G.R. No. L-13677. October 31, 1960.
HUGH M. HAM, plaintiff-appellant, vs. THE BACHRACH MOTOR CO., INC., defendant-appellant. THE SECRETARY OF AGRICULTURE AND NATURAL RESOURCES and THE DIRECTOR OF LANDS, third-party defendants-appellees.

FACTS

1. On February 26, 1919, the Government leased a parcel of public land (Block No. 146, Reclamation No. 1, Manila) to Helene Caswell for 99 years. The lessee built the “Teal Building” on the land.
2. On May 16, 1935, Bachrach Motor Co., Inc. acquired the Teal Building and the leasehold rights through public auction, with approval from the Director of Lands and the Secretary of Agriculture and Natural Resources on April 14, 1939.
3. The building was damaged during the liberation of Manila in World War II.
4. On February 4, 1946, Bachrach Motor Co. leased a portion of the building (approx. 600 sq. m.) to Hugh M. Ham at a monthly rental of P500. Ham occupied the premises and paid rent to Bachrach until October 1949. Ham also spent about P28,000 to reconstruct and improve the leased portion.
5. On September 15, 1947, the Director of Lands, with the Secretary’s approval, issued an order cancelling the original lease contract and forfeiting Bachrach’s improvements in favor of the Government. Bachrach received a copy of this order on March 16, 1948.
6. Bachrach filed petitions for reconsideration and reinvestigation, which were denied by the Secretary of Agriculture and Natural Resources on June 17, 1948, and subsequently.
7. From November 1, 1949, Ham ceased paying rent to Bachrach because he was required to pay occupation fees directly to the Bureau of Lands, which he did from February 1948 onward.
8. Ham filed a complaint against Bachrach on May 24, 1950 (amended on June 2, 1955), seeking recovery of P30,500 (representing his reconstruction costs and other expenses) with interest, attorney’s fees, and costs.
9. Bachrach filed an answer with counterclaim for unpaid rentals from November 1949 and a third-party complaint against the Secretary of Agriculture and Natural Resources and the Director of Lands. The third-party complaint sought to declare the cancellation order void, to have Bachrach’s rights under the lease recognized, to have Bachrach declared owner of the building, to have the sublease to Ham recognized, and to have Ham’s subsequent direct lease with the government declared void.
10. The Court of First Instance of Manila dismissed the complaint, counterclaim, and third-party complaint. Both Ham and Bachrach appealed to the Court of Appeals, which certified the case to the Supreme Court as only questions of law were involved.

ISSUE

1. Whether the Court of First Instance had jurisdiction to entertain Bachrach’s third-party complaint seeking to annul the administrative orders of the Director of Lands and the Secretary of Agriculture and Natural Resources cancelling the lease and forfeiting the improvements.
2. Whether the court should have suspended proceedings pending the outcome of Bachrach’s appeal to the President of the Philippines regarding the administrative cancellation order.

RULING

1. The Court of First Instance had no jurisdiction over the third-party complaint. The authority to dispose of public lands is vested exclusively in the Director of Lands, subject to the control of the Secretary of Agriculture and Natural Resources, by Commonwealth Act No. 141 (Public Land Act). The courts cannot review, reverse, modify, or interfere with the decisions of these officials on matters within their executive and administrative jurisdiction, unless they have acted without or in excess of jurisdiction, or with grave abuse of discretion. Bachrach’s third-party complaint essentially asked the court to substitute its judgment for that of the administrative officials on the validity of the cancellation, which is beyond judicial authority. The proper remedy for Bachrach, if aggrieved by the Secretary’s decision, was to appeal to the President of the Philippines, which it did.
2. The trial court correctly dismissed the complaint and counterclaim. The core dispute between Ham and Bachrach (Ham’s claim for reimbursement and Bachrach’s claim for rent) depended entirely on the validity of Bachrach’s leasehold rights, which had been administratively cancelled. Since the court could not pass upon the validity of that administrative cancellation, it could not adjudicate the parties’ claims deriving from those rights. Furthermore, Bachrach had appealed the Secretary’s order to the President. The court should not take action until the President has decided that appeal.
DISPOSITIVE PORTION: The judgment of the Court of First Instance dismissing the complaint, counterclaim, and third-party complaint is affirmed. Costs against both appellants.