20 it was held:
The rule of requiring exhaustion of administrative remedies before a party may seek judicial
review, so strenuously urged by the Solicitor General on behalf of respondent, has obviously no
application here. The resolution in question was issued by the PCA in the exercise of its rulemaking or legislative power. However, only judicial review of decisions of administrative agencies
made in the exercise of their quasi-judicial function is subject to the exhaustion doctrine.
Even assuming arguendo that the principle of exhaustion of administrative remedies apply in this
case, the records reveal that petitioners sufficiently complied with this requirement. Even during
the drafting and deliberation stages leading to the issuance of Memorandum Circular No. 13-62000, petitioners were able to register their protests to the proposed billing guidelines. They
submitted their respective position papers setting forth their objections and submitting proposed
schemes for the billing circular.21 After the same was issued, petitioners wrote successive letters
dated July 3, 200022 and July 5, 2000,23 asking for the suspension and reconsideration of the socalled Billing Circular. These letters were not acted upon until October 6, 2000, when respondent
NTC issued the second assailed Memorandum implementing certain provisions of the Billing
Circular. This was taken by petitioners as a clear denial of the requests contained in their
previous letters, thus prompting them to seek judicial relief.
In like manner, the doctrine of primary jurisdiction applies only where the administrative agency
exercises its quasi-judicial or adjudicatory function. Thus, in cases involving specialized disputes,

the practice has been to refer the same to an administrative agency of special competence
pursuant to the doctrine of primary jurisdiction. The courts will not determine a controversy
involving a question which is within the jurisdiction of the administrative tribunal prior to the
resolution of that question by the administrative tribunal, where the question demands the
exercise of sound administrative discretion requiring the special knowledge, experience and
services of the administrative tribunal to determine technical and intricate matters of fact, and a
uniformity of ruling is essential to comply with the premises of the regulatory statute
administered. The objective of the doctrine of primary jurisdiction is to guide a court in
determining whether it should refrain from exercising its jurisdiction until after an administrative
agency has determined some question or some aspect of some question arising in the
proceeding before the court. It applies where the claim is originally cognizable in the courts and
comes into play whenever enforcement of the claim requires the resolution of issues which,
under a regulatory scheme, has been placed within the special competence of an administrative
body; in such case, the judicial process is suspended pending referral of such issues to the
administrative body for its view.24
However, where what is assailed is the validity or constitutionality of a rule or regulation issued
by the administrative agency in the performance of its quasi-legislative function, the regular
courts have jurisdiction to pass upon the same. The determination of whether a specific rule or
set of rules issued by an administrative agency contravenes the law or the constitution is within
the jurisdiction of the regular courts. Indeed, the Constitution vests the power of judicial review or
the power to declare a law, treaty, international or executive agreement, presidential decree,
order, instruction, ordinance, or regulation in the courts, including the regional trial courts.25 This
is within the scope of judicial power, which includes the authority of the courts to determine in an
appropriate action the validity of the acts of the political departments.26 Judicial power includes
the duty of the courts of justice to settle actual controversies involving rights which are legally
demandable and enforceable, and to determine whether or not there has been a grave abuse of
discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality
of the Government.27
In the case at bar, the issuance by the NTC of Memorandum Circular No. 13-6-2000 and its
Memorandum dated October 6, 2000 was pursuant to its quasi-legislative or rule-making power.
As such, petitioners were justified in invoking the judicial power of the Regional Trial Court to
assail the constitutionality and validity of the said issuances. In Drilon v. Lim,28 it was held:
We stress at the outset that the lower court had jurisdiction to consider the
constitutionality of Section 187, this authority being embraced in the general definition of
the judicial power to determine what are the valid and binding laws by the criterion of
their conformity to the fundamental law. Specifically, B.P. 129 vests in the regional trial
courts jurisdiction over all civil cases in which the subject of the litigation is incapable of
pecuniary estimation, even as the accused in a criminal action has the right to question in
his defense the constitutionality of a law he is charged with violating and of the
proceedings taken against him, particularly as they contravene the Bill of Rights.
Moreover, Article X, Section 5(2), of the Constitution vests in the Supreme Court
appellate jurisdiction over final judgments and orders of lower courts in all cases in which
the constitutionality or validity of any treaty, international or executive agreement, law,
presidential decree, proclamation, order, instruction, ordinance, or regulation is in
question.29
In their complaint before the Regional Trial Court, petitioners averred that the Circular
contravened Civil Code provisions on sales and violated the constitutional prohibition against the
deprivation of property without due process of law. These are within the competence of the trial
judge. Contrary to the finding of the Court of Appeals, the issues raised in the complaint do not
entail highly technical matters. Rather, what is required of the judge who will resolve this issue is
a basic familiarity with the workings of the cellular telephone service, including prepaid SIM and
call cards and this is judicially known to be within the knowledge of a good percentage of our
population and expertise in fundamental principles of civil law and the Constitution.

