G.R. No. L-65718, June 30, 1987
National Development Company and Dole Philippines, Inc. vs. Wilfredo Hervilla

FACTS

Wilfredo Hervilla filed an action for recovery of possession and damages against Dole Philippines, Inc. and the National Development Company (NDC) concerning two lots in Polomolok, South Cotabato. Hervilla claimed rights as a successor-in-interest, having filed free patent applications for the lots in 1961. However, another claimant, Candido de Pedro, had also filed a free patent application for the same lots in 1963, asserting occupation since 1945. De Pedro subsequently ceded his rights to NDC. The Bureau of Lands conducted an investigation and recommended amending Hervilla’s applications to refer to the correct lot numbers, but also noted the adverse claim by Dole. The District Land Officer ordered further action on Hervilla’s applications held in abeyance pending final resolution of the adverse claim.
The Court of First Instance dismissed Hervilla’s complaint. On appeal, the Intermediate Appellate Court reversed, ordering petitioners to surrender possession to Hervilla and pay damages. The appellate court held that Hervilla, having filed his free patent applications earlier in 1961, had a better right than de Pedro, who filed in 1963. Petitioners NDC and Dole Philippines then elevated the case to the Supreme Court via certiorari.

ISSUE

The core issue is whether the Court of Appeals erred in reversing the trial court and recognizing Hervilla’s preferential right to the disputed public lands over the petitioners’ predecessor-in-interest.

RULING

The Supreme Court reversed the decision of the Intermediate Appellate Court and reinstated the trial court’s dismissal of the complaint. The Court emphasized that jurisdiction over the disposition of public lands is vested exclusively in the Director of Lands, subject to the control of the Secretary of Agriculture and Natural Resources. The administrative decision of the Director of Lands, having become final, is conclusive upon the courts on questions of fact. In this case, the Director of Lands had issued free patents over the disputed lands in favor of Candido de Pedro, petitioners’ predecessor-in-interest. Hervilla failed to exhaust administrative remedies; he did not file a motion for reconsideration of the Director’s decision, nor did he appeal to the Secretary or to the Office of the President. Consequently, the administrative decision became final and beyond judicial interference. The courts cannot substitute their judgment for that of the administrative agency on matters within its exclusive competence. Therefore, Hervilla’s action for recovery of possession had no legal basis, as the final administrative award vested rights in de Pedro and, by extension, the petitioners. The principle of exhaustion of administrative remedies is fatal to Hervilla’s judicial recourse.