Hence, the Regional Trial Court has jurisdiction to hear and decide Civil Case No. Q-00-42221.
The Court of Appeals erred in setting aside the orders of the trial court and in dismissing the
case.
WHEREFORE, in view of the foregoing, the consolidated petitions are GRANTED. The decision
of the Court of Appeals in CA-G.R. SP No. 64274 dated October 9, 2001 and its Resolution
dated January 10, 2002 are REVERSED and SET ASIDE. The Order dated November 20, 2000
of the Regional Trial Court of Quezon City, Branch 77, in Civil Case No. Q-00-42221 is
REINSTATED. This case is REMANDED to the court a quo for continuation of the proceedings.
SO ORDERED.
Davide, Jr., C.J., Vitug, and Carpio, JJ., concur.
Azcuna, J., took no part.

Footnotes
1

Rollo, G.R. No. 151908, pp. 225-228.

Rollo, G.R. No. 152063, p. 112.

Rollo, G.R. No. 151908, p. 229.

Id., p. 230.

Id., pp. 231-247.

Id., pp. 248-270.

Id., pp. 271-273, at 273; penned by Judge Vivencio S. Baclig.

Id., pp. 274-277.

Id., p. 278.

10

Id., pp. 123-132, at 131-132; penned by Associate Justice Rodrigo V. Cosico,

concurred in by Associate Justices Ramon A. Barcelona and Alicia L. Santos.
11

Id., pp. 134-136.

12

Id., pp. 23-24.

13

Rollo, G.R. No. 152063, pp. 14-15.

14

Id., pp. 389-390.

15

Id., pp. 391-392.

16

Bellosillo, J., Separate Opinion, Commissioner of Internal Revenue v. Court of Appeals,

329 Phil. 987, 1017 [1996].

17

Romulo, Mabanta, Buenaventura, Sayoc and De Los Angeles v. Home Development

Mutual Fund, G.R. No. 131082, 19 June 2000, 333 SCRA 777, 785-786.
18

Conte, et al. v. Commission on Audit, 332 Phil. 20, 36 [1996].

19

Bellosillo, J., Separate Opinion, Commissioner of Internal Revenue, G.R. No. 119761,
29 August 1996, supra.
20

G.R. No. 110526, 10 February 1998, 286 SCRA 109, 117.

21

Rollo, G.R. No. 152063, pp. 57-78.

22

Id., pp. 79-86.

23

Id., pp. 87-89.

24

Fabia v. Court of Appeals, G.R. No. 132684, 11 September 2002.

25

Spouses Mirasol v. Court of Appeals, G.R. No. 128448, 1 February 2001, 351 SCRA
44, 51.
26

Santiago v. Guingona, Jr., G.R. No. 134577, 18 November 1998, 298 SCRA 756, 774.

27

CONSTITUTION, Art. VIII, Sec. 1, second paragraph.

28

G.R. No. 112497, 4 August 1994, 235 SCRA 135.

29

Id., at 139-140.